THE BOURNEMOUTH & POOLE COLLEGE · The Bournemouth & Poole College exists so that students,...
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FINANCIAL STATEMENTS
For Year Ended 31 July 2011
THE BOURNEMOUTH & POOLE COLLEGE
ANNUAL REPORT
and
THE BOURNEMOUTH AND POOLE COLLEGE
REPORTS and FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2011
CONTENTS
Page
Operating and Financial Review 1
Members and Professional Advisors 9
Statement of Corporate Governance and Internal Control 10
Statement of Responsibilities of the Members of the Corporation 14
Independent Auditors' Reports to the Corporation 15
Consolidated Income and Expenditure Account 18
Consolidated Statement of Historical Cost Surpluses and Deficits 19
Consolidated Statement of Total Recognised Gains and Losses 19
Balance Sheets - Group and College 20
Consolidated Cashflow Statement 21
Notes to the Financial Statements 22-50
THE BOURNEMOUTH & POOLE COLLEGE OPERATING AND FINANCIAL REVIEW FOR THE YEAR ENDED 31 JULY 2011
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NATURE, STRATEGIES AND OBJECTIVES The members present their report and the audited financial statements for the year ended 31 July 2011. Legal Status The Corporation was established under The Further and Higher Education Act 1992 for the purpose of conducting the affairs of The Bournemouth & Poole College. The College is an exempt charity for the purposes of the Charities Act 1993 as amended by the Charities Act 2006. Mission We reviewed our mission statement in 2008 and adopted the following: ‘Aspire • Achieve • Succeed’ Implementation of Strategic Plan The Board has agreed the following Strategic Outcomes as the defining purpose of The Bournemouth and Poole College:
The Bournemouth & Poole College exists so that students, employers and communities from Bournemouth, Dorset and Poole and beyond are equipped for the futures to which they aspire at a cost that represents excellent value for money. SO-1 for our Students Students have the skills, confidence and knowledge to make a successful transition into work or the next stage of their career or education. SO-2 for Employers Employers have the skilled people they need to create and develop a prosperous and sustainable economy. SO-3 for Communities Community organisations have relationships with the College that help them fulfil their aims / outcomes.
In July 2011 we adopted a new Strategic Plan for the period 1 August 2011 to 31 July 2014. The Strategic Plan sets out a framework of six strategic aims. These are:
Outstanding education, training and employability opportunities
Engagement with our employers, partners and community
Personalised support leading to success
A flexible workforce that is highly skilled and highly motivated
Resources and buildings that are accessible, welcoming and sustainable
Sound financial management and control These aims are underpinned by Strategic Objectives covering the progress required in the three year planning period. The full set of Objectives can be found in the Strategic Plan. Each year, we set key performance targets relating to the achievement of the Strategic Plan and progress against these is monitored at each meeting of the Corporation.
THE BOURNEMOUTH & POOLE COLLEGE OPERATING AND FINANCIAL REVIEW FOR THE YEAR ENDED 31 JULY 2011
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Financial Condition and Objectives With regard to Financial Condition, the Board’s Governance Policy Manual stipulates the following:
The Principal shall not:
Allow the College’s financial health assessment to fall below “satisfactory”.
Spend funds that would exceed any approved overdraft facility.
Enter into any long-term borrowing arrangement.
Breach any loan covenants.
Deliver surpluses that are lower than agreed.
Allow the cash flow delivery to be lower than agreed. In response to the above, the Strategic Plan sets out two Strategic Objectives:
Financial Planning that maximises our investment in providing and supporting teaching and learning and assures long term viability
Sound controls and transparent processes that deliver compliance with legislation and regulation while minimising administrative processes
Performance Indicators We are subject to the sector’s system of performance measures, ‘Framework for Excellence’, which has four key performance indicators:
Success rates
Learner destinations
Learner views
Employer views. The financial indicators (Financial Health and Financial Management & Control) will continue to be graded and will be reported to us directly by the Skills Funding Agency. However, because this direct reporting occurs earlier than Framework for Excellence reporting, these financial indicators will no longer be included in the Framework for Excellence system. The College is committed to observing the importance of the financial measures and indicators within the Framework for Excellence and is monitoring these through the completion of the annual Finance Record for the Skills Funding Agency. The current rating of Good is considered an acceptable outcome. In addition to the Framework for Excellence, during 2010/11 the Board continued to operate its own internal framework for setting key performance targets and undertaking continuous monitoring at Board meetings throughout the year.
THE BOURNEMOUTH & POOLE COLLEGE OPERATING AND FINANCIAL REVIEW FOR THE YEAR ENDED 31 JULY 2011
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FINANCIAL POSITION Financial Results Our underlying financial performance during 2010/11 was good, with a total reported surplus retained within general reserves of £1.2m. This surplus is stated after the deduction of a net FRS17 cost of £0.2m (compared to net FRS17 income of £1.1m in 2009/10). The surplus generated by core operating activities in the year, before FRS17 finance costs and adjustments, was £1.3m as compared to £0.8m in 2009/10. There was no further exceptional income in 2010/11 from the Learning and Skills Council (LSC) or its successor bodies in connection with the sudden halting of the LSC capital programme in 2008/09 (as compared to exceptional income in this respect of £3.5m in 2009/10). During the year under review, a decision was made to bring the College’s artwork collection into the College accounts at its valuation for insurance purposes of £2.4 million, in order to comply with the requirements of Financial Reporting Standard 30 ‘Heritage Assets’ (FRS30) and give a more true and fair view of the College’s financial position at 31 July 2011. As a result of this decision, the accumulated income and expenditure reserves of the College at 31 July 2010 have been restated, bringing in an initial value for the artwork collection at the first available valuation for each piece. The revaluation reserve of the College was also restated to reflect past revaluations of the artwork collection culminating in a revaluation for insurance purposes in 2006. Prior to this restatement, the accumulated income and expenditure reserves at 31 July 2010 were £6.6m, the revaluation reserve at 31 July 2010 was £3.8m and the total funds disclosed on the College balance sheet were £1.8m. Accumulated income and expenditure reserves at 31 July 2011 were £8.7m compared to £7.3m in July 2010 (as restated) and net current assets were £0.7m compared to net current assets of £0.3m in July 2010. There was an increase in the pension fund deficit as calculated under FRS17 rules of £0.6m during the year (compared to a decrease in the pension fund deficit as calculated under FRS17 rules of £1.9m in 2009/10). As a result, the overall balance sheet as at 31 July 2011 shows total reserves of £3.0m compared to total funds of £1.2m (as restated) at 31 July 2010. Cash balances improved by £0.8m in year. This is after the placement of £1.75m on deposit (£1m at 31 July 2010). We aim to continue to rebuild our cash reserves over the next four years in order to create a contingency fund and to provide sufficient working capital to support annual cashflow profiles. Fixed asset additions to equipment during the year were £1.7m compared to £1.0m in 2009/10. The increase reflects our continuing strategy of improving investment in key resources to support teaching and learning. The Bournemouth and Poole College Foundation (company number 2987657, charity number 1042508), a related party of the College, granted its charitable reserves to the College during the year following a decision by its directors to wind up its activities. As a result of this, the College had an Expendable Endowment of £0.07m at 31 July 2011. This fund is held on deposit with the Community Foundation for Bournemouth Dorset and Poole (charity number 1122113) for use in accordance with the terms of the Trust deeds. Of the accumulated income and expenditure reserves of the College at 31 July 2010 of £8.7m, a reserve of £0.03m has been set aside as a designated fund, representing the remaining charitable reserves granted to the College by the College Foundation during the year. Treasury Policies and Objectives Treasury management is the management of our cash flows, our banking, money market and capital market transactions; the effective control of the risks associated with those activities; and the pursuit of optimum performance consistent with those risks. Borrowing requires the authorisation of the Corporation and must comply with the requirements of the Financial Memorandum previously agreed with the LSC and subsequently transferred to the Skills Funding Agency. We are proactive in maximising the return from Treasury Management activities. Work in this area is governed by the Treasury Management Policy which has the following objectives:
To ensure that funds are available to cover outgoings as they fall due.
To ensure that temporary cash surpluses are invested to earn the best return available – consistent with appropriate management effort and the minimisation of risk – bearing in mind that investment is not a primary activity of colleges.
To ensure that borrowing is only undertaken when commercially prudent and on the most advantageous terms – consistent with the need to ensure financial stability.
THE BOURNEMOUTH & POOLE COLLEGE OPERATING AND FINANCIAL REVIEW FOR THE YEAR ENDED 31 JULY 2011
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CURRENT AND FUTURE DEVELOPMENT AND PERFORMANCE Student Numbers In 2010/11 the College delivered activity that produced £26,680,000 in funding body main allocation funding (2009/10 - £27,947,000). The College had approximately 6,700 FE funded students, 1,100 HE students and 3,500 non funded students. Student Success Students continue to prosper at the College and there is a rising trend in Success Rates. The following table shows our FE Long Qualification Level 3 Success Rate over the last three years: 10/11 09/10 08/09
16-18 year olds 78% 77% 70% Adults 72% 72% 70% Total 76% 73% 70%
We continue to celebrate the awards presented to our students, including the Young Painter of the Year. We are also proud to have been awarded the National LSIS ‘Leading the Learner Voice’ Award for the second year running. In addition we gained the ‘Leading Learner Award 2011’ and are the only college to have won two awards in one year from LSIS. Curriculum Teaching, learning, training and assessment is at the forefront of our thinking and planning. By facilitating responsive and innovative teaching and learning strategies, we aspire to be leaders in our field in creating a culture that supports a personalised experience for each individual. A new approach to tutorial is being implemented and this year will see major emphasis on curriculum review and development. We have an excellent reputation in an increasing number of areas including Music, Performing Arts, Hospitality & Catering, Hair & Beauty, Workforce Development and Travel & Tourism and Engineering Apprenticeships have outstanding success. We seek to ensure that students’ experiences at the College equip them with an ability to complete and succeed in their chosen career or continuing education. We aspire to be leaders in the field of employability and have forged a significant partnership with REED / NCFE alongside the creation of E-labs to facilitate this venture. Future Developments The current climate is challenging for the whole of the public sector, with the Further and Higher Education sectors taking their share of the reductions in public expenditure. Our key challenge at the present time is to ensure that we continue to develop and improve further, our core teaching and learning infrastructure, at a time when both rates of funding and financial support for students are diminishing. We will maintain a sharp focus on our core values, delivering our core activities, meeting our key targets, shaping a clear identity for ourselves within our community and maintaining a strong emphasis on performance, quality and efficiency in all that we do.
