annual report and financial statements...

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Annual Report and Financial Statements

for the year ended 31 July 2017

December 2017

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Tyne Metropolitan College

Key Management Personnel, Board of Governors and Professional advisers

Key management personnel

Key management personnel are defined as members of the College Senior Leadership Team andwere represented by the following in 2016/17:

Mr Jon Vincent; Principal and Chief Executive (until 31 December 2016; Accounting Officer until 8November 2016)Mrs Ann-Marie Crozier; Deputy Principal: Finance and Corporate Development (until 21 July 2017;Accounting Officer from 9 November 2016 to 21 July 2017)Mrs Audrey Kingham; Deputy Principal: Curriculum and Business DevelopmentMrs Susan Ross; Director of Planning and Performance (until 21 July 2017)Mrs Pamela Robertson; Director of Learning DevelopmentMr Andrew Carr; Director of Resources (until 20 January 2017)

Dr L Whiterod; Chief Executive Designate became Accounting Officer on 22 July 2017.

Board of Governors

A full list of Governors is given on pages 12-14 of these financial statements.

Mrs Rosamund Moore acted as Company Secretary until 21 July 2017.

Professional advisers

Financial statements auditors and reporting accountants:

PricewaterhouseCoopers LLPCentral Square SouthOrchard StreetNewcastle upon TyneNE1 3AZ

Internal auditors:

KPMG LLPQuayside House110 QuaysideNewcastle upon TyneNFl 3DX

Bankers:

Barclays Bank PLC5 St Ann’s StreetQuaysideNewcastle upon TyneNE1 3DX

Solicitors:

Bond Dickinson LLPSt Ann’s Wharf112 QuaysideNewcastle upon TyneNE1 3DX

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Report and Financial Statements for the year ended 31 July 2017

Contents

Page number

Members’ Report 4

Statement of Corporate Governance and Internal Control 12

Statement of Regularity, Propriety and Compliance 19

Statement of Responsibilities of the Members of the Corporation 20

Independent Auditor’s Report to the Corporation 21

Independent Reporting Accountant’s Assurance Report on Regularity 23

Statement of Comprehensive Income 25

Statement of Changes in Reserves 26

Balance Sheet as at 31 July2017 27

Statement of Cash Flows 28

Notes to the Financial Statements 29

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Members’ Report

NATURE, OBJECTIVES AND STRATEGIES:

The members present their report and the audited financial statements for the year ended 31 July2017.

Legal status

The Corporation was established under the Further and Higher Education Act 1992 for the purpose ofconducting Tyne Metropolitan College. The College is an exempt charity for the purposes of Part 3 ofthe Charities Act 2011.

Mission, Vision and Values

The College’s mission, vision and values during 2016/17 were as follows:

Mission Statement

Raising aspirations; changing lives

Vision Statement• Excel through highly responsive, innovative and student-centred provision which results in

outstanding outcomes and prepares our students to thrive in their chosen career pathway

• Achieve significant growth that is closely aligned to the needs of our local community and itseconomy

• Meet, through a network of strategic partnerships, the social and economic needs of ourcommunity by fulfilling our role as a dynamic nucleus

• Be widely acknowledged as the sub-region’s leading further education provider of Sciences,Technology, Engineering and Mathematics (STEM)

• Maintain robust financial health and be organisationally agile and resilient

Values

The values which underpin this vision are:

• Aspiration• Excellence• Inclusion• Innovation• Partnership• Professionalism

Public Benefit

Tyne Metropolitan College is an exempt charity under the Part 3 of the Charities Act 2011 andfollowing the Machinery of Government changes in 2016 is regulated by the Secretary of State forEducation. The members of the Governing Body, who are trustees of the charity, are disclosed onpages 12-14.

In setting and reviewing the College’s strategic objectives, the Governing Body has had due regardfor the Charity Commission’s guidance on public benefit and particularly upon its supplementaryguidance on the advancement of education. The guidance sets out the requirement that allorganisations wishing to be recognised as charities must demonstrate, explicitly, that their aims arefor the public benefit.

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Members’ Report (continued)

In delivering its mission, the College provides the following identifiable public benefits through theadvancement of education:

• High-quality teaching• Widening participation and tackling social exclusion• Excellent employment record for students• Strong student support systems• Links with employers, industry and commerce• Links with Local Enterprise Partnerships(LEPs).

The full public value statement is published on the College’s website.

Strategic Objectives

The following strategic objectives were endorsed by the Corporation for the period 2015-18.

Strategic Aim - Excel:

Excel through highly responsive, innovative and learner-centred provision which results inoutstanding outcomes and prepares our students to thrive in their chosen career pathway

1.1 To ensure all our students achieve outstanding outcomes and fulfil their potential throughuncompromising expectations and a personalised approach.

1.2 To empower our students to be enterprising, entrepreneurial, independent and expertlearners through innovative teaching and learning practice and pioneering approaches tolearning beyond the classroom.

1.3 To develop in all of our students the skills and qualities to thrive in their choseneducation/career pathways.

1.4 To enrich our exceptional learning journey that is underpinned by comprehensiveinformation, advice, guidance and exceptional support which prepares and facilitates ourstudents well for progression to higher levels of study and/or employment.

1.5 To maintain a learning environment where safety, health and well-being of our students,staff and customers is rigorous promoted, monitored and maintained.

1.6 To achieve the highest levels of stakeholder engagement and satisfaction to systematicallysupport innovation and continuous improvement.

Strategic Aim - Grow

Achieve significant growth that is closely aligned to the needs of our local community and itseconomy

2.1 To achieve sustainable and diverse streams of income which deliver a positive contributionto our financial health, organisational resilience, provide a robust foundation for growth anddemonstrate good value for money.

2.2 To develop key sub-regional specialisms and thriving provision across our STEM portfolio.2.3 To substantially increase our Traineeship and Apprenticeship provision by providing a highly

responsive range of high quality provision.2.4 To increase our market share of 16-18 school leavers by providing distinctive programmes

of study and removing barriers to participation.

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2.5 To increase recruitment of Higher Education and Skills students by developing provisionwhich is aligned to the needs of employers and provides seamless articulation from ourfurther education provision.

2.6 To develop a vibrant and highly responsive commercial training portfolio.

Strategic Enabler - Partner

Meet, through a network of strategic partnerships, the social and economic needs of ourcommunity by fulfilling our role as a dynamic nucleus

3.1 To improve the operational effectiveness and efficiency of the college through thedeployment of innovative models of collaboration and partnership.

3.2 To expand and enhance our network of strategic partnerships so to enrich the learningjourney for our students and fulfil our role as a dynamic nucleus within our locality.

3.3 To ensure that our provision and range of services are responsive, flexible and closelyaligned to the changing needs and interests of our existing and potential customers.

3.4 To actively develop and evolve our provision to support local and sub-regional economicand social priorities (including those of NELEP, NECA and North Tyneside Councils).

3.5 To attract, develop and retain well-qualified and motivated members of staff who are theembodiment of our college values and culture.

3.6 To ensure that pre and post-16 provision throughout the borough is high quality,comprehensive, assessable and transition opportunities are freely available to all schoolleavers through close relationships with all secondary schools in our travel to learn area.

3.7 To work closely with key strategic partners in North Tyneside to identify and tackle sharedissues of inequality, social exclusion, deprivation, underperformance andunderrepresentation within our community.

Governors receive regular updates on progress and have acknowledged good progress made inmany areas during 2016/17, culminating in a decision to merge with South Tyneside College. Thenew organisation will be stronger and more resilient, and therefore well placed to continue to meet theneeds of the local community in North Tyneside.

Financial Objectives

The College’s financial objectives are:

• To achieve an annual operating surplus• To generate sufficient levels of income to support the asset base of the College• To improve the College’s shorter term liquidity and to repay outstanding loans• To fund continued capital investment

A series of performance indicators have been agreed in order to monitor the implementation of theseobjectives.

Performance Indicators

The College is committed to observing the importance of sector measures and indicators and uses theFE Choices data available on the GOV.UK website which looks at measures such as achievementrates.

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The College is required to complete annually the Finance Record for the Education and Skills FundingAgency (ESFA). The College is assessed by the ESFA as having a ‘Satisfactory’ financial healthgrading. Governors acknowledge the challenging fiscal climate in which the College is operating andthe current rating of Satisfactory is considered an acceptable outcome.

FINANCIAL POSITION

Financial results

The Corporation ended its twelfth accounting period with an operating surplus of £6,671,000(2015/16:176,000). It must be noted this surplus is due to the merger and the transfer of LGPSmembers to South Tyneside College resulting in a settlement pension figure of £7,760,000.

The College has accumulated unrestricted reserves of £12,488,000 and cash balances of £157,000.Tangible fixed asset additions amounted to £236,000 in the year. These were upgrades to the ITnetwork, hardware and equipment refreshes and some refurbishment of premises.

The College has significant reliance on the education sector funding bodies for its principal fundingsource, largely from recurrent grants. In 2016/17 the funding bodies provided 83% of the College’stotal income either directly or indirectly.

Treasury policies and objectives

Treasury management is the management of the College’s cash flows, its banking, money marketand capital market transactions; the effective control of the risks associated with those activities; andthe pursuit of optimum performance consistent with those risks.

The College currently has in place an overdraft facility with Barclays Bank of £500,000. Short-termborrowing for temporary revenue purposes is authorised by the Accounting Officer and monitored bythe Corporation.

All other borrowing requires the authorisation of the Corporation and shall comply with therequirements of the Financial Memorandum of the Skills Funding Agency.

Cash flows and Liquidity

The College reported a net cash flow from operating activities of £332,000 (201 5/16: -57,000). Thesize of the College’s total borrowing and its approach to interest rates has been calculated to ensure areasonable cushion between the total cost of servicing debt and operating cash flow. During the yearthis margin was exceeded at each covenant test period.

Reserves Policy

The College cecognises that its major sources of income are not guaranteed. It is crucial therefore toensure that there are sufficient reserves to support the College’s operations in the event of suchsignificant income shortfalls that the Board may need to consider closure. The Board considers sixmonths’ operational costs would be required in this scenario.

