‘The objects of the College are to advancelearning, knowledge and professionalcompetence particularly in the field offine arts, in the principles and practice ofart and design in their relation to industrialand commercial processes and socialdevelopments and other subjects relatingthereto through teaching, research andcollaboration with industry and commerce.’

Charter of Incorporation of theRoyal College of Art, 28 July 1967

Visitor:His Royal Highness The Prince PhilipDuke of Edinburgh

Provost:Sir Terence Conran

Pro-Provost and Chairmanof the Council:Sir Neil Cossons

Rector and Vice-Provost:Professor Sir Christopher Frayling

Editor:Alison Sedgwick

Design:Happily Ever Afterwww.happily-ever-after.co.uk

Printed by:Balding + MansellPrinted on Artic Gloss and Artic Volume.FSC Certified, mixed sources from wellmanaged forests and other controlledsources.

Website:www.rca.ac.uk

Contents

Rector’s Introduction 2Treasurer’s Report for the Year Ended 31 July 2007 3Corporate Governance Statement 4Council and Committee Members and Senior Officers and Advisors 6Independent Auditors’ Report to the Council of the Royal College of Art 7Consolidated Income and Expenditure Account 8Balance Sheet as at 31 July 2007 10Consolidated Cash Flow Statement 11Statement of Principal Accounting Policies 12Notes to the Accounts 14

2

In years to come, when we look back on2006/7, I believe it will be seen as a pivotalyear in the history of the College.

Throughout my period as Rector, each yearhas brought new financial and operationalchallenges. No sooner have last year’sproblems been dealt with than new onestake their place – something which makesmy job so interesting and rewarding.

Addressing the College’s desperate needfor more accommodation has, however,proved a rather more persistent challengethan the others we have faced. But thesigning of a 125-year lease in March 2007on a large site opposite the Sculpturebuilding, in Battersea, was a major firststep in overcoming this particular problem.

Design work is now well underway toprovide accommodation for our Painting,Photography, Printmaking, Ceramics andGlass, and Goldsmithing, Silversmithing,Metalwork and Jewellery departments – andmuch more, including a large lecture theatreand a gallery. Work will begin on the Paintingaccommodation (Phase 1) in the summer of2008 and we hope to have completed thework, in three phases, by 2012.

To raise funds for this development,Council agreed in June 2007 to the sale ofa Francis Bacon painting Study from theHuman Body, Man Turning on the Light,which was given by the artist as rent for astudio which he occupied in the Collegefor a short period in the late 1960s. Thepainting was sold at Christie’s in October2007 for just over £8m.

I am personally leading a fundraisingcampaign for the additional money we willneed to complete the development.

Whilst the ground was being laid for thesenew developments, we were also giving

some much-needed attention to ourexisting buildings. In 2006/7 we completedthe refenestration of the Darwin Buildingat a cost of £1.8m. We also commenceda comprehensive refurbishment of theSculpture building, which will be completedin the spring of 2008, at a cost of £3.8m.

In the summer of 2007 we made asuccessful bid, in collaboration withImperial College, for £3.7m from theHigher Education Funding Council forEngland for the creation of ‘DesignLondon’. This will be a multidisciplinarycentre for design, engineering, technologyand business. We also secured a grant of£900,000 from the National Endowment forScience, Technology and the Arts (NESTA)to support the work of Design London.

Our summer show of the work ofgraduating students – The GreatExhibition 2007 – was a very special eventinvolving a large tent in KensingtonGardens which enabled us, for the firsttime, to show the work of all departmentssimultaneously. The event was generouslysponsored by the Conran Foundation.

Much has happened over the past year –the above paragraphs give just a few ofthe highlights – but, as usual, underlyingeverything has been sound financialmanagement.

Our turnover for the year was a recordlevel of just under £26m (this will rise evenhigher as the work of Design Londoncomes on stream). We ended with asurplus of £998,000 on an historical costbasis and I am pleased that there hasbeen a significant improvement in theposition of the pension scheme sincelast year.

I am very grateful to those who have beenresponsible for ensuring that we have had

another successful year. In particular Iwould like to thank warmly – our Treasurer,Oliver Stocken – who has reached the endof his term of office – and our AuditCommittee Chairman, Eric Hagman.

I am also grateful to the hard-workingstaff of the Finance Department, who arenot thanked often enough.

I commend the accounts to the Court.

Professor Sir Christopher Frayling

Rector’sIntroduction

3

Treasurer’s Report for theYear Ended 31 July 2007

Scope of the Financial StatementsThe financial statements comprise theresults of the College, the Student Fundand the Development Fund (charitablesubsidiary). The College also has twodormant subsidiary companies, RCADesign Group Ltd and Lion & UnicornPress Ltd. The College set up an exemptcharity, the RCA Foundation, to dealwith fundraising activities, in 2000. Notransactions have been recorded by theFoundation as yet. In 2006 the College setup a limited liability partnership, FutureAcoustic LLP, with two other partners.Future Acoustic LLP was formed to developan invention by a former student of theCollege. Its accounts have not beenconsolidated into those of the College asits turnover is too small to have any materialimpact on the College’s financial position.

Results for the YearThe consolidated income and expenditureresults for the year to 31 July 2007 aresummarised as follows. The figuresincorporate the financial position of theCollege’s Retirement Benefits Scheme, asrequired by FRS 17. Because the FRS 17figures show a wide variation from yearto year the effect of these changes is tomake the operational financial performanceof the College less easy to divine from thepublished financial statements. The tablebelow shows the operational financialresults and the effect of the FRS 17adjustments for the past two years.

2006/7 2005/6£000s £000s

Income 25,495 24,090

Expenditure 26,597 24,573

Surplus/(Deficit) (1,102) (483)after Depreciation

Depreciation 1,342 1,342Charged toRevaluation Reserve

Operational Surplus 240 859

Effect of FRS 17 758 256Adjustments

Historic Cost 998 1,115Surplus (p8)

The figures show a substantial drop inthe College’s operational surplus whencompared to the exceptionally high figure

achieved in 2005-06. There are severalreasons for this. The College’s incomefrom overseas students showed a smalldrop last year, reflecting a small drop innumbers in line with the general trend inUK higher education institutions. Therewas substantially increased level ofexpenditure on the summer shows – TheGreat Exhibition 2007, which was held in atent in Hyde Park. This expenditure waspartly financed by sponsorship from theConran Foundation, but some of thecosts fell on the College’s general funds.And the College’s staff costs increased bya larger than usual amount in 2006/7 dueto the implementation of the results of theHERA job evaluation exercise.

