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Members' Report and Financial statements for the year ended 31July 2024

East Durham College Members Report and Financial Statements Year ended 31 July 2024

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Members' Report and Financial statements for the year ended 31July 2024

Contents Strategic Review

Developments and Performance

Key Management Personnel and Professional Advisers

Statement of Corporate Governance and Internal Control

Statement of Regularity, Property and Compliance

Statement of Responsibilities of the Members of the Corporation

Independent Auditor's Report on the Financial Statements

Independent Reporting Accountant's Report on Regularity

Consolidated Statement of Comprehensive Income and Expenditure

Consolidated and College Statement of Changes in Reserves

Balance Sheets

Statement of Cash Flows

Notes to the Financial Statements

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Members' Report and Financial statements for the year ended 31July 2024

Strategic Review OBJECTIVES AND STRATEGY The members present their annual report together with the Financial Statements and Auditor's report for East Durham College the year ended 31 July 2024.

Legal status East Durham College is an incorporated body and falls within the scope of the Further and Higher Education Act 1992. The College is an exempt charity for the purposes of part 3 of the Charities Act 2011. East Durham College was formed by statutory instrument, with effect from 1 June 1999, and represented a merger between the former East Durham Community college (EDCC) and Durham College of Agriculture and Horticulture (Houghall). On 1 June 1999 all assets, liabilities and activities of the respective Colleges were transferred to the newly merged entity, and the two former College Corporations were dissolved.

Mission, Vision, Strategy and Objectives Mission Enriching lives through transformative education.

Public Benefit East Durham College is an exempt charity under the Part 3 of the Charities Act 2011 and is regulated by the Secretary of State for Education. The members of the Governing Body, who are trustees of the charity, are disclosed on page 20-22. In setting and reviewing the college's strategic objectives, the Governing Body has had due regard for the Charity Commission's guidance on public benefit and particularly upon its supplementary guidance on the advancement of education. The guidance sets out the requirement that all organisations wishing to be recognised as charities must demonstrate, explicitly, that their aims are for the public benefit. In delivering its mission, the College provides identifiable public benefits through the advancement of education: • High Quality teaching • Widening participation and tackling social exclusion • Excellent employment and progression record for students • Strong student support systems including advice and guidance • Strong links with employers. Industry and commerce Strong links with Local Enterprise partnerships (LEPS) and the Chamber of • Commerce The many and varied ways in which the college delivers public benefit are outlined in the various parts of these statements.

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Members' Report and Financial statements for the year ended 31July 2024

Strategic plan The achievement and performance against the strategic plan is monitored by the Corporation on a regular basis. The Senior leadership team ensure the plans are regularly reviewed and updated. The College's continuing strategic objectives are to support the mission of "Enriching lives through transformational education". The Colleges' values are outline below: EXCELLENCE — Quality is at the heart of our curriculum and service delivery enabling our organisation to thrive. STUDENTS - Students are at the heart of our decision making as we thrive to achieve a highly ambitious curriculum for all. RESPECTFUL - Nurture a culture of respect for all; providing an inclusive environment which promotes a sense of belonging and community amongst student and staff. SUSTAINABILITY - To build a sustainable provision for our current and future community.

Resources The College has various resources of both a current and non-current nature it can deploy in pursuit of its strategic objectives.

People The College employs 536 people (2023: 523), of whom 214 (2023: 203) are teaching staff. The College enrolled approximately 5,762 students. The college's student population included 1,880 16-to-19-year-old students, 470 apprentices, 106, 14-16-year-olds and 3,306 adult learners.

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Members' Report and Financial statements for the year ended 31July 2024

Financial The College has £11.7 million (2023: £11.5 million) of net assets and reserves before accounting for pension liabilities of £0.09 million (2023: £0.09 million) and after taking into account long-term debt of £4.28 million (2023: £4.77 million). Tangible resources include the two main college sites of Willerby grove and Houghall.

Reputation The College has a good reputation locally, regionally and nationally. Maintaining a quality brand is essential for the College's success at attracting students and developing eternal relationships. The College has developed very fruitful links with major employers such as the NHS and local and regional small and medium enterprises. The College is continuing to refine its curriculum offer to align with the needs of local and regional employers, by further developing its STEM offer to include progression routes to higher level technical qualifications and higher education pathways delivered within the College. In its last Ofsted inspection in May 2024, the college was rated Good overall with outstanding for both Personal Development and Behaviours and Attitudes. The report also stated that leaders understood very well the local, regional and national skills needs and the commended our agility in identifying and responding to these skills priorities. The inspection found that the college provided transformative education pathways which enriched the lives of learners and apprentices in the communities we serve allowing them to make good progress and achieve well.

Stakeholders In line with other colleges and universities the college has many stakeholders including: its current, future, and past students. Education sector funding bodies its staff and their trade unions. The senior management team are listed on page 18. The trade unions of which East Durham College staff are members are the University and College Union and Unison. the employers it works with its partner schools, colleges, and universities the wider college/local community. Its local authority and Local Enterprise Partnership (LEP). The College recognises the importance of these relationships and engages in regular communication with them.

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Members' Report and Financial statements for the year ended 31July 2024

Developments and Performance. Financial Results Group Financial Results The consolidated group surplus before tax for 2023/24 and before the effect of actuarial gains and losses in respect of the pension scheme was of £593k (2023: £110k). This is after additional credit arising from FRS102 relating to pension costs of (£400k) (2023: charge £510k) have been applied. The total comprehensive income for 2023/24 is £193k compared to £6,370k in 2022/23. The results for 2023/24 include adjustments for Financial Reporting Standard 102 (FRS102) for pension costs of (£400k) and 2023: £510k (note 7 to the accounts). After these are removed the group operating profit for the year is a surplus of £193k (2023: £620k). In 2023/24 capital expenditure amounted to £3,891k (2023: £3,538k). The College continues to have significant reliance on the education sector funding bodies for its principal funding source, largely from recurrent grants. It received 82.03% (2023: 81.69%) of its total income for 2023/2024 as grants from funding bodies, most notably from the Education and Skills Funding Agency and Department for Education for 16-18 provision. The increase in performance from the prior year was largely due to an increase in 14-16 provision and Apprenticeships income. At the balance sheet date the Group held net current liabilities of £2,391k and net assets of £11,529k, which includes a defined benefit pension liability of £0,09m.

Subsidiary Financial Results East Durham College has one 100% owned subsidiary company: The College Company Limited: a company incorporated in Great Britain and registered in England and Wales. The principal activity of The College Company Limited is commercial activities ancillary to the College's principal activities. In 2023/24 the company made a surplus before tax of £1k (2023: £5k loss). Previous dormant subsidiary companies Houghall Farm Limited, Houghall Enterprises Limited and Durham Education Group Limited all incorporated in Great Britain and registered in England and Wales were struck off in the year ended 31 July 2023 but not advised as such in the reported financial statements. The financial impact of this has.been reflected in the reported year 31 July 2024 and has a £lOk charge in the College but has no financial impact on Group results as this was previously provided against. The College Company Limited: a company incorporated in Great Britain and registered in England and Wales. The principal activity of The College Company Limited is commercial activities ancillary to the College's principal activities. In 2023/24 the company made a surplus before tax of £lk (2023: £5k loss). 61 Page

Members' Report and Financial statements for the year ended 31July 2024

The consolidated Group generated a surplus from operations of £193k (2023: £110k surplus). The College received 82% of its total income for 2023/2024 as grants from funding bodies, most notably from the Education and Skills Funding Agency and Department for Education for 16-18 provision. The increase in performance from the prior year was largely due to an increase in 14-16 provision and Apprenticeships income.

Cash flows and liquidity During the year cash inflow from operations was £776k (2023: £1,892k) and cash decreased in the year by £1,784k (2023: £85k increase). The decrease from the prior year is due to increased capital spend and net working capital particularly with respect to creditors. During the year £483k of bank debt has been repaid, resulting in a year-end balance of £4,284k. The size of the college's total borrowing and its approach to interest rates has been calculated to ensure a reasonable cushion between the total cost of servicing debt and operating cashflow. During the year this cushion was sizeable; the interest paid of £207k was clearly exceeded comfortably by the operating cashflow of £776k.

Reserves The College has no formal Reserves Policy but recognises the importance of reserves in the financial stability of any organisation and ensures that there are adequate reserves to support the long-term viability and financial stability of the College. This is considered to be where reserves excluding pension liability exceed the annual other operating expenditure for the year. At the year end the College Group had reserves of £11,619k an increase of £193k from the balance as at 31 July 2023 (£11,426k) excluding the pension reserve. The pension reserve remained a deficit of £90k at both 31 July 2024 and 31 July 2024. It is the corporation's intention to increase reserves over the life of the strategic plan through the generation of annual operating surpluses.

Sources of income The group has significant reliance on the education sector funding bodies for its principal funding source, largely from recurrent grants. In 2023/2024, ESFA provided 82.00% (2023: 81.69%) of the group's total income.

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Members' Report and Financial statements for the year ended 31July 2024

Streamlined Energy and Carbon Reporting As an employer and key organisation in the region, East Durham College recognises how important it is for us to make sure we are committed to sustainability in everything we do. Sustainable development is about embracing every opportunity to make a difference environmentally, socially and financially to create an organisation that is fit for the future and that supports the wellbeing of our staff, students and our wider community. For our College as a business, it makes sense to make the operation of our buildings and estate more efficient and to invest in carbon reduction. For our College as an educator, it makes sense to introduce sustainable development into the curriculum to provide leavers the skills, value and knowledge needed to mitigate the effects of climate change. Students with these skills will have increased employment prospects and greater potential for career progression. Additionally, our College has an important part to play in supporting local businesses and our wider community in its journey towards a more sustainable way of living. Finally, we are due to be held accountable by ESFA to help the government reach its net zero target by 2050 and our future funding may be dependent on this. •

In 20232- 2023 a strategy was produced to support the aims of East Durham College in relation to sustainability.

•

In 2023 - 2024 alongside working toward the existing strategy, the sustainability strategy was revised to reflect the requirements of the "Climate Action Roadmap for HE Colleges". A sustainability Committee Meeting has been arranged to discuss the new strategy and implement SMART objectives to achieve these revised goals.

The College is also an active collaborator, partnering with other organisations such as Defra (Green Skills Hub) and is part of the N8 which is a collection of educational institutions in the North East (Universities and Colleges) which undertake research into green technologies. As stated above, the College is committed to reducing its carbon emissions and has taken the following measures in the year to improve energy efficiency: •

• • • • • •

Introduced a cross-college sustainability group that has prepared a sustainability strategy and will continue to work towards implementing projects to improve sustainability. begun work on a Carbon Adaptation Plan Worked in partnership and through the N8 bet Zero North Skills Alliance to identify and provide skills required for the Green Agenda Re-configured the BEMS to reduce the operating temperature Continued LED replacement strategy across campus Sustained the use of virtual meeting technology to reduce need for travel between sites Reviewed its processes internally to reduce paper e.g. electronic enrolment

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Members' Report and Financial statements for the year ended 31July 2024

UK Greenhouse gas emissions and energy use data for the period Energy consumption used to calculate emissions (kWh) * Scope 1 emissions in metric tonnes CO2e

1 August 2023 to 31 July 20241

1 August 2022 to 31 July 20232

3,908,691

4,816,849

365.55 28.10 393.65

477.14 19.16 496.30

374.46

436.07

23.53

25.54

791.64

957.91

1.70

2.10

Gas consumption Owned transport Total Scope 2 emissions in metric tonnes CO2e Purchased electricity Scope 3 emissions in metric tonnes CO2e Business travel in employee owned vehicles Total gross emissions in metric tonnes CO2e Intensity ratio Metric tonnes CO2e per staff member *2023 energy consumption has been restated

Why have the ratios declined/improved? We have installed solar PV panels onto the roof at Willerby Grove in July 2023.

Qualification and reporting methodology We have followed the HM Government Environmental Reporting Guidelines. We have also used the GFIG Conversion Factors for Company Reporting to produce this report.

Intensity ratio The chosen intensity measurement ration is the total gross emissions in metric tonnes CO2e per staff member, the recommended ratio for the sector.

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Members' Report and Financial statements for the year ended 31July 2024

Current Performance Financial Health The College has maintained its Financial Health rating of "Good" despite pressure on costs from inflation, utility price increases, Brexit and the war in Ukraine. There have also been unprecedented challenges with relation to staff costs and recruitment and retention of staff has been difficult. The College continues to monitor ratios and produce forecasts for future years to keep track of performance.

Capital The College successfully carried out various capital bids in the year in relation to T Levels to provide new and updated student facilities. Including, Theatre Refurbishment and Improvements and Arboriculture and Land-based Engineering Workshop Remodel. Works also significantly progressed in relation to the DfE new build project at Houghall Campus.

Student Numbers 2023/24 saw another year of growth for the college across most aspects of its provision. The College delivered activity worth £17,917k (2022/23: £16,341k) in funding body, main allocation funding. The College had 6,077 enrolments (2022/23: 7,126) funded by ESFA. 2023/24 saw the third year of growth in the number of 16-18-year-olds on full time study programmes exceeding its target of 1,892; there was also growth in the number of 1416-year-olds both directly recruited and on part time programmes (home educated).

