birmingham report and financial statements for the year ended … · 2019-04-24 · strategic...
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SOUTH AND CITY COLLEGEBIRMINGHAM
Report and Financial Statementsfor the year ended 31 July 2017
SOUTH and CITY COLLLEGE BIRMINGHAMFinancial Statements for the Year Ended 31 July 2017
CONTENTSPage numbers
Strategic Report 2-10
College Advisers 11
Statement of Corporate Governance and Internal Control 12-16
Statement of Regularity, Propriety and Compliance 17
Statement of Responsibilities of the Members of the Corporation 18
Independent Auditors’ Report to the Corporation ofSouth and City College Birmingham 19-20
Independent Reporting Accountant’s Assurance Report on Regularityto the Corporation of South and City College Birmingham 21-22
Consolidated Statements of Comprehensive Income 23-24
Consolidated and College Statement of Changes in Reserves 25-26
Balance Sheets as at 31 July 27
Consolidated Cash Flow Statement 28
Notes to the Accounts 29-55
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SOUTH and CITY COLLLEGE BIRMINGHAMFinancial Statements for the Year Ended 31 July 2017
Strategic Report
NATURE, OBJECTIVES AND STRATEGIES:
The members present their report and the audited financial statements for the year ended 31 July 2017.
Legal status
South Birmingham College combined with City College Birmingham on 1 August 2012 and South BirminghamCollege was renamed South and City College Birmingham. The legal status of the College has not changed. Itremains a Corporation established under the Further and Higher Education Act 1992. The College is an exemptcharity for the purposes of the Charities Act 2011.
Mission
The College’s mission statement is as follows:
“to provide outstanding education and training, which is primarily vocational, in response to the needs of learnersand employers.”
Public Benefit
South & City College Birmingham is an exempt charity under the Part 3 of the Charities Act 2011 and followingthe Machinery of Government changes in July 2016 is regulated by the Secretary of State for Education. Themembers of the Governing Body, who are trustees of the charity, are disclosed on pages 10 and 11.
In setting and reviewing the College’s strategic objectives, the Governing Body has had due regard for theCharity Commission’s guidance on public benefit and particularly upon its supplementary guidance on theadvancement of education. The guidance sets out the requirement that all organisations wishing to berecognised as charities must demonstrate, explicitly, that their aims are for the public benefit.
In delivering its mission, the College provides the following identifiable public benefits through the advancementof 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 (LEP5).
Implementation of strategic plan
The strategic aims of the College are outlined below.
• Provide excellent teaching and learning to all learners and put learners at the heart of all we do;• Ensure learners achieve their full potential;• Be responsive to the education and training needs of learners, staff, employers and local communities;• Proactively promote Safeguarding and Every Child Matters;• Be responsive to the education and training needs of employers both at a local and regional level;• Achieve high overall achievement rates and improve these each year;• To ensure financial robustness, stability and safeguard the College’s assets;• Promote equality in all we do;• Develop education and training opportunities and specialist provision for young people, pre and post 16;• Provide excellent physical accommodation and learning resources for our learners;• Ensure a safe working environment for our learners and staff;• Work collaboratively with other organisations and companies where it is in the interests of our learners
and the local workforce;• Develop provision for overseas students to generate income.
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SOUTH and CITY COLLLEGE BIRMINGHAMFinancial Statements for the Year Ended 31 July 2017
Strategic Report (continued)
NATURE, OBJECTIVES AND STRATEGIES (continued)
Implementation of strategic plan (continued)
The College set itself broad objectives and achievement of those objectives is addressed below.
• Achieve high standards in terms of student outcomes.Overall achievement rates for 2016/17 were above national benchmarks for both long and short courses.
• Achieve all Education and Skills Funding Agency (ESFA) funding targets.The College did not achieve all of its ESFA funding targets for 201 6/1 7. The College was 55 learnersshort of its 16-18 year old learner number target of 3,090 learners. ESFA adult learner income of£17,668,000 was generated in 2016/1 7, which fell short of the College’s allocation of £18,816,000.
• Maintain a strong financial position.The College’s financial health at the end of 2016/17 is rated as satisfactory under Education and SkillsFunding Agency ratings.
• Improve the College’s physical environment, both in terms of buildings and equipment.The College’s expenditure on new equipment and improvements to its estate exceeded £1,700,000 in201 6/1 7, which has brought about significant improvements to the College’s operational capacity.
Financial objectives
The 2017/18 financial objectives, for the College are to achieve a financial performance that will meet both Lloydsand Barclays bank proposed covenants. These objectives are
• Maximum Leverage of borrowing to EBITA of 5.8• Minimum cash flow cover of 1.0.• Maximum income gearing of 40%• Maintaining cash balances of £3.5m
FINANCIAL POSITION
Financial results
The College produced an operating deficit in the year of £1,882,000 (2015/16 — surplus of £360,000). Under FRS102 guidance, movements in the pension fund liability are added to the deficit and for 2016/17 this movement wasa positive movement of £10.4m. With the inclusion of this movement, the College’s Comprehensive Income for2015/16 was a positive amount of £10.Om.
The College’s reserves show a negative position of £10,178,000, with a negative I & E reserve of £16,224,000.The I & E reserve incorporates the pension liability of £36,471,000 and without this liability the I & E reserve wouldbe £20,097,000 positive.
The College held cash and investment balances of £6,761,000 as at 31 July 2017. The College wishes to continueto accumulate cash balances in order to create a contingency fund.
Tangible fixed asset additions during the year amounted to £1,715,000. This was wholly equipment purchased.
The College has significant reliance on the ESFA for its principal funding source, largely from recurrent grants. In2016/17 the ESFA provided 81% of the College’s total income.
The College has one subsidiary company, FESSA (Projects) Limited. The principal activity of FESSA (Projects)Limited was to provide reprographic services to the College. However, the College made a decision not to utiliseFESSA (Projects) Limited as trading company, as the administration costs of the company outweighed any costadvantages. Therefore, there is no trading result to report.
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SOUTH and CITY COLLLEGE BIRMINGHAMFinancial Statements for the Year Ended 31 July 2017
Strategic Report (continued)
FINANCIAL POSITION (continued)
Treasury policies and objectives
Treasury management is the management of the College’s cash flows, its banking, money market and capitalmarket transactions; the effective control of the risks associated with those activities; and the pursuit of optimumperformance consistent with those risks.
The College has a separate treasury management policy in place.
Short term borrowing for temporary revenue purposes is authorised by the Accounting Officer. Such arrangementsare restricted by limits in the Financial Memorandum previously agreed with the Skills Funding Agency. All otherborrowing requires the authorisation of the Corporation and shall comply with the requirements of the FinancialMemorandum.
Cash flows
Cash and Investments held by the College increased by £1,989,000.
The College currently has £15,693,000 of loans outstanding with bankers on various terms for up to 15 years andsecured on College assets. The College’s forecasts and financial projections indicate that it will be able to operatewithin this existing facility for the foreseeable future.
The College has agreed a new set of financial covenants with both Lloyds and Barclays banks. These covenantsapply from 2nd August 2017. However, the College was in breach of the financial covenants that applied to loansat 31st July 2017 and has followed the appropriate accounting treatment for a breach of banking covenant i.e. allloans are presented as being repayable within 1 year. The College has produced financial forecasts whichdemonstrate that it will be able to meet the new banking covenants and therefore does not consider the breachat 31 July 2017 to present a going concern issue.
After making appropriate enquiries, the Corporation considers that the College has adequate resources tocontinue in operational existence for the foreseeable future. For this reason, it continues to adopt the goingconcern basis in preparing the financial statements.
Cash Flows and Liquidity
The College had a current ratio of 0.39 at the end of 2016/1 7, (2015/16 0.70). However, this ratio is affected byhaving the Lloyds bank loans classified as “amounts falling due within one year”. If the relevant loans wereclassified as “amounts falling due after more than one year”, the College would have a current ratio of 1 .04.
The College reduced its long term liabilities by £951,000 (after adjusting for the reclassification of the Lloydsbank loans) in 2016/17 and has a number of mechanisms in place to manage the uncertainties in interest rates.
Reserves Policy
The College has no formal Reserves Policy but recognises the importance of reserves in the financial stability ofany organisation, and ensures that there are adequate reserves to support the College’s core activities. As atthe balance sheet date the Income and Expenditure reserve (excluding the impact of the pension scheme)stands at £20,247,000 (2016: £20,402,000). It is the Corporation’s intention to increase reserves over the life ofthe strategic plan through the generation of annual operating surpluses.
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SOUTH and CITY COLLLEGE BIRMINGHAMFinancial Statements for the Year Ended 31 July 2017
Strategic Report (continued)
FINANCIAL POSITION (continued)
CURRENT AND FUTURE DEVELOPMENT AND PERFORMANCE
Student numbers
In 2016/17 the College has delivered activity that has produced £37,956,000 in ESFA main allocation funding(2015/16 — £39,670,000).
The College had approximately 13,000 students funded by ESFA.
Student achievements
Students continue to prosper at the College. Whilst the achievement rates for 2016/17 have yet to be finalised, theCollege expects high standards in terms of achievement rates, with overall achievement rates to be over 85% andno areas to be below benchmark in terms of their achievement rates.
Curriculum developments
In 2010/lithe College was awarded Beacon status in recognition of the outstanding training that it delivers. TheCollege is determined to maintain Beacon status and sees outstanding provision as crucial to the success of theCollege. A number of controls have been implemented to ensure the quality of teaching and learning at leastremained or improved upon the high standard set in previous years. These controls will remain in place forforthcoming years and will be updated where necessary.
The College is fully aware of the need to be constantly updating and changing its curriculum offering, in responseto the ever changing needs of both its learners and employers. The main ways in which the College adapted itcurriculum offering in 2016/17 are as follows.
• The College further expanded its Higher Education provision to include a Higher National Diploma(HND) in Creative Media Production.
• The College now offers level 3 Diplomas in Residential Childcare.
• In apprenticeship provision has continued to grow and has done so in line with the Greater Birminghamand Solihull LEP ‘Skills for Growth’ areas, including apprenticeships in the Engineering and Logisticssectors.
Payment Performance
The Late Payment of Commercial Debts (Interest) Act 1998, which came into force on 1 November 1998, requirescolleges in the absence of agreement to the contrary, to make payments to suppliers within 30 days of either theprovisions of goods or services or the date on which the invoice was received. The target set by the Treasury forpayment to suppliers within 30 days is 95%. The College supports the achievement of this target.
Events after the end of the reporting period
Birmingham and Solihull Colleges were amongst the first Colleges in the country to take part in the area basedreview process. This process looks at post 16 provision in an area with the purpose of establishing financiallyviable, sustainable, resilient and efficient Colleges which deliver maximum value for public investment. The keyrecommendation of this review was that South and City College merge with Bournville College and that thismerger be a type B merger, which would involve the Corporation of Bournville College dissolving and its assetsand liabilities being transferred into South & City College. The merger was completed on 2 August 2017.
Future prospects
As one college with a one set of governance and management groups, South and City College (incorporatingBournville College) will focus on excellence in working with students, employers and communities to improve theskills and life chances of the people of Birmingham.
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SOUTH and CITY COLLLEGE BIRMINGHAMFinancial Statements for the Year Ended 31 July 2017
Strategic Report (continued)
CURRENT AND FUTURE DEVELOPMENT AND PERFORMANCE (continued)
The merged college will provide a joined up approach to the provision of further and higher education acrossBirmingham. A greater networks of expertise will be forged involving students, staff and employers will allow themto share best practice and innovation across all curriculum areas. Stronger partnerships with schools anduniversities will be created to raise students’ aspirations. Combining resources of both colleges offers the prospectof developing specialist facilities, working closely with employers.
Resources:
The College has various resources that it can deploy in pursuit of its strategic objectives.
The College has land and buildings with a net book value of £65,733,000 (201 5/16 - £67,104,000).
Expenditure on equipment exceeded £1,700,000, (2015/16 -£1,100,000) as the College continued its policy ofreinvesting in equipment and facilities that benefit students.
The College had cash reserves and investments of over £6,661,000 at the end of the year (2015/16 - £4,773,000),which it intends to use to further resource the college.
