Annual Reports and Financial Statements: Brief overview

Brief overview for the year ended 31 July 2023

Vice-Chancellor’s statement

As I write, I have been Vice-Chancellor for four months, and here in Cambridge for almost seven. I am grateful for the warm welcome I have received, and for the effort shown to inform me of the issues, opportunities and challenges we are facing.

I am inspired by this University on a daily basis. Individuals are doing extraordinary work in every nook and cranny of the collegiate University. The excellence of this work has been recognised by Cambridge’s top scores in this year’s Teaching Excellence Framework and Knowledge Exchange Framework, as well as placing in the top three in the most recent Research Excellence Framework.

The collegiate University is built on partnerships – not only with and among Cambridge’s constituent Colleges, but also with government, industry, and charities throughout the United Kingdom and the world. For example, we are currently partnering locally to build two new hospitals, working to define Greater Cambridge’s innovation strategy and engaging with development plans for our city, county and region.

Nationally, the University contributes around £30bn a year to the UK economy, a colossal value which reflects the brilliant work carried out here every day. And every day, here in Cambridge, our research is leading the response to the biggest challenges facing our planet: around climate and sustainability, AI, and cancer, for example.

Our financial strategy is to drive the maximum resources into those things that matter most – our research, teaching and learning excellence, innovation and our wider impact agenda – and ensure that Cambridge has enough resources to maintain its position as a world-leading university. We are stewards of this University and want to hand on to the next generation an institution which is even stronger than the one we inherited. This, of course, involves making choices. And we all have a part to play in how we use our resources.

The excellence of this University begins and ends with its people – the students and staff who make Cambridge what it is. The past several years have been difficult for people at this University, and we recognise the need to address the impacts of the rising cost of living in a financially sustainable way.

In addition, we are looking hard at our estate – our buildings. We have hundreds of buildings across Cambridge and beyond, many of them outdated and dilapidated. As energy prices have risen, we must look at what buildings we need for the future. We can make financial savings and carbon savings here, and gain some additional income too.

We are also looking hard at our processes – looking at how we can do things better, improving how we work as a team. Examples include procurement, human resources, finance and research, all of which are the focus of major transformation programmes.

For centuries, the University of Cambridge has attracted the very best minds and provided them with an environment in which they could do their best work. That remains our aspiration and commitment going forward.

Professor Deborah Prentice
Vice-Chancellor

About the University

The mission of the University of Cambridge is to contribute to society through the pursuit of education, learning and research at the highest international levels of excellence.

The University retained its number two spot in the 2024 QS World University Rankings and remains the highest-rated higher education institution in the UK. Cambridge was awarded a gold rating in the Teaching Excellence Framework (TEF) 2023 published by the Office for Students (OfS).

The University attracts some of the most able students to undergraduate and postgraduate programmes, renowned for intense learning in small groups. Its graduates are highly sought after for leading roles in industry, academia and government. The University is home to around 13,000 undergraduate and 12,000 post-graduate students.

Cambridge has generated headlines around the globe as it makes key advances in diverse research fields. These include discovering the world’s oldest DNA – breaking the record by one million years and unlocking a new chapter in the history of evolution – to creating a model of a human embryo to help understand why and how pregnancies fail.

A report by London Economics found the University contributes nearly £30bn annually to the UK economy and supports more than 86,000 jobs across the UK, including 52,000 in the East of England. It was calculated that for every £1 the University spends, it creates £11.70 of economic impact and for every £1m of publicly funded research income the University receives, it generates £12.65m in economic impact across the UK.

The 2023 Global Innovation Index (GII) – which evaluates the top-level innovative capacity of countries and economies, and identifies local concentrations of world-leading activity – has named Cambridge as the number one science and technological cluster by intensity, in relation to its size, unchanged from the 2022 Index.

The University sits at the heart of the ‘Cambridge cluster’, powering world-leading research, driving a thriving ecosystem of hundreds of spinout and start-up companies, and nurturing an environment for business services and investment.

Cambridge University Press & Assessment publishes thousands of books, hundreds of journals, and through its examinations, issues more than 11 million grades worldwide each year. The Press & Assessment serves more than 100 million learners in 170 countries.

Public benefit

The University is an exempt charity subject to regulation, with effect from 1 April 2018, by the Office for Students under the Higher Education and Research Act 2017.

The University reports annually on the ways in which it has delivered charitable purposes for the public benefit.

Highlights for the year are included as a separate pdf document at https://www.admin.cam.ac.uk/reporter/2023-24/weekly/6731/brief-overview2023.pdf.

The Council, in reviewing the University’s activities in this regard, has taken into account the Charity Commission’s guidance on public benefit. The Council is satisfied that the activities of the University, as described in this Report and Financial Statements, fully meet the public benefit requirements of advancement of education, research and dissemination of knowledge.

Environmental sustainability

The University is delivering a broad programme of work to improve its environmental sustainability performance.

Work continues to reduce the University’s energy use and deliver against its commitment to reduce energy‑related emissions from the operational estate1 to zero by 2048 at the latest. Over the past year, the University has been exploring options for removing gas from two of its key sites, as well as working with Cambridge City Council to assess the feasibility of a city centre heat network. A programme of work has also commenced to enable the University to make more efficient use of its existing space, and identify opportunities to reduce carbon, as well as improve biodiversity and climate resilience, across the estate.