Members' Report and Financial statements for the year ended 31 July 2024

FUTURE PROSPECTS Future developments In January 2023, the Board of Governors approved a strategic plan for the three-year period 2023 - 26. This included a change to the mission statement but still recognised the need for the College to remain focused upon its core business, whilst recognising the need to invest in identified skills priority areas which are most in demand in the region. The Board also approved a set of key performance indicators to underpin the plan, and a subset of these informed the second Accountability Agreement which is a requirement of funding from the DfE. The development of higher education provision within land based and higher-level technical qualifications in skills shortages areas remain a strategic focus for the college and will be delivered directly by the College. The first year of the degree in Animal Management commenced with a high level of enrolments and planning continues on further developments in this area. T Levels continued focusing on Digital, Engineering, Healthcare, Building Services and Education with plan to triple enrolments in 2024/25. The College was one of 16 colleges nationally to be selected in May 2021 to benefit from a re-development at its Houghall Campus. The college is at the point of planning with building expecting to start in February 2025; this will provide us with new teaching and learning facilities as well as new agricultural buildings to support the growth in that provision. The proposed opening of the new building is September 2026. Significant refurbishment was undertaken of the agricultural and arboriculture workshops at Houghall and the Theatre and other creative spaces at Willerby Grove via the T-level Capital Fund which has provided improved facilities for students and employers and allowed the college to deliver a wider range of provision. In addition, the College re-located its specialist engineering provision to its main campus site in Peterlee which has allowed the college to provide bespoke facilities for the delivery of T Levels and other qualifications; this work had a significant impact on enrolment for 24/25 with this department exceeding its targets.

Curriculum Plan The College continued to deliver a curriculum with sufficient breadth to meet the needs of its community and impact upon social mobility whilst ensuring financial efficiency. The college saw growth in its 16-18 numbers for the fourth year running with increases in local market share which was the highest for 10 years. Areas of growth included Health Science and Health and Social Care, Construction, and land-based areas such as arboriculture and floristry. Student numbers in these cohorts are strong. Apprenticeships continued to grow, exceeding the previous year's outturn with new provision in teaching and learning and the introduction of human resources. This year saw growth in construction (carpentry and joinery) and healthcare science. Adult provision

ill

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Members' Report and Financial statements for the year ended 31July 2024

plateaued however there was growth in alternatively funded provision such as Bootcamps and UKSPF.

Financial plan The college governors approved a financial plan in July 2023 which sets objectives for the period to 2024. The college aims to maintain its health rating of 'Good' and achieve a surplus in the year to 31 July 2024. The college governors approved a financial plan in July 2024 which sets objectives for the period to 2025. The college aims to maintain its health rating of 'Good' and achieve a surplus in the year to 31 July 2025. The College should see increases in revenue from 16-18 funding due to an increase in student numbers combined with an increase in T-level learners. The true cost of T-levels is likely to outweigh the increased financial revenue at a course level. Pay continues to remain a priority and the College remains committed to increasing pay and benefits for staff. Staff recruitment and retention remain a significant risk to the college, with pay being a key barrier. The college will also continue to review utility consumption across its 3 sites, with a view to further reduce usage and costs and the control of non-pay costs remains a priority

Treasury policies and objectives The College has treasury management arrangements in place to manage cash flows, banking arrangements and the risks associated with those activities. This policy is contained within the Financial Regulations.

KEY PERFORMANCE INDICATORS The colleges key performance indicators, targets and results are set out below.

Key performance indicator

Measure/Target Actual for 2023/2024

Actual for 2022/2023

Student number targets

1,919

1,920

1,903

Operating surplus/EBITDA as % of income

2.31%

10%

Staff Costs as a % of income

64%

61%

Adjusted current ratio

0.856

0.72

1.14%

Borrowing as a % Income

<20%

17%

19%

Financial health

Good

Ofsted rating

Good

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Members' Report and Financial statements for the year ended 31July 2024

The College is committed to observing the importance of sector measures and indicators and uses the FE Choices data available on the GOV>UK website which looks at measures such as success rates. The College is required to complete the annual Finance Record for the Education and Skills Funding Agency ("ESFA"). The College was assessed by the ESFA measures as having "Good" grade in 2021/22. The College's result for 2022/23 maintains this grade. East Durham's financial sustainability objectives include: 2023/24

2022/23

Met

•

Meeting all financial banking covenants

•

Generating a surplus of income over expenditure (before actuarial gains/losses)

Total Comprehensive Income

£193k

£620k

•

Improving short term liquidity

Cash in bank

£1,352k

£3,136k

•

Maintaining financial health

Good

Student achievements Students continue to prosper at the college with the majority making good progress and achieving their learning goals. Students benefit from teachers with expert subject knowledge who deliver effective education and training supported by excellent facilities, which enhance students' skills and allows them to progress. Progression to a positive destination (HE, employment, further education) remains high at 93.8% with an increased number of students progressing to employment. 2024 was a successful year for ED6 destinations and leavers have progressed to a variety of higher education institutions. Destinations and degrees including Durham University (Natural Sciences), Durham University (Law), 2 learners progressed to Newcastle University (Mathematics), Newcastle University (Physics), Nottingham (Chemistry), Newcastle University (Zoology), Hull University (Marine Biology), Northern School of Art (Animation), Newcastle University (Politics and Sociology), University of Kent (Sociology), University of Lincoln (Pharmacy), Liverpool Hope University (Accounting and Finance) and York St John University (English Language and Linguistics) Staff and students continue to perform well in competitions across college with students from the Peter Jones Enterprise Academy, Hairdressing and Beauty, Health and Social Care, Arboriculture, Floristry, Agriculture and Engineering winning local, regional and national awards. This year the college had a student a team of Media students who won a Silver Medal at the WorldSkills awards and a Florist who was highly commended.

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Members' Report and Financial statements for the year ended 31July 2024

Payment performance The Late Payment of Commercial Debts (Interest) Act 1998, in the absence of agreement to the contrary, requires organisations to make payments to suppliers within 30 days of either provision of goods or services on the date on which the invoice was received. The target set by the Treasury for payment of suppliers within agreed payment terms of 30 days as appropriate is 95%. During the accounting period 1 August 2023 to 31 July 2024, the college paid 30% (2022/23: 47%) of its invoices within 30 days. The college incurred no interest charges in respect of late payment for this period and continues to make improvements to this position.

Principal Risks and Uncertainties The College has undertaken further work during the year to develop and embed the system of internal control, including financial, operational and risk management which is designed to protect the College's assets and reputation. Based on the strategic plan, the Risk Management Group undertakes a comprehensive review of the risks to which the College is exposed. They identify systems and procedures, including specific preventable actions, which should mitigate any potential impact on the College. The internal controls are them 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 also consider any risks, which may arise as a result of a new area of work being undertaken by the College. A risk register is maintained at the College level, which is reviewed at least annually by the Audit Committee and more frequently where necessary. The risk register identifies the key risks, the likelihood of those risks occurring, their potential impact on the College and the actions being taken to reduce and mitigate the risks. Risks are prioritised using a consistent scoring system. This is supported by a risk management group which is a formal group responsible for managing risk, collating a risk register and monitoring risk mitigation through a risk management action plan. The group meet regularly to identify new risks, monitor existing risks and develop plans to mitigate against significate risk. The Corporation receives regular reports updating it to the position on risk management and the progress made in implementing the risk management action plan. The College makes prudent recognition and disclosure of the financial and no-financial implications of risk. A college risk management strategy was adopted by the Board of Governors and implementation of the strategy is subject to scrutiny at each Audit Committee and at the Full Board meeting. Outlined below is a description of the principal risk factors that may affect the College. Not all the factors are within the College's control. Other factors besides those listed below may also adversely affect the College.

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Members' Report and Financial statements for the year ended 31July 2024

Staff recruitment, retention, and attendance A pay strategy including a 6.5% pay rise in 2023, was implemented in 2023/24. Work has commenced on pay strategies along with other Recruitment, retention and rewards options for the academic year 2024/25 and these will be review by the corporation in due course. The college ensures regular scrutiny of vacancy rates, turnover and absence trends a by both senior leadership and governors.

Failure to maintain financial health and uncertainty of funding. Robust annual and 3-year planning processes together with regular review of in year forecasts. Active monitoring of curriculum offers in relation to funding rules.

Curriculum/Qualification reform The college continues to review its offer in relation to the skills priorities with challenge coming from governors who review the annual plan as well as a three year review as per the DfE guidelines. Curriculum planning focus on efficiency with choices made which facilitate the best outcomes for students. However, the defunding of qualifications across the year has meant that options have reduced and, in some areas, such as childcare, students only have one option to study at level three (T-Levels) and additional courses are required for adults which impacts upon efficiency.

The College is moving more of its adult delivery into skills priority areas and seeking alternative ways of funding this to meet the needs of employers more rapidly, rather than them having to wait or study on long programmes.

Student Recruitment and Retention The college has a strong focus on the application to enrolment conversion rate and sets targets for managers which are reviewed across the year. The breadth of provision and alternative education for 14-16 year olds ensures strong working relationships with local and regional schools which is further reinforced by the schools team who attend events at all feeder schools.

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Members' Report and Financial statements for the year ended 31July 2024

EQUALITY AND DIVERSITY Promoting Equality and Valuing Diversity The College is committed to ensuring equality of opportunity for all who learn and work here. We respect and value positively differences in race, gender reassignment, sexual orientation, disability, religion or belief, sex and age. We strive vigorously to remove conditions which place people at a disadvantage, and we will actively combat bigotry. This policy is resourced, implemented and monitored on a planned basis. The College's Equality Policy is published on the College's website. The College also has a legal commitment to uphold protected characteristics of the Equality Act (2010) and the Public Sector Duty (2011). All College staff have undertaken Prevent and Equality and Diversity training (prevent is one of the four strands of the Governments' counter terrorism strategy). Full time learners have access to a range of activities to raise awareness of the Prevent agenda, cyber bullying and hate/mate crime in order to keep them safe during the year. The college publishes an Annual Equality Report and Equality Objectives to ensure compliance with all relevant equality legislation including the Equality Act 2010. The college undertakes equality impact assessments on all new policies and procedures and publishes the results. Equality impact assessments are also undertaken for existing policies and procedures on a prioritised basis. The college is a 'Disability Confident' employer and has committed to the principles and objectives of the Positive about Disabled standard. The college considers all employment applications from disabled persons, bearing in mind the aptitudes of the individuals concerned. An equalities plan is published each year and monitored by managers and Governors. Good progress is made by learners who have a stated disability or special emotional needs. Learners who require extra support achieve as well as their peers. Swift initial guidance is good with a range of partners to ensure that all learners receive the support they need. The College has rolled out Mental Health First Aid Training to key College staff and is committed to continue to support staff and student wellbeing. The College has achieved accreditation a Bronze Pride in Equality, Diversity and Inclusion.

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Members' Report and Financial statements for the year ended 31July 2024

Gender pay gap reporting Year ending 31 March 2023

Year ending 31 March 2022

Mean gender pay gap

5.8%

4.3%

Median gender pay gap

6.3%

7.7%

Mean bonus gender pay gap

Median gender bonus gap

Proportion of males/females receiving a bonus

0%/0%

0% / 0%

The proportion of males and females in each quartile of the pay distribution are: Males

Females

1 - Lower quartile

24%

76%

26%

74%

29%

71%

4 - Upper quartile

42%

58%

The college publishes its annual gender pay gap report on its website.

Accessibility statement The college seeks to achieve the objectives set down in the Equality Act 2010. The College actively makes arrangements to support learners with leaning difficulties and disabilities to ensure they are able to access the full range of services and provision.

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Members' Report and Financial statements for the year ended 31 July 2024

Trade union facility time The Trade Union (Facility Time Publication Requirements) Regulations 2017 require the college to publish information on facility time arrangements for trade union officials at the college. Numbers of employees who were relevant period (FTE)

2.5

Percentage of time

Number of employees

1-50%

2.5

Total cost of facility time

£1,674

Total pay bill

£16,341k

Percentage of total bill spent on facility time

0.01%

Time spent on paid trade union activities as a percentage of total paid facility time

0.01%

GOING CONCERN After making appropriate enquiries, the Corporation considers that the college has adequate resources to continue in operational existence for the foreseeable future. A fuller explanation of which can be found in the Notes to the Financial Statements. For this reason, it continues to adopt the going concern basis in preparing the financial statements.

EVENTS AFTER THE REPORTING PERIOD There are no events that need to be reported upon that may affect the viability of the College.

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 ail the steps that he or she ought to have taken to be aware of any relevant audit information and to establish that the college's auditors are aware of that information. Approved by order of the members of the corporation on 5 December 2024 and signed on its behalf by:

3 Bromiley Chair

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Members' Report and Financial statements for the year ended 31July 2024

Key Management Personnel and Professional Advisors Key management personnel are defined as the college leadership team and represented by the following in the year:

Key Management Personnel Suzanne Duncan, Principal and CEO; Accounting Officer (retired 31/07/24) Carina Tomlinson, Vice principal Curriculum and Performance Jennifer Mitchelson, Vice Principal Finance and Business Planning-Appointed 15/01/2024 Sarah Judson, Vice Principal Finance and Business Planning-Resigned 31/08/23 Helen McCoy, Assistant Principal Performance Jackie Lanagan, Assistant Principal Curriculum Planning and Partnerships Alfie Wilkinson, Campus Director (resigned 05/07/2024) Lindsay Haggis, Campus Director

Board of Governors A full list of Board of Governors is given in the Statement of Corporate Governance and Internal Control.

