annual-report-2008-statement

Reports and Financial Statements

For the year ending 31 July 2008

Financial Review

Preliminary

The commentary that follows is intended to give the readers of the financial statements an overview of the finances and operations of the entire 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 2007–08. Both these reports are published in the Cambridge University Reporter. 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.

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 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 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 other Associated Trusts are also separately constituted exempt charities with purposes primarily to support students ordinarily resident or domiciled in countries outside the United Kingdom to benefit from education in the University. The assets of these Trusts are similarly not available for the general purposes of the University.

The University will continue to publish separately the accounts of its core education and research activities. The accounts of the activities of Cambridge Assessment and of Cambridge University Press are also published separately.

Mission

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 activities of Cambridge Assessment and Cambridge University Press.

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Funding

The sources of income of the University are: – The Government, which through the Higher Education Funding Council provides a block grant for teaching and a grant

determined by the quality and volume of research through the Research Assessment Exercise last carried out in 2001. – Students through fees charged for instruction and facilities. – Research income from publicly funded Research Councils, charitable foundations, and through collaborations with the

private sector. – Benefactions and donations for current use. – Investment income from our accumulated endowment. – Income from services provided to external customers, including the customers of Cambridge Assessment and Cambridge

University Press. – A small but increasing income from commercialization of intellectual property.

Accounting changes

Certain changes in accounting treatment have been made this year in order to be consistent with the Statement of Recommended Practice: Accounting for further and higher education. Comparative figures for 2006–07 have been restated. The principal changes are (i) to reclassify specific donations as endowments and (ii) to account for donations of, and for the purchase of, heritage assets as income, with no corresponding expense. This latter change has resulted in an increase of £9m in reported surplus for 2007–08.

An accounting adjustment to provide for a post-retirement benefits liability in Cambridge University Press, as required under Financial Reporting Standard 17, has been dealt with in the current year, increasing expenditure by £14m.

Financial performance for the year

The consolidated results for the year ended 31 July 2008 are summarized in Table 1 below.

Table 1 2007–08

£m2006–07

£mChange

%

IncomeExpenditure

Surplus on continuing operations before donations of heritage assetsDonations of heritage assets

Surplus on continuing operations before exceptional itemsExceptional items: gain on sale of tangible fixed assets

Surplus on continuing operations after exceptional itemsMinority interest and transfer from restricted endowments

Surplus for the year retained within general reserves

Net assets

1,074 (1,055)

199

28–

2814

42

2,321

948(946)

23

53

817

25

2,439

+13.4%+11.5%

-4.8%

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This 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 and Cambridge University Press respectively. Within the group there are a number of intra-group transactions, principally 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. Table 2 gives segmental information.

Table 2

Surplus on continuing operations before gifts of heritage assetsIncome

£m

686222186(11)

(11)–2

1,074

Expenditure£m

681197199(11)

(11)(1)1

1,055

Surplus£m

525

(13)–

–11

19

Surplus toreserves

£m

2528

(13)–

–11

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Results by segment

Eliminations

Pension scheme and other adjustments

Education and researchCambridge AssessmentCambridge University PressPress sales to Cambridge AssessmentFinancial support to the University from: Cambridge Assessment Cambridge University Press

Note that the University’s consolidated surplus for the year added to general reserves is higher than the difference between income and expenditure by virtue of two factors. Firstly, donations of heritage assets in the year amounted to £9m, which does not form part of total income but have been credited to reserves via the income and expenditure account. Secondly, a net transfer of funds of £14m has been made from endowments to reserves: this is the extent to which restricted endowments have funded expenditure in the year. In line with the requirements of the SORP, this transfer includes for the first time £13m (£8m in the University and £5m in the Trusts) relating to restricted donations not required to be invested for the longer term.

The education and research activities of the University group were at a surplus because of increased fee income from a further year of undergraduates paying fees at the higher rate, improved recovery of indirect costs of research, a transfer of £11m from Cambridge Assessment in support of academic activities, trading, and other surpluses, and expenditure in Faculties and Departments being less than had been planned. The surplus transferred to reserves further includes donations of heritage assets and the net transfer of endowments to reserves.

Cambridge Assessment continues to grow its UK and international assessment service and exceeded budgeted sales in all product areas. Costs were contained, in particular through benefits of the operational enhancements in warehousing and information systems. Cambridge University Press continued its favourable trend with good increases in sales, despite a weak US dollar to which around half its revenues are linked. Academic and professional publishing in books and journals recorded a strong performance and the English Language Teaching business stream was the Press’s highest growth business. The printing business was more challenging as the industry as a whole turned down in the UK. The Press maintained a small surplus, before the accounting adjustment in respect of earlier years referred to above.

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Change in financial position

The University group has a sizeable balance sheet, and Table 3 below gives the movement in net assets showing the capital flows into the group and the impact of changes in the values of investment assets.

Table 3

Movement in net assets

Net assets at 31 July 2007Surplus on continuing operations after donations of heritage assets and gain on sale of tangible fixed assetsCurrency adjustmentsNew endowment capitalExternal funding for capital expenditureActuarial loss on retirement benefitsDecrease in investment values

Net assets at 31 July 2008

Educationand research

£m

2,222

14–

3638

–(127)

2,183

CambridgeAssessment

£m

177

25–––

(1)(10)

191

Cambridge University Press

£m

99

(13)2––

(24)(2)

62

University Pension scheme

£m

(59)

1–––

(57)–

(115)

Total£m

2,439

272

3638

(82)(139)

2,321

Capital expenditure programme

The Capital Programme over the past ten years has provided new buildings and new facilities at West Cambridge, the Sidgwick Site, the Addenbrooke’s Site (Cambridge Biomedical Campus), Tennis Court Road (the old Addenbrooke’ Site), and at Lensfield Road (the Department of Chemistry), and major warehouse and office facilities for Cambridge Assessment. The majority of capital expenditure for academic activities is funded by external sources: Funding Council capital grants, donations for buildings, and equipment costs funded by research grants.

The University continued to invest in its physical facilities over 2007–08. Total capital expenditure was £119m, of which £103m was in respect of the University’s academic activities, including £32m on equipment and £9m heritage assets. During the year significant expenditure was made on the new Physics of Medicine and Institute for Manufacturing buildings at West Cambridge, the Cambridge Centre for Imaging at the Addenbrooke’s Site, and the new Sainsbury Laboratory for plant sciences. Cambridge Assessment made further expenditure on its main warehouse in Duxford and continued to invest in its information systems.

Endowment and investment performance

The University’s investment assets are significant and although investment income provides only a small percentage of the operating budget of the University’s academic activities it supports posts and activities and gives important financial assistance to students. The investment assets, analysed and disclosed in the financial statements according to the various purposes for which they are held, are managed in three principal pools.

(i) Cambridge University Endowment Fund (CUEF) The majority of the fixed asset investments and endowment assets are invested in the CUEF. As at 31 July 2008 the CUEF had a market value of £907m (2007: £991m). Since 2004 the CUEF has been managed on a total return basis, such that the amount generated for budgetary expenditure is now determined by a formula based on underlying capital values combined with factors which smooth the rate of spending changes from year to year.

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The performance of the CUEF is monitored to a 30 June year end in order to utilize more accurate valuation and benchmark information and to allow comparisons with similar endowment investment funds. The investment performance of the CUEF was –7.1% over the twelve months to 30 June 2008 in a difficult year for equity and property markets (FTSE All-Share –12.9%, MSCI All Country World –8.5%, IPD UK Property –14.9%). Although this was slightly better than its historical WM Charities benchmark, it was well below the long-term objective of RPI+5.25%. During the year the University’s new Investment Office, overseen and advised by the Investment Board, assumed the supervision of the CUEF. A target long-term asset allocation was agreed: global equities 40%, real assets including property 23%, absolute return including hedge funds 20%, private equity 9%, fixed income including cash 8%. The Investment Office has made new global equity fund manager appointments and is now proceeding with caution to increase investment in the alternative asset classes.

