Reports and Financial Statements - 2006

Abstract of Accounts for year ended 31 July 2006

Reports and Financial Statements

Financial ReviewScope of the financial statementsThe consolidated financial statements cover the teaching and research activities of the University, its subsidiary companieswhich undertake activities which for legal or commercial reasons are more appropriately carried out by limitedcompanies, Cambridge Assessment and its subsidiary companies and joint ventures, the Gates Cambridge Trust, theCambridge Commonwealth Trust, Cambridge Overseas Trust, Cambridge European Trust and the MalaysianCommonwealth Studies Centre in Cambridge (the ‘Associated Trusts’). This year, for the first time, the financialstatements also include the activities of Cambridge University Press. The comparative figures for 2004–05 have beenrestated accordingly.

Cambridge Assessment and Cambridge University Press are constituent parts of the corporation known as the Chancellor,Masters and Scholars of the University of Cambridge. Cambridge Assessment’s primary work is the conduct andadministration of examinations in schools and for persons who are not members of the University. Cambridge UniversityPress is the printing and publishing house of the University, dedicated to printing and publishing for the advancement ofknowledge, education and learning worldwide.

The Gates Cambridge Trust is a separately constituted exempt charity. It is deemed to be a subsidiary undertaking of theUniversity since the University appoints the majority of its trustees. The purposes of the Gates Cambridge Trust are tosupport the University by enabling persons from any part of the world outside the United Kingdom to benefit fromeducation in the University by the provision of scholarships and grants and otherwise. The assets of the Gates CambridgeTrust are therefore not available for the general purposes of the University. The Associated Trusts are also separatelyconstituted exempt charities whose purposes are primarily to support students ordinarily resident or domiciled incountries outside the United Kingdom to benefit from education in the University. The assets of the Associated Trusts aresimilarly not available for the general purposes of the University.

For the purpose of these financial statements Cambridge University Press’s accounts to its new financial year end of 30April were taken, and adjustments then made for major transactions and changes in May to July in order to reflect thepositions as at 31 July, the University’s financial year-end.

With the inclusion this year of the activities of Cambridge University Press, the final step has been taken so that theUniversity group accounts now follow current accounting practice. The Council is presenting financial statements whichare ‘true and fair’. However, in providing fully consolidated accounts the presentation of the core teaching and researchactivities of the University is made more difficult, and the University will continue to publish the accounts of theseactivities separately. The accounts of the activities of Cambridge Assessment and of Cambridge University Press are also published separately.

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

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2005–06£m

890.7(882.4)

8.36.5

14.8(2.7)

12.1

Restated2004–05

£m819.9(822.6)

(2.7)9.4

6.7(1.5)

5.2

Change%

+8.6%+7.3%

IncomeExpenditure

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

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

Surplus for the year

It is pleasing to see a return to a small surplus on continuing operations before exceptional items, although it is smallin relation to the size of the University group’s activities. Exceptional gains, arising primarily from the sale of land andbuildings by Cambridge University Press, add to the surplus.

It is helpful to see how this is split between the main segments. There are various transactions between the University’score academic activities, Cambridge Assessment and Cambridge University Press (CUP) which should be separated out.The principal transactions are the printing of examination papers which the Press provides for Cambridge Assessment,and financial and other support for the University’s academic activities made by both Cambridge Assessment and thePress.

This segmental analysis is given in accordance with accounting standards in Note 11 to the accounts, but theadditional information below may be helpful:

In summary, before exceptional items, the academic activities of the University made a small surplus, after acontribution of £3.6m from Cambridge Assessment. Academic activities have benefited from additional governmentfunding in advance of the introduction of full economic costing methodology for research council grants, andadditional investment income. Costs have been kept under control. Although the University, as a whole, is in surplus,the general ‘Chest’ funds were again depleted over 2005–06. In effect, a transfer of funds has been made to academicschools, faculties, and departments as a result of their success in controlling expenditure. Although this permits theschools to build up cash reserves as a deliberate policy to facilitate budgetary and planning devolution, in the mediumterm it will be important to maintain a balance between central strategic reserves and those held in schools andinstitutions.

Cambridge Assessment continues to grow its UK and international assessment services, but is making significantinvestment in information technology and other infrastructure. Cambridge University Press continues its improvementfrom recent operating deficits with recent investment, notably in English language course publishing, beginning to bearfruit.

Consolidated income for the University group for 2005–06 increased by £70.8m (+8.6%) to £890.7m. For theacademic activities (i.e. excluding Cambridge Assessment and Cambridge University Press, but including for thispurpose the Gates Cambridge Trust and the Associated Trusts which support the University’s students) incomeincreased by £37.0m (+6.9 %) to £575.3m.

Grant income from the Higher Education Funding Council for England (HEFCE) and the Training and DevelopmentAgency for Schools increased by £15.8m (+9.7%) to £178.1m. Within this increase the core recurrent grant increasedby only £4.8m (+3.3%), slightly behind our underlying inflation. However, specific grants were released to income, thegrants being primarily to contribute to the costs of rewarding and developing staff and modernisation of highereducation pay structures.

Academic fees and support grants increased by £3.0m to £59.0m with this increase being from full-time overseasstudents, who now contribute around half the total fee income.

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Income (external)Income (intra-group)

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

Surplus/(deficit) on continuing operationsbefore exceptional items

Academicactivities

£m571.73.6

575.3

(566.6)

(566.6)

8.7

CambridgeUniversity

Press£m

144.710.2

154.9

(155.0)

(155.0)

(0.1)

CambridgeAssessment

£m173.2

173.2

(158.0)(10.2)(3.6)

(171.8)

1.4

As reported

£m890.7

890.7

(879.6)

(2.8)

(882.4)

8.3

Centraladjustments

£m1.1

1.1

(2.8)

(2.8)

(1.7)

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Research grants and contracts income increased by £15.2m (+8.1%) to £203.9m continuing the real increase insponsored research, in particular that funded by research councils. This income included £7.7m (2005: £3.8m) of specialgovernment funding in advance of the introduction of full economic funding methodology for research council grants.Improved pricing of research projects will be a key factor in the future financial operating position of the University.

Examination and assessment services income derives from the activities of Cambridge Assessment and increased by£8.4m (+5.2%) to £169.5m from general growth in its business, but in particular from its English language testingstream.

Publishing and printing services income of Cambridge University Press increased by a pleasing £16.3m (+13.0%) to£141.8m. This excludes £10.2m income received by the Press for printing services carried out for CambridgeAssessment and the University itself.

Other operating income increased by £5.1m (+5.9%). Donations received in the year for general use amounted to£10.9m (2005: £8.8m).

Endowment and investment income increased by £7.0m (+17.2 %) to £47.5m, mainly because of an increaseddistribution from the Cambridge University Endowment Fund. Of the total, £32.3m is directly available for the mainUniversity academic activities, with the balance supporting the activities of Cambridge Assessment (£3.3m), the Press(£1.0m), the Gates Cambridge Trust (£5.0m) and the Associated Trusts (£3.8m).

Staff costs overall increased by 6.7% to £407.6m, with the increase mainly arising from general salary increases, andthe impact of the move to a single pay spine for staff in the core University. The split of staff costs between the mainsegments of the University group is:

Other operating expenses at £430.7m were £31.6m (7.9%) higher. Within this, expenditure in the main Universityacademic and administrative departments has increased by 6.2% after a long period of only moderate increases.

Depreciation has increased slightly as capital expenditure on new buildings and major refurbishments continues.

Capital expenditure programmeExpenditure on land and buildings was £69.0m for the year, of which £48.5m was for the academic activities of theUniversity (a reduction from the high levels of recent years). Major expenditure was made on the Centre for AdvancedPhotonics and Electronics on the West Cambridge site, refurbishment of Department of Chemistry buildings, and theCancer Research facility and Institute for Metabolic Sciences at the Addenbrooke’s site. Cambridge Assessmentbuildings expenditure of £19.5m included the purchase of a major warehouse to rationalise its storage and distributionactivities.

The main disposals of operational land and buildings, leading to exceptional accounting gains, were made byCambridge University Press: a New York office building in 2005–06 and land in Cambridge in 2004–05.

Capital expenditure in the year on equipment was £22.3m, of which £18.3m was made for academic activities, a levelsimilar to previous years.

Endowment and investment performanceThe total endowment, fixed asset investment and other investment assets at the year-end were £1,393m for theUniversity group, an increase of £161m made primarily through increases in market values. Of this total £165m isattributable to the Gates Cambridge Trust and £115m to the Associated Trusts.

The majority of the endowment assets of the University and Cambridge Assessment, and the majority of those of theAssociated Trusts, are invested in the Cambridge University Endowment Fund. The Fund’s assets are managed by externalmanagers. The University’s short-term cash and other investment assets are managed by external managers and directly byUniversity staff.

