No 6489
Thursday 14 December 2017
Vol cxlviii No 13
pp. 195–267
The commentary that follows is intended to give readers of the financial statements an overview of the finances and operations of the University group, including Cambridge Assessment and Cambridge University Press. It should be read in conjunction with the Annual Report of the Council and the Annual Report of the General Board to the Council for the academical year 2016–17, which are published alongside these financial statements. The financial position of the teaching and research activities of the University may be seen more clearly in the Financial Management Information published in the Reporter. Further detailed information about the finances and operations of Cambridge Assessment and Cambridge University Press is given in the annual reports of those entities which are also published.
The consolidated financial statements cover the teaching and research activities of the University, its subsidiary companies which undertake activities which for legal or commercial reasons are more appropriately carried out by limited companies, Cambridge Assessment and Cambridge University Press and their subsidiary companies and joint ventures, the Gates Cambridge Trust, and certain other Trusts (the ‘Associated Trusts’).
Cambridge Assessment and Cambridge University Press are constituent parts of the corporation known as the Chancellor, Masters, and Scholars of the University of Cambridge. Cambridge Assessment’s primary work is the conduct and administration of examinations in schools and for persons who are not members of the University. Cambridge University Press is the publishing house of the University dedicated to publishing for the advancement of learning, knowledge, and research worldwide.
The Associated Trusts are separately constituted charities. They are deemed to be subsidiary undertakings of the University since the University appoints the majority of the trustees of each Trust. The purposes of these trusts are to support the University by enabling persons from outside the United Kingdom to benefit from education in the University by the provision of scholarships and grants and otherwise.
The mission of the University of Cambridge is to contribute to society through the pursuit of education, learning, and research at the highest international levels of excellence.
Its principal activities are teaching and learning, research, stewardship of collections and ancient buildings, and the assessment and publishing activities carried out by Cambridge Assessment and Cambridge University Press.
The sources of income of the University are:
–Research income from publicly funded Research Councils, charitable foundations, the European Union, and collaborations with the private sector;
–Students through fees charged for instruction and facilities;
–The government, which, through the Higher Education Funding Council for England (HEFCE), provides a grant for research, determined by the quality and volume of research as assessed through the Research Excellence Framework, and a grant towards the cost of teaching;
–Benefactions and donations for endowments, capital, and current use;
–Investment income from endowment and other assets;
–Income from services provided to external customers, including the customers of Cambridge Assessment and Cambridge University Press; and
–Income from commercialization of intellectual property.
The main investment pool generating investment income is the Cambridge University Endowment Fund (CUEF). The CUEF is managed on a total return basis, such that the amount distributed for budgetary expenditure is determined by a formula that has regard to the total return reasonably to be expected in the long term. A substantial proportion of the CUEF’s investments yield little or no income in the form of dividends, interest, or rents. In the year ended 31 July 2017, distributions by the CUEF exceeded the income received from its underlying investments by £78m (2016: £73m), the balance of the distributions being funded by drawing on long-term capital growth.
In these financial statements total investment income includes the income from the CUEF’s underlying investments rather than the distributions made by the CUEF. The impact is that investment income is £78m less than it would have been had it been based on distribution, with a corresponding increase in gains on investments.
The results for the University group for the year ended 31 July 2017 are summarized in Table 1.
|
Table 1 |
2016–17 |
2015–16 |
Change |
|
£m |
£m |
% |
|
|
Income |
1,870 |
1,799 |
+3.9% |
|
Expenditure |
(1,807) |
(1,734) |
+4.2% |
|
Surplus before other gains and losses |
63 |
65 |
|
|
Gain on investments |
407 |
222 |
|
|
Taxation |
(4) |
(3) |
|
|
Actuarial gain / (loss) and other |
26 |
(182) |
|
|
Gain / (loss) on foreign currency translation |
– |
10 |
|
|
Total comprehensive income for the year |
492 |
112 |
|
|
Total net assets |
4,847 |
4,355 |
+11.3% |
The consolidated position is built up from the University’s three main segments: its core academic activities and the assessment and publishing activities carried out by Cambridge Assessment (CA) and Cambridge University Press (CUP) respectively. Within the group there are a number of intra-group transactions, principally the financial and other support from CA and CUP for the University’s academic activities. Table 2 gives segmental information, which is considered in further detail in note 17 to the Accounts.
|
Table 2 |
Total income 2017 £m |
Expenditure 2017 £m |
Investment gains 2017 £m |
Surplus 2017 £m |
|
|
HEI, Trusts, and others |
1,166 |
(1,159) |
371 |
378 |
|
|
Assessment |
413 |
(365) |
33 |
81 |
|
|
Press |
318 |
(310) |
3 |
11 |
|
|
1,897 |
(1,834) |
407 |
470 |
||
|
Financial support to the University from Cambridge Assessment |
(24) |
24 |
– |
– |
|
|
Financial support to the University from Cambridge University Press |
(3) |
3 |
– |
– |
|
|
As per the reported financial statements |
1,870 |
(1,807) |
407 |
470 |
|
|
|
|||||
|
HEI, Trusts, and others |
70 |
– |
(70) |
– |
|
|
Assessment |
7 |
– |
(7) |
– |
|
|
Press |
1 |
– |
(1) |
– |
|
|
To restate onto a distribution basis |
78 |
– |
(78) |
– |
|
|
Adjusted distribution basis |
1,948 |
(1,807) |
329 |
470 |
|
|
Total income 2016 £m |
Expenditure 2016 £m |
Investment gains 2016 £m |
Surplus 2016 £m |
||
|
HEI, Trusts, and others |
1,148 |
(1,121) |
204 |
231 |
|
|
Assessment |
395 |
(358) |
17 |
54 |
|
|
Press |
275 |
(274) |
|
2 |
|
|
1,818 |
(1,753) |
222 |
287 |
||
|
Financial support to the University from Cambridge Assessment |
(19) |
19 |
– |
– |
|
|
As per the reported financial statements |
1,799 |
(1,734) |
222 |
287 |
|
|
|
|||||
|
HEI, Trusts, and others |
66 |
– |
(66) |
– |
|
|
Assessment |
7 |
– |
(7) |
– |
|
|
To restate onto a distribution basis |
73 |
– |
(73) |
– |
|
|
Adjusted distribution basis |
1,872 |
(1,734) |
149 |
287 |
|
Sponsors of research projects continue to be the main source of income for the University at £466m for the year. Research grants and contract activity increased slightly, with a small fall in income as accounted reflecting a reduced contribution to equipment and building capital expenditure mainly from Research Councils. UK-based charity funded research income increased by around 12% to £142m with the mix of other categories of sponsors remaining broadly similar.
Tuition and education contract fee income grew by 5%, being primarily increases in postgraduate fees. The grants from HEFCE reduced by 8% to £178m reflecting lower capital grants from this source and a further small reduction in the teaching grant as the final steps of the revised funding arrangements for Home/EU undergraduates came through and a reduction in funding council capital grants recognized in the year.