THE BOURNEMOUTH & POOLE COLLEGE OPERATING AND FINANCIAL REVIEW FOR THE YEAR ENDED 31 JULY 2011
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RESOURCES We have various resources to support the achievement of our strategic objectives. Financial Tangible resources include £18.6m held in fixed assets, including the main college sites and also including £2.4m of Heritage assets which have been recognised on the Balance Sheet for the first time. At 31 July 2011, we had total net assets of £16.4m before taking into account the pension liability of £11.1m. Net current assets were £0.7m and long term debt was £2.3m.
Physical Resources
During 2010/11 we continued to invest in equipment and buildings to support teaching and learning. Our Property Strategy covers the period up to July 2012 and during 2010/11 this generated capital expenditure of £926,964 and revenue expenditure of £559,507. The Strategy is funded from a mixture of loan funding and money from our reserves but it has also been bolstered during 2010/11 by capital grants of £394,712 received from the Skills Funding Agency. Development of our IT infrastructure is guided by our Digital College Strategy. During 2010/11 we invested £1,239,695 in IT capital purchases. We also have a smaller capital budget to support other capital needs and during 2010/11 this expenditure was £427,833. People During 2010/11 we employed 754 full-time equivalent staff (FTEs), of which 395 FTEs were teaching staff. This is an overall reduction of 56 FTEs from the numbers employed during 2009/10. During 2010/11 we continued to work hard with our staff to create a culture of openness, integration and transparency. Reputation We have a good reputation locally and nationally and this was consolidated by the outcome of our Ofsted inspection in February 2011. Maintaining a quality brand is essential for us to continue to attract students / employers and develop external relationships in what is a highly competitive market.
THE BOURNEMOUTH & POOLE COLLEGE OPERATING AND FINANCIAL REVIEW FOR THE YEAR ENDED 31 JULY 2011
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PRINCIPAL RISKS AND UNCERTAINTIES We have developed and embedded a system of internal control, including financial, operational and risk management, that is designed to protect our assets, operations and reputation. Based on the strategic plan, the Risk Management Group undertakes a comprehensive review of the risks to which we are exposed. It identifies systems and procedures, including specific preventable actions which should mitigate any potential impact. The internal controls are then implemented and the subsequent year’s appraisal will review their effectiveness and progress against risk mitigation actions. In addition to the annual review, the Risk Management Group will consider any risks which may arise as a result of any new areas of work being undertaken or by changes in the external environment. A risk register is maintained at college level and reviewed at each Audit Committee meeting. The risk register identifies the key risks, the likelihood of those risks occurring, their potential impact and the actions being taken to reduce and mitigate the risks. Risks are prioritised using a consistent scoring system. We have identified the principal risk factors that may affect our ability to achieve our strategic objectives; not all factors are within our control and other factors besides those listed below may also adversely affect us. 1. Government Policy As a public sector organisation, we are vulnerable to changes of Government and / or changes in Government policy. In particular, the following factors may impact on us in the future:
The Comprehensive Spending Review of October 2010 announced significant future funding reductions for our sector which are likely to impact not only on funding rates but also on learner volumes.
In April 2010 the Machinery of Government changed the way in which the sector is funded and regulated and as a result we now deal with a number of different successor bodies. Even since April these bodies have changed again and Government policy may dictate further changes, thus increasing the likelihood of adverse impacts of short term switches of strategic policy.
The risks are being mitigated in the following ways:
By maintaining relationships with key partners, including funding agencies and local planning bodies, especially Local Authorities.
By ensuring that we are aware of political thinking and likely policy change.
By defining our own strategic direction and by focussing on our key strategic aims.
By scrutinising our performance regularly, in terms of both efficiency and effectiveness. 2. Reputational Risks As with any organisation, the achievement of our strategic aims would be adversely affected should an event occur that damages our reputation. In addition to the usual risks of perceptions of poor quality or financial difficulties, we must also ensure that we fulfil the expectations of our local community in terms of our social and ethical responsibilities. The risks are being mitigated in a number of ways:
By ensuring that expectations of staff are clearly communicated.
By maintaining rigorous systems of scrutiny and control that ensure that all our activities, both teaching and non teaching, are of high quality, are efficient and encompass the core values that generate a safe, equal and diverse environment.
By maintaining open channels of communication with staff and students and ensuring that feedback is acted upon.
THE BOURNEMOUTH & POOLE COLLEGE OPERATING AND FINANCIAL REVIEW FOR THE YEAR ENDED 31 JULY 2011
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3. Financial Risks The forthcoming reductions to public sector funding will require more than the conventional response to funding cuts; rather they will require us to adopt radically new approaches to service delivery. Balancing this with the need to continue to improve the quality of our teaching and learning and also with the need to maintain and increase capital investment represents probably the biggest risk the College has ever faced. The risks to our finances are being mitigated in a number of ways:
By adopting a mindset that the situation represents a challenge and generates an opportunity to foster innovation.
By undertaking a fundamental review of all areas of our activities.
By setting realistic targets and monitoring to ensure that they are met.
By developing long term resource plans and ensuring they are fully integrated into financial planning.
By developing a Value for Money Strategy and Plan.
By undertaking sensitivity analysis and contingency planning.
By careful management of working capital. STAKEHOLDER RELATIONSHIPS In line with other colleges and with universities, we have many stakeholders. These include:
Students
Staff
Local employers
The local community
Trade unions
Professional and sector bodies
Funding Councils
Local Authorities
Government Offices / Regional Development Agencies
Other educational institutions. We recognise the importance of these relationships and communicate regularly with all stakeholders by various means. Equality and Diversity
We are committed to the principles of equality and diversity for all who learn and work here. We are opposed to any form of discrimination and we respect and value the positive contributions that differences in ethnicity, gender, disability, age, faith and beliefs, sexual orientation, marriage and civil partnership, gender identity, pregnancy and maternity and socio-economic status bring to the College. We strive vigorously to remove conditions which place people at a disadvantage and we are committed to providing an environment in which people feel comfortable and assured that they will be treated with dignity and respect. The College expects all employees, students and associated partner organisations to adopt this policy. This commitment is explored further in our Single Equality Scheme and accompanying action plan which sets out the steps we will take to ensure equality for the protected characteristics under the Equality Act 2010. The Single Equality Scheme is resourced, implemented and monitored on a planned basis and the Equality & Diversity Action Plan is published annually and monitored at regular intervals throughout the year by the Equality & Diversity Committee and the Corporation.
THE BOURNEMOUTH & POOLE COLLEGE OPERATING AND FINANCIAL REVIEW FOR THE YEAR ENDED 31 JULY 2011
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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 8 December 2011 and signed on its behalf by: Joy Postings Chair
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MEMBERS
Name Date of Appointment Term of Office
Date of
Resignation Committees Served
Mr C Beale 9 July 2009 4 years Audit
Mr R Blaber 11 December 2008 4 years Audit
Mr S Dumaresq 17 January 2011 1 year (Student)
Mrs S King 1 April 2003 4 years November 2010
Re-appointed
1 April 2007
Mrs G Lacey 1 April 1997 4 years
Re-appointed
1 April 2001,
1 April 2005,
and 1 April 2009
Mr S Oliver 19 October 2006 4 years (Staff) October 2010
Mr M Pitcher 1 August 2007 4 years May 2010 Search & Governance
Mrs J Postings 30 January 2006 4 years Chair: Corporation,
Re-appointed 29 Jan
2010 Chair: Search & Governance
Miss H Rodda 16 December 2010 1 year (Student)
Mr R Rowney 16 October 2008 4 years Search & Governance
Mr P Scott 3 July 2008 4 years November 2011 Audit
Mr G Spencer 16 December 1999 1 year
Re-appointed
16 December 2003
20 December 2007
11 December 2008
and 10 December 2009 4 years
Mr P Taylor 1 April 1993 4 years July 2011 Vice Chair: Corporation,
Re-appointed Search & Governance
1 April 1997,
1 April 2001,
1 April 2005,
and 1 April 2009 31 July 2011
Mr L Vincent 1 December 2007 Principal Search & Governance
Mrs C Whittle 16 December 2010 3 years
External Auditors:
Internal Auditors:
Bankers:
Solicitors:
HSBC Bank plc, Poole
Steele Raymond LLP, Bournemouth
THE BOURNEMOUTH AND POOLE COLLEGE
The members who served on the Corporation during the year and up to the date of signature of this report as
listed in Table 2
Table 2: Governors serving on the College Board during 2010/11
Professional Advisers
Grant Thornton UK LLP, Bristol
RSM Tenon, Basingstoke
THE BOURNEMOUTH AND POOLE COLLEGE STATEMENT OF CORPORATE GOVERNANCE AND INTERNAL CONTROL
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The College is committed to exhibiting best practice in all aspects of corporate governance. This summary describes the manner in which the College has applied the principles set out in the revised Combined Code on Corporate Governance issued by the London Stock Exchange. Its purpose is to help the reader of the accounts understand how the principles have been applied. In the opinion of the Corporation, the College has complied with all the provisions of the Combined Code in so far as they apply to the Further Education Sector throughout the year ended 31 July 2011. The Corporation The list of members who served on the Corporation during the year and up to the date of signature of this report is set out on page 9. 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 College together with other information such as performance against funding targets, proposed capital expenditure, quality matters and personnel related matters such as health and safety and environmental issues. The Corporation usually meets at least four times a year and in 2010/11 it met four times. During 2010/11, the Corporation conducted its business through a number of committees. Each committee has terms of reference, which have been approved by the Corporation. These committees are Finance & Resources, Policy and Standards, New Build, Remuneration, Search & Governance and Audit. Full minutes of all meetings, except those deemed to be confidential by the Corporation, are available from the Clerk to the Corporation at: Bournemouth and Poole College North Road Poole BH14 0LS. In March 2010, the Corporation adopted the Policy Governance Model for full implementation during 2010/11. The Clerk to the Corporation maintains a register of financial and personal interests of the governors, which is available for inspection at the above address. All governors are able to take independent professional advice in furtherance of their duties at the College’s expense and have access to the Clerk to the Corporation who is responsible to the Board for ensuring that all applicable procedures and regulations are complied with. The appointment, evaluation and removal of the Clerk are 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 a regular basis and Board members participate in two Planning Days each year. The Corporation has a strong and independent non-executive element and no individual or group dominates its decision making process. The Corporation considers that each of its non-executive members is independent of management and free from any business or other relationship which could materially interfere with the exercise of their independent judgement. There is a clear division of responsibility in that the roles of the Chair of the Corporation and Principal are separate.
