Expenditure

Total expenditure in 2020–21 was £1,056.4 million, almost 9.9% higher than the prior year. Stripping out the volatile pension provision this reduces to 1.8%. Growth in costs this year has been less than the growth in income. The change this year partly reflects our efforts to control our cost-growth during a period of uncertainty combined with costs being deferred to future years as activities, such as overseas field trips and field work, have been curtailed due to restrictions. This is an area we will need to continue to focus on in the coming years.

Staff costs

Staff costs were £590.6 million for 2020–21 (excluding pension provision), up 4.1% on the prior year. With staff numbers remaining mostly flat, the increase is mainly due to a rise in salaries. We issued a 1.6% pay award (effective from August 2020) in addition to 60% staff receiving automatic annual increments to their salaries in October. The pay award was above the national level partly in recognition of the tremendous work by our staff throughout the pandemic.

The March 2020 valuation of the USS pension scheme, which almost half our staff are members of, was filed at the start of October 2021, three months after the statutory deadline. Employers committed to provide additional covenant support and the Joint Negotiating Committee (JNC) agreed to changes in the member benefits. As a result, the original contribution increases from October that were agreed as part of the previous valuation were avoided; under the new valuation the employer contribution increases 0.5% to 31.2%. A consultation with affected employees (and their representatives) on the JNC proposals is now underway.

Though overall staff FTEs remained broadly unchanged year-on-year, there has been a movement between categories of staff. This year’s high student intake meant additional Learning and Teaching staff were required to be able to continue to deliver our excellent quality of teaching in a multi-mode format. Increases in teaching and teaching support staff have, however, been offset by a reduction in our operational staff due to a prolonged halt to  
some of our campus activity.

Expenditure on non-staff costs

Other operating expenditure has fallen by £8.2 million compared to last year to £356.1 million. The prior year included a one-off transfer as the Schistosomiasis Control Initiative became a separate charity. Adjusting for this our expenditure has risen by £6.7 million.
 
As with the prior year, the pandemic meant that the levels of campus-based activity varied throughout the year. Despite the easing of restrictions coming later than we had hoped, we have seen a ramp up in activity compared to the prior year. Our spend remains subdued however, as activities like overseas field trips and field work have been temporarily delayed, though we are optimistic that we will be able to increase our activity in the coming year.
 
Overall, we have been able to conduct more campus-based activity this year than the prior year, contributing to our expenditure on our premises rising by £7.0 million. There has been a 9.9% increase in our utility costs, with a further increase next year likely. Our ambition is to achieve carbon neutrality by 2040.
 
As our campuses have become more populated it has been necessary to increase our operational expenditure. Spend on cleaning, security and maintenance has increased to ensure the safety of both our staff and students. Travel restrictions throughout the year though have limited field work and face-to-face collaboration, so spend on these activities has reduced. Despite this, we have seen increased activity across many areas of College and expect this to continue next year.
 
This year we spent an additional £1.9 million (3.5%) on bursaries and scholarships, including those funded by research grants and contracts, compared to the prior year. Last year’s increase was modest at 1.1%, owing to the uncertainty surrounding the pandemic, so we are pleased to be able to increase our spend in this area. The continued growth in the spend over the last five years despite a period of economic uncertainty demonstrates our commitment to supporting our students.

Total cost by category (£ million) 2020–21

This chart shows Imperial’s total costs by category in pounds for the year 2020–21. The total costs shown is £1,079.3 million – this figure excludes the pension provision.

 
 

Total cost by category (£ million) 2019–20

This chart shows Imperial’s total costs by category in pounds for the year 2019–20. The total costs shown is £1,033.1 million – this figure excludes the pension provision.

 
 

Other gains and losses

In 2020–21, we recognised an overall gain of £138.8 million, mainly driven by market movements on College investments, including endowments and asset sales.

Most of the gains reported this year are unrealised ones. Our external investment managers continue to deliver returns ahead of target, and we also recognised £27.1 million gains on our in-house managed investments, primarily consisting of our remaining holding in IP Group PLC. In line with the diversification strategy from the Endowment Board we sold down around 20 million IP Group shares in the year for total consideration of £23.4 million. Despite this sale, the value of our retained shareholding is almost 9% higher than at the start of the year due to an increase in share price. Our property investment portfolio also increased by £9.7 million on revaluation, primarily led by the valuer’s opinion on increased market interest for these assets.