The level of reserves were monitored and reported on within the monthly management accounts andreviewed by the Board of Governors.

Payment performance

The Late Payment of Commercial Debts (Interest) Act 1998 requires colleges to make payment tosuppliers within 30 days from the date of invoice. The target set by the Treasury for payment tosuppliers within 30 days is 95 per cent. The College monitors payment performance by measuringcreditor days. For the year ending 31 July 2017, creditor days were 31 against a target of 30.

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CURRENT AND FUTURE DEVELOPMENT AND PERFORMANCE:

Student Numbers

Overall there were 6,187 publicly funded classroom based programmes delivered in 2016/1 7.

Of this total, 4,691 were programmes funded by the Education Funding Agency for learners aged 16-18 or for learners with a Learning Disability Assessment up to age 24 and 1,496 were programmesfunded by the Skills Funding Agency for learners aged over 19.

In 2016/17, the College enrolled 949 Apprentices studying 37 different frameworks. This provisionwas funded by the Skills Funding Agency.

There were 690 students enrolled on Higher Education programmes, funded either through HigherEducation Funding Council or via a franchise agreement with the University of Sunderland.

Other provision is funded via school partnerships, by employers directly or by other training providers.

Student Achievements

The College was inspected by Ofsted in May 2016 and inspectors confirmed that the Collegecontinued to be graded as Good.

The College achievement performance 2016/17 at headline rate is 87.6% which is a +10% pointsimprovement on the previous years performance. For 16-18 provision the performance is 87.4%which again is +10% points improvement and for adults 87.6% which is +13% points above the2015/16 performance

Curriculum Developments

2016/17 saw a continuation of expansion in STEM (Science, Technology, Engineering andMathematics) related provision, in line with the priorities of the Local Enterprise Partnership.Advanced welding qualifications were introduced in the new IGNITE facility together with bespokepackages for employers working in the Engineering sector including expansion of Higher Educationqualifications.

Post Balance Sheet Event

In the context of Area Based Review of the Further Education sector in the North East and strongstakeholder support, the Board of Governors of Tyne Metropolitan College agreed to merge withSouth Tyneside College. The corporation of Tyne Metropolitan College was consequently dissolvedon 31st July 2017 and the assets and liabilities of Tyne Metropolitan College were transferred to SouthTyneside College with effect from 1st August 2017. The name of the newly merged organisation isTyne Coast College. The Boards of both colleges believe that the merger will significantly improve thelearning opportunities for students and create a stronger, more financially resilient organisation wellplaced to meet the needs of the communities of North and South Tyneside and beyond.

140 members of TyneMet staff transferred their employment to South Tyneside College under theTransfer of Undertakings (Protection of Employment) legislation on 21 July 2017. A further 146employees similarly transferred on 1 August 2017.

Due to the merger the secured bank loan from Handelsbanken of £1.4m was repaid in full on 1st /

August 2017.

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RESOURCES:

The College has various resources that it can deploy in pursuit of its strategic objectives.

Financial

At the balance sheet date, tangible resources include the College sites in Wallsend and North Shieldsand £528,000 held in current assets. The College has £12.5 million of net assets.

People

As an average over the year, the College employed 259 people (expressed as full time equivalents),of whom 135 were teaching staff.

Reputation

The College has a good reputation locally and regionally. Maintaining a quality brand is essential forthe College’s success at attracting students and external relationships.

PRINCIPAL RISKS AND UNCERTAINTIES:

The College has undertaken further work during the year to develop and embed the system of internalcontrol, including financial, operational and risk management which is designed to protect theCollege’s assets and reputation.

Based on the strategic plan, the Risk Management Group (comprising the Senior Leadership Team)undertakes a comprehensive review of the risks to which the College is exposed. They identifysystems and procedures, including specific preventable actions which should mitigate any potentialimpact on the College. The internal controls are then implemented and the subsequent year’sappraisal will review their effectiveness and progress against risk mitigation actions. In addition to theannual review, the Risk Management Group will also consider any risks which may arise as a result ofa new area of work being undertaken by the College.

A risk register is maintained at the College level which is reviewed termly by the Audit Committee andmore frequently where necessary. The risk register identifies the key risks, the likelihood of thoserisks occurring, their potential impact on the College and the actions being taken to reduce andmitigate the risks. Risks are prioritised using a consistent scoring system. This is supported by a riskmanagement training programme to raise awareness of risk throughout the College.

Outlined below is a description of the principal risk factors that may affect the College. Not all thefactors are within the College’s control. Other factors besides those listed below may also adverselyaffect the College.

I Government funding

The College has considerable reliance on continued government funding through the furthereducation sector funding bodies and HEFCE. In 2016/17, 83% of the College’s revenue wasultimately public funded and this level of requirement is expected to continue. There can be noassurance that government policy or practice will remain the same or that public funding will continueat the same levels or on the same terms.

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The College is aware of several issues which may impact on future funding including Apprenticeshipreform and devolution of the adult education budget. The Apprenticeship Levy was introduced in April2017 and, as yet, the impact of the levy cannot be determined precisely.

This risk is mitigated in a number of ways:• Funding is derived through a number of direct and indirect contractual arrangements• By ensuring the College is rigorous in delivering high quality education and training• Considerable focus and investment is placed on maintaining and managing key relationships

with the various funding bodies• Ensuring the College is focused on those priority sectors which will continue to benefit from

public funding• Regular dialogue with funding bodies

2 Tuition fee policy

Ministers confirmed that the assumed amount of funding to be recouped from learners, the feeassumption, remains at 50% for 2016/17. In line with the majority of colleges, Tyne MetropolitanCollege has sought to increase tuition fees in accordance with the rising fee assumptions. The riskfor the College is that demand falls off as fees increase. This will impact on the growth strategy of theCollege.

The risk is mitigated in a number of ways:• By ensuring the College is rigorous in delivering high quality education and training, thus

ensuring value for money for students• Close monitoring of the demand for courses as prices change.

3 Maintain adequate funding of pension liabilities

The financial statements report the share of the pension scheme deficit on the College’s balancesheet in line with the requirements of FRS 102. This deficit does not reflect a cash liability, rather areflection of assumed assets and liabilities under the Local Government Pension Scheme over thelong term. Ongoing cash contributions are determined on the basis of a triennial valuation byactuaries. (see note 23) The risk is also mitigated by an agreed deficit recovery plan with the Tyne &Wear Pension Fund.

STAKEHOLDER RELATIONSHIPS

In line with other colleges and with universities, Tyne Metropolitan College has many stakeholders.

These include:• Students;• Education sector funding bodies;• FE Commissioner;• Staff;• Local employers (with specific links);• Local Authorities;• Local Enterprise Partnerships;• The local community;• Other FE and HE institutions;• Trade Unions;• Professional bodies.

The College recognises the importance of these relationships and engages in regular communicationthrough a variety of means.

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Equal Opportunities and Employment of Disabled Persons

Tyne Metropolitan College is committed to ensuring the equality of opportunity for all who learn andwork here. We respect and value difference. The College will treat all members of the Collegecommunity with respect and dignity, and seek to promote a positive working and learning environmentfree from discrimination, harassment and victimisation. This policy is resourced, implemented andmonitored on a planned basis. The College’s Equality Policy is published on the College’s website,along with an annual Equality & Diversity Report and Equality Objectives.

The College considers all applications for employment from disabled persons, bearing in mind theaptitudes of the individuals concerned. Where an existing employee becomes disabled, every effort ismade to ensure that employment with the College continues. The College’s policy is to providetraining, career development and opportunities for promotion which are, as far as possible, identical tothose of other employees. An equalities plan is published each year and monitored by managers andgovernors. The College continues to be entitled to display the “Positive about Disabled People” mark.

Disability Statement

The College seeks to achieve the objectives set down in the Equality Act 2010;

a) The College has installed lifts, ramps and automatic doors where possible across itscampuses to ensure that facilities are accessible to wheelchair users.

b) The College has a catalogue of specialist resources which are available for any student withadditional support requirements. The College will endeavour, where possible, to providespecialised equipment for any student who has been assessed as academically able toaccess their chosen course.

c) The admissions policy for all students is described in the College Charter. Appeals against adecision not to offer a place are dealt with under the complaints policy.

U) The College has made a significant investment in the appointment of specialist staff tosupport students with learning difficulties and/or disabilities. There are a number of studentsupport assistants who can provide a variety of support for learning. There is a continuingprogramme of staff development to ensure the provision of a high level of appropriate supportfor students who have learning difficulties and/or disabilities.

e) Specialist programmes ate described in College prospectuses, programme informationguides, and achievements and destinations are recorded and published in the standardcollege format.

f) Counselling and welfare services are described in the student handbook which is issued tostudents at induction.

Disclosure of information to auditors

The members who held office at the date of approval of this report confirm that, so far as they areeach aware, there is no relevant audit information of which the College’s auditors are unaware; andeach member has taken all the steps that he or she ought to have taken to be aware of any relevantaudit information and to establish that the College’s auditors are aware of that information.

Approvby1,eidr of the members of the Corporation on 13 December 2017 and signed on its behalf

MrD W Mid9Chair

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Statement of Corporate Governance and Internal Control

The following statement is provided to enable readers of the annual report and financial statements ofthe College to obtain a better understanding of its governance and legal structure. This statementcovers the year from 1 August 2016 to 31 July 2017 and up to the date of approval of the annualreport and financial statements.

The College endeavours to conduct its business:

i. in accordance with the seven principles identified by the Committee on Standards in PublicLife (selflessness, integrity, objectivity, accountability, openness, honesty and leadership);

ii. in full accordance with the guidance to colleges from the Association of Colleges in The Codeof Good Governance for English Colleges (the Code’); and

iii. having due regard to the UK Corporate Governance Code 2014 insofar as it is applicable tothe further education sector.