Financial
The Group has a negative reserve position of £10,028,000 of net assets (2015/16 - £18,606,000). The positivechange in the reserve position is due to a decrease in the defined pension obligations from £45.3m to £36.5. Longterm loans stood at £14,712,000 (after adjusting for the reclassification of the Barclays bank loans which werepayable on demand at year end but subsequently became long term loans after year end) (2015/16 -
£15,682,000).
People
The College employs 812 people (expressed as full time equivalents), of whom 359 are teaching staff (2015/16—837 people and 383 teaching staff).
Reputation
The College has a good reputation locally and nationally and was awarded Beacon status in 2010/11. The Collegewas rated “Good” in its Ofsted inspection in 2015 and the College operates a nursery that was rated “Outstanding”at a separate Ofsted inspection (2014). Maintaining a quality brand is essential for the College’s success atattracting students and external relationships.
PRINCIPAL RISKS AND UNCERTAINTIES:
The College has undertaken further work during the year to develop and embed the system of internal control,including financial, operational and risk management which is designed to protect the College’s assets andreputation.
Based on the strategic plan, the College’s Senior Management Team (SMT) undertakes a comprehensive reviewof the risks to which the College is exposed. It identifies systems and procedures, including specific preventableactions which should mitigate any potential impact on the College. The internal controls are then implementedand the subsequent year’s appraisal will review their effectiveness and progress against risk mitigation actions.In addition to the annual review, the SMT will also consider any risks which may arise as a result of a new areaof work being undertaken by the College.
A risk register is maintained at the College level which is reviewed at least three times per annum by the AuditCommittee. The risk register identifies the key risks, the likelihood of those risks occurring, their potential impacton the College and the actions being taken to reduce and mitigate the risks. Risks are prioritised using aconsistent scoring system.
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SOUTH and CITY COLLLEGE BIRMINGHAMFinancial Statements for the Year Ended 31 July 2017
Strategic Report (continued)
CURRENT AND FUTURE DEVELOPMENT AND PERFORMANCE (continued)
Outlined below is a description of the principal risk factors that may affect the College. Not all the factors arewithin the College’s control. Other factors besides those listed below may also adversely affect the College.
1. Government funding
The College has considerable reliance on continued government funding through the ESFA. In 2016/17, 81% ofthe College’s revenue was ultimately public funded and this level of requirement is expected to continue.
The College is aware of several issues which may impact on future funding:• Changes to funding rates may result in the College receiving less income per student.• More funding will be based on a commissioning model as greater amounts of funding is set to go direct
to employers and Combined Authority.• The College is likely to face greater competition from new academies and school sixth forms for 16-18
year old students and demographics means that there will be fewer 16-18 year olds in the forthcomingyears.
This risk is mitigated in a number of ways:• 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 and local authorities.• Ensuring the College is focused on those priority sectors which will continue to benefit from public funding.• Reducing the level of dependence upon public funding.• Efficiency gains to reduce expenditure in line with income.
2. Merger with Bournville College
Bournville College has experienced extreme financial difficulties and has one of the highest debt to turnover ratiosin the sector. The College has worked with the ESFA/Transaction Unit to agree a deal, which reduces the debt ofBournville College and therefore the risk of merging with a college with high debt has been reduced. In additionthe ESFA has agreed to underwrite certain future liabilities. It also has a number of unresolved issues which couldgenerate future liabilities. The risk to South and City College is that it will inherit unsustainable debt levels via amerger. In order to mitigate this risk the College has negotiated grant funding from the ESFA to settle existingdebts and the underwriting of future liabilities.
At 31 July 2017 the College was in breach of the financial covenants that applied to Barclays’ loans at 31 July2017. As a result the College has followed the appropriate accounting treatment and the loans are presented asbeing repayable within 1 year at 31 July 2017. As a result, the College balance sheet at 31 July 2017 shows netcurrent liabilities of £13,908,000 (201 5/1 6: £3,771,000).
Since 31 July 2017 the College has agreed new terms with Barclays and Lloyds in respect of the newly mergedCollege (following the merger of SCCB and Bournville College on 2 August 2017). The new terms include a newset of financial covenants with both Lloyds and Barclays banks. These covenants apply from 2nd August 2017.
The College has produced financial forecasts that demonstrate that it will be able to meet the new bankingcovenants, but the cash cover covenant that applies to both the Barclays’ and Lloyds’ loans will require little or noworsening from the forecast position. In the event that actual cashf lows are expected to adversely deviate fromthe forecast position, the College has the ability to revise the timing of planned capital expenditure programsand/or manage working capital to meet the cash cover covenant. So while there is a risk that the College mightnot meet this banking covenant in future years, the College considers this risk to be manageable. Furthermore,the College has built up strong working relationships with both banks and both banks have reaffirmed theircommitment to the College by maintaining loans in the merged College and therefore the College does notconsider this risk of breach of covenant to present significant uncertainty about the College’s ability to continueas a going concern issue. For this reason, the College continues to adopt the going concern basis in preparingthe financial statements.
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SOUTH and CITY COLLLEGE BIRMINGHAMFinancial Statements for the Year Ended 31 July 2017
Strategic Report (continued)
PRINCIPAL RISKS AND UNCERTAINTIES (continued)
3. Maintaining Achievement rates above benchmark
The College’s overall achievement rates, which are basically the percentage of students gaining a qualification,currently stand at over 85%. This is well above the national average or benchmark for FE Colleges. However, in
recent years the benchmark for achievement rates has been rising faster than the College’s achievement rates.The risk to the College is that if this trend continues, its achievement rates will become at or below benchmark,which could have implications for the future funding of the College.
This risk is mitigated in a number of ways:• A very robust self-assessment process.• Comprehensive Management Information System (MIS)data on the performance of all courses.• Every course undergoes a 6 week review to ensure standards of a high quality are maintained.
4. Ensuring the College’s curriculum meets the needs and aspirations of students and funding agencies.
Students have a wide choice in terms of FE education providers as school sixth forms, new academies and privateproviders compete with FE Colleges for students. Where a College does not offer courses which meet the needsand aspirations of students, it will find it difficult to compete in this type of environment and struggle to maintainits current student numbers. In addition to this, Colleges also need to compete for funding and Colleges which donot deliver courses which meet the priorities of funding providers risk a reduction in funding. The College thereforeneeds to ensure that its curriculum offering is attractive to students and meet the priorities of funding bodies orrisk a substantial reduction in its income.
This risk is mitigated in a number of ways:• Incorporation of targets for new provision within curriculum plans.• Systems in place to test the views of students with regard to the College’s curriculum offering.• Regular contact and meetings with funding bodies to ensure the College is meeting their priorities.
5. Maintain adequate funding of pension liabilities
The financial statements report the share of the Local Government Pension Scheme deficit on the College’sbalance sheet in line with the requirements of FRS 102.
This risk is mitigated by an agreed deficit recovery plan with the West Midlands Pension Fund.
6. Failure to maintain the financial viability of the College
The College’s current financial health grade is classified as Satisfactory as described above. The continuingchallenge to the College’s financial position remains the constraint on further education funding arising from theongoing cuts in public sector spending whilst maintaining the student experience.
This risk is mitigated in a number of ways:• By rigorous budget setting procedures and sensitivity analysis• Regular in year budget monitoring• Robust financial controls• Exploring ongoing procurement efficiencies
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SOUTH and CITY COLLLEGE BIRMINGHAMFinancial Statements for the Year Ended 31 July 2017
Strategic Report (continued)
STAKEHOLDER RELATIONSHIPS
In line with other colleges and with universities, South and City College Birmingham has many stakeholders.These include:
- Students;
- Education sector funding bodies;
• FE Commissioner
• Staff;
• Local employers (with specific links);
• Local Authorities;
• Government Offices/Regional Development Agencies/Local Enterprise Partnerships;
• The local community;
• Other FE institutions;
• Trade unions; and
• Professional bodies.
The College recognises the importance of these relationships and engages in regular communication with themthrough the College Internet site and by meetings.
Equality
The College is committed to ensuring equality of opportunity for all who learn and work here. We respect and valuepositively differences in race, gender, sexual orientation, disability, religion or belief and age. We strive vigorouslyto remove conditions which place people at a disadvantage and we will actively combat bigotry. This policy isresourced, implemented and monitored on a planned basis. The College’s Equality Policy is published on theCollege’s Internet site.
The College publishes an Annual Equality Report and Equality Objectives to ensure compliance with all relevantequality legislation including the Equality Act 2010. The College undertakes equality impact assessments on allnew policies and procedures and publishes the results. Equality impact assessments are also undertaken forexisting policies and procedures on a prioritised basis.
The College considers all applications from disabled persons, bearing in mind the aptitudes of the individualsconcerned. Where an existing employee becomes disabled, every effort is made to ensure that employment withthe College continues. The Colleges policy is to provide training, career development and opportunities forpromotion, which are, as far as possible, identical to those for other employees. An equalities plan is publishedeach year and monitOred by managers and governors.
The College has also implemented an Equality & Diversity training programme which all staff complete online.Refresher training and training for new starters is carried out on an ongoing basis.
Disability statement
The College seeks to achieve the objectives set down in the Disability Discrimination Act 1995 as amended by theSpecial Education Needs and Disability Acts 2001 and 2005.
a) As part of its accommodation strategy the College updated its access audit. Experts in this field conducteda full access audit during 2006/07, and the results of this formed the basis of a bid to the Learning SkillsCouncil (LSC) for funding capital projects aimed at improving access.
b) The College has appointed an Access Co-ordinator, who provides information, advice and arranges supportwhere necessary for students with disabilities.
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SOUTH and CITY COLLLEGE BIRMINGHAMFinancial Statements for the Year Ended 31 July 2017
Strategic Report (continued)
STAKEHOLDER RELATIONSHIPS (continued)
c) There is a llst of specialist equipment, such as radio aids, which the College can make available for use by
students and a range of assistive technology is available in the learning centre.
ci) The admissions policy for all students is described in the College charter. Appeals against a decision not to
offer a place are dealt with under the complaints policy.
e) The College has made a significant investment in the appointment of specialist lecturers to support
students with learning difficulties and/or disabilities. There are a number of student support assistants who
can provide a variety of support for learning. There is a continuing programme of staff development to ensure
the provision of a high level of appropriate support for students who have learning difficulties and/or
disabilities.
f) Specialist programmes are described in College prospectuses, and achievements and destinations are
recorded and published in the standard College format.
g) Counselling and welfare services are described in the College Student Guide, which is issued to students
• together with the Complaints and Disciplinary Procedure leaflets 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 are each aware,
there is no relevant audit information of which the College’s auditors are unaware; and each member has taken
all the steps that he or she ought to have taken to be aware of any relevant audit information and to establish that
the College’s auditors are aware of that information.
Approved by order of the members of the Corporation on 5 December 2017 and signed on its behalf by:
Ceeron )V
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SOUTH and CITY COLLLEGE BIRMINGHAMFinancial Statements for the Year Ended 31 July 2017
College Advisers
Financial statement and regularity auditors:PricewaterhouseCoopers LLPCornwall Court19 Cornwall StreetBirminghamB3 2DT
Internal auditors:RSM UK LLPSt Phillips PointTemple RowBirminghamB2 5AF
Bankers:Lloyds Bank114-116 Colmore RowBirminghamB3 3DP
Barclays BankOne Snowh illSnow Hill QueenswayBirminghamB4 6GN
Solicitors: GeneralSGH MartineauNo 1 CoIm ore SquareBirminghamB4 6AA
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SOUTH and CITY COLLLEGE BIRMINGHAMFinancial Statements for the Year Ended 31 July 2017
Statement of Corporate Governance and Internal Control
The following statement is provided to enable readers of the annual report and Financial Statements of theCollege to obtain a better understanding of its governance and legal structure. This statement covers the periodfrom 1st August 2016 to 31st July 2017 and up to the date of approval of the annual report and financialstatements.
The College endeavours to conduct its business:
i) in accordance with the seven principles identified by the Committee on Standards in Public Life(selflessness, integrity, objectivity, accountability, openness, honesty and leadership);
ii) in full accordance with the guidance to colleges from the Association of Colleges in The Code of GoodGovernance in English Colleges (“the Code”); and
iii) having due regard to the UK Corporate Governance Code 2016 insofar as it is applicable to the furthereducation sector.
The College is committed to exhibiting best practice in all aspects of corporate governance and in particular theCollege/Board has adopted and complied with the Foundation Code. We have not adopted and therefore do notapply the UK Corporate Governance Code. However, we have reported on our Corporate Governance
arrangements by drawing upon best practice available, including those aspects of the UK Corporate GovernanceCode we consider to be relevant to the further education sector and best practice.