(ii) The Gates Cambridge Trust The Gates Cambridge Trust investments pool is managed separately through its own investment committee and external investment adviser. As at 31 July 2008 the Gates Cambridge Trust had assets of £166m (2007: £180m).

(iii) Money market investments The majority of the 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 and subject to external advice. The investments are principally short-term deposits with banks and similar institutions. At the time of reporting, amounts within the deposit pool totalling £11m remain frozen pending resolution of the Icelandic banking crisis. It is not possible to estimate accurately how much of the amounts due will ultimately be recovered. Since the year end investment markets have continued to decline, although there will have been a relative benefit during the recent period from the strategic decision to reduce the University’s exposure to UK markets and to increase its exposure to global markets.

Staff costs and pensions

The University’s education and research activities staff received a general increase in salaries of 5% as at 31 October 2008, being the final element of a sector-wide pay settlement of in excess of 15.9% since 1 August 2006. Combined with the move to a single pay spine and other pressures the staff costs of the academic activities have increased significantly. The staff costs for Cambridge Assessment and Press have increased in line with their business growth.

Staff costs by segment, before taking into account pension scheme adjustments and the exceptional prior period charge in the Press, were:

Education and research activitiesCambridge AssessmentCambridge University Press

2007–08£m

3525460

2006–07£m

3265254

Increase%

+8.2%+4.5%

+10.4%

The main pension schemes of the Group are the Universities Superannuation Scheme (USS), the Cambridge University Assistants Contributory Pensions Scheme (CPS), and those of the Press. The position of the USS is disclosed in detail in Note 31 to the accounts. A full actuarial valuation of the USS as at 31 March 2008 is being carried out, and it is expected that the contribution rate required will be increased by at least 2% in 2009 following a review of mortality assumptions, expected investment returns, and the rates of salary increases observed across the HE sector. Further increases in the USS contribution rate may be necessary.

The adverse investment markets of the last year have had an impact on the assets of pension funds. The CPS and the Press’s schemes, being single-employer schemes, are included in the financial statements following Financial Reporting Standard 17 (FRS 17). The total pension liability under FRS 17 has increased from £79m to £158m, of which £48m relates to the Press’s schemes, primarily due to falls in asset values. Like most employers, the Council is aware of the changing liabilities of defined benefit pension schemes and monitors the University’s position carefully. It takes a long-term view but must consider the impact of the recent market falls on current funding positions.

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Development and fundraising

The University celebrates its 800th anniversary in 2009 and the campaign to raise £1 billion across the University and the Colleges is well advanced. The main aims of the 800th Campaign are to improve student support and to increase the capacity of Collegiate Cambridge to deliver its core missions of teaching and research. The benefits are long-term and cannot be expected to affect the finances of the University in the short term.

In 2007–08 an additional £36m was added to endowment, and total funds raised including for capital expenditure and gifts for current use was approximately £70m. Over recent years the average use of donations has been approximately 40% for construction, 40% for endowment (to provide an income to fund a post or activity), and 20% for current use.

Future projects

Plans are well advanced for development of 140 hectares of University land at North West Cambridge to create a site for future growth of academic space, the housing requirements of staff and students, and for commercial research. The project represents a substantial financial commitment over a period of over fifteen years. In addition to the staffing, academic, and research space aims, the University will seek to generate an income stream.

The University has also progressed further proposals for the development of its city-centre New Museums and Mill Lane Sites. Current expectations are that the New Museums Site will be redeveloped to provide new or refurbished accommodation for Departments in the School of Humanities and Social Sciences, for the Department of Geography, and for elements of the Unified Administrative Service and Staff and Student Services. These proposals are in the consultation phase but will require the transfer of the Departments of Materials Science and Metallurgy and Chemical Engineering and Biotechnology to new accommodation in West Cambridge. The costs of the redevelopments have yet to be calculated but, if progressed, they will form an integrated capital programme during the next six years and will inevitably be the focus of significant capital expenditure.

Principal risks and uncertainties affecting the long-term financial position

There are a number of risks that the University faces, the principal ones being the ability to maintain and develop its research funding, to attract the best students, and to maintain and renew its physical facilities. The University is seeking to diversify its sources of income to avoid over-reliance on any one source. The businesses of Cambridge Assessment and the Press are subject to the usual pressures of competing internationally against major competitors, and in balancing their mission with the need to generate sufficient net income to ensure that they thrive and support the University’s core academic activities when possible.In the near and medium term the financial uncertainties are:

– The HEFCE funding model for teaching and for research funding is expected to change. In particular the consequences on the grant of the outcome of the 2008 Research Assessment Exercise (RAE) are impossible to predict, but the increased number of staff submitted by the University compared with 2001 (increased by 16%) give reasonable grounds to assume that it will be at least maintained.

– Significant contributions to the University’s income come through the Research Councils in the contribution to indirect costs and support of research students. Because of wider budgetary issues, some of them may not be able to fund the level of activity to which the sector has become accustomed.

– The University also receives considerable research and capital funding from endowed charities and foundations and is at risk if, as a result of adverse investment markets, their programmes and support were reduced.

– The University is exposed directly to investment markets in its own endowment and other investment assets. – The cost of providing pensions is a particular concern. As discussed above the USS will be subject to a triennial actuarial

review as at 31 March 2008. Its assets will be affected by the world financial conditions, and the valuation of liabilities is likely to increase.

– A weaker economic and financial environment could also put additional pressure on donations for endowment, capital expenditure and for current use, and on other sources of funding such as fees.

– The economic success of Cambridge Assessment and the Press, which operate in challenging international markets and in worsening economic conditions. Cambridge Assessment was able to transfer £11m in respect of 2007–08 (2007: £9m) and provides an increasingly important, but vulnerable, source of unrestricted funding. The Press intends to resume material transfers when conditions allow.

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In conclusion

The University generated a modest operating surplus in 2007–08 and must continue to do so to allow investment in its people, programmes, and physical facilities. It needs a diversity of income streams to reduce its exposure to short-term changes in, for example, government policy or, as we are seeing, the economic situation. The University’s costs, primarily staff costs but also certain other costs such as utilities, have increased significantly over the past three years. This has been manageable as variable undergraduate fees have raised fee income and full economic costing of research grants and contracts has been phased in. The financial plans for academic activities are for small surpluses, against which the downside expectation is for increased pension costs. The position could also be affected by the outcome of the 2008 RAE, changes in the formulaic funding of undergraduate teaching, or reduced commitment by the government to research. These factors need to be viewed against generally worsening economic conditions which will have an impact in many areas and for which the University is now planning.

Professor Tony MinsonPro-Vice-Chancellor (Planning and Resources)

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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 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 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, and the Commissary. Subject to the Regent House, 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 two external members, one of whom chairs the Audit Committee (see paragraph 7 below). The Statutes have been amended to provide for the inclusion of a further two external members on the Council and the appointment of a Deputy Chairman 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 her own accountability. 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 University is an exempt charity. 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 Planning and Resources Committee, the Finance Committee, the Audit Committee, the Remuneration Committee, the Investment Board 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 Remuneration Committee is chaired by an external member of 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.

5. 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.

6. 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 (which is governed by the Council and the Press Syndicate through separate statutory arrangements); 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.