The College is committed to exhibiting best practice in all aspects of corporate governance and inparticular the College/Board has adopted and complied with the Code. We have not adopted andtherefore do not comply with the UK Corporate Governance Code. However, we have reported on outCorporate Governance arrangements by drawing upon best practice available, including thoseaspects of the UK Corporate Governance Code we consider to be relevant to the further educationsector and best practice.

In the opinion of the Governors, the College complies with all the provisions of the Code, and it hascomplied throughout the year ended 31 July 2017. The Governing Body recognises that, as a bodyentrusted with both public and private funds, it has a particular duty to observe the highest standardsof corporate governance at all times. In carrying out its responsibilities, it takes full account of TheCode of Good Governance for English Colleges (the Code’); issued by the Association of Colleges inMarch 2015, which it formally adopted on 16 December2015.

The College is an exempt charity within the meaning of Part 3 of the Charities Act 2011. TheGovernors, who are also the Trustees for the purposes of the Charities Act 2011, confirm that theyhave had due regard for the Charity Commission’s guidance on public benefit and that the requiredstatements appear elsewhere in these financial statements.

As previously mentioned, the Board of Governors agreed to merge with South Tyneside College. Asof 1st August 2017 the corporation of Tyne Metropolitan College was dissolved, this had no materialimpact on the numbers presented other than the reclassification of non-current assets and liabilities tocurrent assets and liabilities.

The Corporation

The members who served on the Corporation of the College during the year to the date of dissolutionas at 31St July 2017 are listed below:

Name Date of Current Date of Status of Committees BoardAppointment Term of Resign Appointment Served Meeting

Office Attendance

Mrs S 09/07/10 3 years Independent Audit (Vice- 6/8Alexander Reappointed Chair until

01/08/13 07/09/16);. Special

Reappointed01/08/15

Mrs S Bartlett 01/08/15 3 years Staff (Support) Audit from 7/707/09/16

Mr M Burton 01/08/15 3 years Staff 7/7(Teaching)

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Statement of Corporate Governance and Internal Control (continued)

Dr G 16/12/08 3 years Independent 7/8Cruickshank Reappointed

01/08/10

Reappointed01/08/13

Reappointed01/08/16

Prof M 21/12/06 3 years Independent QASFC 6/6Dunning Reappointed (Chair)

0 1/08/08

Reappointed01/08/11

Reappointed01/08/13

Reappointed01/08/16

-

Mr B Garner 11/02/15 3 years Independent Audit; 7/8(Vice-Chair) Term extended 6 months Governance,

by 1 year Performance &Search

Ms C Hamilton 14/12/16 8 months Student 5/5

Ms B Held 14/12/16 8 months Student 5/5

Prof G Holmes 21/10/10 3 years Independent Special (Chair) 8/8Reappointed01/08/12

Reappointed01/08/13

Reappointed01/08/15

Mr M Hottas 22/03/17 4 months Independent 2/2

CIIr J Hunter 16/02/06 3 years Independent Governance, 7/8Reappointed Performance &01/08/08 Search

Reappointed0 1/08/09

Reappointed01/08/12

Reappointed01/08/13

Reappointed01/08/16

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Dr A Langman 09/07/10 3 years Independent Audit (Vice- 7/8

Reappointed Chair from

01/08/13 07/09/16)

Reappointed01/08/15

Mr D W 20/01/05 3 years Independent Governance, 8/8Midgley Reappointed Performance &

(Chair) 01/08/07 Search (Chair)

Reappointed01/08/10

Reappointed01/08/13

Reappointed01/08/16

Mr C 01/08/12 3 years Independent Audit (Chair); 8/8Seccombe Reappointed Special

01/08/13

Reappointed01/08/16

Ms V Shipley 27/03/14 3 years Independent Governance, 7/8Performance &Search;

QASFC

Mrs V Soni 15/07/11 3 years Independent 2/8

Reappointed01/08/13

Reappointed01/08/16

Mr J Vincent Ex officio Ex officio 09/11/16 Principal Governance, 1/1Performance &Search;

QASFC - asTyneMetPrincipal

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It is the Corporation’s responsibility to bring independent judgement to bear on issues of strategy,performance, resources and standards of conduct.

The Corporation is provided with regular and timely information on the overall financial performance ofthe College together with other information such as performance against funding targets, proposedcapital expenditure, quality matters and personnel related matters such as health and safety andenvironmental issues. The Corporation meets at least once each term.

The Corporation conducts some of its business through Committees. Each Committee has terms ofreference which have been approved by the Corporation. These Committees are Audit andGovernance, Performance & Search.

Full minutes of all meetings, except those deemed to be confidential by the Corporation, are availableon the College’s website or from the Company Secretary at:

Tyne Metropolitan CollegeBattle Hill Drive

-

WallsendTyne&WearNE28 9NL

The Company Secretary maintains a register of financial and personal interests of the governors. Theregister is available for inspection at the above address.

All governors are able to take independent professional advice in furtherance of their duties at theCollege’s expense and have access to the Company Secretary, who is responsible to the Board forensuring that all applicable procedures and regulations are complied with. The appointment,evaluation and removal of the Company Secretary are matters for the Corporation as a whole.

Formal agendas, papers and reports are supplied to governors in a timely manner, prior to Boardmeetings. Briefings are also provided on an ad-hoc basis.

The Corporation has a strong and independent non-executive element, and no individual or groupdominates its decision making process. The Corporation considers that each of its non-executivemembers is independent of management and free from any business or other relationship whichcould materially interfere with the exercise of their independent judgement.

There is a clear division of responsibility in that the roles of the Chair and Accounting Officer areseparate.

Appointments to the Corporation

Any new appointments to the Corporation are a matter for the consideration of the Corporation as awhole. The Corporation has a Governance, Performance and Search Committee, consisting of fivemembers of the Corporation, which is responsible for the selection and nomination of any newmember for the Corporation’s consideration. The Corporation is responsible for ensuring thatappropriate training is provided as required.

Members of the Corporation are appointed for a term of office not exceeding four years.

Corporation Performance

The annual self-assessment of the Corporation’s performance is judged as Good for 2016/1 7.

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Governance, Performance and Search Committee

Throughout the year ending 31 July 2017, the College’s Governance, Performance and SearchCommittee comprised five members of the Corporation. The Committee’s responsibilities are to makerecommendations to the Board on the remuneration and benefits of the Accounting Officer and othersenior post holders.

Details of the remuneration for the year ended 31 July 2017 are set out in note 7 to the financialstatements.

Audit Committee

The Audit Committee comprises four members of the Corporation (excluding the Accounting Officerand Chair). The Committee operates in accordance with written terms of reference approved by theCorporation.

The Audit Committee meets at least on a termly basis and provides a forum for reporting by theCollege’s internal, regularity and financial statements auditors, who have access to the Committee forindependent discussion, without the presence of College management. The Committee also receivesand considers reports from the main FE funding bodies as they affect the College’s business.

The College’s internal auditors review the systems of internal control, risk management controls andgovernance processes in accordance with an agreed plan of input and report their findings tomanagement and the Audit Committee.

Management is responsible for the implementation of agreed recommendations and internal auditundertake periodic follow-up reviews to ensure such recommendations have been implemented.

The Audit Committee also advises the Corporation on the appointment of internal, reportingaccountants and financial statements auditors and their remuneration for both audit and non-auditwork as well as reporting annually to the Corporation.

Internal Control

Scope of Responsibility

The Corporation is ultimately responsible for the College’s system of internal control and for reviewingits effectiveness. However, such a system is designed to manage rather than eliminate the risk offailure to achieve business objectives, and can provide only reasonable and not absolute assuranceagainst material misstatement or loss.

The Corporation has delegated the day-to-day responsibility to the Accounting Officer for maintaininga sound system of internal control that supports the achievement of the College’s policies, aims andobjectives, whilst safeguarding the public funds and assets for which the Accounting Officer ispersonally responsible, in accordance with the responsibilities assigned to the Accounting Officer inthe Financial Memorandum/Financial Agreement between Tyne Metropolitan College and the fundingbodies. The Accounting Officer is also responsible for reporting to the Corporation any materialweaknesses or breakdowns in internal control.

The Purpose of the System of Internal Control

The system of internal control is designed to manage risk to a reasonable level rather than toeliminate all risk of failure to achieve policies, aims and objectives; it can therefore only providereasonable and not absolute assurance of effectiveness. The system of internal control is based onan ongoing process designed to identify and prioritise the risks to the achievement of college policies,aims and objectives, to evaluate the likelihood of those risks being realised and the impact shouldthey be realised, and to manage them efficiently, effectively and economically. The system of internal

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control has been in place in Tyne Metropolitan College for the year ended 31 July 2017 and up to thedate of approval of the annual report and financial statements.

Capacity to Handle Risk

The Corporation has reviewed the key risks to which the College is exposed together with theoperating, financial and compliance controls that have been implemented to mitigate those risks. TheCorporation is of the view that there is a formal ongoing process for identifying, evaluating andmanaging the College’s significant risks that has been in place throughout the year ending 31 July2017 and up to the date of approval of the annual report and financial statements. This process isregularly reviewed by the Corporation.

The Risk and Control Framework

The system of internal control is based on a framework of regular management information,administration procedures including the segregation of duties, and a system of delegation andaccountability. In particular, it includes:

• Comprehensive budgeting systems with an annual budget, which is reviewed and agreed bythe Corporation

• Regular reviews by the Corporation of periodic and annual financial reports which indicatefinancial performance against forecasts

• Setting targets to measure financial and other performance• Clearly defined capital investment control guidelines• The adoption of formal project management disciplines, where appropriate

The College has an internal audit service, which operates in accordance with requirements of theESFA’s Post 16 Audit Code of Practice. The work of the internal audit service is informed by ananalysis of the risks to which the college is exposed, and annual internal audit plans are based on thisanalysis. The analysis of risks and the internal audit plans are endorsed by the Governing Body onthe recommendation of the Audit Committee.

As a minimum annually, the Head of Internal Audit (HIA) provides the governing body with a report oninternal audit activity in the College. The report includes the HIA’s independent opinion on theadequacy and effectiveness of the college’s system of risk management, controls and governanceprocesses.

