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2022-07-31-accounts

Report and Financial Statements Year ended 31st July 2022

Addysg Oedolion Cymru | Adult Learning Wales Company Number: 3109524

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Addysg Oedolion Cymru | Adult Learning Wales Company Number: 3109524

Page number

CONTENTS

Strategic Report of Governing Body 2
Statement of Corporate Governance and Internal Control 14
Governing Body’s statement on the Organisation’s regularity, propriety and 19
compliance with Funding body terms and conditions of funding
Statement of Responsibilities of the Members of the Council of the Organisation 20
Independent Auditors’ Report to the Council 22
Statement of Comprehensive Income 25
Statement of Changes in Reserves 26
Balance Sheet as at 31 July 2022 27
Statement of Cash Flows 28
Notes to the Accounts and Accounting Policies 29

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Adult Learning Wales Financial Statements for the Year Ended 31 July 2022

Strategic Report

1. NATURE, OBJECTIVES AND STRATEGIES

The Council present their report and the audited financial statements for the year ended 31 July 2022.

With a history of providing quality education spanning 100 years, Adult Learning Wales (ALW), the National Community College, serves the adult population of Wales with inspirational, life-changing learning opportunities.

Drawing on our strong partnerships, our vision sees us at the forefront for growth in lifelong learning, prioritising opportunities for those who are hardest to reach, empowering and upskilling people and delivering equal access to Welsh medium provision. We are committed to supporting health and wellbeing initiatives, developing strong resilient communities, and promoting active democracy.

The Covid-19 pandemic has presented many challenges and whilst there has been disruption and a decline in curriculum delivery, we have grasped the opportunities afforded to us to grow our digital offer. This meant a significant shift to on-line delivery and as restrictions were lifted during 2022, we were able to return to more inperson learning with 80% of our delivery now in place across community venues.

Alongside this, we are working within a continually challenging economic environment impacted greatly by the Conflict in Ukraine and the Cost of Living Crisis, where reliance on public funding alone is uncertain. The labour market is changing fast in Wales and there is a need for people to learn new skills, particularly those associated with digital technologies. The landscape requires us to work collaboratively and demonstrate intelligent business efficiency in order to expand our reach and promote the value of adult community learning. Enabling the working poor to upskill is our passion and priority, as well as helping to tackle broader poverty issues, such as unemployment and homelessness.

It is crucial to nurture the skill of learning over a lifetime to secure informed, flexible, intelligent, and healthy workforces and communities. The economic, social, and civic advantages of developing a truly lifelong learning society in Wales will be profound; giving us the cutting edge that we need for our communities to be resilient, for our economy to adapt to changing circumstances and for our democracy to thrive.

Our new 3 year strategic plan (2023-2026) will focus on supporting and enabling the widest range of learners to achieve success whilst developing and sustaining existing relationships and developing new ones. Our work to advance our position as the leading adult community learning provider in Wales and to be recognised nationally as the ACL provider of choice remains a priority.

1.1 Legal status

Adult Learning Wales (ALW), formerly known as WEA YMCA CC Cymru, is a charity registered in England and Wales (number 1071234) and a company limited by guarantee registered in England and Wales (number 3109524). The Organisation was formed from a merger of WEA Cymru and YMCA Wales CC on 1[st] August 2015.

1.2 Purpose

The Articles of Association state that the Organisation’s object is ‘to promote education, in particular for young people and adults, within Wales’ and it carries out its purpose with public benefit in mind.

1.3 Vision and Mission Statement

Our Vision:

Increasing the social, economic and personal impact of adult community learning in Wales through co-ordination and development of national, regional and local partnerships; delivering equal access to Welsh medium provision.

Our Mission:

Providing inspiring learning opportunities for adults who are hardest to reach in communities and workplaces throughout Wales; empowering people to develop skills and knowledge to realise their full potential and help build strong resilient communities through active citizenship and democratic learning.

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Adult Learning Wales Financial Statements for the Year Ended 31 July 2022

Our Goals:

1. Excellent Teaching and Learning:

2. Raising the profile and importance of adult community learning

3. Strong collaboration and engagement

4. Responsible growth

1.4 Policy Context

Following the appointment of a new Minister for Education and Welsh Language in May 2021 significant focus has been given to the adult learning sector. With an ambitious policy statement to create a “second chance nation”, the Minister has established an External Reference Group tasked with delivering a programme of national Coordination for Lifelong Learning, of which ALW is a member.

The programme is in place to deliver against this commitment, informed by the Wales Centre for Public Policy review Supporting the Welsh Lifelong Learning system | WCPP December 2021. As a member of the group ALW will endeavour to make strong representation on matters relating to adult community learning. Other members include adult community learning leads in local authorities, further and higher education, Wales TUC, the Learning and Work Institute (Wales), the National Centre for Learning Welsh and the Bevan Foundation.

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Adult Learning Wales Financial Statements for the Year Ended 31 July 2022

The Tertiary Education and Research (Wales) Act 2022 was passed by the Senedd on 28 June 2022 and received Royal Assent on 8 September 2022. The Act establishes the Commission for Tertiary Education and Research (CTER), a new Welsh Government sponsored body, and dissolves the Higher Education Funding Council for Wales (HEFCW). The intention is to establish the Commission in 2023 which will be responsible for strategy, funding, and oversight of the Post-16 Education and Training Sector (PCET) including adult education and adult community learning.

A PCET Strategy Board has been established, of which ALW is a member. The Strategy Board will support the Minister, the CTER Programme Senior Responsible Officer (SRO), and officials by working collectively to provide strategic oversight and expert advice to support the delivery of the PCET vision, transition, and the implementation of the programme and the establishment of CTER.

As part of the UK Government’s Levelling Up programme, the Shared Prosperity Fund (SPF) establishes three UKSPF investment priorities: communities and place; supporting local business; and people and skills. There are detailed objectives associated with each of these priorities which are aligned to the relevant Levelling Up White Paper mission. Part of the programme sees a £103M Wales investment in the “Multiply Scheme” to improve numeracy skills in adults. These funds combined offer substantial investment through local authority leads across Wales, and ALW continues to try to establish partnership arrangements to support delivery targets to meet the skills agenda. It has proved to be a challenging environment in which to make progress.

1.5 Governance and Management

The Organisation’s governing body, its Council, plays a full part in approving the Strategic Plan and in monitoring its delivery. All members of Council are also members of at least one Committee, each of which has the remit of monitoring a part of the Strategy relating to that Committee. Members of Senior Management Team attend Council and Committee meetings to provide detailed information for scrutiny by volunteer Council members. A skills audit is undertaken annually to assess gaps in skills levels within the Council and Committees, and co-opted members are brought on to some Committees to address these gaps as far as possible.

1.6 Financial objectives

The Organisation’s financial objectives are:

Meeting the above targets requires the retention of tight staffing levels whilst taking all reasonable opportunities to make efficiency gains. In addition, meeting student growth is imperative in order to ensure the projected income streams.

1.7 Quality controls

The Organisation’s Self-Assessment Report (SAR) measures performance throughout the year as part of the Quality cycle. The SAR is written in accordance with guidance from the Welsh Government. Judgements are made using the format of the Estyn Common Inspection Framework which focuses on 5 key questions relating to Standards, Wellbeing and Attitudes to Learning, Teaching and Learning Experiences, Care, Support and Guidance, and Leadership and Management.

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Adult Learning Wales Financial Statements for the Year Ended 31 July 2022

The Organisation is continually working to improve and develop processes to ensure that data used to inform planning is produced in a timely fashion, is robust and used effectively across the Organisation to inform the SelfAssessment process. The SAR is located on the Organisation’s intranet and can be accessed by all staff. Any areas for development that are identified within the SAR are incorporated into the Quality Development Plan (QDP) which is produced by the Senior Management Team. Monitoring of the QDP is embedded in the Quality cycle and is reviewed at operational, senior management and governance level.

Throughout the year, a range of continuing professional development (CPD) events have been ran to upskill tutors and core staff on quality related issues to ensure standards are maintained. This forms part of the learning and development plan. A range of standardisation activities and events were held with opportunities for all staff to engage in assessment and internal quality assurance activities to develop their practices. The internal quality assessment (IQA) policy is monitored and reviewed for effectiveness and impact of use. Scrutiny of quality control measures is undertaken by the Senior Management Team and by Council, through the Learner Experience Committee.

The Organisation’s major plans are its Strategic Plan, the Provision Development Plan, the SAR/QDP and the Risk Register. Council and its Committees scrutinise the actions and targets set within these plans.

2. CURRENT AND FUTURE DEVELOPMENT AND PERFORMANCE

2.1 Student numbers

In 2021/22 the Organisation recruited 9,534 learners, 69% female and 31% male. Completion* rates for Welsh Government funded provision only are at 96% overall (level with the National Comparator), Attainment rates are at 81% (National Comparator not available) with Successful Completion at 78% (12% below previously available National Comparators). The successful completion % has been significantly impacted by the lockdown and inability to complete a large number of accredited courses.

*Completion includes accredited and non-accredited provision. National Comparators (NCs) are 18/19 data and are taken from National Statistics for Wales document Statistical First Release SFR 08/2020 (Page 9). Welsh Government are not envisaging publishing 21/22 NCs due to the Covid-19 outbreak.

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Adult Learning Wales Financial Statements for the Year Ended 31 July 2022

2.2 Student achievements

The table below gives the current performance data available grouped by learning areas.

Subject
Sector Area		 Subject Sector Area
Description		 Learning
Activities		 Guided Learner
Contact Hours		 Comp
%		 Attain
%		 Success
%
Total 19,376 386,994 96% 81% 78%
14d English for Speakers of
Other Languages		 5,316 143,637 95% 72% 68%
14c Foundation for Work 4,454 66,537 96% 80% 78%
13 Education & Training 925 35,528 96% 72% 69%
1 Health, Public Services &
Care		 2,166 33,846 98% 81% 79%
15 Business, Administration
and Law		 1,205 23,688 98% 97% 95%
9b Art & Design 1,224 22,055 96% 89% 85%
14b Adult Basic Education 1,720 18,504 94% 75% 69%
14a Independent Living Skills 280 13,800 95% 100% 100%
12 Languages, Literature &
Culture		 560 7,643 94% 74% 68%
7c Hospitality & Catering 559 4,805 100% 96% 96%
6 Information &
Communication
Technology		 246 4,099 94% 88% 83%
9a Performing Arts 219 4,044 100% N/A N/A
4 Engineering &
Manufacturing
Technology		 160 2,790 97% 80% 78%
7a Retailing & Customer
Care		 90 1,391 94% 85% 80%
3 Agriculture, Horticulture
& Animal Care		 56 1,332 95% 90% 87%
10 History, Philosophy &
Theology		 84 1,160 100% 100% 100%
2 Science & Mathematics 56 1,136 93% 73% 68%
11 Social Sciences 47 779 89% 78% 78%
12b Welsh, English and
Other Languages		 5 140 60% 100% 60%
8 Leisure, Travel &
Tourism		 4 80 100% 100% 100%

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Adult Learning Wales Financial Statements for the Year Ended 31 July 2022

Completion percentages include both accredited and non-accredited provision whereas Attainment and Success percentages include only accredited provision. Achievements for learners on non-accredited courses are more difficult to measure, although the use of individual learning plans allows for ‘distance travelled’ to be evidenced.

2.3 Student Profile

The most popular courses are: English for Speakers of Other Languages (ESOL), Foundation for Work, Education & Training, Health, Public Services & Care, Trade Union Studies (categorised as Business, Administration and Law), Art & Design, Adult Basic Education, and Independent Living Skills.

We have continued our work with asylum seekers and with ethnic minority groups. 14.9% of our learners in 2021/22 were from minority ethnic communities. We continue to target the most disadvantaged areas and 51.7% of our learners live in areas of deprivation. Over two thirds of our learners are female at 69% in 21/22 compared to 70% in the 20/21 academic year and 80.9% of our learners are aged between 20 and 60 which compares to 20/21 data of 80.6%.