Two of our properties were sold this year. In October 2020 we completed the sale of Centre House at White City. This generated a profit on disposal of £37.2 million. Nearly two-thirds of this profit relates to the estimated value of long-term leases for accommodation and commercial units which will be issued in future years on completion. The inherent uncertainty of forecasting future investment market conditions means the current value assigned to these leases could be different at the point they are issued. One month later we sold our sports ground facilities in Heston. The site was outdated and required significant investment to be a suitable long-term sports facility. Having reviewed our long-term sports strategy, we decided to consolidate our facilities at Harlington. This sale yielded a gain on disposal of £2.3 million.

We recognised a £13.2 million gain from the sale of our stake in TWIG, an EdTech company that provides online science content for primary schools. TWIG will still have a license to use the College brand, and we will receive a percentage of gross revenue for this. Our £0.3 million share of operating surplus in joint ventures relates to our partnership with ScaleSpace. The joint venture generated its first profit this year with greater occupancy than prior years, despite the challenges of the pandemic.

Capital

Investment in our infrastructure was the lowest in recent years at £93.1 million, as several major projects completed in the summer of 2020 and we delayed making new major investments until there was more certainty on the student numbers in the autumn.

We continued to invest in our research (£30.4 million) and teaching (£12.2 million) spaces this year to ensure they enable our students and staff to thrive. We completed the fit-out of the Sir Michael Uren Hub at White City and repurposed teaching spaces in the Chemistry and Physics buildings at our South Kensington Campus.

As part of the Faculty of Medicine’s long-term strategy, the construction of the new School of Public Health building at White City has now started and is due for completion in 2024. Once completed, the multidisciplinary building will comprise over 8,000m² of space and provide collaborative, flexible and interactive spaces for academics, collaborators, students, and the local community. This building will house state-of-the-art facilities and support advances in genomics, data sciences, community engagement, incubators, and educational facilities.

Our expenditure on research funded equipment was boosted this year to £23.2 million (2020: £14.2 million) following increased spend in the Department of Materials. An Engineering and Physical Sciences Research Council (EPSRC) grant was used to fund a unique cryo-microscopy facility (£8.3 million). It will enable the quantitative atomic to micro-scale investigation of light elements that are critical to a host of new technologies associated with a transition to a sustainable, resilient, and healthy future society.

Cash and cashflow

Cash from operating activities improved by £45.6 million this year to £135.3 million. Additional student fee income more than compensated for the increases in expenditure, albeit with lower other operating expenses than we were expecting due to ongoing restrictions. Half of the cash from operations is driven by favourable working capital movements (£63.6 million), an increase of £26.3 million on the prior year. The boost primarily relates to the net amount of pre-funding we received from research funders (£36.9 million) and advance payment of student fees (£20.9 million) for the next academic year. The latter has been enabled by our new student administration system delivering a more efficient billing process. Therefore, this level of favourable cash is not expected to be repeated in subsequent years.

Our net outflows of investing activities are higher than the prior year by £18.7 million. Despite capital expenditure of £93.1 million being the lowest we had seen in recent years, the sales proceeds from Centre House, Heston and our stake in TWIG were lower than those of the sale of the Medical School Building in St Mary’s Hospital in 2019–20, resulting in net outflows of £62.4 million. The net outflows from financing activities increased by £9.4 million to £28.5 million.

We reported the lowest level of new endowments in the last five years. This reflects the challenges faced this year in securing this type of external funding. Overall, cash and cash equivalents increased by £42.4 million during the year. In the autumn of 2020, we entered a revolving credit facility to provide liquidity beyond the closure of the Covid Corporate Financing Facility. We have not needed to use this facility, but it gives us greater flexibility when managing our cash balances should we deem it necessary.

Cash movement

This table shows the cash movements in the financial years 2020–21 and 2019–20 in pounds, including cash and cash equivalents at the beginning and end of the year; cash inflow from operating activities; financing and investing activities; and exchange gains and losses non cash and cash equivalents.
 
 
 
 

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