Clerk to the Corporation Muckle LLP

Professional advisors External auditors

RSM UK Audit LLP 1 St James Gate Newcastle upon Tyne NE1 4AD

Internal auditors

WBG 168 Bath Street Glasgow G2 4TP

Solicitors

Muckle LLP Time Central 32 Gallowgate Newcastle Upon Tyne

Bankers

Lloyds Bank plc 19 Market place Durham DH1 3NL

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Members' Report and Financial statements for the year ended 31July 2024

Statement of Corporate Governance and Internal Control The following statement is provided to enable readers of the annual report and accounts of the college to obtain a better understanding of its governance and legal structure. This statement covers the period from 1 August 2023 to 31 July 2024 and up to the date of approval of the annual report and financial statements. The college endeavours to conduct its business: 1. in accordance with the seven principles identified by the Committee on Standards in Public Life (selflessness, integrity, objectivity, accountability, openness, honesty and leadership); 2. in accordance with the guidance to colleges from the Association of Colleges in The Code of Good Governance for English Colleges ("the Code") The College is committed to exhibiting best practice in all aspects of corporate governance and in particular, the College has adopted and complied with the Code. We have not adopted and therefore do not apply the Corporate Governance Code. However, we have reported on our Corporate Governance arrangements by drawing upon best practice available, including those aspects of UK Corporate Governance Code we consider relevant to the further education sector and best practice. In the opinion of the Governors, the College complies with or is working towards compliance with all the provisions of the Code, and it has complied throughout the year ended 31 July 2024. The Governing Body recognises that, as a body entrusted with both public and private funds, it has a particular duty to observe the highest standards of corporate governance at all times. In carrying out its responsibilities, it takes full account of The Code of Good Governance for English Colleges issued by the Association of Colleges The Governors have adopted the revised 2024 version of the code this financial year for implementation from 2024/25 onwards. The College Is an exempt charity within the meaning of Part 3 of the Charities Act 2011. The Governors, who are also Trustees for the purposes of the Charities Act 2011, confirm that they have had due regard to the Charity Commissions' guidance on public benefit and that the required statements appear elsewhere in these financial statements. The Clerk to the Corporation effectively manages the administration of the Governors' business. Reviews of working practices within the clerking support have resulted in more concise minutes, with papers being shared securely and electronically. Minutes are detailed and accurate, deadlines for papers are consistently met and quoracy levels are continuously maintained. A comprehensive induction for Governors is in place, as well as effective training. The induction process fully incorporates an understanding of key college functions and how this maps into senior management roles. Further work has taken place in relation to developing the governor's understanding of what constitutes high quality teaching, learning and assessment. Governors regularly meet staff and students. In this financial year there have been very successful student governor conferences. Interaction with middle managers and support staff is less consistent. Governors also take their responsibilities seriously with regards to their statutory duty for safeguarding and quality and diversity and undertake regular training in these areas.

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Members' Report and Financial statements for the year ended 31 July 2024

THE CORPORATION Members of the Corporation The members who served on the Corporation during the year and up to the date of signature of this report were as listed in the table below.

Name

Date of Appointment

Term of office

Date of resignation /End of term of office

Status of appointment

Committees served

No. of meetings attended in financial year

Mr J Bromiley

15/10/15

4years

11/10/27

External

Audit & Risk

Board 4/5

Search &

Committee

14/10/19

Remuneration

5/6

12/10/23 (extraordinary reappointment) 12/11/12

Chairs

Member

Reappointed

Mr D Butler

4years

11/11/24

Reappointed 12/11/20

External

Curriculum,

Member

Quality and

Chair from 13/2/14

Board 5/5 Committee

Standards

8/8

Finance and General Purposes Search & Remuneration Chairs

Mr M Curry

26/1/17

4 years

Reappointed

07/08/2024 (Resignation)

External Member

25/02/2021

Audit & Risk

Board 4/5

Finance and

Committee

General

5/6

Purposes Mrs S Duncan

1/9/12

N/A

21/07/2024

Principal

Curriculum, Quality and

(Retirement)

Board 5/5 Committee

Standards

11/11

Finance and General Purposes Search Audit & Risk Mr R Harrison

04/07/19 Reappointed 03/07/23

4 years

02/07/27

External Member

Audit & Risk

Board 4/5

Curriculum,

Committee

Quality and

6/6

Standards

21 'Page

Members' Report and Financial statements for the year ended 31July 2024

Name

Date of Appointment

Term of office

Date of resignation /End of term of office

Status of appointment

Committees served

No. of meetings attended in financial year

Mrs A

13/07/23

4 years

12/07/27

External

Curriculum,

Board 4/5

Member

Brennan

Quality and

Committee

Standards Mr G Dullage

13/07/23

4 years

12/07/27

3/3

External

Finance and

Member

General

Board 4/5 Committee 5/5

Purposes Search & Remuneration Mr G

12/10/23

4 years

11/10/27

Edmunds

External Member

Audit & Risk

Board 4/5 Committee 3/3

Mn J Smith

13/07/23

4 years

12/07/27

External Member

Finance and General

Committee

Purposes

Mr S Laverick

17/07/23

4 years

12/07/27

External Member

2/3

Curriculum,

Board 4/5

Quality and

Committee

Standards Mrs S Robson

13/07/23

4 years

12/07/27

External Member

Board 3/5

3/3

Finance and General

Board 3/5 Committee

Purposes

3/5

Search & Remuneration Mr M Young

07/07/22

4 years

08/07/26

External Member

Curriculum, Quality and , Standards

Ms K Tate

12/10/23

2 years

11/10/25

Staff Member

(Staff

Standards

Governor) Ms G Flanagan (Student

Curriculum, Quality and

14/12/23

1 years

13/12/24

Committee 2/3 Board 4/5 Committee 3/3

Student

Curriculum,

Member

Quality and Standards

Board 4/5

Board 3/5 Committee 2/3

Governor)

22IPage

Members' Report and Financial statements for the year ended 31July 2024

Name

Date of Appointment

Term of office

Date of resignation /End of term of office

Status of appointment

Committees served

No. of meetings attended in financial year

Mr D Jackson

14/12/23

1 years

13/12/24

Student

Curriculum,

Board 2/5

Member

Quality and

Alderson

Standards

(Student

Committee 1/3

Governor) Mr D Hartis

12/10/23

4 years

11/10/27

Co-opted

Audit & Risk

Committee

member of A&R

(only)

3/3

Mr D Butler and Mrs S Duncan acted as Directors of the College wholly owned subsidiary The College Company Ltd during the year and up to the date of their retirements. Mr 3 Bromiley and Mr S Bullock also acted as Directors of the College wholly owned subsidiary The College Company Ltd from the academic year 2024/25 and up to the date of signature of this report:

The Governance framework 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. During 2023/24 the Corporation met 5 times. The corporation conducts its business through a number of committees. Each committee has terms of reference, which have been approved by the corporation. These committees are Curriculum, Quality and Standards, Finance and General Purposes, Audit and Risk, Search and Remuneration. Full minutes of all meetings, except those deemed to be confidential by the corporation, are available from the clerk to the corporation at the college's registered address. The clerk to the corporation maintains a register of financial and personal interests of the governors. The register 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.

23 IPage

Members' Report and Financial statements for the year ended 31July 2024

Formal agendas, papers and reports are supplied to governors in a timely manner, prior to Board meetings. Briefings are provided on an ad hoc basis. 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 and Accounting Officer are separate. There are role descriptions for Chairs of Committees and Link Governors. The Chair and Vice-Chair of the Corporation and the Chairs of all committees are appointed by the board. East Durham College has an Employer Engagement Strategy to ensure that the views of its stakeholders are listened to and has agreed a Public Value Statement that describes how the College seeks to add value to the social, economic and physical well-being of the community it serves. Governors meet with students at a termly Focus Groups to discuss the overall learner experience and to triangulates information provided by way of reported learner consultation sampling and survey outcomes. Governors commit a significant amount of time to fulfilling their responsibilities to determine and review the educational character and mission and values of the College and the overview of its activities for which they do not receive any financial compensation neither wages or other payments. Governors are entitled to reclaim expenses reasonably incurred in performing their roles. Board reports include specific reference to how decisions will impact on the strategic objectives and targets that have been agreed by the Board following consultation with relevant stakeholders. The Board scrutinises the performance and management in meetings of the Board and its Committees. Governors undertake an annual self-assessment of the Corporation other than in years where an external governance review is commissioned. The performance and training and development requirements of individual Governors, their performance against service standards, and their feedback for the chair is discussed at annual one to one meetings with the Chair of the Corporation.

Appointments to the Corporation Any new member appointments to the corporation are a matter for the consideration of the corporation as a whole. The corporation has a Search and Remuneration committee, consisting of Members of the Corporation, which is responsible for the selection and nomination of any new External Member for the Corporation's consideration. The Search and Remuneration Committee meets at least twice per academic year. It considers applications against a skills and EDI audit of existing Board members and has due regard for the diversity of the Board. There is an agreed Governor Recruitment and Planning Policy. 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 and area able to serve for two consecutive terms of office, with further terms of office only agreed in exceptional circumstances.

24 lPage

Members' Report and Financial statements for the year ended 31July 2024

Corporation performance The Corporation was inspected by Ofsted in April 2024 and was graded as "Good" with Outstanding for "behaviours and attitudes" and "personal development". The Board has commissioned an external governance review undertaken by the AOC. The review recognised the EDC has a high-performing Board that puts the success and wellbeing of students at the heart of its work. The overall conclusion of the review of board effectiveness is that there is strong evidence that the board is highly proficient and consistently impacts positively on college strategy, effectiveness and outcomes.

Search and Remuneration Committee The committee is responsible for oversight of the search process for finding any new Board Members for making recommendations to the Board on the remuneration and benefits of the Principal/Accounting Officer, Vice-Principal Finance and Business Planning, Vice Principal Curriculum and Performance, and the Clerk to the Corporation. The College has adopted the Association of Colleges "The Colleges' Senior Post Holder remuneration Code". The Committee comprises of independent External Board Members, save that the Principal is a committee member for Search items only. It meets at least once per academic year and takes account of peer information, and the College's financial circumstances, to ensure the long-term success of the organisation. Details of remuneration of these three senior post-holders for the year ended 31 July 2024 are set out in note 7 to the financial statements.

Audit and Risk Committee The Audit and Risk Committee comprises five members of the corporation (excluding the Accounting Officer and Chair) and a co-opted member. The Committee operates in accordance with written terms of reference approved by the Corporation. The Committee meets on a termly basis and provides a forum for reporting by the college's internal auditors, 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 reports from the main FE funding bodies as they affect the college's business. The college's internal auditors monitor and review 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 auditors and regularity and financial statements auditors and their remuneration for audit and nonaudit work as well as reporting annually to the Corporation.

25 'Page

Members' Report and Financial statements for the year ended 31July 2024

The audit committee met three times in the year to 31 July 2024 as follows.

iliailiir4,1_?Ir'

Mar

023 2024 2024 S Duncan

Principal

C Tomlinson

VP Curriculum

D Everitt

Interim VP Finance

3 Mitchelson (from January 2024)

VP Finance

R Harrison

Chair

3 Brorniley

Member

M Curry

Member

G Edmunds

Member

D Hartis

Independent member

RSM

External Audit

Audit One

Internal Audit

Wylie & Bissett

Internal Audit

3u , 20

T•

Finance and General Purposes Committee The committee meets on a regular basis to make recommendations to the Main board on matters relating to Finance, HR, IT Estates and other matters contained in it's terms of reference as appropriate.

Curriculum, Quality and Standards Committee The Committee monitors academic performance and makes recommendations to the Board of Governors in respect of areas relating to teaching, learning an assessment; quality and curriculum; equality; and the stakeholder voice. Its remit includes overseeing the College's Self-Assessment report and monitoring progress of the Quality Improvement Plan. The Committee meets at least once a term.

26 1Page

Members' Report and Financial statements for the year ended 31July 2024

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 they are personally responsible, in accordance with the responsibilities assigned to them in the Funding Agreement between East Durham College and the funding bodies. They are 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 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 East Durham College for the year ended 31 July 2024 and up to the date of approval of the members report and Financial Statements.

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, and arrangements for compliance with legal and regulatory matters including those relating to the regularity and propriety of public funding 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 period ending 31 July 2024 and up to the date of approval of the annual report 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 targets to measure financial and other performance

•

clearly defined capital investment control guidelines

•

the adoption of formal project management disciplines, where appropriate.

27 IPage

Members' Report and Financial statements for the year ended 31July 2024

The College has an internal audit service, which operates in accordance with the requirements of the ESFA's Post 16 Audit Code of Practice. The work of the internal audit service is informed by an analysis of the risks to which the College is exposed, and annual internal audit plans are based on this analysis. The analysis of risks and the internal audit plans are endorsed by the corporation on the recommendation of the audit committee. At minimum, annually, the Head of Internal Audit (HIA) provides the governing body with a report on internal audit activity in the College. The report includes the HIA's independent opinion on the adequacy and effectiveness of the College's system of risk management, controls and governance processes. The Internal audit service undertakes a planned programme as part of a risk-based approach, which is reported and scrutinised by Audit and Risk Committee. The 23/24 audit work included work on procurement, Student Recruitment and Retention, Cyber Security and Funding Audit for ALS and Apprenticeships. There were no areas of significant weakness and College management agreed all recommendations and action plans were introduced accordingly. The Audit and Risk Committee assesses the performance of the auditors annually against the terms and conditions of their appointment letters, along with their respective in year planning documents, which detail assessment against performance indicators. Following due procurement process the college's Internal Auditors WBG were appointed in 2023/24. The Audit Committee assesses the performance of the auditors annually on the terms and conditions of their appointment letters, along with their respective in year planning documents, which details assessment against set performance indicators. The Audit Committee has formally reviewed the independence of its auditors and letters have been provided form the auditors confirming they remain independent within the meaning of the regulations on this matter and their professional standards. To fulfil its responsibilities regarding he independence of the external auditors, the Audit Committee has reviewed: e •

details of the senior audit personnel in the audit plan for the current year; a report from the external auditors describing their arrangements and safeguards to ensure no conflicts of interest; and the extent on non-audit services provided.

