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2022-03-31-accounts

Royal Academy of Engineering Annual Report and Accounts 2021 | 2022

Contents

Who are we?

A charity

We deliver public benefit from engineering excellence and technology innovation.

A National Academy

We provide progressive leadership for engineering and technology, and independent expert advice to government, in the UK and beyond.

A Fellowship

We bring together an unrivalled community of leading business people, entrepreneurs, innovators and academics from every part of engineering and technology.

Our vision is engineering in the service of society.

Our charitable mission is to deliver public benefit through engineering excellence and technology innovation.

We have outstanding convening power nationally and internationally.

We understand how to make systems and innovations make a positive difference to society.

We are trusted for our independence and professional excellence.

Values

In everything we do, we are guided by our five values:

Progressive leadership – embodying the courage,

commitment and ambition to drive positive change for engineering and society.

Diversity and inclusion – creating cultures in which everyone can thrive and diverse perspectives enrich our collective performance.

Excellence everywhere – bringing evidence, expertise,

integrity and a passion for continuous improvement to everything we do.

Collaboration first – prioritising collaboration and building partnerships to improve outcomes.

Creativity and innovation – solving problems and

generating opportunities through creative thinking and innovation.

||||Foreword|2| |---|---|---|---| ||||Honouring our Founding Senior Fellow|4| ||||How we deliver impact|5| ||||Building a sustainable society...|6| ||||...and an inclusive economy|7| ||||Funding exceptional engineering in the UK|8| ||||Funding exceptional engineering across the world|9| ||| |Talent and diversity|10| ||| |Innovation|15| ||||Policy and engagement|19| ||||People and operations|24| ||||Future plans|27| ||||Report of Trustee Board|31| |||Recipients of Academy grants|35| ||||Structure, governance and management|36| ||||Auditor’s report|38| ||||Consolidated statement of financial activities|41| ||||Balance sheets|42| ||||Consolidated statement of cash flows|43| ||||Notes to the accounts|44| ||||Legal and administrative information|60|

Royal Academy of Engineering Incorporated by Royal Charter

HRH The Prince Philip Duke of Edinburgh KG KT OM GBE Founding Senior Fellow

HRH The Princess Royal KG KT GCVO QSO Royal Fellow

HRH The Duke of Kent KG GCMG GCVO Royal Fellow

Front cover photo:

Professor Sir Jim McDonald FREng FRSE President

Young engineer at Rolls-Royce examines equipment © Rolls-Royce PLC

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Annual Report and Accounts 2021|2022

FOREWORD

Foreword

At the outset of the 2021–22 financial year, we very sadly lost our Founding Senior Fellow, HRH The Prince Philip Duke of Edinburgh, who played a crucial role in the creation of the Fellowship of Engineering in 1976. His vision for the Fellowship was a body that served as an effective voice for the profession in national affairs, drawing together eminent engineers and technologists from all disciplines to provide advice to government and leadership for the profession. It is a vision that has shaped our development to date, and also one that requires us to continually test ourselves on whether we are fulfilling that role to best effect. After a turbulent first year of the pandemic, the last financial year has seen the Academy successfully demonstrate resilience. Our confidence and influence has grown in line with that vision, and significant impact has been delivered against our overarching strategic goal to build a sustainable society and an inclusive economy that works for everyone.

The pandemic, as we reported last year, prompted the Academy to create a ‘Positive Response’ programme aimed at ensuring that engineering expertise was effectively deployed in response to the COVID-19 crisis. While the sense of urgency has changed somewhat, the need for high-quality engineering expertise to inform pandemic response and resilience has not. Against this backdrop, the National Engineering Policy Centre, hosted by the Academy, was commissioned by Government Chief Scientific Adviser, Sir Patrick Vallance FRS FMedSci, to undertake a review of infection control in the built environment, and to consider what actions might be needed, both as we learn to live with COVID19 and in the event of future pandemics. The research undertaken helped to inform the government’s public messaging on the importance of fresh air and the resulting report, Infection Resilient Environments , included recommendations about building ventilation that have prompted action at the heart of government.

Our influence has also been felt on the international stage. COP26 was, naturally, a focal point for several strands of Academy work on sustainability. Engineering X – a partnership between the Academy and Lloyd’s Register Foundation to build global alliances to tackle the most pressing engineering, safety and sustainability problems – featured in an official UN side event at COP26, which highlighted the programme’s work on open burning of waste. This was a particularly notable outcome as it represented the first time that open burning of waste has been raised at a high-level forum and momentum is now building to galvanise global action on this critical issue, catalysed by the Engineering X partnership.

The Academy’s commitment to sustainability extends well beyond COP26, and we are increasingly seeking to advance engineering’s contribution to a more sustainable future across all of our activities. Our This is Engineering campaign, which has now amassed more than 57 million views, focused its films in autumn 2021 on profiling engineers whose work seeks to improve the environmental impact of packaging and of driving. In September 2021 we launched a schools Sustainable Futures Innovation Challenge to mark the 10[th] anniversary of the Connecting STEM Teachers (CST) programme. Since its inception, CST has trained 8,596 teachers and provided more than 764,000 STEM experiences for students. We know that young people are particularly motivated to address climate change, and continue to highlight that engineering offers varied and creative opportunities to make a difference to people and the planet.

In the shorter term, it is today’s emerging engineering leaders and pioneers who give us confidence that the most complex of challenges can be tackled with the right engineering involvement. A significant proportion of our grants to talented researchers and innovators now support sustainability solutions – from circular economy lithium-ion batteries to technologies to decarbonise the water industry. In the last year we have also decided to reframe our Major Project Award to target sustainability. From 2022, it will recognise a team of UK-based engineers who have delivered a major engineering project that has had a substantial impact on creating a more sustainable society.

With our outward facing activities advancing progress towards our sustainable society goal, it is all the more important that our own operations meet the highest standards of sustainability. To that end, we are working with the environmental consultancy Planet Mark to calculate a carbon baseline and set targets for carbon

reduction in the years ahead. In addition, we are currently piloting a toolkit that will enable our Enterprise Hub members to understand the carbon impacts, both positive and negative, of their businesses.

This is one of several exciting developments in our innovation activities over the past year. We were delighted to see the Enterprise Hub named as one of the three most active UK accelerators by Sifted , a leading source of startup intelligence. The Northern Ireland base for our Enterprise Hub celebrated its first anniversary with a joint visit to Belfast and Dublin by the Presidents of the UK and Irish Academies, including a meeting with the President of Ireland, Michael D Higgins. We are also pleased to be piloting new Regional Talent Engines, bringing together our education and enterprise programmes to enhance opportunities for engineers in regions around the UK to pursue careers in the local innovation ecosystem.

In addition, the last year has seen our research activities reach some key milestones. We were thrilled to celebrate 20 years of our Research Fellowship programme, which has enabled more than 200 exceptional engineering researchers to establish themselves as future leaders. We were also very pleased to be able to make the first Bhattacharyya Award for Business-University Collaboration to the University of Surrey and the 5G Innovation Centre, reflecting the vital role that such collaborative research plays in underpinning the UK’s innovation capability.

Alongside supporting outstanding engineering research and innovation, our strategy commits us to ensuring that the benefits of engineering are more equitably experienced across wider society. This year marked the 10-year anniversary of our groundbreaking publication Engineers for Africa , which highlighted the significant gaps in engineering capacity across the continent. This in turn formed the basis for our capacity-building partnerships with engineers in sub-Saharan Africa. This year we engaged widely with our stakeholder community to reflect on progress made over the last decade and agree priorities for the next chapter of our work.

An important strand of our work to create a more inclusive economy has been our collaboration with the Engineering Council on engineering ethics. In addition to producing a joint report and commissioning case studies to support the teaching of ethics, we are in the process of conducting a nationwide survey to understand the perspective of both employers and individual engineers on ethical practice in engineering today.

Finally, we are pleased to have made further progress on our work to improve the diversity and inclusivity of the UK engineering community. This includes the launch of a higher education diversity impact programme to understand what works and improve uptake of successful approaches across UK universities, as well as electing our most diverse group of Fellows in the Academy’s history under the Fellowship Fit for the Future campaign.

As we write, we have reached the mid-point of our 2020–25 strategy period – a period that has seen extraordinary global turbulence, with no sign of this abating. The strategy has proved extremely valuable for guiding progress and aligning the outstanding efforts of our staff, Fellows and partners in the areas where we can make most difference. Our deep appreciation goes to all who have contributed so much over this past year.

We have now started work to envisage what a successful Academy might look like in 2040, to provide a bridge to the next strategy period and develop a long-term view of what impact at scale means for our organisation. There is no question that the role of engineers in tackling our shared societal challenges is only becoming more important. The vision set out nearly half a century ago by our Founding Senior Fellow remains as relevant today as it has ever been.

Professor Sir Jim McDonald FREng FRSE

President, Royal Academy of Engineering

Dr Hayaatun Sillem CBE

CEO, Royal Academy of Engineering CEO, Queen Elizabeth Prize for Engineering Foundation

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Annual Report and Accounts 2021|2022

Honouring our Founding Senior Fellow

How we deliver impact

HRH The Prince Philip Duke of Edinburgh KG KT OM GBE 1921 to 2021 | Founding Senior Fellow

We will always be indebted to our late Founding Senior Fellow, HRH The Duke of Edinburgh KG KT OM GBE, for his interest, support, and advocacy for engineering and technology, which led to the Fellowship’s formation. As our Founding Senior Fellow, HRH The Duke of Edinburgh worked tirelessly to support the Academy right from its inception in 1976 as the Fellowship of Engineering.

His genuine passion for engineering was evident in his many visits to the Academy and in his typically challenging discussions with the engineers he met. He was a staunch supporter of UK industry and presented the Academy’s highest award for UK engineering, the MacRobert Award, almost every year since it began in 1969.

Professor Sir Jim McDonald FREng FRSE and CEO Dr Hayaatun Sillem CBE. Guests shared their memories of Prince Philip over lunch and listened to an inspiring speech from Royal Fellow HRH The Princess Royal KG KT GCVO QSO, about the importance of the Academy’s role in unifying the voice of engineering to solve global problems, and diversifying the profession.

We also announced the creation of the Prince Philip Fund, established in his memory. The fund will exist in perpetuity to realise his vision for the Academy in serving society and secure its long-term future at Prince Philip House, Carlton House Terrace, London, for future generations. It will enable continued philanthropic support to ensure that Prince Philip House remains a home for engineering excellence for the next 50 years and beyond.

In October, the Academy held a reception at Prince Philip House to commemorate our Senior Fellow and his immeasurable contribution to the Royal Academy of Engineering and the engineering profession. The reception was attended by guests including Fellows, Prince Philip Medal winners and friends of the Academy, as well as Academy President

HRH The Princess Royal addresses guest during the reception to commemorate our late Senior Fellow

Prince Philip’s legacy will also be continued through the Prince Philip Medal, which recognises exceptional contributions to engineering through practice, management, or education. In 2021, we celebrated the medal’s 30[th ] anniversary, when Dr Gladys West became the first woman to receive the medal, for her contribution in the development of GPS.

Harnessing the power of engineering to build a sustainable society and an inclusive economy that works for everyone

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Inputs
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Expertise and leadership from Academy staff, Fellows, awardees, and industrial and institutional partners

Funding from government, industry and other partners Consultation with and applications from engineers and innovators International and regional partnerships and networks

Outputs Talent and diversity Innovation Policy and engagement
Talented researchers,
innovators and
entrepreneurs with
enhanced skills, careers
and connections
More and more diverse
skills and inclusive cultures
in engineering research
and business		 Engineering and
technology research
outputs with high potential
for commercialisation and
societal benefits
More innovative, resilient
and investment-ready
engineering businesses		 Policymakers accessing
engineering expertise and
systems thinking
Engineers engaging
with the public on how
innovation can support
and enhance their lives
Outcomes A world-leading, truly
inclusive and influential
engineering workforce		 Ever more innovative
engineering solutions for
a more sustainable and
resilient future
Engineering jobs that make
the UK more productive,
secure, healthier, safer, and
more competitive
Greater investment into
UK innovation		 Policymakers equipped to
make more effective policies,
including on net zero
Wider recognition of the
value of engineering

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Impact
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Faster progress towards net zero and a sustainable world Engineering and technology better harnessed to address global and societal challenges More balanced and inclusive economic opportunity across the UK UK more competitive and productive

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Building a sustainable society...

We advised government on achieving a thriving, lowcarbon economy through our work on applying a systems approach to the net zero challenge

35 of the 93 Research Fellows we fund are working on sustainable technologies, including renewable energy, clean drinking water and energy-saving electronic devices

Engineering Zero, an Academy-wide campaign to promote the crucial contribution engineers can make to a net zero future, was launched in the run up to COP26

We’ve supported 100 UK startup, spinout and scaleup companies working on sustainability solutions

This is Engineering showcased how engineers are creating a sustainable future, with COP26-aligned This is Engineering Day content reaching more than 33 million users across social media

We hosted the UK leg of a special 24-hour live broadcast for UNESCO’s World Engineering Day for Sustainable Development, attracting more than 30,000 views

...and an inclusive economy

Our infection resilient environments work highlighted gaps and current systemic weaknesses in UK buildings and transport and set out an agenda for change to reduce COVID-19 transmissions

We supported more than 1,000 schools in some of the UK’s most underserved areas to offer almost 200,000 STEM experiences to students

The Hamilton Commission report on improving representation of Black people in UK motorsport made recommendations to encourage more Black students to pursue subjects that lead to engineering careers

We launched our Regional Talent Engines programme to offer tailored support to aspiring engineering and technology entrepreneurs in Northern Ireland, North West England, North East England, and Yorkshire and Humber

Our Engineering Ethics report recommended that ethical culture and practice should be embedded in the profession in the same way as health and safety considerations

Our most diverse group of Fellows in the Academy’s history was elected under the Fellowship Fit for the Future initiative with over 50% being from underrepresented groups

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Funding exceptional engineering in the UK

In the UK, we award grants for research, innovation, supporting startups, spinouts and SMEs, enhancing STEM education, and engaging the public.

Funding exceptional engineering across the world

Internationally, we fund engineering innovators supported by the Global Challenges Research Fund and the Newton Fund. Our programmes include:

A heatmap of awards made across the UK is shown above by NUTS2* region. The map shows only grant funding and does not include other regionally based Academy activities.

A heatmap of directly related expenditure made across Official Development Assistance (ODA) programmes by country.

