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2022-12-31-accounts

TRUSTEE BOARD’S REPORT AND ANNUAL ACCOUNTS

Year Ended 31 December 2022

Improving the world through engineering

CONTENTS

President’s Statement 03
Chief Executive’s Statement 05
Our Year in Numbers 06
Education and Skills 08
Environmental Sustainability and Social Responsibility Report 09
Global Membership 10
2022 Key Performance Indicators 12
Future Plans 15
Structure, Governance and Management of the Charity 24
Financial Review 34
Statement of Trustees’ Responsibilities in Respect of Trustees’
Annual Report and the Financial Statements 46
Independent Auditors’ Report 49
Financial Statements 52
Notes to the Accounts for year end 55
Administrative Details 90

The Institution of Mechanical Engineers Incorporated by Royal Charter 1930 Registered Charity in England & Wales No: 206882 Office of the Scottish Charity Regulator No: SCO51227

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PRESIDENT’S STATEMENT

2022 has been a busy year as we have celebrated with pride our 175th anniversary, a memorable milestone in our Institutional history. From the keynote address delivered by Sir Patrick Vallance on the anniversary date last January to Past-President Terry Spall’s long-awaiting (Post-)Presidential Address, the year has been full of memorable events and moments to savour. We have been able to put COVID-19 behind us and move on, holding physical events again as well as making effective use of hybrid and virtual ways of working. Having said that, we must recognise that we live in changing times. There has been significant upheaval in the UK government, the on-going conflict in Ukraine and change of the UK monarchy. UK’s longest serving monarch was patron of many engineering Institutions, including our own. I pay tribute to the Queen’s achievements and the role she played in our history.

For me personally, a real highlight of the year was to return to Birmingham to host our annual dinner in November where, 175 years ago on 27th January 1847, it all started with the Institution’s inaugural meeting and election of George Stephenson as our first President. The unique roles that both Bromsgrove and Curzon Street stations played in the early history of the Institution have also been rightly recognised with prestigious IMechE Engineering Heritage Awards.

When I took over from Peter Flinn last May, I chose as my Presidential Address theme ‘Our Institution: building the future’. I wanted us to realise where we have come from as a distinguished engineering body and acknowledge that we continue to have a significant part to play in society and the future challenges that it faces. I hope that I have managed to achieve that goal during my Presidential year.

After 12 months in the Presidency, you would have expected Peter to have taken it easy this year. Far from it! He has been enthusiastically leading our policy work on Net Zero, attending many related events and authoring our report ‘Engineering a Net Zero energy system’. Thank you, Peter, for proactively championing this critical area of future engineering focus; in your words ‘achieving net

zero is the biggest engineering challenge ever undertaken by mankind’. And with the recruitment of our new Director of Engineering, Policy and Impact, James Partington, we are well placed to influence government over the stance that it takes on this and other important policy decisions. Welcome to the team, James!

The review of the future of our Birdcage Walk headquarters building continues, following on from the initial study done by the Real Estate Strategy Group. The HQ Working Group under the chair of Past President Patrick Kniveton has been working through possible scenarios in detail and earlier this year produced a draft business case document to support the consultation process. As this annual report is published, the Trustee Board is considering inputs with a view to proposing a resolution to the membership. I hope this will lead us to a consensus on how to proceed on this important step for the Institution.

It has been a pleasure working with our CEO, Dr Alice Bunn, over the year – she brings so many positive contributions to the way we function as an Institution. On a personal note, Alice was rightly honoured with an OBE in the Queen’s final Birthday Honours List for her services to the UK space sector and to charity. This award recognises Alice’s impressive achievements and the flair she brought to her role in the space industry and now at IMechE. I congratulate her on behalf of the Institution on receiving this well-deserved award.

Finally, I would like to express my sincere thanks to all those with whom I have worked during the year, whether members, staff or engineering friends and acquaintances. It has been an exceptional honour to represent this fine Institution and one that I will treasure for the rest of my life.

In May, I pass over to Giles Hartill as our next President. As Chair of our Strategy Committee, Giles has been promoting the development of a new strategic direction; one that will place us in a better position moving forward. I wish Giles every success in his endeavours during his Presidential year. I leave the Institution in capable hands.

Phil Peel CEng FIMechE

137th President of the Institution of Mechanical Engineers

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04 04 Annual Report 2022
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CHIEF EXECUTIVE’S STATEMENT

2022 was an exciting year of change as we pivoted towards delivery of the new high-level strategy, with values of inclusion, integrity, impact and innovation at the fore of everything we do. Volunteer and staff efforts were aligned to our strategic goals of developing and supporting engineers, and in doing so, maximising their positive impact on society.

On developing and supporting members, we were delighted to achieve the highest number of new registrants across all engineering Institutions for the 10th year running. We also gained Ofqual recognition to operate as an end point assessment organisation, providing a vitally important route to engineering for earlier careers. But we recognise that our support for members must not stop at these early stages in a world where life-long learning and upskilling and reskilling is more important than ever. So equally impressive that our Learning and Development trading company had a record-breaking year, emerging from COVID stronger than ever.

On impact, we have been working with partners across the engineering landscape, or feeding in advice directly to government. For instance, we provided key input to the report on air quality, commissioned by the Government Chief Scientific Advisor, and convened by the Royal Academy of Engineering. Crucially we fed our members’ expertise directly into the net zero review commissioned by the government too. We have sought opportunities for our members’ expertise to be shared from events in parliament, through to position articles in the wider media. We were also very pleased with the participation we had in a new virtual work experience programme designed to ensure participation is possible from all backgrounds and locations.

Dr Alice Bunn OBE CEng FIMechE FRAeS

We have also targeted our efforts around our 7 strategic enablers, rolling out our diversity and inclusion programme to a greater number of volunteers and staff, and we were delighted to achieved gold IIP status. We did not make the progress that we had hoped for in deciding the future of our headquarters. However, given that this is one of the largest financial decisions that the Institution will take for many years it is important that all voices are heard to ensure that the right decision is taken. Our efforts must also focus on our digital infrastructure as that holds the key to us being able to work together, globally and inclusively, in the future.

Last but not least, to people. Volunteers and staff are the greatest asset of the Institution and when we work together we can achieve amazing things. We trialled the first virtual volunteer conference in 2022, specifically to ensure that this support can be accessible to all our volunteers. We were also delighted to be able to host many of our international volunteers in the ‘extravanganza’ week in September. I feel very lucky to have worked with Peter Flinn, a sentiment shared by many (‘everybody knows Peter’ was a running joke), I am thoroughly enjoying working with Phil Peel, and looking forward to the presidency of Giles Hartill. In 2022 we did have to bid farewell to one very treasured member of staff, Joan Gibbins MBE, leaving in style as she literally danced her way out of the library! Happily, we still see Joan regularly at social events. Let’s hope 2023 similarly brings many opportunities for us all to come together and improve the world through engineering.

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OUR YEAR IN NUMBERS

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TECHNICAL &
NETWORKING EVENTS VIDEO PRODUCTION
Supported 113 events with 17,700 attendees: & PODCAST
56 webinars CHALLENGES 212 videos added to IMechE’s END POINT
8 online seminars 5 Challenges held in physical and virtual form. YouTube channel ASSESSMENT
14 lectures (11 hybrid) 4,069 new YouTube subscribers
190 teams from 27 countries took part 1049 End Point Assessments delivered
23 face-to-face conferences and seminars 2,700 competitors and 400 volunteers 343,905 YouTube views Working with 109 training
6 competition events participated in the live finals Over 6,816 "Impulse to Innovation" providers/colleges
6 special events our portfolio across the challenges podcast downloads EPA Standards Committee
established
STEM YOUNG MEMBERS
4 STEM Ambassador training sessions SOfE Global Final held. 1st physical final
1028 active STEM Ambassadors in 3 years.
2862 activities completed reaching The Technical Paper Competition launched
534,045 participants Pilot launch for “Student Chapter of
the Year Award” SE Asia
3,053 schools and 79 non
schools engaged Young Member of the MEMBERSHIP
Year Awards & BUSINESS
ENGINEERING awarded DEVELOPMENT
HERITAGE COMMITTEE
66,323 members in paying grades vs target of 67,037
175th Anniversary Edition Heritage SOCIAL MEDIA PRIZES & AWARDS
plaques issued to Bromsgrove & 24 University accreditation visits
Curzon Street Stations in the Midlands 97,000 LinkedIn followers (10% increase) 3 ceremonies took place in 2022 (18 virtual; 6 physical)
3 Engineering Heritage Awards 1,100+ New Instagram channel followers 150 prizes and scholarships awarded 50 Company accreditation visits
were presented: Launched Instagram Live and Facebook 1,781 Professional Review Interviews
Farnborough Man Carrying Centrifuge, Live events
2,340 New professionally registered engineers
Coombe Mill, The Bendigo Tramway 175 anniversary widely 5000+ Delegates attended our free online,
celebrated across
face-to-face and in-company
IMechE
professional development
events in 2022
LIBRARY & ARCHIVE MEMBER
549,148 online library downloads ENGAGEMENT
( 17% increase) 1st Virtual Volunteer Conference held,
11 Webinars with 1541 registrants and 603 attendees providing volunteers training and support in
ASME standards collection enabled for members conducting their roles.
7,205 archive catalogue sessions, a 236% increase following 1st “International Extravaganza” held, bringing together global
the implementation of new software members for a week of meetings, networking and engagement events
11,521 Virtual Archive sessions Member Networks team supported: 150+ Division & Group Committee
meetings and 30+ Operating Board & Committee meetings
Painting from the archive collection was loaned for exhibition
at the British Motor Museum Committee Hub launched
1st digitised reel to reel audio file added to Memorandum of Understanding (MoU) signed with
the Virtual Archive. Verein Deutscher Ingenieure (VDI), Germany
Ongoing project for implementation of Cooperation agreement signed with
an integrated Library Search and The South African Institution of
Management system, to be Mechanical Engineering
launched in 2023. (SAIMEchE)
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EDUCATION AND SKILLS

2022 marked a year of repositioning for education and skills across the Institution.

IMechE’s education provision is intended to support the lifecycle of an engineer and spans across Institutional activity. We work to facilitate the inspiration, education and retention of young people and contribute to the long-term sustainable diversification, development and growth of the engineering profession at large.

Education was announced as an Institutional policy priority at the Elevating Education launch event which took place at IMechE HQ in March 2022. Contributors including Amanda Solloway MP, Former Science Minister, met with key stakeholders from the engineering community to discuss the post pandemic educational landscape and to relaunch IMechE’s STEM Ambassador programme.

The Institution’s STEM Ambassador programme, which involves over 10,000 UK members, aims to equip engineers going into schools and colleges with the right skills to inspire and inform young people. The STEM Ambassador programme has been given even more importance following the disruption students suffered during the COVID-19 pandemic. A free education outreach training provision, a new STEM Ambassador induction video and web resources have been developed to encourage members to get involved in education outreach.

The Institution launched a pilot mechanical engineering virtual work experience programme in partnership with careers platform Springpod. The programme successfully engaged nearly 1000 students from across the country. The provision included e-learning materials, quizzes, activities and live webinars relating to our policy priority areas showcasing engineering as a career option to young people. The virtual work experience provided an inclusive method in which IMechE could widen participation and provide greater access to career and education opportunities for young people. The pilot programme provides the background for further developmental work that the Institution will undertake on work experience opportunities in 2023.

ENVIRONMENTAL SUSTAINABILITY AND SOCIAL RESPONSIBILITY REPORT

As an organisation, the Institution is committed to reducing its environmental impact and enhancing its social responsibility as a means of achieving greater sustainability.

We continue to seek to reduce the volume of waste being sent to landfill and have extended our daily refuse contract to a contractor with a zero to landfill policy. In 2022 we concentrated our efforts on the recycling of our excess stationery with our supplier providing “amnesty bins” which allows us to dispose of any good quality and good condition stationery items. Instead of going to landfill the items are distributed to schools and colleges up and down the UK.

The Institution’s Facilities team continue to lead on green initiatives and in preparation for the ban on single use plastic have recently committed to ensuring that all disposable catering supplies will be made of plant-based material by the end of March 2023.

The Facilities team has successfully collaborated with the Social Responsibility Group and as a result of their efforts, sourced sustainable alternatives and introduced a Food Bank drop off point at HQ to support the Trussell Trust.

The increase in both staff and tenants returning to the office along with the post COVID venue hire saw an increase in both our gas and electricity consumption. Coupled with our end-of-life heating and ventilation systems that are in urgent need of replacement, our annual electricity consumption in 2022 increased from 386 MWh to 539 MWh and our gas consumption increased from 436 MWh to 737 MWh.

IMechE is monitoring policy and qualification changes that could potentially impact the future pipeline or skills provision of engineers. In response to the implementation of T Levels as a new technical qualification in England, IMechE conducted a survey on public perceptions of T Levels. Following the report’s publication, the Institution has taken an active role in engaging with key stakeholders to raise awareness and promote T Levels to businesses. The Institution will also be working to ensure T Levels are embedded as a clear and viable pathway for future engineering talent.

The Institution continued to successfully support key strategic partnerships including those with the Department for Education, Primary Engineer, STEM Learning UK and the Engineering Education Grant Scheme in partnership with the Institution for Engineering and Technology.

In 2022 we concentrated our efforts on the recycling of our excess stationery, ensuring nothing went to landfill but distributed to schools and colleges up and down the UK.

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GLOBAL MEMBERSHIP

Figure 1: Global membership by Institution Membership Region.

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TOTAL
110,332
EUROPE
5,561
BRITISH ISLES
76,55 3
NE ASIA
4,386
SE ASIA
AMERICAS 6,457
1,780
SOUTH ASIA
7,289
MIDDLE EAST OCEANIA
& AFRICA 1,447
6,859
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2022 Key Performance Indicators (continued)

2022 KEY PERFORMANCE INDICATORS

Achieved

Not achieved

In 2022 we focused on 6 Key Performance Indicators, in line with our agreed objectives and goals. We achieved 4/6 and 2/6 were not achieved and rolled over to 2023.

What we said we would do

KPI 1: Publish 5 year strategy for the Institution that will deliver our mission of improving the world through engineering.

During 2022 the Strategy Committee produced a high-level strategy which, following wide consultation with our boards and committees, was reviewed and approved by the Trustee Board, and published in April 2022 through the 2021 annual report. Consultation has continued with the wider membership, with a specific focus around our 2 strategic goals plus the digital developments that will be key to support delivery. The full strategy is due to be published in Q2 2023 as part of the 2022 annual report, with work ahead to develop detailed delivery plans over a 3-5 year horizon.

What we said we would do

KPI 2: Relaunch IMechE as an End Point Assessment Organisation, supporting apprentices of the future to make their contribution to ensuring a safer and sustainable world.

Offering End Point Assessment to the engineering and manufacturing sector is the Institution’s commitment to supporting and recognising the contribution and value of apprenticeships to UK industry, and in line with our value of inclusivity. Following the Institution being recognised by Ofqual at the beginning of 2022, IMechE relaunched its first class and robust End Point Assessment Service. End Point Assessment can now be delivered for Engineering Technician, Railway Engineering Design Technician, Rail Engineering Technician and Rail Engineering Advanced Technician. Full information ’ can be found on IMechE s Website.

Achieved

Not achieved

What we said we would do

KPI 4: Ensure charity operates a surplus budget at operational level to support our long term financial resilience. Deliver free reserves increase of £250K.

Charity achieved its surplus budget at operational level, before the movement of market value on investments and any actuarial changes to the defined benefit pension scheme.

What we said we would do

KPI 5: Secure the future of our headquarters through taking a decision on the future of the building via member vote and special meeting.

In early 2022, our Real Estate Strategy Group, completed a substantial consultation about future options for the building, submitted a proposal and we launched an indicative poll to our voting members.

Following feedback from Council, in May 2022, a new Working Group was set up to examine a wider set of options, in particular looking at strategic fit, financial viability, risk profile and chances of receiving member approval, with input from updated valuations and reports on the condition of the building.

