The year in review

Compared with the previous year, income to the University rose by 13.0%, from £764 million to £863 million, as follows:

Research grants and contracts continue to be the largest single source of income to the University and increased by 19.6% to £341 million, most of which is matched by related expenditure.

Grants from the Higher Education Funding Council for England (HEFCE) represent the second largest source of University income and amounted to £195 million, up by 4.8%.

Academic fees and support grants amounted to £123 million, up by 10.8%, with growth in executive education fees and a further cohort of UK/EU undergraduate fees based on the new higher level.

The 20.1% increase in other operating income to £167 million was driven principally by increased donations, foreign exchange gains and by other services rendered, including expansion in educational and medical services.

Endowment and investment income, at £37 million, decreased by 13.9% compared to the previous year. This reduction was due to interest receivable falling over the period as a result of lower bank interest rates and lower profits from the realisation of investments in spinout companies. These falls were partly offset by additional income from the introduction of total return accounting for endowments.

The University’s expenditure of £852 million rose by 13.8%, and includes staff costs of £438 million which increased 8.7% compared to 2007/8. This resulted from the annual negotiated pay settlement, extra staff for research activities, which were matched by related income, and the expansion of academic activities and related support.

Other operating expenses amounted to £146 million, an increase of 25.9%. Major factors explaining the increase include increased bursary and scholarship costs and non-capital costs relating to the refurbishment of the Ashmolean Museum and initial feasibility studies for the Mathematics Building and Radcliffe Observatory Quarter. 

In the autumn of 2008, a number of Icelandic banks went into administration, including three with which the University held deposits. The University has £29 million of fixed-term deposits with these banks, and debtors include a further £3.6 million of accrued interest in relation to these deposits. The University is working together with other affected public bodies and with HEFCE to recover these amounts. The current situation regarding recovery of the sums deposited varies between institutions. The University has included an impairment provision of £15 million in the 2008/9 financial statements.

The net cash outflow, before use of liquid resources and financing for the year, was £52.4 million and compares with an inflow of £39 million in the previous year. The net cash outflow is largely due to higher capital expenditure and a switch from current asset investments to fixed asset investments.

The balance sheet shows a small increase in net assets of 2.3%, from £1,578 million to £1,614 million. Tangible fixed asset cost (including heritage assets) increased by £285 million, reflecting the continued building programme to support the University’s expanding research base. Significant capital expenditure was incurred on a number of projects in 2008/9, including the new Earth Sciences Building, the Ashmolean Museum, the new book storage facility at Swindon and the completion of the Biomedical Sciences Building.

Endowment funds decreased in total value from £653 million to £585 million due to weak equity markets. New funds invested during the year amounted to £22 million.

Prior year figures have been restated to reflect the introduction of total return accounting for endowments