In the opinion of the governors, the College complies with all the provisions of the UK Corporate governance
code insofar as it is applicable to FE Colleges, and it has complied throughout the year ended 31 July 2017.The Governing Body recognises that, as a body entrusted with both public and private funds, it has a particularduty to observe the highest standards of corporate governance at all times.
The College is an exempt charity within the meaning of Part 3 of the Charities Act 2011. The Governors, who are
also the Trustees for the purpose of the Charities Act 2011, confirm that they have had due regard for Charity
Commission’s guidance on public benefit and that the required statements appear elsewhere in these financial
statements.
The Corporation
The members who served on the Corporation during the year and up to the date of signature of this report wereas listed in Table 2.
Table 2: Governors serving on the College Board during 201 6/1 7.
Date of Term Date of Status of Committees Attendanceappointment of resignation appointment served August 2016 —
office July2017(9 meetings)
Prof. P Re-appointed: 4 years 10 June Independent Search 0Walkling 29 February 2017 Governor & Governance;
2016. Senior StaffRemuneration
Gerald Re-appointed: 4 years Independent Audit; 8Bermingham 12 May2017 Governor Employment &
EqualitiesFouzia 7 October 2015 3 years Teaching Staff 8Choudhry GovernorJohn Gemmell 10 February 4 years Independent Chair: Audit 8
2016 GovernorClive Re-appointed: 4 years Independent Chair: Corporation; 9Henderson 11 June 2017 Governor Search
Re-appointed as & Governance;Chair: Chair: Senior Staff20 September Remuneration2016
Mike Hopkins N/A N/A Principal N/A 9
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SOUTH and CITY COLLLEGE BIRMINGHAMFinancial Statements for the Year Ended 31 July 2017
Table 2: Governors serving on the College Board during 2016/17 (continued).
Lucy Jeynes Re-appointed: 4 years Independent 511 December Governor2016
Paul Johal Re-appointed: 4 years Independent Employment & 47 April2015 Governor Equalities;
Search &Governance
Heather Jones Re-appointed: 4 years Independent Audit; 911 June2017 Governor Senior Staff
Remuneration;Search& Governance
Dr Zahoor Re-appointed: 4 years Independent Audit; 7Mann 20 February Governor Employment &
2016 Equalities;Senior StaffRemuneration;Search& Governance
Angela Pocock Re-appointed: 4 years Independent Employment & 75 July 2015 Governor Equalities;Appointed as Senior StaffVice Chair: Remuneration9 February 2016
Pat O’Neill Re-appointed: 4 years Independent Audit; 928 February Governor Employment &2014 Equalities
Derek Osborne 25 March 2015 3 years Non-teaching 7staff Governor
Alex Re-appointed: 4 4 years Independent Audit; 8Stephenson March 2016 Governor Chair: Search
& Governance;Senior StaffRemuneration
Nasir Awan 9 July 2014 4 years Independent Employment & 3(Governor) Governor Equalities
Shireen Avari 9 April 2014 4 years Independent Audit; 7Governor Employment &
EqualitiesRichard Weber Re-appointed: 4 years Independent Search 9(Ryszard) 13 May 2017 Governor & Governance;
Audit;Employment &Equalities
Musa Nela 6 December 2 years Student Governor 92016
Sabina Begum 14 March 2017 2 years Student Governor 3Albert Winners 13 March 2015 2 years 13 March Student Governor 3
2017
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 of the Collegetogether with other information such as performance against funding targets, proposed capital expenditure, qualitymatters and personnel-related matters such as health and safety and environmental issues. The Corporationmeets each term.
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SOUTH and CITY COLLLEGE BIRMINGHAMFinancial Statements for the Year Ended 31 July 2017
Statement of Corporate Governance and Internal Control (continued)
The Corporation conducts its business through a number of committees. Each committee has terms of reference,which have been approved by the Corporation. These committees are planning, resources and estates,employment and equalities, senior staff remuneration, search, student services, standards and audit. Full minutesof all meetings, except those deemed to be confidential by the Corporation, are available on the College’s websiteat www.sccb.ac.uk or from the Clerk to the Corporation at:
South and City College BirminghamHigh StreetDigbethBirminghamB5 5SU
The Clerk to the Corporation maintains a register of financial and personal interests of the governors. The registeris available for inspection at the above address.
All governors are able to take independent professional advice in furtherance of their duties at the College’sexpense and have access to the Clerk to the Corporation, who is responsible to the Board for ensuring that allapplicable procedures and regulations are complied with. The appointment, evaluation and removal of the Clerkare matters for the Corporation as a whole.
Formal agendas, papers and reports are supplied to governors in a timely manner, prior to Board meetings.Briefings are also provided on an ad hoc basis.
The Corporation has a strong and independent non-executive element and no individual or group dominates itsdecision-making process. The Corporation considers that each of its non-executive members is independent ofmanagement and free from any business or other relationship which could materially interfere with the exerciseof their independent judgement.
There is a clear division of responsibility in that the roles of the Chairman and Accounting Officer are separate.
Appointments to the Corporation
Any new appointments to the Corporation are a matter for the consideration of the Corporation as a whole. TheCorporation has a search committee, consisting of three members of the Corporation, which is responsible for theselection and nomination of any new member for the Corporation’s consideration. The Corporation is responsiblefor ensuring that appropriate training is provided as required.
Members of the Corporation are appointed for a term of office not exceeding tour years.
Corporation performance
The Corporation carried out a self-assessment of its own performance for the year ended 31st July 2017 andgraded itself as “Good” on the Ofsted scale.
Remuneration committee
Throughout the year ending 31 July 2017, the College’s Remuneration Committee comprised three members ofthe Corporation. The Committee’s responsibilities are to make recommendations to the Board on the remunerationand benefits of the Principal and other senior post-holders.
Details of remuneration for the year ended 31 July 2017 are set out in note 7 to the financial statements.
Audit committee
The Audit Committee comprises seven members of the Corporation (excluding the Accounting Officer and Chair).The Committee operates in accordance with written terms of reference approved by the Corporation.
The Audit Committee meets on a termly basis and provides a forum for reporting by the College’s internal,regularity and financial statements auditors, who have access to the Committee for independent discussion,
14
SOUTH and CITY COLLLEGE BIRMINGHAMFinancial Statements for the Year Ended 31 July 2017
Statement of Corporate Governance and Internal Control (contThued)
without the presence of College management. The Committee also receives and considers reports from the mainFE funding bodies as they affect the College’s business.
The College’s internal auditors review the systems of internal control, risk management controls and governanceprocesses in accordance with an agreed plan of input and report their findings to management and the AuditCommittee.
Audit committee
Management is responsible for the implementation of agreed audit recommendations and internal auditundertakes periodic follow-up reviews to ensure such recommendations have been implemented.
The Audit Committee also advises the Corporation on the appointment of internal, regularity and financialstatements auditors and their remuneration for both audit and non-audit work as well as reporting annually to theCorporation.
Internal control
Scope of responsibility
The Corporation is ultimately responsible for the College’s system of internal control and for reviewing itseffectiveness. However, such a system is designed to manage rather than eliminate the risk of failure to achievebusiness objectives and can provide only reasonable and not absolute assurance against material misstatementor loss.
The Corporation has delegated the day-to-day responsibility to the Principal, as Accounting Officer, formaintaining a 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 he is personally responsible, in accordancewith the responsibilities assigned to him in the Financial Memorandum/Financial Agreement between South andCity College Birmingham and the funding bodies. He is also responsible for reporting to the Corporation anymaterial weaknesses 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 to eliminate all risk offailure to achieve policies, aims and objectives; it can therefore only provide reasonable and not absoluteassurance of effectiveness. The system of internal control is based on an ongoing process designed to identifyand prioritise the risks to the achievement of College policies, aims and objectives, to evaluate the likelihood ofthose risks being realised and the impact should they be realised, and to manage them efficiently, effectively andeconomically. The system of internal control has been in place in South and City College Birmingham for the yearended 31 July 2017 and up to the date of approval of the financial statements.
Capacity to handle risk
The Corporation has reviewed the key risks to which the College is exposed together with the operating, financialand compliance controls that have been implemented to mitigate those risks. The Corporation is of the view thatthere is a formal ongoing process for identifying, evaluating and managing the College’s significant risks that hasbeen in place for the year ending 31 July 2017 and up to the date of approval of the financial statements. Thisprocess is regularly reviewed by the Corporation.
The risk and control framework
The system of internal control is based on a framework of regular management information, administrativeprocedures including the segregation of duties, and a system of delegation and accountability. In particular, itincludes:
• Comprehensive budgeting systems with an annual budget, which is reviewed and agreed by thegoverning body.
• Regular reviews by the governing body of periodic and annual financial reports which indicate financialperformance against forecasts.
15
SOUTH and CITY COLLLEGE BIRMINGHAMFinancial Statements for the Year Ended 31 July 2017
Statement of Corporate Governance and Internal Control (continued)
• Setting targets to measure financial and other performance.
• Clearly defined capital investment control guidelines.
• The adoption of formal project management disciplines, where appropriate.
The risk and control framework (continued)
South and City College Birmingham has an internal audit service, which operates in accordance with the
requirements of the ESFA’s Post 16 Audit Code of Practice. The work of the internal audit service is informed by
an analysis of the risks to which the College is exposed, and annual internal audit plans are based on this analysis.
The analysis of risks and the internal audit plans are endorsed by the Corporation on the recommendation of the
audit committee. At minimum annually, the Head of Internal Audit (HIA) provides the governing body with a report
on internal audit activity in the College. The report includes the HIA’s independent opinion on the adequacy and
effectiveness of the College’s system of risk management, controls and governance processes.
Review of effectiveness
As Accounting Officer, the Principal has responsibility for reviewing the effectiveness of the system of internal
control. His 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, the regularity auditors (for colleges in
plan-led funding), in their management letters and other reports.
The Principal has been advised on the implications of the result of his review of the effectiveness of the system
of internal control by the Audit Committee, which oversees the work of the internal auditor and other sources of
assurance and a plan to address weaknesses and ensure continuous improvement of the system is in place.
The senior management team receives reports setting out key performance and risk indicators and considers
possible control issues brought to their attention by early warning mechanisms, which are embedded within the
departments and reinforced by risk awareness training. The senior management team and the Audit Committee
also receive regular reports from internal audit and other sources of assurance, which include recommendations
for improvement. The Audit Committee’s role in this area is confined to a high-level review of the arrangements
for internal control. The Corporation’s agenda includes a regular item for consideration of risk and control and
receives reports thereon from the senior management team and the Audit Committee. The emphasis is on
obtaining the relevant degree of assurance and not merely reporting by exception. At its October 2017 meeting,
the Corporation carried out the annual assessment for the year ended 31 July 2017 by considering documentation
from the senior management team and internal audit, and taking account of events since 31 July 2017.
Based on the advice of the Audit Committee and the Accounting Officer, the Corporation is of the opinion that the
College has an adequate and effective framework for governance, risk management, for the “effective and efficient
use of resources, the solvency of the institution and the body and the safeguarding of their assets”.
Going concern
After making appropriate enquiries, the Corporation considers that the College has adequate resources to
continue in operational existence for the foreseeable future. For this reason, it continues to adopt the going
concern basis in preparing the financial statements.
Approved by order of the members of the Corporation on 5 December 2017 anct signed on its behalf by:
Clive HChairman
16
SOUTH and CITY COLLLEGE BIRMINGHAMFinancial Statements for the Year Ended 31 July 2017
Statement of Regularity, Propriety and Compliance
The Corporation has considered its responsibility to notify the Education and Skills Funding Agency (ESFA) ofmaterial irregularity, impropriety and non-compliance with terms and conditions of funding, under the college’sfinancial memorandum. As part of our consideration we have had due regard to the requirements of the financialmemorandum.
We confirm on behalf of the Corporation, that after due enquiry, and to the best of our knowledge, we are able toidentify any material irregular or improper use of funds by the College, or material non-compliance with the termsand conditions of funding under the College’s financial memorandum
We confirm that no instances of material irregularity, impropriety or funding non-compliance have been discoveredto date. If any instances are identified after the date of this statement, these will be notified to the ESFA,
Approved by order of the members of the Corporation on 5 on its behalf by:
Officer
SOUTH and CITY COLLLEGE BIRMINGHAMFinancial Statements for the Year Ended 31 July 2017
Statement of Responsibilities of the Members of the Corporation
The members of the Corporation are required to present audited financial statements for each financial year.