THE BOURNEMOUTH AND POOLE COLLEGE STATEMENT OF CORPORATE GOVERNANCE AND INTERNAL CONTROL
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Appointments to the Corporation Any new appointments to the Corporation are a matter for the consideration of the Corporation as a whole. The Corporation has a Search & Governance Committee, consisting of four members of the Corporation including the Principal. The Committee is responsible for the selection and nomination of any new member for the Corporation’s consideration. The Corporation is responsible for ensuring that appropriate training is provided as required. Members of the Corporation are appointed for a term of office not exceeding four years. Remuneration Committee Throughout the year ending 31 July 2011 the College’s Remuneration Committee comprised three members of the Corporation. The Committee’s responsibilities are to make recommendations to the Board on the remuneration and benefits of the Principal and other senior postholders. Details of remuneration for the year ended 31 July 2011 are set out in notes 6 and 7 to the financial statements. Audit Committee The Audit Committee comprises three members of the Corporation (excluding the Principal and Chair) plus one external co-opted member who is a qualified accountant. 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, without the presence of College management. The Committee also receives and considers those reports from the main FE funding bodies that affect the College’s business. The College’s internal auditors monitor the systems of internal control, risk management controls and governance processes in accordance with an agreed plan of input and report their findings to management and the Audit Committee. Management is responsible for the implementation of agreed audit recommendations and internal audit undertakes 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 financial statements auditors and their remuneration for both audit and non-audit work.
THE BOURNEMOUTH AND POOLE COLLEGE STATEMENT OF CORPORATE GOVERNANCE AND INTERNAL CONTROL
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Internal Control Scope of Responsibility The Corporation is ultimately responsible for the College’s system of internal control and for reviewing its effectiveness. However, such a system is designed to manage rather than eliminate the risk of failure to achieve business objectives and can provide only reasonable and not absolute assurance against material misstatement or loss. The Corporation has delegated the day-to-day responsibility to the Principal, as Accounting Officer, for maintaining a sound system of internal control that supports the achievement of the College’s policies, aims and objectives, whilst safeguarding the public funds and assets for which he is personally responsible, in accordance with the responsibilities assigned to him in the Financial Memorandum between the College and the LSC and its successor organisations. He is also responsible for reporting to the Corporation any material 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 of failure to achieve policies, aims and objectives. It can, therefore, only provide reasonable and not absolute assurance of effectiveness. The system of internal control is based on an ongoing process designed to identify and prioritise the risks to the achievement of College policies, aims and objectives, to evaluate the likelihood of those risks being realised and the impact should they be realised, and to manage them efficiently, effectively and economically. The system of internal control has been in place in the College for the year ended 31 July 2011 and up to the date of approval of the annual report and accounts. Capacity to Handle Risk The Corporation has reviewed the key risks to which the College is exposed, together with the operating, financial and compliance controls that have been implemented to mitigate those risks. The Corporation is of the view that there is a formal ongoing process for identifying, evaluating and managing the College’s significant risks that has been in place for the year ending 31 July 2011 and up to the date of approval of the annual reports and accounts. This process 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, administrative procedures including the segregation of duties, and a system of delegation and accountability. In particular, it includes:
comprehensive budgeting systems with an annual budget, which is reviewed and agreed by the governing body
regular reviews by the governing body of periodic and annual financial reports which indicate financial performance against forecasts
setting and monitoring targets to measure financial and other performance
clearly defined capital investment control guidelines
the adoption of formal project management disciplines, where appropriate. The College has an internal audit service, which operates in accordance with the requirements of the Skills Funding Agency’s Joint 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 a minimum annually, the Head of Internal Audit (HIA) provides the Corporation 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.
THE BOURNEMOUTH AND POOLE COLLEGE STATEMENT OF CORPORATE GOVERNANCE AND INTERNAL CONTROL
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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 and the regularity auditors in their management letters and other reports.
The Principal has been advised on the implications 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 a plan to address weaknesses and ensure continuous improvement of the system is in place. The Senior Leadership 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 Leadership Team and the Audit Committee also receive regular reports from internal audit, 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 Leadership Team and the Audit Committee. The emphasis is on obtaining the relevant degree of assurance and not merely reporting by exception. At its December 2011 meeting, the Corporation carried out the annual assessment for the year ended 31 July 2011 by considering documentation from the Senior Leadership Team and internal audit, and taking account of events since 31 July 2011. 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 8 December 2011 and signed on its behalf by: J Postings Chair L Vincent Principal
THE BOURNEMOUTH AND POOLE COLLEGE STATEMENT OF THE RESPONSIBILITIES OF THE MEMBERS OF THE CORPORATION
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The members of the Corporation are required to present audited financial statements for each financial year. Within the terms and conditions of the Financial Memorandum agreed between the Skills Funding Agency and the Corporation of the College, the Corporation, through its Principal, is required to prepare financial statements for each financial year in accordance with the 2007 Statement of Recommended Practice – Accounting for Further and Higher Education Institutions and with the Accounts Direction issued jointly by the Skills Funding Agency and the Young Peoples Learning Agency 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 adequate accounting records, which disclose with reasonable accuracy, at any time, the financial position of the College and to enable it to ensure that the financial statements are prepared in accordance with 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 Skills Funding Agency are used only in accordance with the Financial Memorandum with the Skills Funding Agency and any other conditions that may be prescribed 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 so that the benefits that should be derived from the application of public funds from the Skills Funding Agency are not put at risk. Approved by order of the members of the Corporation on 8 December 2011 and signed on its behalf by: J Postings Chair
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Independent auditor’s report to the Corporation of The Bournemouth and Poole College
We have audited the financial statements of The Bournemouth and Poole College for the year ended 31 July 2011 which
comprise of the income and expenditure account, the balance sheets, the consolidated cash flow statement, the
consolidated statement of total recognised gains and losses, the consolidated statement of historical cost surpluses and
deficits and the related notes. The financial reporting framework that has been applied in their preparation is applicable
law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) and the 2007
Statement of Recommended Practice: Accounting for Further and Higher Education.
This report is made solely to the Corporation as a body, in accordance with the College’s Articles of Government. Our
audit work has been undertaken so that we might state to the Corporation as a body, those matters we are required to
state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Corporation as a body, for our audit work, for this report, or for the
opinions we have formed.
Respective Responsibilities of the members of the Corporation of The Bournemouth and Poole College and
auditor
As described in the Statement of the Responsibilities of the members of the Corporation set out on page 15, the college's Corporation is responsible for the preparation of financial statements which give a true and fair view.
Our responsibility is to audit, and express an opinion on, the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's (APB's) Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Group’s and the College’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Corporation; and the overall presentation of the financial statements. In addition we read all the financial and non-financial information in the Operating and Financial Review and the Statement of Corporate Governance and Internal Control to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies, we consider the implications for our report.
Opinion on financial statements In our opinion the financial statements:
■ give a true and fair view, in accordance with UK Generally Accepted Accounting Practice, of the state of the Group's and of the College’s affairs as at 31 July 2011 and of the Group’s surplus of income over expenditure for the year then ended;
■ have been properly prepared in accordance with the 2007 Statement of Recommended Practice – Accounting for Further and Higher Education Institutions
16
Opinion on other matters prescribed by the revised Joint Audit Code of Practice (Part 1) issued jointly by the Skills Funding Agency and the Young People's Learning Agency and the Audit Code of Practice issued by the Learning and Skills Council In our opinion:
■ proper accounting records have been kept, and
■ the financial statements are in agreement with the accounting records.
Grant Thornton UK LLP Chartered Accountants & Registered Auditors Hartwell House 55-61 Victoria Street Bristol BS1 6FT 8 December 2011
17
Independent Auditor's report on Regularity to the Corporation of The Bournemouth and Poole College ('The Corporation') and the Chief Executive of Skills Funding
In accordance with the terms of our engagement letter dated 3 January 2008 and further to the requirements of the Chief Executive of Skills Funding we have performed procedures to obtain assurance about whether, in all material respects, the expenditure disbursed and income received of The Bournemouth and Poole College ('the College') for the year ended 31 July 2011 have been applied to the purposes identified by Parliament and the financial transactions conform to the authorities which govern them.
This report is made solely to the Corporation and the Chief Executive of Skills Funding. Our work has been undertaken so that we might state to the Corporation and the Chief Executive of Skills Funding those matters we are required to state to it in a report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Corporation and the Chief Executive of Skills Funding , for our work, for this report, or for the opinion we have formed.
Respective responsibilities of the Members of the Corporation of College and Auditors
The College's Corporation are responsible, under the requirements of the Further & Higher Education Act 1992, subsequent legislation and related regulations, for ensuring that expenditure and income are applied for the purposes intended by Parliament and the financial transactions conform to the authorities which govern them.
Our responsibilities for this work are established in the United Kingdom by our profession's ethical guidance and the audit guidance set out in the Audit Code of Practice as amended by the Joint Audit Code of Practice and the Regularity Audit Framework issued by the Chief Executive of Skills Funding. We report to you whether, in our opinion, in all material respects, expenditure and income for the year ended 31 July 2011 have been applied to purposes intended by Parliament and the financial transactions conform to the authorities which govern them.