To assess the effectiveness of the external auditors, the Committee reviewed: • • •

the external auditors' fulfilment of the agreed audit plan and variations from it; reports highlighting major issues that arose during the course of the audit; feedback form the Vice principal Finance and Business Planning that evaluated the performance of each audit team.

The audit committee has advised the Board of Governors that the Corporation has an effective framework for governance and risk management in place. The Audit Committee believes the Corporation have effective internal controls in place.

28 1Page

Members' Report and Financial statements for the year ended 31July 2024

The specific areas of work undertaken by the Audit committee in 2023/24 and up to the date of the approval of the financial statements are: • • • • • • • • •

Risk Management Cyber Security Gifts and Hospitality Statutory Accounts and associated items Procurement and Payables Subcontracting Controls Devolved Adult Funding Recruitment and Induction GDPR

Risks faced by the corporation. The College assesses all risks and has a Risk register that is categorised under each of the College's Strategic Risks. These Strategic risks and reported under each of the college's five Strategic Objectives:

Performance We are ambitious for our PERFORMANCE and we will continue to grow our share of key markets whilst achieving excellence in provision that meets regional skills needs.

Strong Financial Health Achieve financial and environmental sustainability whilst maintaining exceptional quality and high levels of student satisfaction.

People We are ambitious for our PEOPLE, and we will develop and implement an aspirational People Strategy which will support our people to work collaboratively to deliver our highly ambitious curriculum goals.

Partnerships We are ambitious for our PARTNERSHIPS and we will participate in highly effective and proactive collaborations which allow us to accelerate our growth in key priority skills areas.

29IPage

Members' Report and Financial statements for the year ended 31 July 2024

Collaboration Build a collaborative network that increases our impact and reach. Meetings of the Risk management group take place termly to review the register in terms of scoring of identified existing risks, the effectiveness of mitigating actions, the identification of new risks or the removal of existing risks. During the year special emphasis was placed on the continuing management of risk around Covid 19. The Risk management group is chaired by the principal and its membership covers expertise in finance, human resources, estates, curriculum, marketing, governance, and student support. The Register and Action Plan is monitored and discussed at every meeting of Audit Committee. The College Leadership group has responsibility for overseeing the risks and ensuring risks are managed. All risks are categorised in terms of likelihood and impact. This year the risk register has also been integrated into a new reporting template which pulls together the strategic KPIs, risk, progress against the strategic plan and any key changes to operations across the key strategic areas of the plan. The aim of this was to make risk fully integrated into reporting and strategy.

Responsibilities under funding agreements The college has ensured that it is has submitted all returns on time, provided and retained evidence of learner data to support the claims and ensured funds are spent appropriately. The Department for Education and Skills Funding Agency introduced new controls for the college on 29 November 2022 on the day that the Office for National Statistics reclassified colleges as public sector organisations in the national accounts. The ESFA chief executive communicated these changes to all college accounting officers and explained plans to introduce a college financial handbook in 2024. The college has reviewed its policies, procedures, and approval processes in line with the new requirements. The college is establishing systems and processes to identify and handle any transactions which DfE approval is required.

30 I Page

Members' Report and Financial statements for the year ended 31July 2024

Statement from the Audit Committee The Audit Committee and the Accounting Officer has advised the Board of Governors that the corporation has an effective framework for governance, risk management and control and has fulfilled its statutory responsibilities for the "effective and efficient use of resources, the solvency of the institution and the body and the safeguarding of assets". The specific areas of work undertaken by the audit committee in 2023/24 and up to the date of approval of the financial statements are: ,_,

rc),=--c,,,if- ,

External

There are no major issues ro report and a

Audit

clean audit opinion.

External

A full Funding audit is now undertaken every

Audit-

year. This specifically looks at compliance and

Funding

quality of data regarding learner records

Internal

The year end report gives Good overall

All recommendations are

Audit

assurance

followed up and reported at

Lir N/a

N/a

Audit & Risk Committee Risk

Audit and Risk Committee has reviewed the

N/a

Strategic Risk Register during the course of the year, in particular focusing on ensuring that key risks facing the organisation are being effectively managed. Sub-

Robust review of all sub-contracting

N/A

contracting arrangements. No issues reported. Gifts and

There was one gift received above the value

Hospitality

of £100 as per the Financial Regulations — see

N/A

gifts and hospitality declaration. Fraud

There was one allegation of fraud which

The college is fully complying

remains under investigation.

with the investigation team at the ESFA.

TOR

The TOR is reviewed bi-annually by the Clerk

N/A

and the Audit and Risk Committee to ensure the remit of the committee is still fit for purpose

31 Ipage

Members' Report and Financial statements for the year ended 31July 2024

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; and

•

comments made by the college's financial statements auditors and the reporting accountant for regularity assurance, in their management letters and other reports.

The Accounting Officer has been advised on the implications of the result of their review of the effectiveness of the system of internal control by the Audit Committee, which oversees the work of the internal auditor and other sources of assurance, and a plan to address weaknesses and ensure continuous improvement of the system is in place. The senior management team receives reports setting out key performance and risk indicators and considers possible control issues brought to their attention by early warning mechanisms, which are embedded within the departments and reinforced by risk awareness training. The senior management team and the Audit Committee also receive regular reports from internal audit and other sources of assurance, which include recommendations for improvement. The Audit Committee's role in this area is confined to a high-level review of the arrangements for internal control. The Corporation's agenda includes a regular item for consideration of risk and control and receives reports thereon from the senior management team and the Audit Committee. The emphasis is on obtaining the relevant degree of assurance and not merely reporting by exception. In addition, the Corporation received the Financial management Report including financial KPI's every month. This is supported by reports in connection to the financial health of the College as appliable. The Corporation also approve the Financial Regulations, which set out authorisation requirements to be adhered to for various expenditure levels. These include Board approval for any spend exceeding £250k (including VAT). In addition to the financial information presented to the Corporation, the curriculum KPI's are presented to all Curriculum, Quality and Standards Committee meetings and all Board meetings. At its November 2024 meeting, the Corporation carried out the annual assessment for the year ended 31 July 2024 by considering documentation from the senior management team and internal audit and taking account of events since 31 July 2024. Based on the advice of the Audit Committee and the Accounting Officer, the corporation is of the opinion that the college has an adequate and effective framework for governance, risk management and control, and has fulfilled its statutory responsibility for"the effective and efficient use of resources, the solvency of the institution and the body and the safeguarding of their assets".

32 1Page

Members' Report and Financial statements for the year ended 31July 2024

Going Concern After making appropriate enquiries, the Corporation considers that the College has adequate resources to continue in operational existence for the foreseeable future. A fuller explanation of which can be found in the Notes to the Accounts. For this reason, it continues to adopt the going concern basis in preparing the financial statements.

Approved by order of the members of the Corporation on 5 December 2024 and signed on its behalf by: James Bromiley Chair

Scott Bullock

Ott, .

P?..../"A

-----)

Accounting Officer

33 IPage

Members' Report and Financial statements for the year ended 31July 2024

Statement of Regularity, Propriety and Compliance As accounting officer, I confirm that the following instances of material irregularity, impropriety, funding non-compliance, or non-compliance with the framework of authorities have been discovered and have been notified to ESFA. If any further instances are identified after the date of this statement, these will be notified to ESFA During the financial year ended 31July 2024 the college made two non-contractual termination payments to two employees in excess of the delegated authority given to the college under the ESFA's bite-size guide "college requirements for special payments, including severance, compensation and ex-gratia payments". The amounts of the noncontractual special payments that required prior ESFA consent which was not sought was £11,772 and £7,823, which was greater than the equivalent to 3 months gross salary in each instance, when including non-contractual PILON. The values by which payments exceeded the required 3 month's gross salary bracket in each instance were £1,890 and £253, respectively. The college acted in good faith in this matter, having sought expert legal advice, in each case and by believing the payment of PILON to be a statutory requirement and not a special payment. The payments made in respect of PILON only represent the value of statutory payments due to the individuals, based on their length of service, and had they not been paid these values, they could have sought legal damages. The college believes it took every reasonable effort to ensure it acted in the best interests for best value for managing public money, the best interest of the learners of East Durham College, the colleagues who were the subjects of the severance arrangements and those who remained in the business. During the financial year 2024/25 and prior to the date of this statement and prior to the clarification of the ESFA rules granted throughout the 2023/24 external audit process, a further payment was made, based on the same good faith principles as outlined above. The amount of the non-contractual special payment that required prior ESFA consent which was not sought was £16,413 which was greater than the equivalent to 3 months gross salary in this instance, when including non-contractual PILON. The value of the payment above the required 3 month's gross salary bracket was £2,706.

Scott Bullock Accounting Officer 05 December 2024 341 Page

Members' Report and Financial statements for the year ended 31July 2024

Statement of the Chair of Governors On behalf of the Corporation, I confirm that the accounting ,officer has discussed their statement of regularity, propriety and compliance with the board and that I am content that it is materially accurate.

James Bromiley Chair of Governors 05 December 2024

Statement of Responsibilities of the Members of the Corporation The members of the Corporation (who act as trustees for the charitable activities of the College) are required to present audited financial statements for each financial year. The law applicable to charities in England and the terms and conditions of the Corporation's grant funding agreement and contracts with Education and Skills Funding Agency (ESFA) and any other relevant funding bodies, the corporation is required to prepare financial statements which give a true and fair view of the financial performance and position of the College for that period. Corporations must also prepare a strategic report which includes an operating and financial review for the year. The bases for the preparation of the financial statements and strategic report are the Statement of Recommended Practice - Accounting for Further and Higher Education, ESFA's College Accounts Direction, and United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards. 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 UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements • assess whether the corporation is a going concern, noting the key supporting assumptions, qualifications or mitigating actions, as appropriate • 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 a strategic report, in accordance with paragraphs 3.23 to 3.27 of the FE and HE SORP, that describes what it is trying to do and how it is going about it, including information about the legal and administrative status of The corporation.

35 1Pa ge

Members' Report and Financial statements for the year ended 31July 2024

The Corporation is responsible for keeping proper accounting records which are sufficient to show and explain the company's transactions and disclose with reasonable accuracy, at any time, the financial position of the Corporation, and enable it to ensure that the financial statements are prepared in accordance with the Further and Higher Education Act 1992, the Charities Act 2011 and relevant accounting standards. It is responsible for taking steps that are reasonably open to it in order to safeguard its assets 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 and that the financial transactions conform to the authorities that govern them. In addition, they are responsible for ensuring that funds from ESFA, and any other public funds, are used only in accordance with ESFA's grant funding agreements and contracts and any other conditions, that may be prescribed from time to time by ESFA, or any other public funder, including that any transactions entered into by the corporation are within the delegated authorities following the reclassification of college corporations on 29 November 2022. Members of the corporation must ensure that there are appropriate financial and management controls in place to safeguard public and other funds and ensure they are used properly. In addition, members of the corporation are responsible for securing economic, efficient and effective management of the corporation's resources and expenditure so that the benefits that should be derived from the application of public funds from ESFA and other public bodies are not put at risk Approved by order of the members of the corporation on 05 December 2024 and signed on its behalf by:

Th James Bromiley Chair of Governors

36 'Page

Members' Report and Financial statements for the year ended 31 July 2024

Independent Auditor's Report on the Financial Statements Opinion We have audited the financial statements of East Durham College (the "College") and its subsidiary (the "Group") for the year ended 31 July 2024 which comprise the consolidated and college statements of comprehensive income, the consolidated and college balance sheets, the consolidated and college statements of changes in reserves, the consolidated statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is United Kingdom Accounting Standards, including FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" (United Kingdom Generally Accepted Accounting Practice) and the Accounts Direction issued by the Education and Skills Funding Agency. In our opinion the financial statements: •

give a true and fair view of the state of the Group's and of the College's affairs as at 31 July 2024 and of the Group's and the College's surplus of income over expenditure for the year then ended;

•

have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

•

have been prepared in accordance with the Accounts Direction issued by the Education and Skills Funding Agency.

Basis for opinion We conducted our audit in accordance with international standards on auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and college in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusion relating to Going Concern In auditing the financial statements, we have concluded that the governors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's or the college's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. Our responsibilities and the responsibilities of the governors with respect to going concern are described in the relevant sections of this report.

37IPage

Members' Report and Financial statements for the year ended 31July 2024

Other information The other information comprises the information included in the Report and Financial Statements other than the financial statements and our auditor's report thereon. The governors are responsible for the other information contained within the Report and Financial Statements. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements, or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Matters on which we are required to report by exception. We have nothing to report in respect of the following matters where the Post-16 Audit Code of Practice issued by the Education and Skills Funding Agency requires us to report to you if, in our opinion: •

adequate accounting records have not been kept.