2.4 Curriculum developments

Provision for 2021/22 was an aggregate of workplace/trade union studies, regional, national and Asylum, Migration and Integration Fund (AMIF )Project curricula administered from organisational offices and the homes of staff who are dedicated home workers/have agile working practices agreed.

2021/22 saw a shift back to face-to-face delivery for the majority of provision, with some online/blended delivery continuing as appropriate to learners’ needs.

The organisation continued to engage adult learners who were furthest away from employment, particularly from areas of deprivation and those with the lowest skills levels, through strong collaborative working with the Organisation’s Branch structure, national, regional and local partners and networks. Learning delivered in the workplace was offered in response to demand from the trade union movement and employers. Some of this was supported through the Wales Union Learning Fund (WULF). In addition to core funded programmes of learning, full cost recovery / income generation either through delivery or accreditation services remained a focus. Furthermore, the organisations’ AMIF Project engaged with over 450 refugees and Third Country Nationals.

Throughout 2021/22, ALW continued to offer a broad range of provision, spanning from pre-Entry to Level 2 in the majority of programme areas, with Youth Work and Counselling programmes delivering up to Levels 3 and 4. This was consistent with Welsh Government policy priorities for Adult Learning in Wales, with a continued emphasis on essential skills (including Digital Literacy), ESOL and employability skills. ESOL continued to be the largest programme area, in terms of number of delivery hours.

Throughout the academic year, non-accredited provision accounted for a significant percentage of delivery. Learner engagement continued to be a priority, with a particular focus on learner health and well-being and the impact of the pandemic on this.

For Welsh Government and Estyn purposes, all learning continues to be badged as Adult Community Learning and not Further Education or Work-based Learning.

2.5 Future developments

We now find ourselves in a landscape that is characterised by the impact of a global pandemic, a war in Ukraine and a Cost of Living Crisis that has caused major disruption to our economy. This has put further pressure on public spending and uncertainty about future funding. This means that there is additional pressure on our resources. The changing economic context presents a number of significant challenges for Wales, and for adult learning in particular. In addition to the problems associated with an ageing population, rapid advances in technology and changing employment patterns, the private sector is experiencing a slow economic recovery. Set within this challenging economic environment, there is an increased need for more cost effective and innovative ways of working with reduced budget availability.

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Adult Learning Wales Financial Statements for the Year Ended 31 July 2022

The Organisation is confident in its capacity and capability to respond effectively to these challenges. It is well placed to build on the legacy of its founding organisations and will promote a broad liberal education which improves social justice and community engagement, alongside offering highly focused education and training services for employability, enterprise and skills development.

We will continue to review and develop our curriculum offer to ensure that resources are directed to improve our digital framework, grow our provision, develop external relationships particularly across the voluntary sector and establish ourselves as the recognised national provider of ACL in Wales. It is important that we ensure a flexible approach and a broad range of learning options that increase learner engagement.

3. RESOURCES

The Organisation has limited physical resources that it can deploy in pursuit of its strategic objectives. Its tangible resources include the Bryn Menai in Bangor and Coopers Yard sites in Cardiff. The Organisation still holds some tangible resources in Harlech.

3.1 Financial

Financial objectives

The Organisation’s financial objectives are:

Meeting the above targets requires the retention of tight staffing levels whilst taking all reasonable opportunities to make efficiency gains .

Financial results

The following table summarises performance for 2021/22 against 2020/21:

The following table summarises performance for 2021/22 against 2020/21:
2021/22 2020/21
Operating surplus/(deficit) prior to FRS 102 (28) pension adjustments and
net proceeds of sales
Operating surplus/(deficit) after FRS 102 (28) pension adjustments and net
proceeds of sales
Current ratio (current assets/current liabilities)
Staff costs as % of income
Welsh Government income as a % of total income
Total unrestricted reserves
Cash balances
Net assets		 £44K
(£793k)
2 : 1
85.7%
89%
£6.48m
£5.904m
£7.633m		 £228K
(£471k)
2.2:1
86.1%
90%
(£1.34m)
£5.215m
(£117k)

Tangible fixed asset additions during the year amounted to £116k and were split between fixtures & fittings £23k and equipment at £93k.

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Adult Learning Wales Financial Statements for the Year Ended 31 July 2022

Treasury policies and objectives

Treasury management is the management of the Organisation’s cash flows, its banking, money market and capital market transactions; the effective control of the risks associated with those activities; and the pursuit of optimum performance consistent with those risks.

This responsibility is absorbed within the finance function and is overseen by the Head of Curriculum and Performance.

There have been no short term borrowings during the year. If the Organisation were to make any short term borrowings for temporary revenue purposes this would be authorised by the Chief Executive and approved by the Resources Committee. Such arrangements are restricted by limits in the Financial Memorandum with the WG. All other borrowing requires the authorisation of Council and shall comply with the requirements of the Financial Memorandum of the WG.

Investments

The Organisation has previously developed an ethical investment policy which is used to support its investments. At year end the Organisation held £1.264m (note 17) within two separate investment funds managed by Brewin Dolphin.

Cash flows and Liquidity

At £802k (2020/21: £1,311k) the operating cash flow is again positive for the period.

There was an increase in net funds for the year of £693k compared to 2020/21 £1,149k.

The current ratio which stands at (2:1) has decreased slightly from 20/21 (2.2:1) but still remains at a good level. The financial position continues to be stable which highlights the Organisation’s continuing progress in its objective of maintaining financial health through improved liquidity.

Reserves

Levels of reserves depend upon operational needs, but the Organisation aims to have a minimum of three months’ running costs, including salaries, held in General (unrestricted) reserves. These stood at £6.48m (2020/21: (£1.34m)) at 31 July 2022, thus the target of £1.6m was met. There has been a reduction to the pension deficit in the year of £7.786m resulting in a £2.410m surplus at 31 July 2022. The target of £1.6m is in line with Charity Commission guidance and Welsh Government’s suggested good practice for Further Education Institutions. All reserves are reported to and reviewed regularly at Resources Committee meetings, and expenditure from reserves is approved by the Council.

A three year budget is usually developed but due to uncertainty and volatility in funding only a one year budget has been produced for the 2022/23 year which is intended to increase the levels of reserves. However, it is recognised that there are significant challenges in financial forecasting due to the current situation and the impact this has on the Organisation’s ability to plan.

Payment performance

The Late Payment of Commercial Debts (Interest) Act 1998, which came into force on 1 November 1998, requires ALW, in the absence of agreement to the contrary, to make payments to suppliers within 30 days of either the provision of goods or services or the date on which the invoice was received.

Supplier terms are set within the accounting system and may range from zero days (for employee/voluntary member expense claims) to 30 days for large suppliers. Where payment is required to be made more frequently e.g. suppliers of utilities etc., terms are set and wherever possible, payment is made within the required time frame.

Where invoices are contested, suppliers are notified immediately and they are settled as soon as possible if monies are owed. When suppliers query non-payment for whatever reason, the situation is investigated immediately and copy invoices requested where required.

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Adult Learning Wales Financial Statements for the Year Ended 31 July 2022

Wherever possible the Organisation complies with the Better Payments Practice Code.

Late receipt of authorised invoices into the Finance Department can result in late payment.

Field offices are aware of the need to authorise invoices and return them to the Finance Section for payment as quickly as possible.

During the period 1 August 2021 to 31 July 2022 the Organisation incurred no interest charges in respect of late payment.

Post-balance sheet events

There are no post-balance sheet events to report.

3.2 Staffing

As at 31st July 2022 there were 209 active hourly paid teaching staff, including support workers, and 117 salaried support staff, 72 full time and 45 part time.

A Learning and Development Plan, based on the training needs recognised by the Organisation and individuals, is implemented on an annual basis and updated throughout the year.

Teaching observations enable the monitoring of teaching quality and the provision of support to teaching staff while identifying training and development needs. Regular catch up meetings between staff and line managers provide a proactive approach to self-assessment and target setting, with an emphasis on the individual’s Continuing Professional Development (CPD) needs and aspirations for improvement to deliver targets.

4. PRINCIPAL RISKS AND UNCERTAINTIES

ALW has undertaken further work during the year to develop and embed the system of internal control, including financial, operational and risk management which is designed to protect ALW’s assets and reputation.

The Senior Management Team undertakes a comprehensive review of the risks to which the Organisation is exposed which are documented in a risk register with clear plans of action. They identify systems and procedures, including specific preventable actions which should mitigate any potential impact on the Organisation. The internal controls are then implemented and the subsequent year’s appraisal will review their effectiveness and progress against risk mitigation actions. In addition to the annual review, the Senior Management Team also considers any risks which may arise as a result of a new area of work being undertaken by the Organisation.

The main risks identified have been compounded by the impact of the legacy pandemic issues coupled with the ongoing cost of living challenges. The situation has decreased the ability to forecast accurately due to the volatility and uncertainty of the current position. In order to mitigate the risks, the Senior Officers of the Organisation are in regular contact with the Welsh Government in order to identify and manage key challenges.

A Risk Register is maintained and is reviewed on a termly basis by the Audit Committee. The Risk Register identifies the key risks, the likelihood of those risks occurring, their potential impact on the Organisation and the actions being taken to reduce and mitigate the risks. Risks are prioritised using a consistent scoring system.

Outlined below is a description of the principal risk factors that may affect ALW along with mitigating actions. Not all the factors are within the Organisation’s control: other factors besides those listed below may also adversely affect it.

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Adult Learning Wales Financial Statements for the Year Ended 31 July 2022

4.1 Government funding

The Organisation has considerable reliance on continued government funding through the Senedd with levels of funding due to remain stable for 2022/23.

This risk is mitigated in several ways:

4.2 Maintain adequate funding of pension liabilities

The financial statements report the share of the pension scheme deficit on the Organisation’s balance sheet in line with the requirements of FRS 102. Regular dialogue takes place with the pension providers to ensure employer contributions are sufficient to reduce the deficit on the fund but at the same time are not excessive.

4.3 IT Infrastructure

The support contract for the Organisation has been improved and implemented for the year which puts in place stronger support mechanisms. This helps to mitigate the risks associated with the IT infrastructure.

5. STAKEHOLDER RELATIONSHIPS

The Organisation has many stakeholders. These include:

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Adult Learning Wales Financial Statements for the Year Ended 31 July 2022

The Organisation recognises the importance of these relationships and engages in regular communication and collaboration with stakeholders. It is particularly appreciative of the voluntary efforts of its Branch officers and Regional Forum chairpersons in extending the democratic nature of the Organisation’s structures.

5.1 Equality and Diversity

The Organisation recognises that discrimination, prejudice and disadvantage exist in society, and that groups and individuals have been treated unfairly for reasons relating to gender, ethnic origin, race, nationality, disability status, marital or family status, sexual orientation, age and religion. We are committed to making our contribution to help eliminate this by working positively to promote a more inclusive society. It is our aim and commitment to provide all of our services and employment opportunities on a fair and equitable basis.

ALW’s values emphasise the principle of equity, aimed at extending education opportunities to all learners and potential learners, regardless of class, age, disability or learning difficulty, gender, sexual orientation, race, colour, language and culture, religious beliefs, economic or marital status. The commitment at all times is to meet the needs and aspirations, and enhance the skills, of individuals both within the learning experience and at work. The Organisation further recognises that education enables the progress not only of individuals but of communities through the contribution of aware and committed individuals, and sees its recognition of the social purpose of education as integral to its commitment to equal opportunities.

It is the policy of the Organisation to take all reasonable steps to employ and promote employees on the basis of their skills. Ongoing monitoring and regular analysis of data collected as a result of diversity monitoring provide the basis for appropriate action to eliminate unlawful direct and indirect discrimination and promote equality of opportunity. As a Disability Confident employer, the Organisation considers all applications for employment from disabled persons, bearing in mind the aptitudes of the individuals concerned. Where an existing employee becomes disabled, every effort is made to ensure that employment with ALW continues. The Organisation’s policy is to provide training, career development and opportunities for promotion which are, as far as possible, identical to those for all employees. The Organisation makes every effort to ensure that any problems encountered by disabled employees or potential disabled employees are minimised.