Basis of opinion
We conducted our work in accordance with the Audit Code of Practice as amended by the Joint Audit Code of Practice and the Regularity Audit Framework issued by the Chief Executive of Skills Funding . Our work includes examination, on a test basis, of evidence relevant to the regularity and propriety of the College's income and expenditure.
Opinion
In our opinion, in all material respects, the expenditure and income for the year ended 31 July 2011 have been applied to purposes intended by Parliament and the financial transactions conform to the authorities which govern them.
Grant Thornton UK LLP
Chartered Accountants &
Registered Auditors
Hartwell House
55-61 Victoria Street
Bristol, BS1 6FT
8 December 2011
18
THE BOURNEMOUTH AND POOLE COLLEGE
CONSOLIDATED INCOME AND EXPENDITURE ACCOUNT
FOR THE YEAR ENDED 31 JULY 2011
2011 2010
£'000 £'000
Notes
Income
Funding body grants 2 26,680 27,947
Tuition fees and education contracts 3 7,814 7,736
Other income 4 3,137 3,400
Endowment and investment income 5 93 6
T ota l income 37,724 39,089
Expenditure
Staff costs 6 25,360 27,671
Exceptional restructuring costs 6 449 349
Exceptional FRS17 past service gain 6 - (1,606)
Other operating expenses 8 8,753 9,071
Depreciation 12 1,682 1,369
Interest and other finance costs 9 252 518
T ota l expenditure 36,496 37,372
Surplus on continuing opera tions prior to costs
re la ting to the property stra tegy 1,228 1,717
Property strategy costs 33 - 235
Grant support for property strategy costs 33 - 3,500
Surplus on continuing operations
after depreciation of assets at valuation and
before tax 1,228 5,452
Taxation 10 - -
Surplus on continuing opera tions
a fte r deprecia tion of asse ts a t va lua tion
and tax 11 1,228 5,452
Endowment grant income transferred to
accumulated income in endowment funds 24 (74) -
Surplus for the year re ta ined within genera l reserves 1,154 5,452
The income and expenditure account is in respect of continuing activities.
19
THE BOURNEMOUTH AND POOLE COLLEGE
CONSOLIDATED STATEMENT OF HISTORICAL COST SURPLUSES AND DEFICITS
FOR THE YEAR ENDED 31 JULY 2011
2011 2010
£'000 £'000
Notes
Surplus on continuing operations before taxation 1,228 5,452
Difference between historical cost depreciation and
the actual charge for the year calculated
on the revalued amount 25 89 89
Historica l cost surplus for the year
be fore taxa tion 1,317 5,541
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
FOR THE YEAR ENDED 31 JULY 2011
2011 2010
£'000 £'000
Notes Restated
Surplus on continuing operations after
depreciation of assets at valuation and tax 1,228 5,452
Actuarial (loss)/gain in respect of pension scheme 34 (408) 740
including the CPI adjustment of £Nil (2010 (£1,606K))
Unrealised surplus on revaluation of Heritage assets 13 977 -
Recognition of Heritage assets 13 - 1,386
T ota l recognised ga ins re la ting to the year 1,797 7,578
Prior year adjustment (as explained in note 13) 1,386
Total gains and losses recognised since last annual report 3,183
Reconcilia tion of movement in reserves
Opening reserves 1,245 (6,333)
Total recognised gains for the year 1,797 7,578
Closing reserves 3,042 1,245
During the year, a change in accounting policy was adopted in order to bring the College accounts
in line with the provisions of FRS30 'Heritage Assets', as it was determined this would give a more
true and fair view of the position of the College at 31st July 2011. See notes 13, 25 and 26 for
further information.
20
THE BOURNEMOUTH AND POOLE COLLEGE
BALANCE SHEETS AS AT 31 JULY 2011
Group College Group College
2011 2011 2010 2010
Notes £'000 £'000 £'000 £'000
Fixed assets Restated Restated
Tangible assets - Property & Equipment 12 16,208 15,178 15,295 14,184
Tangible assets - Heritage assets 13 2,393 2,393 1,386 1,386
Investments 16 0 0 15 15
Total fixed assets 18,601 17,571 16,696 15,585
Endowment assets 17 74 74 0 0
Current assets
Stock 20 20 17 17
Debtors 18 1,672 1,729 1,692 1,681
Investments 1,750 1,750 1,000 1,000
Cash at bank and in hand 2,147 2,144 1,317 1,317
Total current assets 5,589 5,643 4,026 4,015
Creditors: amounts falling due within one year 19 (4,875) (4,928) (3,685) (3,679)
Net current assets 714 715 341 336
Total assets less current liabilities 19,389 18,360 17,037 15,921
Creditors: amounts falling due after more than
one year 20 (2,258) (2,258) (2,424) (2,424)
Provisions for liabilities 22 (723) (723) (980) (980)
Net assets excluding pension liability 16,408 15,379 13,633 12,517
Net pension liability 34 (11,105) (11,105) (10,468) (10,468)
5,303 4,274 3,165 2,049
Deferred capital grants 23 2,261 1,231 1,920 810
Expendable endowments 24 74 74 0 0
Reserves
Income and expenditure account excluding 26 8,745 8,746 7,273 7,267
pension reserve
Pension reserve 26 (11,105) (11,105) (10,468) (10,468)
Income and expenditure account including (2,360) (2,359) (3,195) (3,201)
pension reserve
Revaluation reserve 25 5,328 5,328 4,440 4,440
Total reserves 2,968 2,969 1,245 1,239
TOTAL 5,303 4,274 3,165 2,049
The financial statements on pages 19 to 51 were approved by the corporation on 8th December 2011 and were signed
on its behalf on that date by:
J Postings L Vincent
Chair Principal
NET ASSETS INCLUDING PENSION LIABILITY
21
THE BOURNEMOUTH AND POOLE COLLEGE
CONSOLIDATED CASHFLOW STATEMENT
FOR THE YEAR ENDED 31 JULY 2011
2011 2010
Notes £'000 £'000
27 3,854 4,396
Returns on investments and
servicing of finance 28 (11) (37)
Capital expenditure and financial
investment 29 (2,018) (829)
Management of liquid resources 30 (750) (1,000)
Financing 31 (245) (1,842)
Increase in cash in the year 830 688
Reconciliation of net cash flow to movement in net debt
2011 2010
£'000 £'000
Increase in cash in the year 830 688
Cash outflow to liquid resources 30 750 1,000
Cash outflow to unsecured loan 31 245 1,842
Movement in net funds in the year 1,825 3,530
Net debt at 1 August (342) (3,872)
Net funds/(debt) at 31 July 32 1,483 (342)
Cash inflow from operating activities
THE BOURNEMOUTH AND POOLE COLLEGE NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2011
1. ACCOUNTING POLICIES
22
The following accounting policies have been applied consistently in dealing with items which are considered material 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 2007 (the SORP) and in accordance with applicable Accounting
Standards. They conform to guidance published jointly by the Skills Funding Agency and the YPLA in the 2010/11
Accounts Direction Handbook.
Basis of accounting
The financial statements are prepared in accordance with the historical cost convention modified by the revaluation of
certain fixed assets and in accordance with applicable United Kingdom Accounting Standards.
Change in accounting policy
During the year, the College has fully implemented Financial Reporting Standard (FRS) 30 ‘Heritage Assets’, which
has resulted in the market value of these assets being reported on the College’s balance sheet. This change in
accounting policy has had no impact on the College’s reported surplus for the current or prior year, but the
comparative balance sheet has been restated to introduce the heritage assets, along with an adjustment to the
income and expenditure reserves and the revaluation reserve, details of which are given in notes 25 and 26.
Going concern
The activities of the College, together with the factors likely to affect its future development and performance are set
out in the Operating and Financial Review. The financial position of the College, its cashflow, liquidity and borrowings
are described in the Financial Statements and accompanying Notes.
The College currently has £2.4m of loans outstanding with bankers on terms re-negotiated during the year under
review (the terms of the original loan of £3.2m were negotiated in 2005). Additionally, there is £2.5m of uncommitted
facility available for unconditional drawdown with all being unsecured. The terms of the existing agreement are for up
to another 15 years. The College’s forecasts and financial projections indicate that it will be able to operate within this
existing facility and covenants for the foreseeable future.
Accordingly the College has a reasonable expectation that it has adequate resources to continue in operational
existence for the foreseeable future, and for this reason will continue to adopt the going concern basis in the
preparation of its Financial Statements.
Basis of consolidation
The consolidated financial statements include the College and its subsidiary undertaking, Bournemouth and Poole
College Services Limited. Intra-group sales and profits are eliminated fully on consolidation. In accordance with
Financial Reporting Standard (FRS) 2, the activities of the student union have not been consolidated because the
College does not control those activities. All financial statements are made up to 31 July 2011.
THE BOURNEMOUTH AND POOLE COLLEGE NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2011
2. ACCOUNTING POLICIES (continued)
23
Recognition of income
Funding body recurrent grants are recognised in line with best estimates for the period of what is receivable and
depend on the particular income stream involved. Any under or over achievement for the adult learner responsive
funding element is adjusted for and reflected in the level of recurrent grant recognised in the income and expenditure
account. The final grant income is normally determined with the conclusion of the year end reconciliation process with
the funding body at the end of November following the year end. Employer responsive grant income is recognised
based on a year end reconciliation of income claimed and actual delivery. 16-18 learner-responsive funding is not
normally subject to a reconciliation and is therefore not subject to contract adjustments.
Non-recurrent grants from the funding bodies or other bodies received in respect of the acquisition of fixed assets are
treated as deferred capital grants and amortised in line with depreciation over the life of the assets.
The recurrent grant from HEFCE represents the funding allocations attributable to the current financial year and is
credited direct to the income and expenditure account.
Income from tuition fees is recognised in the period for which it is received and includes all fees payable by students
or their sponsors, for example the National Health Service.
Income from grants, contracts and other services rendered is included to the extent the conditions of the funding have
been met or the extent of the completion of the contract or service concerned.