*Nomenclature of Territorial Units for Statistics or NUTS (French: Nomenclature des unités territoriales statistiques ) is a geocode standard for referencing the subdivisions of countries for statistical purposes.

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TALENT AND DIVERSITY

Talent and diversity

Engineers are vital in the drive for a more

sustainable society, providing leadership both within and beyond the UK. Through our education and skills programmes, we continue to work to address the engineering skills crisis, including by supporting more young people from underrepresented backgrounds to enter the engineering profession. As the UK strives to recover from the COVID-19 pandemic and focuses on working towards a net zero future, we need more highly skilled engineers and technicians to address complex and everevolving challenges. Our work with teachers and employers is making the profession more resilient, diverse and prepared for the future, as part of our goal to ensure that the UK has a world-leading and truly inclusive engineering workforce that sets the highest standard for technical excellence, ethics and professionalism.

Over 10 years, Connecting STEM Teachers has trained 8,596 teachers and engaged 5,967 schools, 80% of which are secondary, resulting in more than 764,000 STEM experiences for students

For the past decade, the Connecting STEM Teachers (CST) programme has been supporting teachers to engage a greater number and wider spectrum of school students with STEM education and engineering careers awareness. Supported by Shell as a strategic partner, as well as Amazon, The Arthur Clements Fund, Boeing, the estate of the late Mr John Gozzard, the Helsington Foundation, and the Royal Air Force, the programme’s 48 teacher coordinators have built networks in regions across the UK that offer peer-to-peer support, training, collaborative projects and much more. In September 2021, the programme celebrated its 10[th] anniversary with a national Sustainable Futures Innovation Challenge. Pupils aged 9 to 14 were invited to come up with creative solutions to tackle some of the biggest problems that are impacting

our environment, with winners announced at a celebration event at Prince Philip House in June 2022. The challenge launched with an interactive workshop hosted by TIME magazine’s 2020 ‘Kid of the Year’, Gitanjali Rao – inventor, author, scientist, engineer, and STEM promoter. More than 1,500 students from 37 schools across the UK attended the workshop, with teachers sharing feedback that indicated many of the young people were inspired to not only take part in the challenge but also to consider themselves as STEM innovators.

Students from Ysgol Gymraeg take part in a STEM club

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TALENT AND DIVERSITY

TALENT AND DIVERSITY

has soared, and project-based learning approaches have been adopted. The STEM club participated in and won a network STEM challenge. A range of staff members have been involved and report excitement across the school.”

We also offer free-to-download STEM teaching and learning resources to enrich and enhance the STEM curriculum or be used in after-school clubs, which are designed to be interactive and encourage discussion. Covering topics ranging from entertainment to engineering in a pandemic, and the future of flight, more than 8,500 resource boxes have been sent to schools to date, with a further 32,500 individual packs sent to students learning at home during lockdowns.

Gerard Cocker, subject leader for design technology at Dover Grammar School for Girls, added: “We are in an area of lower social aspiration, so raising expectations and aspiration was crucial alongside demonstrating that the world of STEM is achievable. The combination of the Academy kits, the teaching resources and online information has been incredibly helpful. The results have been striking in terms of how students perceive the world of STEM, with some students reassessing their options and career routes.”

Sharon Rees-Williams, a STEM club organiser at Ysgol Gymraeg in Abercynon, said: “We had a thriving STEM afterschool club with some very enthusiastic pupils and the Academy’s STEM boxes were great to get us going – [they] give us more confidence to try different activities, and also show us what resources are needed... Enthusiasm for cross-curricular work

The Welsh Valleys Engineering Project (WVEP) is an initiative developed jointly by the Panasonic

Trust and the Academy that started in 2018, funded by the Trust and delivered by the Academy. Its aim is to create centres of excellence in STEM teaching and improve learning opportunities in the South Wales valleys by bringing real-world engineering practice into schools and colleges. The programme is particularly keen to help increase diversity in STEM careers, engaging with groups that are currently underrepresented in engineering. This year, WVEP received a commitment of funding totalling £349,697 from the Welsh Government’s Tech Valleys Programme to extend its employer engagement activities to cover all 53 schools in Blaenau Gwent and Merthyr Tydfil for four years from the spring term of 2022. The expansion will help create a sustainable legacy of better-resourced schools, upskilled teachers and closer alignment between the STEM curriculum and the needs of STEM businesses in the area. It will also offer valuable opportunities for social mobility and contribute to the pipeline of highly skilled workers that the Welsh Government’s £100 million Tech Valleys programme aims to facilitate. The programme has so far provided more than 20,000 STEM learning opportunities and has awarded 69 Panasonic Trust Future Engineer bursaries to post-16 students, with 33% of bursaries awarded to women students in academic year 2020/21. In partnership with Amazon, we’ve also launched a new bursary

Over the last six years, more than 1,000 students from over 66 universities have taken part in our GEEP programme, which has resulted in at least 250 employment opportunities including internships, graduate placements and jobs

for women engineering students from low-income households to support their study of computer science or an engineering-related degree at a UK university.

A focus on diversity and inclusion (D&I) is integral to our education activities, but it is also embedded across all the Academy’s work to ensure we are contributing to a more representative and inclusive profession in everything we do. The Academy’s D&I programme continues to work with industry, education institutions, partners, and professional engineering institutions (PEIs) through activities such as the D&I Progression Framework and the Graduate Engineering Engagement Programme (GEEP), to attract and retain talented people from all backgrounds, and help build a truly inclusive workforce.

This year, we launched a new diversity impact programme aimed at transforming outcomes for engineering students in higher education. The programme engages directly with university engineering departments, offering them funding for projects that address the unequal outcomes experienced by students from diverse and underrepresented groups. We awarded the first grants to 11 projects in March, among which are several that focus on low socioeconomic backgrounds and neurodiversity – two areas currently underserved by research. Available data suggests career progression and sense of belonging within engineering for students from these groups is weak. Other projects will explore the impact an inclusive culture can have on the outcomes of students from diverse and underrepresented groups; and focus specifically on disability, gender, race, and ethnicity. One project leader, Kawal Rhode, a professor of bioengineering at King’s College London, noted: “We have carefully reviewed the findings of the Hamilton Commission Report and our project, ‘Success for Black Engineers’, aims to better understand the needs of pre-university Black students interested in engineering degrees and our own Black engineering students… to ensure their success at King’s.”

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TALENT AND DIVERSITY

This year, we expanded our award-winning Graduate Engineering Engagement Programme programme – which works with employers to increase the transition of engineering students and graduates from underrepresented backgrounds into engineering employment – offering places to more participants. In partnership with The Windsor Fellowship, the programme also now includes more activities and opportunities for participants.

learn about the company, what it wants from prospects and made key links that got me the role I am in now.” Darrell is fulfilling a lifelong passion for aviation and hopes to undertake an MBA in air transport management to combine the business side of the industry with the technical background gained through his degree. “I have gained industrial experience that could never be taught within my degree: understanding how the engineering workplace operates, the different opportunities available and what works for me,” he says. “The personal development I experienced through the programme and networking opportunities are the biggest benefits I’ve gained. I noticed how important networking is and how meeting key people in industry could support your career development and open doors you didn’t even know existed. The Academy helped me to get where I am.”

Alumnus Darrell Njogo is currently undertaking an industrial placement as an aerospace engineer at BAE Systems. He describes his experience on the programme as “invaluable”. “The programme helped me tailor my CV for the right roles and develop skills that are critical for the workplace as well as allowing us [to] meet with employers,” he adds. “For me, this was very beneficial as that’s where I met my current employer. I got to

Innovation

We invest in some of the UK’s most creative and exciting engineering ideas and businesses, by offering support, training, mentoring, and funding to talented innovators, researchers and leaders from across the profession. We work with industry, entrepreneurs and academia to create wealth, employment and benefit for society.

home in Ormeau Baths, Belfast. The President also signed a Memorandum of Understanding with the NI Department for the Economy, formalising an agreement between the organisations to work together to deliver an engineering talent programme in Northern Ireland, inspired by our Welsh Valleys Engineering Project.

In October, the Northern Ireland (NI) Enterprise Hub celebrated a successful first year, during which it has supported four new NI-based entrepreneurs to set up and grow their operations. The date was marked with a visit from Academy President Sir Jim McDonald, who officially opened the NI Hub’s

In January 2022, our Enterprise Fellowships programme was named a top three UK accelerator by Sifted , the European startup media site, established by the Financial Times . The ranking, created in conjunction with Beauhurst, tracked the accelerators that sponsored the most startups between 2011 and

NI Hub members with Ana Avaliani, Academy Director of Enterprise and Sustainable Development (far left), Gillian Gregg, Senior Business Development Manager NI (centre) and Sir Jim McDonald (third from right)

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INNOVATION

INNOVATION

In almost 10 years, we have supported over 300 researchers, recent graduates and SME leaders to start up and scale up businesses that can give practical application to their inventions and awarded over £8 million in grant funding, which has led to £800 million in follow-on funding and over 5,000 new jobs

  1. And the Enterprise Hub’s activities continue to grow. In September 2021, a substantial gift from Ian Shott CBE FREng helped us to launch the Shott Scale Up Accelerator – a six-month programme run twice a year, offering a support package to individuals in decision-making roles to develop their leadership skills in high-growth engineering and technology SMEs. The support on offer is helping to scale up businesses built around technologies of strategic importance for the UK government, such as AI, digital and advanced computing, energy, bioinformatics, and smart machines, and is positioned to play a key role in supporting UK economic recovery post COVID-19.

Meanwhile, existing Hub members continue to achieve success: in April, Wootzano, which has developed a state-of-the-art fruit-picking robot, signed a £300 million deal with one of the largest fresh produce packing houses in the UK. Hub member Dr Atif Syed and the Wootzano team also raised over £2.5 million in follow-on funding. In May, clean-tech spinout Kenoteq, founded by Dr Sam Chapman, received £1 million from Zero Waste Scotland to commercialise production of its brick made of recycled construction waste, the K-Briq, to more than two million bricks per year.

In 2021, our Research Fellowships programme celebrated its 20[th] anniversary. Over these 20 years, the scheme has awarded more than £100 million in funding to over 200 early-career engineering researchers. Two Research Fellows have also gone on to become Academy Fellows, while two have achieved professorships and six have received Academy and Engineers Trust Young Engineer of the Year Awards. Over the last 35 years, our Research Chairs and Senior Fellowships scheme has successfully supported over 200 awardees in UK universities to undertake use-inspired research that meets the needs of their industrial partners. And this year, in partnership with WMG at the University of Warwick, we announced the University of Surrey’s 5G Innovation Centre (5GIC) as the first ever winner of the £25,000 Bhattacharyya Award. This was presented in recognition of an exemplary academia–industry partnership that has helped to build the UK’s work in 5G technology from the ground up and produced world-leading innovation in the field. Surrey’s 5GIC has built collaborations with more than 27 global industrial partners and over 300 UK SMEs since its launch in 2013, bringing together leading academics and companies to help develop the 5G infrastructure that will underpin the way we communicate, work and live. 5G technology is estimated to be worth up to £173 billion to the UK economy by 2030, increasing productivity, driving modernisation and enabling transformative applications in automation, healthcare, manufacturing, self-driving vehicles, and remote robotics. Its evolution into 6G is set to help address grand societal and industrial challenges, such as the digital divide and privacy, as well as support efforts towards achieving the net-zero national agenda.

We also invest in innovation and capacity building globally. February 2022 marked 10 years since the publication of the Engineers for Africa report, which highlighted a shortage of engineering skills in the region and prompted the creation of three programmes to bridge this gap: Higher Education Partnerships in sub-Saharan Africa (HEP SSA), Africa Prize for Engineering Innovation and GCRF Africa Catalyst. To date, we have funded innovators, higher education institutions and professional engineering bodies in 24 countries across Africa, helping them to improve knowledge and skills, share best practice, promote professionalism, increase local engineering capacity, and develop scalable engineering solutions to local challenges.

Our Industrial Fellowships scheme enables midcareer academics and industrialists to undertake a collaborative research project in either an industrial or academic environment. It aims to strengthen the relationship between industry and academia by providing an opportunity to establish or enhance collaborative research between the two parties.

involved in funded projects with several industrial partners spanning multiple sectors, including pharmaceutical (AstraZeneca, GlaxoSmithKline) chemical (IFPEN, Johnson Matthey), food (Mondelez), and personal care (Unilever). This industry and grant funding has, in turn, helped me to expand the size of my research group: at the time of my initial Industrial Fellowship, I employed one PhD student and now I employ 19 researchers. I sincerely doubt I would have enjoyed this degree of success without the Academy’s funding.” In the past year, he also received a Proof of Concept award, which helps our research awardees to explore the viability and commercial potential of a novel and innovative concept. He is in the process of setting up an operating division, with the eventual aim of spinning out a company based on the ideas developed during the award. “The Academy’s support has markedly improved my grant income; it has considerably expanded the horizons of my research, allowing me to expand my work into multiple new industrial sectors; and it has provided opportunities for more enterprise-focused research, which I had never previously explored. These grants provide much more than ‘just’ funding: they provide a support network, a community, and fantastic opportunities to share your work, make new connections and access additional funding.”

Industrial Fellow Kit Windows-Yule’s research focuses on the recycling of plastic waste, particularly the development of novel, modular plastic recycling systems that will be valuable to low- and middle-income countries without the infrastructure to support more conventional facilities. Through the programme he built a close relationship with host company Recycling Technologies, which has helped him secure considerable additional funding in the field of plastic recycling, including a £440,000 New Investigator Award from the Engineering and Physical Sciences Research Council. He said: “My time as an Industrial Fellow has helped me to ‘talk the language of industry’, and to understand the interests, wants and needs of companies, which often differ significantly from those of academics and grant funding bodies. Thanks to this improved understanding, I have managed to attract significant industry funding. I am currently

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INNOVATION

Policy and engagement

Cecile Uwimana from Rwanda, an awardee of the Africa Catalyst programme, which aims to strengthen professional engineering institutions in sub-Saharan Africa, said: “As project manager and initiator, I am proud to see the impact that this Africa Catalyst project brought to the Institution of Engineers Rwanda and to the society in general. This programme supported and developed career skills for 210 young graduate engineers needed in the industry, 77% of whom were hired after the internship period.”

Through these global sustainable development programmes, including Leaders in Innovation Fellowships and Frontiers symposia, we have awarded more than £1.45 million in grant funding and delivered more than 1,100 hours of expert training and mentoring support, with entrepreneurs going on to raise more than £11 million in followon funding as a result of our support. Our alumni have started more than 91 new companies, creating more than 430 new jobs, while 86 engineering entrepreneurs from 19 countries have been able to commercialise their innovations.

