Accounts 16-17

Barking & Dagenham College
Notes to the Accounts (continued)

13 Tangible fixed assets (College only)

Land and buildings Equipment Total

Freehold Short leasehold

£’000 £’000 £’000 £’000

Cost or valuation 46,762 3,341 12,075 62,178
At 1 August 2016 57 585 642
Additions - - - -
Disposals 3341
At 31 July 2017 46,819 12,660 62,820

Depreciation 13,621 1,897 8,483 24,002
At 1 August 2016 839 29 1,067 1,934
Charge for the year - - -
Elimination in respect of disposals -
At 31 July 2017 14,460 1,926 9,550 25,936

Net book value at 31 July 2017 32,359 1,415 3,110 36,884

Net book value at 31 July 2016 33,140 1,444 3,592 38,176

If fixed assets had not been revalued they would have been included at the following historical cost amounts:

£’000

Cost Nil
Aggregate depreciation based on cost Nil
Net book value based on cost Nil

50

Barking & Dagenham College
Notes to the Accounts (continued)

13 Goodwill £000s
Hairazors Limited 484

Purchase consideration

Fair value of assets at purchase 29
Fixed assets 94
Bank 32
Debtor 15
Stock (119)
Creditors 51
Net Assets

Goodwill at Cost 433

Accumulated amortisation charge: (109)

Balance 324

Year Ended Year Ended
31st July 2017 31st July 2016

Net Book Value at 1 August 346 368
Less amortisation (22) (22)

324 346

Net Book Value at 31 July 324 346

The goodwill above relates to Hairazors Limited. The hairdressing and training salon was purchased to provide
training to students undertaking hairdressing courses. The college owns 100 per cent of Hairazors Limited.

51

Barking & Dagenham College
Notes to the Accounts (continued)

13 Investments

Year Ended 2017 31st July Year Ended 2016 31st July
£000's £000's £000's £000's

Barking Learning 1,772 1,772
Centre (886) (787)

Less amortisation

886 985
886 985

Hairazors Limited 485 485
Less amortisation (108) (87)

377 398

Total 1,263 1,383

Investments in subsidiary company - Aspire Group College Group College
Training & Enterprise 2017 2017 2016 2016
£ £
Investments in subsidiary company - £ 1 £ 1
Apprenticeships Work Limited 1 1
1 1
Investments in subsidiary company - 1 1
BDC@Broadway Limited 1 1
1 1
Hairazors Limited
484,523 484,523 484,523 484,523
Total 484,526 484,526 484,526 484,526

52

The college owns 100 per cent of the issued £1 share the building, for the purposes of delivering
of Aspire Training & Enterprise Limited, vocational courses, and shares common services
Apprenticeships Work Limited and BDC@Broadway with other users for a period of no less than twenty
Limited; all companies incorporated in England & years.
Wales. The principal business of Aspire Training &
Enterprise Limited is to act as the holding company The investment will be amortised on a straight line
for all BDC investments. Aspire Training & Enterprise basis over a period of twenty years from the 1st
Limited started trading in November 2013. The August 2004.
Apprenticeships Work Limited principal activity is an
employment business for providing employment for Barking Learning Centre
apprentices. The BDC@Broadway Limited principal
activity is a training and commercial theatre to The College has entered into a lease and
provide performing arts activities and started trading memorandum of understanding by which it has
in June 2014. The college owns 100 per cent of agreed to make capital contributions of £1,772,000
Hairazors Limited. The hairdressing and training towards the cost of the Barking Learning Centre.
salon was purchased during 2011-12 to provide The college has exclusive use of parts of the
training to students undertaking hairdressing building for the purposes of delivering a range of
courses. courses and shares common services with other
users, London Borough of Barking & Dagenham and
Broadway Theatre University of East London for a period of not less
than twenty years.
The college has entered into a Development
Agreement by which it has agreed to make capital The investment will be amortised on a straight line
contributions of £1,800,000 to refurbish with basis over a twenty year period. The college has
Barking & Dagenham Council the Broadway Theatre received LSC grant approval for a sum of £167,000
building. The college has exclusive use of one part of towards the cost of the investment which is being
released over a similar period.