The Cambridge University Endowment Fund performed well over the year with a closing value of £870.8m. The capitalvalue of a unit increased from £30.20 to £33.60, and this capital growth and distribution for spend gave a totalinvestment return of 15.0% over the year. The distribution for spend is determined by a formula intended to provide a

Academic activitiesCambridge AssessmentCambridge University Press

2005–06£m

301.852.450.7

2004–05£m

284.149.447.3

Increase%

+6.2%+6.0%+7.2%

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consistent income stream for academic and related activities whilst ensuring that permanent capital of the endowment ismaintained in real terms. The distribution made in 2005–06 was equivalent to a yield of 3.77% on the opening capitalunit value.

The investment portfolio of the Gates Cambridge Trust is managed by a number of fund managers. The total value of theendowment of the Trust increased by £15m over the year.

PensionsThe University group participates in a number of pension schemes. The main schemes are the Universities SuperannuationScheme (USS) and the Cambridge University Assistants Contributory Pensions Scheme (CPS). In addition the Press has anumber of schemes, which are now accounted for in these financial statements. The University’s Finance Committee ismonitoring the position of the schemes closely.

The USS carried out an actuarial valuation of the scheme as at 31 March 2005 which showed that the scheme was 77%funded. The position of the USS is disclosed in detail in note 30 to the accounts. The USS has recently consultedparticipating institutions on the scheme’s benefits and costs in respect of future service.

The CPS and the Press’s schemes, being single-employer schemes, are presented in the financial statements in accordancewith Financial Reporting Standard 17 (FRS 17), which provides a snapshot of fund liabilities at the balance sheet dates.The total pension liability under FRS 17 has increased from £115m to £127m, of which £27m relates to the Press’sschemes. A triennial valuation of the CPS as at 31 July 2006 is in progress and the outcome may lead to an increase incontributions by the University.

Conclusion We are pleased that we have now published financial statements for the University and the University group which followcurrent accounting practice and are ‘true and fair’. However it is important to disaggregate the various activities within theUniversity group and, as noted above, the University will continue to publish separately the accounts of its teaching andresearch activities, Cambridge Assessment and Cambridge University Press.

The University group showed a small operating surplus in 2005–06, but of less than 1 per cent of total income.Cambridge Assessment and Cambridge University Press are projected to remain in small surplus over the next few years,and the main uncertainties lie with the teaching and research activities of University. Here again, the projections indicatethat the results will be close to balance, aided by higher fees charged to Home/EU undergraduates and the introduction of research funded by research councils by reference to full economic costing of this activity. On the expenditure side, staffcosts will increase significantly as a result of the recent national settlement, and pension costs may increase following theactuarial valuation of the CPS and the current policy review by the USS.

The balance sheet remains sound and net assets are growing steadily, giving the University its operating and financialcapability. Securing the sustainability of our operations and of our financial position remains a key concern for theUniversity’s Council and its committees.

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

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Corporate Governance The following statement is provided by the Council to enable readers of the financial statements to obtain a betterunderstanding of the arrangements in the University for the management of its resources and for audit.

1. The University endeavours to conduct its business in accordance with the seven principles identified by theCommittee on Standards in Public Life (selflessness, integrity, objectivity, accountability, openness, honesty andleadership) and within the general principles of the Guidance to Universities which has been provided by theCommittee of University Chairmen and its ‘Guide for Members of Governing Bodies of Universities and Colleges inEngland, Wales and Northern Ireland’. Further information is given at paragraph 8 below.

2. Under the Statutes the Governing Body of the University is the Regent House which comprises the resident seniormembers 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 itswork, and for the management of its resources. The membership of the Council includes two external members, one ofwhom chairs the Audit Committee (see paragraph 6 below). The General Board of the Faculties is responsible, subjectto the Regent House and to the responsibilities of the Council, for the academic and educational policy of theUniversity.

3. The Council is advised in carrying out its duties by a number of Committees, including the Planning and ResourcesCommittee, the Finance Committee, the Audit Committee and the Risk Steering Committee. The Planning andResources Committee is a joint committee of the Council and the General Board. Its responsibilities include thedevelopment and oversight of the University’s Strategic Plan, and the preparation of the University’s budget. TheFinance Committee is chaired by the Vice-Chancellor and advises the Council on the management of the University’sassets, including real property, monies and securities, and on the care and maintenance of all University sites andbuildings. The Audit Committee governs the work of the Internal and External Auditors, reporting on these mattersdirectly to the Council. The Risk Steering Committee is responsible to the Council for the identification of the majorcorporate risks and their management.

4. The Vice-Chancellor is, de facto, the principal academic and administrative officer of the University. Under the termsof the Financial Memorandum between the University and the Higher Education Funding Council for England, the Vice-Chancellor is the Designated Officer of the University.

5. Under the Statutes, it is the duty of the Council to exercise general supervision over the finances of all institutions inthe University other than the University Press; to keep under review the University’s financial position and to make areport thereon to the University at least once in each year; to recommend bankers for appointment by the RegentHouse; to prepare and publish the annual accounts of the University in accordance with UK applicable accountingstandards such that the accounts give a true and fair view of the state of affairs of the University.

6. It is the duty of the Audit Committee to keep under review the effectiveness of the University’s internal systems offinancial and other controls; to advise the Council on the appointment of external and internal auditors; to considerreports submitted by the auditors, both external and internal; to monitor the implementation of recommendationsmade by the internal auditors; to satisfy themselves that satisfactory arrangements are adopted throughout theUniversity for promoting economy, efficiency and effectiveness; to establish appropriate performance measures and tomonitor the effectiveness of external and internal audit; to make an annual report to the Council, the Vice-Chancellorand the Higher Education Funding Council for England; to receive reports from the National Audit Office and theHigher Education Funding Council for England. The Registrary is Secretary to the Audit Committee. Membership of theAudit Committee includes five external members (including the chair of the Committee), appointed by the Council withregard to their professional expertise and experience in comparable roles in corporate life.

7. The University maintains a Register of Interests of Members of the Council, the General Board, the Finance Committeeand the Audit Committee, and of the Senior Administrative Officers, which may be consulted by arrangement with theRegistrary.

8. The University is a self-governing community whose members act in accordance with the seven principles of public life(see paragraph 1 above) and in pursuit of the objectives and purposes of the University as set out in its Statutes. TheUniversity complies with most but not all of the voluntary Governance Code of Practice published in November 2004 bythe Committee of University Chairmen. In particular the Vice-Chancellor is chair of the Council, which does not have amajority of external members, and the Council is subject to the statutory authority of the Regent House. The Universityhas no immediate plans to change these arrangements, which have proved reliable over many years in enabling theUniversity to achieve its academic objectives.

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Statement of Internal Control1. The Council has responsibility for maintaining a sound system of internal control that supports the achievement ofpolicies, aims and objectives, while safeguarding the public and other funds and assets for which the Council isresponsible, 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, aimsand objectives; it can therefore only provide reasonable and not absolute assurance of effectiveness.

3. The system of internal control is based on an ongoing process designed to identify the principal risks to theachievement of policies, aims and objectives, to evaluate the nature and extent of those risks and to manage themefficiently, effectively and economically. This process was in place for the year ended 31 July 2006 and up to the date ofapproval of the financial statements, and accords with HEFCE guidance.

4. The Council has responsibility for reviewing the effectiveness of the system of internal control. The following processeshave been established:

(a) The Council meets ten times throughout the year to consider the plans and strategic direction of the University. (b) The Council receives periodic reports from the Chairman of the Audit Committee concerning internal control and

receives the minutes of all meetings of the Audit Committee. (c) The Council has established a Risk Steering Committee to oversee risk management. The Council receives

periodic reports from the Chairman of the Risk Steering Committee and receives the minutes of all meetings ofthe Risk Steering Committee. Risk management is a standing item on the agenda for meetings of the Council.

(d) The Audit Committee receives regular reports from the internal auditors, which include the internal auditors’independent opinion on the adequacy and effectiveness of the University’s system of internal control and riskmanagement, together with recommendations for improvement.

(e) A regular programme of risk management and awareness courses has been held during the year.(f) A system of risk indicators has been developed for the University’s key risks. (g) A robust risk prioritisation methodology based on risk ranking and cost-benefit analysis has been established.(h) A University-wide risk register is maintained. (i) Key risks have been assigned to risk owners and risk-reporting channels established.

5. The Council’s review of the effectiveness of the system of internal control is informed by the work of the internalauditors, RSM Robson Rhodes. They operate to the standards defined in Accountability and Audit: HEFCE Code ofPractice.

6. The Council’s review of the effectiveness of the system of internal control is also informed by the work of the seniorofficers and the risk owners within the University, who have responsibility for the development and maintenance of theinternal control framework, and by comments made by the external auditors in their management letter and otherreports.

Statement of Responsibilities of the Council1. Under the University’s Statutes it is the duty of the Council to prepare and to publish the annual accounts of theUniversity in accordance with UK applicable accounting standards such that the accounts give a true and fair view ofthe state of affairs of the University.

2. The Council is responsible for keeping proper accounting records which disclose with reasonable accuracy at anytime the financial position of the University.

