ANNUAL REPORT - Newcastle Colleges one of the largest providersoflearning,skills andemployabilitytrainingintheUK,the Groupisahuboftalentandinnovation. During2007/08wecontinuedtobecomea

ANNUA L R E PORT

Newcastle College Group

At the time of publication (March 2009) the Group endeavoured to ensure that all information contained in this report was correct.

Newcastle College Group welcomes diversity in its organisation – valuing differences in race,gender, sexual orientation, disability, religion or belief, class and age. We actively oppose discrimination,aim to remove all conditions that put people at a disadvantage, strive to improve access and to provideoutstanding support.

We are committed to providing an inclusive learning environment. We have produced a ValuingDiversity Policy, a Race Equality Statement, a Disability Equality Scheme and a Gender Equality Schemewhich set out our response to statutory obligations and our approach to the active promotion ofequality and diversity. Please discuss your support needs with us and we will make every effort tomake adjustments to help you succeed.

07/08ANNUA L R E PORTNEWCAST L E COL L EGE GROUP

CONTENT S

Providing a range ofprovision that responds tothemarketplace

Investing in ourorganisation tomeetmarket demand

OurVision

Meeting customeraspirations

Introduction

03ANNUA L R E PORT 0 7 / 0 8NEWCAST L E COL L EGE GROUP

Foreword from the GroupChief Executive

Foreword from the Chairof Governors

Our GroupDivisions Key Estates Developmentsin 2007/08

OurHistory Financial StatementsEqual OpportunitiesBoard of Governors

Newcastle College Group


The Newcastle College Group is a £175millionorganisation (2008/09), which brings together over40,000 learners and over 3,800 staff across four divisionsat over 100 sites, to formone of the largest educational,training and employability organisations in the UK.

Ourmission is to develop people through learning and achievement forthe benefit of themselves, society and the economy. Our focus is onmeeting national and regional education, skills and employability needsfor individuals and the skills priorities of employers in-line withGovernment agendas.

We deliver quality education, training, employability and work-basedlearning solutions to thousands of organisations and learnersthroughout England, Scotland, Wales and Northern Ireland. Theserange from Government funded and commercial skills training andeducation, through to bespoke professional courses and employabilityservices, to national training contract management.

We are often cited as a model of excellence in the sector and ourstrong national reputation creates growing demand for NewcastleCollege Group’s expertise.

Through fostering outstanding stakeholder and client relationshipswecontinue to create unrivalled provision and innovative solutions tomeetthe needs of our customers, our people and our communities.

Our aim is to provide complete skills and employabilitysolutions and be the training provider of choice for UKbusinesses and individuals.

Our mergers and acquisitions have given Newcastle CollegeGroup the opportunity to expand its activities and develop awide range of employer facing and individual provision.

Ourmarkets continue to growanddevelop, offering substantialopportunities across the UK. We have outstanding expertiseacross our key sectors to meet stakeholder andcustomer needs.

We aim to:

•Achieve tangible benefits for our customers.

•Deliver innovative, bespoke education, training and employability servicesin-line with Government agendas.

•Be in the top 10% of high performing organisations in the UK.

•Continue to achieve business growth and financial success across theGroup.

•Build a strong national reputation in all areas.

v i s ion


The Newcastle College Group brings together over 40,000students and over 3,800 staff across four divisions and 100sites to form one of the largest educational, training andemployability organisations in the UK.

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s one of the largestproviders of learning, skills

and employability training in theUK, theGroup is a hub of talent and innovation.

During 2007/08 we continued to become amuch larger and diverse organisation, helpingus to realise our ambition of providing newopportunities for learners and customersacross new geographical boundaries, themost recent of which, Intraining, is alreadyforging new partnerships and expanding ouremployer provision on a national scale.

We continued to put the Group at theforefront of national, regional and localbusiness communities that we serve andshow the valuable contribution we make tothe economy.

We continued to influence policy with seatson the Higher Education Funding Council forEngland Council (HEFCE) and RegionalDevelopment Agency (RDA) boards, theConfederation of British Industry (CBI)regional council, the Board of BusinessEnterprise North East, Connexions and theNewcastle Partnership. We are also foundermembers of the 157 Group, which aims togive large colleges greater influence overnational policy.

Intraining and TWL continue to forge strongpartnerships with the Department for Work

and Pensions, Job Centre Plus, the Learningand Skills Council, the Welsh Assembly, theDepartment of Employment and Learning inNorthern Ireland, local employersand charities.

We hadmany national visits this year includingThe Rt. HonDavid Blunkett, MPwho helpedlaunch Newcastle College’s partnership withthe Royal National Institute of Blind People(RNIB) to develop a specialist centre for blindand partially sighted learners. Lord DigbyJones, Minister of State for Trade andInvestment gave an inspirational address onthe Government Skills Agenda and ChrisGrayling, ShadowSecretary of State forWorkand Pensions, cited the new ConstructionAcademy at Skelmersdale and OrmskirkCollege as a centre of good practice.

My thanks to theGovernors, themembers ofthe Skelmersdale and Ormskirk AdvisoryCommittee and to all our staff and learnersfor their continued commitment and hardwork. We have much to be proud of and Ilook forward to the coming year withgreat optimism.

Jamie MartinChair of Governors

A

FOR EWORDFROM THE CHA IR O F GOV ERNOR S

J AM I E MART I N


As part of our growth and development plans we havecontinued to make further exciting acquisitions.Theseinvestments represent great opportunities.

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he year 2007/2008 has beena most rewarding one for

the Newcastle College Group.

As part of our growth and development planswe have continued to make further excitingacquisitions, purchasing TWLTraining Ltd andmore recently, parts of the trading business ofCarter and Carter Group PLC (inadministration). These investments representgreat opportunities for the Group to furtherdevelop its employer facing provision,includingWork Based Learning, Train to Gainand very important work with theDepartment for Work and Pensions.Strategically it provides a platform fromwhichto increase our offer on a national scale. Webelieve that these acquisitions will strengthentheNewcastleCollegeGroup and allowus tobenefit from the expertise of colleagues whohave joined us. As part of this excitingdevelopment we successfully rebranded thetrading business of Carter andCarter to forma newdivision calledThe IntrainingGroup andare delighted to welcome Chris Bailey asChief Executive. Chriswill provide the strongleadership and direction needed to ensure thefuture success of the business.

As a further development of ourmergerwithSkelmersdale and Ormskirk College,constructionwork has recently started on there-development of its site to provide a new£41million college campus. The visionary new

campus will make up a significant part of theregeneration of Skelmersdale town centre –Skelmersdale Vision, which is currently beingundertaken by English Partnerships andWestLancashire District Council.

Newcastle College’s and Skelmersdale andOrmskirk College’s recent OFSTEDinspection results were a wonderful finale tothe academic year. Newcastle College wasgraded outstanding in all areas and achieved agrade one in every category. This positionsNewcastle College as one of the topperforming further education colleges inthe UK.

Newcastle College also became one of thefirst college’s in the north east to achieve theTraining Quality Standard with excellence inconstruction. This quality kite markrecognises those organisations that candemonstrate excellence in delivering trainingsolutions to employers.Our strategy to createworld-class training facilities continues toensure that staff and students work and learnin an innovative and inspiring environment.Last September we opened the £8.6millionSandyford building within Newcastle Collegecreating a centre of excellence foremployer engagement.

Twelve months on work has already startedon a brand-new Sixth Form Academy atNewcastle College which will open in

T

FOR EWORDFROM THE GROUP CH I E FEX E CUT I V E O F F I C ER

J AC K I E F I S H E R


September 2011. This £43million buildingwillcreate a flagship facility within the region,further enhancing learning and giving studentsaccess to highly specialised facilities includingperformance studios, visual arts suites andteaching laboratories.

We have also launched the £3.3millionexpansion of the Newcastle AviationAcademy. This is a strategic partnershipbetween Newcastle College, One NorthEast, TyneWear Partnership, the Learning andSkills Council and Newcastle InternationalAirport. This development provides studentswith world-class training, qualifications andfacilities andwill help skill the next generationof engineers and related vocational tradeswithin the aviation industry.

None of this could be possible without thesignificant contribution of our learners, staff,Board of Governors, customers and partnersand we can all take much pride in the newGroup formation as it goes from strength tostrength. My thanks to you all for yourcontinued hardwork and I look forwardwithgreat optimism to themany opportunities thatwill be realised as part of our ongoing vision tostrengthen the Group in the very excitingyear ahead.

Jackie FisherGroup Chief Executive

We respond to market demands and embrace creativityand innovation.

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OUR GROUP D IV I S IONS

N ew c a s t l e C o l l e g e G r o u p Tu r n ov e r 2 0 0 7 / 0 8

£53.2mFE40%

£7.3mTWL6%

£15.2mIntraining

13%

£9.7mAcademy ofLearning for

Justice8% £9.8m

Skelmersdaleand Ormskirk

College8%

The Newcastle College Group employs over 3,800 staff, has aturnover ofmore than £117million (2007/08),has an ambitious£250m capital investment programme and is continually citedas a model of excellence.

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£75.5mNewcastle College

65%65%13%

6%

8%

8%

Intraining

Intraining operates across four business units:Employability, CBE, NTP and Quantica todeliver Apprenticeships, Train to Gain andemployability contracts nationwide.

Since its formation in March 2008 Intraininghad a turnover of £15.2million, contributing13% to the Group’s overall turnover.

Intraining Employability continued as amarketleader in the delivery of the Government'swelfare reform agenda working closely withfunders, employers and providers of Train toGain and Apprenticeships to ensure clientsprogress from training into employment.

At the heart of the Government’s welfarereform agenda is a long-term aim for anemployment rate of 80%. According to theOffice of National Statistics the employmentrate for people ofworking agewas 74.4% forthe three months to August 2008.

Intraining Employability responded to thisagenda by delivering a wide range ofprogrammes through partnerships with keystakeholders, such as the Department forWork and Pensions, Jobcentre Plus, theLearning and Skills Council, employers andlocal charities. At any one time IntrainingEmployability was in contact with more than6,000 individuals seeking information, adviceand guidance on how to secure sustainablework. In addition Intraining Employability

delivered bespoke training to several UKbluechip organisations.

Intraining CBE is a work-based learningprovider that works with employers acrossthe south east of England to sourceGovernment funding to help employees gainnationally recognised qualifications.

Intraining NTP is a major provider ofgovernment funded training courses to largeand small organisations, with an extensiveclient list across a wide range of UK industry.NTP Consulting brings key people from arange of organisations together to facilitateknowledge transfer,with the aimof improvingbusiness performance and success. NTP hasan impressive portfolio of private sectorclients spanning various industry sectors.

Intraining Quantica is a leading provider ofTrain to Gain and runs a range ofApprenticeships and NVQ based learningprogrammes in management, businessadministration, customer service andwarehousing aswell as a range of preparationfor work courses for school leavers.


Newcastle College

During 2007/08 23,629 further education (FE)students and 2,909 higher education (HE)students enrolled at Newcastle College.

The college had a turnover of more than£75.5million, an ambitious £250million capitalinvestment programme and is continually citedas a model of excellence.

Diverse academic, vocational, work-based andemployer training courses range from entrylevel to post-graduate qualifications.

During the latest OFSTED inspection in June2008 Newcastle College was found to beoutstanding in all areas, positioning the collegeas one of the best performing furthereducation providers in the country.

Achievement levels within the schools ofBusiness and Care, and Art and Designremained in the top 10%of further educationnationally. The Performance Academyachieved continued success in the form ofimpressive pass rates of 94% for furthereducation and 96% for higher education. TheLifestyle Academy – centre for sport, traveland tourism, beauty and hospitality, enjoyed anoverall success rate of 89%.

During the year the School of Applied Scienceworked in collaboration with STEM andNewcastle Science City to develop

programmes for growth industries such assubsea engineering, bio science,pharmaceutical and petrochemical. Inconjunction with One North East, thedevelopment of an exciting £3.3millionAviation Academy at Newcastle InternationalAirport began.

During the year the School of ConstructionAutomotive and Land-basedwas awarded thecoveted Training Quality Standard (TQS) PartB with excellence in construction. The awardrecognises the school’s exceptional industrylinks and the success of itsCentre of VocationalExcellence, which achieved all objectives forachievement and growth.

Excellent industry links are demonstratedacross the college through industrial workplacements and a BeaconAward for employerengagement.

2007/08 was an amazing year ofunprecedented growth for the InternationalOffice. Revenue increased by £1million on theprevious year and international studentnumbers increased by 70%to around 700 full-time and 300 short course enrolments –making Newcastle College one of the biggestinternational recruiters in the UK furthereducation sector.

During the year AS andA2 Level success rates

increased by 5% on the previous yearpositioning Newcastle Sixth Form Collegefirmly within the top 4% of best performingFE colleges in the UK.

In April 2008 Newcastle Sixth Form Collegeofficially launched the InternationalBaccalaureate (IB) Diploma Programme, oneof the most widely recognised pre-universityqualifications worldwide. The launch cameafter the IBOrganisation inGeneva confirmedthe sixth form as a World School in January2008. Also in April, the sixth form won acompetitive tender to run two three-yearcontracts for Science and EngineeringAmbassador (SEA) brokerage and Science,Technology, Engineering and Mathematics(STEM) enrichment activities in all primaryand secondary schools in Tyne andWear.

Academy of Learning for Justice

TheAcademy of Learning for Justice (ALJ) is asub division of Newcastle College. ALJcontinued to deliver offender learning in fourprisons and two young offender institutions inthe north east, Northumbria and Durhamprobation areas. During 2007/08ALJworkedwithmore than 7,000 learners in custody andthose subject to a probation order. Focuscontinued on engagement of learners toachieve newqualifications thatwill boost theircareer prospects and set them on positivelearning journeys.

During 2007 ALJ successfully won theGroup’s first national contract. This was towork with the Prison Service to assess NVQLevels 2 and 3 in Custodial Care. Thesequalifications are now undertaken by all newprison officer recruits across the country andduring 07/08 ALJ worked with more than1,600 prison officers.

In addition, during the course of the year, ALJengaged with more than 1,500 learnersthrough externally funded schemes includingcommunity projects.


Skelmersdale and Ormskirk College

During 2007/08 around 3,000 furthereducation students enrolled at Skelmersdaleand Ormskirk College.

Since merging with Newcastle College, thecollege has made significant progress andcontinues to go from strength to strength. Thecollege received an excellent OFSTEDinspection result in June 2008with praise givenfor high and improving success rates,outstanding student support, advice andguidance and good teaching and learning.

A 4% improvement in success rates to 80%means the college is now in the top 25% ofgeneral further education colleges nationally.

