LOWESTOFT SIXTH FORM COLLEGE Report and Financial Statements for the year ended 31 July 2017 LOWESTOFT SIXTH FORM COLLEGE Financial Statements for the Year Ended 31 July 2017 Key Management Personnel, Board of Governors and Professional Advisers Key management personnel Key management personnel are defined as members of the College Leadership Team and were represented by the following in 2016/17: Yolanda Botham, Principal and CEO; Accounting Officer David Gartland, Deputy Principal Claire Eaton, Finance Manager Board of Governors A full list of Governors is given on pages 13 and 14 of these financial statements. Mrs R Robson acted as Clerk to the Corporation throughout the period. Professional advisers Financial statements auditors and reporting accountants: RSM UK Audit LLP Abbotsgate House Hollow Road Bury St. Edmunds Suffolk IP327FA Banker: Barclays Bank 1 Churchill Place London E145HP Solicitors: Mills & Reeve LLP 1 St James Court, Whitefriars Norwich NR31RU Birketts LLP 24-26 Museum Street Ipswich Suffolk IP1 1HZ 2 LOWESTOFT SIXTH FORM COLLEGE Financial Statements for the Year Ended 31 July 2017 CONTENTS Page number Report of the Governing Body 4 Statement of Corporate Governance and Internal Control 12 Governing Body's statement on the College's regularity, propriety and 19 compliance with Funding body terms and conditions of funding Statement of Responsibilities of the Members of the Corporation 20 Independent Auditor's Report to the Corporation of Lowestoft Sixth 21 Form College Statement of Comprehensive Income 23 Balance Sheet as at 31 July 24 Statement of Changes in Reserves 25 Statement of Cash Flows 26 Notes to the Accounts 27 3 LOWESTOFT SIXTH FORM COLLEGE Financial Statements for the Year Ended 31 July 2017 REPORT OF THE GOVERNING BODY: NATURE, OBJECTIVES AND STRATEGIES: The members of the governing body present their report and the audited financial statements for the year ended 31 July 2017. legal status The Corporation was established under the Further and Higher Education Act 1992 for the purpose of conducting Lowestoft Sixth Form College. The College is an exempt charity for the purposes of Part 3 of the Charities Act 2011. The Corporation was incorporated as Lowestoft Sixth Form College on 23 March 2010. Mission In June 2011 the Corporation adopted a mission statement as follows: "Our mission is to enable our students to excel and progress beyond expectation in an outstanding learning environment in the heart of Lowestoft." Public Benefit Lowestoft Sixth Form College is an exempt charity under the Part 3 of the Charities Act 2011 and following the machinery of government changes in 2016 its principal regulator is the Secretary of State for Education. The members of the Governing Body, who are trustees of the charity, are disclosed on pages 13and14. In setting and reviewing the College's strategic objectives, the Governing Body has had due regard for the Charity Commission's guidance on public benefit and particularly upon its supplementary guidance on the advancement of education. The guidance sets out the requirement that all organisations wishing to be recognised as charities must demonstrate, explicitly, that their aims are for the public benefit. In delivering its mission, the College provides the following identifiable public benefits through the advancement of education: • High-quality teaching • Widening participation and tackling social exclusion • Excellent employment record for students • Strong student support systems • Links with employers, industry and commerce. Implementation of strategic plan In July 2017 the College approved the strategic plan for the period 1 August 2017 to 31 July 2019. The Corporation monitors the performance of the College against these plans. The plans are reviewed and updated each year. The College's strategic objectives are: Quality of Teaching and Learning - Enhance Further to provide excellent teaching, foster an innovative, creative culture of learning to achieve or exceed our annual targets for student retention, achievement and success 2 Think Big. There is a world beyond Lowestoft. To prepare our students to face and relish the challenges ahead 3 Community Partnerships for transition & growth 4 Invest in, encourage and develop all colleagues 5 Robust finances 6 Successful Merger These objectives are achieved through the implementation and monitoring of a detailed annual operating plan, which includes actions and targets assigned to individual managers. Progress against these targets is reported throughout the year to Corporation. 