Examination and assessment services are carried out by CA through its three exam boards: Cambridge Assessment English, Cambridge Assessment International Education, and Oxford Cambridge and RSA Examinations (OCR). The two international businesses between them now account for over 80% of CA’s income. Total examination and assessment income increased by £20m to £412m, with the gains of the international businesses offsetting a small decline in OCR’s revenues.
Publishing service revenue is CUP’s income from the sales of educational and scholarly books, e-books, journals, applications, and related services. Its three publishing groups are: Academic, which publishes research books, advanced learning materials, and reference content as well as journals; Cambridge English Language Teaching, which publishes materials for both adults and students; and Education, which provides teaching materials for schools and advises on educational reform. Overall publishing income from publishing services in the year to 31 July 2017 increased by £42m (+16%) to £311m. Some 90% of Press sales arise outside the United Kingdom and income was also buoyed by the general weakness of sterling. The Education business was particularly strong despite constraints on library budgets and customer business models changing, Academic publishing revenues also increased compared to the previous year.
Donations and endowment income reported under FRS102 recognizes all new endowments, donations for capital and in respect of heritage assets, and other restricted and unrestricted donations available for current spend. In aggregate such income totaled £79m (2016: £71m) of which approximately £12m (2016: £13m) was of a capital nature, i.e. donations for fixed assets and heritage assets.
The University receives and generates significant Other income, including from various services provided to external customers, contributions from health and hospital authorities, residences and catering, and income from intellectual property managed primarily through Cambridge Enterprise Limited. Total Other income increased by 7% to £130m.
Investment income provided by the University’s financial investments, primarily the CUEF, is an important component of the University’s funding mix. As explained above and in Note 11 to the accounts, the CUEF’s distribution, which is available for spending on operations, exceeded the income received in the year from its underling investments by £78m. On a ‘distribution basis’ investment income was £96m (2016: £94m) with the limited increase reflecting spend down of the funds held for the major capital projects including the North West Cambridge development and CA’s Triangle building.
Table 3 shows the movement in net assets into the group analyzed into its three main segments.
|
Table 3 |
HEI, Trusts, and others |
Assessment |
Press |
Eliminations |
Group |
|
£m |
£m |
£m |
£m |
£m |
|
|
Net assets at 31 July 2016 |
3,805 |
514 |
52 |
(16) |
4,355 |
|
Surplus for the year before tax (Table 2) |
378 |
81 |
11 |
– |
470 |
|
Taxation |
– |
– |
(4) |
– |
(4) |
|
Actuarial gain / (loss) |
(1) |
– |
27 |
– |
26 |
|
Net assets at 31 July 2017 |
4,182 |
595 |
86 |
(16) |
4,847 |
The University continues its investment in refreshing, renewing, and expanding its academic estate and equipment and in the physical facilities and IT infrastructure for CA and CUP. Continued investment in infrastructure is essential if the University is to remain globally competitive.
Capital expenditure on land and buildings across the Group totalled £284m with a further £45m on equipment and £24m on software projects. Investment of £180m was made in the academic estate across a wide range of building projects, with significant expenditure on the Cambridge Judge Business School building, major laboratory facilities on the Cambridge Biomedical Campus, a new student services centre in central Cambridge, the Chemistry of Health building, and off-site storage facilities for the University Library.
CA continues to make substantial investments in its technical infrastructure and is developing a new office building to accommodate its Cambridge-based staff in a single location and provide space to absorb planned growth. CUP is also maintaining its investment in business systems.
The University is proposing significant capital expenditure in the coming years on academic buildings, with major academic developments planned at the Cambridge Biomedical Campus, the New Museums site, the Old Addenbrooke’s site, and at West Cambridge, the last including both the new Cavendish Laboratory and the phased relocation of the Department of Engineering.
The University is developing its site at North West Cambridge to provide University housing for letting to staff, market housing for sale and let, supermarket and retail units, and further sites for research. This will contribute to the strategic need to provide affordable and high quality housing for postdoctoral research staff and others at the beginning of their careers with the University. The development will add to the long-term strategy of the University in allowing further expansion of academic activities. The market housing, which will number 1,500 units, and retail and commercial developments contribute significantly to the viability of the development. The first phase of the development comprises some 700 residential units for University and related staff, approximately 325 postgraduate accommodation units, development sites for approximately 450 units for market sale to residential developers, and a local centre with shops, a supermarket, and other facilities. This first phase is expected to involve a peak cumulative investment by the University approaching £400m in 2017–18 when the bulk of rental income streams begin. Work is now underway to identify and define the priorities for a second phase of development at North West Cambridge.
Cumulative net capitalized expenditure on the North West Cambridge development was £332m at 31 July 2017 and is included in non-current investments.
The University’s endowment and other investments support posts and activities and give important financial assistance to students. The investment assets are managed in three principal pools:
The majority of non-current asset investments are held in the CUEF, which is managed by the University’s Investment Office with the advice and oversight of the Investment Board. Colleges and other charities linked with the University are permitted to invest in the CUEF, to gain from its scale, diversification, and professional management. The Associated Trusts are substantially entirely invested in the CUEF, and a number of Colleges have made investments.
The CUEF’s long-run investment objective is to achieve or exceed an average annual rate of total return (i.e. income and net capital gains) net of all costs and before distributions are taken into account equal to RPI plus 5.25%, such that after the distributions for expenditure are taken into account the capital is maintained in real terms. A further objective is to manage judiciously the risk taken in order to meet the total return objective by utilizing diversification of investment strategies, investment asset classes, and investment managers.
The amount distributed for expenditure in the operating budget is determined by a formula based on underlying capital values combined with factors which smooth the rate of spending changes from year to year, allowing a degree of certainty for planning purposes.
The CUEF reports its performance to 30 June. During the year ended 30 June 2017 the CUEF had an investment return of 18.8% (2016: 6.3%). The Fund has returned an annualized 13.8% return over a rolling five-year period, which compares favourably to the long-term investment objective over this period of 7.7% annualized. The value of the CUEF at 30 June 2017 was £2,959m (2016: £2,656m).
The asset allocation and investment selection in the Fund is aimed at optimizing the expected future long-run total return, bearing in mind expected future volatility. The CUEF’s asset allocation at 30 June 2017 was:
|
Public equity |
59% |
|
Private investment |
13% |
|
Absolute return |
12% |
|
Credit |
0% |
|
Real assets |
12% |
|
Fixed interest / cash |
4% |
Over the course of 2016–17 allocations to these broad asset classes did not change significantly. Small reductions in percentage terms were made to public equities and absolute return and the allocations to private investments and fixed interest/cash both increased.