3. In preparing the financial statements the Council is required to:(a) select suitable accounting policies and then apply them consistently;(b) make judgements and estimates that are reasonable and prudent;(c) state whether applicable accounting standards have been followed, subject to any material departures disclosed

and explained in the financial statements;(d) prepare the financial statements on a going concern basis unless it is inappropriate to presume that the

University will continue to operate;(e) ensure that income has been applied in accordance with the University’s Statutes and Ordinances, and its

Financial Memorandum with the HEFCE and the funding Agreement with the Training and DevelopmentAgency for Schools; and

(f) safeguard the assets of the University and take reasonable steps to prevent and detect fraud and otherirregularities.

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Independent Auditors’ Report We have audited the financial statements of the University of Cambridge for the year ended 31 July 2006 which comprisethe statement of principal accounting policies, the consolidated income and expenditure account, the consolidatedstatement of total recognised gains and losses, the balance sheets, the consolidated cash flow statement and the relatednotes 1 to 35. These financial statements have been prepared under the accounting policies set out therein.

This report is made solely to the Council, as a body, in accordance with the Financial Memorandum effective from 1 October2003. Our audit work has been undertaken so that we might state to the Council those matters we are required to state tothem in an auditors’ report and for no other purpose. To the fullest extent permitted by law, we do not accept or assumeany 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 auditorsAs described in the statement of the responsibilities of the Council, the Council is responsible for the preparation of thefinancial statements in accordance with the University’s Statute, the Statement of Recommended Practice on Accounting forFurther and Higher Education and other applicable United Kingdom law and accounting standards (United KingdomGenerally Accepted Accounting Practice).

Our responsibility is to audit the financial statements in accordance with relevant United Kingdom legal and regulatoryrequirements 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 inaccordance with the Statement of Recommended Practice on Accounting for Further and Higher Education. We also reportwhether, in all material respects, income from funding bodies, grants and income for specific purposes and from otherrestricted funds administered by the University of Cambridge have been properly applied only for the purposes for whichthey were received and whether income has been applied in accordance with the Statutes and Ordinances and, whereappropriate, with the Financial Memorandum with the Higher Education Funding Council for England and the Training andDevelopment 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 hasnot kept proper accounting records, the accounting records do not agree with the financial statements or if we have notreceived 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 ofInternal Control and the Statement of Responsibilities of the Council and consider the implications for our report if webecome aware of any apparent misstatements or material inconsistencies with the financial statements.

Basis of audit opinionWe conducted our audit in accordance with International Standards on Auditing issued by the Auditing Practices Board andthe Audit Code of Practice issued by the Higher Education Funding Council for England. An audit includes examination, on atest basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment ofthe significant estimates and judgements made by the Council in the preparation of the financial statements and of whetherthe 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 inorder to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from materialmisstatement, whether caused by fraud or other irregularity or error. In forming our opinion, we also evaluated the overalladequacy of the presentation of information in the financial statements.

OpinionIn 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 July2006 and of the surplus of the Group for the year then ended and have been properly prepared in accordance withthe Statement of Recommended Practice on Accounting for Further and Higher Education;

(b) in all material respects income from Higher Education Funding Council for England, and from the Training andDevelopment Agency for Schools and grants and income for specific purposes and from other restricted fundsadministered by the University have been applied only for the purposes for which they were received; and

(c) in all material respects income has been applied in accordance with the University’s Statutes and Ordinances, andwhere appropriate, with the Financial Memorandum, dated October 2003 with the Higher Education FundingCouncil for England and with the funding agreement with the Training and Development Agency for Schools.

Deloitte & Touche LLPChartered Accountants and Registered AuditorsCambridge, United Kingdom11 December 2006

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

Basis of accounting The financial statements have been prepared under the historical cost convention, modified in respect of the treatmentof 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 GatesCambridge Trust and other Associated Trusts. Details of the subsidiary undertakings included are given in note 31.Intra-group transactions and balances are eliminated on consolidation.

The Gates Cambridge Trust is a separately constituted exempt charity which is accounted for as a subsidiaryundertaking of the University since the University appoints the majority of its trustees. The purposes of the GatesCambridge Trust are to support the University by enabling persons (to be known as ‘Gates Cambridge Scholars’) fromany part of the world outside the United Kingdom to benefit from education in the University by provision ofscholarships 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 generalpurposes of the University.

The Associated Trusts are similarly constituted exempt charities with purposes primarily to provide support to enablestudents ordinarily resident or domiciled in countries outside the United Kingdom to benefit from education in theUniversity. 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 theUniversity (‘the Colleges’), each of which is an independent corporation. Transactions with the Colleges are disclosed innote 33.

The consolidated financial statements do not include the accounts of Cambridge University Students Union or of theCambridge University Graduate Union, as these are separate bodies in which the University has no financial interestand 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 andDevelopment Agency for Schools. Recurrent grant is recognised as income in the period to which it relates.

Restricted income Income is received which is designated for restricted purposes as specified by grantors or donors, including HEFCEspecific grants, research grants and specific donations. Except for income in respect of specific endowments, restrictedincome is recognised to the extent that relevant expenditure has been incurred, and unspent restricted income isincluded in creditors.

Capital grants and donations Grants and external donations are received for the purposes of funding the acquisition and construction of tangiblefixed assets. These are credited to deferred capital grants when the related capital expenditure is incurred and releasedto income over the expected useful life of the respective assets consistent with the depreciation policy.

Academic fees Tuition fees for degree courses are charged to students by academic term. Income is recognised for academic termsfalling within the period. For short courses, fees are charged in advance for the entire course and income is recognisedto the extent that the course duration falls within the period.

Examination and assessment services Income from assessment is recognised when the assessment service has been substantially rendered. Where assessmentincludes ongoing verification, judgement is used to establish the proportion of income that may be recognised in theperiod, based upon services performed within the period as a proportion of the total services to be performed.

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

Other income Income is received from a range of activities including catering, conferences, room hire and other services rendered.Income is recognised on the exchange of the relevant goods or services.

Endowment and investment incomeAll investment income is credited to the income and expenditure account in the period in which it is earned. Income fromspecific endowments not expended in accordance with the restrictions of the endowment is transferred from the incomeand expenditure account to specific endowments.

Specific endowments Permanent endowments are not included in the income and expenditure account but are credited to specificendowments when funds are received.

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

Tangible fixed assetsLand and buildings Operational land and buildings are included in the financial statements at their 1994 valuation with subsequent additionsat cost. No depreciation is provided on freehold land or on assets in construction. Freehold buildings are written off overtheir estimated useful lives, which are between 15 and 50 years, and leasehold properties are written off over the lengthof the lease.

Equipment Equipment costing less than £10,000 per individual item is written off in the year of purchase. All other equipment iscapitalised and depreciated so that it is written off over its estimated useful life of between four and ten years, exceptwhere 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 orscientific importance. In accordance with FRS 15, all acquisitions since 1 August 1999 have been capitalised at cost or, inthe case of donated assets, at valuation on receipt. In line with the general fixed assets accounting policy, the thresholdfor capitalising assets is £10,000. Heritage assets are not depreciated since their long economic life and high residualvalue 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 fairvalue of its assets at the date of acquisition. Goodwill is amortised over its estimated economic life of between five andten years on a straight line basis, being its estimated useful economic life. Where there is impairment in the carryingvalue of goodwill, the loss is included in the results of the period.

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

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

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

Pension costsThe University contributes to a number of defined benefit pension schemes and accounts for the costs in relation tothese 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 reasonableand consistent basis, it accounts as if the scheme were a defined contribution scheme, so that the cost is equal to thetotal of contributions payable in the year.

For other defined benefit schemes, the assets of each scheme are measured at fair value, and the liabilities aremeasured on an actuarial basis using the projected unit method and discounted at an appropriate rate of return. TheUniversity’s share of the surplus or deficit of the scheme is recognised as an asset or liability on the balance sheet. Thecurrent service cost, being the actuarially determined present value of the pension benefits earned by employees in thecurrent period, and the past service cost are included within staff costs. Endowment and investment income includesthe net of the expected return on assets, being the actuarial forecast of total return on the assets of the scheme, andthe interest cost being the notional interest cost arising from unwinding the discount on the scheme liabilities. Allchanges in the pension surplus or deficit due to changes in actuarial assumptions or differences between actuarialforecasts and the actual out-turn are reported in the statement of total recognised gains and losses.

IncomeFunding 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

ExpenditureStaff costs Other operating expenses Depreciation Interest payable

Total expenditure

Surplus/(deficit) on continuing operations before exceptionalitems

Exceptional items: gain on sale of tangible fixed assets

Surplus on continuing operations after exceptional items

Minority interests in results of subsidiary undertakings

Surplus on continuing operations after minority interest

Transfer to accumulated income within specific endowments

Surplus for the year retained within general reserves

Consolidated income and expenditure account for the year ended 31 July 2006

Note

Year ended31 July 2005

Restated £m


£m

1234567

8, 9999

9

10, 11

24

25

178.1 59.0

203.9 169.5141.8 90.947.5

890.7

407.6430.743.7 0.4

882.4

8.3

6.5

14.8

0.7

15.5

(3.4)

12.1

162.356.0

188.7161.1125.585.840.5

819.9

382.0399.140.70.8

822.6

(2.7)

9.4

6.7

0.7

7.4

(2.2)

5.2

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

No consolidated statement of historical cost surpluses and deficits is presented as explained in the statement ofprincipal accounting policies.