Since the COVID-19 pandemic started, all our international events have been online. In March 2022, our first-ever hybrid event for the Frontiers programme took place. Hosted on a bespoke virtual platform with live sessions at Prince Philip House, the symposium welcomed 86 emerging leaders from 22 countries, who took part in a mix of in-person sessions, livestreaming and online interaction. Frontiers symposia bring together the best early- and mid-career researchers, practitioners and innovators to discuss international development themes and address the Sustainable Development Goals. Participants can build transformative networks that tackle global goals and that enhance their careers and future opportunities. Dr Witiya Pittungnapoo, Associate Professor in the Faculty of Architecture at Naresuan University in Thailand, attended a symposium in Brazil in 2018 and is now a Frontiers Champion, bringing together a network of peers focusing on flood resilience for waterbased communities. She says: “It’s a great opportunity for research about different countries to share practice about Sustainable Development Goals. The Academy has encouraged research around every region to keep going during the pandemic. You cannot work just within your discipline alone to deal with these issues – you need collaboration with multiple disciplines to get different perspectives.”

Much of our work aims to improve awareness and recognition of the crucial role engineers play and of engineering’s impact on lives, both in the UK and internationally.

The National Engineering Policy Centre (NEPC) brings engineering thinking and systems approaches to the heart of policymaking, to create a positive impact for society. We partner with 43 professional engineering organisations that cover the breadth and depth of our profession, and represent the expertise of more than 450,000 engineers, to provide insights, advice, and practical policy recommendations on complex national and global challenges. Since it was established, the NEPC has helped shape critical policy decisions that have made a difference to people’s lives and the economy.

In July, we published the Infection Resilient

Environments report, a review of infection control in the built environment commissioned by Government Chief Scientific Adviser, Sir Patrick Vallance FRS FMedSci. The report was disseminated widely, and discussed with policymakers, industry and at committee inquiries such as the Scottish Parliament COVID-19 Recovery Committee, attracting a significant amount of interest and engagement across government One the report’s key recommendations – that good ventilation inside public buildings and on transport systems is essential to reducing the risk of COVID-19 – helped shape the government’s public messaging. The Cabinet Office has taken steps to implement the recommendations, improving the ventilation guidance and public information campaigns, and establishing a ventilation Technical Advisory Group with strong engineering representation. The NEPC has followed this work with a

April 2021

NEPC | Late-stage R&D: business perspectives

May 2021

Engineering X | Exploring the safety of super-sized structures Critical capabilities: strengthening UK resilience

July 2021

NEPC | Infection Resilient Environments

September 2021

NEPC | Decarbonising construction: building a new net zero industry

November 2021

NEPC | Rapid low regrets decisionmaking for net zero policy

February 2022

Engineering Ethics: Maintaining society’s trust in the engineering profession

deeper exploration of a systems approach to achieving infection resilience across a wider range of buildings.

We have also been an influential voice in encouraging policymakers nationally and internationally to take a systems approach and consider ‘low regrets decisionmaking’ to address net zero. In September, we published Decarbonising construction: building a new

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Annual Report and Accounts 2021|2022

POLICY AND ENGAGEMENT

POLICY AND ENGAGEMENT

On This is Engineering Day, our hashtags were seen over 30 million times across Twitter, LinkedIn, Facebook, and Instagram; we achieved a broadcast reach of over four million across key national and regional broadcasters including Channel 4, BBC Radio 4 and regional radio stations; and we secured 17 pieces of print and online coverage including The Mirror and The Scotsman

net zero industry , which outlined specific actions that need to be taken if the construction sector is to contribute to achieving net zero. And in November, we produced a rapid low regrets decision-making framework for net zero policy, to guide government decisions on tackling carbon emissions across the UK.

We undertook a raft of activity in the run up to – and during – the UN Climate Change Conference, COP26. Our Engineering Zero campaign highlighted and promoted the crucial contribution engineers can make to move us closer to achieving a thriving, lowcarbon economy and reaching the net zero future required to stabilise our climate. Our Getting to net zero video explainer series was launched as part of the campaign, featuring experts, innovators and entrepreneurs explaining why reaching net zero in time requires a new approach to transforming infrastructure, and how to tackle such a complex and broad challenge. Other activity as part of the campaign included a series of Ask the Engineers online panel discussions to engage the STEMand environment-interested public in debates about some of the issues raised by COP26 from an engineering perspective. Chaired by Economist Science Correspondent Alok Jha, speakers from industry, academia and Academy partner organisations discussed questions including ‘What should COP26 aim to achieve?’ and ‘Is hydrogen the silver bullet that will help achieve net zero?’.

This is Engineering Day 2021 was timed to coincide with COP26 and linked into the Engineering Zero programme by showcasing and celebrating how engineers will contribute to a net zero future. We worked with a digital artist to reimagine classic artworks to spark a discussion about what an engineered sustainable future could look like. The reimagined artworks were created with input from expert engineers in the Fellowship and our wider networks, including This is Engineering partners and supporters. The University of Strathclyde hosted a physical installation of the paintings in Glasgow throughout COP26 at the Technology and Innovation Centre, with an estimated footfall of 4,000 over the period. They were also featured online in the Museum of Engineering Innovation on Google Arts and Culture, attracting more than 4,500 views during November. Three new This is Engineering films were also released in October, featuring Lucy Hughes, an entrepreneur and inventor of MarinaTex, a compostable alternative to plastic film made of fish waste, and George Imafidon, a performance engineer in Sir Lewis Hamilton MBE HonFREng’s X44 racing team that races as part of the Extreme E electric racing series.

We also supported events that took place at COP26. A panel of expert speakers discussed Engineering X’s work on open burning of waste at an official UN side event – the first time the topic has been raised

The DnaNudge team members with their gold medals

Alongside its use in NHS hospitals, the test is being in used in care homes across the UK © thisisjude.uk 2020

Based in central London at the Imperial College London Translation and Innovation Hub in White City, DnaNudge was created by biomedical engineer and CEO Professor Chris Toumazou FREng FRS and geneticist and CSO Dr Maria Karvela. The winning team also includes Dr Caroline Golden, Clinical Research Manager; Josef Cicinski, UK Retail Store Manager; and David West, COO.

In July, we awarded the MacRobert Award – the UK’s longest running and most prestigious prize for innovation in UK engineering – to DnaNudge. The company’s pioneering consumer genetics technology was pivoted and adapted to deliver a rapid, lab-free RT-PCR COVID-19 test to NHS hospitals.

In August 2020, the UK government placed a major order with DnaNudge to supply the Department of Health and Social Care with CovidNudge test kits for use in NHS hospitals across the UK. The test can accurately detect the SARS-CoV-2 virus from saliva samples on-site in just over an hour – eliminating the need for a laboratory.

The DnaNudge team was awarded a £50,000 prize and a gold medal at an Awards Celebration at Prince Philip House, the first in-person event since the start of the COVID-19 pandemic. Supported by The Worshipful Company of Engineers, the MacRobert Award recognises winners that deliver outstanding engineering innovation, commercial success and tangible social benefit.

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POLICY AND ENGAGEMENT

POLICY AND ENGAGEMENT

at a high-level forum. Panel members shared their expertise and knowledge on open burning’s impact on climate change and global health and highlighted the need for urgent action on this dangerous issue. Climate emissions from open burning of waste are potentially double that of aviation but rarely acknowledged, while health impacts are deadly. In January 2021, Engineering X Safer End of Engineered Life (SEEL) and International Solid Waste Association (ISWA) workshops pointed to open burning as a climate issue. Engineering X then published a report on the related challenges and opportunities in Africa, and we partnered with the United Nations High Level Climate Champions team, funding two Waste Management Leads in Africa, to raise the topic and bring people together to seek solutions. We are now building momentum in the run up to COP27 in Egypt in 2022. SEEL is one of five missions under Engineering X, a partnership between the Academy and Lloyd’s Register Foundation to create a global network of expert engineers, academics, policymakers, NGOs, and business leaders across more than 30 countries to address the most pressing global engineering, safety and sustainability challenges. To date, the programme has produced three global reviews, funded more than 30 champions and awarded more than 170 grants.

Climate Change Catastrophe! , a filmed show about climate change funded through our Ingenious public engagement programme, was also presented at COP26. Run by theatre company Cap-a-Pie in collaboration with Newcastle University’s School of Engineering, the theatre show focuses on what children think of climate change, and their hopes, fears and ideas for the future. The organisations worked with scientists, engineers and researchers to condense their work into lesson plans and activities. They then sent the resources to participating schools for teachers to introduce to Key Stage 2 students, who were then tasked with creating characters, scripts, scene ideas, and drawings. These were then used by Cap-a-Pie to inspire the content of a theatre show. When schools were closed because of COVID-19, the team instead created a filmed version of the performance based on the children’s ideas and shared it with the schools that inspired their work. Ingenious, which supports projects that engage the public with engineers and engineering, has funded over 250 projects to date, providing opportunities for close to 7,000 engineers to take part in public engagement activities, gain

skills in communication and showcase the role that engineering plays at the very centre of society. Together, Ingenious projects have reached over 3.2 million members of the public.

In February 2022, the Queen Elizabeth Prize for Engineering Innovation (QEPrize) was awarded to Japan’s Dr Masato Sagawa for his pioneering work on the discovery, development and global commercialisation of the sintered NeodymiumIron-Boron permanent magnet – the world’s most powerful permanent magnet, which has been an integral component of clean technologies such as electric vehicles and wind turbines. Dr Sagawa is the first laureate since the prize started to be awarded annually, rather than biennially, a change made to reflect the increasing pace of engineering innovation. Dr Sagawa was announced as the winner of the 2022 QEPrize by Lord Browne of Madingley FREng FRS, Chair of the QEPrize Foundation, via a global livestream hosted by TV presenter Katie Derham, which gained more than 1,300 views, and opened with congratulations from HRH The Princess Royal, the Academy’s Royal Fellow. News of the announcement was broadcast across 650 outlets in 25 countries spanning five continents, including Canada, the USA, Germany, Italy, South Korea, India, and Japan. Dr Sagawa will receive £500,000 and a unique trophy, designed by 2022 Create the Trophy competition

The QEPrize Create the Future podcast streams in over 130 countries. It has been downloaded more than 8,000 times and entered the ‘Top 100 Technology’ podcast charts in the UK, Canada, Hong Kong, Thailand, France, and Japan

Anytime, Anywhere, Engineers is an Ingenious-funded project between the National Farmers Union (NFU), agricultural engineers and experienced education practitioners. Online STEM club sessions are recorded and shared online with a wider audience and the project is also running interactive 3D tours, launched at Shrewsbury Food Festival where guests toured facilities at Syngenta, Harper Adams and many more using virtual reality headsets. 1,750 virtual tours have taken place so far, with the project’s website getting 5,900 visitors to date. The team is now working on the development of STEM club sessions for secondary school students, which they aim to run at 7.00pm so the whole family can get involved. As project lead Josh Payne, Chief Education Manager at the NFU, says: “We know that parents play a big role in their children’s career aspirations, so we want to encourage them to get involved too.”

winner Anshika Agarwal, aged 17, from India. The competition received more than 1,000 entries from across 78 countries.

technology. The engineers were recognised not only for the global impact of LED and solid-state lighting, but also for the contribution the technology has made, and will continue to make, to reducing energy consumption and addressing climate change. Very sadly Professor Akasaki passed away in April 2021 but was represented at the ceremony by his son-in-law, Dr Kazuaki Takahashi. His Royal Highness presented each winner with a stunning gold trophy, designed by the winner of the 2021 Create the Trophy competition, Hannah Goldsmith, who also attended the ceremony.

In December, HRH The Prince of Wales presented the 2021 QEPrize during a ceremony at St James’s Palace to the 2021 QEPrize laureates: Isamu Akasaki, Shuji Nakamura, Nick Holonyak Jr (awarded in absentia), M George Craford, and Russell Dupuis, who were recognised for the creation and development of LED lighting, which forms the basis of all solid-state lighting

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Royal Academy of Engineering

Annual Report and Accounts 2021|2022

PEOPLE AND OPERATIONS

People and operations

Our credibility as a charity, National Academy and Fellowship with a mission to deliver public benefit from engineering excellence and technology innovation is underpinned by our ability to deliver.

In the last year, the Academy secured £3,386,980 in new funding commitments for its programmes from industry, charitable trusts and individual donors

Our staff are at the core of making this happen. The Academy has grown significantly over the past year: since March 2021, we have recruited 58 new members of staff, bringing our total number to 154. This has included the creation of 28 new posts to expand under-resourced and strategic priority areas. Our HR team, led by the Academy’s first Director of People, Sharon Noble, has led the development of our first people strategy, in consultation with all staff, to embed the Academy’s values, provide a positive employee experience, and build on what currently works to help us deliver our overall strategy and our charitable objectives. Wellbeing is a central pillar of the strategy and, as the COVID-19 pandemic and the limitations it imposed on our day-to-day lives continue to recede, the Academy has adopted a hybrid working model that allows staff to work flexibly and structure their working day in a way that suits them.

bodies such as the other National Academies, royal colleges and the Institute of Physics, we decided to begin this baseline with 2019 to 2020 to understand our footprint pre-pandemic. This has now been received and will shortly be published, showing that during that period we had a carbon footprint of 1,323 tonnes of carbon, which is 10.7 tonnes per employee – equivalent to 1,170 flights from London to New York. We are now starting work to: understand how this compares with other equivalent organisations; compare it to 2020/2021 and 2021/2022; and increase the amount of scope 3 measures (indirect emissions such as international travel) included in future reports. All this information will help the Academy’s

Our Environmental Sustainability Action Group continues to ensure that the Academy improves its environmental performance. This year we worked with Planet Mark to commission a carbon baseline for the financial year 2019 to 2020, which will give us a goal to work towards in reducing our carbon footprint. Planet Mark is an organisation that offers a certification based on leading international standards and has many other charitable clients such as the Eden Project and the Institute of Directors. After a series of discussions with leading engineering organisations such as Arup and Atkins, and similar

The Princess Royal Silver Medal

known as the Major Project Award for Sustainability. It will recognise the contribution of a team of up to five UK-based engineers who have delivered a major engineering project that has had a substantial impact on creating a more sustainable society.

Trustee Board and senior leadership team make decisions on our next steps and operationalising our continued commitment to reduction.