The new £2.3million West LancashireConstruction Academy offering courses inseveral trades opened in September 2007.During the year significant investment wasmade to refurbish the Westbank Campus –specifically to improve student social areas andbeauty/holistic therapy salons. And the futurenow looks brightwith a brand-new£41millioncampus in Skelmersdale town centre openingin September 2010.

TWL

For over 25 years TWL Training has helpedyoung people, adults and employers achievetheir true potential through learning. TWL isbased in Lancashire and has a network ofcentres across England, Wales and NorthernIreland.

Since its acquisition TWL had a turnover of£7.3million, contributing 6% to the Group’soverall turnover.

As a provider of post-16 education, trainingand development TWL’s key partners includethe Learning and Skills Council, theDepartment for Work and Pensions (DWP),and theWelsh Assembly.

During 2007/08 TWL successfully securedseveral significant skills and employabilitycontracts through open and competitivetendering. These included the delivery ofSkillbuild and Apprenticeships for the Northand Mid Wales area, e2e for Luton andOxford, ESF co-financed projects across theNorth West region and Programme Centrefor Derbyshire DWP.

Business objectives continue to tackleunemployment by linking people, jobs andtraining, to increase 16 to 19 participation,attainment and progression and to increasethe proportion of adults with the skills andqualifications needed for employment, with afocus on Skills for Life and Level 2 courses.


During 2007/08 around 3,000 further education studentsenrolled at Skelmersdale and Ormskirk College.

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Sandyford Building,Newcastle College

In December 2007 theSandyford Building re-opened and thanks toinvestment of £8.6million itbecame the new centre foremployer engagement.

KEY E STAT E SD EV E LOPMENT SIN 2007 / 0 8

West LancashireConstruction Academy,Skelmersdale andOrmskirk College

A new £2.3million facilityoffering courses inbricklaying, plastering,joinery, plumbing, electricalinstallation, motor vehiclerepair and engineering wasofficially opened.

Rye Hill House,Newcastle College

In June 2007 the collegeofficially opened the restoredGrade II listedRyeHill Housein a £8million redevelopmentto centralise StudentServices, Exams and Finance.

Skelmersdale Campus,Skelmersdale andOrmskirk College

During 2008 plans werefinalised for a brand-new£41million campus inSkelmersdale town centre.This development is due toopen in September 2010.

Westbank Campus,Skelmersdale andOrmskirk College

Significant investment wasmade to refurbish studentareas of the WestbankCampus including R Space,the Poolside Lounge and hair,beauty and holistic therapysalons.

Intraining Investment

During the year Intraininginvested £400,000 on a totalrefurbishment of its Sheffieldhead office.

Newcastle ConstructionAcademy, NewcastleCollege

In December 2007 plans tocreate a new campuscentred around sustainableconstruction and renewableenergies were developed.

Newcastle Sixth FormAcademy, NewcastleCollege

In 2007/08 proposals for a£43million new buildprogressed to the detaileddesign stage in consultationwith staff and the Learningand Skills Council. Theinspirational Sixth FormAcademy is due to open bySeptember 2011.

Aviation Academy,Newcastle College

During the year work beganon a £3.3million AviationAcademy at NewcastleInternational Airport. Thisexciting developmentwill beofficially launched in March2009.


Keeping up-to-date and setting the standard in educationand training are at the heart of our strategic aims andcorporate culture.

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eeping up-to-date andsetting the standard ineducation and training are

at the heart of our strategic vision for theGroup. We continue to respond toGovernment initiatives and embracenew opportunities to meet our missionand objectives.

14-19 provisionTheGroup continued to provide awide rangeof vocational and academic provision for 14to 19 year olds. In April 2008Newcastle SixthForm College launched the InternationalBaccalaureate Diploma Programme, one ofthe most widely recognised pre-universityprogrammes studied in 131 countriesworld-wide.

During the year planswere developed for theintroduction of the 14-19NewDiploma. TheDiploma, which aims to bridge the gapbetween vocational and academic learning, iswidely recognised as one of the mostimportant changes to the country’squalification system in a generation. 10Diploma subjects including Aerospace,Creative and Media, Business Admin, IT, andScience were due to be launched at selectcolleges from September 2008.

Newcastle College’s outstanding OFSTEDinspection in June 2008 is testament to theGroup’s excellent 14-19 provision.

Employer training and theGovernment’sSkills AgendaNewcastle College Group continued torespond to the Leitch review and is firmlycommitted to the skills agenda.

Newcastle College was one of the firstorganisations in theUK to receive the covetedTraining Quality Standard with excellence inconstruction. This recognises its excellentemployer engagement. Newcastle Collegewent on to successfully win several publicsector training contracts. In addition Train toGain provision across theGroup continued toexpand in the north east, north west, westmidlands, Yorkshire and Humberside.Working in partnership with Sector SkillsCouncils and employers, allowed the Groupto increase the breadth of its Apprenticeshipcourses further.

Increased support in today’s difficulteconomic climateIntraining’s courses continued to be tailoredto the needs of local labour markets. Duringthe year key aims continued to be theprovision of qualifications for learners on

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PROV ID ING A RANGE OFPROV I S ION THATRE S PONDS TO THEMARKETP LACE


Department for Work and Pensionsprogrammes. This meant supporting long-term unemployed and disabled peoplethrough training and guidance to help themback into employment. Some of this activitywas targeted around widening participationand improving social inclusion throughcontracts specifically focused on black,minority and ethnic groups.

During the year Intraining put additionalsupport in place for work-based learnersfacing redundancy. Learners accessed adedicated training centre to gain real workexperience that enabled them to achieve theirqualifications. Intraining also offered arecruitment service to learners andemployers.

Skelmersdale and Ormskirk College focusedon developing its course provision to meetlocal market need. This was achieved bymaking good use of local labour marketintelligence, college enquiries data anddeveloping good working relationships withschools, employers and key agencies such asThe Young Peoples’ Service and Job CentrePlus. The college worked closely with theseagencies to refine its course portfolio in-linewith the needs of the community. This wasrecognised by inspectors in the June 2008OFSTED inspection.

TWL responded to the changing contractprocurement strategies of funding bodies,particularly the introduction of Flexible NewDeal by establishing a Skills and PartnershipDirectorate with specific responsibility formanaging subcontractor partner relationships,major employer relationships and for ensuringlinkagewith local and regional, economic andsocial regeneration strategies. This directorateincluded an experienced national skillsmanager, to effectively target and developrelationships with transport and logisticsemployers.

Adult literacy and numeracyNewcastle College continued to support theGovernment’s priority of improving adultliteracy and numeracy. The School of Accessto Learning engaged with hundreds oflearners in a range of community settings toincrease adult literacy and numeracy levels.Key partnerships continued to assist thecollege to reach learners in themost deprivedareas of Newcastle.

Access to Learning also continued to offerEnglish for Speakers of Other Languages(ESOL), literacy and numeracy to learnersfrom overseas countries, including significantnumbers of asylum seekers, refugees,members of settled communities and thosepaying full costs as international studentslearning English as a Foreign Language (EFL).

In June 2008 Access to Learning’s English andmaths section launched Test the Toon – acampaign to support Newcastle College’sSkills for Life targets for literacy and numeracyby engaging with and encouraging individualsto take a National Test.

Higher EducationNewcastleCollege offered an ever expandingrange of higher education courses includingover 50 FoundationDegrees, over 25BA/BScHonours Degrees and two Certificates inHigher Education in a wide range of subjects.Plans were also developed for a part-timeMBAand anMScAppliedComputing in 2009.It continued toworkwith LeedsMetropolitanUniversity as its main awarding body and alsohad awards validated by NewcastleUniversity, the University of Sunderland,Kingston University London and theUniversity of Wales.

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Newcastle College Group continued to respond to the LeitchReview and is firmly committed to Government’sSkillsAgenda.

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NEWCASTLE COLLEGE GRADUATION CEREMONY


In December 2007 plans to create a new facility centredaround sustainable construction and renewable energieswere developed.

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e aim to respond tomarket demands,embrace creativity

and innovate to position the Group atthe forefront of cutting-edge learningand training.

Major investmentsDuring 2007/08 plans for a brand-new SixthForm Academy at Newcastle College weredeveloped. Senior managers and architectsvisited New York to see first-hand howworld-class buildings and facilities can benefitstudents and communities. Plans for a£43million new build opening in September2011 are now at the detailed design stage.

Skelmersdale and Ormskirk Collegedeveloped plans for an ambitious new£41million campus for 2010, whichwill makeup a significant part of the regenerationprogramme of Skelmersdale town centre.

Intraining invested over £1million in propertyand IT infrastructure including £400,000 in therefurbishment of its Sheffield head office. Inaddition eightNewPathways sites sawmajorimprovements with a total of £200,000

invested across the sites. These newdevelopments will benefit both staff andlearners.

Industry linksIntraining spread its wings across manysectors of industry and worked with majororganisations including Tesco, Ericsson,Whitbread, Haven Holidays, DVLA, B&Q,British Gas, NPower, Centrica and the RoyalNavy.

Forging new working partnerships withindustry is a priority across the Group. Anexcellent example comes from NewcastleCollege’s School of Applied Science whichcompleted various projects that resulted inbespoke training for businesses includingSiemens Power Generation, Proctor andGamble,QuantumSpecials and SCAHygiene.Additional project work led to thedevelopment of new Foundation Degrees inprocess engineering and laboratorytechniques for 2009 entry.

TWL effectively targeted and developedrelationships with transport and logisticsmanagers in response to the changing

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I NV E ST ING IN OURORGAN I SAT ION TO MEETMARKET DEMAND


TheOnline Learning Centre – an internet based method ofstudy designed to make learning easier and more accessiblewas relaunched by Newcastle College’sTrade Union Centre.

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SKELMERSDALE CAMPUS ARTIST’S IMPRESSION

contract procurement strategies of fundingbodies in particular Flexible NewDeal.

Supporting disadvantaged groupsNewcastle College’s Learning Developmentstudents were given the opportunity to learna range of valuable work skills through realworking environments. These includedrecycling, catering, horticulture and retail.Retail experiencewas offered via a traditionalfruit and vegetable stall and an organicvegetable delivery scheme. The schemes alsohelped provide extra confidence and life skills.During the college’s June 2008 OFSTEDinspection, inspectors commented that, “Wellconsidered and thoughtfully implementedlearning opportunities are provided forlearners with learning difficulties and/ordisabilities”.

Newmethods of learning deliveryVarious divisions throughout the Group areincreasingly offering blended learning, whichgives learners the flexibility to study at a timeand place that is convenient to them. Thisresponds to changes in demographics,consumer attitudes and lifestyles.

Intraining developed plans for a newportfolioof online learning, which will launch inMarch 2009.

Intraining also moved into new premises inSale, Manchester in October 2007 andintroduced an improved delivery model thathas enabled learners to receive trainingwith amore flexible approach.

Newcastle College’s Trade Union Centre(TUC) EducationTeam re-launched itsOnlineLearning Centre – an internet based methodof study for TUC members. The TUC has6.85millionmembers nationally and this onlineinitiative in conjunction with Learndirect isdesigned to make learning easier and moreaccessible for these members.

The BA (Hons) Airline and AirportManagement coursewas offered as a blendedlearning course pioneering the use of ILT andwebcam technology to support studentsworking at Newcastle International Airportand within airline industries based across theUK and in Europe.

“In this current economic climate, it is important that peopleare equippedwith the necessary skills to enable them to findwork, and to help people who have been out of work for along time back into employment.” Joan Humble MP and member of the

Government’s Work and Pensions Commitee, commenting on her recent visit to TWL’s offices.

> 29ANNUA L R E PORT 0 7 / 0 8NEWCAST L E COL L EGE GROUP

Our stakeholders and customers are at the heart of everythingwe do.We understand that learners want to succeed and thatcorporate clients have specific performance objectives.Forgingworking partnerships with industry is a priority acrossthe Group.

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eeting and exceedingthe needs andaspirations of our

learners and our customers is at theheart of everything we do.

Weunderstand that learnerswant to succeedand that corporate clients have specificperformance objectives. Each of our diversebusiness operations has an excellent trackrecord of providing high standards ofeducation and training. The followingexamples demonstrate the success of ourlearner, community and employerengagement activities.

Further EducationSamantha Louise Jubb,mother to a 17monthold boy, returned to education following herpregnancy to study childcare at NewcastleCollege and after completing Levels 1 and 2 isnowworking towardsNVQLevel 3. She said“I’m moving into my own home. I’m lookingforward tomy career. I feel confident and bestof all I’ve learnt how to be a goodmother. Thecourse is the best thing that’s ever happenedto me."

Higher EducationRichard John Thompson, 22, recentlygraduated from the BMus (Hons) Jazz,Popular and Commercial Music course atNewcastle College and since graduating hasreleased two albums and provided supportfor music artists such as Midge Ure, DeaconBlue, Blondie and Paul Weller. Richard said“It’s absolutely fantastic to have someone likeMidge Ure interested in what you do”.

ApprenticeshipsZoe Humphries contacted Intraining straightfrom school to look for an Apprenticeship.The Intraining teamworked closely with Zoeand supported herwhen she had problems inher career to gain alternative employment.

Soon after starting her new job, the changewithin Zoe was incredible. Her confidencegrew, she took feedback on board and herrole quickly developed. As a result of this, Zoeachieved her Apprenticeship in BusinessAdministrationwithin sevenmonths and soonwent on to complete her AdvancedApprenticeship. A promotion at workfollowed soon after. Two years on, Zoe joined

M

MEET ING CUSTOMERA S P I RAT IONS


Intraining as a Trainee Training Co-ordinator.Now aged 21, Zoe is working towards an A1Assessor’s Award and continues to progressher career.

HajraDawood, anApprenticewithTWL,waschosen as a worthy winner of the LancashireApprentice of the Year by the LSC.

SinceHajra has beenwith the Little AchieversNursery in Preston, attendance has increasedby 17%. Her employers feel that Hajra’s bi-lingual skills (she speaks fluent Gujerati) havehad a direct effect on this increase. Theincreased confidence Hajra has gained duringherApprenticeshipwith TWLhas carried intoher personal life and she has overcome hershyness. Hajra is described by her employeras an integral part of the team and an asset tothe nursery.

During the year Intraining Employabilityhelped learners to shine in two glitteringawards evenings. The annual RewardingExcellence events are a requirement ofIntraining’s Jobcentre Plus contracts. Thepurpose of the events was to give learnerswho had made significant progress throughNew Deal programmes. Many of thenominees and award recipients had never hadthe chance to be in the spotlight and theevents rewarded their achievements andsupported them in gaining further confidencefor the journey into sustained employment.One event was held in the east midlands atLeicester and the other in the Humbersideregion near Scunthorpe.

Our successful learner, community and employer engagementis clear through these examples.

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HajraDawood, Apprentice of theYear, at the Little AchieversNursery in Preston.