Review of Effectiveness

The Accounting Officer is responsible for reviewing the effectiveness of the system of internal control.The Accounting Officer’s review of the effectiveness of the system of internal control is informed by:

• The work of the internal auditors• The work of the executive managers within the College who have responsibility for the

development and maintenance of the internal control framework• Comments made by the college’s financial statements auditors, regularity auditors and

funding auditors in their management letters and other reports

The Accounting Officer has been advised on the implications of the result of his review of theeffectiveness of the system of internal control by the Audit Committee, which oversees the work of theinternal auditor and other sources of assurance, and a plan to address weaknesses and ensurecontinuous improvement of the system is in place.

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The Senior Leadership Team receives reports setting out key performance and risk indicators andconsiders possible control issues brought to their attention by early warning mechanisms, which areembedded within the departments and reinforced by risk awareness training. The Senior LeadershipTeam and Audit Committee also receive regular reports from internal audit and other sources ofassurance, which include recommendations for improvement. The Audit Committee’s role in this areais confined to a high-level review of the arrangements for internal control. The Corporation’s agendaincludes a regular item for consideration of risk and control and receives reports thereon from theSenior Leadership Team and the Audit Committee. The emphasis is on obtaining the relevant degreeof assurance and not merely reporting by exception. At its December 2017 meeting, the CorporationBoard of Tyne Coast College carried out the annual assessment for the year ended 31 July 2017 byconsidering documentation from the Audit Committee of Tyne Metropolitan College and takingaccount of events since 31 July 2017.

Based on the advice of the Audit Committee and the Accounting Officer, the Corporation is of theopinion that the College has an adequate and effective framework for governance, risk managementand control, and has fulfilled its statutory responsibility for “the effective and efficient use of resources,the solvency of the institution and the body and the safeguarding of their assets”.

Approved by order of the members of the Corporation on 13 December 2017 and signed on its behalfby:

Mr D W Midgley ) Dr L Whiterod

Chair Accounting Officer

18


Statement of Regularity, Propriety and Compliance

The Corporation has considered its responsibility to notify the Education and Skills Funding Agency(ESFA) of material irregularity, impropriety and non-compliance with terms and conditions of funding,under the financial memorandum. As part of our consideration we have had due regard to therequirements of the financial memorandum.

We confirm, on behalf of the Corporation, that after due enquiry and, to the best of our knowledge, weare able to identify any material irregular or improper use of funds by the College, or material noncompliance with the terms and conditions of funding under the College’s financial memorandum.

We confirm that no instances of material irregularity, impropriety or funding non-compliance havebeen discovered to date. If any instances are identified after the date of this statement, these will benotified to the ESFA.

Approv,by order of the members of the Corporation on 13 December 2017 and signed on its behalfby’

Mr D W Midgley Dr L Whiterod

Chair Accounting Officer

19


Statement of Responsibilities of the Members of the Corporation

The members of the Corporation (who act as trustees for the charitable activities of the College) arerequired to present audited financial statements for each financial year.

Within the terms and conditions of the College’s Financial Memorandum with the ESFA, theCorporation, through its Accounting Officer, is required to prepare financial statements for eachfinancial year in accordance with the 2015 Statement of Recommended Practice — Accounting forFurther and Higher Education and with the Accounts Direction 2016 to 2017 issued by the ESFA, andwhich give a true and fair view of the state of affairs of the College and the result for that year.

In preparing the financial statements, the Corporation is required to:

• select suitable accounting policies and apply them consistently

• make judgements and estimates that are reasonable and prudent

• state whether applicable Accounting Standards have been followed, subject to any materialdepartures disclosed and explained in the financial statements

• prepare financial statements on the going concern basis, unless it is inappropriate to assumethat the College will continue in operation.

The Corporation is also required to prepare a Members’ Report which describes what it is trying to doand how it is going about it, including the legal and administrative status of the College.

The Corporation is responsible for keeping proper accounting records which disclose with reasonableaccuracy, at any time, the financial position of the College, and which enable it to ensure that thefinancial statements are prepared in accordance with the relevant legislation of incorporation andother relevant accounting standards. It is responsible for taking steps that are reasonably open to it inorder to safeguard the assets of the College and to prevent and detect fraud and other irregularities.

The maintenance and integrity of the College website is the responsibility of the Corporation of theCollege; the work carried out by the auditors does not involve consideration of these mailers and,accordingly, the auditors accept no responsibility for any changes that may have occurred to thefinancial statements since they were initially presented on the website. Legislation in the UnitedKingdom governing the preparation and dissemination of financial statements may differ fromlegislation in other jurisdictions.

Members of the Corporation are responsible for ensuring that expenditure and income are applied forthe purposes intended by Parliament and that the financial transactions conform to the authorities thatgovern them. In addition they are responsible for ensuring that funds from the Skills Funding Agencyare used only in accordance with the Financial Memorandum with the Skills Funding Agency and anyother conditions they may be prescribed from time to time. Members of the Corporation must ensurethat there are appropriate financial and management controls in place in order to safeguard publicand other funds and to ensure that they are used properly. In addition, members of the Corporationare responsible for securing economical, efficient and effective management of the College’sresources and expenditure, so that the benefits that should be derived from the application of publicfunds from the Skills Funding Agency are not put at risk.

Approved by order of the members of the Corporation on 13 December 2017 and signed on its behalfby: ‘N

MrDWMidgey

Chair

20


Independent Auditor’s report to the Corporation of Tyne Metropolitan College(the “institution”)

Report on the audit of the financial statements

Opinion

In our opinion, Tyne Metropolitan College’s financial statements (the “financial statements”):• give a true and fair view of the state of the institution’s affairs as at 31 July 2017 and of the

institution’s income and expenditure and cash flows for the year then ended;• have been properly prepared in accordance with United Kingdom Generally Accepted

Accounting Practice (United Kingdom Accounting Standards, comprising FRS 102 “TheFinancial Reporting Standard applicable in the UK and Replublic of Ireland”, and apilicablelaw): and

• have been properly prepared in accordance with the Statement of Recommended Practice —

Accounting for Further and Higher Education.

We have audited the financial statements, included within the Annual Report and FinancialStatements (the “Annual Report”), which comprise the Balance Sheet as at 31 July 2017; theStatement of Comprehensive Income for the year then ended; the Statement of Changes in Reservesfor the year then ended; the Statement of Cash Flows for the year then ended; and the notes to thefinancial statements, which include a summary of significant accounting policies and otherexplanatory information.

Basis for opinion

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

Independence

We remained independent of the institution in accordance with the ethical requirements that arerelevant to our audit of the financial statements in the UK, which includes the FRC’s Ethical Standard,and we have fulfilled our other ethical responsibilities in accordance with these requirements.

Emphasis of matter — going concern

In forming our opinion on the financial statements, which is not modified, we have considered theadequacy of the disclosure made in note 1 to the financial statements in respect of the basis ofpreparation. The College governors have approved a merger which resulted in the transfer of TyneMetropolitan College’s trade, assets and liabilities to Tyne Coast College (formerly known as SouthTyneside College) and the dissolution of Tyne Metropolitan College with effect from 1 August 2017.Accordingly, the going concern basis of preparation is no longer appropriate and the financialstatements have been prepared on a basis other than going concern as described in note 1 to thefinancial statements. Adjustments have been made in these financial statements to reclassify fixedassets and long-term liabilities as current assets and liabilities.

Reporting on other information

The other information comprises all of the information in the Annual Report other than the financialstatements and our auditors’ report thereon. The Corporation is responsible for the other information.Our opinion on the financial statements does not cover the other information and, accordingly, we donot express an audit opinion or any form of assurance thereon.

In connection with our audit of the financial statements, our responsibility is to read the otherinformation and, in doing so, consider whether the other information is materially inconsistent with thefinancial statements or our knowledge obtained in the audit, or otherwise appears to be materiallymisstated. If we identify an apparent material inconsistency or material misstatement, we are requiredto perform procedures to conclude whether there is a material misstatement of the financialstatements or a material misstatement of the other information. If, based on the work we haveperformed, we conclude that there is a material misstatement of this other information, we arerequired to report that fact. We have nothing to report based on these responsibilities.

21


Independent Auditor’s report to the Corporation of Tyne Metropolitan College

(the “institution”)

Responsibilities for the financial statements and the audit

Responsibilities of the Corporation for the financial statements

As explained more fully in the Statement of Responsibilities of the Members of the Corporation set out

on page 20, the Corporation is responsible for the preparation of the financial statements in

accordance with the applicable framework and for being satisfied that they give a true and fair view.

The Corporation is also responsible for such internal control as they determine is necessary to enable

the preparation of financial statements that are free from material misstatement, whether due to fraud

or error.

In preparing the financial statements, the Corporation is responsible for assessing the institution’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 Corporation either intends to liquidate the

institution or to cease operations, or has no realistic alternative but to do so.

Auditors’ responsibilities for the audit of the financial statements

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 auditors’ 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 ISA5 (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.

A further description of our responsibilities for the audit of the financial statements is located on the

Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description

forms part of our auditors’ report.

Use of this report

This report, including the opinions, has been prepared for and only for the Corporation as a body in

accordance with Article 22 of the institution’s Articles of Government and for no other purpose. We do

not, in giving these opinions, accept or assume responsibility for any other purpose or to any other

person to whom this report is shown or into whose hands it may come save where expressly agreed

by our prior consent in writing.

Other Required Reporting

Opinions on other matters prescribed in the Audit Code of Practice issued by the Education

and Skills Funding Agency

In our opinion, in all material respects:

• proper accounting records have been kept, and

• the financial statements are in agreement with the accounting records and returns.

ft)PricewaterhouseCoopers LLPChattered Accountants and Statutory AuditorsNewcastle upon Tyne

December2017

22


Independent Reporting Accountant’s Assurance Report on Regularity to theCorporation of Tyne Metropolitan College and the Secretary of State forEducation acting through the Education and Skills Funding Agency

In accordance with the terms of our engagement letter dated 17 October 2017 and further to therequirements of the financial memorandum with the Education and Skills Funding Agency we havecarried out an engagement to obtain limited assurance about whether anything has come to ourattention that would suggest that in all material respects the expenditure disbursed and incomereceived by Tyne Metropolitan College during the period 1 August 2016 to 31 July 2017 have notbeen applied to the purposes identified by Parliament and the financial transactions do notconform to the authorities which govern them.