•

the financial statements are not in agreement with the accounting records; or

•

we have not received all the information and explanations required for our audit.

Responsibilities of the Corporation of East Durham College As explained more fully in the Statement of the Member of the Corporation's Responsibilities set out on pages 35 to 36, the Corporation is responsible for the preparation of financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Corporation determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Corporation is responsible for assessing the Group's and the College's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Corporation either intend to liquidate the Group or the College or to cease operations, or have no realistic alternative but to do so.

381 Page

Members' Report and Financial statements for the year ended 31 July 2024

Auditor's responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

The extent to which the audit was considered capable of detecting irregularities, including fraud. Irregularities are instances of non-compliance with laws and regulations. The objectives of our audit are to obtain sufficient appropriate audit evidence regarding compliance with laws and regulations that have a direct effect on the determination of material amounts and disclosures in the financial statements, to perform audit procedures to help identify instances of non-compliance with other laws and regulations that may have a material effect on the financial statements, and to respond appropriately to identified or suspected non-compliance with laws and regulations identified during the audit.

In relation to fraud, the objectives of our audit are to identify and assess the risk of material misstatement of the financial statements due to fraud, to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud through designing and implementing appropriate responses and to respond appropriately to fraud or suspected fraud identified during the audit.

However, it is the primary responsibility of management, with the oversight of those charged with governance, to ensure that the entity's operations are conducted in accordance with the provisions of laws and regulations and for the prevention and detection of fraud. In identifying and assessing risks of material misstatement in respect of irregularities, including fraud, the group audit engagement team: •

obtained an understanding of the nature of the sector, including the legal and regulatory frameworks that the group and College operate in and how the group and college are complying with the legal and regulatory frameworks.

•

inquired of management, and those charged with governance, about their own identification and assessment of the risks of irregularities, including any known actual, suspected or alleged instances of fraud.

•

discussed matters about non-compliance with laws and regulations and how fraud might occur including assessment of how and where the financial statements may be susceptible to fraud.

As a result of these procedures, we consider the most significant laws and regulations that have a direct impact on the financial statements are FRS 102, Further and Higher Education SORP, the College Accounts Direction published by the Education and Skills Funding Agency and tax compliance regulations. We performed audit procedures to detect 39IPage

Members' Report and Financial statements for the year ended 31 July 2024

non-compliances which may have a material impact on the financial statements which included reviewing financial statement disclosures and reviewing relevant correspondence with the main funding bodies. The most significant laws and regulations that have an indirect impact on the financial statements are those which are in relation to the Education Inspection Framework under the Education and Inspections Act 2006, Keeping Children Safe in Education under the Education Act 2002 and the UK General Data Protection Regulation (UK GDPR) and the Data Protection Act 2018. We performed audit procedures to inquire of management and those charged with governance whether the group is in compliance with these law and regulations and inspected correspondence and inspected correspondence with licensing or regulatory authorities.

The group audit engagement team identified the risk of management override of controls and income recognition as the areas where the financial statements were most susceptible to material misstatement due to fraud. Audit procedures performed included but were not limited to testing manual journal entries and other adjustments and evaluating the business rationale in relation to significant, unusual transactions and transactions entered into outside the normal course of business, challenging judgments and estimates and review of income transactions surrounding the year end.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at http://wwvv.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report. Use of our report This report is made solely to the Corporation, as a body, in accordance with the Funding Agreement published by the Education and Skills Funding Agency and our engagement letter dated 21 August 2024. Our audit work has been undertaken so that we might state to the Corporation, as a body, those matters we are engaged 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.

(63m ilL L

i- h/

UK AUDIT LLP Chartered Accountants 1 St James' Gate Newcastle Upon Tyne NE1 4AD

it)

40IPage

Members' Report and Financial statements for the year ended 31July 2024

INDEPENDENT REPORTING ACCOUNTANT'S REPORT ON REGULARITY TO THE CORPORATION OF EAST DURHAM COLLEGE AND THE SECRETARY OF STATE FOR EDUCATION ACTING THROUGH EDUCATION AND SKILLS FUNDING AGENCY Qualified Conclusion We have carried out an engagement, in accordance with the terms of our engagement letter dated 21 August 2024 and further to the requirements of the grant funding agreements and contracts with the Education and Skills Funding Agency (the "ESFA") or those of any other public funder, to obtain limited assurance about whether the expenditure disbursed and income received by East Durham College during the period 1 August 2023 to 31 July 2024 have been applied to the purposes identified by Parliament and the financial transactions conform to the authorities which govern them. In the course of our work, except for the matters listed below, nothing has come to our attention which suggests that in all material respects the expenditure disbursed and income received during the period 1 August 2023 to 31 July 2024 have not been applied to purposes intended by Parliament and the financial transactions do not conform to the authorities which govern them.

Matters arising During the financial year ended 31 July 2024 the college made non-contractual termination payments to two employees in excess of the delegated authority given to the college under the ESFA's bite-size guide "college requirements for special payments, including severance, compensation and ex-gratia payments". The amounts of the noncontractual special payments that required prior ESFA consent which was not sought were £11,772 and £7,823, which were greater than the equivalent to 3 months gross salary in each instance, when including non-contractual PILON.

Basis for qualified conclusion The framework that has been applied is set out in the Post-16 Audit Code of Practice (the Code) issued by the ESFA and in any relevant conditions of funding concerning adult education notified by a relevant funder. We have complied with the independence and other ethical requirements of the FRC's Ethical Standard and the ethical pronouncements of the ICAEW. We also apply International Standard on Quality Management (UK) 1 Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements and accordingly maintain comprehensive systems of continuing quality management. We believe the assurance evidence we have obtained is sufficient to provide a basis for our qualified conclusion.

41IPa ge

Members' Report and Financial statements for the year ended 31July 2024

Responsibilities of Corporation of East Durham College for regularity The Corporation of East Durham College is responsible, under the grant funding agreements and contracts with the ESFA and the requirements of the Further & Higher Education Act 1992, subsequent legislation and related regulations and guidance, for ensuring that expenditure disbursed, and income received are applied for the purposes intended by Parliament and the financial transactions conform to the authorities which govern them. The Corporation of East Durham College is also responsible for preparing the Governing Body's Statement of Regularity, Propriety and Compliance.

Reporting accountant's responsibilities for reporting on regularity Our responsibilities for this engagement are established in the United Kingdom by our profession's ethical guidance and are to obtain limited assurance and report in accordance with our engagement letter and the requirements of the Code. The objective of a limited assurance engagement is to perform such procedures as to obtain information and explanations in order to provide us with sufficient appropriate evidence to express a negative conclusion on regularity. A limited assurance engagement is more limited in scope than a reasonable assurance engagement and the procedures performed vary in nature and timing from, and are less in extent than for a reasonable assurance engagement; consequently a limited assurance engagement does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in a reasonable assurance engagement. Accordingly, we do not express a positive opinion. We report to you whether anything has come to our attention in carrying out our work which suggests that in all material respects, expenditure disbursed and income received during the period 1 August 2023 to 31 July 2024 have not been applied to purposes intended by Parliament or that the financial transactions do not conform to the authorities which govern them. Our work included identification and assessment of the design and operational effectiveness of the controls, policies and procedures that have been implemented to ensure compliance with the framework of authorities including the specific requirements of the grant funding agreements and contracts with the ESFA and those of any other public funder and high level financial control areas where we identified a material irregularity is likely to arise. We undertook detailed testing, on a sample basis, on the identified areas where a material irregularity is likely to arise where such areas are in respect of controls, policies and procedures that apply to classes of transactions. This work was integrated with our audit of the financial statements and evidence was also derived from the conduct of that audit to the extent it supports the regularity qualified conclusion.

age

Members' Report and Financial statements for the year ended 31July 2024

Use of our report This report is made solely to the Corporation of East Durham College and the Secretary of State for Education acting through the ESFA in accordance with the terms of our engagement letter. Our work has been undertaken so that we might state to the Corporation of East Durham College and the Secretary of State for Education acting through the ESFA those matters we are required to state 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 of East Durham College and the Secretary of State for Education acting through the ESFA for our work, for this report, or for the qualified conclusion we have formed. Signed:

gAitA vt

A,„„t-k (-(4

RSM UK AUDIT LLP Chartered Accountants 1 St James' Gate Newcastle upon Tyne NE1 4AD

1 O 6-e-ct.A.U).

43 I

Members' Report and Financial statements for the year ended 31July 2024

East Durham College Consolidated Statements of Comprehensive Income and Expenditure For the year ended 31 July 2024 Notes

Year ended 31 July 2024

Year ended 31 July 2023

Group £'000

College £'000

Group £'000

College £'000

INCOME Funding body grants Tuition fees and education contracts Other grants and contracts

2 3 4

21,039 1,399 987

21,039 1,399 974

19,487 1,415 2,484

19,487 1,415 2,471

Other income Endowment and Investment income

5 6

2,217 15

2,217 19

2,044 44

2,044 46

25,657

25,648

25,474

25,463

16,341 6,752 1,764 207

16,341 15,516 6,762 8,042 1,746 1,581 207 225 25,056 25,364 592 110

15,516 8,042 1,563 225 25,346 117

Total income EXPENDITURE Staff costs Other operating expenses Depreciation Interest and other finance costs Total expenditure Surplus before other gains and losses Loss on disposal of assets Surplus before tax Taxation Surplus for the year Remeasurement of net defined benefit pension asset/liability Total Comprehensive Income for the year

7 8 11 9

25,064 593

593

592

110

117

593

592

110

117

(400)

6,260

193

192

6,370

6,377

All items of income and expenditure relate to continuing activities.

44 I

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Members' Report and Financial statements for the year ended 31July 2024

East Durham College Consolidated and College Statement of Changes in Reserves Income and expenditure account

Pension Reserve

Revaluation Reserve

Total

£'000

Group Balance at 31 July 2022

8,757

(5,840)

2,049

Surplus/(deficit) from the income and expenditure Movement on pension reserve

(5,750)

Other comprehensive income

6,260

Transfers between revaluation and income and expenditure

Total Comprehensive

715

5,750

(95)

6,370

Balance at 31 July 2023

9,472

(90)

1,954

11,336

Surplus/(deficit) from the income and expenditure account

193

Movement on pension reserve Other comprehensive income Transfers between revaluation and income and expenditure Total Comprehensive Balance at 31 July 2024

110

4,966 110

5750 6,260 (95)

193

(95)

288

(95)

193

1,859

11,529

9,760

(90)

45 IPage

Members' Report and Financial statements for the year ended 31July 2024

East Durham College Consolidated and College Statement of Changes in Reserves

College

Income and expenditure account £'000

Balance at 31 July 2022

8,832

Surplus/(deficit) from the income and expenditure

117

Movement on pension reserve Other comprehensive income Transfers between revaluation and income and expenditure reserves

Pension Revaluation Reserve Reserve

Total

£'000

(5,840)

2,049

5,041 117

(5,750) 6,260 95

5,750

722

5,750

(95)

6,377

Balance at 31 July 2023

9,554

(90)

1,954

11,418

Surplus/(deficit) from the income and expenditure

192

Total Comprehensive

6,260 (95)

192

Movement on pension reserve Other comprehensive income Transfers between revaluation and income and expenditure reserves

Total Comprehensive Balance at 31 July 2024

(95)

287

(95)

192

1,859

11,610

9,841

(90)

Page

Members' Report and Financial statements for the year ended 31July 2024

East Durham College Consolidated and College Balance sheets as at 31 July 2024 Notes

Group 2024 £'000

College 2024 £'000

Group 2023 £'000

College 2023 £'000

11 12

46,128 57

46,071 67

44,001 63

43,926 83

46,185

46,138

44,064

44,009

445 2,521 1,352

445 2,595 1,352

394 876 3,136

394 941 3,136

Non current assets

Tangible Fixed assets Investments

Current assets

Stocks Trade and other receivables Cash at bank and in hand Creditors - amounts falling due within one year

13 14 20 16

4,318

4,392

4,406

4,471

(4,803)

(4,786)

(5,145)

(5,140)

(485)

(394)

(739)

(669)

Net current liabilities Total assets less current liabilities

Creditors — amounts falling due after more than one year

45,700

45,744

43,325

43,340

(33,828)

(33,791)

(31,595)

(31,528)

24 19

(90) (253)

. (90) (253)

(90) (304)

11,529

11,610

11,336

11,418

(90) 9,760 1,859

(90) 9,841 1,859

(90) 9,472 1,954

(90) 9,554 1,954

11,529

11,610

11,336

11,418

Provisions

Defined benefit obligations Other provisions Total net assets

Unrestricted Reserves

Pension reserve Income and expenditure account Revaluation reserve Total unrestricted surplus

The financial statements on pages 44 to 82 were approved and authorised for issue by the corporation on 05 December 2024 and were signed on its behalf on that date by:

Bromiley Chair

S Bullock

C4.47

Accounting Officer

47 'Page

Members' Report and Financial statements for the year ended 31 July 2024

East Durham College Consolidated Statement of Cash Flows

Notes

2024 £'000

2023 £'000

Cash flow from operating activities Surplus/(Deficit) for the year

593

110

1,764 (51) 261 (581) (51) (400) (972) 6

1,581 12 155 53 102 510 (860) 4

207

225

776

1,892

15 11

2,021 (3,891) (1,870)

2,427 (3,538) (1,111)

(207) (483) (690)

(225) 773 (1,244) (696)

(1,784)

3,136 1,352

3,051 3,136

Adjustment for non-cash items Depreciation (Increase)/decrease in stocks (Increase)/decrease in debtors Increase/(decrease) in creditors Increase/(decrease) in provisions FRS102 pension costs less contributions payable Deferred Capital grants released to income Fair value loss on investment

24 15

Adjustment for investing or financing Investment revaluation Interest payable Taxation paid Profit/ (Loss) on disposal of fixed assets

Net cash flow from operating activities Cash flows from investing activities Deferred Capital Grants received Payments made to acquire fixed assets

Cash flows from financing activities Interest paid Proceeds from borrowing Repayments of amounts borrowed

(Decrease)/Increase in cash and cash equivalents in the year Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year

20 20

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Members' Report and Financial statements for the year ended 31July 2024

East Durham College Notes to the Financial Statements 1.