The Learner Services and Human Resources team has responsibility for coordinating the development, implementation and review of all matters and progress relating to safeguarding, equality and diversity, in accordance with legislation and statutory duties. Monitoring and scrutiny of safeguarding, equality and diversity matters at Committee level is within the remit of the Learner Experience Committee.

5.2 Disability statement

As part of its commitment to Equality and Diversity the Organisation seeks to secure full access to its courses and meetings for those with disabilities. As far as reasonably practicable arrangements are made to ensure that students with disabilities can engage fully with its activities, by ensuring that necessary media and support are provided and that physical access to courses is possible. However, courses are usually provided in premises that are not owned by ALW. In these situations the Organisation will work with the providers of premises to provide equal access wherever possible. If equal access is not available at a community venue, alternative arrangements will be explored as required.

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Adult Learning Wales Financial Statements for the Year Ended 31 July 2022

5.3 ALW and the Welsh Language

ALW is committed to the Welsh Government’s vision of a truly bilingual Wales, as set out in the document Cymraeg 2050 , the Welsh Government’s Welsh language strategy (2018). This sets out its vision to increase the number of Welsh speakers and the use of Welsh by the year 2050. It is a vision to which ALW is fully committed. ALW will work to ensure that the Welsh language is treated as wholly equal to the English language. Standards set will be clear and consistent in terms of the services to be provided in both languages and will strive to be reasonable and proportionate, to reflect an all-Wales educational Organisation. Compliance with Welsh Language Standards will be ensured through regular monitoring.

In addition to advancing learning and knowledge through participation in education and training, ALW is committed to promoting awareness and understanding of the Welsh language, Welsh heritage and culture in all aspects of its business and services. ALW fully supports the principle of a bilingual workplace, and has put in place the mechanisms necessary to encourage the promotion, use and improvement of the Welsh language skills of its workforce.

The Learner Services and Human Resources team continues to co-ordinate, develop and implement the wide range of activities required to achieve the organisation’s strategic aims and meet statutory requirements in respect of Welsh and Bilingualism. Welsh and Bilingualism is monitored and scrutinised at Committee level by the Learner Experience Committee.

5.4 Disclosure of information to auditors

The members who held office at the date of approval of this report confirm that, so far as they are each aware, there is no relevant audit information of which ALW’s auditors are unaware; and each member has taken all the steps that he or she ought to have taken to be aware of any relevant audit information and to establish that the Organisation’s auditors are aware of that information.

Approved by order of the members of the Council on 22[nd] February 2023 and signed on its behalf by:

John Graystone Chair of Governors

……………………………………………………..

Professional advisers

External auditors:

Baker Knoyle Chartered Accountants, Merthyr Tydfil

Internal auditors:

TIAA, Cardiff

Bankers: Handelsbanken, Cardiff

Solicitors: Eversheds Sutherland, Cardiff

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Adult Learning Wales Financial Statements for the Year Ended 31 July 2022

Statement of Corporate Governance and Internal Control

The Organisation is committed to exhibiting best practice in all aspects of corporate governance.

This summary describes the way the Organisation has applied the principles set out in the UK Corporate Governance Code issued by the Financial Reporting Council in July 2018. Its purpose is to help the reader of the accounts understand how the principles have been applied.

In the opinion of the Council, the Organisation complies with all the provisions of the Code in so far as they apply to the Further Education sector, and it has complied throughout the year ended 31 July 2022.

THE COUNCIL

The members who served on the Council during the year are as listed below:-

Name Status and
Category		 Accession date (if
after 1 Aug.
2021) or
Resignation date		 Committee
Membership		 Council meetings
attended (out of
5 in total)
John Graystone Chair;Appointed Search(Chair) 5
Toni Schiavone Vice Chair; Elected
Regional Governor		 Resigned,
31/3/2022		 Resources, Search 2 (out of 4)
Sonia Reynolds Vice Chair; Elected
Regional Governor		 Audit, Search 3
Dona Lewis Appointed Resources 4
Chris Franks Elected Members’
Governor		 Audit (Chair) 5
Marion Burke Appointed Learner Experience 1(out of 3)
Cathy Clark Elected Learner
Governor		 Learner Experience 5
Caroline Davies Elected Regional
Governor		 Learner Experience
(Chair),Audit,Search		 4
Jan Tiley Elected Learner
Governor		 Resources 5
Sam Emmett Elected Staff
Governor		 Elected, 14/6/2022 Learner Experience 1 (out of 1)
Judith Evans Appointed Resources 5
Nicole Kinnaird Elected Staff
Governor		 Elected, 14/6/2022 Resources 0 (out of 1)
Sion Aled Owen Elected Regional
Governor		 Elected, 5/11/2021 Learner Experience 4 (out of 4)
Jenni Jones-Annetts Elected Learner
Governor		 Learner Experience 4
Stephen Nicholls Appointed Resources(Chair) 5
Suzanne Samuel Appointed Resigned,
6/11/2021		 Learner Experience 1 (out of 1)
Gareth Cork Elected Staff
Governor		 Resigned,
30/4/2022		 Resources 2 (out of 4)
Steve David Elected Staff
Governor		 Resigned,
30/4/2022		 Learner Experience 0 (out of 4)
TimothyPalazon Appointed Learner Experience 3
Salamatu Fada Appointed Learner Experience 4
Victory Ezeofor Elected Regional
Governor		 Audit 5
Carl Hoskins Elected Regional
Governor		 Resigned, 23/5/2022 Resources 0 (out of 4)

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Adult Learning Wales Financial Statements for the Year Ended 31 July 2022

Statement of Corporate Governance and Internal Control (continued)

The Council is provided with regular and timely information on the overall financial performance of the Organisation together with other information such as performance against funding targets, proposed capital expenditure, quality matters and personnel-related matters such as health and safety and environmental issues. The Council meets a minimum of three times a year, and during 2021-22 met on five occasions.

The Council conducts much of its business through four committees: Audit, Learner Experience, Resources and Search. Each committee has terms of reference which have been approved by the Council. Full minutes of all Council meetings, except those deemed to be confidential by the Council, are available on the organisation’s web-site or from the Clerk to the Council at:

Stephen Thomas Clerk to the Council ALW 7 Coopers Yard Curran Road Cardiff CF10 5NB

The Clerk to the Council maintains a register of financial and personal interests of Council members. The register is available for inspection at the above address.

Members of the Council can take independent professional advice in furtherance of their duties at the Organisation’s expense and have access to the Clerk to the Council, who is responsible to the Council for ensuring that all applicable procedures and regulations are complied with. The appointment, evaluation and removal of the Clerk are matters for the Council as a whole. Formal agendas, papers and reports are supplied to the Council and Committee members in a timely manner, prior to meetings. Briefings are also provided on an ad hoc basis.

The Council has a strong and independent non-executive element and no individual or group dominates its decision-making process: there is no person with significant control registered for it at Companies House. The Council considers that each of its members is independent of management and free from any business or other relationship which could materially interfere with the exercise of their independent judgement. The Committees comprise members of the Council, one of whom is Committee Chair, and co-opted individuals. Co-opted members who served during 2021-22 were: Paul Charlton, Graham Price and Guy Wallace Smith (Audit Committee); Jeremy Gass and Ashok Chopra (Learner Experience Committee); Susan Roberts (Resources Committee). In addition, other task and finish groups may be convened at the discretion of the Council.

There is a clear division of responsibility in that the roles of Chair of the Council and that of Chief Executive are separate.

Composition of the Council

The adoption of revised Articles of Association at the time of the re-naming of the Organisation in late 2016 also saw the formation of a new Council. Most Council members up to 31 March 2017 were appointed to their roles. From 1 April 2017 there have been up to 12 elected members (variously nominated by Regional Forums, individual members, learners and staff) and up to 8 appointed members. The Council is responsible for ensuring that appropriate training is provided for its members as required. The Council adheres to the 2016 Code of Good Governance for Colleges in Wales.

15

Adult Learning Wales Financial Statements for the Year Ended 31 July 2022

Statement of Corporate Governance and Internal Control (continued)

Audit Committee

The Audit Committee comprises four members of the Council (and excludes the Chair, learner governors and Resources Committee members). The Committee operates in accordance with written terms of reference approved by the Council.

The Audit Committee meets on a termly basis and provides a forum for reporting by ALW’s internal and external auditors, who have access to the Committee for independent discussion, without the presence of ALW management if necessary. The Committee can also receive and consider reports from the Charity Commission and the Welsh Government as they affect ALW’s business.

The Organisation’s internal auditors monitor the systems of internal control, risk management controls and governance processes in accordance with an agreed plan of input and report their findings to management and to the Audit Committee.

Management is responsible for the implementation of agreed audit recommendations and internal auditors undertake periodic follow-up reviews to ensure such recommendations have been implemented.

The Audit Committee also advises the Council on the appointment of internal, regularity and financial statements auditors and their remuneration for both audit and non-audit work.

The Search Committee is responsible for overseeing the appointment of Council members, making recommendations to the full Council to fill the vacancies that exist. The Diversity Categories and Skills Matrix for Governors, forming part of the Organisation’s Standing Orders, inform the Search Committee’s recruitment practices. All governors appointed in 2021/22 came through application of these norms.

INTERNAL CONTROL

Scope of responsibility

The Council is ultimately responsible for the Organisation’s system of internal control and for reviewing its effectiveness. However, such a system is designed to manage rather than eliminate the risk of failure to achieve business objectives, and can provide only reasonable and not absolute assurance against material misstatement or loss.

The Council has delegated the day-to-day responsibility to the Chief Executive, as Accounting Officer, for maintaining a sound system of internal control that supports the achievement of the Organisation’s policies, aims and objectives, whilst safeguarding the public funds and assets for which s/he is personally responsible, in accordance with the responsibilities assigned to him or her in the Financial Memorandum between the Organisation and the Welsh Government. S/he is also responsible for reporting to the Council any material ALW weaknesses or breakdowns in internal control.

The purpose of the system of internal control

The system of internal control provides reasonable, not absolute, assurance of effectiveness and is based on an ongoing process designed to identify and prioritise the risks to the achievement of the Organisation’s policies, aims and objectives, to evaluate the likelihood of those risks being realised and the impact should they be realised, and to manage them efficiently, effectively and economically. The system of internal control has been in place for the year ended 31 July 2022 and up to the date of approval of the annual report and accounts.

16

Adult Learning Wales Financial Statements for the Year Ended 31 July 2022

Statement of Corporate Governance and Internal Control (continued)

Capacity to handle risk

The Council has reviewed the key risks to which the Organisation is exposed together with the operating, financial and compliance controls that have been implemented to mitigate those risks. The Council is of the view that there is a formal ongoing process for identifying, evaluating and managing the Organisation's significant risks. This process is regularly reviewed by the Organisation.

The risk and control framework

The system of internal control is based on a framework of regular management information, administrative procedures including the segregation of duties, and a system of delegation and accountability. In particular, it includes:

The Organisation has an internal audit service, which operates in accordance with the requirements of the Welsh Government. The work of the internal audit service is informed by an analysis of the risks to which the Organisation is exposed, and annual internal audit plans are based on this analysis. The analysis of risks and the internal audit plans are endorsed by the Council on the recommendation of the Audit Committee. At minimum annually, the Chair of Audit Committee provides Council with a report on internal audit activity in the Organisation. The report includes the Internal Auditor’s independent opinion on the adequacy and effectiveness of the Organisation’s system of risk management, controls and governance processes.