The framework that has been applied is set out in the Post-16 Audit Code of Practice issued by theEducation and Skills Funding Agency. In line with this framework, our work has specifically notconsidered income received from the main funding grants generated through the IndividualisedLearner Record (ILR) returns, for which Education and Skills Funding Agency has other assurancearrangements in place.

This report is made solely to the corporation of Tyne Metropolitan College and the Education andSkills Funding Agency in accordance with the terms of our engagement letter. Our work has beenundertaken so that we might state to the corporation of Tyne Metropolitan College and Educationand Skills Funding Agency those matters we are required to state in a report and for no otherpurpose. To the fullest extent permitted by law, we do not accept or assume responsibility toanyone other than the corporation of Tyne Metropolitan College and Education and Skills FundingAgency for our work, for this report, or for the conclusion we have formed, save where expresslyagreed in writing.

Respective responsibilities of Tyne Metropolitan College and the reporting accountant

The corporation of Tyne Metropolitan College is responsible, under the requirements of the Further& Higher Education Act 1992, subsequent legislation and related regulations and guidance, forensuring that expenditure disbursed and income received is applied for the purposes intended byParliament and the financial transactions conform to the authorities which govern them.

Our responsibilities for this engagement are established in the United Kingdom by our profession’sethical guidance and are to obtain limited assurance and report in accordance with ourengagement letter and the requirements of the Post-16 Audit Code of Practice. We report to youwhether anything has come to our attention in carrying out our work which suggests that in allmaterial respects, expenditure disbursed and income received during the period 1 August 2016 to31 July 2017 have not been applied to purposes intended by Parliament or that the financialtransactions do not conform to the authorities which govern them as set out in the Association ofColleges Accounts Direction 2016 to 2017.

23


Independent Reporting Accountant’s Assurance Report on Regularity to theCorporation of Tyne Metropolitan College and the Secretary of State forEducation acting though the Education and Skill Funding Agency

Approach

We conducted our engagement in accordance with the Post-16 Audit Code of Practice issued

jointly by the Education and Skills Funding Agency. We performed a limited assurance

engagement as defined in that framework.

The objective of a limited assurance engagement is to perform such procedures as to obtain

information and explanations in order to provide us with sufficient appropriate evidence to express

a negative conclusion on regularity.

A limited assurance engagement is more limited in scope than a reasonable assurance

engagement and consequently does not enable us to obtain assurance that we would become

aware of all significant matters that might be identified in a reasonable assurance engagement.

Accordingly, we do not express a positive opinion.

Our engagement includes examination, on a test basis, of evidence relevant to the regularity of the

college’s income and expenditure.

Conclusion

In the course of our work, nothing has come to our attention which suggests that in all material

respects the expenditure disbursed and income received during the period 1 August 2016 to 31

July 2017 has not been applied to purposes intended by Parliament and the financial transactions

do not conform to the authorities which govern them.

cePricewaterhouseCoopers LLPChartered Accountants and Statutory AuditorsNewcastle upon Tyne13 December2017

24


Statement of Comprehensive Income

Note Year ended Year ended31 July 2017 31 July 2016

£‘OOO £‘OOOINCOME

Funding bodygrants 2 11,115 11,177Tuition fees and education contracts 3 3,566 3,840Other grants and contracts 4 264 208Other income 5 881 1,056Investment income 6 - 2Total income 15,826 16,283

EXPENDITURE

Staff costs 7 10,510 10,536Other operating expenses 9 4,659 4,570Depreciation 12 1,134 1,082Interest and other finance costs 10 269 271

Exceptional itemsMerger costs 8 343 -

Pension settlement 7 (7,760) -

Total exceptional items (7,417) -

Total expenditure 9,155 16,459

Surplusl(loss) before other gains and losses 6,671 (176)

Analysed as:Operating Deficit before exceptional items (746)Merger costs (343)Pension Settlement 7,760Operating Surplus after exceptional items 6,671

Actuarial gain/(loss) in respect of pensions 23 2,330 (3,110)Actuarial gain/(loss) in respect of enhanced (7) (58)pensions

Total Other Comprehensive Income/(Expense) 2,323 (3,168)Thtal Comprehensive Incomel(Expense)for

8,994 (3,344)

25


Statement of Changes in Reserves

Income and Revaluation Totalexpenditure reserve

account Unrestrictedreserves

£‘OOO £‘OOO £‘OOO

Balance at 1st August 2016 170 6,668 6,838

Deficit for the year (176) - (176)

Other comprehensive expense (3,168) - (3,168)

Transfers between revaluation 270 (270) -

and income and expenditure

_____________ _____________ ______________

Balance at 31st July 2016 (3,074) 6,398 3,494

Surplus for the year 9,001 - 9,001

Other comprehensive expense (7) (7)

Transfers between revaluation 270 (270)and income and expenditure

_____________ _____________ ______________

Total comprehensive Income 9,264 (270) 8,994for the year

Balance at 31 July 2017 6,360 6,128 12,488

26


Balance Sheet as at 31 July 2017

Note

Non-current assetsTangible fixed assets 12 - 21,683

21,683

Current assetsTangible fixed assetsTrade and other receivablesCash and cash equivalents

Creditors — amounts falling due withinone yearProvisionsNet current assets I (liabilities)

12 20,78413 37118 157

21,31214 (7,526)

15 (1,298)

12,488

830426

1,256(2,460)

(1,204)

Unrestricted ReservesIncome and expenditure accountRevaluation reserveTotal unrestricted reserves

6,3606,128

12,488

(9,620)

(1,349)

3,494

(2,904)

6,398

3,494

The financial statements on pages 25 to 48 were approved and authorised for issue by theCorporatpn on 13 December 2017 and were signed on its behalf on that date by:

Accounting Officer

2017£‘OOO

2016£‘OOO

Total assets less current liabilitiesCreditors — amounts falling due after morethan one year

ProvisionsDefined benefit obligationsOther provisionsTotal net assets

15

23

17

20,479(6,016)

12,488

12,488

MrDW

Chair

Dr L Whiterod

27


Statement of Cash Flows

Note 2017 2016

£‘OOO £‘OOO

Cash flow from operating activities

Surplus J(deficit) for the year 6,671 (176)

Adjustment for non-cash items

Depreciation 1,134 1,082

Release of deferred capital grant (486) (430)

Settlement on transfer of pension (7,760)

Increase in trade and other receivables 459 (178)

(Decrease)/increase in creditors due within one year (147) (551)

Decrease in provisions (58) (63)

Pensions costs less contributions payable 250 (10)

Adjustment for investing or financing activities

Investment income (2)

Interest payable 269 271

Net cash flow from operating activities 332 (57)

Cash flows from investing activities

Capital grants received 34 882

Investment income - 2

Payments made to acquire fixed assets (236) (1,037)

(236) (153)

Cash flows from financing activities

Interest paid (49) (61)

Repayments of amounts borrowed (350) (350)

Cash outflow from financing activities (399) (411)

Decrease in cash and cash equivalents in the year (269) (621)

Cash and cash equivalents at beginning of the year 18 426 1,047

Cash and cash equivalents at end of the year 18 157 426

28


Notes to the Financial Statements

1. Statement of Accounting Policies

The following accounting policies have been applied consistently in dealing with items which areconsidered material in relation to the financial statements.

Basis of preparation

The financial statements have been prepared in accordance with the Statement of RecommendedPractice: Accounting for Further and Higher Education 2015 (the 2015 FE HE SORP), the CollegeAccounts Direction for 2015 to 2016 and in accordance with Financial Reporting Standard 102— “TheFinancial Reporting Standard applicable in the United Kingdom and Republic of Ireland” (FRS 102).The College is a public benefit entity and has therefore applied the relevant public benefitrequirements of FRS 102.

The preparation of financial statements in compliance with FRS1O2 requires the use of certain criticalaccounting estimates. It also requires management to exercise judgement in applying the College’saccounting policies.

The College governors have approved a merger which resulted in the transfer of Tyne MetropolitanCollege’s trade, assets and liabilities to Tyne Coast College (formerly known as South TynesideCollege) and the dissolution of Tyne Metropolitan College with effect from is’ August 2017.Accordingly, the going concern basis of preparation is no longer appropriate and the financialstatements have been prepared on a basis other than going concern as described in note 1 to thefinancial statements. Adjustments have been made in these financial statements to reclassify fixedassets and long term liabilities as current assets and liabilities.

The College has reclassified the land and buildings of its estate as current assets and the relateddeferred capital grants balance as a current liability as a result of Tyne Metropolitan College beingdissolved on 1st August 2017. These balances are measured in accordance with the accounting policydescribed in on page 31. There are no plans to sell or otherwise change the intended use of theexisting estate in the newly formed Tyne Coast College and the accounting policies applied arecommon between both entities.

Basis of accounting

The financial statements are prepared in accordance with the historical cost convention as modifiedby the use of previous valuations as deemed cost at transition for certain non-current assets.

The activities of the College, together with the factors likely to affect its future development andperformance are set out in the Members’ Report. The financial position of the College, its cash flow,liquidity and borrowings are described in the Financial Statements and accompanying Notes.

Recognition of income

Government revenue grants include funding body recurrent grants and other grants and areaccounted for under the accrual model as permitted by FRS 102. Funding body recurrent grants aremeasured in line with best estimates for the period of what is receivable and depend on the particularincome stream involved. Any under achievement for the Adult Education Budget is adjusted for andreflected in the level of recurrent grant recognised in the Statement of Comprehensive Income. Thefinal grant income is normally determined with the conclusion of the year-end reconciliation processwith the funding body following the year end, and the results of any funding audits. 16-18 learnerresponsive funding is not normally subject to reconciliation and is therefore not subject to contractadjustments.