Any decision regarding the future of Birdcage Walk will need the approval of two thirds of voting members in a special meeting. The Working Group submitted a report to the Trustee Board in February 2023, recommending further work before a proposed members special meeting and vote later in 2023.

Further information can be found on the Birdcage Walk HQ Working Group Website Page.

What we said we would do

KPI 6: Deliver improved services to members in an inclusive way through our digital platform modernisation, with projects delivered in line with the Business Plan.

What we said we would do

KPI 3: Develop our complaints procedure to include the new values and behaviours and serious complaints processes and procedures, to strengthen our operations as a diverse and inclusive organisation.

A first draft of the serious complaints procedure has been delivered but is now on ice pending introduction of a new management system across all policies, procedures, and guidance. This is being delivered with the Council’s governance sub-group, with staff and volunteers working in close partnership. This will be the pre-cursor to our ambition of building out a comprehensive suite of guidance and tools to be best-in-class for volunteer support. This remains an important priority for the Institution and we expect to deliver it during 2023.

The Digital & Technology Services team worked throughout 2022 on stabilising existing systems including the main IMechE website to improve member experience. Significant discovery and planning were completed in readiness for planned major infrastructure overhaul in 2023. The stabilisation of existing systems is also essential for releasing capacity to work on the delivery of meaningful modernisation projects.

A high-level roadmap of priority projects was agreed with the Executive Team at the start of 2022 and shared with all stakeholders, boards, and committees. This roadmap encountered a later start due to in-flight work taking longer to complete to a good standard. A small number of projects from this plan were deferred into larger technology changes planned for the next few years due to interdependencies. Despite this, a good number of projects were delivered with outcomes including a new committee management hub, improvements to MPDS and CPD, and a vastly improved online payments system.

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Our 175 anniversary was an opportunity to celebrate our past while looking confidently to the future.

FUTURE PLANS

During 2022 the Strategy Committee established working groups for three key strategy areas – Member Development, Impact, and Digital – to develop strategic objectives and detailed sub strategies. The Working Groups presented the final iterations of their respective outputs to the Strategy Committee which were subsequently approved by the Trustee Board in March 2023.

Our Strategy 2030

Mission: Improving the world through engineering

Vision 2030: A global, inclusive, and digitally enabled engineering community

Values: Inclusion | Integrity | Impact | Innovation

Strategic Goals:

Membership Development

Developing, registering, and supporting our members to be their best for a more inclusive and sustainable world.

Impact

Maximising the impact of our members to promote engineering, inform opinion, and stimulate innovation for the benefit of society.

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14 Annual Report 2022
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Future Plans (continued)

Future Plans (continued)

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Values:
INCLUSION
Mission: Vision 2030:
INTEGRITY
IMPROVING THE
A global, inclusive,
WORLD THROUGH
and digitally
ENGINEERING IMPACT
enabled engineering
community
INNOVATION
Strategic
Membership Development Impact
Goals
Standards Community Harness Advise
Strategic
Objectives
Services Support Communicate
Strategic
Enablers
Digital First
Sustainable
Governance
and
finance
and facilities
Leadership
Strategic
Enablers
Collaboration
People and
and
Culture
Partnership
Evaluation and
Continuous
Improvement
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Our Values

Integrity

We do the right thing for IMechE and for one another by being honest, truthful, and authentic, acting with integrity in every decision we make and every action we take.

Impact

We make a difference and an impact in what we do, taking accountability and ownership for meeting our commitments, making things happen by succeeding together and excelling as individuals.

Inclusion

We work together as one inclusive team, valuing and respecting diversity by opening up to, and actively listening to the contributions one another have to make.

Innovation

We find better ways to get things done, innovating to resolve problems, drive change and move our mission forward by making tomorrow better than today.

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Future Plans (continued)

Future Plans (continued)

Strategic Goals

Membership Development

Developing, registering, and supporting our members to be their best for a more inclusive and sustainable world

1. Community

Build inclusive, thriving communities to support technicians and engineers to learn, work and excel.

2. Standards

Lead in membership standards and accreditation.

3. Services

Provide the best personalised, relevant services, content and knowledge to support technicians and engineers throughout their careers.

4. Support

Enable and support members to effectively promote engineering, inform opinion, and stimulate innovation for the benefit of society.

Impact

Maximising the impact of our members to promote engineering, inform opinion, and stimulate innovation for the benefit of society

1. Harness

Expand and harness the expertise of our members and employees for the good of society and promote engineering as a means for solving the major challenges faced by humanity today.

2. Advise

Be a point of reference for policymakers across industry and government when impartial technical expertise is considered essential in informing key international, national, regional and local decisions.

3. Communicate

Communicate the outputs of the Institution across multiple platforms including webinars, in person events, and social, broadcast and print media.

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Digital First
Sustainable
Governance
and
finance
and facilities
Leadership
Strategic
Enablers
Collaboration
People and and
Culture
Partnership
Evaluation and
Continuous
Improvement
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Strategic Enablers

Governance and Leadership

People and Culture

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Future Plans (continued)

Future Plans (continued)

Digital First

Collaboration and Partnership

Sustainable finances and facilities

Evaluation and Continuous Improvement

2023 Key Performance Indicators

Membership Membership Membership
Title Description Indicators
Population We want to achieve sustainable growth in
our professional, registered membership.		 • % voluntary membership lapsing
• No. of professional registrations
Satisfaction We want to have satisfed and
engaged members.		 • Change in no. of active members
• % of eligible members voting in
elections
Diversity We want our membership to refect the
diversity of society.		 • % of international membership
• % of female membership

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Impact health
Title Description Indicators
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Impact health Impact health Impact health
Title Description Indicators
Learning We want to increase the amount of life-long
learning we support.		 • No. of days of learning events attended
Infuence We want to be a trusted point of reference
for policymakers, industry, and current and
future engineers.		 • No. of key infuencing events
• No. of IMechE policy report citations
Reach We want to increase our reach to extend
the expertise of HQ and our members.		 • % Change in website interactions
• % Change in digital downloads
• % Change in social media audience
• No. of press references

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Financial health
Title Description Indicators
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Financial health Financial health Financial health
Title Description Indicators
Membership
income		 We want our membership income to
support our strategic goals.		 • % Change in membership income
Income
diversity		 A greater spread of income increases
our resilience and supports our
charitable objectives.		 • % unrestricted revenue from non-
subscription sources (*)
Free reserves Our free reserves should enable us to cope
with fnancial shocks and take advantage
of opportunities.		 • Free reserves (3 year rolling average to
smooth out market value volatility)

(*) for this indicator we are including the operating profit after shared costs from our trading subsidiaries rather than turnover as the relevant component of this metric.

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Future Plans (continued)

Our STEM Ambassador

programme aims to equip engineers going into schools and colleges with the right skills to inspire and inform young people.

Gender Pay Gap Reporting

The Institution employs fewer than the requisite 250 employees and does not have to publish gender pay gap information. As part of its commitments to its values and to demonstrate transparency the Institution has made the decision to publish gender pay gap information annually.

While we are happy with the improvement shown in the year, which is mainly driven by both an increased proportion of female employees in the upper quartile (40%, 2021:38%) and a small increase of relative pay of female employees within each quartile, we recognise that further progress is necessary and will work towards this.

In 2022 male employees were paid on average 12.7% more than female employees (2021 15.9%).

This is due to the proportion of men being much higher in the higher two quartiles (59%, 2021: 58%) than the lower two quartiles (40%, 2021: 42%).

Within the individual quartiles pay is very close with female pay ranging from 99% to 103% of the mean (2021: 98 to 102%) or the quartile and being higher in three (2021: two) of the four quartiles.

Figure 1: Gender split by pay quartile

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120%
M
100% F
62% 58.9% 53.2% 60.3% 46.1% 42% 38% 40.2%
80%
60%
40%
38% 41.1% 46.8% 39.7% 53.9% 58% 62% 59.8%
20%
0%
Q1 2021 Q1 2022 Q2 2021 Q2 2022 Q3 2021 Q3 2022 Q4 2021 Q4 2022
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Figure 2: Mean gender pay within each quartile

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120%
M
100%
F
80%
60%
40%
99% 102% 101% 99% 98% 102% 98% 103%
20%
0%
Q1 Q2 Q3 Q4
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Structure, Governance and Management of the Charity (continued)

STRUCTURE GOVERNANCE AND MANAGEMENT OF THE CHARITY

The Institution is governed by a Trustee Board comprising members of the Institution elected to office by Corporate and Associate members, through an annual election process. Trustee essential training is provided at the start of each election term for all Trustees and additional specific training provided as required related to specific activities or skills growth.

Trustee Board

President

Phil Peel

Giles Hartill Dr Clive Hickman OBE Heather Clarke Helena Rivers Dr Richard Judge Vijay Raman Bridget Eickhoff Professor David Nowell

Deputy President

Vice Presidents

International Vice President Ordinary Members

Chris Chong

Professor Emeritus Graeme Britton Ross O’Brien

Member ordinarily resident overseas

Member under 30

Trustees retired or resigned in year Past President Peter Flinn Vice President Matt Garside International Vice President Raymond Hodgkinson

Trustees typically meet eight times a year with additional meetings as required. Trustees are invited and attend as observers at Council meetings.

Senior Management Team

The Chief Executive is responsible for the daily management of the Institution in accordance with the Royal Charter and By-laws and the direction of the Trustee Board, and the organisation and deployment of the Institution’s employees. Four Directors support the delivery of the Chief Executive’s responsibilities.

Chief Executive

Dr Alice Bunn Sean Fox Bims Alalade Joanna Horton James Partington

Finance and Commercial Director Human Resources Director Member Operations Director Engineering Policy and Impact Director

Boards and Committees

The Trustee Board is directly supported by the work of its governance sub-committees and through the work of its advisory bodies. Responsibility for core Learned Society functions is delegated to operational boards and committees.

Governance sub-committees

Advisory bodies

Operational boards and committees

Structure of local operations

Every member is assigned to an Institution region aligned to the defined geographical areas under the remits of the Regional Strategy Board (UK and Republic of Ireland) and the International Strategy Board (all global areas outside of the British Isles). The combined RSB and ISB networks covering our global reach is the key mechanism for the Institution’s engagement with members at a local level.

The UK and Republic of Ireland operations are structured into 16 regions and the International operations into 7 regions, each of which is overseen by a committee of volunteers. Regional Committees comprise elected positions such as Chair, Vice Chair, Secretary, and Treasurer, whose work is supported by other volunteer members.

Regional operations can be further delineated into a regional sub-structure comprising local Branches, Areas, Young Member Panels and include the TSB’s Division Centres located near to industry hubs.

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Structure, Governance and Management of the Charity (continued)

Structure, Governance and Management of the Charity (continued)

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TRUSTEE BOARD
OPERATIONAL BOARDS ADVISORY GOVERNANCE BOARDS
BOARDS
(D&I)
e
Qualifications & Membership Board (QMB) Technical Strategy Board (TSB) Regional Strategy Board (RSB) International Strategy Board (ISB) with International Young Members’ Committee as a Sub-committee Young Members Board (YMB) Engineering Heritage Awards Committee (EHA) Education and Skills Strategy Board (ESSB) Diversity & Inclusion Committe Council Trustee Board Awards Committee (TBAC) Finance Board (FB) with PEP Ltd Board as a Sub-committee Strategy Committee (STRATCOM) Audit and Risk Committee (ARC) Nomination Committee (NOMCO) Remuneration Committee (REMCO)
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Figure 3: IMechE governance – organisational structure (April 2022)

Details of activities delivered in 2022 by the regional networks and the operating boards are reported elsewhere in this report.

Member volunteers are also crucial in the delivery of Professional Reviews, registration events, STEM based activities, local events, mentoring, student challenges, to name just a few of the many opportunities to connect with the Institution. Without this support many of our activities or meetings would not be possible.

Membership Volunteering

The extent and success of the Learned Society’s engagement and activities is dependent on the commitment and efforts of our volunteer members who are supported by professional and well-trained staff.

Provision of free facilities

The Institution pays for most of the external facilities that it uses, particularly at national level. Locally, in the Regions and Centres, there is some dependence on the provision of free facilities to hold meetings and activities.

The Trustee Board would like to thank the thousands of members around the world who freely volunteer their time to support the Institution in all parts of its Learned Society activities. Institution members give their time on a purely voluntary basis as members of the Trustee Board, governance committees, advisory bodies, operational boards and committees, and across the regional networks.

Charity Commission of England & Wales and Office of the Scottish Charity Regulator

The Institution takes seriously its responsibilities and duties as a large charity and is focused on continuous improvement in its governance framework to fully comply with its statutory and regulatory obligations and to demonstrate best practice.

As reported in previous annual reports, 16 remaining recommendations from the 2018-2019 governance review were allocated to the senior management team for completion.

There are two key themes associated with this work:

sub-group, is developing a communications strategy to act as a roadmap for longer-term improvements. A key conclusion of the Strategy Committee is that we must move to a digital first approach. Work kicked off in 2022 to improve our existing digital offer in advance of moving to delivering personal digital communications tailored for our members.

In 2022 Past President Peter Flinn agreed an initiative with Council to focus on a review of the Institution’s high-level constitutional documents for the purpose of improving their clarity and members’ understanding of our governance framework. The intention was not to propose changes to the existing governance arrangements per se but to propose changes to the documents’ contents such as to remove inconsistencies and address overlaps. It was envisaged that a holistic review of the Royal Charter & By-laws and the related Regulations and Terms of Reference would be a large project and as a first step a scoping study would be required. A joint (Trustee Board/Council) working group was formed for that purpose.

The two-year time scale for the project was deemed as ambitious due to resource availability and the Trustees felt more time would need to be allocated to the project to ensure quality. The project will be picked up again once the Institution has completed its more urgent projects.

In addition, the Institution in early 2022 adopted new Trustee Board regulations which have enabled us to move to a situation where we will have two Deputy Presidents in waiting allowing better planning continuity.

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Structure, Governance and Management of the Charity (continued)

Structure, Governance and Management of the Charity (continued)

Activities in Scotland

The Institution has approx. 9,390 members based in Scotland supported locally via the Scottish regional committee and its sub-groups led by member volunteers. The regional programme in 2022 consisted of local technical and social events organised by the Scottish Area Committees, technical Centres and Young Member Panels, including technical visits, lectures , and the Scottish Region Annual Dinner.

A number of national events took place in Scotland including technical seminars, for example “Innovative Materials Offshore” in Aberdeen by the Process Industries Division. The Institution also ran a varied programme of events and activities open to all members including our members in Scotland such as “The ABC of Scotland’s Railway Strategy”, organised by the Railway Division which was livestreamed globally.

Internal Control

Internal control systems provide reasonable but not absolute assurance against material misstatement or loss, and cover measures to identify and manage risk.

In 2022:

risk, including the creation and launch of new strategic and department operational risk registers across the Institution. A senior risk manager was appointed to move the Institution forward on risk management. The Programme Office reported the results to the Executive and Audit and Risk Committee.

Employee Engagement

The commitment to the improvement of culture and engagement at the Institution has continued with positive experiences of culture transformation taking place across the Institution. The achievement of Investors in People Gold was testament to the embedding of our values amongst our staff and the great work and support our leadership teams have provided.

Inclusion is the first of IMechE’s four core values, and in that spirit, we continued to deliver our Training Programme ‘Creating Inclusion’ throughout 2022 and have felt a positive culture change on how we bring our values to life at IMechE. One of the highlights of the training programme was having a mixed number of members and employees engaging and working together as one team. Members and employees also came together and attended workshops to discuss how we can align our values, the D&I Strategy and Institution’s longterms strategy going forward, which were fed into a Diversity and Inclusion Action Plan.

The reformed Employee Engagement Group has established working groups to support key engagement streams across the Institution.

The Social Responsibility, IT, Wellbeing and Cheer groups have been working to generate employee engagement and embed a positive work culture at IMechE.