Review of effectiveness

As Accounting Officer, the Chief Executive has responsibility for reviewing the effectiveness of the system of internal control. That review of the effectiveness of the system of internal control is informed by:

The Chief Executive has been advised on the implications of the result of the review of the effectiveness of the system of internal control by the Audit Committee which oversees the work of the internal auditor, and a plan to address weaknesses and ensure continuous improvement of the system is in place.

The Senior Management Team receives reports setting out key performance and risk indicators and considers possible control issues brought to their attention by early warning mechanisms, which are embedded within the regions and reinforced by risk awareness training. The Senior Management Team and the Audit Committee also receive regular reports from internal audit, which include recommendations for improvement. The Audit Committee's role in this area is confined to a high-level review of the arrangements for internal control. The Council’s agenda includes a regular item for consideration of risk and control and it receives reports thereon

17

Adult Learning Wales Financial Statements for the Year Ended 31 July 2022

Statement of Corporate Governance and Internal Control (continued)

from the Senior Management Team and the Audit Committee. The emphasis is on obtaining the relevant degree of assurance and not merely reporting by exception.

GOING CONCERN

After making appropriate enquiries, the Council considers that the Organisation has adequate resources to continue in operational existence for the foreseeable future. For this reason, it continues to adopt the going concern basis in preparing the financial statements.

Approved by order of the members of the Organisation on 22[nd ] February 2023 and signed on its behalf by:

John Graystone Chair of Governors

Kathryn Robson Chief Executive

…………………………………….

………………………………

18

Adult Learning Wales Financial Statements for the Year Ended 31 July 2022

Governing Body’s statement on the Organisation’s regularity, propriety and compliance with Funding body terms and conditions of funding

The Organisation has considered its responsibility to notify the Welsh Government of material irregularity, impropriety and non-compliance with Welsh Government terms and conditions of funding, under the Financial Memorandum in place between the Organisation and the Welsh Government. As part of our consideration we have had due regard to the requirements of the Financial Memorandum.

We confirm, on behalf of the Organisation, that after due enquiry, and to the best of our knowledge, we are able to identify any material irregular or improper use of funds by the Organisation, or material non-compliance with the Welsh Government’s terms and conditions of funding under the Organisation’s Financial Memorandum.

We confirm that no instances of material irregularity, impropriety or funding non-compliance have been discovered to date. If any instances are identified after the date of this statement, these will be notified to the Welsh Government.

John Graystone Chair of Governors

Kathryn Robson Chief Executive

…………………………………….

..………………………………

19

Adult Learning Wales Financial Statements for the Year Ended 31 July 2022

Statement of Responsibilities of the Members of the Council of the Organisation

The Members of the Council of the Organisation are required to present audited financial statements for each financial year.

Within the terms and conditions of the Financial Memorandum agreed between the Welsh Government and the Organisation, the Organisation, through its Chief Executive, is required to prepare financial statements for each financial year in accordance with the 2019 Statement of Recommended Practice – Accounting for Further and Higher Education Institutions, Company Law and with the Accounts Direction issued by the Welsh Government, which give a true and fair view of the state of affairs of the Organisation and the result for that year.

In preparing the financial statements, the Organisation is required to:

The Organisation is responsible for maintaining proper accounting records which disclose with reasonable accuracy, at any time, the financial position of the Organisation, and which enable it to ensure that the financial statements comply with the Companies Act 2006. It is responsible for taking steps that are reasonably open to it in order to safeguard the assets of the Organisation and to prevent and detect fraud and other irregularities.

The maintenance and integrity of the Organisation website is the responsibility of the Organisation. The work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

The Members of the Council are responsible for ensuring that expenditure and income are applied for the purposes intended by the funders and that the financial transactions conform to the authorities that govern them. In addition they are responsible for ensuring that funds from the Welsh Government are used only in accordance with the Financial Memorandum with the Welsh Government and any other conditions that the Welsh Government may prescribe from time to time. The Members of the Council must ensure that there are appropriate financial and management controls in place in order to safeguard public and other funds and to ensure they are used properly. In addition, the Members of the Council are responsible for securing economical, efficient and effective management of the Organisation’s resources and expenditure, so that the benefits that should be derived from the application of public funds by the Welsh Government are not put at risk.

In accordance with Company Law, as the Members of the Council, we certify that:

The Members of the Council are aware that the Organisation has a responsibility under the Charities Act to demonstrate that it has charitable aims that meet the public benefit requirement and are therefore charitable. The Members of the Council confirm that they have had due regard to the Charity Commission’s guidance on public benefit when considering, planning and implementing the activities of the charity and when exercising their powers and duties to which the guidance is relevant, and that they have complied with the duty under Section 4 of the Charities Act 2006 in this regard. As Council, we believe that the objects of the Organisation to promote education, in particular for young people and adults, within Wales are charitable and for public benefit. Furthermore, in our view, no detriment or harm arises from the Organisation carrying out its work and we are not aware of any widespread views among others that such detriment or harm might arise.

20

Adult Learning Wales Financial Statements for the Year Ended 31 July 2022

Statement of Responsibilities of the Members of the Council of the Organisation (continued)

This report is prepared in accordance with the 2019 Statement of Recommended Practice – Accounting for Further and Higher Education Institutions, and the Companies Act 2006.

Approved by order of the Members of the Council of the Organisation on 22[nd] February 2023 and signed on its behalf by:

John Graystone Chair of Governors

.........................................................

21

Adult Learning Wales Financial Statements for the Year Ended 31 July 2022

Independent Auditors’ Report to the Governing Body (Council) of Adult Learning Wales

A COMPANY LIMITED BY GUARANTEE - 3109524

Report on the audit of the financial statements

Opinion

In our opinion, Adult Learning Wales financial statements:

We have audited the financial statements, included within the Annual Report and Financial Statements for the year ended 31 July 2022 (the "Annual Report"), which comprise the Balance Sheet as at 31 July 2022; the Statement of Comprehensive Income for the year then ended; the Statement of Changes in Reserves for the year then ended; the Statement of Cash Flows for the year then ended; and the notes to the financial statements, which include a summary of significant accounting policies and other explanatory information.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) ("ISAs (UK)") and applicable law. Our responsibilities under ISAs (UK) are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence

We remained independent of the organisation in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, which includes the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

Conclusions relating to going concern

We have nothing to report in respect of the following matters in relation to which ISAs (UK) require us to report to you when:

22

Adult Learning Wales Financial Statements for the Year Ended 31 July 2022

Independent Auditors’ Report to the Governing Body (Council) of Adult Learning Wales (continued)

However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the organisation's ability to continue as a going concern.

Reporting on other information

The other information comprises all of the information in the Annual Report other than the financial statements and our auditors' report thereon. The Governing Body is responsible for the other information. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report based on these responsibilities.

Responsibilities for the financial statements and the audit

Responsibilities of the Governing Body for the financial statements

As explained more fully in the Statement of the Governing Body's responsibilities set out on pages 20 and 21, the Governing Body (who are also the directors of the organisation for the purposes of company law) is responsible for the preparation of the financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair view. The Governing Body is also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Governing Body is responsible for assessing the organisation's ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the Governing Body either intends to liquidate the organisation or to cease operations, or has no realistic alternative but to do so.

Auditors' responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK} will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors' report.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

23

Adult Learning Wales Financial Statements for the Year Ended 31 July 2022

Independent Auditors’ Report to the Governing Body (Council) of Adult Learning Wales (continued)

Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.

Use of this report

This report, including the opinions, has been prepared for and only for the organisation's Governing Body as a body in accordance with the organisation's articles of government and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Other required reporting

Opinions on other matters prescribed in the Further Education Audit Code of Practice 2016 issued by the Welsh Government

In our opinion, in all material respects:

Richard Phillips FCCA Senior Statutory Auditor For and behalf of: Baker Knoyle Accountancy Limited Chartered Accountants & Statutory Auditors Orbit Business Centre, Merthyr Tydfil, CF48 lDL

Date:

24

Adult Learning Wales Financial Statements for the Year Ended 31 July 2022

Statement of Comprehensive Income

INCOME
Notes
Welsh Government Grants
2
Tuition fees and education contracts
3
Other grants and contracts
4
Other Income
5
Branch Income
6
Investment Income
7
Pension Finance Income
8
Donations and Endowments
9
Total Income
EXPENDITURE
Staff costs
10
Other operating expenses
12
Depreciation
16
Interest and other finance costs
13
Branch Expenditure
12
Total Expenditure
(Deficit)/Surplus before other gains and losses
15
Gain/(loss) on disposal of assets
(Deficit)/Surplus before tax
Taxation
14
(Deficit)/Surplus for the year
Revaluation Reserve movement
27
Gain/(loss) on investments
17
Actuarial gain/(loss) in respect of pensions schemes
33
Total Comprehensive Income for the year
Represented by:
Restricted comprehensive income
Unrestricted comprehensive income
Endowment comprehensive income		 2022
£'000
7,819
346
542
19
13
3
-
-
8,742
7,489
1,800
147
86
13
9,535
(793)
-
(793)
-
(793)
-
(80)
8,623
7,750
-
7,830
(80)
7,750		 2021
£'000
6,584
336
388
9
3
2
-
-
7,322
6,303
1,254
143
85
8
7,793
(471)
-
(471)
-
(471)
-
271
1,596
1,396
-
1,125
271
1,396

The statement of comprehensive income is in respect of continuing activities.

25

Adult Learning Wales Financial Statements for the Year Ended 31 July 2022

Statement of Changes in Reserves

Balance at 1st August 2020
Surplus/(deficit) from the income and expenditure account
Other comprehensive income
Total comprehensive income for the year
Balance at 31st July 2021
Surplus/(deficit) from the income and expenditure account
Other comprehensive income
Total comprehensive income for the year
Balance at 31st July 2021
expenditure reserves
expenditure reserves
Transfers between revaluation and income and
Transfers between revaluation and income and		 Endowment
Other
£'000
£'000
318
(2,812)
-
(471)
244
1,596
-
-
244
1,125
562
(1,687)
-
(793)
(67)
8,623
-
-
(67)
7,830
495
6,143
Income and Expenditure
Reserve		 Endowment
Other
£'000
£'000
971
10
-
-
27
-
-
-
27
-
998
10
-
-
(13)
-
-
-
(13)
-
985
10
Restricted Reserve		 Total
£'000
(1,513)
(471)
1,867
-
1,396
(117)
(793)
8,543
-
7,750
7,633

26

Adult Learning Wales Financial Statements for the Year Ended 31 July 2022

Balance Sheet as at 31 July

Notes
Non current assets
Tangible Fixed Assets
16
Endowment Assets
17
Current Assets
Trade and other receivables
18
Cash and cash equivalents
25
Creditors - amounts falling due within one year
19
Net Current assets
Total assets less current liabilities
Creditors - amounts falling due after more than one year
20
Provisions
Defined benefit obligations
21
Other provisions
21
Total net assets
Restricted Reserves
Endowments
23
Other
26
Total restricted reserves
Unrestricted Reserves
Endowments
23
Income and expenditure account
26
Revaluation Reserve
27
Total unrestricted reserves
Total Reserves		 2022
£'000
761
1,479
2,240
374
5,904
6,278
(3,106)
3,172
5,412
(170)
2,410
(19)
7,633
1,148
10
1,158
331
6,144
-
6,475
7,633		 2021
£'000
792
1,559
2,351
532
5,215
5,747
(2,602)
3,145
5,496
(212)
(5,376)
(25)
(117)
1,215
10
1,225
344
(1,686)
-
(1,342)
(117)

The financial statements on pages 25 - 52 were approved and authorised for issue by the Governing Body on 22nd February 2023 and were signed on its behalf on that date by:-

John Graystone Chair of Governors

Kathryn Robson Chief Executive

27

Adult Learning Wales Financial Statements for the Year Ended 31 July 2022

STATEMENT OF CASH FLOWS

Notes
Cash flow from operating activities
Surplus/(Deficit) for the year
Adjustment for non-cash items
Depreciation
16
(Increase)/decrease in debtors
18
Increase/(decrease) in creditors due within one year
19
Increase/(decrease) in creditors due after one year
20
Increase/(decrease) in provisions
21
Pension costs less contributions payable
33
Adjustment for investing or financing activities
Interest receivable
Interest payable
Net cash flow from operating activities
Cash flows from investing activities
Proceeds from sale of fixed assets
Interest receivable
Income from endowments
23
Payments made to acquire fixed assets
16
Payments made to acquire endowment assets
17
Proceeds from sale of endowment assets
17
Drawdown from endowments
23
Cash flows from financing activities
Interest paid
New secured loans
Repayments of amounts borrowed
Increase / (decrease) in cash and cash equivalents in the year
Cash and cash equivalents at beginning of the year
24
Cash and cash equivalents at end of the year
24		 2022
£'000
(793)
147
158
504
(42)
(6)
837
(3)
-
802
-
3
4
(116)
-
-
-
(109)
-
-
-
-
693
5,276
5,969		 2021
£'000
(471)
143
(375)
1,239
88
(10)
699
(2)
-
1,311
-
2
3
(184)
(109)
126
-
(162)
-
-
-
-
1,149
4,127
5,276

28

Adult Learning Wales Financial Statements for the Year Ended 31 July 2022

Notes to the Accounts

1. Statement of accounting policies and estimation techniques

The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the financial statements.