36

37

Statement of total recognised gains and losses for the year ended 31 July 2006

Surplus on income and expenditure account

Increase in market value of investmentsEndowments Reserves

New endowment capital

Gain arising on foreign currency translation

Actuarial loss

Total recognised gains relating to the year

Prior year adjustments:

Endowments Reserves

Total gains since the last annual report

ReconciliationOpening reserves and endowments as previously stated

Total gains since the last annual report

Closing reserves and endowments(excluding minority interests)

Note


Restated £m


£m

2425

24

25

25

1212

15.5

72.240.9

23.4

0.5

(11.3)

141.2

(8.6)103.5

94.9

236.1

1,498.9

236.1

1,735.0

7.4

88.953.4

13.7

0.2

(5.7)

157.9

(7.4)86.9

79.5

237.4

1,356.4

237.4

1,593.8

38

Balance sheet as at 31 July 2006

Fixed assetsTangible assets Intangible assets Investments

Endowment asset investments

Current assetsStocks and work in progress Debtors Investments

University Held on behalf of others

Cash at bank and in hand

Creditors: amounts falling due within oneyear

Net current assets

Total assets less current liabilities

Creditors: amounts falling due after morethan one year

Pension liability

Total net assets

Represented by:Deferred capital grants

EndowmentsSpecific endowments General endowments

ReservesGeneral reserves Revaluation reserve

Minority interest in subsidiary undertakings

Total

University31 July 2005

Restated £m

University31 July 2006

£m

926.46.8

242.9

1,176.1

629.9

35.2168.1

223.0178.219.1

623.6

(417.6)

206.0

2,012.0

(11.1)

(27.0)

1,973.9

436.9

622.27.7

629.9

743.7163.4

907.1-

1,973.9

881.61.1

252.6

1,135.3

546.1

34.3153.1

169.1103.718.2

478.4

(301.6)

176.8

1,858.2

(13.0)

(30.0)

1,815.2

410.3

539.26.9

546.1

689.4169.4

858.8-

1,815.2

Note

Group31 July 2005

Restated £m

Group31 July 2006

£m

131415

16

1718

1919

20

21

22

23

2424

24

2525

25

930.88.0

320.9

1,259.7

804.1

38.5175.4

263.05.3

27.7

509.9

(272.5)

237.4

2,301.2

(3.2)

(127.0)

2,171.0

436.9

796.47.7

804.1

767.5163.4

930.9(0.9)

2,171.0

886.34.3

320.2

1,210.8

705.1

36.1162.9

207.55.3

23.8

435.6

(228.9)

206.7

2,122.6

(4.1)

(115.0)

2,003.5

410.3

698.26.9

705.1

719.3169.4

888.7(0.6)

2,003.5

The financial statements on pages 25 to 58 were approved by the Council on 11 December 2006 and signed on itsbehalf by:

Professor Alison Richard Professor William Brown Andrew ReidVice-Chancellor Member of Council Director of Finance

39

Year ended Year ended31 July 2006 31 July 2005

RestatedNote £m £m

Net cash inflow / (outflow) from operating activities 26 6.6 (37.0)

Returns on investments and servicing of finance 27 46.2 41.2

Capital expenditure and financial investment 27 (40.1) 20.0

Cash inflow before use of liquid resources and financing 12.7 24.2

Management of liquid resources:Increase in short-term deposits (1.5) (5.3)

Financing 27 (0.5) 0.5

Increase in cash in the year 10.7 19.4

Reconciliation of net cash flow to movement in net funds

Increase in cash 10.7 19.4

Cash outflow from liquid resources 1.5 5.3

Movement in net funds in the year 12.2 24.7

Net funds at 1 August 62.5 37.8

Net funds at 31 July 28 74.7 62.5

Consolidated cash flow statement for the year ended 31 July 2006

40

2006 2005£m £m

1 Funding Council and Training and Development Agency grants

Higher Education Funding Council for England (HEFCE)Recurrent grant 147.3 142.2Specific grants 20.3 10.9Deferred capital grant released in year (note 23)

Equipment 4.5 4.1Buildings 2.5 1.3

HEFCE total 174.6 158.5Training and Development Agency for Schools

Recurrent grant 3.5 3.8

178.1 162.3

2 Academic fees and support grantsFull-time home students 21.5 21.2Full-time overseas students 28.9 25.7Part-time course fees 7.8 8.2Research Training Support Grants 0.8 0.9

59.0 56.0

3 Income: research grants and contractsResearch councils 89.7 78.0UK based charities 60.1 57.3Other bodies 54.1 53.4

203.9 188.7

4 Examination and assessment servicesExamination fees 155.4 146.4Other examination and assessment services 14.1 14.7

169.5 161.1

5 Publishing and printing services RestatedPublishing services 132.9 119.1Printing services 8.9 6.4

141.8 125.5

6 Other income RestatedOther services rendered 24.4 22.0Health and hospital authorities 10.8 12.2Catering 3.8 3.5AHRB museum grant 1.5 1.5University companies 9.9 8.0Released from deferred capital grants (note 23) 6.4 6.2General donations 10.9 8.8Specific donations released in the year 12.4 14.5Rental income 7.0 6.2Sundry income 3.8 2.9

90.9 85.8

Notes to the accounts

41

2006 2005£m £m

7 Endowment and investment income RestatedIncome from specific endowment asset investments 25.7 23.9Income from general endowment asset investments 0.3 0.3Other income credited to specific endowments 0.5 1.7Other investment income 21.3 14.6

47.5 40.5

8 Staff costs 2006 2005£m £m

RestatedWages and salaries 329.8 311.4Social security costs 29.4 27.7Pension costs (note 30) 48.4 42.9

407.6 382.0

Emoluments of the Vice-Chancellor 2006 2005£000 £000

Emoluments excluding employer’s pension contributions 196 190Employer’s pension contributions - -

196 190

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

Clinical Non-Clinical and Press Total TotalRestated

£ 70,000 – £ 80,000 36 41 16 93 69£ 80,001 – £ 90,000 32 32 7 71 44£ 90,001 – £100,000 22 16 6 44 20£100,001 – £110,000 7 5 6 18 20£110,001 – £120,000 9 3 5 17 14£120,001 – £130,000 6 1 1 8 12£130,001 – £140,000 9 1 1 11 8£140,001 – £150,000 7 1 1 9 6£150,001 – £160,000 1 2 1 4 4£160,001 – £170,000 5 – – 5 7£170,001 – £180,000 5 – – 5 7£180,001 – £190,000 1 1 1 3 2£190,001 – £200,000 2 – – 2 2£200,001 – £210,000 1 – – 1 1£210,001 – £220,000 – – – – –£220,001 – £230,000 – – 1 1 1£230,001 – £240,000 – – – – –£240,001 – £250,000 – – 1 1 –

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

Notes to the accounts (continued)

Education and research Assessment 20052006

42

9 Analysis of expenditure by activity OtherStaff operating Deprec- Interest 2006 2005costs expenses iation payable Total Restated

£m £m £m £m £m £mAcademic departments 140.3 25.4 7.8 - 173.5 167.2Academic services 19.6 9.6 0.7 - 29.9 26.1Payments to Colleges (see note 33) - 34.1 - - 34.1 30.1Research grants and contracts 90.6 74.1 8.3 - 173.0 162.4Other activities:

Examinations and assessment services 51.8 107.4 2.4 - 161.6 153.4Publishing and printing services 49.8 87.2 1.8 0.4 139.2 125.5Other services rendered 9.8 12.9 0.3 - 23.0 22.1University companies 1.5 5.7 - - 7.2 6.1Catering 2.0 4.4 0.1 - 6.5 6.0

Other activities total 114.9 217.6 4.6 0.4 337.5 313.1Administration and central services:

Administration 21.3 7.9 1.5 - 30.7 26.8General educational 2.6 23.5 - - 26.1 24.4Staff and student facilities 2.4 0.6 - - 3.0 3.1Development office 2.0 2.9 - - 4.9 4.1Other 2.8 1.1 - - 3.9 2.3

Administration and central services total 31.1 36.0 1.5 - 68.6 60.7Premises 11.1 33.9 20.8 - 65.8 63.0

Total per income and expenditure account 407.6 430.7 43.7 0.4 882.4 822.6

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

43.7Auditors’ remuneration 2006 2005

£000 £000Restated

Other operating expenses include:Audit fees payable to the University’s external auditors 223 188Other fees payable to the University’s external auditors 7 -Audit fees payable to other firms 119 124

These amounts include related irrecoverable VAT.

10 Surplus/(deficit) on continuing operations for the year 2006 2005£m £m

RestatedThe surplus/(deficit) on continuing operations for the year is made up as follows:

University’s surplus for the year 17.2 3.9Surplus generated by subsidiary undertakings and transferred to the University under gift aid 2.8 2.4

Surplus dealt with in the accounts of the University 20.0 6.3Group level adjustments re defined benefit schemes (0.7) (1.1)Deficit retained in subsidiary undertakings (11.0) (7.9)

8.3 (2.7)


43

11 Segmental reportingThe group consisting of the University and its subsidiary undertakings has three principal classes of activity:

Education and researchAssessment Examination and assessment services, carried out by the University of Cambridge Local

Examinations Syndicate and subsidiary undertakings, collectively known as Cambridge Assessment.