The CUEF’s total return of 18.8% in the twelve months to 30 June 2017 was a strong performance. Despite a steady fall in broad market volatility, an increase in the dispersion of individual stock returns in the second half of the year favoured active management, and the CUEF benefitted from the outperformance of its equity and hedge fund managers compared to their benchmarks. There were strong performances in the private investments and direct property assets. Over the year the overall conditions were benign, continued to favour equities over other asset classes, but also caused few investments to be objectively cheap relative to their histories. Aside from a growing list of geopolitical concerns, the principal investment risk is that of bond market weakness, whether arising from the suspension or reversal of Quantitative Easing programmes or a rise in inflation.
The majority of the University and Group current asset investments are invested in the deposit pool. This pool is managed by the Finance Division according to guidelines on diversification, exposure, and credit quality agreed by the Finance Committee. The investments are principally short-term deposits with banks and similar institutions.
Some long-term investments are held outside the CUEF including certain investment properties in Cambridge, other securities, and equity investments in spin-out companies overseen by the University’s technology transfer company Cambridge Enterprise Limited.
In 2012, the University issued £350m of 3.75% unsecured bonds due October 2052. The bonds are listed on the London Stock Exchange. The net proceeds of the issue of £342m have now largely been applied in the University’s investment in the North West Cambridge development.
The University continues to be rated Aaa (stable outlook) by Moody’s Investors Service.
The costs and risks of the pension schemes to which the University is exposed remain of concern. The Universities Superannuation Scheme (USS) is a major exposure for the University. The USS is a multi-employer scheme and Note 34 to the Accounts describes how the scheme is reflected in these financial statements. The USS trustee is currently preparing the triennial actuarial valuation of the USS as at 31 March 2017. Initial indications are that the deficit will be worse and the cost of future service benefits also materially higher than in the previous valuation, and it is probable that further changes to scheme contributions or benefits, or both, will be necessary.
The University group has three other major schemes: the Cambridge University Assistants’ Contributory Pension Scheme (CPS) for assistant staff and two defined benefit schemes for staff of the Cambridge University Press. The CPS is a hybrid defined benefit scheme with a Defined Contribution component and remains open to new joiners and future accrual. The University is making deficit-recovery contributions to the scheme of £14.6m per annum until 2019. The next triennial valuation of the CPS will be as at 31 July 2018. The Cambridge University Press defined benefit schemes are closed to new joiners and, following the triennial valuation of these two schemes as at 1 January 2016, are subject to a recovery plan projecting an aggregate deficit contribution of £25.3m to be funded by 31 July 2022.
Included in the balance sheet as a liability is the present value of future contributions payable to the USS to the extent that they represent recovery payments towards covering the deficit in the USS. The liability recognized with this treatment was £120m as at 31 July 2017 (2016: £127m). The CPS and the Press schemes, being single-employer schemes, are included in the financial statements following FRS102 and the total net pension liability is £619m (2016: £629m), of which £97m relates to the Press schemes. Pensions are discussed further in Note 34 to the Accounts.
Major financial risks and uncertainties continue to face the University and the sector: the impact of Brexit, the changes in the Higher Education legislative framework, and how these will affect funding for teaching and research.
The single largest source of funding, Research grants and contracts income, is projected to continue steady growth, but against the uncertainties of future European research funding following Brexit and the proposed restructuring of UK Research Councils. The failure to cover the full economic cost of research from our sponsors remains a concern. Fee income is expected to increase gently through the long-term upward trend in postgraduate student numbers, although Home/EU undergraduate fees will now be frozen going forward, and therefore, in an increasingly inflationary environment, reduce further in real terms.
CA’s international activities are expected to continue to grow over the next five years but the UK market remains challenging. CA’s income is expected to grow over the next five years, and there will be continued investment in research, technology, product development, and staff. CUP also anticipates steady revenue growth but faces market, global economic, and competitive challenges as customer needs evolve, and continuing global economic challenges. Deepening links, closer working and strategic alignment and greater joint investment between CA and CUP, and opportunities to work more closely with the academic University, are expected to yield gains.
The University is seeing pressure on its pension schemes’ costs and risks, in particular the USS, and pay costs more generally given the pay restraint in recent years.
The University faces significant challenges in funding its ambitious but essential strategic capital expenditure programme, with major academic developments planned at the Cambridge Biomedical Campus, the New Museums site, the Old Addenbrooke’s site, and the West Cambridge physical sciences and technology campus, although Cambridge Assessment’s major Triangle building is now largely completed. Cash generated from the University’s own activities are insufficient on their own to deliver the programme and philanthropic and other sources of capital funding will be increasingly important.
Performance of the University’s investment assets has again been strong, with favourable impact on the University’s endowment and the assets of its pension schemes. Global economic uncertainties remain and investment returns at the target levels look challenging in the near future.
The principal financial risks and uncertainties the University must address do not change: its long-term ability to maintain and develop its research funding, attract the best staff and students, and maintain, refresh, and renew its physical facilities. The activities of Cambridge Assessment and Cambridge University Press are subject to the pressures of international competition and they must balance the need to generate sufficient net income to ensure that they thrive with the need to support the University’s core academic activities whenever possible.
The University’s key financial uncertainties and risks are:
•Further cuts to government support for teaching and research. The University will continue to engage with government directly and through the wider HE sector, and generally seek to continue to diversify its income sources.
•The continuing deficit between the costs of our education delivered to UK and EU undergraduates and the support for it from student fees and government grants. The University has calculated that the average annual cost borne by the University and Colleges per Home/EU undergraduate student is around £18,500. The Cambridge teaching model is distinctive and successful but is costly to deliver. The University continues to review ways of controlling costs, seek value for money gains, and is looking to gradually develop the mix of students to permit this quality of education to be maintained.
•The outcome of the restructuring of Research Councils, the funding available to them, and the potential consequential impact on the University’s research funding. The formation of UK Research and Innovation, which will bring the current Research Councils together, and the increasing emphasis on national research institutes might affect funding. The University will develop strategic relationships with funders, including engaging more closely with Research Councils and other key bodies.
•Research sponsorship from EU sources following the UK’s forthcoming exit from the European Union. Loss of European Research Council funding would likely impact on the University’s ability to engage leading researchers. The University and the HE sector engages with government on Brexit issues, and the University has established working groups to keep all aspects of Brexit under review.
•The ability to recover the full economic costs of research. Charities and foundations are unwilling to cover the full costs and typically contribute only to direct costs. Measures are proposed to improve cost recovery on grants, and to increase research funding from industry, which would be expected to bring improved recovery of indirect costs.
•Movements in investment markets impacting the value of the endowment and other investment assets. The CUEF is managed across a diversified range of asset classes, sectors, styles, and geographies with a broad equity focus, and is designed to be resilient over the long term. Short-term volatility, particularly at the high assets values currently observed, should, however, be expected.
•The costs and risks of pension provision, in particular from participation in the Universities Superannuation Scheme. The USS’s triennial valuation currently being reviewed indicates an increased deficit and potentially materially increased cost of provision of future defined benefits. The HE sector is currently proposing changes to the USS benefits with the aim of controlling cost and risks in respect of future service benefits.