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 the Higher Education Funding Council for England; to receive reports from the National Audit Office and the Higher Education Funding Council for England. 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.

Corporate Governance

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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 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.

The Chancellor and the Vice-Chancellor

Elected as Heads of CollegesProf. William BrownProf. Anthony BadgerDame Veronica SutherlandLord Wilson of Dinton

Elected as Professors or ReadersProf. Ross Anderson Prof. Zygmunt Baranski (to 17 March 2008)Prof. David Abulafia (from 23 May 2008)Prof. Stephen YoungDr Liba Taub

Elected as members of the Regent HouseDr Nick BamposDr Michael ClarkDr Stephen CowleyMr Robert DowlingMs Deborah LowtherDr Donald MacDonaldDr Joan WhiteheadDr George Reid

Members in class (e) (external members)Mr Nigel BrownLord Simon of Highbury

Student members 2007–08 (to 30 June 2008)Mr William BortrickMr Sam Ensor-RoseMr Mark Fletcher

(from 1 July 2008)Mr Anthony BagshawMr William BortrickMs Freya Morrison

Secretary: the Registrary

Members of the Council during the year ended 31 July 2008

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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 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 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 2008 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 ten times throughout the year to consider the plans and strategic direction of the University.

(b) The Council receives periodic reports from theChairman 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 riskmanagement. The Council receives periodic reports

from the Chairman of the Risk Steering Committee and 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 periodic 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) The University offers a formal programme of riskmanagement and awareness training and individual training to risk managers as required.

(f) A system of indicators has been developed for theUniversity’s key risks.

(g) A robust risk prioritization 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

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 Grant Thornton. 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 Internal Control

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 are 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 are required to:

(a) select suitable accounting policies and then applythem consistently;

(b) make judgements and estimates that are reasonableand prudent;

(c) state whether applicable accounting standards havebeen followed;

(d) prepare the financial statements on a going concernbasis unless it is inappropriate to presume that the University will continue to operate;

(e) ensure that income has been applied in accordancewith 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 reasonablesteps to prevent and detect fraud and other irregularities.

Statement of the Responsibilities of the Council

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We have audited the financial statements of the University of Cambridge for the year ended 31 July 2008 which comprise the statement of principal accounting policies, the consolidated income and expenditure account, the note of historical cost result, the consolidated statement of total recognised gains and losses, the balance sheets, the consolidated cash flow statement and the related notes 1 to 36. 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 August 2006. 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 and other applicable United Kingdom law and accounting standards (United Kingdom Generally Accepted Accounting Practice). 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

funding agreement with 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 2008 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;

Independent Auditors’ Report to the Council

59

(b) in all material respects income from Higher EducationFunding 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 inaccordance with the University’s Statutes and

Ordinances, and where appropriate, with the Financial Memorandum, dated July 2006 with the Higher Education Funding Council for England and with the funding agreement with the Training and Development Agency for Schools.

Deloitte & Touche LLPChartered Accountants and Registered AuditorsCambridge, United Kingdom24 November 2008

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).

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 32. 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 34.

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 grant income Grants are received for restricted purposes, principally from HEFCE and research sponsors. Restricted grants are recognised as income to the extent that relevant expenditure has been incurred.

Charitable donationsCharitable donations are recognised on receipt or where there is certainty of future receipt and the value can be measured reliably. The accounting treatment of a donation depends on the nature and extent of restrictions specified

Statement of Principal Accounting Policies

60

by the donor. Donations with no substantial restrictions are recognised as income in the income and expenditure account. Donations which are to be retained for the future benefit of the University, and other donations with substantially restricted purposes, other than for the acquisition or construction of tangible fixed assets, are recognised in the statement of total recognised gains and losses as new endowments.

Capital grants and donations Grants and donations are received for the purposes of funding the acquisition and construction of tangible fixed assets. In the case of depreciable 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 in line with the depreciation policy. Grants and donations of, or for the acquisition of, freehold land or heritage assets, which are non-depreciable assets, are credited to the income and expenditure account in the year of acquisition. This is a change of accounting policy: in previous years all such grants and donations were credited to deferred capital grants. 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 services are rendered and substantially completed.

Publishing and printingIncome is recognised on delivery of the goods to the customer.

Other income Income is received from a range of activities including residences, catering, conferences, and other services rendered. Income is recognised on the exchange of the relevant goods or services. Endowment and investment incomeAll investment income is credited to the income and expenditure account in the period in which it is earned. Income from restricted endowments not expended in accordance with the restrictions of the endowment is transferred from the income and expenditure account to restricted endowments.

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 Cambridge University Press (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 £10,000 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, heritage assets acquired before 1 August 1999 have not been capitalised, since reliable estimates of cost or value are not available on a cost-benefit basis. 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 £10,000. 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. Where there is impairment in the carrying value of goodwill, the loss is included in the results of the period.

Investments

Fixed asset investments and endowment assets are included in the balance sheet at market value, except for investments in subsidiary undertakings which are stated in the University’s

61

balance sheet at cost and eliminated on consolidation. 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. Current asset investments are included in the balance sheet at the lower of cost and net realisable value.

Stocks and work in progress

Stocks are stated at the lower of cost and net realisable value after making provision for slow moving and obsolete items.

Endowment funds

Endowment funds are classified under three headings:Where the donor has specified that the fund is to be permanently invested to generate an income stream for the general purposes of the University, the fund is classified as an unrestricted permanent endowment.

Where the donor has specified that the fund is to be permanently invested to generate an income stream to be applied for a restricted purpose, the fund is classified as a restricted permanent endowment.

Where the donor has specified a particular objective other than the acquisition or construction of tangible fixed assets, and that the University must or may convert the donated sum into income, the fund is classified as a restricted expendable endowment.

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.

62

Consolidated income and expenditure account for the year ended 31 July 2008

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

Total income

Expenditure Staff costs excluding exceptional item Exceptional staff costs Other operating expenses Depreciation Interest payable

Total expenditure

Surplus on continuing operations before donations of heritage assets and exceptional items

Donations of heritage assets

Surplus on continuing operations before exceptional items

Exceptional items: gain on sale of tangible fixed assets

Surplus on continuing operations after donations of heritage assets and exceptional items

Minority interests in results of subsidiary undertakings

Surplus on continuing operations after minority interest

Transfer from restricted endowments

Surplus for the year retained within general reserves

The income and expenditure account is in respect of continuing activities.

Note

1 2 3 4 5 6 7

8 8 9 9 9

9

10

12

11

25

26

Year ended 31 July 2008

£m

202 77

243 216 174 103

59

1,074

467 14

513 60

1

1,055

19

9

28

–

28

–

28

14

42


Restated £m

183 68

211 193 153

86 54

948

435 –

462 48

1

946

2

3

5

3

8

1

9

16

25

63

Note of historical cost result for the year ended 31 July 2008

Surplus on continuing operationsRealisation of gains on disposal of fixed asset investmentsDepreciation on revaluation element of tangible fixed assets

Historical cost surplus for the year

Note

26 26


£m

28 27

6

61


Restated £m

916

6

31

Statement of total recognised gains and losses for the year ended 31 July 2008

Surplus on income and expenditure account

(Decrease) / increase in market value of investments Endowment assets Fixed asset investments

New endowment capital

Gain / (loss) arising on foreign currency translation

Actuarial (loss) / gain

Total recognised (losses) / gains relating to the year

Prior year adjustments: Endowments Reserves

Total (losses) / gains since the last annual report

Reconciliation

Opening reserves and endowments as previously stated

Total (losses) / gains since the last annual report

Closing reserves and endowments

Note

25 15, 26

25

26

26

12, 2512, 26


£m

28

(93)(46)

