Reports and Financial statements 2009 - the University Offices ...
Reports and Financial statements 2009 - the University Offices ...
Reports and Financial statements 2009 - the University Offices ...
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<strong>Financial</strong> Review<br />
Capital expenditure programme<br />
The <strong>University</strong> group continued to invest in its physical facilities over 2008–09, although<br />
expenditure in <strong>the</strong> year was slightly lower than in recent years.Total capital expenditure was<br />
£85m, of which £63m was in respect of <strong>the</strong> <strong>University</strong>’s academic activities. During <strong>the</strong> year<br />
<strong>the</strong> Alan Reece Building for <strong>the</strong> Institute for Manufacturing was completed, <strong>and</strong> <strong>the</strong>re was<br />
major expenditure on <strong>the</strong> Hauser Forum at West Cambridge, <strong>the</strong> Kavli Institute of Cosmology,<br />
<strong>the</strong> new Sainsbury Laboratory for plant sciences, <strong>and</strong> on <strong>the</strong> <strong>University</strong> Library. Cambridge<br />
Assessment continued to invest in its information technology systems.<br />
New works in progress include a new building for Materials Science <strong>and</strong> Metallurgy at West<br />
Cambridge, <strong>and</strong> at 7 West Road on <strong>the</strong> Sidgwick Avenue Site which will bring toge<strong>the</strong>r seven<br />
different institutions of <strong>the</strong> School of <strong>the</strong> Humanities <strong>and</strong> Social Sciences. Both <strong>the</strong>se projects<br />
will be funded by <strong>the</strong> HEFCE Capital Investment Framework funding stream.<br />
The majority of capital expenditure for academic activities is funded by external sources:<br />
Funding Council capital grants, donations for buildings, <strong>and</strong> equipment costs funded by<br />
research grants.<br />
The <strong>University</strong> continues to review options for <strong>the</strong> renewal of <strong>the</strong> central sites, notably <strong>the</strong><br />
Old Press Site <strong>and</strong> <strong>the</strong> New Museums Site.<br />
Endowment <strong>and</strong> investment performance<br />
The <strong>University</strong> group’s investment assets are significant. Although investment income provides<br />
only a small percentage of <strong>the</strong> operating budget of <strong>the</strong> <strong>University</strong>’s academic<br />
activities, it supports posts <strong>and</strong> activities <strong>and</strong> gives important financial assistance to students.<br />
The investment assets, analysed <strong>and</strong> disclosed in <strong>the</strong> financial <strong>statements</strong> according to <strong>the</strong><br />
various purposes for which <strong>the</strong>y are held, are managed in three principal pools.<br />
(i) Cambridge <strong>University</strong> Endowment Fund (CUEF)<br />
The majority of fixed asset investments <strong>and</strong> endowment assets are invested in <strong>the</strong> CUEF.<br />
As at 31 July <strong>2009</strong> <strong>the</strong> CUEF had a market value of £956m (2008: £907m), which includes net<br />
new funds invested during <strong>the</strong> period of £136m, including fur<strong>the</strong>r investment<br />
of £100m of <strong>the</strong> <strong>University</strong>’s general reserves. Since 2004 <strong>the</strong> CUEF has been managed<br />
on a total return basis, such that <strong>the</strong> amount distributed for budgetary expenditure is<br />
determined by a formula based on underlying capital values combined with factors which<br />
smooth <strong>the</strong> rate of spending changes from year to year, allowing a degree of certainty for<br />
planning purposes.<br />
The performance of <strong>the</strong> CUEF is measured to a 30 June year-end in order to utilize more<br />
accurate valuation <strong>and</strong> benchmark information <strong>and</strong> to allow comparisons with similar<br />
endowment investment funds.The investment performance of <strong>the</strong> CUEF was –11.1% over<br />
<strong>the</strong> twelve months to 30 June <strong>2009</strong>.The difficult investment environment experienced over<br />
<strong>the</strong> previous year persisted as illustrated by <strong>the</strong> equity benchmark indices FTSE<br />
All-Share (–20.5%) <strong>and</strong> MSCI All Country World (–14.5%).The CUEF performance was<br />
satisfactory in such circumstances <strong>and</strong> ahead of its historical WM Charities benchmark.<br />
Performance has recovered since <strong>the</strong> year-end in line with improvements in investment<br />
markets.<br />
The <strong>University</strong>’s Investment Office, overseen <strong>and</strong> advised by <strong>the</strong> Investment Board, manages<br />
<strong>the</strong> CUEF. In response to <strong>the</strong> exceptional conditions <strong>and</strong> volatility in investment markets<br />
<strong>Reports</strong> <strong>and</strong> <strong>Financial</strong> Statements 61