The Social Responsibility Working Group supports IMechE and its employees to increase engagement in socially responsible activities, focusing on charitable and/or environmental initiatives. Over the past year the group has organised a number of

fundraising events for Action for Children, Home - KidsOut and The Trussell Trust - Stop UK Hunger.

The Leadership Forum expanded to enable key stakeholders to be part of the forum allowing them to directly contribute to business planning for the Institution.

Wellbeing continues to be a focal point for the Institution with all employees offered the opportunity to attend a mental health awareness course. There are 8 trained Mental Health First Aiders who provide support and signposting to employees as a first point of assistance. The Institution continues to support flexible work patterns.

The Institution is an equal opportunity employer and does not discriminate on the grounds of disability, age, race, ethnicity or sexual orientation. The Institution has continued to focus on retaining skilled employees by providing more secondment and promotion.

Arrangements for setting the pay and remuneration of key personnel

The remuneration of senior management at Director level and above is reviewed and approved annually by the Remuneration Committee. The Committee ensures arrangements are affordable and fair, and designed to motivate and reward performance in the interests of the Group. Remuneration is benchmarked periodically using external surveys and data which include both commercial and not-forprofit organisations.

Public Benefit Statement

The Trustees confirm that they have complied with the duty in Part 1, Section 4 of the Charities Act 2011 to have due regard to the Charity Commission’s general guidance on public benefit, ‘Charities and Public Benefit’.

The charitable objective of the Institution is to promote the development of Mechanical Engineering to benefit “the general public / mankind” as detailed in the Royal Charter. The Trustees ensure that this purpose is carried out for the public benefit by delivering services that are valued by our members and setting standards of achievement for engineers, thereby engendering public confidence and trust.

Membership is open to people who are pursuing a career or have an interest in mechanical engineering.

The Institution actively pursues the development of debate and action on topics for the betterment of society that relate to mechanical engineering. The Institution provides free literature, free lectures and free access to the library to encourage members of the public to engage in the improvement of the world through engineering.

Modern Slavery: Commitment Statement

IMechE is committed to preventing acts of modern slavery and human trafficking from occurring within its business and supply chain, and suppliers.

As part of our commitment to combating modern slavery, we will continually review the requirements of the MSA 2015 and when appropriate, consider implementing appropriate modern/anti-slavery policies and processes within the organisation. In considering whether to implement the above, we consider:

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Structure, Governance and Management of the Charity (continued)

Structure, Governance and Management of the Charity (continued)

Ukraine

The Institution has decided fees for membership application and subscription will be waived for up to two years for refugee engineers in the UK wishing to join the Institution.

We took the decision as we believe it is important to support refugee engineers to integrate and rebuild their lives, while at the same time helping them to contribute to the UK economy and society.

These engineers have knowledge, skills and training and by supporting them to gain employment or continue with their studies, we can help fill the skills gap we have in the UK.

Membership will provide that important early help and support that may be needed, providing access to some member benefits and services in particular our learned society and training activities, local networks of members and the Support Network assistance.

As part of our overall response to the wider refugee crisis, we are working with the Royal Academy of Engineering, the Engineering Council and other Professional Engineering Institutions help determine how professional bodies can support refugee engineers.

Sri Lanka

Support has also been offered to our members in Sri Lanka, during this time of significant economic crisis.

The Institution is committed to supporting all our members and our Support Network provides advice and support, including financial support, to our members worldwide.

Risk Management

The corporate risk register is maintained by a Senior Risk Manager who works closely with the Executive Team and all departmental managers. The Executive Team regularly update the record with oversight from the Audit and Risk Committee.

Risk issues identified may impact the Institution’s strategy, finances, regulation and reputation, so their identification, documentation and treatment are vital in mitigating high priority or high impact areas, as well as confirming the Institution’s risk appetite.

The Corporate Risk Register is reviewed at the Trustee Board level to ensure that, where possible, risks are being mitigated and managed effectively. The register is presented annually to the Trustee Board and reviewed more frequently by the Audit and Risk Committee to ensure risks are managed effectively and remain relevant.

Overall responsibility for risk management rests with the Trustee Board. Comprehensive risk registers are maintained at the department level with a consistent approach to risk being adopted throughout the organisation. The COVID-19 pandemic generated additional risk reviews necessitated by the frequent changes to Government guidelines and the impact of the pandemic on the Institution’s operations.

Risk Appetite Statement 2022

Introduction

Risks associated with the Institution can be described as events that may or may not happen, that could lead to the Institution not achieving its stated objectives, be they strategic or operational.

The Institution’s risk appetite can be described as the level of risk that the Institution is willing to tolerate (carry) whilst achieving its stated objectives, including financial and operational priorities.

The Institution’s priorities include (but are not limited to):

Our approach

The Institution’s approach to risk is to identify activities that could impact its business objectives. Where activities or potential activities are identified, they are evaluated and recorded as risks. Evaluating risks allows the Institution to assess whether they are within the Institutions risk appetite in their current state. Where identified risks are not within risk appetite additional measures need to be implemented to reduce the probability or impact of them occurring, thus bringing them with risk appetite. The Institution’s risk appetite is linked inextricably to our ability to measure and manage risks. We use several methods to achieve this by implementing policies, procedures, conducting regular reviews and updates as well as assurance processes (internal audits).

This approach provides the Institution with an opportunity to make improvements to the business and charity. The Institution will only accept a risk where the potential benefit or detriment to the business is understood and where sensible measures can be put, or are in place, to control or mitigate the risk.

As risks bear a cost, they are also expressed in financial terms, thus allowing the financial impact on the Institution to be evaluated. The Institution’s approach to risk is proactive.

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Structure, Governance and Management of the Charity (continued)

Major organisational risks

Risk Description Mitigation Failing to agree There are risks associated with the need to agree Whilst the current strategy remains in place, a fully revised and implement a and implement a 5-year strategy for the Institution, 5-year strategy continues to be established. The Strategy 5-year strategy providing focus and priorities. Committee continues to meet and has continued input into for the Institution. other forums such as Council. Individual sub-groups are all in progress to develop the next stage of the revised strategy. The cost of The cost of running and maintaining property assets To continue the information campaign, complete the maintaining remains very high. One Birdcage Walk continues to ongoing consultation, and seek member approval by property assets - require major structural works due to its age and achieving a 2/3 vote. One Birdcage Walk condition. A costing exercise took place in 2022, with the cost of building repairs to meet current standards rising substantially. Revenue produced from venue hire and tenant income from One Birdcage Walk does not cover running costs of the building. One Birdcage Walk’s future depends on achieving a 2/3 vote by the membership. There is an additional risk that if a 2/3 membership vote is not achieved, although risk reduction strategy may reduce the impact of the risk, it will remain without resolution. IT Infrastructure IT infrastructure and operations continue to pose Mitigation includes recruitment and development of – Maintaining in-house team of IT professionals, including structured a significant risk to the Institution, mainly where IT information training to keep skillsets relevant; projects for 2023 systems and processes are no longer fit for purpose. integrity, security Cyber security remains a continuing risk, as it does to focus on migration, development and maintenance of and become a all organisations, however legacy systems naturally infrastructure; documentation and discovery of as-is highly functional pose a higher risk. and to-be plans being developed in response to these; and globally improvement of our security posture where permissible accessible, digital before infrastructure changes; management of communications underperforming third party contracts, replacing these as services contract terms end; development of and delivery roadmap for major digital strategy to tackle underlying outdated systems and lack of strategically important capabilities. Compliance These are risks associated with regulatory Both mandatory staff training as well as appropriate policies with regulatory requirements such as GDPR and Health & Safety. and procedures to maintain the confidentiality, integrity and requirements security of our data (UK GDPR) continue to be updated and implemented.

Whilst the current strategy remains in place, a fully revised 5-year strategy continues to be established. The Strategy Committee continues to meet and has continued input into other forums such as Council. Individual sub-groups are all in progress to develop the next stage of the revised strategy.

For Health & Safety, we continue to employ professionally qualified facilities management staff ensuring Health & Safety conformity across all sites. We have regular site inspections and audits by Head of Building Services. The annual Health & Safety report is submitted to and reviewed by both Audit & Risk Committee and the Trustee Board. IMechE has completed its PEP Strategic review and recommendations have been made to the Finance Board on the future strategy for PEP.

Professional Professional Engineering Projects Ltd (PEP) has four Engineering trading entities: Venue Hire, Learning & Development, Projects Ltd Argyll Ruane, and Sonaspection. The four entities does not deliver were negatively impacted by the COVID-19 pandemic, budgeted profits and recovery was significantly slower than expected. Throughout 2022 the four trading entities experienced varying degrees of recovery. Unaudited accounts show PEP Ltd achieved a small profit in 2022. Membership and Compared to other Professional Engineering Accreditations Institutions (PEI), IMechE continues to have limited resources to devote to member recruitment. Overall, IMechE membership numbers have declined with the number of members in the paying grades marginally down (this excludes those with free membership such as students). Factors including economic downturn after COVID, accessibility to applicants due to hybrid working and the increase in the cost of living, as well as previously identified PEI registration becoming less relevant to employers. The divergence of modern engineering careers that no longer fit neatly into a single PEI, may exacerbate this decline.

Mitigations include ongoing reviews of membership benefits and offerings, marketing campaigns, regular member surveys, continued use of effective business development function, the ongoing use of Falzani model to predict retirement, regular reviews of performance at Senior Leadership team and Trustee Board, setting objectives conducive to being amongst the top UK PEI. This list is not exhaustive.

Governance Corporate Governance risks associated with challenges leadership, accountability and transparency continue to be an area of risk for the Institution.

Aligning Governance planning with IMechE Business Plan, Corporate elections process is being reviewed and amended where applicable and restructuring of the Governance resources to align with better ways of working.

Our report “Engineering a Net-Zero Energy System” looked at the challenges of decarbonisation and what the engineering community should be doing to overcome them.

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Financial Review (continued)

FINANCIAL REVIEW

Financial Results

The key objective in improving the financial position of the Institution is to provide secure financial underpinnings to deliver the Learned Society activities to our members. The Institution runs several commercial ventures and invests in innovation as part of supporting its overall charitable purpose. Following the completion of the Finance Review in 2019, achieving self-funding for the charitable business and increasing the level of free reserves have become key priorities.

In 2022, overall income rose 27% to £28.7M (2021 – £22.6M).

There was no furlough income receivable under government COVID-19 support schemes (2021: £0.1M)

Operating expenditure rose 30% to £28.5M (2021 – £21.9M) resulting in an operating surplus of £0.2M (2021 – £0.7M).

Non-operating costs included a £1.6M loss on investments (2021– £1.8M gain), and a £0.3M actuarial loss (2020 – £9.4M gain) on the pension fund scheme (see note 10 for full details), resulting in a net movement of funds (operating and non-operating) of £1.7M deficit (2021 – £11.9M surplus) for the year.

Figure 4: Income and expenditure trends 2013–2022 (£’000s)

----- Start of picture text -----
30,000 12,000
10,000
25,000 8,000
6,000
20,000 4,000
2,000
15,000 0
-2,000
-4,000
10,000
-6,000
5,000 -8,000
-10,000
0 -12,000
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
restated restated
Operating Surplus/Deficit (RH axis) Operating Income (LH axis)
Other Income/Expenditure (RH axis) Operating Expenditure (LH axis)
----- End of picture text -----

Charity only income and expenditure

To assist members in understanding a summary of charity income and expenditure has been developed in a non-statutory format.

Sources of income (Charity, unrestricted)

----- Start of picture text -----
2%
1%
4%
92%
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Membership subscriptions Investment income Rental income from tenants Legacies End point assessment surplus PEP profits

Income only includes membership subscriptions, rental income from tenants, investment income and departments which have a net surplus e.g. end-point assessment. Legacies and profits from PEP are included but each is well below 1% of total income in 2022 so they are not easily visible. Departments which are a net expense e.g. events, professional development, are not shown within income but the net expenditure is included within the graphic below

Charity only expenditure

----- Start of picture text -----
6%
12%
33%
14%
17%
18%
----- End of picture text -----

Membership development Governance and leadership Sustainable finance and facilities Digital first Impact People and culture

All departments with net expenditure have been allocated over the strategic goals and enablers. Depreciation has been excluded from the totals but capital expenditure in the year is included in the relevant values. The ‘Collaboration and Partnership’ and ‘Evaluation and Continuous Improvement’ enablers have not historically had costs measured separately but both are small compared to the others. Further work to improve this will be conducted during 2023.“

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Financial Review (continued)

Financial Review (continued)

Charity Reserves

The reserves target is £11.6M (2021 £11.6M). Of this, £7m is required to cover known major repairs to the HQ building. Once any building upgrade goes ahead, these repairs will be included and subsequently this component of the free reserves target could be substantially reduced.

As of 31st December 2022, this calculation of free reserves was as shown:

2022 2021
£’000 £’000
Total Charity funds excluding pension liability 33,454 35,150
Less: Endowment funds (10,618) (11,842)
Less: Restricted income funds (3,438) (3,592)
Unrestricted funds 19,398 19,716
Less: mixed-motive investments (3,082) (2,908)
Less: intangible assets (3,446) (3,530)
Less: tangible assets (5,897) (6,298)
Less: current year pension defcit payments (500) (500)
Free reserves 6,473 6,480

The main action to bring the free reserves back to target is the future head office project. Extensive work was completed by a working group during 2022 and a report was presented to trustees early in 2023. Further work continues with a decision by trustees expected in mid 2023.

Figure 5: Trends in unrestricted and free reserves 2013–2022 £000

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25,000
20,000
15,000
10,000
5,000
0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Free reserves
Unrestricted
Unrestricted exc. Pension fund
----- End of picture text -----

Trading Entities

The Institution operates four main trading activities through its subsidiary Professional Engineering Projects Ltd and its sub-subsidiaries:

The trading performance of these businesses is overseen by the Board of Professional Engineering Projects Ltd (PEP). This is chaired by a Trustee (Vice-President), who is also deputy chair of the Finance Board. The PEP Board is directly accountable to the Finance Board (chaired by a Deputy President), which provides oversight of commercial activities as an integral part of its responsibilities for the Institution’s finance, and ultimately to the Trustee Board. Both the PEP and Finance Boards have external members who are senior members of the Institution or appropriately qualified independent members. They are supported as required by external professional advice.

The PEP Ltd Board reviews the annual plan and three-year strategy for each business. Related financial metrics are approved by the Finance Board as part of the overall Institution’s financial processes. Financial and commercial performance is monitored by the PEP Board, with a summary provided through its quarterly reports to the Finance Board.

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Financial Review (continued)

Financial Review (continued)

PEP Ltd trading performance

Overall trading income for PEP recovered strongly after the COVID-19 downturn seen in previous years. Turnover increased by 53% in 2022 to £10.1M (2021: £6.6M), generating a profit of £0.01M (2021: £0.25M loss) at budgeted exchange rates, after direct costs of £10.1M. There were no R&D tax credit claims received in cash during the year (2021 £0.11M).

There was considerable variability in performance across the four businesses – with L&D being the stand-out performer in what was an exceptional year for the business. By contrast, revenue growth in IAR’s market was significantly lower than expected, resulting in significant losses.

Although the four businesses operate largely independently of each other, PEP Ltd holds shared costs. These largely relate to provision by IMechE of finance, HR, IT and legal & professional services, as well as other minor commercial activities. These totalled a net cost of £0.46M in 2022, (2021: £0.39M). The increase follows an internal review which amended some of the recharges to more accurately reflect costs attributable to the trading entities.

Historical practice has been to present performance in terms of operating profits (excluding the costs of recharged services that are held at PEP level). Our future intent is to move towards reporting of “net profits”, expected from 2023, once the PEP and Finance Boards have validated the treatment of these shared costs.

Revenue Operating proft/(loss)
2022 2021 2022 2021
One Birdcage Walk 1.14 0.36 0.31 0.06
IMechE Argyll Ruane 2.92 2.00 (0.36) (0.27)
Learning and Development 2.46 1.60 0.37 0.15
Sonaspection 3.57 2.66 0.21 0.28
Shared costs (held by PEP) (0.52) (0.47)
PEP Ltd Group 10.09 6.62 0.01 (0.25)

Longer term trends and strategy

The graphic of operating profit below highlights the beginning of a recovery following the significant impact of COVID on trading performance, as well as some of the trading volatility experienced in these small businesses over the years.