So far, the group has also actioned several changes at Prince Philip House including improving the sustainability of consumables such as coffee, enabling oil from the kitchens to be turned into biofuel, and updating key policies such as the procurement policy to embed principles of reduce, reuse, recycle. We have also been exchanging information, ideas and experiences with peer organisations to inform our approach.

In 2020, the Trustee Board initiated a Governance Review. The Review Group, chaired by Professor Iain Gray CBE FREng FRSE (former Vice President of the Academy) and comprising eight Fellows and one non-Fellow (who was subsequently elected a Fellow), reviewed aspects of the Academy’s governance under a scope determined by the Trustee Board. The overall purpose of the review was to ensure that the Academy’s governance provides a framework within which the Academy Trustees effectively govern the Academy towards the achievement of its charitable objects.

At the end of 2021, we announced that we would rename two of our most prestigious awards as part of our commitment to reflect the modern engineering landscape and celebrate the diverse range of engineers who are helping to tackle some of the world’s most pressing challenges. Our Royal Fellow, HRH The Princess Royal, has generously allowed us to rename the Silver Medal, which celebrates outstanding personal contribution to UK engineering by an early- to mid-career engineer resulting in market exploitation, as The Princess Royal Silver Medal. This is to honour Her Royal Highness’s outstanding contributions as a Royal Fellow, as an exceptional champion for engineering more broadly, and as a vocal and longstanding supporter of women in engineering and science. The Major Project Award has been repurposed to align directly with the Academy’s strategic goal on sustainability and will now be

The Review Group consulted widely in formulating its recommendations, with Fellows and across Academy committee members, with Trustees, and with Academy staff. The Group received formal, legal advice from charity law specialists Womble Bond Dickerson (WBD) and considered wider trends in charity governance good practice.

The Review Group delivered its findings and recommendations to the Trustee Board in May 2021, making 12 recommendations across the nine items in the scope. The Board accepted these recommendations unanimously and they were

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Royal Academy of Engineering

Annual Report and Accounts 2021|2022

PEOPLE AND OPERATIONS

Future plans

presented to the Fellowship at a briefing during the Academy’s AGM in September 2021.

Several of the recommendations were acted on immediately without requiring any changes to regulations. However, a small number of recommendations required changes to the Academy’s Charter, Statutes and Regulations, the formal governing document of the Academy.

On 21 March 2022, an Extraordinary General Meeting (EGM) was held at which Fellows were asked to vote by Special Resolution in favour, or against, the amended Charter, Statutes and General Regulations. There were three resolutions at the EGM, each to endorse changes to the i) Charter, ii) Statutes and iii) General Regulations respectively:

Fellows overwhelmingly voted in favour of the resolutions, with over 98% voting in favour of the amendments.

the Academy’s overarching goal is to harness the power of engineering to build a sustainable society and an inclusive economy that works for everyone .

We work in three ways to address these goals: fostering talent and diversity, promoting innovation, and influencing policy and public perceptions . In keeping with our values, many of these goals will be delivered through active collaboration with key partners around the world, across and beyond engineering. The annual report details the significant progress made against these actions over the 2021/22 financial year. We aim to accelerate progress against these actions over the following year.

Over the next three years, we are working towards six key strategic goals (SGs):

£96,000 has been raised in response to our fundraising appeals thanks to the generous support of 105 donors, 22 of whom are new. For the first time, the donors include members of our awardee community. As well as the Academy’s 2021 Annual President’s Appeal, we also received donations following the publication of our first donor report, Impact of Giving , in September 2021 and in response to the Prince Philip Fund, launched in June 2021.

In October 2012, our late Senior Fellow, HRH The Prince Philip, met with students from Lambeth College, who were undertaking engineering projects, at the reopening and naming of Prince Philip House.

Strand Building a sustainable society

Talent and diversity Innovation

SG1

Engineers are influential agents of change in the drive for a more sustainable society, providing leadership both within and beyond the UK. Innovation SG3 More and better engineering and technology solutions are being developed and deployed to support faster decarbonisation and more sustainable use of resources. Policy and engagement SG5 Engineering expertise is consistently being used to inform and improve government policy on sustainability.

Building an inclusive society

SG2

The UK has a world-leading and truly inclusive engineering workforce that sets the highest standard for technical excellence, ethics and professionalism.

SG4

Engineering innovation and enterprise is improving productivity, competitiveness, public health, safety, and security while delivering economic and social value for people from all parts of the UK.

SG6

Policymakers and the public recognise the value of engineering, allowing it to thrive and contribute to a resilient UK economy that works for all.

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Royal Academy of Engineering

Annual Report and Accounts 2021|2022

FUTURE PLANS

FUTURE PLANS

TALENT AND DIVERSITY

Sustainable society (SG1)

In 2022–23 we will deliver on our Strategy commitments by:

Inclusive economy (SG2)

In 2022–23 we will deliver on our Strategy commitments by:

POLICY AND ENGAGEMENT

Sustainable society (SG5)

In 2022–23 we will deliver on our Strategy commitments by:

Inclusive economy (SG6)

In 2022–23 we will deliver on our Strategy commitments by:

INNOVATION

Sustainable society (SG3)

In 2022–23 we will deliver on our Strategy commitments by:

Inclusive economy (SG4)

In 2022–23 we will deliver on our Strategy commitments by:

To enable this delivery, we will also:

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Royal Academy of Engineering

Annual Report and Accounts 2021|2022

Report of Trustee Board

Financial Review

Results for the year

The Academy has produced group accounts for the year, having consolidated its accounts with those of its two subsidiaries: the Queen Elizabeth Prize for Engineering Foundation (QEPF) and RAE Trading Limited. The annual report, incorporating the financial statements for the year ended 31 March 2022, has been prepared in accordance with the Academy’s Royal Charter, and in compliance with Accounting and Reporting by Charities: Statement of Recommended Practice 2019, 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) – (Charities SORP (FRS102)), the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS102). The Academy meets the definition of public benefit entity under FRS102. These financial statements are prepared under FRS102.

Group income for the year was £48.3 million (2020/21 £51.2 million). During the year, income from grants and other contracts totalled £45.6 million (2020/21 £49.0 million). Donations totalled £0.7 million (2020/21 £0.5 million), of which £0.2 million was to the QEPF. Other major sources of income during the year were: investments, subscriptions, events, and facilities hire income at a total of £2.0 million compared to £1.7 million in the previous year.

Group expenditure on charitable activities was £47.5 million (2020/21 £53.4 million): 97% of total resources expended. Of this total, £42.9 million represented charitable activities and grants paid under various programmes and £4.7 million represented the costs of operating those programmes.

The cost of generating funds across the group was £1.3 million: 3% of total resources expended. The cost of generating funds consists of fees paid to investment managers, facilities hire and catering, and the staff costs and expenses associated with fundraising. The Academy is continuing with major fundraising activity aimed at obtaining funds for the enhancement and expansion of the Academy’s programmes to support talent and diversity, innovation, and policy and engagement, as well as central infrastructure.

Royal Academy of Engineering

Total income for the year was £47.2 million (2020/21 £50.3 million). The Academy is grateful to the Department for Business, Energy and Industrial Strategy (BEIS) for providing the government core grant to support activities aimed primarily at promoting engineering research in the UK. The core grant at £19.7 million (2020/21 £13.8 million) represented 41% of total group incoming resources.

Income from other grants and contracts decreased by 26% to £25.9 million. Included in this amount were grants received from BEIS of £13.3 million from the Investment in Research Talent fund, £3.0 million from the Global Challenges Research Fund and £1.7 million from the Newton Fund programme.

Expenditure on charitable activities was £46.2 million compared to £51.6 million in the previous year. An analysis based upon the principal objective of each activity shows that, of the total charitable expenditure of £46.2 million: 73% was on innovation; 13% on policy and engagement; and 14% on talent and diversity. Employment costs increased from the previous year by 10% to £8.2 million to ensure that the resourcing of direct operational and enabling support functions were at the level required to execute delivery plans in relation to 2021/22 funding.

Queen Elizabeth Prize for Engineering Foundation

Total income for the year was £0.8 million (2020/21 £0.8 million). Expenditure on charitable activities was £1.3 million compared to £1.8 million the previous year. The Queen Elizabeth Prize for Engineering has moved from a biennial to an annual cycle. The Foundation pays a management fee to the Academy for services, which includes staff employed and office space.

RAE Trading Limited

The commercial activity undertaken by the company during the year was the provision of rooms and catering services within Prince Philip House, primarily to corporate customers. Catering services are also provided to the Academy at cost. Revenue for the year was £0.5 million (2020/21 £21,000). Operating expenditure, including the cost of providing a service to the Academy, was £0.4 million (2020/21 £173,000). The net profit for the year was £92,000 compared to a net loss of £152,000 in the previous year.

Group asset value

The carrying value of the group’s net assets was £70.7 million (2020/21 £68.4 million). Investments were valued at £53.7 million, with the Academy holding £27.5 million and QEPF holding £26.2 million. Tangible fixed assets valued at £24.6 million included the £11.0 million value of the Carlton House Terrace lease and the £12.6 million of leasehold improvements to Prince Philip House. The main liability was a bank loan of £11.5 million, which funded the extension of the Academy’s property lease secured in 2017. The loan also funded part of the lower ground floor extension and settled the previous loan with NatWest.

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Royal Academy of Engineering

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REPORT OF TRUSTEE BOARD

REPORT OF TRUSTEE BOARD

Fixed assets

Capital expenditure during the year amounted to £0.4 million, which was on computer systems and equipment, office fixtures and fittings, and leasehold improvement.

Investments

The value of the Academy’s investment portfolio increased over the year by £0.8 million to £27.5 million. Realised and unrealised investment gains during the year were £0.9 million. 70% of the Academy’s investment portfolio is held in global equities and 30% is held in fixed interest bonds and asset backed and alternative investments. Income to the Academy from dividends decreased by 24% during the year to £488,000. Group investment income decreased by £164,000 to £1.0 million, of which £562,000 was income from QEPF’s investments, which are managed separately to those of the Academy.

The Academy’s investments are held in a managed investment fund and index funds. QEPF’s investments are held in a managed investments fund. The Academy has adopted the following sustainable principles within its investment policy:

  1. The Academy’s assets should be invested in line with its aims.

  2. The Academy aims for the best possible financial return from its investments. However, the Academy understands the importance of sustainable investing practices that are compliant with the United Nations Principles of Responsible Investments (UN PRI). The Trustees believe that the two considerations are not contradictory and that sustainable investing principles should not lead to lower return expectations over the long term.

  3. The Academy’s charitable object is the pursuit, encouragement and maintenance of excellence in the whole field of engineering to useful purpose. The Trustees conclude that a blanket exclusionary policy on certain sectors, as followed by many institutional investors, is not appropriate for the Academy.

  4. The Academy requires its fund managers to pay appropriate regard to relevant corporate governance, social, ethical, and environmental considerations in the selection, retention and realisation of all fund investments. The Academy requires all investment managers to be signatories to UN PRI.

  5. These principles will be reviewed on a regular basis to ensure that they are in-sync with the broader ethical and sustainability policies of the Academy.

Reserves policy

The Academy’s intention is to maintain sufficient reserves to ensure financial resilience and sustainability, including protection against risks identified in the risk register. The reserves policy sets out the target reserves level and the key principles by which the Academy will manage any excesses or deficits compared to the target. The aim is to strike the appropriate balance between ensuring a sustainable financial position and using funds to fulfil the charitable objectives of the Academy and deliver public benefit. The reserves policy is reviewed regularly.

Year ended 31 March 2022 2021
£000 £000
Total funds as per group balance sheet 70,664 68,411
Exclude:
Restricted funds 38,168 36,326
Unrestricted funds tied up in
tangible fixed assets
Designated and special funds		 24,628
3,724		 24,836
3,198
Free reserves 4,144 4,051

Free Reserves

Free Reserves are available to be spent for any purpose that meets the Academy’s charitable objectives. Free Reserves would cover a short-term emergency or longer term structural change. The reserves policy states that the recommended range for Free Reserves is £3.0 million to £4.5 million. Whenever the Academy’s Free Reserves fall below the recommended range, the intention is to build the level of Free Reserves to be within the recommended range within five years.

Designated Funds

A strategic development fund of £2.8 million is available to deliver impactful charitable activities over the next five years and/or strengthen the Academy for the longer term and fund non-recurring costs of major projects without impacting annual operating budgets.

Capital building fund

Within restricted and designated funds there is a fund of £2.7 million to cover major capital improvements to Prince Philip House.

QEPF Trustees consider the level of the Foundation’s reserves as part of their risk assessment review process. These reserves are restricted within the group balance sheet. There are no reserves held by RAE Trading Limited as all profit arising is gift aided to the Academy.

The specific uses and needs of the restricted and designated funds held by the Academy are detailed separately in the notes to the accounts referred to above.

The Academy’s reserves are available and adequate to fulfil the current obligations of the Academy.

The funds have been invested in a diversified portfolio of assets. The core of the portfolio has been invested in the income and return generating assets. Asset classes include domestic and international equities, fixed income instruments, property, commodities, cash, and any other assets deemed suitable for the Academy.

Investment policy

The Trustees’ general powers of investment derive from and are restricted by the Trustee Act 2000. These powers are not restricted by the Academy’s Royal Charter, which states that “the Board may invest any monies of the Academy not immediately required for the purposes of the Academy”. The investment objective is to generate a total return of inflation (Consumer Price Index) plus 4% per annum over the long term, after expenses. This will allow the Academy to maintain the real value of the assets, while funding annual expenditure at the level generally not exceeding 4% per annum.

Risk management and appetite

The Trustees have agreed a risk appetite statement and associated risk management policy. The Audit and Risk Committee reviews the risk register four times a year. The Chair of the Audit and Risk Committee provides updates to the Trustee Board. Risk management is supported by the work of the Audit and Risk Committee as well as various operating committees. The Academy’s overall approach to risk is illustrated by the following table:

Risk appetite table

Risk appetite table
Zero Very low Low Some Acceptance
Health, safetyand security 3
Safeguarding 3
Compliance andgovernance 3
Dataprotection and cybersecurity 3
Reputation 3
IT infrastructure and development 3
People and culture 3
Financial 3
Programme delivery 3
Environment and sustainability 3
Impact 3
Programme innovation 3

Risk appetite classification

Zero Avoidance of risk and uncertainty (aspiration even though difficult to achieve). Very low Preference for very safe options that have a low degree of inherent risk. Low Preference for safe options that have a low degree of residual risk. Some Willing to consider all potential options and choose one that is most likely to result in successful delivery, despite the potential for some degree of risk. Acceptance Eager to innovate and to choose options offering potentially higher reward, despite greater inherent risk.