Within the terms and conditions of the College’s Financial Memorandum with the ESFA, the Corporation, through
its Accounting Officer, is required to prepare financial statements for each financial year in accordance with the
2015 Statement of Recommended Practice: Accounting for Further and Higher Education 2015 (the 2015 FE HE
SORP), the College Accounts Direction for 2016 to 2017 issued by the Education and Skills Funding Agency
(ESFA) and in accordance with Financial Reporting Standard 102—The Financial Reporting Standard applicable
in the United Kingdom and Republic of Ireland (FRS 102), and which 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 material departures
disclosed and explained in the financial statements.
• Prepare financial statements on the going concern basis, unless it is inappropriate to assume that the
College will continue in operation.
The Corporation is also required to prepare an Operating and Financial Review which describes what it is trying
to do and 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 reasonable accuracy,
at any time, the financial position of the College, and which enable it to ensure that the financial statements are
prepared in accordance with the relevant Legislation of incorporation and other relevant accounting standards. It
is responsible for taking steps that are reasonably open to it in order 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 the College; the
work carried out by the auditors does not involve consideration of these matters and accordingly, the auditors
accept no responsibility for any changes that may have occurred to the financial statements since they were
initially presented on the website. Legislation in the United Kingdom governing the preparation and dissemination
of financial statements may differ from legislation in other jurisdictions.
Members of the Corporation are responsible for ensuring that expenditure and income are applied for the
purposes intended by Parliament and that the financial transactions conform to the authorities that govern them.
In addition they are responsible for ensuring that funds from the ESFA are used only in accordance with the
Financial Memorandum/Financial Agreement with the ESFA and any other conditions that may be prescribe from
time to time. Members of the Corporation must ensure that there are appropriate financial and management
controls in place in order to safeguard public and other funds and to ensure they are used properly. In addition,
members of the Corporation are responsible for securing economical, efficient and effective management of the
College’s resources and expenditure, so that the benefits that should be derived from the application of public
funds from the ESFA are not put at risk.
Approved by order of the members of the Corporation on 5 December2017 and signed on its behalf by:
CeHen”17
18
SOUTH and CITY COLLLEGE BIRMINGHAMFinancial Statements for the Year Ended 31 July 2017
INDEPENDENT AUDITORS’ REPORT TO THE CORPORATION OF SOUTH AND CITYCOLLEGE BIRMINGHAM (the “institution”)
Report on the audit of the financial statements
Opinion
In out opinion, South and City College Birmingham’s group financial statements and patent institution financialstatements (the ‘inancial statements”):
• give a true and fair view of the state of the group’s and of the parent institution’s affairs as at 31 July 2017and of the group’s income and expenditure and cash flows for the year then ended;
• have been properly prepared in accordance with United Kingdom Generally Accepted AccountingPractice (United Kingdom Accounting Standards, comprising FRS 102 “The Financial Reporting Standardapplicable in the UK and Republic of Ireland”, and applicable law); and
• have been properly prepared in accordance with the Statement of Recommended Practice — Accountingfor Further and Higher Education.
We have audited the financial statements, included within the Report and Financial Statements (the “AnnualReport”), which comprise the group and parent institution Balance sheets as at 31 July 2017; the ConsolidatedStatements of Comprehensive Income for the year then ended; the Consolidated and College Statement ofChanges in Reserves for the year then ended; the Consolidated Cash Flow Statement for the year then ended;and the notes to the financial 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)”) andapplicable law. Our responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for theaudit of the financial statements section of our report. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our opinion.
Independence
We remained independent of the group in accordance with the ethical requirements that are relevant to ouraudit of the financial statements in the UK, which includes the FRC’s Ethical Standard, and we have fulfilled ourother ethical responsibilities in accordance with these requirements.
Conclusions Relating to Going Concern
We have nothing to report in respect of the following matters in relation to which ISAs (UK) require us to reportto you when:
the Corporation’s use of the going concern basis of accounting in the preparation of the financialstatements is not appropriate; or• the Corporation has not disclosed in the financial statements any identified material uncertainties thatmay cast significant doubt about the group’s and parent institution’s ability to continue to adopt the goingconcern basis of accounting for a period of at least twelve months from the date when the financial statementsare authorised for issue.
However, because not all future events or conditions can be predicted, this statement is not a guarantee as tothe group’s and parent institution’s ability to continue as a going concern.
Reporting on Other Information
The other information comprises all of the information in the Annual Report other than the financial statementsand our auditors’ report thereon. The Corporation is responsible for the other information. Our opinion on thefinancial statements does not cover the other information and, accordingly, we do not express an audit opinionor any form of assurance thereon. In connection with our audit of the financial statements, our responsibility is toread the other information and, in doing so, consider whether the other information is materially inconsistent with
19
SOUTH and CITY COLLLEGE BIRMINGHAMFinancial Statements for the Year Ended 31 July 2017
the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.If we identify an apparent material inconsistency or material misstatement, we are required to performprocedures to conclude whether there is a material misstatement of the financial statements or a materialmisstatement of the other information. If, based on the work we have performed, we conclude that there is amaterial misstatement of this other information, we are required to report that fact. We have nothing to reportbased on these responsibilities.
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 page18, the Corporation is responsible for the preparation of the financial statements in accordance with the applicableframework and for being satisfied that they give a true and fair view. The Corporation is also responsible for, suchinternal control as they determine is necessary to enable the preparation of financial statements that are free frommaterial misstatement, whether due to fraud or error.
In preparing the financial statements, the Corporation is responsible for assessing the group’s and parentinstitution’s ability to continue as a going concern, disclosing as applicable, matters related to going concernandusing the going concern basis of accounting unless the Corporation either intends to liquidate the group andparent 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 freefrom material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes ouropinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted inaccordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arisefrom fraud or error and are considered material if, individually or in the aggregate, they could reasonably beexpected 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 FinancialReporting 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 accordancewith Article 22 of the institution’s Articles of Government and for no other purpose. We do not, in giving theseopinions, accept or assume responsibility for any other purpose or to any other person to whom this report isshown 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 SkillsFunding 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.
P2r L(’
PricewaterhouseCoopers LLPChartered Accountants and Statutory Auditors
ZI €C.e%’-y 2OI-(a) The maintenance and integrity of the South and City College Birmingham’s website is the responsibility of the Corporation; the work carriedout by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changesthat may have occurred to the financial statements since they were initially presented on the website.(b) Legislation in the united Kingdom governing the preparation and dissemination of financial statements may differ from legislation in otherjurisdictions.
20
SOUTH and CITY COLLLEGE BIRMINGHAMFinancial Statements for the Year Ended 31 July 2017
Independent Reporting Accountant’s Assurance Report on Regularity to theCorporation of South and City College Birmingham and the Secretary of State forEducation acting through the Education and Skills Funding Agency
In accordance with the terms of our engagement letter dated 4 August 2017 and further to the requirements ofthe financial memorandum with the Education and Skills Funding Agency we have carried out an engagementto obtain limited assurance about whether anything has come to our attention that would suggest that in allmaterial respects the expenditure disbursed and income received by South and City College Birmingham duringthe period 1 August 2016 to 31 July 2017 have not been applied to the purposes identified by Parliament andthe financial transactions do not conform 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 the Educationand Skills Funding Agency. In line with this framework, our work has specifically not considered incomereceived from the main funding grants generated through the Individualised Learner Record (ILR) returns, forwhich Education and Skills Funding Agency has other assurance arrangements in place.
This report is made solely to the corporation of South and City College Birmingham and the Education and SkillsFunding Agency in accordance with the terms of our engagement letter. Our work has been undertaken so thatwe might state to the corporation of South and City College Birmingham and Education and Skills FundingAgency those matters we are required to state in a report and for no other purpose. To the fullest extentpermitted by law, we do not accept or assume responsibility to anyone other than the corporation of South andCity College Birmingham and the Education and Skills Funding Agency for our work, for this report, or for theconclusion we have formed, save where expressly agreed in writing.
Respective responsibilities of South and City College Birmingham and the reporting accountant
The corporation of South and City College Birmingham is responsible, under the requirements of the Further &Higher Education Act 1992, subsequent legislation and related regulations and guidance, for ensuring thatexpenditure disbursed and income received is applied for the purposes intended by Parliament and the financialtransactions conform to the authorities which govern them.
Our responsibilities for this engagement are established in the United Kingdom by our profession’s ethicalguidance and are to obtain limited assurance and report in accordance with our engagement letter and therequirements of the Post-16 Audit Code of Practice. We report to you whether anything has come to ourattention in carrying out our work which suggests that in all material respects, expenditure disbursed andincome received during the period 1 August 2016 to 31 July 2017 have not been applied to purposes intendedby Parliament or that the financial transactions do not conform to the authorities which govern them as set out inthe Association of Colleges Accounts Direction 2016 to 2017.
Approach
We conducted our engagement in accordance with the Post-i 6 Audit Code of Practice issued jointly by theEducation and Skills Funding Agency. We performed a limited assurance engagement as defined in thatframework.
The objective of a limited assurance engagement is to perform such procedures as to obtain information andexplanations in order to provide us with sufficient appropriate evidence to express a negative conclusion onregularity.
A limited assurance engagement is more limited in scope than a reasonable assurance engagement andconsequently does not enable us to obtain assurance that we would become aware of all significant matters thatmight 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’sincome and expenditure.
21
SOUTH and CITY COLLLEGE BIRMINGHAMFinancial Statements for the Year Ended 31 July 2017
The work undertaken to draw to our conclusion includes:• Obtaining an understanding of South and City College Birmingham’s key policies, procedures and
controls;
• Reviewing a sample of payments to governors, settlement payments and expenses; and
• Confirming that activities during the year reflect the controls, policies and procedures identified.
Conclusion
In the course of our work, nothing has come to our attention which suggests that in all material respects theexpenditure disbursed and income received during the period 1 August 2016 to 31 July 2017 has not beenapplied to purposes intended by Parliament and the financial transactions do not conform to the authoritieswhich govern them.