TWL learners creatingmore thana mile of useable footpath for localpeople to enjoy. This New Dealproject, designed by TWL inconjunction with Jobcentre Plusand the European Social Fundprovided valuablework experiencefor those wishing to return towork.

IntrainingRewarding Excellence event.

SAMANTHA LOUISE JUBB


BOARD OF GOVERNORS

Newcastle CollegeCorporationOur Governors are members of theNewcastle College Corporation. TheCorporation oversees all businessmatters andhas various sub-committees. Our Governorsare drawn from awide range of backgroundsand bring extensive experience to themanagement of our business.

Audit Committee

GRAHAMCOOKALANGROVESPETERMICHELLALEX TURNER

Search Committee

DAVID FAULKNERJACKIE FISHERJAMIE MARTIN

Remuneration Committee

CAROLE HOWELLSJOANNE SYRETTALEX TURNER

Skelmersdale and Ormskirk AdvisoryCommittee

Stakeholders in activities at Skelmersdale andOrmskirk have been co-opted to thiscommittee. The committee nominatedSTEVEN BROOMHEAD to serve as aGovernor.

Committees

Newcastle College Corporation

MR STEVEN BROOMHEADChief Executive of the Northwest RegionalDevelopment Agency (NWDA)

MR JON BRYANStaff Member

MR SHAUNCHAPMANStaff Member

MR GRAHAMCOOKBusiness Consultant

COUNCILLORDAVID FAULKNEROBEDeputy Leader and an Executive Member ofNewcastle City Council

MRS JACKIE FISHER CBEChief Executive Officer of the NewcastleCollege Group

MR ALANGROVESFormer Finance Director of NorthernElectric PLC

MS CAROLE HOWELLS MBEDirector of Newcastle Council forVoluntary Service

CHAIR, MR JAMIE MARTINOBEManaging Partner, Ward Hadaway

MR ARTEM LIEBENTHALStudent Member

MR PETERMICHELLFormer General Manager in a variety of rolesat IBMUK Ltd

MRS SUE PEARSONChief Executive of Age Concern, Newcastleupon Tyne

MS JOANNE SYRETTHuman Resources Consultant

MRS ALEX TURNEREnvironmental Consultant

MISS KAYLEIGHWILSONStudent Member

The following also served as a Governorduring the year ended 31 July 2008

MISS RUTHCROWTHERStudent Member

Our Governors


OUR H I STORY

Newcastle College wasfounded.

In May of this year thecollege was divided andoperated as two separateorganisations: The Collegeof Further Education andthe Charles TrevelyanTechnical College.

The two colleges mergedand the number of studentsincreased to 7,963.

The Education Reform Actchanged the relationshipbetween the college andthe Local EducationAuthority, giving collegeGovernors increasedindependence.

Renamed RutherfordCollege Secondary Schoolfor Boys.

Opened by HRHDuke ofYork as RutherfordMemorial College.

Newcastle College Group History

Jackie Fisher joinedNewcastle College asPrincipal and ChiefExecutive.

After offering highereducation courses formore than 30 years, thecollege piloted one of thefirst ever FoundationDegree courses inmulti-media.

The college’s £21millionPerformance Academy wasofficially opened by Sting.

Newcastle Collegesuccessfully secured severalcontracts for OffenderLearning.

In March of this yearIntraining was establishedfrom several of the tradingbusinesses of Carter andCarter Group (inadministration). Studentnumbers increased to over40,000.

In April Newcastle SixthForm College officiallylaunched the InternationalBaccalaureate (IB) DiplomaProgramme.

In June Newcastle Collegereceived an outstandingOFSTED inspection report.

In April Newcastle Collegewas launched as aSETPOINT centre forTyne andWear with the aimof further developingscience, technology,engineering and mathsprovision.

In June Newcastle Collegeofficially opened therestored Grade II listed RyeHill House in a £8millionredevelopment.

In August of this yearNewcastle College mergedwith Skelmersdale andOrmskirk College inWest Lancashire.

In September NewcastleCollege successfully securedout of area contracts forTrain to Gain provision.

Also in SeptemberNewcastle College offeredits first ever MBAprogramme.

In December TWL TrainingLimited based inWestLancashire was acquired.

Also in December the£8.6million business centreat Sandyford opened.

In December NewcastleCollege launched its Centreof Excellence in TeacherTraining.

In December of this yearthe £16million LifestyleAcademy was unveiled.

Newcastle College wasannounced Company of theYear in the 2005 JournalBusiness Awards.


Wewelcome diversity in our student population - valuingdifferences in race, gender, sexual orientation, disability,religion or belief, class and age.

>

e welcome diversityamongst our staff andstudents – valuing

differences in race, gender, sexualorientation, disability, religion or belief,class and age. We actively opposediscrimination, aim to remove allconditions that put people at adisadvantage, strive to improve accessand to provide outstanding support. Weare committed to providing an inclusivelearning environment.

We value our people and during 2007/08committed more than £600,000 to stafftraining. Furthermore we actively promote aculture of continuous professionaldevelopment.

W

EQUAL OPPORTUN IT I E S


S TA F F AND S TUDENT FACT S AND F I GUR E S

GROUP S TA F F G ENDER

GROUP S TUDENT G ENDER

Student gender -Across the Group there were 50% femaleand 50%male students.

>

Male36%

Female64%

Male50%

Female50%

� Under 25 � 25-34 � 35-44 � 45-54 � 55-64 � Over 65

GROUP S TA F F AG E S

Student ages - Themajority of learners and customersacross the Group were aged within the range 26-50.

>


9%27%

27%22%

14%

1%

� 13-15 � 16-18 � 19-25 � 26-50 � Over 50

GROUP S TUDENT AG E S

19%

28%

42%

10%

1%

Staff gender - the Group employed 36%males and64% females.

>

Student ethnicity -Across the Group there wereapproximately 14% students from black,minority or ethnicgroups within each division (BME).

>

GROUP S TA F F E THN I C I T Y

GROUP S TUDENT E THN I C I T Y

BME7%

Other93%

BME14%

Other86%

S TA F F AND S TUDENT FACT S AND F I GUR E S

Student disability - The number of learners with adisability across the Group was 14%.

>


GROUP S TA F F D I S AB I L I T Y

1%

GROUP S TUDENT D I S AB I L I T Y

Disabled5%

Disabled14%

No disability95%

No disability86%

Staff disability -During 2007/08 the number of staffwith a declared disability was 2.86% at Newcastle Collegeand Skelmersdale and Ormskirk College, 7.61% atTWLand 3.48% at Intraining.

>

We believe that we can achieve our Group objectives throughbuilding meaningful and strategic partnerships with forward-thinking teams who share our vision and our passion foroutstanding education, training and employability.

>

F INANC IA L STAT EMENT S

Page 46 Registered office and advisers

Page 47 Operating and Financial ReviewNature, Objectives And Strategies

Review of 2007/2008

Financial Position

Current and Future Developmentand Performance

Resources

Financial Highlights

Statement of CorporateGovernance and Internal Control

Page 63 Statement of the Responsibilities ofthe Members of the Corporation

Page 64 Independent Auditor’s Reportto the Members of the Corporationof Newcastle College

Page 66 Group Income and ExpenditureAccount for the year ended 31July 2008

Page 67 Group Statement of Historical CostSurpluses and Deficits for the yearended 31 July 2008

Page 68 Group Statement of TotalRecognised Gains and Losses forthe year ended 31 July 2008

Page 69 Group Balance Sheet as at 31July 2008

Page 70 College Balance Sheet at 31July 2008

Page 71 Group Cash Flow Statement forthe year ended 31 July 2008

Page 72 Notes to the Financial Statementsat 31 July 2008

Page 99 Independent Auditor’s Report onRegularity to the Members of theCorporation of Newcastle College(‘the Corporation’) and theLearning and Skills Council(‘the LSC’)


REG I S T ER ED O F F I C E AND ADV I S E R S

AddressNewcastle CollegeRye Hill CampusScotswood RoadNewcastle upon TyneNE4 7SA

External AuditorsErnst & Young LLPCitygateSt James’ BoulevardNewcastle upon TyneNE1 4JD

BankersHSBC Bank plcCity Branch110 Grey StreetNewcastle upon TyneNE1 6JG

SolicitorsWatson Burton LLP1 St James’ GateNewcastle upon TyneNE99 1YQ

Other professional advisersInternal Auditors: KPMG LLPInsurance: Heath Lambert

46

The members present their report andthe audited financial statements for theyear ended 31 July 2008.

Legal statusThe Corporation was established under theFurther and Higher Education Act 1992 forthe purpose of conducting NewcastleCollege. TheCollege is an exempt charity forthe purposes of the Charities Act 1993.TheNewcastleCollegeGroup comprises thefollowing divisions:

•Newcastle College• Skelmersdale and Ormskirk College• TWL Training Limited• The Intraining Group Limited and itssubsidiaries

Newcastle College is a Further and HigherEducation College based in Newcastle uponTyne. It comprises several academic schools,a national Academy of Learning for Justiceincluding OLASS provision, and substantialprovision in higher education.

Skelmersdale and Ormskirk College is aFurther Education College based in WestLancashire. Newcastle College merged withSkelmersdale andOrmskirkCollege inAugust2007.

TWL Training Limited is a wholly ownedsubsidiary of the Corporation. It specialises inprogrammes to support employability andskills. TWL Training Ltd was acquired inDecember 2007.

The Intraining Group Limited is a whollyowned subsidiary of the Corporation. Itoperates a wide range of skills andemployability programmes. The IntrainingGroup Ltd was formed from parts of theformer Carter and Carter plc inadministration acquired in March 2008.

MissionThe mission of the Group is to developpeople through learning and achievement forthe benefit of themselves, society and theeconomy. The mission is delivered throughour core business objectives and operationalprocesses that:

• put the needs of the learner first• deliver excellence in teaching and learning• promote diversity• value and involve our staff• provide great buildings and resources• secure our future through growth andfinancial stability.

R E PORT O F THE MEMBER S O F THECORPORAT ION FOR THE Y EAR ENDED 3 1JU LY 2 0 0 8 – OP E RAT I NG AND F I N ANC I A LR E V I EW NATUR E , O B J E C T I V E S AND S T R AT EG I E S


REV I EW OF 2 0 0 7 / 2 0 0 8

Implementation of the operational planIn July 2005 Newcastle College adopted astrategic plan for the period 1August 2005 to31 July 2008 to achieve the business objectivesand mission. Each year an operational plan isformulated to implement this and to reflectother developments.

The following summarises the main targetsset and progressmade in the operational planfor 2007/2008:

• Increasing the participation rates of 16-18year old LSC learners in academic andvocational qualifications from FoundationTier to Level 3. The College grew by 463FTE (Full-time Equivalent) 16-18 year oldLSC funded learners.

• Increasing levels of literacy and numeracythrough the attainment of Skills for Lifequalifications at Entry Level 3, Level 1 and 2for all ages. The College achieved itsaggregate target for levels 2 and 3 forboth ages.

• Increasing participation rates and timelycompletion of qualifications frameworks foryoung people in Apprenticeships. TheCollege achieved a 66% frameworksuccess rate for apprenticeships.

• Diversifying income through provisionaimed at International markets and othernon-grant related training anddevelopment. The College’s income frominternational students grew from £1.7m to£2.9m and we believe we have significantlyincreased our share of this market. Thebusiness acquisitions allow new incomestreams to be accessed.

• Increasing fee income from LSC fundedadults. Fees fromLSC funded adults rose to£991k from £867k. As the curriculum isfocussed on government priorities, whichhave feewaivers formost learners, then the

opportunity for significant growth willreduce.

• Increase participation in HE throughFoundation Degrees and Year 3 Honours.Higher Education numbers grew by 28%from 1,720 to 2,204 FTE students withgrowth being funded through AdditionalStudent Numbers (ASN) provided byNorth East Higher Skills Network andPathfinder.

• Develop International Baccalaureate for2008/09. International Baccalaureate hasbeendeveloped and is recruiting strongly for2008/09.

• Developing stronger partnerships withschools to deliver the new SpecialistDiploma. The College was part of thesuccessful partnerships that starteddelivering Specialised Diplomas fromSeptember 2008.

• Embedding an ambitious learner supportstrategy and implementing electronicIndividual Learning Plans (ILPs). Thedevelopment of ILPs, nowbranded LearnerView, was embedded in 2006/07 and wasan integral part of the full time FE learner’ssupport during 2007/08. The good practicewas highlighted at inspection.

• Delivering a successful Skelmersdale andOrmskirk College. The College mergedwith Skelmersdale and Ormskirk Collegeon 1 August 2007. Success rates are in thetop 25% and a highly positive OFSTEDinspection in June 2008.

• Improving success rates for all categories oflearners. Success rates increased by 5%points to 87% for FE learners.

In delivering the mission, the focus of theGroup is on meeting the skills needs ofindividuals and the skills priorities ofemployers in line with government priorities.

48

R EV I EW OF 2 0 0 7 / 2 0 0 8CONT I NU ED

These needs and priorities define ourmarketand shape the activity of each division as itoperates across the regions. Each division hasits own individual character and definedposition in its own learning market that isdetermined by client group, geography, corebusiness, and related funding streams.

Implementation of strategic planMeeting government priorities throughaddressing national and local skills will beachieved by the attainment of the followingstrategic objectives:

• developing the Newcastle College Groupstrategy

• embedding Group structures anddeveloping clear lines of accountability inrelation to the divisions of the Group

•managing the complexity of new fundingarrangements and ensuring fundingcompliance throughout the organisation

• establishing themanagement structure andbrand of Intraining to deliver consolidationand growth in high quality multi-regionaland national provision for the Departmentfor Work and Pensions (DWP) and LSC

• supporting TWL in its growth anddevelopment in high quality multi-regionaland national provision for DWP and LSC

• sustaining, and further developing a locallyresponsive and successful Skelmersdale andOrmskirk College ready for new build

• preparing for Offender Learning and SkillsService (OLASS) re-tendering

• improving the infrastructure of NewcastleCollege through new accommodation forthe Sixth Form College and developing theCentre for Sustainable and RenewableTechnologies

• influencing government policy through

DWP, DCSF, and DIUS and attainingrecognition of success through regional andnational awards and relevant quality kitemarks.

The abovewill be delivered throughworkingin partnership with our Local Authorities inthe North East and West Lancashire, theNorth East and North West RegionalDevelopment Agencies, DWP, LSCs andSector Skills Councils across the regions,national and regional employers, SMEs andpublic sector organisations.

Embedded through all of our work is adetermination to value our staff and learnersin all of our divisions.Wewill provide equalityof opportunity through learning and skills, andwe will recruit and promote our staff withadherence both to the spirit and statutoryrequirements of legislation. We arecommitted to keeping self-imposedbureaucracy to a minimum and ensure thatour administrative functions operate asefficiently as possible whilst at the same timeensuring legislative and funding compliance.