36

2

(82)

(155)

26 21

47

(108)

1,938

(108)

1,830


Restated £m

9

68 36

47

(2)

51

209

24 18

42

251

1,735

251

1,986

64

Balance sheets as at 31 July 2008

Fixed assets Tangible assets Intangible assets Investments

Endowment assets

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

Net current assets

Total assets less current liabilities

Creditors: amounts falling due after more than one year Pension liabilitiesOther retirement benefits liability

Total net assets

Represented by:

Deferred capital grants

Endowments Expendable endowments Permanent endowments

Reserves General reserves Operational property revaluation reserve Fixed asset investment revaluation reserve

Reserves and endowments

Total

Note

13 14 15

16

17 18

19 19

20

21 22 23

24

25 25

25

26 26 26

26

Group 31 July 2008

£m

1,041 4

369

1,414

857

46 196

222 5

47

516

(285)

231

2,502

(8)(158)

(15)

2,321

491

303 554

857

757 151

65

973

1,830

2,321

Group 31 July 2007

Restated £m

983 6

408

1,397

928

47 170

230 5

24

476

(280)

196

2,521

(3)(79)

–

2,439

453

329 599

928

763 157 138

1,058

1,986

2,439

University 31 July 2008

£m

1,032 3

284

1,319

681

37 200

150 142

31

560

(381)

179

2,179

(16)(43)(15)

2,105

491

128 553

681

745 151

37

933

1,614

2,105

University 31 July 2007

Restated £m

979 5

311

1,295

736

42 170

182 136

13

543

(388)

155

2,186

(11)(19)

–

2,156

453

138 598

736

717 157

93

967

1,703

2,156

The financial statements on pages 59 to 86 were approved by the Council on 24 November 2008 and signed on its behalf by: Professor Alison Richard Lord Simon of Highbury Andrew Reid Vice-Chancellor Member of Council Director of Finance

65

Consolidated cash flow statement for the year ended 31 July 2008

Net cash (outflow) / inflow from operating activities

Returns on investments and servicing of finance

Capital expenditure and financial investment

Cash inflow / (outflow) before management of liquid resources and financing

Management of liquid resources: Increase in short-term deposits

Financing

Increase / (decrease) in cash in the year

Reconciliation of net cash flow to movement in net funds

Increase / (decrease) in cash

Cash outflow from liquid resources

Movement in net funds in the year

Net funds at 1 August

Net funds at 31 July

Note

27

28

28

28

29


£m

(3)

57

(20)

34

(11)

5

28

28

11

39

22

61


Restated £m

4

53

(61)

(4)

(6)

–

(10)

(10)

6

(4)

26

22

66

Notes to the accounts

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 24) Equipment Buildings

HEFCE total Training and Development Agency for Schools Recurrent grant

2 Academic fees and support grants Full-time home / EU students Full-time overseas (non-EU) 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 Residences, catering and conferences Arts & Humanities Research Council museum grant University companies Released from deferred capital grants (note 24) General donations Rental income Sundry income

2008 £m

172.0 12.4

5.9 8.7

199.0

3.2

202.2

34.8 36.2

5.6 0.7

77.3

112.3 68.6 62.2

243.1

203.0 12.8

215.8

158.8 15.3

174.1

25.3 11.0

7.6 1.7

16.8 8.8

11.0 5.8

14.6

102.6

2007£m

162.1 10.2

4.4 3.1

179.8

3.4

183.2

27.4 31.0

8.6 0.8

67.8

93.2 60.6 57.7

211.5

180.0 12.7

192.7

146.8 6.4

153.2

Restated

23.3 10.8

8.1 1.7

12.1 5.1 8.8 4.7

10.9

85.5

67

Notes to the accounts (continued)

7 Endowment and investment income

Income from expendable endowment asset investments Income from permanent endowment asset investments Income from fixed asset investments Other investment income

8 Staff costs

Wages and salaries Social security costs Pension costs (note 31)

Exceptional item: post-retirement benefits attributable to past service (note 23)

Emoluments of the Vice-Chancellor

Emoluments excluding employer’s pension contributions Employer’s pension contributions

2008 £m

10.5 21.9 13.9 12.6

58.9

2008 £m

383.0 33.2 51.2

467.4

14.2

481.6

2008 £000

227 –

227

2007£m

Restated

11.0 19.4 12.7 10.5

53.6

2007 £m

350.3 32.6 52.4

435.3

–

435.3

2007 £000

204 –

204

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 2008 2007Clinical Non-Clinical and Press Total Total

£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£250,001 – £260,000£260,001 – £270,000

14 6 5 8

11 11

3 3 5 4 2 – 1 – – – –

28 15

7 3 3 4 3 2 – 1 – – 1 – – – –

4 7 4 2 – 3 – – – 1 – – – – – – 1

46 28 16 13 14 18

6 5 5 6 2 – 2 – – – 1

35 15 15 13 10 12

2 5 6 2 3 1 – – 1 – –

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

68


9 Analysis of expenditure by activity

Academic departments Academic services Payments to Colleges (see note 34) Research grants and contracts Other activities:

Examinations and assessment services Publishing and printing services Other services rendered University companies Residences, catering and conferences

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

The depreciation charge has been funded by: Deferred capital grants (note 24) Revaluation reserve (note 26) General income

Staff costs

£m

163.2 19.7

– 106.8

54.4 74.1

7.8 3.6 3.0

142.9

28.9 3.3 3.0 2.3 1.0

38.5 10.5

481.6

Other operating expenses

£m

29.4 9.1

36.0 89.3

125.8 110.0

15.3 12.2

7.3

270.6

8.7 30.4

0.5 3.5 1.4

44.5 34.4

513.3

Deprec- iation

£m

10.3 0.6

– 8.4

5.8 3.0 0.1 0.1 0.1

9.1

1.9 0.1

– – –

2.0 29.3

59.7

31.7 6.0

22.0

59.7

Interest payable

£m

––––

–0.5

–––

0.5

–––––

––

0.5

2008 Total

£m

202.9 29.4 36.0

204.5

186.0 187.6

23.2 15.9 10.4

423.1

39.5 33.8

3.5 5.8 2.4

85.0 74.2

1,055.1

2008 £000

225 174 354

2007 Restated

£m

186.3 27.5 34.7

182.1

176.2 153.3

22.5 10.3 10.6

372.9

33.5 28.3

3.3 4.8 4.7

74.6 67.5

945.6

2007 £000

221 27

391

Auditors’ remuneration

Other operating expenses include: Audit fees payable to the University’s external auditors in respect of the audit of the University’s financial statements Other fees payable to the University’s external auditors Audit fees payable to other firms

These amounts include related irrecoverable VAT.