The College’s Balance Sheet strengthenedconsiderably during the year. This is due toa large reduction in the FRS 17 deficit onthe Pension Scheme, which fell from£11.8m to £3.2m, including a one-offpast service gain of £492,000 arisingfrom some pensioners and deferredpensioners opting to change the rate ofincrease of benefits from past servicefrom 5% to RPI.

Battersea AccommodationOn 15 March 2007 the College entered intoa 125 year lease on a site opposite thecurrent Scuplture Department in HowieStreet, SW11. The site consists of variouswarehouses and commercial premises.Some of these premises are being used asdecanting space for activities displaced bythe refurbishment of the SculptureDepartment which is currently takingplace, and the rest is let to various tenantson short leases.The College plans toredevelop the site to provide purpose-builtaccommodation for fine and applied art.The development is planned to take placein three phases. The first phase, currentlycosted at approximately £4m, will consistof converting the accommodationcurrently being used for Sculpture intopainting studios, allowing enough spaceto accommodate the entire PaintingDepartment. The second phase, costingapproximately £21m, will provideaccommodation for the rest of the Schoolof Fine Art and the third phase, costingapproximately £12m, will provideaccommodation for applied art.

To raise funds for the development Councilagreed in June 2007 to the sale of a Francis

Bacon work Study from the Human Body –Man Turning on the Light which was givenby the artist to the College as rent for astudio which he occupied for a shortperiod in the 1960s. The painting was soldat Christie’s on 14 October 2007 for £8.1m.

InvestmentsThe College’s portfolio was split betweentwo managers, JP Morgan Private Bankand Ruffer Investment Management LLP,in October 2003. Following changes at JPMorgan it was agreed that investmentsmanaged by them would be moved intoiShares, which are traded funds whichtrack various stock market indices. Thischange was implemented during the year.The Finance Committee agreed a policyon asset allocation for the funds to beinvested in iShares, and Coutts & Co wererequested to invest in the various iSharesthat made up the agreed allocation. TheFinance Committee receives reports oninvestment performance at all of itsmeetings and will keep the allocationunder review.

Cash FlowThe College’s cash resources showeda fall during the year. This was due toexpenditure of approximately £1.4m on theDarwin Building Refenestration project.

Future DevelopmentsDemand for places at the Collegecontinues to outstrip the number availableby a considerable margin. However,until the Battersea development iscompleted the College does not havespace to take more students than arecurrently accommodated.

The fee increases and cost reductionsachieved by the College over the past fewyears have effected a major improvementin our underlying financial position.Nevertheless recent changes to thefunding of undergraduate study pose apotential threat to the number andquality of applications from UK studentsfor postgraduate study, and the Collegewill need to keep a careful eye ondevelopments.

The College received a grant of £245,000from the London Development Agencyto purchase additional rapid prototypingequipment during the year. This grant,which follows previous ones from the

5

the risk framework.The disaster recoveryplan includes a telephone cascade systemunder which all College staff could becontacted in an emergency. Records ofthe cascade system, and duplicatecopies of all systems and data on theCollege network, are kept off-site.

The College maintains a Register ofInterests completed by Council membersand senior managers and these declaredinterests are updated annually.The Directorof Finance ensures that any declaredinterest is brought to the attention of anyCollege committee when matters relevantto such interest are considered.

Responsibilities ofthe CouncilThe Council is responsible for theadministration and management of theaffairs of the College and is required topresent audited financial statements foreach financial year.

The Council is responsible for keeping properrecords which disclose with reasonableaccuracy at any time the financial positionof the College and enable it to ensure thatthe accounts are prepared in accordancewith the Royal Charter and the 2003Statement of Recommended Practice:Accounting for Further and HigherEducation (SORP) and other relevantaccounting standards. In addition, withinthe terms and conditions of the FinancialMemorandum agreed between HEFCE andthe Council of the College, the Council,through its designated office holder, isrequired to prepare accounts for eachfinancial year which give a true and fairview of the state of affairs of the Collegeand of the surplus or deficit for that year.

In causing the accounts to be prepared,the Council has to ensure that:• suitable accounting policies are selected

and applied consistently;• judgements and estimates are made that

are reasonable and prudent;• applicable accounting standards have

been followed, subject to any materialdepartures disclosed and explained inthe financial statements;

• the College had adequate resources tocontinue in operation for the foreseeablefuture and for this reason the financialstatements are prepared on the goingconcern basis.

The Council has taken reasonable steps to:• ensure that funds from the HEFCE are

used only for the purposes for whichthey have been given and in accordancewith Financial Memorandum with theFunding Council and any other conditionswhich the Funding Council may fromtime to time prescribe;

• ensure that there are appropriatefinancial and management controls inplace to safeguard public funds andfunds from other sources;

• safeguard the assets of the College andprevent and detect fraud;

• secure the economical, efficient andeffective management of the College’sresources and expenditure.

The key elements of the College’s systemof internal financial control, which isdesigned to discharge the responsibilitiesset out above, include the following:• clear definitions of the responsibilities

of, and the authority delegated to, headsof academic and administrativedepartments;

• a comprehensive medium and short-term planning process, supplemented bydetailed variance reporting and updatesof forecast outturns;

• clearly defined and formalisedrequirements for approval and control ofexpenditure, with investment decisionsinvolving capital or revenue expenditurebeing subject to formal detailed appraisaland review according to approval levelsset by the Council;

• comprehensive Financial Regulations,detailing financial controls andprocedures, approved by the FinanceCommittee and Council;

• a professional Internal Audit team whoseannual programme is approved by theAudit Committee.

The Audit Committee, on behalf of theCouncil, has reviewed the effectivenessof the College’s system of internal control.Any system of internal financial controlcan, however, only provide reasonable, butnot absolute, assurance against materialmisstatement or loss.

The maintenance and integrity of theRoyal College of Art website is theresponsibility of the Council; the workcarried out by the auditors does notinvolve consideration of these mattersand, accordingly, the auditors accept no

responsibility for any changes that mayhave occurred to the financial statementssince they were initially presented onthe website.

4

agency, will be used to develop ourposition as a centre for rapid prototyping,for which the College offers a bureauservice to small and medium sizedenterprises in the London area.

Payment of CreditorsThe College is fully committed to the promptpayment of its suppliers' invoices, and aimsto pay in accordance with contractualconditions, or where no such conditionsexist, within 30 days of receipt of invoice orof the goods or services concerned.

Pension SchemeThe College’s pension scheme shows adeficit of £3.2m on the FRS 17 valuation.This figure is shown on the Balance Sheet.A full actuarial valuation as at 31 July 2005showed a deficit of £8.9m (this figure isprepared on a different actuarial basis fromthat required by FRS 17 and so the figuresare not directly comparable). Council hasagreed that the College will contribute anadditional £100,000 per year to the Schemeto help recover the deficit.This raised theemployer’s contribution rate to 21.5% ofpensionable salaries with effect from 1August 2006. A new actuarial valuationof the scheme will be undertaken at 31July 2008.

