2025-07-31-accounts

FINANCIAL STATEMENTS for the year to 31 July 2025

Charity Number: SC021174

NORTH EAST SCOTLAND COLLEGE

Charity No: SC021174

Financial Statements for the year to 31 July 2025

Index

		Page
1.	Performance Report
	Overview	3
	Performance Analysis	11
	Adjusted Operating Position	24
2.	Accountability Report	30
	2.1Corporate Governance Report	30
	Directors Report	30
	Governance Statement	32
	2.2Remuneration and Staff Reports	41
	2.3Parliamentary Accountability Report	46
	2.4Independent Auditor’s Report	47
3.	Financial Statements	51
	Consolidated and College Statement of Comprehensive Income	51
	Consolidated and College Statement of Changes in Reserves	52
	Consolidated and College Balance Sheet	54
	Consolidated Cash Flow Statement	55
	Notes to the Financial Statements	56
4.	Appendix 1: Scottish Funding Council – Accounts Direction	73

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NORTH EAST SCOTLAND COLLEGE

Charity No: SC021174 Financial Statements for the year to 31 July 2025

1. PERFORMANCE REPORT

OVERVIEW

This overview provides the reader with highlights of the College’s performance for the year to 31 July 2025. It contains statements from the Principal and the Chair, background to our purpose, operating environment, business model and objectives, and discusses the principal risks that the College faces.

Introductory Statement by the Principal and Chief Executive

The college sector across Scotland continues to face significant financial pressures, operating within an increasingly constrained and uncertain funding landscape. Persistent underinvestment in public funding, coupled with rising operational costs, has placed colleges under considerable strain. Despite a growing awareness amongst most stakeholders of the plight of Scotland’s colleges, this situation is not improving, and the long-term sustainability of Scotland’s colleges remains a significant concern. Despite the best efforts to mitigate these challenges, the impact is being felt across the sector, with services to students and stakeholders inevitably affected.

At North East Scotland College (NESCol), we are not exempt from these financial pressures and have proactively continued lobbying the Scottish Government, Scottish Funding Council and others to ensure our requirements for a better and fairer funding allocation are heard and addressed.

This said, we remain committed to ensuring our future sustainability through effective financial management, adaptive leadership and focused strategic planning. Our approach is both responsive and robust, enabling us to continue delivering high-quality education, skills development, and training. Such an approach ensures that our students, our partners, our employers and our region receive the support, experience, and outcomes they expect and deserve.

Throughout academic year 2024/25, and despite financial constraints, NESCol has – yet again - made encouraging progress in several key areas of its activities. Student success rates have improved, reflecting the effectiveness of our teaching and support strategies. In addition, student satisfaction levels have remained exceptionally high. This is testament to the dedication of our curriculum and support staff as well as the quality of the learning environment we provide across our campuses. We also continue to experience strong demand from employers for our Modern Apprenticeship programmes, highlighting the relevance and value of our vocational offerings.

Further, our strategic partnerships continue to strengthen, particularly through our active involvement with regional bodies such as the Regional Economic Partnership (REP), the Multi-Agency Transformation Management Group (MATMG), and the Community Planning Partnerships (CPPs) of Aberdeen City and Aberdeenshire. These collaborations underscore NESCol’s central role, as the region’s college, in driving economic development and transformation across the North East. By working closely with these groups, we are helping to shape and deliver the region’s ambitions for future prosperity and inclusive economic growth.

One of our most exciting developments is the ongoing partnership with Energy Transition Zone Ltd and Shell, which – over the course of academic year 2024/25 – has progressed well. Together, we launched the Energy Transition Skills Hub in September 2025—a facility that will play a key role in equipping the workforce required with the skills needed for a low-carbon future. Further, our collaboration with the University of Aberdeen and Robert Gordon University through the National Energy Skills Academy (NESA) continues to thrive. This tripartite initiative is addressing both current and emerging skills needs within the energy sector, positioning the North East as a leader in energy transition not only in Scotland but across the UK and Europe.

The College has also been central to regional partnership discussions relating to the North East Scotland Investment Zone (NESIZ). This initiative will see £160m of UK and Scottish Government monies being match-funded and spent within Aberdeen City and Aberdeenshire on various projects; projects that will ensure increased economic activity across five thematic areas, namely skills, regional infrastructure, research and innovation, local enterprise and business support, and planning and development. The Investment Zone process will also allow monies from the £160m proposed allocation to be spent on two tax sites in Aberdeen and Peterhead.

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NORTH EAST SCOTLAND COLLEGE

Charity No: SC021174 Financial Statements for the year to 31 July 2025

Looking ahead, our Board and Leadership Team are united in their ambition to grow and evolve our offer. Extensive work has been conducted over the course of this academic year on the development of the College’s new five-year strategic plan. The extensive consultation with students, staff and stakeholders on ‘Bringing Learning to Life’ will lead to the publication of the plan in the early stages of academic year 2025/26.

There remains significant interest in what we are doing at NESCol. Demand is high and our ambition to meet the ever-increasing needs of our region is central to our current and future thinking, strategizing, activity and ambition. Put simply, a more favourable and fairer funding position would allow us to do more. This said, as we enter our new strategic planning cycle, NESCol will continue to focus on its key priorities, namely our student experience, our colleagues, our digital ambition, our spaces, our region, and our secure future. And in doing so, we fully intend to embrace the opportunities, and address the challenges, we face in order to become the high-quality educator, progressive employer and partner of choice we seek and need to be.

Neil Cowie Principal and Chief Executive

11 December 2025

Statement by the Chair

The publication of the NESCol annual report provides an opportunity to reflect on the financial performance of the past year and to ensure transparency and scrutiny.

As the accounts highlight, and as our Principal and Chief Executive has articulated, it has been a time of significant challenge. That applies not only to the period covered by this report but for a number of years preceding it.

In my role as Chair of the NESCol Regional Board and as a member of the board of trustees of Colleges Scotland, the organisation tasked with providing a collective voice for the sector, I am acutely aware of the obstacles facing our country’s institutions.

Fairer funding is a necessity if we are to realise our great ambitions for NESCol and for the region we serve.

NESCol has been as adept as any college in navigating what is not a straightforward route through the current landscape and the financial position we report is one that balances our delivery imperatives with the fiscal realities we face.

To be excelling, as our students and staff have done and continue to do, is testament to the agility and resilience of our College community. We can take enormous pride in the many accomplishments of the past year.

I must place on record my appreciation for the Executive Team, Strategic Leadership Team and wider staff body for their pragmatism and diligence. Steering an organisation of NESCol’s size and complexity revolves around decision making at a macro and micro level. These decisions do not sit in isolation and knit together to bring the stability and financial sustainability that underpins every aspect of our operations.

Whilst the challenges we face cannot be ignored, it is also important to focus on the opportunities in front of us.

At NESCol our commitment is to be a driver of positive social change and inclusive economic growth. That is evident in the daily work of our teams and the impact of our students on the North East of Scotland.

The determination to build on the strong foundations we have set since NESCol’s inception is as strong as it has ever been and we look forward to working with our partners to delivering our shared goals.

Susan Elston Chair of the NESCol Regional Board

10 December 2025

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NORTH EAST SCOTLAND COLLEGE

Charity No: SC021174 Financial Statements for the year to 31 July 2025

Our Purpose and Activities

Legal Status

North East Scotland College (NESCol) was formed on 1[st ] November 2013, as a result of merger between Aberdeen College and Banff and Buchan College.

The College is incorporated under the Further and Higher Education (Scotland) Act 1992 and is funded directly by the Scottish Further and Higher Education Funding Council (SFC). The College is a charity registered with the Office of the Scottish Charity Regulator (Scottish Charity Number SC021174) and is recognised by HM Revenue and Customs as a charity for the purpose of Section 505, Income and Corporation Taxes Act 1988. As such, the College is exempt from corporation tax on its charitable activities. The College receives no similar exemption in respect of Value Added Tax.

Business Model and Operating Environment

Through its Regional Outcome Agreement with the Scottish Funding Council, the College responds to the Scottish Government’s national policy drivers, while also working with regional partners and local businesses in improving opportunities for the people of Aberdeen and Aberdeenshire, in helping the region’s young people progress to work or higher education, and in supporting businesses through professional updating and workforce development.

Each year, the College enrols around 6,500 full-time students and 15,000 part-time students. It employs just short of 600 staff across the range of its business activities.

NESCol is the only further education college located within the North East of Scotland, and provides a wide range of education and training opportunities across the region to meet the needs of individuals, communities and employers. The College’s main (College-owned) centres are in Aberdeen (three sites), Fraserburgh and Peterhead.

The College’s Estates Strategy recognises the need to maintain a regional presence, but also to differentiate provision at each campus to meet the differing needs of learners. The Estates Strategy prioritises the improvement of the current College-owned sites, to meet the changing needs of learners, staff and other stakeholders. The Estate Strategy includes the objective of closing a small campus and exploring opportunities to sell spare land in order to reinvest in line with the College’s new five-year strategic plan adopted in financial year 2025/26.

Student success rates have improved, reflecting the effectiveness of our teaching and support strategies. In addition, student satisfaction levels have remained exceptionally high. We also continue to experience strong demand from employers for our Modern Apprenticeship programmes, highlighting the relevance and value of our vocational offerings.

Our strategic partnerships continue to strengthen, particularly through our active involvement with regional bodies such as the Regional Economic Partnership (REP), the Multi-Agency Transformation Management Group (MATMG), and the Community Planning Partnerships (CPPs) of Aberdeen City and Aberdeenshire. These collaborations underscore NESCol’s central role, as the region’s college, in driving economic development and transformation across the North East. By working closely with these groups, we are helping to shape and deliver the region’s ambitions for future prosperity and inclusive economic growth. The College has also been central to regional partnership discussions relating to the North East Scotland Investment Zone (NESIZ).

Our Board and Leadership Team are united in their ambition to grow and evolve our offer. Extensive work has been conducted over the course of this academic year on the development of the College’s new fiveyear strategic plan.

The College operates a wholly-owned subsidiary company, Aberdeen Skills and Enterprise Training Ltd (ASET), delivering specialist support to the Oil and Gas industry.

The College’s other wholly-owned subsidiary, Clinterty Estates Ltd, is dormant and has not traded since 30 April 1998.

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NORTH EAST SCOTLAND COLLEGE

Charity No: SC021174

Financial Statements for the year to 31 July 2025

The College operates on the management structure shown in the following organisational chart.

Strategic Plan Development

The current Strategic Plan for the College was due to be renewed for the 2023-24 academic year. However, due to the effect of Covid, as well as a desire to consult wider with more stakeholders (staff, students and key external stakeholders) on the development of the new Strategic Plan, the previous Plan continued until replaced. The College believes that by coming together collaboratively, we can create a strategic roadmap that not only will help overcome the challenges that we face, but also harnesses our strengths and opportunities. It is the intention that the plan will clearly articulate what the College wants to become or accomplish over the next 5 years.

The first phase of the process was the set up a small Project Delivery Team, comprising a range of managers, teaching and support staff, and student representatives, to act as the operational management group for the project.

The new Strategic Plan was launched in November 2025 to be fully in place for academic year 2025/26.

The existing Strategic Plan used for academic year 2024/25 clearly defines the College’s vision and values.

Vision and Values

Vision

• North East Scotland College will, through the delivery of high-quality education and training:

• drive and support innovation and economic prosperity,

• raise aspiration,

• create success, and

• promote diversity, fairness and opportunity for all

• providing individuals, businesses and communities in the North East of Scotland with 21st century skills.

Values

• The College’s values shape our work, influence our behaviours and apply to everyone who comes to the College to learn or work.

NORTH EAST SCOTLAND COLLEGE

Charity No: SC021174 Financial Statements for the year to 31 July 2025

Commitment and Excellence

• Understanding and responding to the needs of our students, staff, key stakeholders and customers

• • Being business-like and professional

• Maintaining clear focus on our goals and ensuring these are achieved through effective planning and organisation

• Achieving excellence by continually evaluating and improving our services

• Ensuring our processes are consistent, accessible, effective and efficient.

Empowerment and Engagement

• Creating an environment where innovation and creativity are encouraged and can flourish

• Providing clear direction, information and communication

• Providing development opportunities to ensure we have the skills, knowledge and confidence to perform to the best of our ability

• Giving recognition and praise

• Encouraging and supporting collaboration.

Respect and Diversity

• Valuing the experience and talent of all

• Treating others with dignity and respect

• Creating an accessible, inclusive learning and working environment

• Being fair, open and transparent to ensure a culture of mutual trust and integrity

Strategic Themes

Our Strategic Plan for 2024-2025 is focused on five Strategic Themes and their accompanying Strategic Goals.

Being Agile and Responsive

• Deliver a curriculum and support services that respond to the needs of students.

• Support students to make choices that reflect individual ambitions.

• Build on the unique and distinctive strengths of our campuses.

Empowering People

• Deliver supporting strategies to support mental, physical and social wellbeing of staff and students.

• Provide development opportunities to maximise potential of all staff and students.

• Build creative, confident and highly motivated staff and students.

• Discover and nurture talent in our students and workforce.

• Create a culture that is based on respect, trust, engagement and shared goals.

• Foster digital skills and knowledge whilst investing in infrastructure and resources.

Advancing Partnership Working

• Work with Community Planning Partners to deliver on key priorities, with a focus on reducing inequality and removing barriers to educational attainment.

• Work with regional economic development bodies to support the delivery of the refreshed Regional Economic Strategy to support post-Covid economic recovery.

• Work with the Regional Learning and Skills Partnership to deliver the Regional Skills Strategy, developing individuals with the skills to meet the evolving needs of the region.

• Work with local schools and other partners to develop and deliver effective learning pathways for young people, including the delivery of regional plans for Developing the Young Workforce.

• Work with Higher Education partners to promote learning opportunities, widen access, increase articulation and improve the learner journey.

• Work with employers to ensure provision adapts to meet the needs of industry and supports regional economic recovery and development.

• Embed an enhanced approach to stakeholder engagement which builds greater understanding of the NESCol offer and strengthens regional relationships in support of shared ambitions.

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Charity No: SC021174

Financial Statements for the year to 31 July 2025

• Work with the Students’ Association to ensure all students have the opportunity to shape and influence their College experiences, and to build a successful, resilient, confident and engaged student body.

• • Work with local partners to support the health and wellbeing of staff and students.

Delivering Excellence and Innovation

• Be recognised as a college which delivers excellence across all courses and services, building a reputation as the premier provider of employer informed education and skills in the region.

• Deliver outstanding learning and teaching which is exciting, innovative and relevant, and which increases the number of learners achieving successful outcomes and positive destinations.

• Deliver a curriculum and support service which enables students to build resilience, develop essential meta skills and achieve success.

• Deliver a whole-College approach to student support that promotes health and wellbeing alongside effective academic tutoring and personal development.

• Encourage and enable a strong student voice, co-designing and co-delivering sector leading approaches to quality improvement.

• Drive continuous quality improvement through a strong culture of self-evaluation, and the adoption of an evidence-informed approach to decision-making and enhancement planning.

• Provide modern, fit-for-purpose buildings, facilities, and spaces for learning, studying and socialising.

• Maximise the use of digital technology to deliver sector leading student experiences and support services.

• Continue to advance equality of opportunity across the College to ensure success for all students regardless of protected characteristics, background or experience, and to maintain a College-wide culture of respect.

Leading Sustainability

• Through the delivery of our Outcome Agreement seek to achieve sustainable levels of funding in support of our core activities from the Scottish Funding Council (SFC).

• Maximise income from commercialisation and other opportunities.

• Deliver year-on-year operational efficiencies to enable investment in innovation, staff and facilities.

• Fully utilise the financial resources available and produce annually a balanced budget position, within a longer-term sustainable financial plan.

• Implement a Procurement Strategy that ensures the College achieves best value and complies with all regulatory requirements.

• Streamline business processes and systems using technology and digital skills.

• Develop and deliver a Carbon Management Plan for the period 2020–2025, to achieve a further reduction in CO2 emissions of 50%, and supporting the transition to a Net-Zero Economy.

• Implement an Environmental and Social Sustainability Strategy aligned to the United Nations Sustainable Development Goals, embedding the principles and practices of sustainability across the curriculum and support services.

NESCol Strategic Plan 2025-30

The Strategic Plan 2025–2030 has been developed through a collaborative and inclusive process, engaging staff, students, stakeholders, and community partners across a range of forums. This has included an allstaff survey, targeted consultations, strategic workshops with the Leadership Team and Regional Board, student workshops across campuses, a Winter Development Day staff session, open information events, and online feedback opportunities.

The insights gathered through these activities have been carefully analysed to identify key themes and priorities, which have shaped the development of a high-level strategic framework. The resulting plan sets out a clear and ambitious direction for the College, underpinned by a strong regional focus, a commitment to sustainability and innovation, and a shared vision for student success and institutional growth.

The plan is structured with clear articulation of:

Who We Are (an overview) Why We’re Here (mission statement) What We Stand For (core values) Where We’re Going (vision statement) How We’ll Get There (key objectives)

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NORTH EAST SCOTLAND COLLEGE

Charity No: SC021174 Financial Statements for the year to 31 July 2025

There are 5 strategic objectives:

• Delivering outstanding education and learning

• Building a better future with students

• Strengthening our region’s communities and economy

• Building a stronger and more sustainable College

• Striving to deliver excellence and growth

There are 6 sub-strategies, each contributing to the overarching College goals. There are themes that cut across many, if not all sub-strategies (e.g., innovation, sustainability, efficiency, wellbeing, skills):

Our Region – Enhancing regional engagement, commercial development, and curriculum alignment with local labour market needs.

Our Secure Future – Ensuring long-term sustainability through diverse funding, operational efficiency, and alignment with the UN’s Sustainable Development Goals (SDG).

Our Colleagues – Supporting staff development, wellbeing, and strategic workforce planning.

Our Spaces – Improving physical infrastructure with a focus on sustainability, safety, and inclusivity.

Our Digital Ambition – Driving digital transformation and building digital capabilities across the College.

Our Student Experience – Enriching the student journey through innovation in learning, teaching, and support.

The plan was launched in October 2025.