69


10 Surplus on continuing operations

The surplus on continuing operations before donations of heritage assets and exceptional items 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 Surplus retained in subsidiary undertakings

2008 £m

11.5 1.2

12.7 2.8

12.0

27.5

2007 £m

Restated

5.8 1.6

7.4 (4.2)5.1

8.3

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:

Year ended 31 July 2008Education and researchAssessmentPress

Unallocated re Contributory Pension Scheme

Group

Year ended 31 July 2007 (restated)Education and researchAssessmentPress

Unallocated re Contributory Pension Scheme

Group

Segment total

income £m

685.8 221.5 186.4

1,093.7

1.8

1,095.5

604.8197.1165.1

967.0(1.1)

965.9

Inter- segment

income £m

11.0 –

10.5

21.5

–

21.5

9.3–

9.1

18.4–

18.4

Income from third

parties £m

674.8 221.5 175.9

1,072.2

1.8

1,074.0

595.5 197.1 156.0

948.6 (1.1)

947.5

Surplus / (deficit)

£m

13.7 24.6

(11.6)

26.7

0.8

27.5

(3.0)14.4

2.2

13.6 (4.5)

9.1

Net assets

£m

2,183.4 190.5

61.5

2,435.4

(114.7)

2,320.7

2,221.4 176.8

98.5

2,496.7 (58.6)

2,438.1

70


12 Prior year adjustments

The University has changed its accounting policies in two respects:

a In previous years donations for restricted purposes, other than those to be spent on tangible fixed assets and those to beinvested for the longer term, were included in current liabilities on receipt and released into income to match expenditure. These were referred to as specific donations. In accordance with the requirements of the SORP, all such donations are now credited to expendable restricted endowments on receipt.

b In previous years donations of, and for the acquisition of, heritage assets, were credited to deferred capital grants.In view of the non-depreciation of heritage assets, the accounting policy has been reviewed and such donations are now credited to the income and expenditure account in the period of acquisition of the related asset.

Comparative figures have been restated to reflect the revised accounting policies. The effect of the prior year adjustments on the result for the year is as follows.

Surplus for the year under previous accounting policiesSpecific donations classified as endowmentsDonations of heritage assets

Surplus before transfer from restricted endowments as stated

The effect of these changes on net assets is as follows:

Reduction in deferred capital grantsIncrease in endowmentsIncrease in reserves

Net increase in net assetsNet assets under previous accounting policies

Net assets as restated

2008 £m

31.7 (12.8)

8.6

27.5

Group 2008

£m

(29.4)29.4 29.4

29.4 2,291.3

2,320.7

2007 £m

16.4 (10.7)

3.4

9.1

Group 2007

£m

(20.8)26.7 20.8

26.7 2,411.4

2,438.1

University 2008

£m

(29.4)28.4 29.4

28.4 2,076.3

2,104.7

University 2007

£m

(20.8)25.7 20.8

25.7 2,130.3

2,156.0

71


13 Tangible fixed assets

GroupCost or valuationAt 1 AugustAdditions at costTransfersDisposalsCurrency adjustments

At 31 July

DepreciationAt 1 AugustCharge for the yearElimination on disposalsCurrency adjustments

At 31 July

Net book valueAt 31 July

At 1 August

UniversityCost or valuationAt 1 AugustAdditions at costTransfersDisposalsCurrency adjustments

At 31 July

DepreciationAt 1 AugustCharge for the yearElimination on disposalsCurrency adjustments

At 31 July

Net book valueAt 31 July

At 1 August

Land and buildings

£m

1,007.9 4.2

53.7 (0.6)0.4

1,065.6

153.3 32.0 (0.5)0.1

184.9

880.7

854.6

1,000.2 4.4

53.7 (0.6)0.4

1,058.1

149.1 31.6 (0.5)0.1

180.3

877.8

851.1

Assets in construction

£m

44.3 64.0

(53.7)––

54.6

––––

–

54.6

44.3

44.5 63.1

(53.7)––

53.9

––––

–

53.9

44.5

Equipment

£m

198.0 42.0

–(19.6)

0.2

220.6

135.4 27.7

(18.4)0.6

145.3

75.3

62.6

192.7 39.6

–(30.1)

0.1

202.3

131.3 26.5

(25.5)0.1

132.4

69.9

61.4

Heritage assets

£m

21.4 8.9

–––

30.3

––––

–

30.3

21.4

21.4 8.9

–––

30.3

––––

–

30.3

21.4

2008 Total

£m

1,271.6 119.1

–(20.2)

0.6

1,371.1

288.7 59.7

(18.9)0.7

330.2

1,040.9

982.9

1,258.8 116.0

–(30.7)

0.5

1,344.6

280.4 58.1

(26.0)0.2

312.7

1,031.9

978.4

2007 Total

£m

1,209.1 108.1

– (44.8)

(1.7)

1,270.7

278.3 48.0

(38.1)(0.4)

287.8

982.9

930.8

1,196.8 105.2

– (41.4)

(1.8)

1,258.8

270.4 47.2

(36.8)(0.4)

280.4

978.4

926.4

Land and buildings includes freehold land totalling £75.1m (2007: £75.1m) which is not depreciated.

The net book value of land and buildings at the year end on a historical cost basis would be: Group £729.3m (2007: £697.2m); University £726.4m (2007 £693.7m). All other tangible fixed assets are stated at cost less accumulated depreciation.

The cost to the group of freehold 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.

The University holds and conserves certain collections, artefacts and other assets of historical, artistic or scientific importance. Most of these are housed in the University’s nationally accredited museums and collections and in its libraries, providing a valuable research and educational resource locally, nationally and internationally as well as an unrivalled opportunity to present the University’s work to a wide audience. Other collections are held in academic departments or are on display as public art. Major collections include those held by the University Library, a legal deposit, the Botanic Garden and the Fitzwilliam Museum.

72


14 Intangible fixed assets: goodwill and others

Opening balanceAmortisation charge for the yearCurrency adjustments

Closing balance

15 Fixed asset investments

Opening balance as previously statedReclassification of holdings formerly included as current asset investments

Restated opening balanceNet additions in the year(Decrease) / increase in market value of investments

Closing balance

Represented by:PropertySecuritiesMoney market investmentsInvestments in subsidiary undertakingsInvestment in spin-out companies (see note 32)Cash in hand and at investment managersInvestments in joint venturesOther

Group 2008

£m

5.7 (1.8)(0.1)

3.8

413.1

(5.1)

408.0 7.3

(45.8)

369.5

68.3 210.7

79.9 –

10.3 –

0.1 0.2

369.5

Group 2007

£m

8.0 (2.2)(0.1)

5.7

Restated

369.6

(4.6)

365.0 6.9

36.0

407.9

64.6 298.3

31.1 –

10.4 3.2 0.1 0.2

407.9

University 2008

£m

5.0 (1.5)

–

3.5

316.3

(5.2)

311.1 5.2

(32.5)

283.8

61.8 136.3

66.0 17.2

2.2 –

0.1 0.2

283.8

University 2007

£m

6.8 (1.7)(0.1)

5.0

Restated

291.7

(4.6)

287.1 6.5

17.5

311.1

55.9 204.2

24.9 21.2

2.2 2.5

– 0.2

311.1

Following the change in accounting policy referred to in note 12 (a) above, long term investments held for specific donations, which were in previous years included in fixed asset investments, have been reclassified as endowment assets.

16 Endowment assets

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 32)

84.4 549.2 216.2

–4.9

854.7 2.3

857.0

Restated

99.3 700.4 104.7

– 20.5

924.9 2.6

927.5

68.2 399.6 210.0

2.5 1.0

681.3 –

681.3

Restated

88.8 541.8

93.1 2.6

10.1

736.4 –

736.4

Included in the Group’s endowment assets is £165.9m (2007: £179.6m) 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.

