Reports and Financial Statements - 2006

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Reports and Financial Statements Abstract of Accounts for year ended 31 July 2006


Financial Review Scope of the financial statements 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 its subsidiary companies and joint ventures, the Gates Cambridge Trust, the Cambridge Commonwealth Trust, Cambridge Overseas Trust, Cambridge European Trust and the Malaysian Commonwealth Studies Centre in Cambridge (the ‘Associated Trusts’). This year, for the first time, the financial statements also include the activities of Cambridge University Press. The comparative figures for 2004–05 have been restated accordingly. 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 printing and publishing house of the University, dedicated to printing and publishing for the advancement of knowledge, education and learning worldwide. The Gates Cambridge Trust is a separately constituted exempt charity. It is deemed to be a subsidiary undertaking of the University since the University appoints the majority of its trustees. The purposes of the Gates Cambridge Trust are to support the University by enabling persons from any part of the world outside the United Kingdom to benefit from education in the University by the provision of scholarships and grants and otherwise. The assets of the Gates Cambridge Trust are therefore not available for the general purposes of the University. The Associated Trusts are also separately constituted exempt charities whose purposes are primarily to support students ordinarily resident or domiciled in countries outside the United Kingdom to benefit from education in the University. The assets of the Associated Trusts are similarly not available for the general purposes of the University. For the purpose of these financial statements Cambridge University Press’s accounts to its new financial year end of 30 April were taken, and adjustments then made for major transactions and changes in May to July in order to reflect the positions as at 31 July, the University’s financial year-end. With the inclusion this year of the activities of Cambridge University Press, the final step has been taken so that the University group accounts now follow current accounting practice. The Council is presenting financial statements which are ‘true and fair’. However, in providing fully consolidated accounts the presentation of the core teaching and research activities of the University is made more difficult, and the University will continue to publish the accounts of these activities separately. The accounts of the activities of Cambridge Assessment and of Cambridge University Press are also published separately.

Results for the year The consolidated results for the year ended 31 July 2006 are summarised as follows:

Income Expenditure

Restated 2005–06 2004–05 £m £m 890.7 819.9 (882.4) (822.6)

Surplus/(deficit) on continuing operations Exceptional items: gain on sale of tangible fixed assets

8.3 6.5

(2.7) 9.4

Surplus on continuing operations after exceptional items Minority interest and transfer to accumulated income within specific endowments

14.8 (2.7)

6.7 (1.5)

Surplus for the year

12.1

5.2

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Change % +8.6% +7.3%


It is pleasing to see a return to a small surplus on continuing operations before exceptional items, although it is small in relation to the size of the University group’s activities. Exceptional gains, arising primarily from the sale of land and buildings by Cambridge University Press, add to the surplus. It is helpful to see how this is split between the main segments. There are various transactions between the University’s core academic activities, Cambridge Assessment and Cambridge University Press (CUP) which should be separated out. The principal transactions are the printing of examination papers which the Press provides for Cambridge Assessment, and financial and other support for the University’s academic activities made by both Cambridge Assessment and the Press. This segmental analysis is given in accordance with accounting standards in Note 11 to the accounts, but the additional information below may be helpful:

Income (external) Income (intra-group)

Expenditure (external) Expenditure (intra-group for services) Expenditure (intra-group transfer) Other adjustments – pension fund accounting

Surplus/(deficit) on continuing operations before exceptional items

Academic activities £m 571.7 3.6 575.3

Cambridge Assessment £m 173.2

(566.6)

(158.0) (10.2) (3.6)

173.2

Cambridge University Central Press adjustments £m £m 144.7 1.1 10.2 154.9 1.1

As reported £m 890.7 890.7 (879.6)

(155.0)

(566.6)

(171.8)

(155.0)

(2.8) (2.8)

8.7

1.4

(0.1)

(1.7)

(2.8) (882.4) 8.3

In summary, before exceptional items, the academic activities of the University made a small surplus, after a contribution of £3.6m from Cambridge Assessment. Academic activities have benefited from additional government funding in advance of the introduction of full economic costing methodology for research council grants, and additional investment income. Costs have been kept under control. Although the University, as a whole, is in surplus, the general ‘Chest’ funds were again depleted over 2005–06. In effect, a transfer of funds has been made to academic schools, faculties, and departments as a result of their success in controlling expenditure. Although this permits the schools to build up cash reserves as a deliberate policy to facilitate budgetary and planning devolution, in the medium term it will be important to maintain a balance between central strategic reserves and those held in schools and institutions. Cambridge Assessment continues to grow its UK and international assessment services, but is making significant investment in information technology and other infrastructure. Cambridge University Press continues its improvement from recent operating deficits with recent investment, notably in English language course publishing, beginning to bear fruit. Consolidated income for the University group for 2005–06 increased by £70.8m (+8.6%) to £890.7m. For the academic activities (i.e. excluding Cambridge Assessment and Cambridge University Press, but including for this purpose the Gates Cambridge Trust and the Associated Trusts which support the University’s students) income increased by £37.0m (+6.9 %) to £575.3m. Grant income from the Higher Education Funding Council for England (HEFCE) and the Training and Development Agency for Schools increased by £15.8m (+9.7%) to £178.1m. Within this increase the core recurrent grant increased by only £4.8m (+3.3%), slightly behind our underlying inflation. However, specific grants were released to income, the grants being primarily to contribute to the costs of rewarding and developing staff and modernisation of higher education pay structures. Academic fees and support grants increased by £3.0m to £59.0m with this increase being from full-time overseas students, who now contribute around half the total fee income.

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Research grants and contracts income increased by £15.2m (+8.1%) to £203.9m continuing the real increase in sponsored research, in particular that funded by research councils. This income included £7.7m (2005: £3.8m) of special government funding in advance of the introduction of full economic funding methodology for research council grants. Improved pricing of research projects will be a key factor in the future financial operating position of the University. Examination and assessment services income derives from the activities of Cambridge Assessment and increased by £8.4m (+5.2%) to £169.5m from general growth in its business, but in particular from its English language testing stream. Publishing and printing services income of Cambridge University Press increased by a pleasing £16.3m (+13.0%) to £141.8m. This excludes £10.2m income received by the Press for printing services carried out for Cambridge Assessment and the University itself. Other operating income increased by £5.1m (+5.9%). Donations received in the year for general use amounted to £10.9m (2005: £8.8m). Endowment and investment income increased by £7.0m (+17.2 %) to £47.5m, mainly because of an increased distribution from the Cambridge University Endowment Fund. Of the total, £32.3m is directly available for the main University academic activities, with the balance supporting the activities of Cambridge Assessment (£3.3m), the Press (£1.0m), the Gates Cambridge Trust (£5.0m) and the Associated Trusts (£3.8m). Staff costs overall increased by 6.7% to £407.6m, with the increase mainly arising from general salary increases, and the impact of the move to a single pay spine for staff in the core University. The split of staff costs between the main segments of the University group is:

Academic activities Cambridge Assessment Cambridge University Press

2005–06 £m 301.8 52.4 50.7

2004–05 £m 284.1 49.4 47.3

Increase % +6.2% +6.0% +7.2%

Other operating expenses at £430.7m were £31.6m (7.9%) higher. Within this, expenditure in the main University academic and administrative departments has increased by 6.2% after a long period of only moderate increases. Depreciation has increased slightly as capital expenditure on new buildings and major refurbishments continues.

Capital expenditure programme Expenditure on land and buildings was £69.0m for the year, of which £48.5m was for the academic activities of the University (a reduction from the high levels of recent years). Major expenditure was made on the Centre for Advanced Photonics and Electronics on the West Cambridge site, refurbishment of Department of Chemistry buildings, and the Cancer Research facility and Institute for Metabolic Sciences at the Addenbrooke’s site. Cambridge Assessment buildings expenditure of £19.5m included the purchase of a major warehouse to rationalise its storage and distribution activities. The main disposals of operational land and buildings, leading to exceptional accounting gains, were made by Cambridge University Press: a New York office building in 2005–06 and land in Cambridge in 2004–05. Capital expenditure in the year on equipment was £22.3m, of which £18.3m was made for academic activities, a level similar to previous years.

Endowment and investment performance The total endowment, fixed asset investment and other investment assets at the year-end were £1,393m for the University group, an increase of £161m made primarily through increases in market values. Of this total £165m is attributable to the Gates Cambridge Trust and £115m to the Associated Trusts. The majority of the endowment assets of the University and Cambridge Assessment, and the majority of those of the Associated Trusts, are invested in the Cambridge University Endowment Fund. The Fund’s assets are managed by external managers. The University’s short-term cash and other investment assets are managed by external managers and directly by University staff. The Cambridge University Endowment Fund performed well over the year with a closing value of £870.8m. The capital value of a unit increased from £30.20 to £33.60, and this capital growth and distribution for spend gave a total investment return of 15.0% over the year. The distribution for spend is determined by a formula intended to provide a 28


consistent income stream for academic and related activities whilst ensuring that permanent capital of the endowment is maintained in real terms. The distribution made in 2005–06 was equivalent to a yield of 3.77% on the opening capital unit value. The investment portfolio of the Gates Cambridge Trust is managed by a number of fund managers. The total value of the endowment of the Trust increased by £15m over the year.