Basis of Preparation

These financial statements have been prepared in accordance with the Statement of Recommended Practice: Accounting for Further & Higher Education 2019 (the 2019 FE HE SORP), the College Accounts Direction for 2021 to 2022 and in accordance with Financial Reporting Standard 102 – “The Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland” (FRS 102) and Companies Act 2006. The Organisation is a public benefit entity and has therefore applied the relevant public benefit requirements of FRS 102.

The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the Organisation’s accounting policies.

Basis of accounting

The financial statements are prepared in accordance with the historical cost convention modified by the revaluation of certain fixed assets.

Basis of Consolidation

The consolidated financial statements include the Organisation and its Branches for the financial year to 31 Jul y 2022. Intra-group transactions have been eliminated and uniform accounting policies are applied across the group for the purposes of the consolidated financial statements.

Going Concern

The activities of the Organisation, together with the factors likely to affect its future development and performance, are set out in the Strategic Report. The financial position of the Organisation, its cash flow, liquidity and borrowings are presented in the Financial Statements and accompanying Notes.

After reviewing the Organisation’s forecasts and financial projections, the Trustees are of the opinion that the Organisation will have sufficient funds to meet its liabilities as they fall due over the period of 12 months from the date of approval of the financial statements (the going concern assessment period). Consequently, the Trustees have prepared the financial statements on a going concern basis.

Recognition of income

Revenue grant funding

Government revenue grants include funding body recurrent grants and other grants and are accounted for under the accrual model as permitted by FRS 102. Funding body recurrent grants are measured in line with best estimates for the period of what is receivable and depend on the particular income stream involved. Any under achievement for the Adult Education Budget is adjusted for and reflected in the level of recurrent grant recognised in the income and expenditure account. The final grant income is normally determined with the conclusion of the year end reconciliation process with the funding body following the year end, and the results of any funding audits.

The recurrent grant from the Welsh Government (WG) represents the funding allocations attributable to the current financial year and is credited direct to the Statement of Comprehensive Income.

29

Adult Learning Wales Financial Statements for the Year Ended 31 July 2022

Statement of accounting policies (continued)

Where part of a government grant is deferred, the deferred element is recognised as deferred income within creditors and allocated between creditors due within one year and creditors due after more than one year as appropriate.

Grants from non-government sources are recognised in income when the Organisation is entitled to the income and performance related conditions have been met. Income received in advance of performance related conditions being met is recognised as deferred income within creditors on the balance sheet and released to income as the conditions are met.

Capital grant funding

Government capital grants are capitalised, held as deferred income and recognised in income over the expected useful life of the asset, under the accrual model as permitted by FRS 102. Other, non-governmental, capital grants are recognised in income when the Organisation is entitled to the funds subject to any performance related conditions being met. Income received in advance of performance related conditions being met is recognised as deferred income within creditors on the Balance Sheet and released to income as conditions are met.

Fee income

Income from tuition fees is stated gross of any expenditure which is not a discount and is recognised in the period for which it is received.

Investment income

All income from short-term deposits is credited to the income and expenditure account in the period in which it is earned on a receivable basis. Income from restricted purpose endowment funds not expended in accordance with the restrictions of the endowment in the period is transferred from the income and expenditure account to accumulated income within endowment funds.

Agency arrangements

The Organisation in some cases acts as an agent in the collection and payment of the discretionary support fund, Financial Contingency Fund (FCF). Related payments received from the WG and subsequent disbursements to students totalling £4k (2021: £1k) are excluded from the income and expenditure of the Organisation where the Organisation is exposed to minimal risk or enjoys minimal economic benefit related to the transaction (note 32).

Where the Organisation has paid a third party direct, the related income and expenditure has been included within the income and expenditure of the Organisation (note 32).

Accounting for post-employment benefits

Post-employment benefits to employees of the Organisation are provided by the Teachers’ Pension Scheme (TPS) and the Local Government Pension Scheme (LGPS). The TPS and LGPS are defined benefit plans, which are externally funded and contracted out of the State Second Pension.

Teachers’ Pension Scheme (TPS)

The TPS is an unfunded scheme. Contributions to the TPS are calculated so as to spread the cost of pensions over employees’ working lives with the Organisation in such a way that the pension cost is a substantially level percentage of current and future pensionable payroll. The contributions are determined by qualified actuaries on the basis of valuations using a prospective benefit method.

The TPS is a multi-employer scheme and there is insufficient information available to use defined benefit accounting. The TPS is therefore treated as a defined contribution plan and the contributions recognised as an expense in the income statement in the periods during which services are rendered by employees.

30

Adult Learning Wales Financial Statements for the Year Ended 31 July 2022

Statement of accounting policies (continued)

Cardiff & Vale of Glamorgan and Gwynedd Local Government Pension Scheme (LGPS)

The LGPS is a funded scheme. The assets of the LGPS are measured using closing fair values. LGPS liabilities are measured using the projected unit credit method and discounted at the current rate of return on a high quality corporate bond of equivalent term and currency to the liabilities. The actuarial valuations are obtained at least triennially and are updated at each balance sheet date. The amounts charged to operating surplus are the current service costs and the costs of scheme introductions, benefit changes, settlements and curtailments. They are included as part of staff costs as incurred.

Net interest on the net defined benefit liability/asset is also recognised in the Statement of Comprehensive Income and comprises the interest cost on the defined benefit obligation and interest income on the scheme assets, calculated by multiplying the fair value of the scheme assets at the beginning of the period by the rate used to discount the benefit obligations. The difference between the interest income on the scheme assets and the actual return on the scheme assets is recognised in interest and other finance costs.

Actuarial gains and losses are recognised immediately in actuarial gains and losses.

Short term employment benefits

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

Enhanced Pensions

The Organisation incurred enhanced pension costs during the year of £6k relating to 3 former members of Coleg Harlech staff that left its employment, by arrangement, prior to the merger with the WEA (North Wales) in 2001. Due to uncertainty over life expectancy it is not possible to profile the enhanced pension provision. These costs have been charged against the enhanced pension provision in the balance sheet.

Tangible fixed assets

Tangible fixed assets are stated at cost less accumulated depreciation and impairment losses. Certain items of fixed assets that have been revalued to fair value on or prior to the date of transition to the FE HE SORP are measured on the basis of deemed cost, being the revalued amount at the date of that revaluation.

Where parts of a fixed asset have different useful lives, they are accounted for as separate items of fixed assets.

Where tangible fixed assets are acquired with the aid of specific Government grants, they are capitalised and depreciated as above. The related Government grants are credited to a deferred income account within creditors, and are released to the income and expenditure account over the expected useful economic life of the related asset on a systematic basis consistent with the depreciation policy. The deferred income is allocated between creditors due within one year and those due after more than one year.

Land & Buildings

Freehold and long leasehold buildings are depreciated on a straight line basis over their expected useful l i ves as follows:-

• Freehold 20-50 years / 2%-5% per annum
• Leasehold 50 years / 2% per annum
• Property Improvements 5 years / 20% per annum

Freehold land is not depreciated as it is considered to have an infinite useful life.

31

Adult Learning Wales Financial Statements for the Year Ended 31 July 2022

Statement of accounting policies (continued)

Land, buildings and property improvements are stated in the balance sheet at either purchase cost or revaluation cost less depreciation costs. Cost includes the original purchase price of the asset and the costs attributable to bringing the asset to its working condition for its intended use.

Freehold and long leasehold buildings are depreciated over their expected useful economic life to the Organisation of between 20 and 50 years. The Organisation has a policy of depreciating major adaptations to buildings over the period of their useful economic life of between 20 and 50 years.

A review for impairment of a fixed asset is carried out if events or changes in circumstances indicate that the carrying amount of any fixed asset may not be recoverable.

On adoption of FRS 102, the Organisation followed the transitional provision to retain the book value of land and buildings.

Subsequent expenditure on existing tangible fixed assets

Where significant expenditure is incurred on tangible fixed assets after initial purchase it is charged to income i n the period it is incurred, unless it increases the future benefits to the Organisation, in which case it is capitalised and depreciated on the relevant basis.

Equipment

Equipment costing less than £1,000 per individual item is recognised as expenditure in the period of acquisiti on. All other equipment is capitalised at cost.

Inherited equipment and other capitalised equipment is depreciated on a straight-line basis over its remaining useful economic life as follows:

• General Equipment 5 years / 20% per annum
• Computer Equipment 4 years / 25% per annum
• Motor Vehicles 5 years / 20% per annum
• Furniture, fixtures and fittings 5 years / 20% per annum

A review for impairment of a fixed asset is carried out if events or changes in circumstances indicate that the carrying value of any fixed asset may not be recoverable. Shortfalls between the carrying value of fixed assets and their recoverable amounts are recognised as impairments. Impairment losses are recognised in the Statement of Comprehensive Income.

Borrowing costs

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

Leased assets

Costs in respect of operating leases are charged on a straight-line basis over the lease term to the Statement of Comprehensive Income and Expenditure. Any lease premiums or incentives relating to leases signed after 1[st] August 2014 are spread over the minimum lease term

The Organisation does not have any finance leases.

Investments and Endowments

Listed investments held as current asset investments which relate to endowment assets are stated at fair value, with movements recognised in the Statement of Comprehensive Income.

The general purpose endowments are classified as an investment in the balance sheet in line with the Statement of Recommended Practice: Accounting for Further & Higher Education 2019 (the 2019 FE&HE SORP).

32

Adult Learning Wales Financial Statements for the Year Ended 31 July 2022

Statement of accounting policies (continued)

Inventories

The Organisation does not hold inventories.

Cash and cash equivalents

Cash includes cash in hand, deposits repayable on demand, and overdrafts. Deposits are repayable on demand i f they are in practice available within 24 hours without penalty.

Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash with insignificant risk of change in value. An investment qualifies as a cash equivalent when i t has maturi ty of 3 months or less from the date of acquisition. The Organisation had no cash equivalents during the year.

Financial liabilities and equity

Financial liabilities and equity are classified according to the substance of the financial i nstrument’s contractual obligations, rather than the financial instrument’s legal form.

All loans, investments and short term deposits held by the Organisation are classified as basic financial instruments in accordance with FRS 102. These instruments are initially recorded at the transaction price less any transaction costs (historical cost). FRS 102 requires that basic financial instruments are subsequentl y measured at amortised cost, however the Organisation has calculated that the difference between the historical cost and amortised cost basis is not material and so these financial instruments are stated on the balance sheet at historical cost.

Foreign currency translation

Transactions denominated in foreign currencies are recorded using the rate of exchange ruling at the date of the transaction. There were no monetary assets and liabilities denominated in foreign currencies at year end.