73


17 Stocks and work in progress

Goods for resale Work in progress Other stocks

18 Debtors

Research grants recoverableAmounts due from subsidiary undertakingsDebtors re examination and assessment servicesDebtors re publishing and printingOther debtors

19 Current asset investments

PropertySecuritiesMoney market investmentsShort-term deposits

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

Group 2008

£m

37.3 8.0 0.4

45.7

62.3 –

48.4 51.2 33.6

195.5

0.3 1.5

208.0 17.2

227.0

222.2

4.8

227.0

Group 2007

£m

40.0 7.1 0.3

47.4

54.7 –

43.8 41.8 29.2

169.5

0.8 2.2

225.7 6.3

235.0

229.9

5.1

235.0

University 2008

£m

30.6 6.4

–

37.0

62.3 32.2 38.4 68.0 (1.2)

199.7

7.0 39.5

228.2 17.2

291.9

150.3

141.6

291.9

University 2007

£m

36.3 5.3 0.3

41.9

54.7 20.9 34.7 52.6

7.3

170.2

10.0 56.6

242.9 8.0

317.5

181.5

136.0

317.5

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

Following the change in accounting policy referred to in note 12 (a) above, money market investments and short-term deposits held for specific donations, which were in previous years included in current asset investments, have been reclassified as endowment assets.

74


20 Creditors: amounts falling due within one year

Bank overdraft Research grants received in advanceAmounts due to subsidiary undertakingsCreditors re examination and assessment servicesCreditors re publishing and printingOther creditorsInvestments 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 undertakingsBank loansLoan from minority interest

22 Pension liabilities

The pension liabilities have been measured in accordance with the requirements of FRS 17 and relate to the defined benefit schemes disclosed in note 31.

Opening balanceMovement 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

Closing balance

Group 2008

£m

3.3 84.7

– 37.4 49.6

104.8

4.8

284.6

– 5.1 2.7

7.8

79.3

18.4 (20.7)

(1.8)–

82.8

158.0

Group 2007

£m

8.6 79.1

– 46.8 47.3 93.2

5.1

280.1

– –

2.7

2.7

127.0

22.3 (19.5)

0.3 –

(50.8)

79.3

University 2008

£m

1.9 84.7 22.6 19.4 45.7 65.5

141.6

381.4

10.6 5.1

–

15.7

19.4

3.9 (5.1)(0.1)

–

25.2

43.3

University 2007

£m

Restated

7.7 79.1 11.9 27.8 47.2 78.1

136.0

387.8

10.6 ––

10.6

27.0

6.2 (6.6)(0.7)(0.1)

(6.4)

19.4

75


23 Other retirement benefits liability

Group and University

The liability has been measured in accordance with the requirements of FRS 17 and relates to unfunded post-retirement medical and insurance schemes.

Liability at 31 July 2007 previously omitted (see note 8)Movement attributable to the year: Current service cost including life assurance Contributions Other finance cost Actuarial gain recognised in statement of total recognised gains and losses

Closing balance

2008 £m

14.2

0.5 (0.2)0.8

(0.5)

14.8

24 Deferred capital grants

Group and University

Balance 1 August Buildings Equipment Heritage assets Prior year adjustment re heritage assets (see note 12)

Restated opening balance

Grants received Buildings Equipment

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

Balance 31 July Buildings Equipment

Funding Council

£m

143.0 12.0

–

–

155.0

30.8 7.9

38.7

(8.7)(5.9)(0.2)

(14.8)

165.1 13.8

178.9

Research Grants

£m

– 15.7

–

–

15.7

– 9.8

9.8

– (8.3)(0.4)

(8.7)

– 16.8

16.8

Other Grants

£m

279.8 2.0

20.8

(20.8)

281.8

21.1 0.6

21.7

(7.4)(1.4)

–

(8.8)

293.5 1.2

294.7

2008 Total

£m

422.8 29.7 20.8

(20.8)

452.5

51.9 18.3

70.2

(16.1)(15.6)

(0.6)

(32.3)

458.6 31.8

490.4

2007 Restated

£m

392.2 27.3 17.4

(17.4)

419.5

37.5 19.0

56.5

(6.9)(15.0)

(1.6)

(23.5)

422.8 29.7

452.5

76


25 Endowments

GroupBalance 1 August As previously stated Prior year adjustment (see note 12)

Restated opening balanceNew endowments received

Income receivable from endowment asset investments Expenditure

Net transfer (to) / from income and expenditure account(Decrease) / increase in market value of investments

Balance 31 July

CapitalUnspent income

Balance 31 July

Representing:Trust and Special Funds: Professorships, Readerships and Lectureships Scholarships and bursaries OtherSpecific donationsExamination Board restricted fundsGates Cambridge TrustOther subsidiary undertakingsGeneral endowments

Group total

UniversityBalance 1 August As previously stated Prior year adjustment (see note 12)

Restated opening balanceNew endowments received

Income receivable from endowment asset investments Expenditure

Net transfer (to) / from income and expenditure account(Decrease) / increase in market value of investments

Balance 31 July

CapitalUnspent income

Balance 31 July

Expendable £m

301.8 26.7

328.5 20.2

10.4 (29.4)

(19.0)(26.3)

303.4

296.2 7.2

303.4

28.8 4.1

59.2 28.3

7.6 165.8

9.6 –

303.4

112.2 25.7

137.9 16.3

4.9 (19.2)

(14.3)(11.8)

128.1

122.3 5.8

128.1

Permanent £m

599.0 –

599.0 16.0

21.9 (16.7)

5.2 (66.6)

553.6

490.7 62.9

553.6

268.6 69.9

207.3 – – –

0.3 7.5

553.6

598.5 –

598.5 16.0

21.8 (16.4)

5.4 (66.7)

553.2

490.1 63.1

553.2

2008 Total £m

900.8 26.7

927.5 36.2

32.3 (46.1)

(13.8)(92.9)

857.0

786.9 70.1

857.0

297.4 74.0

266.5 28.3

7.6 165.8

9.9 7.5

857.0

710.7 25.7

736.4 32.3

26.7 (35.6)

(8.9)(78.5)

681.3

612.4 68.9

681.3

2007 Total £m

Restated

804.1 24.0

828.1 47.2

30.5 (46.1)

(15.6)67.8

927.5

855.7 71.8

927.5

321.1 80.4

286.0 25.7 12.3

179.6 14.1

8.3

927.5

629.8 23.2

653.0 43.4

23.9 (36.9)

(13.0)53.0

736.4

666.6 69.8

736.4

77


26 Reserves

GroupBalance 1 August As previously stated Prior year adjustments (see note 12): Donations of heritage assets Fixed asset investment revaluation reserve

Restated opening balanceSurplus retained for the yearActuarial (loss) / gainTransfer in respect of depreciation on revalued operational propertiesTransfer in respect of disposals of fixed asset investmentsGain / (loss) arising on foreign currency translation(Decrease) / increase in market value of investments

Balance 31 July

Reserves are reduced by the net liabilities in respect of retirement benefits Reserves before net liabilities in respect of retirement benefits Effect of net pension liability (see note 22) Effect of liability for other retirement benefits (see note 23)

Reserves balance at 31 July

UniversityBalance 1 August As previously stated Prior year adjustments (see note 12): Donations of heritage assets Fixed asset investment revaluation reserve

Restated opening balanceSurplus retained for the yearActuarial (loss) / gainTransfer in respect of depreciation on revalued operational propertiesTransfer in respect of disposals of fixed asset investmentsGain / (loss) arising on foreign currency translation(Decrease) / increase in market value of investments

Balance 31 July

General reserves

£m

740.9

20.8 1.3

763.0 41.3

(82.3)

6.0

26.72.0

–

756.7

929.5

(158.0)(14.8)

756.7

694.7

20.8 1.3

716.8 21.5

(24.7)

6.0

23.51.6

–

744.7

Operationalproperty

revaluationreserve

£m

157.4

– –

157.4 ––

(6.0)

–––

151.4

151.4

––

151.4

157.4

– –

157.4 – –

(6.0)

