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← The City Literary Institute

2024-07-31-accounts

The City Literary Institute, a company limited by guarantee Registered in England & Wales, Company No.: 02471686 Registered Office: 1-10 Keeley Street WC2B 4BA Registered Charity No.: 803007

The City Literary Institute Annual Report 2024

Annual Report 2024 | City Lit

Contents

Message from the Chair of Governors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Key Highlights and Achievements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Message from CEO and Principal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 About City Lit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Operating and Financial Review (including the Strategic Report). . . . . . . . . . . . . . . . . . . . . 15 Disclosure of Information to Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Statement of Corporate Governance and Internal Control . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Statement of Regularity, Propriety and Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Statement of Responsibilities of City Lit’s Governing Body . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Independent Auditor’s Report to the Members of the City Literary Institute . . . . . . . . . . . 35 Reporting Accountant’s Assurance Report on Regularity . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . 39 Financial Statements for the Year Ended 31 July 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 Notes to the Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

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Annual Report 2024 | City Lit

Message from The Chair of Governors

Lindsay Nicholson MBE

As I write this message, I am nearing the close of my second year as Chair of Governors of City Lit. It has been a privilege and a pleasure to work with the dedicated staff and fellow governors of this remarkable institution, and to witness the impact of lifelong learning on so many lives.

City Lit is rightly heralded as ‘London’s leading adult education college. For me, it is so much more than that – as it demonstrates a microcosm of London, offering high quality educational choices for all; support for those on career transitions; and probably most importantly offering an environment that is open, challenging and fun.

The past year has been one of growth and development. We have seen significant growth in learner participation, with a 13% increase in enrolments. We embraced new ways of learning and teaching in recent years, and we continue to enhance our online and blended offer. I am immensely proud of how City Lit has maintained the high standards of quality and excellence, as evidenced by our outstanding Ofsted inspection in May 2023, which recognised our exceptional provision across all areas of assessment.

As a Governing Body, we continue to believe there are three key measures to the Institute’s success:

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As we look ahead to the next year, we are optimistic and ambitious for the future of City Lit. We have agreed a new Strategic Plan, which sets out the key milestones that we want to achieve over the next five years. This strategic direction, coupled with an improving financial position, and a talented and committed team of staff and tutors led by the Principal and senior leadership team, put us in good stead for the next half decade.

We are grateful for the support and collaboration of our partners, funders, and stakeholders, who share our vision and values. Together we will continue to champion the cause of adult education, and to celebrate the joy and power of learning.

The Board looks forward to being part of the College’s ongoing achievements and success, supporting and challenging in equal measure.

Lindsay Nicholson MBE Chair of Governors

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Key Highlights & Achievements

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Message from CEO and Principal

Mark Malcomson CBE

2023-24 was a good year for City Lit. We continued to build on the success of our Ofsted inspection in May 2023, where the college was rated as ‘Outstanding’ across all areas. We have seen our enrolments increase by 13%, enabling us to deliver our purpose of ‘Bringing people together to enrich lives through learning’ to more Londoners and nationally. Over 26,000 students were part of the City Lit community during the last year, both in-person and online.

As the leading adult education college in Britain - and the largest in Europe - we provide an unparalleled number of high-quality courses and an outstanding learning experience. We endeavour to enrich the lives of all of those who interact with us. Throughout our history we have embraced the diversity of London and welcomed everyone, whatever their background or ambition, to learn as equals and being better for it.

We constantly refresh and reinvigorate our curriculum, which is a never-ending process that our colleagues take huge pride in. Our online courses, initially developed in response to the pandemic, have become a significant part of our offer. This means we reach learners across the country where adult education is often in short supply. Last year has seen a particular focus on expanding our skillsbased provision, drawing on funds specifically targeted at those students seeking out new skills in the furtherance of their careers. Ensuring learners have the skills for multiple careers throughout their lives is a key area of focus for our new Strategic Plan that we developed this year, which sets out our main aims and objectives for the next 5 years.

Bringing people together to enrich lives through learning

City Lit is not just an adult education college. Whilst we pride ourselves on the world-class teaching that we deliver, we also contribute hugely to the well-being of our students and help support many communities with the work that we do. We serve people by helping them to fulfil an aspiration, which might be to get a better job, or learn a new skill, or satisfy their curiosity. We also improve people’s wellbeing, both physical and mental, and provide multiple communities to support our learners in their studies and lives. In serving these different elements, we help people realise their potential and improve their lives and, as a result, make a significant contribution to creating a better society.

College finances

The events of the past few years have placed huge financial strain on the college. This was further complicated last year by the reclassification of colleges from the private to the public sector, by the Office of National Statistics (ONS). As a result of this reclassification the college had to negotiate a long-term loan with the Department for Education, adding an additional strain on already stretched resources. During the year we renegotiated the terms of this loan with the DfE, to reduce the burden that it places on the college. We have continued to work closely with the Further Education Commissioner’s (FEC) team to restore the college finances. Our student fee income grew by over 11% last year, but with Government funding flatlining for the second consecutive year, our finances remain tight. It was also hugely disappointing that the previous Government refused to support adult colleges

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with additional funds to support pay rises. This was in stark contrast to the money given to schools and general further education colleges for pay.

Fellows and friends

One of the highlights of this year was the appointment of four new Fellows, who have made significant contributions to their fields of expertise and to the wider society. They are: Will Gompertz, the BBC's arts editor and a bestselling author; Claudette Johnson MBE, a celebrated artist and activist, and former City Lit student and tutor; Professor Olivette Otele, a leading historian and the first black woman to hold a chair in history in the UK; and Russell Tovey, a popular actor and art enthusiast. We are honoured and delighted to have them join our Fellowship, and we look forward to working with them to promote the value and importance of adult education.

Our core purpose is: To bring people together to enrich lives through learning.

Our new strategy comprises three core goals:

  1. We put our students at the heart of everything we do

  2. We have a commitment to excellence

  3. We deliver social and community value

All our Fellows provide tireless support for our causes by speaking at events and using their influence to promote our values. Malorie Blackman, Dame Evelyn Glennie, Ed Balls and Vince Cable were all active members of the City Lit community during the year supporting our endeavours. A particular highlight was 'In conversation with Dame Mary Beard', where Mary discussed her new book 'Emperor of Rome' which filled our theatre to capacity. We were also delighted that City Lit Fellow, and a huge advocate of ours, Rt Hon David Lammy became Foreign Secretary in July.

On a more sombre note, our great friend and Fellow, Jeremy Swain, died this year. His tireless advocacy on behalf of those who have experienced homelessness will be hugely missed, as will his irrepressible humour and joy of life. In his honour we have named our partnership award after Jeremy and it will be presented at our Annual Awards later this year.

Support from the Board and Colleagues

So much has been achieved by the tremendous work of all our amazing staff and tutors. Nothing that has been done this year could have been achieved without their dedication and commitment. It is an honour and a privilege to serve alongside truly inspirational professionals, who go the extra mile in ensuring that this great Institution continues to educate and support students.

We are delighted to be supported by a talented Board of Governors, Chaired by Lindsay Nicholson, MBE. Lindsay became Chair at the end of 2022, and we are hugely grateful for her stewardship and leadership since then. From a personal perspective, I could not have wished to work with a more committed Chair and feel honoured that we have partnered together to ensure that City Lit remains a cultural and educational beacon.

Mark Malcomson CBE Principal and Chief Executive

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Shani Akilah

Creative Writing

I signed up to a short stories course at City Lit in 2019 and five years later I am now a published author of a short story collection called ‘For Such A Time As This’ (Oneworld). The various courses I completed at City Lit were instrumental in my journey to publication, allowing me to develop my craft as a writer.

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Akin Omobitan

v Counselling

I chose to study counselling here at City Lit, as I was trying to re-direct my career and do something different with my life.

What I enjoy most about studying at City Lit, is that unlike many other counselling places, there is a lot on offer here at City Lit. I had so many conversations with individuals who were doing different things with their lives and that range of experiences is very helpful especially studying counselling. It was galvanizing to be reminded that there are other people here at City Lit who want to do things, whether it be for career or hobbies, and shake their lives up, and perhaps bring about some change.

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Susannah Goulding

Visual Arts

Three years ago, my whole life changed when I was diagnosed with incurable metastatic cancer throughout my whole skeleton. I lost everything. I lost my job. I lost my sense of identity, my sense of self and I really didn’t know what to do. I had an artist inside of me that wanted to say something but didn’t even know where to begin. City Lit courses, have been totally and utterly life changing.

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About City Lit

City Lit (The City Literary Institute) has a national and international reputation as a leading provider of part-time learning for adults.

Established in 1919 to improve post-war literacy, the Institute today offers over 5,000 courses, including 1,700 online courses, to over 26,000 students a year. Our wide range of courses include: visual and performing arts, languages, computing, counselling, health and movement, humanities, deaf education, speech therapy and provision for adults with learning disabilities.

We also work in communities across London with disadvantaged groups including: the homeless, immigrants and refugees and ex-offenders.

Based in London’s Covent Garden, City Lit occupies a purpose-designed home for adult learning and is the largest adult education institute in Europe.

City Lit is graded ‘Outstanding' by OFSTED and over 95% of our students rate our courses ‘good’ to ‘excellent’. We hold the Queen’s Anniversary Prize for outstanding work in the field of speech therapy and many of our teachers continue to be distinguished professionals including well-known authors, artists, actors, broadcasters, musicians and academics.

Famous alumni include: David Bowie; actors Steven Berkoff and Richard Wilson; authors Jake Arnott, Andrea Levy and former Children’s Laureate, Malorie Blackman; comedians Jimmy Carr and Shazia Mirza.

City Lit is Where London learns...

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Fundraising

City Lit does not fundraise directly with individuals and therefore is not registered with the Fundraising Regulator. When donations from individuals are received City Lit aims to protect personal data and does not sell or swap data with other organisations. City Lit manages its own fundraising activities and undertakes to react to and investigate any complaints regarding its fundraising activities and to learn from them and improve its service. During the year ended 31 July 2024, City Lit did not receive any complaints about its fundraising activities.

Public Benefit

City Lit is a registered charity (charity number 803007) under Part 3 of the Charities Act 2011 and is regulated by the Secretary of State for Education. The members of the Governing Body, who are trustees of the charity, are listed on pages 24 and 25. In setting and reviewing City Lit’s strategic objectives, the Governing Body has had due regard for the Charity Commission’s guidance on public benefit and particularly upon its supplementary guidance on the advancement of education. The guidance sets out the requirement that all organisations wishing to be recognised as charities must demonstrate, explicitly, that their aims are for the public benefit. In delivering its mission, City Lit provides the following identifiable public benefits through the advancement of adult education: quality teaching and course offering, inclusive approach to student enrolment, tackling social exclusion and encouraging social participation, providing solutions to education inequality and delivering robust student support programmes.