In July, the University received planning permission to build a solar farm and, this year, the Chris Abell Day Nursery was certified as BREEAM Excellent, and the Entopia building won awards2 for its environmental sustainability performance.

The University has now completed a high-level screening assessment under the Greenhouse Gas Protocol across its scope 3 carbon emissions, estimating the magnitude of each major category of scope 3 emissions as relevant to our organisation.3 This is providing early insights into our priorities for further work and will inform the further development of a prioritised action plan, which, with time, will look to address emissions sources, including the University’s supply chain and staff and student travel.

In relation to transport, this year, the University has been developing a broader range of options for staff and students to utilise sustainable and active transport across the city and between sites, including a new route and revised timetable for the Universal bus service, operating with electric buses.

Work has also continued to deliver against the commitments set out in the University’s Biodiversity Action Plan and this year the University became a signatory of the Nature Positive Universities initiative,4 as part of its journey to address the wider impacts it has on nature and biodiversity.

In February 2022, the University Council asked the Environmental Sustainability Strategy Committee to oversee the development of a new Sustainability Strategy, which would be broader in scope than the existing University’s Environmental Visions, Policy and Strategy. Following extensive stakeholder engagement, the University has developed a draft Strategic Framework for Sustainability, which will be a foundation for the new Sustainability Strategy.

University staff and students continue to play a key role in supporting delivery against the University’s environmental sustainability commitments, and, this year, their achievements were celebrated at the University’s inaugural sustainability showcase event.5

Shown below are energy-related (total scope 1 and 2) emissions from the University’s operational estate in 2022–23 and previous years. To date, the University remains on track to meeting its commitment to reduce energy-related emissions from its operational estate to absolute zero by 2048. The University reports its environmental sustainability performance in full in an annual environmental sustainability report. The 2022–23 report will be available in early 2024 and selected environmental performance measures for the year ended 31 July 2023 for the operational estate will be subject to independent limited assurance.

Total Scope 1 and 2 emissions for the University’s operational estate (tCO2e per year):^†

	2022–23	2021–22	2020–21	2019–20	Baseline (2015–16)
Total Scope 1 and 2 Location-based carbon emissions (energy and fuel)	50,690	49,124	55,106	53,931	74,828
Total Scope 1 and 2 Market-based carbon emissions (energy and fuel use)	23,229	24,766	27,695*	24,136*	**
Total nuclear waste generated (tonnes/year)***	0.794	0.783	0.732	0.769	–

†For details on how the emissions figures were calculated see the Methodology Statement available at https://www.environment.admin.cam.ac.uk/Annual-Report.

*Market-based emissions figures for 2019–20 and 2020–21 have changed from those reported last year, following an amendment to the calculation methodology, in line with best practice defined under the Greenhouse Gas Protocol.

**Reporting of market-based carbon emissions started from 2019–20, after securing the first Power Purchase Agreement (PPA) in 2019.

***The University’s long-term strategy for its procured electricity is to incrementally increase the proportion that is being sourced from renewable sources via PPAs. As an interim step towards zero carbon energy sources, the proportion of the University’s procured electricity that is currently not sourced via a PPA is generated through nuclear power. In the interests of transparency, the amount of nuclear waste generated as a result of the University’s use of nuclear power (since market-based emissions reporting started in 2019–20) has been calculated. Conversion factors from https://www.edfenergy.com/fuel-mix.

The Press & Assessment is a signatory of UN Global Compact the world’s largest corporate sustainability programme that helps organisation’s align strategies and operations with Ten Principles on human rights, labour, the environment and anti-corruption. It communicates its progress on sustainability via the UN Global Compact website at https://cambunipress.prod.acquia-sites.com/people-and-planet/united-nations-global-compact.

Financial highlights

The University’s audited financial statements for the year ended 31 July 2023 are included in the next section of this Reporter issue, p. 298 to p. 385. The following analyses, extracted from those financial statements and the accompanying financial review, summarise the University’s sources of income, surplus for the year and the factors affecting net assets.

Group income

The Group’s income has increased by £280m (up 13%) compared to the prior year, due primarily to a continued strong performance from Cambridge University Press & Assessment, where revenues are up 15%, and increased income from donations and endowments, up £80m to £132m.

Group net assets

The Group’s net assets totalled £7,168m at 31 July 2023 (2022: £6,693m). The increase in net assets substantially reflects actuarial gains of £286m on the Group’s defined benefit pension schemes, combined with non-cash credit adjustments of £75m relating to the USS pension scheme deficit recovery provision and £85m relating to the fair value revaluation of the Group’s CPI-linked bond.

Cash and cash equivalents (excluding cash held in the CUEF) decreased from £553m to £399m in the year, primarily as a result of operating cash inflows of £26m, and cash outflow of £227m from investing activities relating primarily to the acquisition of fixed assets, CUEF investment activity, and investments of £150m into the Cambridge Multi Asset Fund (CMAF).

Group surplus for the year

The Group generated a surplus for the year of £199m. After adjusting for the fair value revaluation the CPI index linked Bond, change in USS pension deficit recovery provision, donations, endowments and capital grant income, and the CUEF income on a distribution basis, the underlying ‘adjusted operating deficit’ was £9m. The University considers this to be the best measure of underlying recurrent operating performance. The consolidated Group has recorded a small adjusted operating deficit this year following a surplus of £25m in 2021–22.