Figure 6: Trading entities operating profit and loss 2013-2022

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800
600
400
200
0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
restated restated
(200)
(400)
(600)
(800)
One Birdcage Walk IAR (inc. Fife) Total inc. shared costs
L&D Sonaspection
----- End of picture text -----

Three of the trading entities (L&D, IAR and Sonaspection) were acquired for £4.3m over the years 2011-13. Different accounting assumptions have since been applied, complicating the reporting of trends. The cumulative net profit from acquisition through to 2022 of these three businesses (after allocated costs are applied) is estimated to be just above break-even. This lower than expected return, in part, reflects the significant impact of COVID for all of these businesses (costing around £1.0m). With trading performance now improving once more, future returns should be higher.

The businesses, particularly L&D and One Birdcage Walk, also bring indirect benefits through provision of services to members (directly and indirectly). The strategic intent agreed by the Trustee Board is to place greater emphasis on this aspect of value-add, with a more explicit alignment of commercial and learned society strategic goals, while retaining commercial focus and discipline in the businesses. There are plans to carry out market testing in 2023 to assess whether a more entrepreneurial, commercially focussed ownership could give the IAR and Sonaspection businesses and their people greater scope to take advantage of their strong market position and benefit from the many opportunities that exist.

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Financial Review (continued)

Our venue hire business,

trading under the ‘One Birdcage Walk’ brand recovered strongly as customers began to return to pre-COVID levels of activity.

One Birdcage Walk

Our venue hire business, trading under the ‘One Birdcage Walk’ brand recovered strongly as customers began to return to pre-COVID levels of activity from Q2 onwards. Income rose to £1.14m (2021: £0.36M), which is approaching the 2019 turnover of £1.35M pre-COVID. Operating profit rose to £0.31M (2021: £0.06M).

The income growth was supported by our investments in re-shaping the marketing team to ensure One Birdcage Walk had direct support, with high numbers of leads generated coupled with strong conversion. The positive trends were adversely impacted in December by strikes on the transport network which led to cancellation or postponement of a number of events. The outlook for 2023 is one of continued growth (10%) that returns us to pre-COVID levels. Profits are expected to be largely unchanged, as additional staffing is required to cope with the recent growth.

In addition, the business has started to offer its professional venue hire capabilities to internal (Institution) customers on a cost neutral basis.

IMechE Argyll Ruane (IAR)

IAR had a challenging year. Although turnover rose from £2.00M to £2.92M, market recovery from COVID, and growth from IAR’s new Fife operation, were slower than expected. With resources having been built up in anticipation of rapid growth that did not materialise, this led to a significant operating loss of £0.36M for IAR (2021: £0.27M).

Our strong focus in 2023 is to restore profitability and to put in place a more sustainable business model that capitalises on IAR’s market position, reputation and capabilities. This is supported by action taken towards the end of 2022 to address IAR’s largely fixed cost base, which included a small restructuring and associated redundancies. The business is under new leadership, following the retirement of the previous general manager.

We are encouraged by the NDT training market showing more positive signs in early 2023, with the COVID-control measures that impacted our international markets having now been lifted. There are also opportunities linked to a new 10 year agreement with the Institute of Corrosion (ICorr) in 2023 to develop and deliver ICorr certified training courses and examinations globally (building on IAR’s current UK activities in this area).

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Financial Review (continued)

Financial Review (continued)

Learning and Development

Our training business grew strongly during 2022, aided by enhanced marketing capability, to deliver record turnover and operating profits, despite a small amount of disruption in December from the transport strikes. Income increased by 54% to £2.46M (2021: £1.60M), which supported a significant increase in operating profits to £0.36M (2021: £0.14M).

The intent for 2023 is to consolidate this strong 2022 performance, with modest turnover growth expected. This reflects an uncertain economic outlook and challenging business environment affecting demand. Emphasis is also being given to re-invigorating investment in new products, which includes the introduction of an “early years development programme” targeted at SMEs.

L&D continues to grow its engagement with the Institution’s Groups and Divisions, for example successfully delivering training courses in collaboration with the Railway Division. It is expanding its training portfolio to supports broader institutional initiatives relating to net zero.

Sonaspection

Sonaspection had a mixed performance. Overall turnover rose to £3.57M (2021: £2.66M), partly linked to major deliverables being rephased from December 2021 into Q1 2022 to meet customer requirements. The turnover growth was mainly in the UK. However, operating profits were down 23% to £0.21M (2021: £0.28M) – primarily due to higher than expected costs in the US.

Orders and market interest remained strong in the second half of 2022. The outlook is for turnover to remain broadly flat, with a small decline in the UK as major projects reach their conclusion. This is offset by expected growth in the US. There is a focus on restoring margins to previous levels in the face of significant inflationary impacts on the business (such as cost of energy and raw materials) and of taking action to support sustained profitability of the US operations.

Performance in 2023 will be boosted by receipt of tax credits from the US government business support programme (£100k received in Q1 2023).

Balance Sheet

Through the Stephenson LLP fund, we invested in early stage innovation companies until November 2018, in line with our charitable aim of being an impulse to innovation. Further investment is now on hold, outside of the costs necessary to operate the fund for the remainder of its life. At the end of 2022, we had invested £1.9M in 11 companies (2021: £1.8M in 11). The market value of these investments was £3.1M at the end of 2022 (2021: £2.9M), an increase of £0.2M (2021: £0.2M).

Our listed investments decreased to £18.2M (2021: £19.9M) due to market value movements.

Intangible assets remained flat at £3.5M (2021: £3.5M). with amortisation and investment broadly in balance, as predicted last year.

Tangible fixed assets decreased by £0.4M (2021: £0.4M decrease) to £5.9M (2019: £6.3M). Investment in land and property remains low while the future head office project is in the planning stages.

The pension fund remained at a nil deficit at the end of 2022 (2021: nil). Although there were very large movements in asset and liability values, the effect of hedging meant that the overall impact was very small. Due to hedging the sensitivity of the fund has substantially declined with a 0.5% reduction in interest rates leading to a £2.6M increase in pension liabilities (2021: £5.5M). The aim of the Trustees of the pension fund and the Institution is to transfer the total risk to an acceptable financial vehicle, such as an insurance company, in the medium-term.

Due to the decline in investments, group reserves decreased to £33.5M from £35.2M in 2021. The Institution continues to remain financially sound. The Trustee Board is committed to maintaining financial prudence and, in particular, making an overall surplus and increasing free reserves.

Degree of Financial Dependency

The Institution is dependent on the voluntary efforts of its members. However, there is no significant degree of dependence on any single member or small group of members in respect of voluntary effort or financial contributions.

Income from events and publications is also derived from a significant number of independent sources. However, the success of these activities is dependent on the general state of the economy.

Going Concern

The Trustees have considered several factors in concluding that the adoption of a going concern basis in the preparation of these financial statements is appropriate. These factors have included a summary of the key risks and uncertainties in the context of the Institution’s operations and a review of the budgets and forecasts, including cash flows and sensitivity analysis. The future forecast considers the mitigating actions the Institution has taken and considers both immediate liquidity and longer-term solvency, together with the impact on reserves.

Working capital requirements are met through a combination of income received from the Institution’s activities, including commercial activities undertaken in the Institution’s trading subsidiaries. The Institution has the ability to drawdown against funds held within the Institution’s unrestricted investment portfolio if required. The Institution does not have any debt facilities but has £0.1M of COVID-19 bounce back loans within the trading subsidiaries.

Membership income is a key income stream and the Institution continues to ensure the delivery of value from being a member to guard against any decline. The experience of 2021 has been incorporated into future forecasts.

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Financial Review (continued)

Financial Review (continued)

As detailed above, Trustees have reviewed sensitivities and approved a 2023 budget reflecting expected levels of income to maintain free reserves during the year.

Having regard to the above, the Trustees believe it appropriate to adopt the going concern basis of accounting in preparing the financial statements.

Summary of Funds and Investments

General

A description of all the various funds included within the Institution’s accounts is provided below.

Investment policy and returns

The Trustee Board has established an investment policy which is reviewed on an annual basis. The policy includes the following principles:

  1. A diversity of investments will be held, in so far as is appropriate to the fund concerned. This may be achieved via a pooled investment vehicle like a unit trust or investment trust.

  2. Investment policy will be appropriate to the needs of the fund.

  3. Appropriately authorised investment managers will be employed.

  4. Appropriately authorised nominees may be employed to hold individual stocks and shares. The investment managers work towards the following objectives:

Reserve Fund, General Trust and James Clayton Trust

Target asset allocations have been set for each fund with the objective of outperforming the relevant composite benchmark by 0.5% over rolling three-year periods. The composite benchmark being calculated using the asset allocations and an appropriate index for the asset class.

Other Trusts

Funds are invested in special pooled funds restricted to charity use. It is not appropriate to set individual objectives for these investments. However, performance is compared against statistics prepared by the Investment Management company.

A summary of the total annual rates of return (income and capital) achieved on investments during 2022 and 2021 is as follows:


during 2022 and 2021 is as follows:
Year to Year to
31.12.22 31.12.21
% %
Reserve Fund (6.7) 10.3
General Trust (6.8) 10.5
James Clayton Trust (6.8) 10.4
Charities Ofcial Investment Fund income units (9.1) 17.4
Whitworth Scholarships Fund – Charishare (0.2) 14.9
Whitworth Scholarships Fund – Charinco (17.3) (3.7)

Figure 7: Investment and pension fund gains/losses trends 2013–2022 £000

----- Start of picture text -----
3,000
2,000
1,000
0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
restated restated restated restated
(1,000)
(2,000)
(3,000)
(4,000)
Investments 3 year rolling average
Pension fund 3 year rolling average
----- End of picture text -----

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Statement of Trustees’ Responsibilities (continued)

STATEMENT OF TRUSTEES’ RESPONSIBILITIES IN RESPECT OF TRUSTEES’ ANNUAL REPORT AND THE FINANCIAL STATEMENTS

Under the trust deed and rules of the charity and charity law, the Trustees are responsible for preparing the Trustees’ Annual Report and the financial statements in accordance with applicable law and regulations.

Charity law requires the Trustees to prepare financial statements for each financial year. The Trustees have elected to prepare the financial statements in accordance with FRS102, the Financial Reporting Standard applicable in the UK and Republic of Ireland.

The group and charity’s financial statements are required by law to give a true and fair view of the state of affairs of the group and the charity and of the group’s excess of income over expenditure for that period.

In preparing these financial statements, generally accepted accounting practice entails that the Trustees:

The Trustees are required to act in accordance with the trust deed and the rules of the charity, within the framework of trust law. They are responsible for keeping proper accounting records, sufficient to disclose at any time, with reasonable accuracy, the financial position of the charity at that time, and to enable the Trustees to ensure that, where any statements of accounts are prepared by them under section 132(1) of the Charities Act 2011, those statements of accounts comply with the requirements of regulations under that provision. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the charity and to prevent and detect fraud and other irregularities. The Trustees are responsible for the maintenance and integrity of the financial and other information included on the charity’s website.

Disclosure of Information to Auditor

The Trustees who held office at the date of approval of this Trustees’ Annual Report confirm that, so far as they are each aware, there is no relevant audit information of which the Institution’s auditor is unaware; and each Trustee has taken all the steps that he/she ought to have taken as a Trustee to make himself/herself aware of any relevant information and to establish that the Institution’s auditor is aware of that information. The financial statements have been prepared in accordance with the accounting policies set out in the notes to the accounts and comply with the charity’s governing documents, the Charities Act 2011 and Accounting and Reporting by Charities: Statement of Recommended Practice applicable to charities preparing their accounts in accordance with FRS102, the Financial Reporting Standard applicable in the UK and Republic of Ireland, published on 16 July 2014.

This annual report was approved by the Trustee Board on 26 April 2023 and was signed on its behalf by

Clive Hickman Chair, Finance Board

Phil Peel President

Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Fundraising

The charity had no fundraising activities requiring disclosure under S162A of the Charities Act 2011.

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We saw

190 teams from 27 countries taking part in our 5 Challenge events.

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS AND TRUSTEES OF INSTITUTION OF MECHANICAL ENGINEERS

Opinion on the financial statements

we have fulfilled our other ethical responsibilities in accordance with these requirements.

In our opinion, the financial statements:

Conclusions related to going concern

In auditing the financial statements, we have concluded that the Trustees’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group and the Parent Charity’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

We have audited the financial statements of Institution of Mechanical Engineers (“the Parent Charity”) and its subsidiaries (“the Group”) for the year ended 31 December 2022 which comprise the consolidated statement of financial activities, the consolidated balance sheets, the consolidated statement of cash flows and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

Other information

The Trustees are responsible for the other information. The other information comprises the information included in the Trustee Board’s Report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

We have nothing to report in this regard.

Matters on which we are required to report by exception

Independence

We remain independent of the Group and the Parent Charity in accordance with the ethical requirements relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and

We have nothing to report in respect of the following matters in relation to which the Charities (Accounts and Reports) Regulations 2008 and the Charities

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Independent Auditor’s Report to the Members and Trustees (continued)

Independent Auditor’s Report to the Members and Trustees (continued)

Accounts (Scotland) Regulations 2006 requires us to report to you if, in our opinion;

Responsibilities of Trustees

As explained more fully in the Statement of Trustees’ Responsibilities, the Trustees are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Trustees determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Trustees are responsible for assessing the Group’s and the Parent Charity’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Trustees either intend to liquidate the Group or the parent Charity or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements

We have been appointed as auditor under section 151 of the Charities Act 2011 and section 44(1)(c) of the Charities and Trustee Investment (Scotland) Act 2005 and report in accordance with the Acts and relevant regulations made or having effect thereunder.

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that

an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Extent to which the audit was capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

Non-compliance with laws and regulations

Based on:

we considered the significant laws and regulations to be the Charities Act in the UK, UK GAAP and UK tax legislation.

The Group is also subject to laws and regulations where the consequence of non-compliance could have a material effect on the amount or disclosures in the financial statements, for example through the imposition of fines or litigations. We identified such laws and regulations to be the Charity Commission

Our procedures in respect of the above included:

Fraud

We assessed the susceptibility of the financial statements to material misstatement, including fraud. Our risk assessment procedures included:

Our procedures in respect of the above included:

We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.

Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed noncompliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.

A further description of our responsibilities for the audit of the financial statements is located at the Financial Reporting Council’s (“FRC’s”) website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

Use of our report

This report is made solely to the Charity’s trustees, as a body, in accordance with the Charities Act 2011 and the Charities and Trustee Investment (Scotland) Act 2005. Our audit work has been undertaken so that we might state to the Charity’s trustees those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Charity and the Charity’s trustees as a body, for our audit work, for this report, or for the opinions we have formed.

BDO LLP, statutory auditor London, UK

Date: 28 April 2023

BBDO LLP is eligible for appointment as auditor of the charity by virtue of its eligibility for appointment as auditor of a company under section 1212 of the Companies Act 2006.