•Pay inflation, against a background of pay restraint in recent years. General pay increases have been at levels below inflation, and recruitment and retention of all categories of staff, particularly in the context of Cambridge housing costs, is under pressure. The University is investing in its North West Cambridge residential development to ease certain pressures, and in economy, efficiency, and effectiveness in its operations to accommodate pay inflation as necessary.
•The ability to continue to invest in buildings, infrastructure, and equipment for both teaching and research, against a background of limited government capital funding. The University has an ambitious building programme, and is actively managing its strategic investment, and the operating cash flows and capital grants from government and philanthropic sources.
•The support by benefactors for endowment, capital expenditure, and for current use. The University is investing further in its Development and Alumni Relations activities. A new campaign with a target to raise £2 billion across collegiate Cambridge was launched in October 2015.
•The economic success of Cambridge Assessment and Cambridge University Press, which operate in challenging international markets. CA in particular provides a valuable source of unrestricted funding which the University designates for its academic capital programme. A joint board provides oversight of these two businesses and is developing an overarching strategy to ensure they continue to thrive.
•The further impact of the UK’s forthcoming exit from the European Union on these risks and uncertainties. The University has established working groups to keep all aspects of Brexit under review and develop strategies to ensure that the University maintains and enhances its position as the external environment changes.
The University group’s financial operating performance over 2016–17 was satisfactory with a surplus before other gains and losses of £63m, on total income of £1.9 billion. With the exception of funding body grants and research income, each category of income grew. The University is active in diversifying its funding sources to avoid dependence on any single stream. The relatively small overall surplus was after all donations, including for permanent endowment and capital purposes, and significant surplus from CA’s trading activities. After bringing in the full distribution from the CUEF available for spend and adjusting for non-cash charges such as depreciation and amortization the underlying cash flow is more substantial, but against this must be set the demands of capital expenditure on the operational estate, equipment, and IT, which in 2016–17 totalled £354m. The financial position remains finely balanced with pressures on costs, and the need to generate support for the strategic capital programme.
The University is one of the world’s leading academic institutions and has a reputation for outstanding academic achievement. This reputation has been built up over a long time and is an important factor in attracting the best academic staff and students. Maintaining the financial ability to continue to attract and retain the best staff and to provide research and teaching facilities commensurate with our standing as one of the world’s leading universities remains an ongoing challenge.
Professor Duncan Maskell
Senior Pro-Vice-Chancellor
1. The following statement is provided by the Council to enable readers of the financial statements to obtain a better understanding of the arrangements in the University for the management of its resources and for audit.
2. The University endeavours to conduct its business in accordance with the seven principles identified by the Committee on Standards in Public Life (selflessness, integrity, objectivity, accountability, openness, honesty, and leadership) and within the general principles of the Higher Education Code of Governance, which has been provided by the Committee of University Chairs. Further information is given at paragraph 9 below.
Under the Statutes, the Governing Body of the University is the Regent House, which comprises the resident senior members of the University and the Colleges, together with the Chancellor, the High Steward, the Deputy High Steward, the Commissary, and the external members of the Council. The approval of the Regent House is required for changes to the University’s Statutes and Ordinances and for any other matter for which in Statute or Ordinance the University’s approval must be obtained; the Council and the General Board may also decide to seek the Regent House’s approval on questions of policy which are considered likely to be controversial. The Council of the University is the principal executive and policy-making body of the University, with general responsibility for the administration of the University, for the planning of its work, and for the management of its resources. The membership of the Council includes four external members, one of whom chairs the Audit Committee (see paragraph 7 below). The Statutes provide for the appointment of a Deputy Chair of the Council, normally one of the external members, to take the chair as necessary or when it would be inappropriate for the Vice-Chancellor to do so, in particular in relation to the Vice-Chancellor’s own accountability. The General Board of the Faculties is responsible for the academic and educational policy of the University.
3. The University is an exempt charity and is subject to regulation by the Higher Education Funding Council for England (HEFCE). The members of the University Council are the charity trustees and are responsible for ensuring compliance with charity law.
4. The Council is advised in carrying out its duties by a number of committees, including the Finance Committee, the Audit Committee, the Planning and Resources Committee, the Remuneration Committee, the Investment Board, and the Risk Steering Committee. The Finance Committee is chaired by the Vice-Chancellor and advises the Council on the management of the University’s assets, including real property, monies, and securities, and on the care and maintenance of all University sites and buildings. The Audit Committee, which has a majority of external members, governs the work of the Internal and External Auditors, reporting on these matters directly to the Council. The Planning and Resources Committee is a joint committee of the Council and the General Board. Its responsibilities include the development and oversight of the University’s strategic plan, and the preparation of the University’s budget. The Remuneration Committee is chaired by an external member of the Council and advises the Council on the remuneration of senior staff in the University. The Investment Board, which has a majority of external members, advises the Council on the management of the University’s investment assets. The Risk Steering Committee is responsible to the Council for the identification of the major corporate risks and their management. The West and North West Cambridge Estates Board reports to the Council on its oversight of the development of two key University sites. The Press and Assessment Board advises the Council on matters concerning Cambridge University Press and Cambridge Assessment.
5. Under the terms of the Financial Memorandum between the University and HEFCE, the Vice-Chancellor is the Accountable Officer of the University.
6. Under the Statutes, it is the duty of the Council to exercise general supervision over the finances of all institutions in the University; to keep under review the University’s financial position and to make a report thereon to the University at least once in each year; to recommend bankers for appointment by the Regent House; and to prepare and publish the annual accounts of the University in accordance with UK-applicable accounting standards such that the accounts give a true and fair view of the state of affairs of the University.
7. It is the duty of the Audit Committee to keep under review the effectiveness of the University’s internal systems of financial and other controls; to advise the Council on the appointment of external and internal auditors; to consider reports submitted by the auditors, both external and internal; to monitor the implementation of recommendations made by the internal auditors; to satisfy themselves that satisfactory arrangements are adopted throughout the University for promoting economy, efficiency, and effectiveness; to establish appropriate performance measures and to monitor the effectiveness of external and internal audit; to make an annual report to the Council, the Vice-Chancellor, and to HEFCE; and to receive reports from the National Audit Office and from HEFCE. Membership of the Audit Committee includes as a majority five external members (including the chair of the Committee), appointed by the Council with regard to their professional expertise and experience in comparable roles in corporate life.
8. There are Registers of Interests of Members of the Council, the General Board, the Finance Committee, and the Audit Committee, and of the senior administrative officers. Declarations of interest are made systematically at meetings.
9. The University is a self-governing community whose members act in accordance with the seven principles of public life (see paragraph 2 above) and in pursuit of the objectives and purposes of the University as set out in its Statutes. The University complies with most but not all of the voluntary Higher Education Code of Governance published in December 2014 by the Committee of University Chairs. In particular the Vice-Chancellor is chair of the Council, which does not have a majority of external members, and the Council is subject to the statutory authority of the Regent House. The University has no immediate plans to change these arrangements, which have proved reliable over many years in enabling the University to achieve its academic objectives.