Taxation

The Organisation is considered to pass the tests set out in Paragraph 1 Schedule 6 Finance Act 2010 and therefore it meets the definition of a charitable company for UK corporation tax purposes. Accordingly, the Organisation is potentially exempt from taxation in respect of income or capital gains received within categori es covered by sections 478-488 of the Corporation Tax Act 2010 or Section 256 of the Taxation of Chargeable Gai ns Act 1992, to the extent that such income or gains are applied exclusively to charitable purposes.

The Organisation is also exempt in respect of Value Added Tax on all services it provides and therefore unabl e to recover input VAT it suffers on goods and services purchased. Irrecoverable VAT on inputs is included in the costs of such inputs and added to the cost of tangible fixed assets as appropriate, where the inputs themselves are tangible fixed assets by nature.

Provisions and contingent liabilities

Provisions are recognised when

Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value using a pre-tax discount rate. The unwinding of the discount is recognised as a finance cost in the statement of comprehensive income in the period it arises.

A contingent liability arises from a past event that gives the Organisation a possible obligation whose existence wi l l only be confirmed by the occurrence or otherwise of uncertain future events not wholly within the control of the Organisation. Contingent liabilities also arise in circumstances where a provision woul d otherwi se be made but either it is not probable that an outflow of resources will be required or the amount of the obligation cannot be measured reliably.

33

Adult Learning Wales Financial Statements for the Year Ended 31 July 2022

Statement of accounting policies (continued)

Contingent liabilities are not recognised in the balance sheet but are disclosed in the notes to the financial statements.

Judgements in applying accounting policies and key sources of estimation uncertainty

In preparing these financial statements, management have made the following judgements:

Other key sources of estimation uncertainty

Tangible fixed assets, other than investment properties, are depreciated over their useful lives taking into account residual values, where appropriate. The actual lives of the assets and residual values are assessed annually and may vary depending on a number of factors. In re-assessing asset lives, factors such as technological innovation and maintenance programmes are taken into account. Residual value assessments consider issues such as future market conditions, the remaining life of the asset and projected disposal values.

• Local Government Pension Scheme

The present value of the Local Government Pension Scheme defined benefit liability depends on a number of factors that are determined on an actuarial basis using a variety of assumptions. The assumptions used in determining the net cost (income) for pensions include the discount rate. Any changes in these assumptions, which are disclosed in Note 33, will impact on the carrying amount of the pension liability. Furthermore a roll forward approach which projects results from the latest full actuarial valuation performed at 31 March 2019 has been used by the actuary in valuing the pensions liability at 31 July 2022. Any differences between the figures derived from the roll forward approach and a full actuarial valuation would impact on the carrying amount of the pension liability.

34

Adult Learning Wales Financial Statements for the Year Ended 31 July 2022

Notes to the accounts (continued)

2022 2021
Note £'000 £'000
2 Welsh Government (WG) Grants
WG Mainstream Recurrent grant 5,665 5,456
WG Other Recurrent 201 416
WG release of capital grants 22 122 105
WG Maintenance, Digital, SOP & Capital funding 684 417
WG non recurrent grants 1,147 190
Total 7,819 6,584
3 Tuition Fees and Education Contracts
Education Contracts 54 37
Tuition Fees 286 296
Other fees including exam fees 6 3
Total 346 336
4 Other Grants and Contracts
European Social Fund (5) 55
Other Grants and Contracts 547 333
Total 542 388
5 Other Income
Release of other government capital grants 22 - -
Individual Subscriptions, Affiliations, Donations 3 2
Room rental 12 -
Other miscellaneous 4 7
Total 19 9
6 Branch income 13 3
7 Investment Income
Interest receivable 3 2
Total 3 2
8 Net return on pension scheme 33 - -
9 Donations - -

35

Adult Learning Wales Financial Statements for the Year Ended 31 July 2022

Notes to the accounts (continued)

10 Staff numbers and costs

The average number of persons (including key management personnel) employed by the Organisation during the year, described as full-time equivalents were:

Note
Teaching & Learning departments
Teaching & Learning support services
Other support services
Administration and central services
General Education
Premises
Total average staff numbers
2022
Staff Costs for the above persons
£'000
Wages and Salaries
4,368
Social security costs
391
Other pension costs
33
1,798
Payroll sub total
6,556
Contracted out staffing services
779
7,335
Restructuring costs
Contractual
46
Non-Contractual
108
Total Staff costs
7,489
Year ended
31 July 2022
209
11
28
34
1
3
286		 Year ended 31
July 2021
188
9
36
34
1
2		 Year ended 31
July 2021
188
9
36
34
1
2
2021
£'000
4,051
337
1,607
270
5,995
62
6,057
125
121
6,303

The organisation has salary sacrifice arrangements in place for a Cycle Scheme.

11 Key management personnel

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Organisation and are represented by the Senior Management Team (SMT) which comprises the Chief Executive (Accounting Officer), Head of Curriculum and Performance, and Head of Learner Services and Resources for the period ending 31 July 2022.

36

Adult Learning Wales Financial Statements for the Year Ended 31 July 2022

Notes to the accounts (continued)

11 Key management personnel (continued)

Emoluments of Key management personnel, Accounting Officer and other higher paid staff

2022 2021
No. No.
The number of key management personnel
including Accounting Officer was: 3 3

The number of key management personnel and other staff who received annual emoluments, excluding employer contributions to national insurance and pensions but including benefits in kind, in the following ranges was:

£50,001 to £55,000 p.a.
£55,001 to £60,000 p.a.
£60,001 to £65,000 p.a.
£65,001 to £70,000 p.a.
£70,001 to £75,000 p.a.
£75,001 to £80,000 p.a.
£80,001 to £85,000 p.a.		 2022
2021
No.
No.
-
-
2
2
-
-
-
-
-
-
-
-
1
1
3
3
Key management personnel		 2022
2021
No.
No.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Other staff		 2022
2021
No.
No.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Other staff
-

Key management personnel compensation is made up as follows:

Basic salary
Benefits in kind
Pension Contributions
Total key management personnel compensation		 2022
£'000
200
-
200
63
263		 2021
£'000
194
-
194
57
252

The above compensation includes amounts paid to the Chief Executive who is the Accounting Officer and who is also the highest paid member of staff. Their pay and remuneration is as follows:

37

Adult Learning Wales Financial Statements for the Year Ended 31 July 2022

Notes to the accounts (continued)

11 Key management personnel (continued)

Basic Salary
Benefits in kind
Pension Contributions		 2022
£'000
84
-
27
111		 2021
£'000
83
-
25
108

The Council is aware of its obligations under the Welsh Government’s 2017 publication ‘Transparency of Senior Remuneration in the Devolved Welsh Public Sector’. The Chief Executive reports to the Chair and Vice Chair of the Council, who undertook an annual appraisal of performance against the Organisation’s goals in 2021-22, using qualitative and quantitative measures of performance. The remuneration of the Chief Executive, as a senior post-holder, is subject to annual consideration by the Search Committee, which decides whether Cost of Living settlements or other increments are applied to it.

Relationship of Chief Executive pay and remuneration expressed as a multiple:

Relationship of Chief Executive pay and remuneration expressed as a multiple:
2022 2021
£'000 £'000
Chief Executive basic salary as a multiple of the median of all AOC ALW staff 2.9
Chief Executive total emoluments as a multiple of the median of all AOC ALW
staff		 3.9

The above has been calculated based on full time equivalent salaries for all salaried and hourly paid staff. Total emoluments for the Chief Executive are formed of basic salary and pension contributions.

Compensation for loss of office paid to former key management personnel

Compensation for loss of office paid to former key management personnel
2022 2021
£'000 £'000
Compensation paid to former post-holders - contractual - -
Compensation paid to former post-holders - non contractual - -
Estimated value of other benefits, including provisions for pension benefits - -
Number of post-holders - -

Of the Governing Body, four staff members (2 resigned 30 April 2022) were the only Governors paid as employees of the Organisation during the year. All other Governors have the right only to receive payment for reimbursement of travel and subsistence expenses incurred in the course of their duties.

38

Adult Learning Wales Financial Statements for the Year Ended 31 July 2022

Notes to the accounts (continued)

Note
12 Other operating expenses
Teaching costs
Non teaching costs:
Teaching support services
Other support services
Administration and central services
General Education including Marketing & Promotional
Premises Costs
Consultancy
Branch Expenditure
Total
Other operating expenses included above:
Auditors' Remuneration:
External audit
Financial
Other
Internal audit
13 Interest and other finance costs
Net interest on defined pension liability
33
Interest on bank loans, overdrafts and other loans
Finance Leases
Total		 £'000
115
157
68
754
62
610
34
13
1,813
£'000
£'000
10
4
14
7
2022
£'000
86
-
-
86
2022		 £'000
61
134
83
495
90
348
43
8
1,262
£'000
£'000
10
4
14
9
2021
£'000
85
-
-
85
2021		 £'000
61
134
83
495
90
348
43
8
2021
1,262
9
2021
£'000
85
-
-
85

14 Taxation

The trustees do not believe that the Organisation, as a registered charity, was liable for any corporation tax arising out of its activities during either year.

15 Surplus/(deficit) on Continuing Operations for the period

The Organisation's surplus / (deficit) for the year 2022
£'000
(793)		 2021
£'000
(471)

39

Adult Learning Wales Financial Statements for the Year Ended 31 July 2022

Notes to the accounts (continued)

16
Tangible Fixed Assets
Cost or valuation
At 1 August 2021
Additions
Adjustments
Disposals
At 31 July 2022
Depreciation
At 1 August 2021
Charge for the year
Adjustments
Disposals
At 31 July 2022
Net Book Value at 31 July 2022
Net Book Value at 31 July 2021		 Freehold
Land &
Buildings
Long
Leasehold
Land &
Buildings
Property
Improve-
ments
Equip-
ment
Furniture,
Fixtures &
Fittings
Motor
Vehicles
Total
£'000
£'000
£'000
£'000
£'000
£'000
£'000
1,304
-
246
1,475
66
-
3,091
-
-
-
93
23
-
116
-
-
-
(156)
-
-
(156)
-
-
-
-
-
-
-
1,304
-
246
1,412
89
-
3,051
707
-
139
1,392
61
-
2,299
35
-
30
76
6
-
147
-
-
-
(156)
-
-
(156)
-
-
-
-
-
-
-
742
-
169
1,312
67
-
2,290
562
-
77
100
22
-
761
597
-
107
83
5
-
792
The Net Book Value of equipment does not include any amounts in respect of assets held under finance leases. The Net Book Value of equipment does not include any amounts in respect of assets held under finance leases.
17 Investments
2022 2021
Endowment Assets £'000 £'000
Balance at 1 August 1,559 1,289
Purchases of assets - 110
Sales of assets - (126)
Revaluation of endowment assets - -
Appreciation/(Depreciation) of endowment asset investments (84) 267
Movement in cash balances 4 19
Balance at 31 July 1,479 1,559
Represented by:
Equities, Bonds, Other 1,264 1,348
Cash and deposits 65 61
Land 150 150
1,479 1,559
18 Trade and other receivables 2022 2021
£'000 £'000
Amounts falling due within one year:
Trade receivables 114 34
Prepayments and accrued income 260 498
374 532

40

Adult Learning Wales Financial Statements for the Year Ended 31 July 2022

Notes to the accounts (continued)

19 Creditors: amounts falling due within one year 2022 2021
£'000 £'000
Notes
Trade payables 115 74
Other taxation and social security 105 92
Accruals - annual leave 120 125
Accruals - other 1,785 1,302
Deferred income - government capital grants 22 90 56
Deferred income - government revenue 361 415
Deferred income - other 530 538
Total 3,106 2,602
20 Creditors: amounts falling due after one year
Deferred income - government capital grants 22 170 212
Total 170 212
Defined Enhanced Total
benefit pensions
21 Provisions obligations
£'000 £'000 £'000
At 1 August 2021 5,376 25 5,401
Expenditure in the period (762) (6) (768)
Additions in the period (7,024) - (7,024)
At 31 July 2022 (2,410) 19 (2,391)

Defined benefit obligations relate to the liabilities under the Organisation's membership of the Local Government Pension Scheme. Further details are given in Note 33.