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

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FINANCIAL STATEMENTS

Financial Statements (continued)

Statement of Financial Activities

Year ended 31 December 2022

Consolidated Statement of Financial Activities

2022 2021
Notes Unrestricted Restricted Endowment Total Total
Funds Funds Funds
Income and Endowments from: £’000 £’000 £’000 £’000 £’000
Donations and Legacies 21 – – 21 113
Charitable Activities
Membership Subscriptions 12,706 – – 12,706 12,436
Groups, Divisions and Events 1,621 – – 1,621 1,117
Professional Development and Membership 211 – – 211 174
Information and Library Services 4 – – 4 3
Apprentice End Point Assessment 2,243 – – 2,243 1,172
Other trading activities
Venue Hire, Training, Exam Services, Consultancy, Flawed Samples 10,668 – – 10,668 6,353
Marketing, Advertising and Merchandise 7 – – 7 –
Investments
Interest and Dividends 14 145 556 – 701 637
Other
Other Income 2 4 – – 4 91
Rents Receivable 524 – – 524 506
Total 28,154 556 – 28,710 22,602
Expenditure on:
Raising funds
Non-charitable Trading Activities 11,344 – – 11,344 7,015
Investment Management Costs 6 10 – 16 10
Charitable Activities
Groups, Divisions and Events 5,236 – – 5,236 4,369
Marketing 2,182 – – 2,182 1,686
Business Development 2,148 – – 2,148 2,395
Apprentice End Point Assessment 2,178 – – 2,178 1,162
Professional Development 914 – – 914 763
Information and Library Services 804 – – 804 801
Membership Subscriptions 2,617 – – 2,617 2,527
Tenants and Public Facilities 495 – – 495 400
Prizes, Awards and Scholarships 28 561 – 589 735
Total 3 27,952 571 – 28,523 21,863
Net(losses)/gains on investment assets 13/14 (219) (139) (1,224) (1,582) 1,776
Net(expenditure)/income (17) (154) (1,224) (1,395) 2,515
Other recognised gains/(losses)
Actuarial (losses)/gains on defned beneft pension scheme 10 (301) – – (301) 9,425
Net movement in funds (318) (154) (1,224) (1,696) 11,940
Reconciliation of funds
Total funds brought forward 19,716 3,592 11,842 35,150 23,210
Total funds carried forward 22 19,398 3,438 10,618 33,454 35,150

The notes to the accounts numbered 1 to 27 form part of these accounts.

2021
Unrestricted Restricted Endowment Total
Funds Funds Funds
Comparative Information £’000 £’000 £’000 £’000
Total Income 22,090 512 – 22,602
Total expenditure (21,202) (661) – (21,863)
Net investment gains 399 252 1,125 1,776
Actuarial losses on defned beneftpension scheme
Net movement in funds		 9,425
10,712		 –
103		 –
1,125		 9,425
11,940

Consolidated Balance Sheets as at 31 December 2022

Group Institution
Notes 2022 2021 2022 2021
£’000 £’000 £’000 £’000
Fixed Assets
Intangible assets 11 3,446 3,530 3,172 3,322
Tangible assets 12 5,897 6,298 5,168 5,516
Investments: mixed-motive 13 3,082 2,908 3,082 2,908
Investments: listed
Total fxed assets		 14 18,155
30,580		 19,876
32,612		 11,366
22,788		 12,736
24,482
Current Assets
Stocks 15 191 246 12 –
Debtors 16 3,393 3,175 7,423 7,353
Cash at bank and in hand 7,537 7,210 6,424 6,619
Total current assets 11,121 10,631 13,859 13,972
Liabilities
Creditors: amounts fallingdue within oneyear 17 8,184 8,010 6,687 6,460
Net current assets 2,937 2,621 7,172 7,512
Total assets less current liabilities 33,517 35,233 29,960 31,994
Creditors: amounts fallingdue after oneyear 18 63 83 – –
Total net assets 22 33,454 35,150 29,960 31,994
The Funds of the Charity
Endowment funds 10,618 11,842 6,632 7,644
Restricted income funds 3,438 3,592 720 702
Unrestricted funds 19,398 19,716 22,608 23,648
Total unrestricted funds 19,398 19,716 22,608 23,648
Total charityfunds 21 33,454 35,150 29,960 31,994

The consolidated statement of financial activities is for the Group as a whole. The Charity’s total income for the year was £18,096k (2021: £16,229k). The Charity’s total funds decreased by £2,034k (2021: £11,708k increase).

The financial statements were approved by the Trustee Board on 26 April 2023 and were signed on its behalf by:

Clive Hickman Chair, Finance Board

Phil Peel President

The notes to the accounts numbered 1 to 27 form part of these accounts. Charity Registration No: 206882.

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Financial Statements (continued)

NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2022

1. Accounting Policies

Consolidated Statement of Cash Flows

Consolidated Statement of Cash Flows
Notes 2022 2021
£’000 £’000
Cash fows from operating activities:
Net cashprovided by /(used in) operating activities		 25 848 1,805
Cash fows from investing activities:
Dividends, interest and rent from investments		 14 701 637
Purchase of property, plant and equipment 12 (311) (366)
Proceeds from sale of property, plant and equipment 7 5
Purchase of mixed-motive investments 13 (36) (35)
Purchase of intangible assets 11 (864) (1,030)
Proceeds from sale of investments 14 – 3
Cash awaitinginvestment – 12
Net cash used in investing activities (503) (774)
Cash fows from fnancing activities:
New bank loans		 – 100
Bank loan repayments (18) –
Net cash fowsprovided by fnancing activities
Change in cash and cash equivalents in the reporting period		 (18)
327		 100
1,131
Cash and cash equivalents at the beginningof the reporting period 7,210 6,079
Cash and cash equivalents at the end of the reporting period 7,537 7,210

The notes to the accounts numbered 1 to 26 form part of these accounts.

Analysis of Net Funds

Analysis of Net Funds
Group Balance
01.01.2022		 Cash Flows Balance
31.12.2022
£’000 £’000 £’000
Cash and cash equivalents
Cash awaiting investment 41 – 41
Cash at bank and in hand 7,210 327 7,537
7,251 327 7,578
Borrowings
Debt due within one year (17) (2) (19)
Debt due after oneyear (83) 20 (63)
(100) 18 (82)
Total 7,151 345 7,496

The Charity is registered with the Charity Commission (registered number: 206882), and the Scottish Charity Regulator (registered number: SCO51227) domiciled in the UK and is a public benefit entity and incorporated by Royal Charter in 1930. The address of the registered office is 1 Birdcage Walk, London, SW1H 9JJ

a) Basis of preparation

The Financial Statements have been prepared in accordance with the Charities SORP, FRS102 The Financial Reporting Standard applicable in the UK and Republic of Ireland, and applicable UK charity law.

The Financial statements have been prepared to give a true and fair view and have departed from the charities (Accounts and Reports) Regulation 2008 only to the extent required to give a true and fair view. This departure has involved following Accounting and Reporting by Charities: Statement of Recommended Practice applicable to charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS102) effective 1 January 2019 rather than the Accounting and Reporting by Charities: Statement of Recommended Practice effective from 1 April 2005 which has since been withdrawn.

The annual accounts have been prepared on the historical cost basis of accounting, modified by the recognition of certain financial assets and liabilities measured at fair value.

b) Going concern

The Trustees have considered several factors in concluding that the adoption of a going concern basis in the preparation of these financial statements is appropriate. These factors have included a summary of the key risks and uncertainties in the context of the Institution’s operations (including COVID-19) and a review of the budgets and forecasts, including cash flows and sensitivity analysis.

The budgets and forecasts consider the mitigating actions the Institution can deploy and consider both immediate liquidity and longer term solvency, together with the impact on reserves.

Working capital requirements are met through a combination of income received from the Institution’s activities, including commercial activities undertaken in the Institution’s trading subsidiaries. The Institution has the ability to drawdown against funds held within the Institution’s unrestricted investment portfolio if required. The Institution does not have any debt facilities other than the bounce back loans taken out by two commercial subsidiaries (Notes 17 and 18).

The impact of the COVID-19 on the Institution’s operations has substantially reduced during the year and we expect there to be no further impact in the future, subject to unexpected developments in new variants. However, the move to on-line activities will partially remain through a permanent hybrid approach which has proved both effective and popular, with some permanent cost savings as a result.

Membership income is a key income stream and the Institution continues to ensure the delivery of value from being a member to guard against any decline. The experience of 2021 has been incorporated into future forecasts.

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Notes to the Accounts for the year end (continued)

Notes to the Accounts for the year end (continued)

1. Accounting Policies (continued)

As detailed above, Trustees have reviewed sensitivities and approved a 2023 budget reflecting expected levels of income to target a cash surplus during the year.

Having regard to the above, the Trustees believe there are no material uncertainties and therefore it is appropriate to adopt the going concern basis of accounting in preparing the financial statements.

c) Basis of consolidation

Consolidated figures for the Institution and group companies (see note 2 to the accounts) have been included in these financial statements for the year ended 31st December 2022. Companies acquired by the group are consolidated on an acquisition basis ie fair values are attributed to the Group’s share of the net tangible assets and where the cost of acquisition (being the fair value of the purchase consideration and the expenses of the acquisition) is greater than the fair values attributable to such net assets, the difference is treated as goodwill.

1. Accounting Policies (continued)

e) Tangible fixed assets

Tangible fixed assets are stated at cost less depreciation. Depreciation is calculated so as to write off the cost of fixed assets on a straight line basis at the following rates:

Freehold buildings: Building improvements 2% on original purchases, 4% on improvements per annum Leasehold buildings: Building improvements 2% or over the period of the lease if quicker per annum Furniture and equipment: 20% to 33.3% per annum Plant and equipment: 10–20% per annum

d) Income

Income is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. No amounts are included in these financial statements for the services donated by volunteers.

With the exception of Membership Income, all income is included in the SOFA when the Institution is legally entitled to the income and the amount can be quantified with reasonable accuracy.

Membership subscription income is accounted for on the basis of the amount receivable for the year. Accordingly, the amounts received during the year in relation to future years are deferred. Members who join in the final quarter of the year are not charged subscriptions by the Institution for that year. The annual subscription payment received is treated as relating entirely to the following year and is deferred.

Pecuniary legacies are recognised when probate is in place. Residuary legacies are recognised when probate is granted, a copy of the will has been received to confirm the Institution’s entitlement, and there is sufficient information to value them. In practice this is usually when the assets and liabilities statement is received. Reversionary interests involving a life tenant and contentious legacies are not recognised.

Income from contracts for the provision of professional services (professional development, information and library services, consultancy, flawed samples categories) is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. When the outcome cannot be estimated reliably, income is recognised only to the extent of the expenses recognised that are recoverable.

Freehold land is not depreciated.

Fixed assets are regularly reviewed to consider whether they have been impaired and to ensure that the depreciation costs reflect their working life. Expenditure below £1,000 is not capitalised except laptops/computers.

f) Goodwill

Goodwill represents the excess of the cost of acquisition of incorporated and unincorporated businesses over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill shall be considered to have a finite useful life, and shall be amortised on a systematic basis over its economic life of five years.

Where there are indications of impairment, an impairment review is undertaken to assess a recoverable amount, which considers a service potential and not cash flows.

g) Website and digital transformation costs

Website costs are capitalised when it is probable that the expected future economic benefits that are attributable will flow to the Group and their costs can be reliably measured. Website and Digital Transformation costs are initially recognised at cost and amortised over the expected useful life of five years.

Income from events, apprentice end-point assessment, venue hire, training and exam services, are recognised on the basis of the amount receivable in the period in which the event takes place. Income from sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, the amount can be measured reliably, and it is probable that the economic benefits associated with the transaction will flow to the entity.

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Notes to the Accounts for the year end (continued)

Notes to the Accounts for the year end (continued)

1. Accounting Policies (continued)

h) Impairment of tangible and intangible assets

At each reporting end date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss.

Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually, and whenever there is an indication that the asset may be impaired.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in SOFA, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried in at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

i) Financial assets

The Group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS102 to all of its financial instruments.

Financial assets are recognised in the company’s statement of financial position when the Group becomes party to the contractual provisions of the instrument.

Interest is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial. The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating the interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the debt instrument to the net carrying amount on initial recognition.

1. Accounting Policies (continued)

j) Financial liabilities

Basic financial liabilities are initially measured at transaction price, unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Other financial liabilities classified as fair value through profit or loss are measured at fair value.

k) Investments

Listed investments are stated at market value, valued at their bid price, at the balance sheet date.

It is the Group’s policy to keep valuations of stock exchange listed investments up to date, such that when investments are sold there is no gain or loss arising relating to prior years. As a result the statement of financial activities does not distinguish between the valuation adjustments relating to sales and those relating to continued holdings, as they are together treated as changes in the value of the investment portfolio throughout the year. Investments not listed on a recognised stock exchange are valued at fair value, unless there is no reliable basis of valuation, in which case they are valued at cost.

Mixed-motive investments

The Institution formed a limited partnership with Stephenson LP in February 2014 to make venture capital investments into a portfolio of companies involved in or associated with young innovative engineering businesses. This investment has a genuine mixed motive because investment is being made both for financial return but also to advance engineering. The investment is held at fair value based on the most recent share sale prices of the underlying investments, less any impairment. If there is objective evidence of impairment, then an immediate impairment loss is recognised in the statement of financial activities.

l) Foreign currency

Monetary assets and liabilities denominated in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. All differences are taken to Statement of Financial Activities.

m) Expenditure

Expenditure is included in the Statement of Financial Activities on an accruals basis and is recognised once there is a legal or constructive obligation to transfer economic benefit to a third party, it is probable that a transfer of economic benefits will be required in settlement and the amount of the obligation can be measured reliably.

n) Stocks

Stock classified as finished goods per sale are stated at the lower of cost and net realisable value using FIFO method. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.

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Notes to the Accounts for the year end (continued)

Notes to the Accounts for the year end (continued)

1. Accounting Policies (continued)

Work-in progress is assessed on an individual basis based on the stage of completion of the contract which is estimated using combination of the milestones in the contract and the time spent to date compared to the total time expected to be required to undertake the contract. Estimates of the total time required to undertake the contracts are made on a regular basis and subject to management review. These estimates may differ from the actual results due to a variety of factors such as efficiency of working, accuracy of assessment of progress to date and client decision making.

See note 15 for the disclosure of the amount of work in progress as at the balance sheet date. Net realisable value is the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.

o) Retirement benefit

The Charity operates a defined benefit pension scheme which was closed to new members in 2002 and is also closed to future accrual. It also operates a defined contribution scheme open to existing staff.

Defined benefit pension scheme assets are measured using market values. Pension scheme liabilities are measured using a projected unit method and discounted at the current rate of return on a high-quality corporate bond of equivalent term and currency to the liability.

For the defined benefit pension scheme, the current service costs, gains and losses on settlements and curtailments, and administrative costs are charged to expenditure. They are included as part of staff costs. Actuarial gains and losses are recognised immediately in ‘Other recognised gains/(losses)’.

For the defined contribution scheme, the amounts charged to expenditure in respect of pension costs and the post-retirement benefits are the contributions payable in the year.

p) Operating leases

Rents payable under operating leases are recognised in the Statement of Financial Activities in the year in which they fall due.

Future commitments under operating leases are disclosed in the notes to the financial statements.

q) Grant commitments

Scholarships are awarded for a period of study, usually three academic years, with the students’ progress being assessed on an annual basis.

1. Accounting Policies (continued)

r) Critical accounting estimates and judgements

In the application of the accounting policies, the Trustees are required to make judgements, estimates and assumptions about the carrying value of assets and liabilities that are not readily apparent from other sources. Judgements and estimates are also required for the allocation of support costs to the expenditure headings in the statement of financial activities, as set out in Note 3.

The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised, if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities have been outlined as follows.

Intangible fixed assets

The majority of the cost of intangible fixed assets are based on the capitalisation of both internal and external staff costs. These are allocated to specific projects based on a monthly review of time spent and development output conducted by the Chief Technology Officer, for the charity digital modernisation programme, or the relevant General Manager, for commercial training course development.

An annual review is conducted to assess the carrying value of the projects against future expected economic benefits.

Unlisted investments

The Group makes an estimate of the fair value of unlisted investments based on the last price paid for shares and subject to an impairment review for any material changes in circumstance since the last share sale.

Actuarial assumptions in respect of defined benefit pension schemes

The application of actuarial assumptions relating to defined benefit pension schemes is incorporated in the financial statements in accordance with FRS102. In applying FRS102, advice is taken from independent qualified actuaries. In this context, significant judgement is exercised in a number of areas, including future changes in salaries and inflation, mortality rates and the selection of appropriate discount rates.

Bad debt provision

Expenditure is not accrued beyond each academic year as future payments are subject to a review by the relevant panel which therefore has discretion to terminate the funding agreement in case the performance related conditions are not met.

