Council 21 July 2006 Budget 2006/07 and Long Term Plan to 2009/10

Strategy Expand student numbers while effecting a shift towards a higher proportion of postgraduate and overseas students Develop vocational offerings to broaden market appeal and widen participation Capitalise on recent investment in research capacity and on changes in research funding to increase research income, broaden the customer base and improve margins Use strategic partnerships to improve the mobilisation of intellectual property to both reputational and financial advantage Continue to invest in high quality staff and facilities so as to secure benefit from the RAE exercise Modernise human resource and management practices to improve productivity and general operational effectiveness Improve the absolute contribution from non-core activities Improve absorption of fixed costs

Key changes since 2005/06 £mTimescale Adverse developments(9.5)assumed on-going, though potential for some reduction over time Corrective action a) contain planned growth in staff numbers2.0 implement with immediate effect 25% to be released in 2007/08 b) institute departmental review to identify & implement efficiency improvements across the board4.0 75% to be delivered in 2007/08 25% in 2008/09 Assume additional income (RAE)3.0effective 2009/10 and beyond Total(0.5)

Chart 5a

Financial Forecast, including exploitation of potential for additional capital expenditure

Table 5

Key Ratio 2006/07 Budget and Long-term Plan 2005/062006/072007/082008/092009/10 Turnover (£000)170,511180,885194,377209,773222,212 Long Term Debt to Fixed Assets ( less DCG)41.79%45.56%56.02%63.13%66.71% Profit to Turnover0.10%0.96%0.57%0.50%1.39% Operating Cash Flow to Turnover3.25%1.52%5.11%6.61%7.92% Staff Cost as a percentage of Turnover56.58%59.27%58.61%57.19%56.20% Research Margin20.94%18.31%20.23%21.77%21.75% Debtors to Turnover14.11%13.55%12.95%12.31%11.92% Creditors to Turnover-21.90%-19.19%-16.57%-15.80%-15.01%

Sensitivities Favourable 10%NeutralAdverse 10% Efficiency gains: Impact on: Capital spend £m Impact on: Operating margin % RAE outcome: Impact on: Capital spend £m Impact on: Operating margin %