Force for good

City Lit prides itself on being inclusive and serving areas of the community that often get neglected in an adult college environment, these include:

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We adopt the same approach and dedicate the same resources to fulfil the demands of these groups as we would for any other department within the Institute. The number of awards received for our work with these groups evidences this along with our reputation for delivering quality learning and making a real difference to people’s lives.

We are one of the country’s leading adult Deaf Education facilities. Not only do we support many deaf students developing skills in English, Maths and Computing, we also support many of those who work with deaf adults. Our British Sign Language courses are attended by people working in many aspects of London life where deaf awareness helps to support deaf people such as hospital trusts; schools and universities; and the police.

Our approach to Speech Therapy has gained national and international recognition as a centre of excellence. Our tutors have published the methodology that we use and they are widely cited throughout the world with many professionals believing that ours is the most effective way to help people with stammers. As well as specialising in therapy for people who stammer we also work with people who have suffered from speech impairment as a result of a head injury or stroke. Our

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methodology and therapy helps improve speech, builds confidence and enables people to contribute more positively in all aspects of their lives, particularly at work.

We believe that everyone is entitled to a second chance at education. We know much more now about learning difficulties than we did 20 years ago when children would usually have slipped through the traditional education system with little or no support. Students with learning difficulties at City Lit have opportunities to learn skills in a safe and encouraging environment, which builds confidence, pride and often leads to employment or further education. Our team works hard to ensure that the participants’ positive learning experience continues outside of the classroom, including pathways into work.

In addition to these very specific areas we also know that City Lit as a whole provides Health and Wellbeing benefits to many of our students, particularly our more mature students. Dementia has now been cited as the biggest threat to life and whilst the research continues, it has been claimed that maintaining an active body and mind helps to combat the onset of symptoms. We are also aware that loneliness can lead to mental health issues and we have always believed that in a digital age there is still a real need for interaction with other people in an open and social environment, something that City Lit provides.

Our ‘public benefit’ touches all parts of our work at City Lit from the plays that are performed to public, to artwork that is displayed for all to see, to the stimulating debates that provide a sense of purpose, to the nurturing of talent such as Andrea Levy, Malorie Blackman and Grayson Perry who entertain, amuse and stimulate millions of people through their work.

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Charitable status

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Operating and Financial Review (including the Strategic Report)

Performance indicators

City Lit is required to complete the annual Finance Record for the Education and Skills Funding Agency (ESFA). The Finance Record produces a financial health grading. The impact of the pandemic caused our grading to fall to ‘Inadequate’ in 2019-20. Our grading returned to ‘Requires Improvement’ in 202122, two years earlier than anticipated. This was achieved through targeted cost savings and re-growing student fee income. Our financial result for this year was in line with our budgeted expectations and our financial health grade remains ‘Requires Improvement’, with an improvement in the overall score.

We continue to work with the Further Education Commissioner's team to restore our financial health to pre-pandemic levels. We have seen encouraging growth in student fee income in the past year, which is a key driver in this recovery. Following the reclassification of colleges by the ONS into the public sector, we were required to convert commercial finance to a long-term loan with the DfE. We renegotiated the terms of this loan during the year, to enable us to rebuild our cash reserves.

Treasury policies and objectives

Treasury management is the management of City Lit’s cash flows, its banking and investment transactions; the effective control of the risks associated with those activities; and the pursuit of optimum performance consistent with those risks. The Principal, who is also the Accounting Officer, authorises all significant investment transactions.

Following the reclassification of colleges to public sector in November 2022, all borrowing now requires the permission of the Department of Education. In 2022-23 we negotiated a long-term loan from the Department of Education in order to repay our commercial overdraft and secure future working capital.

We received a loan of £2.85m on 31 July 2023. During the year we renegotiated the terms of this loan with the DfE, to reduce the burden that it places on the college. Under the new terms of the loan we have an interest payment holiday for the financial year 2024-2025, with the interest owed added to the loan balance each quarter. We have also negotiated a capital repayment holiday for the next three financial years. The rate of interest remains at the rate of the Public Works Loan Board (PWLB) standard rate, which increased from 4.97% to 5.6% on 1 April 2024. The term of the loan has been extended by 3 years, to a total of 20 years. At the end of the capital repayment holiday, the capital will be repaid over the remaining 17 years, unless we submit a business case to the DfE to review the capital repayment terms, which would require their approval.

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Financial results

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----- Start of picture text -----
2023-24 2022-23
£’000 £’000
Income
Funding body grants 10,298 9,756
Student fees and educational contracts 9,051 8,118
Other income 335 300
19,684 18,174
Expenditure (19,941) (18,335)
-
Loss on disposal of assets (38)
Deficit (before actuarial pension & other adjustments) (295) (161)
----- End of picture text -----

Student fee income was £9.1m, an 11% increase of on the last financial year but still 17.2% lower than the pre-pandemic level in 2018-19. Our average enrolments have increased over the last year which has contributed to the increase in fee income.

We have continued to see students returning in higher numbers to attend classes in person in curriculum areas that were not able to offer a full provision during the pandemic, in particular the School of Performing Arts and the School of Visual Arts.

Our core funding from the ESFA and GLA has remained static, however we have provided courses to support the GLA’s Free Course for Jobs and Multiply initiatives which have contributed to an increase in overall income. We have also accrued £227,000, for additional funding we expect to receive from the GLA after the year end, based on the growth in learner hours we have seen this year and the over delivery of provision achieved.

Overall the Institute ended the year with a deficit, before actuarial pension adjustments and exceptional costs of £295,000 (2022-23: deficit of £161,000). The result for the year including pension adjustments and exceptional costs was a deficit of £328,000 (2022-23: surplus of £6,065,000). At 31 July 2024, City Lit had net assets of £7,387,000 (2022-23: net assets of £7,715,000).

Pension liability

At the year end the defined benefit pension had an accounting surplus of £2,868,000 (2022-23: pension surplus of £3,071,000). The discount factor used to calculate the pension valuation has decreased from 5.15% to 5.05%, resulting in a decrease in the surplus. In accordance with our post retirements benefits accounting policy we have not recognised the surplus in the financial statements. The pension valuation for 2023-24 is therefore £nil (2022-23: pension liability of £nil).

This valuation is purely for the purposes of the financial statements, under the FRS102 accounting standard. The value recognised on the balance sheet differs from the last actuarial scheme valuation at 31 March 2022 which shows that we have a funding surplus of £3.48m and are 118.5% fully funded. Our employer contribution rate remains at 13.6%.

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Cash flow

City Lit’s cash inflow from operating activities was £1,092,000 (2022-23: £468,000 inflow). There was an overall improvement in the Institute’s cash position as a result of the increase in fee income during the year.

Reserves policy

Our sector and its financial model, which relies on a significant amount of statutory funding, does not lend itself to the accumulation of free reserves in the short to medium term. The Governing Body reviewed the reserves policy during the year and made no changes. However, the Governing Body recognises its responsibility to have financial headroom in the event of any financial shock. Following the reclassification of colleges to the public sector, the Institute can no longer utilise a bank overdraft facility to provide such headroom. The Institute negotiated a long-term loan with the Department of Education to repay the overdraft and fund future working capital requirements. Going forward, such headroom is now only available from management’s proven ability to reduce variable expenditure when necessary in a strictly prioritised and controlled manner. Our net current liability at 31 July 2024 was £1,839,000 (2023: £1,952,000).

Payment performance

The Late Payment of Commercial Debts (Interest) Act 1998, which came into force on 1 November 1998, requires colleges, 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.

The target set by the Treasury for payment to suppliers within 30 days is 95%. During the year ended 31 July 2024, City Lit paid 90% of its invoices within 30 days (2022-23: 87%).

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Streamlined energy and carbon reporting

The College’s greenhouse gas emissions and energy use for the period are set out below:

UK Greenhouse gas emissions and energy use
data for the period
Energy consumption used to calculate emissions (kWh)
Scope 1 emissions in metric tonnes CO2e
Gas consumption
Scope 2 emissions in metric tonnes CO2e
Purchased electricity
Scope 3 emissions in metric tonnes CO2e		 UK Greenhouse gas emissions and energy use
data for the period
Energy consumption used to calculate emissions (kWh)
Scope 1 emissions in metric tonnes CO2e
Gas consumption
Scope 2 emissions in metric tonnes CO2e
Purchased electricity
Scope 3 emissions in metric tonnes CO2e		 1 August 2023 to
31 July 2024
1,300,362
91.50
165.48		 1 August 2022 to
31 July 2023
1,242,090
83.92
151.29
Business travel in employee owned vehicles - -
Total gross emissions in metric tonnes CO2e 256.98 235.21
Intensity ratio
Metric tonnes CO2e per student 0.01 0.01

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Qualification and reporting methodology

We have followed the HM Government Environmental Reporting Guidelines issued in March 2019. We have also used the GHG Reporting Protocol - Corporate Standard and the 2021 UK Government’s Conversion Factors for Company Reporting.

Intensity ratio

The chosen intensity measurement ratio is Metric tonnes CO2e per student.

Employees

During the year City Lit employed an average of 1,192 employees (2022-23: 1,221). Included in this figure are 969 part-time tutors (2022-23: 1,010). The staff numbers in Note 8 only include employees that worked for City Lit during the year, with the difference being tutors who did not teach in the year but remain part of our talent bank.

Our staff costs (excluding restructure and pension costs) have increased to £13,416,000 (2022-23: £12,469,000). We awarded employees an increase of £1,000 (pro-rated for contracted hours worked) and increased our hourly rates of pay by 3% from 1 February 2024. It remains a challenge to ensure our dedicated staff are adequately renumerated whilst maintaining affordability and balancing the college finances.

Further details of staff costs are provided in Note 8.

Outlook for 2024-25

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In 2024-25 we will continue to provide a mix of online and face to face learning, which we will adapt according to the perceived demand from our students and the direction of government funding. We expect the upcoming year to be another challenging year from a financial perspective, given the current economic climate and the pressures on our students' disposable income. Our key objective continues to be to grow fee income back and restore course profitability towards pre-pandemic levels, and to build our cash reserves.