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

Income, result for the year and net assets at the year end are attributable to the three segments as follows:Segment Inter- Income

total segment from third Surplus/ Netincome income parties (deficit) assets

Year ended 31 July 2006 £m £m £m £m £mEducation and research 575.3 3.6 571.7 10.8 2,023.0Assessment 173.2 – 173.2 1.4 156.2Press 154.9 10.2 144.7 5.0 89.6

903.4 13.8 889.6 17.2 2,268.8

Unallocated re Contributory Pension Scheme 1.1 (1.7) (97.8)

Group 890.7 15.5 2,171.0

Year ended 31 July 2005Education and research 538.3 19.0 519.3 16.1 1,858.5Assessment 165.4 – 165.4 (12.1) 147.9Press 145.0 9.6 135.4 4.9 79.9

848.7 28.6 820.1 8.9 2,086.3

Unallocated re Contributory Pension Scheme (0.2) (1.5) (82.8)

Group 819.9 7.4 2,003.5

12 Prior year adjustmentsThe basis of preparation of these financial statements differs from the basis of preparation of the University’s financialstatements for the previous year. These financial statements include for the first time the income and expenditure,assets and liabilities of Cambridge University Press (CUP) a constituent part of the University, and of subsidiaryundertakings forming part of the operational group headed by CUP. Comparative figures have been restated to reflectthe revised basis of preparation. The effect of the prior year adjustments on the result for the year is as follows.

2006 2005£m £m

Surplus for the year under previous basis of preparation and accounting policies 9.8 1.8Change in basis of preparation: Inclusion of CUP 5.0 4.9

Surplus for the year as restated 14.8 6.7

The effect of these changes on opening net assets at 1 August 2005 is as follows: Group £m

Reduction in deferred capital grants (14.3)Reduction in endowments (8.6)Increase in reserves 103.5Less minority interest (0.6)

Overall effect of change in basis of preparation 80.0Opening net assets at 1 August 2005 as previously reported 1,923.5

Opening net assets at 1 August 2005 as restated 2,003.5

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


44

13 Tangible fixed assets Land and Assets in Equipment Heritage 2006 2005buildings construction assets Total Restated

Group £m £m £m £m £m £mCost or valuationAt 1 August: As previously stated 788.9 107.5 160.3 14.3 1,071.0 967.7

Prior year adjustment re CUP (note 12) 40.3 - 18.6 - 58.9 67.2

Restated opening balance 829.2 107.5 178.9 14.3 1,129.9 1,034.9Additions at cost 4.7 64.3 22.3 3.2 94.5 105.3Transfers 44.3 (44.3) - - - -Disposals (6.4) - (8.9) - (15.3) (9.1)Currency adjustments 0.7 - 0.2 - 0.9 (1.2)

At 31 July 872.5 127.5 192.5 17.5 1,210.0 1,129.9DepreciationAt 1 August: As previously stated 109.1 - 115.6 - 224.7 186.6


Restated opening balance 113.0 - 130.6 - 243.6 204.4Charge for the year 21.2 - 22.5 - 43.7 40.7Elimination on disposals (0.6) - (7.7) - (8.3) (1.2)Currency adjustments 0.1 - 0.1 - 0.2 (0.3)

At 31 July 133.7 - 145.5 - 279.2 243.6

Net book valueAt 31 July 738.8 127.5 47.0 17.5 930.8 886.3

At 1 August (restated) 716.2 107.5 48.3 14.3 886.3 830.5

UniversityCost or valuationAt 1 August: As previously stated 779.9 107.7 156.3 14.3 1,058.2 955.7


Restated opening balance 820.1 107.7 174.8 14.3 1,116.9 1,022.7Additions at cost 4.5 64.3 22.3 3.2 94.3 104.5Transfers 44.3 (44.3) - - - -Disposals (6.4) - (8.9) - (15.3) (9.1)Currency adjustments 0.7 - 0.2 - 0.9 (1.2)

At 31 July 863.2 127.7 188.4 17.5 1,196.8 1,116.9

DepreciationAt 1 August: As previously stated 104.3 - 112.2 - 216.5 178.8


Restated opening balance 108.2 - 127.1 - 235.3 196.6Charge for the year 20.9 - 22.3 - 43.2 40.1Elimination on disposals (0.6) - (7.7) - (8.3) (1.1)Currency adjustments 0.1 - 0.1 - 0.2 (0.3)

At 31 July 128.6 - 141.8 - 270.4 235.3

Net book valueAt 31 July 734.6 127.7 46.6 17.5 926.4 881.6

At 1 August 711.9 107.7 47.7 14.3 881.6 826.1

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


45

14 Intangible fixed assets: goodwill and others Group Group University University2006 2005 2006 2005£m £m £m £m

Opening balance: as previously stated 1.5 2.1 - -Prior year adjustment re CUP (note 12) 2.8 3.4 1.1 1.6

Restated opening balance 4.3 5.5 1.1 1.6Additions/(disposals) in the year 6.0 0.6 6.1 0.3Amortisation charge for the year (2.4) (1.9) (0.5) (0.9)Currency adjustments 0.1 0.1 0.1 0.1

Closing balance 8.0 4.3 6.8 1.1

15 Fixed asset investmentsOpening balance as previously stated 292.6 264.1 223.0 209.3Prior year adjustment re CUP (note 12) 27.6 23.0 29.6 25.0

Restated opening balance 320.2 287.1 252.6 234.3Additions/(disposals) in the year (31.9) (14.5) (30.6) (14.5)Increase in market value of investments 32.6 47.6 20.9 32.8

Closing balance 320.9 320.2 242.9 252.6

Represented by:Property 56.0 61.0 47.2 53.2Securities 247.4 242.4 160.7 171.4Money market investments 9.8 8.0 7.4 6.3Investments in subsidiary undertakings - - 24.3 17.2Investment in spin-out companies (see note 31) 6.6 8.2 2.4 3.1Cash in hand and at investment managers 0.8 0.3 0.7 0.2Investments in joint ventures 0.1 0.1 - -Other 0.2 0.2 0.2 1.2

320.9 320.2 242.9 252.616 Endowment asset investments

Long-term InvestmentsProperty 100.1 88.1 83.1 72.3Securities 611.1 540.9 468.7 405.8Money market investments 71.2 67.2 70.9 64.9Loan to subsidiary undertaking - - 2.4 2.4Cash in hand and at investment managers 1.7 2.9 0.8 0.6

784.1 699.1 625.9 546.0Investment in spin-out companies (see note 31) 2.2 2.4 - -Short-term deposits 15.9 2.5 2.8 -Bank balances 1.9 1.1 1.2 0.1

804.1 705.1 629.9 546.1

Included in the Group’s endowment asset investments is £164.7m (2005: £149.7m) relating to the Gates CambridgeTrust. The use of these assets is restricted to supporting the University by enabling persons from any part of theworld outside the United Kingdom to benefit from education in the University by the provision of scholarships and grantsand otherwise. The assets of the Gates Cambridge Trust are therefore not available for the general purposes of theUniversity.

17 Stocks and work in progressGoods for resale 30.1 28.2 29.0 28.8Work in progress 7.1 7.0 5.3 5.0Other stocks 1.3 0.9 0.9 0.5

38.5 36.1 35.2 34.3


46

Group Group University University2006 2005 2006 2005

£m £m £m £mRestated Restated

18 DebtorsResearch grants recoverable 59.2 57.2 59.2 57.2Amounts due from subsidiary undertakings - - 4.5 4.3Debtors re examination and assessment services 41.5 35.4 33.5 24.3Debtors re publishing and printing 44.8 29.1 46.9 31.9Other debtors 29.9 41.2 24.0 35.4

175.4 162.9 168.1 153.1

19 Current asset investmentsProperty 7.3 5.2 26.6 15.3Securities 37.6 29.2 142.6 83.5Money market investments 189.1 132.2 193.4 136.3Short-term deposits 34.3 46.2 38.6 37.7

268.3 212.8 401.2 272.8Representing:

University 263.0 207.5 223.0 169.1Held on behalf of subsidiary undertakings, related parties and other associated bodies (see note 20) 5.3 5.3 178.2 103.7

268.3 212.8 401.2 272.8

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

20 Creditors: amounts falling due within one yearBank overdraft 5.1 11.1 5.1 11.1Research grants received in advance 68.1 53.4 68.1 53.4Amounts due to subsidiary undertakings - - 0.8 -Creditors re examination and assessment services 43.6 38.0 25.5 22.7Creditors re publishing and printing 48.9 38.1 48.2 38.0Other creditors 101.5 83.0 91.7 72.7Investments held on behalf of subsidiary undertakings, related parties and other associated bodies (see note 19) 5.3 5.3 178.2 103.7

