Financial Summary

Finance foreword

We need to ensure we have the financial capacity to secure our strategic ambitions.

2023–24 was a sound year financially, underpinned by robust student recruitment.

To understand financial performance for the year, we need to look much deeper than the headline surplus figure, which was dominated by an accounting adjustment for the USS pension scheme. Without the latter, the operating surplus (i.e. before investment gains) would have been just £2.2 million, down £26.3 million from the prior year. This was more a reflection of fewer one-off receipts (for example for capital projects) than a change in the underlying operating performance. Utilities costs remained at elevated levels in 2023–24 but we are budgeting reductions in 2024–25.

Cash from operations, a key measure of our financial performance, recovered to £81 million in 2023–24 from £56 million in the prior year, though most of the improvement was down to timing. For example, the amount we receive in advance of work being done on research grants and contracts generated a net additional £26 million of cash with the related expenditure only following in later years. At the end of the year the cumulative amount of cash we had received on research grants and contracts less the cash owed for work done stood at £197 million out of a total cash and current investment balance of £364 million.

Fortunately, we did not experience a repeat of the extreme volatility in markets of the year before, with CPI falling steadily from 6.8% in July 2023 to 2.2% over the course of the year. We recognised the pressure high inflation was having on members of our university and started salary negotiations for the 2024–25 pay round earlier than usual. Once it was clear that the contributions we have to make to USS were reducing, we agreed to accelerate part of the award into 2023–24. We are not part of national pay bargaining, and I was pleased we were able to reach agreement with our Joint Trade Unions on the 2024–25 pay award of a minimum of 4% for all staff and end prior disputes.

Our new strategy launched in March 2024 has generated considerable excitement both internally and externally, at home and overseas. It is rightly ambitious and sets out a direction of travel for Imperial for at least the next decade. We are reviewing financing options, prioritising and determining the pace at which it makes sense to proceed. Philanthropy will need to play a major role and we are planning for this.

Not all initiatives in the strategy require significant new investment and some are already underway, for example the Global Hubs (launched first in Singapore), the Class of 2030 and the Centre for Societal Engagement. Other aspects of Imperial’s vision for the future do require large amounts of funding. We are digesting the report we received on how to deliver our carbon net zero target by 2040, with an indicative cost of more than £1 billion. Momentum behind our sustainability agenda has been ramping up across the whole university over the last couple of years and Imperial is often at its best when faced with challenging, real-world problems to solve. This is one of them. I referred in last year’s Financial Foreword to the choices and trade-offs we needed to make to give us the financial capacity to deliver our plans, whether they be for further investment in staff, student experience or the digital and physical infrastructure that supports them. One choice we made this year is to invest in a new Enterprise Resource Planning system. The process changes and new ways of working the system will facilitate have the potential to deliver major improvements in the effectiveness and efficiency of our Professional Services. When it comes to trade-offs, we have been reviewing our asset base and identifying where we might release capital for reinvestment elsewhere to support the developing requirements of our academic mission. There is room for improvement in the way we currently use our space.

In summary, we continued to make progress on many fronts in 2023–24, facilitated by robust student recruitment and a
growing research order book. The financial outturn, putting the pension movement to one side, was a reminder however of the small margins that the University operates on and cash from operations remained below our long-term target of 10% of income. We are focused on improving financial margins to boost our capacity to deliver our strategy and at the same time further improve our resilience against possible external shocks. Having spent a lot of time recently looking ahead 10 or more years in developing the strategy we are eager to get on with implementing it but recognise the need to do this in a financially sustainable way and we will pace ourselves appropriately.

Dr Tony Lawrence
Chief Financial Officer