All income from short-term deposits is credited to the income and expenditure account in the period in which it is
earned.
Post retirement benefits
Retirement benefits to employees of the College are provided by the Teachers’ Pension Scheme (TPS) and the Local
Government Pension Scheme (LGPS). These are defined benefit schemes, which are externally funded and
contracted out of the State Earnings-Related Pension Scheme (SERPS).
Contributions to the TPS are calculated so as to spread the cost of pensions over employees’ working lives with the
College in such a way that the pension cost is a substantially level percentage of current and future pensionable
payroll. The contributions are determined by qualified actuaries on the basis of quinquennial valuations using a
prospective benefit method. As stated in Note 34, the TPS is a multi employer scheme and the College is unable to
identify its share of the underlying assets and liabilities of the scheme on a consistent and reasonable basis. The TPS
is therefore treated as a defined contribution scheme and the contributions recognised as they are paid each year.
The assets of the LGPS are measured using closing market values. LGPS liabilities are measured using the
projected unit method and discounted at the current rate of return on a high quality corporate bond of equivalent term
and currency to the liability. The increase in the present value of the liabilities of the scheme expected to arise from
employee service in the period is charged to the operating surplus. The expected return on the scheme’s assets and
the increase during the period in the present value of the scheme’s liabilities, arising from the passage of time, are
included in pension finance costs. Actuarial gains and losses are recognised in the statement of total recognised
gains and losses.
THE BOURNEMOUTH AND POOLE COLLEGE NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2011
2. ACCOUNTING POLICIES (continued)
24
Enhanced Pensions
The actual cost of any enhanced ongoing pension to a former member of staff is paid by the College annually. An
estimate of the expected future cost of any enhancement to the ongoing pension of a former member of staff is
charged in full to the College’s income and expenditure account in the year that the member of staff retires. In
subsequent years a charge is made to provisions in the balance sheet using the enhanced pension spreadsheet
provided by the funding bodies.
Tangible Fixed Assets
Land and Buildings
Land and buildings inherited from the Local Education Authority are stated in the balance sheet at valuation on the
basis of open market value for existing use. The associated credit is included in the revaluation reserve. The
difference between depreciation charged on the historic cost of assets and the actual charge for the year calculated
on the revalued amount is released to the income and expenditure account reserve on an annual basis. Building
improvements made 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 of up to 50 years. Leasehold land and
buildings are amortised over 50 years or, if shorter, the period of the lease.
A review for impairment of a fixed asset is carried out if events or changes in circumstances indicate that the carrying
amount of the fixed asset may not be recoverable.
Buildings under construction are accounted for at cost, based on the value of architects’ certificates and other direct
costs incurred to 31 July. Finance costs directly attributable to freehold developments are capitalised up to the date of
completion of the project. Buildings are not depreciated until they are brought into use. Depreciation in the first year
of use is charged from the month the building comes into use.
Where land and buildings are acquired with the aid of specific grants, they are capitalised and depreciated as above. The related grants are credited to a deferred capital grant account and are released to the income and expenditure account over the expected useful economic life of the related asset on a basis consistent with the depreciation policy. On adoption of FRS 15 the College followed the transitional provisions to retain the book value of inherited land and
buildings, which were re-valued in 1993, but not to adopt a policy of revaluation of these properties in the future.
These values are retained subject to the requirement to test assets for impairment in accordance with FRS 11.
Where significant expenditure is incurred on existing buildings, it is charged to the income and expenditure account in the period it is incurred, unless it meets one of the following criteria, in which case it is capitalised and depreciated 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
THE BOURNEMOUTH AND POOLE COLLEGE NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2011
2. ACCOUNTING POLICIES (continued)
25
Equipment
Equipment costing less than £500 per individual item is written off to the income and expenditure account in the year
of acquisition. All other equipment is capitalised at cost.
Capitalised equipment has been depreciated on a straight line basis over its useful economic life as follows:
Motor vehicles and general equipment 5 years
Computer equipment 3 years
Depreciation in the first year of use is charged in full.
Fully depreciated items are removed from the balance sheet on an annual basis.
Where equipment is acquired with the aid of specific grants, it is capitalised and depreciated as above. The related
grants are credited to a deferred capital grant account and are released to the income and expenditure account over
the expected useful economic life of the related asset on a basis consistent with the depreciation policy.
Heritage Assets
Where an asset is deemed to have historic, artistic, scientific, technological, geophysical, or environmental qualities,
and is held principally for its contribution to knowledge and culture it is classified as a heritage asset.
The College has a collection of artwork, consisting of sculptures and paintings, collected over the years for their
educational value to art students in particular, but also to all vocational students and to the community as a whole.
Acquisitions are made by purchase or donation. Purchases are initially recorded at cost and donations are recorded
at market value for insurance purposes ascertained by the College at the time of the donation.
Heritage assets which were acquired on incorporation for no consideration, and pieces of artwork acquired after that
date and prior to 31 July 2010, have been brought into the accounts via a prior year adjustment, at their market value
for insurance purposes, or at the most reliable valuation available for each piece. The comparatives have been
restated to reflect the increase to their 2010 value for insurance purposes, with the surplus on revaluation being
reported in the Statement of Total Recognised Gains and Losses, and within the revaluation reserve.
A revaluation will be carried out every five years with any surplus or deficit on revaluation being reported in the
Statement of Total Recognised Gains and Losses. The collection of artwork is deemed to have an indeterminate life
and a high residual value: hence the Trustees do not consider it appropriate to charge depreciation.
Preservation costs – expenditure which, in the Trustees’ view, is required to preserve individual pieces of artwork is
recognised in the Income and Expenditure account when it is incurred.
Further information on the collection is given in Notes 13, 14 and 15 to the accounts.
THE BOURNEMOUTH AND POOLE COLLEGE NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2011
2. ACCOUNTING POLICIES (continued)
26
Leased assets
Costs in respect of operating leases are charged on a straight line basis over the lease term.
Leasing agreements which transfer to the College substantially all the benefits and risks of ownership of an asset are
treated as if the asset had been purchased outright. The assets are included in fixed assets and the capital element
of the leasing commitments is shown as obligations under finance leases. The lease rentals are treated as consisting
of capital and interest elements. The capital element is applied to reduce the outstanding obligations and the interest
element is charged to the income and expenditure account in proportion to the reducing capital element outstanding.
Assets held under finance leases are depreciated over the shorter of the lease term or the useful economic lives of
equivalent owned assets. The capital element outstanding is shown as obligations under finance leases.
Investments
Investments are included in the balance sheet at the lower of their original cost and net realisable value.
Stocks
Stocks are stated at the lower of their cost and net realisable value. Where necessary, provision is made for obsolete,
slow moving and defective stocks.
Taxation
The College is considered to pass the tests set out in Paragraph 1 Schedule 6 Finance Act 2010 and therefore it
meets the definition of a charitable company for UK corporation tax purposes. Accordingly, the College is potentially
exempt from taxation in respect of income or capital gains received within categories covered by Chapter 3 Part 11
Corporation Tax Act 2010 or Section 256 of the Taxation of Chargeable Gains Act 1992, to the extent that such
income or gains are applied exclusively to charitable purposes.
The College is partially exempt in respect of Value Added Tax, so that it can only recover a minor element of VAT
charged on its inputs. Irrecoverable VAT on inputs is included in the costs of such inputs and added to the cost of
tangible fixed assets as appropriate, where the inputs themselves are tangible fixed assets by nature.
The College’s subsidiary company is subject to corporation tax and VAT in the same way as any commercial
organisation.
Liquid resources
Liquid resources include sums on short-term deposits with recognised banks and building societies.
Provisions
Provisions are recognised when:
a. the College has a present legal or constructive obligation as a result of a past event, b. it is probable that a transfer of economic benefit will be required to settle the obligation and c. a reliable estimate can be made of the amount of the obligation.
THE BOURNEMOUTH AND POOLE COLLEGE NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2011
2. ACCOUNTING POLICIES (continued)
27
Agency arrangements
The College acts as an agent in the collection and payment of discretionary support funds. Related payments
received from the funding bodies and subsequent disbursements to students are excluded from the Income and
Expenditure Account and are shown separately in Note 39.
28
THE BOURNEMOUTH AND POOLE COLLEGE
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2011
2 FUNDING BODY INCOME
2011 2010
£'000 £'000
Recurrent grant 21,982 22,458
Non-recurrent grants ** 4,647 5,429
Release of deferred capital grant (note 23) 51 60
TOTAL26,680 27,947
2011 2010
£'000 £'000
Train to Gain income 429 907
Payments to FE college partners - 18
Net income 429 925
2011 2010
£'000 £'000
European Social Fund 431 900
Payments to FE college partners (50) (127)
Payments to non College partners (84) (307)
Net income 297 466
** The College is the lead partner in a consortium to deliver Train to Gain and Dorset Training Plus
(European Social Fund). The income shown above includes that earned by the College in its capacity
both as a provider and as the consortium lead. All other income claimed from the funding bodies and
payable to consortium partners has been excluded from these accounts. Total income claimed in the
year under this arrangement and the related payments to partners were as follows:
29
THE BOURNEMOUTH AND POOLE COLLEGE
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2011
3 TUITION FEES AND EDUCATION CONTRACTS
2011 2010
£'000 £'000
Tuition fees 2,974 2,730
Education contracts * 4,840 5,006
TOTAL 7,814 7,736
2011 2010
£'000 £'000
Jobcentre Plus income 1,638 1,936
Work Programme income 141 -
Payments to non college partners (1,164) (1,085)
Payments to FE college partners (129) (157)
Net income 486 694
* The College is the lead partner in a consortium to deliver New Deal, and as of June 2011 the
Government's new Work Programme. The income shown above includes that earned by the College in
its capacity both as a provider and as the consortium lead. All other income claimed from Jobcentre
Plus and payable to consortium partners has been excluded from these accounts. Total income
claimed in the year under this arrangement and the related payments to partners were as follows:
The Education Contracts income includes £189,000 which is a deferred capital grant release relating to
income received from Bournemouth University.