272.5 228.9 417.6 301.6

21 Creditors: amounts falling due after more than one yearAmounts due to subsidiary undertakings - - 10.6 10.6Bank loans 0.5 1.5 0.5 1.5Loan from minority interest 2.7 2.6 - 0.9

3.2 4.1 11.1 13.0


47

22 Pension liabilityThe pension liability has been measured in accordance with the requirements of FRS 17 and relates to the defined benefit schemes disclosed in note 30.Opening balance

As previously stated 85.0 72.8 - -Prior year adjustment re CUP 30.0 35.5 30.0 35.5

Restated opening balance 115.0 108.3 30.0 35.5Movement in year:

Current service cost including life assurance 21.1 17.0 6.2 5.7Contributions (19.5) (17.4) (7.2) (7.1)Other finance (income)/cost (0.9) 1.5 0.1 1.2Currency adjustments - (0.1) 0.1 (0.1)Actuarial loss/(gain) recognised in statementof total recognised gains and losses 11.3 5.7 (2.2) (5.2)

Closing balance 127.0 115.0 27.0 30.0

23 Deferred capital grantsFunding Research Other 2006 2005

Group and University Council Grants Grants Total£m £m £m £m £m

Balance 1 AugustBuildings 93.8 - 288.5 382.3 317.6Equipment 9.9 15.2 3.0 28.1 26.8Heritage assets - - 14.2 14.2 10.7

103.7 15.2 305.7 424.6 355.1

Prior year adjustment re CUP (note 12) - - (14.3) (14.3) (14.6)

Grants receivedBuildings 29.7 - 2.0 31.7 71.3Equipment 5.2 8.9 0.5 14.6 15.0Heritage assets - - 3.2 3.2 3.5

34.9 8.9 5.7 49.5 89.8Released to income and expenditure

Buildings – for depreciation (2.5) - (5.0) (7.5) (6.3)Equipment – for depreciation (4.5) (8.5) (1.4) (14.4) (13.7)Equipment – on disposals (0.8) (0.2) - (1.0) -

(7.8) (8.7) (6.4) (22.9) (20.0)Balance 31 July

Buildings 121.0 - 271.2 392.2 368.0Equipment 9.8 15.4 2.1 27.3 28.1Heritage assets - - 17.4 17.4 14.2

130.8 15.4 290.7 436.9 410.3


Group Group University University2006 2005 2006 2005

£m £m £m £m

48

24 Endowments2006 2005

Group Specific General Total Total£m £m £m £m

Balance 1 AugustAs previously stated 706.8 6.9 713.7 607.7Prior year adjustment re CUP (note 12) (8.6) - (8.6) (7.4)

Restated opening balance 698.2 6.9 705.1 600.3Permanent endowments received 23.4 - 23.4 13.7

Income receivable from endowment asset investments 25.7 0.3 26.0 24.2Donations and other income 0.2 - 0.2 1.7Expenditure (22.5) (0.3) (22.8) (23.7)

Excess of income over expenditure retained in specific endowments 3.4 - 3.4 2.2Increase in market value of investments 71.4 0.8 72.2 88.9

Balance 31 July 796.4 7.7 804.1 705.1

University 2006 2005Specific General Total Total

£m £m £m £mBalance 1 August 547.8 6.9 554.7 467.4

Prior year adjustment re CUP (note 12) (8.6) - (8.6) (7.4)

Restated opening balance 539.2 6.9 546.1 460.0Permanent endowments received 23.4 - 23.4 16.1

Income receivable from endowment asset investments 20.3 0.3 20.6 19.4Donations and other income 0.2 - 0.2 1.5Expenditure (17.0) (0.3) (17.3) (18.5)

Excess of income over expenditure retained in specific endowments 3.5 - 3.5 2.4

Increase in market value of investments 56.1 0.8 56.9 67.6

Balance 31 July 622.2 7.7 629.9 546.1

Representing: 2006 2005Specific General Total Total

£m £m £m £mTrust and Special Funds: Restated

Professorships, Readerships and Lectureships 251.1 - 251.1 208.6Scholarships and bursaries 67.6 - 67.6 60.8Other 282.4 - 282.4 253.2

Examination Board restricted funds 18.6 - 18.6 16.6General endowments - 7.7 7.7 6.9

University total 619.7 7.7 627.4 546.1Gates Cambridge Trust 164.7 - 164.7 149.7Other subsidiary undertakings 12.0 - 12.0 9.3

Group total 796.4 7.7 804.1 705.1


49

25 Reserves OperationalGroup property

General revaluation 2006 2005reserves reserve Total Total

£m £m £m £m

Balance 1 AugustAs previously stated 586.2 199.0 785.2 748.7Prior year adjustment re CUP (note 12) 103.5 - 103.5 86.9Prior year adjustment to revaluation reserve (see note 12) 29.6 (29.6) - -

Restated opening balance 719.3 169.4 888.7 835.6Surplus retained for the year 12.1 - 12.1 5.2Actuarial loss (11.3) - (11.3) (5.7)Transfer in respect of depreciation on revalued operational

properties 6.0 (6.0) - -Gain arising on foreign currency translation 0.5 - 0.5 0.2Increase in market value of investments 40.9 - 40.9 53.4

Balance 31 July 767.5 163.4 930.9 888.7

Reserves are reduced by the net pension liability in respectof defined benefit pension schemes – see note 22

Reserves before net pension liability 894.5 163.4 1,057.9 1,003.7Effect of net pension liability (127.0) - (127.0) (115.0)

Reserves balance at 31 July 767.5 163.4 930.9 888.7

University Operationalproperty

General revaluation 2006 2005reserves reserve Total Total

£m £m £m £mBalance 1 August

As previously stated 553.7 199.0 752.7 723.7Prior year adjustment re CUP (note 12) 106.1 - 106.1 87.3Prior year adjustment to revaluation reserve (see note 12) 29.6 (29.6) - -

Restated opening balance 689.4 169.4 858.8 811.0Surplus retained for the year 16.5 - 16.5 3.9Actuarial gain 2.2 - 2.2 5.2Transfer in respect of depreciation on revalued operational properties 6.0 (6.0) - -

Gain arising on foreign currency translation 0.5 - 0.5 0.2Increase in market value of investments 29.1 - 29.1 38.5

Balance 31 July 743.7 163.4 907.1 858.8


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2006 200526 Reconciliation of consolidated operating surplus/(deficit) to net cash £m £m

inflow/(outflow) from operating activities Restated

Surplus/(deficit) on continuing operations before gain on disposal of tangible fixed assets 8.3 (2.7)

Depreciation of fixed tangible assets 43.7 40.7Amortisation of goodwill 2.4 1.9Deferred capital grants released to income (21.9) (20.0)Investment income (47.5) (40.5)Interest payable 0.4 0.8Pension cost less contributions payable (see note 22) 1.6 (0.4)Currency adjustments (0.2) 0.8

(13.2) (19.4)(Increase)/decrease in stock (2.5) 0.5(Increase) in debtors (13.9) (25.1)Increase in creditors 36.2 7.0

Net cash inflow/(outflow) from operating activities 6.6 (37.0)

27 Cash flows 2006 2005£m £m

RestatedReturns on investments and servicing of finance

Endowment and investment income received 46.6 42.0Interest paid (0.4) (0.8)

Net cash inflow from returns on investments and servicing of finance 46.2 41.2

Capital expenditure and financial investmentPurchase of tangible fixed assets (94.0) (108.8)Acquisition of goodwill and other fixed intangible assets (6.0) (0.6)Donations for buildings and other deferred capital grants received 62.6 79.5Proceeds of disposal of tangible fixed assets 12.5 17.4Net (purchase)/sale of long-term investments (excluding investments

held on behalf of others) (40.0) 20.2New endowments received 24.8 12.3

Net cash (outflow)/inflow from capital expenditure and financial investment (40.1) 20.0

FinancingIssue of share capital to minority interest 0.5 -New loan from minority interest - 1.5Repayment of long-term loan (1.0) (1.0)

Net cash (outflow)/inflow from financing (0.5) 0.5


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28 Analysis of the balances of cash and bank overdraftGroup Group University University

2006 2005 2006 2005£m £m £m £m

Restated RestatedBank overdrafts (5.1) (11.1) (5.1) (11.1)Bank balances held directly by trust funds 1.9 1.1 1.2 0.1Cash at bank and in hand 27.7 23.8 19.1 18.2

24.5 13.8 15.2 7.2Add short term deposits:

Endowment asset investments 15.9 2.5 2.8 -Current asset investments (excluding those held on behalf

of related parties and other associated bodies) 34.3 46.2 38.6 37.7

Net funds 74.7 62.5 56.6 44.9

29 Capital commitments 2006 2005£m £m

Commitments contracted at 31 July 49.2 58.6

Authorised but not contracted at 31 July - -

Of the capital expenditure committed at 31 July 2006, approximately 50% (2005: 75%) will be funded by specific grants and donations.