Lord Sainsbury of Turville
Professor Sir Leszek Borysiewicz
Dr Anthony Freeling (from 19 July 2017)
Mr Stuart Laing
Professor Michael Proctor
Professor Susan Smith
Professor Ian White (until 18 July 2017)
Professor Ross Anderson
Professor Anne Davis (until 31 December 2016)
Professor Nick Gay (from 1 January 2017)
Professor Fiona Karet
Dr Susan Oosthuizen
Dr Richard Anthony
The Reverend Jeremy Caddick (until 31 December 2016)
Dr Ruth Charles
Dr Stephen Cowley (from 1 January 2017)
Dr Margaret Glendenning (until 31 December 2016)
Dr David Good (until 31 December 2016)
Dr Nicholas Holmes
Dr Alice Hutchings
Dr Rachael Padman (until 31 December 2016)
Dr Pippa Rogerson (from 1 January 2017)
Dr Mark Wormald (from 1 January 2017)
Ms Jocelyn Wyburd (from 1 January 2017)
Mr Chad Allen (until 30 June 2017)
Mr Amatey Doku (until 30 June 2017)
Ms Daisy Eyre (from 1 July 2017)
Ms Darshana Joshi (from 1 July 2017)
Ms Umang Khandelwal
Mr Mark Lewisohn
Professor Dame Shirley Pearce (until 31 December 2016)
Mr John Shakeshaft (Deputy Chair)
Ms Sara Weller
The Chancellor, external members, student members, Dr Freeling, Mr Laing, Professor Smith, Dr Anthony, and Mr Caddick are not employees of the University. The other members of the Council are employees of the University. No member of the Council receives payment for serving as a member of the Council.
The University is an exempt charity subject to regulation by HEFCE under the Charities Act 2011. The University reports annually on the ways in which it has delivered charitable purposes for the public benefit.
The Council, in reviewing the University’s activities in this regard, has taken into account the Charity Commission’s guidance on public benefit. The Council is satisfied that the activities of the University as described in these Reports and Financial Statements, and in the Annual Report of the Council, fully meet the public benefit requirements.
The mission of the University is ‘to contribute to society through the pursuit of education, learning, and research at the highest international levels of excellence’. The University makes a significant contribution, through these activities, directly and most obviously to the advancement of education, research, and dissemination of knowledge.
The University is widely recognized as one of the leading research universities in the world both in terms of quality and in terms of scope and breadth. Research is undertaken at the highest level across a wide range of areas. The University takes seriously its obligations to disseminate and make publicly accessible the outcomes of its academic research activities through publication, teaching, conferences, consultancy, and other knowledge transfer and outreach activities. It therefore offers public benefit through the continued advancement of knowledge across the sciences, medicine, arts, humanities, culture, and heritage.
A substantial proportion of the research undertaken in the University across the fields of clinical medicine, biomedicine, physics of medicine, and engineering leads directly to the advancement of health and the saving of lives. Research is also carried out in the area of sustainability, environmental protection, and improvement.
Research work in the University is focused at local, national, and international levels. The products of this research have a wide-ranging influence through the advancement of understanding and its application in scientific and technological advances, and through informing public debate on policy. The impact of the University’s research extends to governments, public sector bodies, and charities.
The University’s research activities feed directly into its teaching at every level. Around 20,000 students, of whom 12,000 are full-time undergraduates, pursue courses across a wide range of disciplines. The quality of the education (and, as importantly, the educational experience) which the University provides is consistently recognized by the University’s status at or near the top of national and international rankings.
The University is committed to admitting students of the highest intellectual potential, irrespective of social, racial, religious, financial, or other considerations. The University ensures that individuals from all backgrounds can benefit from the opportunities afforded by a first-rate education and are not unreasonably excluded from those opportunities by the charging of fees. The University ensures that bursaries are available where necessary and outreach activities are undertaken to improve participation by under-represented groups. Financial support is provided to students from overseas through University funds and by trusts associated with the University. Further information is available at https://www.cambridgestudents.cam.ac.uk/cambridgebursary and http://www.graduate.study.cam.ac.uk/finance/funding.
The University is aware that there are significant variations in the educational opportunities, information, and support available to individuals. It therefore invests significant resource and effort into its access and widening participation activities. The University encourages applications from people with disabilities and from mature students.
For the wider community a broad range of lectures, seminars, and courses provide the opportunity for members of the wider public to share in the University’s educational provision. The University’s Institute of Continuing Education offers short non-credit courses, and residential and summer schools.
The University is committed to equipping those who participate in its educational programmes with the highest quality of teaching and pastoral, infrastructural, and academic support. It is fundamental to the University’s mission that its students are personally, academically, and professionally equipped to contribute positively to society. In this regard, the quality and depth of their student experience benefits them directly but also benefits the societies to which they will contribute, through their participation in the workforce and as informed and questioning citizens.
The University’s publishing house, the Cambridge University Press, contributes to the University’s commitment to make publicly accessible the outcomes of academic research activities in Cambridge and from across the world by publishing peer-reviewed academic material and other educational publications. Through Cambridge Assessment, the University develops and delivers a range of widely used and respected examinations, benefiting the UK and world-wide community by offering internationally recognized qualifications, raising aspirations, and transforming lives.
1. The Council is responsible for maintaining a sound system of internal control that supports the achievement of policies, aims, and objectives, while safeguarding the public and other funds and assets for which the Council is responsible, in accordance with the Statutes and Ordinances and the HEFCE Memorandum of Assurance and Accountability.
2. The system of internal control is designed to manage rather than eliminate the risk of failure to achieve policies, aims, and objectives; it therefore provides reasonable but not absolute assurance of effectiveness.
3. The system of internal control is designed to identify the principal risks to the achievement of policies, aims, and objectives, to evaluate the nature and extent of those risks and to manage them efficiently, effectively, and economically. This process was in place for the year ended 31 July 2017 and up to the date of approval of the financial statements, and accords with HEFCE guidance.
4. The Council is responsible for reviewing the effectiveness of the system of internal control. The following processes have been established:
(a)The Council meets eleven times throughout the year to consider the plans and strategic direction of the University.
(b)The Council receives periodic reports from the Chair of the Audit Committee concerning internal control and the minutes of all meetings of the Audit Committee.
(c)The Council’s Risk Steering Committee oversees risk management. The Council receives periodic reports from the Chair of the Risk Steering Committee and the minutes of all meetings of the Risk Steering Committee.
(d)The Audit Committee receives regular reports from the internal auditors, which include the internal auditors’ independent opinion on the adequacy and effectiveness of the University’s system of internal control and risk management, together with recommendations for improvement. Risk management is a standing item on the Audit Committee agenda.
(e)The University provides information (primarily through web-based resources) to those who own or manage central or School risks.