Principal risks and uncertainties

City Lit has several embedded internal controls to manage and mitigate risk including a Risk Management Group who update and maintain the risk register. The risk register is reviewed termly by the Audit & Risk Committee, as well as a Board Assurance Framework which is a wide-reaching governance tool that informs the Governors of progress against strategic direction including risk management. Risk Management processes are designed to protect its assets, reputation and financial stability. The risk register identifies the key risks, the likelihood of those risks occurring, their potential impact on the College and the actions being taken to reduce or mitigate the risks.

The principal risks and uncertainties for City Lit are:

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us to provide a more flexible curriculum that is affordable in tougher times. Our goal to diversify income streams should enable us to continue offering places to the most vulnerable.

Our stakeholders

We have a wide range of stakeholders including:

The Institute recognises the importance of these relationships and engages in regular communication with them.

Equality and diversity

At City Lit we seek to achieve the objectives laid out in the Equality Act 2010.

One of our core principles is to value and promote equality and diversity. Equality is about the creation of a fairer organisation where everyone can participate and fulfil their potential as equals, free from discrimination and harassment. Diversity is about respecting, valuing and celebrating different views and cultures.

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Our equality and diversity policy applies to all members of staff, Governors and students, and an equality and diversity strategy incorporates our equality schemes as required by the Equality Act 2010. The programme and service areas Self-Assessment Reports (SARs) contain detailed analysis of student progress by a number of diversity strands and equality impact assessments can be shown to lead to improvements in service and performance. We will continue to strive to improve the quality of our teaching by implementing and embedding excellent diversity practices.

Our policy is to provide support that ensures disabled employees have equality with regards to training, career development and promotion opportunities. Where an existing employee becomes disabled, every effort is made to ensure that employment can continue through targeted support.

We also have one of the largest centres for the education and training of deaf people and we employ a significant number of staff with severe hearing impairments.

We short list and appoint suitable candidates for employment in accordance with an approved policy and all relevant employment legislation. In so far as resources and opportunity permit, all employees, including temporary and agency staff, are entitled to training and development.

Bursary scheme: The ability of the less well-off to be able to access City Lit courses is an area of growing concern. To try and alleviate this problem City Lit setup a bursary scheme in 2011 (see note 21). This fund comprises amounts set aside out of City Lit general funds. This year we received £45,000 in donations and the balance on the fund at 31 July 2024 was £162,000 (31 July 2023: £133,000).

Facilities: The Keeley Street building was designed to comply with modern building standards, and to be fully accessible for staff and students with disabilities. The design process included an access audit. Further accessibility improvements have been made since, based on recommendations in specific access audits and feedback from staff and students.

Student support and admissions: City Lit has a Learning Support Team that provides information, advice and arranges support where necessary for students with disabilities or additional learning support needs. The admissions procedure for students is described on the website. Appeals against admission decisions are dealt with under the complaints procedure. There is a list of specialist equipment, such as radio aids, which the Institute can make available for use by students and a range of assistive technology is available in the supported learning centre and the Centre for the Deaf. City Lit has specialist tutors and support staff to assist students with additional learning needs and/or disabilities. There is a continuing programme of staff development to ensure the provision of a high level of appropriate support for such students.

Trade union facility time

The Trade Union (Facility Time Publication Requirements) regulations 2018 require the Institute to publish information on facility time arrangements for trade union officials at the Institute, for the period covering 1 April 2023-31 March 2024.

Number of employees who were trade union representatives: 7 (FTE 3.0)

Percentage of time No of employees Total cost of facility time:£nil
0% - Total pay bill:£13.0 million
1-50% 7 Percentage of total bill: 0%
51-99% - Time spend on paid trade union activities as a
100% - percentage of total paid facility time:None

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Belinda Wava

Performing Arts Drama

I chose the Acting Diploma course because I have a passion for acting. The main reason for choosing City Lit is because of the flexibility around managing full-time work and the other facets of my lifestyle. It just provided the intense training that I needed around work and life. What I enjoy most about studying at City Lit are the relationships I have built, they really are, for lack of a better phrase, priceless.

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Geoff Levett

Languages - French

Now, at the age of 50, I’ve made the decision to go freelance as a guide. Having worked as a tour guide for two decades, I’m transitioning to fulltime freelance work. One of my ambitions is to become a qualified Frenchspeaking guide. To achieve this dream, I need to pass one more exam, and I believe City Lit is the institution that can help me reach that goal.

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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 City Lit’s auditor is 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 City Lit’s auditor is aware of that information.

This confirmation is given and should be interpreted in accordance with the provisions of S418 of the Companies Act 2006.

Approved by the Governing Body on 3 December 2024 and signed on its behalf by:

Lindsay Nicholson MBE Chair of Governors

Senior post-holders during this period:

Mark Malcomson CBE - Principal

Katrina O’Sullivan - Director of Governance

Financial statement and regularity auditors:

Buzzacott LLP, 130 Wood Street, London, EC2V 6DL

Bankers:

Barclays Bank Plc, One Churchill Place, London, E14 5HP

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Statement of Corporate Governance and Internal Control

The following statement is provided to clarify our governance and legal structure.

City Lit strives to conduct its operations:

In the opinion of the Governing Body, City Lit complies with all the provisions of the Code, and it has complied throughout the year ended 31 July 2024. This opinion is based on an External Board Review which commenced in May 2024.

The Governing Body recognises that, as a body entrusted with both public and private funds, it has a particular duty to observe the highest standards of corporate governance at all times. In carrying out its responsibilities, it takes full account of the Further Education Code of Good Governance issued by the Association of Colleges in 2023, which it formally adopted on 9 July 2024.

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Governing Body and committee meetings

The total number of meetings held in the year were as follows: Governing Body - 5 (plus 1 day strategy session not included in the figures); Audit & Risk Committee - 3; Finance & Commercial Committee - 4; Governance & People Committee - 4; Quality Committee - 3; and Remuneration Committee - 2.

Members of the Institute

The members who served on City Lit’s Governing Body during the 2023-24 academic year and up to the date of signature of this report were as listed in the table below.

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----- Start of picture text -----
Committees
Date of No. of Governing Served
Name appointment/ Term of Date of Status of Body meetings (number in brackets
office resignation appointment attended relates to no. of
re-appointment
(not inc. Strategy Session) meetings attended
in year)
Lucy Arnold-Courtney 11/5/21 4 years 1 2 Quality (2)
Finance & Commercial
Donna Birkett Baida 19/10/21 4 years 1 5
(4)
Edward Breen (Staff
17/10/23 4 years 2 4 Quality (3)
Governor)
Clancy Gebler Davies 5/12/23 2 years 3 4 Quality (3)
(Student Governor)
Finance & Commercial
4); Governance
Colin Jones 6/12/22 4 years 1 5
& People (4);
Remuneration (2)
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----- Start of picture text -----
Committees
Date of No. of Governing Served
Name appointment/ Term of Date of Status of Body meetings (number in brackets
office resignation appointment attended relates to no. of
re-appointment
(not inc. Strategy Session) meetings attended
in year)
Audit & Risk (3);
Simon Judge 13/10/20 4 years 1 5 Governance & People
(4)
Finance & Commercial
Christine Kinnear 1/12/20 4 years 1 4
(3)
Mark Lever
Finance & Commercial
(sabbatical taken from 14/7/22 4 years 1 3
(3)
Sept-Dec23)
Finance & Commercial
Mark Malcomson
11/6/11 N/A 4 5 (4); Governance &
(Principal)
People (4); Quality (3)
4 Audit & Risk
Gabriel MacGregor 5/12/23 4 years 1
(out of a possible 4) (2 out of a possible 2)
Finance & Commercial
Lindsay Nicholson 9/5/22 4 years 1 5 (3); Governance
(Chair) & People (4);
Remuneration (2)
Alison Pike 19/10/21 4 years 1 4 Quality (2)
Jill Westerman Quality (3); Governance
14/7/22 4 years 1 5 & People (4);
(Deputy Chair)
Remuneration (2)
Hayley White 14/7/22 4 years 1 4 Audit & Risk (3)
----- End of picture text -----

Co-opted member: Krys Rapier was re-appointed to the Audit & Risk Committee on 05/12/23 for a term of two years.

Status of appointment: 1 = Governors who have the necessary skills to ensure that the Governing Body carries out its function under Article 8; 2 = Elected by and from staff; 3 = Appointed from the student community; 4 = The Principal.

It is the Governing Body’s responsibility to bring independent judgement to bear on issues of strategy, performance, resources and standards of conduct.

The Governing Body is provided with regular and timely information on the overall financial performance of City Lit 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 Governing Body meets at least once a term.

The Governing Body conducts its business through a number of Committees. Each committee has terms of reference, which have been approved by the Governing Body. These Committees are: Audit & Risk, Finance & Commercial, Governance & People, Quality, and Remuneration. Full minutes of all meetings, except those deemed to be confidential by the Governing Body, are available on the College’s website (www.citylit.ac.uk) or from the Director of Governance at: Katrina.Osullivan@citylit. ac.uk or the College’s registered address.

The Director of Governance maintains a register of financial and personal interests of the Governors, which is available for inspection on request.

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All Governors are able to obtain independent professional advice in furtherance of their duties at City Lit’s expense and have access to the Director of Governance, who is responsible to the Board for ensuring that all applicable procedures and regulations are complied with. The appointment, evaluation and removal of the Director of Governance are matters for the Governing Body as a whole.

Formal agendas, papers and reports are supplied to Governors in a timely manner, prior to Board meetings. Briefings are also provided on an ad hoc basis. The Governing Body ensures that it receives appropriate training and development throughout the year including attendance at relevant governance conferences and network events. During 2023-24 this included Deaf Awareness training; Association of Colleges (AoC) Finance Masterclass sessions; ETF Governance Development modules; Safeguarding & Prevent training; Equity, Diversity & Inclusion training; the AoC Governors’ Summit conference; the AoC Annual Conference; inhouse induction and buddying programme for new governors; department information presentations; City Lit staff and tutor conference; and various webinars covering GenAI, and topical legal/financial issues.

The Director of Governance is qualified and experienced in the role and is supported by the Governing Body in continued professional development. She holds the governance qualification: Award for Further Education Governance Professionals (FEGP Award) from the Institute of Directors and is a member of the FE Governance Professionals network. The Governing Body ensures that the postholder continues to develop in the role and, in response to a recommendation in the External Board Review, modernised the job title in July 2024 from Clerk to the Governors to Director of Governance. This is to reflect the importance of the governance professional role and emphasise the critical function it plays in ensuring institutional accountability and success.