PXrV LI-P
PricewaterhouseCoopers LLPChartered Accountants
Date: 2 20t
22
SOUTH and CITY COLLLEGE BIRMINGHAMFinancial Statements for the Year Ended 31 July 2017
Consolidated Statements of Comprehensive IncomeFor the year ended 31 July 2017
Note Year ended Year ended31 July2017 31 July2076
IncomeFunding body grantsTuition fees and education contractsOther grants and contractsOther incomeInvestment income
Total Income
_______________________________________
ExpenditureStaff costs 6Fundamental restructuring costs 6Other operating expenses 8Depreciation 11Interest and other finance costs 9
Total expenditure
_________________________________________
(Deficit)/Surplus before other gains andlosses
Profit/(loss) on disposal of assetsImpairment LossResult on investments
Deficit before tax
Taxation
Deficit for the year
Unrealised surplus on revaluation of assetsActuarial profit/floss) in respect of pensionsschemes
_________________________________________
Total Comprehensive lncome/(Expense) forthe year
_______________________________________
Represented by:Restricted comprehensive incomeUnrestricted comprehensive income
Deficit for the year attributable to:Non-controlling interest
Group
_______________________________________
Group College Group College£000 £000 £000 £000
2 39,059 39,059 41,106 41,1063 5,765 5,765 6,118 6,1184 19 19 104 104
2,432 2,432 1,439 1,4395 14 14 36 36
12
10
47,289 47,289 48,803 48,803
33,220 33,220 33,118 33,118353 353 492 492
10,657 10,657 9,750 9,7503,070 3,070 3,229 3,2291,871 1,871 1 ,854 1,854
49,171 49,171 48,443 48,443
(1,882) (1,882) 360 360
32 32 (186) (186)0 0 f 1,624) (1,624)0 0 0 0
(1,850) (7,850) (7,450) (7,450)
0 0 0 0
(1,850) (1,850) (1,450) (1,450)
0 0 0 0
10,428 10,428 (15,086) (15,086)
8,578 8,578 (16,536) (16,536)
0 0 0 08,578 8,578 (16,536) (16,536)
8,578 8,578 (16,536) (16,536)
(1,850) (1,850) (1,450) (1,450)
23
SOUTH and CITY COLLLEGE BIRMINGHAMFinancial Statements for the Year Ended 31 July 2017
Consolidated Statements of Comprehensive Income
Year ended Year endedNote 31 July2016 31 July2016
Group College Group CollegeTotal Comprehensive Expense for the year £000 £000 £000 £000attributable to:Non-controlling interest 0 0 0 0Group 8,578 8,578 (16,536) (16,536)
24
SOUTH and CITY COLLLEGE BIRMINGHAMFinancial Statements for the Year Ended 31 July 2077
Consolidated and College Statement of Changes in ReservesFor the year ended 31 July 2017
Deficit from the incomeand expenditure accountOther comprehensiveexpenseTransfers betweenrevaluation and incomeand expenditurereserves
(1,450)
(15,086)
133
0 (1,450)
0 (15,086)
(133) 0
(1,450)
(15,086)
0
Total comprehensiveexpense for the year
Balance at 31 July2076
Deficit from the incomeand expenditure accountOther comprehensiveexpenseTransfers betweenrevaluation and incomeand expenditurereserves
Total comprehensiveincome/(expense) forthe year
Balance at 31 July2017
CollegeBalance at 1 August2015
Deficit from the incomeand expenditure accountOther comprehensiveexpenseTransfers betweenrevaluation and incomeand expenditurereserves
Total comprehensiveexpense for the year
(24,935)
(1,850)
10,428
133
(133) (16,536)
6,329 (18,606)
0 (1,850)
0 10,428
(133) 0
(18,606)
(1,850)
10,428
0
8,771 (133) 8,578 8,578
(16,224) 6,196 (10,028) (10,028)
(8,489) 6,462 (2,027) (2,027)
(1,450) 0 (1,450) (1,450)
(15,086) 0 (15,086) (15,086)
133 (133) 0 0
(16,403) (133) (76,536) (16,536)
GroupBalance at 1 August2015
Income and Revaluation Total excluding Totalexpenditure reserve Non-controlling
account interest£000 £000 £000 £000
(8,532) 6,462 (2,070) (2,070)
(16,403) (16,536)
25
SOUTH and CITY COLLLEGE BIRMINGHAMFinancial Statements for the Year Ended 31 July 2017
Income andexpenditure
account£000
Revaluation Total excludingreserve non-controlling
interest£000 £000
Balance at 31 July2016
(24,892) 6,329 (18,563) (18,563)
Deficit from the incomeand expenditure accountOther comprehensiveexpenseTransfers betweenrevaluation and incomeand expenditurereserves
(1,850) 0
10,428 0
133 (133)
(1,850) (1,850)
10,428 10,428
0 0
Total comprehensiveexpense for the year
Balance at 31 July2017
8,711 (133) 8,578 8,578
(16,181) 6,196 (9,985) (9,985)
Total
£000
26
SOUTH and CITY COLLLEGE BIRMINGHAMFinancial Statements for the Year Ended 31 July 2017
Balance sheets as at 31 July 2017
Note Group College Group College
Current assetsStocksTrade and other receivablesAssets held for resaleInvestmentsCash and cash equivalents
_____________________________________________
Total current assets
Less: Creditors — amounts falling duewithin one year
Net current liabilities
___________________________________________
Total assets less current liabilities
Creditors amounts falling due after morethan one year
Provisions
Defined benefit obligations
Other provisions
Net liabilities
Unrestricted ReservesIncome and expenditure accountRevaluation reserve
Total unrestricted reserves
Non-current assets
Tangible fixed assetsInvestments
2017 2017 2016 2016£000 £000 £000 £000
11 65,733 65,733 67,104 67,10412 0 0 0 0
65,733 65,733 67,104 67,104
10 10 20 2014 1,689 1,736 1,575 1,62215 500 500 2,250 2,25013 100 100 101 10120 6,661 6,661 4,672 4,672
8,960 9,007 8,618 8,665
16 (22,911) (22,915) (12,432) (12,436)
17
19
19
(13,951) (13,908) (3,814) (3,771)
51,782 51,825 63,290 63,333
(25,339) (25,339) (36,559) (36,559)
(36,471) (36,471) (45,337) (45,337)
0 0 0 0
(10,028) (9,985) (18,606) (18,563)
(16,224) (16,181) (24,935) (24,892)6,196 6,196 6,329 6,329
(10,028) (9,985) (18,606) (18,563)
The financial statements on pages 23 to 55 were approved by thesigned on its behalf on by:
Clive Henderson - Chairman 1’
on 5 December2017 and were
27
SOUTH and CITY COLLLEGE BIRMINGHAMFinancial Statements for the Year Ended 31 July 2017
Consolidated Cash Flow Statement for the year ended 31 July 2017
Notes Year ended Year ended31 July2017 31 July2016
£000 £000
Cash flow from operating activities
Deficit for the year (1,850) (1,450)Adjustment for non-cash itemsDepreciation 3,070 3,229Impairment of Assets 0 1,624(Increase)/decrease in stocks 10 (11)(Increase)/decrease in debtors (114) (193)(Increase)/decrease in assets held for sale 1,750 (300)lncrease/(decrease) in creditors due within one 1,182 (3,541)yearDecrease in creditors due after one year (973) (482)Increase/(decrease) in provisions 0 0Pensions costs less contributions payable 1,562 1,058Taxation 0 0Adjustment for investing or financingactivitiesInvestment income (14) (36)Interest payable 718 781Taxation paid 0 0(Profit)/loss on sale of fixed assets (32) 186Net cash flow from operating activities 5,309 865
Cash flows from investing activitiesProceeds from sale of fixed assets 48 314Disposal of non-current asset investments 0 0Investment income 14 36Withdrawal of deposits 1 1,976New deposits 0 0Payments made to acquire fixed assets (1,715) (1,188)
(1,652) 1,138
Cash flows from financing activitiesInterest paid (718) (781)Interest element of finance lease rental 0 0paymentsNew unsecured loans 0 0Repayments of amounts borrowed (950) (1,095)Capital element of finance lease rental payments 0 0
(1,668) (1,876)
Increase in cash and cash equivalents in the 1,989 127year V
Cash and cash equivalents at beginning of the 20 4,672 4,545yearCash and cash equivalents at end of the year 20 6,661 4,672
28
SOUTH and CITY COLLLEGE BIRMINGHAMFinancial Statements for the Year Ended 31 July 2017
Notes to the Accounts
1 Accounting policies
Statement of accounting policies
The following accounting policies have been applied consistently in dealing with items which are consideredmaterial in relation to the financial statements.
Basis of preparation
These financial statements have been prepared in accordance with the Statement of Recommended Practice:Accounting for Further and Higher Education 2015 (the 2015 FE HE SORP), the College Accounts Direction for2016 to 2017 and in accordance with Financial Reporting Standard 102 — “The Financial Reporting Standardapplicable in the United Kingdom and Republic of Ireland” (FRS 102). The College is a public benefit entity andhas therefore applied the relevant public benefit requirements of FRS 102.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accountingestimates. It also requires management to exercise judgement in applying the College’s accounting policies.
Basis of accounting
The financial statements are prepared in accordance with the historical cost convention and in accordance withapplicable United Kingdom Accounting Standards.
Going Concern
At 31 July 2017 the College was in breach of the financial covenants that applied to Barclays’ loans at 31 July2017. As a result the College has followed the appropriate accounting treatment and the loans are presentedas being repayable within 1 year at 31 July 2017. As a result, the College balance sheet at 31 July 2017 showsnet current liabilities of £13,908,000 (201 5/1 6: £3,771,000).
Since 31 July 2017 the College has agreed new terms with Barclays and Lloyds in respect of the newly mergedCollege (following the merger of SCCB and Bournville College on 2 August 2017). The new terms include anew set of financial covenants with both Lloyds and Barclays banks. These covenants apply from 2nd August2017.
The College has produced financial forecasts that demonstrate that it will be able to meet the new bankingcovenants, but the cash cover covenant that applies to both the Barclays’ and Lloyds’ loans will require little orno worsening from the forecast position. In the event that actual cashf lows are expected to adversely deviatefrom the forecast position, the College has the ability to revise the timing of planned capital expenditureprograms and/or manage working capital to meet the cash cover covenant. So while there is a risk that theCollege might not meet this banking covenant in future years, the College considers this risk to be manageable.Furthermore, the College has built up strong working relationships with both banks and both banks havereaffirmed their commitment to the College by maintaining loans in the merged College and therefore theCollege does not consider this risk of breach of covenant to present significant uncertainty about the College’sability to continue as a going concern issue. For this reason, the College continues to adopt the going concernbasis in preparing the financial statements.
Basis of consolidation
The consolidated financial statements include the College and its subsidiary, FESSA (Projects) Limited. The resultsof the subsidiary during the year are included in the consolidated income and expenditure account. Intra-group salesand profits are eliminated fully on consolidation. All financial statements are made up to 31 July 2017.
Recognition of income
Government revenue grants include funding body recurrent grants and other grants and are accounted forunder the accrual model as permitted by FRS 102. Funding body recurrent grants are measured in line withbest estimates for the period of what is receivable and depend on the particular income stream involved. Anyunder or over achievement for the Adult Education Budget is adjusted for and reflected in the level of recurrent
29
SOUTH and CITY COLLLEGE BIRMINGHAMFinancial Statements for the Year Ended 31 July 2017
Notes to the Accounts (continued)
1 Accounting policies (continued)
grant recognised in the income and expenditure account. The final grant income is normally determined withthe conclusion of the year end reconciliation process with the funding body following the year end, and theresults of any funding audits. 16-18 learner-responsive funding is not normally subject to reconciliation and istherefore, not subject to contract adjustments.
The recurrent grant from HEFCE represents the funding allocations attributable to the current financial yearand is credited direct to the Statement of Comprehensive Income.
Grants from non-government sources are recognised in income when the College is entitled to the income andperformance related conditions have been met. Income received in advance of performance related conditionsbeing met is recognised as deferred income within creditors on the balance sheet and released to income as theconditions are met.
Government capital grants are capitalised, held as deferred income and recognised in income over theexpected useful life of the asset, under the accrual method as permitted by FRS 102. Other capital grants arerecognised in income when the College is entitled to the funds subject to any performance related conditionsbeing met.
Income from tuition fees is recognised in the period for which it is received and includes all fees chargeable tostudents or their spouses.
All income from short-term deposits is credited to the income and expenditure account in the period in which it isearned.
Accounting for post-employment benefits
Post-employment benefits to employees of the College are principally provided by the Teachers’ PensionScheme (TPS) and the Local Government Pension Scheme (LGPS). These are defined benefit plans, which areexternally funded and contracted out of the State Second Pension.
The TPS is an unfunded scheme. Contributions to the TPS are calculated so as to spread the cost of pensionsover employees’ working lives with the College in such a way that the pension cost is a substantially levelpercentage of current and future pensionable payroll. The contributions are determined by qualified actuarieson the basis of valuations using a prospective benefit method. The TPS is a multi-employer scheme and theCollege is unable to identify its share of the underlying assets and liabilities of the scheme on a consistent andreasonable basis. The TPS is therefore treated as a defined contribution plan and the contributions recognisedas an expense in the income statement in the periods during which services are rendered by employees.
The LGPS is a funded scheme. The assets of the LGPS are measured using closing fair values. LGPS liabilitiesare measured using the projected unit credit method and discounted at the current rate of return on a highquality corporate bond of equivalent term and currency to the liabilities. The actuarial valuations are obtainedat least triennially and are updated at each balance sheet date. The amounts charged to operating surplus arethe current service costs and the costs of scheme introductions, benefit changes, settlements andcurtailments. They are included as part of staff costs as incurred. Net interest on the net defined benefitliability/asset is also recognised in the Statement of Comprehensive Income and comprises the interest cost onthe defined benefit obligation and interest income on the scheme assets, calculated by multiplying the fairvalue of the scheme assets at the beginning of the period by the rate used to discount the benefit obligations.
The difference between the interest income on the scheme assets and the actual return on the scheme assetsis recognised in other recognised gains and losses.
Actuarial gains and losses are recognised immediately in other recognised gains and losses.
Short term Employment benefits
Short term employment benefits such as salaries and compensated absences (holiday pay) are recognised as
30
SOUTH and CITY COLLLEGE BIRMINGHAMFinancial Statements for the Year Ended 31 July 2017
Notes to the Accounts (continued)
1 Accounting policies (continued)
an expense in the year in which the employees render service to the College. Any unused benefits are accruedand measured as the additional amount the College expects to pay as a result of the unused entitlement.