29


Notes to the Financial Statements (continued)

Non-recurrent grants from the SFA and other bodies received in respect of the acquisition of fixedassets are treated as deferred capital grants and amortised in line with depreciation over the life of theasset.

The recurrent grant from HEFCE represents the funding allocations attributable to the current financialyear and is credited direct to the Statement of Comprehensive Income.

Income from tuition fees is recognised in the year for which it is received and includes all fees payableby students or their sponsors.

Income from grants, contracts and other services rendered is included to the extent of the completionof the contract or service concerned.

All income from short-term deposits is credited to the income and expenditure account in the year inwhich it is earned.

Accounting for post-employment benefits

Retirement benefits to employees of the College are provided by the Teachers’ Pension Scheme(TPS) and the Local Government Pension Scheme (LGPS). These are defined benefit schemeswhich are externally funded and are contracted out of the State Earnings Related Pension Scheme.

The TPS is an unfunded scheme. Contributions to the TPS are calculated so as to spread the cost ofpensions over employees’ working lives with the College in such a way that the pension cost is asubstantially level percentage of current and future pensionable payroll. The contributions aredetermined by qualified actuaries on the basis of valuations using a prospective benefit method. Asstated in Note 23, the TPS is a multi-employer scheme and there is insufficient information availableto use defined benefit accounting. The TPS is therefore treated as a defined contribution plan and thecontributions recognised as an expense in the Statement of Comprehensive Income in the periodsduring which services are rendered by employees.

The Tyne & Wear Pension Fund (LGPS) is a funded scheme. The assets of the LGPS are measuredusing closing market values. LGPS liabilities are measured using the projected unit credit methodand discounted at the current rate of return on a high quality corporate bond of equivalent term andcurrency to the liability. The actuarial valuations are obtained at least triennially and are updated ateach balance sheet date. The amounts charged to operating surplus are the current service costs andthe costs of scheme introductions, benefit changes, settlements and curtailments. They are includedas part of staff costs as incurred.

Net interest on the net defined benefit liability/asset is also recognised in the Statement ofComprehensive Income and comprises the interest cost on the defined benefit obligation and interestincome on the scheme assets, calculated by multiplying the fair value of the scheme assets at thebeginning of the period by the rate used to discount the benefit obligations. The difference betweenthe interest income on the scheme assets and the actual return on the scheme assets is recognisedin interest and other finance costs.

Actuarial gains and losses are recognised immediately in actuarial gains and losses.

As at 21 July 2017 Tyne Metropolitan College ceased to be a member of the Tyne and Wear PensionFund following the merger with Tyne Coast College (formerly known as South Tyneside College). Theadjustments recognised in respect of this are set out as exceptional items in the Statement ofComprehensive Income as described in note 23.

Short-term Employment benefits

Short-term employment benefits such as salaries and compensated absences (holiday pay) arerecognised as an expense in the year in which the employees render service to the College. Any

30



unused benefits are accrued and measured as the additional amount the College expects to pay as aresult of the unused entitlement.Enhanced Pensions

The actual cost of any enhanced ongoing pension to a former member of staff is paid by a collegeannually. An estimate of the expected future cost of any enhancement to the ongoing pension of aformer member of staff is charged in full to the Colleges Statement of Comprehensive Income in theyear that the member of staff retires. In subsequent years a charge is made to provisions in thebalance sheet using the enhanced pension spreadsheet provided by the funding bodies.

Tangible fixed assets

Land and buildings

Tyne Metropolitan College was formed in 2005 as a merger of two previously existing furthereducation institutions. Due to the original transfer of the College’s land and buildings at ‘deemed cost’from the Local Authority at 31 July 2005, this is the earliest point to which cost based records can beobtained. As a result of this, the College retains the revaluation reserve in respect of the originaltransaction on the balance sheet and is releasing this to the l&E reserve over the remaining usefuleconomic life of the College’s land and buildings.Freehold buildings are depreciated over their expected useful economic life to the College of between20 and 50 years. The College has a policy of depreciating major adaptations to buildings over theperiod of their useful economic life of between 20 and 50 years.

Where land and buildings are acquired with the aid of specific grants, they are capitalised anddepreciated as above. The related grants are credited to a deferred income account within creditors,and are released to the Statement of Comprehensive Income over the expected useful economic lifeof the related asset on a systematic basis consistent with the depreciation policy.

A review for impairment of a fixed asset is carried out if events or changes in circumstances indicatethat the carrying amount of any fixed asset may not be recoverable.

On adoption of FRS 102, the College followed the transitional provision to retain the book value ofland and buildings, at deemed cost but not to adopt a policy of revaluations of these properties in thefuture.

Where significant expenditure is incurred on tangible fixed assets after initial purchase it is charged toincome in the period it is incurred, unless it increases the future benefits to the College, in which caseit is capitalised and depreciated on the relevant basis.

Equipment

Equipment costing less than £1,000 per individual item is written off to the income and expenditureaccount in the period of acquisition. All other equipment is capitalised at cost.

Leased assets

The finance charges are allocated over the period of the lease in proportion to the capital elementoutstanding. Where finance lease payments are funded in full from funding council capital equipmentgrants, the associated assets are designated as grant-funded assets.

Depreciation

Equipment is depreciated over its useful economic life as follows:

Fixtures and Fittings 10 years

31



Plant and Machinery, Furniture and Motor Vehicles 5 yearsComputer equipment 4 years

Where equipment is acquired with the aid of specific grants it is capitalised and depreciated inaccordance with the above policy. The related grants are credited to a deferred capital grant accountand released to the statement of comprehensive income over the expected useful economic life of therelated equipment.

Maintenance of Premises

The cost of routine corrective maintenance is charged to the statement of comprehensive income inthe year it is incurred.

Taxation

The College is considered to pass the tests set out in Paragraph 1 Schedule 6 Finance Act 2010 andtherefore it meets the definition of a charitable company for UK corporation tax purposes.Accordingly, the College is potentially exempt from taxation in respect of income or capital gainsreceived within categories covered by Chapter 3 Part 11 Corporation Tax Act 2010 or Section 256 ofthe Taxation of Chargeable Gains Act 1992, to the extent that such income or gains are appliedexclusively to charitable purposes.

The College is partially exempt in respect of Value Added Tax, so that it can only recover a minorelement of VAT charged on its inputs. Irrecoverable VAT on inputs is included in the costs of suchinputs and added to the cost of tangible fixed assets as appropriate, where the inputs themselves aretangible fixed assets by nature.

Provisions and contingent liabilities

Provisions are recognised when the College has a present legal or constructive obligation as a resultof a past event, it is probable that a transfer of economic benefit will be required to settle theobligation and a reliable estimate can be made of the amount of the obligation.

Leased Assets

Costs in respect of operating leases are charged on a straight-line basis over the lease term. Leasingarrangements which transfer to the College substantially all the benefits and risks of ownership of anasset are treated as if the asset had been purchased outright and are capitalised at their fair value atthe inception of the lease and depreciated over the shorter of the lease term or the useful economiclives of equivalently owned assets. The capital element outstanding is shown as obligations underfinance leases.

Agency Arrangements

The College acts as an agent in the collection and payment of certain Discretionary Support Funds.Related payments received from the funding bodies and subsequent disbursements to students areexcluded from the Statement of Comprehensive Income and are shown separately in Note 25, exceptfor the 5 per cent of the grant received which is available to the college to cover administration costsrelating to the grant.

The College employs one member of staff dedicated to the administration of Discretionary SupportFund applications and payments.

32



Cash and cash equivalents

Cash includes cash in hand, deposits repayable on demand and overdrafts. Deposits are repayable ondemand if they are in practice available within 24 hours without penalty.

Cash equivalents are short term, highly liquid investments that are readily convertible to known amountsof cash with insignificant risk of change in value. An investment qualifies as a cash equivalent when ithas maturity of 3 months or less from the date of acquisition.

Financial liabilities and equity

Financial liabilities and equity are classified according to the substance of the financial instrument’scontractual obligations, rather than the financial instrument’s legal form.

All loans, investments and short-term deposits held by the College are classified as basic financialinstruments in accordance with FRS 102. These instruments are initially recorded at the transactionprice less any transaction costs (historical cost). FRS 102 requires that basic financial instruments aresubsequently measured at amortised cost, however the College has calculated that the differencebetween the historical cost and amortised cost basis is not material and so these financial instrumentsare stated on the balance sheet at historical cost. Loans and investments that are payable orreceivable within one year are not discounted.

Foreign currency translation

Transactions denominated in foreign currencies are recorded using the rate of exchange ruling at thedate of the transaction. Monetary assets and liabilities denominated in foreign currencies aretranslated at the rates of exchange ruling at the end of the financial year with all resulting exchangedifferences being taken to income in the year in which they arise.

Other key sources of estimation uncertainty

Tangible fixed assets

Tangible fixed assets are depreciated over their useful lives taking into account residual values,where appropriate. The actual lives of the assets and residual values are assessed annually andmay vary depending on a number of factors. In re-assessing asset lives, factors such astechnological innovation and maintenance programmes are taken into account. Residual valueassessments consider issues such as future market conditions, the remaining life of the asset andprojected disposal values.

• Local Government Pension Scheme

The present value of the Local Government Pension Scheme defined benefit liability depends ona number of factors that are determined on an actuarial basis using a variety of assumptions. Theassumptions used in determining the net cost (income) for pensions include the discount rate.Any changes in these assumptions, which are disclosed in note 23, will impact the carryingamount of the pension liability. Furthermore a roll forward approach which projects results fromthe latest full actuarial valuation performed at 31 March 2013 has been used by the actuary invaluing the pensions liability at 31 July 2017. Any differences between the figures derived fromthe roll forward approach and a full actuarial valuation would impact on the carrying amount of thepension liability.