Mr Julian HarrisonI regret to record that my predecessoras Treasurer, Julian Harrison, died on5 August 2007 at the age of 67. Julianserved as Treasurer for 10 years from 1991to 2001, during the period in which theCollege moved from direct funding by theDepartment of Education and took itsplace alongside other HE institutionsin the HEFCE sector. He also served asChairman of the Trustees of the College’sPension Scheme. Julian made a considerablecontribution to the College and I inheriteda sound financial position from him.

Oliver Stocken, Treasurer

Corporate GovernanceStatement

The College is a corporation formed byRoyal Charter with charitable status, so itdoes not fall within the regulation of theLondon Stock Exchange, but neverthelessthe Council is satisfied that the Collegehas, throughout the year ended 31 July2007 been in compliance with all theCode provisions set in Section 1 of theCombined Code on Corporate Governanceinsofar as they relate to Colleges.

The College also complies with the Guidefor Members of Governing Bodies ofUniversities and Colleges in England,Wales and Northern Ireland that wasissued by the Committee of UniversityChairmen in November 2004.

Summary of the Structure ofCorporate GovernanceThe Council comprises lay and academicpersons appointed under the College’sStatutes, the majority of whom are non-executive. The roles of Chairman andVice-Chairman of Council are separatedfrom the role of the College’s ChiefExecutive, the Rector. The mattersspecifically reserved to the Council fordecision are set out in the College’sStatutes. By custom and under theHEFCE Financial Memorandum, theCouncil is responsible for the College’songoing strategic direction, approvalof major developments and receivingregular reports from Executive Officerson day-to-day operations. The Councilmeets at least three times a year and hasseveral Committees, including a FinanceCommittee, an Audit Committee, a Buildingsand Estates Committee and a RemunerationCommittee. All these Committees areformally constituted with terms of referenceand comprise mainly lay members of Council.

The Planning and Resources Committeerecommends to the Finance Committeethe College’s annual revenue and capitalbudgets and monitors performance inrelation to the approved budgets. ThePlanning and Resources Committee advisesCouncil on the College’s overall objectivesand priorities and the strategies andpolicies to achieve them.The NominationsCommittee considers nominations forvacancies on Council and Committeemembership under the relevant Statute.The

Remuneration Committee determines theremuneration of the most senior staff.

The Audit Committee meets three timesannually, with the External Auditors, todiscuss audit findings and with theInternal Auditors, to consider detailedinternal audit reports and recommendationsfor the improvement of the College’ssystems of internal control, together withmanagement’s response and implementationplans. It also receives and considersreports from HEFCE as they affectthe College’s business and monitorsadherence to the regulatory requirements.Whilst senior management team membersattend meetings of the Audit Committeeas necessary, they are not members of theCommittee, and the Committee meetswith the External and Internal Auditors ontheir own for independent discussions.

The Buildings and Estates Committee isresponsible for estates planning andmaintenance issues.

Risk ManagementOn behalf of Council, the Audit Committeehas commissioned during the year theCollege’s internal auditors, ImperialCollege Internal Audit Services, to reviewthe effectiveness of the College’s systemsof internal control. The results wereconsidered by management and weresummarised for review by the AuditCommittee. The Audit Committee is alsoresponsible for the oversight of theCollege’s policies and procedures forRisk Management, in accordance withguidelines issued by HEFCE. A riskmanagement policy for the College hasbeen approved by Council, and a RiskFramework has been presented to theAudit Committee. The risk managementpolicy sets out the College’s underlyingapproach to risk management anddocuments the roles and responsibilitiesof senior managers, Council and other keyparties. During the year heads of schooland other senior officers attended theCommittee to discuss their perceptionsof the key risks facing the College andthe Audit Committee has updated therisk register accordingly.

A number of other key plans and strategieshave been drawn up, including a disasterrecovery plan and an IT security policy.These address areas of risk identified by

7

Independent Auditors’Report to the Council ofthe Royal College of ArtWe have audited the financial statementsof the Royal College of Art for the yearended 31 July 2007 which comprise theconsolidated Income and ExpenditureAccount, the Group and College BalanceSheets, the consolidated Cash FlowStatement, the consolidated Statementof Total Recognised Gains and Lossesand the related notes. These financialstatements have been prepared under thehistorical cost convention (as modified bythe revaluation of certain fixed assets)and in accordance with the accountingpolicies set out therein.

Respective Responsibilities of theCouncil and AuditorsThe Council’s responsibilities for preparingthe financial statements in accordancewith the Accounts Direction issued by theHigher Education Funding Council forEngland, the Statement of RecommendedPractice – Accounting for Further andHigher Education, applicable UnitedKingdom Law and Accounting Standards(United Kingdom Generally AcceptedAccounting Practice) are set out in theStatement of Council’s Responsibilities.

Our responsibility is to audit the financialstatements in accordance with relevantlegal and regulatory requirements, andInternational Standards on Auditing (UKand Ireland). This report, including theopinion, has been prepared for and onlyfor the Council of the College in accordancewith the Charters and Statutes of theinstitution. We do not, in giving thisopinion, accept or assume responsibility forany other purpose or to any other person towhom this report is shown or in to whosehands it may come save where expresslyagreed by our prior consent in writing.

We report to you our opinion as to whetherthe financial statements give a trueand fair view and are properly preparedin accordance with the Statement ofRecommended Practice – Accounting forFurther and Higher Education. We reportto you whether in our opinion, incomefrom funding bodies, grants and incomefor specific purposes and from otherrestricted funds administered by theCollege, have been properly applied in all

material respects for the purposes forwhich they were received, and whetherincome has been applied in all materialrespects in accordance with the College’sstatutes and where appropriate with thefinancial memorandum with the HigherEducation Funding Council for England.We also report to you if, in our opinion, theinstitution has not kept proper accountingrecords, the accounting records do notagree with the financial statements, or ifwe have not received all the informationand explanations we require for our audit.

We read the other information contained inthe Financial Statements and consider theimplications for our report if we becomeaware of any apparent misstatementswithin it.The other information comprisesonly the Treasurer’s report and thecorporate governance statement.

We also review the statement of internalcontrol included as part of the CorporateGovernance Statement and comment ifthe statement is inconsistent with ourknowledge of the institution and group. Weare not required to consider whether thestatement of internal control covers allrisks and controls, or to form an opinionon the effectiveness of the institution'scorporate governance procedures or its riskand control procedures. We consider theimplications for our report if we becomeaware of any apparent misstatements ormaterial inconsistencies with the financialstatements. Our responsibilities do notextend to any other information.