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REPORT OF TRUSTEE BOARD

REPORT OF TRUSTEE BOARD

The most significant risks currently faced by the Academy and mitigating actions are shown in the table below.

Trading conditions or market forces cause decline in levels of Gift Aid profits from the Academy trading subsidiary leading to threat to financial sustainability.

There has been a significant recovery in trading performance over 2021/22 after near zero sales in 2020/21. Trading performance is closely monitored by senior staff and Finance Committee.

Inability to secure funding at scale and timing needed, causing financial shortfall leading to threat to financial sustainability and/or inability to deliver programmes and activities required for successful implementation of the strategy.

Programme activities are implemented only when sufficient funding is in place and/or can be scaled based on funding available. Confidence in current fundraising activity is based on track record, quality of proposition and competitive position. A cultivation and stewardship programme is in place. A financial strategy is in place that sets out the purpose and appropriate levels of reserves. Up-to-date technology and methodologies including third-party daily monitoring, malware protection, regular patching on laptops and servers, and email and web filtering. Encryption on laptops and VPN, and two-factor authentication is required when using Academy laptops and/or other services remotely. Risks addressed following annual penetration testing. Specific mitigation solution in place against distributed denial of service attacks.

Cyber attack causes failure or compromise of IT systems and/or data leading to reduced ability to operate and/or reputational/financial damage.

Recipients of Academy grants

The Academy made over 1,000 grants and awards to organisations and individuals in 2021/22 totalling £31.2 million. The first 25 organisations, in order of total amount of funds paid to recipients, are listed below.

Policy and Talent and Total
Innovation engagement diversity amount in £
1 Imperial College London 2,929,380 – 91,988 3,021,368
2 University College London 2,365,099 68,111 42,532 2,475,742
3 University of Southampton 2,026,707 – 74,956 2,101,663
4 University of Glasgow 1,862,961 6,764 21,226 1,890,951
5 University of Oxford 1,304,320 – 500 1,304,820
6 University of Bristol 1,254,406 21,325 4,300 1,280,031
7 University of Newcastle 911,565 7,600 117,492 1,036,657
8 University of Manchester 1,004,350 2,818 1,777 1,008,945
9 University of Strathclyde 795,012 – 96,116 891,128
10 University of Nottingham 790,207 – 8,075 798,282
11 University of Sheffeld 644,576 17,865 101,457 763,898
12 Heriot-Watt University 656,825 10,966 28,782 696,573
13 Queen’s University Belfast 579,938 7,230 8,200 595,368
14 University of Cambridge 513,476 – 20,500 533,976
15 University of Leeds 491,935 11,988 9,462 513,385
16 University of Liverpool 498,479 10,966 – 509,445
17 Loughborough University 348,159 8,925 57,475 414,559
18 King’s College London 322,500 – 77,106 399,606
19 University of South Wales 390,500 – 500 391,000
20 University of Exeter 387,437 – – 387,437
21 University of Warwick 298,942 – 65,589 364,531
22 University of Birmingham 342,943 2,827 16,500 362,270
23 University of Edinburgh 337,743 7,861 488 346,092
24 City, University of London 311,028 – 8,000 319,028
25 University of Bath 244,095 36,195 500 280,790
Total 21,612,583 221,441 853,521 22,687,545

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Royal Academy of Engineering

Annual Report and Accounts 2021|2022

STRUCTURE, GOVERNANCE AND MANAGEMENT

Structure, governance and management

Election to the Trustee Board

Trustee Board members are elected for a term of three years with the exception of the President who is elected for a term of up to five years. With the exception of the President, Trustees are eligible for re-election for a further three-year term. The Trustee election is by a ballot of Fellows each year. The Nominations Committee helps to ensure that there is an appropriate candidate slate for election to the Trustee Board and the associated governance roles.

Induction and training of Trustee Board members

Following election, Trustees are provided with an information pack comprising the Academy’s Charter, Statutes and Regulations, a Charity Commission publication on the responsibilities of charity trustees and the Academy strategy. Trustee Board members receive a full induction briefing from senior staff and the Academy’s legal advisor and are encouraged to attend recommended external training courses for charity trustees.

Charity Governance Code

The Trustees have undertaken a review of current Academy practice mapped against the recommended practice of the Charity Governance Code. The vast majority of Academy practices correspond with the recommended practices set out in the Code. A Governance Review was conducted beginning in 2020/21 and adopted in 2021/22 following an Extraordinary General Meeting.

Code of Conduct

A Code of Conduct is in place to cover the conduct and ethical behaviour expected of Fellows of the Royal Academy of Engineering. Fellows are ambassadors for the Academy and should therefore conduct themselves in a manner that supports the Academy’s aims and that upholds and enhances the reputation of the Academy and its Fellows. Fellows are expected to follow the Nolan principles of selflessness, integrity, objectivity, accountability, openness, honesty, and leadership. Fellows who are working for or on behalf of the Academy must act in accordance with Academy policies on conduct and behaviour covering items such as conflicts of interest, equality, diversity and inclusion, antibullying and harassment, and anti-bribery. The Conduct Committee, chaired by the Vice-President for Committee Coordination, has been established to oversee the Code and its implementation.

Public benefit

Fellows are not remunerated for serving as Trustees. The Trustee Board has complied with its duty to have due regard to the Charity Commission’s public benefit

guidance when exercising any powers or duties to which that guidance is relevant. Information about public benefit provided by the Academy is presented in this report.

Internal control

Finance Committee

The Finance Committee is mandated by and reports to the Trustee Board on the following issues:

Detailed management accounts are prepared monthly within 10 working days of the month end and submitted six times a year to the Finance Committee. Summarised accounts are submitted at each Trustee Board meeting.

The Finance Committee meets at least six times during each financial year. Included in the items considered by the Committee during the year were the Academy’s investment strategy and the performance of RAE Trading Limited.

The investment Sub-Committee supports the Finance Committee providing strategic direction and oversight of the Royal Academy of Engineering’s investment assets. The committee is established to determine, implement and review an investment strategy to deliver the organisation’s agreed investment objectives in line with the Investment policy approved by the Academy’s Finance Committee and Trustee Board. The long-term performance of the investment portfolio is monitored against the investment objectives.

Audit and Risk Committee

The Audit and Risk Committee is mandated by and reports to the Trustee Board on the following issues:

The Audit and Risk Committee meets at least four times during each financial year. Included in the items considered by the Committee during the year were the review of the external audit findings, a review of the risk appetite statement, a review of the development programme, and a cybersecurity review.

Fundraising statement

Section 162a of the Charities Act 2011 requires charities to make a statement regarding fundraising activities. Although the Academy does not undertake widespread fundraising from the general public, the legislation defines fundraising as “soliciting or otherwise procuring money or other property for charitable purposes”. Such amounts receivable are presented in the Academy’s accounts as ‘voluntary income’ and include legacies and grants. The day-to-day management of all income generation is delegated to the senior leadership team, who are accountable to the Trustees.

The charity adheres to the Institute of Fundraising Code of Fundraising Practice, which outlines standards expected of all charitable fundraising organisations in the UK.

The Academy has received no complaints in relation to fundraising activities. Its terms of employment require staff to behave reasonably at all times.

Grant-making policy

The grant and award programmes are run by committees or steering groups of Fellows of the Academy, and where appropriate other experts, chosen based on their experience and expertise. Fellows of the Academy offer their time freely; no remuneration was paid in the year beyond the reimbursement of reasonable expenses. There is a policy of strict impartiality and no Fellow may participate in a group/award decision if there is a conflict of interest. The role of Academy staff is one of administration of programmes.

Grant awardees are issued with agreements and progress is monitored and recorded utilising a grant management system.

Remuneration policy

The Academy’s policy is to pay staff salaries at the market mid-point. Salaries are reviewed in alternate years following a market benchmarking exercise conducted by an independent consultancy. The last independent review was undertaken during 2021 to inform the salary review implemented with effect from 1 April 2022.

The remuneration of the Chief Executive and directors is set annually by the Remuneration Committee. In setting appropriate levels of senior management pay, the Remuneration Committee considered the skills, experience and competencies required for each role, and the remuneration level for those roles in sectors where suitable candidates would be found.

Senior leadership team

Day-to-day management of the Academy is the responsibility of the Chief Executive who, with the directors, comprise the senior leadership team listed below, which meets weekly. Strategy is set by the Trustee Board, and implemented by the senior leadership team, with oversight provided by Academy committees.

The directors who served during the period of the report are as follows:

Chief Executive | Dr Hayaatun Sillem CBE Chief Operating Officer | Chris Boyle

Director, Development | Samantha Bagchi Director, Programmes | Dr Andrew Clark

Director, Engineering and Education | Dr Rhys Morgan Director, Policy | Dr Nick Starkey

Director, Communications and Engagement | Joanna Trigg

Director, Enterprise and Sustainable Development | Ana Avaliani

Director, Finance | Burnham Quail

Director, People | Sharon Noble-Ovenell (appointed 04/05/2021)

Trustees’ responsibilities

The Trustees are responsible for preparing the 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 in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under charity law the Trustees must not approve the

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Royal Academy of Engineering

Annual Report and Accounts 2021|2022

AUDITOR’S REPORT

Auditor’s report

financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and charity and of the incoming resources and application of resources, including the income and expenditure, of the group for that period.

In preparing these financial statements, the Trustees are required to:

The Trustees are responsible for keeping adequate accounting records that are sufficient to show and explain the charity’s transactions and disclose with reasonable accuracy at any time the financial position of the charity and enable them to ensure that the financial statements comply with the Charities Act 2011. They are also responsible for safeguarding the assets of the charity and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Signed on behalf of the Trustee Board on 17 August 2022

Professor Sir Jim McDonald FREng FRSE President

Professor Stephen Young CBE FREng FRS Chair of the Finance Committee

Independent auditor’s report to Trustees of the Royal Academy of Engineering

Opinion on the financial statements

In our opinion, the financial statements:

We have audited the financial statements of Royal Academy of Engineering (“the Parent Charity”) and its subsidiary (“the Group”) for the year ended 31 March 2022 which comprise the consolidated statement of financial activities, the group and charity balance sheets, the consolidated cash flow statement 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).

Opinion on other matter as required by BEIS grant letters

In our opinion, in all material respects, the grant payments received from the Department for Business, Energy, and Industrial Strategy (BEIS) have been applied for the purposes set out in the Grant Letters and in accordance with the terms and conditions of the agreements.

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.

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

fulfilled our other ethical responsibilities in accordance with these requirements.

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.

Our responsibilities and the responsibilities of the Trustees with respect to going concern are described in the relevant sections of this report.

Other information

The Trustees are responsible for the other information. The other information comprises the information included in the Annual Report, other than the financial statements and our auditor’s report thereon. The other information comprises: Foreword, Honouring our senior Fellow, How we deliver impact, Highlights from the past year, UK funding map, Global funding map, Talent and diversity, Innovation, Policy and engagement, People and operations, Future plans, Report of Trustee Board, Structure, governance and management.

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 or a material misstatement of the other information. 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.

We have nothing to report in this regard.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters in relation to which the Charities Act 2011 us to

report to you if, in our opinion:

Responsibilities of Trustees

As explained more fully in the Trustees’ responsibilities statement, 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 determines 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 144 of the Charities Act 2011 and report in accordance with the Act 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 noncompliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect

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Royal Academy of Engineering

Annual Report and Accounts 2021|2022

AUDITOR’S REPORT

Consolidated statement of financial activities

of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

Based on our understanding of the group and charity and the sector in which it operates, we identified that the principal laws and regulations that directly affect the financial statements to be relevant charities acts in the UK and Ireland. We assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.

In addition, the group and charity are subject to many other laws and regulations where the consequences of non-compliance could have a material effect on amounts or disclosures in the financial statements, for instance through the imposition of fines or litigation.

In order to help identify instances of non-compliance with other laws and regulations that may have a material effect on the financial statements, we made enquiries of management and those charged with Governance about whether the entity is in compliance with such laws and regulations and we inspected any relevant regulatory and legal correspondence.

Audit procedures performed by the engagement team included:

particularly around all revenue streams, and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business; and

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 non-compliance 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: 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 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: 18 August 2022

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

Year ended 31 March 2022 Unrestricted Restricted Total
Unrestricted		 Restricted Total
Notes funds 2022 funds 2022 31 March
funds 2021		 funds 2021 31 March
2022 2021
£ £ £ £ £ £
Income from:
Charitable activities 2,3,4 – 45,639,341 45,639,341 – 49,017,668 49,017,668
Donations and legacies 5 99,813 559,955 659,768 69,523 463,046 532,569
Other tradingactivities 6a 924,392 – 924,392 444,410 – 444,410
Investments 6 457,015 593,587 1,050,602 604,932 612,254 1,217,186
Total income 1,481,220 46,792,883 48,274,103 1,118,865 50,092,968 51,211,833
Expenditure on:
Raisingfunds 1,099,835 189,311 1,289,146 834,125 194,277 1,028,402
Charitable activities 7 1,423,251 46,100,598 47,523,849 1,666,483 51,734,943 53,401,426
Other 8 29,517 3,675 33,192 64,104 12,517 76,621
Total expenditure 2,552,603 46,293,584 48,846,187 2,564,712 51,941,737 54,506,449
Netgains on investment 11 804,854 2,019,879 2,824,733 3,995,164 5,157,955 9,153,119
Net(expenditure) / income (266,529) 2,519,178 2,252,649 2,549,317 3,309,186 5,858,503
Transfer between funds 16 677,084 (677,084) – 930,891 (930,891) –
Net movement in funds 410,555 1,842,094 2,252,649 3,480,208 2,378,295 5,858,503
Fund balances brought
forward 1 April 32,085,352 36,325,765 68,411,117 28,605,144 33,947,470 62,552,614
Fund balances carried 16, 17
forward 31 March 32,495,907 38,167,859 70,663,766 32,085,352 36,325,765 68,411,117

All the above results are derived from continuing activities. There are no gains and losses other than those stated above.