Pensions The University group participates in a number of pension schemes. The main schemes are the Universities Superannuation Scheme (USS) and the Cambridge University Assistants Contributory Pensions Scheme (CPS). In addition the Press has a number of schemes, which are now accounted for in these financial statements. The University’s Finance Committee is monitoring the position of the schemes closely. The USS carried out an actuarial valuation of the scheme as at 31 March 2005 which showed that the scheme was 77% funded. The position of the USS is disclosed in detail in note 30 to the accounts. The USS has recently consulted participating institutions on the scheme’s benefits and costs in respect of future service. The CPS and the Press’s schemes, being single-employer schemes, are presented in the financial statements in accordance with Financial Reporting Standard 17 (FRS 17), which provides a snapshot of fund liabilities at the balance sheet dates. The total pension liability under FRS 17 has increased from £115m to £127m, of which £27m relates to the Press’s schemes. A triennial valuation of the CPS as at 31 July 2006 is in progress and the outcome may lead to an increase in contributions by the University.

Conclusion We are pleased that we have now published financial statements for the University and the University group which follow current accounting practice and are ‘true and fair’. However it is important to disaggregate the various activities within the University group and, as noted above, the University will continue to publish separately the accounts of its teaching and research activities, Cambridge Assessment and Cambridge University Press. The University group showed a small operating surplus in 2005–06, but of less than 1 per cent of total income. Cambridge Assessment and Cambridge University Press are projected to remain in small surplus over the next few years, and the main uncertainties lie with the teaching and research activities of University. Here again, the projections indicate that the results will be close to balance, aided by higher fees charged to Home/EU undergraduates and the introduction of research funded by research councils by reference to full economic costing of this activity. On the expenditure side, staff costs will increase significantly as a result of the recent national settlement, and pension costs may increase following the actuarial valuation of the CPS and the current policy review by the USS. The balance sheet remains sound and net assets are growing steadily, giving the University its operating and financial capability. Securing the sustainability of our operations and of our financial position remains a key concern for the University’s Council and its committees.

Professor Tony Minson Pro-Vice-Chancellor (Planning and Resources)

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Corporate Governance 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. 1. 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 Guidance to Universities which has been provided by the Committee of University Chairmen and its ‘Guide for Members of Governing Bodies of Universities and Colleges in England, Wales and Northern Ireland’. Further information is given at paragraph 8 below. 2. 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, and the Commissary. Subject to the Regent House, the Council of the University is the principal executive and policymaking 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 two external members, one of whom chairs the Audit Committee (see paragraph 6 below). The General Board of the Faculties is responsible, subject to the Regent House and to the responsibilities of the Council, for the academic and educational policy of the University. 3. The Council is advised in carrying out its duties by a number of Committees, including the Planning and Resources Committee, the Finance Committee, the Audit Committee and the Risk Steering Committee. 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 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 governs the work of the Internal and External Auditors, reporting on these matters directly to the Council. The Risk Steering Committee is responsible to the Council for the identification of the major corporate risks and their management. 4. The Vice-Chancellor is, de facto, the principal academic and administrative officer of the University. Under the terms of the Financial Memorandum between the University and the Higher Education Funding Council for England, the Vice-Chancellor is the Designated Officer of the University. 5. Under the Statutes, it is the duty of the Council to exercise general supervision over the finances of all institutions in the University other than the University Press; 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; 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. 6. 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 the Higher Education Funding Council for England; to receive reports from the National Audit Office and the Higher Education Funding Council for England. The Registrary is Secretary to the Audit Committee. Membership of the Audit Committee includes 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. 7. The University maintains a Register of Interests of Members of the Council, the General Board, the Finance Committee and the Audit Committee, and of the Senior Administrative Officers, which may be consulted by arrangement with the Registrary. 8. The University is a self-governing community whose members act in accordance with the seven principles of public life (see paragraph 1 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 Governance Code of Practice published in November 2004 by the Committee of University Chairmen. 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.

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Statement of Internal Control 1. The Council has responsibility 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 Financial Memorandum with the HEFCE. 2. The system of internal control is designed to manage rather than eliminate the risk of failure to achieve policies, aims and objectives; it can therefore only provide reasonable and not absolute assurance of effectiveness. 3. The system of internal control is based on an ongoing process 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 2006 and up to the date of approval of the financial statements, and accords with HEFCE guidance. 4. The Council has responsibility for reviewing the effectiveness of the system of internal control. The following processes have been established: (a) The Council meets ten times throughout the year to consider the plans and strategic direction of the University. (b) The Council receives periodic reports from the Chairman of the Audit Committee concerning internal control and receives the minutes of all meetings of the Audit Committee. (c) The Council has established a Risk Steering Committee to oversee risk management. The Council receives periodic reports from the Chairman of the Risk Steering Committee and receives the minutes of all meetings of the Risk Steering Committee. Risk management is a standing item on the agenda for meetings of the Council. (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. (e) A regular programme of risk management and awareness courses has been held during the year. (f) A system of risk indicators has been developed for the University’s key risks. (g) A robust risk prioritisation methodology based on risk ranking and cost-benefit analysis has been established. (h) A University-wide risk register is maintained. (i) Key risks have been assigned to risk owners and risk-reporting channels established. 5. The Council’s review of the effectiveness of the system of internal control is informed by the work of the internal auditors, RSM Robson Rhodes. They operate to the standards defined in Accountability and Audit: HEFCE Code of Practice. 6. 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.

Statement of Responsibilities of the Council 1. Under the University’s Statutes 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. 2. The Council is responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the University. 3. 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, subject to any material departures disclosed and explained in the financial statements; (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 Financial Memorandum with the HEFCE and the funding Agreement with the Training and Development Agency for Schools; and (f) safeguard the assets of the University and take reasonable steps to prevent and detect fraud and other irregularities.

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Independent Auditors’ Report We have audited the financial statements of the University of Cambridge for the year ended 31 July 2006 which comprise the statement of principal accounting policies, the consolidated income and expenditure account, the consolidated statement of total recognised gains and losses, the balance sheets, the consolidated cash flow statement and the related notes 1 to 35. These financial statements have been prepared under the accounting policies set out therein. This report is made solely to the Council, as a body, in accordance with the Financial Memorandum effective from 1 October 2003. Our audit work has been undertaken so that we might state to the Council those matters we are required to state to them in an auditors’ report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume any responsibility to anyone other than the Council and the Council’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of the Council and auditors As described in the statement of the responsibilities of the Council, the Council is responsible for the preparation of the financial statements in accordance with the University’s Statute, the Statement of Recommended Practice on Accounting for Further and Higher Education and other applicable United Kingdom law and accounting standards (United Kingdom Generally Accepted Accounting Practice). Our responsibility is to audit the financial statements in accordance with relevant United Kingdom legal and regulatory requirements and International Standards on Auditing (UK and Ireland). We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in accordance with the Statement of Recommended Practice on Accounting for Further and Higher Education. We also report whether, in all material respects, income from funding bodies, grants and income for specific purposes and from other restricted funds administered by the University of Cambridge have been properly applied only for the purposes for which they were received and whether income has been applied in accordance with the Statutes and Ordinances and, where appropriate, with the Financial Memorandum with the Higher Education Funding Council for England and the Training and Development Agency for Schools. We also report to you if, in our opinion, the Financial Review is not consistent with the financial statements, if the Group has not kept proper accounting records, the accounting records do not agree with the financial statements or if we have not received all the information and explanations we require for our audit. We read the other information contained in the Financial Review, the Corporate Governance Statement, the Statement of Internal Control and the Statement of Responsibilities of the Council and consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements.

Basis of audit opinion We conducted our audit in accordance with International Standards on Auditing issued by the Auditing Practices Board and the Audit Code of Practice issued by the Higher Education Funding Council for England. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the Council in the preparation of the financial statements and of whether the accounting policies are appropriate to the Group’s circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion, we also evaluated the overall adequacy of the presentation of information in the financial statements.

Opinion In our opinion: (a) the financial statements give a true and fair view of the state of affairs of the University and the Group as at 31 July 2006 and of the surplus of the Group for the year then ended and have been properly prepared in accordance with the Statement of Recommended Practice on Accounting for Further and Higher Education; (b) in all material respects income from Higher Education Funding Council for England, and from the Training and Development Agency for Schools and grants and income for specific purposes and from other restricted funds administered by the University have been applied only for the purposes for which they were received; and (c) in all material respects income has been applied in accordance with the University’s Statutes and Ordinances, and where appropriate, with the Financial Memorandum, dated October 2003 with the Higher Education Funding Council for England and with the funding agreement with the Training and Development Agency for Schools. Deloitte & Touche LLP Chartered Accountants and Registered Auditors Cambridge, United Kingdom 11 December 2006 32


Statement of Principal Accounting Policies Basis of preparation The financial statements have been prepared in accordance with applicable United Kingdom accounting standards and the Statement of Recommended Practice: Accounting for Further and Higher Education (the SORP). These financial statements include for the first time the income and expenditure, assets and liabilities of Cambridge University Press (CUP), a constituent part of the corporation known as the University of Cambridge. The effect of this change in the basis of preparation is explained further in note 12. Comparative figures have been restated accordingly.

Basis of accounting The financial statements have been prepared under the historical cost convention, modified in respect of the treatment of investments and certain operational properties which are included at valuation.