Financial objectivesThe Group’s financial objectives for the yearwere:

• to generate a surplus after interest anddepreciation of 5% (excluding Skelmersdaleand Ormskirk College)

• tomaintain cash balances or facilities at leastequivalent to 30 days

• to provide a level of capital equipment tomeet curriculum needs and ensure theeffective operation of college support andmanagement function

• annualised servicing costs for borrowingshould not exceed 4% of total income.


REV I EW OF 2 0 0 7 / 2 0 0 8CONT I NU ED

50

TheGroupmet all of these targets except forcash days in hand.

Excluding Skelmersdale and OrmskirkCollege surplus after interest and depreciationwas 5%.

The cash balance at the year end wasequivalent to only 15 days cover. Thiswas dueto the short term level of working capitalsupport required by the IntrainingGroup dueto the delay in cash receipts from incomeearned whilst funding contracts were beingnovated.

£14.9m was spent on capital to meetstudents’ and business support needs,excluding assets acquired from SkelmersdaleandOrmskirk, TWL and the IntrainingGroup.Annual servicing costs for borrowing wereminimal.

The LSC has a series of performanceindicators to assess the financial health ofcolleges. A financially sound college is scoredas Grade A, whilst B and C describeincreasingly less financially robust colleges.The financial health of the College is checkedwhen the College prepares its three yearbudgeting forecast and again when actualresults for the year are reported to theCorporation and to the LSC. The strategiesand financial policies implemented by theCollege have allowed it to maintain Grade Afinancial health status and should allow it tomaintain this status in the longer term. Thereis an anticipated loss of Grade A status until2013 due to the cash flows required tocomplete the College’s property strategy.

Performance indicatorsAlthough the LSC continues to measure FEperformance in terms of contribution tonational targets, individual colleges are nowrequired to submit three year DevelopmentPlans which are reviewed each year. Thesedevelopment plans focus on the followingheadline targets:

• learner number growth and achievement ofLSC funding targets

• learner success rates• teacher qualifications• employer engagement.

In 2007/2008 the Group exceeded itsallocation from the LSC for the delivery ofFurther Education. The Group wasparticularly successful in attracting 5,370 FTE16-18 year old full time students, above thetarget of 5,272. In the area of employerengagement the College significantlyincreased success rates of apprentices andgrew the Train to Gain initiative that seeks toimprove skills in the workplace.

The LSC is alsomoving towards a new systemof performance measures for colleges, the“Framework for Excellence”. This frameworkis intended to be implemented across allproviders in 2008/09 and in the interveningperiod, pilot institutions have developed themeasures to be employed. The College wasmonitored against the draft measuresalongside the existing measures. TheFramework has three dimensions:

• Responsiveness• Effectiveness• Finance


Each of the dimensions has two or three KeyPerformance Areas. These Areas are furtherbroken down into Performance Indicatorssupported by Performance Measures whichare absolute measures of performance suchas the outcome from a learner survey or aqualification success rate. In deriving theoverall performance rating, the Frameworkgives equal weighting to each of thethree dimensions.

The College is committed to observing theimportance of the measures and indicatorswithin the Framework and is monitoringthese through the completion of the annualFinance Record for the LSC. As benchmarksdevelop so the College will be better placedto take appropriate action in the light of theoverall performance rating. The current ratingof “Good” is considered anacceptable outcome.

52

Financial resultsThe Group consists of Newcastle Collegeincluding Skelmersdale andOrmskirkCollegeand owns several subsidiaries, namely, TWLTraining Limited a company based inLancashire, andThe IntrainingGroup Limitedwhich comprises five trading companies,namely Intraining (ALD) Limited, Intraining(CBE) Limited, Intraining (ESD) Limited,Intraining (NTP) Limited and Intraining(Quantica) Limited. The principal businessactivity of the subsidiaries is carrying outtraining of employees on behalf of employers.On 1 August 2008 Intraining (ALD) Limitedchanged its name to Newcastle CollegeConstruction Limited and moved from theIntraining Group to be a direct subsidiary ofthe college.

The Group generated an operating surplus inthe year of £4,715k (2006/07 - surplus of£5,450k). The result in 2007/08 is stated afteraccounting for losses on fixed asset disposalsof £232k.

It has accumulated income and expenditurereserves of £40,981k and cash balances of£4,859k. It took out bank loans in the periodresulting in net debt of £11,384k.

Tangible fixed asset additions during the yearamounted to £20,402k. This was splitbetween land and buildings acquired of£13,738k and equipment, informationtechnology and motor vehicles purchased of£6,664k.

TheGroup has significant reliance on the LSCfor its principal funding source, largely fromrecurrent grants. In 2007/08 the LSCprovided 55% of the Group’s total income.

Treasury policies and objectivesTreasury management is the management ofthe Group’s cash flows, its banking, moneymarket and capital market transactions; theeffective control of the risks associated withthose activities; and the pursuit of optimumperformance consistentwith those risks. TheGroup has a separate treasury managementpolicy in place.

Short termborrowing for temporary revenuepurposes is authorised by the Principal. Sucharrangements are restricted by limits in theFinancial Memorandum with the LSC. Allother borrowing requires the authorisation ofthe Corporation and shall comply with therequirements of the Financial Memorandumof the LSC.

Cash flowsAt £5,857k (2006/07 £13,942k), operatingcash inflowwas reasonably strong, taking intoaccount the support required to the IntrainingGroup due to the delay in cash receipts fromincome earnedwhilst funding contracts werebeing novated.

LiquidityDuring the year the Group took out loanstotalling £15,000k in line with the propertystrategy. Loans totalling £1,460k wereretained from Skelmersdale and OrmskirkCollege due to favourable credit terms.

The size of the Group’s total borrowing andits approach to interest rates has beencalculated to ensure a reasonable cushionbetween the total cost of servicing debt andoperating cashflow. During the year thismargin was comfortably achieved.

F I NANC I A L PO S I T I ON


CURRENT AND FUTURE D EV E LOPMENTAND P ER FORMANC E

Student numbersTheCollege is funded for its further educationprovision according to the level of activity thatit generates each year. In 2007/2008 theCollege attracted 23,629 (2006/07: 20,609)individual FE students which translate into11,255 (2006/07: 9,636) full-time equivalents(“FTE”). Other students include work basedlearners and those funded by European SocialFunds on roll-on-roll-off courses.

The College is funded for much of its HEprovision by the Higher Education FundingCouncil. In 2007/2008 the College recruited2,909 (2006/07: 1,566) full-timeHE and 2,476(2006/07: 398) FTE part-time HE students.Growth was achieved through additionalstudent numbers provided by North EastHigher Skills Network and Pathfinder.

Student achievementsStudents achieved 87% success rate, anincrease from the 2006/07 rate (82%).Success is the product of retention andachievement.

The Group has various resources that it candeploy in pursuit of its strategic objectives.

FinancialTheGroup has net liabilities of £4,103k, a netpension liability of £11,392k and long termdebt of £15,679k.

PeopleTheGroup employs 3,138 people (expressedas full-time equivalents). TheCollege employs994 teaching staff.

ReputationTheColleges, TWLand Intraining have a goodreputation locally and nationally.Maintaining aquality brand is essential for the Group’ssuccess at attracting students and externalrelationships.

Environment statementAs an expression of responsible corporatecitizenship Newcastle College Group iscommitted to improving its environmentalperformance so far as is practicable. Thatperformance includes the aestheticenhancement of the local environment towhich its buildings and grounds already makea contribution. It is also the minimisation ofthe less easily perceived adverseenvironmental impacts of its activitiesthrough, for example, transport planning,proportionate reduction of energy andwaterconsumption and the management of waste.

The Group recognises that its environmentalperformance impacts attitude in awider sensethrough staff and students and thecommunities in which it operates.

It is the Group’s policy to comply with therequirements of environmental legislation and

codes of practice and to take such additionalenvironmental protection measures as itconsiders necessary. Specific environmentaltargets are as follows:

• implementation of a College Travel Plan,highlighting alternative modes of transportand making them both feasible andattractive to staff and students

• develop an EnvironmentalWorkingGroup,with appointed representatives fromschools, services and the student population

• implementation of a Waste and RecyclingPlan

• increase the efficiency of fuel and watersystems through the new build andrefurbishment process and decrease usageproportionately across the estate

•work to ensure all new buildings andrefurbishment works are designed andwork carried out with maximumsustainability in mind

• develop procurement procedures whichuse sustainably sourced products, minimalpackaging and environmentally friendlydelivery procedures

• continue to reduce the release ofcontaminants into the environment,avoiding the use of toxic materials butensuring correct disposal of such materialsif their use is essential

• work to improve awareness andunderstanding of sustainable developmentthrough education, consultation and liaisonwithin the college curricula, the localcommunity, public and private sectororganisations

• aim to ensure that Group suppliers andpartners have a commitment to sustainabledevelopment

• review current practices and activities toidentify, understand and evaluate all the

R E SOURC E S

54


direct and indirect environmental impactsand aspects, enabling action to be taken toaddress them

• develop measurable targets which arereviewed annually through the selfassessment process

• prepare an annual report for Governors onthe Environmental Plan and its progress

• seek to amend Group policydocumentation to incorporate anEnvironmental Impact Assessmentrequirement

• seek an undertaking that all Groupprocesses should identifymeasures to avoidor mitigate damage to the environment.

Staff and student involvement andvaluing diversityAs an accredited Investor in People theCollege believes good communication withstaff and students to be very important. Thereis an effective communication strategy whichincludes all staff meetings, a regular staffnewsletter, a regular staff e-bulletin and teambriefings. Formal representation of staff isthrough the recognised Trade Unions.

Students’ views continue to be sought eachtermvia the online student evaluation surveys.Additionally, we have established a LearnerForum in every School in the College toenhance communications between learnersand their School and College. Students areencouraged to participate in local activities andnationally in the National Union of Studentsby supporting, administering and subsidisingthe Newcastle College Students’ Union.

The Group is committed to valuing diversityby eliminating bias and discrimination from theway it operates, and incorporates thisfundamental fairness in its mission. The

College has an Academic Board to advise oncurriculum, quality and equal opportunitiesand disseminates policy into practice. TheAcademic Board includes representativesfrom the management, staff and the studentbody. The College has a Diversity WorkingGroup which provides feedback on theimpact of policy and practice on equality andincludes members of the college communitywith a particular interest in this area. TheCollege also has a network of DiversityChampions who contribute to thedevelopment and implementation of equalopportunities action plans atdepartmental level.

Equal opportunities and employmentof disabled personsTheCollege is committed to ensuring equalityof opportunity for all students and employees.We respect and value positively differences inrace, gender, sexual orientation, able-bodiedness, class and age. We strivevigorously to remove conditions which placepeople at a disadvantage and we will activelycombat bigotry. This policy is resourced,implemented and monitored on a plannedbasis. The College’s Valuing Diversity Policy,including its statement on Race Equality, ispublished on the College’s intranet site andincludes its statement on Race Equality,Disability Equality Scheme, Gender EqualityScheme and Equality Action Plan.

The College considers all applications foremployment from disabled persons, bearingin mind the aptitudes of the individualsconcerned. Where an existing employeebecomes disabled, every effort is made toensure that employment within the Collegecontinues. The College’s policy is to providetraining, career development andopportunities for promotionwhich are, as faras possible, identical to those for otheremployees.

Disability statementThe College is fully conversant with itsobligations under theDisabilityDiscriminationAct 2005, and has developed and pursued acomprehensive action plan to ensure that wefulfil the requirements of theAct. TheCollegecontinues to make arrangements to supportstudents with learning difficulties anddisabilities to ensure that they are able toaccess the full range of curriculum services. Asrequired by the Learning and Skills Council,theCollege produced and published its annualDisability Statement “Access to Learning”.

Risk Management PolicyThe College makes prudent recognition anddisclosure of the financial and non-financialimplications of risk.

The College is committed to an inclusiveapproach to the identification andmanagement of risk throughout the Collegeand that the key risks should be closelymonitored and wherever possible actionstaken to mitigate these risks.

The Corporation reviews the RiskManagement Policy each year and reviewsstrategic risks on a rolling basis within eachyear.

56R E SOURC E SCONT I NU ED


F I NANC I A L H IGHL I GHT S

Results for the year

The detailed financial statements are set out on pages 60 to 90. A summary of the results for thelast 5 years is given below.

2007/08 2006/07 2005/06 2004/05 2003/04

£000 £000 £000 £000 £000

Restated Restated

Income 117,538 73,023 65,735 55,173 47,161Expenditure 112,591 66,774 59,270 49,239 41,933Surplus on continuing operations afterdepreciation of assets at valuation,before tax 4,947 6,249 6,465 5,934 5,228Loss on disposal of fixed assets (232) (799) (584) (516) (34)Surplus on continuing operations afterdepreciation of assets at valuation anddisposal of assets and after tax 4,715 5,450 5,881 5,418 5,194Transfer from revaluation reserve 708 707 732 767 748Historic cost surplus 5,423 6,157 6,613 6,185 5,942

The summary above has been restated for the reversal of the SSAP 24 provisions which wererecognised from 2003/04 as a result of the implementation in 2007/08 of FRS 17Retirement Benefits.

Capital expenditureThe Group invested £14,904k in 2007/2008, excluding assets acquired from Skelmersdale andOrmskirk, TWL and the Intraining Group. The principal schemes were:

£000

Aviation Academy 2,833New Sixth Form College 1,034Haltwhistle House 1,973West Lancashire Construction Academy 2,204

Intangible investments

Acquisitions were made in the year, the cash considerations were: £000

Intraining Group 15,000TWL Training Ltd 900Skelmersdale and Ormskirk College -

N J Martin(Chair of the Corporation)19 December 2008

The College is committed to exhibiting bestpractice in all aspects of corporategovernance. This summary describes themanner in which the College has applied theprinciples set out in Section 1 of theCombined Code onCorporate Governance,issued by the London Stock Exchange in June1998. Its purpose is to help the reader of thefinancial statements to understand how theprinciples have been applied.

In the opinion of the members of theCorporation, theCollege complieswith all theprovisions of the Combined Code in so far asthey apply to the further education sector, andit has complied throughout the year ended 31July 2008.

The CorporationThe composition of theCorporation is set outon page 63. It is the Corporation’sresponsibility to bring independent judgementto bear on issues of strategy, performance,resources and standards of conduct.

TheCorporation is providedwith regular andtimely information on the overall financialperformance of the College, together withother information such as performanceagainst funding targets, proposed capitalexpenditure, quality matters and personnel-related matters such as health and safety andenvironmental issues. The Corporation metnine times during the year.

