Annual Finance Report 21/22

To help address the additional financial pressure this year including inflation and the increased cost of living, we all need to do all we can to help reduce any non-essential spend – the Finance team have written to budget holders with updated budgets to reflect this and we should all keep this in mind when planning projects in the months ahead. We have also put in place an ‘exceptional approval to hire’ process so there is tighter control around staff recruitment for the time being.

Our Financial Statements and Annual Review for 21/22 have now been published, showing an underlying operating result of an £11.7m deficit which is in line with the budget we set for the year – reflecting an important step on the path to achieving financial sustainability. As with many universities, this year’s accounts include a very significant additional pensions charge of £54.6m which is why you see a larger overall deficit – this is the result of the 2020 valuation of the USS pension scheme and is an accounting adjustment only, with no adverse impact on Kent’s underlying performance or cash levels.

Reflected in the reported 21/22 performance was the return to more regular conditions as the impact of Covid receded, with increased face-to-face activity, improved occupancy and more use of student accommodation and catering facilities leading to increased income. Total income grew by 3.7% to £260.4m compared to 2020/21, although tuition fees were lower with increased competition for students. This return to full activity and the removal of temporary measures to control costs, as well as additional investment into areas of growth potential, meant that costs increased by 11%, to £274.5m. This excess of spend over income, along with planned payments to lenders resuming in-year, has meant that our cash balances have reduced in the year, to £30.5m (equivalent to 45 days of spend). Whilst this still exceeds the University’s financial sustainability target, work continues to improve the underlying operating performance and cash generation.

Looking ahead, 2022/23 has brought additional challenges with lower student retention than expected impacting on income levels, and inflation and energy costs are also placing pressure on budgets. We have put in place measures to ensure that we can we achieve the budgeted result – a managed deficit of £6.0m. This involves short-term cost control measures which delay the timing of new investments and restrict non-essential spending. We’re currently working through the details of these measures and will be providing full updates to budget holders early in the New Year. Alongside this, and with a focus on the longer-term financial sustainability, initiatives are being worked up aimed at increasing and diversifying income and ensuring our operations are delivered as efficiently as possible.