Basis of consolidation The consolidated financial statements include the University and its subsidiary undertakings including the Gates Cambridge Trust and other Associated Trusts. Details of the subsidiary undertakings included are given in note 31. Intra-group transactions and balances are eliminated on consolidation. The Gates Cambridge Trust is a separately constituted exempt charity which is accounted for as a subsidiary undertaking of the University since the University appoints the majority of its trustees. The purposes of the Gates Cambridge Trust are to support the University by enabling persons (to be known as ‘Gates Cambridge Scholars’) from any part of the world outside the United Kingdom to benefit from education in the University by provision of scholarships and grants and otherwise. These purposes cannot be changed without the consent of the settler, The Bill & Melinda Gates Foundation. The assets of the Gates Cambridge Trust are therefore not available for the general purposes of the University. The Associated Trusts are similarly constituted exempt charities with purposes primarily to provide support to enable students ordinarily resident or domiciled in countries outside the United Kingdom to benefit from education in the University. The assets of the Associated Trusts are therefore not available for the general purposes of the University. The consolidated financial statements do not include the accounts of the 30 Colleges and one Approved Society in the University (‘the Colleges’), each of which is an independent corporation. Transactions with the Colleges are disclosed in note 33. The consolidated financial statements do not include the accounts of Cambridge University Students Union or of the Cambridge University Graduate Union, as these are separate bodies in which the University has no financial interest and over whose policy decisions it has no control.

Recognition of income Recurrent grant Recurrent grant is received from the Higher Education Funding Council for England (HEFCE) and the Training and Development Agency for Schools. Recurrent grant is recognised as income in the period to which it relates. Restricted income Income is received which is designated for restricted purposes as specified by grantors or donors, including HEFCE specific grants, research grants and specific donations. Except for income in respect of specific endowments, restricted income is recognised to the extent that relevant expenditure has been incurred, and unspent restricted income is included in creditors. Capital grants and donations Grants and external donations are received for the purposes of funding the acquisition and construction of tangible fixed assets. These are credited to deferred capital grants when the related capital expenditure is incurred and released to income over the expected useful life of the respective assets consistent with the depreciation policy. Academic fees Tuition fees for degree courses are charged to students by academic term. Income is recognised for academic terms falling within the period. For short courses, fees are charged in advance for the entire course and income is recognised to the extent that the course duration falls within the period. Examination and assessment services Income from assessment is recognised when the assessment service has been substantially rendered. Where assessment includes ongoing verification, judgement is used to establish the proportion of income that may be recognised in the period, based upon services performed within the period as a proportion of the total services to be performed.

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Publishing and printing Income is recognised on delivery of the goods to the customer. Other income Income is received from a range of activities including catering, conferences, room hire and other services rendered. Income is recognised on the exchange of the relevant goods or services. Endowment and investment income All investment income is credited to the income and expenditure account in the period in which it is earned. Income from specific endowments not expended in accordance with the restrictions of the endowment is transferred from the income and expenditure account to specific endowments. Specific endowments Permanent endowments are not included in the income and expenditure account but are credited to specific endowments when funds are received.

Foreign currency translation Transactions denominated in foreign currencies are recorded at the rate of exchange ruling at the date of the transactions. Where foreign branches of CUP accounting in foreign currencies operate as separate businesses, all their assets and liabilities are translated into sterling at year-end rates and the net effect of currency adjustments is taken directly to reserves. Otherwise, monetary assets and liabilities denominated in foreign currencies are translated into sterling at year-end rates and translation differences are taken to the income and expenditure account.

Tangible fixed assets Land and buildings Operational land and buildings are included in the financial statements at their 1994 valuation with subsequent additions at cost. No depreciation is provided on freehold land or on assets in construction. Freehold buildings are written off over their estimated useful lives, which are between 15 and 50 years, and leasehold properties are written off over the length of the lease. Equipment Equipment costing less than ÂŁ10,000 per individual item is written off in the year of purchase. All other equipment is capitalised and depreciated so that it is written off over its estimated useful life of between four and ten years, except where it is purchased from a research grant when it is written off over the remaining life of the grant. Heritage assets The University holds and conserves a number of collections, exhibits, artefacts and other assets of historical, artistic or scientific importance. In accordance with FRS 15, all acquisitions since 1 August 1999 have been capitalised at cost or, in the case of donated assets, at valuation on receipt. In line with the general fixed assets accounting policy, the threshold for capitalising assets is ÂŁ10,000. Heritage assets are not depreciated since their long economic life and high residual value mean that any depreciation would not be material.

Intangible fixed assets: goodwill Goodwill arises on consolidation and is based on the fair value of the consideration given for the subsidiary and the fair value of its assets at the date of acquisition. Goodwill is amortised over its estimated economic life of between five and ten years on a straight line basis, being its estimated useful economic life. Where there is impairment in the carrying value of goodwill, the loss is included in the results of the period.

Investments Fixed asset investments, endowment asset investments and current asset investments are included in the balance sheet at market value. Properties held for investment purposes are valued annually on the basis of estimated open market values on an existing use basis by Knight Frank. Marketable securities are valued at mid-market valuation on 31 July. Non-marketable securities, including investments in spin-out companies, are included at valuation by the Council.

Historical cost surpluses and deficits Differences arise between the surplus or deficit on continuing operations as reported in the consolidated income and expenditure account and its historical cost equivalent. Depreciation is charged on pre-1994 buildings based on their valuation at that date; the difference between this and historical cost depreciation cannot be quantified as the historical cost of buildings is unavailable. Fixed asset investments are included in the balance sheet at market value and increases or decreases are taken directly to general reserves. Realised gains or losses within the total increase or decrease in value of investments are not separately calculated. Accordingly, no consolidated statement of historical cost surpluses and deficits is presented.

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Stocks and work in progress Stocks are stated at the lower of cost and net realisable value. Expenditure on consumable materials for use in teaching and research activities is charged to revenue as incurred.

Pension costs The University contributes to a number of defined benefit pension schemes and accounts for the costs in relation to these schemes in accordance with FRS 17 (Retirement benefits). Where the University is unable to identify its share of the underlying assets and liabilities in a scheme on a reasonable and consistent basis, it accounts as if the scheme were a defined contribution scheme, so that the cost is equal to the total of contributions payable in the year. For other defined benefit schemes, the assets of each scheme are measured at fair value, and the liabilities are measured on an actuarial basis using the projected unit method and discounted at an appropriate rate of return. The University’s share of the surplus or deficit of the scheme is recognised as an asset or liability on the balance sheet. The current service cost, being the actuarially determined present value of the pension benefits earned by employees in the current period, and the past service cost are included within staff costs. Endowment and investment income includes the net of the expected return on assets, being the actuarial forecast of total return on the assets of the scheme, and the interest cost being the notional interest cost arising from unwinding the discount on the scheme liabilities. All changes in the pension surplus or deficit due to changes in actuarial assumptions or differences between actuarial forecasts and the actual out-turn are reported in the statement of total recognised gains and losses.

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Consolidated income and expenditure account for the year ended 31 July 2006 Year ended 31 July 2006 Note Income Funding Council grants Academic fees and support grants Research grants and contracts Examination and assessment services Publishing and printing services Other income Endowment and investment income

1 2 3 4 5 6 7

178.1 59.0 203.9 169.5 141.8 90.9 47.5

162.3 56.0 188.7 161.1 125.5 85.8 40.5

890.7

819.9

8, 9 9 9 9

407.6 430.7 43.7 0.4

382.0 399.1 40.7 0.8

9

882.4

822.6

10, 11

8.3

(2.7)

6.5

9.4

14.8

6.7

0.7

0.7

15.5

7.4

Total income Expenditure Staff costs Other operating expenses Depreciation Interest payable Total expenditure Surplus/(deficit) on continuing operations before exceptional items

ÂŁm

Year ended 31 July 2005 Restated ÂŁm

Exceptional items: gain on sale of tangible fixed assets Surplus on continuing operations after exceptional items Minority interests in results of subsidiary undertakings Surplus on continuing operations after minority interest Transfer to accumulated income within specific endowments

24

(3.4)

(2.2)

Surplus for the year retained within general reserves

25

12.1

5.2

The income and expenditure account is in respect of continuing activities. No consolidated statement of historical cost surpluses and deficits is presented as explained in the statement of principal accounting policies.