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Royal Academy of Engineering

Annual Report and Accounts 2021|2022

Balance sheets

At 31 March 2022
Notes		 Group
2022
2021
£
£		 Charity
2022
2021
£
£
Tangible fxed assets
10
Investments
11		 24,628,325
24,836,180
53,651,386
53,099,866		 24,628,325
24,836,180
27,503,846
26,722,247
Total fxed assets 78,279,711
77,936,046		 52,132,171
51,558,427
Current assets:
Debtors
12		 8,150,622
8,795,658		 8,161,068
8,968,764
Stock
13		 3,004
3,108		 3,004
3,108
Short-term deposits 1,049,046
377,879		 117,345
61,008
Cash at bank 3,647,571
3,198,637		 2,531,101
2,391,975
12,850,243
12,375,282		 10,812,518
11,424,855
Liabilities
Creditors (amounts falling due within one
year)
14a		 (8,966,188)
(10,400,211)		 (8,241,851)
(9,407,400)
Net current assets 3,884,055
1,975,071		 2,570,667
2,017,455
Total assets less current liabilities 82,163,766
79,911,117		 54,702,838
53,575,882
Creditors (amounts falling due beyond
oneyear)
14c		 (11,500,000)
(11,500,000)		 (11,500,000)
(11,500,000)
Total net assets 70,663,766
68,411,117		 43,202,838
42,075,882
**The funds of the charity: **
Restricted income funds
16		 38,167,859
36,325,765		 10,870,683
10,154,781
Unrestricted funds
Designated fund 3,724,180
3,197,927		 3,197,927
329,256
General fund 28,771,727
28,887,425		 29,134,228
31,591,845
Total unrestricted funds 32,495,907
32,085,352		 32,332,155
31,921,101
Total charitable funds 70,663,766
68,411,117		 43,202,838
42,075,882

Consolidated statement of cash flows

Year ended 31 March 2022

Year ended 31 March 2022
2022 2021
£ £
Cash fows from operating activities:
Net cash expended byoperatingactivities (1,795,630) (3,475,530)
Cash fows from investingactivities:
Dividends, interest and rents from investments 1,050,602 1,217,183
Purchase ofproperty,plants and equipment (408,084) (728,836)
Proceeds from the sale of investments 28,901,597 9,985,319
Purchase of investments (26,628,384) (9,600,017)
Net cashprovided byinvestingactivities 2,915,731 873,649
Cash fows used in fnancingactivities:
Change in cash and cash equivalents in the reporting period 1,120,101 (2,601,881)
Cash and cash equivalents at 1 April 3,576,516 6,178,397
Cash and cash equivalents at 31 March 4,696,617 3,576,516
Reconciliation of net income to net cash fow from operating activities
Net income for the reporting periods(asper the statement of fnancial activities) 2,252,649 5,858,503
Net(gains)on investments (2,824,733) (9,153,119)
Adjustments for:
Depreciation charges 615,939 534,822
Dividends, interest and rents from investments (1,050,602) (1,217,186)
Decrease in stocks 104 87
Decrease /(increase)in debtors 645,036 (902,564)
(Decrease)/increase in creditors (1,434,023) 1,403,927
Net cash expended by operating activities (1,795,630) (3,475,530)
Analysis of cash and cash equivalents
Cash in hand 3,647,571 3,198,637
Notice deposits 1,049,046 377,879
Total cash and cash equivalents 4,696,617 3,576,516

These financial statements were approved and authorised for issue by the President and Chair of the Finance Committee under delegated authority from the Trustee Board.

Signed on behalf of the Trustee Board on 17 August 2022

Professor Sir Jim McDonald FREng FRSE President

Professor Stephen Young CBE FREng FRS Chair of the Finance Committee

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Royal Academy of Engineering

Annual Report and Accounts 2021|2022

NOTES TO THE ACCOUNTS

Notes to the accounts

For the year ended 31 March 2022

Note 1 – Accounting policies

(a) Basis of preparation of the

accounts

The annual report, incorporating the financial statements for the year ended 31 March 2022, has been prepared in accordance with the Academy’s Royal Charter, and in compliance Accounting and Reporting by Charities: Statement of Recommended Practice 2019 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) – (Charities SORP (FRS102)), the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS102). The Academy meets the definition of public benefit entity under FRS102. These financial statements are prepared under FRS102.

(b) Historical cost convention

The financial statements have been prepared under the historical cost convention, as modified for the inclusion of investment assets at market value.

(c) Consolidation

The financial statements consolidate the results of the Academy and its own wholly owned subsidiaries, RAE Trading Limited and The Queen Elizabeth Prize for Engineering Foundation, on a line-by-line basis. Transactions and balances between the Academy and its subsidiaries have been eliminated from the consolidated financial statements. Balances between the Academy and the subsidiaries are disclosed in the notes of the Academy’s balance sheet. A separate statement of Financial Activities and Income and Expenditure Account for the Academy has not been presented because the Academy has taken advantage of the exemption afforded by FRS 102.

(d) Income

The specific bases for accounting for income are described below. In general terms, income is accounted for on a receivable basis, gross of related expenditure. Income is only recognised where there is evidence of entitlement, where it is probable that income will be received and recognised only when income can be measured.

– Grants receivable are recognised when entitlement to the grant is approved and communicated, and also include returned grants that are accounted for on receipt.

– Gifts and donations and legacies are included in full in the statement of financial activities when receivable.

– For legacies, entitlements is taken as the earlier of the date on which either: the Academy is aware that probate has been granted, the estate has been finalised and notification has been made by the executor(s) to the Academy that a distribution will be made; or when a distribution is received from the estate. Receipt of a legacy, in whole or in part, is only considered probable when the amount can be measured reliably and the Academy has been notified to the executor’s intention to make a distribution.

– Income from sales of goods or contracts for services is

recognised when the goods and services are delivered.

– Investment income is included in the Statement of Financial Activities in the year in which it is receivable.

– Other incoming resources consist of subscriptions, including income tax recoverable.

(e) Donated services and facilities

Donated professional services and donated facilities are recognised as income when the Academy has control over the item, any condition associated with the donated item has been

met, the receipt of economic benefit from the use by the Academy of the item is probable and that economic benefit can be measured reliably. On receipt, donated professional services and donated facilities are recognised on the basis of the value of the gift to the Academy which is the amount the Academy would have been willing to pay to obtain services or facilities of equivalent economic benefit on the open market; a corresponding amount in then recognised in expenditure in the period of receipt.

(f) Expenditure

Expenditure is recognised on an accruals basis, gross of any related income. Costs are allocated to activities as described below. Indirect costs are apportioned to activities on a basis consistent with the use of the resources.

– Costs of raising funds comprise direct costs and expense of staff involved with fundraising, fees paid to investment fund managers, and trading costs.

– Charitable activities – grants. Grants payable are charged in the year in which the commitments to pay the grants are made.

– Charitable activities – other. Other charitable expenditure includes all direct expenditure, including irrecoverable VAT and staff costs, which is directly attributable to activities. Indirect costs are allocated to each charitable activity based on the number of staff directly supporting the activity.

(g) Support costs

Support costs are those functions that assist the work of the Academy and mainly comprise of staff costs and overheads. Support costs, which include irrecoverable VAT, are assigned to the Academy’s charitable objectives in line with the direct expenditure under each heading.

Rental costs under operating leases are charged to the Statement of Financial Activities evenly over the term of the lease.

Computer equipment – over three years

Carlton House Terrace – over the term of lease

(k) Pensions The Academy operates a defined contribution pension scheme. The assets of the scheme are held separately from those of the Academy in independently administered funds. The pensions cost charge represents contributions payable to the scheme in the year. The Academy has no liability under the scheme other than the payment of those contributions.

(l) Funds General funds are those that are available for use at the Trustee Board’s discretion in the furtherance of the Academy’s objectives. Designated funds are unrestricted funds set aside for unrestricted purposes and which would otherwise form part of general funds. Details of the nature and purpose of each designated fund are set out in note 16. Restricted funds are funds

(s) Going concern

that are subject to restrictions imposed by donors and are applied in accordance with these restrictions. Details of the nature and purpose of each restricted fund are set out in note 16.

imposed by donors and are These accounts have been applied in accordance with these prepared on a going concern restrictions. Details of the nature basis. and purpose of each restricted Royal Academy of Engineering’s fund are set out in note 16. senior leadership team monitor the Group and Charity’s cash Trade and other debtors are position on a monthly basis recognised at the settlement by looking at the cash flow amount due after any trade forecast for the next twelve discount offered. Prepayments months, broken down by month. are valued at the amount This forecast, combined with prepaid net of any trade an assessment of the future discounts due. reserves position, forms the basis of our assessment of going Stock is included at the lower of concern. It has been stress cost or net realisable value. tested to reflect a number of (o) Cash and cash equivalents possible scenarios regarding the at bank coronavirus pandemic and its Cash and cash equivalents at impact on the wider economy, bank includes cash and short including using reverse stress term highly liquid investments testing. In doing so, we have obtainable within 3 months. particularly considered the impact of a global economic Creditors are recognised where recession that results austerity the Academy has a present measures and the reduction obligation resulting from a past of the Charity’s government event that will probably result funding being reduced over and in the transfer of funds to a above our key risk assumptions third party and the amount (set out in the report of Trustee due to settle the obligation Board). can be measured or estimated Based on these forecasts, and reliably. Creditors are normally the Group and Charity’s net asset recognised at their settlement position of £70.7 million, which amount after allowing for any is comprised primarily of cash trade discounts due. and investments, we believe

(m) Debtors

(n) Stock

(o) Cash and cash equivalents

(p) Creditors

Based on these forecasts, and the Group and Charity’s net asset position of £70.7 million, which is comprised primarily of cash and investments, we believe that the going concern basis of accounting remains appropriate for our accounts. We have also considered whether there is any material uncertainty that may cast significant doubt over the use of that basis for a period of at least 12 months from the date of approval of the financial statements and we do not believe that this is the case.

(q) Financial instruments

The Academy only has financial assets and financial liabilities of a kind that qualify as basic financial instruments. Basic financial instruments are initially recognised at transaction value and subsequently measured at their settlement value with the exception of bank loans which are subsequently measured at amortised cost using the (t) Government grants effective interest method.

Grants payable are recognised when entitlement to the grant is approved and communicated, and also include returned grants that are accounted for on receipt.

(r) Corporation taxation

The Academy is exempt from tax on income and gains falling within section 505 of the Taxes Act 1988 or section 252 of the Taxation of Chargeable Gains Act 1992 to the extent that these are applied to its charitable objectives.

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Royal Academy of Engineering

Annual Report and Accounts 2021|2022

NOTES TO THE ACCOUNTS

NOTES TO THE ACCOUNTS

Year ended 31 March 2022 Unrestricted Restricted Totals Unrestricted Restricted Totals
funds funds 31 March funds funds 31 March
2022 2021
£ £ £ £ £ £
Note 2 – Grants
Government grant
(See note 3) – 19,730,182 19,730,182 – 13,800,231 13,800,231
Note 3 – Governmentgrant
Grant was expended on:
Programme expenditure – 18,696,206 18,696,206 – 11,696,206 11,696,206
Cost of managing
programmes – 1,033,976 1,033,976 – 2,104,025 2,104,025
– 19,730,182 19,730,182 – 13,800,231 13,800,231
Note 4 – Other grants and
contracts
Investment in Research Talent – 13,304,319 13,304,319 – 13,977,048 13,977,048
Global Challenges Research
Fund – 2,974,270 2,974,270 – 8,277,532 8,277,532
UK Intelligence Community
(IC) Postdoctoral Research
Fellowships – 2,210,530 2,210,530 – 855,000 855,000
Newton Fund – 1,705,680 1,705,680 – 7,820,780 7,820,780
Engineering skills where they
are most needed – 816,276 816,276 – – –
Sainsbury Management
Fellowships – 528,375 528,375 – 485,015 485,015
End of engineered life – 500,626 500,626 – – –
Tier 1 Visa Applications – 493,175 493,175 – 329,950 329,950
Northern Ireland Engineering
Education Programme – 477,000 477,000 – –
Leverhulme Fellowships – 450,425 450,425 – 310,810 310,810
ConnectingSTEM Teachers – 353,010 353,010 – 558,561 558,561
1851 Royal Commission
Enterprise Fellowships – 350,003 350,003 – 300,000 300,000
Amazon Future Engineer
Bursaries – 337,500 337,500 – – –
BEIS Bhattacharrya – 309,750 309,750 – 235,998 235,998
Connecting STEM Teachers
Social MobilityPilot – 300,000 300,000 – – –
Programme for safer complex
industrial and engineered
systems – 235,223 235,223 – – –
Other awards and contracts – 182,930 182,930 – 229,899 229,899
RAEng/EPSRC Research
Fellowships – 47,349 47,349 – 237,324 237,324
Year ended 31 March 2022 Unrestricted Restricted Totals Unrestricted Restricted Totals
funds funds 31 March funds funds 31 March
2022 2021
£ £ £ £ £ £
Welsh Valleys Bursaries
Scheme – 107,393 107,393 – 170,100 170,100
Enterprise Hub – 100,902 100,902 – 1,135,362 1,135,362
Education Studies and
Support – 99,600 99,600 – – –
Sir Ralph Robins Scholarships – 50,000 50,000 – 50,000 50,000
Africa Prize for Engineering
Innovation – 2,250 2,250 – 100,000 100,000
EngineeringFE – (27,427) (27,427) – – –
Pandemic Response – – – – 123,400 123,400
MacRobert Award – – – – 20,158 20,158
KS2 STEM Resources and CPD
Programme – – – – 500 500
– 25,909,159 25,909,159 – 35,217,437 35,217,437
Engineering FE is showing negative income 2021/22 due to the return of funds following the end of the scheme
Total charitable activities – 45,639,341 45,639,341 – 49,017,668 49,017,668
Note 5 – Donations and
legacies
Annual Appeal 54,301 – 54,301 60,806 – 60,806
This is Engineering – 360,000 360,000 – 259,000 259,000
Prince PhilipFund 41,736 – 41,736 – – –
Queen Elizabeth Prize for
Engineering – 199,955 199,955 – 204,046 204,046
Legacies 2,811 – 2,811 – – –
Other 965 – 965 8,717 – 8,717
99,813 559,955 659,768 69,523 463,046 532,569
Note 6 – Investment income
Dividends and income
from equity investments
and fxed interest bonds 456,415 593,481 1,049,896 601,616 612,070 1,213,686
Interest on bank deposits 600 106 706 3,316 184 3,500
457,015 593,587 1,050,602 604,932 612,254 1,217,186
Note 6a – Other trading
income
Sponsorshipand events 118,584 – 118,584 61,774 – 61,774
Subscription income 355,579 – 355,579 335,271 – 335,271
Advertising income and
merchandising 16,469 – 16,469 26,208 – 26,208
Conferencingbusiness 433,760 – 433,760 21,157 – 21,157
924,392 – 924,392 444,410 – 444,410