This year the Director of Governance has attended: ‘Governance Professionals Network Thursday’ training sessions with the ETF; ‘Good Governance Institute Monthly Morning Meetings’ good practice sessions; AoC Governance Professionals Annual Conference; the FE Commissioner’s ‘Just One Thing’ sharing best practice events; AoC Governors’ Summit Conference; Deaf Awareness training; Equity, Diversity & Inclusion training; Information Security training; departmental information sessions; City Lit Annual Staff Conference and various information webinars which included GenAI, and topical legal/ financial issues.

The Governing Body undertakes an annual self-assessment of governance practices and produces an associated action plan. Additionally, in November 2023 Governors reviewed the internal auditor’s Governance Review audit report which gave substantial assurance over the Governance function of the Institute. The Governing Body commissioned the Association of Colleges to undertake the first of the required triannual external board reviews. This commenced in May 2024 and an executive summary and actions agreed by the reviewer are on the College’s website.

The Governing Body has a strong and independent non-executive element, in addition to one staff member and one student member, and no individual or group dominates its decision making process. The Governing Body considers that each of its non-executive members is independent of management, and free from any business or other relationship, which could materially interfere with the exercise of their independent judgement.

There is a clear division of responsibility in that the roles of the Chair and Accounting Officer are separate.

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Appointments to the Governing Body

Any new appointments to the Governing Body are a matter for consideration of the Governing Body as a whole. The Governing Body has a Governance & People Committee consisting of six members, which is responsible for the selection and nomination of any new member for the Governing Body’s consideration. The Governing Body is responsible for ensuring that appropriate training is provided as required.

Members of the Governing Body are appointed for a term of office not exceeding four years and are able to undertake two terms subject to a reappointment process. Additional terms of office are subject to recommendation to the Governing Body by the Governance & People Committee and based on the Governance need.

Finance & Commercial Committee

The Finance & Commercial Committee is charged with monitoring the Institute’s financial performance and approving the annual budget. It met four times in 2023-24 and comprises of six members of the Governing Body.

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Remuneration Committee

The Remuneration Committee comprises three members of the Governing Body and met twice this year. The Committee’s responsibilities are to make recommendations to the Board on the remuneration and benefits of the Accounting Officer and other senior post-holders. Details of remuneration for the year ended 31 July 2024 are set out in note 8 to the financial statements.

Governance & People Committee

The purpose of the Governance and People Committee is to advise the Governing Body on the appointment of new Governors and on the reappointment of existing members. The Committee is also responsible for overseeing the aspects of the College’s People resource, and discussing governance matters for information or recommendation to the Board. This Committee met four times during the year and comprises of five members.

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Quality Committee

The Quality Committee met three times throughout 2023-24 and comprises six members, including the Student and Staff Governors. The aim of the Committee is to advise the Governing Body on the appropriateness and operation of the Institute’s Quality Assurance systems, the quality of the learner experience and performance against key quality targets. It also makes recommendations on quality improvements for the Board’s approval.

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Audit & Risk Committee

The Audit & Risk Committee comprises of three members of the Governing Body and one Coopted member. Membership does not include the Accounting Officer, Chair or members of the Finance & Commercial Committee. Its purpose is to advise the Governing Body on the adequacy and effectiveness of City Lit’s systems of internal control and its arrangements for risk management, control and governance processes.

The Audit & Risk Committee meets on a termly basis and provides a forum for reporting by City Lit’s internal auditors and external auditors. The Committee also reviews the strategic risk register and Board Assurance Framework.

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The Committee agrees the College’s Independent Assurance Programme which includes reviews of internal control systems, risk management controls and governance processes and receives the independent reports.

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

The Audit & Risk Committee also makes a recommendation to the Governing Body on the appointment of internal, regularity and financial statements auditors and decides on their remuneration for both audit and non-audit work.

The Audit & Risk Committee meets at least once a year with the external auditors without staff members present. The Committee met three times this year.

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Internal Control

City Lit’s system of internal financial control includes:

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Scope of responsibility

The Governing Body is ultimately responsible for City Lit’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 Governing Body has delegated to the Principal, as Accounting Officer, the day-to-day responsibility for maintaining a sound system of internal control that supports the achievement of City Lit’s policies, aims and objectives, whilst safeguarding the public funds and assets for which he is personally responsible, in accordance with the responsibilities assigned to him in the Financial Memorandum between City Lit and the funding bodies. He is also responsible for reporting to the Governing Body any material weaknesses or breakdowns in internal control.

The purpose of the system of internal control

The system of internal control is designed to manage risk to a reasonable level rather than to eliminate all risk of failure to achieve policies, aims and objectives; it can therefore only provide reasonable and not absolute assurance of effectiveness.

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The system of internal control is based on an ongoing process designed to identify and prioritise the risks to the achievement of Institute 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.

Following the ONS reclassification of colleges to public sector entities, the Institute’s related policies and procedures were updated to ensure compliance with the new requirements. This included ensuring that transactions that require DfE or HM Treasury approval are identified and treated appropriately.

The system of internal control has been in place in City Lit for the year ended 31 July 2024 and up to the date of approval of the annual report and financial statements.

Capacity to handle risk

The Governing Body has reviewed the key risks to which City Lit is exposed, together with the operating, financial and compliance controls that have been implemented to mitigate those risks. The Governing Body is of the view that there is a formal ongoing process for identifying, evaluating and managing City Lit’s significant risks that has been in place for the year ended 31 July 2024 and up to the date of approval of the annual report and financial statements. This process is regularly reviewed by the Governing Body.

City Lit has conducted a rigorous evaluation of all risks and has maintained a detailed risk register and action plan designed to mitigate to the extent possible, all significant risks identified. This has been approved by the Governing Body. City Lit is confident that it has embedded a culture of risk management into all aspects of its activities through a number of methods:

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:

As a result of the introduction of the Post 16 Audit Code of Practice, the Institute is no longer required to have an internal audit function. The Audit & Risk Committee appointed BDO LLP during 2015 to

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provide internal audit services and this contract came to end during 2023. The Audit & Risk Committee decided not to appoint new internal auditors. Instead, the Institute undertakes reviews using the services of individual specialists, to provide assurance in high risk areas. During the year four reviews were commissioned in the following areas: an external Board Governance review; a mock funding body audit; an Information Technology security posture review and an IT penetration testing review.

Under the Code of Practice, the Institute is required to have a Board Assurance Framework in place. The creation of this is a task that was taken on by the Audit & Risk Committee, with the assistance of the Executive. The Board Assurance Framework is a useful tool for Boards and brings together the relevant information about the risks to the Board’s strategic objectives. It aims to cover all the areas of City Lit’s operations and informs Governors on how the Institute is working according to the strategic direction set. It also sets out what specific parts Governors play in doing this, as a Governing Body, and through the various Committees. The framework acts as an overarching control document to help see that City Lit’s strategy is being executed. One aspect of that is checking that mechanisms are in place should things go wrong, which is a central part of the risk management process. The framework also acts to focus the work of the independent assurance programme.

Review of effectiveness

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

The Executive Team receives reports setting out key performance and risk indicators and considers possible control issues brought to their attention by early warning mechanisms.

Based on the advice of the Audit & Risk Committee and the Accounting Officer, the Governing Body is of the opinion that the Institute has an adequate and effective framework for governance, risk management and control, and has fulfilled its statutory responsibility for “the effective and efficient use of resources, the solvency of the institution and the body and the safeguarding of their assets”.

Going concern

The Institute incurred an operating deficit of £295,000 during the year (2022-23: deficit of £161,000), against an original budget deficit of £243,000. Tuition fee income grew by over 11% compared to last year to £9,038,000 (2022-23: £8,097,000).

At 31 July 2024, the Institute had net current liabilities of £1,839,000 (2023: £1,952,000). Following the reclassification of colleges from private to public sector, we negotiated a long term loan of £2.85m with the DfE, to enable us to repay our overdraft and provide us with future working capital. During the year, we renegotiated the terms of the loan, deferring the interest payments for one year and the capital repayments for three years. Capital repayments will recommence in October 2027, with the term of the loan being extended by three years. These interest and capital payment holidays will give the Institute the opportunity to build up its cash reserves and strengthen its financial position.

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Overall, the Institute has a net asset balance of £7,387,000 (2023: net assets of £7,715,000). There is no pension liability in relation to the Local Government Pension Scheme. The FRS102 valuation produced a surplus for the year ended 31 July 2024 and this has not been recognised in the financial statements as the Institute does not expect to benefit from it. At the last reported triennial valuation, the scheme was fully funded.

Our budget for the financial year ending 31 July 2025 anticipates a positive EBITDA and a deficit of £190,000. The budget is based on the key assumptions that a certain level of tuition fees will be achieved and the Institute will deliver its adult education funding budget in full.

Our challenge in the next few years will be to bring our student fee income back to pre-pandemic levels and pressures on our cost base. Given the current economic climate and the constraints on core Government funding, which has remained static for the past few years, the upcoming year will be another challenging year from a financial perspective. However, the following factors provide the Board with assurance that the Institute remains a going concern:

Taking all the above into consideration, the Institute has a reasonable expectation that it has adequate resources to continue in operational existence for the foreseeable future, has therefore prepared the financial statements on a going concern basis.

Approved by the Governing Body on 3 December 2024 and signed on its behalf by:

Lindsay Nicholson MBE Chair of Governors

Mark Malcomson CBE Accounting Officer

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Statement of Regularity, Propriety and Compliance

Statement of the Accounting Officer

As Accounting Officer I confirm that the Institute has had due regard to the framework of authorities governing regularity, priority and compliance, and the requirements of the Institute's accountability agreement, funding agreements and contracts with ESFA and DFE, and has considered its responsibility to notify ESFA of material irregularity, impropriety and non-compliance with those authorities and terms and conditions of funding.

I confirm on behalf of the Institute that after due enquiry, and to the best of my knowledge, I am able to identify any material irregular or improper use of funds by the Institute, or material non-compliance with the framework of authorities and the terms and conditions of funding under the Institute’s accountability agreement, funding agreements and contracts with ESFA and DFE, or any other public funder. This includes the elements outlined in the “Dear accounting officer” letter of 29 November 2022 and ESFA’s bite size guides.

I confirm that no instances of material irregularity, impropriety, funding non-compliance, or noncompliance with the framework of authorities have been discovered to date. If any instances are identified after the date of this statement, these will be notified to ESFA.