30
THE BOURNEMOUTH AND POOLE COLLEGE
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2011
4 OTHER INCOME
2011 2010
Other income: £'000 £'000
Cafeterias 512 464
Nursery 236 232
Sales of books, equipment and materials 375 371
Other Grant Income 371 349
Other Income 1,643 1,984
3,137 3,400
Other income includes grant income from the College Foundation of £28,732. This grant income
is being held in a designated fund and is not available for general use by the College. Other income
also includes donated heritage assets of £15,000, which reverted to the College on the closure of
the Study Gallery, Poole in November 2010. (See note 38 Related Parties).
5 ENDOWMENT AND INVESTMENT INCOME
2011 2010
£'000 £'000
Endowment fund grant income (note 24) 74 -
Interest receivable 19 6
93 6
The Endowment fund was granted to the College by the College Foundation during the year under
review (see note 38 Related Parties). The entire Endowment fund is on deposit with the Community
Foundation for Bournemouth Dorset and Poole (Charity no 1122113), for use in accordance with
specific restrictions as defined in the relevant trust deeds. The funds will be applied at the direction
of the College, and the funds are repayable to the College upon written direction from the
College directors.
31
THE BOURNEMOUTH AND POOLE COLLEGE
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2011
6 STAFF COSTS
The average number of persons (including senior post holders) employed by the College during the
year, expressed as full-time equivalents, was:
2011 2010
No. No.
Teaching staff 395 443
Non-teaching staff 359 367
754 810
2011 2010
£'000 £'000
Staff costs for the above persons:
Wages and salaries 20,354 21,717
Social security costs 1,323 1,534
Other pension costs (including FRS17
adjustments of £7,000) 2,513 2,651
Payroll sub-total 24,190 25,902
Contracted out staffing services 1,170 1,769
25,360 27,671
Exceptional past service pension gain - (1,606)
Exceptional restructuring costs 449 349
Total 25,809 26,414
The number of senior post-holders and other staff who received emoluments
(including pension contributions and benefits in kind) in the following ranges was:
2011 2010 2011 2010
No. No. No. No.
£ 60,001 to £ 70,000 1 1 3 1
£ 80,001 to £ 90,000 1 2 - -
£ 90,001 to £ 100,000 1 1 - 1
£ 100,001 to £ 110,000 - - 1 -
£ 140,001 to £ 150,000 1 1 - -
4 5 4 2
Senior Post Holders Other Staff
32
THE BOURNEMOUTH AND POOLE COLLEGE
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2011
7 SENIOR POST-HOLDERS' EMOLUMENTS
Senior post-holders are defined as the Principal and holders of the other senior posts whom the
Governing Body has selected for the purposes of the articles of government of the College relating
to the appointment and promotion of staff who are appointed by the Governing Body.
2011 2010
No. No.
The number of senior post-holders including the
Principal was: 4 5
Senior post-holders' emoluments are made up as follows:
£'000 £'000
Salaries* 362 417
Benefits in kind - -
Pension contributions 50 60
Total emoluments 412 477
There were no payrises for Senior post-holders in 2009/10 or 2010/11.
* This figure includes £18,214 pay in lieu of notice in respect of one senior post-holder. A payment of
£15,000 redundancy was made to the same senior post-holder during the year under review, and
a payment of £49,614 compensation for early retirement was accrued for the same senior post-holder
at the year end.
2011 2010
£'000 £'000
Salary 130 130
Benefits in kind - -
130 130
Pension contributions 18 17
Total 148 147
The above emoluments include amounts payable to the Principal (who is also the highest paid
senior post holder) of:
The pension contributions in respect of the Principal and senior post-holders are in respect of
employer's contributions to the Teachers' Pension Scheme and the Local Government Pension
Scheme and are paid at the same rate as for other employees.
The members of the Corporation other than the Principal and other staff governors did not receive
any payment from the College other than the reimbursement of travel and subsistence expenses
incurred in the course of their duties.
33
THE BOURNEMOUTH AND POOLE COLLEGE
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2011
8 OTHER OPERATING EXPENSES
2011 2010
£'000 £'000
Teaching costs 4,152 4,998
Non teaching costs 1,613 1,711
Premises costs 2,988 2,362
Total 8,753 9,071
Other operating expenses include:
Auditors' remuneration
Financial Statements audit 17 23
Internal audit 26 29
Other services from financial statements audit - 1
Other services from internal audit 12 13
55 66
Hire of plant and machinery - operating leases 156 141
Hire of other assets - operating leases 107 115
263 256
318 322
34
THE BOURNEMOUTH AND POOLE COLLEGE
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2011
9 INTEREST PAYABLE
2011 2010
£'000 £'000
On bank loans and overdrafts:
Repayable in more than five years 30 43
Pension finance costs (note 34) 222 475
Total 252 518
10 TAXATION
2011 2010
£'000 £'000
United Kingdom corporation tax NIL NIL
11 SURPLUS ON CONTINUING OPERATIONS FOR THE YEAR
The surplus on continuing operations
is made up as follows:
2011 2010
£'000 £'000
College's surplus for the year 1,184 5,445
Surplus generated by subsidiary undertakings and 44 7
transferred to the College under gift aid
1,228 5,452
The College owns 100% of the issued ordinary £1 shares of Bournemouth and Poole
College Services Limited, a company incorporated in England and Wales, whose
principal business is the rental of property.
35
THE BOURNEMOUTH AND POOLE COLLEGE
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2011
12 TANGIBLE FIXED ASSETS (GROUP)
Land and Buildings
Freehold Leasehold Equipment TOTAL
£'000 £'000 £'000 £'000
Cost or valuation
At 1 August 2010 19,188 1,992 2,297 23,477
Additions 927 - 1,669 2,596
Disposals - - (892) (892)
At 31 July 2011 20,115 1,992 3,074 25,181
Depreciation
At 1 August 2010 6,156 839 1,188 8,183
Charge for the year 478 81 1,123 1,682
Eliminated on disposals - - (892) (892)
At 31 July 2011 6,634 920 1,419 8,973
Net book value
At 31 July 2011 13,481 1,072 1,655 16,208
Net book value
At 1 August 2010 13,032 1,153 1,109 15,294
36
THE BOURNEMOUTH AND POOLE COLLEGE
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2011
12 TANGIBLE FIXED ASSETS (COLLEGE ONLY)
Land and Buildings
Freehold Leasehold Equipment TOTAL
£'000 £'000 £'000 £'000
Cost or valuation
At 1 August 2010 19,188 90 2,200 21,478
Additions 927 - 1,669 2,596
Disposals - - (892) (892)
At 31 July 2011 20,115 90 2,977 23,182
Depreciation
At 1 August 2010 6,156 47 1,091 7,294
Charge for the year 478 1 1,123 1,602
Eliminated on disposals - - (892) (892)
At 31 July 2011 6,634 48 1,322 8,004
Net book value
At 31 July 2011 13,481 42 1,655 15,178
Net book value
At 1 August 2010 13,032 43 1,109 14,184
Inherited land and buildings were valued at open market value for existing use on 3 February 1993 at an amount
of £6,985,000. They were acquired at incorporation at nil cost.
The transitional rules set out in FRS 15 Tangible Fixed Assets were applied on implementing FRS 15 and the
valuation has been retained with annual depreciation charged accordingly.
Land and buildings with a net book value of £4,579,149 have been partly financed by exchequer funds through for
example the receipt of capital grants. Should these assets be sold, the College may be liable, under the terms of
the Financial Memorandum, to surrender the proceeds.
37
THE BOURNEMOUTH AND POOLE COLLEGE
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2011
13 TANGIBLE FIXED ASSETS - HERITAGE ASSETS (GROUP AND COLLEGE)
Paintings &
Sculptures Other TOTAL
£'000 £'000 £'000
Cost or valuation
At 1 August 2010 (as restated) 1,168 218 1,386
Additions 27 3 30
Surplus on Revaluation 945 32 977
At 31 July 2011 2,140 253 2,393
A market valuation of the artwork collection acquired by the College on incorporation for no
consideration was carried out for insurance purposes by Hazlitt Holland-Hibbert in September 2010.
This gave a valuation for the main pieces of artwork inherited on incorporation of £1,888,150. The
remaining significant pieces in the collection have been valued by various different sources. This
artwork had not previously been reported on the College balance sheet, and has been brought into
the accounts in the year under review as a prior year adjustment at the earliest available valuation
for each piece (three main valuations have been used for this purpose, one by Christies in 1997, and
later valuations for insurance purposes by Hazlitt Holland-Hibbert in 2003 and 2004.) The artwork is
disclosed on the balance sheet at 31 July 2011 at the September 2010 valuation for insurance
purposes. There have been two revaluations for insurance purposes since 2004, one in 2006 (the
resulting surplus on revaluation has been brought into the accounts as a prior year adjustment), and
the other in 2010. The September 2010 surplus on revaluation has been reported in the Statement
of Total Recognised Gains and Losses.
Other artwork included in the College collection includes a sculpture by Anthony Cragg entitled
'Trisome', valued by the Lisson Gallery at £350,000 in July 2009.
A particularly significant piece in the collection is a sculpture entitled 'Mother and Child with Apple'
by Henry Moore (1898-1987), valued by the insurers in September 2010 at £1.5 million (originally
valued in 1997 at £0.4 million by Christies). Henry Moore has received numerous honours for his
work from British, American and European universities. In 1980 he received the Grand Cross.
Artwork included above to the value of £1,977,021 was partly financed by exchequer funds. Should
these assets be sold, the College may be liable, under the terms of the Financial Memorandum, to
surrender the proceeds.
Additions in 2010/11 comprise:
o £15,000 - The donation of two sculptures to the College, by the Study Gallery, Poole, at the time
of its dissolution in November 2010.
o £14,600 - Two pieces of artwork, one sculpture and two glass screens, previously disclosed as
investments in the College accounts.
There were no disposals in the year ended 31 July 2011.