The Corporation conducts its businessthrough a number of committees. Eachcommittee has terms of referencewhich havebeen approved by the Corporation. Thesecommittees are: Remuneration, Search andAudit. Full minutes of all meetings, exceptthose deemed to be confidential by theCorporation, are available from the Clerk tothe Corporation at:

Newcastle CollegeRye Hill CampusScotswood RoadNewcastle upon TyneNE4 7SA

The Clerk to the Corporation maintains aregister of financial and personal interests ofthe Governors. The register is available forinspection at the above address.

All Governors are able to obtain independentprofessional advice in furtherance of theirduties at the College’s expense via the Clerkto theCorporation,who is responsible to theBoard for ensuring compliance with allapplicable procedures and regulations. Theappointment, evaluation and removal of theClerk are matters for the Corporation asa whole.

Formal agendas, papers and reports aresupplied to members of the Corporation in atimely manner, prior to Board meetings.Briefings are also provided on an ad hoc basis.

The Corporation has a strong andindependent non-executive element and noindividual or group dominates its decisionmaking process. The Corporation considersthat each of its non-executive members isindependent of management, and free fromany business or other relationshipwhich couldmaterially interfere with the exercise of theirindependent judgement.

There is a clear division of responsibility in thatthe roles of the Chair of the Corporation andPrincipal of the College are separate.

S TAT EMENT O F CORPORAT E GOV ERNANC E ANDIN T ERNA L CONTROL

58

The members who served on the Corporation during the year and up to the date of signature of this report were:

Name Appointment/ Resignation Term Status of CommitteesReappointment Appointment Served

Mr S Broomhead App: Sep 07 Co-optedReapp: Jul 08 2 yrs

Mr J Bryan App: Nov 06 4 yrs StaffMr S Chapman App: Apr 06 4 yrs StaffMr G Cook App: Nov 06 Business Audit

Reapp: Nov 07 4 yrsMs R Crowther App: Jul 06 Res: Jun 08 Student

Reapp: Jul 07 1 yrCllr D Faulkner App: Sep 07 Local Authority Search

Reapp: Jul 08 4 yrsMrs J Fisher App: Jun 00 Principal SearchMr A Groves App: Nov 01 Co-opted Audit

Reapp:Dec02Reapp: Sep 06 4 yrs

Ms C Howells App: Dec 01 Community RemunerationReapp:Dec 02Reapp: Jun 06 4 yrs

Mr A Liebenthal App: Jul 08 1 yr StudentMr N J Martin App: Mar 00 Business Search

Reapp: Feb 03 ChairReapp: Jan 07 4 yrs

Mr P Michell App: Jan 04 Co-opted AuditReapp: Dec 04Reapp: Dec 08 4 yrs

Mrs S Pearson App: Mar 01 CommunityReapp: Feb 05Reapp: Jan 06Reapp: Dec 06 4 yrs

Mrs J Syrett App: Dec 01 Business RemunerationReapp: Dec 02 Vice ChairReapp: Nov 06 4 yrs

Mrs A Turner App: Nov 97 Business RemunerationReapp: Nov 01 AuditReapp: Oct 05 4 yrs

Ms KWilson App: Jul 08 1 yr Student

Further information about members of the Corporation is available on the College’swebsite at www.ncl-coll.ac.uk/corporate-information/governors.aspx


Appointments to the CorporationAny new appointments to the Corporationare a matter for consideration of theCorporation as awhole. TheCorporation hasa Search Committee comprised of the Chair,Principal and a third member of theCorporation,which is responsible for advisingon the appointment of all members exceptstaff and student members who arenominated by election. The SearchCommittee is responsible for ensuring thatappropriate training is provided as required.

Members of the Corporation are appointedfor a term of office not exceeding four years,excepting the Principal who will remain amember throughout her term of office.

Remuneration CommitteeThroughout the year ended 31 July 2008, theCollege’s Remuneration Committeecomprised three members of theCorporation. The Committee’sresponsibilities are to makerecommendations to the Board on theremuneration and benefits of the Principal andother senior post holders and theClerk to theCorporation. Details of remuneration for theyear ended 31 July 2008 are set out in note 8to the financial statements.

Audit CommitteeThroughout the year ended 31 July 2008, theAudit Committee comprised four eligiblemembers of the Corporation. TheCommittee operates in accordance withwritten terms of reference approved by theCorporation.

The Audit Committee meets at least threetimes a year and provides a forum forreporting by the College’s internal andfinancial statements auditors,who have accessto theCommittee for independent discussion,

without the presence of Collegemanagement. The Committee met threetimes during the year ended 31 July 2008 andits terms of reference encompass reportsfrom the LSC as they affect the College’sbusiness.

The College’s internal auditors monitor thesystems of internal control, risk managementcontrols and governance processes inaccordance with an agreed plan of input andreport their findings to management and theAudit Committee.

Management is responsible for theimplementation of agreed auditrecommendations and internal auditundertake periodic follow-up reviews toensure such recommendations have beenimplemented.

The Audit Committee also advises theCorporation on the appointment of internaland financial statements auditors and theirremuneration for both audit and non-auditwork.

Internal Control Scope of responsibilityTheCorporation is ultimately responsible forthe College’s system of internal control andfor reviewing its effectiveness.However, sucha system is designed to manage, rather thaneliminate, the risk of failure to achievebusiness objectives and can provide onlyreasonable and not absolute assurance againstmaterial misstatement or loss.

The Corporation has delegated the day-to-day responsibility to the Principal, asAccounting Officer, for maintaining a soundsystem of internal control. This supports theachievement of the College’s policies, aimsand objectives, while safeguarding the publicfunds and assets for which the Principal is

60S TAT EMENT O F CORPORAT E GOV ERNANC E ANDIN T ERNA L CONTROLCONT I NU ED

personally responsible, in accordancewith theresponsibilities assigned to her in the FinancialMemorandum between the College and theLearning and Skills Council. The Principal isalso responsible for reporting to theCorporation any material weaknesses orbreakdowns in internal control.

The Purpose of the system ofinternal controlThe system of internal control is designed tomanage risk to a reasonable level rather thanto eliminate all risk of failure to achievepolicies, aims and objectives; it can thereforeonly provide reasonable and not absoluteassurance of effectiveness. The system ofinternal control is based on an ongoingprocess designed to identify and prioritise therisks to the achievement of College policies,aims and objectives, to evaluate the likelihoodof those risks being realised and the impactshould they be realised, and to manage themefficiently, effectively and economically. Thesystemof internal control has been in place inthe College for the year ended 31 July 2008and up to the date of approval of the annualreport and financial statements.

Capacity to Handle RiskThe Corporation has reviewed the key risksto which the College is exposed, togetherwith the operating, financial and compliancecontrols that have been implemented tomitigate those risks. TheCorporation is of theview that there is a formal ongoing processfor identifying, evaluating and managing theCollege’s significant risks that has been in placefor the year ended 31 July 2008 and up to thedate of approval of the annual report andfinancial statements. This process is regularlyreviewed by the Corporation.

The Risk and Control FrameworkThe system of internal control is based on a

framework of regular managementinformation, administrative proceduresincluding the segregation of duties and asystem of delegation and accountability. Inparticular, it includes:

• regular review of all business risks by theCorporation

• quarterly review of non-financial keyperformance indicators of the business tothe Corporation

• comprehensive budgeting systems with anannual budget which is reviewed andagreed by the Corporation

• regular reviews by the Corporation ofperiodic and annual financial reports whichindicate financial performance againstforecasts

• setting targets to measure financial andother performance

• clearly defined capital investment controlprocedures

• the adoption of formal projectmanagementdisciplines, where appropriate.

Newcastle College has an internal auditservice, which operates in accordance withthe requirements of the Learning and SkillsCouncil’s Audit Code of Practice. The workof the internal audit service is informed by ananalysis of the risks to which the College isexposed and annual internal audit plans arebased on this analysis. The analysis of risks andthe internal audit plans are approved by theCorporation on the recommendation of theAudit Committee. At least annually the headof internal audit provides the Corporationwith a report on internal audit activity in theCollege. The report includes the head ofinternal audit’s independent opinion on theadequacy and effectiveness of the College’ssystem of risk management, controls, andgovernance processes.


Review of EffectivenessAs Accounting Officer, the Principal hasresponsibility for reviewing the effectivenessof the system of internal control. ThePrincipal’s review of effectiveness of thesystem of internal control is informed by:

• the work of the internal auditors

• the work of the executive managers withinthe College who have responsibility for thedevelopment and maintenance of theinternal control framework

• comments made by the College’s financialstatements auditors

The Principal has been advised on theimplications of the result of her review of theeffectiveness of the systemof internal controlby the Audit Committee which oversees thework of the internal auditor, and a plan toaddress weaknesses and ensure continuousimprovement of the system is in place.

The senior management team receivesreports setting out key performance and riskindicators, and considers possible controlissues brought to their attention by earlywarning mechanisms which are embeddedwithin the departments and reinforced by riskawareness training. The senior managementteam and the Audit Committee also receiveregular reports from internal audit, whichinclude recommendations for improvement.The Audit Committee’s role in this area isconfined to a high-level review of thearrangements for internal control. The

Corporation’s agenda includes a regular itemfor consideration of risk and control and itreceives reports thereon from the seniormanagement team and theAudit Committee.The emphasis is on obtaining the relevantdegree of assurance, notmerely reporting byexception. At its 16December 2008meeting,the Corporation carried out the annualassessment for the year ended 31 July 2008by considering documentation from theAuditCommittee, financial statements and internalaudit, and taking account of events since 31July 2008.

Going ConcernAfter making appropriate enquiries, theCorporation considers that the College hasadequate resources to continue in operationalexistence for the foreseeable future. For thisreason it continues to adopt the goingconcern basis in preparing the financialstatements.

J Fisher(Principal and Chief Executive)


62S TAT EMENT O F CORPORAT E GOV ERNANC E ANDIN T ERNA L CONTROLCONT I NU ED

The members of the Corporation arerequired to present audited financialstatements for each financial year inaccordance with applicable United Kingdomlaw and United Kingdom Generally AcceptedAccounting Practice.

Within the terms and conditions of theFinancial Memorandum agreed between theLearning and Skills Council (the LSC) and theCorporation of theCollege, theCorporation,through its Principal, is required to preparefinancial statements for each financial year inaccordance with the 2007 Statement ofRecommended Practice – Accounting forFurther andHigher Education Institutions andwhich give a true and fair view of the state ofaffairs of the College and the Group and theresult of the Group for that year.

In preparing the financial statements, theCorporation is required to:

a)Select suitable accounting policies and applythem consistently

b) Make judgements and estimates that arereasonable and prudent

c)State whether applicable accountingstandards have been followed, subject toany material departures disclosed andexplained in the financial statements

d) Prepare financial statements on the goingconcern basis unless it is inappropriate toassume that the College will continue inoperation

The Corporation is also required to preparea Members Report which describes what it istrying to do and how it is going to about it,including the legal and administrative status ofthe College.

The Corporation is responsible for keepingproper accounting records, which disclosewith reasonable accuracy, at any time, thefinancial position of the Group and enable itto ensure that the financial statements areprepared in accordance with the relevantlegislation of incorporation and other relevantaccounting standards. It is responsible fortaking steps that are reasonably open to it tosafeguard the assets of the Group and toprevent and detect fraud and otherirregularities.

In addition, members of the Corporation areresponsible for ensuring that funds from theLSC are used only in accordance with theFinancialMemorandumwith the LSC and anyother conditions which the LSC may fromtime to time prescribe. Members of theCorporation must ensure that there areappropriate financial and managementcontrols in place to safeguard public and otherfunds, and ensure they are used properly. Inaddition, members of the Corporation areresponsible for securing economical, efficientand effective management of the College’sresources and expenditure, so that thebenefits that should be derived from theapplication of public funds by the LSC are notput at risk.

Signed on behalf of the Corporation


S TAT EMENT O F THE R E S PON S I B I L I T I E S O F THEMEMBER S O F THE CORPORAT ION


I ND E P ENDENT AUD I TOR ’ S R E PORTTO TH E MEMB E R S O F TH E COR PORAT I ONO F N EWCA S T L E CO L L EG E

We have audited the Group and Collegefinancial statements (the “financialstatements”) of Newcastle College for theyear ended 31 July 2008, which comprise thegroup income and expenditure account, thegroup statement of historical cost surplusesand deficits, the group statement of totalrecognised gains and losses, the group balancesheet, the College balance sheet, the groupcash flow statement, and the related notes 1to 28. These financial statements have beenprepared under the historical cost conventionasmodified by the revaluation of certain fixedassets and the accounting policies set outtherein.

This report ismade solely to theCorporation,as a body, in accordance with statutoryrequirements. Our audit work has beenundertaken so that we might state to theCorporation, as a body, thosematterswe arerequired to state to them in an auditors’report and for no other purpose. To the fullestextent permitted by law,we do not accept orassume responsibility to anyone other thanthe Corporation, as a body, for our auditwork, for this report, or for the opinions wehave formed.

Respective responsibilities of theMembers of the Corporation ofNewcastle College and AuditorsAs described in the Statement ofResponsibilities the Members of theCorporation are responsible for preparing theReport of the Members of the Corporationand financial statements in accordance withthe 2007 Statement of RecommendedPractice – Accounting for Further andHigherEducation, applicable law, and UnitedKingdom Accounting Standards (UnitedKingdom Generally Accepted AccountingPractice).

Our responsibility is to audit the financialstatements in accordance with relevant legaland regulatory requirements and InternationalStandards on Auditing (UK and Ireland).

We report to you our opinion as to whetherthe financial statements give a true and fairview and are properly prepared in accordancewith the 2007 Statement of RecommendedPractice – Accounting for Further andHigherEducation. We also report to you if, in ouropinion, the Report of the Members of theCorporation is not consistent with thefinancial statements, if the College has notkept proper accounting records, or if we havenot received all the information andexplanations we require for our audit.

We read the Report of the Members of theCorporation and consider the implications forour report if we become aware of anyapparent misstatement within it.

We read other information contained in thefinancial statements, and consider whether itis consistent with the audited financialstatements. This information comprises onlythe Statement of CorporateGovernance andInternal Control and the Statement of theResponsibilities of the Members of theCorporation.We consider the implications forour report if we become aware of anyapparent misstatements or materialinconsistencies with the financial statements.Our responsibilities do not extend to anyother information.

64

Basis of audit opinionWe conducted our audit in accordance withInternational Standards on Auditing (UK andIreland) issued by theAuditing Practices Boardand the Audit Code of Practice issued by theLearning and Skills Council. An audit includesexamination, on a test basis, of evidencerelevant to amounts and disclosures in thefinancial statements. It also includes anassessment of the significant estimates andjudgements made by the Members of theCorporation in the preparation of the financialstatements, and of whether the accountingpolicies are appropriate to the Group’s andCollege’s circumstances, consistently appliedand adequately disclosed.