Mark Malcomson CBE Accounting Officer 3 December 2024

Statement of the Chair of Governors

On behalf of the Institute, I confirm that the Accounting Officer has discussed their statement of regularity, propriety and compliance with the board and that I am content that it is materially accurate.

Lindsay Nicholson MBE Chair of Governors 3 December 2024

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Statement of Responsibilities of City Lit’s Governing Body

The Governing Body of the Institute is required to present audited financial statements for each financial year.

Within the terms and conditions of the Institute’s accountability agreement, funding agreements and contracts with the Education and Skills Funding Agency (ESFA), Department of Education (DFE), and the Greater London Authority (GLA), the Institute is required to prepare financial statements which give a true and fair view of the financial performance and position of the Institute for the relevant period. The Institute must also prepare a strategic report which includes an operating and financial review for the year.

The bases for the preparation of the financial statements and strategic report are the Statement of Recommended Practice – Accounting for Further and Higher Education, ESFA’s College Accounts Direction and the UK’s Generally Accepted Accounting Practice.

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

The Institute is also required to prepare a strategic report, in accordance with paragraphs 3.23 to 3.27 of the FE and HE SORP, that describes what it is trying to do and how it is going about it, including information about the legal and administrative status of the Institute.

The Institute is responsible for keeping proper accounting records which disclose, with reasonable accuracy at any time, the financial position of the Institute and which enable it to ensure that the financial statements are prepared in accordance with relevant legislation including the Further and Higher Education Act 1992 and Charities Act 2011, and relevant accounting standards. It is responsible for taking steps that are reasonably open to it to safeguard its assets and to prevent and detect fraud and other irregularities.

The Institute is responsible for the maintenance and integrity of its website; the work carried out by auditors does not involve consideration of these matters and, accordingly, 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 Governing Body of the Institute is responsible for ensuring that expenditure and income are applied for the purposes intended and that the financial transactions conform to the authorities that govern them. In addition, they are responsible for ensuring that funds from the ESFA, DFE, and any

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other public funds, are used only in accordance with the accountability agreement, funding agreements and contracts and any other conditions, that may be prescribed from time to time by ESFA, or any other public funder, including that any transactions entered into by the Institute are within the delegated authorities set out in the “Dear accounting officer” letter of 29 November 2022 and ESFA’s bite size guides.

The Governing Body of the Institute must ensure that there are appropriate financial and management controls in place to safeguard public and other funds and ensure they are used properly. In addition, the Governing Body of the Institute is responsible for securing economic, efficient and effective management of the Institute’s resources and expenditure so that the benefits that should be derived from the application of public funds from ESFA, DFE and other public bodies are not put at risk.

Approved by order of the Governing Body of the Institute on 3 December 2024 and signed on its behalf by:

Lindsay Nicholson MBE

Chair of Governors

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Independent auditor’s report to the members of

The City Literary Institute

Opinion

We have audited the financial statements of The City Literary Institute (the “Institute”) for the year ended 31 July 2024 which comprise the statement of comprehensive income, the statement of changes in reserves, the balance sheet, the statement of cash flows, the principal accounting policies, and the notes to the financial statements. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’ (United Kingdom Generally Accepted Accounting Practice).

In our opinion, the financial statements:

Basis for opinion

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We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the Institute in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

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In auditing the financial statements, we have concluded that the members of the Governing Body's use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Institute's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the members of the Governing Body with respect to going concern are described in the relevant sections of this report.

Other information

The other information comprises the information included in the annual report, including the Governors' report, other than the financial statements and our auditor’s report thereon. The Governing Body are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

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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 course of the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. 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 in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the Institute and its environment obtained in the course of the audit, we have not identified material misstatements in the Governors’ report including the strategic report. We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 and Post 16 Code of Practice issued by the Education and Skills Finding Agency requires us to report to you if, in our opinion:

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Responsibilities of the Governing Body

As explained more fully in the Statement of Responsibilities of the Governing Body, set out on page 33, members of the Governing Body (who are also the directors of the Institute for the purposes of company law) are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the members of the Governing Body 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 members of the Governing Body are responsible for assessing the Institute’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 members of the Governing Body either intend to liquidate the Institute or to cease operations, or have no realistic alternative but to do so.

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Auditor’s 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 auditor’s 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.

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:

Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:

We assessed the susceptibility of the Institute’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:

To address the risk of fraud through management bias and override of controls, we:

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In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:

There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of noncompliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the members of the Governing Body and other management and the inspection of regulatory and legal correspondence, if any.

Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.

A further description of our responsibilities is available on the Financial Reporting Council’s website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

Use of our report

This report is made solely to the Institute’s members, as a body, in accordance with the Institute’s Articles of Government and Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Institute’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Institute and the Institute’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Shachi Blakemore (Senior Statutory Auditor)

For and on behalf of Buzzacott LLP Statutory Auditor 130 Wood Street London EC2V 6DL Date: 17 December 2024

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Reporting accountant’s assurance report on regularity

To: The Governing Body of The City Literary Institute and Secretary of State for Education acting through Education and Skills Funding Agency (“the ESFA”)

In accordance with the terms of our engagement letter and further to the requirements and conditions of funding in the ESFA’s grant funding agreements and contracts, or those of any other public funder, we have carried out an engagement to obtain limited assurance about whether anything has come to our attention that would suggest, in all material respects, the expenditure disbursed and income received by The City Literary Institute during the period 1 August 2023 to 31 July 2024 have not been applied to the purposes identified by Parliament and the financial transactions do not conform to the authorities which govern them.

The framework that has been applied is set out in the Post-16 Audit Code of Practice (the Code) issued by the ESFA and in any relevant conditions of funding concerning adult education notified by a relevant funder.

This report is made solely to the Governing Body of The City Literary Institute and the ESFA in accordance with the terms of our engagement letter. Our work has been undertaken so that we might state to the Governing Body of The City Literary Institute and the ESFA those matters we are required to state in a report and for no other purpose. To the fullest extent permitted by law, we do not accept, or assume, responsibility to anyone other than the Governing Body of The City Literary Institute and the ESFA for our work, for this report, or for the conclusion we have formed.

Respective responsibilities of The City Literary Institute and the reporting accountant

The Governing Body of The City Literary Institute is responsible, under the requirements of the Further & Higher Education Act 1992, subsequent legislation and related regulations and guidance, for ensuring that expenditure disbursed, and income received, are applied for the purposes intended by Parliament, and the financial transactions conform to the authorities that govern them.

Our responsibilities for this engagement are established in the United Kingdom by the Code our profession’s ethical guidance and are to obtain limited assurance and report in accordance with our engagement letter and the requirements of the Code. We report to you whether anything has come to our attention in carrying out our work which suggests that in all material respects, expenditure disbursed and income received, during the period 1 August 2023 to 31 July 2024 have not been applied to purposes intended by Parliament or that the financial transactions do not conform to the authorities which govern them.

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Reporting accountant’s assurance report on regularity (continued)

Approach

We conducted our engagement in accordance with the Code issued by the ESFA. We performed a limited assurance engagement as defined in that framework. The objective of a limited assurance engagement is to perform such procedures as to obtain information and explanations in order to provide us with sufficient appropriate evidence to express a negative conclusion on regularity. A limited assurance engagement is more limited in scope than a reasonable assurance engagement and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in a reasonable assurance engagement. Accordingly, we do not express a positive opinion. Our engagement includes examination, on a test basis, of evidence relevant to the regularity of The City Literary Institute’s income and expenditure.

The work undertaken to draw to our conclusion includes:

Conclusion

In the course of our work, nothing has come to our attention which suggests that in all material respects, the expenditure disbursed and income received during the period 1 August 2023 to 31 July 2024 has not been applied to purposes intended by Parliament, and the financial transactions do not conform to the authorities that govern them.

Buzzacott LLP, Statutory Auditor 130 Wood Street London EC2V 6DL Date: 17 December 2024

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Statement of Comprehensive Income for the year ended 31 July 2024

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----- Start of picture text -----
Notes 2023-2024 2022-2023
Before Actuarial After actuarial Before Actuarial After
actuarial pension pension actuarial pension actuarial
pension (LGPS) & other pension (LGPS) pension
& other & other adjustments & other & other & other
adjustments adjustments adjustments adjustments adjustments
£’000 £’000 £’000 £’000 £’000 £’000
INCOME
Funding body grants 2 10,298 - 10,298 9,756 - 9,756
Tuition fees and education contracts 5 9,051 - 9,051 8,118 - 8,118
Other income 6 256 25 281 254 100 354
Investment income 7 32 172 204 - - -
Donations 3,4 47 - 47 46 - 46
Total income 19,684 197 19,881 18,174 100 18,274
EXPENDITURE
Staff costs 8 13,416 88 13,504 12,469 645 13,114
Fundamental restructuring costs 8 116 - 116 21 - 21
Other operating expenses 10 4,960 53 5,013 4,526 864 5,390
- -
Depreciation & amortisation 12,13 1,303 1,303 1,280 1,280
Interest and other finance costs 11 146 - 146 39 229 268
Total expenditure 19,941 141 20,082 18,335 1,738 20,073
- - - -
Loss on disposal of assets (38) (38)
(295) 56 (239) (161) (1,638) (1,799)
(Deficit)/Surplus for the year
Actuarial (loss)/gain in respect of
18 (5) (84) (89) 4 7,860 7,864
pension schemes
Total comprehensive income/
(300) (28) (328) (157) 6,222 6,065
(expenditure) for the year
Represented by:
Unrestricted comprehensive
23 (329) (28) (357) (173) 6,222 6,049
(expenditure)/income
Restricted comprehensive income 23 29 - 29 16 - 16
(300) (28) (328) (157) 6,222 6,065
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Statement of Changes in Reserves

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----- Start of picture text -----
Income and
Revaluation
Expenditure Total
reserve
account
£’000 £’000 £’000
Balance at 31st July 2022 650 1,000 1,650
-
Deficit from the income and expenditure account (1,799) (1,799)
-
Other comprehensive income 7,864 7,864
-
Total comprehensive income for the year 6,065 6,065
Balance at 31st July 2023 6,715 1,000 7,715
-
Deficit from the income and expenditure account (239) (239)
-
Other comprehensive (expenditure) (89) (89)
Total comprehensive (expenditure) for the -
(328) (328)
year
Balance at 31st July 2024 6,387 1,000 7,387
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A breakdown of the funds within the income and expenditure account is provided on the Balance Sheet.