Basis of Audit OpinionWe conducted our audit in accordance withInternational Standards on Auditing (UKand Ireland) issued by the AuditingPractices Board and with the HEFCE Codeof Practice. An audit includes examination,on a test basis, of evidence relevant to theamounts and disclosures in the financialstatements. It also includes an assessmentof the significant estimates and judgementsmade by the College in the preparation ofthe financial statements, and of whetherthe accounting policies are appropriate tothe group’s circumstances, consistentlyapplied and adequately disclosed.

We planned and performed our audit so as toobtain all the information and explanationswhich we considered necessary in order toprovide us with sufficient evidence to give

reasonable assurance that the financialstatements are free from materialmisstatement, whether caused by fraudor other irregularity or error. In formingour opinion we also evaluated the overalladequacy of the presentation of informationin the financial statements.

OpinionIn our opinion:

i. The financial statements give a true andfair view of the state of affairs of theCollege and the group at 31 July 2007,and of the deficit of income overexpenditure, recognised gains andlosses and cashflows for the year thenended, and have been properly preparedin accordance with the Statement ofRecommended Practice – Accountingfor Further and Higher Education andUnited Kingdom Generally AcceptedAccounting Practice;

ii.In all material respects, incomefrom the Higher Education FundingCouncil for England, grants and incomefor specific purposes and from otherrestricted funds administered by theinstitution have been applied only for thepurposes for which they were received;

iii.In all material respects, income hasbeen applied in accordance with theCollege’s statutes and where appropriatein accordance with the financialmemorandum (2006/24) with the HigherEducation Funding Council for England.

PricewaterhouseCoopers LLPChartered Accountants and RegisteredAuditors80 Strand,London WC2R 0DW

22 November 2007

6

Council and CommitteeMembers

The following served as members ofCouncil during the year:

Ex OfficioThe Provost Sir Terence ConranThe Chairman and Pro-Provost Mr Ian Hay

Davison (retired 28 February 2007)Sir Neil Cossons (from 1 March 2007)The Rector and Vice-Provost Professor

Sir Christopher FraylingThe Treasurer Mr Oliver StockenThe Pro Rector Professor Alan CummingsThe President of the Students Union

Ms Pooja Pottenkulam

Members Appointed by the CourtMr Charles Allen-Jones (Vice-Chairman

from 8 March 2007)Professor Richard Burdett (from

1 October 2006)Sir James DysonMr Eric HagmanMrs Joanna KennedyMr David KesterMr Robin LevienMs Sarah MillerMr Sandy NairneSir Idris PearceMr Rumi Verjee

Members Appointed by the SenateProfessor Jeremy AynsleyProfessor Dan FernMs Hilary FrenchMr Peter HassellProfessor Clare JohnstonMs Martina MargettsProfessor Glynn Williams

One Student Elected by the StudentsMr Chris Eales

Co-opted MembersProfessor Peter BearmanDr David GoodMr Mark JonesMs Gail RebuckMs Auriol Stevens (Vice-Chairman –

retired 31 December 2006)Ms Rosemary Thorne

The following served as members of theother Committees directly concerned withfinancial matters:

Finance CommitteeMr Oliver Stocken, ChairmanMr Charles Allen-JonesMr Rumi VerjeeProfessor Sir Christopher FraylingMs Auriol Stevens (to 31 December 2006)Ms Rosemary Thorne (from 1 January 2007)

Audit CommitteeMr Eric Hagman, ChairmanMr Geoffrey Mitchell (to 31 July 2007)Mr David Kester (to 28 February 2007)Ms Carragh MerrickMs Sarah MillerDr David Good

Planning & Resources CommitteeProfessor Sir Christopher Frayling,

ChairmanProfessor Alan CummingsMr Garry PhilpottMr Alan SelbyMr Nick CattermoleProfessor Jeremy AynsleyProfessor Wendy DagworthyProfessor Dan FernMs Hilary FrenchMr Peter HassellProfessor Sandra KempProfessor Jeremy MyersonProfessor Martin SmithProfessor Glynn WilliamsMs Pooja Pottenkulam

Remuneration CommitteeMr Ian Hay Davison, Chairman (to 28

February 2007)Sir Neil Cossons, Chairman (from

1 March 2007)Ms Auriol Stevens (to 31 December 2006)Mr Charles Allen Jones (from 1 January

2007)Mr Oliver StockenProfessor Sir Christopher Frayling

Buildings & Estates CommitteeSir Idris Pearce, ChairmanProfessor Peter BearmanMr Robert EvansMs Joanna KennedyProfessor Sir Christopher FraylingMs Hilary French (to 31 December 2006)Professor Nigel Coates (from 1 January

2007)Mr Garry PhilpottProfessor Glynn WilliamsMr Charles Allen JonesProfessor Derek Walker (from 13 February

2007)

Senior Officers andAdvisers

Rector and Vice Provost:Professor Sir Christopher Frayling

Pro Rector and Director of AcademicDevelopment:Professor Alan Cummings

Director of Administration:Mr Garry Philpott

Registrar:Mr Alan Selby

Director of Finance:Mr Nick Cattermole

Director of Research:Professor Sandra Kemp

Head of Information & LearningServices:Mr Peter Hassell

Director of InnovationRCA:Professor Jeremy Myerson

BankersNational Westminster Bank plc, 180Brompton Square, SW3 1XJ.Coutts & Co, 40 Strand, WC2R 0QS.

SolicitorsStephenson Harwood, One St Paul’sChurchyard, EC4M 8SH.

InsurersUM Association Ltd, Woburn House,Tavistock Square, WC1H 9HW.

External AuditorsPricewaterhouseCoopers, 80 Strand,London WC2R 0DW.

Internal AuditorsImperial College Management Audit &Review, Exhibition Road, SW7 2AZ.

Investment ManagersRuffer LLP, 80 Victoria Street, SW1E 5JL

Royal London Cash Management Ltd, 55Gracechurch Street, EC3V 0UF.

8

Consolidated Income and ExpenditureAccount for theYear Ended 31 July 2007

Income

Funding Council GrantsTuition Fees and Education ContractsResearch Grants and ContractsOther Operating IncomeEndowment and Investment Income

Total Income

Expenditure

Staff CostsOther Operating ExpensesDepreciation

Total Expenditure

Deficit on continuing operations afterdepreciation of tangible fixed assetsat valuation and disposal of assets

Transfer to specific endowments

Deficit for the year retained withingeneral reserves

All activities in the Income & ExpenditureAccount are continuing. The College didnot incur any tax liability during the year.