–– –

151.4

Fixed assetinvestmentrevaluation

reserve £m

139.1

– (1.3)

137.8 – – –

(26.7)–

(45.9)

65.2

65.2 ––

65.2

94.2

– (1.3)

92.9 – – –

(23.5)–

(32.5)

36.9

2008 Total

£m

1,037.4

20.8 –

1,058.2 41.3

(82.3) – –

2.0 (45.9)

973.3

1,146.1

(158.0)(14.8)

973.3

946.3

20.8 –

967.1 21.5

(24.7) –

–1.6

(32.5)

933.0

2007 Total

£m

Restated

930.9

17.4 –

948.3 24.7 50.8

– –

(1.9)36.3

1,058.2

1,137.5

(79.3)–

1,058.2

907.1

17.4 –

924.5 20.4

6.4 – –

(2.1)17.9

967.1

78


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

Surplus on continuing operations before donations of heritage assets and 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) Other retirement benefits – cost less contributions payable (see note 23) Currency adjustments

Decrease / (increase) in stock(Increase) / decrease in debtorsIncrease in creditors

Net cash (outflow) / inflow from operating activities

28 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 intangible fixed assets Donations for buildings and other deferred capital grants received Proceeds of disposal of tangible fixed assets Net purchase of long-term investments (excluding investments held on behalf of others) New endowments received

Net cash outflow from capital expenditure and financial investment

Financing Issue of share capital to minority interest Bank loan acquired Repayment of long-term loan

Net cash inflow / (outflow) from financing

2008 £m

18.9 59.7

1.8 (31.7)(58.9)

0.5 (2.3)

15.3 2.3

5.6 1.7

(26.0)16.0

(2.7)

2008 £m

57.1 (0.5)

56.6

(116.1)–

70.2 0.6

(11.2)36.2

(20.3)

– 4.8

–

4.8

2007 £m

Restated

1.9 48.0

2.2 (21.9)(53.6)

0.5 2.8

– (0.5)

(20.6)(8.8)5.8

27.4

3.8

2007 £m

Restated

53.9 (0.5)

53.4

(107.2)–

56.5 8.2

(66.0)47.2

(61.3)

0.7 –

(0.5)

0.2

79


29 Analysis of the balances of cash and bank overdraft

Bank overdrafts Cash at bank and in hand

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

Net funds

30 Capital commitments

Commitments contracted at 31 July

Authorised but not contracted at 31 July

Group 2008

£m

(3.3)46.5

43.2

17.2

60.4

Group 2007

£m

Restated

(8.6)24.3

15.7

6.3

22.0

University 2008

£m

(1.9)30.8

28.9

17.2

46.1

2008 £m

138.6

–

University 2007

£m

Restated

(7.7)13.3

5.6

8.0

13.6

2007 £m

64.7

–

Of the capital expenditure committed at 31 July 2008, approximately 86% (2007: 63%) will be funded by specific grants and donations.

31 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.

USSIt 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 valuationInvestment returns per annumSalary scale increases per annumPension increases per annumMortality– equivalent life expectancy for members reaching retirement age of 65: Males FemalesMarket value of assets at date of last valuationProportion of members’ accrued benefits covered by the actuarial value of the assets

March 20054.50%3.90%2.90%

85 88

£21,740m77%

The contribution rate payable by the institution is 14% of pensionable salaries. The results of the next actuarial valuation at 31 March 2008 are awaited.

80


31 Pension schemes (continued)

Cambridge University Assistants’ Contributory Pension Scheme (CPS) The CPS was established under the authority of the Universities of Oxford and Cambridge Act 1923. It is a registered pension scheme for the purposes of Finance Act 2004. The active members of the scheme are employees of the University and its subsidiary undertakings.

Triennial valuation of the schemeA 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 2006. The results showed the actuarial value of the scheme’s assets as £276.8m. These were insufficient to cover the scheme’s past service liabilities of £285.0m and as a result the scheme had a deficit of £8.2m and was 97% funded. The joint contribution rate has been set at 25.7% of pensionable pay from 1 August 2005.

CPS: Pension costs under FRS 17For 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 market-based 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. The principal assumptions used by the actuary were:

Discount rateExpected rate of return on scheme assets at beginning of year Equities and hedge funds Bonds (including cash) PropertyRate of increase in salariesRate of increase in pensions in defermentRate of increase in pensions in paymentAge at retirement: Males – active Males – deferred Females – active Females – deferredMortality – equivalent life expectancy for members reaching retirement age: Males Females

2008

6.40%

8.00%5.30%7.00%4.55%3.80%3.80%

63616160

8588

2007

5.80%

7.50%4.70%6.50%4.00%3.25%3.25%

63616160

8487

The following results were measured in accordance with the requirements of FRS 17, based on the assumptions summarised above:

Present value of defined benefit obligation

Fair value of scheme assets

Net liability recognised in the balance sheet

OpeningService costEmployer contributionsExpected return on scheme assetsContributions by membersInterest costActuarial (losses) / gainsBenefits and expenses paid

Closing defined benefit obligation

2008 £m

(372.5)(14.4)

––

(4.3)(21.7)

(5.7)13.1

(405.5)

2007 £m

(374.6)(16.0)

– –

(4.0)(19.6)28.8 12.9

(372.5)

2008 £m

313.9 –

13.4 23.5

4.3 –

(51.2)(13.1)

290.8

2007 £m

276.8 –

12.6 18.5

4.0 –

14.9 (12.9)

313.9

2008 £m

(58.6)(14.4)13.4 23.5

– (21.7)(56.9)

–

(114.7)

2007 £m

(97.8)(16.0)12.6 18.5

–(19.6)43.7

–

(58.6)

81



The amounts recognised in the income and expenditure account were as follows:

In staff costs: current service cost In endowment and investment income: Expected return on pension scheme assets Interest on pension scheme liabilities

2008 £m

14.4

23.5 (21.7)

1.8

2007 £m

16.0

18.5 (19.6)

(1.1)

Amounts for the current and previous four years were as follows:

Defined benefit obligationPlan assets

Deficit at the balance sheet date

Experience (losses) / gains for the year on plan liabilities

Experience (losses) / gains for the year on plan assets

2008 £m

(405.5)290.8

(114.7)

(1.3)

(51.2)

2007 £m

(372.5)313.9

(58.6)

(4.1)

14.9

2006£m

(374.6)276.8

(97.8)

(7.2)

5.8

2005£m

(331.8)249.0

(82.8)

0.2

22.2

2004£m

(279.4)208.9

(70.5)

(0.8)

(1.2)

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 January 2007.