33



2 Funding body grants2017 2016

£‘OOO £‘OOO

Recurrent grants

Education and Skills Funding Agency:adults 1,463 1,226

Education and Skills Funding Agency;16-18 7,448 7,999

Education and Skills Funding Agency:apprenticeships 1,024 1,229

Higher Education Funding Council 552 501

Specific grants

Education and Skills Funding Agency:adults 131 938

Education and Skills Funding Agency:16-18 275

Releases of government capital grants 222 222

Total 11,115 11,177

3 Tuition fees and education contracts

2017 2016

£‘OOO £‘OOO

Adult education fees 455 351

Fees for FE loan supported courses 637 746

Fees for HE loan supported courses 999 1,015

Total tuition fees 2,091 2,112

Education contracts 1,475 1,728

Total 3,566 3,840

4 Other grants and contracts2017 2016

£‘OOO £‘OOO

Release of deferred capital grant 264 208

Total 264 208

34



5 Other income

Catering and residencesOther income generating activitiesOther grant incomeMiscellaneous income

Total

6 Investment income

Other interest receivable

Total

881 1,056

2017

£‘OOO

2016

£‘OOO

2

2

7 Staff costsThe average number of persons (including key management personnel) employed by the Collegeduring the year, described as full-time equivalents, was:

2017 2016No.

Teaching staffNon-teaching staff 124 128

Staff costs for the above persons

259 272

Wages and salariesSocial security costsOther pension costsPension Settlement

Payroll sub totalContracted out staffing services

2016£‘OOO

7,454521

1,206

9,181

1,355

Total staff costs 2,750 10,536

2017 2016

£‘OOO £‘OOO114336

84546

332 39799 29

135No.144

2017£‘OOO7,180

6131,461

(7,760)

1,494

1,256

35



Key management personnel

Key management personnel are those persons having authority and responsibility for planning,directing and controlling the activities of the College and are represented by the Senior LeadershipTeam which comprises the Principal & Chief Executive, Deputy Principal: Finance and CorporateDevelopment, Deputy Principal: Curriculum and Business Development, Director of Planning andPerformance, Director of Learning Development and the Director of Resources. Staff costs includecompensation paid to key management personnel for loss of office.

The Principal was the Accounting Officer for the period 1 August 2016 to 8 November 2016 and leftthe College’s employment on 31 December 2016. The Deputy Principal: Finance & CorporateDevelopment was the Accounting Officer for the period 9 November 2016 to 21 July 2017. The ChiefExecutive Designate became Accounting Officer on 22 July 2017 and received no remuneration.

Emoluments of key management personnel, Accounting Officer and other higher paid staff

2017 2016

No. No.

The number of key management personnel including the AccountingOfficer was: 6 6

The number of key management personnel and other staff who received annualised emoluments,excluding pension contributions and employers’ national insurance but including benefits in kind,in the following ranges was:

Key management Other staffpersonnel

2017 2016 2017 2016

No. No. No. No.

£50,007 to £60,000 p.a. 3 3 -

£70,001 to £80,000 p.a. - 2 -

£80,001 to £90,000 p.a. 2 - -

£110,007 to £120,000 p.a. 1 1

6 6

Key management personnel emoluments are made up as follows:2017 2016

£‘OOO £‘OOO

Salaries 347 415

Employers’ national insurance 42 49

Benefits in kind 1 2

390 466

Pension contributions 44 54

Total emoluments 434 520

There were no amounts due to key management personnel that were waived in the year, nor anysalary sacrifice arrangements in place.

36



The above emoluments include amounts payable to the Accounting Officer (who was also the highestpaid officer) of:

2017 2016£‘OOO £‘OOO

Salaries 97 116Benefits in kind 1 1

98 117Pension contributions 19 19

The Accounting Officer for the period 1 August to 8 November 2016 was paid £31,416 and theAccounting Officer for the period 9 November 2016 to 21 July 2017 was paid £65,169. Employerpension contributions of £8,973 and £10,391 were made respectively.

Compensation for loss of office paid to former key management personnel

2017 2016£‘OOO £‘OOO

Contractual severance payments 162 -

Non-contractual severance payments 100

262 -

Number of staff to whom payments were made 4 -

Payments to senior post holders were approved by the Corporation Board on 12 October 2016 and toother key management personnel on 14 December 2016. The Accounting Officer for the period IAugust to 8 November 2016 was paid non-contractual compensation for loss of office of £46,885 andthe Accounting Officer for the period 9 November to 21 July 2017 was paid non-contractualcompensation for loss of office of £43,279.

The members of the Corporation other than the Accounting Officer and the staff members did notreceive any payment from the institution other than the reimbursement of travel and subsistenceexpenses incurred in the course of their duties.

8 Merger Costs

2017 2016£‘OOO £‘OOO

Contracted Severance costs due to restructuring 343

Total 343

9 Other operating expenses

2017 2016£‘OOO £‘OOO

Teaching costs 1,145 899Non-teaching costs 2,066 2,278Premises costs 1448 1,393

Total 4,659 4,570

37



Other operating expenses include:

Auditors’ remuneration:Financial statements auditInternal audit

Hire of assets under operating leases

Total

11 Taxation

269

Freehold Equipment TotalLand andBuildings

271

Cost or valuation

Ati August2016

AdditionsDisposals

At 31 July 2017

Accumulated depreciation

At 1 August 2016

ChargefortheyearElimination in respect of disposals

At 31 July 2017

Net book value at 31 July 2017

Net book value at 31 July 2016

£‘OOO

23,572 9,732 33,304

- 236 236(4,872) (4,872)

23,572 5,096 28,668

4,900 6,721 11,621

394 740 1,134- (4,871) (4,871)

5,294 2,590 7,884

18,278 2,506 20,784

18,672 3,011 21,683

Land and buildings and other tangible fixed assets inherited from the Local Education Authority atincorporation in 1993 have been valued by the Corporation on a depreciated replacement cost basiswith the assistance of independent professional advice.

2017 2016

£‘OOO £‘OOO

23 25

16 21- 28

10 Interest and other finance costs2017 2016

£‘OOO £‘OOO

On bank loans, overdrafts and other loans: 49 61

Pension finance costs (note 23) 220 210

The members do not believe that the College was liable for any corporation tax arising out of itsactivities durinq the year.

12 Tangible fixed assets

£‘OOO £‘OOO

38



13 Trade and other receivables

2017 2016£‘OOO £‘OOO

Amounts falling due within one year:Trade receivables 116 442Prepayments and accrued income 255 388

Total 371 830

14 Creditors: amounts falling due within one year

2017 2016£‘OOO £‘OOO

Bank loans and overdrafts 1400 350Trade payables 50 465Other taxation and social security 315 285Accruals and deferred income 795 751Deferred income - government capital grants 4649 484Amounts owed to the ESFA 318 125

Total 7,527 2,460

15 Creditors: amounts falling due after one year

2017 2016£‘OOO £‘OOO

Bank loans- 1,400

Deferred income - government capital grants - 4,616

Total 6,016

16 Bank loans and overdrafts

Bank loans and overdrafts ate repayable as follows:

2017 2016£‘OOO £‘OOO

In one year or less 1,400 350Between one and two years

- 350Between two and five years

- 1,050Total 1,400 1,750

The bank loan of £1,400,000 from Handelsbanken AB bears a rate of LIBOR plus 2.5%. The initialten-year term loan of £3,500,000 was taken out in July 2011 and is secured on the Coast Roadcampus. Due to the merger the loan was repaid in full on 1St August 2017.

39



17 Provisions

Defined Enhanced Totalbenefit pensions

obligations

£‘OOO £‘OOO £‘OOO

At 1 August 2016—non-current 9,620 1,349 10,969

Expenditure in the year (105) (105)

Additions in year 54 54

Pension liability settlement (9,620) - (9,620)

At 31 July 2017 - current 0 1,298 1,298

Defined benefit obligations relate to the liabilities under the College’s membership of the Local Governmentpension Scheme. Further details are given in Note 23.

The enhanced pension provision relates to the cost of staff who have already left the College’s employ.This provision has been recalculated in accordance with guidance issued by the Education and SkillsFunding Agency.

The principal assumptions for this calculation are:2017 2016

Price inflation 2.90% 2.90%

Discount rate 2.30% 2.30%

18 Cash and cash equivalentsAtI Cash Other At31

August flows changes July2016 2017

£‘OOO £‘OOO £‘OOO £‘OOO

Cash and cash equivalents 426 (269) - 157

Total 426 (269) 157

19 Financial Instruments

The College has the following financial instruments:2017 2016

£‘OOO £‘OOOFinancial assets

Debt instruments measured at amortised cost:

Trade receivables 116 442

Accrued income 127 131

Total 243 573

40



Financial liabilities

2017

£‘OOO

2016

£‘OOO

Financial liabilities measured at amortised costBank loans and overdraftsTrade payablesAccrualsAmounts owed to the ESFATotal

1,400 1,75050 465

792 751318 125

3,0912,560

20 Capital and other commitments

Commitments contracted for at 31 July

21 Lease obligationsAt 31 July the College had minimum lease payments under non-cancellable operating leases as follows:

Future minimum lease payments due

Land and buildingsLater than one year and not later than five years

Other

Total lease payments due

60 19360 193

93 122

153 315

The future minimum lease payments will be borne by Tyne Coast College following the mergerdescribed in note 1.

2017£‘OOO

2016£‘OOO

2017£‘OOO

2016£‘OOO

Later than one year and not later than five yeats 93Later than five years

122

41



22 Post Balance Sheet Event

In the context of Area Based Review of the Further Education sector in the North East and strongstakeholder support, the Board of Governors of Tyne Metropolitan College agreed to merge with SouthTyneside College. The corporation of Tyne Metropolitan College was consequently dissolved on 31st

July 2017 and the assets and liabilities of Tyne Metropolitan College were transferred to SouthTyneside College with effect from 1st August 2017. The name of the newly merged organisation isTyne Coast College. The Boards of both colleges believe that the merger will significantly improve thelearning opportunities for students and create a stronger, more financially resilient organisation wellplaced to meet the needs of the communities of North and South Tyneside and beyond.