(f)A system of indicators has been developed for the University’s key risks.
(g)A robust risk prioritization methodology based on risk ranking and cost-benefit analysis has been established.
The Council’s review of the effectiveness of the system of internal control is informed by the work of the internal auditors, Deloitte LLP.
5. The Council’s review of the effectiveness of the system of internal control is also informed by the work of the senior officers and the risk owners within the University, who have responsibility for the development and maintenance of the internal control framework, and by comments made by the external auditors in their management letter and other reports.
Under the University’s Statutes and Ordinances it is the duty of the Council to prepare and to publish the annual accounts of the University in accordance with UK applicable accounting standards such that the accounts give a true and fair view of the state of affairs of the University.
The Council is responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the University.
In preparing the financial statements the Council is required to:
(a)select suitable accounting policies and then apply them consistently;
(b)make judgements and estimates that are reasonable and prudent;
(c)state whether applicable accounting standards have been followed;
(d)prepare the financial statements on a going concern basis unless it is inappropriate to presume that the University will continue to operate;
(e)ensure that income has been applied in accordance with the University’s Statutes and Ordinances, and its Memorandum of Assurance and Accountability with HEFCE and the funding agreement with the National College for Teaching and Leadership; and
(f)safeguard the assets of the University and take reasonable steps to prevent and detect fraud and other irregularities.
In our opinion the University of Cambridge’s group financial statements and University financial statements (the “financial statements”):
1.give a true and fair view of the state of the group’s and of the University’s affairs as at 31 July 2017 and of the group’s and the University’s income and expenditure and the group’s cash flows for the year then ended;
2.have been properly prepared in accordance with the United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”, and applicable law); and
3.have been properly prepared in accordance with the Statement of Recommended Practice – Accounting for Further and Higher Education, and the requirements of the 2016/17 HEFCE Accounts Direction.
We have audited the financial statements, included within the Reports and Financial Statements, which comprise: the consolidated and University’s Balance Sheets as at 31 July 2017; the consolidated and University’s Statements of Comprehensive Income, the consolidated Statement of Cash Flows, and the consolidated and University’s Statement of changes in Reserves for the year then ended; and the notes to the financial statements, which include a summary of significant accounting policies and other explanatory information.
Our opinion is consistent with our reporting to the Audit Committee
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We remained independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, which includes the FRC’s Ethical Standard as applicable to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were not provided to the group or the University.
Other than those disclosed in note 14 to the financial statements, we have provided no non-audit services to the group or the University in the period from 1 August 2016 to 31 July 2017.
Overview
 |
|
|
Our audit scope addressed 97% of Group income and 93% of the Group’s assets |
|
|
Pension schemes and
post-retirement benefits Valuation of
investments Costs relating to significant
capital projects Accounting for donations |
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular, we looked at where the Council made subjective judgements, for example in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits we also addressed the risk of management override of internal controls, including evaluating whether there was evidence of bias by the Council that represented a risk of material misstatement due to fraud. We also addressed the risk of fraud in revenue recognition.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters, and any comments we make on the results of our procedures thereon, were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. This is not a complete list of all risks identified by our audit.
|
Key audit matter |
How our audit addressed the key audit matter |
|
|
Pension schemes and post-retirement benefits Refer to note 34 (Pension schemes) and note 28 (Pension liabilities) The Group has defined benefit pension plans with net liabilities of £619.0 million, which is significant in the context of the Group balance sheet. The Group also holds a liability in respect of the deficit reduction agreement for the USS of £120.1m. The valuation of the pension liabilities require significant levels of judgement and technical expertise in choosing appropriate assumptions. Changes in a number of key assumptions (including salary increases, inflation, discount rates, and mortality rates) can have a material impact on the calculation of the liability. |
We obtained the pension valuation report from the external actuary. With the assistance of our internal actuarial specialists we compared the inflation rates and discount rates used in the valuation of the pension liability by the external actuary to our internally developed benchmarks. We compared the assumptions around salary increases and mortality to national and industry averages. We performed testing over the census data on which the valuation is based. We agreed underlying assets in the scheme to confirmations obtained from fund managers, and obtained controls reports and / or financial statements to evaluate the reliability of the evidence obtained. Based on this work, no material issues were noted. |
|
|
Valuation of investments held in the Cambridge University Endowment Fund (CUEF) Refer to note 21 (Non-current investments) and note 11 (Investment income). £2,689.6 million of the group’s investments are held within the CUEF. Therefore the valuation of the units, used by the various components of the group in determining their investment valuations, is key. The remaining £294.8m of units in the CUEF are held by third parties. For the majority of assets (92.5%), valuation is not significantly judgemental, and is based on market data. The remaining balance consists of £177m of assets which are valued by an independent third party, and £22m which are valued internally. |
For investments in quoted securities, pooled investment funds and derivatives, totalling 92.5% of the fund, we agreed a sample of the valuations to independent sources, and for a further sample, agreed the valuations included confirmations from fund managers. Where we obtained confirmations from fund managers, we obtained controls reports and / or financial statements to evaluate the reliability of the evidence obtained. In addition, we obtained confirmation over 92.5% of the total balance from the custodian. In the case of a sample of property related assets valued by third parties (5.9% of the total), with the assistance of our internal valuation specialists, we performed procedures to assess the valuation approach used and the reliability of the information provided. In the case of property related assets valued internally by the investment committee (0.7%), with the assistance of our internal valuation specialists, we considered the reasonableness of the approach to the valuation and of the key inputs. No exceptions were identified during our testing. |
|
|
Costs relating to significant building projects Refer to note 19 (Fixed assets), note 21 (Non-current investments) and note 18 (Intangible assets) During the year the Group capitalized £329.3m in relation to building projects. |
We assessed the appropriateness of capitalizing such costs as well as testing the significant additions to projects in progress, agreeing a sample of additions to third party evidence. No exceptions were noted during our testing. |
|
|
Accounting for donations Refer to note 9 (Donations and endowments) During the year the Group recognized income of £79.1m from donations and endowments. The accounting treatment for donations varies depending on the conditions attached by the donor at the time of the gift. There is a risk that donations to the University are misclassified. |
For a sample of donations recorded, we inspected the terms of the donation and confirmed that the accounting for such donations was in accordance with the Statement of Recommended Practice – Accounting for Further and Higher Education. We considered whether any of the donations made in the year are in the form of multi-year grants, and in discussion with management assessed whether the amounts should be recognized upfront or over the term of the grant. Our testing involved assessing the processes and controls involved in the recording of donations. We also agreed whether a sample of donations had been correctly classified by agreeing donations to supporting documentation, such as letters from the donor setting out any restrictions on the gift. No exceptions were noted as part of our testing. |
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements as a whole, taking into account the structure of the group and the University, the accounting processes and controls, and the industry in which they operate.
Audit Approach overview
The scope of our audit included the Academic University, Cambridge Assessment, the Cambridge University Press, and the Cambridge University Endowment Fund. Together the results of these components account for all material balances and line items within the consolidated financial statements.
