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Report and Financial Statements for the Year Ended 31 July 2018

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Report and Financial Statements for the Year Ended 31 July 2018 The North Highland College Report & Financial Statements for the year ended 31 July 2018 SCOTTISH CHARITY NUMBER SC021215 The North Highland College UHI Financial Statements for the year ended 31 July 2018 CONTENTS PAGE Board of Management and Professional Advisors 3 Performance Report 3 Accountability Report 18 Independent Auditor’s Report to the Board of Management, 33 the Auditor General and the Scottish Parliament Statement of Comprehensive Income 36 Statement of Changes in Reserves 37 Balance Sheet 38 Statement of Cash Flows 39 Notes to the Financial Statements 40 2 The North Highland College UHI Financial Statements for the year ended 31 July 2018 Board of Management and Professional Advisors Board of Management A full list of the membership of the Board of Management is included in the Accountability Report. The Chair of the Board of Management is Blair Sandison. Professional Advisors External Auditors - Ernst & Young LLP Atria One 144 Morrison Street, Edinburgh, EH3 8EB Internal Auditors - TIAA Ltd Artillery House Fort Fareham Newgate Lane Fareham Hants PO14 1AH Bankers - Royal Bank of Scotland 11 Olrig Street Thurso Caithness KW14 7BL Solicitors - Anderson Strathern 1 Rutland Court Edinburgh EH3 8EY Insurers - Marsh (Education Practice) Capital House 1-5 Perrymount Road Haywards Heath West Sussex RH16 3SY 3 The North Highland College UHI Financial Statements for the year ended 31 July 2018 Performance Report The Board of Management of North Highland College UHI present their report and the audited financial statements for the year ended 31 July 2018. OVERVIEW The overview section is designed to aid the reader in understanding our College including - the context in which we operate; our main objectives; our performance during the year; and the key challenges and risks facing the College. Principal’s Statement Session 2017-18 was another year in which North Highland College UHI operated in a tight financial position. Thus, it is pleasing to note that overall the College’s financial performance in 2017-18 was both better than budget and the previous year. A small operating Resource Departmental Expenditure Limit (RDEL) surplus of £111,000 (prior to repayment of property loan capital of £55,000) is reported on the management accounts. Movements on non-controllable year-end adjustments has resulted in the College’s Statement of Comprehensive Income showing a loss). The principal drivers delivering this positive outcome included; SFC Further Education student recruitment targets (core and ESIF funded) set for the College as part of the Highlands & Islands Regional Outcome Agreement being fully achieved. Growth in our under-graduate and post-graduate Higher Education student recruitment. Our numbers were significantly above our targeted contributions to the University of the Highlands & Islands student enrolment profile. Better than budgeted income for project activities including research and curriculum development. Continuing tight budgeting and fiscal management delivering further operational efficiencies. As noted in our Performance Report for the previous year, complying with emerging national standards for staff pay and terms & conditions has presented North Highland College UHI (and other rural colleges in the Highlands & Islands Region) with financial challenges disproportionate to the rest of the sector. Uncertainty over the level of additional funding to meet this ongoing commitment represents the biggest element of risk to the College’s overall financial well-being in the medium - longer term (2 – 5 years). We will continue to monitor our financial position with great vigilance, and explore all opportunities to improve our financial standing by growing income and providing our services more efficiently. The NHC Board of Management continues to oversee the development of the College with vigour and commitment. The Board has strong staff, student and independent representation with members drawn from communities across the north Highlands. Recruitment activities for new Board members have taken due cognisance of the Board’s commitment to the “50:50 by 2020” gender balance pledge which remains a priority objective requiring further progress. During 2017, the Board led the development and publication of the College’s Strategic Plan for the period 2018-20. The new plan is very closely aligned to that of the University of the Highlands & Islands and provides a development framework for the College’s curriculum, student services and research through the enabling resources of our staff, finance and facilities. Board members also actively progressed the actions arising from the externally facilitated review of Board effectiveness carried out in the previous year. With the endorsement of the NHC Board, along with his counterparts from other UHI incorporated colleges, our Chair played a lead role in moves to deliver greater organisational and operational integration within the UHI partnership. Initial plans to integrate four of the colleges, including North 4 The North Highland College UHI Financial Statements for the year ended 31 July 2018 Highland College, with the University were not progressed, although the work of the Integration Board has acted as a catalyst for options for organisational reform to be further reviewed through the newly formed UHI Partnership Assembly. A Project Board is to be formed with representation from across the partnership. Its results should see commencement of change within the next year. Over the year, the College’s Audit & Risk Management Committee maintained a comprehensive oversight of the quality of college governance, management and services. The Committee noted a number of positive outcomes to statutory and other audits. Within the annual internal audit programme, auditors confirmed their satisfaction that systems and controls for the administration and disbursement of funds were adequate and used in accordance with the SFC conditions. More widely, a number of recommendations were noted and accepted in relation to compliance with the new General Data Protection regulation (GDPR) and these are being actively progressed with guidance and support from our Regional Strategic Body. In association with our education and business partners, the College progressed a number of initiatives in response to key sector priorities. The College continues to make a major contribution to the delivery of the Highlands & Islands Regional Outcome Agreement. Staff played an active role in supporting the Caithness & Sutherland Developing the Young Workforce (DYW) Regional Board. Working closely in partnership with our local schools, we have developed and implemented new vocationally orientated programmes including Foundation Apprenticeships for the senior phase. We also worked with UHI colleagues to create new courses and opportunities at both under-graduate and post-graduate levels. A high-level summary of the College’s performance in meeting key student activity targets is provided below; Student Targets V Actual Final 2017/18 Target Actual Variance HE UG 401 423 +22 (FTEs) PGT 5 18.1 +13.1 PGDE 7 7 0 FE 12555 12573 +18 (Credits) Key:- UG – undergraduate (Scottish and EU) PGT – Post Graduate taught (all categories of student home location) PGDE - Professional Graduate Diploma in Education During 2017/18, we advanced the planning and development of the College estate in a number of priority areas. We have achieved the Board’s high-level objective of having “shovel ready” plans to transform the College’s main campus in Thurso. These have been shared with College stakeholders and we are progressing discussions to meet the funding requirements. In Dornoch, we have successfully secured the funding necessary to complete our project to enhance our Burghfield campus with support from the Scottish Colleges Foundation and the UHI partnership. With our UHI Golf curriculum built around strong links with the PGA and high-quality UHI student accommodation already in place, the outcome of this project will complete our ambitious plans to confirm Dornoch as a centre of excellence for Golf education regionally, nationally and internationally. 5 The North Highland College UHI Financial Statements for the year ended 31 July 2018 In response to growing pressure on existing facilities due to the expansion of our student numbers in the Easter Ross area, our Estates team have moved swiftly to secure some additional high quality accommodation in the vicinity of our Alness campus for session 2018/19. Our campus developments are of strategic significance to the long-term future and sustainability of the college, and as such will continue to provide a focus for our efforts as we progress them with our key stakeholders in the year ahead. Summary In summary, despite the challenging financial context noted above, I believe the college continues to deliver on its core mission to provide inclusive and accessible high quality vocational training, life-long learning and research opportunities, relevant to the needs of learners, communities and employers, across the north Highland area. I am indebted to the College staff, students, governors and stakeholders who have made this possible. Donald MacBeath Principal 6 The North Highland College UHI Financial Statements for the year ended 31 July 2018 Performance Report NATURE, OBJECTIVES AND STRATEGIES The North Highland College was established under the Further and Higher Education (Scotland) Act 1992. The College is a registered charity (Scottish Charity Number SC021215) for the
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