Prizes are paid in one instalment at the beginning of the academic year, with the exception of scholarships through the Whitworth fund, which are paid in three termly instalments.

The Group makes an estimate of the recoverable value of trade and other debtors. When assessing impairment of trade and other debtors, management considers factors including the current credit rating of the debtors, the aging profile of debtors and historical experience.

Multi-year grants that do not meet the recognition criteria are disclosed as contingent liabilities in the notes to the financial statements.

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Notes to the Accounts for the year end (continued)

Notes to the Accounts for the year end (continued)

1. Accounting Policies (continued)

s) Reserves

Unrestricted funds are those available for application against any of the charity’s objectives. Restricted funds are those only available for certain purposes defined by the provider of the original funds. Permanent endowment funds are those where the original gift may not be spent, only any income on those funds, which is placed into a related restricted fund. Expendable endowment funds are those where both the income and the original capital may be spent.

t) Taxation

As a charity the Institution is exempt from corporation tax. The tax expense represents the sum of the corporation tax currently payable and deferred tax in the commercial subsidiaries. The companies liabilities for current tax are calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Input VAT relating to taxable activities is fully recoverable, and relating to exempt and out of scope activities is irrecoverable. VAT on support costs is partially recoverable, with the recoverable percentage being recalculated each year. Any irrecoverable VAT is recognised as an expense through support costs in the period to which it relates.

u) Heritage assets

Heritage assets comprise:

Additions to heritage assets are made by donation. Reliable and relevant information on the cost of many of the assets is therefore not readily available and there is a lack of comparable market values. As such, none of these assets are recognised in the accounts. Moreover, the Trustees do not consider that a reliable estimate of the fair value can be obtained without incurring costs that would exceed the benefits provided.

2. Net Incoming Resources

The consolidated results for the Institution are presented in the statement of financial activities. These include the activity of the parent charity, The Institution of Mechanical Engineers, and the activities of its 100% owned subsidiaries, as detailed below. The incoming resources of the Institution alone for 2022 were £18,096k (2021: £16,229k), and resources expended in 2022 were £18,601k (2021: £15,125k).

Other Income

Other Income
2022 2021
£’000 £’000
Government grants ‐ furlough scheme – 90
Proft on disposal of fxed assets 4
4		 1
91

Subsidiary companies

Professional Engineering Projects Ltd, a wholly owned subsidiary, registered in England and Wales (Reg N 01103638), was established by the Institution as an organisation from which it could conduct the majority of its publishing activities, including the magazines that are made available to members. Whilst this main trade was disposed of during 2010, the company continues to carry on trading in non-charitable activities, mainly provision of training to engineers.

The company also has four wholly owned subsidiary companies, IMechE Services Ltd (Reg N 01361114), IMechE Fife NDT Limited (Reg N 01917207), Siantonas Ball Ltd (Reg N 01655732), Sonaspection Worldwide Limited (Reg N 04891363), all registered in England and Wales, which carry on non-charitable trading activities. These activities are consolidated on a line by line basis with the relevant amounts described as “Other noncharitable trading activities” under Incoming Resources and Resources Expended in the Consolidated Statement of Financial Activities. Siantonas Ball Ltd became dormant on 1st January 2014.

Sonaspection Worldwide has two wholly owned subsidiary companies, Sonaspection International Limited (Reg N 02050101) registered in England and Wales and Sonaspection Incorporated registered in the United States of America, which carry on non-charitable activities. These activities are consolidated on a line by line basis with the relevant amounts described as “Other non-charitable trading activities” under Incoming Resources and Resources Expended in the Consolidated Statement of Financial Activities.

The whole of the issued share capital of Professional Engineering Projects Ltd (£2) is held by nominees on behalf of the Institution. A summary of the company’s consolidated profit and loss account is shown below. Audited accounts are filed with the Registrar of Companies for the individual companies. These figures are subject to the adjustments mentioned above prior to their incorporation in the Consolidated Statement of Financial Activities.

The Whitworth Scholarships Fund, registered charity No. 313756, was established in 1868 under a deed of covenant and trust between Sir Joseph Whitworth and the then President of the Committee of Council on Education. The Fund is now governed under the terms of a Scheme made by the Charity Commissioners for England and Wales dated 11 December 2001, with the Institution of Mechanical Engineers as the controlling entity.

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Notes to the Accounts for the year end (continued)

Notes to the Accounts for the year end (continued)

2. Net Incoming Resources (continued)

Subsidiary Companies 2022

PEP Sona Int’l Sona Inc IMechE IMechE Total
Services Fife NDT
£’000 £’000 £’000 £’000 £’000 £’000
Turnover 6,041 2,557 1,028 – 469 10,095
Cost of Sales (2,308) (1,438) (710) – (354) (4,810)
Grossproft
Distribution costs		 3,733
–		 1,119
(57)		 318
–		 –
–		 115
(1)		 5,285
(58)
Administration costs (3,812) (715) (425) (3) (247) (5,202)
Interestpayable to the Institution (148) – – – – (148)
Proft/(loss) on ordinary activities before tax
Taxation		 (227)
–		 347
2		 (107)
–		 (3)
–		 (133)
–		 (123)
2
Proft/(loss) for theyear
Total assets		 (227)
4,707		 349
2,755		 (107)
588		 (3)
–		 (133)
582		 (121)
8,632
Total liabilities (7,371) (375) (860) (23) (124) (8,753)
Total funds (2,664) 2,380 (272) (23) 458 (121)

Subsidiary Companies 2021

Subsidiary Companies 2021
PEP Sona Int’l Sona Inc IMechE IMechE Total
Services Fife NDT
£’000 £’000 £’000 £’000 £’000 £’000
Turnover 3,774 1,716 771 – 112 6,373
Cost of Sales (1,194) (855) (422) – (40) (2,511)
Grossproft
Distribution costs		 2,580
–		 861
(31)		 349
(28)		 –
–		 72
–		 3,862
(59)
Administration costs (2,974) (600) (372) (3) (212) (4,161)
Interest payable to the Institution (108) – – – – (108)
Other income 70 – 83 – – 153
Proft/(loss) on ordinary activities before tax
Dividends payable		 (432)
–		 230
–		 32
–		 (3)
–		 (140)
–		 (313)
–
Taxation 82 (27) – – – 55
Proft/(loss) for theyear
Total assets		 (350)
4,091		 203
2,534		 32
523		 (3)
–		 (140)
938		 (258)
8,086
Total liabilities (7,370) (503) (689) (21) (347) (8,930)
Total funds (3,279) 2,031 (166) (21) 591 (844)

3. Expenditure

All expenditure is accounted for on an accruals basis and has been classified under headings that aggregate all costs related to that category.

For administrative purposes the Institution is divided into a number of directorates and then subdivided into departments. Accounting records permit the costs and revenues of all departments to be determined accurately.

The classification of costs in the Consolidated Statement of Financial Activities utilises this information to show expenditure broken‐down into broad functional areas.

Where costs cannot be directly attributed to a particular heading, they have been allocated to activities on the basis of headcount and floor area.

Resources expended 2022

Resources expended 2022
Direct Allocated Total
Costs Support
Costs
£’000 £’000 £’000
Raising funds
Non Charitable activities 10,533 811 11,344
Investment management costs 16 – 16
Charitable activities
Marketing and Policy 993 1,189 2,182
Groups, Divisions and Events 3,516 1,720 5,236
Business development 1,141 1,007 2,148
Apprentice End Point Assessment 1,956 222 2,178
Professional development 353 561 914
Library 484 320 804
Membership 1,069 1,548 2,617
Public facilities – Birdcage Walk – 495 495
Prizes, Awards and Scholarships 589 – 589
Total resources expended 20,650 7,873 28,523

Resources expended 2021

Resources expended 2021
£’000 £’000 £’000
Raising funds
Non Charitable activities 6,051 964 7,015
Investment management costs 10 – 10
Charitable activities
Marketing and Policy 814 872 1,686
Groups, Divisions and Events 2,587 1,782 4,369
Business development 1,011 1,384 2,395
Apprentice End Point Assessment 1,048 114 1,162
Professional development 289 474 763
Library 475 326 801
Membership 1,064 1,463 2,527
Public facilities – Birdcage Walk – 400 400
Prizes, Awards and Scholarships 735 – 735
Total resources expended 14,084 7,779 21,863

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Notes to the Accounts for the year end (continued)

Notes to the Accounts for the year end (continued)

3. Expenditure (continued)

3. Expenditure(continued)
Allocated Support Costs
2022 Governance &
Management		 Finance Information
Technology		 Facilities &
Depreciation		 Defned
Beneft
Pension		 Total
Scheme
£’000 £’000 £’000 £’000 £’000 £’000
Non‐charitable activities 137 180 356 138 – 811
Marketing 465 87 261 339 37 1,189
Groups, Divisions and Events 673 126 377 490 54 1,720
Business Development 394 74 220 287 32 1,007
Apprentice End Point Assessment 90 17 50 65 – 222
Professional Development 219 41 123 160 18 561
Information and Library Services 120 22 67 101 10 320
Membership Subscriptions 606 113 339 441 49 1,548
Tenants and Public Facilities – – – 495 – 495
Total support costs allocated 2,704 660 1,793 2,516 200 7,873
Allocation basis Headcount Headcount Headcount Floor Area Headcount
2021
£’000 £’000 £’000 £’000 £’000 £’000
Non‐charitable activities 140 180 300 344 – 964
Marketing 307 78 173 272 42 872
Groups, Divisions and Events 628 159 354 555 86 1,782
Business Development 488 123 275 431 67 1,384
Apprentice End Point Assessment 42 11 24 37 – 114
Professional Development 167 42 94 148 23 474
Information and Library Services 112 28 63 108 15 326
Membership Subscriptions 516 130 291 455 71 1,463
Tenants and Public Facilities – – – 400 – 400
Total 2,400 751 1,574 2,750 304 7,779
Allocation basis Headcount Headcount Headcount Floor Area Headcount

Support costs comprises finance, IT, HR, maintenance and running costs of One Birdcage Walk, closed defined-benefit pension costs, governance and management of IMechE.

These costs are allocated to IMechE’s charitable and commercial activities on a pro-rata basis using headcount or floor area.

To resolve a dispute at the Institution, and acting in the best interests of the charity and with Charity Commission approval, the charity has made a settlement payment of £125k to a past Trustee with no admission of liability, which is included in the Governance and Management costs.

4. Taxation

The Institution is considered to pass the tests set out in Paragraph 1 Schedule 6 Finance Act 2010 and therefore it meets the definition of a charitable trust for UK income tax purposes. Accordingly, the charity is potentially exempt from taxation in respect of income or capital gains received within categories covered by Part 10 Income Tax Act 2007 or Section 256 of the Taxation of Chargeable Gains Act 1992, to the extent that such income or gains are applied exclusively to charitable purposes.

The charity’s trading subsidiaries are subject to corporation tax; however all of their taxable profits are paid to the Institution under gift aid.

5. Transactions with Members of the Trustee Board

2022 2021
£’000 £’000
Travel and subsistence expenses 25 3
No. No.
Number of members reimbursed 6 2

All Trustee costs are reimbursements to Trustees for costs incurred in fulfilling their duties. The Trustees nor any person connected with them receive remuneration.

6. Indemnity Insurance

6. Indemnity Insurance
2022 2021
£’000 £’000
Indemnityinsurancepremiumspaid 10 13

During 2022 the Institution paid for two insurance policies, covering professional indemnity and the liabilities of Trustees and “directors and officers”. Cover applies to the Trustee Board, ordinary members involved with Institution affairs and employees.

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Notes to the Accounts for the year end (continued)

Notes to the Accounts for the year end (continued)

7. Staff Employed

2022 2021
No. No.
Average numbers of staf employed throughout the year:
The Institution of Mechanical Engineers		 137 130
Professional Engineering Projects Limited 49 42
Sonaspection International Ltd 21 18
Sonaspection Incorporated 11 6
IMechE Fife NDT Ltd 6 4
Total employees 224 200

8. Employment Costs (continued)

40 of the above employees are members of the defined contribution scheme and none (2021: 30) are active members of the defined benefit scheme. The Institution contributed £233,403 as employer pension contributions (2021: £144,456) for these members into the defined contribution scheme.

During the year key management received remunerations and benefits of £733,328 (2021: £516,665). The remuneration of key management consists of salary, employers’ national insurance contributions, pension contributions and benefits in kind.

Number of Directors in 2022: 5 (2021: 4)

The charity designated five directors as key management personnel.

8. Employment Costs

8. Employment Costs
2022 2021
£’000 £’000
Salaries and benefts
Employer’s social security costs		 9,908
1,046		 8,479
798
Employer’spension costs 557 467
Total 11,511 9,744

The numbers of employees whose emoluments, excluding employer’s pension contributions, exceeded £60,000 are analysed as follows:


exceeded £60,000 are analysed as follows:
2022 2021
No. No.
£60,001 ‐ £70,000 15 15
£70,001 ‐ £80,000 9 7
£80,001 ‐ £90,000 6 3
£90,001 ‐ £100,000 4 3
£100,001 - £110,000 2 2
£110,001 ‐ £120,000 1 –
£120,001 ‐ £130,000 1 –
£130,001 ‐ £140,000 – 1
£150,001 ‐ £160,000 – 1
£170,001 ‐ £180,000 1 –
£180,001 ‐ £190,000 1 –
Total 40 32
2022 2021
£’000 £’000
Highest paid director ‐ Dr Alice Bunn (2021: Sean Fox)
Salary 163 137
Benefts
Total		 10
173		 21
158

6 employees were made redundant during the year (2021: 4). The cost of redundancies of £141,292 was paid during 2022 (2021: £103,181). Included within these costs were ex‐gratia costs of £43,562, payable to 5 people (2021: £31,451 to 4 people).

9. Auditor’s Remuneration

9. Auditor’s Remuneration
2022 2021
£’000 £’000
Fees for: the audit of 2022 fnancial statements
Fees for: the audit of other group companies		 101
47		 75
32
Fees for: in relation to theprioryear audit 7 75
Total 155 182

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Notes to the Accounts for the year end (continued)

Notes to the Accounts for the year end (continued)

10. Pensions

The Institution operates a defined benefit pension arrangement called the Institution of Mechanical Engineers Staff Pension & Life Assurance Scheme (the Scheme). The Scheme is closed to new members with an effective date of 5 September 2002, and is closed to future accrual. The most recent comprehensive actuarial valuation of the Scheme was carried out as at 31 December 2020, and the next valuation of the Scheme is due as at 31 December 2023.

A defined contribution pension plan has been established for employees who are not eligible to join the defined benefit pension scheme. The Institution has agreed to match employee contributions to the defined contribution plan up to a maximum of 10% of salary. There is an outstanding contribution at the end of the financial year of £112,661 (2021: £102,388).

The pension cost charge for the period represents contributions payable by the Institution to the defined benefit pension plan and amounted to £500,000 (2021: £410,000).

Assumptions

Assumptions
2022 2021
% %
Price infation (RPI)
Price infation (CPI)
Salary increases		 3.00
2.60
3.50		 3.10
2.70
3.60
Return on Assets * *
Discount rate 4.70 1.80

Mortality assumptions used in 2022 and 2021 are based on the S3PxA tables adjusted to reflect the broad wealth characteristics of each member. Future improvements are assumed to be in line with the CMI projection model, assuming improvements have peaked. The long term improvement is assumed to be 1.25% p.a. (2021: 1.25% p.a.), with weight parameters of 15% (2021: 0%). Members are assumed to take 80% of the maximum cash at retirement.