In establishing the overall approach to the group and University audit, we determined the type of work that needed to be performed at the reporting units by us, as the group engagement team, or component auditors within PwC UK. Where the work was performed by component auditors, we determined the level of involvement we needed to have in the audit work at those reporting units to be able to conclude whether sufficient and appropriate audit evidence had been obtained as a bases for our opinion on the group financial statements as a whole. Our involvement in the work of the component auditors included regular communication with a formal meeting arranged following the performance of the procedures. In addition, a member of the Group engagement team conducted a review of the working papers.
Our scoping of the University was consistent with our group scoping.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing, and extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
|
Group and University financial statements |
|
|
Overall materiality |
£18 million (2016: £18 million). |
|
How we determined it |
1% of income. |
|
Rationale for benchmark applied |
As the University is a not-for-profit organization, the most suitable benchmark to use for overall group materiality is total income. |
For each component in the scope of our group audit, we allocated a materiality that is less than our overall group materiality. The range of materiality allocated across components was between £6 million and £14.5 million.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £0.6 million (2016: £0.6 million) as well as misstatements below those amounts that, in our view, warranted reporting for qualitative reasons.
Going concern
In accordance with ISAs (UK) we report as follows:
|
Reporting obligation |
Outcome |
|
We are required to report if we have anything material to add or draw attention to in respect of the Council statement in the financial statements about whether the Council considered it appropriate to adopt the going concern basis of accounting in preparing the financial statements and the Council’s identification of any material uncertainties to the group’s and the University’s ability to continue as a going concern over a period of at least twelve months from the date of approval of the financial statements. |
We have nothing material to add or to draw attention to. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the group’s and University’s ability to continue as a going concern. |
The other information comprises all of the information in the Reports and Financial Statements other than the financial statements and our auditors’ report thereon. The Council is responsible for the other information. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report based on these responsibilities.
Based on the responsibilities described above and our work undertaken in the course of the audit, ISAs (UK) require us also to report certain opinions and matters as described below.
Responsibilities of the Council for the financial statements
As explained more fully in the Statement of Responsibilities of the Council, the Council is responsible for the preparation of the financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair view. The Council is also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Council is responsible for assessing the group’s and the University’s ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the Council either intends to liquidate the group or the University or to cease operations, or has no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the Council as a body in accordance with the Charters and Statutes of the University and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
In our opinion, in all material respects:
•funds from whatever source administered by the institution for specific purposes have been properly applied to those purposes and, if relevant, managed in accordance with relevant legislation;
•income has been applied in accordance with the Statutes and Ordinances of the University; and
•funds provided by HEFCE have been applied in accordance with the Memorandum of Assurance and Accountability, and any other terms and conditions attached to them.
Under the HEFCE Audit Code of Practice issued under the Further and Higher Education Act 1992 we are required to report to you if, in our opinion the statement of internal control is inconsistent with our knowledge of the University and group. We have no exceptions to report from this responsibility.
Following the recommendation of the audit committee, we were appointed by the members on 1 December 2008 to audit the financial statements for the year ended 31 July 2009 and subsequent financial periods. The period of total uninterrupted engagement is 9 years, covering the years ended 31 July 2009 to 31 July 2017.
PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Cambridge
20 November 2017
|
Group Year ended 31 July 2017 |
Group Year ended 31 July 2016 |
University Year ended 31 July 2017 |
University Year ended 31 July 2016 |
|||
|
Note |
£m |
£m |
£m |
£m |
||
|
Income |
||||||
|
Tuition fees and education contracts |
5 |
276 |
263 |
264 |
250 |
|
|
Funding body grants |
6 |
178 |
193 |
178 |
193 |
|
|
Research grants and contracts |
7 |
466 |
469 |
458 |
462 |
|
|
Examination and assessment services |
8 |
412 |
392 |
335 |
312 |
|
|
Publishing services |
311 |
269 |
277 |
242 |
||
|
Donations and endowments |
9 |
79 |
71 |
81 |
67 |
|
|
Other income |
10 |
130 |
121 |
106 |
99 |
|
|
Investment income |
11 |
18 |
21 |
15 |
18 |
|
|
Total income |
12 |
1,870 |
1,799 |
1,714 |
1,643 |
|
|
Expenditure |
||||||
|
Staff costs |
13 |
799 |
762 |
738 |
708 |
|
|
Other operating expenses |
14 |
887 |
862 |
786 |
751 |
|
|
Depreciation |
14, 19 |
90 |
77 |
87 |
76 |
|
|
Interest and other finance costs |
14, 15 |
31 |
33 |
31 |
33 |
|
|
Total expenditure |
1,807 |
1,734 |
1,642 |
1,568 |
||
|
Surplus before other gains and losses |
63 |
65 |
72 |
75 |
||
|
Gain on investments |
21 |
407 |
222 |
326 |
180 |
|
|
Surplus before tax |
470 |
287 |
398 |
255 |
||
|
Taxation |
16 |
(4) |
(3) |
(1) |
(2) |
|
|
Surplus for the year |
32 |
466 |
284 |
397 |
253 |
|
|
Other comprehensive income |
||||||
|
Actuarial gain / (loss) |
28, 29 |
26 |
(182) |
26 |
(182) |
|
|
Gain arising on foreign currency translation |
– |
10 |
– |
11 |
||
|
Total comprehensive income for the year |
32 |