Statement of accounting policies and estimation techniques

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 2019 (the 2019 FE HE SORP), the College Accounts Direction for 2023 to 2024 and in accordance with Financial Reporting Standard 102 - "The Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland" (FRS 102). The college is a public benefit entity and has therefore applied the relevant public benefit requirements of FRS 102. The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the college's accounting policies. The Corporation has the view that the College is a going concern. It is aware of the Net Liabilities position, however there are other sources of income and the financial position is monitored closely.

Basis of accounting The financial statements are prepared in accordance with the historical cost convention as modified by the use of previous valuations as deemed cost at transition for certain non-current assets. The consolidated financial statements are presented in sterling which is also the functional currency of the College. Monetary amounts in these financial statements are rounded to the nearest whole £1,000, except where otherwise indicated.

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Members' Report and Financial statements for the year ended 31July 2024

Basis of consolidation The consolidated financial statements include the college and one subsidiary, The College Company Limited. The subsidiaries of Houghall Farm Limited, Houghall Enterprises Limited and Durham Education Group Limited have been dissolved. Control is achieved where the group has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. Intra-group sales and profits are eliminated fully on consolidation. In accordance with FRS 102, 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 2024.

Going concern The activities of the college, together with the factors likely to affect its future development and performance are set out in the Strategic Report. The financial position of the college, its cashflow, liquidity and borrowings are presented in the Financial Statements and accompanying Notes. The college currently has £3,594m of loans outstanding with bankers on terms negotiated in 2016, which is equivalent to 20% of College income. The College also has £690k of loans facilitated by Department for Education, following changes to borrowing under the reclassification of FE colleges. A robust set of financial models have been applied to the college's forecasts and financial projections (including significant stress testing on the cashflow position) for the 12 months succeeding the approval of these financial statements. Which show that the college would be able to meet its financial liabilities as they fall due. No overdraft is forecast to be required for the coming year, however, if one was required the college would look to our bankers, Lloyds, who have supported such facilities in the past, in line with The College Financial handbook guidance. 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.

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Members' Report and Financial statements for the year ended 31July 2024

Recognition of income Revenue grant funding Government revenue grants include funding body recurrent grants and other grants and are accounted for under the accrual model as permitted by FRS 102. Funding body recurrent grants are measured in line with best estimates for the period of what is receivable and depend on the particular income stream involved. The final grant income is normally determined with the conclusion of the year end reconciliation process with the funding body following the year end, and the results of any funding audits. 16-18 funding is not subject to reconciliation and is therefore not subject to contract adjustments. Where part of a government grant is deferred, the deferred element is recognised as deferred income within creditors and allocated between creditors due within one year and creditors due after more than one year as appropriate. Grants (including research grants) from non-government sources are recognised in income when the college is entitled to the income and performance related conditions have been met. Income received in advance of performance related conditions being met is recognised as deferred income within creditors on the balance sheet and released to income as the conditions are met. Capital grant funding Government capital grants are capitalised, held as deferred income and recognised in income over the expected useful life of the asset, under the accrual model as permitted by FRS 102. Other, non-governmental, capital grants are recognised in income when the college is entitled to the funds subject to any performance related conditions being met. Income received in advance of performance related conditions being met is recognised as deferred income within creditors on the Balance Sheet and released to income as conditions are met. Fee income Income from tuition fees is stated gross of any expenditure which is not a discount and is recognised in the period for which it is received. Investment income All income from short-term deposits is credited to the income and expenditure account in the period in which it is earned on a receivable basis.

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Members' Report and Financial statements for the year ended 31July 2024

Agency arrangements The college acts as an agent in the collection and payment of certain discretionary support funds and any other arrangements. Related payments received from the funding bodies and subsequent disbursements to students are excluded from the income and expenditure of the college where the college is exposed to minimal risk or enjoys minimal economic benefit related to the transaction.

Accounting for post-employment benefits Post-employment benefits to employees of the college are principally provided by the Teachers' Pension Scheme (TPS) and the Local Government Pension Scheme (LGPS). These are defined benefit plans, which are externally funded and contracted out of the State Second Pension. Teachers' Pension Scheme (TPS) The TPS is an unfunded scheme. 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 valuations using a projected unit method. The TPS is a multi-employer scheme and there is insufficient information available to use defined benefit accounting. The TPS is therefore treated as a defined contribution plan and the contributions recognised as an expense in the income statement in the periods during which services are rendered by employees. Durham County Council Local Government Pension Scheme (LGPS) The LGPS is a funded scheme. The assets of the LGPS are measured using closing fair values. LGPS liabilities are measured using the projected unit credit method and discounted at the current rate of return on a high-quality corporate bond of equivalent term and currency to the liabilities. The actuarial valuations are obtained at least triennially and are updated at each balance sheet date. The amounts charged to operating surplus are the current service costs and the costs of scheme introductions, benefit changes, settlements and curtailments. They are included as part of staff costs as incurred. Net interest on the net defined benefit liability/asset is also recognised in the Statement of Comprehensive Income and comprises the interest cost on the defined benefit obligation and interest income on the scheme assets, calculated by multiplying the fair value of the scheme assets at the beginning of the period by the rate used to discount the benefit obligations. The difference between the interest income on the scheme assets and the actual return on the scheme assets is recognised in staff costs. Re-measurement comprising actuarial gains and losses, the effect of the asset ceiling and the return on scheme assets (excluding amounts included in net interest on the defined benefit liability) are recognised immediately in other comprehensive income.

52 'Page

Members' Report and Financial statements for the year ended 31July 2024

The LGPS assets are managed by the scheme trustees as scheme level and determination/allocation of assets to each individual employer in the scheme is managed by the scheme actuary. The assets are allocated to each employer for accounting purposes based on the valuation of the assets at the latest triennial valuation as adjusted for subsequent contributions received from the employer, asset returns and benefit payments made (either on a cash basis or actuarial basis). The retirement benefit obligation recognised represents the deficit or surplus in the defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans.

Short term Employment benefits Short term employment benefits such as salaries and compensated absences (holiday pay) are recognised as an expense in the year in which the employees render service to the college. Any unused benefits are accrued and measured as the additional amount the college expects to pay as a result of the unused entitlement.

Enhanced Pensions The actual cost of any enhanced ongoing pension to a former member of staff is paid by a 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 in the year that the member of staff retires. In subsequent years a charge is made to provisions in the balance sheet.

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Members' Report and Financial statements for the year ended 31July 2024

Tangible fixed assets Tangible fixed assets are stated at cost / valuation less accumulated depreciation and accumulated impairment losses. Cost includes the original purchase price of the asset and the costs attributable to bringing the asset to its current working condition for its intended purpose. 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. On adoption of FRS 102, the college followed the transitional provision to retain the book value of land and buildings, which were revalued in 1994, as deemed cost but not to adopt a policy of revaluations of these properties in the future. Where land and buildings are acquired with the aid of specific grants, it is capitalised and depreciated in accordance with the policy, with the related grant being credited to a deferred capital grant account and released to the Consolidated Statement of Comprehensive Income in line with the depreciation. Finance costs, which are directly attributable to the construction of land and buildings, are capitalised as part of the cost of these assets. A review for impairment of a fixed asset is carried out if events or changes in circumstances indicate that the carrying amount of any fixed asset may not be recoverable. Assets under construction Assets under construction are accounted for at cost, incurred to 31 July. They are not depreciated until they are brought into use. Subsequent expenditure on existing fixed assets Where significant expenditure is incurred on tangible fixed assets after initial purchase it is charged to income 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 tangible asset has substantially 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.

Equipment Equipment costing less than f500 per individual item is recognised as expenditure in the period of acquisition. All other equipment is capitalised at cost. Equipment inherited from the Local Education Authority is included in the balance sheet at valuation. Capitalised equipment is depreciated on a straight-line basis over its remaining useful economic life as follows: A review for impairment of a fixed asset is carried out if events or changes in circumstances indicate that the carrying value of any fixed asset may not be recoverable.

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Members' Report and Financial statements for the year ended 31July 2024

Where equipment is acquired with the aid of specific grants, it is capitalised and depreciated in accordance with the policy, with the related grant being credited to a deferred capital grant account and released to the Consolidated Statement of Comprehensive Income in line with the depreciation. Motor Vehicles Motor vehicles are capitalised at cost. Where motor vehicles are acquired with the aid of specific grants, it is capitalised and depreciated in accordance with the policy, with the related grant being credited to a deferred capital grant account and released to the Consolidated Statement of Comprehensive Income in line with the depreciation.

Depreciation Depreciation is provided to write down the cost or valuation of tangible fixed assets and is provided on a straight line basis over their useful life as follows: • • • • •

Freehold buildings - not more than 50 years Building improvements - not more than 10 years Land - not depreciated Motor vehicles - 4 years Equipment - 4 to 10 years

Land is not depreciated as it is believed to have an indefinite useful life.

Borrowing costs Borrowing costs are recognised as expenditure in the period in which they are incurred.

Leased assets Costs in respect of operating leases are charged on a straight-line basis over the lease term to the Statement of Comprehensive Income and Expenditure. Any lease premiums or incentives relating to leases signed after 1 August 2014 are spread over the minimum lease term. Leasing agreements which transfer to the college substantially all the benefits and risks of ownership of an asset are treated as finance leases. Assets held under finance leases are recognised initially at the fair value of the leased asset (or, if lower, the present value of minimum lease payments) at the inception of the lease. The corresponding liability to the lessor is included in the balance sheet as an obligation under finance leases. Assets held under finance leases are included in tangible fixed assets and depreciated and assessed for impairment losses in the same way as owned assets. Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charges are allocated over the period of the lease in proportion to the capital element outstanding.

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Members' Report and Financial statements for the year ended 31July 2024

Investments Investments in subsidiaries Investments in subsidiaries are accounted for at cost less impairment in the individual financial statements. Other investments Listed investments held fixed asset investments, are stated at fair value, with movements recognised in Comprehensive Income. Investments comprising unquoted equity instruments are measured at fair value, estimated using a valuation technique.

Inventories Inventories are stated at the lower of their cost and net realisable value, being selling price less costs to complete and sell. Where necessary, provision is made for obsolete, slowmoving and defective items. Farm stocks are professionally valued at the year-end by Youngs Chartered Surveyors, Agricultural and Industrial Valuers. Finished goods stocks are valued on an open market basis.

Cash and cash equivalents Cash includes cash in hand, deposits repayable on demand and overdrafts. Deposits are repayable on demand if they are in practice available within 24 hours without penalty. Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash with insignificant risk of change in value. An investment qualifies as a cash equivalent when it has maturity of 3 months or less from the date of acquisition.

Financial liabilities and equity Financial liabilities and equity are classified according to the substance of the financial instrument's contractual obligations, rather than the financial instrument's legal form. All loans, investments and short-term deposits held by the group are classified as basic financial instruments in accordance with FRS 102. These instruments are initially recorded at the transaction price less any transaction costs (historical cost). FRS 102 requires that basic financial instruments are subsequently measured at amortised cost, however the college has calculated that the difference between the historical cost and amortised cost basis is not material and so these financial instruments are stated on the balance sheet at historical cost. Loans and investments that are payable or receivable within one year are not discounted.

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Members' Report and Financial statements for the year ended 31July 2024

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 sections 478-488 of the 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 the 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 companies are subject to corporation tax and VAT in the same way as any commercial organisation.

Provisions and contingent liabilities Provisions are recognised when • • •

the Group has a present legal or constructive obligation as a result of a past event it is probable that a transfer of economic benefit will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value using a pre-tax discount rate. The unwinding of the discount is recognised as a finance cost in the statement of comprehensive income in the period it arises. A contingent liability arises from a past event that gives the college a possible obligation whose existence will only be confirmed by the occurrence or otherwise of uncertain future events not wholly within the control of the college. Contingent liabilities also arise in circumstances where a provision would otherwise be made but either it is not probable that an outflow of resources will be required or the amount of the obligation cannot be measured reliably. Contingent liabilities are not recognised in the balance sheet but are disclosed in the notes to the financial statements.