36


Statement of total recognised gains and losses for the year ended 31 July 2006 Year ended 31 July 2006 Note Surplus on income and expenditure account

ÂŁm

Year ended 31 July 2005 Restated ÂŁm

15.5

7.4

Increase in market value of investments Endowments Reserves

24 25

72.2 40.9

88.9 53.4

New endowment capital

24

23.4

13.7

Gain arising on foreign currency translation

25

0.5

0.2

Actuarial loss

25

(11.3)

(5.7)

141.2

Total recognised gains relating to the year

157.9

Prior year adjustments: Endowments Reserves

Total gains since the last annual report

Reconciliation Opening reserves and endowments as previously stated Total gains since the last annual report Closing reserves and endowments (excluding minority interests)

12 12

(8.6) 103.5

(7.4) 86.9

94.9

79.5

236.1

237.4

1,498.9

1,356.4

236.1

237.4

1,735.0

1,593.8

37


Balance sheet as at 31 July 2006 Group 31 July 2006

Fixed assets Tangible assets Intangible assets Investments

Endowment asset investments Current assets Stocks and work in progress Debtors Investments University Held on behalf of others Cash at bank and in hand

Creditors: amounts falling due within one year

University University Group 31 July 2005 31 July 2006 31 July 2005 Restated Restated £m £m £m

Note

£m

13 14 15

930.8 8.0 320.9

886.3 4.3 320.2

926.4 6.8 242.9

881.6 1.1 252.6

1,259.7

1,210.8

1,176.1

1,135.3

16

804.1

705.1

629.9

546.1

17 18

38.5 175.4

36.1 162.9

35.2 168.1

34.3 153.1

19 19

263.0 5.3 27.7

207.5 5.3 23.8

223.0 178.2 19.1

169.1 103.7 18.2

509.9

435.6

623.6

478.4

(272.5)

(228.9)

(417.6)

(301.6)

237.4

206.7

206.0

176.8

2,301.2

2,122.6

2,012.0

1,858.2

20

Net current assets Total assets less current liabilities Creditors: amounts falling due after more than one year

21

(3.2)

(4.1)

(11.1)

(13.0)

Pension liability

22

(127.0)

(115.0)

(27.0)

(30.0)

2,171.0

2,003.5

1,973.9

1,815.2

Total net assets Represented by: Deferred capital grants

23

436.9

410.3

436.9

410.3

Endowments Specific endowments General endowments

24 24

796.4 7.7

698.2 6.9

622.2 7.7

539.2 6.9

24

804.1

705.1

629.9

546.1

25 25

767.5 163.4

719.3 169.4

743.7 163.4

689.4 169.4

25

930.9 (0.9)

888.7 (0.6)

907.1 -

858.8 -

2,003.5

1,973.9

1,815.2

Reserves General reserves Revaluation reserve

Minority interest in subsidiary undertakings

2,171.0

Total

The financial statements on pages 25 to 58 were approved by the Council on 11 December 2006 and signed on its behalf by: Professor Alison Richard Vice-Chancellor 38

Professor William Brown Member of Council

Andrew Reid Director of Finance


Consolidated cash flow statement for the year ended 31 July 2006

Year ended 31 July 2006

Year ended 31 July 2005 Restated ÂŁm (37.0)

Note 26

ÂŁm 6.6

Returns on investments and servicing of finance

27

46.2

41.2

Capital expenditure and financial investment

27

(40.1)

20.0

Cash inflow before use of liquid resources and financing

12.7

24.2

Management of liquid resources: Increase in short-term deposits

(1.5)

(5.3)

(0.5)

0.5

10.7

19.4

10.7

19.4

Cash outflow from liquid resources

1.5

5.3

Movement in net funds in the year

12.2

24.7

Net funds at 1 August

62.5

37.8

74.7

62.5

Net cash inflow / (outflow) from operating activities

Financing

27

Increase in cash in the year

Reconciliation of net cash flow to movement in net funds

Increase in cash

Net funds at 31 July

28

39


Notes to the accounts 2006 ÂŁm

2005 ÂŁm

147.3 20.3

142.2 10.9

4.5 2.5

4.1 1.3

174.6

158.5

3.5

3.8

178.1

162.3

21.5 28.9 7.8 0.8

21.2 25.7 8.2 0.9

59.0

56.0

89.7 60.1 54.1

78.0 57.3 53.4

203.9

188.7

155.4 14.1

146.4 14.7

169.5

161.1

132.9 8.9

Restated 119.1 6.4

141.8

125.5

24.4 10.8 3.8 1.5 9.9 6.4 10.9 12.4 7.0 3.8

Restated 22.0 12.2 3.5 1.5 8.0 6.2 8.8 14.5 6.2 2.9

90.9

85.8

1 Funding Council and Training and Development Agency grants Higher Education Funding Council for England (HEFCE) Recurrent grant Specific grants Deferred capital grant released in year (note 23) Equipment Buildings HEFCE total Training and Development Agency for Schools Recurrent grant

2 Academic fees and support grants Full-time home students Full-time overseas students Part-time course fees Research Training Support Grants

3 Income: research grants and contracts Research councils UK based charities Other bodies

4 Examination and assessment services Examination fees Other examination and assessment services

5 Publishing and printing services Publishing services Printing services

6 Other income Other services rendered Health and hospital authorities Catering AHRB museum grant University companies Released from deferred capital grants (note 23) General donations Specific donations released in the year Rental income Sundry income

40


Notes to the accounts (continued)

2006 £m 7 Endowment and investment income Income from specific endowment asset investments Income from general endowment asset investments Other income credited to specific endowments Other investment income

8 Staff costs

Wages and salaries Social security costs Pension costs (note 30)

Emoluments of the Vice-Chancellor Emoluments excluding employer’s pension contributions Employer’s pension contributions

25.7 0.3 0.5 21.3

2005 £m Restated 23.9 0.3 1.7 14.6

47.5

40.5

2006 £m 329.8 29.4 48.4

2005 £m Restated 311.4 27.7 42.9

407.6

382.0

2006 £000 196 -

2005 £000 190 -

196

190

Remuneration of higher paid staff, excluding employer’s pension contributions: The numbers in each band have been analysed by segment (see note 11)

Education and research Assessment Clinical Non-Clinical and Press £ 70,000 – £ 80,000 £ 80,001 – £ 90,000 £ 90,001 – £100,000 £100,001 – £110,000 £110,001 – £120,000 £120,001 – £130,000 £130,001 – £140,000 £140,001 – £150,000 £150,001 – £160,000 £160,001 – £170,000 £170,001 – £180,000 £180,001 – £190,000 £190,001 – £200,000 £200,001 – £210,000 £210,001 – £220,000 £220,001 – £230,000 £230,001 – £240,000 £240,001 – £250,000

36 32 22 7 9 6 9 7 1 5 5 1 2 1 – – – –

41 32 16 5 3 1 1 1 2 – – 1 – – – – – –

16 7 6 6 5 1 1 1 1 – – 1 – – – 1 – 1

2006 Total 93 71 44 18 17 8 11 9 4 5 5 3 2 1 – 1 – 1

2005 Total Restated 69 44 20 20 14 12 8 6 4 7 7 2 2 1 – 1 – –

The above statistics include additional payments to employees of the University on behalf of NHS bodies.

41


Notes to the accounts (continued) 9 Analysis of expenditure by activity

Academic departments Academic services Payments to Colleges (see note 33) Research grants and contracts Other activities: Examinations and assessment services Publishing and printing services Other services rendered University companies Catering Other activities total Administration and central services: Administration General educational Staff and student facilities Development office Other Administration and central services total Premises

Total per income and expenditure account

Other Staff operating costs expenses

Depreciation

£m 140.3 19.6 90.6

£m 25.4 9.6 34.1 74.1

£m 7.8 0.7 8.3

51.8 49.8 9.8 1.5 2.0 114.9

107.4 87.2 12.9 5.7 4.4 217.6

2.4 1.8 0.3 0.1 4.6

21.3 2.6 2.4 2.0 2.8 31.1 11.1

7.9 23.5 0.6 2.9 1.1 36.0 33.9

407.6

430.7

Interest 2006 2005 payable Total Restated £m -

£m 173.5 29.9 34.1 173.0

£m 167.2 26.1 30.1 162.4

0.4 0.4

161.6 139.2 23.0 7.2 6.5 337.5

153.4 125.5 22.1 6.1 6.0 313.1

1.5 1.5 20.8

-

30.7 26.1 3.0 4.9 3.9 68.6 65.8

26.8 24.4 3.1 4.1 2.3 60.7 63.0

43.7

0.4

882.4

822.6

2006 £000

2005 £000 Restated

223 7 119

188 124

2006 £m

2005 £m Restated

17.2

3.9

2.8

2.4

20.0 (0.7) (11.0)

6.3 (1.1) (7.9)

8.3

(2.7)

The depreciation charge has been funded by: Deferred capital grants (note 23) 21.9 Revaluation reserve (note 25) 6.0 General income 15.8 43.7 Auditors’ remuneration

Other operating expenses include: Audit fees payable to the University’s external auditors Other fees payable to the University’s external auditors Audit fees payable to other firms These amounts include related irrecoverable VAT. 10 Surplus/(deficit) on continuing operations for the year

The surplus/(deficit) on continuing operations for the year is made up as follows: University’s surplus for the year Surplus generated by subsidiary undertakings and transferred to the University under gift aid Surplus dealt with in the accounts of the University Group level adjustments re defined benefit schemes Deficit retained in subsidiary undertakings

42


Notes to the accounts (continued) 11 Segmental reporting The group consisting of the University and its subsidiary undertakings has three principal classes of activity: Education and research Assessment Examination and assessment services, carried out by the University of Cambridge Local Examinations Syndicate and subsidiary undertakings, collectively known as Cambridge Assessment. Press

Publishing and printing services, carried out by the Cambridge University Press Syndicate and subsidiary undertakings.