38
THE BOURNEMOUTH AND POOLE COLLEGE
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2011
14 FIVE YEAR FINANCIAL SUMMARY OF HERITAGE ASSET TRANSACTIONS
2010-11 2009-10 2008-09 2007-08 2006-07
£000 £000 £000 £000 £000
Purchases
Artwork - - - - 9
Donations
Artwork 15 - - - 15
Total Additions 15 0 0 0 24
See note 13 for a full explanation of the history of the artwork collection that has been
brought into the College accounts during the year under review. Additions in 2006/07
included £14,600 that were disclosed on the College balance sheet as investments up
until 31 July 2010, and which have been treated as investment disposals and additions
to heritage assets during the year under review.
15 FURTHER INFORMATION ON THE COLLEGE'S HERITAGE ASSETS
The collection consists of 178 pieces of artwork, consisting mainly of sculptures and
paintings. Detailed information on the collection and how it came into being can be
found in The College Art Collection and the Study Gallery Poole - An Outline History
by Roy S Hall, which can be acquired from the College upon application to the Governors.
16 FIXED ASSET INVESTMENTS
Group College Group College
2011 2011 2010 2010
£'000 £'000 £'000 £'000
Works of Art- -
15 15
The Works of Art shown as a Fixed Asset Investment in 2009/10 have been reclassified
as Heritage Assets in the year ended 31 July 2011.
39
THE BOURNEMOUTH AND POOLE COLLEGE
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2011
17 ENDOWMENT ASSETS
Group College Group College
2011 2011 2010 2010
£'000 £'000 £'000 £'000
Balance as at 1 August 2010 - - - -
Additions (note 29) 74 74 - -
Balance at 31 July 2011 74 74 - -
Represented by:
Funds held and managed on behalf of
the College by the Community Foundation
for Bournemouth Dorset and Poole
(Charity no 1122113) 74 74 - -
Total 74 74 - -
18 DEBTORS
Group College Group College
2011 2011 2010 2010
£'000 £'000 £'000 £'000
Amounts Falling Due Within One Year
Trade debtors 383 450 521 510
Prepayments and accrued income 611 601 605 605
Amounts owed by the SFA 678 678 566 566
1,672 1,729 1,692 1,681
19 CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Group College Group College
2011 2011 2010 2010
£'000 £'000 £'000 £'000
Trade creditors 484 548 712 712
Pension scheme contributions 284 284 316 316
Other taxation and social security 461 451 512 512
Payments received in advance * 1,752 1,752 938 938
Accruals 1,738 1,737 972 966
Bank loans and overdrafts 156 156 235 235
4,875 4,928 3,685 3,679
* Payments received in advance include £731,031 (2009/10 £179,340) grant received from the
funding bodies.
40
THE BOURNEMOUTH AND POOLE COLLEGE
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2011
20 CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
Group College Group College
2011 2011 2010 2010
£'000 £'000 £'000 £'000
Bank loans 2,258 2,258 2,424 2,424
21 BORROWINGS
The bank loans are repayable as follows:
Group College Group College
2011 2011 2010 2010
£'000 £'000 £'000 £'000
In one year or less 156 156 235 235
Between one and two years 156 156 206 206
Between two and five years 467 467 511 511
In five years or more 1,636 1,636 1,707 1,707
2,415 2,415 2,659 2,659
22 PROVISIONS FOR LIABILITIES AND CHARGES
Group and College
Enhanced Other Total
Pension
Provision
£'000 £'000 £'000 £'000
At 1 August 2010 89 486 405 980
Expenditure in the year (89) (33) (165) (287)
Transferred from income and expenditure account - 31 - 31
At 31 July 2011 - 484 240 723
Restructuring
Provision
b) a provision for penalties and interest that is potentially payable following a review of the employment status
of the College's visiting lecturers.
The outstanding bank loan is repayable by instalments falling due between 1 January 2007 and 31 December
2026 and is unsecured. The terms of the loan were renegotiated during the year under review. Interest is
payable on this loan at 1.5% above LIBOR.
The Enhanced Pension Provision relates to the ongoing cost for staff who have left the College. It is calculated
in accordance with LSC Circular 05/02.
a) a potential repayment of VAT claimed in the period from February 1999 to July 2005 under a leasing
contract arrangement. A European Court of Justice ruling appears to favour the view of HM Revenue and
Customs that this type of arrangement confers an unfair tax advantage on participating entities. There is
uncertainty as to the future date when this matter will be resolved.
The Other Provision is in respect of:
41
THE BOURNEMOUTH AND POOLE COLLEGE
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2011
23 DEFERRED CAPITAL GRANTS
Funding
bodies Other Total
Funding
bodies Other Total
£'000 £'000 £'000 £'000 £'000 £'000
At 1 August 2010
Land and buildings 564 1,124 1,688 564 13 577
Equipment 2 231 233 2 231 233
566 1,355 1,921 566 244 810
Income receivable
Land and buildings 395 - 395 395 - 395
Equipment - 268 268 - 268 268
961 1,623 2,584 961 512 1,473
Land and buildings 49 83 132 49 2 51
Equipment 2 189 191 2 189 191
51 272 323 51 191 242
910 1,351 2,261 910 321 1,231
At 31 July 2011
Land and buildings 910 1,041 1,951 910 11 921
Equipment - 310 310 - 310 310
910 1,351 2,261 910 321 1,231
24 ENDOWMENTS
Restricted Total
Expendable
£'000 £'000
At 1 August 2010 - -
Grants received 74 74
At 31 July 2011 74 74
Endowment funds owned by the College Foundation (charity no 1042508) were granted to the College in
July 2011, prior to the winding up of the College Foundation. These funds are being held and managed on
behalf of the College by the Community Foundation for Bournemouth Dorset and Poole (Charity no 1122113)
in accordance with the terms of the trust deeds. See note 38 Related Parties.
Group College
Released to income and expenditure
account
42
THE BOURNEMOUTH AND POOLE COLLEGE
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2011
25 REVALUATION RESERVE
Group College Group College
2011 2011 2010 2010
£'000 £'000 £'000 £'000
Restated Restated
At beginning of year as previously stated 4,440 4,440 3,854 3,854
Prior year adjustment - - 675 675
At beginning of year as restated 4,440 4,440 4,529 4,529
Transfer from revaluation reserve to general reserve
in respect of:
Depreciation on revalued assets (89) (89) (89) (89)
Revaluation of Heritage Assets in year 977 977 - -
At 31 July 5,328 5,328 4,440 4,440
26 MOVEMENT ON GENERAL RESERVES
Group College Group College
2011 2011 2010 2010
£'000 £'000 £'000 £'000
Restated Restated
Income and Expenditure Account
At beginning of year as previously stated (3,195) (3,201) (10,187) (10,186)
Prior year adjustment - - 711 711
At beginning of year as restated (3,195) (3,201) (9,476) (9,475)
Surplus retained for year 1,154 1,161 5,452 5,445
Transfer from revaluation reserve 89 89 89 89
Actuarial (loss)/gain in respect of pension scheme (408) (408) 740 740
At 31 July (2,360) (2,359) (3,195) (3,201)
Balance represented by:
Pension reserve (11,105) (11,105) (10,468) (10,468)
8,745 8,746 7,273 7,267
At 31 July (2,360) (2,359) (3,195) (3,201)
The prior year adjustment applied to the income and expenditure account represents the value of Heritage Assets
received on incorporation, whilst the prior year adjustment included within the revaluation reserve relates to the
increase in market value of these assets up until 31 July 2009. Further details on Heritage Assets are given in
note 13 to these accounts.
Income and expenditure account reserve excluding
pension reserve
43
THE BOURNEMOUTH AND POOLE COLLEGE
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2011
27 RECONCILIATION OF CONSOLIDATED OPERATING SURPLUS TO NET CASH
INFLOW FROM OPERATING ACTIVITIES
2011 2010
£'000 £'000
Surplus on continuing operations after depreciation
of assets at valuation and tax 1,228 5,452
Depreciation (note 12) 1,682 1,369
Deferred capital grants released to income (note 19) (323) (242)
Interest payable (note 9) 30 43
Interest receivable (note 5) (19) (6)
FRS17 pension cost less contributions payable (note 34) 7 (1,606)
FRS17 pension finance costs (note 9) 222 475
(Increase)/Decrease in stocks (3) 1
Decrease/(Increase) in debtors 20 (396)
Increase/(Decrease) in creditors 1,267 (763)
(Decrease)/Increase in provisions (note 22) (257) 69
Net cash inflow from operating activities 3,854 4,396
28 RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
2011 2010
£'000 £'000
Interest received 19 6
Interest paid (30) (43)
Net cash outflow from returns on investments and
servicing of finance (11) (37)
29 CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT
Purchase of tangible fixed assets (2,607) (1,172)
Deferred capital grants received 663 343
Endowment fund investment (74) -
Net cash outflow for capital expenditure (2,018) (829)
and financial investment
44
THE BOURNEMOUTH AND POOLE COLLEGE
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2011
30 MANAGEMENT OF LIQUID RESOURCES
2011 2010
£'000 £'000
Withdrawal from deposits 1,000 -
Placing of deposits (1,750) (1,000)
Net cash outflow from management of (750) (1,000)
liquid resources
31 FINANCING
Repayment of loan funding - (1,600)
Due beyond a year:
Repayment of amounts borrowed (245) (242)
Net cash outflow from financing (245) (1,842)
32 ANALYSIS OF CHANGES IN NET (DEBT)/FUNDS
At At
1 August 2010 Cashflows 31 July 2011
£'000 £'000 £'000
Cash at bank and in hand 1,317 830 2,147
Current asset investments 1,000 750 1,750
Bank loans - due within one year (235) 79 (156)
- due after one year (2,424) 166 (2,258)
Total (342) 1,825 1,483
33 PROPERTY STRATEGY
During the year ended 31 July 2010 the College received a £3.5 million contribution from the LSC towards the
property strategy costs it had written off in prior periods. Also in the year ended 31 July 2010 a further £235,000
income represented an over accrual of property strategy costs in the prior period. No further contributions have been
received during the year ended 31 July 2011 towards property strategy costs written off in prior periods.