We planned and performed our audit so as toobtain all the information and explanationswhich we considered necessary in order toprovide us with sufficient evidence to give usreasonable assurance that the financialstatements are free from materialmisstatement, whether caused by fraud orother irregularity or error. In forming ouropinion we also evaluated the overalladequacy of the presentation of informationin the financial statements.

OpinionIn our opinion:

• the financial statements give a true and fairview, in accordance with United KingdomGenerally AcceptedAccounting Practice, ofthe state of affairs of theCollege andGroupas at 31 July 2008 andof theGroup’s surplusof income over expenditure for the yearthen ended; and

• the financial statements have been properlyprepared in accordance with the 2007Statement of Recommended Practice -Accounting for Further and HigherEducation.

Ernst & Young LLPRegistered auditorNewcastle upon Tyne22 December 2008


2008 2007Notes £000 £000

Income

Funding council income 2 75,214 52,256Tuition fees and education contracts 3 21,408 17,632Other grants and contracts 4 15,009 264Other operating income 5 5,534 2,331Investment income 6 373 540

Total Income 117,538 73,023

Expenditure

Staff costs 7 68,759 43,321Other operating expenses 9 34,843 17,909Amortisation 12(a) 1,701 138Depreciation 13 6,961 5,405Interest payable 10 327 1

Total Expenditure 112,591 66,774

Surplus on continuing operations after depreciationof assets at valuation and before tax 4,947 6,249

Loss on disposal of assets (232) (799)

Surplus on continuing operations after depreciation 4,715 5,450of assets at valuation and disposal of assets but before tax

Taxation 11 - -

Surplus on continuing operations after depreciationof assets at valuation, disposal of assets and tax 11 4,715 5,450

The income and expenditure account is in respect of continuing activities.

GROUP I NCOME AND EXP END I TUR E ACCOUNTFOR TH E Y E A R END ED 3 1 J U LY 2 0 0 8

66

GROUP S TAT EMENT O F H I S TOR I CA L CO S TSURP LU S E S AND DE F I C I T SFOR TH E Y E A R END ED 3 1 J U LY 2 0 0 8

2008 2007Notes £000 £000

Surplus on continuing operations after depreciationof assets at valuation, disposal of assets and tax 4,715 5,450

Difference between historical cost depreciation andthe actual charge for the year calculated on therevalued amount 20 708 707

Historical cost surplus for the year 5,423 6,157


Notes 2008 2007£000 £000

Surplus on continuing operations after depreciationof assets at valuation, disposal of assets and tax 4,715 5,450Actuarial deficit recognised on de-pooling ofpension scheme 22 (6,910) -

Actuarial loss in respect of pension scheme 22 (2,630) -

Total recognised (losses)/gains relating to the year (4,825) 5,450

£000 £000

Reconciliation of reserves

Reserves at 1 August 58,415 52,965Total recognised (losses) and gains for the year (4,825) 5,450

Reserves at 31 July 53,590 58,415

GROUP S TAT EMENT O F TOTA L R ECOGN I S EDGA IN S AND LO S S E SFOR TH E Y E A R END ED 3 1 J U LY 2 0 0 8

68

2008 2007Fixed assets Notes £000 £000Intangible assets 12(a) 17,075 28Tangible assets 13 96,747 83,973

Total fixed assets 113,822 84,001

Current assetsStock 54 41Debtors 14 19,594 1,835Investments – liquid resources - 3,760Cash at bank and in hand 4,859 3,130

Total current assets 24,507 8,766

Less: Creditors – amounts falling due within one year 15 28,610 12,044Net current liabilities 4,103 3,278Total assets less current liabilities 109,719 80,723Less: Creditors – amounts falling due after more than one year 16 15,679 -Less: Provisions for liabilities and charges 18 3,326 3,101Net assets excluding pension liability 90,714 77,622Net pension liability 22 11,392 -Net assets including pension liability 79,322 77,622

Deferred capital grants 19 25,732 19,207

ReservesRevaluation reserve 20 12,609 13,317Income and expenditure account 21 40,981 45,098

Total reserves 53,590 58,415TOTAL 79,322 77,622

The financial statements were approved by the members of the Corporation and were signedon their behalf by:

N J Martin J Fisher(Chair of the Corporation) (Principal and Chief Executive)19 December 2008

GROUP BA LANC E SH E E TA S AT 3 1 J U LY 2 0 0 8


2008 2007Fixed assets Notes £000 £000

Intangible assets 12(a) 2,487 28Tangible assets 13 95,571 83,973Investments 12(b) - -

Total fixed assets 98,058 84,001

Current assetsStock 54 41Debtors 14 29,355 1,835Investments – liquid resources - 3,760Cash at bank and in hand 2,956 3,130

Total current assets 32,365 8,766

Less: Creditors – amounts falling due within one year 15 18,400 12,044Net current assets/(liabilities) 13,965 (3,278)Total assets less current liabilities 112,023 80,723Less: Creditors – amounts falling due aftermore than one year 16 15,679 -Less: Provisions for liabilities and charges 18 3,326 3,101Net assets excluding pension liability 93,018 77,622Net pension liability 22 11,392 -Net assets including pension liability 81,626 77,622

Deferred capital grants 19 25,732 19,207

ReservesRevaluation reserve 20 12,609 13,317Income and expenditure account 21 43,285 45,098

Total reserves 55,894 58,415

TOTAL 81,626 77,622

The financial statements were approved by the members of the Corporation and were signedon their behalf by:

N J Martin J Fisher(Chair of the Corporation) (Principal and Chief Executive)19 December 2008

COL L EG E BA LANC E SH E E TAT 3 1 J U LY 2 0 0 8

70

Notes 2008 2007£000 £000

Net cash inflow from operating activities 23 7,251 13,942

Return on investments and servicing of financeInterest received 373 540Interest paid (327) -Interest element of finance lease payments - (1)

Net cash inflow from return on investments andservicing of finance 46 539

Capital expenditure and financial investmentPayments to acquire intangible fixed assets - (32)Payments to acquire tangible fixed assets (14,681) (17,090)Capital grants received 7,835 1,746

Net cash outflow from investing activities (6,846) (15,376)

AcquisitionsPurchase of subsidiary undertakings (15,900) -Net overdrafts acquired (795) -

Net cash outflow from acquisitions (16,695) -

Management of liquid resourcesWithdrawals from deposits 3,760 1,840

Net cash inflow frommanagement of liquid resources 3,760 1,840

FinancingCapital element of finance lease payments (2) (5)Cash inflow from bank loans 15,000 -Repayment of loans (785) -

Net cash inflow/(outflow) from financing 14,213 (5)

Increase in cash in the year 24 1,729 940

Movements in net fundsIncrease in cash 1,729 940Capital element of finance lease payments 2 5Cash inflow from change in liquid resources (3,760) (1,840)Cash inflow from new loans (15,000) -Repayment of loans 785 -Loans acquired with subsidiary undertakings (2,028) -

Movement in net funds in the period (18,272) (895)

Net funds at 1 August 24 6,888 7,783

Net (debt)/funds at 31 July 24 (11,384) 6,888

GROUP CA SH F LOW STAT EMENTFOR TH E Y E A R END ED 3 1 J U LY 2 0 0 8


1. Accounting policies

Basis of preparationThese financial statements have beenprepared in accordance with the Statementof Recommended Practice: Accounting forFurther and Higher Education 2007 (theSORP) and in accordance with applicableAccounting Standards. They conform toguidance published by the LSC, in theAccounts Direction Handbook.

The group financial statements consolidatethose of the College and its subsidiaries(together referred to as “the group”). TheCollege financial statements presentinformation about the College as a separateentity and not about its Group.

Fundamental accounting conceptThe Group has net current liabilities of£4,103k, however, it has facilities available tomeet working capital requirements andtherefore the financial statements have beenprepared on a going concern basis

Recognition of incomeIncome from tuition fees is recognised in theperiod for which it is receivable and includesfees payable by students or their sponsors.

Income from grants, contracts and otherservices rendered is recognised when theCollege has complied with all terms andconditions, including any independent review.

All income from short term deposits iscredited to the income and expenditureaccount in the year in which it is earned. Therecurrent grants from the Learning and SkillsCouncil and Higher Education FundingCouncil for England represent the fundingallocations attributable to the current financial

year and are credited direct to the incomeand expenditure account. Recurrent grantsare recognised in line with planned activity.Any under-achievement against this plannedactivity is adjusted

in-year and reflected in the level of recurrentgrant recognised in the income andexpenditure account.

PensionsRetirement benefits to employees of theCollege are provided by theTeachers’ PensionScheme (TPS) and the Local GovernmentPension Scheme (LGPS). These are definedbenefit schemes which are externally fundedand contracted out of the State EarningsRelated Pension Scheme.

Under the definitions set out in FinancialReporting Standard (FRS 17) RetirementBenefits, the TPS is amulti-employer pensionscheme. The College is unable to identify itsshare of the underlying assets and liabilities ofthe scheme.

Contributions to the LGPS are charged to theincome and expenditure account so as tospread the cost of the pensions overemployees’ working lives with the College insuch a way that the pension cost isapproximately a level percentage of currentand future pensionable payroll. Thecontributions are determined by qualifiedactuaries on the basis of triennial valuations,using the projected unitmethod for the LGPS.

NOT E S TO THE F I NANC I A L S TAT EMENT SAT 3 1 J U LY 2 0 0 8

72

1. Accounting policies (continued)

Enhanced PensionsThe actual cost of any enhanced ongoingpension to a former member of staff is paidby the College annually. An estimate of theexpected future cost of any enhancement tothe ongoing pension of a former member ofstaff is charged in full to the College’s incomeand expenditure account in the year that themember of staff retires. In subsequent years acharge is made to provisions in the balancesheet to reflect the interest accrued using theenhanced pension spreadsheet provided bythe LSC.

Intangible fixed assetsOn acquisition of a subsidiary, the fair value ofthe consideration is allocated between theidentifiable net tangible and intangible assetsand liabilities on a fair value basis, with anyexcess consideration representing goodwill.Goodwill in respect of subsidiaries is includedwithin intangible fixed assets.

Goodwill arising on acquisitions is capitalisedas an asset on the balance sheet. Wheregoodwill is regarded as having a finite usefuleconomic life it is amortised on a straight linebasis over its estimated life, up to amaximumof 5 years. Impairment reviews are carriedout at the end of the first full year ofownership and at other times if there areindications that the carrying valuemay not besupportable.

Tangible fixed assets(a) Land and buildingsThe College’s buildings are specialisedbuildings and therefore it is not appropriate tovalue themon the basis of openmarket value.The College’s policy is to carry all assets athistoric cost, except for inherited assetswhichare included on the balance sheet at a

valuation existing when the Collegeimplemented FRS15 for the first time. Thesevalues are retained subject to the requirementto test assets for impairment in accordancewith FRS11. Finance costs are not capitalisedas part of the cost of those assets. Freeholdland is not depreciated. Freehold buildings aredepreciated over their expected usefuleconomic life to the College.

Where land and buildings are acquired withthe aid of specific grants they are capitalisedand depreciated as above. The related grantsare credited to a deferred capital grantaccount and are released to the income andexpenditure account over the expected usefuleconomic life of the related asset on a basisconsistent with the depreciation policy. Areview for impairment of a fixed asset iscarried out if events or changes incircumstances indicate that the carryingamount of the fixed asset may not berecoverable.

(b) EquipmentEquipment costing less than £1k per individualitem is written off to the income andexpenditure account in the year of acquisition.All other equipment is capitalised at cost.Equipment inherited from the LocalEducation

Authority was included in the balance sheetat a valuation of the net book value at the dateof inheritance.

Where equipment is acquired with the aid ofspecific grants it is capitalised and depreciatedas above. The related grant is credited to adeferred capital grant account and is releasedto the income and expenditure account overthe expected useful economic life of therelated asset on a basis consistent with thedepreciation policy.



(c) DepreciationDepreciation is provided on all tangible fixedassets, except for freehold land. Depreciationrates are calculated to write off the cost orvaluation of each asset evenly over itsexpected useful life as follows:

Freehold Buildings – remaining life of eachbuilding between 5 and 50 yearsLeasehold Building – remaining lease termEquipment and InformationTechnology assets – 3 to 5 years

Leased assetsCosts in respect of operating leases arecharged on a straight line basis over the leaseterm. Leasing agreements which transfer tothe College substantially all the benefits andrisks of ownership of an asset are included infixed assets and the capital elements of theleasing commitments are shown as obligationsunder finance leases. The lease rentals aretreated as consisting of capital and interestelements. The interest element is charged tothe income and expenditure account inproportion to the reducing capital elementoutstanding. Assets held under finance leasesare depreciated over the shorter of the leaseterm or the useful economic lives ofequivalent owned assets.

Assets which are held under hire purchasecontracts which have the characteristics offinance leases are depreciated over theireconomic useful lives.

InvestmentsFixed asset investments in subsidiaryundertakings are recorded at cost.

StocksStocks are stated at the lower of their cost ornet realisable value.

Revenue grantsRevenue grants are taken to the income andexpenditure account in the period to whichthey relate.

Capital grantsCapital grants are credited to a deferredcapital grant account and released to incomein line with the depreciation of the relevantassets.

Maintenance of premisesThe cost of routine correctivemaintenance ischarged to the income and expenditureaccount in the period it is incurred.

TaxationThe College is an exempt charity for taxationpurposes.

The College is potentially exempt fromtaxation in respect of income or capital gainsreceived to the extent that such income orgains are applied to exclusively charitablepurposes.

The College is exempted from levying VATon most of the services it provides tostudents. The College uses the partialexemption method to recover input VAT itsuffers on goods and services purchased. Thecapital items scheme applies to large buildingprojects and large one off items of computerequipment. The scheme regulates therecovery of input VAT on these items for tenyears after purchase in the case of buildingsand for five years in other cases.

74


Investments – Liquid resourcesLiquid resources comprise sums on shortterm deposit with recognised banks andbuilding societies.

ProvisionsProvisions are recognised when the Collegehas a present legal or constructive obligationas a result of a past event, it is probable that atransfer of economic benefit will be requiredto settle the obligation and a reliable estimatecan be made of the amount of the obligation.

Learner Support FundsThe College acts as an agent in the collectionand payment of learner support funds. Suchfunds received from the Learning and SkillsCouncil and the Higher Education FundingCouncil in England and disbursements tostudents are excluded from the income andexpenditure account and are shownseparately in Note 28 to the financialstatements.


