Finance foreword

This Annual Report and Accounts covers the University’s financial performance for the year to 31 July 2025, with a detailed review of the key areas presented in the financial review section on pages 37 to 41.

Financial headlines

Our total income increased by 3.0 per cent in 2024/25, however our expenditure grew at a faster rate of 3.4 per cent. The outcome of expenditure growth exceeding income growth is that surplus before other gains and losses reported on our statement of comprehensive income and expenditure fell to £20 million (2024: £25 million).

In addition to reported surplus, we use Earnings Before Interest, Taxation, Depreciation and Amortisation (EBITDA) to measure our underlying financial performance. EBITDA can be used as a proxy for the cash generated from our internal operations – this is the cash we use to service our debt and fund important investment in equipment, our digital infrastructure and our physical estate.

Our EBITDA for 2024/25 was £96 million or 6.5 per cent of total income (2024: £84 million, 5.8 per cent of income). Although EBITDA has grown in the year, this compares to an operating surplus that reduced in the year as noted above. See the table below for the reconciliation from EBITDA to surplus before other gains and losses.

Surplus and EBITDA achieved in the year have again been significantly supported by non-core activities including interest received on our treasury cash balances, returns from our accommodation, catering and events business, and strong performance across our subsidiaries. Although very helpful that our non-core activities make the contribution they do, future income and surpluses from these activities cannot be relied upon to continue into the future.

Capital investment

The University maintains a complex and sophisticated physical estate across five distinct campuses. Capital expenditure over the last year totalled £207 million, with £149 million of this towards our physical estate. Supporting our capital investment was receipt of £46 million of capital grant funding from sources including the Scottish Funding Council, our research funders and the UK Government towards the City Region Deal.

Capital investment increases the value of net assets and reserves we report on our statement of financial position, totalling £3.1 billion as at 31 July 2025. The vast majority of these assets are used by the University to deliver its core activities of teaching and research. Although reduced capital investment and asset sales could improve short-term liquidity, they would not resolve the core issue of expenditure growth outpacing income growth.

Endowment fund

Our endowment fund recorded an increase in valuation at the end of the 2024/25 financial year with the fund now valued at £605 million (2024: £580 million). The endowment fund is invested for the long-term and while contributing to a growing University reserves balance there are restrictions on how this reserve can be used.

Notes to table: In calculating EBITDA, adjustments are made for interest costs, capital grants and non-cash items such as depreciation and pension provision movements. 

Conclusion

We can consider performance through an EBITDA lens of failure to meet our financial risk key metric that EBITDA is in the 7-9 per cent range or that expenditure continues to grow faster than income and surplus is consequently falling towards breakeven. However viewed, the conclusion is that we must improve the financial performance of our core teaching and research activities to remain financially sustainable and achieve our strategic objectives as set out in Strategy 2030.