Income, result for the year and net assets at the year end are attributable to the three segments as follows: Segment InterIncome total segment from third Surplus/ Net income income parties (deficit) assets Year ended 31 July 2006 £m £m £m £m £m Education and research 575.3 3.6 571.7 10.8 2,023.0 Assessment 173.2 – 173.2 1.4 156.2 Press 154.9 10.2 144.7 5.0 89.6 903.4

13.8

889.6

Unallocated re Contributory Pension Scheme

1.1

Group Year ended 31 July 2005 Education and research Assessment Press

17.2 (1.7)

2,268.8 (97.8)

890.7

15.5

2,171.0

538.3 165.4 145.0

19.0 – 9.6

519.3 165.4 135.4

16.1 (12.1) 4.9

1,858.5 147.9 79.9

848.7

28.6

820.1

8.9

2,086.3

(0.2)

(1.5)

(82.8)

819.9

7.4

2,003.5

Unallocated re Contributory Pension Scheme Group

12 Prior year adjustments The basis of preparation of these financial statements differs from the basis of preparation of the University’s financial statements for the previous year. These financial statements include for the first time the income and expenditure, assets and liabilities of Cambridge University Press (CUP) a constituent part of the University, and of subsidiary undertakings forming part of the operational group headed by CUP. Comparative figures have been restated to reflect the revised basis of preparation. The effect of the prior year adjustments on the result for the year is as follows. 2006 2005 £m £m Surplus for the year under previous basis of preparation and accounting policies 9.8 1.8 Change in basis of preparation: Inclusion of CUP 5.0 4.9 Surplus for the year as restated The effect of these changes on opening net assets at 1 August 2005 is as follows: Reduction in deferred capital grants Reduction in endowments Increase in reserves Less minority interest

14.8

6.7 Group £m (14.3) (8.6) 103.5 (0.6)

Overall effect of change in basis of preparation Opening net assets at 1 August 2005 as previously reported

80.0 1,923.5

Opening net assets at 1 August 2005 as restated

2,003.5

In addition an adjustment has been made to correct an error in the calculation in 1996 of the balance on the operational property revaluation reserve resulting from the 1994 valuation. This has no impact on total reserves or on the result for the year. 43


Notes to the accounts (continued) 13 Tangible fixed assets Group Cost or valuation At 1 August: As previously stated Prior year adjustment re CUP (note 12)

Land and Assets in Equipment Heritage buildings construction assets £m £m £m £m

2006 Total £m

2005 Restated £m

788.9 40.3

107.5 -

160.3 18.6

14.3 -

1,071.0 58.9

967.7 67.2

Restated opening balance Additions at cost Transfers Disposals Currency adjustments

829.2 4.7 44.3 (6.4) 0.7

107.5 64.3 (44.3) -

178.9 22.3 (8.9) 0.2

14.3 3.2 -

1,129.9 94.5 (15.3) 0.9

1,034.9 105.3 (9.1) (1.2)

At 31 July Depreciation At 1 August: As previously stated Prior year adjustment re CUP (note 12)

872.5

127.5

192.5

17.5

1,210.0

1,129.9

109.1 3.9

-

115.6 15.0

-

224.7 18.9

186.6 17.8

Restated opening balance Charge for the year Elimination on disposals Currency adjustments

113.0 21.2 (0.6) 0.1

-

130.6 22.5 (7.7) 0.1

-

243.6 43.7 (8.3) 0.2

204.4 40.7 (1.2) (0.3)

At 31 July

133.7

-

145.5

-

279.2

243.6

Net book value At 31 July

738.8

127.5

47.0

17.5

930.8

886.3

At 1 August (restated)

716.2

107.5

48.3

14.3

886.3

830.5

779.9 40.2

107.7 -

156.3 18.5

14.3 -

1,058.2 58.7

955.7 67.0

Restated opening balance Additions at cost Transfers Disposals Currency adjustments

820.1 4.5 44.3 (6.4) 0.7

107.7 64.3 (44.3) -

174.8 22.3 (8.9) 0.2

14.3 3.2 -

1,116.9 94.3 (15.3) 0.9

1,022.7 104.5 (9.1) (1.2)

At 31 July

863.2

127.7

188.4

17.5

1,196.8

1,116.9

Depreciation At 1 August: As previously stated Prior year adjustment re CUP (note 12)

104.3 3.9

-

112.2 14.9

-

216.5 18.8

178.8 17.8

Restated opening balance Charge for the year Elimination on disposals Currency adjustments

108.2 20.9 (0.6) 0.1

-

127.1 22.3 (7.7) 0.1

-

235.3 43.2 (8.3) 0.2

196.6 40.1 (1.1) (0.3)

At 31 July

128.6

-

141.8

-

270.4

235.3

Net book value At 31 July

734.6

127.7

46.6

17.5

926.4

881.6

At 1 August

711.9

107.7

47.7

14.3

881.6

826.1

University Cost or valuation At 1 August: As previously stated Prior year adjustment re CUP (note 12)

Land and buildings includes land totalling £78.8m (2005: £78.6m) which is not depreciated. The cost to the group of buildings and assets in construction consists of the cost incurred by the University less the surplus recorded in the accounts of Lynxvale Limited, a subsidiary undertaking, and eliminated on consolidation. 44


Notes to the accounts (continued) 14 Intangible fixed assets: goodwill and others

Group 2006 £m 1.5 2.8

Group 2005 £m 2.1 3.4

University 2006 £m 1.1

University 2005 £m 1.6

4.3 6.0 (2.4) 0.1

5.5 0.6 (1.9) 0.1

1.1 6.1 (0.5) 0.1

1.6 0.3 (0.9) 0.1

8.0

4.3

6.8

1.1

292.6 27.6

264.1 23.0

223.0 29.6

209.3 25.0

Restated opening balance Additions/(disposals) in the year Increase in market value of investments

320.2 (31.9) 32.6

287.1 (14.5) 47.6

252.6 (30.6) 20.9

234.3 (14.5) 32.8

Closing balance

320.9

320.2

242.9

252.6

Represented by: Property Securities Money market investments Investments in subsidiary undertakings Investment in spin-out companies (see note 31) Cash in hand and at investment managers Investments in joint ventures Other

56.0 247.4 9.8 6.6 0.8 0.1 0.2

61.0 242.4 8.0 8.2 0.3 0.1 0.2

47.2 160.7 7.4 24.3 2.4 0.7 0.2

53.2 171.4 6.3 17.2 3.1 0.2 1.2

320.9

320.2

242.9

252.6

100.1 611.1 71.2 1.7

88.1 540.9 67.2 2.9

83.1 468.7 70.9 2.4 0.8

72.3 405.8 64.9 2.4 0.6

784.1 2.2 15.9 1.9

699.1 2.4 2.5 1.1

625.9 2.8 1.2

546.0 0.1

804.1

705.1

629.9

546.1

Opening balance: as previously stated Prior year adjustment re CUP (note 12) Restated opening balance Additions/(disposals) in the year Amortisation charge for the year Currency adjustments Closing balance 15 Fixed asset investments Opening balance as previously stated Prior year adjustment re CUP (note 12)

16 Endowment asset investments Long-term Investments Property Securities Money market investments Loan to subsidiary undertaking Cash in hand and at investment managers

Investment in spin-out companies (see note 31) Short-term deposits Bank balances

Included in the Group’s endowment asset investments is £164.7m (2005: £149.7m) relating to the Gates Cambridge Trust. The use of these assets is restricted to supporting the University by enabling persons from any part of the world outside the United Kingdom to benefit from education in the University by the provision of scholarships and grants and otherwise. The assets of the Gates Cambridge Trust are therefore not available for the general purposes of the University. 17 Stocks and work in progress Goods for resale Work in progress Other stocks

30.1 7.1 1.3

28.2 7.0 0.9

29.0 5.3 0.9

28.8 5.0 0.5

38.5

36.1

35.2

34.3 45


Notes to the accounts (continued)

18 Debtors Research grants recoverable Amounts due from subsidiary undertakings Debtors re examination and assessment services Debtors re publishing and printing Other debtors

19 Current asset investments Property Securities Money market investments Short-term deposits

Representing: University Held on behalf of subsidiary undertakings, related parties and other associated bodies (see note 20)

Group 2006 £m

Group 2005 £m Restated

University University 2006 2005 £m £m Restated

59.2 41.5 44.8 29.9

57.2 35.4 29.1 41.2

59.2 4.5 33.5 46.9 24.0

57.2 4.3 24.3 31.9 35.4

175.4

162.9

168.1

153.1

7.3 37.6 189.1 34.3

5.2 29.2 132.2 46.2

26.6 142.6 193.4 38.6

15.3 83.5 136.3 37.7

268.3

212.8

401.2

272.8

263.0

207.5

223.0

169.1

5.3

5.3

178.2

103.7

268.3

212.8

401.2

272.8

Current asset investments include investments held on behalf of subsidiary undertakings, related parties (see note 32) and other associated bodies. The book value of these investments is included in creditors due within one year.