The enhanced pension provision relates to the projected costs of 3 former members of Coleg Harlech staff that left its employment by arrangement prior to the merger with the WEA (North Wales) in 2001. Due to uncertainty over life expectancy it is not possible to profile the enhanced pension provision.

22
Deferred income - Government Capital Grants
At 1 August 2021
Additional funding received
Released to income & expenditure account
At 31 July 2022		 £'000
268
114
(122)
260

41

Adult Learning Wales Financial Statements for the Year Ended 31 July 2022

Notes to the accounts (continued)

23 Endowments

Endowments
Period Ended 31 July 2022
Restricted
Books, Prizes &
Learning Supp
Materials Fund
£’000

Bursaries &
Scholar-
ships Fund
Books, Prizes &
Learning Supp
Materials Fund
General
Purposes
Fund
£’000
£’000
£’000
Unrestricted

Total
£’000
At 1 August 2021 as previously
stated
Depreciation of Endowment
Investments
Investment Income for year
Draw down from Endowments
Investment Management Expenses
At 31 July 2022
Split of Endowments
Endowments Investments
Endowments Fixed Assets		 1,215
(70)
12
-
(9)		 226 81 37
(5) (6) (3)
1 1 1
-
-
-
(1) (1)
-		 1,559
(84)
15
-
(11)
1,148 221 7535 1,479
1,148
-		 71 75 35
150
-
-		 1,329
150
1,148 221 75
35		 1,479

The Fixed Asset Endowments of £150,000 above refer to land owned at Astor Fields, Harlech. This was gifted for use as a general asset of the Organisation. A further £181,000 of the Endowments Investments (divided between all three of the defined Funds) are unrestricted in their application. The headings of the unrestricted funds reflect historical decisions of Coleg Harlech Workers' Educational Association North Wales (CHWEAN).

The majority of the Endowments total, however, is formed of the Tudor Bowen Jones Fund: this is a restricted fund of £1,148,000 included within the Books, Prizes and Learning Support Materials Fund above. Under the terms of the benefactor’s will, the original capital amount that established this Fund is to be retained intact by the Organisation until 2091. The income on that initial capital endowment can be drawn down in order to provide educational resources and materials for the Tudor Bowen Jones Library. In 2021/22: none (2020/21: none) of this income was used to purchase such materials.

Period Ended 31 July 2021 Period Ended 31 July 2021 Period Ended 31 July 2021
Restricted
Books, Prizes
and Learning
Support
Materials Fund
£’000


Bursaries &
Scholar-
ships Fund
Books, Prizes and
Learning Support
Materials Fund
General
Purposes
Fund
£’000
£’000
£’000
Unrestricted

Total
£’000
At 1 August 2020 as previously
stated
Appreciation of Endowment
Investments
Investment Income for year
Draw down from Endowments
Investment Management Expenses
At 31 July 2021
Split of Endowments
Endowments Investments
Endowments Fixed Assets		 971
241
12
-
(9)		 216 70 32
10 11 5
1 1
-
-
-
-
(1) (1)
-		 1,289
267
14
-
(11)
1,215 **2268137 **
1,559
1,215
-		 76 81 37
150
-
-		 1,409
150
1,215 22681
37		 1,559

42

Adult Learning Wales Financial Statements for the Year Ended 31 July 2022

Notes to the accounts (continued)

24
Cash and Cash Equivalents
1 August 2021
£'000
Cash and cash equivalents
5,205
Restricted Funds
10
Endowment Asset investments
61
Total
5,276
25
Cash and Cash Equivalents
Note
Cash
Co-op Bank accounts
Handelsbanken bank accounts
Branch Bank accounts
Barclays Bank accounts
Nationwide Building Society
Restricted Fund Accounts:
Keith Evans Fund Account
Alwyn Evans Fund Account
Dil Llewellyn Fund Account
Total cash & cash equivalents
26
Movement on General Reserves
Income & Expenditure Account Reserve
At 1 August
Transfer from/(to) branch reserves
Gain on disposal of assets
33
Branch reserves
At 1 August
Movement for year
Total general reserve
Balance Represented by:
Pension Reserve (FRS 102 (28))
33
As at 31 July
Income and expenditure account reserve excluding pension
reserve
Surplus for the year on continuing operations
Actuarial gain/ (loss) in respect of pension scheme		 Cash flows
£'000
689
-
4
693
2022
£'000
1
-
4,452
25
410
1,006
5,894
5
5
-
5,904
2022
£'000
(1,711)
(793)
-
-
8,623
6,119
25
-
25
6,144
2,410
3,734
6,144		 31 July 2022
£'000
5,894
10
65
5,969
2021
£'000
-
-
3,772
25
405
1,003
5,205
5
5
-
5,215
2021
£'000
(2,843)
(471)
7
-
1,596
(1,711)
31
(6)
25
(1,686)
(5,376)
3,690
(1,686)

43

Adult Learning Wales Financial Statements for the Year Ended 31 July 2022

Notes to the accounts (continued)

26
Restricted Reserves
Keith Evans Fund Account (Summer School/Scholarships)
Alwyn Evans Fund Account (Residential/Scholarships)
Dil Llewellyn Fund Account
As at 31 July
27
Revaluation Reserve
At 1 August
Transfer from Revaluation Reserve to General Reserve in respect of:
Revaluation of assets
At 31 July		 2022
£'000
5
5
-
10
2022
£'000
-
-
-		 2021
£'000
5
5
-
10
2021
£'000
-
-
-

28 Capital Commitments, Contingencies & Exceptional Items

There were no capital commitments and contingencies at year end or exceptional items during the year.

29 Lease Obligations

At 31 July the Organisation had minimum lease payments under non-cancellable operating leases as follows:

Future minimum lease payments due
Land and buildings
Not later than one year
Later than one year and not later than five years
Later than five years
Other
Not later than one year
Later than one year and not later than five years
Later than five years		 2022
£'000
69
70
-
139
13
11
-
24		 2021
£'000
66
112
-
178
12
16
-
28

30 Events after the reporting period

There are no events after the reporting period.

44

Adult Learning Wales Financial Statements for the Year Ended 31 July 2022

Notes to the accounts (continued)

31 Related Party Transactions

Due to the nature of the Organisation's operations and the composition of the Governing Body 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 Governing Body may have an interest. All transactions involving such organisations are conducted at arm's length and in accordance with the Organisation's financial regulations and normal procurement procedures.

The total of expenses paid to Governors during the year was £379; 22 Governors (2021: nil; 23 Governors). This represents travel and subsistence expenses and other out of pocket expenses incurred in attending Governor meetings and charity events in their official capacity.

During the year 4 staff Governors (2 resigned 30 April 2022, 2 commenced duties 14 June 2022) received remuneration from the Organisation to the value of £31,098 (2021: 3 staff Governors; £33,530). No other Governor has received remuneration or waived payments from the Organisation during the year (2021: nil).

Neath & Port Talbot CBC - Councillor Sonia Reynolds (Gwaun-Cae-Gurwen and Lower Brynaman ward) was a Governor of the Organisation during the year. Sales transactions in the year amounted to £12,180 (2021: £2,850). There were no purchase transactions during the year (2021: nil) or balances outstanding at the year end (2021: nil).

Canolfan Maerdy - Councillor Sonia Reynolds was a Governor of the Organisation during the year and a Director of Canolfan Maerdy. Sales transactions in the year amounted to £8,620 (2021: nil). There were no purchase transactions during the year (2021: nil) or balances outstanding at the year end (2021: nil).

Wales TUC Cymru - Marion Burke (Policy Officer, Wales TUC Education) was a Governor of the Organisation during the year and employed by Wales TUC Cymru. Sales transactions in the year amounted to £103,113 (2021: £104,148). There were balances of £26,894 outstanding at the year end (2021: nil). Purchase transactions during the year amounted to £700 (2021: nil). There were no balances outstanding at the year end (2021: nil).

Geirda - Siôn Aled Owen was a Governor of the Organisation during the year and owner of Geirda translation and interpretation services. There were no sales transactions during the year (2021: nil). Purchase transactions during the year amounted to £613 (2021: £1,628). There were no balances outstanding at the year end (2021: nil).

Vale of Glamorgan Council - Councillor Chris Franks (Dinas Powys ward, from 5 May 2022) was a Governor of the Organisation during the year. Sales transactions in the year amounted to £180 (2021: £300). Purchase transactions during the year amounted to £2,061 (2021: £1,481). There were no balances outstanding at the year end (2021: nil).

Cardiff Council - Caroline Davies was a Governor of the Organisation during the year and employed by Cardiff Council. Sales transactions in the year amounted to £300 (2021: nil). Purchase transactions during the year amounted to £5,441 (2021: nil). There were no balances outstanding at the year end (2021: nil).

32 AMOUNTS DISBURSED AS AGENT

Learner Support Fund - Financial Contingency Fund (FCF)

WG Grant for year
Interest earned
Paid to third party
Disbursed to students
Other including administration costs
Balances unspent as at 31 July, including accrued income*		 Year Ended
31 July 2022
£'000
70
-
70
29
4
2
35		 Year Ended
31 July 2021
£'000
46
-
46
8
1
2
35

Welsh Government FCF grants are available solely for eligible students.

  • Where the Organisation has paid a third party, the related Income and Expenditure has been included within the Statement of Comprehensive Income.

** Where the Organisation acts as a paying agent the grants and related disbursements are excluded from the Statement of Comprehensive Income.

45

Adult Learning Wales Financial Statements for the Year Ended 31 July 2022

Notes to the accounts (continued)

33 Pension and Similar Obligations

The Organisation's employees belong to two principal post-employment benefit plans: The Teachers' Pension Scheme England and Wales (TPS) for academic and related staff; and The Local Government Pension Scheme (LGPS) for nonteaching staff, which is managed by City and County of Cardiff and Gwynedd Council. Both are multi-employer definedbenefit plans.

The pension costs are assessed in accordance with the advice of independent qualified actuaries. The latest formal actuarial valuation of the TPS was 31 March 2016 and of the LGPS 31 March 2019.

Total pension cost for the year
Teachers' Pension Scheme (TPS): contributions paid
Aviva Pension Scheme
Local Government Pension Scheme:
Contributions paid Cardiff & Vale of Glamorgan (CVG)
Contributions paid Gwynedd (GC)
FRS 102 (28) charge Cardiff & Vale
FRS 102 (28) charge Gwynedd
Charge to the Statement of Comprehensive Income
Enhanced pension charge to Statement of Comprehensive Income
Total Pension Cost for Year within staff costs		 2022
£'000

285
-
584
178
394
357
1,512
-
1,798		 2021
£'000
241
-
545
207
382
232
1,366
-
1,607		 2021
£'000
241
-
545
207
382
232
1,366
-
1,607
1,607

There were no outstanding or prepaid contributions at either the beginning or the end of the financial year (2020/21: nil) included within creditors.

Teachers' Pension Scheme

The Teachers' Pension Scheme (TPS) is a statutory, contributory, defined benefit scheme, governed by the Teachers' Pension Scheme Regulations 2014. These regulations apply to teachers in schools, colleges and other educational establishments. Membership is automatic for teachers and lecturers at eligible institutions. Teachers and lecturers are able to opt out of the TPS.

The TPS is an unfunded scheme and members contribute on a 'pay as you go' basis - these contributions, along with those made by employers, are credited to the Exchequer under arrangements governed by the above Act. Retirement and other pension benefits are paid by public funds provided by Parliament.

Under the definition set out in FRS 102 (28.11), the TPS is a multi-employer pension plan. The Organisation is unable to identify its share of the underlying assets and liabilities of the plan.

