Annual Report and Accounts 2010/11 - Cancer Research UK

Our finances
(continued)
Cancer information and influencing
We spent £16 million (2010: £14 million) on cancer
information and influencing, which reflects our continued
emphasis on providing better cancer information and
influencing relevant government bodies.
Funds
Total funds were £186 million, an increase of £4 million.
General funds were £182 million, a reduction of £15 million,
mainly due to transfers to restricted funds.
Cash and investments were £211 million, a reduction of
£14 million due to operating and capital expenditure in
the year.
Reserves
We base our monitoring of reserves cover on liquid net cash
and investments and adjusted net assets. At 31 March 2011,
liquid net cash and investments were £198 million (2010:
£227 million). These will help us to finance the £441 million
of research grant commitments to be paid in future periods.
Close monitoring of our reserves position is essential in
enabling us to meet the demands of our forward five-year
research programme. Planned investments in key projects,
such as the UKCMRI, and in maintaining critical research
projects in the light of a predicted relatively flat fundraising
contribution for the next few years mean that our liquid net
cash and investments are expected to reduce from five
months of total cash requirements to three months by
31 March 2015.
Reserves policy
We plan research over the long term. But as a fundraising
charity, we are subject to the effects of short-term volatility in
income. We hold reserves (‘funds’) to ensure that we can
meet our research commitments (typically three to five years)
in the face of such fluctuations. We use a rolling five-year plan
to model how the Charity will manage resources in the best
way to deliver the strategy, while holding reserves at no more
than is necessary.
Our reserves policy mandates a minimum level of liquid funds
that are readily convertible into cash. This ensures that the
Charity will be able to discharge its financial commitments
over the course of the five-year plan. To reflect this, we
monitor a reserves measure of ‘liquid net cash and
investments’, as shown below. Liquid funds are those funds
which, taken as a whole, can readily be realised within two
months for at least 95% of current market value, allowing
forecast gross cash outflows to be paid on their due date.
In addition, to enhance risk management, and ensure that we
can fund known liabilities in the near term, we monitor a
balance sheet measure of reserves, which is calculated below.
‘Adjusted net assets’ matches our realisable assets against our
current liabilities, and ensures that this measure does not fall
below an acceptable liquidity level, which we define as 10% of
our future fundraising contribution.
We are managing our finances carefully over a five-year cycle
so that we are able to maintain a stable research programme
to achieve the maximum impact in our vision to beat cancer.
2%
Total funds up
to £186 million
(2010: £182 million)
6%
Cash and investments
down to £211 million
(2010: £225 million)
12 / Annual Report and Accounts / Our finances