20 Creditors: amounts falling due within one year Bank overdraft Research grants received in advance Amounts due to subsidiary undertakings Creditors re examination and assessment services Creditors re publishing and printing Other creditors Investments held on behalf of subsidiary undertakings, related parties and other associated bodies (see note 19)

21 Creditors: amounts falling due after more than one year Amounts due to subsidiary undertakings Bank loans Loan from minority interest

46

5.1 68.1 43.6 48.9 101.5

11.1 53.4 38.0 38.1 83.0

5.1 68.1 0.8 25.5 48.2 91.7

11.1 53.4 22.7 38.0 72.7

5.3

5.3

178.2

103.7

272.5

228.9

417.6

301.6

0.5 2.7

1.5 2.6

10.6 0.5 -

10.6 1.5 0.9

3.2

4.1

11.1

13.0


Notes to the accounts (continued) Group 2006 £m

22 Pension liability The pension liability has been measured in accordance with the requirements of FRS 17 and relates to the defined benefit schemes disclosed in note 30. Opening balance As previously stated Prior year adjustment re CUP

Group University University 2005 2006 2005 £m £m £m

85.0 30.0

72.8 35.5

30.0

35.5

Restated opening balance Movement in year: Current service cost including life assurance Contributions Other finance (income)/cost Currency adjustments Actuarial loss/(gain) recognised in statement of total recognised gains and losses

115.0

108.3

30.0

35.5

21.1 (19.5) (0.9) -

17.0 (17.4) 1.5 (0.1)

6.2 (7.2) 0.1 0.1

5.7 (7.1) 1.2 (0.1)

11.3

5.7

(2.2)

(5.2)

Closing balance

127.0

115.0

27.0

30.0

2006 Total £m

2005

23 Deferred capital grants Group and University Balance 1 August Buildings Equipment Heritage assets

Prior year adjustment re CUP (note 12) Grants received Buildings Equipment Heritage assets

Released to income and expenditure Buildings – for depreciation Equipment – for depreciation Equipment – on disposals

Balance 31 July Buildings Equipment Heritage assets

Funding Research Other Council Grants Grants £m £m £m

£m

93.8 9.9 -

15.2 -

288.5 3.0 14.2

382.3 28.1 14.2

317.6 26.8 10.7

103.7

15.2

305.7

424.6

355.1

-

-

(14.3)

(14.3)

(14.6)

29.7 5.2 -

8.9 -

2.0 0.5 3.2

31.7 14.6 3.2

71.3 15.0 3.5

34.9

8.9

5.7

49.5

89.8

(2.5) (4.5) (0.8)

(8.5) (0.2)

(5.0) (1.4) -

(7.5) (14.4) (1.0)

(6.3) (13.7) -

(7.8)

(8.7)

(6.4)

(22.9)

(20.0)

121.0 9.8 -

15.4 -

271.2 2.1 17.4

392.2 27.3 17.4

368.0 28.1 14.2

130.8

15.4

290.7

436.9

410.3

47


Notes to the accounts (continued) 24 Endowments Specific £m

General £m

2006 Total £m

2005 Total £m

706.8 (8.6)

6.9 -

713.7 (8.6)

607.7 (7.4)

Restated opening balance Permanent endowments received Income receivable from endowment asset investments Donations and other income Expenditure Excess of income over expenditure retained in specific endowments Increase in market value of investments

698.2 23.4 25.7 0.2 (22.5)

6.9 0.3 (0.3)

705.1 23.4 26.0 0.2 (22.8)

600.3 13.7 24.2 1.7 (23.7)

3.4 71.4

0.8

3.4 72.2

2.2 88.9

Balance 31 July

796.4

7.7

804.1

705.1

General £m 6.9 -

2006 Total £m 554.7 (8.6)

2005 Total £m 467.4 (7.4)

Group Balance 1 August As previously stated Prior year adjustment re CUP (note 12)

University

Balance 1 August Prior year adjustment re CUP (note 12)

Specific £m 547.8 (8.6)

Restated opening balance Permanent endowments received Income receivable from endowment asset investments Donations and other income Expenditure Excess of income over expenditure retained in specific endowments Increase in market value of investments

539.2 23.4 20.3 0.2 (17.0)

6.9 0.3 (0.3)

546.1 23.4 20.6 0.2 (17.3)

460.0 16.1 19.4 1.5 (18.5)

3.5 56.1

0.8

3.5 56.9

2.4 67.6

Balance 31 July

622.2

7.7

629.9

546.1

Representing:

Trust and Special Funds: Professorships, Readerships and Lectureships Scholarships and bursaries Other Examination Board restricted funds General endowments

251.1 67.6 282.4 18.6 -

7.7

251.1 67.6 282.4 18.6 7.7

2005 Total £m Restated 208.6 60.8 253.2 16.6 6.9

University total Gates Cambridge Trust Other subsidiary undertakings

619.7 164.7 12.0

7.7 -

627.4 164.7 12.0

546.1 149.7 9.3

Group total

796.4

7.7

804.1

705.1

Specific £m

48

General £m

2006 Total £m


Notes to the accounts (continued) 25 Reserves Group General reserves £m Balance 1 August As previously stated Prior year adjustment re CUP (note 12) Prior year adjustment to revaluation reserve (see note 12)

Operational property revaluation reserve £m

2006 Total £m

2005 Total £m

586.2 103.5 29.6

199.0 (29.6)

785.2 103.5 -

748.7 86.9 -

Restated opening balance Surplus retained for the year Actuarial loss Transfer in respect of depreciation on revalued operational properties Gain arising on foreign currency translation Increase in market value of investments

719.3 12.1 (11.3)

169.4 -

888.7 12.1 (11.3)

835.6 5.2 (5.7)

0.5 40.9

0.2 53.4

Balance 31 July

767.5

930.9

888.7

1,057.9 (127.0)

1,003.7 (115.0)

930.9

888.7

Reserves are reduced by the net pension liability in respect of defined benefit pension schemes – see note 22 Reserves before net pension liability Effect of net pension liability Reserves balance at 31 July

6.0 0.5 40.9

894.5 (127.0) 767.5

University General reserves £m Balance 1 August As previously stated Prior year adjustment re CUP (note 12) Prior year adjustment to revaluation reserve (see note 12)

(6.0) 163.4

163.4 163.4

Operational property revaluation reserve £m

2006 Total £m

2005 Total £m

553.7 106.1 29.6

199.0 (29.6)

752.7 106.1 -

723.7 87.3 -

Restated opening balance Surplus retained for the year Actuarial gain Transfer in respect of depreciation on revalued operational properties Gain arising on foreign currency translation Increase in market value of investments

689.4 16.5 2.2

169.4 -

858.8 16.5 2.2

811.0 3.9 5.2

0.5 29.1

0.2 38.5

Balance 31 July

743.7

907.1

858.8

6.0 0.5 29.1

(6.0) 163.4

49


Notes to the accounts (continued)

26 Reconciliation of consolidated operating surplus/(deficit) to net cash inflow/(outflow) from operating activities

2006 £m

2005 £m Restated

Surplus/(deficit) on continuing operations before gain on disposal of tangible fixed assets Depreciation of fixed tangible assets Amortisation of goodwill Deferred capital grants released to income Investment income Interest payable Pension cost less contributions payable (see note 22) Currency adjustments

8.3 43.7 2.4 (21.9) (47.5) 0.4 1.6 (0.2)

(2.7) 40.7 1.9 (20.0) (40.5) 0.8 (0.4) 0.8

(Increase)/decrease in stock (Increase) in debtors Increase in creditors

(13.2) (2.5) (13.9) 36.2

(19.4) 0.5 (25.1) 7.0

6.6

(37.0)

2006 £m

2005 £m Restated

46.6 (0.4)

42.0 (0.8)

46.2

41.2

(94.0) (6.0) 62.6 12.5

(108.8) (0.6) 79.5 17.4

(40.0) 24.8

20.2 12.3

(40.1)

20.0

Financing Issue of share capital to minority interest New loan from minority interest Repayment of long-term loan

0.5 (1.0)

1.5 (1.0)

Net cash (outflow)/inflow from financing

(0.5)

0.5

Net cash inflow/(outflow) from operating activities

27 Cash flows

Returns on investments and servicing of finance Endowment and investment income received Interest paid Net cash inflow from returns on investments and servicing of finance Capital expenditure and financial investment Purchase of tangible fixed assets Acquisition of goodwill and other fixed intangible assets Donations for buildings and other deferred capital grants received Proceeds of disposal of tangible fixed assets Net (purchase)/sale of long-term investments (excluding investments held on behalf of others) New endowments received Net cash (outflow)/inflow from capital expenditure and financial investment

50


Notes to the accounts (continued) 28 Analysis of the balances of cash and bank overdraft Group 2006 £m Bank overdrafts Bank balances held directly by trust funds Cash at bank and in hand

(5.1) 1.9 27.7

Group 2005 £m Restated (11.1) 1.1 23.8

University 2006 £m

24.5

13.8

15.2

(5.1) 1.2 19.1

University 2005 £m Restated (11.1) 0.1 18.2 7.2

Add short term deposits: Endowment asset investments Current asset investments (excluding those held on behalf of related parties and other associated bodies)

15.9

2.5

2.8

-

34.3

46.2

38.6

37.7

Net funds

74.7

62.5

56.6

44.9

2006 £m

2005 £m

49.2

58.6

-

-

29 Capital commitments

Commitments contracted at 31 July Authorised but not contracted at 31 July

Of the capital expenditure committed at 31 July 2006, approximately 50% (2005: 75%) will be funded by specific grants and donations. 30 Pension schemes The two principal pension schemes for the University’s staff are the Universities Superannuation Scheme (USS) and the Cambridge University Assistants’ Contributory Pension Scheme (CPS). Cambridge University Press operates two defined benefit schemes for its UK staff, the Press Contributory Pension Fund (PCPF) and the Press Senior Staff Pension Scheme (PSSPS). Employees covered by the schemes are contracted out of the State Second Pension. The assets of the schemes are held in separate trustee-administered funds. The USS and the CPS are not closed, nor is the age profile of their active membership rising significantly. The PCPF and the PSSPS have been closed to new members. The schemes are defined benefit schemes which are valued every three years using the projected unit method, by professionally qualified actuaries, the rates of contribution payable being determined by the trustees on the advice of the actuaries. USS It is not possible to identify each institution’s share of underlying assets and liabilities of the scheme, and therefore contributions are accounted for as if it were a defined contribution scheme in accordance with FRS 17. The assumptions and other data that have the most significant effect on the determination of the contribution levels are as follows: Latest actuarial valuation Investment returns per annum Salary scale increases per annum Pension increases per annum Market value of assets at date of last valuation Proportion of members’ accrued benefits covered by the actuarial value of the assets

March 2005 4.5% 3.9% 2.9% £21,740m 77%

The contribution rate payable by the institution is 14% of pensionable salaries. The next actuarial valuation is due to take place at 31 March 2008. The scheme actuary has estimated that on the FRS 17 basis the funding level at 31 March 2005 was approximately 90% and that at 31 March 2006 it was over 100%.