Key Issues and Risks

The Regional Board has established a Strategic Risk Register in September 2023, which considers matters which may impact on the College’s ability to deliver on its strategic objectives. Risks and mitigating factors are kept under review by the Executive and Leadership Teams on a monthly basis, and reported to the Board via the Audit and Risk Committee. The Audit and Risk Committee met four times during the academic year 2024/25 as noted in the Corporate Governance Report on page 32. The Risks are categorised alongside the Strategic Goal they most impact on. The Board identifies the principal risks to the College, currently rated as “high” or “very high”, as being: -

Strategic Goal 1: Deliver high quality, accessible and inclusive learning and training opportunities, which transform lives, and which support the economic and social development of our region.

• Failure to deliver future skills needs of the region and contributing to regional and national economic growth.

Mitigations for the above risk focus on engagement with key stakeholders, horizon scanning, scenario planning, and maximising income.

Strategic Goal 2: Develop the skills, talents and potential of all the people who come to college either to learn or to work.

• Unable to recruit, retain and develop appropriately qualified staff, adversely impacting on the learner experience, curriculum delivery and development.

• If the College fails to adapt quickly and flexibly to changing demands, may not meet delivery targets.

Mitigations for the above risks focus on the implementation of strategies, policies and procedures, organisational development activities, effective communication and consultation mechanisms including the provision of detailed staff guidance, partnership working with local trade union representatives, participation with the national Employers’ Association, the provision of staff health and wellbeing support and initiatives, and business planning processes.

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Charity No: SC021174 Financial Statements for the year to 31 July 2025

Strategic Goal 3: Work with our partners to deliver positive and sustainable change for the individuals, communities and businesses in our region

• If competitions between the College and University sector continues to intensify then FT HE student recruitment will be negatively impacted.

Mitigations for the above risk focus on engagement with key regional stakeholders and national agencies, effective communication and consultation mechanisms, operation of agreements including Partnership Agreements, Memorandums of Understanding, Articulation Agreements, and monitoring of external guidance.

Strategic Goal 4: Deliver an excellent learning environment and experience leading to successful outcomes for all learners.

• If the SFC fails to provide adequate funding for counsellors and other targeted health and wellbeing support then student outcomes and experiences will decline.

• Insufficient funding to maintain modern fit-for-purpose buildings, infrastructure and equipment negatively impacting the quality of the student experience.

Mitigations for the above risks focus on effective monitoring and reporting mechanisms, provision of student support services and academic guidance, learning and development activities, ongoing engagement with the SFC and key regional stakeholders, business continuity documentation and arrangements, resource planning, and monitoring of external guidance.

Strategic Goal 5: Optimise the use of our available resources to deliver financial and environmental sustainability.

• Funding and increasing cost pressures will reduce the College's ability to achieve a balanced budget and challenge future sustainability.

• If ASET does not grow at sufficient rates then gift aid will not meet budgeted levels.

Mitigations for the above risks focus on engagement with national agencies, engagement with key regional stakeholders, data analysis, and effective marketing approaches.

Going Concern

The Group Balance Sheet at 31 July 2025 shows Net Current Assets of £4.2m (FY 2023/24 equivalent £1.6m) and Total Net Assets of £57.8m (FY 2023/24 £59.0m). The SFC has indicated to the College expected funding levels for the period to 2025-26 and the Regional Board has approved a financial plan for 2025/26 on that basis.

The comments on page 39 to these financial statements outline the Board’s assessment of going concern. Accordingly, the Board considers that it is appropriate to consider that the College is a “going concern” and these financial statements have been prepared on that basis.

Accounting Treatment of Job Evaluation

The College Financial Statements continue to incorporate the change to the accounting treatment of the national support staff job evaluation. An adjustment to remove multi-year SFC funding totalling £3.8m was processed in 2023/24 creating a provision for this value. An additional provision of £645,000 was processed in 2024/25 resulting in a total provision at the end of the 2024/25 of £4.5m. This is based on advice from our external auditors and the revised SFC Accounts Direction which states ‘It is important to note that this is a technical accounting change only’ and ‘Scottish Government agreeing that responsibility for job evaluation funding commitments now rests with the Scottish Government until the process is complete’ The estimated costs of the national support staff job evaluation exercise are not matched by revenue funding in these Financial Statements however the Scottish Government funding is essential to implementing the outcomes and costs. The Scottish Government commitment to funding the cost of the national support staff job evaluation outcomes was restated again at the Public Audit Committee on the 28[th ] November 2024.

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NORTH EAST SCOTLAND COLLEGE

Charity No: SC021174 Financial Statements for the year to 31 July 2025

Performance Summary

Overall, the College met its activity target for the year, while also exceeding its budgeted position. As can be seen from the Key Strategic Indicators noted on p16, performance continues to be markedly improved from that recorded in prior years. This is a very good result from the College. This sustained success has been achieved during a period of high inflationary pressures – while the College has faced increases in fuel costs, pay awards and generally high inflation, our funding is being held on a ‘flat cash’ basis, which does not allow for these increases in costs.

There is further analysis of the College’s performance during the year in the next section.

Performance Analysis

This section of the report provides a more detailed analysis of the College’s performance against financial and non-financial indicators, and gives a commentary on the key financial outcomes for the year, with figures extracted from the Balance Sheet as well as the Statement of Comprehensive Income and Expenditure for the year.

It defines the relationships between the College’s national and regional drivers, its Strategic Plan, performance measurement framework and risk register. It also discusses the College’s wider performance in relation to environmental and social matters.

Regional Priorities and Skills Needs

As the Region’s College, NESCol will shape and respond to the immediate and longer-term regional priorities and skills needs as identified within the Regional Economic Strategy, Regional Skills Strategy, Regional Skills Assessments and related action plans. Further, the College will shape and response to the priorities identified within the Region’s two Community Planning Partnerships. This Plan addresses these priorities as follows:

Regional Economic Strategy
Priorities: • Delivering a world class digital skills programme within our schools • Reducing the % of employers with a skills gap • Narrowing disability, racial and gender-based inequalities • Driving interest in, and uptake of, educational pathways to deliver the future workforce for our key regional clusters – ensuring people achieve higher level qualifications reflecting the ongoing need for parity between vocational and academic qualifications • Reducing the proportion of income deprived households • Getting more young people in lower SIMD out of poverty by focussing relentlessly on closing the gap	College Contribution: The College aligns its curriculum with the objectives of the Regional Economic Strategy through rigorous analysis of labour market intelligence and employer feedback. Using resources such as SDS Regional and Sector Skills Assessments, Lightcast labour market data, and insights from organisations including ECITB, OE UK, Opito, and RGU’s Energy Transition Institute, we design and adapt courses to meet the evolving skills needs of key regional employers. This approach is strengthened by collaboration with local authorities, partner universities, public and third-sector organisations, and over 1,000 industry partners. These partnerships provide critical intelligence and enable co-created solutions that drive regional growth. Engagement is deepened through employer-student events, support for investment zone initiatives, and community engagement activities. Curriculum governance is maintained through approval panels, internal committees, strategic leadership forums, and oversight by the Regional Board, ensuring continuous alignment with economic priorities and social mobility goals. NESCol plays a central role in delivering digital and other critical skills programmes and we work closely with local authorities, schools and regional stakeholders to equip young people for the future	Strategic Objective(s): 1.1, 3.1, 3.2, 5.7, 5.8

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NORTH EAST SCOTLAND COLLEGE	Charity No: SC021174 Financial Statements for the year to 31 July 2025	Charity No: SC021174 Financial Statements for the year to 31 July 2025
	economy. Regular curriculum updates ensure alignment with employer needs, reducing skills gaps across the region. We champion equality and inclusion by embedding inclusive practices across campuses and programmes, widening participation for underrepresented groups, and creating accessible pathways into vocational and academic qualifications. Targeted support for learners from lower SIMD and care-experienced backgrounds, including bursaries and tailored interventions, helps close the attainment gap and tackle deprivation. The college promotes uptake of educational pathways that support future workforce needs in key regional priority areas. By offering a broad range of further and higher-level qualifications and maintaining parity between vocational and academic routes, NESCol ensures learners are prepared for growth sectors and emerging opportunities. Through our committed leadership in skills development, inclusive education, and partnership working, NESCol is integral to achieving regional ambitions for economic growth, social mobility, and equality.

Regional Skills Strategy
Priorities: • Responding to the downturn • Supporting economic transition • Repositioning the skills system • Supporting school to work transitions	College Contribution: The College plays a central role in supporting the successful delivery of the Aberdeen City and Aberdeenshire Regional Skills Strategy, which aims to ensure that the region’s workforce is equipped for both current and future economic challenges. We achieve this by aligning our curriculum with regional priorities, using robust labour market intelligence and employer feedback. This ensures that courses are regularly reviewed and adapted to meet the evolving needs of employers across sectors including energy, health and social care, construction, and digital/ICT. As a core regional partner, NESCol collaborates closely with key regional partners to co-design solutions, share responsibilities for skills delivery, and participates in regional governance to ensure continuous improvement and strategic alignment in skills and workforce development. NESCol also plays a key role in supporting economic transition by delivering work-based learning and apprenticeships aligned with employer demand, and by supporting upskilling and retraining for those affected by changes in the oil and gas industry. Initiatives such as the Transition Training Fund, Energy Transition Skills Hub,ABZ Works initiatives and enhanced	Strategic Objective(s): 1.1, 3.1, 3.2, 3.4, 3.6, 5.7, 5.8

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NORTH EAST SCOTLAND COLLEGE

Charity No: SC021174

Financial Statements for the year to 31 July 2025

	employability services help individuals move into new roles and sectors. The college is committed to strengthening school- to-work transitions, supporting young people through Foundation and Modern Apprenticeships, and working with schools and the Developing Young Workforce Regional Group to create clear pathways from education to employment.

CommunityPlanningAberdeen(CPA)
Priorities: • Prosperous Economy • Prosperous People (Children & Young People) • Prosperous People (Adults) • Prosperous Place		College Contribution: The College is a partner of CPA working with partners on locality planning, community empowerment, and improving outcomes for the population of Aberdeen City, especially those who experience poorer outcomes as a result of socio-economic disadvantage. The work of the CPA sees the College contributing to initiatives for priority and at-risk neighbourhoods, and priority communities of interest e.g., children and young people, people with disabilities. NESCol is a member of the CPA Board, the CPA Management Group, and two Outcome Improvement Groups: Aberdeen Prospers:supports delivery of the Local Outcome Improvement Plan (LOIP) and underpinning locality plans, specifically two Economy Stretch Outcomes in the LOIP: 1.Support 400 unemployed Aberdeen City residents into sustained, Fair Work by 2026 2.Upskill/reskill 500 Aberdeen City residents to enable them to move into, within and between economic opportunities as they arise by 2026. Integrated Children’s Services:ensures the effective delivery of services for children and young people at all stages of their development and growth. All key agencies that deliver services for children and young people in Aberdeen City are represented, working together to deliver the City’s Children’s services plan and using the Scottish Government’s ‘Getting It Right for Every Child’ as a common approach to deliver better outcomes for children and to measure success. The College also participates in a number of associated workstreams: • The Attainment and Progression to Adulthood Group • Child Friendly Cities Group • Target Operating Model Sub Group • ACC Care Experienced Champions Board	Strategic Objective(s): 1.1, 3.1, 3.2

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NORTH EAST SCOTLAND COLLEGE

Charity No: SC021174

Financial Statements for the year to 31 July 2025

Aberdeenshire CommunityPlanningPartnership (ACPP)	Aberdeenshire CommunityPlanningPartnership (ACPP)	Aberdeenshire CommunityPlanningPartnership (ACPP)
Priorities: • Changing Aberdeenshire’s relationship with alcohol • Reducing child poverty in Aberdeenshire • Connected and Cohesive Communities		College Contribution: The College is a partner of ACPP which aims to work together for the best quality of life with happy, healthy and fulfilled people, living in a healthy, safe and sustainable environment with a vibrant local economy. This includes partnership working to deliver more efficient and improved services which meet local needs in Aberdeenshire and to contribute to the delivery of key actions in a number of Locality Plans. NESCol is a member of the CPA Board, and Connected and Cohesive Communities. Connected and Cohesive Communities:supports the Planning Partnership in the delivery of locality plans for three areas of Aberdeenshire that experience the most social and economic disadvantage. This includes the delivery of several initiatives around addressing inequalities, employability and health, as well as supporting communities to becomemoreresilient.	Strategic Objective(s): 1.1, 3.1, 3.9

The College also uses the Regional Skills Assessments for Aberdeen City and Aberdeenshire, to ensure it aligns provision with anticipated demand.

There are a number of key Scottish Government priorities which have particular relevance to the college sector. The College, through the Strategic Plan, will respond as follows:

Scottish Government	College Contribution	Strategic Objective(s)
Priority
Fair Access and Transitions	The College will provide access to further and higher education for people of all ages from the widest range of backgrounds, and ensure that all students are enabled to achieve their full potential as successful learners, ready for transition to future learning,life andwork.	1.3, 3.1, 3.5
Health and Wellbeing	The College will provide health and wellbeing services and support, and will work with partners to contribute to positive and sustainable change in the health and wellbeingof staff and students.	2.1, 3.9, 4.4
Net Zero	The College will ensure its activities as an educator, employer and regional leader contribute fully to the delivery of Scottish Government’s climate change ambitions.	5.7, 5.8
Economic recovery, reform and prosperity	The College will ensure its contributions, post- COVID-19 and post-Brexit, to the immediate and future regional economic requirements support a revitalised and successful Scottish economy.	1.1, 3.2, 2.4, 3.6, 4.1
Integration of tertiary education and skills system	The College will develop, in conjunction with others, a cohesive and connected tertiary sector offer which delivers a greater educational and skills-based coherence for students, employers and otherstakeholders.	3.5
Mainstreaming Equality	The College will continue to advance equality of opportunity through the Public Sector Equality Duty (PSED), ensuring that its operations, activities and decision making processes are impact assessed against the protected characteristics of age; disability; gender reassignment; pregnancy and maternity; race; religion or belief; sex, and sexual orientation.	1.1, 4.9

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Financial Statements for the year to 31 July 2025

Retention and Attainment	The College will raise student retention and attainment levels to ensure that ever-increasing numbers of students successfully fulfil their potential and achieve their ambitions.	4.2
Employability	The College will improve employment outcomes for young people and provide for support aimed at addressing youth unemployment, in particular thosewithbarriers towork.	1.1, 4.1
Innovation and Enterprise	The College will contribute to driving up levels of business innovation in Scotland by ensuring that its learners are exposed to entrepreneurialthinking.	4.2
Senior Phase and Developing the Young Workforce	The College will play a lead role in ensuring that an enhanced regional approach is undertaken to support improved and progressive senior phase pathways by working closely with partners on planning and delivery.	3.4
Apprenticeships	The College will build and strengthen pathways into and across Apprenticeship programmes, particularly in key sectors such as STEM, digital skills and early years workforce expansion.	3.6
Flexible Workforce Development Fund	The College will help employers to increase productivity and address skills gaps by supporting in-work trainingof their workforce.	3.6
STEM and Energy Transition	The College will contribute to the development of Scotland’s STEM and energy transition priorities to generate inclusive and sustainable economic growth by equipping young people with skills for thefuture.	1.1, 3.2, 3.3, 3.6, 4.1
Digital	The College will support improved digital skills development and acquisition for its students, staff and Stakeholders.	2.6, 4.8, 5.6

SFC Outcome Framework and Assurance Model

The Scottish Funding Council (SFC) has introduced a new approach to assurance and accountability for Scotland’s colleges and universities, replacing the previous Outcome Agreement model with the Outcomes Framework and Assurance Model (OF&AM) starting in Academic Year 2024–25.

At a high level, the Outcomes Framework sets broad expectations for institutions in return for public funding, focusing on areas such as high-quality learning and teaching, financial sustainability, good governance, skills development, and student success. Unlike the previous model, it does not require institutions to agree on specific targets in advance. Instead, outcomes are expressed generally across themes that relate to students, employers, and government stakeholders.

The College is no longer required to produce an Outcome Agreement. The Outcome Agreement for academic year 2023-24 was closed off and a Self-Evaluation Action Plan (SEAP) was produced and submitted to SFC.

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Financial Statements for the year to 31 July 2025

STRATEGIC PLAN 2021-2025

KEY STRATEGIC INDICATOR TABLE

STRATEGIC PLAN 2021-2025	STRATEGIC PLAN 2021-2025	STRATEGIC PLAN 2021-2025	STRATEGIC PLAN 2021-2025	STRATEGIC PLAN 2021-2025	STRATEGIC PLAN 2021-2025	STRATEGIC PLAN 2021-2025	STRATEGIC PLAN 2021-2025	STRATEGIC PLAN 2021-2025	STRATEGIC PLAN 2021-2025
KEY STRATEGIC INDICATOR TABLE
		2021/22		2022/23		2023/24		2024/25
	Key Strategic Indicator	Target	Actual	Target	Actual	Target	Actual	Target	Actual
Activity Levels
	The total number of	131,915	128,655	128,812	129,769	115,931	116,040	115,931	117,750
	credits delivered
	The volume of core	129,280	127,606	128,812	129,769	115,931	116,040	115.931	117,750
	credits delivered
	The volume of ESF	2,635	1,049	0	0	0	0	0	0
	credits delivered
Learner Success
Overall learner success rate (Incorporate level, mode, withdrawal and partial success measures)
		2021/22		2022/23		2023/24		2024/25
	FE Full Time	Target	Actual	Target	Actual	Target	Actual	Target	Actual
	Learner Success	62%	57%	60%	63%	65%	69%	65%	70.2%
	Partial Success	-	20%	-	14%	-	11%	-	12.3%
	Early Withdrawal	-	9%	-	7%	-	4%	-	-
	Further Withdrawal	-	14%	-	16%	-	16%	-	17.5%
	FE Part Time	Target	Actual	Target	Actual	Target	Actual	Target	Actual
	Learner Success	72%	68%	78%	89%	72%	92%	72%	93.3%
	Partial Success	-	27%	-	7%	-	4%	-	4.1%
	Early Withdrawal	-	1%	-	2%	-	2%	-	-
	Further Withdrawal	-	2%	-	2%	-	2%	-	2.6%
	HE Full Time	Target	Actual	Target	Actual	Target	Actual	Target	Actual
	Learner Success	72%	65%	68%	67%	68%	72%	68%	76.3%
	Partial Success	-	15%	-	16%	-	14%	-	12.4%
	Early Withdrawal	-	6%	-	13%	-	1%	-	-
	Further Withdrawal	-	14%	-	4%	-	13%	-	11.3%
	HE Part Time	Target	Actual	Target	Actual	Target	Actual	Target	Actual
	Learner Success	81%	77%	77%	75%	75%	79%	75%	81.5%
	Partial Success	-	20%	-	22%	-	19%	-	17.4%
	Early Withdrawal	-	1%	-	1%	-	1%	-	-
	Further Withdrawal	-	2%	-	2%	-	1%	-	1.1%
Sustainability
		2021/22		2022/23		2023/24		2024/25
		Target	Actual	Target	Actual	Target	Actual	Target	Actual
	Non-SFC income as a	20%	20%	20%	20%	20%	25%	20%	26%
	percentage of Group
	turnover
	Staff costs as a	66%	62%	66%	58%	66%	56%	66%	58%
	percentage of Group
	turnover

The Scottish Funding Council has published updated guidance for the 2024–25 academic year, introducing several refinements to the way college performance indicators are defined and reported. These changes aim to improve clarity, consistency, and fairness in how learner outcomes are measured across the sector.