76

2. Funding council incomeLearning Higher

and EducationSkills Funding

Council Council 2008 2007£000 £000 £000 £000

Recurrent grant 52,448 9,367 61,815 47,252Work based learning – Employer Training Pilot 1,058 - 1,058 363Work based learning – modern apprenticeships 8,319 - 8,319 1,980Release of deferred capital grants 1,069 - 1,069 985Domestic funds - - - 23Widening participation - - - 79Non programmed 918 322 1,240 603Centre of Vocational Excellence 70 - 70 76Excellence Challenge/Aim Higher - 188 188 76Franchise Degrees - 124 124 201European Social Fund Co-Financing 1,190 - 1,190 532Increased Flexibility for 14 – 16 year olds 141 - 141 86

65,213 10,001 75,214 52,256

3. Tuition fees and education contracts2008 2007£000 £000

UKHigher Education students 4,498 3,345European Union (excluding UK) students 200 75Non European Union students 2,857 1,733UK Further Education students 991 867

Total fees payable by or on behalf of students in the above categories 8,546 6,020Offender Learning and Skills contract for Durham and Northumberland 9,737 9,704Other contracts 3,125 1,908

21,408 17,632

Tuition fees foregone under theCollege’s own feewaiver policy in the yearwere £3,717k (2007: £3,595k).In 2007/2008 all courseswere given an assumed fee based on guided learner hours, whether or not a feehad been charged to the students, to reflect the actual fees foregone.


4. Other grants and contracts2008 2007£000 £000

European Commission 55 100Other funds 14,923 103Releases from deferred capital grants(European Regional Development Fund) 31 61

15,009 264

Income from other funds of £14,923k includes £7,250k TWL Training Limited income and£4,951k Intraining Group from the course of delivering training and employability skills.

5. Other income2008 2007£000 £000

Catering and residence operations 1,826 1,021Releases from deferred capital grants (other non LSC) 1,041 512Other income 2,667 798

5,534 2,331

6. Investment income2008 2007£000 £000

Bank interest receivable 373 540

7. Staff costsThe average number of persons (including senior post holders) employed by the group duringthe year, expressed as full time equivalents, was as follows:

2008 2007No. No.

CollegeTeaching departments – teaching staff 994 888Teaching departments – other staff 259 248Teaching support services 386 221Other support services 38 16Administration and central services 109 102General expenditure – marketing, international and examinations 58 35Premises 46 40Catering and residences 34 34

1,924 1,584Intraining Group - all staff

894 -TWL Training Limited - all staff

320 -

3,138 1,584

7. Staff costs (continued)Staff costs for the above persons:

2008 2007£000 £000

College

Teaching departments – teaching staff 29,551 22,795Teaching departments – other staff 7,931 7,554Teaching support services 8,990 4,828Other support services 564 335Administration and central services(including work based learning) 4,883 4,085General expenditure – marketing, international and examinations 879 805Premises 1,202 969Catering and residences 692 671Intraining Group staff costs 9,435 -TWL Training Limited staff costs 3,170 -Group restructuring and provision for unfunded pensions offormer employees 1,462 1,279

68,759 43,321

2008 2007£000 £000

Wages and salaries 58,098 35,401Social security costs 4,072 2,681Other pension costs 5,127 3,960Restructuring costs and provision for unfunded pensions toformer employees 1,462 1,279

68,759 43,321

Total pension costs, therefore, were £6,009k (see note 22).

A general pay award of 3% was made with effect from 1 January 2008, approved by theCorporation for College staff.

78


7. Staff costs (continued)The number of staff, including senior post holders, theClerk to theGovernors and the Principal,who received emoluments in the following ranges was:

College 2008 2008 2007 2007Number Number Number Number

senior post other senior post otherholders staff holders staff

£60,001 to £70,000 1 11 - 8£70,001 to £80,000 - 4 - 6£80,001 to £90,000 - 1 - -£90,001 to £100,000 1 - 1 -£100,001 to £110,000 2 - 2 -£110,001 to £120,000 2 - - -£180,001 to £190,000 - - 1 -£200,001 to £210,000 1 - - -

7 16 4 14

Intraining Group 2008 2008Number Number

senior post otherholders staff

£60,001 to £70,000 - 8£70,001 to £80,000 - 2£80,001 to £90,000 - 4£90,001 to £100,000 - 1£110,001 to £120,000 - 3£120,001 to £130,000 - 1£140,001 to £150,000 - 1£150,001 to £160,000 - 2

- 22

TWL Training Limited 2008 2008Number Number

senior post otherholders staff

£70,001 to £80,000 - 1

- 1

8. Senior post holders emolumentsSenior post holders are defined as the Principal (or chief executive) and holders of the othersenior postswhom theCorporation have selected for the purposes of the articles of governanceof the College relating to the appointment and promotion of staff who are appointed by theCorporation.

2008 2007No. No.

The number of senior post holders including thePrincipal and the Clerk to the Governors (and includingthose who held office, for only part of the year) was: 7 5

Senior post holders’ emoluments are made up as follows: 2008 2007£ £

Salaries 603,550 495,296Pension contributions 79,680 64,094

Total emoluments 683,230 559,390

The above emoluments include amounts payable to the highest paid senior post holder, thePrincipal, of: 2008 2007

£ £

Salaries 183,645 165,743Pension contributions 23,540 20,785

Total emoluments 207,185 186,528

During the year a senior post holder resigned from their role.The pension contributions in respect of the Principal and senior post-holders relate toemployer’s contributions to the Teachers Pension Scheme or the Local GovernmentSuperannuation Scheme and are paid at the same rate as for other employees.The members of the Corporation other than the Principal and the above staff members didnot receive any payment from the College other than the reimbursement of travel andsubsistence expenses incurred in the course of their duties.Overseas activitiesThe following costs were incurred during 2008 in respect of overseas activities which werecarried out in accordance with the strategy approved by the Corporation:

Total costto College

£Members of the Corporation and senior post holders -College staff 128,814

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9. Other operating expenses

2008 2007£000 £000

Teaching departments 14,279 5,073Teaching support services 1,445 670Other support services 1,304 318Administration and central services 2,289 2,696General education expenditure 4,576 3,264Premises costs - running costs 5,337 3,034Premises costs - maintenance 986 505Premises costs - rents and leases 2,867 839Catering and residence operations 330 538Franchise provision 1,430 488Miscellaneous – Asgha House premiumwrite down

- 484

34,843 17,909

Other operating expenses include: 2008 2007£000 £000

Auditors’ remunerationexternal audit (including Regularity Audit)* 56 32internal audit** 45 29other services – internal audit 29 12

Hire of plant and machinery - operating leases 203 227Hire of other assets – operating leases 1,120 809Asgha House premiumwrite down - 484

* Includes £33k in respect of the College (2007: £32k)** Includes £33k in respect of the College (2007: £29k)

10. Interest payable and similar charges2008 2007£000 £000

On finance leases - 1On bank loans 288 -Other bank interest 39 -

327 1

11. Surplus on continuing operations for the period

Group

The surplus on continuing operations for the year is made up as follows:Group College Group2008 2008 2007£000 £000 £000

Surplus for the year 4,715 6,481 5,450Surplus generated by subsidiary undertakings and transferredto the College under Gift Aid - 538 -

4,715 7,019 5,450

The members do not believe the Group was liable for any corporation tax arising out of itsactivities during the year.

12(a) Intangible fixed assets

Group Goodwill£000

Cost:At 1 August 2007 207Additions 18,748

At 31 July 2008 18,955

Amortisation:At 1 August 2007 179Charge for year 1,701

At 31 July 2008 1,880

Net book value:At 31 July 2008 17,075

Net book value:At 1 August 2007 28

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12(a) Intangible fixed assets (continued)Skelmersdale College was acquired on 1 August 2007 for nil consideration.

Skelmersdale College fair value table

Book valueand fair value

£000

Tangible fixed assets 4,760Stocks 13Debtors 554Cash at bank and in hand (988)Creditors: amounts falling due within one year (2,951)Creditors: amounts falling due after more than one year (2,044)Deferred capital grants (1,014)Pension liability (1,412)

Net liabilities acquired (3,082)

Fair value of consideration -

Goodwill 3,082

TWLTraining Limited acquired the trade, assets and liabilities of TrainingWest Lancashire Limitedon 1 December 2007 for £900k consideration in cash.TWL Training Limited fair value table


£000

Tangible fixed assets 364Debtors 960Cash at bank 193Creditors: amounts falling due within one year (1,086)

Net assets acquired 431

Fair value of consideration 900

Goodwill 469

12(a) Intangible fixed assets (continued)The Intraining Group Limited acquired the assets of certain parts of Carter and Carter Plc (InAdministration) on 21 March 2008 for £15,000k consideration in cash.

Intraining Group fair value table


£000

Tangible fixed assets 421Creditors: amounts falling due within one year (618)

Net liabilities acquired (197)

Fair value of consideration 15,000

Goodwill 15,197

Newcastle College Goodwill£000

Cost:At 1 August 2007 207Additions 3,082

At 31 July 2008 3,289

Amortisation:At 1 August 2007 179Charge for year 623

At 31 July 2008 802

Net book value:At 31 July 2008 2,487

Net book value:At 1 August 2007 28

As noted above, Skelmersdale College was acquired on 1 August 2007 for nil consideration,see fair value table above.

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12(b) InvestmentsThe College owns 100 per cent of the issued ordinary £1 shares of TWL Training Limited, acompany incorporated in England andWales, and 100 per cent of the issued ordinary £1 sharesof Intraining Group Limited, a company incorporated in England andWales which in turn owns100 per of the issued ordinary £1 shares of five trading companies, namely Intraining (ALD)Limited, Intraining (CBE) Limited, Intraining (ESD) Limited, Intraining (NTP) Limited andIntraining (Quantica) Limited. The principal business activity of the subsidiaries is carrying outtraining of employees on behalf of employers. On 1 August 2008 Intraining (ALD) Limitedchanged its name to Newcastle College Construction Limited and moved from the IntrainingGroup to be a direct subsidiary of the College.

13. Tangible fixed assetsGroup Equipment,

informationFreehold technologyland and Leasehold and motorbuildings buildings vehicles Total

£000 £000 £000 £000Cost or valuation:At 1 August 2007 95,206 173 11,494 106,873Additions 13,692 46 6,664 20,402Disposals (357) - (1,799) (2,156)

At 31 July 2008 108,541 219 16,359 125,119

Depreciation:At 1 August 2007 17,339 173 5,388 22,900Charge for year 3,918 8 3,035 6,961Disposals (8) - (1,481) (1,489)

At 31 July 2008 21,249 181 6,942 28,372

Net book value:At 31 July 2008 87,292 38 9,417 96,747

Net book value:At 1 August 2007 77,867 - 6,106 83,973

Inherited 12,609 - - 12,609Other 53,317 38 5,051 58,406Financed by capital grant 21,366 - 4,366 25,732

87,292 38 9,417 96,747

13. Tangible fixed assets (continued)College Freehold Equipment &

land and Leasehold Informationbuildings building technology Total

£000 £000 £000 £000Cost or valuation:At 1 August 2007 95,206 173 11,494 106,873Additions 13,673 - 5,375 19,048Disposals (357) - (1,758) (2,115)

At 31 July 2008 108,522 173 15,111 123,806

Depreciation:At 1 August 2007 17,339 173 5,388 22,900Charge for year 3,917 - 2,903 6,820Disposals (8) - (1,477) (1,485)

At 31 July 2008 21,248 173 6,814 28,235

Net book value:At 31 July 2008 87,274 - 8,297 95,571

Net book value:At 1 August 2007 77,867 - 6,106 83,973

Inherited 12,609 - - 12,609Other 53,299 - 3,931 57,230Financed by capital grant 21,366 - 4,366 25,732

87,274 - 8,297 95,571

The transitional rules set out in FRS 15Tangible FixedAssetswere applied on implementing FRS15. Accordingly, the book values at implementation have been retained.Inherited land and buildings were valued at £25,934k on 27 August 1993. Of this, £25,859krelates to buildings stated at depreciated replacement cost, and £75k relates to a building valuedat open market value by Storey Sons & Parker, a firm of chartered surveyors.Other tangible fixed assets inherited from the local education authority at incorporation werecapitalised at depreciated cost at incorporation. Should these assets be sold, the Collegewouldhave to use the sale proceeds in accordance with the financial memorandumwith the LSC.If inherited land and buildings had not been revalued they would have been includedwith a netbook value of nil.Land and buildings with a net book value of £49,979k have been partially financed by grantsfrom the LSC. Should these assets be sold, the Collegewould either have to surrender the saleproceeds to the LSC or use the proceeds in accordance with the Financial Memorandumwiththe LSC.

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13. Tangible fixed assets (continued)The net book value of tangible fixed assets includes an amount of £nil (2007: £3k) in respect ofassets held under finance leases.The College has a lease expiring in 2014 over NewcastleWest End College (formerly the JohnMarley Centre) at an annual rent of the cost of insurance and upkeep of the building.

14. DebtorsGroup and

Group College College2008 2008 2007£000 £000 £000

Amounts falling due within one year:Trade debtors 4,947 1,760 698Other debtors 367 95 103

Amounts owed by group undertakings:Subsidiary undertakings - 23,723 -Gift aid from TWL Training Limited - 538 -

Prepayments and accrued income 10,883 356 1,034Amounts owed by the LSC 3,397 2,883 -

19,594 29,355 1,835

Amounts owed by group undertakings include an Intraining Group loan in the sum of £15,394kand a TWL Training loan of £953k which are due after more than one year. The balance of£7,376k relates to Intraining Group working capital payments made by the College on theirbehalf which is due within one year.

15. Creditors: amounts falling due within one yearGroup and


Obligations under finance leases - - 2Payments received on account 8,166 5,439 2,529Trade creditors 2,621 1,836 1,858Payroll creditor 194 657 -Other taxation and social security 2,652 1,291 935Accruals 11,871 8,091 6,691Bank loans 564 564 -Other creditors 2,542 522 29

28,610 18,400 12,044

16. Creditors: amounts falling due after more than one yearGroup and


Loans 15,679 15,679 -

17. Analysis of borrowingsGroup and


(a) Bank loans and overdraftsBank loans and overdrafts are repayable as follows:In one year or less 564 564 -Between one to two years 593 593 -Between two to five years 6,195 6,195 -In five years or more 8,891 8,891 -

16,243 16,243 -

Bank loans and overdrafts carry interest at rates between 5%and 6.5% for fixed rate loans andLIBOR +0.3825% for variable. Loans are repayable by instalments falling due between 2007and 2018.

(b) Finance leases

The net finance lease obligations to which the Collegeis committed are:In one year or less - - 2

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18. Provisions for liabilities and chargesGroup and College

Pension Enhancedprovision pensions Total

£000 £000 £000At 31 July 2007 327 2,774 3,101Balance relating to Skelmersdale College - 81 81Expenditure in the year - (188) (188)Interest charged to other operating expenses - 147 147Provided in the year 136 49 185

At 31 July 2008 463 2,863 3,326

The enhanced pension provision relates to the cost of staff who have already left the College’semploy and commitments for reorganisation costs from which the College cannot reasonablywithdraw at the balance sheet date. This provision has been recalculated in accordancewith theLSC Circular 05/02.