57 IPage

Members' Report and Financial statements for the year ended 31July 2024

Judgements in applying accounting policies and key sources of estimation uncertainty Judgements in applying accounting policies In preparing these financial statements, management have made the following judgements: •

Determine whether leases entered into by the college either as a lessor or a lessee are operating or finance leases. These decisions depend on an assessment of whether the risks and rewards of ownership have been transferred from the lessor to the lessee on a lease by lease basis. Determine whether there are indicators of impairment of the group's tangible assets. Factors taken into consideration in reaching such a decision include the economic viability and expected future financial performance of the asset. Determining the existence of a minimum funding requirements for the Local Government Pension Scheme to be included in the asset ceiling in measuring and recognising a surplus in the scheme. This judgement is based on an assessment of the nature of the scheme as a statutory scheme and its inherent implied continuance as well as the operation of the primary and secondary contributions.

•

Other key sources of estimation uncertainty •

•

Tangible fixed assets, other than investment properties, are depreciated over their useful lives taking into account residual values, where appropriate. The actual lives of the assets and residual values are assessed annually and may vary depending on a number of factors. In re-assessing asset lives, factors such as technological innovation and maintenance programmes are taken into account. Residual value assessments consider issues such as future market conditions, the remaining life of the asset and projected disposal values. The depreciation charge for the year was £1,764k. The present value of the Local Government Pension Scheme defined benefit obligation depends on a number of factors that are determined on an actuarial basis using a variety of assumptions. The assumptions used in determining the net cost (income) for pensions include the discount rate. Any changes in these assumptions, which are disclosed in note 24, will impact the carrying amount of the pension obligation. The actuary has used a roll forward approach which projects results from the latest full actuarial valuation performed on 31 March 2022 to value the pensions obligation at 31 July 2024. Any differences between the figures derived from the roll forward approach and a full actuarial valuation would impact on the carrying amount of the pension obligation. The carrying value of the pension obligation is £90k.

58 IPage

Members' Report and Financial statements for the year ended 31July 2024

Y/end 31 July

2024

2023

Group

College

Group

College

£'000

Education and Skills Funding Agency — adult education budget

1,891

2,534

Education and Skills Funding Agency — 16 18 & 14-16

14,383

12,507

Education and Skills Funding Agency — Apprenticeships

1,643

1,203

Teacher Pension Scheme contribution grant

428

322

Releases of government capital grants — Equipment

134

Releases of government capital grants — Buildings

825

809

334

Other

1,730

1,727

Total

21,039

19,487

Funding body grants

Recurrent grants

Specific grants

Grants from combined authorities

59 I Page

Members' Report and Financial statements for the year ended 31July 2024

Tuition fees and education contracts

Y/end 31 July

2024

2023

Group

College

Group

College

£'000

Fees for FE loan supported courses

763

845

Fees for HE loan supported courses

636

570

1,399

1,415

1,399

1,415

Total tuition fees Education contracts

Total 4

Other grants and contracts

Releases of non-SFA capital grants — Buildings

Y/end 31 July

2024

2023

Group

College

Group

College

£'000

Releases of non-SFA capital grants — Equipment Other grant income

974

2,471

Total

987

974

2,484

2,471

Other income

Y/end 31 July

2024

2023

Group

College

Group

College

£'000

Catering and residences

619

522

Farming activities

239

321

Sports centre

126

101

Accommodation

Childcare

410

346

Other income

793

726

2,217

2,044

Total

60 IPage

Members' Report and Financial statements for the year ended 31July 2024

Investment income

Interest receivable

Y/end 31 July 2023 2023

1r/end 31 July 2024 2024 Group

College

Group

College

£'000

Investment income

Investment fair value adjustment

(6)

(4)

Total

611 Page

Members' Report and Financial statements for the year ended 31July 2024

Staff costs - Group and College

The average number of persons (including key management personnel) employed by the college during the year, described as average headcount was:

2024

2023

No.

Teaching staff *

214

203

Non-teaching staff *

284

271

Premises *

536

523

2024

2023

£'000

Wages and salaries

13,228

11,628

Social security costs

1,076

953

Other pension costs

2,411

2,177

Payroll sub total

16,715

14,758

217

16,741

15,006

(400)

510

16,341

15,516

Staff costs for the above persons

Restructuring costs: Contractual Non contractual

Pension (credit) costs arising from FRS 102

Total Staff costs

Severance payments. The college paid 5 severance payments in the year, disclosed in the following bands: £0 - £25,000

Total including all non-contractual PILON & Legal Fees-£25,201 (2023: £31,3611). Individually the payments were: £963,£4,643,£7,823 and £11,772. The corporation does not have any salary sacrifice arrangements in place. •

The July 2023 average number of persons has been restated.

621 Page

Members' Report and Financial statements for the year ended 31July 2024

Key management personnel Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the College and are represented by the College Leadership Team which comprises the Principal and holders of other senior posts (as detailed on page 18) 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.

63 I Page

Members' Report and Financial statements for the year ended 31July 2024

Emoluments of key management personnel, Accounting Officer and other higher paid staff 2024 No. The number of key management personnel including the Principal was: Key management personnel

£45,001 to £50,000 p.a £50,001 to £55,000 p.a. £55,001 to £60,000 p.a. £60,001 to £65,000 p.a £65.001 to £70,000 p.a £70,001 to £75,000 p.a. £80,001 to £85,000 p.a £85,001 to £90,000 p.a £120,001 to £125,000 p.a £135,001 to £140,000 p.a

2024 No. 1 1 1 2

2023 No.

2023 No. 7

7 Other staff 2024 No.

2 1 1

2023 No.

1 7

1 1 1 7

There were no amounts due to key management personnel that were waived in the year, nor any salary sacrifice arrangements in place. Key management personnel compensation is made up as follows: 2024 £1000 518 63

2023 £'000 Basic salary 535 67 Employer's national insurance 3 Benefits in kind 103 89 Pension contributions 50 Restructuring costs 684 744 Total key management personnel compensation The above emoluments include amounts payable to the Accounting Officer, who is the Principal. Their pay and remuneration is as follows:

Basic salary Performance related pay and bonus Other including benefits in kind Pension contributions

2024 £'000 136

2023 £'000 122

26 162 ..

145

64 I Page

Members' Report and Financial statements for the year ended 31July 2024

The highest paid officer was the Principal. The highest paid officer in the prior year was the Vice Principal of Finance and Estates. The governing body adopted AoC's Senior Staff Remuneration Code in July 2019 and assesses pay in line with its principals. The remuneration package of key management staff, including the Principal and Chief Executive, is subject to annual review by the Remuneration Committee of the governing body who benchmark the remuneration against the AOC published data and deem the package reasonable. No member of key management was involved in setting their remuneration package for the year to 31 July 2024. The remuneration package was further justified due to the fact that despite the rising inflationary pressures the college has again achieved a `Good' financial health score and has attracted significant growth in student numbers which will enable the college to attain increased funding for 2024 and invest further in the college's future.

Relationship of Principal/Chief Executive pay and remuneration expressed as a multiple 2024

2023

Principal's basic salary as a multiple of the median of all staff *

6.06

5.97

Principal's remuneration as a multiple of the median of all staff *

7.24

7.13

* The median calculated for all staff has been calculated using all payroll staff and excludes agency staff as these are not paid via payroll. The members of the corporation other than the Accounting Officer and the staff member did not receive any payment from the institution other than the reimbursement of travel and subsistence expenses incurred in the course of their duties.

65 IPage

Members' Report and Financial statements for the year ended 31July 2024

Other operating expenses

2024

2023

Group

College

Group

College

£'000

3,536

3,707

530

540

1,934

Premises costs

2,686

2,401

Total

6,752

6,762

8,042

Teaching costs Non-teaching costs

Other operating expenses

2024

2023

£'000

Auditors' remuneration: Financial statements audit*

Other assurance services provided by the financial statements auditor

Internal audit fees**

Hire of assets under operating leases

587

325

1,764

1,581

Depreciation *

includes £65,000 in respect of the college (2023: £43,000)

** includes £12,000 in respect of the college (2023: £12,000)

2024 Over £5000 Write offs and losses & rationale: £'000 Old student debt unsuccessfully pursued

66 IPage

Members' Report and Financial statements for the year ended 31July 2024

Interest and other finance costs - Group and College

On bank loans, overdrafts and other loans:

2024

2023

£'000

207

225

207

225

207

225

On finance leases Net interest on defined pension liability (note 24)

Total

10 Taxation - Group only The members do not believe that the college was liable for any corporation tax arising out of its activities during either year.

11 Tangible fixed assets (Group) Land and Buildings

Equipment

Motor vehicles

Assets in the course of construction

Total

£'000

Cost or valuation

2,916

64,346

3,830

3,891

1,312

1,490

(2,802)

58,213

6,069

At 1 August 2023

17,515

2,819

Charge for the year

1,242

522

At 31 July 2024

18,757

3,341

Net book value at 31 July 2024

39,456

2,728

3,944

46,128

Net book value at 31 July 2023

39,352

1,733

2,916

44,001

At 1 August 2023 Additions

56,867

4,552

Disposals Transfers At 31 July 2024

3,944

68,237

Depreciation

20,345 1,764

Disposals 11

22,109

67 1Page

Members' Report and Financial statements for the year ended 31July 2024

Tangible fixed assets (College)

College

Land and buildings

Equipment

Motor vehicles

£'000

£1000

Assets in the course of construction £'000

Total

£'000

Cost or valuation

At 1 August 2023 Additions

56,411

4,524

2,916

63,862

3,830

3,891

Disposals 1,312

1,490

57,757

6,041

3,944

67,753

At 1 August 2023

17,134

2,791

19,936

Charge for the year

1,224

522

1,746

At 31 July 2024

18,358

3,313

Net book value at 31 July 2024

39,399

2,728

3,944

46,071

Net book value at 31 July 2023

39,277

1,733

2,916

43,926

Transfers At 31 July 2024

(2,802)

Depreciation

Elimination in respect of disposals 21,682

Included with the net book value of freehold land and buildings is land at a valuation of £1,985k (2023: £1,985k) which is not subject to depreciation. The net book value of land and buildings includes an amount of £Nil (2023: £Nil) in respect of assets held under finance leases. The depreciation charge on these assets for the year was (2022/23: £Nil). Inherited land and buildings were valued in 1994 at open market value for existing use by the local District Valuer in accordance with the RICS Statement of Asset Valuation Practice and guidance notes. Other tangible fixed assets inherited from the Local Education Authority at incorporation have been valued by the Corporation on a depreciated replacement cost basis with the assistance of independent professional advice. Land and buildings with a net book value of £1,985k (2023: £2,055k) have been funded from Local Education Authority sources. Should these assets be sold, the College would have to use the sales proceeds in accordance with the Financial Memorandum with the SFA.

68 1Page

Members' Report and Financial statements for the year ended 31July 2024

11Tangible fixed assets (continued)

If fixed assets had not been revalued before being deemed as cost on transition they would have been included at the following historical cost amounts:

£'000 Cost

Nil

Aggregate depreciation based on cost

Nil

Net book value based on cost

Nil

12 Non-current investments College

College

2024 £'000

2023 £'000

Investments in subsidiary companies

Other investments - Listed*

Total

The following company is a wholly owned and registered in England and Wales, the registered office being at East Durham College, Willerby Grove, Peterlee, Co. Durham, SR8 2RN. Company

Activity

Issued Share Capital

The College Company Limited

Engage in commercial activities

10,000 £1 Ordinary Share

10,000

Previous dormant subsidiary companies Houghall Farm Limited, Houghall Enterprises Limited and Durham Education Group Limited all incorporated in Great Britain and registered in England and Wales were struck off in the year ended 31 July 2023 but not advised as such in the reported financial statements. The financial impact of this has been reflected in the reported year 31 July 2024 and has a £10k charge in the College but no financial impact on Group results as this was already provided against. Need note on Dormants from last year. *The Market value of the listed shares at 31 July 2024 was £57k (2023: £63k)

69 'Page

Members' Report and Financial statements for the year ended 31July 2024

13 Stock

Farm stock

Group & College 2024

Group & College 2023

£'000

445

394

14 Trade and other receivables Group

College

Group

College

2024

2023

£'000

215

277

2,246

Amounts falling due within one year: Trade receivables Amounts owed by group undertakings: Subsidiary undertakings Prepayments and accrued income * Amounts owed by the ESFA

65 206

206

335

Taxation and social security

Other debtors

2,521

2,595

876

941

Total

*Accrued income for Group and College in 2024 includes £1,906k for deferred grant income which is due within 2025.

70 IPage

Members' Report and Financial statements for the year ended 31July 2024

15 Capital Grant

Group

College

SFA Grants £'000

Other Grants £'000

Land and buildings

16,700

9,298

25,998

16,718

9,213

25,931

Equipment

2,363

2,366

2,363

2,366

Total

19,063

9,301

28,364

19,081

9,216

28,297

Total £'000

SFA Grants £'000

Other Grants £'000

Total £'000

At 1 August 2023

Cash received and accrued (*) Land and buildings Equipment

3,927

Total

3,927

Land and buildings

838

825

Equipment

132

134

132

134

Total

970

972

957

959

Land and buildings

15,862

9,298

25,160

15,893

9,213

25,106

Equip

6,158

6,159

6,158

6,159

Total

22,020

9,299

31,319

22,051

9,214

31,265

Release to Statement of Comprehensive income:

At 31 July 2024

*For 2024 equipment cash received and accrued includes £2,021k of grants received and £1,906k of accrued capital grant.