53

Barking & Dagenham College
Notes to the Accounts (continued)

14 Trade and other receivables Group College Group College
2017 2017 2016 2016
Amounts falling due within one year: £’000 £’000 £’000 £’000
Trade receivables
Amounts owed by group undertakings: 1,993 1,749 1,717 1,554

Subsidiary undertakings - 137 - 143
Prepayments and accrued income 85 80 70 60
Amounts owed by the ESFA 120 206
Total 2,198 120 1,993 206
2,086 1,963

15 Creditors: amounts falling due within one year Group College Group College
2017 2017 2016 2016
Bank loans and overdrafts £’000 £’000 £’000 £’000
Obligations under finance leases 215 215 215 215
Trade payables
Amounts owed to group undertakings: - 798 1,716 1,532
Subsidiary undertakings 1,048
- - 28
-

Other taxation and social security 498 494 349 342
Accruals and deferred income 1,599 1,585 1,379 1,377
Deferred income - government capital grants 292 292 294 294
Deferred income - government revenue grants 439 439 556 556
Receipts in advance 313 312 162 162
Amounts owed to ESFA
Total 85 85 - -
4,490 4,221 4,671 4,506

54

Barking & Dagenham College
Notes to the Accounts (continued)

16 Creditors: amounts falling due after one year

Group College Group College
2017 2017 2016 2016
£’000 £’000 £’000 £’000
4,355
Bank loans 4,140 4,140 4,355 8,087
Deferred income - government capital grants 7,826 7,826 8,087
12,442
11,966 11,966 12,442
College
Total 2016
£’000
17 Maturity of debt 215
4,355
Bank loans and overdrafts 4,570

Bank loans and overdrafts are repayable as follows:

Group College Group
2017 2017 2016
£’000 £’000 £’000

In one year or less 215 215 215
In five years or more 4,140 4,140 4,355

Total 4,355 4,355 4,570

55

Barking & Dagenham College
Notes to the Accounts (continued)

18 Provisions

Group and College

Enhanced pensions Other Total
£’000
£’000 £’000

At 1 August 2016 1,798 - 1,798

Expenditure in the period -- -
Transferred from income and expenditure account -- -

At 31 July 2017 1,798 - 1,798

Defined benefit obligations relate to the liabilities under the College’s membership of the Local Government
pension Scheme. Further details are given in Note 25.

56

Barking & Dagenham College
Notes to the Accounts (continued)

18 Provisions (contd.)

The enhanced pension provision relates to the cost of staff who have already left the College’s employ and
commitments for reorganisation costs from which the College cannot reasonably withdraw at the balance sheet
date. This provision has been recalculated in accordance with guidance issued by the funding bodies.

The principal assumptions for this calculation are:

2017 2016

Price inflation 2.30% 2.30%
1.30%
Discount rate 1.30%
Group
19 Revaluation Reserve 2016
£000's
College Group College
2016 2015 2015
£000's £000's £000's

As at 1 August 2016 5,086 5,086 4,936 4,936

Transfer on revalued assets - - 150 150

As at 1 August 2017 5,086 5,086 5,086 5,086

20 Cash and cash equivalents Cash flows Other changes At 31 July 2017
At 1 August 2016 £’000 £’000 £’000
£’000

Cash and cash equivalents 4,181 2,014 - 6,195
Overdrafts - - --

Total 4,181 2,014 - 6,195

57

Barking & Dagenham College Group and College 2016
Notes to the Accounts (continued) 2017 £’000
£’000
21 Capital commitments 0
0
Commitments contracted for at 31 July