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Balance Sheet as at 31 July 2024

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----- Start of picture text -----
||||| |---|---|---|---| |Notes|2024|2023| |£’000|£’000| |Fixed assets| |Tangible fixed assets|12|16,969|17,369| |Intangible fixed assets|13|378|400| |17,347|17,769| |Current assets| |Trade and other receivables|14|1,622|1,509| |Cash and cash equivalents|19|1,158|1,265| |2,780|2,774| |Less: Creditors - amounts falling due within one year|15|(4,619)|(4,726)| |Net current liabilities|(1,839)|(1,952)| |Total assets less current liabilities|15,508|15,817| |Less: Creditors - amounts falling due after more than one year|16|(8,072)|(8,053)| |Provisions| |-|-| |Defined benefit obligations|18, 22| |Other provisions|18|(49)|(49)| |Total net assets|7,387|7,715| |Funds| |Income and expenditure account|23|6,209|6,566| |Revaluation reserve|23|1,000|1,000| |Restricted Bursary Fund|23|162|133| |Restricted funds|23|16|16| |Total funds|7,387|7,715|

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The financial statements on pages 41 to 72 were approved and authorised for issue by the Institute on 3 December 2024 and were signed on its behalf on that date by:

Lindsay Nicholson MBE, Chair Registered Company No.: 02471686

Mark Malcomson CBE, Accounting Officer

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Statement of Cash Flows as at 31 July 2024

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----- Start of picture text -----
Notes 2023-24 2022-23
£’000 £’000
Cash inflow from operating activities
Deficit for the year after loss on disposal of fixed assets (239) (1,799)
Adjustment for non cash items
Depreciation and amortisation 12,13 1,303 1,280
(Increase) in debtors 14 (113) (704)
Increase in creditors due within one year 15 61 473
Increase in creditors due after one year 16 19 349
(Decrease) in provisions 18 (5) (5)
Pensions costs less contributions payable 22 (84) 874
Adjustment for investing or financing activities
Investment income 7 (32) -
Interest payable 11 144 -
Loss on disposal of fixed assets 38 -
Net cash flow from operating activities 1,092 468
Cash flows from investing activities
Proceeds from sales of fixed assets 23 -
Investment income 7 32 -
Payments made to acquire tangible fixed assets 12 (801) (606)
Payments made to acquire intangible fixed assets 13 (141) (191)
(887) (797)
Cash flows from financing activities
Loan received 16 - 2,850
Interest paid 11 (144) -
Repayments of amounts borrowed 15 (168) -
(312) 2,850
Increase in cash and cash equivalents in the year (107) 2,521
Cash and cash equivalents at beginning of the year 19 1,265 (1,256)
Cash and cash equivalents at end of the year 19 1,158 1,265
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Notes to the Financial Statements 1

1. Statement of accounting policies

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 and Higher Education 2015 (the 2015 FE HE SORP), the College Accounts Direction for 2023-24 and in accordance with Financial Reporting Standard 102 - “The Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland” (FRS 102). The Institute 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 Institute’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 treated as deemed cost within these financial statements.

Going concern

The Institute incurred an operating deficit of £295,000 during the year (2022-23: deficit of £161,000), against an original budget deficit of £243,000. Tuition fee income grew by over 11% compared to last year to £9,038,000 (2022-23: £8,097,000).

At 31 July 2024, the Institute had net current liabilities of £1,839,000 (2023: £1,952,000). Following the reclassification of colleges from private to public sector, we negotiated a long term loan of £2.85m with the DfE, to enable us to repay our overdraft and provide us with future working capital. During the year, we renegotiated the terms of the loan, deferring the interest payments for one year and the capital repayments for three years. Capital repayments will recommence in October 2027, with the term of the loan being extended by three years. These interest and capital payment holidays will give the Institute the opportunity to build up its cash reserves and strengthen its financial position.

Overall, the Institute has a net asset balance of £7,387,000 (2023: net assets of £7,715,000). There is no pension liability in relation to the Local Government Pension Scheme. The FRS102 valuation produced a surplus for the year ended 31 July 2024 and this has not been recognised in the financial statements as the Institute does not expect to benefit from it. At the last reported triennial valuation, the scheme was fully funded.

Our budget for the financial year ending 31 July 2025 anticipates a positive EBITDA and a deficit of £190,000. The budget is based on the key assumptions that a certain level of tuition fees will be achieved and the Institute will deliver its adult education funding budget in full.

Our challenge in the next few years will be to bring our student fee income back to pre-pandemic levels and pressures on our cost base. Given the current economic climate and the constraints on core Government funding, which has remained static for the past few years, the upcoming year will be another challenging year from a financial perspective. However, the following factors provide the Board

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with assurance that the Institute remains a going concern:

Taking all the above into consideration, the Institute has a reasonable expectation that it has adequate resources to continue in operational existence for the foreseeable future, has therefore prepared the financial statements on a going concern basis.

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Recognition of income

Government revenue grants include funding body recurrent grants and other grants 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 Skills 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.

Grants from non-government sources are recognised in income when the Institute 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.

Government capital grants are capitalised, held as deferred income and recognised in income over the expected useful life of the asset, under the accrual method as permitted by FRS 102. Other capital grants are recognised in income when the Institute is entitled to the funds subject to any performance related conditions being met.

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Notes to the Financial Statements 1 (continued)

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.

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.

Post retirement benefits

Post-employment benefits to employees of the Institute are principally provided by the Teachers’ Pension Scheme (TPS) and the Local Government Pension Scheme (LGPS). These are defined benefit plans, which are externally funded.

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 Institute 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 the Institute is unable to identify its share of the underlying assets and liabilities of the scheme on a consistent and reasonable basis. 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.

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

If the present value of the defined benefit obligation at the balance sheet date is less than the fair value of the scheme's assets at that date, the scheme is in surplus. The Institute only recognises a scheme surplus as a defined benefit asset only to the extent that it is able to recover the surplus either through defined contributions in the future or through refunds from the scheme.

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 Institute. Any unused benefits are accrued and measured as the additional amount the Institute expects to pay as a result of the unused entitlement.

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Notes to the Financial Statements 1 (continued)

Enhanced pensions

The actual cost of any enhanced ongoing pension to a former member of staff is paid by the Institute annually. An estimate of the expected future cost of any enhancement to the ongoing pension of a former member of staff is charged in full to the Institute’s income in the year that the member of staff retires. In subsequent years a charge is made to provisions in the balance sheet using the enhanced pension spreadsheet provided by the funding bodies.

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Tangible fixed assets

Tangible fixed assets are stated at deemed cost less accumulated depreciation and accumulated impairment losses. Certain items of fixed assets that had been revalued to fair value on or prior to the date of transition to the 2015 FE HE SORP, are measured on the basis of deemed cost, being the revalued amount at the date of that revaluation.

Land and buildings

Freehold buildings are depreciated on a straight line basis over their expected useful lives as follows:

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The Institute has a policy of depreciating major adaptations to buildings over the period of their useful economic life of between 10 and 50 years.

Where land and buildings are acquired with the aid of specific grants, they are capitalised and depreciated as above. The related grants are credited to a deferred income account within creditors, and are released to the statement of comprehensive income 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.

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.

Subsequent expenditure on existing fixed assets

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

Equipment

Equipment costing less than £2,000 is recognised as expenditure in the period of acquisition. All other equipment is capitalised at cost.

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Notes to the Financial Statements 1 (continued)

Capitalised equipment is depreciated on a straight-line basis over its remaining useful economic life as follows:

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Maintenance of premises

==> picture [52 x 46] intentionally omitted <==

The cost of routine corrective maintenance is charged to the statement of comprehensive income in the period that it is incurred.

Intangible assets

Intangible fixed assets comprise of software licences and Information Technology development. Items costing less than £2,000 are written off to the statement of comprehensive income in the year of acquisition. All other items are capitalised at cost.

Software licenses are amortised over the length of the license. Development expenditure is amortised over the estimated useful life of the project, which is currently 5 years.

The carrying value of intangible fixed assets is reviewed for impairment, events or circumstances that indicate that the carrying value may not be recoverable.

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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 August 2014 are spread over the minimum lease term where material.

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Cash and cash equivalents

Cash includes cash in hand, deposits repayable on demand and overdrafts. Deposits are repayable on demand if 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 it has maturity of 3 months or less from the date of acquisition.

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Financial liabilities

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

Short term deposits and loans held by the Institute are classified as basic financial instruments in accordance with FRS 102. These instruments are initially recorded at the transaction price less any material transaction costs (historical cost). FRS 102 requires that basic financial instruments are subsequently measured at amortised cost, however the Institute has calculated that the difference between the historical cost and amortised cost basis is not material and so these financial instruments

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Notes to the Financial Statements 1 (continued)

are stated on the balance sheet at historical cost. Investments that are payable or receivable within one year are not discounted.

Taxation

The Institute is considered to have passed 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 Institute is potentially exempt from taxation in respect of income or capital gains received within categories covered by sections 478-488 of the Corporation Tax Act 2010 or Section 256 of the Taxation of Chargeable Gains Act 1992, to the extent that such income or gains are applied exclusively to charitable purposes.

The Institute receives no similar exemption in respect of Value Added Tax (VAT). For this reason City Lit is generally unable to recover input VAT it suffers on goods and services purchased. 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 the Institute has a present legal or constructive obligation as a result of a past event, it is probable that a transfer of economic benefit will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

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 Institute a possible obligation whose existence will only be confirmed by the occurrence or otherwise of uncertain future events not wholly within the control of the Institute. Contingent liabilities also arise in circumstances where a provision would otherwise 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.

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:

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Notes to the Financial Statements 1 (continued)

Other key sources of estimation uncertainty:

• Tangible fixed assets

Tangible fixed assets 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 22, will impact 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 2022, has been used by the actuary in valuing the pensions liability at 31 July 2024. 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.

Fund accounting

Restricted funds comprise monies raised for, or their use restricted to, a specific purpose, or contributions subject to donor imposed conditions. Designated funds comprise monies set aside out of general funds and designated for specific purposes by the Governing Body.