19. Deferred capital grantsGroup and College

OtherLSC grants Total

£000 £000 £000At 1 August 2007Land and buildings 13,960 2,968 16,928Equipment 1,216 1,063 2,279

15,176 4,031 19,207

Cash received and receivableLand and buildings 4,678 909 5,587Equipment 1,356 1,692 3,048

6,034 2,601 8,635

Released to income and expenditure accountLand and buildings 853 296 1,149Equipment 216 745 961

1,069 1,041 2,110

At 31 July 2008Land and buildings 17,785 3,581 21,366Equipment 2,356 2,010 4,366

20,141 5,591 25,732

20. Revaluation reserveGroup and


At 1 August 13,317 13,317 14,024Transfer from revaluation reserve to general reservein respect of depreciation on revalued assets (708) (708) (707)

At 31 July 12,609 12,609 13,317

21. Income and expenditure accountGroup and


At 1 August 45,098 45,098 38,941Transfer from revaluation reserve 708 708 707Surplus on continuing operations after depreciation 4,715 7,019 5,450of assets at valuation and taxFRS17 actuarial pension costs (9,540) (9,540) -

At 31 July 40,981 43,285 45,098

22. Pension schemesThe College’s employees belong to two principal pension schemes: the Teacher’s PensionScheme England and Wales (TPS) for academic and related staff; and the Local GovernmentPension Scheme (LGPS), the Tyne and Wear Pension Fund, for non teaching staff. Both aredefined benefit schemes.

Total pension cost for the yearGroup and


Teacher’s Pension Scheme contributions paid 3,031 3,031 2,321Local Government Pension Scheme:Contributions paid 2,097 2,047 1,639FRS17 charge 440 440 -

Charge to the income and expenditure account (staff costs) 5,568 5,518 3,960Enhanced pension charge to income and expenditure account 49 49 111Deficiency cost provision 392 392 -

Total pension cost for year 6,009 5,929 4,071

90


22. Pension schemes (continued)

The pension costs are assessed in accordancewith the advice of independent qualified actuaries.The latest actuarial valuations of the TPSwas as at 31March 2004 and as at 31March 2007 forthe LGPS.

Early retirement pensionThepension charge for the year included an amount in respect of enhanced pension entitlementsof staff taking early retirement in earlier years under the reorganisation programme. Thecalculation of the cost of early retirement provisions charged to the income and expenditureaccount in the year of retirement is based on the total capital cost of providing enhancedpensions with allowance for future investment returns. Each year, the year end provision isrecalculated using updated actual investment returns and the resulting change in provision ischarged or credited to the income and expenditure account.

Details of the movement in the provision are shown in note 18.

The Teachers’ Pension Scheme (TPS)TheTeachers’ Pension Scheme is an unfunded defined benefit scheme.Contributions on a “payas you go” basis are credited to the Exchequer under arrangements governed by theSuperannuation Act 1972. A notional asset value is ascribed to the scheme for the purpose ofdetermining contribution rates.

The pensions cost is normally assessed not less than every 4 years in accordancewith the adviceof the Government Actuary. The assumptions and other data that have the most significanteffect on the determination of the contribution levels are as follows:

Latest actuarial valuation 31 March 2004Actuarial method Prospective BenefitsInvestment returns per annum 6.5%Salary scale increases per annum 5.0%Notional value of assets at date of last valuation £162,650 million

Proportion of members’ accrued benefits 98.88%covered by the notional value of the assetsContribution rates with effect Employee 6.4%from 1 January 2007 Employer 14.1%


FRS 17Under the definitions set out in Financial Reporting Standard 17 (Retirement Benefits), the TPSis amulti employer pension scheme. TheCollege is unable to identify its share of the underlyingassets and liabilities of the scheme.

Accordingly, the College has taken advantage of the exemption in FRS17 and has accounted forits contributions to the scheme as if it were a defined contribution scheme. TheCollege has setout above the information available on the scheme and the implications for theCollege in termsof the anticipated contribution rates.

Local Government Pension Scheme (LGPS)The following disclosures relate to the funded liabilities of the Tyne&Wear Pension Fundwhichis part of the Local Government Pension Scheme. Newcastle College participates in the Fundwhich provides defined benefits, based on members’ final pensionable salary.

In accordancewith FRS 17 disclosure of certain information concerning assets, liabilities, incomeand expenditure relating to pension schemes is required.

An approximate allowance has beenmade for the bulk transfer ofmembers fromSkelmersdaleCollege in the Lancashire Pension Fund toNewcastle College that occurred on 1 August 2007.A full reviewof the information received from theAdministering Authority has not been carriedout by the Scheme’s actuary, who therefore cannot therefore the accuracy of the data used atthe time of compiling the financial statements. Deferred members in the Fund have beenincluded at their 2006/07 value of £1,130k.

Therewas also a transfer fromNewCollegeDurham in theDurhamPension Fund toNewcastleCollege that occurred on 1August 2005. An allowance has beenmade for the service that thesemembers have accrued in the Tyne and Wear Pension Fund since 1 August 2005, but theScheme’s actuary does not have the information ofwhichmembers elected to link their previousservice in the Durham Pension Fund or the length of their service. This report therefore doesnot make allowance for the impact of this transfer.

Regular employer contributions to the Fund for the year ending 31 July 2009 are estimated tobe £2,280k. In addition, Strain on Fund Contributions may be required.

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Contribution rates from 1 April 2008 are:

Full-time Equivalent Salary Contribution rate per yearUp to £12,000 5.5%£12,001 to £14,000 5.8%£14,001 to £18,000 5.9%£18,001 to £30,000 6.5%£30,001 to £40,000 6.8%£40,001 to £75,000 7.2%More than £75,001 7.5%

Principal Actuarial AssumptionsThe latest actuarial valuation of the Fund took place as at 31 March 2007. The principalassumptions used by the independent qualified actuaries in updating the latest valuation of theFund for FRS17 purposes were:

At 31 July At 31 July2008 2007

Inflation 3.8% 3.3%Rate of general long-term increase in salaries 5.3% 4.8%Rate of increase for pensions in payment 3.8% 3.3%Rate of increase to deferred pensions 3.8% 3.3%Discount rate 6.5% 5.7%

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

At 31 July2008

Retiring 31 July 2008 YearsMales 19.1Females 22.1Retiring in 20 yearsMales 21.0Females 23.3


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The assets and liabilities in the scheme and the expected rates of return were:

Long-term rate Value at 31 Long-term rate Value at 31of return July 2008 of return July 2007

expected at 31 expected at 31July 2008 July 2007

% pa £m % pa £m

Equities 7.8% 2,284 7.9% 2,527Property 6.8% 341 6.9% 372Government Bonds 4.8% 295 4.9% 558Corporate Bonds 6.5% 436 5.7% 304Other 5.9% 229 6.0% 32Total market value 7.2% 3,585 7.2% 3,793

NewcastleCollege employs a building block approach in determining the rate of return on Fundassets. Historical markets are studied and assets with higher volatility are assumed to generatehigher returns consistent with widely accepted capital market principles. The assumed rate ofreturn on each asset class is set outwithin this note. The overall expected rate of return on assetsis then derived by aggregating the expected return for each asset class over the actual assetallocation for the Fund as at 31 July 2008.

Reconciliation of funded status to balance sheet

2008 2007£m £m

Fair value of Fund assets 33.11 28.43Present value of liabilities (44.50) (35.34)Net pension liability (11.39) (6.91)

Analysis of the amount charged to income and expenditure account

2008£m

Current service cost 2.28Past service cost 0.45Interest cost 2.24Expected return on assets (2.24)Impact of disposals and acquisitions 0.23Expense recognised in profit and loss 2.96


Changes to the present value of liabilities during the year£m

Present value of liabilities at 1 August 2007 35.34Current service cost 2.28Interest cost 2.24Contributions by participants 0.89Actuarial gains on liabilities* (2.35)Net benefits paid out** (0.38)Past service cost 0.45Net increase in liabilities from disposals and acquisitions 6.03Curtailments and settlements -Present value of liabilities at 31 July 2008 44.50

*Includes changes to the actuarial assumptions.** Consists of net cashflow out of the Fund in respect of the employer, excluding contributionsand any death in service lump sums paid, and including an approximate allowance for theexpected cost of death in service lump sums of £600k for the year ended 31 July 2008.

Changes to the fair value of assets during the year

£mFair value of assets at 1 August 2007 28.43Expected return on assets 2.24Actuarial losses on assets (4.98)Contributions by the employer 2.29Contributions by participants 0.89Net benefits paid out (0.38)Net increase in assets from disposals and acquisitions 4.62Present value of assets at 31 July 2008 33.11

Actual return on assets2008£m

Expected return on assets 2.24Actuarial loss on assets (4.98)Actual return on assets (2.74)

Amount recognised in the statement of total recognised gains and losses (STRGL)

2008£m

Total actuarial losses (2.63)Actuarial loss recognised in STRGL (2.63)


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22. Pension schemes (continued)History of asset values, present value of liabilities and deficit

2008£m

Fair value of assets 33.11Present value of liabilities (44.50)Deficit (11.39)

History of experience gains and losses2008£m

Experience losses on assets (4.98)Experience losses on liabilities* (0.24)

* This item consists of losses in respect of liability experience only and excludes any change inliabilities in respect of changes to the actuarial assumptions used.

23. Reconciliation of operating surplus to net cash inflow from operating activities

Group Notes 2008 2007£000 £000

Surplus on continuing operations after depreciation of assetsat valuation and tax 4,715 5,450Amortisation 12 1,701 138Depreciation 13 6,961 5,405Deferred capital grants released to income 2 & 5 (2,110) (1,558)(Increase)/decrease in stocks (13) (17)Interest payable 10 327 1Increase/(Decrease) in debtors (6,602) 170Decrease in prepayments and accrued income (9,849) 3,962Increase in creditors 763 642Increase in other taxation and social security 1,717 110Increase/(Decrease) in payments on account 5,637 (623)Increase/(Decrease) in accruals 3,920 (286)Increase in provisions 18 225 289Interest receivable 6 (373) (540)Loss on sale of fixed assets 232 799

Net cash inflow from operating activities 7,251 13,942

24. Analysis of change in net funds/(debt)

Group At 1 August Acquisitions Cash flow At 31 July2007 2008£000 £000 £000 £000

Cash 3,130 (795) 2,524 4,859Liquid resources 3,760 - (3,760) -Finance lease obligations (2) - 2 -Loans - (2,028) (14,215) (16,243)

6,888 (2,823) (15,449) (11,384)25. Capital commitments

Group andGroup College College2008 2008 2007£’000 £’000 £’000

Commitments contracted for at 31 July 3,020 2,914 264

26. Financial commitmentsAt 31 July there were annual commitments under non-cancellable operating leases as follows:


Land and buildingsExpiring within one year 938 213 171Expiring within two to five years inclusive 1,044 277 448Expiring in over five years 594 528 26

2,576 1,018 645


OtherExpiring within one year 10 10 5Expiring within two to five years inclusive 8 8 13

18 18 18


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27. Related party transactionsDue to the nature of the College’s operations and the composition of the Corporation (beingdrawn from local public and private sector organisations) it is inevitable that transactionswill takeplace with organisations in which a member of the Corporation may have an interest. Alltransactions involving organisations inwhich amember of theCorporationmay have an interestare conducted at arm’s length and in accordance with the College’s financial regulations andnormal procurement procedures. No transactions were identified which should be disclosedunder Financial Reporting Standard 8 Related Party Disclosures.

28. Amounts disbursed as agentLearner support funds

Group Group2008 2007£000 £000

LSC Grants – hardship funds 805 532LSC Grants - childcare 333 229Other Funding bodies grants 134 99Interest earned 5 2

1,277 862Disbursed to students (961) (748)Administration costs (57) (39)

Balance unspent at 31 July 259 75

LSC grants are available solely for students. In themajority of instances, theCollege only acts asa paying agent. In these circumstances, the grants and related disbursements are thereforeexcluded from the income and expenditure account. The income and expenditure consolidatedin theCollege's financial statements relates to the purchase of some equipment from the accessfund and the payment of accommodation by the College on the student's behalf.

In accordance with the terms of ourengagement letter dated 31 October 2006and further to the requirements of the LSC,we have carried out a review to obtainassurance about whether, in all materialrespects, the expenditure and income ofNewcastleCollege (‘theCollege’) for the yearended 31 July 2008 have been applied to thepurposes identified by Parliament and thefinancial transactions conform to theauthorities which govern them.

This report is made solely to themembers ofthe Corporation and the LSC. Our reviewwork has been undertaken so that we mightstate to themembers of theCorporation andthe LSC those matters we are required tostate to them in a report and for no otherpurpose. To the fullest extent permitted bylaw, we do not accept or assumeresponsibility to anyone other than themembers of theCorporation and the LSC, forour review work, for this report, or for theopinion we have formed.

Respective responsibilities of theMembers of the Corporation andAuditorsThe members of the Corporation areresponsible, under the requirements of theFurther & Higher Education Act 1992,subsequent legislation and related regulations,for ensuring that expenditure and income areapplied for the purposes intended byParliament and the financial transactionsconform to the authorities whichgovern them.

Our responsibilities for this review areestablished in the United Kingdom by ourprofession’s ethical guidance and the auditguidance set out in theAudit Code of Practiceand theRegularity Audit Framework issued bythe LSC. We report to you whether, in ouropinion, in all material respects, the College’sexpenditure and income for the year ended31 July 2008 has been applied to purposesintended by Parliament and the financialtransactions conform to the authoritieswhichgovern them.

Basis of opinionWeconducted our review in accordancewiththe Audit Code of Practice and the RegularityAudit Framework issued by the LSC. Ourreview includes examination, on a test basis,of evidence relevant to the regularity andpropriety of the College’s income andexpenditure.

OpinionIn our opinion, in all material respects theexpenditure and income for the year ended31 July 2008 has been applied to purposesintended by Parliament and the financialtransactions conform to the authoritieswhichgovern them.

Ernst & Young LLPRegistered AuditorNewcastle upon Tyne22 December 2008

I NDEP ENDENT AUD ITOR ’ S R EPORT ONREGULAR ITY TO TH E MEMB E R S O F TH ECOR PORAT I ON O F N EWCA S T L E CO L L EG E ( ‘ T H ECOR PORAT I ON ’ ) A ND TH E L E A RN I NG AND S K I L L SCOUNC I L ( ‘ T H E L S C ’ )


NOT E S

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ANNUAL REPORT - Newcastle Colleges one of the largest providersoflearning,skills andemployabilitytrainingintheUK,the Groupisahuboftalentandinnovation. During2007/08wecontinuedtobecomea