58

Barking & Dagenham College Group College Group College
Notes to the Accounts (continued) 2017 2017 2016 2016
£’000 £’000 £’000 £’000
22 Income and Expenditure Reserve
6,587 6,672 8,156 8,201
At 1 August
Surplus retained for the year 825 848 807 848
Transfer from revaluation reserve
Re-measurements - - --
At 31 July
2,986 2,986 (2,377) (2,377)

10,398 10,506 6,587 6,672

Pension reserve (12,791) (12,791) (15,137) (15,137)
23,198 23,278 21,723 21,809
Income and expenditure account reserve excluding 10,407 10,487 6,672
pension reserve 6,586
At 31 July

59

Barking & Dagenham College
Notes to the Accounts (continued)

23 Defined benefit obligations Borough of Barking & Dagenham. Both are multi-
employer defined-benefit plans.
The College’s employees belong to two principal
post-employment benefit plans: the Teachers’ The pension costs are assessed in accordance with
Pension Scheme England and Wales (TPS) for the advice of independent qualified actuaries. The
academic and related staff; and the Local latest formal actuarial valuation of the TPS was 31
Government Pension Scheme (LGPS) for non- March 2012 and of the LGPS 31 March 2016.
teaching staff, which is managed by the London

Total pension cost for the year

Teachers’ Pension Scheme: contributions paid 2017 2016
Local Government Pension Scheme: £'000 £'000
Contributions paid
976 959
FRS 102 (28) charge
Charge to the Statement of Comprehensive Income 1,334 1,321
640 522

1,974 1,843

Enhanced pension charge to Statement of Comprehensive Income

(125) (125)

Total Pension Cost for Year 2,825 2,677

The pension costs are assessed in accordance with In addition, teachers in many independent and
the advice of independent qualified actuaries. The voluntary-aided schools and teachers and lecturers
latest formal actuarial valuation of the TPS was 31 in some establishments of further and higher
March 2012 and of the LGPS 31 March 2013. education may be eligible for membership.
Membership is automatic for full-time teachers and
Teachers’ Pension Scheme lecturers and, from 1 January 2007, automatic too
for teachers and lecturers in part-time employment
The Teachers' Pension Scheme (TPS) is a statutory, following appointment or a change of contract.
contributory, defined benefit scheme, governed by Teachers and lecturers are able to opt out of the
the Teachers' Pensions Regulations 2010, and, from TPS.
1 April 2014, by the Teachers’ Pension Scheme
Regulations 2014. These regulations apply to
teachers in schools and other educational
establishments, including academies, in England
and Wales that are maintained by local authorities.

60

The Teachers’ Pension Budgeting and Valuation above Act. Retirement and other pension benefits
Account are paid by public funds provided by Parliament.

Although teachers and lecturers are employed by The Teachers' Pensions Regulations require an
various bodies, their retirement and other pension annual account, the Teachers' Pension Budgeting
benefits, including annual increases payable under and Valuation Account, to be kept of receipts and
the Pensions (Increase) Acts are, as provided for in expenditure (including the cost of pensions’
the Superannuation Act 1972, paid out of monies increases). From 1 April 2001, the Account has
provided by Parliament. Under the unfunded TPS, been credited with a real rate of return which is
teachers' contributions on a 'pay-as-you-go' basis, equivalent to assuming that the balance in the
and employers' contributions, are credited to the Account is invested in notional investments that
Exchequer under arrangements governed by the produce that real rate of return.