30 Pension schemesThe two principal pension schemes for the University’s staff are the Universities Superannuation Scheme (USS) andthe Cambridge University Assistants’ Contributory Pension Scheme (CPS). Cambridge University Press operates twodefined benefit schemes for its UK staff, the Press Contributory Pension Fund (PCPF) and the Press Senior StaffPension Scheme (PSSPS). Employees covered by the schemes are contracted out of the State Second Pension. Theassets of the schemes are held in separate trustee-administered funds. The USS and the CPS are not closed, nor isthe age profile of their active membership rising significantly. The PCPF and the PSSPS have been closed to newmembers.

The schemes are defined benefit schemes which are valued every three years using the projected unit method, byprofessionally qualified actuaries, the rates of contribution payable being determined by the trustees on the adviceof the actuaries.

USSIt is not possible to identify each institution’s share of underlying assets and liabilities of the scheme, and thereforecontributions are accounted for as if it were a defined contribution scheme in accordance with FRS 17. Theassumptions and other data that have the most significant effect on the determination of the contribution levels areas follows:

Latest actuarial valuation March 2005Investment returns per annum 4.5%Salary scale increases per annum 3.9%Pension increases per annum 2.9%Market value of assets at date of last valuation £21,740mProportion of members’ accrued benefits covered by the actuarial value of the assets 77%

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


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CPSThe CPS was established under the authority of the Universities of Oxford and Cambridge Act 1923. It has been approvedby the Inland Revenue Savings, Pensions, Share Schemes under Chapter I of Part XIV of the Income & Corporation TaxesAct 1988. 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 fundingpurposes as at 31 July 2003. The results showed the actuarial value of the scheme’s assets as £215,913,000. Thesewere insufficient to cover the scheme’s past service liabilities of £233,518,000 and as a result the scheme had a deficitof £17,605,000 and was 92% funded. Based on the advice of the actuary, the University and its subsidiaryundertakings made additional lump sum contributions totalling £12,078,000 to the scheme during the year ended 31July 2004. The joint contribution rate was increased to 22.5% of pensionable pay from 1 August 2004 and to 25.7%from 1 August 2005. The results of the full valuation as at 31 July 2006 are currently awaited.

Pension costs under FRS 17For accounting purposes the scheme’s assets are measured at market value and liabilities are valued using the projectedunit 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 contributionrate set by the trustees of the scheme. Full actuarial valuations for this purpose were carried out as at 31 July 2003 and31 July 2006 by a qualified actuary. The actuary also updated the 2003 accounting valuation to 31 July 2004 and 31July 2005 for the purposes of the University’s financial statements. The principal assumptions used by the actuary were:

2006 2005 2004Discount rate 5.00% 5.75% 5.70%Inflation assumption 2.80% 3.00% 2.50%Rate of increase in salaries 3.60% 3.75% 3.50%Rate of increase in pensions in deferment 2.80% 3.00% 2.50%Rate of increase in pensions in payment 2.80% 3.00% 2.50%

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

31 July 2006 31 July 2005 31 July 2004———————— ————————— —————————Expected Expected Expectedlong term Value long term Value long term Value

rate of return £m rate of return £m rate of return £mEquities 7.50% 166.4 7.50% 192.1 8.00% 164.1Bonds (including cash) 4.70% 68.7 4.70% 27.1 5.00% 31.4Property 6.50% 41.7 6.50% 29.8 7.00% 13.3

276.8 249.0 208.8

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

2006 2005 2004Assets and liabilities at the balance sheet date £m £m £m

Total market value of scheme assets as above 276.8 249.0 208.8Present value of scheme liabilities (374.6) (331.8) (279.4)

Net pension liability (97.8) (82.8) (70.6)

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

2006 2005 2004 2003£000 £000 £000 £000

Analysis of the amount included in staff costs for the yearCurrent service cost 14.6 11.1 12.7 11.8Life assurance premium - - - -Past service cost - - - -

Total operating charge 14.6 11.1 12.7 11.8


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30 Pension schemes (continued)2006 2005 2004 2003£000 £000 £000 £000

Analysis of the amount credited to endowment and investment income for the year

Expected return on pension scheme assets 17.9 15.7 14.6 12.8Interest on pension scheme liabilities (16.8) (16.0) (13.9) (12.8)

Net return 1.1 (0.3) 0.7 -

Analysis of the amount recognised in the statement of total recognised gains and losses (STRGL)

Actual return less expected return on pension scheme assets 5.8 22.2 (1.2) (5.0)Experience gains and losses arising on the scheme liabilities (7.2) 0.2 (0.8) (1.7)Changes in assumptions underlying the present value of the scheme liabilities (12.0) (33.1) (15.4) (4.3)

Actuarial loss recognised in the STRGL (13.4) (10.7) (17.4) (11.0)These amounts are:As a percentage of scheme assets at the balance sheet date:Actual return less expected return on pension scheme assets 2.1% 8.9% (0.6%) (2.6%)

As a percentage of the present value of the scheme liabilities at the balance sheet date:Experience gains and losses arising on the scheme liabilities (1.9%) 0.1% (0.3%) 0.7%Actuarial loss recognised in the STRGL (3.6%) (3.2%) (6.2%) (4.5%)

The above results have been recognised in the consolidated balance sheet. The University is, however, unable toidentify its own share of the underlying assets and liabilities in the scheme, as distinct from that attributable tosubsidiary undertakings, on a reasonable and consistent basis. For the University itself, therefore, pension costs areaccounted for as if the CPS were a defined contribution scheme, and the University’s own balance sheet does notinclude a pension liability in respect of the CPS.

Cambridge University Press UK defined benefit schemes (PCPF and PSSPS)

Triennial valuation of the schemesFull triennial valuations of the schemes were carried out by the actuary for the trustees of the schemes for funding purposes as at 1 July 2004.

Pension costs under FRS 17For accounting purposes the schemes’ assets are measured at market value and liabilities are valued using theattained age method and discounted using the gross redemption yield for corporate AA rated bonds. The valuationsuse market-based assumptions and asset valuations, and represent current valuations. They do not impact on thejoint contribution rates set by the trustees of the schemes. Full actuarial valuations for this purpose were carried outas at 1 January 2004 by a qualified actuary. The actuary has also updated the 2004 accounting valuation to 31 July2004, 31 July 2005 and 31 July 2006 for the purposes of the University’s financial statements. The principalassumptions used by the actuary for both schemes were:

2006 2005 2004

Discount rate 5.00% 5.25% 5.50%Inflation assumption 2.50% 2.50% 2.50%Rate of increase in salaries 3.00% 3.00% 3.50%Rate of increase in pensions in deferment 3.00% 3.00% 3.00%Rate of increase in pensions in payment 3.00% 3.00% 3.00%


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30 Pension schemes (continued) Scheme assets

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

PCPF PSSPS2006 2005 2004 2006 2005 2004

£m £m £m £m £m £mProperty 9.4 7.9 - 6.2 5.2 -Equities 55.7 49.1 48.2 36.5 32.3 32.3Bonds 24.6 22.3 16.6 16.1 14.6 11.1Cash - - 0.6 0.6 0.2 0.4

89.7 79.3 65.4 59.4 52.3 43.8

The overall expected long-term rate of return on these assets was 6.25% at all three dates.

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

Assets and liabilities at the balance sheet datePCPF PSSPS

2006 2005 2004 2006 2005 2004£m £m £m £m £m £m

Total market value of scheme assets 89.7 79.3 65.4 59.4 52.3 43.8Present value of scheme liabilities 96.7 89.0 79.3 78.2 70.8 63.3

Net pension liability (7.0) (9.7) (13.9) (18.8) (18.5) (19.5)

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

PCPF PSSPS2006 2005 2006 2005

£m £m £m £mAnalysis of the amount included in staff costs for the year

Current service cost 4.5 4.0 1.1 1.1Life assurance premium - - - -Past service cost - - - -

Total operating charge 4.5 4.0 1.1 1.1

Analysis of the amount credited to/(deducted from) endowment and investment income for theyear

Expected return on pension scheme assets 4.9 3.8 3.3 2.5Interest on pension scheme liabilities (4.7) (4.1) (3.7) (3.3)

Net return 0.2 (0.3) (0.4) (0.8)


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30 Pension schemes (continued)PCPF PSSPS

2006 2005 2006 2005£m £m £m £m

Analysis of the amount recognised in the statement of total recognised gains and losses (STRGL)Actual return less expected return on pension scheme assets 5.2 9.1 3.1 6.0Experience gains and losses arising on the scheme liabilities 1.8 0.2 (2.2) (2.2)Changes in assumptions underlying the present value of the scheme liabilities (3.5) (4.0) (2.8) (4.0)

Actuarial gain / (loss) recognised in the STRGL 3.5 5.3 (1.9) (0.2)These amounts are:As a percentage of scheme assets at the balance sheet date:

Actual return less expected return on pension scheme assets 5.8% 11.5% 5.2% 11.5%

As a percentage of the present value of the scheme liabilities at the balance sheet date:

Experience gains and (losses) arising on the scheme liabilities 1.9% 0.2% (2.8%) (3.1%)Actuarial gain / (loss) recognised in the STRGL 3.6% 6.0% (2.4%) (0.3%)

The University also has a smaller number of staff in other pension schemes, including the National HealthService 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 areaccounted for in accordance with FRS 17 as applied to a defined benefit scheme and the related pensionliability is included in the consolidated balance sheet (see note 22). Further disclosures are not given as thebalances and movements are not material.