10. Pensions (continued)

Current asset split

Current asset split
Bid values as at
31 Dec 2022
£’000
Equities 19,488
Liability Driven Investments 17,210
Corporate Bonds 3,292
Global Asset‐Backed Securities 18
Cash 322
Annuities 40
Total assets 40,370

Balance sheet

Balance sheet
2022 2021
£’000 £’000
Fair value of plan assets 40,370 62,437
Present value of funded obligations (39,067) (60,516)
Surplus/(defcit) in scheme
Efect of asset ceiling
Net defned beneft asset/(liability)		 1,303
(1,303)
–		 1,921
(1,921)
–

Amount recognised in SOFA

Amount recognised in SOFA
2022 2021
£’000 £’000
Current service cost 200 180
Interest on liabilities 1,071 873
Interest on assets (1,108) (750)
Interest on efect of asset ceiling
Total charge to SOFA		 35
198		 –
303

The assumptions result in life expectancies as follows:

Remeasurements over the period

31.12.22 31.12.21
years years
Male aged 45 87.7 88.3
Male aged 65 86.5 87.0
Female aged 45 90.6 91.0
Female aged 65 89.2 89.5
Remeasurements over the period
2022 2021
£’000 £’000
Loss/(gain) on assets in excess of interest 21,387 (4,725)
Experience losses/(gains) on liabilities 2,048 (305)
Losses/(gains) from changes to demographic assumptions (719) (1,177)
Losses/(gains) from changes to fnancial assumptions
Losses/(gains)from change in efect of asset ceiling
Total remeasurements		 (21,762)
(653)
301		 (5,139)
1,921
(9,425)

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Notes to the Accounts for the year end (continued)

Notes to the Accounts for the year end (continued)

10. Pensions (continued)

Change in the value of assets

Change in the value of assets
2022 2021
£’000 £’000
Fair value of assets at start ofperiod 62,437 58,484
Interest on assets 1,108 750
Company contributions 500 410
Benefts paid (including expenses)
Return on assets less interest		 (2,288)
(21,387)		 (1,932)
4,725
Fair value of assets at end ofperiod 40,370 62,437
Actuarial return on assets (20,279)

Change in value of the DB liabilities

Change in value of the DB liabilities
2022 2021
£’000 £’000
Value of liabilities at start ofperiod 60,516 68,016
Current service cost 200 180
Interest on liabilities 1,071 873
Benefts paid (including expenses)
Experience (gain)/loss on liabilities		 (2,288)
2,048		 (1,932)
(305)
Changes to demographic assumptions (719) (1,177)
Changes to fnancial assumptions
Value of liabilities at end ofperiod		 (21,762)
39,066		 (5,139)
60,516

10. Pensions (continued)

Sensitivity of the value placed on the liabilities
Sensitivity of the value placed on the liabilities Approximate efect
on liability
£’000
Discount rate ‐0.5% p.a. + 2,636
Infation +0.5% p.a.
Long term rate of mortaility improvement increased to 1.5% p.a.		 + 1,234
+ 263

Projected SOFA charge for next period

Projected SOFA charge for next period
2023
£’000
Current service cost 200
Interest on liabilities 1,791
Interest on assets (1,859)
Interest on efect of asset ceiling
Total charge to SOFA		 61
193

The deficit shown in the accounts reflects the methodology and assumptions required to be used for accounting purposes.

The Institution expects to pay contributions of £500,000 in the year to 31 December 2023.

Reconciliation of effect of asset ceiling

2022 2021
£’000 £’000
Efect of asset ceiling at start ofperiod
Interest on efect of asset ceiling
Actuarial losses/(gains)on efect of asset ceiling
Efect of asset ceiling at end ofperiod		 1,921
35
(653)
1,303		 –
–
1,921
1,921

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Notes to the Accounts for the year end (continued)

Notes to the Accounts for the year end (continued)

11. Fixed Assets – Intangible Assets

Group Goodwill Website &
DM costs		 Website &
DM costs		 Total
£’000 £’000 £’000
Cost
At 1 January 2022 5,232 5,705 10,937
Additions – 864 864
At 31 December 2022 5,232 6,569 11,801
Depreciation
At 1 January 2022 5,232 2,175 7,407
Amortisation charged – 948 948
At 31 December 2022 5,232 3,123 8,355
Net Book Value
At 31 December 2022 – 3,446 3,446
At 1 January2022 – 3,530 3,530

12. Fixed Assets – Tangible Assets

Group Land &
Property		 Furniture &
Equipment		 Total
£’000 £’000 £’000
Cost
At 1 January 2022 10,789 2,324 13,113
Additions 24 287 311
Disposals/movements – (63) (63)
At 31 December 2022 10,813 2,548 13,361
Depreciation
At 1 January 2022 5,103 1,712 6,815
Disposals/movements – (61) (61)
Depreciation charged 435 275 710
At 31 December 2022 5,538 1,926 7,464
Net Book Value
At 31 December 2022 5,275 622 5,897
At 1 January2022 5,686 612 6,298

Institution

Institution
£’000 £’000
Cost
At 1 January 2022 5,360 5,360
Additions 739 739
At 31 December 2022 6,099 6,099
Depreciation
At 1 January 2022 2,038 2,038
Amortisation charged 889 889
At 31 December 2022 2,927 2,927
Net Book Value
At 31 December 2022 3,173 3,173
At 1 January2022 3,322 3,322

Institution

Institution
£’000 £’000 £’000
Cost
At 1 January 2022 10,347 1,068 11,415
Additions 13 158 171
Disposals/movements – (53) (53)
At 31 December 2022 10,360 1,173 11,533
Depreciation
At 1 January 2022 5,028 871 5,899
Disposals/movements – (53) (53)
Depreciation charged 385 134 519
At 31 December 2022 5,413 952 6,365
Net Book Value
At 31 December 2022 4,947 221 5,168
At 1 January2022 5,319 197 5,516

Website and Digital Modernisation Programme, Platform costs

The intangible assets for the Institution are represented by Website and Digital Modernisation (DM) costs. The website development was completed in March 2016 and begun being amortised from April. The DM projects started to come into use during 2019 althought there are still significant amounts still in development. Both website and DM costs were purchased and developed by the Institution.

The Institution’s head office at One Birdcage Walk is included in Land and Property above at its depreciated historical cost. The Trustees believe that its open market value is significantly in excess of this historical cost based on carrying value.

The Institution owns the freehold of One Birdcage Walk and its head office. Whilst part of the building is let out to third parties, the entire property is accounted for within tangible fixed assets at cost less depreciation as the fair value of the investment property component cannot be reliably measured without undue cost or undue cost or effort.

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Notes to the Accounts for the year end (continued)

Notes to the Accounts for the year end (continued)

12. Fixed Assets – Tangible Assets (continued)

Heritage Assets

The Institution holds a collection of heritage assets relating to the history of the Institution itself and the wider history of mechanical engineering, which includes printed works, pictures, and other artefacts. All these items have been donated to the Institution some time ago and so information on their cost or valuation is not available and cannot be obtained at a cost commensurate with the benefit to the users of the accounts and the charity.

The collection is broadly split into the following categories:

Printed Works

The Institution has the one of the strongest specialist engineering libraries in the UK, holding unparalleled physical collections relating to mechanical engineering and comprising over 90,000 titles. These range from very early works such as Theatrum instrumentorum et machinarum, published in 1578, to extensive scarce nineteenth‐ and early twentieth‐century works to current reference works and British Standards. Subjects covered include fluid mechanics, tribology, combustion engines, automotive engineering, environment and emissions, risk and reliability, energy, machine tools and pressure vessels.

Archives

The archive collection dates from 1726 and is comprised of documents, volumes, engineering drawings, digital files and an extensive photographic collection relating to engineers, engineering firms and engineering products. The collection also includes the business and administrative records of the Institution of Mechanical Engineers as well as the Institution of Locomotive Engineers and the Institution of Automobile Engineers.

Works of Art and Artefacts

The collection is comprised of over 50 portraits and busts of prominent engineers including many former Presidents of the Institution and over 100 artefacts including models, instruments and personal items of engineers.

The Institution’s collections are managed by the Information and Library Service according to the relevant professional standards for each format of material. Expenditure which in the Trustees’ view is required to preserve or clearly prevent deterioration of individual collection items is recognised in the income and expenditure account when it is incurred.

13. Investments – Mixed Motive

Group and Institution

Group and Institution
2022 2021
Cost Market Cost Market
Value Value
Analysis of Investments ‐ UK £’000 £’000 £’000 £’000
Stephenson LLP 1,879 3,082 1,843 2,908
2022 2021
Movement of Investments £’000 £’000
Market value at 1 January 2,907 2 ,679
Acquisitions 36 35
Net investment(loss)/gain 139 193
Market value at 31 December 3,082 2,907
Unrealised investment gain at 31 December 1,193 1,054

14. Fixed Assets – Investments

Group

Group
2022 2021
Cost Market Cost Market
Value Value
Analysis of Investments ‐ UK £’000 £’000 £’000 £’000
Fixed Interest Unit Trusts 170 474 170 599
Equities Unit Trusts 1,312 6,314 1,312 6,542
Charities Ofcial Inv. Fund Income Units
Cash		 1,066
41		 3,091
41		 1,066
41		 3,502
41
Property– let on 999year lease 9 9 9 9
2,598 9,929 2,598 10,693
Multi‐Asset Funds 7,815 8,226 7,815 9,183
Total Investments 10,413 18,155 10,413 19,876

There have been 4 donations made in 2022 (2021:3). No further additions or disposals of heritage assets were made in the last 2 years.

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Notes to the Accounts for the year end (continued)

Notes to the Accounts for the year end (continued)

14. Fixed Assets – Investments (continued)

2022 2021
Cost Market Cost Market
Value Value
Analysis of Funds and Ranges £’000 £’000 £’000 £’000
Reserve Fund – Unrestricted
Free range 3,028 3,111 3,028 3,470
3,028 3,111 3,028 3,470
Whitworth Scholarships Fund
Restricted 819 2,803 819 2,942
Endowment 663 3,986 663 4,198
1,482 6,789 1,482 7,140
General Trust
Wider range 3,378 3,632 3,378 4,055
3,378 3,632 3,378 4,055
James Clayton
Wider range 1,450 1,523 1,450 1,699
Special –property 9 9 9 9
1,459 1,532 1,459 1,708
Education and Research
Charities Ofcial Inv. Fund Income Units
Sundry Small Trusts		 829 2,380 829 2,697
Charities Ofcial Inv. Fund Income Units 237 711 237 806
10,413 18,155 10,413 19,876

The above figures refer to investments held by the Group, the figures for the Institution exclude the investments held by the Whitworth Scholarships Fund.

The investments of the Reserve Fund, General Trust and James Clayton Trust are managed by Schroder & Co Ltd. Investments of the Whitworth Scholarships Fund are managed by Blackrock Investment Management (UK) Ltd. The let property is part of the James Clayton Trust Fund and was included as part of assets left to the Institution in the will of the late James Clayton. A summary of the investment powers can be found in the Administrative Details section.

14. Fixed Assets – Investments (continued)

14. Fixed Assets – Investments(continued)
2022 2021
Movement of Investments £’000 £’000
Market value at 1 January 19,835 18,257
Sales proceeds – (3)
Net investmentgain /(loss) (1,721) 1,581
Market value(excludingcash)at 31 December 18,114 19,835
Cash awaiting investment 41 41
Total market value at 31 December 18,155 19,876
Historic cost at 31 December (10,413) (10,413)
Unrealised investmentgain at 31 December 7,742 9,463
2022 2021
Interest and Dividends £'000 £'000
Dividends receivable from unit trusts 689 637
Bank interest ‐general funds 12 –
701 637

All the dividend and loan stock interest arises from the investments detailed above.

15. Stocks

15. Stocks
Group Institution
2022 2021 2022 2021
£’000 £’000 £’000 £’000
Work in progress 29 128 – –
Finishedgoods andgoods for resale 162 118 12 –
191 246 12 –

The carrying value of investments in subsidiaries amounted to £2.

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Notes to the Accounts for the year end (continued)

Notes to the Accounts for the year end (continued)

16. Debtors

Group Institution
2022 2021 2022 2021
Amounts due within 1 year: £’000 £’000 £’000 £’000
Trade debtors 2,439 2,169 664 523
Other debtors incl VAT, other taxes 57 206 55 171
Prepayments and accrued income 897 800 699 642
Amounts due fromgroupcompanies – – 1,726 896
3,393 3,175 3,144 2,232
Amounts due after more than 1 year:
Loans due fromgroupcompanies – – 4,279 5,121
3,393 3,175 7,423 7,353

Loans from group companies are charged interest at a rate of 2% above the National Westminster Bank base rate.

The loan was provided to Professional Engineering Projects Limited to permanently fund the acquisitions of the trading companies acquired between 2011 and 2015. It is repayable on 53 weeks notice or by any net proceeds of the sale of the acquired companies.

In 2022, the Trustees agreed to write off £842,292 of the loan balance. This amount related to the acquisition of a company that is no longer trading.

17. Creditors – Amounts Falling Due Within One Year

Group Institution
2022 2021 2022 2021
£’000 £’000 £’000 £’000
Trade creditors 866 902 586 594
Other creditors 156 155 157 156
Accruals 1,429 1,645 879 1,202
Grants payable 174 169 – –
Bank loan 19 17 – –
Taxation and social security 1,021 308 928 241
3,665 3,196 2,550 2,193
Deferred income 4,519 4,814 4,137 4,267
Total creditors 8,184 8,010 6,687 6,460

17. Creditors – Amounts Falling Due Within One Year (continued)

Group Institution
2022 2021 2022 2021
Reconciliation of deferred income: £’000 £’000 £’000 £’000
Balance at 1 January 4,814 4,706 4,267 4,314
Amount released to income (4,806) (4,706) (4,264) (4,314)
Amount deferred in theyear 4,511 4,814 4,134 4,267
Balance at 31 December 4,519 4,814 4,137 4,267

18. Creditors – Amounts Falling Due Greater than One Year

Group Institution
2022 2021 2022 2021
£’000 £’000 £’000 £’000
Bank loan 63 83 – –

The bank loans were issued under the COVID‐19 ‘Bounce‐back’ scheme in January 2021. No interest charges or repayments were due for the first 12 months. The loan now bears interest at 2.5% and is repayable over a five year period.

19. Operating Lease Commitment

The operating lease charges represent leasehold leases from 3rd parties. The leases are negotiated over terms of 10 years and rentals are fixed for two years. All leases include a provision for five‐yearly upward rent reviews according to prevailing market conditions. The next rent review will take place in 2024. The total of future minimum lease payments under non‐cancellable operating leases for each of the following periods is:

2022 2021
£’000 £’000
Within one year 115 109
Between one and fve years
Over fveyears		 475
251
841		 482
311
902

Deferred income represents the value of membership subscriptions, property rents, and event income received in respect of the next calendar year.

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Notes to the Accounts for the year end (continued)

Notes to the Accounts for the year end (continued)

20. Grant Commitments

These sums have been provisionally approved as grants to be made to current scholars for completion of their studies. Because the Trustees have further actions to take on them before releasing for payment, they have not been accrued in this year’s accounts. No discounting has been applied to grant commitments due in more than one year.