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Notes to the Financial Statements 2, 3 & 4

2. Funding Body grants

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----- Start of picture text -----
2023-24 2022-23
£’000 £’000
Recurrent grants
Education & Skills Funding Agency 9,012 8,623
Specific Grants
Release of Government capital grants 586 510
Teachers Pension Scheme contribution grant 700 623
Total 10,298 9,756
3. Appeal fund donations
2023-24 2022-23
£’000 £’000
Release of appeal fund donations 2 2
Total 2 2
4. Other donations
2023-24 2022-23
£’000 £’000
Bursary donations received 45 43
General Donations - 1
Total 45 44
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Notes to the Financial Statements 5, 6 & 7

5. Tuition fees and education contracts

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----- Start of picture text -----
2023-24 2022-23
£’000 £’000
Gross tuition fees 8,929 7,953
Less: bursaries (16) (27)
Fees for FE loan supported courses 125 171
Total tuition fees 9,038 8,097
Other grants and contracts 13 21
Total education contracts 13 21
Total 9,051 8,118
6. Other income
2023-24 2022-23
£’000 £’000
Sales relating to courses 12 12
Consultancy 70 68
Other income 199 274
Total 281 354
7. Investment Income
2023-24 2022-23
£’000 £’000
Bank deposit interest 32 -
Net interest from pension asset 172 -
Total 204 -
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Notes to the Financial Statements 8

8. Staff costs

The average number of persons (including senior post-holders) employed during the year was:

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2023-24 2022-23
No. No.
Teaching staff 539 534
Non teaching staff 75 68
Total Staff 614 602
Staff costs for the above persons, analysed by department 2023-24 2022-23
£’000 £’000
Teaching departments 8,980 8,388
Administration and central services 4,258 3,742
Agency staff 178 339
Actuarial pension adjustment 88 645
Total staff costs 13,504 13,114
Restructuring costs 116 21
Staff costs, analysed by cost type 2023-24 2022-23
£’000 £’000
Salaries 10,402 9,584
Social security costs 845 788
Other pension costs (excluding FRS 102 charge) 1,991 1,758
Agency staff 178 339
Actuarial pension adjustment 88 645
Total staff costs 13,504 13,114
Restructuring costs 116 21
Staff costs, analysed by type of contract 2023-24 2022-23
£’000 £’000
Employment costs for staff on permanent contracts 8,619 7,808
Employment costs for staff on short term and temporary contracts 4,619 4,322
Agency staff 178 339
Actuarial pension adjustment 88 645
Total staff costs 13,504 13,114
Restructuring costs 116 21
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Notes to the Financial Statements 8 (continued)

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Institute and are represented by the Institute’s Executive Team.

The Executive Team comprises of the Principal, the Chief Financial Officer, the Vice Principal and the Executive Director of Human Resources. The Director of Governance is also included within key management personnel.

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

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----- Start of picture text -----
2023-24 2022-23
No. No.
The number of key management personnel at the end of the year was: 5 5
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The number of key management personnel and other staff who received annual emoluments, excluding employer’s pension contributions and national insurance contributions, but including benefits in kind, in the following ranges was:

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----- Start of picture text -----
Key Management Personnel Other
2023-24 2022-23 2023-24 2022-23
No. No. No. No.
£60,001 to £65,000 1 1 1 1
£65,001 to £70,000 - - 1 2
£70,001 to £75,000 - - 2 2
£75,001 to £80,000 - - 2 -
£80,001 to £85,000 - - - 1
£95,001 to £100,000 - - 1 -
£100,001 to £105,000 - - - 1
£105,001 to £110,000 3 3 1 -
£130,001 to £135,000 - 1 - -
£135,000 to £140,000 1 - - -
5 5 8 7
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The table includes part time workers’ earnings grossed up to full time equivalent earnings, including staff on maternity, paternity or sickness leave.

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Notes to the Financial Statements 8 (continued)

Total key management personnel emoluments are detailed below.

Key management personnel emoluments are made up as follows:

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----- Start of picture text -----
2023-24 2022-23
£’000 £’000
Salaries 503 494
Employers National Insurance contributions 63 63
Pension contributions 81 76
Total emoluments 647 633
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There were no amounts due to key management personnel that were waived in the year.

The emoluments above include amounts payable to the Accounting Officer of:

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----- Start of picture text -----
2023-24 2022-23
£’000 £’000
Salaries 136 134
Employers National Insurance contributions 18 18
Pension contributions 19 18
Total emoluments 173 170
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The pension contributions in respect of the Accounting Officer and key management personnel are in respect of employer’s contributions to the Teachers’ Pension Scheme or the Local Government Pension Scheme and are paid at the same rate as for other employees.

The Accounting Officer reports to the Chair of the Governing Body, who undertakes an annual review of his performance against the College’s overall objectives.

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Notes to the Financial Statements 8 (continued)

Accounting Officer pay and remuneration expressed as a multiple:

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----- Start of picture text -----
2023-24 2022-23
Accounting Officer’s basic salary as a multiple of the median of all
2.4 2.4
staff
Accounting Officer’s total remuneration as a multiple of the median
2.2 2.3
of all staff
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The Governors other than the Accounting Officer did not receive any payments from City Lit other than the reimbursement of travel and subsistence expenses in attending Governor meetings and charity events in 2023-24, which totalled £1,175 for four Governors (2022-23: £2,054 for three Governors).

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----- Start of picture text -----
Staff Restructuring Costs
Staff restructuring costs comprise:
2023-24 2022-23
£’000 £’000
Redundancy payments 45 21
Pension strain costs 71 -
Total restructuring costs 116 21
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There were four redundancy payments made during the year disclosed in the following banding:

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----- Start of picture text -----
||| |---|---| |2023-24| |£0 to £25,000|3| |£25,001 to £50,000|1| |4|

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Notes to the Financial Statements 9 & 10

9. Taxation

City Lit is a charity with no additional trading activities. The Governing Body do not believe that any corporation tax liability was incurred in 2023-24 (2022-23: £nil).

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----- Start of picture text -----
10. Other operating expenses
2023-24 2022-23
£’000 £’000
Teaching purchases 288 282
Exam fees 104 95
Teaching departments 392 377
Learner services 57 45
Teaching and other support services 57 45
Administration purchases 913 682
IT support 394 358
Administration and central services 1,307 1,040
Marketing expenditure 851 818
Premises running costs 2,015 1,743
Maintenance 69 216
Rent 269 287
Premises 2,353 2,246
Exceptional Costs 53 864
Total operating expenses 5,013 5,390
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Notes to the Financial Statements 10 (continued) & 11

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----- Start of picture text -----
2023-24 2022-23
£’000 £’000
Total operating expenses includes the following:
External auditors fees
Buzzacott LLP 37 35
Other assurance fees
Internal assurance work 13 30
Total audit fees 50 65
Operating leases
Office Equipment 21 21
11. Interest payable
2023-24 2022-23
£’000 £’000
Interest Payable on overdraft 144 37
Pension finance costs (note 22) - 229
Enhanced Pension finance costs (note 22) 2 2
Total interest payable 146 268
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Notes to the Financial Statements 12

12. Tangible fixed assets

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----- Start of picture text -----
Freehold Land Building
Equipment Total
and Buildings Refurbishment
£’000 £’000 £’000 £’000
Cost or valuation
At 1 August 2023 19,903 5,116 3,192 28,211
Additions - 768 33 801
-
Disposals (171) (12) (183)
At 31 July 2024 19,903 5,713 3,213 28,829
Depreciation
At 1 August 2023 6,799 1,606 2,437 10,842
Charge for the year 378 449 313 1,140
-
Elimination in respect of disposals (110) (12) (122)
At 31 July 2024 7,177 1,945 2,738 11,860
Net book value at 31 July 2024 12,726 3,768 475 16,969
Net book value at 31 July 2023 13,104 3,510 755 17,369
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On adoption of FRS 102 the Institute followed the transitional provision to retain the book value of land and buildings, which were revalued in 2004, as deemed cost but not to adopt a policy of revaluations of these properties in the future. This was a valuation by Governors on professional advice on the basis of an open market value for existing use.

At 31 July 2024, freehold land & buildings, building refurbishment and equipment with respective net book values of £3.6m, £2.3m and £0.4m have been financed by government grants. Should these assets be sold, the Institute may be required, under the terms of the funding agreement, to surrender the proceeds.

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Notes to the Financial Statements 13 & 14

13. Intangible fixed assets

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Software Licences
& Information
Technology
Development
£’000
Cost or valuation
At 1 August 2023 1,096
Additions 141
Disposals (187)
At 31 July 2024 1,050
Amortisation
At 1 August 2023 696
Charge for the year 163
Elimination in respect of disposals (187)
At 31 July 2024 672
Net book value at 31 July 2024 378
Net book value at 31 July 2023 400
14. Trade and other receivables
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14. Trade and other receivables
31 July 2024 31 July 2023
£’000 £’000
Trade receivables 813 723
Other receivables 154 380
Prepayments and accrued income 655 406
Total Debtors 1,622 1,509
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Notes to the Financial Statements 15, 16 &17

15. Creditors: amounts falling due within one year

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31 July 2024 31 July 2023
£’000 £’000
Loans payable within 1 year - 168
Trade payables 456 668
Other taxation and social security 205 217
Accruals and deferred income 2,589 2,187
Holiday pay accrual 161 130
Deferred income - Government capital grants 584 526
Deferred income - Government revenue grants 90 276
Other creditors 534 554
Total 4,619 4,726
16. Creditors: amounts falling due after one year
31 July 2024 31 July 2023
£’000 £’000
Loans 2,682 2,682
Deferred income - Government capital grants 5,390 5,371
Total 8,072 8,053
17. Maturity of debt:
31 July 2024 31 July 2023
£’000 £’000
Bank loans and overdraft are repayable as follows:
In one year or less - 168
Between one and two years - 168
Between two and five years 336 504
In five years or more 2,346 2,010
Total 2,682 2,850
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The Institute received a loan of £2.85m from the Department for Education repayable over 17 years at the Public Works Loan Board (PWLB) standard rate, which is currently 5.6%.

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Notes to the Financial Statements 18 & 19

18. Provisions

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Defined benefit Enhanced
Total
obligations pensions
£’000 £’000 £’000
At 1 August 2023 - 49 49
Expenditure in the period (543) (7) (550)
Charged to the income and expenditure account 459 2 461
Actuarial gain 84 5 89
At 31 July 2024 - 49 49
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Defined benefit obligations relate to the liabilities under the Institute’s membership of the Local Government Pension Scheme. Further details are given in note 22.