Accordingly, the Organisation 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 Organisation has set out above the information available on the plan and the implications for the Organisation in terms of the anticipated contribution rates.

The valuation of the TPS is carried out in line with regulations made under the Public Service Pension Act 2013. Valuations credit the teachers' pension account with a real rate of return assuming funds are invested in notional investments that produce that real rate of return.

46

Adult Learning Wales Financial Statements for the Year Ended 31 July 2022

Notes to the accounts (continued)

33 Pension and Similar Obligations (continued)

The latest actuarial review of the TPS was carried out as at 31 March 2016. The valuation report was published by the Department for Education (DfE) in April 2019. The valuation reported total scheme liabilities (pensions currently in payment and the estimated cost of future benefits) for service to the effective date of £218 billion, and notional assets (estimated future contributions together with the notional investments held at the valuation date) of £198 billion, giving a notional past service deficit of £22 billion.

As a result of the valuation, new employer contribution rates were set at 23.68% of pensionable pay from September 2019 onwards (compared to 16.48% during 2018/19). DfE has agreed to pay a teacher pension employer contribution grant to cover the additional costs during the 2021-22 academic year.

A full copy of the valuation report and supporting documentation can be found on the Teachers’ Pension Scheme website.

The pension costs paid to TPS in the year amounted to £285,162 (2021: £240,558).

Local Government Pension Scheme

The LGPS is a funded defined-benefit plan, with the assets held in separate funds administered by City and County of Cardiff (CCC) and Gwynedd Council (GC). The total contributions made for the year ended 31 July 2022 were £942,642 of which employer's contributions totalled £761,365 and employees' contributions totalled £181,276. The agreed contribution rates for future years are 32.7% from April 2022 for Cardiff & Vale of Glamorgan LGPS and 23.7% for Gwynedd LGPS for the Organisation and range from 5.5% to 12.5% for employees, depending on salary.

Due mainly to the exceptional circumstances linked to the Covid-19 pandemic, the net pension liability recognised on the balance sheet increased to £6.3 million as at 31 July 2020 compared to £2.5 million at 31 July 2019. This was mainly due to reduced yields on corporate bonds (upon which the discount rate is determined) and volatile investment returns linked to the pandemic. There is a £2.4 million surplus as at 31 July 2022 compared to a £5.4 million liability as at 31 July 2021.

Local Government Pension Scheme - Cardiff & Vale of Glamorgan LGPS

Principal Actuarial Assumptions

The following information is based upon a full actuarial valuation of the fund at 31 March 2019 updated to 31 July 2021 by AON:

by AON:
At 31 July 2022 At 31 July 2021
% pa % pa
Discount rate 3.4 1.7
CPI Inflation 2.5 2.6
Pension Increase 2.5 2.6
Pension accounts revaluation rate 2.5 2.6
Salary increases 3.5 3.6

Mortality Assumptions

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

At 31 July 2022 At 31 July 2021
years years
Current Pensioners
Male 22.1 22.3
Female 24.6 24.7
Future Pensioners*
Male 23.2 23.3
Female 26.0 26.1

47

Adult Learning Wales Financial Statements for the Year Ended 31 July 2022

Notes to the accounts (continued)

33 Pension and Similar Obligations (continued)

Local Government Pension Scheme - Cardiff & Vale of Glamorgan LGPS (continued) Asset allocation and expected return on assets

Asset allocation and expected return on assets
Equities
Property
Government bonds
Corporate bonds
Multi Asset Credit
Cash
Other
Total		 %
£'000
67.2
6,256
7.5
698
9.0
838
8.0
745
5.6
521
2.7
251
-
-
100
9,309
Value at
31 July 2022		 %
£'000
66.5
5,994
6.6
595
10.1
910
15.2
1,370
-
-
1.6
144
-
-
Value at
31 July 2021
100
9,013

Reconciliation of funded status to Balance Sheet

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

Fair value of plan assets
Present value of plan liabilities
Net pensions (liability)/asset		 2022
2021
£'000
£'000
9,309
9,013
(8,308)
(11,897)
1,001
(2,884)

The split of the liabilities at the last valuation between the various categories of members is as follows:

Active members 78%
Deferred Pensioners 8%
Pensioners 14%

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

Amounts included in staff costs
Current service cost
Past service cost
Curtailment cost
Total
Amounts included in Finance costs (Note 13)
Interest on net defined benefit liability / (asset)
Total
Amount recognised in Other Comprehensive Income
Asset gains/(losses) arising during the period
Liability gains/(losses) arising during the period
Total amount recognised in Other Comprehensive Income		 2022
£'000
978
-
-
978
44
1,022
(374)
4,697
4,323		 2021
£'000
911
-
16
927
46
973
1,286
(160)
1,126

48

Adult Learning Wales Financial Statements for the Year Ended 31 July 2022

Notes to the accounts (continued)

33 Pension and Similar Obligations (continued)

Local Government Pension Scheme - Cardiff & Vale of Glamorgan LGPS (continued)

Actual Return on Assets
Interest income on plan assets
Gain / (loss) on assets
Actual return on assets
Movement in net defined benefit (liability) / asset during year
Net defined benefit (liability) / asset in scheme at 1 August
Movement in year:
Current service costs
Past service costs
Curtailment costs
Employer contributions
Net interest on the defined (liability) / asset
Actuarial gain / (loss)
Net defined benefit (liability) / asset in scheme at 31 July
Changes to the present value of the defined benefit obligation
Opening defined benefit obligation
Current service cost
Interest expense on defined benefit obligation
Contributions by Scheme participants
Experience (gains) / losses on defined benefit obligations
Net Benefits paid out
Past service cost
Curtailment cost
Closing defined benefit obligation
Changes in the fair value of plan assets
Opening fair value of plan assets
Interest income on plan assets
Remeasurement gains / (losses) on plan assets
Contributions by employer
Contributions by Scheme participants
Net benefits paid out
Closing fair value of plan assets		 2022
£'000
158
(374)
(216)
2022
£'000
(2,884)
(978)
-
-
584
(44)
4,323
1,001
2022
£'000
11,897
978
202
122
(4,697)
(194)
-
-
8,308
2022
£'000
9,013
158
(374)
584
122
(194)
9,309		 2021
£'000
103
1,286
1,389
2021
£'000
(3,582)
(911)
-
(16)
545
(46)
1,126
(2,884)
2021
£'000
10,632
911
149
122
160
(93)
-
16
11,897
2021
£'000
7,050
103
1,286
545
122
(93)
9,013

Deficit contributions

After a triennial valuation in March 2019 the contribution rate was increased to 28.9% (20/21), 30.8% (21/22) and 32.7% (22/23) with no additional deficit payments due for the three years. These are awaiting review based on the results of the triennial valuation of March 2022.

49

Adult Learning Wales Financial Statements for the Year Ended 31 July 2022

Notes to the accounts (continued)

33 Pension and Similar Obligations (continued)

Local Government Pension Scheme - Gwynedd LGPS

Principal Actuarial Assumptions

The following information is based upon a full actuarial valuation of the fund at 31 March 2019 updated to 31 July 2022 by Hymans Robertson LLP:

At 31 July 2022 At 31 July 2021
% pa % pa
Discount Rate 3.5 1.6
Pension Increase Rate 2.75 2.85
Salary Increase Rate 3.05 3.15

Mortality Assumptions

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

At 31 July 2022
years
Current Pensioners
Male
21.3
Female
23.7
Future Pensioners*
Male
22.4
Female
25.7
figures assume members aged 45 as at the last formal valuation date
Value at
At 31 July 2022
%
Equities
71
Property
10
Bonds
-
Cash
19
Total
100
Asset allocation and expected return on assets*		 At 31 July 2021
years
21.5
23.9
22.7
25.9
Value at
At 31 July 2021
%
73
8
-
19
100

Reconciliation of funded status to Balance Sheet

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

Fair value of plan assets
Present value of plan liabilities
Net pensions (liability)/asset		 2022
£'000
9,027
(7,618)
1,409		 2021
£'000
8,667
(11,159)
(2,492)

50

Adult Learning Wales Financial Statements for the Year Ended 31 July 2022

Notes to the accounts (continued)

33 Pension and Similar Obligations (continued)

Local Government Pension Scheme - Gwynedd LGPS (continued)

The split of the liabilities at the last valuation between the various categories of members is as follows:

Active members 23%
Deferred Pensioners 38%
Pensioners 39%

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

follows:
Amounts included in staff costs
Current service cost
Past service cost
Total
Amounts included in Finance costs (Note 13)
Net interest on defined pension liability / (asset)
Total
Amount recognised in Other Comprehensive Income
Asset gains/(losses) arising during the period
Liability gains/(losses) arising during the period
Total amount recognised in Other Comprehensive Income
Actual Return on Assets
Interest income on plan assets
Gain / (loss) on assets
Actual return on assets
Movement in net defined benefit (liability) / asset during year
Net defined benefit (liability) / asset in scheme at 1 August
Movement in year:
Current service cost
Past service cost
Employer contributions
Net interest on the defined (liability) / asset
Actuarial gain / (loss)
Net defined benefit (liability) / asset in scheme at 31 July		 2022
£'000
(535)
-
(535)
(42)
(577)
193
4,107
4,300
2022
£'000
139
193
332
2022
£'000
(2,492)
(535)
-
178
(42)
4,300
1,409		 2021
£'000
(439)
-
(439)
(39)
(478)
1,460
(990)
470
2021
£'000
99
1,460
1,559
2021
£'000
(2,691)
(439)
-
207
(39)
470
(2,492)

51

Adult Learning Wales Financial Statements for the Year Ended 31 July 2022

Notes to the accounts (continued)

33 Pension and Similar Obligations (continued)

Local Government Pension Scheme - Gwynedd LGPS (continued)
Changes to the present value of the defined benefit obligation
Opening defined benefit obligation
Current Service Cost
Past Service Cost
Interest expense on defined benefit obligation
Contributions by Scheme participants
Experience (gains) / losses on defined benefit obligations
Net Benefits paid out
Closing defined benefit obligation
Changes in the fair value of plan assets
Opening fair value of plan assets
Interest income on plan assets
Remeasurement gains / (losses) on plan assets
Contributions by employer
Contributions by Scheme participants
Net benefits paid out
Closing fair value of plan assets		 2022
£'000
11,159
535
-
181
57
(4,107)
(207)
7,618
2022
£'000
8,667
139
193
178
57
(207)
9,027		 2021
£'000
9,745
439
-
138
56
990
(209)
11,159
2021
£'000
7,054
99
1,460
207
56
(209)
8,667

After a triennial valuation in March 2019 the contribution rate was decreased to 23.7% until 22/23 with no additional deficit payments due for this period. These are awaiting review based on the results of the triennial valuation of March 2022.

The figures disclosed within these accounts relating to the Cardiff & Vale and Gwynedd Local Government Pensions schemes, reflect the impact of the McCloud / Sergeant judgment which ruled that the transitional protection for some members of public service schemes implemented when they were reformed constituted age discrimination. This provision is just under 2% of the total scheme liability as at 31 July 2022. The calculation of adjustment to past service costs, £7 billion, arising from the outcome of the Court of Appeal judgment is based on a number of key assumptions including:

The other financial and demographic assumptions adopted to calculate the past service cost are the same as those used to calculate the overall scheme liability. Adopting different assumptions, or making other adjustments to reflect behavioural changes stemming from the judgment, would be expected to change the disclosed past service cost. Similarly, allowing for variations in individual members’ future service or salary progression is expected to produce higher costs. The past service cost is particularly sensitive to the difference between assumed long term general pay growth and the Consumer Price Index (CPI). If the long term salary growth assumptions were 0.5% pa lower, then the past service cost disclosed here would be expected to reduce by 50% and conversely a 0.5% pa increase would increase the estimated cost by 65%.

52

Addysg Oedolion Cymru | Adult Learning Wales Company Number: 3109524

Oedollon Adult Wal•s