492 |
112 |
423 |
82 |
|
|
Represented by: |
||||||
|
Endowment comprehensive income for the year |
30 |
209 |
105 |
180 |
93 |
|
|
Restricted comprehensive income for the year |
31 |
50 |
66 |
49 |
66 |
|
|
Unrestricted comprehensive income / (expense) for the year |
233 |
(59) |
194 |
(77) |
||
|
32 |
492 |
112 |
423 |
82 |
|
Endowment £m |
Restricted £m |
Unrestricted £m |
Total £m |
|
|
Group |
||||
|
Balance at 1 August 2015 |
1,414 |
81 |
2,748 |
4,243 |
|
Surplus for the year ended 31 July 2016 |
105 |
66 |
113 |
284 |
|
Other comprehensive income |
– |
– |
(172) |
(172) |
|
Total comprehensive income for the year ended 31 July 2016 |
105 |
66 |
(59) |
112 |
|
Release of restricted capital funds spent in the year ended 31 July 2016 |
– |
(68) |
68 |
– |
|
Balance at 31 July 2016 |
1,519 |
79 |
2,757 |
4,355 |
|
Surplus for the year ended 31 July 2017 |
209 |
50 |
207 |
466 |
|
Other comprehensive income |
– |
– |
26 |
26 |
|
Total comprehensive income for the year ended 31 July 2017 |
209 |
50 |
233 |
492 |
|
Release of restricted capital funds spent in the year ended 31 July 2017 |
– |
(43) |
43 |
– |
|
Balance at 31 July 2017 |
1,728 |
86 |
3,033 |
4,847 |
|
University |
||||
|
Balance at 1 August 2015 |
1,176 |
81 |
2,536 |
3,793 |
|
Surplus for the year ended 31 July 2016 |
93 |
66 |
95 |
254 |
|
Other comprehensive income |
– |
– |
(172) |
(172) |
|
Total comprehensive income for the year ended 31 July 2016 |
93 |
66 |
(77) |
82 |
|
Release of restricted capital funds spent in the year ended 31 July 2016 |
– |
(68) |
68 |
– |
|
Balance at 31 July 2016 |
1,269 |
79 |
2,527 |
3,875 |
|
Surplus for the year ended 31 July 2017 |
180 |
49 |
168 |
397 |
|
Other comprehensive income |
– |
– |
26 |
26 |
|
Total comprehensive income for the year ended 31 July 2017 |
180 |
49 |
194 |
423 |
|
Release of restricted capital funds spent in the year ended 31 July 2017 |
– |
(43) |
43 |
– |
|
Balance at 31 July 2017 |
1,449 |
85 |
2,764 |
4,298 |
|
Group 31 July 2017 |
Group 31 July 2016 |
University 31 July 2017 |
University 31 July 2016 |
|||
|
Note |
£m |
£m |
£m |
£m |
||
|
Non-current assets |
||||||
|
Intangible assets and goodwill |
18 |
77 |
75 |
74 |
74 |
|
|
Fixed assets |
19 |
2,488 |
2,249 |
2,484 |
2,243 |
|
|
Heritage assets |
20 |
67 |
65 |
67 |
65 |
|
|
Investments |
21 |
3,173 |
2,904 |
2,646 |
2,440 |
|
|
5,805 |
5,293 |
5,271 |
4,822 |
|||
|
Current assets |
||||||
|
Stocks and work in progress |
22 |
49 |
53 |
44 |
46 |
|
|
Trade and other receivables |
23 |
380 |
368 |
369 |
369 |
|
|
Investments |
24 |
345 |
242 |
873 |
694 |
|
|
Cash and cash equivalents |
25 |
281 |
328 |
246 |
292 |
|
|
1,055 |
991 |
1,532 |
1,401 |
|||
|
Creditors: amounts falling due within one year |
26 |
(896) |
(792) |
(1,404) |
(1,228) |
|
|
Net current assets |
159 |
199 |
128 |
173 |
||
|
Total assets less current liabilities |
5,964 |
5,492 |
5,399 |
4,995 |
||
|
Creditors: amounts falling due after more than one year |
27 |
(356) |
(359) |
(345) |
(347) |
|
|
Pension liabilities |
28 |
(739) |
(756) |
(734) |
(751) |
|
|
Other retirement benefits liabilities |
29 |
(22) |
(22) |
(22) |
(22) |
|
|
Total net assets |
4,847 |
4,355 |
4,298 |
3,875 |
||
|
Restricted reserves |
||||||
|
Income and expenditure reserve – endowment |
30 |
1,728 |
1,519 |
1,449 |
1,269 |
|
|
Income and expenditure reserve – restricted |
31 |
86 |
79 |
85 |
79 |
|
|
Unrestricted reserves |
||||||
|
Income and expenditure reserve – unrestricted |
3,033 |
2,757 |
2,764 |
2,527 |
||
|
Total reserves |
4,847 |
4,355 |
4,298 |
3,875 |
The financial statements on pages 235 to 267 were approved by the Council on 20 November 2017 and signed on its behalf by:
|
Professor Stephen
Toope |
John
Shakeshaft |
Andrew
Reid |
|
Note |
Group Year ended 31 July 2017 £m |
Group Year ended 31 July 2016 £m |
||
|
Cash flow from operating activities |
||||
|
Surplus for the year |
466 |
284 |
||
|
Adjustments for non-cash items: |
||||
|
Depreciation |
14, 19 |
90 |
77 |
|
|
Amortization of intangible assets |
18 |
23 |
23 |
|
|
Gain on investments |
21 |
(407) |
(222) |
|
|
Decrease in stocks and work in progress |
22 |
4 |
2 |
|
|
Increase in trade and other receivables |
(12) |
(7) |
||
|
Increase in creditors |
19 |
8 |
||
|
Revision of deficit recovery cost recognized in the year |
13, 28 |
(2) |
18 |
|
|
Other pension costs less contributions payable |
28 |
9 |
7 |
|
|
Other retirement benefit costs less contributions payable |
29 |
– |
– |
|
|
Receipt of donated assets |
20 |
(1) |
(3) |
|
|
Currency adjustments |
2 |
11 |
||
|
Adjustments for investing or financing activities: |
||||
|
Investment income |
11 |
(18) |
(21) |
|
|
Interest payable |
13 |
14 |
||
|
New endowments |
9 |
(30) |
(30) |
|
|
Capital grants and donations |
(78) |
(109) |
||
|
Share of joint venture and associated net surplus |
(1) |
– |
||
|
Gain on the sale of fixed assets |
– |
– |
||
|
Net cash inflow from operating activities |
77 |
52 |
||
|
Cash flows from investing activities |
||||
|
Capital grants and donations |
78 |
109 |
||
|
Proceeds from sales of fixed assets |
2 |
2 |
||
|
Proceeds of sales: North West Cambridge |
– |
20 |
||
|
Proceeds from sales of other non-current asset investments |
21 |
318 |
201 |
|
|
Net disposal of other current asset investments |
– |
28 |
||
|
Investment income |
11 |
18 |
21 |
|
|
Payments made to acquire intangible assets |
18 |
(25) |
(26) |
|
|
Payments made to acquire fixed assets |
(314) |
(244) |
||
|
Payments made to acquire heritage assets |
20 |
(2) |
(2) |
|
|
Payments made to acquire other non-current asset investments |
21 |
(69) |
(74) |
|
|
Acquisition of non-controlling interest |
32 |
(1) |
– |
|
|
Payments made re. North West Cambridge development costs |
(110) |
(137) |
||
|
Net cash outflow from investing activities |
(105) |
(102) |
||
|
Cash flows from financing activities |
||||
|
New endowments |
9 |
30 |
30 |
|
|
Interest paid |
(13) |
(14) |
||
|
Capital element of finance lease repayments |
26, 27 |
(1) |
(1) |
|
|
Repayments of loans |
26, 27 |
(1) |
(1) |
|
|
Net cash inflow from financing activities |
15 |
14 |
||
|
Reduction in cash and cash equivalents in the year |
(13) |
(36) |
||
|
Cash and cash equivalents at beginning of the year |
294 |
330 |
||
|
Cash and cash equivalents at end of the year |
281 |
294 |
||
|
Represented by: |
||||
|
Cash and cash equivalent assets |
25 |
281 |
328 |
|
|
Bank overdrafts |
26 |
– |
(34) |
|
|
281 |
294 |