61

Barking & Dagenham College Scheme Changes

Notes to the Accounts (continued) Following the Hutton report in March 2011 and the
subsequent consultations with trade unions and
Valuation of the Teachers’ Pension Scheme other representative bodies on reform of the TPS,
the Department published a Proposed Final
The latest actuarial review of the TPS was carried Agreement, setting out the design for a reformed
out as at 31 March 2012 and in accordance with TPS to be implemented from 1 April 2015.
The Public Service Pensions (Valuations and
Employer Cost Cap) Directions 2014. The valuation The key provisions of the reformed scheme include:
report was published by the Department for a pension based on career average earnings; an
Education (the Department) on 9 June 2014. The accrual rate of 1/57th; and a Normal Pension Age
key results of the valuation are: equal to State Pension Age, but with options to
enable members to retire earlier or later than their
 employer contribution rates were set at Normal Pension Age. Importantly, pension benefits
16.48% of pensionable pay (including built up before 1 April 2015 will be fully protected.
administration fees of 0.08%);
In addition, the Proposed Final Agreement includes
 total scheme liabilities for service to the a Government commitment that those within 10
effective date oof £191,500 million, and years of Normal Pension Age on 1 April 2012 will
notional assets (estimated future see no change to the age at which they can retire,
contributions together with the notional and no decrease in the amount of pension they
investments held at the valuation date) of receive when they retire. There will also be further
£176,600 million giving a notional past transitional protection, tapered over a three and a
service deficit of £14,900 million; half year period, for people who would fall up to
three and a half years outside of the 10 year
 an employer cost cap of 10.9% of protection.
pensionable pay.
Regulations giving effect to a reformed Teachers’
 the assumed real rate of return is 3.0% in Pension Scheme came into force on 1 April 2014
excess of prices and 2% in excess of and the reformed scheme commenced on 1 April
earnings. The rate of real earnings growth 2015.
is assumed to be 2.75%. The assumed
nominal rate of return is 5.06% The employer pension costs paid to TPS in the year
amounted to £976k (2015: £959k)
The new employer contribution rate for the TPS will
be implemented in September 2015. The next
valuation of the TPS is currently underway based on
April 2016 data, whereupon the employer
contribution rate is expected to be reassessed and
will be payable from 1 April 2019.

A full copy of the valuation report and supporting
documentation can be found on the Teachers’
Pension Scheme website at the following location:

https://www.teacherspensions.co.uk/news/employ
ers/2014/06/publication-of-the-valuation-
report.aspx

62

Barking & Dagenham College Local Government Pension Scheme

Notes to the Accounts (continued) The LGPS is a funded defined-benefit plan, with the
assets held in separate funds administered by
23 Defined benefit obligations (continued) London Borough of Barking & Dagenham Local
Authority. The total contribution made for the year
FRS 102 (28) ended 31 July 2017 was £1,669m, of which
employer’s contributions totalled £1,334m and
Under the definitions set out in FRS 102 (28.11), the employees’ contributions totalled £0.335m. The
TPS is a multi-employer pension scheme. The agreed contribution rates for future years are 17.3
College is unable to identify its share of the % for employers and range from 5.5% to 7.5% cent
underlying assets and liabilities of the scheme. for employees, depending on salary.

Accordingly, the College has taken advantage of the
exemption in FRS 102 and has accounted for its
contributions to the scheme as if it were a defined-
contribution plan. The College has set out above the
information available on the plan and the
implications for the College in terms of the
anticipated contribution rates.

63

Barking & Dagenham College
Notes to the Accounts (continued)

Principal Actuarial Assumptions

The following information is based upon a full actuarial valuation of the fund at 31 March 2016 updated to 31
July 2017 by a qualified independent actuary

At 31 July At 31 July

2017 2016

Rate of increase in salaries 3.00% 3.40%

Future pensions increases 2.50% 1.90%

Discount rate for scheme liabilities 2.70% 2.40%

Inflation assumption (CPI) 1.25% 1.25%

Commutation of pensions to lump sums 50% 50%

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

Retiring today At 31 July At 31 July
Males 2017 2016
Females years years

22.00 21.80
24.70 24.00

Retiring in 20 years 24.00 24.10
Males 26.40 26.50
Females

64

Barking & Dagenham College
Notes to the Accounts (continued)

23 Defined benefit obligations (continued) At 31 July At 31 July
Local Government Pension Scheme (Continued) 2017 2016
Sensitivity analysis £'000 £'000