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

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The principal assumptions for this calculation are:
2023-24 2022-23
Price inflation 2.80% 2.80%
Discount rate 4.80% 5.00%
19. Cash and cash equivalents
At 1 August At 31 July
Cash flows
2023 2024
£’000 £’000 £’000
Cash and cash equivalents 1,265 (107) 1,158
Total 1,265 (107) 1,158
Analysis of changes in net debt
£’000 £’000 £’000
Cash in hand and at bank 1,265 (107) 1,158
Loans (2,850) 168 (2,682)
Total (1,585) 61 (1,524)
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Following the reclassification of colleges from private to public sector, the Institute negotiated a longterm loan from the Department for Education.

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Notes to the Financial Statements 20 & 21

20. Capital commitments

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|||| |---|---|---| |31 July 2024|31 July 2023| |£’000|£’000| |Commitments contracted for at 31 July|342|1,068|

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21. Lease Obligations

At 31 July 2024 the Institute had minimum lease payments under non-cancellable operating leases as follows:

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|||| |---|---|---| |31 July 2024|31 July 2023| |£’000|£’000| |Future minimum lease payments due| |Land and buildings| |Not later than one year|238|238| |Later than one year and not later than five years|666|739| |Later than five years|89|254| |993|1,231| |Other| |Not later than one year|25|21| |Later than one year and not later than five years|76|-| |101|21| |Total lease payments payable|1,094|1,252|

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Notes to the Financial Statements 22

22. Defined benefit obligations

The Institute’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 non-teaching staff, which is managed by London Pension Fund Authority. Both are multi-employer defined-benefit plans.

The pension costs are assessed in accordance with the advice of independent qualified actuaries. The latest formal actuarial valuation of the TPS was as at 31 March 2020 and of the LGPS as at 31 March 2022.

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Pension costs for the year 2023-24 2022-23
£’000 £’000
Teachers Pension Scheme
Contributions paid (included within the general reserve) 1,444 2021-22 1,284
Local Government Pension Scheme
Net pension costs 459 1,397
Contributions paid (543) (523)
Total allocated to the pension reserve (84) 874
Enhanced Pension
Pension costs (allocated to the general reserve) 2 2
Total pension costs 1,362 2,160
Total actuarial (loss)/gain (84) 7,860
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Contributions amounting to £231,000 (2023: £198,000) payable to the schemes as at 31 July 2024 are included in 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 and other educational establishments, including colleges. 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.

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Notes to the Financial Statements 22 (continued)

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

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

Valuation of the Teachers’ Pension Scheme

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.

The latest actuarial review of the TPS was carried out as at 31 March 2020. The valuation report was published by the Department for Education in October 2023. The valuation reported total scheme liabilities (pensions currently in payment and the estimated cost of future benefits) for service to the effective date of £262 billion, and notional assets of (estimated future contributions together with the notional investments held at the valuation date) of £222 billion giving a notional past service deficit of £40 billion.

As a result of the valuation, employer contribution rates were set at 28.68% of pensionable pay from 1 April 2024 onwards (compared to the current rate of 23.68%). The Department for Education has agreed to pay a teacher pension employer contribution grant to cover the additional costs until at least March 2025, with future funding reviewed as part of subsequent spending review rounds.

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 £1,444,000 (2022-23: £1,284,000).

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Notes to the Financial Statements 22 (continued)

Local Government Pension Scheme

The LGPS is a funded defined-benefit plan, with the assets held in separate funds administered by London Pension Fund Authority. The total contribution made for the year ended 31 July 2024 was £834,000 (2022-23: £789,000), of which employer’s contributions totalled £543,000 (2022-23: £523,000) and employees’ contributions totalled £291,000 (2022-23: £266,000). The contribution rate was 13.6% for employers and ranged from 5.5% to 12.5% for employees, depending on salary.

Principal actuarial assumptions

The following information is based upon a full actuarial valuation of the fund at 31 March 2022 updated to 31 July 2024 by a qualified independent actuary.

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At 31 July 2024 At 31 July 2023
Rate of increase in salaries 2.90% 2.80%
Future pensions increases 2.90% 2.80%
Discount rate for scheme liabilities 5.05% 5.15%
Inflation assumption (CPI) 2.90% 2.80%
Commutation of pensions to lump sums 50% 50%
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The current mortality assumptions include suifficient allowance for future improvements in mortality rates. The assumed life expectations from age 65, weighted by liability, are:

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----- Start of picture text -----
At 31 July 2024 At 31 July 2023
Years Years
Retiring today
Males 20.70 20.70
Females 23.70 23.60
Retiring in 20 years
Males 22.00 22.00
Females 24.90 24.90
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Notes to the Financial Statements 22 (continued)

Sensitivity analysis

The table below shows the impact of a change in key assumptions on the present value of the defined benefit obligation and the total service cost charge:

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Change in discount rate +0.5% +0.1% 0.0% -0.1% -0.5%
Present value of defined benefit obligation (£’000) 21,439 23,066 23,502 23,950 25,878
Projected service cost (£,000) 547 639 664 690 803
Change in long term salary increase +0.5% +0.1% 0.0% -0.1% -0.5%
Present value of defined benefit obligation (£’000) 23,548 23,511 23,502 23,493 23,458
Projected service cost (£,000) 664 664 664 664 664
Change to pension increases and deferred revaluation +0.5% +0.1% 0.0% -0.1% -0.5%
Present value of defined benefit obligation (£’000) 25,873 23,950 23,502 23,066 21,433
Projected service cost (£,000) 807 691 664 638 543
Change in life expectancy assumptions +1 year None -1 year
Present value of defined benefit obligation (£’000) 24,277 23,502 22,155
Projected service cost (£,000) 689 664 640
The Institute’s share of the assets in the plan and the expected rates of return were:
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The Institute’s share of the assets in the plan and the expected rates of return were:
Share of assets Fair Value at Share of assets Fair Value at
31 July 2024 31 July 2024 31 July 2023 31 July 2023
£’000 £’000
Equities 61% 16,010 57% 14,049
Target return portfolio 16% 4,185 19% 4,648
Infrastructure 11% 2,864 12% 3,047
Property 9% 2,367 9% 2,298
Cash 3% 944 3% 667
Total market value of assets 100% 26,370 100% 24,709
Long-term Fair Value at Long-term Fair Value at
rate of return 31 July 2024 rate of return 31 July 2023
expected at (£’000) expected at (£’000)
31 July 2024 31 July 2023
Total market value of assets 26,370 24,709
Weighted average expected
5.27% 4.64%
long term rate of return
Actual return on plan assets 1,310 1,076
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Notes to the Financial Statements 22 (continued)

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

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31 July 2024 31 July 2023
£’000 £’000
Fair value of plan assets 26,370 24,709
Present value of plan liabilities (23,502) (21,638)
Adjustments to remove scheme surplus (2,868) (3,071)
- -
Net pension asset/(liability)
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The pension scheme asset has not been recognised in the financial statements. The total actuarial loss for the year amounted to £287,000 of which £84,000 has been recognised in the statement of comprehensive expenditure.

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

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31 July 2024 31 July 2023
£’000 £’000
Amounts included in staff and investment costs
Service cost 624 1,156
Net interest on the defined benefit (asset)/liability (172) 229
Administration expenses 7 12
Total 459 1,397
Amounts recognised in Other Comprehensive Income
Return on pension plan assets 28 288
Other actuarial gains - 330
Changes in financial assumptions (862) 10,428
Changes in demographic assumptions 284 1,606
Experience gain on defined benefit obligation 263 (1,721)
Adjustment to remove scheme surplus 203 (3,071)
Amount recognised in Other Comprehensive Income (84) 7,860
Movement in the defined benefit plan during the year
31 July 2024 31 July 2023
£’000 £’000
Surplus/(deficit) in scheme at 1 August 3,071 (6,986)
Movement in year:
Current service cost (624) (1,152)
Employer contributions 543 523
-
Past service cost, including curtailments (4)
Net interest on the pension asset/(liability) 172 (229)
Administration expenses (7) (12)
Actuarial gain (287) 10,931
Net defined benefit pension asset at 31 July 2,868 3,071
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Notes to the Financial Statements 22 (continued)

Asset and liability reconciliation

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31 July 2024 31 July 2023
£’000 £’000
Changes in the present value of defined benefit obligations
Defined benefit obligations at start of period 21,638 30,047
Current service cost 624 1,152
Interest cost 1,110 1,017
Contributions by scheme participants 291 266
Experience (gain)/loss on defined benefit obligations (263) 1,721
Change in financial assumptions 862 (10,428)
Change in demographic assumptions (284) (1,606)
Estimated benefits paid (476) (535)
Past service cost, including curtailments - 4
Defined benefit obligations at end of the period 23,502 21,638
Reconciliation of assets
Fair value of plan assets at start of period 24,709 23,061
Interest on plan assets 1,282 788
Return on plan assets less interest 28 288
Other actuarial gains - 330
Administration expenses (7) (12)
Employer contributions 543 523
Contributions by scheme participants 291 266
Estimated benefits paid (476) (535)
Assets at end of the period 26,370 24,709
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Notes to the Financial Statements 23

23. Reserves

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Restricted
General Pension Revaluation Restricted
Notes Bursary Total
Reserve Reserve Reserve Funds
Fund
Reserves as at 31 July 2023 6,566 - 1,000 133 16 7,715
- - - -
Deficit for the year (295) (295)
- - - -
Exceptional costs (net) (28) (28)
Net FRS 102 pension charge - 84 - - - 84
- - - -
Actuarial loss in respect of pension scheme (84) (84)
- - - -
Actuarial loss in respect of enhanced pension (5) (5)
Bursary donations received - transfer to (45) - - 45 - -
restricted fund
Bursary resources expended - transfer from
16 - - (16) - -
restricted fund
Reserves as at 31 July 2024 6,209 - 1,000 162 16 7,387
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The pension reserve represents the liability under FRS102 for the Local Government Pension Scheme.

The revaluation reserve was created on 1 April 1991 to account for the difference between the transfer cost of City Lit’s land (£nil) and its market value at the time. Other restricted funds consist of four trust funds.

A bursary fund was established on 31 July 2011 by the Governors. City Lit’s bursary schemes have been set up to help students with financial difficulties. The schemes provide help with course fees, books and materials and are particularly aimed at students who wish to study courses for vocational reasons or to help transform their lives.

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Notes to the Financial Statements 24 & 25

24. Related party transactions

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

The total expenses paid to or on behalf of the Governors during the year was £1,775 for four Governors; (2022-23: £2,054 for three 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.

No Governor has received any remuneration or waived payments from the Institute during the year (2022-23: None).

25. Events after the reporting period

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There were no significant events after the reporting period that would necessitate revision of these financial statements.

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