71 'Page

Members' Report and Financial statements for the year ended 31July 2024

Creditors: Amounts falling due within one year Group

College

Group

College

2024

2023

£'000

518

505

1,257

1,240

1,031

Trade payables

853

1,522

Other creditors

803

374

369

159

142

Accruals and deferred income

1,213

1,571

Total

4,803

4,786

5,145

5,140

Bank Loans Deferred capital grants

Amounts owed to group undertakings: Subsidiary undertakings Amounts owed to ESFA Other taxation and social security

Creditors: amounts falling due after one year Group

College

2024 £'000

Group

College

2024

2023

£'000

3,766

4,262

Deferred income - government capital grants

30,062

30,025

27,333

27,266

Total

33,828

33,791

31,595

31,528

Bank loans

72 'Page

Members' Report and Financial statements for the year ended 31July 2024

18 (a)

Maturity of debt Bank loans and overdrafts

Bank loans and overdrafts are repayable as follows: Group

College

Group

College

2024

2023

£`000

£'000

In one year or less

518

505

Between one and two years

532

518

Between two and five years

1,690

1,644

In five years or more

1,544

2,100

Total

4,284

4,767

The Original principal borrowed is split, £6.3m repayable at a fixed interest rate of 4.605%, £2.1m repayable at a variable interest rate of 0.35% above the Bank's rate. The full loan is unsecured and repayable by instalments. The college commenced repayments of principal against this loan on 1 October 2009, from when it was repayable over 22 years. repayable over 22 years. The Department for Education loan of £0.8M is repayable by instalments over 9 years at the PWLB standard interest rate.

Provisions

At 1 August 2023

Defined benefit obligations

Dilapidation provisions

£'000

(90)

(304)

(394)

Expenditure in the period

Total

Additions in period

At 31 July 2024

(90)

(253)

(343)

Defined benefit obligations relate to the liabilities under the college's membership of the Local Government Pension Scheme. Further details are given in note 24.

73 'Page

Members' Report and Financial statements for the year ended 31July 2024

20 Cash and cash equivalents At 1 August 2023

Cash flows

At 31 July 2024

£'000

Cash and cash equivalents

3,136

(1,784)

1,352

Total

3,136

(1,784)

1,352

21 Capital and other commitments Group and College

Commitments contracted for at 31 July

2024

2023

£'000

1,033

640

22 Lease obligations At 31 July the college had minimum lease payments under non-cancellable operating leases as follows: Group and College 2024

2023

£1000

£'000

Future minimum lease payments due Land and buildings Not later than one year

193

Later than one year and not later than five years

290

580

483

773

Not later than one year

256

224

Later than one year and not later than five years

311

303

567

527

1,050

1,300

Later than five years Other

Later than five years

Total lease payments due 23 Contingencies There are no contingent liabilities to be reported this year (2023: £Nil).

74 'Page

Members' Report and Financial statements for the year ended 31July 2024

24 Defined benefit obligations The College's employees belong to two principal post-employment benefit plans: the Teachers' Pension Scheme England and Wales (TPS) for academic and related staff; and the Durham County Council Local Government Pension Scheme (LGPS) for non-teaching staff. Both are multi-employer defined-benefit plans. The pension costs are assessed in accordance with the advice of independent qualified actuaries. The latest formal actuarial valuation of the TPS was as at 31 March 2020 and of the LGPS 31 March 2022.

Total pension cost for the year

Teachers' Pension Scheme: contributions

2024

2023

£000

1,248

1,071

Local Government Pension Scheme: Contributions paid

1,080

976

FRS 102 (28) charge

(400)

510

Charge to the Statement of Comprehensive Income

680

1,486

1,928

2,557

Enhanced pension charge to Statement of Comprehensive Income

Total Pension Cost for Year within staff costs

Contributions amounting to £123k (2023: £110k) were payable to DCC and of £139k (2023: £124k) to TPS at 31 July. Both amounts are included in creditors.

75 !Page

Members' Report and Financial statements for the year ended 31July 2024

Teachers' Pension Scheme The Teachers' Pension Scheme (TPS) is a statutory, contributory, defined benefit scheme, governed by the Teachers' Pension Scheme Regulations 2014. These regulations apply to teachers in schools, colleges, and other educational establishments. Membership is automatic for teachers and lecturers at eligible institutions. Teachers and lecturers are able to opt out of the TPS. The TPS is an unfunded scheme and members contribute on a 'pay as you go' basis - these contributions, along with those made by employers, are credited to the Exchequer under arrangements governed by the above Act. Retirement and other pension benefits are paid by public funds provided by Parliament. Under the definitions set out in FRS 102 (28.11), the TPS is a multi-employer pension plan. The College is unable to identify its share of the underlying assets and liabilities of the plan. Accordingly, the College has taken advantage of the exemption in FRS 102 and has accounted for its contributions to the scheme as if it were a defined-contribution plan. The College has set out above the information available on the plan and the implications for the college in terms of the anticipated contribution rates.

Valuation of the teachers' pension scheme. The latest actuarial valuation was carried out as at 31 March 2020 and in accordance with The Public Service Pensions (Valuation and Employer Cost Cap) Directions 2023 and the Employer Contributions Rate was assessed using the agreed assumptions in line with the Directions and was accepted at the original assessed rate as there was no cost control mechanism breach. The key results after the valuation published on 26 October 2023 are: Total scheme liabilities for service (the capital sum needed at 31 March 2020 to meet the stream of future cash flows in respect of benefits earned) of £262 billion. Value of notional assets (estimated future contributions together with the proceeds from the notional investments held at the valuation date) of £222 billion. Notional past service deficit of £39,8 billion (2016: £22 billion) Discount rate is 1,7% in excess of CPI (2016: 2,4% in excess of CPI (this change has had the greatest financial significance)) As a result of the valuation, new employer contribution rates have been at 28,6% of pensionable pay from 1 April 2024 until 31 March 2027 (compared to 23,68% under the previous valuation including a 0,08% administration levy. DfE agreed to pay a Teachers Pensions employee contribution grant to cover the additional costs during the 2023-24 academic year, and currently through to July 2025. The pension costs paid to TPS in the year amounted to £1,248k (2023: £1,071k).

76 'Page

Members' Report and Financial statements for the year ended 31July 2024

Local Government Pension Scheme The LGPS is a funded defined-benefit plan, with the assets held in separate funds administered by Durham County Council Local Authority. The total employer contributions made for the year ended 31 July 2024 were £1,080k (2023: £976k). The agreed contribution rates for future years are 19.5% for the college and range from 5.5% to 7.5% for employees, depending on salary according to a national scale. Parliament has agreed, at the request of the Secretary of State for Education, to a guarantee that, in the event of an FE body the statutory sector closure, where there is no transfer or merger, outstanding Local Government Pension Scheme liabilities would be met by the Department of Education. The guarantee came into force on 12 November 2024. The following information is based upon a full actuarial valuation of the fund at 31 March 2023 updated to 31 July 2024 by a qualified independent actuary. At 31 July 2024

At 31 July 2023

Rate of increase in salaries

3.60%

Future pensions increases

2.60%

Discount rate for scheme liabilities

5.00%

5.0%

Inflation assumption (CPI)

2.60%

Pensions accounts revaluation rate

2.60%

The college's share of the assets in the plan at the balance sheet date and the expected rates of return were:

At 31 July 2024 Years

At 31 July 2023 Years

Retiring today Males

21,5

21,7

Females

22,4

22,9

Males

23,8

23,9

Females

24,6

25,0

Retiring in 20 years

77 'Page

Members' Report and Financial statements for the year ended 31July 2024

The College's share of the assets in the plan at the balance sheet date and the expected rates of return were: Long-term rate of return expected at 31 July 2024

Fair Value at 31 July 2024

Equity

55.1%

17,980

50.9%

15,150

Debt

6.4%

3,300

10.6%

3,150

Corporate

10.1%

3,130

9.4%

2,800

£'000

Longterm rate of return expected at 31 July 2023

Fair Value at 31 July 2023 £'000

Property

9.6%

2,090

7.5%

2,230

Cash

1.9%

620

2.0%

600

Multi Asset

15.3%

4,990

15.3%

4,550

Other

1.6%

520

4.3%

1,280

Total fair Weighted average expected long term rate of return Return on assets

32,630 35.0%

29,760 31.00/0

£2,270

£630

The amount included in the balance sheet in respect of the defined benefit pension plan and enhanced pensions benefits is as follows:

Fair value of plan assets Present value of plan liabilities Restriction to level of asset ceiling Present value of unfunded liabilities Net pensions asset/(liability) (note 19)

2024

2023

£'000

32,630

29,760

(30,630)

(29,220)

(2,000)

(540)

(90)

The value of the College's share of net assets has been restricted due to the effect of the asset ceiling being the maximum value of the present economic benefits available in the form of the unconditional right to reduced contributions from the plan. A corresponding charge has been made to other comprehensive income in the period. 78 I Page

Members' Report and Financial statements for the year ended 31July 2024

Amounts recognised in the Statement of Comprehensive Income in respect of the plan are as follows: 2024

2023

£'000

Amounts included in staff costs Current service cost

800

Past service cost

1,380 70

Financing (credit)/costs - interest on net defined benefit liability (asset)

(50)

180

Total

750

1,630

Employer contribution

(1,150)

(1,120)

Total

(400)

510

Allowance for administration expenses included in current service

Amount recognised in Other Comprehensive Income Asset gains /(losses) arising during the period

770

Liability gains / (losses) arising during the period

(350) 11,000

Changes in assumptions underlying the present value of plan liabilities

270

370

Actuarial gains/(losses) due to liability experience

(4,220)

Adjustment in respect of paragraph 28.22

(1,460)

(540)

Amount recognised in Other Comprehensive Income

(400)

6,260

79 I Page

Members' Report and Financial statements for the year ended 31July 2024

Movement in net defined benefit asset/(liability) during year 2024

2023

£1000 Net defined benefit (liability)/asset in scheme at 1 August

£'000

(90)

(5,840)

Current service cost

(800)

(1,380)

Employer contributions

1,150

1,120

Past service cost

(70)

Net interest on the defined (Iia bility)/asset

(180)

(940)

6,260

(90)

Movement in year:

Actuarial gain or (loss) due to Liability experience Net defined benefit asset/(liability) at 31 July

Asset and Liability Reconciliation 2024

2023

£'000

Changes in the present value of defined benefit obligations Defined benefit obligations at start of period Current service cost Interest cost Contributions by Scheme participants

29,220

34,440

800

1,380

1,450

1,160

350

300

Experience gains and losses on defined benefit obligations

(11,000)

Changes in financial assumptions

(270)

(370)

Estimated benefits paid

(900)

(980) 70

Past Service cost (20)

4,220

30,630

29,220

Fair value of plan assets at start of period

29,760

28,690

Interest on plan assets

1,500

980

Return on plan assets

770

(350)

Employer contributions

1,150

1,120

350

300

(900)

(980)

32,630

29,760

Actuarial (gain)loss due to liability experience Defined benefit obligations at end of period

Changes in fair value of plan assets

Contributions by Scheme participants Estimated benefits paid Fair value of plan assets at end of period

80 I Page

Members' Report and Financial statements for the year ended 31July 2024

Related party transactions

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 the organisations in which a member of the board of governors may have an interest. All transactions involving such organisations are conducted at arm's length and in accordance with the College's financial regulations and normal procurement procedures. Endeavour (Also known as Apollo Schools Trust)

An institution in which, C Tomlinson-Briggs, the VicePrincipal Curriculum and Performance has an interest. Sales in the year amounted to £182k (2023: £141k). The trade debtors balance outstanding at the year-end was £7k (2023: £39k). Purchases in the year amounted to £Nil (2023: £ Nil). The trade creditors balance outstanding at the year-end was £Nil (2023: £ Nil)

Advanced Learning Partnership (Dene Academy)

An institution in which C Tomlinson-Briggs, the VicePrincipal has an interest. Sales in the year amounted to £90.1k, there was no interest in 2023. Purchases in the year amounted to Elk there was no interest in 2023.Trade debtor balance outstanding at the year-end was £Nil. The trade creditors balance outstanding at the year-end was £Nil (2023: £21k)

AAT

An institution in which D Hartis, Governor, has an interest. Purchases in the year amounted to £3k there was no interest in 2023. There were no sales in the year The trade creditors balance outstanding at the year end was £ik (2023: £NIL). The trade debtors balance outstanding at the year-end was £Nil (2023: Nil).

Ofsted

An institution in which S Duncan, Principal, has an interest. Sales in the year amounted to £2k. There was no interest in 2023. The trade debtor and trade creditor balance outstanding at the year-end was £Nil.

University of Sunderland

An institution in which M Young, Governor and Mr D Butler have an interest. Sales in the year amounted to £534k (2023: £441k). Purchases in the year amount to £8k (2023 £14k). The trade debtors balance outstanding at the yearend was £Nil (2023: £Nil) The trade creditors balance outstanding at the year-end was £3k (2023:£NiI)

81 1Page

Members' Report and Financial statements for the year ended 31July 2024

Amounts disbursed as agent - Learner support funds 2024

2023

£'000

Balance b/fwd

(14)

(15)

ESFA Grants

1,094

1,097

Interest earned

1,080

1,082

(1,078)

(1,045)

Administration costs

(51)

Balance unspent as at 31 July, included in creditors

(49)

(14)

Disbursed to students

Funding body grants are available solely for students. In the majority of instances, the college only acts as a paying agent. In these circumstances, the grants and related disbursements are therefore excluded from the Statement of Comprehensive Income.

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