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Key updates are summarised below:

Early Withdrawal

A student is now classified as an early withdrawal if they leave before reaching the funding threshold — typically five weeks into a full-time course of 20 weeks or more, or one quarter of the course duration for shorter programmes. Crucially, early withdrawals are excluded from the learner success indicator, ensuring that colleges are not penalised for students who disengage before meaningful participation. Additionally, the SFC will begin publishing contextual data on reasons for early withdrawal, supporting sector-wide understanding and improvement.

Further Withdrawal

Students who withdraw after the early threshold remain part of the performance indicator dataset. However, the guidance introduces new contextual reporting on reasons for non-completion, which will be published alongside core indicators. This aims to provide a more nuanced picture of learner progression and institutional performance.

Partial Success

The definition of success has been tightened. Partial success — where a student completes only part of their qualification aim — is no longer counted as a successful outcome. Only full achievement of the qualification aim, as defined in the learner’s personal learning and support plan, will be recognised. This includes learners receiving additional support, provided their agreed outcomes are met.

Learner Success

Success is now strictly defined as full completion of the qualification aim. The SFC has introduced a “Ready Reckoner” tool to help colleges determine success criteria by qualification type and awarding body. This is intended to ensure consistency and transparency in reporting across institutions.

Key curriculum developments of 2024-25

Curriculum Overview

North East Scotland College (NESCol) continues to play a pivotal role in driving social and economic improvement across the North East of Scotland. With campuses rooted in Aberdeen and Aberdeenshire, the College remains committed to shaping the future workforce by supporting the transformation of traditional industries and embracing the potential of emerging sectors.

At the heart of NESCol’s student experience is a dynamic, inclusive, and supportive curriculum and learning environment. This approach ensures that every student is empowered to thrive, both professionally and personally, as staff, students and key stakeholders work collectively towards a vibrant, innovative, and sustainable future.

During academic year 2024–25, NESCol sustained its upward trajectory in student success and attainment, building on the improvement in student outcomes achieved in recent years. The College’s strategic focus on core learning, teaching, and assessment has been instrumental in addressing the lingering effects of the COVID-19 pandemic, which continue to influence student enrolment, support needs and engagement patterns.

Emphasis on “getting the basics right”

Our approach to focusing on enhancing the basic underpinning principles of high-quality learning and teaching was further refined throughout 24-25. Over the past few years curriculum and support teams have revisited essential policies and practices that had been disrupted during the pandemic and have sought to refine and reintegrate these back into primary student services. This deliberate recalibration has enabled teams to reflect on their core mission and strengthen their collective impact on student outcomes.

Staff have also focused on being innovative in the way that they teach and have been proactive in embracing new technologies and incorporating trauma informed approaches into their day-to-day learning and teaching and academic support.

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As a result, full-time student attainment across both FE and HE programmes has shown marked improvement, with performance indicators rising significantly compared to previous years. NESCol now sits alongside the highest performing colleges in Scotland for both FE and HE student attainment and is proud to have once again achieved sector-leading levels of engagement with the national Student Satisfaction and Engagement Survey, resulting in an excellent response rate and extremely high levels of student satisfaction.

Curriculum Design and Delivery

NESCol remains committed to delivering high-quality, face-to-face teaching, facilitated by passionate and experienced staff. The 2024–25 curriculum design prioritised regular on-campus engagement, ensuring students could access our state-of-the-art facilities, build relationships, and participate in the vibrant campus community.

Recognising the diverse commitments of our student population, including employment and caregiving responsibilities, and the evolving support requirements of the changing, leaner academic and support teams continued to evolve and enhance their use of online and blended learning and support strategies. This flexible approach, informed by pandemic-era insights, has enhanced accessibility and supported achievement across varied student cohorts including full-time and part-time learners.

Rollout of a new Virtual Learning Environment

In academic year 2024-25 the College successfully launched Brightspace as its new Virtual Learning Environment (VLE), rebranded internally as MyNESCol. This strategic upgrade replaced the legacy Blackboard VLE platform, which had been in place for over 20 years, and marked a significant step forward in enhancing digital learning across the College.

The rollout was supported by a comprehensive training programme, including immersive content creation workshops, guided sessions, and Q&A forums. All teaching staff engaged with the training, and evaluation scores reflected strong satisfaction. The integration of Brightspace with Microsoft Teams and other college systems streamlined course creation, enrolment, and communication, while the addition of YuJa Panorama improved accessibility for all learners.

For staff, Brightspace has enabled more efficient course management and better access to student data and analytics. For students, the platform has provided a more intuitive and engaging learning experience, with improved access to resources, support services, and peer interaction. The transition has been widely recognised as a positive development in NESCol’s digital transformation journey.

Piloting of Teachermatic

A further innovation introduced during academic year 2024-25 was the successful pilot of the AI-powered teaching assistant Teachermatic as part of our broader Learning & Teaching Futures strategy. The pilot was led by the Learning and Teaching Futures group with support from the Technologies Team and supported through training and awareness sessions aimed at helping staff understand the potential of AI in education.

The pilot demonstrated clear benefits in terms of efficiency and timesaving, particularly for routine tasks such as learning resource creation, lesson planning, and formative assessment generation. Staff involved in the pilot reported improved clarity around the use of AI tools and expressed confidence in integrating them into their teaching practice. As a result, a wider rollout of Teachermatic is planned for 2025–26. The expanded use will be accompanied by tailored guidance to help staff maximise its benefits. The cross-college expansion of Teachermatic’s use is expected to significantly enhance productivity, reduce administrative burden, and support more personalised learning experiences for students.

Curriculum Planning and Approval

Curriculum planning processes were further developed this year, with revised planning meetings chaired by the Head of Planning and Academic Partnerships. These sessions enabled teams to align curriculum decisions with demand and performance data.

This year the College also introduced a new Market Insight Analyst role as part of its strategic commitment to enhancing evidence-based decision-making and performance monitoring. This new position supports the College’s ambition to optimise digital resources and strengthen internal capabilities by providing actionable insights into student outcomes, curriculum effectiveness, and operational efficiency. The role has already begun to positively impact planning and quality assurance processes, enabling more targeted interventions and fostering a culture of continuous improvement across academic and support teams.

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Quality Assurance and Enhancement

In academic year 2024–25, NESCol began implementation of the Tertiary Quality Enhancement Framework (TQEF), a major reform in Scotland’s approach to quality assurance and enhancement across colleges and universities. Developed collaboratively by the Scottish Funding Council (SFC), QAA Scotland, colleges and universities, and key sector partners including SPARQS (Student Partnerships In Quality Scotland) and CDN (College Development Network), the TQEF replaces the previous “How Good is Our College” model and introduces a unified framework grounded in shared principles, external peer review, and continuous improvement.

At its core, the TQEF promotes excellence in learning, teaching, and assessment, supports student success, and fosters a culture of enhancement and partnership. It is delivered through mechanisms such as the Tertiary Quality Enhancement Review (TQER), Annual Quality Engagements (AQE), and the Scotland’s Tertiary Enhancement Programme (STEP), a sector-led initiative focused on thematic enhancement activity.

For NESCol, the introduction of the TQEF marks a significant shift in how quality is assured and improved. It empowers the College to engage in critical self-evaluation, share good practice, and address areas for development in a transparent and collaborative manner.

Staff and students are supported through new committee structures, bespoke resources, toolkits, and dropin sessions, enabling meaningful engagement with the new framework and reinforcing NESCol’s commitment to delivering high-quality, future-focused education.

Several NESCol staff have been recruited by QAA Scotland as Peer Reviewers, meaning that the College will benefit from the shared learning of being involved directly in the national TQER process.

Student Support Services

Student support services continued to evolve, with the counselling provision and 1-2-1 support, remaining in high demand. NESCol has managed budgets to sustain the counselling service throughout 2024–25, though long-term national funding for this has now ended. This poses a significant risk to the standard of service that NESCol, and all other colleges, can provide, and issue has been escalated to the SFC and Scottish Government directly and via Colleges Scotland.

The College’s Report and Support system remains a vital platform for wellbeing communications and external referrals.

In academic year 2024–25, the College began the process of transitioning to a new digital student information system, Tribal EBS. This system change represents a significant upgrade in how the College manages student support, student attendance, applications, enrolments, and learner data. The implementation is closely aligned with the development of new data dashboards, which will enhance the College’s ability to monitor performance, support decision-making, and improve the student journey. With applications for 2025– 26 already launched through the new platform, the transition to Tribal EBS is expected to streamline processes, improve data accuracy, and provide staff with more intuitive tools for managing curriculum and student engagement.

Commercial Provision

In 2024/25, NESCol’s Business and Community Development (BCD) department undertook a comprehensive review of its organisational structure to support commercial income growth, enhance tender readiness, and identify opportunities for innovation. Drawing on both internal and external insights, the College implemented a scalable new model that separates Business Operations from Business Development, enabling more efficient delivery and sharper strategic focus.

The restructure is now largely complete, and its benefits are already evident through growth across multiple areas. A key development has been the rebranding and launch of NESCol’s employer-facing offer, now promoted under the banner ‘Workforce Development@NESCol’ , with prominent visibility on the College website.

Modern Apprenticeships achieved record income of £1.3m, an increase of 53% on the previous year. This has been driven by 323 new apprentices, including 151 in engineering, 82 in construction, and 48 in automotive. NESCol now directly delivers programmes previously managed by the Construction Industry Training Board and the Scottish Motor Trade Association, improving both income and employer engagement. The Modern Apprenticeship team has expanded to meet demand, successfully recruiting in a challenging

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national landscape. Growth is expected to continue over the next three years, subject to economic conditions and Scottish Government funding.

Fraserburgh Campus received a further £200k donation from a local benefactor, bringing total contributions to £900k over five years. This funding has enabled the creation of two future classrooms, upgraded kitchen equipment, and a new digital photography suite and darkroom, enhancing student engagement and industrystandard learning experiences.

NESCol’s commercial partnerships continue to thrive. Shell’s support of the award-winning Girls in Energy programme reached 250 girls in 2024/25, with demand set to exceed 300 in 2025/26. Bluefloat sponsored a pre-apprenticeship engineering programme aligned with Scotwind projects, offering accelerated pathways into Modern Apprenticeships.

The Scottish Maritime Academy has seen increased demand across fishing and merchant sectors, from trainee deckhands to Skippers and Deck Cadets. Marine Engineering provision has expanded with the launch of an Maritime and Coastguard Agency approved Workshop Skills Course, complementing existing engine programmes. Plans are underway to introduce an Approved Electric Propulsion Course to support the energy transition.

Demand for English for Speakers of other Languages (ESOL) remained strong throughout the year. The BCD restructure enabled curriculum realignment and increased capacity for full-cost recovery ESOL, generating £50k in additional income and supporting 212 learners. Course lengths were adjusted for accessibility and affordability, with further refinements planned based on student feedback. In partnership with the ESOL curriculum team, NESCol also delivered a range of full and part-time programmes funded by the UK Shared Prosperity Fund, securing an additional £92k.

As the region embraces its journey to Net Zero, NESCol is well-positioned to respond to emerging funding opportunities through the Investment Zone, Just Transition Fund, and CSR-linked initiatives. While the loss of the Flexible Workforce Development Fund continues to impact employer expectations, the College is actively seeking funding solutions to complement its training offer. The enhanced capacity within the Business Development team is strengthening NESCol’s networking reach and enabling new strategic relationships.

Energy Transition Skills Hub

ETZ Ltd and NESCol have been awarded funding through the Scottish Government’s Just Transition Fund, with additional support from Shell UK and other partners, to create an exciting new Energy Transition Skills Hub (ETSH) in Altens, adjacent to NESCol’s existing campus, and will provide flexible workshop space with cutting edge equipment for industry-critical training.

The refurbishment and development of a former dairy building into this modern training facility has opened and there was an official launch on 29 September 2025.

The new ETSH will be at the heart of the region’s journey to net zero and will be the first of its kind in Scotland. The Skills Campus of the Energy Transition Zone will provide:

• Industry-leading workshops and flexible teaching spaces, shaped by the needs of employers;

• Cutting-edge equipment reflecting to the latest advancements in the energy sector and showcasing future technologies related to the likes of offshore wind, electric vehicles, hydrogen fuel, and carbon capture and storage;

• Expert-led learning and training, ensuring students are equipped with the knowledge, technical capability and experience integral to energy transition;

• Accessible training designed to suit the needs of individuals and employers, blending provision for fulltime students with opportunities for upskilling and reskilling through part-time, evening and weekend programmes;

• Community spaces for use by local groups and organisations, supporting the ambitions for a just transition for the North East.

The ETSH complements the existing facilities at the Aberdeen Altens Campus, including construction, automotive and engineering workshops which replicate industry environments.

The ETSH aims to equip the workforce of the future with the skills the energy industry needs to deliver the low carbon transition. It will increase the breadth and capacity of skills training to support a Just Transition in the north east, whilst the outreach vehicle will help to promote careers and inspire new entrants to join the

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energy industry. Specifically, the ETSH will provide a pipeline of appropriately trained people to support workforce security through the transition.

Energy Outreach Vehicle

As part of the ETSH project, NESCol’s ‘ Energy on the Move ’ vehicle has commenced operations with journeys across the North East of Scotland and beyond including its launch at the Net Zero Challenge in February 2025 in Altens and a prominent position at All Energy in Glasgow in May 2025. Housing the ‘Net Zero Challenge’, the vehicle expands into a classroom providing a unique learning experience for the next generation of scientists, engineers and enthusiasts.

The aim of the Net Zero Challenge initiative is to demystify the energy transition, raising awareness of lowcarbon energy industries and promoting pathways into energy careers. Energy on the Move is visiting schools across the region and will continue to showcase at events across Scotland in the year ahead.

Partnerships

NESCol will also continue to support the National Energy Skills Accelerator (NESA) along with ETZ Ltd, the Robert Gordon University and the University of Aberdeen – providing a one-stop-shop for inward skills investment (which is expected as part of the Investment Zone 10-year project) and consultant services for the preparation of the workforce for energy transition and access to new skills and capabilities required for delivering the Net Zero agenda.

NESCol is also actively engaged with many of the Scotwind Operators and has supported employer engagement events at its campuses in Fraserburgh and Peterhead. The College looks forward to the development of the Kintore and Altens Hydrogen projects as well as the Acorn Carbon Capture project at St Fergus, where College-trained technicians already support the transportation of gas from offshore. Similar skills will be required to support the Acorn Project in pushing CO2 offshore and NESCol is already well placed to develop the next generation of technicians for this work.

Staff and Student Involvement

The College recognises the benefits of keeping employees informed on performance and encourages suggestions for the improvement of the College’s position. In particular, Joint Consultative Committees (JCC), comprising management and members of the recognised trade unions for both teaching and support staff, have been established for this purpose. In addition, periodic core communication sessions are held on all main sites to brief staff on current developments and receive information. The College publishes news via its intranet, available to all staff. Staff consultation is also a key part of the College’s strategic planning process with workshops taking place for all academic faculties and support departments to contribute to the process.

The College has a wide range of approaches to gaining feedback from student representatives on the governing body. The College supports an active Students’ Association and has entered into a partnership agreement with the Association.

Employer Engagement

As an organisation with a long-standing commitment to vocational education and skills development across the North-East of Scotland, NESCol is well-positioned to align with the Government’s continued emphasis on the national skills agenda. The College delivers an extensive range of training opportunities for individuals in employment and for employers across the private, public and third sectors. These programmes are offered both on campus, integrated with the College’s wider learning provision, and through our Business and Community Development Team, which provides comprehensive work-based training and assessment.

NESCol also collaborates with partners including the National Energy Skills Accelerator (NESA) and Developing the Young Workforce (DYW) to reach more employers, coordinate apprenticeship opportunities, and ensure skills development matches regional economic priorities. This combination of direct engagement and partnership work helps NESCol deliver relevant, employer-led education and training.

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Increasingly, NESCol is also focused on supporting people from more disadvantaged areas of Aberdeen and Aberdeenshire into employment. A range of targeted interventions is in place to help individuals overcome barriers to work and build the skills needed to succeed in the labour market.

Environmental and Social Sustainability

NESCol fully recognises its responsibilities with regard to Environmental and Social Sustainability as an education and training provider, but also as a business, an employer and role model for other public and private organisations.

The College is a signatory to the Environmental Association of Universities and Colleges’ (EAUC) Sustainable Development Goal (SDG) Accord, committing to measure and report on its activities in line with the seventeen Sustainable Development Goals, as set by the United Nations General Assembly in September 2015. The College recently submitted its annual SDG Accord report addressing all seventeen goals. NESCol has integrated the Sustainable Development Goals with the College's International management system, the Environmental Management System ISO14001. Through doing this we are committed to demonstrating continual improvement throughout the year through a process of externally verified audits. The SDG's are also integrated into Support and Faculty team self-evaluations. As part of their Enhancement Plans, an Environmental and Social Sustainability Summary is now produced each academic year for Support and Faculty Teams. The Faculty Team summary highlights where sustainability is integrated into the curriculum. This will be built on year on year and will highlight both areas for improvement and good practice within the curriculum. Full integration of the SDG's are now very much at the forefront of our planning processes and overall objectives going forward. Integrating them in this way rather than addressing them as a separate entity will ensure progress and raise awareness which are our key goals.

The College is accredited to the International Organisation for Standardisation (ISO) Environmental Management System ISO14001:2015. The College is now fully accredited to the most up to date standards through BSI and are audited twice a year by an external auditor from the British Standards Institution (BSI). At each audit, the College is required to demonstrate continual improvement and maintenance of previous actions.