Statement of Historical CostSurpluses and Deficits for the yearended 31 July 2007

Deficit after Depreciation ofAssets at Valuation

Difference Between the Historical CostDepreciation Charge and the ActualDepreciation Charge for the YearCalculated on the Revalued Amount

Historical Cost Surplus

Note

12345

679

8

Note

15

2006/2007£’000

14,4755,3551,2233,5721,330

25,955

11,30613,2301,763

26,299

(344)

(28)

(372)

2006/2007£’000

(344)

1,342

998

2005/2006£’000

13,7535,2771,2253,0891,171

24,515

10,80012,1671,775

24,742

(227)

78

(149)

2005/2006£’000

(227)

1,342

1,115

9

Statement of Consolidated TotalRecognised Gains and Losses For theyear ended 31 July 2007

Deficit After Depreciation of Assets atValuation and Tax

Actuarial Gain/(loss)Appreciation of Endowment Asset

InvestmentsAdjustment due to reclassification of

endowmentsEndowment Additions

Total Recognised Gains/(Losses) Relatingto the Year

Note

1914

14

14

2006/2007£’000

(344)

7,802176

–

191

7,825

2005/2006£’000

(227)

(2,242)1,043

(185)

–

(1,611)

Consolidated Cash Flow Statementfor the Year Ended 31 July 2007

Net Cash Inflow/(Outflow) from OperatingActivities

Returns on Investments and Servicing ofFinance

Capital Expenditure and FinancialInvestment

Cash Inflow Before Use of LiquidResources and Financing

Management of Liquid Resources

(Decrease)/Increase in Cash

Reconciliation of Net Cash Flow toMovement in Net Funds

(Decrease)/Increase in Cash in the PeriodCash Inflow from Liquid ResourcesMovement in Net Funds in Period

Net funds at 1 August

Net funds at 31 July

Note

20

21

22

23

2323

2006/2007£’000

(1,045)

870

(1,123)

(1,298)

714

(584)

(584)(714)

(1,298)

7,250

5,952

2005/2006£’000

(925)

746

1,848

1,669

(1,143)

526

5261,1431,669

5,581

7,250

Balance Sheetsas at 31 July 2007 Note

Fixed AssetsTangible Assets 9

Endowment Asset Investments 10

Current AssetsStockDebtors 11Short Term InvestmentsCash at Bank and in Hand

Total Current Assets

Creditors: Amounts Falling DueWithin One Year 12

Net Current Assets

Net assets excluding pension liability

Pension liability 19

Net assets including pension liability

Represented by:

Deferred Capital Grants 13

EndowmentsSpecific 14

Total Endowments

Revaluation reserve 15

General ReservesGeneral Reserves excluding

pension reservePension reserve 19

Total general reserves 16

Total

The financial statements on pages 8 to24 were approved by the Council on22 November 2007 and signed on itsbehalf by:

Consolidated2007

£’000

54,118

10,997

90582

5,021385

6,078

(2,133)

3,945

69,060

(3,200)

65,860

4,986

10,997

10,997

48,729

4,348(3,200)

1,148

65,860

Consolidated2006

£’000

53,512

10,602

89761

5,735329

6,914

(2,827)

4,087

68,201

(11,760)

56,441

3,392

10,602

10,602

50,071

4,136(11,760)

(7,624)

56,441

College2007

£’000

54,118

7,300

90582

5,021385

6,078

(2,133)

3,945

65,363

(3,200)

62,163

4,986

7,300

7,300

48,729

4,348(3,200)

1,148

62,163

College2006

£’000

53,512

7,132

89761

5,735329

6,914

(2,827)

4,087

64,731

(11,760)

52,971

3,392

7,132

7,132

50,071

4,136(11,760)

(7,624)

52,971

Professor Sir Christopher Frayling Oliver StockenRector Treasurer

1110

1312

quantities of precious metals and silverloaned by Metalor Limited for teachingpurposes.These are included in the balancesheet at the lower of cost or net realisablevalue. Where necessary, provision is madefor slow-moving and defective stocks.

11. Maintenance of PremisesThe College has a rolling maintenanceplan, which is reviewed on an annualbasis. The cost of routine and correctivemaintenance is charged to the incomeand expenditure account as incurred.

12.Taxation StatusThe College is an exempt charity within themeaning of Schedule 2 of the Charities Act1993 and as such is a charity within themeaning of Section 506(1) of the Incomeand CorporationTaxes Act 1988 (ICTA 1988).Accordingly, the College is exempt fromtaxation in respect of income or capitalgains received within categories covered bySection 505 of the ICTA 1988 or Section 256of the Taxation of Chargeable Gains Act1992 to the extent that such income or gainsare applied to exclusively charitablepurposes. The College receives no similarexemption in respect of Value Added Tax.

13. Pension SchemeThe principal pension scheme for theCollege’s staff is the Royal College of ArtRetirement Benefits Scheme. The Schemeis a defined benefit scheme which isexternally funded and contracted out ofthe State Earnings-Related PensionScheme. The Fund is valued every threeyears by actuaries using the definedaccrued benefit method, the rates ofcontribution payable being determined bythe trustees on the advice of the actuaries.Pension costs are assessed on the latestactuarial valuations of the Scheme andare accounted for on the basis of chargingthe cost of providing pensions over theperiod during which the College benefitsfrom the employees’ services.

The disclosures required by FinancialReporting Standard 17 are included in thefinancial statements. FRS 17 requires thatthe gains and losses on pension schemesand the surpluses and deficits on suchschemes be shown in the financialstatements of the sponsoring entity.

14. Foreign CurrenciesTransactions denominated in foreigncurrencies are recorded at the rate of

exchange ruling at the dates of thetransactions. Monetary assets and liabilitiesdenominated in foreign currencies areconverted into sterling at year-end rates.The resulting exchange differences aredealt with in the determination of incomeand expenditure for the financial year.

Statement of PrincipalAccounting Policies

1. Accounting ConventionThe Accounts for 2006/7 have been drawnup in accordance with the 2003 Statementof Recommended Practice: Accounting forFurther and Higher Education (SORP) andapplicable accounting standards. Thefinancial statements have been preparedunder the historical cost convention, asmodified by the revaluation of endowmentasset investments and of buildings forwhich a cost is not readily ascertainable.