45
THE BOURNEMOUTH AND POOLE COLLEGE
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2011
34 PENSION AND SIMILAR OBLIGATIONS
Total pension cost for the year
2011 2010
£'000 £'000
TPS: contribution paid 1,380 1,488
LGPS:
Contributions paid 1,095 1,152
FRS 17 adjustment 7 (1,606)
Charge to the Income and Expenditure Account ( staff costs) 1,102 (454)
Enhanced pension charge to Income and Expenditure Account (staff costs) 31 11
Total Pension Cost for Year 2,513 1,045
The pension costs are assessed in accordance with the advice of independent qualified actuaries.
The latest actuarial valuation of the TPS was 31 March 2004 and of the LGPS 31 March 2010.
Teachers' Pension Scheme
The pensions cost is normally assessed no less than every four years in accordance with the advice
of the Government Actuary Department (GAD). The results of the 2008 review commissioned by GAD
have not yet been published. The assumptions and other data that have the most significant effect on
the determination of the contribution levels are as follows:
Latest actuarial valuation (under the new provisions) 31 March 2004
Actuarial method Prospective benefits
Investment returns 6.5%
Salary scale increases 5.0%
Notional value of assets at date of last valuation £162,650 million
Proportion of members' accrued benefits covered
by the actuarial value of the assets 98.88%
Following the implementation of Teachers' Pension (Employers' Supplementary Contributions)
Regulations 2000, the Government Actuary carried out a further review on the level of employer
contributions. For the period from 1 August 2010 to 31 July 2011 the employer contribution was 14.1%.
The employee rate was 6.4% for the same period. An appropriate provision in respect of unfunded
pensioners' benefits is included in provisions.
The College's employees belong to two principal pension schemes, the Teachers' Pension Scheme
England and Wales (TPS) for academic staff and related staff; and the Local Government Pension
Scheme (LGPS) for non-teaching staff, which is managed by Dorset County Council. Both are defined
benefit schemes.
The TPS is an unfunded defined benefit scheme. Contributions on a ‘pay-as-you-go’ basis are credited
to the Exchequer under arrangements governed by the Superannuation Act 1972. A notional asset
value is ascribed to the scheme for the purpose of determining contribution rates.
46
THE BOURNEMOUTH AND POOLE COLLEGE
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2011
34 PENSION AND SIMILAR OBLIGATIONS (continued)
FRS 17
LGPS
FRS 17
At 31 July 2011 At 31 July 2010
Rate of increase in salaries 4.0% 3.7%
Inflation assumption (RPI) 3.5% 3.2%
Inflation assumption (CPI) 2.7% 2.7%
Discount rate for liabilities 5.3% 5.4%
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 2011 At 31 July 2010
Retiring today
Males 19.8 20.8
Females 23.9 23.9
Retiring in 20 years
Males 21.9 21.8
Females 25.8 24.8
Principal Actuarial Assumptions
Under the definitions set out in Financial Reporting Standard 17 Retirement Benefits, the TPS is a multi-
employer pension scheme. The College is unable to identify its share of the underlying assets and
liabilities of the scheme. Accordingly, the College has accounted for its contributions as if it were a
defined contribution scheme. The College has set out above the information available on the scheme and
the implications for the College in terms of the anticipated contribution rates.
The LGPS is a funded defined benefit scheme, with the assets held in separate trustee administered
funds. The total employers' contribution for the year was £1,196,000 (2009/10 £1,179,000). Employee
contributions range from 5½% to 7½% dependent on their whole time pay rate, whilst the College pays
16.1%.
47
THE BOURNEMOUTH AND POOLE COLLEGE
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2010
34 PENSION AND SIMILAR OBLIGATIONS (continued)
Long-term Value at Long-term Value at
rate of return 31 July 11 rate of return 31 July 10
expected expected
At 31 July 11 At 31 July 10
% £'000 % £'000
Equities 7.6 14,325 7.9 13,218
Gilts 4.0 5,099 4.3 3,411
Other Bonds 5.3 - 5.4 1,066
Absolute Return Funds 5.0 1,457 7.9 1,066
Property 7.1 1,942 7.4 1,706
Cash 3.0 1,457 3.0 853
Total market value of assets 24,280 21,320
Present value of scheme liabilities (35,385) (31,788)
Deficit in the scheme (11,105) (10,468)
Analysis of the amount charged to income and expenditure account
2011 2010
£'000 £'000
Employer service cost 1,112 1,138
Past service gain 0 (1,629)
Curtailments and settlements 91 64
Total operating charge/(credit) 1,203 (427)
2011 2010
Analysis of pension finance costs£'000 £'000
Expected return on pension scheme assets 1,504 1,319
Interest on pension scheme liabilities (1,726) (1,794)
Net interest (222) (475)
Amount recognised in the statement of total recognised gains and losses (STRGL)
Actual return less expected return on pension scheme assets 762 1,991
Experience gains and losses 364 -
Changes in assumptions underlying the scheme liabilities (1,534) (1,251)
Actuarial (loss)/gain recognised in STRGL (408) 740
The College's estimated share of assets and liabilities in the scheme and the
expected rates of return were:
48
THE BOURNEMOUTH AND POOLE COLLEGE
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2011
34 PENSION AND SIMILAR OBLIGATIONS (continued)
Movement in deficit during year
Deficit in scheme at 1 August 2010 (10,468) (12,339)
Employer service cost (1,112) (1,138)
Employer contributions 1,196 1,179
Past service gain - 1,629
Net interest (222) (475)
Curtailments and settlements (91) (64)
Actuarial (loss)/gain (408) 740
Deficit in scheme at 31 July 2011 (11,105) (10,468)
Asset and Liability Reconciliation
Reconciliation of Liabilities
Liabilities at start of period 31,788 29,487
Service cost 1,112 1,138
Interest cost 1,726 1,794
Employee contributions 443 478
Actuarial loss 1,265 1,251
Benefits paid (1,040) (795)
Past service gain - (1,629)
Curtailments and settlements 91 64
Liabilities at end of period 35,385 31,788
2011 2010
Reconciliation of Assets
£'000 £'000
Assets at start of period 21,320 17,148
Expected return on assets 1,504 1,319
Actuarial gain 857 1,991
Employer contributions 1,196 1,179
Employee contributions 443 478
Benefits paid (1,040) (795)
Assets at end of period 24,280 21,320
The estimated value of employer contributions for the year ended 31 July 2012 is £1,196,000
49
THE BOURNEMOUTH AND POOLE COLLEGE
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2011
34 PENSION AND SIMILAR OBLIGATIONS (continued)
History of experience gains and losses
2011 2010 2009 2008 2007 2006
Difference between the expected 857 1,991 (4,296) (4,598) 502 728
and actual return on assets
% of scheme assets 4% 9% (25%) (24%) 2% 4%
Experience gains and losses on scheme 269 - - 662 - -
liabilities
% of scheme liabilities 1% 0% 0% 3% 0% 0%
Total amount recognised in STRGL (408) 740 (5,211) (2,919) 3,132 (864)
% of scheme liabilities (1%) 2% (18%) (11%) 12% (3%)
35 CONTINGENT LIABILITIES
36 CAPITAL COMMITMENTS
Group and College
2011 2010
£'000 £'000
Commitments contracted for at 31 July 2011 1,087 175
37 FINANCIAL COMMITMENTS
At 31 July 2011 the College had annual commitments under non-cancellable operating leases
as follows:
Group and College
2011 2010
£'000 £'000
Land and buildings
Expiring within one year 43 31
Expiring within two to five years - 30
Expiring in over five years 1 54
44 115
Equipment
Expiring within one year 1 -
Expiring within two and five years 146 138
147 138
There were no contingent losses or gains existing at 31 July 2011 other than those which relate to
uncertainties connected with normal accounting estimates.
The cumulative amount of losses since 2004 (recognised in the Statement of Total
Recognised Gains and Losses amounted to £3,953,000 (2010 £3,545,000k).
50
THE BOURNEMOUTH AND POOLE COLLEGE
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 JULY 2011
38 RELATED PARTY TRANSACTIONS
The Study Gallery, Poole
The Bournemouth and Poole College Foundation
39 AMOUNTS DISBURSED AS AGENT
Learner Support Fund 2011 2010
£'000 £'000
Funding Body Grants 400 470
Interest earned - -
400 470
Disbursed to students (380) (424)
Audit and administration (20) (23)
Balance unspent - 23
40 POST BALANCE SHEET EVENT
After the end of the year, the College took the decision to terminate the lease it had previously
granted to its subsidiary, Bournemouth and Poole College Services Limited.
Owing to the nature of the College's operations and the composition of the board of governors
(being drawn from local public and private sector organisations) it is inevitable that
transactions will take place with organisations in which a member of the board may have an
interest. All transactions involving organisations in which a member of the board of governors
may have an interest are conducted at arm's length and in accordance with the College's
financial regulations and normal procurement procedures. Members of the Corporation sat on
the Boards of The Study Gallery, Poole and the Bournemouth and Poole College Foundation,
two charities which previously had material transactions with the College. Both entities
ceased trading in the year ended 31 July 2011, details as below:-
The Bournemouth and Poole College Foundation was a charity which up until the current year
has raised funds for the benefit of the College students. The College stopped financially
supporting the College Foundation in the year ended 31 July 2010, when that support
amounted to £28,000. The College Foundation ceased trading during the year ended 31 July
2011, and prior to its dissolution the Foundation's reserves were transferred to the College,
which will continue to administer them for the purposes for which they were given.
Funding Body grants are available solely for students. In the majority of instances, the College
only acts as paying agent. In these circumstances, the grants and related disbursements are
therefore excluded from the Income and Expenditure Account.The income and expenditure
consolidated in the College's financial statements relates to the purchase of some equipment
from the access fund and the payment of accommodation by the College on the student's
behalf.
The Study Gallery, Poole was a charity which operated the Kube facility on the College's
North Road campus. The College ceased to financially support the Study Gallery in the year
ended 31 July 2010. The Study Gallery ceased trading in the year ending 31 July 2010, and
was dissolved on 30 November 2010. No transactions between the Study Gallery and the
College took place during the year under review.