The College has considered and evaluated the risks and issues that need to be addressed in meeting ISO14001, and has carried out an impact assessment to identify and prioritise those risks as well as the subsequent actions that can be taken to mitigate them. A Stakeholders Register also forms part of this.

Overall, the environmental impact of the College’s business is fully managed through both standards, and associated policies and procedures, and therefore minimised due to the practices we have in place.

NESCol believes that every learning institution must be a leader in tackling the climate emergency, both in terms of its own direct actions but also in how it influences others. The College was an early signatory to the Universities and Colleges Climate Change Commitment for Scotland (UCCCfS) and developed its first Carbon Management Plan which delivered a 33% reduction in our Greenhouse Gas emissions over the period 2015-2020. Our new Carbon Management Plan is designed to deliver a further 50% reduction from 3382 tCO2e, the 2018/19 baseline year, by the end of financial year 2025. Building on these measures, NESCol has now committed to achieving Net Zero Greenhouse Gas Emissions by 2035. We are currently sitting at a 46% reduction in emissions.

Once all data is collated, a final 2025 reduction figure will be calculated. The College is currently establishing a new 2025-2030 target which will be supported by a new Carbon Management Plan and Sustainability Strategy. The target aims to be realistic and based on improvement measures within the college estate with no offsetting.

In line with Zero Waste Scotland, we will also apply 5 key principles to help us work out the most effective ways to reduce our emissions by doing things differently. The five principles, used by zero waste Scotland, plan to guide us to net-zero are:

1. All net-zero strategies must be evidence-led;

2. They must achieve absolute emissions reduction;

3. They must prioritise emissions reductions over offsets;

4. Organisations need to go beyond net-zero to tackle their whole carbon footprint;

5. To accelerate change, we must share our successes and failures.

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Strategic themes and principles:

• To continue to take a whole business approach so that carbon management is adopted as a key objective. Key stakeholders will continue to be appointed to ensure that carbon reduction is fully integrated into the college’s culture.

• To adopt revised targets for the measurable reduction of carbon emissions and to deliver these reductions.

The College will continue to focus on increasing the energy efficiency of the estate by installing up-to-date technologies, including renewables where practicable, and engaging with staff and other stakeholders.

Compliance with the Climate Change (Scotland) Act 2009

As an early signatory to the Universities and Colleges Climate Change Commitment for Scotland (UCCCfS), NESCol continues to fully comply with all aspects of the Climate Change (Scotland) Act 2009 and the reporting requirements of the Climate Change (Duties of Public Bodies: Reporting Requirements) (Scotland) Order 2015. The College submits reports on an annual basis in line with requirements.

Modern Slavery and Human Trafficking

The Regional Board has considered its responsibilities with regard to the Modern Slavery Act 2015 and has published its annual Modern Slavery and Human Trafficking Statement here:

https://www.nescol.ac.uk/about-nescol/corporate-information/

Anti-Bribery and Corruption

The Regional Board has considered its obligations under the Bribery Act 2010 and has published its AntiBribery and Corruption Policy here:

https://www.nescol.ac.uk/about-nescol/corporate-information/

The following statement is extracted from the Policy:

“The Regional Board of North East Scotland College prohibits: the offering, the giving, the solicitation or the acceptance of any bribe, whether cash or other inducement to or from any person or company, wherever they are situated and whether they are a public official or body or private person or company by any individual employee, agent or other person or body acting on North East Scotland College’s behalf in order to gain any commercial, contractual or regulatory advantage for North East Scotland College in a way which is unethical or in order to gain any personal advantage, financial or otherwise, for the individual or anyone connected with the individual.

Financial Planning and Performance

Financial Objectives

The College’s Financial Strategy has been developed to support its Strategic Plan and other supporting strategies. The Strategy also addresses the requirements and restrictions placed on the College by both the Financial Memorandum with the Scottish Funding Council and the wider requirements of public sector accounting and accountability. Specifically, the Strategy identifies:

With regard to Financial Sustainability , the College will strive to:

• Prioritise ongoing Outcome Agreement negotiations with the SFC to ensure the needs of North East Scotland are recognised and that the College receives a resource allocation to meet demand and deliver on national and local priority areas;

• Manage its financial resources to allow it to fund the maintenance of its estate and IT infrastructure, together with future identified estates developments; and

• Ensure all costs are identified, accounted and planned for over a five-year planning period.

With regard to Resource Deployment , the College will strive to:

• Allocate resources through a budgeting cycle which considers external economic influence and utilises scenario planning techniques;

• Fully utilise its allocation from SFC on both an academic and financial year basis;

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Charity No: SC021174 Financial Statements for the year to 31 July 2025

• Ensure that strategic priorities, including estates, IT and curriculum planning are fully integrated into the budget cycle; and

• Ensure workforce planning and future curriculum delivery are considered when budgeting for staff costs and that close monitoring and control is deployed to ensure efficient delivery.

• With regard to Liquidity , the College will ensure that it uses the facilities available to it to:

• Maximise returns against agreed risk profiles and within the constraints of the public sector regulatory framework;

• Retain adequate cash reserves, at a level of not less than 10 days trading activity, while meeting Scottish Government cash flow requirements; and

• Balance cash released through net depreciation and the Cash Budget for Priorities over a five-year planning period.

With regard to Innovation and Flexibility , the College will seek to:

• Optimise the use of SFC income to support innovation in learning and teaching while continuing to deliver against our core performance indicators; and

• Exploit income opportunities from sources other than the SFC, seeking to increase such funding yearon-year.

The financial planning cycle takes cognisance of the learning and teaching planning cycle to ensure that resources are targeted to the Colleges priority development areas.

Financial Results

The Consolidated Statement of Comprehensive Income and Expenditure (SOCI) for the year showed a surplus on the continuing operations after disposals of assets and taxation of £177,000 (FY2023-24: £2,850,000 deficit). After adjusting for the pension deficit on the revaluation of the funds as well as a loss on the revaluation of property, the loss for the year was £1,517,000 (FY2023-24: £6,304,000 loss). Of the total income of the Group, 26% (FY2023-24: 25.0%) was received from non-SFC sources.

Model Adjusted Operating Position (AOP) note

The SOCI presents the financial performance during the accounting period in accordance with the SORP. The AOP is intended to reflect the underlying operating performance after allowing for material one-off or distorting items required by the SORP or other items outwith the control of the College. The AOP is therefore designed to smooth any volatility in reported results arising from FRS102 and also to recognise that some of the reported costs do not have an immediate cash impact on the College. The College’s Underlying Operating Position can be illustrated as:

		2024-25 £’000	2023-24 £’000
Surplus/(deficit) before other gains and losses		177	(2,850)
Add back: Depreciation (net of deferred capital grant release) Pension adjustment – Net Service Cost/(Income) Pension adjustment – Net Interest Cost/(Income) Loss on revaluation of Investment Property Costs of middle management job evaluation exercise not matched by revenue	Note: 4 & 10 30 30 20	925 155 (1,300) 1,275 645	961 (245) (1,358) 190 3,817
Adjusted operating surplus		1,877	515

The underlying position for 2024/25 has been approved by SFC.

The accumulated surplus on the Income and Expenditure reserve at 31 July 2025 was £13,046,000 (31 July 2024 £14,014,000). The provision for future pension costs arising from early retirement of former staff and the equalization of pension contributions under the Local Government Pension Scheme and the Scottish Teachers Superannuation Scheme at 31 July 2025 was £3,982,000 (31 July 2024: £3,982,000) whilst the

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NORTH EAST SCOTLAND COLLEGE

Charity No: SC021174 Financial Statements for the year to 31 July 2025

FRS102 provision for the College’s share of the North East Scotland Pension Fund (NESPF) was nil (31 July 2024: £nil).

The College has net assets of £57,544,000 (31 July 2024: £59,034,000). The current asset to current liabilities ratio is 1.5:1 (31 July 2024 adjusted: 1.2:1) – and shows the College has capital on hand to meet short term obligations, with a ratio over 1 indicating short term solvency. The gearing on long term liabilities is 0.92:1 (31 July 2024: 0.87:1) and a ratio of 0.25-0.5 to1 is considered optimal. This shows the College is reliant on SFC funding to meet its long-term liabilities.

During 2024-25, the College retained two subsidiary companies, Aberdeen Skills and Enterprise Training Ltd (ASET), and Clinterty Estates Ltd. The principal activity of ASET is the delivery of commercial training to the Oil and Gas and Engineering sectors. Clinterty Estates Ltd is dormant.

Taxation Status

The College has been entered into the Scottish Charity Register, and is entitled, in accordance with section 13(1) of the Charities and Trustee Investment (Scotland) Act 2005, to refer to itself as a Charity registered in Scotland. The College is recognised by HM Revenue and Customs as a charity for the purposes of section 505, Income and Corporation Taxes Act 1988 and is exempt from corporation tax on its charitable activities. The College receives no similar redemption in respect of Value Added Tax.

Treasury Policies and Objectives

Treasury management is the management of the College’s cash flows, its banking, money market and capital market transactions; the effective control of the risks associated with those activities; and the pursuit of optimum performance consistent with those risks. The College’s treasury management arrangements are governed by the College’s financial regulations, which are compliant with the Financial Memorandum with the SFC, as are the College’s borrowing arrangements.

Cash Flows

The Group cash flow balance increased by £1,159,000 in the year (2023-24 – decrease of £388,000)

Liquidity

During the financial reporting period, the College maintained its cash balances at a level which maintains sufficient resources to fund the operation of the College. The Regional Board acknowledges the prohibition set out in the Scottish Public Finance Manual on the accumulation of reserves.

The College’s cash and liquid resources position at the end of the year was £9,446,000 (31 July 2024: £8,287,000), this equates to the College having 69 days of cash on hand (FY2023-24: 47 days).

Future Developments

In line with advice on overall budget for the college sector, the College is planning for the level of SFC teaching grant for activity levels to remain relatively static in future years. While recognising the SFC intention to provide medium-term support for the impact of national pay harmonisation, the College also recognises that significant future efficiencies will be required. In negotiating future Outcome Agreements, we will continue to review activity levels to ensure we meet demand. The College also plans to reduce dependency on the Scottish Funding Council grant and is seeking opportunities in the areas where it currently performs well, while also targeting increased contributions to training costs from employers. The College continues to seek best value in its activities through the use of collaborative procurement and framework agreements.

The condition survey of Scotland’s colleges undertaken by the Scottish Funding Council in summer 2024 has shown that the College, in particular the Aberdeen City Campus, has a pressing need for investment to maintain its operations. In order to address this and also meet the needs and aspirations of all the College’s learners and other stakeholders, the College had developed a masterplan for consideration by the Scottish Funding Council. However, as the Scottish Funding Council advised the College that it was unable to provide the grant funding necessary to support this masterplan, the College has prioritised the backlog and is using additional maintenance funding to address the more pressing items in 2025-26 and beyond.

The above notwithstanding, the College has continued to address immediate backlog maintenance needs, and work has continued during the year to improve the physical learning environment of the College estate to provide a better service to support learning and teaching. This work will continue in the next financial year in line with funding levels and agreed priorities.

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NORTH EAST SCOTLAND COLLEGE

Charity No: SC021174 Financial Statements for the year to 31 July 2025

Supplier Payment Policy

The College complies with the CBI prompt payment code and has a policy of paying its suppliers within 30 days of invoice unless the invoice is contested. At the time of writing, no interest has been paid under the late Payments of Commercial Debts (Interest) Act. All disputes are handled as quickly as possible. Suppliers’ invoices were paid in 11 days from receipt in the year to 31 July 2025 (7 days in the year to 31 July 2024).

Interest paid under the Late Payments of Commercial Debts (Interest) Act amounts to £0 during this period (£0 during period to 31 July 2024).

Fair Work Disclosure– general statementon the College’s position.	Fair Work Disclosure– general statementon the College’s position.	Fair Work Disclosure– general statementon the College’s position.	Fair Work Disclosure– general statementon the College’s position.
No	FW Principle	Govt expectation	NESCol Position
1	Appropriate channels for effective voice, such as trade union recognition	All organisations with a workforce must be able to demonstrate, before they can access a grant, that all workers employed within that organisation have access to effective voice channel(s), including agency workers. Voice exists at both collective and individual levels and organisations will be expected to show how genuine and effective voice is evidenced.	Trade Union Engagement • NESCol recognises Unison and EIS-FELA as trade unions representing all employees. • Regular formal and informal meetings are held between management and union representatives. • Union representatives are included on the College Board, ensuring their voice is part of strategic decision-making. • The College promotes trade union membership during staff induction. • Consultation with union representatives takes place on key decisions, such as proposed restructuring. • A collective disputes procedure is in place as part of the Recognition and Procedures Agreement (RPA) with both recognised unions. • Remission time is provided for union representatives, including access to relevant trade union training. Staff Communication & Engagement • The Principal and Strategic Leadership Team regularly share updates via all-staff videos and face- to-face sessions across campuses. • Staff are encouraged to provide feedback through the College’s online feedback form, which is promoted in weekly and monthly updates. • NESCol conducts regular staff engagement surveys, in consultation with the Employee Voice Group. • Managers are expected to hold regular one-to-one meetings with team members. • Team meetings are held regularly across all departments. Performance & Development • All employees participate in the College’s personal development review process, known as iCon. • NESCol has a well-established Grievance Policy and Procedure to support fair resolution of concerns. NESCol is committed to fostering a collaborative, transparent, and inclusive working environment where employee voice is valued and respected.
2	Investment in workforce development	Effective workforce development involves employers providing opportunities for their staff at all levels of the organisation and should be a shared responsibility and shared commitment between the employer and workers. Everyone should be able to	Learning & Development • NESCol maintains a CPD budget for all departments and cross-college activities, supporting a wide range of development opportunities. • An active Learning and Development Catalogue is available to all employees and is updated regularly. • The College has designated Staff Development and Wellbeing Days to support continuous learning.

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NORTH EAST SCOTLAND COLLEGE

Charity No: SC021174

Financial Statements for the year to 31 July 2025

		engage in lifelong learning.	• A wide range of training courses are available to all employees, including annual management and leadership development programmes. • Bespoke training is provided to meet legal standards, support succession planning, and enhance digital skills across the organisation. • Financial support is available for undergraduate qualifications, including degrees. • Employees are encouraged to maintain and update professional qualifications relevant to their roles. Lecturer Development • NESCol supports lecturers in gaining their Teaching Qualification in Further Education (TQFE) and other relevant qualifications, including generous study leave. • All lecturers are required to be members of the General Teaching Council for Scotland (GTCS) and must obtain a TQFE if they do not already hold one. Mandatory Training All employees are required to complete mandatory training in the following areas: • Health and Safety • Equality & Diversity Essentials • Information Security • Prevent, Safeguarding & Corporate Parenting • Data Protection • Environment and Sustainability • Freedom of Information • Copyright • Complaints Handling Additional Support & Wellbeing • Union representatives are provided with remission time, including access to relevant trade union training. • NESCol offers carbon literacy training to all employees as part of its commitment to achieving carbon neutrality. NESCol is committed to fostering a culture of continuous learning, professional growth, and environmental responsibility for all employees.
3	No inappropriate use of zero hours contracts	Although there is no legal definition of a zero-hours contract, in the context of Fair Work, such a contract is one which does not guarantee any work to the individual and does not set out a minimum number of hours (whether ongoing or for a set period).	• All employees are engaged on permanent or fixed- term contracts, with clearly defined hours and work patterns. • Each contract accurately reflects the hours worked and ensures a fair minimum number of weekly hours. • NESCol does not use zero-hours contracts, and there are no compulsory overtime requirements. • In line with national Collective Agreements, employees on fixed-term contracts are eligible for conversion to permanent status after two years of continuous service. These practices reflect NESCol’s commitment to secure, fair, and transparent employment for all staff.
4	Action to tackle the gender pay gap and create a more diverse and	Fair Work expects employers to go beyond their legal obligations under the Equality Act 2010, enhancing the protection for workers discriminated on the basis of	Equality, Diversity & Inclusion • NESCol measures both the gender and ethnicity pay gaps annually. While ethnicity pay gap reporting is not a legal requirement, the College voluntarily publishes this data alongside a wide range of

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NORTH EAST SCOTLAND COLLEGE

Charity No: SC021174

Financial Statements for the year to 31 July 2025

	inclusive workforce	their age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion and belief, sex, and sexual orientation.	metrics linked to protected characteristics, as defined by the Equality Act 2010. • A range of actions have been agreed to improve gender balance and promote ethnic inclusivity across the College. • The College has an Equalities Policy and an Equal Pay Policy and Statement, developed in consultation with union representatives. • Regular Equality and Wellbeing Committee meetings are held, with broad representation from employees and services, to discuss issues of shared interest. Supportive Employment Practices • NESCol offers generous annual leave entitlements that exceed statutory requirements. • The College provides enhanced maternity, paternity, parental, and adoption leave and pay provisions. • A wide range of paid leave options are available, including leave for personal and family circumstances. • Reasonable adjustments are made to support employees with disabilities or long-term health conditions, enabling them to remain in employment. Health & Wellbeing • The College offers a 24/7 Employee Assistance Programme (EAP) for employees and their families, including access to free individual counselling sessions. • NESCol has adopted a national Menopause Policy and provides college-level guidance and manager training to support women experiencing menopause. • Safe and private facilities are available for breastfeeding employees to express and store milk. Recruitment & Development • NESCol does not use blind recruitment methods, as research indicates limited impact on appointment outcomes. • Continuous Professional Development (CPD) opportunities are available to all employees. • Employees are encouraged to seek support and advice from union representatives. NESCol is committed to fostering an inclusive, respectful, and supportive working environment where all employees feel valued and empowered.
5	Payment of the real Living Wage	All UK-based staff aged 16 and over, including apprentices, who are directly employed by the grant recipient, must be paid at least the real Living Wage; and any UK-based workers who are not directly employed but are directly engaged in delivering the grant-funded activity, whether they be sub-contractors or agency staff, must also be paid at least the real Living Wage.	• NESCol pays the Real Living Wage and is recognised as a Living Wage Accredited Employer, reflecting its commitment to fair and equitable pay. • All nationally negotiated pay rates and increases are fully implemented by the College. • The College offers an extensive range of paid leave options, including annual leave, parental leave, and special leave for personal or family circumstances. These practices reflect NESCol’s dedication to supporting staff wellbeing, financial security, and work-life balance
6	Other flexible and family friendly	Flexible working and family friendly working practices take manyforms including,	• The College has a Flexible Working Policy that applies to all employees from their first day of

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NORTH EAST SCOTLAND COLLEGE

Charity No: SC021174

Financial Statements for the year to 31 July 2025

	working practices for all workers from day one of employment	but not limited to, part-time work and job share, flexitime, compressed hours, term- time, staggered hours, and working remotely and working from home. Flexible working can also be a reasonable adjustment for disabled workers or those who have a long-term health condition.	employment. Flexible working requests are managed through a robust and transparent process and are approved wherever possible. Where appropriate, trial periods may be used to assess the suitability of a requested arrangement. • All flexible working and family-friendly policies are available on the College’s intranet. • NESCol offers a wide range of flexible working options, including but not limited to: part-time work, compressed hours, and term-time working. • Remote working is common practice. All lecturers are entitled to work off-site for up to 7 hours (equivalent to one day) per week. • There is no electronic monitoring of off-site or remote working arrangements. • Training and development opportunities are delivered through a blend of face-to-face sessions— which offer a more interactive experience—and online delivery via Microsoft Teams. • The College utilises Microsoft Outlook, SharePoint, Office 365, and Teams to support communication and collaboration. • All meetings are scheduled within standard working hours to support work-life balance. • The College makes reasonable adjustments wherever possible to support employees with long- term health conditions in remaining in employment. NESCol is committed to fostering a flexible, inclusive, and supportive working environment that enables all employees to thrive.
7	Oppose the use of fire and rehire practice.	An employer is likely to be using fire and rehire practice if they use dismissal and re- engagement for the purpose of diminishing terms and conditions. Employers should not use the threat of dismissal and/or redundancy in order to pressurise staff into accepting changes to terms and conditions.	NESCol does not engage in ‘fire and rehire’ practices and has no intention of doing so. Our core terms and conditions are governed by national Collective Agreements. Any changes to non-core terms and conditions are made through a process of consultation with employees and recognised trade union representatives, with the aim of reaching mutual agreement wherever possible. We remain committed to fair and transparent employment practices, and value the input of our staff and union partners in shaping workplace policies.