2. Basis of ConsolidationThe consolidated financial statementsconsolidate the financial statements ofthe College and the Development Fund(quasi-subsidiary charity).The DevelopmentFund was established to support theactivities of the College, via the giving ofgrants and loans. The accounts of theother subsidiaries, the RCA DesignGroup Ltd, Lion & Unicorn Press Ltdand the RCA Foundation, have not beenconsolidated, as these organisations weredormant during 2006/7. The Students’Union runs its own affairs separatelyfrom the College but under its generalsupervision. Future Acoustic is an LLPin which the College is a partner withMr Andreas Raptopoulus and Mr DonHanson.The partnership is being financedby Mr Hanson to develop a product inventedby Mr Raptopoulus, a former student of theCollege. The partnership has producedaccounts as at 28 February 2007, but it hasnot been included in the College’s accountsas the figures are not material.

3. Recognition of Income andExpenditureBoth income and expenditure, includingendowments, are accounted for in theperiod when they are incurred. Incomefrom research grants and contracts andother sponsored events and projects areincluded to the extent of the expenditureincurred during the year, together with anyrelated contributions toward overheadcosts. Income from short-term depositsand Endowment Asset Investments iscredited to the Income and ExpenditureAccount in the period in which it is earned.

Income from tuition fees is recognised inthe period for which it is received andincludes all fees chargeable to studentsor their sponsors. The costs of any fees

waived by the College are included inexpenditure. Income receivable from theFunding Council is recognised in line withthe latest estimates of grants receivable foran academic year.The final grant allocationis determined in the subsequent February,following an audit of the College’s activity.

4. Skillset Grants and Access FundsDuring the years the College received£531,000 from HEFCE to support workundertaken by the National Film &Television School. The money waspassed on to the NFTS. These grants,and access Funds received for paymentto students, have not been included inthe income and expenditure account.

5. Land and BuildingsLand and buildings are stated at cost or atvaluation. Chartered Quantity Surveyorscarried out a revaluation in December 1998.Under FRS 15 the College has opted to usethe 1998 valuation as the Balance Sheetvalue, and not to make regular revaluations.

A review for impairment is conducted ifevents or changes in market conditionsindicate that the carrying amount of anyfixed asset may not be recoverable.

Where buildings are acquired with the aidof specific grants they are capitalised anddepreciated over 50 years. The relatedgrants are treated as deferred capitalgrants and released to income over theexpected useful life of the buildings.

During 2006 the College undertook thereplacement of all the windows in theDarwin Building at a cost of some £1.8m.The costs of this project have beencapitalised in the accounts and will bedepreciated over 50 years, this being areasonable estimate of the useful life ofthe new windows.

6. EquipmentEquipment, including PCs and software,costing less than £10,000 per individualitem or group of related items is expensedin the year of acquisition. All otherequipment is capitalised.

Capitalised equipment is stated at costand depreciated over its expected usefullife, as follows:Computing Equipment 3 yearsOther Equipment 5 years

Where equipment is acquired with the aidof specific grants it is capitalised anddepreciated as above. The related grantsare treated as deferred capital grantreceived in advance and released toincome over the expected useful life ofthe equipment (the period of the grant inrespect of specific research projects).

7. Leased AssetsCosts in respect of operating leases arecharged on a straight-line basis over thelease term. Leasing agreements, whichtransfer to the College substantially allthe benefits and risks of ownership ofan asset, are treated as if the asset hadbeen purchased outright. The assets areincluded in fixed assets and the capitalelements of the leasing commitments areshown as obligations under finance leases.The lease rentals are treated as consistingof capital and interest elements.

The capital element is applied in order toreduce outstanding obligations and theinterest element is charged to the incomeand expenditure account in proportion tothe reducing capital element outstanding.Assets held under finance leases aredepreciated over the shorter of the leaseterm or the useful economic lives ofequivalent owned assets.

8. Art CollectionThe College Art Collection consists mainlyof works of art acquired free of charge fromformer students and artists associated withthe College. A revaluation was carried outin October 2003 by Christie’s for insurancepurposes. Since these works of art wereacquired at nil cost they are not included inthe balance sheet. During the year Councilagreed that one item in the Collection,Francis Bacon’s Study from the HumanBody, Man Turning on the Light should besold to raise money for the Battersea NorthSite development. The work was sold atChristie’s on 14 October 2007 for £8.1m.

9. InvestmentsEndowment Asset Investments areincluded in the Balance Sheet at marketvalue. Short term investments consist ofcash balances, which are invested byRoyal London Cash Management.

10. StocksStocks include consumables in the CollegeShop, Restaurant and Senior CommonRoom. In addition the College holds

4. Other Operating Income

LettingsCatering ServicesOther Services RenderedDegree Shows IncomeOther Deferred Grants Released (note 13)Other Income

Total

5. Endowment and Investment Income

Income from Endowment AssetInvestments (Note 14)

Pension SchemeOther Interest Receivable

Total

6. Staff Costs

Contracted StaffProjects and Other Staff

Social Security CostsOther Pension Costs (Note 19)Past Service Gain (Note 19)

Total

Emoluments of the Rector– plus Pension Costs

Total

Average Full-time Equivalent StaffNumbers by Major Category:Academic Courses and ServicesPremisesCateringResearchAdministrative and Other

Total

2006/2007£’000

242565860499147

1,259

3,572

2006/2007£’000

520

460350

1,330

2006/2007£’000

8,663836

9,499813

1,486(492)

11,306

2006/2007£’000

15032

182

Number2006/2007

15730142543

269

2005/2006£’000

201540818314121

1,095

3,089

2005/2006£’000

444

425302

1,171

2005/2006£’000

7,819953

8,772732

1,296–

10,800

2005/2006£’000

as restated14631

177

Number2005/2006

15727152849

276

Notes to the Accounts for the YearEnded 31 July 2007

1. Funding Council Grants

Recurrent Grant

Specific Grants

Deferred Capital Grants Released in YearBuildings (Note 13)Equipment (Note 13)

Total

Access Funds have not been included inthe Income and Expenditure Account:(Accounting policies note 4)

Balance B/F as at 1 AugustReceived from HEFCEPayments made to Students

Balance C/F as at 31 July

Grants totalling £531,000 were receivedfrom HEFCE during the year for workundertaken by the National Film &TelevisionSchool.These grants were passed on to theNFTS, and have not been included in theCollege’s Accounts. The College receivesand administration charge for this, which isshown in the other income (Note 4).