51


Notes to the accounts (continued) CPS The CPS was established under the authority of the Universities of Oxford and Cambridge Act 1923. It has been approved by the Inland Revenue Savings, Pensions, Share Schemes under Chapter I of Part XIV of the Income & Corporation Taxes Act 1988. The active members of the scheme are employees of the University and its subsidiary undertakings. Triennial valuation of the scheme A full triennial valuation of the scheme was carried out by the actuary for the trustees of the scheme for funding purposes as at 31 July 2003. The results showed the actuarial value of the scheme’s assets as £215,913,000. These were insufficient to cover the scheme’s past service liabilities of £233,518,000 and as a result the scheme had a deficit of £17,605,000 and was 92% funded. Based on the advice of the actuary, the University and its subsidiary undertakings made additional lump sum contributions totalling £12,078,000 to the scheme during the year ended 31 July 2004. The joint contribution rate was increased to 22.5% of pensionable pay from 1 August 2004 and to 25.7% from 1 August 2005. The results of the full valuation as at 31 July 2006 are currently awaited. Pension costs under FRS 17 For accounting purposes the scheme’s assets are measured at market value and liabilities are valued using the projected unit method and discounted using the gross redemption yield for corporate AA rated bonds. The valuation uses marketbased assumptions and asset valuations, and represents a current valuation. It does not impact on the joint contribution rate set by the trustees of the scheme. Full actuarial valuations for this purpose were carried out as at 31 July 2003 and 31 July 2006 by a qualified actuary. The actuary also updated the 2003 accounting valuation to 31 July 2004 and 31 July 2005 for the purposes of the University’s financial statements. The principal assumptions used by the actuary were: 2006 5.00% 2.80% 3.60% 2.80% 2.80%

Discount rate Inflation assumption Rate of increase in salaries Rate of increase in pensions in deferment Rate of increase in pensions in payment

2005 5.75% 3.00% 3.75% 3.00% 3.00%

2004 5.70% 2.50% 3.50% 2.50% 2.50%

The assets in the scheme and the expected rates of return were:

Equities Bonds (including cash) Property

31 July 2006 31 July 2005 31 July 2004 ———————— ————————— ————————— Expected Expected Expected long term Value long term Value long term Value rate of return £m rate of return £m rate of return £m 7.50% 166.4 7.50% 192.1 8.00% 164.1 4.70% 68.7 4.70% 27.1 5.00% 31.4 6.50% 41.7 6.50% 29.8 7.00% 13.3 276.8

249.0

208.8

The following results were measured in accordance with the requirements of FRS 17, based summarised above: 2006 Assets and liabilities at the balance sheet date £m Total market value of scheme assets as above 276.8 Present value of scheme liabilities (374.6)

on the assumptions 2005 £m 249.0 (331.8)

2004 £m 208.8 (279.4)

(97.8)

(82.8)

(70.6)

2006 £000

2005 £000

2004 £000

2003 £000

Analysis of the amount included in staff costs for the year Current service cost 14.6 Life assurance premium Past service cost -

11.1 -

12.7 -

11.8 -

11.1

12.7

11.8

Net pension liability The movement for the year in the net pension liability is reflected in note 22.

Total operating charge

52

14.6


Notes to the accounts (continued) 30 Pension schemes (continued)

Analysis of the amount credited to endowment and investment income for the year Expected return on pension scheme assets Interest on pension scheme liabilities Net return

Analysis of the amount recognised in the statement of total recognised gains and losses (STRGL) Actual return less expected return on pension scheme assets Experience gains and losses arising on the scheme liabilities Changes in assumptions underlying the present value of the scheme liabilities Actuarial loss recognised in the STRGL These amounts are: As a percentage of scheme assets at the balance sheet date: Actual return less expected return on pension scheme assets As a percentage of the present value of the scheme liabilities at the balance sheet date: Experience gains and losses arising on the scheme liabilities Actuarial loss recognised in the STRGL

2006 £000

2005 £000

2004 £000

2003 £000

17.9 (16.8)

15.7 (16.0)

14.6 (13.9)

12.8 (12.8)

1.1

(0.3)

0.7

-

5.8 (7.2)

22.2 0.2

(1.2) (0.8)

(5.0) (1.7)

(12.0)

(33.1)

(15.4)

(4.3)

(13.4)

(10.7)

(17.4)

(11.0)

2.1%

8.9%

(0.6%)

(2.6%)

(1.9%) (3.6%)

0.1% (3.2%)

(0.3%) (6.2%)

0.7% (4.5%)

The above results have been recognised in the consolidated balance sheet. The University is, however, unable to identify its own share of the underlying assets and liabilities in the scheme, as distinct from that attributable to subsidiary undertakings, on a reasonable and consistent basis. For the University itself, therefore, pension costs are accounted for as if the CPS were a defined contribution scheme, and the University’s own balance sheet does not include a pension liability in respect of the CPS. Cambridge University Press UK defined benefit schemes (PCPF and PSSPS) Triennial valuation of the schemes Full triennial valuations of the schemes were carried out by the actuary for the trustees of the schemes for funding purposes as at 1 July 2004. Pension costs under FRS 17 For accounting purposes the schemes’ assets are measured at market value and liabilities are valued using the attained age method and discounted using the gross redemption yield for corporate AA rated bonds. The valuations use market-based assumptions and asset valuations, and represent current valuations. They do not impact on the joint contribution rates set by the trustees of the schemes. Full actuarial valuations for this purpose were carried out as at 1 January 2004 by a qualified actuary. The actuary has also updated the 2004 accounting valuation to 31 July 2004, 31 July 2005 and 31 July 2006 for the purposes of the University’s financial statements. The principal assumptions used by the actuary for both schemes were: 2006 2005 2004 Discount rate Inflation assumption Rate of increase in salaries Rate of increase in pensions in deferment Rate of increase in pensions in payment

5.00% 2.50% 3.00% 3.00% 3.00%

5.25% 2.50% 3.00% 3.00% 3.00%

5.50% 2.50% 3.50% 3.00% 3.00%

53


Notes to the accounts (continued) 30 Pension schemes (continued) Scheme assets The fair value of the schemes’ assets at 31 July, which are not intended to be realised in the short term and may be subject to significant change before they are realised, are as follows:

Property Equities Bonds Cash

2006 £m 9.4 55.7 24.6 -

PCPF 2005 £m 7.9 49.1 22.3 -

2004 £m 48.2 16.6 0.6

2006 £m 6.2 36.5 16.1 0.6

PSSPS 2005 £m 5.2 32.3 14.6 0.2

2004 £m 32.3 11.1 0.4

89.7

79.3

65.4

59.4

52.3

43.8

The overall expected long-term rate of return on these assets was 6.25% at all three dates. The following results were measured in accordance with the requirements of FRS 17, based on the assumptions summarised above: Assets and liabilities at the balance sheet date

Total market value of scheme assets Present value of scheme liabilities Net pension liability

2006 £m 89.7 96.7 (7.0)

PCPF 2005 2004 £m £m 79.3 65.4 89.0 79.3 (9.7)

2006 £m 59.4 78.2

PSSPS 2005 £m 52.3 70.8

2004 £m 43.8 63.3

(18.8)

(18.5)

(19.5)

2006 £m

PCPF 2005 £m

2006 £m

PSSPS 2005 £m

4.5 -

4.0 -

1.1 -

1.1 -

4.5

4.0

1.1

1.1

(13.9)

The movement for the year in the net pension liability is reflected in note 22.