PROFESSIONAL ADVISERS

External auditor:

Bankers:

Solicitors:

Audit Scotland Woodhill House Annexe Westburn Road Aberdeen AB16 5GB The Royal Bank of Scotland 1 Albyn Place Aberdeen AB10 1BR Burness Paull Union Plaza 1 Union Wynd Aberdeen AB10 1DQ

Approved by the Principal and Chief Executive on 10[th] December, 2025.

Neil Cowie Principal and Chief Executive

11 December 2025

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Charity No: SC021174 Financial Statements for the year to 31 July 2025

2. ACCOUNTABILITY REPORT

2.1 CORPORATE GOVERNANCE REPORT

Directors’ Report

The undernoted individuals were Members of the Regional Board during the period of these financial statements, and up to the date of signing the accounts:

D Anderson (Co-opted member – until March 2025)

N. Cowie (Principal and Chief Executive)

S. Elston – Regional Chair – appointed Nov 2022 – appointment extended to November 2028) E MacIsaac (student member) V Nikitina (student member) N. McLennan (until 27.11.24) S. Ross C Dempster (support staff member) D Blackhall (teaching staff member) J Gifford L McDermid I Watt B Hutcheson D Cockburn M Fotheringham C Laurenson E Rattray G Lawrie E Zemani E Bell (UNISON nominated member) (from Sept 2024 to January 2025 – no replacement since then) A Watt (EIS-FELA nominated member)

Secretary to the Board: S Lawrance

In addition to the Principal and Chief Executive, other members of the Executive Team who are in a position to influence the decisions made by the College as a whole are: R McGregor – Vice Principal Curriculum and Quality S Thompson – Vice Principal Finance and Resources

Details of transactions with members of the Board are given in Note 28 to the financial statements, but the full list of members can be found here: https://www.nescol.ac.uk/regional-board-register-of-interests

Statement of Regional Board’s Responsibilities

The Regional Board is required to present audited financial statements for each financial year. In accordance with the Further and Higher Education (Scotland) Act 1992 and 2005, as well as the 2019 Statement of Recommended Practice on Accounting for Further and Higher Education, the Regional Board is responsible for the administration and management of the College’s affairs, including ensuring an effective system of financial control, and is required to present audited financial statements for each financial year.

The Regional Board is responsible for keeping proper accounting records in accordance with the 2024-25 Government Financial Reporting Manual (FReM) issued by the Scottish Government. The accounting records also comply with other relevant accounting standards that disclose with reasonable accuracy at any time the financial position of the College and enable it to ensure that the financial statements are prepared in accordance with the Further and Higher Education (Scotland) Act 1992 and 2005. In addition, within the terms and conditions of the Financial Memorandum agreed between the Scottish Funding Council and the College’s Regional Board, the Regional Board, through its designated office holder, is required to prepare financial statements for each financial period that give a true and fair view of the College’s state of affairs and of the surplus or deficit and cash flows for that period.

The financial statements have been prepared in accordance with the Government Financial Reporting Manual (FReM) issued by the Scottish Government. They are also prepared in accordance with the Accounts Direction issued by the Scottish Funding Council, which brings together the provisions of the Financial

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Charity No: SC021174 Financial Statements for the year to 31 July 2025

Memorandum with other formal disclosures that the Scottish Funding Council require the Regional Board to make in the financial statements and related notes.

The Accounting Officer of the College is required to confirm that, as far as they are aware, there is no relevant audit information of which the College’s auditors are unaware, and the Accounting Officer has taken all the steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the College’s auditors are aware of that information.

In preparing the financial statements, the Regional Board is required to:

• Select suitable accounting policies and apply them consistently;

• Make judgements and estimates that are reasonable and prudent;

• State whether applicable Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;

• Prepare financial statements on the going concern basis unless it is inappropriate to presume that the College will continue in operation. The Regional Board is satisfied that it has adequate resources to continue in operation for the foreseeable future and for this reason the going concern basis continues to be adopted in the preparation of the financial statements.

The Regional Board has taken reasonable steps to:

• Ensure that funds from the Scottish Funding Council (SFC) are used only for the purposes that they have been given and in accordance with the Financial Memorandum with the SFC and any other conditions which the Funding Council may from time to time prescribe;

• Ensure that there are appropriate financial and management controls in place to safe guard public funds and funds from other sources;

• Safeguard the assets of the College and prevent and detect fraud;

• Secure the economical and efficient management of the College’s resources and expenditure.

The key elements of the College’s system of internal financial control that is designed to discharge the responsibilities set out above include the following:

• Clear definitions of responsibilities of, and the authority delegated to, heads of academic and administrative departments;

• A comprehensive medium and short term planning process supplemented by detailed annual income, expenditure, capital and cash flow budgets;

• Regular reviews of key strategic indicators and business risks and monthly financial results involving variance reporting and updates of forecast outturns;

• Clearly defined and formalised requirements for approval and control of expenditure, with investment decisions involving capital or revenue expenditure being subject to formal detailed appraisal and review according to approval levels set by the Regional Board;

• Comprehensive Financial Regulations, detailing financial controls and procedures approved by the Audit and Risk Committee and the Finance and Resources Committee;

• A professional internal audit service whose annual programme is established by the Audit and Risk Committee and endorsed by the Regional Board and whose head provides the Regional Board with a report on internal audit activity within the College and an opinion on the adequacy and effectiveness of the College’s system of internal control, including internal financial control.

Any system of internal financial control can, however, only provide reasonable, but not absolute, assurance against material misstatement or loss.

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Charity No: SC021174 Financial Statements for the year to 31 July 2025

Governance Statement

Introduction

The College is committed to exhibiting best practice in all areas of corporate governance. The following summarises the corporate governance principles which have been applied during the reporting period.

Governing Body

The Regional Board has responsibility for overseeing the business of the College, determining its future direction and fostering an environment in which the College vision and values are achieved, and the potential of all learners is maximised. The Regional Board must also ensure compliance with the statutes, ordinances and provisions regulating the College and its framework of governance and, subject to these, take all final decisions on matters of fundamental concern to the College.

The operation of the Regional Board is defined in a Governance Manual which includes its Constitution and Standing Orders, Scheme of Delegation, Code of Conduct and detailed Terms of Reference for the Board and each of its committees. The Board at its March 2025 meeting, considered and approved the revised Governance Manual which now incorporates the Standards Commission for Scotland Model Code of Conduct, which is available on the College website Model Code of Conduct for Members of Devolved Public Bodies. The Governance Manual (updated annually) is also available on the College website GovernanceManual-March-2025.

The Regional Board meets a minimum of four times during each academic year. In addition to Regional Board Meetings, the following Standing Committees have also been established:

• Audit and Risk Committee The Committee has overall responsibility for monitoring the College’s internal control, internal and external audit, value for money, and risk management processes.

• Curriculum and Quality Committee The Committee has overall responsibility for maintaining a strategic overview of the College’s curriculum offer and its development and monitoring the quality of the student experience.

• Finance and Resources Committee The Committee has overall responsibility (within the Financial Memorandum between the College and the Scottish Funding Council (SFC)) for the direction and oversight of the College’s financial affairs.

• • Human Resources Committee The Committee has overall responsibility for the direction and oversight of all human resource matters relating to the function of the Regional Board as employer of the College’s staff.

The Audit and Risk Committee and the Finance and Resources Committee both met four times last year. The Curriculum and Quality Committee and the HR Committee both met three times.

The following additional Committees are held as required:

Remuneration Committee - the remit of this committee is to:

• advise the Board and make recommendations on matters relating to the pay, conditions of service and structure of the College’s Executive Team and such other staff as the Regional Board may from time to time determine;

• seek comparative information on salaries and other emoluments and conditions of service in the FE sector;

• ensure that the performance of the Principal as head of the College is assessed on an annual basis;

• oversee severance arrangements for senior staff and ensure that account is taken of the SFC guidance on Severance Arrangements in respect of senior staff. Where consideration of severance arrangements is delegated, to ensure that boundaries of delegated authority are clear, and to receive formal reports of any severance arrangements.

• The Remunerations Committee met twice in this financial year – 9 September 2024 and 6 February 2025.

Governance and Nominations Committee – The remit of this Committee is to support the Regional Board in maintaining high standards of governance, and shall:

• Consider and recommend amendments to the Regional Board’s Governance Manual;

• Ensure that the Regional Board complies with the Code of Good Governance for Scotland’s Colleges;

• Consider implications of legislative changes and advise the Regional Board accordingly;

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Financial Statements for the year to 31 July 2025

• Provide a forum to consider any governance issues that arise centrally or in other college regions and any possible implications or considerations for the Regional Board of North East Scotland College;

• Consider the Board’s succession planning arrangements;

• Support the process by which Regional Board Members are recruited, selected, and recommended for appointment;

• Support the process by which individuals, including Non-executive Members at the end of their term of office, are co-opted to Board Committees;

• Advise the Regional Board on matters relating to the appointment of the Chairs, Vice Chairs and membership of the Board’s Committees;

• Where the Regional Board so determines, provide assistance in identifying, selecting and recommending candidates for appointment to senior staff positions in the College, and to senior positions in College subsidiaries or any other body to which the College is entitled to make appointments.

• The Governance and Nominations Committee met once in January 2025. Please note some of the Governance and Nominations Committee remit was combined with the Chairs Committee Meetings.

Positive changes following Covid-19 that continued throughout academic year 2024/25

Changes made in light of the Covid-19 pandemic are reviewed annually, with the following positive operations of the Board and its Committees continued throughout academic year 2024/25:

• The Regional Board agreed to continue to hold all Committee Meetings (in agreement with Committee Chairs) through the use of Microsoft Teams, noting if required these can be changed to in person meetings.

• The Regional Board agreed to continue to hold all Regional Board Meetings throughout academic year 2024/25 in person at various campuses with the option for Members to join via MS Teams also offered where possible.

• Chairs Committee remain a permanent aspect of the Board’s governance arrangements and met twice during academic year 2024/25.

• Weekly engagement has continued between the Regional Chair and Principal & Chief Executive (held through a combination of Microsoft Teams and face to face meetings).

• Weekly engagement has continued between the Regional Chair and the Governance Professional (held through a combination of Microsoft Teams and face to face meetings).

• Enhanced reporting on Staff Wellbeing (through the HR Committee) and reporting on student support and wellbeing (through the Curriculum and Quality Committee) continue.

• The College’s Strategic Risk Register, owned by the Board and monitored by the Audit and Risk Committee remains a Standing Item for the Board Meetings and is regularly reviewed by the Strategic Leadership Team.

• A Microsoft Teams area dedicated to the Regional Board (and accessible to Board Members) was set up during Covid-19 and continues to be used by Board members where all agendas, papers and key College documents can be found.

Committee Memberships

The Regional Board has formally constituted several committees with terms of reference. These committees act with delegated authority. Membership of key committees during the period to 31 July 2025 is as follows:

Key Committees (noting the changes to Regional Board members in 2.1 above and some changes to Committee membership agreed by the Regional Board throughout academic year 2024/25, including M Fotheringham’s temporary position to the Project Board of the Energy Transition Skills Hub.)

• Audit and Risk Committee Members – J Gifford (Chair); I Watt (Vice Chair); D. Anderson (Co-opted Member- until March 2025); L McDermid; S Elston (invited as Regional Chair); B Hutcheson; C Laurenson; E Zemani

• Curriculum and Quality Committee Members – D Blackhall, N. Cowie, C Dempster; D Cockburn. B Hutcheson (Chair); M Fotheringham (Vice Chair); S Elston (invited as Regional Chair); C Laurenson; E Zemani; E Rattray; V Nikitina

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Charity No: SC021174 Financial Statements for the year to 31 July 2025

• Finance and Resources Committee Members – D Blackhall, N. Cowie, S. Elston, J Gifford, S Ross (Chair); E Rattray (Vice Chair), I Watt; M Fotheringham; V Nikitina; N McLennan (Vice Chair until November 2024)

• Human Resources Committee Members – N. Cowie, S. Elston, J. Gifford, (Vice Chair); N McLennan; C Dempster; L McDermid (Chair), D Cockburn, E MacIsaac; G Lawrie

• Remuneration Committee Members – D Blackhall; S Ross; S Elston; L McDermid (Chair), E MacIsaac; B Hutcheson

• Governance and Nominations Committee

Members - S Elston; L McDermid; S Ross; N Cowie; B Hutcheson

• Chairs Committee

S Elston; B Hutcheson; S Ross; L McDermid; J Gifford; N Cowie

Board Member attendance at Board and Committee meetings for the year to 31 July 2025 is as follows:

Board Member	Regional	Audit &	Curriculum &	Human	Finance &
	Board	Risk	Quality	Resources	Resources
D. Anderson	3/3	1/3
D Blackhall	3/4		2/3		3/4
N. Cowie	4/4		2/3	2/3	3/4
S. Elston	4/4	4/4	2/3	3/3	3/4
J Gifford	3/4	4/4		3/3	4/4
C Laurenson	4/4	4/4	3/3
L McDermid	2/4	4/4		3/3
N. McLennan	0/1			0/1	1/1
S. Ross	3/4				4/4
E Bell	2/2
B Hutcheson	3/4	3/4	3/3
D Cockburn	2/4		3/3	1/3
I Watt	3/4	1/4			2/4
C Dempster	3/4		2/3	3/3
V Nikitina	4/4		3/3		4/4
E MacIsaac	4/4			1/3
E Zemani	4/4	2/4	3/3
G Lawrie	4/4			3/3
M Fotheringham	3/4		0/3		0/1
E Rattray	4/4		1/3		3/4
A Watt	4/4

The Governance and Nominations Committee continue to undertake a key role in monitoring compliance with the Code of Good Governance for Scotland’s Colleges and consider implications of any legislative changes. The Committee also helps to ensure that the Board remains fully effective by considering and recommending the implementation of any guidance or best practice that is issued to the sector. In addition, the Committee considers succession planning arrangements for its membership and ensures that the Board’s Governance Manual is reviewed regularly.

The Board has established an annual evaluation process for reviewing its effectiveness. This includes a suite of evaluations – Board, Committees, Regional Chair, Committee Chairs, individual Board Members and

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Secretary to the Board. The annual process reflects sector guidance issued in “Guidance Notes for Boards in the College Sector: A Board Development Framework”.

The Regional Board seeks to comply fully with the Code without exception.

At its meeting in March 2021 the Board considered a paper by MHA Henderson Loggie on its Externally Facilitated Effectiveness Review undertaken in academic year 2020/21. The Report evidenced a high level of compliance with all aspects of the Code of Good Governance for Scotland’s Colleges. MHA Loggie highlighted the report contained no areas of non-compliance and no recommendations.

MHA Henderson Loggie commented that the External Effectiveness Review carried out should provide Members with assurance that the North East Scotland College Regional Board is strong and committed. The Report was approved by the Regional Board prior to its submission to the SFC and publication on the College’s website.

In line with the Code of Good Governance for Scotland’s Colleges, and the recommendation to undertake an externally facilitated effectiveness evaluation every three/five years, it has been agreed by the Regional Chair to complete this in the early part of academic year 2025/26. The Evaluation will be carried out by the College’s Internal Auditors, Henderson Loggie.

The college continues to comply with all the principles of the 2022 Code of Good Governance for Scottish Colleges, and it has complied throughout the year ended 31 July 2025.

Risk Management and Internal Control

During academic year 2024/25 The Audit and Risk Committee continue to review the evolved Strategic Risk Register (SSR) which now includes a risk scoring guide. The SRR is reviewed monthly by the Strategic Leadership Team.

The Audit and Risk Committee, during 2022/23 asked that the Strategic Risk Register be reviewed, to reflect the risk appetite at a strategic level, which Members noted at their May meeting would take place over the summer period and include discussions with the Internal Auditors, Henderson Loggie. The intention to streamline the format, process and framework was highlighted along with intended Executive Team and Leadership team risk awareness and risk management training scheduled for early academic year 2023/24.

The Leadership Team participated in a training session on risk management facilitated by Henderson Loggie. The session covered the principles, objectives, impact and process followed by a detailed review of the College Strategic Risk Register. The revised strategic risk register was discussed and agreed by the College Leadership Team and subsequently by the Audit and Risk Committee at its meeting in September 2023.