2. Tuition Fees and Education Contracts

Full-time Home FeesOverseas FeesPart-time Home FeesOther Short Course Fees

Total

3. Research Grants and EducationContracts

Research Councils GrantsUK Based CharitiesUK Industries & Commerce

Total

2006/2007£’000

13,615

687

31142

14,475

2006/2007£’000

443

(37)

10

2006/2007£’000

2,7592,305

20091

5,355

2006/2007£’000

386278559

1,223

2005/2006£’000

12,594

939

14206

13,753

2005/2006£’000

732

(35)

4

2005/2006£’000

2,6472,369

99162

5,277

2005/2006£’000

448288489

1,225

1514

8. Analysis of 2006/7 Expenditureby Activity

Academic DepartmentsAcademic ServicesAdministrative ServicesGeneral EducationalHEFCE BursariesStudent Awards and SupportOther ServicesPremisesCateringResearch Grants and ContractsEarmarked Expenditure

Total per Income and ExpenditureAccount

The Depreciation Charge has beenfunded by:Deferred Capital Grants Released (Note 13)Revaluation Reserve Released (Note 15)General Income

Total

9. Tangible Fixed Assets(consolidated and College)

Cost/ValuationAt 1 August 2006

Additions at Cost

At 31 July 2007

DepreciationAt 1 August 2006Charge for year

At 31 July 2007

Net Book ValueAt 31 July 2007

At 1 August 2006

Staff Costs£’000

5,6431,0181,640

399––

164970331643498

11,306

Land & Buildings£’000

60,284

1,950

62,234

(7,575)(1,430)

(9,005)

53,229

52,709

Depreciation£’000

333––––––

1,430–––

1,763

3201,342

101

1,763

Equipment£’000

3,227

419

3,646

(2,424)(333)

(2,757)

889

803

OperatingExpenditure

£’000

2,374797895692

2,650616883

2,464351867641

13,230

Total£’000

63,511

2,369

65,880

(9,999)(1,763)

(11,762)

54,118

53,512

TotalExpenditure

£’000

8,3501,8152,5351,0912,650

6161,0474,864

6821,5101,139

26,299

continued...

Remuneration of Higher Paid Staff:£70,000 – £80,000£80,000 – £90,000

Remuneration of Higher Paid Staffexcludes employer’s pension contributions

7. Other Operating Expenses

Academic CoursesCentral Library & Learning ResourcesComputing & Information ServicesAdministrative ServicesRents and RatesHeat, Light, Water and PowerMinor WorksHowie Street developmentsOther Premises CostsDegree ShowsGrants to Students’ UnionScholarships, Prizes and AwardsCateringResearch Projects ExpenditureSponsored Projects/Exhibitions etcHEFCE Student BursariesHEFCE Earmarked ExpenditureOther Educational ExpensesOther Expenses

Total

Other Operating Expenses Include:

Auditors’ Remuneration:External Audit *Internal Audit

Hire of Machinery – Operating Leases

* Includes £37,000 (2005/6 – £43,000)in respect of the College

Number2006/2007

12

2006/2007£’000

2,37423915089542745326940191476480

616351867402

2,65064169245

13,230

2006/2007£’000

401310

Number2005/2006

11

2005/2006£’000

2,13524514190723140723342593633963

559352879385

2,62555167183

12,167

2005/2006£’000

44157

1716

13. Deferred Capital Grants

At 1 AugustBuildingsEquipment

Total

Grants received during the yearBuildingsEquipment

Total

Released to Income and ExpenditureBuildingsEquipment

Total

At 31 JulyBuildingsEquipment

Total

Grants received for projects which havenot yet been completed have been deferredand will be released to the Income andExpenditure Account over the life of theprojects concerned.

14.Consolidated Endowments

(All endowments are for specific purposes)Balance as at 1 AugustReclassification adjustmentAdditions (Note 22)Appreciation of Endowment Asset

InvestmentsIncome for Year (Note 5)Expenditure for Year

Balance as at 31 July

Representing:Scholarships, Awards & Prize FundsHelen Hamlyn EndowmentCollege Development FundStudent Hardship Fund (including the

Jocelyn Stevens Fund)

Total

Consolidated& College

2007 HEFCE£’000

1,372457

1,829

1,669–

1,669

(31)(142)

(173)

3,010315

3,325

2006/2007£’000

10,602–

191176

520(492)

10,997

4,6231,7973,699

878

10,997

Consolidated& College

2007 Non- HEFCE£’000

1,170393

1,563

–245

245

(4)(143)

(147)

1,166495

1,661

2005/2006£’000

9,822(185)

–1,043

444(522)

10,602

4,2932,0173,470

822

10,602

2007 Total£’000

2,542850

3,392

1,669245

1,914

(35)(285)

(320)

4,176810

4,986

2006 Total£’000

724363

1,087

1,836810

2,646

(18)(323)

(341)

2,542850

3,392

10. Endowment Asset Investments

Balance at 1 AugustAdditionsDisposalsUnrealised Appreciation (note 14)Increase/(Decrease) in Cash Balance

Balance at 31 July

Represented by:Fixed Interest Stocks (listed)Equities (listed)Cash Balances

Total

11. Debtors

Amounts Falling Due Within One Year:DebtorsPrepaymentsAccrued Income

Total

12. Creditors: Amounts Falling DueWithin One Year

Sundry CreditorsSocial Security and Other Taxation PayableAccrued ExpenditureDeferred Income – Projects and

SponsorshipsOther Deferred income

Total

Consolidated2006/2007

£’000

10,6025,901

(5,042)176

(640)

10,997

4,8315,620

546

10,997

Consolidated& College

2007£’000

25328148

582

Consolidated& College

2007£’000

494288158

870323

2,133

Consolidated2005/2006

£’000

9,8223,949

(4,448)1,043

236

10,602

4,1145,3021,186

10,602

Consolidated& College

2006£’000

50721341

761

Consolidated& College

2006£’000

516265181

1,193672

2,827

College2006/2007

£’000

7,1323,603

(2,949)38

(524)

7,300

3,6063,360

334

7,300

College2005/2006

£’000

6,9052,988

(3,341)52948

7,132

3,3213,012

799

7,132

1918

18. Capital CommitmentsThe College is currently refurbishing the Sculpture Department at Howie Street.The total cost of this project is expected to be approximately approximately £3.8m,of which £2.6m will be financed by HEFCE project capital grants, £1m by a grant fromthe Garfield Weston Foundation and the balance from College funds.

19. Pension Schemes

The following notes provide full disclosure of the College pension details under FRS 17.

The College operates a defined benefit pension scheme which is open to all staff. Thelast full actuarial valuation of the scheme, upon which the FRS 17 figures have beenbased, was at 31 July 2005. The College has contributed to the scheme at a rate of 21.5%of pensionable salaries since 1 August 2006.