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 2007 by a qualified actuary. The actuary has also updated the 2007 accounting valuation to 31 July 2007 and 31 July 2008 for the purposes of the University’s financial statements. The principal assumptions used by the actuary for both schemes were:

Discount rateExpected rate of return on scheme assets at beginning of year Rate of increase in salaries – schemes are now on frozen current salary basis Rate of increase in pensions in deferment Rate of increase in pensions in paymentAge at retirement: PSSPS – males – active All othersMortality – equivalent life expectancy for members reaching retirement age: Males Females

2008

6.40%6.25%0.00%3.80%3.80%

5960

8890

2007

5.75%6.25%0.00%3.50%3.50%

5960

8487

82



The following results were measured in accordance with the requirements of FRS 17, based on the assumptions summarised above:

Present value of defined benefit obligation

Fair value of scheme assets

Net liability recognised in the balance sheet

OpeningService costEmployer contributionsExpected return on scheme assetsContributions by membersInterest costActuarial (losses) / gainsBenefits and expenses paid

Closing defined benefit obligation

2008 £m

(181.4)(3.4)

––

(0.7)(10.4)

(5.3)8.9

(192.3)

2007 £m

(174.9)(5.5)

––

(0.7)(8.7)1.6 6.8

(181.4)

2008 £m

163.1 –

4.7 10.3

0.7 –

(18.5)(8.9)

151.4

2007 £m

149.1 –

5.9 9.3 0.7

– 4.9

(6.8)

163.1

2008 £m

(18.3)(3.4)4.7

10.3 –

(10.4)(23.8)

–

(40.9)

2007 £m

(25.8)(5.5)5.9 9.3

– (8.7)6.5

–

(18.3)

The amounts recognised in the income and expenditure account were as follows:

In staff costs: current service cost

In endowment and investment income: Expected return on pension scheme assets Interest on pension scheme liabilities

2008 £m

3.4

10.3 (10.4)

(0.1)

2007 £m

5.5

9.3 (8.7)

0.6

Amounts for the current and previous three years were as follows::

Defined benefit obligationPlan assets

Deficit at the balance sheet date

Experience losses for the year on plan liabilities

Experience (losses) / gains for the year on plan assets

2008 £m

(192.3)151.4

(40.9)

(5.3)

(20.0)

2007£m

(181.4)163.1

(18.3)

(3.8)

5.2

2006£m

(174.9)149.1

(25.8)

(0.4)

8.3

2005£m

(159.8)131.6

(28.2)

(2.0)

15.1

83



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: contributionsCPS: charged to income and expenditure accountPCPF: charged to income and expenditure accountPSSPS: charged to income and expenditure accountNHSPS: contributionsCUPDBP: charged to income and expenditure accountRSAEBS: charged to income and expenditure accountContributions to other pension schemes

2008 £m

29.3 14.4

2.6 0.8 1.6 0.5 0.2 1.8

51.2

2007 £m

27.3 16.0

4.3 1.2 1.5 0.6 0.2 1.3

52.4

84


32 Principal subsidiary and associated undertakings and other significant investments

The following undertakings were wholly-owned subsidiary undertakings throughout the year ended 31 July 2008. Except where stated, the accounting reference date is 31 July and the undertaking is a company registered in England and Wales.

Name Notes Principal activity

Cambridge Enterprise Limited Consultancy and commercial exploitation of intellectual propertyCambridge Investment Limited Land developmentCambridge Manufacturing Industry Links Limited Consultancy and commercial exploitation of intellectual property

Cambridge Programme for Industry (Australia) a Sustainability leadership programmesCambridge University Technical Services Limited Consultancy and commercial exploitation of intellectual propertyChallenge Fund Trading Company Limited Providing funds to promote the transfer of research to businessFitzwilliam Museum Enterprises Limited b Publication of fine art books and sale of museum merchandiseJBS Executive Education Limited Corporate education servicesLynxvale Limited Provision of construction and development servicesThe Cambridge Foundation c Fund raising

Associated Trusts c

Cambridge Overseas Trust Cambridge Commonwealth Trust Provision of scholarships, grants and other support for theGates Cambridge Trust education of overseas students in the University Cambridge European Trust Malaysian Commonwealth Studies Centre in Cambridge

Cambridge Assessment subsidiary undertakings

Cambridge Examinations Inc d Examination servicesMill Wharf Limited Training and consultancyOxford and Cambridge International Assessment Services Limited Assessment servicesOxford Cambridge and RSA Examinations Examination and assessment servicesRSA Examinations Board Assessment servicesSandonian Properties Limited Property holdingThe West Midlands Examinations Board Examination services

Cambridge University Press subsidiary undertakings e

Cambridge Global Grid for Learning Limited Electronic educational publishingCambridge Knowledge (China) Limited f Representative officeCambridge Printing Services Limited Printing servicesCambridge University Press (Greece) EPE g Representative officeCambridge University Press (Holdings) Limited Holding companyCambridge University Press India Private Limited h Publishing and distributionCambridge University Press Japan KK i Representative officeCambridge University Press South Africa (Proprietary) Limited j Publishing and distributionCambridge-Hitachisoft Educational Solutions PLC k Electronic educational publishing ELT Trading SA DE CV l Representative officeUnited Publishers Services Limited f Distribution

85


32 Principal subsidiary and associated undertakings and other significant investments (continued)

a Cambridge Programme for Industry (Australia) is incorporated in Australia and has an accounting reference date of 30 June 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 Examinations Inc is a United States non-stock non-profit corporation.e Cambridge University Press subsidiary undertakings have an accounting reference date of 30 April for commercial reasons. f Cambridge Knowledge (China) Limited and United Publishers Services Limited are incorporated in Hong Kong.g Cambridge University Press (Greece) EPE is incorporated in Greece.h Cambridge University Press India Private Limited is a 51% subsidiary incorporated in India.i Cambridge University Press Japan KK is incorporated in Japan.j Cambridge University Press South Africa (Proprietary) Limited is incorporated in South Africa.k The University holds 60% of the issued share capital in Cambridge-Hitachisoft Educational Solutions PLC.l ELT Trading SA DE CV is incorporated in Mexico.

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 assets (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 % interest Principal Activity

Ampika Limited 40 Commercial exploitation of intellectual propertyBluegnome Limited 21 Commercial exploitation of intellectual propertyBSCR Limited 22 Commercial exploitation of intellectual propertyCambridge Flow Solutions Limited 20 Commercial exploitation of intellectual propertyCambridge in America 22 Fund raisingCambridge Lab-on-Chip Limited 32 Commercial exploitation of intellectual propertyCamfridge Limited 23 Commercial exploitation of intellectual propertyEnval Limited 26 Commercial exploitation of intellectual propertyInotec AMD Limited 23 Commercial exploitation of intellectual propertyMarkready Limited 33 Research and developmentMicrobial Technics Limited 23 Commercial exploitation of intellectual propertyThe CRISP Consortium Limited 45 Commercial exploitation of intellectual propertyVivamer Limited 58 Commercial exploitation of intellectual 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 was the support of research and educational programmes. The company ceased its activities in the year ended 31 July 2008, during which it funded expenditure of £0.1m (2007: £4.2m), including reimbursements to the University totalling nil (2007: £1.9m), and its profit after tax was nil (2007: nil). At 31 July 2008 and 2007 CMI had nil net assets.

33 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.

86


34 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 publicly-funded undergraduates of £36.0m (2007: £34.7m). 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 £3.3m (2007: £2.6m). These payments are included in other operating expenses.

The Cambridge Foundation distributed third party donations to the Colleges totalling £5.3m (2007: £5.2m). 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 £5.0m (2007: £3.0m), and the Colleges provided accommodation, catering and other services to the University for which the University paid a total of £7.1m (2007: £6.3m).

During the year the Colleges made donations to the University totalling £2.5m (2007: £2.1m) which were credited to specific endowments.

Colleges fund

Balance at 1 AugustContributions received from CollegesInterest earnedPayments to Colleges

Balance at 31 July included in creditors

2008 £000

6

3,428 48

(3,480)

2

2007 £000

40 3,025

41 (3,100)

6

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.

35 DIUS / HEFCE Access funds

Access to Learning Fund allocationInterest earned

Disbursed to students

Balance unspent at 31 July

2008 £000

311

7

318 (318)

–

2007 £000

310 4

314(314)

–

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.

36 TDA grants for Black and Minority Ethnic Recruitment and Retention

TDA grantsDisbursed to students

Balance unspent at 31 July

2008 £000

6

(6)

–

2007 £000

8 (8)

–

annual-report-2008-statement

Documents

Transcript of annual-report-2008-statement