Non-current Assets - Tangible fixed assets
Land and buildingsLand and buildings inherited from the Local Education Authority are stated in the balance sheet at frozen valuationor deemed cost. Land and buildings acquired since incorporation are included in the balance sheet at cost.
Freehold land is not depreciated. Freehold buildings are depreciated over their expected useful economic life tothe College of between 20 and 50 years. The College has a policy of depreciating major adaptations to buildingsover the period of their useful economic life.
Where land and buildings are acquired with the aid of specific grants, they are capitalised and depreciated asabove. The related grants are credited to a deferred income account within creditors, and are released to theincome and expenditure account over the expected useful economic life of the related asset on a systematicbasis consistent with the depreciation policy. The deferred income is allocated between creditors due withinone year and those due after more than one year.
Finance costs, which are directly attributable to the construction of land and buildings, are not capitalised as partof the cost of those assets.
A review for impairment of a fixed asset is carried out if events or changes in circumstances indicate that thecarrying 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 of land andbuildings, which were revalued in 1999, as deemed cost but not to adopt a policy of revaluations of theseproperties in the future.
Subsequent expenditure on existing fixed assets
Where significant expenditure is incurred on tangible fixed assets it is charged to the income and expenditureaccount in the period it is incurred, unless it meets one of the following criteria, in which case it is capitalised anddepreciated on the relevant basis:
• Market value of the fixed asset has subsequently improved
• Asset capacity increases
• Substantial improvement in the quality of output or reduction in operating costs
• Significant extension of the asset’s life beyond that conferred by repairs and maintenance
Buildings owned by third parties
Where land and buildings are used, but the legal rights are held by a third party, for example a charitable trust,they are only capitalised if the College has rights or access to ongoing future economic benefit.
Assets held for resaleAssets held for sale at 31 July 2016 comprised of three buildings: Saltley, Tyseley Campus and Balsall HeathCampus. The buildings had become surplus to College requirements and are expected to be sold during 2016/1 7.
EquipmentEquipment costing less than £500 per individual item is written off to the income and expenditure account in theperiod of acquisition. All other equipment is capitalised at cost.
All equipment assets are depreciated over their useful economic life as follows:
Motor vehicles and general equipment - 5 years31
SOUTH and CITY COLLLEGE BIRMINGHAMFinancial Statements for the Year Ended 31 July 2077
Notes to the Accounts (continued)
1 Accounting policies (continued)
Computer equipment - 5 yearsFixtures and Fittings - 10 years
Where equipment is acquired with the aid of specific grants, it is capitalised and depreciated in accordance withthe above policy, with the related grant being credited to a deferred capital grant account and released to theincome and expenditure account over the expected useful economic life of the related equipment.
A review for impairment of a fixed asset is carried out if events or changes in circumstances indicate that thecarrying value of any fixed asset may not be recoverable. Shortfalls between the carrying value of fixed assets
and their recoverable amounts are recognised as impairments. Impairment losses are recognised in the Statementof Comprehensive Income and Expenditure.
Investments
Fixed asset investments are carried at historical cost less any provision for impairment in their value.
Current asset investments are included in the balance sheet at the lower of cost and net realisable value.
Leased assets
Costs in respect of operating leases are charged on a straight-line basis over the lease term.
Inventories
Stocks are stated at the lower of their cost and net realisable value. Stock cost is measured by the first in, firstout method. Where necessary, provision is made for obsolete, slow moving and defective stocks.
Maintenance of premises
The cost of routine corrective maintenance is charged to the income and expenditure account in the period it isincurred.
Cash and cash equivalents
Cash includes cash in hand, deposits repayable on demand and overdrafts. Deposits are repayable on demandif they are in practice available within 24 hours without penalty.
Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cashwith insignificant risk of change in value. An investment qualifies as a cash equivalent when it has maturity of 3months 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’s contractualobligations, rather than the financial instrument’s legal form.
All loans, investments and short term deposits held by the Group are classified as basic financial instruments inaccordance with FRS 102. These instruments are initially recorded at the transaction price less any transactioncosts (historical cost). FRS 102 requires that basic financial instruments are subsequently measured at amortisedcost, however the College has calculated that the difference between the historical cost and amortised cost basisis not material and so these financial instruments are stated on the balance sheet at historical cost. Loans andinvestments that are payable or receivable within one year are not discounted.
Foreign currency translation
32
SOUTH and CITY COLLLEGE BIRMINGHAMFinancial Statements for the Year Ended 31 July 2017
Notes to the Accounts (continued)
1 Accounting policies (continued)
Assets and liabilities denominated in foreign currencies are translated at the rates of exchange ruling at the endof the financial year with all resulting exchange differences being taken to the income and expenditure account inthe period in which they arise.
TaxatIon
The College is considered to pass the tests set out in Paragraph 1 Schedule 6 Finance Act 2010 and therefore, itmeets the definition of a charitable company for UK corporation tax purposes. Accordingly, the College ispotentially exempt from taxation in respect of income or capital gains received within categories covered byChapter 3 Part 11 Corporation Tax Act 2010 or Section 256 of the Taxation of Chargeable Gains Act 1992, to theextent that such income or gains are applied exclusively to charitable purposes.
The College is partially exempt in respect of Value Added Tax, so that it can only recover a minor element of VATcharged on its inputs. Irrecoverable VAT on inputs is included in the costs of such inputs and added to the costof tangible fixed assets as appropriate, where the inputs themselves are tangible fixed assets by nature.
The College’s subsidiary companies are subject to corporation tax and VAT in the same way as any commercialorganisation.
Judgements in applying accounting policies and key sources of estimation uncertainty
In preparing these financial statements, management have made the following judgements:
• Determine whether leases entered into by the College either as a lessor or a lessee are operating or financeleases. These decisions depend on an assessment of whether the risks and rewards of ownership have beentransferred from the lessor to the lessee on a lease by lease basis.
• Determine whether there are indicators of impairment of the group’s tangible assets, including goodwill.Factors taken into consideration in reaching such a decision include the economic viability and expectedfuture financial performance of the asset and where it is a component of a larger cash-generating unit, theviability and expected future performance of that unit.
Other key sources of estimation uncertainty
• Tangible fixed assets
Tangible fixed assets, other than investment properties, are depreciated over their useful lives taking into accountresidual 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 as technological innovationand maintenance programmes are taken into account. Residual value assessments consider issues such asfuture market conditions, the remaining life of the asset and projected disposal values.
• Local Government Pension Scheme
The present value of the Local Government Pension Scheme defined benefit liability depends on a number offactors that are determined on an actuarial basis using a variety of assumptions. The assumptions used indetermining the net cost (income) for pensions include the discount rate. Any changes in these assumptions,which are disclosed in note 23, will impact the carrying amount of the pension liability. Furthermore, a roll forwardapproach which projects results from the latest full actuarial valuation performed at 31 March 2013 has been usedby the actuary in valuing 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 the pension liability.
33
SOUTH and CITY COLLLEGE BIRMINGHAMFinancial Statements for the Year Ended 31 July 2017
Notes to the Accounts (continued)
2 Funding body grants
3 Tuition fees and education contracts
Total
4 Other grants and contracts
European FundingOther Grant Income
Total
Year ended 31 July 2017Group College
£000 £0004,827 4,827
July 2016College
£0004,781
5,765 5,765 6,118 6,118
Year ended 31 July 2017 Year ended 31 July 2016Group College Group College
£000 £000 £000 £00019 19 95 95
0 0 9 9
19 19 104 104
5 Investment incomeYear ended 31 July 2017
Group£000
College£000
Year ended 31 July 2016
Group£000
College£000
Total other interest receivable (note 23)
Year ended 31 July 2017 Year ended 31 July 2015Group College Group College
£000 £000 £000 £000Recurrent grantsSkills Funding Agency 20,536 20,536 18,379 18,379Education Funding Agency 14,910 14,910 16,809 16,809Higher Education Funding Council 328 328 210 210Specific grantsSkills Funding Agency 1,672 1,672 3,717 3,717Education Funding Agency 651 651 964 964Release of government capitalgrants
Buildings 649 649 668 668Equipment 313 313 359 359
Total 39,059 39,059 41,106 41,106
Tuition feesEducation contracts
Year ended 31Group
£0004,781
938 938 1,337 1,337
14 14 36 36
34
SOUTH and CITY COLLLEGE BIRMINGHAMFinancial Statements for the Year Ended 31 July 2017
Notes to the Accounts (continued)
6 Staff costs
The average monthly number of persons (including senior post-holders) employed by the College during theyear, expressed as full-time equivalents, was:
Year ended 31 Year ended 31July2017 July2016
Number Number
Teaching staff 359 383Non-teaching staff 453 454
812 837
Staff costs for the above persons:Year ended 31 Year ended 31
July2017 July2016£000 £000
Wages and salaries 23,8 1 1 24,484Social security costs 2,317 2,014Other pension costs 4,650 4,032
Payroll sub total 30,778 30,530Contracted out staffing services 2,442 2,588
33,220 33,118Fundamental restructuring costs — Contractual 0 107Fundamental restructuring costs — Non- 353 385contractual
33,573 33,610
The number of staff, including senior post-holders and the Accounting Officer, who received emoluments,excluding pension contributions and benefits in kind, in the following ranges was:
Key managementpersonnel Other staff
2017 2016 2017 2016Number Number Number Number
£60,001 to £70,000 p.a. 2 2 3 4
£70,001 to £80,000 p.a. 2 3 0 0
£80,001 to £ 90,000 p.a. 2 2 0 0
£90,001 to £100,000 p.a. 0 0 0 0
£100,001 to £110,000 p.a. 1 2 0 0
£110,001 to £120,000 p.a. 0 0 0 0
£120,001 to £130,000 p.a. 1 0 0 0
£130,001 to £140,000 p.a. 0 0 0 0
£140,001 to £150,000 p.a. 0 0 0 0£150,001 to £160,000 p.a. 1 1 0 0
8 10 3 4
35
SOUTH and CITY COLLLEGE BIRMINGHAMFinancial Statements for the Year Ended 31 July 2017
Notes to the Accounts (continued)
7 Senior post-holders’ emoluments
Year ended Year ended31 July 2017 31 July 2016
Number Number
The number of key management personnel including the Accounting 8 10Officer was:
Key management personnel emoluments are made up as follows: 2017 2016£000 £000
Salaries 703 707Employers NI 88 82Benefits in Kind 0 0
791 789Pension Contributions 102 144Total key management personnel compensation 893 933
The above emoluments include amounts payable to the Accounting Officer (who is also the highest paidsenior post-holder) of:
Year ended Year ended31 July2017 31 July2016
£000 £000
Salaries 157 158Benefits in kind 0 0
157 158
Pension Contributions 0 36
The pension contributions in respect of the Accounting Officer and senior post-holders are in respect ofemployer’s contributions to the Teachers’ Superannuation Scheme and are paid at the same rate as forother employees.
The members of the Corporation other than the Accounting Officer and the staff members did not receiveany payment from the institution other than the reimbursement of travel and subsistence expensesincurred in the course of their duties.
Overseas activities
The following costs were incurred during 201 6-2017 in respect of overseas activities which were carriedout in accordance with the strategy approved by the governing body:
Total Contributions Net costsCost received to College
£ £ £
Senior post-holders 0 0 0Other higher paid staff 0 0 0Other staff 5,334 0 5,334
Other staff 5,334 0 5,334
36
SOUTH and CITY COLLLEGE BIRMINGHAMFinancial Statements for the Year Ended 31 July 2017
Notes to the Accounts (continued)
8 Other operating expenses
Total
Year ended 31 July2017
Group College£000 £000
10,657 10,657
Year ended 31 July2016
Group College£000 £000
9,750 9,750
Other operating expenses include: Year ended31 July2077
£000
Year ended37 July 2076
£000
Auditors’ remunerationFinancial statement audit*Other services provided by the financialstatementsInternal audit
Pension Administration costsHire of assets under operating leases
* includes £38,760 in respect of the College(2015/16 £44,418)
Teaching costs 1 ,237 1 ,237 1,330 1,330
Non-Teaching costs 7,004 7,004 5,377 5,377Premises costs 2,416 2,416 3,043 3,043
39 45
2 226 2630 35
470 625
37
SOUTH and CITY COLLLEGE BIRMINGHAMFinancial Statements for the Year Ended 31 July 2017
Notes to the Accounts (continued)
9 Interest and other finance costs
Year ended Year ended31 July2017 31 July2016
£000 £000
On bank loans, repayable wholly or partly in morethan 5 years 718 781
Pension finance costs (note 23) 1,153 1,073
Total 1,871 1,854
JO Taxation
The members do not believe that the College was liable for any Corporation Tax on its activities duringthe year (2016: £Nil). Furthermore, the subsidiary undertaking did not generate any taxable results inthe year.