North East Scotland College’s Risk Management Policy is owned by the Regional Board and sets out the College’s underlying approach to risk management, including the College’s overall Risk Appetite Statement, to ensure that appropriate risk management arrangements are in place and that these have been embedded throughout the whole College. The Policy also documents the roles and responsibilities of the Board, the Executive Team, and other key parties, and outlines key aspects of the risk management process, identifying the main reporting procedures.

The Board’s Audit and Risk Committee has specific duties in relation to Internal Control and Risk Management:

Internal Control

Reviewing and advising the Regional Board of the Internal Audit Services (IAS) and the external auditor’s assessment of the effectiveness of the College’s financial and other internal control systems, including controls specifically to prevent or detect fraud or other irregularities, as well as those for securing economy, efficiency and effectiveness reviewing and advising the Regional Board on its compliance with corporate governance requirements and good practice guidance.

Risk Management

• Reviewing the Risk Management Policy, ahead of its consideration by the Regional Board;

• • The Committee will be responsible for satisfying itself that risks are being managed and will seek assurance on the adequacy of their management, including from Internal and External Auditors and the Executive Team.

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The Committee also has specific duties in relation to Internal Audit, External Audit, and Value for Money.

The Regional Board, in conjunction with the Executive Team, maintains a Strategic Risk Register. The Register identifies, against each Strategic Theme, actual critical risks that the College is facing. An overall strategic risk appetite is detailed along with a risk appetite for each Strategic Theme. Details of current controls and further actions to be taken to mitigate each risk along with the current level of risk control are also provided alongside risk scorings. The Strategic Risk Register is reviewed regularly by the Executive and Strategic Leadership Team, with the document considered by the Audit and Risk Committee as a standing item at each of its meetings. The Strategic Risk Register is reflected upon during the setting of the College’s Annual Internal Audit Programme. The College addresses operational risks through its Team and Faculty Enhancement Plans, which cross reference relevant risks included in the Strategic Risk Register. The Plans are ‘live’ documents which are key to the College’s quality enhancement and improvement planning processes and are referred to and reported on throughout the academic year. Individual risk registers and risk assessments are also completed for significant College projects.

The College’s system of internal control incorporates risk management. This system encompasses a number of elements that together facilitate an effective and efficient operation, enabling the College to respond to a variety of operational, financial, and commercial risks. These elements include: policies and procedures; monthly reporting; business planning and budgeting; strategic themes, goals and objectives; risk registers; internal audit programme; and external audit.

The Regional Board is responsible for reviewing the effectiveness of internal control of the College, based on information provided by the Executive Team. For each significant risk identified, the Board, as part of the strategic planning and review process:

• reviews the previous year and examines the College’s track record on risk management and internal control; and

• Considers, on a continuous basis, the internal and external risk profile of the coming year and in terms of medium and longer term planning, and considers if current internal control arrangements are likely to be effective.

In making its decision, the Board considers the control environment; on-going identification and evaluation of significant risks; Information and communication; and monitoring and corrective action.

In addition, the remit of the Board’s Audit and Risk Committee includes the review of the comprehensiveness, reliability and integrity of assurances, including the College’s governance, risk management and internal control frameworks, and making recommendations to the Regional Board as appropriate.

The College has identified the risks to its Strategic Goals as noted on pages 9-10 of this report, as currently requiring close monitoring, because they have all been graded as significant or above. Other, more general risks have been identified which do not so readily attach themselves to individual Strategic Goals. These risks are:

RISKS	MITIGATIONS
IF staff do not adhere to key statutory obligations and legislative requirements, THEN the College may face significant financial penalties and/or reputational damage may occur.	• Data Protection Officer & Legal advice • Comprehensive policies and procedures • Internal audits to review process & compliance • Staff training & raising awareness • Engagement with key external stakeholders (Advance HE, SPSO & Scottish Information Commissioner) • Review & monitoring strategic risk register on a monthly basis • Leadership Team create a culture & behaviour to ensure compliance with obligations
IF the College is the victim of a cyber-attack, THEN the College may experience IT systems outages and/or data security breaches, both resulting in significant business disruption.	• IT Strategy & IT Security Policy • Internal audits & robust systems testing • Appropriate physical security and use of preventative technologies • Resilient architecture of links between sites • Monitoring of threat levels through partners • Use of cloud-based services

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Financial Statements for the year to 31 July 2025

• Staff and student training & awareness campaigns • Dedicated Information Security Lead role supported by CISO share service • Cyber Essentials & accreditation • Action plan containing improvement actions • User awareness training

The new Energy Transition Skills Hub does not meet the College or economic needs and is not financially sustainable

• Ensure project board has appropriate remit and representation • Add more time to design phase to allow sufficient development and scrutiny • Delay signing of lease agreement until College Board satisfied with planning, budgeting and governance • Engage quantity surveyor to review plans to ensure compliance with College needs • Engage M&E consultant to review plans to ensure compliance with College needs • Curriculum plan sufficient activity to ensure building is sufficiently utilised • Plan for efficient design of building so that energy costs are minimised • Make full use of Shell money to support operational staffing and marketing costs • Arrange for development time for existing staff, making use of staff from across College and Protocol to backfill where possible • Work with industrial partners to identify where skilled staff may be sourced or seconded to teach • Work with industrial partners to identify suitable work placement and training opportunities for staff • Work with ESP to source suitable placement and training opportunities

The Board Meeting in June 2021 considered and approved the Strategic Plan 2021-23 which is underpinned by a series of supporting strategies each representative of key areas of College activity and priority. All supporting strategies are very closely aligned to the Strategic Plan. The themes contained within each are woven into the ones contained within the Plan itself and will help support the realisation of the short, medium and longer term aspirations of the College. Additional contextual information, including a mapping of the Plan to regional and national priorities, is also provided within the three appendices of the report. A copy of the College Strategic Plan is available on the College website NESCol-Strategic-Plan2021-23.

The Board throughout academic year 2024/25 were involved in the co-creation (alongside Students; Stakeholders and Staff) of the College’s five-year Strategic Plan which includes new Mission, Vision and Values for North East Scotland College. In June 2025 the Board endorsed the draft 2025-2030 Draft Plan Bringing Learning to Life, with six inter-dependent sub-strategies sitting there-under. The new Strategic Plan launched in November 2025 is available on the College website.

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Board’s Statement on Internal Control

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

The Board’s Committees and Executive Team receive reports setting out key strategic and risk indicators and considers possible control issues brought to their attention by early warning mechanisms which are embedded within the College’s academic sectors and teams and reinforced by risk awareness training. The Executive Team and the Audit and Risk Committee also receive regular reports from internal audit that include recommendations for improvement and identify areas of good practice.

The Audit and Risk Committee’s role in this area is confined to a high-level review of the arrangements for internal control.

The Regional Board’s agenda includes items relating to the consideration of risk and control at key points of the College’s planning and reporting cycle and receives reports thereon from the Executive Team and the Audit and Risk Committee. The emphasis is on obtaining the relevant degree of assurance and not merely reporting by exception.

The Regional Board is of a view that there is an ongoing process for identifying, evaluating and managing the College’s significant risks that has been in place throughout the year ended 31 July 2025 and up to the date of approval of the annual report and accounts. The Regional Board regularly review this process, which accords with the Turnbull guidance on internal control, as applicable to the further education sector.

The Audit and Risk Committee at their September 2024 meeting were informed of Henderson Loggie’s reappointment as internal auditors, and noted the development of a new 3-year plan which was considered by Committee during their November meeting and confirmed by Committee at their February 2025 meeting.

The Programme of internal audit work to be undertaken, as approved by the Audit and Risk Committee identified the following areas for review: Marketing and Communications; Student Engagement (Students Association); Student Fees; Workforce Planning and Systems Development/Implementation; plus, all annual audit activities, including credits audit; student support funds and any follow-up reviews. The Committee also discussed at their February 2025 meeting the Strategic Internal Audit Plan 2024 to 2028 and Internal Audit Annual Plan 2025/26, which had been discussed and agreed by the Strategic Leadership Team to ensure all high priority areas will be audited within the plan.

Conclusions from 2024/25 Internal Audit Reports include:

• Student Engagement (SA): Level of Assurance Satisfactory. With three Priority 3 actions, covering student engagement monitoring and evaluation; and adequate resources allocated to student engagement activities.

• Student Fees: Level of Assurance Good with no actions identified.

• Marketing and Communications: Level of Assurance Good with no actions identified.

• Workforce Planning: Level of Assurance Good with no actions identified.

• Systems Development: Level of Assurance Good with one Priority 3 action.

• Credits Audit: Unqualified audit opinion with three Priority 3 actions.

• Student Support Funds: No issues raised.

To ensure that internal audit recommendations are implemented as agreed, each year a follow up review is included as part of the Annual Internal Audit Plan. This provides the Regional Board, via the Audit & Risk Committee, with independent assurance that recommendations have been fully implemented by the College and can therefore be removed from the audit action plan. If any issues remain outstanding beyond the agreed implementation deadline this also highlighted if a recommendation requires to be reviewed due to changed circumstances.

Follow-up review details were also shared with Audit and Risk Committee at their September 2025 meeting.

The internal auditor has expressed the opinion that the Regional Board of North East Scotland College has adequate and effective risk management, control and governance processes to manage its achievement of the College’s objectives at the time internal audit work was undertaken and that the College has proper arrangements to promote and secure value for money.

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Student resuls

During the academic year a problem with the recording and processing of some students results was identified. This was fully investigated, and action was taken to minimise the impact on students, satisfactorily resolve the issues identified with the results, and address the issues with staff performance and management practices.

In response to the issues identified, a comprehensive action plan was developed to address the fundamental weaknesses within academic area concerned. A revised management team was installed and a series of targeted interventions aimed at rebuilding core operational structures, reinstating critical processes that had previously been neglected, and introducing robust protocols to ensure performance was effectively implemented and monitored. These measures were designed to enable timely and deliberate responses to emerging issues and to foster a culture of accountability and continuous improvement.

To support these efforts, dedicated resource from the Quality Team was allocated to provide specialist expertise in quality assurance processes. This partnership has helped strengthen compliance and embed best practices across the team.

Following conclusion of the actions a lesson learned report was produced.

Significant Lapses of Data Security

There was one data breach during academic year 2024-25 which was reported to the Information Commissioner’s Office (ICO). The severity and risk were categorised as very low. There has not been a response from the ICO to date.

Conclusion

The Regional Board is ultimately responsible for the College’s system of internal control and for reviewing its effectiveness. Such a system was designed to manage rather than eliminate the risk of failure to achieve business objectives and could only provide reasonable and not absolute assurance against material misstatement or loss.

The Audit and Risk Committee agendas during academic year 2024-25 included consideration of risk and control and reports thereon from the Executive Team and the Internal Auditors. The emphasis was on obtaining the relevant degree of assurance and not merely reporting by exception.

The Regional Board is of the view that there was an on-going process for identifying, evaluating and managing the College's significant risks, that it had been in place for the year ended 31 July 2025 and up to the date of approval of the annual report and accounts, that it was regularly reviewed by the Regional Board and that it accords with the 2016 Code of Good Governance for Scotland’s Colleges.

Going Concern

In accordance with the FReM, the College has prepared its financial statements on a going concern basis as we have not been informed by the Scottish Government through the Scottish Funding Council of the intention for dissolution without transfer of services or function to another entity of the Higher and Further Education provision.

The Group recorded a surplus for the year of £177,000 before other gains and losses during the financial year, and also recorded a total for comprehensive income of £54 million. The Group reported an adjusted operating surplus of £1,880,000 after accounting for technical pension adjustments of (£1,145,000), net depreciation adjustments of £925,000, a loss on revaluation of an Investment Property of £1,275,000 and an accounting adjustment for Job Evaluation of £645,000. Cash increased by £1.2 million during the year to £9.4 million at 31 July 2025. At 31 July 2025, the Group held no borrowings and has reported a Group net asset position in these financial statements of £57.5 million (2023/24: £59 million). This includes a pension liability of £4 million for previous employees who left the Group in previous years at 31 July 2025 (2023/24: £4 million), and a provision of £4.5 million for the Job Evaluation scheme (2023/24: £3.8m).

The activities of North East Scotland College are 74% funded by the Scottish Government through the Scottish Funding Council to provide Higher and Further Education. The Regional Board and the Executive Team are responsible for ensuring that these funds are used to meet this purpose and the operations within the College to achieve this support ensuring financial sustainability for the College.

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The College has in place a 3-year strategic plan outlining its key strategic aims. One of the key strategic themes is leading sustainability, which seeks to achieve sustainable levels of funding in support of our core activities from the Scottish Funding Council and maximise income from commercialisation. This theme is in turn supported by a Finance Strategy.

The College has recently updated the financial forecast up to 2027/28 in line with the assumptions provided by the Scottish Funding Council (SFC) which include assuming colleges taking relevant actions to balance their underlying positions each year. Based on our latest assumptions the College will operate with an Adjusted Operating Position showing a planned deficit of £454,000 in 2025/26, a deficit of £641,000 in 2026/27, and a deficit of £947,000 in 2027/28. Over that same period, the forecast cash balance is expected to reduce to £6.5 million at the end of 2027/28.

The Regional Board and the Finance and Resources Committee have had full sight of the financial forecasts as they have progressed. These forecast positions will remain fluid and will be regularly reviewed by the College. Mitigating actions are being established should they be necessary to implement to support, and include:

• Ongoing engagement with SFC and other external agencies within the education landscape to support economic recovery and secure funding sources through the College to provide education and training activities to individuals and businesses.

• Review of staffing structures and the non-staff cost base across the forecast period to align with rising costs and real time funding cuts as indicated within SFC funding assumptions.

• Rigorous budgeting, forecasting and ongoing reporting against budget.

• Ongoing drive for year-on-year operational efficiencies, including the implementation of a Procurement Strategy.

• Streamlining business processes and systems using technology and digital skills.

Following review of the updated Financial Forecast and mitigating actions, the Regional Board considers that the College has adequate resources to continue in operational existence for the foreseeable future. As a result, the financial statements have been prepared on a going concern basis for the period to 31 July 2025.

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2.2 REMUNERATION AND STAFF REPORT

All information disclosed in the tables in this report were audited by the College’s external auditor, apart from the Staff Numbers on p38, the Equalities, Diversity and Inclusion on p39 & p40 and Facility Time disclosures on p40. All other sections of the Remuneration Report were reviewed to ensure they are consistent with the financial statements.

Remuneration Policy

The remuneration of the Chair of the Regional Board is set by the Scottish Government.

The College has a Remuneration Committee, which meets as required, with the remit outlined on page 32.

The remuneration policy for the Principal and Executive Team is considered in two ways:

• The roles and responsibilities of each job description; significant changes in responsibilities during the previous period; equal pay; benchmarking data, and the analysis of similar public sector roles within the Scottish public sector.

• Cost of living uplifts bearing in mind public sector pay policy guidance, settlements agreed under national collective bargaining arrangements for Scottish colleges, and any formal performance management procedures to which the individual is subject to at the point of the review.

Remuneration (including salary) and Pension entitlements

Single total figure of Remuneration:

Actuals	12 months ended 31 July 2025	12 months ended 31 July 2025	12 months ended 31 July 2025	12 months ended 31 July 2024	12 months ended 31 July 2024	12 months ended 31 July 2024
Name	Salary £’000	Pension Benefit (to nearest £’000)	Total £’000	Salary £’000	Pension Benefit (to nearest £’000)	Total £’000
S Elston, Regional Chair	25-30	-	25-30	25-30	-	25-30
N Cowie, Principal & Chief Executive	145-150	140	285-290	140-145	(27)	110-115
R. McGregor, Vice Principal Curriculum & Quality	115-120	39	155-160	105-110	33	140-145
S Thompson Vice Principal Finance & Resources	115-120	53	170-175	105-110	1,159	1,265-1,270

A Menzies, the Chief Executive Officer of Aberdeen Skills and Enterprise Training Ltd (ASET), a whollyowned subsidiary company, was paid in the £110,000-£115,000 salary banding and retired on 31[st ] July 2025.

Notes : (these notes also apply to the table on the following page)

1. There were no payments made for performance, bonuses, in lieu of pension, or non-cash.

2. Only the persons disclosed in the Directors Report who are remunerated are disclosed in the above table.

3. The value of pension benefits accrued during the year is calculated as the real increase in pension multiplied by 20 less the contribution made by the individual for the table above only. The real increase excludes increases due to inflation or any increase or decrease due to a transfer of pension rights.

4. For S Thompson, there was a pension transfer during the prior year from another fund which is the reason for the large value in 2023/24.

5. Accrued pension benefits included in this table for any individual affected by the Public Service Pensions Remedy have been calculated based on their inclusion in the legacy scheme for the period between 1 April 2015 and 31 March 2022, following the McCloud judgment. The Public Service Pensions Remedy applies to individuals that were members, or eligible to be members, of a public service pension scheme on 31 March 2012 and were members of a public service pension scheme between 1 April 2015 and 31 March 2022. The basis for the calculation reflects the legal position that impacted members have been rolled back into the relevant legacy scheme for the remedy period and that this will apply unless the member actively exercises their entitlement on retirement to decide instead to receive benefits calculated under the terms of the Alpha scheme for the period from 1 April 2015 to 31 March 2022.

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Median Remuneration

Colleges are required to disclose the relationships between the remuneration of the highest paid official and the median remuneration of their workforce.

The banded remuneration of the highest paid official in the organisation in the financial year 2024/25, was £145,000-£150,000 (2023/24 £140,000-£145,000). This was 3.6 (2023/24 3.6) times the median total remuneration for the College which was £41,444 (2023/24 £38,728).

Accrued Pension Benefits

Pension benefits for academic employees are provided through the Scottish Teacher’s Pensions Scheme (STSS) to March 2015, and the reformed Scottish Teachers’ Pension Scheme (STPS) from April 2015. The STSS and STPS are Government funded. Pension benefits for support staff are provided through the Local Government Pension Scheme (LGPS). Both academic and support staff pension schemes are defined benefit schemes.

From 1 April 2015, the STPS and LGPS changed from a final salary scheme to a CARE scheme where pension is based on career average revalued earnings, taking the average earnings over the employee’s working life, while member of the scheme, to calculate pension entitlement. Pension on service up to 31 March 2015 is still however calculated on a final salary basis.

Contribution rates for all employees are determined annually by the respective pension schemes and can be found in Note 30.

There is no automatic entitlement to a lump sum. Members may opt to give up (commute) pension for lump sum up to the limit set by the Finance Act 2004. The accrual rate guarantees a pension based on a career average earnings basis.