140 LGPS members of TyneMet staff transferred their employment to South Tyneside College underthe Transfer of Undertakings (Protection of Employment) legislation on 21 July 2017. A further 146employees similarly transferred on 1 August 2017.

The secured bank loan from Handelsbanken of £1.4m was transferred to Tyne Coast College on 1August 2017.

23 Defined benefit obligations

The College’s employees belong to two principal post-employment benefit plans: the Teachers’Pension Scheme England and Wales (TPS) for academic and related staff; and the Local GovernmentPension Scheme (LGPS) for non-teaching staff, which is managed by Tyne & Wear Pension Fund.Both are multi-employer defined-benefit plans.

Total pension cost for the year 2017 2016

£000 £000

Teachers’ Pension Scheme: contributions paid 277 316

Local Government Pension Scheme:

Contributions paid 690 680

FRS 102 (28) charge 250 (10)

LGPS Additional Contribution 244 220

Charge to the Statement of ComprehensiveIncome 1,184 890

Total Pension Cost for Year within staff costs 1,461 1,206

The pension costs are assessed in accordance with the advice of independent qualified actuaries. Thelatest formal actuarial valuation of the TPS was 31 March 2012 and of the LGPS 31 March 2016.

There were no outstanding or prepaid contributions at either the beginning or the end of the financialyear.

42



Teachers’ Pension Scheme

The Teachers Pension Scheme (TPS) is a statutory, contributory, defined benefit scheme, governedby the Teachers’ Pensions Regulations 2010, and, from 1 April 2014, by the Teachers’ PensionScheme Regulations 2014. These regulations apply to teachers in schools and other educationalestablishments, including academies, in England and Wales that are maintained by local authorities.In addition, teachers in many independent and voluntary-aided schools and teachers and lecturers insome establishments of further and higher education may be eligible for membership. Membership isautomatic for full-time teachers and lecturers and, from 1 January 2007, automatic too for teachers andlecturers in part-time employment following appointment or a change of contract. Teachers andlecturers are able to opt out of the TPS.

The Teachers’ Pension Budgeting and Valuation Account

Although members may be employed by various bodies, their retirement and other pension benefitsare set out in regulations made under the Superannuation Act 1972 and are paid by public fundsprovided by Parliament. The TPS is an unfunded scheme and members contribute on a ‘pay as yougo’ basis — these contributions, along with those made by employers, are credited to the Exchequerunder arrangements governed by the above Act. Retirement and other pension benefits are paid bypublic funds provided by Parliament.

The Teachers’ Pensions Regulations 2010 require an annual account, the Teachers’ PensionBudgeting and Valuation Account, to be kept of receipts and expenditure (including the cost of pensionincreases). From 1 April 2001, the Account has been credited with a real rate of return, which isequivalent to assuming that the balance in the Account is invested in notional investments that producethat real rate of return.

Valuation of the Teachers’ Pension Scheme

The latest actuarial review of the TPS was carried out as at3l March 2012 and in accordance withThe Public Service Pensions (Valuations and Employer Cost Cap) Directions 2014. The valuationreport was published by the Department for Education (the Department) on 9 June 2014. The keyresults of the valuation are:

- New employer contribution rates were set at 16.48% of pensionable pay (including administrationfees of 0.08%);

- total scheme liabilities for service to the effective date of £191.5 billion, and notional assets of£176.6 billion, giving a notional past service deficit of £14.9 billion;

- an employer cost cap of 10.9% of pensionable pay.

The new employer contribution rate for the TPS was implemented in September 2015.

A full copy of the valuation report and supporting documentation can be found on the Teachers’Pension Scheme website at the following location:

https:/Iwww.teacherspensions.coukInewsIemployersI2O14lO6lpublication-of-the-valuation-report.aspx

43



Scheme Changes

Following the Hutton report in March 2011 and the subsequent consultations with trade unions andother representative bodies on reform of the TPS, the Department published a Proposed FinalAgreement, setting out the design for a reformed TPS to be implemented from 1 April 2015.

The key provisions of the reformed scheme include: a pension based on career average earnings; anaccrual rate of 1/57th; and a Normal Pension Age equal to State Pension Age, but with options toenable members to retire earlier or later than their Normal Pension Age. Importantly, pension benefitsbuilt up before 1 April 2015 will be fully protected.

In addition, the Proposed Final Agreement includes a Government commitment that those within 10years of Normal Pension Age on 1 April 2012 will see no change to the age at which they can retire,and no decrease in the amount of pension they receive when they retire. There will also be furthertransitional protection, tapered over a three and a half year period, for people who would fall up tothree and a half years outside of the 10-year protection.

Regulations giving effect to a reformed Teachers’ Pension Scheme came into force on 1 April 2014and the reformed scheme commenced on 1 April 2015.

The pension costs paid to TPS in the year amounted to £277,000 (2016: £315,000)

FRS 702 (28)

Under the definitions set out in FRS 102 (28.11), the TPS is a multi-employer pension plan. TheCollege is unable to identify its share of the underlying assets and liabilities of the plan.

Accordingly, the College has taken advantage of the exemption in FRS 102 and has accounted for itscontributions to the scheme as if it were a defined-contribution plan. The College has set out above theinformation available on the plan and the implications for the College in terms of the anticipatedcontribution rates.

Local Government Pension Scheme

The LGPS is a funded defined-benefit plan, with the assets held in separate funds administered bySouth Tyneside Council. The total contributions made for the year ended 31 July 2017 were£880,000 of which employer’s contributions totalled £690,000 and employees’ contributions totalled£190,000. The agreed contribution rates for future years are 16.9% for employers and range from5.5% to 8.5% for employees, depending on salary, which will be borne by Tyne Coast College from 1August2017 following the merger as described in note 1.

44



Principal Actuarial AssumptionsThe following information is based upon a full actuarial valuation of the fund at 31 Match 2016updated to 31 July 2017 by a qualified independent actuary.

At 31 July At 31 July2017 2016

Rate of increase in salaries 3.50% 3.30%Future pensions increases 2.00% 1.80%Discount rate for scheme liabilities 2.60% 2.40%Inflation assumption (CPI) 2.00% 1.80%Commutation of pensions to lump sums 38.00% 50%

The current mortality assumptions include sufficient allowance for future improvements in mortalityrates. The assumed life expectations on retirement age 65 are:

At 31 July At 31 July2017 2016

Years YearsRetiring todayMales 22.80 23.20Females 26.30 24.80Retiring in 20 yearsMales 25.00 25.30Females 28.60 27.10

The College’s share of the assets in the plan at the balance sheet date and the expected rates ofreturn were:

Fair FairValue at Value at31 July 31 July2017 2016

£‘OOO £‘OOO

Equity instruments - 10,615Debt instruments - 2,450Property

- 1,601Cash

- 480Other 864Total fair value of plan assets 16,010

Weighted average expected long 510term rate of return

Actual return on plan assets 1,110

45



The amount included in the balance sheet in respect of the defined benefit pension planis as follows:

2017 2016

£‘OOO £‘OOO

Fair value of plan assets - 16,010

Present value of plan liabilities - (25,630)

Net pensions liability (Note 16) - (9,620)

Amounts recognised in the Statement of Comprehensive Income in respect of the planare as follows:

2017 2016

£‘OOO £‘OOO

Amounts included in staff costs

Current service cost 940 670

Settlement Cost (7,760)

____________

Total (6,820) 670

Amounts included in interest and other finance costs

Interest on planned assets 390 510

Interest costs (610) (720)

(220) (210)

Amount recognised in Other Comprehensive Income

Return on pension plan assets 1,820 1,110

Experience losses arising on defined benefit obligations 510 (4,220)

Amount recognised in Other Comprehensive Income 2,330 (3,110)

Movement in net defined benefit liability during year2017 2016

£‘OOO £‘OOO

Net defined benefit liability in scheme at 1 August (9,620) (6,310)

Movement in year:

Current service cost (940) (670)

Employer contributions 690 680

Net interest on the defined liability (220) (210)

Actuarial gain or loss 2,330 (3,110)

Settlement Cost 7,760

___________

Net defined benefit liability at 31 July - (9,620)

46



Asset and Liability Reconciliation

2017 2016£‘OOO £‘OOO

Changes in the present value of defined benefit obligations

Defined benefit obligations at start of year 25,630 20,210Current service cost 940 670Interest cost 610 720Contributions by Scheme participants 190 190Experience gains and losses on defined benefit obligations (510) 4,220Estimated benefits paid (380)Settlements (26,600)

___________

Defined benefit obligations at end of year - 25,630

Changes in fair value of plan assets

Fair value of plan assets at start of year 16,010 13,900Interest on plan assets 390 510Return on plan assets 1,820 1,110Employer contributions 690 680Contributions by Scheme participants 190 190Estimated benefits paid (260) (380)Settlements (18,840)

___________

Fair value of plan assets at end of year - 16,010

24 Related party transactions

Owing to the nature of the College’s operations and the composition of the board of governors beingdrawn from local public and private sector organisations, it is inevitable that transactions will take placewith organisations in which a member of the board of governors may have an interest. All transactionsinvolving such organisations are conducted at arm’s length and in accordance with the College’s financialregulations and normal procurement procedures.

The total expenses paid to or on behalf of the Governors during the year was £731; 3 governors (2016:£791; 4 governors). This represents travel and subsistence expenses and other out of pocket expensesincurred in attending Governor meetings and charity events in their official capacity.

No Governor has received any remuneration or waived payments from the College or its subsidiariesduring the year (2016: None).

47



25 Amounts disbursed as agent

Learner support funds

2017 2016

£‘OOO £‘OOO

Funding body grants — bursary support 391 539

Funding body grants — discretionary learner support 160 90

551 629

Disbursed to students (464) (463)

Administration costs (28) (25)

Balance unspent as at 31 July, included in creditors 59 141

Funding body grants are available solely for students. In the majority of instances, the College only actsas a paying agent.

48

annual report and financial statements...

Documents