38
SOUTH and CITY COLLLEGE BIRMINGHAMFinancial Statements for the Year Ended 31 July 2017
Notes to the Accounts (continued)
11 Tangible fixed assets (Group)
Land and BuildingsFreehold Long Leasehold Equipment Total
£000 £000 £000 £000Cost or valuation
At 1 August 2016 77,375AdditionsTransfer: assets held for saleDisposals
At 31 July 2017
_________ ________________ ___________ _______
Accumulated Depreciation
Ati August2016Charge for the yearTransfer: assets held for saleImpairmentEliminated in respect of disposals
At31 July2017
________ ______________ __________ _______
Net book valueAt31 July2017
________ ______________ __________ _______
Net book valueAt1 August2016
________ _____________ __________ ______
7,086 0 7,08624,890 1,612 26,50227,637 4,508 32,145
59,613
________________ ___________ ________
000
0000
77,375
16,2691,493
000
17,762
59,613
61,106
16,609 93,9841,715 1,715
0 0(158) (158)
18,166 95,541
10,611 26,8801,577 3,070
0 00 0
(142) (142)
12,046 29,808
6,120 65,733
5,998 67,104
0
00000
0
0
0
000
0
InheritedFinanced by capital grantOther
Net book valueAt31 July2017 6,120 65,733
39
SOUTH and CITY COLLLEGE BIRMINGHAMFinancial Statements for the Year Ended 31 July 2017
Notes to the Accounts (continued)
11 Tangible fixed assets (College only)
Land and BuildingsFreehold Long Leasehold
£000 £000
77,374000
93,9831,715
0(158)
Total£000
Equipment£000
0 16,6090 1,7150 00 (158)
Cost or valuation
Ati August2016AdditionsTransfer: assets held for saleDisposals
At 31 July 2017
Accumulated Depreciation
Ati August2016Charge for yearTransfer: assets held for saleImpairmentEliminated in respect of disposals
As at 31 July 2017
Net book valueAt 31 July 2017
Net book valueAtl August2016
InheritedFinanced by capital grantOther
Net book valueAt31 July2017
18,166
10,6111,577
00
(142)
12,046
6,120
95,540
26,8793,070
00
(142)
29,807
65,733
77,374
16,2681,493
000
17,761
59,613
61,106
7,08624,89027,637
59,613
0
00000
0
0
0
000
0
5,998 67,104
01,6124,508
7,08626,50232,145
6,120 65,733
40
SOUTH and CITY COLLLEGE BIRMINGHAMFinancial Statements for the Year Ended 31 July 2017
Notes to the Accounts (continued)
11 Tangible fixed assets (continued)
The transitional rules set out in FRS 15 Tangible Fixed Assets have been applied on implementing FRS 15.Accordingly the book values at implementation have been retained and assets are valued at frozen valuationor deemed cost.
Land and buildings for the former South Birmingham College were valued in 1999 at depreciated replacementcost by a firm of independent chartered surveyors. The land and buildings of the former City CollegeBirmingham sites, as at 1/08/2012 were valued independently by independent chartered surveyors in 2012/1 3.Other tangible fixed assets inherited from the Local Education Authority at incorporation were valued by theCollege on a depreciated replacement cost basis with the assistance of independent professional advice.
The assets were valued on incorporation. The historic cost of assets was £1,449,000. These valuationshave not been updated since first time adoption of FRS 15. If fixed assets had not been revalued they wouldhave been included at the following historical cost amounts:
£000
Cost 1,449Aggregate depreciation based on cost 559
Net book value based on cost 890
Land and buildings with a net book value of £24,890,000 have been financed by exchequer funds, through forexample the receipt of capital gains. Should these assets be sold, the College may be liable, under the termsof the Finance Memorandum with the Council, to surrender the proceeds.
41
SOUTH and CITY COLLLEGE BIRMINGHAMFinancial Statements for the Year Ended 31 July 2017
Notes to the Accounts (continued)
12 Non-current investments
Investments in subsidiary companiesInvestments in associate companies
Total
CollegeYear ended
31 July2017£
CollegeYear ended
31 July 2016£
8 8300 300
308 308
The senior post-holders believe that the carrying value of the investments is supported by their underlyingnet assets
(a) Subsidiary companies
Details of the College’s subsidiary company are shown below. The company is registered in England and Wales.The holding is of ordinary shares and the shares are held by the College.
Proportion of votingrights and shares held
Nature ofbusiness
FESSA (Projects) Limited 100% Services connected with Education
The members believe that the carrying value of the investments is supported by their underlying net assets.
(b) Associated companies
Included within investments of the College is a 16.67% interest in City of Birmingham Community College, acompany limited by guarantee and registered in England and Wales. City of Birmingham Community Collegetrades as Birmingham Community College.
City of Birmingham Community College operates as a consortium for the purposes of collaboration and thereare no shares. The company was incorporated on 10th March 1999 and has since traded with a financialyear end of 31 July. The College is of the opinion that their share of assets and liabilities is not material tothe overall state of affairs of the College and, consequently, they have not been included as part of theconsolidated financial statements.
Name of company
42
SOUTH and CITY COLLLEGE BIRMINGHAMFinancial Statements for the Year Ended 31 July 2017
Notes to the Accounts (continued)
13 Current Investments
Group College Group CollegeYear ended Year ended Year ended Year ended
31 July2017 31 July2017 31 July2016 37 July2016£000 £000 £000 £000
Shortterm deposits 100 100 101 101
Deposits are held with banks and building societies operating in the London market and licensed by theFinancial Conduct Authority with more than three months
maturity at the balance sheet date. The interest rates for these deposits are fixed for the duration of the depositat time of placement.
14 Trade and other receivables
Year ended 31 July Year ended 31 July2017 2076
Group College Group College
£000 £000 £000 £000Amounts falling due within one yearTrade receivables 1,044 1,044 532 532Amounts owed by group undertakings:Subsidiary undertakings 0 58 0 58Associate undertakingsPrepayments and accrued income 568 557 938 927Amounts owed by the Skills Funding Agency 77 77 105 105
1,689 1,736 1,575 1,622
75 Assets held for resale
Assets held for sale at 31 July 201 7 comprises of three buildings: Saltley Campus. The building hasbecome surplus to College requirements and is expected to be sold during 2017/18. They are held at thelower of cost and net realisable value of £500,000.
43
SOUTH and CITY COLLLEGE BIRMINGHAMFinancial Statements for the Year Ended 31 July 2017
Notes to the Accounts (continued)
16 Creditors: amounts falling due within one year
Group College Group CollegeYear Year Year Year
ended ended ended ended31 July 31 July 31 July 31 July
2017 2017 2016 2016£000 £000 £000 £000
Overdrafts 0 0 0 0
Bank loans (note 18) 15,693 15,693 6,397 6,397
Payments received in advance 814 814 1,195 1,195
Trade payables 935 935 726 726
Amounts owed to group undertakings:Subsidiary undertakings 0 11 0 11
Associate undertakings 0 0 0 0
Corporation taxOthertaxation and social security 1,196 1,196 1,130 1,130
HM Revenue and Customs 0 0 0 0
Other creditors 0 0 0 0
Accruals 1,272 1,265 1,164 1,157
Deferred income - government capital grants 924 924 913 913
Deferred income - government revenue grantsAmounts owed to the Skills Funding Agency 2,077 2,077 907 907
22,911 22,915 12,432 12,436
17 Creditors: amounts falling dUe after one year
Group College Group CollegeYear ended Year ended Year ended Year ended
37 July2077 37 July2077 31 July2076 31 July2076
£000 £000 £000 £000
Bank loans (note 18) 0 0 10,247 10,247
Other creditors (note 18) 0 0 0 0
Deferred income - governmentcapital grants 25,339 25,339 26,312 26,312
25,339 25,339 36,559 36,559
44
SOUTH and CITY COLLLEGE BIRMINGHAMFinancial Statements for the Year Ended 31 July 2017
Notes to the Accounts (continued)
18 Maturity of debt
(a) Bank loans
The bank loans are repayable over the following periods:
Group College Group CollegeYear ended Year ended Year ended Year ended
31 July2017 37 July2017 31 July2016 31 July2016£000 £000 £000 £000
In one year or less 15,693 15,693 6,397 6,397Between one and two years 0 0 669 669Between two and five years 0 0 2,040 2,040In five years or more 0 0 7,538 7,538
Total 15,693 15,693 16,644 16,644
The Lloyds Bank loans totalling £9,481 ,000 are repayable by instalments at an interest rate of 1.95% aboveLIBOR falling due between 1 August2016 and 21 March 2031. The loans are secured on a legal charge overCollege freehold land and buildings.
Following a full tender process Lloyds made available a £3,000,000 revolving credit facility to specifically fundthe construction of North West Skills vocational centre. On completion of the building the facility was convertedto a £2,000,000 repayment loan for a period of 20 years. Interest is charged at 44 basis points over bank baserate or LIBOR. The loan was secured on a first legal charge over the freehold land and buildings at theTechnical Campus, Amington Road, which was sold in January 2017 for £1,200,000. Lloyds are currentlyholding receipts for the sale of this building until new bank covenants and security has been agreed with themerged college. New covenants and security have now been agreed and the College anticpates that the fundswill be transferred by 31 December 2017.
Following a full tender process Barclays Bank was selected to provide a loan facility of up to £12,000,000 tospecifically fund the Fordrough Campus development. At 31 July 2011 £11,000,000 had been drawn downfrom this facility. The College repaid £4,000,000 in March 2011 leaving a £7,000,000 20 year term loan. Thefixed term fixed rate repayments commenced in February 2012 and are continuing in accordance with theTreasury contract signed with Barclays. The outstanding balance on this loan as at the 31 July 2017 was£5,523,000.
45
SOUTH and CITY COLLLEGE BIRMINGHAMFinancial Statements for the Year Ended 31 July 2017
Notes to the Accounts (continued)
19 Provisions
Group and College
Defined benefitObligations Total
£‘OOO £‘OOO
AtlAugust2Ol6 45,337 45,337Expenditure in the year (2,012) (2,012)Additions in the year (6,854) (6,854)
At 31 July 2017 36,471 36477
Defined benefit obligations relate to the liabilities under the College’s membership of theLocal Government pension Scheme. Further details are given in Note 23.
20 Cash and cash equivalents
At 1 Cash flows At 31August July
2016 2016£‘OOO £‘OOO £‘OOO
Cash and cash equivalents 4,672 1,989 6,661
Overdrafts 0 0 0
Total 4,672 1,989 6,661
46
SOUTH and CITY COLLLEGE BIRMINGHAMFinancial Statements for the Year Ended 31 July 2017
Notes to the Accounts (continued)
21 Lease Obligations
At 31 July the College had minimum lease payments under non-cancellable operating leases as follows:
Group and College2017 2016
£‘OOO £‘OOOLand and BuildingsNot later than one year 23 1Later than on year and not later than five years 0 48Laterthan five years 196 214
219 263
OtherNot laterthan one year 170 0Later than on year and not later than five years 12 178Later than five years 0 0
182 178
22 Events after the reporting period
Birmingham and Solihull Colleges were amongst the first Colleges in the country to take part in the area basedreview process. This process looks at post 16 provision in an area with the purpose of establishing financiallyviable, sustainable, resilient and efficient Colleges which deliver maximum value for public investment. The keyrecommendation of this review was that South and City College merge with Bournville College and that thismerger be a type B merger, which would involve the Corporation of Bournville College dissolving and its assetsand liabilities being transferred into South & City College. The merger was completed on 2 August 2017.
47
SOUTH and CITY COLLLEGE BIRMINGHAMFinancial Statements for the Year Ended 31 July 2017
Notes to the Accounts (continued)
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 West Midlands Local
Government Pension Scheme (LGPS) for non-teaching staff, which is managed by Mercer.