Group Institution
2022 2021 2022 2021
£’000 £’000 £’000 £’000
Scholarship commitments due within one year 153 159 82 91
Scholarshipcommitments due after oneyear 395 458 46 76
Total scholarship commitments 548 617 128 167

21. Analysis of Group Net Assets Between Funds

Group

Group
2022
**Unrestricted ** Endowment Restricted Total
Fund balances at 31 December 2022
are represented by:		 £’000 £’000 £’000 £’000
Intangible fxed assets
Tangible fxed assets
Investments: listed		 3,446
5,897
3,111		 –
–
12,218		 –
–
2,826		 3,446
5,897
18,155
Investments: social 3,082 – – 3,082
Current assets and liabilities 3,925 (1,600) 612 2,937
Non‐current liabilities (63) – – (63)
19,398 10,618 3,438 33,454
2021
Total
Fund balances at 31 December 2021
are represented by:		 £’000 £’000 £’000 £’000
Intangible fxed assets
Tangible fxed assets
Investments: listed		 3,530
6,298
3,389		 –
–
13,438		 –
–
3,049		 3,530
6,298
19,876
Investments: social 2,908 – – 2,908
Current assets and liabilities 3,674 (1,596) 543 2,621
Non‐current liabilities (83) – – (83)
19,716 11,842 3,592 35,150

21. Analysis of Group Net Assets Between Funds (continued)

Institution

Institution
2022
**Unrestricted ** Endowment Restricted Total
Fund balances at 31 December 2022
are represented by:		 £’000 £’000 £’000 £’000
Intangible fxed assets
Tangible fxed assets
Investments: listed		 3,172
5,168
3,111		 –
–
8,232		 –
–
23		 3,172
5,168
11,366
Investments: social 3,082 – – 3,082
Current assets and liabilities 8,075 (1,600) 697 7,172
22,608 6,632 720 29,960
2021
Total
Fund balances at 31 December 2021
are represented by:		 £’000 £’000 £’000 £’000
Intangible fxed assets
Tangible fxed assets
Investments: listed		 3,322
5,516
3,389		 –
–
9,240		 –
–
107		 3,322
5,516
12,736
Investments: social 2,908 – – 2,908
Current assets and liabilities 8,513 (1,596) 595 7,512
23,648 7,644 702 31,994

22. Capital and Income Funds – Analysis

Group

Balance Incoming Resources Gains & Balance
01.01.2022 Resources Expended (Losses) 31.12.2022
£’000 £’000 £’000 £’000 £’000
Unrestricted Funds
Institution, Reserve Fund & PEP Ltd 19,716 28,154 (27,952) (520) 19,398
Restricted Funds
Whitworth Scholarships Fund 2,890 237 (270) (139) 2,718
General Trust (includes legacy) – 159 (159) – –
James Clayton Trust 68 67 (54) – 81
Trust for Education and Research 364 71 (70) – 365
Sundrysmall trusts 270 22 (18) – 274
3,592 556 (571) (139) 3,438
Endowment Funds
Whitworth Scholarships Fund 4,198 – – (212) 3,986
General Trust (includes legacy) 2,968 – – (423) 2,545
James Clayton Trust 1,636 – – (177) 1,459
Trust for Education and Research 2,430 – – (317) 2,113
Sundrysmall trusts 610 – – (95) 515
11,842 – – (1,224) 10,618
Total funds 35,150 28,710 (28,523) (1,883) 33,454

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Notes to the Accounts for the year end (continued)

Notes to the Accounts for the year end (continued)

22. Capital and Income Funds – Analysis (continued)

Institution

Institution
Balance Incoming Resources Gains & Balance
01.01.2022 Resources Expended (Losses) 31.12.2022
£’000 £’000 £’000 £’000 £’000
Unrestricted Funds
Institution, Reserve Fund 23,648 17,780 (18,300) (520) 22,608
Restricted Funds
General Trust (includes legacy) – 159 (159) – –
James Clayton Trust 68 67 (54) – 81
Trust for Education and Research 364 71 (70) – 365
Sundrysmall trusts 270 22 (18) – 274
702 319 (301) – 720
Endowment Funds
General Trust 2,968 – – (423) 2,545
James Clayton Trust 1,636 – – (177) 1,459
Trust for Education and Research 2,430 – – (317) 2,113
Sundrysmall trusts 610 – – (95) 515
7,644 – – (1,012) 6,632
Total funds 31,994 18,099 (18,601) (1,532) 29,960

23. Trust and Prize Fund Individual Accounts

General Trust

Benefactors comprise

James Bates Horace Bedford Charles Sharpe Beecher William Bennett Joseph Bramah T H Carr Thomas Andrew Common Gresham Cooke Winifred Smart Crabtree George Curry Bernard Incledon Day Bryan Donkin H V Disney A H Duncan Christian Peter Dunkel John Edward Elliott James Moir Forbes Sir Hugh Ford Winifred Foreman Andrew Fraser Thomas Lowe Gray Donald Julius Groen

Thomas Bernard Hall Herbert Edward Hancocke Francis Hewlett Lord Hinton of Bankside Shirley Nelson Howe Robert Herbert Innes Kenneth Harris James Anne Labrow Olive Mary Main Ernest William Moss The Reactionaries Charles Howard Readman William Sweet Smith A M Strickland Clifford S Steadman Thomas Stephen Thatcher Bros. Fredrick Barnes Waldron Edwin Walker Neil Watson Viscount Weir Frau May Borner Wylie

Trust for Education and Research

Benefactors and Predecessor Trusts comprise

Frank Radcliffe

John F Alcock Memorial Prize Carl Louis Breedon Alfred Rosling Bennett Premium Henry Stacey Cattermole Clarence Noel Goodall Engineering Applied to Agriculture Charles S Lake Filtration Rover Midlander M M Flatman T A Stewart Dyer Thomas Hawksley Fredrick Harvey Trevithick Sir Seymour Briscoe Tritton Hele‐Shaw National Certificate Mrs P M Lowery Stanley Herbert Whitelegg Manville Bequest Scholarship Safety Award in Mech. Engineering Starley Premium E May George Stephenson Research Ludwig Mond Herbert Ackroyd Stuart F G Moore The Students Aid Arthur Morley Higher National Diploma Water Arbitration John Player Lectureship Willans Premium Raymond Coleman Prescott Scholarship William L Marson Alexander Agnew Meritorious Margaret Winifred Astridge Alastair Graham‐Bryce

The above trust funds are under the trusteeship of the Institution of Mechanical Engineers. Because of the limited space available, the information presented is, of necessity, brief. If you would like more details, please contact the Secretary to the Trustee Board Awards Committee.

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Notes to the Accounts for the year end (continued)

Notes to the Accounts for the year end (continued)

24. Related Party Transactions

2022 2021
£’000 £’000
Amounts due from Professional Engineering Projects Limited 1,050 726
Amounts due from IMechE Services Limited 17 18
Amounts due from Sonaspection International Limited 68 40
Amounts due from IMechE Fife NDT Limited 442 113
Loan due from Professional Engineering Projects Limited 4,279 5,121
All amounts are considered to be repayable on demand during the year except the
loan which has a 53 week notice period of repayment
Transactions with Professional Engineering Projects Limited (4) (19)
Professional Engineering Projects Limited
Amounts due to Siantonas Ball Limited (223) (233)
Amounts due to IMechE Fife NDT Limited (218) (731)
Amounts due to Sonaspection International Limited (158) (14)
Transactions with IMechE Fife NTD Limited 106 31
Transactions with Sonaspection International Limited (90) (38)

Dr Clive Hickman, appointed as Trustee on 25 May 2022, is the Chief Executive at The Manufacturing Technology Centre Limited and its subsidiary, MTC Operations Limited. Heather Clarke, appointed as Trustee in May 2017, is a non-executive director at The Manufacturing Technology Centre Limited. In 2022, the Institution and its subsidiaries paid the MTC Group £26,157 (2021: £7,998) for event attendance, and catering and venue hire services. The Institution and its subsidiaries charged the MTC Group £17,992 (2021: £3,068) for event attendance, accreditation fees, and standard samples. MTC Group also sponsors the apprentice challenge by providing the facility free of charge for the event. At 31 December 2022, the balance receivable was nil (2021: £3,068) and the balance payable was nil (2021: nil).

25. Reconciliation of Net Income to Net Cashflow from Operating Activities

25. Reconciliation of Net Income to Net Cashfow
from Operating Activities
2022 2021
£’000 £’000
Net (expenditure)/Income for the reporting period (as per the statement of fnancial activities): (1,395) 2,515
Adjustments for:
(Gain)/Loss on disposal of tangible assets (4) (1)
Amortisation 948 863
Impairment loss – 247
Depreciation charges 710 762
Dividends and interest (701) (637)
(Increase)/decrease in debtors (218) (619)
Increase/(decrease) in creditors 172 676
(Increase)/decrease in stocks 55 (118)
(Gain)/losses on investments 1,582 (1,776)
Net cashprovided by operating activities beforepension scheme costs 1,149 1,912
(Increase)/decrease in Defned beneft pension scheme costs (301) (107)
Net cashprovided by operating activities 848 1,805

26. Financial Instruments

Group Institution
2022 2021 2022 2021
£’000 £’000 £’000 £’000
Financial assets measured at amortised cost 10,224 9,760 7,208 8,264
Financial liabilities measured at amortised cost 2,707 2,802 1,622 1,951
Financial assets measured at fair value 21,237 19,875 14,448 12,735

Helena Rivers, originally elected as a Trustee on 24 May 2017, is also a director at AECOM. The Institution has charged a fee to AECOM for MPDS accreditation visits for a number of years. Fees charged were £nil for the year ended 31 December 2022 (2021: £500). There was no balance outstanding as at 31 December 2022 (31 December 2022: nil).

Neil Kelly is a director of Sonaspection International Limited appointed on 29th June 2020, whose close related family member is the owner of Kelly Contracting. Kelly Contracting provide electrical material and labour and have been providing a service for a number of years. Kelly Contracting charged £3,222 during the year to 31 December 2022 (2021: £4,781). Kelly Contracting has a balance payable as at 31 December 2022 of £0 (2021: nil).

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Notes to the Accounts for the year end (continued)

27. Consolidated Statement of Financial Activities 2021

Staff enjoyed the first away day since the pandemic which was a chance to meet colleagues, share ideas and have fun.

Restated
Unrestricted Restricted Endowment 2021 2020
Funds Funds Funds Total Total
Income and Endowments from: £’000 £’000 £’000 £’000 £’000
Donations and legacies 113 – – 113 72
Charitable activities
Membership subscriptions 12,436 – – 12,436 12,468
Groups, Divisions and Events 1,117 – – 1,117 578
Professional development and Membership 174 – – 174 205
Information and Library services 3 – – 3 4
Apprentice End Point Assessment 1,172 – – 1,172 411
Other trading activities
Venue hire, Training, Exam Services, Consultancy, Flawed Samples 6,353 – – 6,353 6,461
Investments
Interest and Dividends 125 512 – 637 634
Other
Other income 91 – – 91 399
Rents Receivable 506 – – 506 697
Total 22,090 512 – 22,602 21,929
Expenditure on:
Raising funds
Non‐charitable trading activities 7,015 – – 7,015 7,665
Investment management costs – 10 – 10 9
Charitable activities
Groups, Divisions and Events 4,369 – – 4,369 3,856
Marketing 1,686 – – 1,686 1,769
Business Development 2,395 – – 2,395 2,229
Apprentice End Point Assessment 1,162 – – 1,162 455
Professional development 763 – – 763 826
Information and Library Services 801 – – 801 787
Membership Subscriptions 2,527 – – 2,527 2,345
Tenants and Public Facilities ‐ ‐ 400 – – 400 506
Prizes, Awards and Scholarships 84 651 – 735 556
Total 21,202 661 – 21,863 21,003
Net income/(expenditure) before gains/(losses) on investment assets 888 (149) – 739 926
Net Gains /(losses)on investment assets 399 252 1,125 1,776 (742)
Net income/(expenditure) before amortisation ofgoodwill 1,287 103 1,125 2,515 184
Net(expenditure)/Income 1,287 103 1,125 2,515 184
Other recognised gains / (losses)
Actuarial gains/(losses) on defned beneft pension scheme 9,425 – – 9,425 (7,081)
Net movement in funds 10,712 103 1,125 11,940 (6,897)
Reconciliation of funds
Total funds brought forward, as previously stated 9,004 3,647 10,717 23,368 30,243
Opening balance adjustment – (158) – (158) (136)
Total funds brought forward, as restated 9,004 3,489 10,717 23,210 30,107
Total funds carried forward 19,716 3,592 11,842 35,150 23,210

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Administrative Details (continued)

ADMINISTRATIVE DETAILS

Name

The Institution of Mechanical Engineers

Address of principal office

1 Birdcage Walk, Westminster, London, SW1H 9JJ

Charity registration numbers

Charity Commission of England & Wales: The Institution and subsidiary prize and award funds are registered under 206882. The Whitworth Scholarship Funds are registered under 313756.

Chief Executive:

Dr Alice Bunn

Key Management Personnel:

This includes the Chief Executive and four Directors:

Human Resources Director Bims Alalade Finance and Commercial Director Sean Fox Membership Operations Director Joanna Horton Engineering Policy and Impact Director James Partington

Office of Scottish Charity Regulator: The Institution is registered under SCO51227.

Governing document and constitution

The Institution was founded in 1847 and was incorporated by Royal Charter in 1930. Digital copies of the Royal Charter and By-Laws are available from the Corporate Governance team via governance@imeche.org.

Professional advisers

Auditor:

BDO LLP, Baker Street, London W1U 7EU

Bankers:

Trustees

The Trustee Board comprises the President, two Deputy Presidents, three Vice-Presidents, an International Vice-President and five or more ordinary members. All Trustees are elected by the Corporate and Associate Membership of the Institution.

Trustees are required to retire after a maximum of 3 years in post.

Trustees met 8 times for Board Meetings supported by the Executive team during 2022 (2021:9). In addition to the 8 main Trustee Board meetings, the Trustees also met on 7 other separate occasions in 2022 to discuss specific issues.


other separate occasions in 2022 to discuss specifc issues.
Number of Number of
meetings meetings
attended in session
Professor Emeritus G Britton (appointed 23 June 2022, due to retire 24 May 2023) 4 4
C Chong (appointed 09 September 2022, due to retire 25 May 2023) 2 2
H A Clarke (due to retire 25 May 2023) 5 8
B M Eickhof (due to retire 22 May 2024) 8 8
P Flinn (retired 25 May 2022) 3 3
M P J Garside (retired 25 May 2022) 3 3
G S Hartill (due to retire 22 May 2024) 7 8
Dr C Hickman OBE (due to retire 21 May 2025) 4 5
R G Hodgkinson (retired 25 May 2022) 3 3
Dr R C B Judge (due to retire 21 May 2025) 6 8
Professor D Nowell (due to retire 21 May 2025) 6 8
R M O’Brien (due to retire 25 May 2023) 5 8
P J Peel (due to retire 25 May 2023) 8 8
V Raman (due to retire 21 May 2025) 8 8
H C Rivers (due to retire 25 May 2023) 7 8

National Westminster Bank PLC PO Box 113, Cavell House, 2A Charing Cross Road London WC2H 0PD

CAF Bank Limited

25 Kings Hill Avenue, Kings Hill, West Malling, Kent ME19 4JQ

Investment managers:

Schroder & Co Limited 12 Moorgate, London EC2R 6DA

Blackrock Investment Management (UK) Limited 33 King William Street, London EC4R 9AS

CCLA Investment Management Limited 80 Cheapside, London EC2V 6DZ

Solicitors:

Mills & Reeve LLP Botanic House, 1 Hills Road, Cambridge CB2 1PH Bristows 100 Victoria Embankment London EC4Y 0DH

Pension advisers:

Barnett Waddingham LLP Decimal Place, Chiltern Avenue, Amersham HP6 5FG Lane, Clark & Peacock LLP 95 Wigmore Street, London W1U 1DQ

Elected’ and ‘retired’ relate to the normal transition of Trustees at the beginning and end of their periods of elected office. ‘Appointed’ and ‘resigned’ relate to other changes outside this normal process.

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----- Start of picture text -----
Sir Patrick Vallance,
the Government’s
Chief Scientific Adviser,
launched our
175 anniversary
celebrations by
giving a lecture at
Birdcage Walk.
----- End of picture text -----

Image credits:

Front cover: Formula Student © Thomas Lupson-Darnell Page 2: Phil Peel © IMechE Page 4: Dr Alice Bunn OBE © IMechE Page 14: IMechE 175 Plaque © Jam Butty Photography Page 22: STEM Ambassador Workshop © IMechE Page 32: Wind turbine; Shutterstock © Raphael Ruz Page 40: One Birdcage Walk © IMechE Page 48: UAS Challenge © Jam Butty Photography Page 89: Staff Away Day © Prince Page 92: Sir Patrick Vallance © Syed Ansar

92 Annual Report 2022

Institution of Mechanical Engineers

1 Birdcage Walk Westminster London SW1H 9JJ +44 (0)20 7973 1293 media@imeche.org imeche.org