46

47

Royal Academy of Engineering

Annual Report and Accounts 2021|2022

NOTES TO THE ACCOUNTS

NOTES TO THE ACCOUNTS

Talent and Innovation Policy and Queen Total Total
diversity engagement Elizabeth 31 March 31 March
Prize for 2022 2021
Engineering
Foundation
£ £ £ £ £ £
Note 7 – Charitable
activities
Unrestricted
Charitable activities 3,434 – 56,299 – 59,733 86,114
Charitablegrants 91,717 – – – 91,717 65,366
Direct salaries 57,055 – 229,769 – 286,824 292,187
Support costs 342,067 – 642,910 – 984,977 1,222,816
494,273 – 928,978 – 1,423,251 1,666,483
Restricted
Charitable activities 2,597,777 2,233,388 1,445,616 875,098 7,151,879 8,159,376
Charitablegrants 2,445,222 26,723,311 983,750 – 30,152,283 36,239,270
Direct salaries 603,372 2,216,504 2,110,471 190,979 5,121,326 4,640,039
Support costs 495,896 2,737,805 398,713 42,696 3,675,110 2,696,258
6,142,267 33,911,008 4,938,550 1,108,773 46,100,598 51,734,943
Total charitable
activities 6,636,540 33,911,008 5,867,528 1,108,773 47,523,849 53,401,426

Total support costs of £4,659,983 are made up of indirect staff costs totalling £1,638,791 and accommodation costs and overheads totalling £3,021,192

2021 Total charitable
activities 2,710,866 44,048,058 4,983,955 1,658,547 53,401,426

In 2021 £1,736,462 of charitable activities expenditure related to unrestricted funds and £47,063,692 related to restricted funds

2022 2021
£ £
Note 8 – Other costs
Auditor’s fees:
– Audit 33,075 35,026
– Other services 117 3,050
Legal andprofessional fees – 38,545
33,192 76,621
£5,007 was charged to the Academyin relation to operatingleases
Note 9 – Staff andpensions costs 2022 2021
Gross salaries 6,177,989 5,886,843
Employer's National Insurance less NI Allowance 680,395 651,935
Benefts in kind 34,578 39,839
Pension charge 625,725 608,871
Recruitment costs 223,395 52,833
Temporarystaff costs 233,872 28,895
Trainingcosts 65,362 28,431
Other costs 147,045 121,161
8,188,361 7,418,808
Average number of staff in theyear byactivity: 2022 2021
– Engineeringand education 22 17
– Programmes and fellowship 53 44
– Policyand external affairs 31 25
– Executive, development, finance and administration 42 38
– Queen Elizabeth Prize for EngineeringFoundation 6 6
154 130

No remuneration is paid to the President or members of the Trustee Board of the Academy. Travelling expenses to attend Trustee Board meetings were nil in 2021/22 (2020/21 £271 – seven members). No ex gratia payments were made in 2021/22 (2020/21 £72,000)

The emoluments of higherpaid staff within the followingscales were: 2022 2021
£60,000 – £70,000 11 11
£70,001 – £80,000 3 3
£80,001 – £90,000 1 1
£90,001 – £100,000 3 3
£100,001 – £110,000 1 1
£110,001 – £120,000 1 2
£120,001 – £130,000 1 –
£130,001 – £140,000 1 1
£170,001 – £180,000 – 1
£180,001 – £190,000 1 1

time equivalent.

The senior management team comprises of a chief executive, chief operating officer and eight directors (2020/21 eight directors) who manage the day-to-day operations of the charity. Their aggregate remuneration in the year was £1,220,534 (2020/21 £1,340,893).

Note: There were no resignations and one appointment among the senior management team during the year.

48

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Royal Academy of Engineering

Annual Report and Accounts 2021|2022

NOTES TO THE ACCOUNTS

NOTES TO THE ACCOUNTS

Note 9(b) – Pensions

compliant with auto-enrolment legislation. The assets of the scheme are held separately from those of the Academy in independently administered funds. The Academy has no liability under the scheme other than the payment of contributions.

Note 10 Computer systems Offce fxtures Leasehold Carlton House Total
and equipment and fttings Terrace
improvement
£ £ £ £ £
Tangible fxed assets
(group and charity)
Cost
At 1 April 2021 1,688,040 1,346,804 12,509,790 13,996,607 29,541,241
Additions 341,345 66,739 – – 408,084
At 31 March 2022 2,029,385 1,413,543 12,509,790 13,996,607 29,949,325
Depreciation
At 1 April 2021 (1,290,571) (672,551) (1,467,919) (1,274,020) (4,705,061)
Charge foryear (165,453) (233,333) (91,257) (125,896) (615,939)
At 31 March 2022 (1,456,024) (905,884) (1,559,176) (1,399,916) (5,321,000)
Net book value
At 31 March 2022 573,361 507,659 10,950,614 12,596,691 24,628,325
At 1 April 2021 397,469 674,253 11,041,871 12,722,587 24,836,180

All assets are used for charitable purposes.

Medal collections

These medal collections are not held on the balance sheet, the Trustees consider that it is not practicable to obtain a valuation, but are satisfied that the value of the medals collections is not material.

Note 11 – Investments (group and charity)

Investments held in the general fund portfolio represent those held by the Royal Academy of Engineering with the objective of generating income for the Academy’s charitable object while preserving the capital value of the portfolio.

Investments held in the restricted fund portfolio represent those held by the Queen Elizabeth Prize for Engineering Foundation with the objective of generating income for the Foundation’s charitable object.

2022 2022 2022 2022 2022
Designated Restricted
General fund income funds Total funds fund Total Portfolio
(Charity) (Charity) (Charity) (Subsidiary) (Group)
Market value at 1 April 25,062,957 1,659,190 26,722,147 26,377,719 53,099,866
Add acquisitions at cost 22,887,321 1,109,031 23,996,352 2,632,032 26,628,384
Less: salesproceeds (22,991,526) (1,116,615) (24,108,141) (4,793,456) (28,901,597)
Net investmentgains for theyear 804,854 88,534 893,388 1,931,345 2,824,733
Market value at 31 March 25,763,606 1,740,140 27,503,746 26,147,640 53,651,386

Investments in the general fund (charity) consist of securities listed on global stock markets (70% of portfolio) and fixed interest bonds/ diversified assets (30% of portfolio).

The designated income funds consists of funds invested in line with the general fund (charity) investment strategy to support the MacRobert Award and funds invested in securities listed on global stock markets to support the Colin Campbell Mitchell Award.

bonds/diversified assets (25% of portfolio).

Group
2022
£
2021
£		 Charity
2022
£
2021
£
Note 12 – Debtors
Grants and sponsorshipreceivable 6,654,024
7,835,039		 6,654,024
7,835,041
Prepayments 293,739
130,584		 293,739
130,584
Other debtors 1,202,859
830,035		 967,469
740,232
Amounts due for subsidiaryundertakings –
–		 245,836
262,907
8,150,622
8,795,658		 8,161,068
8,968,764
Note 13 – Stocks(Group and Charity)
Publications, Academy ties, presentation plates and
medals		 3,004
3,108		 3,004
3,108

50

51

Royal Academy of Engineering

Annual Report and Accounts 2021|2022

NOTES TO THE ACCOUNTS

NOTES TO THE ACCOUNTS

Group
2022
£
2021
£		 Charity
2022
£
2021
£
Note 14a – Creditors (amounts falling due within
oneyear)
Committedgrants andprizes 6,920,722
7,861,464		 6,920,722
7,861,465
Deferred income 497,387
598,475		 497,387
598,475
Subscriptions in advance 203,363
173,494		 203,363
173,494
Other creditors 1,344,716
1,593,652		 542,432
436,452
Amounts due to subsidiaryundertakings –
–		 77,947
164,388
Social securityand other costs –
173,126		 –
173,126
8,966,188
10,400,211		 8,241,851
9,407,400
Note 14b – Deferred income

Deferred income comprises of advance funding for the Connecting STEM Teachers programme, Enterprise Fellowships and Research Fellowships.

and Research Fellowships.
Balance at 1 April 598,475 727,601 598,475 727,601
Amount released to income earned from charitable (1,172,702) (1,299,062) (1,172,702) (1,299,062)
activities
Amount deferred inyear 1,071,614 1,169,936 1,071,614 1,169,936
Balance as at 31 March 497,387 598,475 497,387 598,475
Note 14c – Creditors(amounts falling beyond oneyear)
and Research Fellowships.
Balance at 1 April 598,475
727,601		 598,475
727,601
Amount released to income earned from charitable
activities		 (1,172,702)
(1,299,062)		 (1,172,702)
(1,299,062)
Amount deferred inyear 1,071,614
1,169,936		 1,071,614
1,169,936
Balance as at 31 March 497,387
598,475		 497,387
598,475
Note 14c – Creditors(amounts falling beyond oneyear)
Bank loan*
– Due one to twoyears –
–		 –
–
– Due within two to fveyears –
–		 –
–
– Due after fveyears 11,500,000
11,500,000		 11,500,000
11,500,000
11,500,000
11,500,000		 11,500,000
11,500,000
Note 15 – Future commitments
Total minimum commitments under operating leases
Rent
not later than oneyear 240,000
240,000		 240,000
240,000
later than oneyear and not later than fveyears; –
–		 –
–
later than fveyears –
–		 –
–
Equipment
not later than oneyear 1,738
1,305		 1,738
1,305
later than oneyear and not later than fveyears; –
–		 –
–
later than fveyears –
–		 –
–
Total 241,738
241,305		 241,738
241,305

Note 16 – Statement of changes in reserves

potential and achieve their career goals.

(a) Restricted funds –

Ms Morag Campbell Nelder Legacy is to be used to fund the Colin Campbell Mitchell Award, which is given to an individual or – group of outstanding engineers. Newton Fund schemes promote research and innovation intended to have a direct and longterm impact on the economic development and social welfare of countries participating with the UK in the Newton Fund.

The Capital Building Fund has been used to create a base for the Academy’s enterprise activities and develop 3 Carlton House – Terrace into a national forum of engineering excellence.

This is Engineering , previously known as the Engineering Talent Project, is a multi-year campaign to encourage more young people from all backgrounds to consider a career in engineering

by changing perceptions of the profession.

Enriching Engineering Education Programme is centered on a combination of two-way secondments and collaborative workshops. These secondments and workshops lead to improved industry-academia links and result in wide-ranging benefits for both parties.

Project CARE was launched in March 2020 with a goal to mobilise the Academy’s alumni of Africa- based entrepreneurs and leverage the Fellowship and their networks to help strengthen capacity and provide resources to address the consequences and impacts of COVID-19 in African communities in a constructive and sustainable way.

Other awards and contracts are donations and contracts by a number of companies for specific programmes each year. Global Challenges Research Fund is part of a £1.5 billion UK government fund to support cutting-edge research that addresses the challenges faced by developing countries through collaborative research and innovation, and research and innovation capacity building within both the UK and developing countries. UK Intelligence Community (IC) Postdoctoral Research Fellowships are offered by the Government Office for Science with the Academy acting as academic engagement partner. They support outstanding earlycareer science or engineering researchers to promote unclassified basic research in areas of interest to the intelligence, security and defense community. Northern Ireland Engineering Education Programme is working with schools and colleges across Northern Ireland to encourage more young people, particularly young women and those from socially disadvantaged backgrounds and other underrepresented groups, to progress

52

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Royal Academy of Engineering

Annual Report and Accounts 2021|2022

NOTES TO THE ACCOUNTS

NOTES TO THE ACCOUNTS

towards careers in engineering. evaluated two-year pilot project – Amazon Future Engineer supporting schools to run action Bursaries is a national bursary research projects to identify and programme aimed at supporting tackle problems in their schools women A-level and BTEC/OCR that they see as barriers that (or Scottish equivalent) students disadvantaged groups of young from low-income households who people face in accessing STEM wish to study computer science education and continuing onto or related engineering courses at STEM careers. UK universities. –

tailored support designed in collaboration with industry experts and leading engineering and technology business leaders.

(b) Designated funds

Strategic Development Fund is used to deliver impactful charitable activities over the next five years and strengthen the Academy for the longer term.

Balance at Incoming Resources Transfers Net Balance at
1 April resources expended between investment 31 March
2021 funds gains 2022
£ £ £ £ £ £
Restricted funds
Government grant – 19,730,182 (19,730,182) – – –
Investment in Research Talent – 13,304,320 (13,304,320) – – –
End of engineered life 346,941 500,626 (391,346) – – 456,221
Programme for safer complex
industrial and engineered systems 510,745 199,223 (233,073) – – 476,895
Engineering skills where they are
most needed 236,107 816,276 (505,509) – – 546,874
BEIS Bhattacharyya – 309,750 (309,750) – – –
Sainsbury Management Fellowships – 564,375 (564,375) – – –
RAEng/EPSRC Research Fellowships – 47,349 (47,349) – – –
Leverhulme Fellowships – 450,425 (450,425) – – –
Engineering Leaders Scholarships 176,846 – – – – 176,846
Connecting STEM Teachers 992,701 353,010 (948,814) – – 396,897
Connecting STEM Teachers Social
Mobility Pilot – 300,000 – – – 300,000
Amazon Future Engineer Bursaries – 337,500 (107,527) – – 229,973
Northern Ireland Engineering
Education Programme – 477,000 – – – 477,000
Sir Ralph Robins Scholarships 280,631 50,000 (30,000) – – 300,631
Welsh Valleys Bursaries Scheme 87,471 107,393 (101,624) – – 93,240
Engineering FE 372,391 (27,427) (45,071) – – 299,893
Enterprise Hub 1,214,721 100,902 (100,902) (1,000,000) – 214,721
Balance at Incoming Resources Transfers Net Balance at
1 April resources expended between investment 31 March
2021 funds gains 2022
£ £ £ £ £ £
Shott Scale Up Accelerator – – (159,376) 1,000,000 – 840,624
Africa Prize for Engineering
Innovation 552,704 2,250 (144,336) – – 410,618
Colin Campbell Mitchell Award 371,833 5,011 (20,680) – 44,666 400,830
Newton Fund – 1,705,680 (1,705,680) – – –
Capital Building Fund 2,133,904 – – (408,084) – 1,725,820
This is Engineering 13,957 360,000 (366,079) – – 7,878
Enriching Engineering Education
Programme 313,524 – (8,730) – – 304,794
Education Studies and Support – 99,600 (78,600) – – 21,000
MacRobert Award 1,270,100 26,268 (61,207) – 43,868 1,279,029
Other awards and contracts 222,699 182,930 (201,895) – – 203,734
1851 Royal Commission Enterprise
Fellowships – 350,003 (350,003) – – –
Global Challenges Research Fund – 2,974,270 (2,883,787) – – 90,483
Tier 1 Visa Applications – 493,175 (493,175) – – –
UK Intelligence Community (IC)
Postdoctoral Research Fellowships 847,199 2,210,530 (1,604,797) – – 1,452,932
Pandemic Response 46,056 – (46,056) – – –
Queen Elizabeth Prize for
Engineering 26,335,235 762,262 (1,298,916) (269,000) 1,931,345 27,460,926
Total restricted funds 36,325,765 **46,792,883 ** (46,293,584) (677,084) 2,019,879 38,167,859
Designated funds
Strategic Development Fund 2,531,831 – – 218,169 – 2,750,000
Capital Building Fund 666,096 – – 308,084 – 974,180
Ingenia Designated fund – 16,336 (16,336) – – –
Total designated funds 3,197,927 16,336 (16,336) 526,253 – 3,724,180
General fund 28,887,425 1,464,884 (2,536,267) 150,831 804,854 28,771,727
Total funds 68,411,117 **48,274,103 ** (48,846,187) – 2,824,733 70,663,766

The general fund deficit of £1,071,279 is the difference between incoming resources of £1,464,884 and resources expended of £2,536,163 All other funds, other than the Queen Elizabeth Prize for Engineering, are funds of the parent charity.