4 LOWESTOFT SIXTH FORM COLLEGE Financial Statements for the Year Ended 31 July 2017 REPORT OF THE GOVERNING BODY (continued) Financial objectives During the year of these statements the College's financial objectives were to: • Maintain a sound financial base in terms of liquidity and solvency • Maintain sound financial management • Maintain the confidence of Funding Bodies, Suppliers, Bankers & Auditors Finance Key Performance Indicators (KPls) The following financial KPls are used to report to the College leadership team, Finance and General Purposes Committee (F&GP) and the Corporation: Key performance Indicator Measure/Target (Per Actual for 2016/17 2016/17 Budget) Operating surplus/sector EBITDA as % of income (4.5%) 1.3% Staff costs as % of income 74% 71% Operating cash flow (£81k) £176k Cash days in hand 28 66 Liquidity (adjusted current ratio) 0.9 1.5 Borrowing as % of income Nil Nil Reliance on ESFA income 96% 93% Financial Health Score Satisfactory Good The College is committed to observing the importance of sector measures and indicators. The College is required to complete the annual Finance Record for the Education and Skills Funding Agency (ESFA). The Finance Record produces a financial health grading. The current rating of Good is considered an acceptable outcome, demonstrating the improvement in financial performance 2016/17 compared to the budget for the year and the prior year's performance. 5 LOWESTOFT SIXTH FORM COLLEGE Financial Statements for the Year Ended 31 July 2017 REPORT OF THE GOVERNING BODY (continued) FINANCIAL POSITION Financial results The College generated a surplus before other gains and losses in the year of £41 ,000 (2015/16 - deficit of £368,000), with total income of £3,638,000, (2015/16 - £3,388,000)). The College has an accumulated deficit of £75,000 and cash and short term investment balances of £593,000. The College wishes to continue to accumulate reserves and cash balances in order to maintain a reserve for reinvestment. There were £5k of tangible fixed asset additions during the year. The College has significant reliance on the education sector funding bodies for its principal funding source, largely from recurrent grants. In 2016/17 the FE funding bodies provided 93% of the College's total income. Treasury policies and objectives Treasury management is the management of the College's cash flows, its banking transactions; the effective control of the risks associated with those activities; and the pursuit of optimum performance consistent with those risks. The College has a separate treasury management policy in place. Short term borrowing for temporary revenue purposes is authorised by the Accounting Officer. Such arrangements are restricted by limits in the College's Funding Agreement with the ESFA. All other borrowing requires the authorisation of the Corporation. The College has a short term overdraft facility in place of £250,000. This was not required in the year to 31 July 2017. Cash flows Cash inflow from operations was £176,000 (2016: cash outflow of £256,000) during the year. Liquidity The College had no borrowings at 31 July 2017. Throughout the year of these statements the College maintained a positive cash balance. Reserves policy The College has no formal Reserves Policy but recognises the importance of reserves in the financial stability of any organisation, and ensures that there are adequate reserves to support the College's core activities. As at the balance sheet date the Income and Expenditure reserve stands at (£75,000) (2016: (£425,000)). It is the Corporation's intention to increase reserves over the life of the strategic plan through the generation of annual operating surpluses. CURRENT AND FUTURE DEVELOPMENT AND PERFORMANCE Financial health The College's assessment of its financial health for the year ending 31 July 2017 is good, rated using the ESFA automated scoring system, an improvement on the budget assessment for the full year of satisfactory, due to the surplus on the Statement of Comprehensive Income, the current ratio and absence of debt. 6 LOWESTOFT SIXTH FORM COLLEGE Financial Statements for the Year Ended 31 July 2017 REPORT OF THE GOVERNING BODY (continued) Student numbers and achievements The College enrolled 685 students in September 2016. This increased to 745 students in September 2017. Students continue to prosper at the College, with the Summer 2017 results showing improved achievement rates against last year for both A level and vocational (BTEC) cohorts. For A level achievement rates improved to 97.3%, 1.4% above the national average, for AS level the achievement rate was 85.4%, 4.7% above the national average, for BTEC L3 the achievement rate was 94.4%, 6.2% above the national average, GCSE grades at A - C were significantly above the sector average at 49.8%, whilst the functional skills pass rate was significantly above the national average at 29.1%. Student progression at Level 3 was 81 %, an increase from 80% in 2016, and value added was excellent: • 85.5% of A Level students achieved at or above their ALPs target grade, recording a value added rating of ALPS 2, which is performance in the top 5% of the country. • 76.6% of BTEC students achieved at or above their ALPs target grade, recording a value added rating of ALPS 3, which is performance in the top 25% of the country. • 73.3% of AS students achieved at or above their ALPs target grade, recording a value added rating of ALPS 2, performance in the top 10%.