Senior Officials’ Pension

Pension Benefits are provided to senior management on the same basis as all other staff. The accrued pension benefits for senior officials are set out in the table below, together with the pension contributions made by the College.

Accrued Pension Benefits for senior staff:

Name	Accrued Pension at Pension age at 31 July 2025	Accrued Lump Sum at Pension age at 31 July 2025	Real Increase in Pension 1 Aug 2024 to 31 July 2025	Real Increase in Lump Sum 1 Aug 2024 to 31 July 2025	CETV at 31 July 2025	Restated CETV at 31 July 2024	Real Increase/ (Decrease) in CETV
	£’000	£’000	£’000	£’000	£’000	£’000	£’000
S Elston, Regional Chair	-	-	-	-	-	-	-
N Cowie, Principal & Chief Executive	75-80	140-145	5-7.5	12.5-15	1,689	1,501	188
R. McGregor, Vice Principal Curriculum & Quality	20-25	-	0-2.5	-	298	260	34
S Thompson, Vice Principal – Finance & Resources	55-60	70-75	2.5-5	0-2.5	1,152	1,064	70

Cash Equivalent Transfer Value (CETV)

A Cash Equivalent Transfer Value (CETV) is the actuarially assessed capitalised value of the pension scheme benefits accrued by a member at a particular point in time.

The value of the accrued pension benefits has been calculated on the basis of the age at which the person will first be entitled to receive a pension on retirement without reduction on account of its payment at that age, without exercising any option to commute pension entitlement into a lump sum, and without any

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adjustment for the effects of future inflation. The pension figures shown relate to the benefits that the person has accrued as a consequence of their total pensionable service and not just their current appointment. In considering the accrued pension figures, the following contextual information should be taken into account:

• The figures for pension and lump sum are illustrative only in light of the assumptions set out above and do not necessarily reflect the actual benefits an individual may receive upon retirement.

• The accrued benefits figures are reflective of the pension contributions that both the employer and the scheme member have made over a period of time.

Real Increase in CETV

This reflects the increase in CETV that is funded by the employer. It does not include the increase in accrued pension due to inflation, contributions paid by the employee (including the value of any benefits transferred from another pension scheme or arrangement) and uses common market valuation factors for the start and end of the period. The table reflects updated information from the SPPA as at 31[st ] July 2024 for N Cowie.

Compensation for loss of office

Three employees left under voluntary redundancy terms in 2024/25 (2023/24 Fourteen). They did not receive any additional compensation, which includes compensation for an actuarial reduction on their pension rights.

Total number of exit packages by cost band

Exitpackage cost band	2024/25	2023/24
<£10,000	0	1
£10,000 - £25,000	1	2
£25,000 - £50,000	1	9
£50,000 - £100,000	1	2
£100,000 - £150,000	0	0
Total Number of exitpackages	3	14
Total cost(£000s)	100	473

Staff Numbers

Staff Data as at 31 July 2025	Total	Male	Female
Number of Staff(Headcount)	567	250	317
Number of Staff(FTE)	496	236	260
Number of Staff(FTE)onpermanent contracts	479	228	251
Number of Staff(FTE)on temporarycontracts	17	8	9

Note: FTE figures are rounded to the nearest whole number.

	Year ended 31 July2025	Year ended 31 July2025	Year ended 31 July2025	Year ended 31 July2024	Year ended 31 July2024	Year ended 31 July2024
	Male	Female	Total	Male	Female	Total
Directors	1	1	2	1	1	2
Senior employees	2	-	2	2	-	2
Other employees	227	260	487	221	259	480
Total	230	261	491	224	260	484

There was an average of 1.0 FTE (0.75 FTE 2023/24) agency staff employed each month by the College.

Other information on Staffing Costs is given in Note 7 to these financial statements.

Salaries and Related Costs

During the year, the College incurred staffing costs of £30,968,000 (2023/24 £33,804,000) and costs of £2,206,000 (2023/24 £2,063,000) on agency staff. The number of days lost to sickness during the year was approximately 4,781 days (2023/24 4,524). This represented 3.9% (2023/24 3.0%) as a percentage of days available to work. The overall staff turnover for the year was 14.7% (2023/24 12.2%).

The College spent £42,000 on Consultancy during the year (2023/24 £51,000), but there were no off-payment engagements, nor were there any consultancy payments to staff who had left the College’s employment.

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Financial Statements for the year to 31 July 2025

	2024-25 £’000	2023-24 £’000	Change %
Range of workforce remuneration	(25-27k)–(145-150k)	(22-24k)–(140-145k)
% Change in salary and allowances for employees as a whole	45	46	-2.2%
Highestpaid official remuneration	145-150	140-145	6.5%
Median(totalpayand benefits)	48	51	-4.5%
Median(salaryonly)	48	51	-4.5%
Ratio	3.15:1	2.81:1	12.1%
25thpercentile(totalpayand benefits)	37	39	-3.6%
25thpercentile(salaryonly)	37	39	-3.6%
Ratio	4.07:1	3.67:1	11.0%
75thpercentile(totalpayand benefits)	48	51	-4.5%
75thpercentile(salaryonly)	48	51	-4.5%
Ratio	3.15:1	2.81:1	12.1%

In the financial year 2024/25, the highest paid official received a remuneration of £145k-£150k (2023/24 £140k-£145k). This is 3.15 times the median remuneration of £48,357 (2023/24 2.81 times the median total remuneration of £46,998).

Equalities, Diversity and Inclusion

The College takes equality, diversity and inclusion very seriously. This includes having an Equality & Diversity Policy available to all staff on its intranet.

Every two years, in line with legislation, the College also publishes a number of reports on its website which detail the progress it is making towards meeting the Public Sector Equality Duty (PSED) and how the College is mainstreaming this duty to ensure that everyone who learns or works at North East Scotland College receives the best possible experience. The most recent reports are available at:

Public Sector Equality Duty 2024 - Equality-Mainstreaming-and-Outcomes-2025-2029.pdf

Staff Equality Report 2024 - Appendix-3-Staff-Equality-Profile-2024.pdf

Pay Gap Report - Gender & Ethnicity 2024 - Appendix-4-Pay-Gap-Report-Gender-and-Ethnicity-2024.pdf

Learning & Development Equalities Report 2024 - Equality-Mainstreaming-and-Outcomes-2025-2029.pdf (page 8 provides a brief overview). No further L&D report has been published but will be included in the April 2026 publications to summarise 2025 activity. This is because previously the date of the report was different from the other reports so a decision has been made to publish at the same time as other reports.

People Services has an Equality Action Plan to ensure it delivers on the actions identified its Gender & Ethnicity Pay Gap, Staff Equality, and Learning and Development reports and progress is reported to the Board’s Human Resources Committee.

In addition, the College has an Equalities Committee which meets regularly to drive forward equalities initiatives.

As at 31 December 2024, College’s disability profile was as follows:

	Total Number	Total % of overall headcount	Male (Number)	Female (Number)
Disability	68	12.5	23	45
No disability	300	55.0	118	182
Prefer not to say	29	5.3	17	12
Unaware/Blank	148	27.2	73	75
Total	545	100.0	231	314

Note: % Figures have been rounded to one decimal place

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NORTH EAST SCOTLAND COLLEGE

Charity No: SC021174

Financial Statements for the year to 31 July 2025

This compares with the College disability profile as at 31 December 2023:

	Total Number	Total % of overall headcount	Male (Number)	Female (Number)
Disability	76	13.8	25	51
No disability	321	58.1	125	196
Prefer not to say	12	2.2	8	4
Unaware/Blank	143	25.9	75	68
Total	552	100.0	233	319

Note: % Figures have been rounded to one decimal place

It should be noted the College, which is a Disability Confident Employer, continues to work closely with occupational health to provide support for any member of staff who has or who develops a health condition/disability which may impact on their ability to do their job and also provides support to staff via the College’s Employee Assistance Programme.

The College also has a number of policies and procedures, all of which are available on the College’s intranet:

• Health & Attendance Policy – which includes a section on disability, including reasonable adjustments as support

• Flexible Working Policy & Procedure – which allows staff to request changes to their working pattern (hours of work, days of work etc.)

• Menopause Policy – which identifies support for those going through the menopause

• Recruitment & Selection Strategy & Policy – to ensure fairness and transparency in the recruitment process, across all protected characteristics

• Staff Development Policy – which outlines the College’s commitment to staff development and which applies to all staff

Facility Time for Trade Union Activities

In accordance with the Trade Union (Facility Time Publication Requirements) Regulations 2017, the College provided the following support through paid facility time for union officials working at the College during the year ended 31 July, 2025.

Number of employees who were relevant union officials during the year:	Full-time equivalent employee number:
5	4.5

Percentage of time spent on facility time

Percentage:	Number of employees
0%	-
1% - 50%	4.5
51% - 99%	-
100%	-

Percentage of pay bill spent on facility time

Total cost of facility time	£7,652
Total Pay Bill	£30,961,000
Percentage of the total Pay Bill spent on facility time	0.02%

Time spent on trade union activities as a percentage of total paid facility time hours:

The College does not monitor the time spent on trade union activities as a percentage of total paid facility time hours.

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NORTH EAST SCOTLAND COLLEGE

Charity No: SC021174 Financial Statements for the year to 31 July 2025

2.3 PARLIAMENTARY ACCOUNTABILITY REPORT

As Scottish government bodies, Colleges are required to disclose under each of the following three headings additional information if that information is deemed to be material. For North East Scotland College, these items are not deemed to be material. This was the same position in 2023/24.

Fees and charges

There are no items to be disclosed under this heading.

Disclosure of contingent liabilities

There are no items to be disclosed under this heading.

Disclosure of total losses and total special payments

There are no items to be disclosed under this heading.

Auditor Scrutiny

In reviewing the Accountability Report for consistency with other information in the financial statements, the auditors will provide an opinion on the following disclosures:

• Regularity of expenditure

• Disclosures on parliamentary accountability

• Single total figure of remuneration for each member of senior management

• CETV disclosures for each member of the senior management

• Payments to past members of senior management

• Payments for loss of office, if relevant

• Fair pay disclosures

• Exit packages (if relevant), and

• Analysis of staff numbers and costs

The Accountability Report on pages 30 to 46 was approved on behalf of the Regional Board and signed on its behalf by:

Signed:

Susan Elston Regional Chair

Neil Cowie Principal and Chief Executive

Date: 10 December 2025

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NORTH EAST SCOTLAND COLLEGE

Charity No: SC021174 Financial Statements for the year to 31 July 2025

2.4 INDEPENDENT AUDITOR’S REPORT

Independent auditor’s report to the North East Scotland College Regional Board, the Auditor General for Scotland and the Scottish Parliament

Reporting on the audit of the financial statements

Opinion on financial statements

I have audited the financial statements in the annual report and accounts of North East Scotland College and its group for the year ended 31 July 2025 under the Further and Higher Education (Scotland) Act 1992 and section 44(1)(c) of the Charities and Trustee Investment (Scotland) Act 2005. The financial statements comprise the Consolidated and College Statement of Comprehensive Income, Consolidated and College Statement of Changes in Reserves, Consolidated and College Balance Sheet, and the Consolidated Cash Flow Statement and notes to the financial statements, including significant accounting policies. 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 my opinion the accompanying financial statements:

• give a true and fair view of the state of the affairs of the college and its group as at 31 July 2025 and of its surplus for the year then ended;

• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

• have been prepared in accordance with the requirements of the Further and Higher Education (Scotland) Act 1992 and directions made thereunder by the Scottish Funding Council, the Charities and Trustee Investment (Scotland) Act 2005, and regulation 14 of The Charities Accounts (Scotland) Regulations 2006 (as amended).

Basis for opinion

I conducted my audit in accordance with applicable law and International Standards on Auditing (UK) (ISAs (UK)), as required by the Code of Audit Practice approved by the Auditor General for Scotland. My responsibilities under those standards are further described in the auditor’s responsibilities for the audit of the financial statements section of my report. I was appointed by the Auditor General on 3 April 2023. My period of appointment is five years, covering 2022/23 to 2026/27. I am independent of the college and its group in accordance with the ethical requirements that are relevant to my audit of the financial statements in the UK including the Financial Reporting Council’s Ethical Standard, and I have fulfilled my other ethical responsibilities in accordance with these requirements. Non-audit services prohibited by the Ethical Standard were not provided to the college. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

Conclusions relating to going concern basis of accounting

I have concluded that the use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work I have performed, I have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the ability of the college and its group to continue to adopt the going concern basis of accounting for a period of at least twelve months from when the financial statements are authorised for issue.

These conclusions are not intended to, nor do they, provide assurance on the current or future financial sustainability of the college and its group. However, I report on the college’s arrangements for financial sustainability in a separate Annual Audit Report available from the Audit Scotland website.

Risks of material misstatement

I report in my Annual Audit Report the most significant assessed risks of material misstatement that I identified and my judgements thereon.

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NORTH EAST SCOTLAND COLLEGE

Charity No: SC021174 Financial Statements for the year to 31 July 2025

Responsibilities of the Regional Board for the financial statements

As explained more fully in the Statement of the Regional Board’s Responsibilities, the Regional Board is responsible for the preparation of financial statements that give a true and fair view in accordance with the financial reporting framework, and for such internal control as the Regional Board determines 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 Regional Board is responsible for assessing the ability of the college and its group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless there is an intention to discontinue the operations of the college and its group.

Auditor’s responsibilities for the audit of the financial statements

My 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 my 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 decisions of users taken on the basis of these financial statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. I design procedures in line with my responsibilities outlined above to detect material misstatements in respect of irregularities, including fraud. Procedures include:

• using my understanding of the college sector to identify that the Further and Higher Education (Scotland) Act 1992 and section 44(1)(c) of the Charities and Trustee Investment (Scotland) Act 2005 are significant in the context of the college;

• inquiring of the College Principal and Vice Principal Finance and Resources as to other laws or regulations that may be expected to have a fundamental effect on the operations of the college;

• inquiring of the College Principal and Vice Principal Finance and Resources concerning the college’s policies and procedures regarding compliance with the applicable legal and regulatory framework;

• discussions among my team on the susceptibility of the financial statements to material misstatement, including how fraud might occur; and

• considering whether the audit team collectively has the appropriate competence and capabilities to identify or recognise non-compliance with laws and regulations.

The extent to which my procedures are capable of detecting irregularities, including fraud, is affected by the inherent difficulty in detecting irregularities, the effectiveness of the college’s controls, and the nature, timing and extent of the audit procedures performed.

Irregularities that result from fraud are inherently more difficult to detect than irregularities that result from error as fraud may involve collusion, intentional omissions, misrepresentations, or the override of internal control. The capability of the audit to detect fraud and other irregularities depends on factors such as the skilfulness of the perpetrator, the frequency and extent of manipulation, the degree of collusion involved, the relative size of individual amounts manipulated, and the seniority of those individuals involved.

A further description of the auditor’s responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website www.frc.org.uk/auditorsresponsibilities. This description forms part of my auditor’s report.

Reporting on regularity of expenditure and income

Opinion on regularity

In my opinion in all material respects the expenditure and income in the financial statements were incurred or applied in accordance with any applicable enactments and guidance issued by the Scottish Ministers.

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NORTH EAST SCOTLAND COLLEGE

Charity No: SC021174 Financial Statements for the year to 31 July 2025

Responsibilities for regularity

The Regional Board is responsible for ensuring the regularity of expenditure and income. In addition to my responsibilities in respect of irregularities explained in the audit of the financial statements section of my report, I am responsible for expressing an opinion on the regularity of expenditure and income in accordance with the Public Finance and Accountability (Scotland) Act 2000.

Reporting on other requirements

Opinion prescribed by the Auditor General for Scotland on the audited parts of the Remuneration and Staff Report

I have audited the parts of the Remuneration and Staff Report described as audited. In my opinion, the audited parts of the Remuneration and Staff Report have been properly prepared in accordance with the Further and Higher Education (Scotland) Act 1992 and directions made thereunder by the Scottish Funding Council.

Other information

The Regional Board is responsible for the other information in the annual report and accounts. The other information comprises the Performance Report and the Accountability Report excluding the audited parts of the Remuneration and Staff Report.

My responsibility is to read all the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or my knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If I identify such material inconsistencies or apparent material misstatements, I am required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work I have performed, I conclude that there is a material misstatement of this other information, I am required to report that fact. I have nothing to report in this regard.

My opinion on the financial statements does not cover the other information and I do not express any form of assurance conclusion thereon except on the Performance Report and Governance Statement to the extent explicitly stated in the following opinions prescribed by the Auditor General for Scotland.

Opinions prescribed by the Auditor General for Scotland on the Performance Report and Governance Statement

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

• the information given in the Performance Report for the financial year for which the financial statements are prepared is consistent with the financial statements and that report has been prepared in accordance with the Further and Higher Education (Scotland) Act 1992 and directions made thereunder by the Scottish Funding Council; and

• the information given in the Governance Statement for the financial year for which the financial statements are prepared is consistent with the financial statements and that report has been prepared in accordance with the Further and Higher Education (Scotland) Act 1992 and directions made thereunder by the Scottish Funding Council.

Matters on which I am required to report by exception

I am required by the Auditor General for Scotland to report to you if, in my opinion:

• adequate accounting records have not been kept; or

• the financial statements and the audited parts of the Remuneration and Staff Report are not in agreement with the accounting records; or

• I have not received all the information and explanations I require for my audit.

I have nothing to report in respect of these matters.

Conclusions on wider scope responsibilities

In addition to my responsibilities for the annual report and accounts, my conclusions on the wider scope responsibilities specified in the Code of Audit Practice are set out in my Annual Audit Report.

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NORTH EAST SCOTLAND COLLEGE

Charity No: SC021174 Financial Statements for the year to 31 July 2025

Use of my report

This report is made solely to the parties to whom it is addressed in accordance with the Public Finance and Accountability (Scotland) Act 2000 and for no other purpose. In accordance with paragraph 108 of the Code of Audit Practice, I do not undertake to have responsibilities to members or officers, in their individual capacities, or to third parties.

Anne MacDonald CA Senior Audit Manager Audit Scotland Woodhill House Annexe Westburn Road Aberdeen AB16 5GB 11 December 2025

Anne MacDonald is eligible to act as an auditor in terms of section 21 of the Public Finance and Accountability (Scotland) Act 2000.