Both are multi-employer defined-benefit plans.
The pension costs are assessed in accordance with the advice of independent qualified actuaries.
The latest formal actuarial valuation of the TPS was 31 March 2012 and of the LGPS 31 March 2016.
Total pension cost for the year Year ended Year ended31 July2017 31 July2016
£000 £000
Teachers’ PensionScheme: Contributionsmade 2,259 2,120
Local Government Pension Scheme:
Contributions Paid 2,012 1,962FRS 102 (28)Charge 379 (50)
Charge to the Statement of ComprehensiveIncome 2,391 1,912
Enhanced pension charge to Statement ofComprehensive income 0 0
Total Pension Cost for Year within staff costs 4,650 4,032
Contributions amounting to £281 ,000 (2015 £288,000) were payable to the Teachers’ Pension Scheme
and £214,000 (2015 £221,000) were payable to the Local Government Pension Scheme at 31st July
and are included within creditors.
Teachers’ Pension Scheme
The Teachers’ Pension Scheme (TPS) is a statutory, contributory, defined benefit scheme, governed by the
Teachers’ Pensions Regulations 2010, and, from 1 April 2014, by the Teachers’ Pension Scheme Regulations
2014. These regulations apply to teachers in schools and other educational establishments, 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 in some establishments of further and
higher education may be eligible for membership. Membership is automatic for full-time teachers and lecturers
and, from 1 January 2007, automatic too for teachers and lecturers in part-time employment following
appointment or a change of contract. Teachers and lecturers 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 benefits are set out
in regulations made under the Superannuation Act 1972 and are paid by public funds provided by Parliament.
The TPS is an unfunded scheme and members contribute on a ‘pay as you go’ basis — these contributions,
along with those made by employers, are credited to the Exchequer under arrangements governed by the
above Act. Retirement and other pension benefits are paid by public funds provided by Parliament.
The Teachers’ Pensions Regulations 2010 require an annual account, the Teachers’ Pension Budgeting and
Valuation Account, to be kept of receipts and expenditure (including the cost of pension increases).
48
SOUTH and CITY COLLLEGE BIRMINGHAMFinancial Statements for the Year Ended 31 July 2017
Notes to the Accounts (continued)
23 Defined benefit obligations (continued)
From 1 April 2001, the Account has been credited with a real rate of return, which is equivalent to assuming thatthe balance in the Account is invested in notional investments that produce that real rate of return.
Valuation of the Teachers’ Pension Scheme
The latest actuarial review of the TPS was carried out as at 31 March 2012 and in accordance with The PublicService Pensions (Valuations and Employer Cost Cap) Directions 2014. The valuation report was published bythe Department for Education (the Department) on 9 June 2014. The key results of the valuation are:- New employer contribution rates were set at 16.48% of pensionable pay (including administration feesof 0.08%);- total scheme liabilities (pensions currently in payment and the estimated cost of future benefits) for service
to the effective date of £191,500 million, and notional assets (estimated future contributions together with thenotional investments held at the valuation date) of £176,600 million giving a notional past service deficit of £14,900million;- an employer cost cap of 10.9% of pensionable pay.- the assumed real rate of return is 3.0% in excess of prices and 2% in excess of earnings. The rate of realearnings growth is assumed to be 2.75%. The assumed nominal rate of return is 5.06%.
The new employer contribution rate for the TPS was implemented in September 2015. The next valuation of theTPS is currently underway based on April 2016 data, whereupon the employer contribution rate is expected to bereassessed and will be payable from 1 April 2019
A full copy of the valuation report and supporting documentation can be found on the Teachers’ Pension Schemewebsite at the following location:https://www.teacherspensions.co.uk/news/employers/201 4/06/publication-of-the-valuation-report.asjx
Scheme Changes
Following the Hutton report in March 2011 and the subsequent consultations with trade unions and otherrepresentative bodies on reform of the TPS, the Department published a Proposed Final Agreement, setting outthe 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; an accrual rateof 1/57th; and a Normal Pension Age equal to State Pension Age, but with options to enable members to retireearlier or later than their Normal Pension Age. Importantly, pension benefits built up before 1 April 2015 will befully protected.
In addition, the Proposed Final Agreement includes a Government commitment that those within 10 years ofNormal Pension Age on 1 April 2012 will see no change to the age at which they can retire, and no decrease inthe amount of pension they receive when they retire. There will also be further transitional protection, taperedover a three and a half year period, for people who would fall up to three and a half years outside of the 10 yearprotection.
Regulations giving effect to a reformed Teachers’ Pension Scheme came into force on 1 April 2014 and thereformed scheme commenced on 1 April 2015.
The pension costs paid to TPS in the year amounted to £2,261,000 (2016: £2,120,000)
FRS 102 (28)
Under the definitions set out in FRS 102 (28.11), the TPS is a multi-employer pension plan. The College 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 its contributionsto the scheme as if it were a defined-contribution plan. The College has set out above the information available on
the plan and the implications for the College in terms of the anticipated contribution rates.
49
SOUTH and CITY COLLLEGE BIRMINGHAMFinancial Statements for the Year Ended 31 July 2017
Notes to the Accounts (continued)
23 Defined benefit obligations (continued)
Local Government Pension Scheme
The LGPS is a funded defined-benefit plan, with the assets held in separate funds administered by West MidlandsMetropolitan Authority. The total contributions made for the year ended 31 July 2017 were £2,557,000, of whichemployer’s contributions totalled £2,012,000 and employees’ contributions totalled £545,000. The agreedcontribution rates for future years are 12.6%, plus a lump sum payment for past years, which will give an averagecontribution rate of 19.5%. For employees contributions will range from 5.5% to 7.5% for employees, depending onsalary, with an average rate of 6.5% being estimated.
Principal Actuarial Assumptions
The following information is based upon a full actuarial valuation of the fund at 31 March 2016 updated to 31 July2017 by a qualified independent actuary.
At 31 July At 31 July2017 2016
Rate of increase in salaries 4.20% 3.75%
Rate of increase for pensions in payment/inflation 2.70% 2.20%
Discount rate for scheme liabilities 2.70% 2.60%
Inflation assumption (CPI) 2.70% 2.00%
Commutation of pensions to lump sums 50% 50%
The current mortality assumptions include sufficient allowance for future improvements in mortality rates.The assumed life expectations on retirement age 65 are:
At 31 July At 31 July2017 2016
Retiring todayMales 21.8 23.0
Females 24.3 25.7
Retiring in 20 yearsMales 23.9 25.3
Females 26.6 28.1
The assets and liabilities in the scheme relating to the College were:
Value at 31 Value at 31July2017 July2016
£000 £000
Equities 50,363 39,223
Government Bonds 5,824 4,586
Other Bonds 3,066 5,658
Property 5,820 5,260
Cash/Liquidity 3,960 4,242
50
SOUTH and CITY COLLLEGE BIRMINGHAMFinancial Statements for the Year Ended 31 July 2017
Notes to the Accounts (continued)
23 Defined benefit obligations (continued)Value at 31 Value at 31
July2017 July2016£000 £000
Other 10,574 7,130
Total fair value of plan assets 79,607 66,099
Weighted average expected long termrate of returnActual return on plan assets 13,396 6,740
The amount included in the balance sheet in respect of the defined benefit pension plan is asfollows:
2017 2016£‘OOO £‘OOO
Fair value of plan assets79,607 66,099
Present value of plan liabilities(116,078) (111,436)
Present value of unfunded liabilities 0 0
Net pensions liability (Note 19) (36,471) (45,337)
Amounts recognised in the Statement of Comprehensive Income in respect of the planare as follows:
2017 2016£‘OOO £‘OOO
Amounts included in staff costsCurrentservicecost 2,391 1,912Past service cost 0 0
Total 2,391 1,912
Amounts included in Other Operating ExpensesAdministration expenses 30 35
30 35
Amounts included in interest payableNet interest cost
1,153 1,073
1,153 1,073
51
SOUTH and CITY COLLLEGE BIRMINGHAMFinancial Statements for the Year Ended 31 July 2077
Notes to the Accounts (continued)
23 Defined benefit obligations (continued)
Amounts recognised in Other Comprehensive Income
Return on pension plan assets
Experience losses arising on defined benefit obligationsChanges in assumptions underlying the present value of planliabilities
Amount recognised in Other Comprehensive Income
11,676 4,509
10,227 0
(11,475) (19,595)
10,428 (15,086)
2077£‘OOO
2017£‘OOO
52
SOUTH and CITY COLLLEGE BIRMINGHAMFinancial Statements for the Year Ended 31 July 2017
Notes to the Accounts (continued)
23 Defined benefit obligations (continued)
Movement in net defined benefit liability during the year
2017 2016£‘OOO £‘OOO
Surplus/(deficit) in scheme at 1 August (45,337) (29,193)Movement in year:
Current service cost (2,391) (1,912)Employer contributions 2,012 1,962Past service cost 0 0Net interest on the defined liability (1,153) (1,073)Actuarial gain or loss 10,428 (15,086)Administration Expenses (30) (35)
Net defined benefit liability at 31 July (36,471) (45,337)
Asset and Liability Reconciliation2017 2016
£‘OOO £‘OOOChanges in the present value of defined benefit obligations
Defined benefit obligations at start of year 111,436 87,254Current Service cost 2,391 1,912Interest cost 2,873 3,304Contributions by Scheme participants 545 562Experience gains and losses on defined benefit obligations (6,9 1 1) 0Change in demographic assumptions (3,316) 0Changes in financial assumptions 11,475 19,595Estimated benefits paid (2,415) (1,191)Past Service cost 0 0Curtailments and settlements 0 0
Defined benefit obligations at end of year 116,078 111,436
Reconciliation of Assets
Fair value of plan assets at start of year 66,099 58,061Interest on plan assets 1,720 2,231Return on plan assets 11,676 4,509Administration Expenses (30) (35)Employercontributions 2,012 1,962Contributions by Scheme participants 545 562Benefits paid (2,415) (1,191)
Assets at end of year 79,607 66,099
53
SOUTH and CITY COLLLEGE BIRMINGHAMFinancial Statements for the Year Ended 31 July 2017
Notes to the Accounts (continued)
24 Related party transactions
Due to the nature of the Colleges operations and the composition of the board of governors(being drawn from local public and private sector organisations) it is inevitable that transactions willtake place with organisations in which a member of the board of governors may have aninterest. All transactions involving organisation in which a member of the board of governors mayhave an interest are conducted in accordance with the Colleges financial regulationsand normal procurement procedures.
The total expenses paid to or on behalf of the Governors during the year was £663; 8 governors(2016: £1,734; 11 governors). This represents travel and subsistence expenses and other out of pocketexpenses incurred 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).
Governing Party Relationship Transaction Value for the Amounts due to I from themember Associated to Party Year Ended 31 July College at 31 July
2017 2016 2017 2016Professor Birmingham Councillor and £1,925,650 £887,813 £96,050 due £60,931Philip City Council Chair of Audit Sales Sales to College of due toWalkling (BCC) Committee Transactions Transactions which a bad College of(Date of £447,830 £308,643 debt which a badresignation: Purchase Purchase provision of debt10 June Transactions Transactions £17,440 has provision of2017) been made. £17,348
£5,042 due has beenfrom the made.
. College £37,525due fromthe College
54
SOUTH and CITY COLLLEGE BIRMINGHAMFinancial Statements for the Year Ended 31 July 2017
Notes to the Accounts (continued)
25 Amounts disbursed as agentYear Year
Ended 31 Ended 31July2017 July2016
£000 £000Learner support funds
Funding Body Grants 665 3,623
665 3,623
Disbursed to Students (658) (3,465)Administration costs (7) (142)
Balance unspent at 31 July, included in creditors 0 16
Funding body grants are available solely for students. The College only acts as a paying agent. In thesecircumstances, the grants and related disbursements are therefore excluded from the Income andExpenditure Account.
Prior to the year ending 31 July 2017, the College recorded Discretionary Learner Support and FreeMeals as amounts disbursed as agent’. As control on how to disburse these funds now resides with theCollege, the associated income and expenditure is now recognised with the Statement of ComprehensiveIncome. This is the reason there is large movement between ‘amounts disbursed as agent’ between theyear ended 31 July 2016 and the year ended 31 July 2017. 0
55