2006 2005The total pension cost for the year (see note 8) was: £m £mUSS: contributions 24.9 22.4CPS: charged to income and expenditure account 14.6 12.7PCPF: charged to income and expenditure account 4.5 4.0PSSPS: charged to income and expenditure account 1.1 1.1NHSPS: contributions 1.4 0.8CUPDBP: charged to income and expenditure account 0.6 0.6RSAEBS: charged to income and expenditure account 0.2 0.2Contributions to other pension schemes 1.1 1.1

48.4 42.9


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31 Principal subsidiary and associated undertakings and other significant investments

The following undertakings were wholly-owned subsidiary undertakings throughout the year ended 31 July 2006. Except where stated, the accounting reference date is 31 July and the undertaking is a company registered in England and Wales.

Name Notes Principal activityCambridge Manufacturing Industry Links Limited Consultancy and commercial exploitation of

intellectual propertyCambridge University Environmental Projects Limited Environmental projectsCambridge University Technical Services Limited Consultancy and commercial exploitation of

intellectual propertyChallenge Fund Trading Company Limited Providing funds to promote the transfer of research

to businessCory Enterprises Limited a Retail shopFitzwilliam Museum Enterprises Limited b Publication of fine art books and sale of museum

merchandiseLynxvale Limited Provision of construction and development servicesThe Cambridge Foundation c Fundraising

Associated Trusts cCambridge Overseas TrustCambridge Commonwealth Trust Provision of scholarships, grants and other Gates Cambridge Trust support for the education of Cambridge European Trust overseas students in the UniversityMalaysian Commonwealth Studies Centre in Cambridge

Cambridge Assessment subsidiary undertakings dCambridge Examinations Inc e 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 fCambridge Knowledge (China) Limited g Representative officeCambridge University Press (Holdings) Limited Holding companyCambridge University Press India Private Limited h PublishingCambridge University Press Japan KK i Representative officeCambridge-Hitachisoft Educational Solutions PLC j Electronic educational publishingGreenwich Medical Media Limited Medical publishingOncoweb Limited Non-tradingPrescribing Professionals Network Limited Non-trading


57

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

a Cory Enterprises Limited has an accounting reference date of 30 November for commercial reasons. The effect ofthis is not material to the consolidated accounts.

b Fitzwilliam Museum Enterprises Limited has an accounting reference date of 31 January for commercial reasons. The effect of this is not material to the consolidated accounts.

c The Cambridge Foundation and the Associated Trusts are exempt charities established by trust deeds.d Cambridge Assessment subsidiary undertakings have an accounting reference date of 30 September for

commercial reasons. For these undertakings the consolidation is based on interim financial statements to 31 July 2006.

e Cambridge Examinations Inc is a United States non-stock non-profit corporation.f Cambridge University Press subsidiary undertakings have an accounting reference date of 30 April for commercial

reasons.g Cambridge Knowledge (China) Limited is incorporated in Hong Kong.h Cambridge University Press India Private Limited is a 51% subsidiary incorporated in India and was acquired in the

year ended 31 July 2006.i Cambridge University Press Japan KK is incorporated in Japan.j The University holds 60% of the issued share capital in Cambridge-Hitachisoft Educational Solutions plc.

The University has interests in a number of spin-out companies formed to exploit intellectual property rights orinventions. These are included at valuation in fixed asset investments (see note 15) and endowment asset investments(note 16). In some cases the University’s interest amounts to 20% or more of the share capital, and these companiesare listed below. As the University does not exercise a significant influence over these investments and they are notintended to be held for the long-term, they are not accounted for as associated undertakings. Other undertakingswhere the University’s investment amounts to 20% or more are also listed below. These are not accounted for asassociated undertakings as the effect on the financial statements would not be material.

Name % interest Principal ActivityAmpika Limited 27 Commercial exploitation of intellectual propertyBluegnome Limited 22 Commercial exploitation of intellectual propertyCambridge Flow Solutions Limited 20 Commercial exploitation of intellectual propertyCambridge in America 22 FundraisingCambridge Lab-on-Chip Limited 32 Commercial exploitation of intellectual propertyCamfridge Limited 33 Commercial exploitation of intellectual propertyCoolanalgesia Limited 20 Commercial exploitation of intellectual propertyEnecsys Limited 31 Commercial exploitation of intellectual propertyGenapta Limited 22 Research and developmentMarkready Limited 33 Commercial exploitation of intellectual propertyMetalysis Limited 23 Commercial exploitation of intellectual propertyMicrobial Technics Limited 33 Commercial exploitation of intellectual propertyPsynova Limited 45 Commercial exploitation of intellectual propertySmart Holograms Limited 58 Commercial exploitation of intellectual propertyThe CRISP Consortium Limited 21 Commercial exploitation of intellectual propertyVivamer Limited 22 Commercial exploitation of intellectual property

In addition, the University is one of two equal members of Cambridge-MIT Institute Limited (CMI), a joint venturecompany limited by guarantee whose principal activity is the support of research and educational programmes. At 31 July 2006 and 2005 CMI had nil net assets. In the year ended 31 July 2006 it funded expenditure of £12.5m (2005:£17.1m) and its profit after tax was nil (2005: nil). During the year CMI reimbursed the University £6.7m (2005: £9.5m)for expenditure incurred on projects. As at 31 July 2006 the University was owed £1.5m (2005: £1.7m) by CMI.

32 Related party transactionsIn accordance with FRS 8 the University is not required to disclose the transactions and balances between its groupundertakings, which have been eliminated on consolidation.


58

33 CollegesThere are 30 Colleges and one Approved Society (the Colleges) each of which is an independent corporation with itsown property and income. The individual audited accounts of the Colleges, in a form specified by the University, arepublished 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 £34.1m (2005: £30.1m). These payments are included as ‘Payments to Colleges’ in note 9above. The University also made payments in respect of the College fees of postgraduate students totalling £2.2m(2005: £2.2m). These payments are included in other operating expenses.

The Cambridge Foundation distributed third party donations to the Colleges totalling £6.3m (2005: £2.8m). Thepayments 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 paida total of £3.6m (2005: £3.0m), and the Colleges provided accommodation, catering and other services to theUniversity for which the University paid a total of £4.7m (2005: £5.6m).

During the year the Colleges made donations to the University totalling £4.0m (2005: £2.0m) of which £2.0m (2005: £nil) was credited to specific endowments.

Colleges Fund 2006 2005£000 £000

Balance at 1 August 58 30Contributions received from Colleges 2,835 2,618Interest earned 30 30Payments to Colleges (2,883) (2,620)

Balance at 31 July included in creditors 40 58

The Colleges Fund is administered by the University on behalf of the Colleges, who make all contributions to andreceive all allocations from the Fund. The transactions on the Colleges Fund are not included in the income andexpenditure account.

34 DfES/HEFCE Access funds 2006 2005£000 £000

Access to Learning Fund allocation 573 575Interest earned 6 9

579 584Disbursed to students (579) (584)

Balance unspent at 31 July - -

Access to Learning Fund grants are available for students: the University acts only as agent. The grants and relateddisbursements are therefore excluded from the income and expenditure account.

35 TDA grants for Minority Ethnic Recruitment 2006 2005£000 £000

TDA grants 22 16Disbursed to students (22) (16)

Balance unspent at 31 July - -


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Contacts

Information for journalists Office of Communications Tel: +44 (0)1223 332300 Fax: +44 (0)1223 330262 Email: [email protected]

Information on the 800th Anniversary Campaign Development Office Tel: +44 (0)1223 332288Fax: +44 (0)1223 764476 Email: [email protected]

Cambridge in America Tel: +1 212 984 0960Fax: +1 212 984 0970Email: [email protected]

The first Cambridge 800th Anniversary Campaign Report 2005–2006 has been published. If you would like a copy pleasecontact the Development Office. For all other enquiries please contact the Office of Communications.

Produced by Communications Services, University of Cambridge Designed by www.cambridgedesignstudio.orgPhotography by Steve Forrest/Insight Visual p1; Nigel Luckhurst, pp2, 3 (top), 4 (top), 7 (bottom), 14 (bottom), and cover;Keith Heppell, pp3 (bottom), 5, 6 (bottom), 8, 9 (bottom) and cover; Philip Mynott, p4 (bottom) and cover; Perry Hastings,pp7 (top), 9 (top), 11 (bottom) and cover; Mark Mniszko, pp10, 12 (bottom); Don Pollard, p12 (top) and cover; The FitzwilliamMuseum, p11 (top); Jamie Marland, p14 (top), Cambridge Newspapers Ltd, p6 (top)Printed by Cambridge Printing, the printing business of Cambridge University Press Printed on 100 per cent recycled paper

This information is available in other accessible formats upon request. Email: [email protected] Tel: +44 (0)1223 339397

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Reports and Financial Statements - 2006

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