Transfers between funds: a £1 million donation was received 2020/21 for the Enterprise Hub. The donor agreed that his donation should be included within our 50th anniversary fundraising campaign, and for this named donation to be reflected in the title of the programme ‘Shott Scale Up Accelerator’. Capital Building Fund transfer relates to fixed asset additions. Queen Elizabeth Prize for Engineering transfer relates to the management fee charged by the charitable parent.

54

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Royal Academy of Engineering

Annual Report and Accounts 2021|2022

NOTES TO THE ACCOUNTS

NOTES TO THE ACCOUNTS

Balance at Incoming Resources Transfers
Net		 Balance at
1 April resources expended between
investment		 31 March
2020 funds gains/(losses) 2021
£ £ £ £ £ £
Restricted funds
Government grant – 13,800,231 (13,800,231) – – –
Investment in Research Talent – 13,977,048 (13,977,048) – – –
End of engineered life 675,998 – (329,057) – – 346,941
Programme for safer complex
industrial and engineered systems 925,712 – (414,967) – – 510,745
Engineering skills where they are
most needed 761,544 – (525,437) – – 236,107
Policy Fellowships – 59,700 (59,700) – – –
BEIS Bhattacharrya – 235,998 (235,998) – – –
BEIS UK-DE Energy Systems
Symposium – 71,365 (71,365) – – –
Sainsbury Management Fellowships – 485,015 (485,015) – – –
RAEng/EPSRC Research Fellowships – 237,324 (237,324) – – –
Leverhulme Fellowships – 310,810 (310,810) – – –
Engineering Leaders Scholarships 183,646 – (6,800) – – 176,846
Connecting STEM Teachers 1,327,182 558,561 (643,042) (250,000) – 992,701
Sir Ralph Robins Scholarships 258,339 50,000 (27,708) – – 280,631
Welsh Valleys Bursaries Scheme 36,990 170,100 (119,619) – – 87,471
Policy Centre – 1,000 (1,000) – – –
Engineering FE 136,617 – (14,226) 250,000 – 372,391
Barrow Engineering Programme 13,634 – – – – 13,634
KS2 STEM Resources and CPD
Programme 107,120 500 (107,620) – – –
Enterprise Hub 265,654 1,135,362 (186,295) – – 1,214,721
Africa Prize for Engineering
Innovation 453,024 100,000 (320) – – 552,704
Colin Campbell-Mitchell Award 339,567 10,131 (25,675) – 47,809 371,833
Newton Fund – 7,820,780 (7,820,780) – – –
Capital Building Fund 2,862,740 – – (728,836) – 2,133,904
This is Engineering 260,953 259,000 (505,996) – – 13,957
Lowestoft Engineering Programme – 3,350 (3,350) – – –
Enriching Engineering Education
Programme 364,561 – (51,037) – – 313,524
Sir Angus Paton Bequest Fund 56,603 – – – – 56,603
MacRobert Award 1,092,435 49,321 (62,237) – 190,581 1,270,100
MacFarlane Award 17,038 – (2,500) – – 14,538
Other awards and contracts 118,959 – – – – 118,959
RAEng/WCE Awards – 16,250 (16,250) – – –
1851 Royal Commission Enterprise
Fellowships – 300,000 (300,000) – – –
Global Challenge Research Fund – 8,277,532 (8,277,532) – – –
Tier 1 Visa Applications – 329,950 (329,950) – – –
Balance at Incoming Resources Transfers
Net		 Balance at
1 April resources expended between
investment		 31 March
2020 funds gains/(losses) 2021
£ £ £ £ £ £
UK Intelligence Community (IC)
Postdoctoral Research Fellowships 985,016 855,000 (992,817) – – 847,199
Project CARE – 123,400 (77,344) – – 46,056
Hamilton Commission – 44,000 (25,035) – – 18,965
RAF Centenary Programme – 33,290 (33,290) – – –
History of the Royal Academy of
Engineering – 944 (944) – – –
Queen Elizabeth Prize for
Engineering 22,704,140 777,005 (1,863,418) (202,055) 4,919,565 26,335,237
Total restricted funds 33,947,470 50,092,968 (51,941,737) (930,891) 5,157,955 36,325,765
Designated funds
Strategic Development Fund 2,456,831 – – 75,000 – 2,531,831
Capital Building Fund – – – 666,096 – 666,096
Ingenia Designated fund – 26,144 (26,144) – – –
Total designated and special funds 2,456,831 26,144 (26,144) 741,096 – 3,197,927
General fund 26,148,313 1,092,721 (2,538,568) 189,795 3,995,164 28,887,425
Total funds 62,552,614 **51,211,833 ** (54,506,449) – 9,153,119 68,411,117

Note 17 – Analysis of net assets between funds

Tangible fxed Investments Current assets Liabilities Total net
assets 2022 2022 2022 2022 assets 2022
£ £ £ £ £
Restricted funds 24,628,325 27,887,781 3,052,427 (17,400,674) 38,167,859
Special and designated funds – – 3,724,180 – 3,724,180
General funds – 25,763,605 6,073,636 (3,065,514) 28,771,727
Total funds 24,628,325 53,651,386 12,850,243 (20,466,188) 70,663,766
Tangible fxed Investments Current assets Liabilities Total net
assets 2021 2021 2021 2021 assets 2021
£ £ £ £ £
Restricted funds 24,836,180 28,036,910 5,222686 (21,770,011) 36,325,765
Special and designated funds – – 3,197,927 – 3,197,927
General funds – 25,062,956 3,954,669 (130,200) 28,887,425
Total funds 24,836,180 53,099,866 12,375,282 (21,900,211) 68,411,117

56

57

Royal Academy of Engineering

Annual Report and Accounts 2021|2022

NOTES TO THE ACCOUNTS

NOTES TO THE ACCOUNTS

Note 18 – Subsidiary activities

The Academy has one wholly owned subsidiary, RAE Trading Limited (registered company number 08038360) and a charitable subsidiary company, the Queen Elizabeth Prize for Engineering Foundation (registered charity number 1147743, registered company number 8077332). RAE Trading Limited was formed in April 2012 and manages a conferencing business at Prince Philip House; all available trading profits are gift-aided to the charity.

RAE Trading Limited and the Queen Elizabeth Prize for Engineering Foundation are registered in the UK and have the same year end date as the charity.

The Academy owns all 100 £1 shares in RAE Trading Limited.

The Queen Elizabeth Prize for Engineering Foundation was formed in May 2012 and advances the education of the public in the subject of engineering by awarding biennially a high-profile and internationally recognised prize for engineering.

All activities have been consolidated on a line-by-line basis in the statement of financial activities and these results have been adjusted to eliminate income and expenditure relating to conferencing activities to the Academy and the Queen Elizabeth Prize for Engineering, and management fees payable to the Academy.

Note 19 – Related party transactions

The Academy has the following transactions within its subsidiaries during the year:

Sales Salary Management Debtors Creditors
recharges charges
£ £ £ £ £
Queen Elizabeth Prize for EngineeringFoundation – 323,636 269,000 76,336 529
RAE TradingLimited 72,019 – 21,400 169,501 (78,476)

A member of staff of the Royal Academy of Engineering R Earnshaw is a close family relation of C Earnshaw who is a Trustee of the Royal Academy of Engineering. The staff appointment was made prior to C Earnshaw becoming a Trustee. All employee salaries including that of R Earnshaw are set in line with market benchmarks. All transactions in respect of trustees is provided for in Note 9.

Note 20 – Analysis of changes in net debt

At 31 March 2022 RAE Trading Ltd
2022
2021
£
£		 Queen Elizabeth Prize for
Engineering Foundation
2022
2021
£
£
Total incomingresources 505,779
20,957		 762,262
777,005
Total resources expended (413,424)
(173,172)		 (1,567,916)
(2,065,473)
92,355
(152,215)		 (805,654)
(1,288,468)
Total investment(losses)/gains –
–		 1,931,345
4,919,565
Net funds beforegift aid 92,355
(152,215)		 1,125,691
3,631,097
Gift aid to Royal Academyof Engineering (92,355)
152,215		 –
–
Retained net funds for theyear –
–		 1,125,691
3,631,097
The aggregate of the assets, liabilities and funds was:
Assets 317,033
59,338		 28,132,256
27,550,402
Liabilities (376,793)
(211,453)		 (671,330)
(1,215,171)
Funds (59,760)
(152,115)		 27,460,926
26,335,231

The parent charity’s results for the year are disclosed as follows:

The parent charity’s results for the year are disclosed as follows:
Academy
2022
£
2021
£
Gross income 47,984,118
49,694,456
Retained net funds for theyear 813,244
2,176,634
2022 Cash fows 2021
£ £ £
Cash and cash equivalents
Cash in hand 3,647,571 448,934 3,198,637
Notice deposits 1,049,046 671,167 377,879
4,696,617 1,120,101 3,576,516
Borrowings
Debt due within oneyear – – –
Debt due after oneyear (11,500,000) – (11,500,000)
Total funds (6,803,383) 1,120,101 (7,923,484)

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Royal Academy of Engineering

Annual Report and Accounts 2021|2022

Legal and administrative information

Name and Trustee Board Registered Office members

The Royal Academy of Engineering is a registered charity No. 293074. It is a corporate body governed by Royal Charter. The registered office is Prince Philip House, 3 Carlton House Terrace, London SW1Y 5DG.

The Academy’s Trustee Board comprises 13 members elected by and from the Fellowship with the discretion to co-opt up to two additional members. Trustee Board members are the Trustees of the Academy as defined under its status as a registered charity. The Trustee Board meets at least six times a year and is responsible for the governance of the Academy. At these meetings, the Trustee Board will discuss issues of strategy and policy and also matters referred to it by the governance committees for Finance, Audit and Risk, Conduct, Membership, Nominations, and Remuneration.

Bankers

National Westminster Bank plc Charing Cross, London Branch PO Box 113, Cavell House 2a Charing Cross Road London WC2H 0NN

Solicitors

All Trustee Board members and committee members give their time freely; no remuneration was paid in the year beyond the reimbursement of reasonable expenses. The majority of Academy activities are controlled by committees primarily composed of Fellows. The members of the Trustee Board during the year were:

Womble Bond Dickinson 4 More London Riverside London SE1 2AU

Auditor

BDO LLP 55 Baker Street London W1U 7EU

Officers

President

Investment managers

Professor Sir Jim McDonald FREng FRSE

Waverton Investment Management Limited 16 Babmaes Street London SW1Y 6AH

Vice-Presidents

Naomi Climer CBE FREng Vice-President for Fellowship Engagement (retired 22 September 2021)

Members of the Trustee Board at the date the report was approved:

Professor Bashir Al-Hashimi CBE FREng (appointed 22 September 2021)

Sir Simon Bollom KBE CB FREng

Chris Earnshaw OBE FREng

Dr Carolyn Griffiths FREng (appointed 22 September 2021)

Dame Judith Hackitt DBE FREng

Professor Eileen Harkin-Jones OBE FREng

Professor John Loughhead CB OBE FREng

Professor Nilay Shah OBE FREng (appointed 22 September 2021)

Professor Jeremy Watson CBE FREng

Professor Stephen Young FREng FRS

Other Trustees who served during the period of the report:

Naomi Climer CBE FREng (retired 22 September 2021)

Professor Peter Goodhew OBE FREng (retired 22 September 2021)

Professor Stephen Williamson FREng (retired 22 September 2021)

Professor Peter Guthrie OBE FREng Vice-President for Committee Coordination (appointed 22 September 2020)

Catriona Schmolke FREng Vice-President for Fellowship Engagement (appointed 22 September 2021)

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Annual Report and Accounts 2021|2022
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Royal Academy of Engineering

The Royal Academy of Engineering is harnessing the power of engineering to build a sustainable society and an inclusive economy that works for everyone.

In collaboration with our Fellows and partners, we’re growing talent and developing skills for the future, driving innovation and building global partnerships, and influencing policy and engaging the public.

Together we’re working to tackle the greatest challenges of our age.

What we do

TALENT & DIVERSITY

We’re growing talent by training, supporting, mentoring and funding the most talented and creative researchers, innovators and leaders from across the engineering profession.

We’re developing skills for the future by identifying the challenges of an ever-changing world and developing the skills and approaches we need to build a resilient and diverse engineering profession.

INNOVATION

We’re driving innovation by investing in some of the country’s most creative and exciting engineering ideas and businesses.

We’re building global partnerships that bring the world’s best engineers from industry, entrepreneurship and academia together to collaborate on creative innovations that address the greatest global challenges of our age.

POLICY & ENGAGEMENT

We’re influencing policy through the National Engineering Policy Centre – providing independent expert support to policymakers on issues of importance.

We’re engaging the public by opening their eyes to the wonders of engineering and inspiring young people to become the next generation of engineers.

Royal Academy of Engineering Prince Philip House 3 Carlton House Terrace London SW1Y 5DG

Tel 020 7766 0600 www.raeng.org.uk @RAEngNews

Registered charity number 293074