At31 July 2007

%

4.25.03.25.03.25.83.2

Long-term rate ofreturn expected

at 31 July 2007

8.35.84.0

Value at31 July 2007

£’000

36,51310,4992,503

49,515

(52,715)

(3,200)

At31 July 2006

%

4.55.03.05.03.05.13.0

Long-term rate ofreturn expected

at 31 July 2006

8.35.13.8

Value at31 July 2006

£’000

32,7299,8532,516

45,098

(56,858)

(11,760)

At31 July 2005

%

4.25.02.75.02.75.02.7

Long-term rate ofreturn expected

at 31 July 2005%

8.15.03.5

Value at31 July 2005

£’000

31,3626,4182,807

40,587

(50,361)

(9,774)

The assumptions used in calculating the figures under FRS 17 are:-

Rate of increase in salariesRate of increase to pensions in payment accrued before 1 August 1998Rate of increase to pensions in payment accrued after 31 July 1998Rate of increase of deferred pensions accrued before 1 August 1998Rate of increase of deferred pensions accrued after 31 July 1998Discount rateInflation assumption

Assets and Liabilities:The assets in the scheme and the expected rate of return at 31 July2007 were:

EquitiesBondsOther

EquitiesBondsOther

Total Market Value of Assets

Present Value of Scheme liabilities

Deficit in the Scheme

15. Revaluation Reserve

ValuationAt 1 August 2006

Contributions to DepreciationAt 1 August 2006Released in Year (Note 8)

At 31 July 2007

Net Revaluation Amount

At 31 July 2007

At 1 August 2006

16. Movement on Reserves

Deficit after Depreciation of Assets atValuation

Released from Revaluation Reserve

Historical Cost Surplus

Balance b/f at 1 AugustHistoric Cost Surplus for the yearTransfer to/(from) sepcific endowmentsActuarial gain/(loss)

General reserves at 31 July

17. Lease Obligations

Operating lease commitments in respectof buildings and equipment

on lease expiring:Between One and Five YearsOver Five Years

Total

Land & Buildings£’000

57,334

(7,263)(1,342)

(8,605)

48,729

50,071

2006/2007£’000

(344)

1,342

998

(7,624)988(28)

7,802

1,148

Consolidated& College

2006/2007£’000

10516

526

2005/2006£’000

(227)

1,342

1,115

(6,575)1,115

78(2,242)

(7,624)

Consolidated& College

2005/2006£’000

84200

284

2120

20. Reconciliation of OperatingActivities

Deficit Before TaxDepreciation (Note 8)Deferred Capital Grants Released to

Income (Note 13)Investment, Endowment & Pension

Interest (Note 5)Decrease (Increase) in StocksDecrease (Increase) in DebtorsIncrease in CreditorsPension costs

Net Cash Inflow/(Outflow) fromOperating Activities

21. Returns on Investments andServicing of Finance

Income from Endowment InvestmentsOther Interest Received

Net Cash Inflow from Returns onInvestments and Servicing of Finance

22. Capital Expenditure and FinancialInvestment

Tangible Assets AcquiredEndowment Assets AcquiredReceipts from Sale of Endowment AssetsDeferred Capital Grants Received (Note 13)Endowments reclassificationEndowments Additions

Net Cash Inflow/(Outflow) from CapitalExpenditure and Financial Investment

23. Analysis of Changes in Net Funds

Endowment Asset Investments (note 10)Cash at Bank and in Hand

Total

Current Asset Investments

Changes in Net Funds

Consolidated2006/2007

£’000

(344)1,763(320)

(1,330)

(1)179

(694)(298)

(1,045)

2006/2007£’000

520350

870

2006/2007£’000

(2,369)(5,901)

5,0421,914

–191

(1,123)

At1 August 2006

£’000

1,186329

1,515

5,735

7,250

Consolidated2005/2006

£’000

(227)1,775(341)

(1,171)

(26)(113)(991)

169

(925)

2005/2006£’000

444302

746

2005/2006£’000

(1,112)(3,949)

4,4482,646(185)

–

1,848

Cashflows£’000

(640)56

(584)

(714)

(1,298)

At31 July 2007

£’000

546385

931

5,021

5,952

Analysis of amounts charged tooperating surplus:-

Current Service CostPast service gainTotal

Analysis of the amount charged/credited to other finance income:-

Interest on scheme liabilitiesExpected return on assets in the schemeNet charge/(credit) to other finance income

Total Charge to Income andExpenditure Account

Analysis of amounts recognised inthe STRGL

(Gain)/loss on assetsExperience (gain)/loss on assets(Gain)/loss on changes to assumptions

Total (gain)/loss recognised in STRGL

History of Experience Gains & Losses

(Gain)/loss on scheme assets% of scheme assets at year end

Experience (gain)/loss on scheme liabilities% of scheme liabilities at year end

Total actuarial (gain)/loss recognised in STRGL% of scheme liabilities at end of year

Reconciliation to Balance Sheet

Market value of scheme assetsActuarial value of scheme liabilities

Deficit in the scheme recognised inbalance sheet

Analysis of the movement insurplus/(deficit) during the year

(Deficit) in scheme at 1 AugustContributions paidCurrent service costPast service gainOther finance incomeActuarial gain/(loss)

Deficit in the scheme at 31 July

2006/2007£’000

1,486(492)

994

2,861(3,321)

(460)

534

2006/2007£’000

(1,191)272

(6,883)

(7,802)

2006/2007£’000

(1,191)4.41

2720.52

(7,802)14.80

31 July 2007£’000

49,515(52,715)

(3,200)

2006/2007£’000

(11,760)1,292

(1,486)492460

7,802

(3,200)

2005/2006£’000

1,296–

1,296

2,512(2,937)

(425)

871

2005/2006£’000

(1,938)702

3,478

2,242

2005/2006£’000

(1,938)4.30

7021.23

2,2423.94

31 July 2006£’000

45,098(56,858)

(11,760)

2005/2006£’000

(9,774)1,127

(1,296)–

425(2,242)

(11,760)

2004/2005£’000

1,059–

1,059

2,441(2,456)

(15)

1,044

2004/2005£’000

(5,395)3

5,219

(173)

2004/2005£’000

(5,395)13.30

30.00

(173)0.34

2322

24. Related Party Transactions

Due to the nature of the College’soperations and the make-up of its Counciland staff it is inevitable that transactionswill take place with external bodies, trustsand organisations with which Councilmembers and/or staff may be associated.The College maintains a Register ofInterests in which all such interests aredeclared, and all transactions are conductedat arms’ length and in accordance with theCollege’s financial regulations.

Mr Ian Hay Davison, the former Pro Provostand Chairman of Council, is a non-executivedirector of Ruffer LLP, which manages someof the College’s endowment funds. He is alsoa partner of Ruffer LLP. Ruffer LLP manages£3.3m of the College’s endowments. Theirfees are 0.85% per annum exclusive of VAT.

24