Analysis of the amount included in staff costs for the year Current service cost Life assurance premium Past service cost Total operating charge

Analysis of the amount credited to/(deducted from) endowment and investment income for the year Expected return on pension scheme assets 4.9 3.8 3.3 2.5 Interest on pension scheme liabilities (4.7) (4.1) (3.7) (3.3) Net return

54

0.2

(0.3)

(0.4)

(0.8)


Notes to the accounts (continued) 30 Pension schemes (continued) 2006 £m

PCPF 2005 £m

2006 £m

PSSPS 2005 £m

Analysis of the amount recognised in the statement of total recognised gains and losses (STRGL) Actual return less expected return on pension scheme assets 5.2 9.1 3.1 6.0 Experience gains and losses arising on the scheme liabilities 1.8 0.2 (2.2) (2.2) Changes in assumptions underlying the present value of the scheme liabilities (3.5) (4.0) (2.8) (4.0) Actuarial gain / (loss) recognised in the STRGL These amounts are: As a percentage of scheme assets at the balance sheet date: Actual return less expected return on pension scheme assets

3.5

5.3

(1.9)

(0.2)

5.8%

11.5%

5.2%

11.5%

As a percentage of the present value of the scheme liabilities at the balance sheet date: Experience gains and (losses) arising on the scheme liabilities Actuarial gain / (loss) recognised in the STRGL

1.9% 3.6%

0.2% 6.0%

(2.8%) (2.4%)

(3.1%) (0.3%)

The University also has a smaller number of staff in other pension schemes, including the National Health Service Pension Scheme (NHSPS), the Cambridge University Press Defined Benefit Plan (CUPDBP, for US staff) and the RSA Examinations Board scheme (RSAEBS). Pension costs relating to CUPDBP and RSAEBS are accounted for in accordance with FRS 17 as applied to a defined benefit scheme and the related pension liability is included in the consolidated balance sheet (see note 22). Further disclosures are not given as the balances and movements are not material.

The total pension cost for the year (see note 8) was: USS: contributions CPS: charged to income and expenditure account PCPF: charged to income and expenditure account PSSPS: charged to income and expenditure account NHSPS: contributions CUPDBP: charged to income and expenditure account RSAEBS: charged to income and expenditure account Contributions to other pension schemes

2006 £m 24.9 14.6 4.5 1.1 1.4 0.6 0.2 1.1

2005 £m 22.4 12.7 4.0 1.1 0.8 0.6 0.2 1.1

48.4

42.9

55


Notes to the accounts (continued) 31 Principal subsidiary and associated undertakings and other significant investments The following undertakings were wholly-owned subsidiary undertakings throughout the year ended 31 July 2006. Except where stated, the accounting reference date is 31 July and the undertaking is a company registered in England and Wales. Name Cambridge Manufacturing Industry Links Limited Cambridge University Environmental Projects Limited Cambridge University Technical Services Limited Challenge Fund Trading Company Limited Cory Enterprises Limited Fitzwilliam Museum Enterprises Limited Lynxvale Limited The Cambridge Foundation

Notes Principal activity Consultancy and commercial exploitation of intellectual property Environmental projects Consultancy and commercial exploitation of intellectual property Providing funds to promote the transfer of research to business a Retail shop b Publication of fine art books and sale of museum merchandise Provision of construction and development services c Fundraising

Associated Trusts Cambridge Overseas Trust Cambridge Commonwealth Trust Gates Cambridge Trust Cambridge European Trust Malaysian Commonwealth Studies Centre in Cambridge

c

Cambridge Assessment subsidiary undertakings Cambridge Examinations Inc Mill Wharf Limited Oxford and Cambridge International Assessment Services Limited Oxford Cambridge and RSA Examinations RSA Examinations Board Sandonian Properties Limited The West Midlands Examinations Board

d e

Cambridge University Press subsidiary undertakings Cambridge Knowledge (China) Limited Cambridge University Press (Holdings) Limited Cambridge University Press India Private Limited Cambridge University Press Japan KK Cambridge-Hitachisoft Educational Solutions PLC Greenwich Medical Media Limited Oncoweb Limited Prescribing Professionals Network Limited

f g

56

Provision of scholarships, grants and other support for the education of overseas students in the University

Examination services Training and Consultancy Assessment services Examination and assessment services Assessment services Property Holding Examination services

h i j

Representative office Holding company Publishing Representative office Electronic educational publishing Medical publishing Non-trading Non-trading


Notes to the accounts (continued) 31 Principal subsidiary and associated undertakings and other significant investments (continued) a Cory Enterprises Limited has an accounting reference date of 30 November for commercial reasons. The effect of this is not material to the consolidated accounts. b Fitzwilliam Museum Enterprises Limited has an accounting reference date of 31 January for commercial reasons. The effect of this is not material to the consolidated accounts. c The Cambridge Foundation and the Associated Trusts are exempt charities established by trust deeds. d Cambridge Assessment subsidiary undertakings have an accounting reference date of 30 September for commercial reasons. For these undertakings the consolidation is based on interim financial statements to 31 July 2006. e Cambridge Examinations Inc is a United States non-stock non-profit corporation. f Cambridge University Press subsidiary undertakings have an accounting reference date of 30 April for commercial reasons. g Cambridge Knowledge (China) Limited is incorporated in Hong Kong. h Cambridge University Press India Private Limited is a 51% subsidiary incorporated in India and was acquired in the year ended 31 July 2006. i Cambridge University Press Japan KK is incorporated in Japan. j The University holds 60% of the issued share capital in Cambridge-Hitachisoft Educational Solutions plc. The University has interests in a number of spin-out companies formed to exploit intellectual property rights or inventions. These are included at valuation in fixed asset investments (see note 15) and endowment asset investments (note 16). In some cases the University’s interest amounts to 20% or more of the share capital, and these companies are listed below. As the University does not exercise a significant influence over these investments and they are not intended to be held for the long-term, they are not accounted for as associated undertakings. Other undertakings where the University’s investment amounts to 20% or more are also listed below. These are not accounted for as associated undertakings as the effect on the financial statements would not be material. Name Ampika Limited Bluegnome Limited Cambridge Flow Solutions Limited Cambridge in America Cambridge Lab-on-Chip Limited Camfridge Limited Coolanalgesia Limited Enecsys Limited Genapta Limited Markready Limited Metalysis Limited Microbial Technics Limited Psynova Limited Smart Holograms Limited The CRISP Consortium Limited Vivamer Limited

% interest 27 22 20 22 32 33 20 31 22 33 23 33 45 58 21 22

Principal Activity Commercial exploitation of Commercial exploitation of Commercial exploitation of Fundraising Commercial exploitation of Commercial exploitation of Commercial exploitation of Commercial exploitation of Research and development Commercial exploitation of Commercial exploitation of Commercial exploitation of Commercial exploitation of Commercial exploitation of Commercial exploitation of Commercial exploitation of

intellectual property intellectual property intellectual property intellectual intellectual intellectual intellectual

property property property property

intellectual intellectual intellectual intellectual intellectual intellectual intellectual

property property property property property property property

In addition, the University is one of two equal members of Cambridge-MIT Institute Limited (CMI), a joint venture company limited by guarantee whose principal activity is the support of research and educational programmes. At 31 July 2006 and 2005 CMI had nil net assets. In the year ended 31 July 2006 it funded expenditure of £12.5m (2005: £17.1m) and its profit after tax was nil (2005: nil). During the year CMI reimbursed the University £6.7m (2005: £9.5m) for expenditure incurred on projects. As at 31 July 2006 the University was owed £1.5m (2005: £1.7m) by CMI. 32 Related party transactions In accordance with FRS 8 the University is not required to disclose the transactions and balances between its group undertakings, which have been eliminated on consolidation.

57


Notes to the accounts (continued) 33 Colleges There are 30 Colleges and one Approved Society (the Colleges) each of which is an independent corporation with its own property and income. The individual audited accounts of the Colleges, in a form specified by the University, are published in the Cambridge University Reporter. During the year payments were made by the University from HEFCE funding in respect of the College fees of publiclyfunded undergraduates of £34.1m (2005: £30.1m). These payments are included as ‘Payments to Colleges’ in note 9 above. The University also made payments in respect of the College fees of postgraduate students totalling £2.2m (2005: £2.2m). These payments are included in other operating expenses. The Cambridge Foundation distributed third party donations to the Colleges totalling £6.3m (2005: £2.8m). The payments are not included in the consolidated income and expenditure account. During the year the University provided printing, network and other services to the Colleges for which the Colleges paid a total of £3.6m (2005: £3.0m), and the Colleges provided accommodation, catering and other services to the University for which the University paid a total of £4.7m (2005: £5.6m). During the year the Colleges made donations to the University totalling £4.0m (2005: £2.0m) of which £2.0m (2005: £nil) was credited to specific endowments. Colleges Fund Balance at 1 August Contributions received from Colleges Interest earned Payments to Colleges Balance at 31 July included in creditors

2006 £000 58 2,835 30 (2,883) 40

2005 £000 30 2,618 30 (2,620) 58

The Colleges Fund is administered by the University on behalf of the Colleges, who make all contributions to and receive all allocations from the Fund. The transactions on the Colleges Fund are not included in the income and expenditure account. 34 DfES/HEFCE Access funds Access to Learning Fund allocation Interest earned

2006 £000 573 6

2005 £000 575 9

Disbursed to students

579 (579)

584 (584)

Balance unspent at 31 July

-

-

Access to Learning Fund grants are available for students: the University acts only as agent. The grants and related disbursements are therefore excluded from the income and expenditure account. 35 TDA grants for Minority Ethnic Recruitment TDA grants Disbursed to students Balance unspent at 31 July

58

2006 £000 22 (22) -

2005 £000 16 (16) -



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Information on the 800th Anniversary Campaign Development Office Tel: +44 (0)1223 332288 Fax: +44 (0)1223 764476 Email: enquiries@foundation.cam.ac.uk Cambridge in America Tel: +1 212 984 0960 Fax: +1 212 984 0970 Email: mail@cantab.org The first Cambridge 800th Anniversary Campaign Report 2005–2006 has been published. If you would like a copy please contact the Development Office. For all other enquiries please contact the Office of Communications.

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