Discount rate +0.5% (4,569) (4,936)
Discount rate -0.5% 864 1,223
Salary increase 0.5%
Salary decrease -0.5% (864) (1,223)
CPI rate +0.5% 564 1,400
CPI rate -0.5% 0 0

The College’s share of the assets in the plan and the expected rates of return were: Fair Value at 31
Fair Value at 31 July 2016
July 2017
£’000
£’000

Equities 76.00% 22,221 69.00% 17,689
Bonds 18.00% 5,263 20.00% 5,127
Property 6.00% 1,754 7.00% 1,795
Cash 0.00% 0 4.00% 1,025

Total market value of assets 29,238 25,636

Weighted average expected long 5.80% 5.50%
term rate of return

Actual return on plan assets 1,696 1,410

65

Barking & Dagenham College
Notes to the Accounts (continued)

23 Defined benefit obligations (continued)
Local Government Pension Scheme (Continued)

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

Amounts included in staff costs 2017 2016
Current service cost £’000 £’000
Past service cost
Total 1,610 1,403
- -

1,610 1,403

Amounts included in investment income

Net interest income 992 812

Total 992 812

66

Barking & Dagenham College
Notes to the Accounts (continued)

23 Defined benefit obligations (continued)
Local Government Pension Scheme (Continued)

Amounts recognised in Other Comprehensive Income (2,078) (1,757)
Return on pension plan assets (2,020) (436)
Experience losses arising on defined benefit obligations -
Changes in demographic assumptions (325) 4,570
Changes in assumptions underlying the present value of plan liabilities 1,437
2,377
Amount recognised in Other Comprehensive Income (2,986)

Movement in net defined benefit (liability/asset during the year 2017 2016
£’000 £’000
Surplus/(deficit) in scheme at 1 August (15,137) (12,238)
Movement in year:
(1,610) (1,403)
Current service cost 1,334 1,321
Employer contributions -
Past service cost (366) (442)
Net interest on the defined (liability)/asset 2,986
Actuarial gain or loss (12,791) (2,377)
Net defined benefit (liability)/asset at 31 July (15,137)

67

Barking & Dagenham College 2017 2016
Notes to the Accounts (continued) £’000 £’000

23 Defined benefit obligations (continued) 40,773 34,305
Local Government Pension Scheme (Continued) 1,610 1,403
Asset and Liability Reconciliation 992 1,254
336 344
Changes in the present value of defined benefit obligations (436)
(2,020) 4,570
Defined benefit obligations at start of period 1,437 (665)
Current Service cost (772) -
Interest cost (325) -
Contributions by Scheme participants - -
Experience gains and losses on defined benefit obligations -
Changes in financial assumptions 40,775
Estimated benefits paid 42,031
Changes in demographic assumptions
Past Service cost 25,636 22,067
Curtailments and settlements 626 812

Defined benefit obligations at end of period 2,078 1,757
1,334 1,321
Reconciliation of Assets
Fair value of plan assets at start of period 336 344
Interest on plan assets (772) (665)
Return on plan assets 29,238 25,636
Employer contributions
Contributions by Scheme participants
Estimated benefits paid
Fair value of plan assets at end of period

68

Barking & Dagenham College
Notes to the Accounts (continued)

24 Related party transactions

Due to the nature of the College’s operations and
the composition of the board of governors being
drawn from local public and private sector
organisations, it is inevitable that transactions will
take place with organisations in which a member of
the board of governors may have an interest. All
transactions involving such organisations are
conducted at arm’s length and in accordance with
the College’s financial regulations and normal
procurement procedures.

Broadway Theatre

During the year ending 31 July 2017 the College
paid £100,000 (2016: £100,000) towards the cost of
meeting common services with other users. These
are not repayable to the College and have been
charged as a cost in the College's accounts.

Barking Learning Centre

During the year ending 31 July 2016 the College
paid £138,587 (2015: £160,000) to Barking Learning
Centre as a contribution to operating costs. These
are not repayable to the College and have been
charged as a cost in the College's accounts.

69

70

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www.bdc.ac.uk