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NORTH EAST SCOTLAND COLLEGE

Charity No: SC021174 Financial Statements for the year to 31 July 2025

3. FINANCIAL STATEMENTS

CONSOLIDATED AND COLLEGE STATEMENT OF COMPREHENSIVE INCOME

Notes INCOME Tuition fees and education contracts 3 Funding body grants 4 Other income 5 Investment income 6 Total Income EXPENDITURE Staff costs 7 Restructuring costs 7 Other operating expenses 10 Depreciation 13 Interest and other finance costs 9 Total Expenditure Surplus/(deficit) before other gains, losses, taxation and shares of operating surplus/(deficit) of joint ventures & associate Taxation 11 Surplus/(deficit) for the year Unrealised loss on revaluation of Land and Buildings Actuarial loss in respect of pension schemes Total comprehensive loss in for the year Represented by: Unrestricted comprehensive deficit for the year Revaluation reserve comprehensive loss for the year Loss for the year attributable to: Non-controlling interest College Total Comprehensive Income for the year attributable to: Non-controlling interest College	Year ended 31 July 2025 Year ended 31 July 2024 £’000 £’000 Group College Group College 9,164 7,065 8,898 6,534 39,593 39,593 40,025 40,025 3,498 4,044 2,827 3,567 1,592 1,590 1,609 1,604
	53,847 52,292 53,359 51,730
	30,968 30,284 33,804 33,086 475 475 866 866 19,770 18,948 19,101 18,255 2,457 2,411 2,438 2,391 - - - -
	53,670 52,118 56,209 54,598
	177 174 (2,850) (2,868) - - - -
	177 174 (2,850) (2,868) (549) (549) (1,851) (1,851) (1,145) (1,145) (1,603) (1,603)
	(1,517) (1,520) (6,304) (6,322)
	(968) (971) (4,453) (4,471) (549) (549) (1,851) (1,851)
	(1,517) (1,520) (6,304) (6,322)
	- - - - (1,517) (1,520) (6,304) (6,322)
	- - - - 53,847 52,292 53,359 51,730

The Statement of Comprehensive Income and Expenditure (see note 2) is prepared under the FE/HE SORP. The SORP does not permit colleges to reflect the non-cash budget for depreciation in the Statement of Comprehensive Income. Note 2 provides details of the adjusted operating position on a Central Government accounting basis.

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NORTH EAST SCOTLAND COLLEGE Charity No: SC021174

Financial Statements for the year to 31 July 2025

CONSOLIDATED AND COLLEGE STATEMENT OF CHANGES IN RESERVES

For the year ended 31 July 2025

Group Balance at 1 August 2023 Deficit from the Comprehensive Statement of Income & Expenditure Transfers between revaluation and income & expenditure reserve Revaluation during year Addition for the year Spend for year Total movement for the year Balance at 1 August 2024 Loss from the Comprehensive Statement of Income & Expenditure Transfers between revaluation and income & expenditure reserve Revaluation during year Addition for year Spend for year Total movement for the year Balance at 31 July 2025

Income and expenditure account Total excluding Non-controlling Non-controlling Restricted Unrestricted Revaluation Interest Interest Total £’000 £’000 £’000 £’000 £’000 £’000 248 18,698 46,334 65,280 - 65,280 - (4,453) - (4,453) - (4,453) - (231) 231 - - - - - (1,851) (1,851) - (1,851) 200 - - 200 - 200 (142) - - (142) - (142) 58 (4,684) (1,620) (6,246) - (6,246) 306 14,014 44,714 59,034 - 59,034 - (968) - (968) - (968) - - - - - - - - (549) (549) - (549) 200 - - 200 - 200 (174) - - (174) - (174) 26 (968) (549) (1,491) - (1,491) 332 13,046 44,165 57,543 - 57,543

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NORTH EAST SCOTLAND COLLEGE Charity No: SC021174

Financial Statements for the year to 31 July 2025

College Balance at 1 August 2023 Surplus from the Comprehensive Statement of Income & Expenditure Transfers between revaluation and income & expenditure reserve Revaluation during year Addition for year Spend for year Total movement for the year Balance at 1 August 2024 (Deficit) from the Comprehensive Statement of Income & Expenditure Transfers between revaluation and income & expenditure reserve Revaluation during year Addition for year Spend for year Total movement for the year Balance at 31 July 2025	Income and expenditure account Restricted Unrestricted Revaluation Total excluding non-controlling Interest Non-controlling Interest Total £’000 £’000 £’000 £’000 £’000 £’000
	248 18,729 46,334 65,311 - 65,311 - (4,471) - (4,471) - (4,471) - (231) 231 - - - - - (1,851) (1,851) - (1,851) 200 - - 200 - 200 (142) - - (142) - (142)
	58 (4,702) (1,620) (6,264) - (6,264)
	306 14,027 44,714 59,047 - 59,047 - (971) - (971) - (971) - - - - - - - - (549) (549) - (549) 200 - - 200 - 200 (174) - - (174) - (174)
	26 (971) (549) (1,494) - (1,494)
	332 13,056 44,165 57,553 - 57,553

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NORTH EAST SCOTLAND COLLEGE

Charity No: SC021174 Financial Statements for the year to 31 July 2025

CONSOLIDATED AND COLLEGE BALANCE SHEET

		Group	Group	College	College
		31 July 2025	31 July 2024	31 July 2025	31 July 2024
	Notes	£’000	£’000	£’000	£’000
Non-current assets
Fixed assets	13	105,462	106,586	105,383	106,462
Investment Property	12	985	2,260	985	2,260
Investments	14	-	-	30	30
		106,447	108,846	106,398	108,752
Current assets
Stock	15	15	10	15	10
Trade and other receivables	16	2,566	2,195	2,511	2,127
Cash and cash equivalents	22	9,446	8,287	9,116	7,961
		12,027	10,492	11,642	10,098
Less: Creditors: amounts falling	17	(8,018)	(8,845)	(7,624)	(8,432)
due within one year
Net current assets		4,009	1,647	4,018	1,666
Total assets less current liabilities		110,456	110,493	110,416	110,418
Creditors: amounts falling due
after more than one year	19	(44,468)	(43,660)	(44,418)	(43,572)
Deferred tax (liability)	18	-	-	-	-
Provisions
Pension provisions	20	(8,444)	(7,799)	(8,444)	(7,799)
TOTAL NET ASSETS		57,544	59,034	57,554	59,047
Restricted Reserves
Income & Expenditure reserve –	21	332	306	332	306
restricted reserve
Unrestricted Reserves
Income and Expenditure reserve		13,046	14,014	13,056	14,027
– unrestricted
Revaluation reserve		44,166	44,714	44,166	44,714
		57,544	59,034	57,554	59,047
Non-controlling interest		-	-	-	-
Total reserves		57,544	59,034	57,554	59,047

The financial statements on pages 51 to 73 were approved and authorised for issue by the Regional Board on 10th December 2025 and signed on its behalf by:

Susan Elston Regional Chair

Neil Cowie Principal and Chief Executive

10 December 2025

Charity Number: SCO21174

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NORTH EAST SCOTLAND COLLEGE

Charity No: SC021174

Financial Statements for the year to 31 July 2025

CONSOLIDATED CASH FLOW STATEMENT

Notes Cash flow from operating activities Surplus/(deficit) for the year (before tax) Adjustment for non-cash items Depreciation 13 Income 4 Other Group non-cash income (Increase)/decrease in stock 15 (Increase)/decrease in debtors 16 (Decrease)/increase in creditors 17 (Decrease)/increase in Deferred Tax Pension accounting adjustments Other non-cash items (including Job Evaluation provision) 11 Adjustment for investing or financing activities Investment income 6 Interest payable Net cash inflow from operating activities Payments made to acquire fixed assets Cash flows from financial activities Interest Paid 9 Interest element of finance lease and service concession payments Capital funding used to acquire fixed assets 13 Repayments of amounts borrowed Increase in cash and cash equivalents in the year Cash and cash equivalents at beginning of year 22 Cash and cash equivalents at end of the year 22	Year ended 31 July 2025 Year ended 31 July 2024 £’000 £’000 177 (2,850) 2,457 2,438 (1,532) (1,477) (5) 4 (371) 2,283 (827) (3,208) - (1,145) 2,405 (1,603) 4,276 - (251) - -
	1,159 (388)
	(2,382) (4,231)
	(1,224) (4,619)
	- - - 2,382 - 4,231 - -
	1,159 4,231
	1,159 (388) 8,287 8,675
	9,446 8,287

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NORTH EAST SCOTLAND COLLEGE

Charity No: SC021174 Financial Statements for the year to 31 July 2025

Notes to the accounts

For the year ended 31 July 2025

1. STATEMENT OF ACCOUNTING POLICIES

Basis of preparation

These financial statements have been prepared in accordance with the Statement of Recommended Accounting Practice (SORP) 2019; ‘Accounting in Further and Higher Education’; the Financial Reporting Standards FRS 102 and the 2024/25 Government Financial Reporting Model (FReM), issued by the Scottish Government and in accordance with applicable Accounting Standards. They conform to the Accounts Direction and other guidance issued by the Scottish Funding Council.

These financial statements are prepared under the historical cost convention modified by the revaluation of certain fixed assets and liabilities to fair value as determined by the relevant accounting standards, and subject to the interpretations and adaptations of those standards in the FReM.

These financial statements have also been prepared on the basis that the College remains a going concern. There are further comments on this issue on page 39 of these statements, as part of the Governance Statement from the Board.

Basis of consolidation

The consolidated financial statements include the College and its subsidiary undertakings, Aberdeen Skills and Enterprise Training Limited and Clinterty Estates Limited. Intra-group sales and profits are eliminated fully on consolidation. In accordance with FRS 102, the activities of the College Student’s Association have not been consolidated because the College does not control those activities.

Income recognition

Income from tuition fees is recognised in the year in which it is receivable and includes all fees chargeable to students or their sponsors.

Income from contracts and other services rendered is included to the extent of completion of the contract or service concerned. This is generally equivalent to the sum of the relevant expenditure incurred during the year and any related contributions towards overhead costs.

Income from short term deposits is credited to the income and expenditure account in the period in which it is earned.

Donor imposed restrictions are recognised in income when the College is entitled to the funds. Income is retained within the restricted reserve until such time that it is utilised in line with such restrictions at which point the income is released to general reserves through a reserve transfer.

Grant funding

Government revenue grants including funding council block grant and research grants are recognised in income over the periods in which the College recognises the related costs for which the grant is intended to compensate. Where part of a government grant is deferred it is recognised as deferred income within creditors and allocated between creditors due within one year and due after more than one year as appropriate.

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

Capital grants

Government capital grants are recognised in income over the expected useful life of the asset. Other capital grants are recognised in income when the College is entitled to the funds subject to any performance related conditions being met.

Government social fund grants

Capital based Government European Social Fund grants are treated as deferred income in the balance sheet and credited to operating profit over the estimated useful lives of the assets to which they relate.

Maintenance of Premises

The cost of maintenance is charged to the Consolidated Statement of Comprehensive Income and Expenditure.

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Charity No: SC021174 Financial Statements for the year to 31 July 2025

Foreign Currency Translation

Translations denominated in foreign currencies are recorded using the rate of exchange ruling at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated into Sterling at the rates of exchange ruling at the end of the financial period with all resulting exchange differences being taken to the income and expenditure account in the period in that they arise.

Research and Development

Research and development expenditure is written off as incurred, with the exception of development expenditure incurred on an individual project, which is carried forward when its future recoverability can reasonably be regarded as assured. Any expenditure carried forward is amortised in line with the expected future sales from the related project.

Accounting for retirement benefits

Retirement benefits to employees of the College are provided by the North East Scotland Pension Fund (NESPF), which administers the Local Government Pension Scheme (LGPS), and the Scottish Teachers’ Pension Scheme (STPS), which is administered by the Scottish Public Pensions Agency (SPPA). These are defined benefits schemes, which are externally funded and contracted out of the State Earnings Related Pension Scheme.

North East Scotland Pension Fund (NESPF)

The contributions are determined by an actuary on the basis of periodic valuations using the projected unit method. The amount charged to the Consolidated Statement of Comprehensive Income and Expenditure represents the service cost expected to arise from employee service in the current year.

Scottish Public Pensions Agency (SPPA)

The College participates in the Scottish Teachers’ Pension Scheme, a defined benefit scheme, which is externally funded. The assets of the scheme are held separately from those of the College in a separate trustee-administered fund. The College is unable to identify its share of the underlying assets and liabilities of the scheme on a consistent and reasonable basis and therefore, as required by Financial Reporting standard 17 (Retirement Benefits), the scheme is accounted for as if it were a defined contribution scheme. As a result, the amounts charged to the Consolidated Statement of Comprehensive Income and Expenditure represent the contributions payable to the scheme in the year.

In the event of staff taking early retirement, the full liability of the College is calculated and charged to the Consolidated Income and Expenditure Account on the year of retirement, with a corresponding provision being established in the Balance Sheet.

Defined Benefit Plan

Defined benefit plans are post-employment benefit plans other than defined contribution plans. Under defined benefit plans, the College’s obligation is to provide the agreed benefits to current and former employees and actuarial risk (that benefits will cost more or less than expected) and investment risk (that returns on assets set aside to fund the benefits will differ from expectations) and investment risk (that returns on assets set aside to fund the benefits will differ from expectations) are borne, in substance, by the College. The Group should recognise a liability for its obligations under defined benefit plans net of plan assets. The net defined benefit liability is measured as the estimated amount of benefit that employees have earned in return for their service in the current and prior periods, discounted to determine its present value, less the fair value (at bid price) of plan assets. The calculation results in a net asset, recognition of the asset is limited to the extent to which the College is able to recover the surplus either through reduced contributions in the future or through refunds from the plan. According to FRS 102, an asset should be recognised when it is probable that future economic benefits will flow and the cost or value of the asset can be reliably measured. In this case, no asset is recognised due to the level of future service contribution rates.

Employment benefits

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

Finance leases

Leases in which the College assumes substantially all the risks and rewards of ownership of the leased asset are classified as finance leases. Leased assets acquired by the way of finance lease and the corresponding lease liabilities are initially recognised at an amount equal to the lower of their fair value and the present value of minimum lease payments at inception of the lease.

Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is allocated to each period during the lease term to produce a constant periodic

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Charity No: SC021174 Financial Statements for the year to 31 July 2025

rate of interest on the remaining balance of the liability. The lease that the College entered in to for the facility at Ellon has been recognised over a 5-year period, being to the first break clause of the lease.

Operating leases

Costs in respect of operating leases are charged on a straight-line basis over the lease term. Any lease premiums or incentives are spread over the minimum lease term.

Fixed assets

Assets that have physical substance and are held for use in the supply of services, or for administrative purposes, and that are expected to be used during more than one financial year are classified as Tangible Fixed Assets. Classification as a tangible fixed asset is subject to a de minimis level of £10,000 for vehicles, plant and machinery.

Fixed assets are stated at fair value less accumulated depreciation and accumulated impairment losses.

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

Land and buildings

Land and buildings are measured using the revaluation model. Under the revaluation model, and in compliance with the FReM, assets are revalued to fair value. The College has a policy of ensuring a full revaluation takes place every 5 years, supplemented by an interim professional valuation in year 3. Depreciation and impairment losses are subsequently charged on the revalued amount.

Costs incurred in relation to land and buildings after initial purchase or construction, and prior to valuation, are capitalised to the extent that they increase the expected future benefits to the College.

Freehold land is not depreciated as it is considered to have an indefinite useful life. Freehold buildings are depreciated on a straight-line basis over their expected useful lives as estimated by the valuer, ranging from 20 years to 60 years.

Leasehold land is depreciated over the life for the lease up to a maximum of 50 years. No depreciation is charged on assets in the course of construction.

Equipment

Equipment, including computers and software, costing less than the de minimis per individual item is recognised as expenditure. All other equipment is capitalised.

Capitalised equipment is stated at cost and depreciated over the useful life of the asset as advised by a suitably qualified officer, ranging from 3 years to 20 years.

Depreciation methods, useful lives and residual values are reviewed at the date of preparation of each Balance Sheet.

Intangible assets and Goodwill

Goodwill arises on consolidation and is based on the difference between the fair value of the consideration given for the undertaking acquired and the fair value of its separable net assets at the date of acquisition.

Goodwill is subject to periodic impairment review as appropriate.

Negative goodwill is amortised over 5 years or the service lives of long-life assets to which the goodwill is attributed.

Investments

Non-current asset investments are held on the Balance Sheet at amortised cost less impairment.

Investments in subsidiaries are carried at cost (less impairment) in the College’s accounts.

Current asset investments are held at fair value with movements recognised in the Surplus or Deficit.

Stock

Stocks consist of catering items. Stocks are stated at the lower of their cost and net realisable value. Where necessary, provision is made for obsolete, slow moving and defective stocks.

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NORTH EAST SCOTLAND COLLEGE

Charity No: SC021174 Financial Statements for the year to 31 July 2025

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 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.

Provisions, contingent liabilities and contingent assets

Provisions are recognised in the financial statements when:

• (a) The College has a present obligation (legal or constructive) as a result of a past event;

• (b) It is probably that an outflow of economic benefits will be required to settle the obligation; and

• (c) A reliable estimate can be made of the amount of the obligation

The amount recognised as a provision is determined by discounting the expected future cash flows at a pre-tax rate that reflects risks specific to the liability.

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

A contingent asset arises where an event has taken place that gives the College a possible asset whose existence will only be confirmed by the occurrence or otherwise of uncertain future events not wholly within the control of the College.

Contingent assets and liabilities are not recognised in the Balance Sheet but are disclosed in the notes.

Taxation

The College is an exempt Charity within the meaning of the trustee Investment and Charities (Scotland) Act 2005 and, as such, is a charity within the meaning of section 506 (1) of the Income and Corporation Taxes Act 1988. The College is recognised as a charity by HM Revenue & Customs and is recorded on the index of charities maintained by the Office of Scottish Charity regulator. It is therefore a charity within the meaning of Para 1 of schedule 6 to the Finance Act 2010 and accordingly, the College is potentially exempt from taxation in respect of income or capital gains received within categories covered by section 478-488 of the Corporation Tax Act 2010 (CTA 2010) or section 256 of the Taxation of Chargeable Gains Act 1992, to the extent that such income or gains are applied to exclusively charitable purposes.

The College receives no similar exemption in respect of Value Added Tax. Irrecoverable VAT on inputs is included in the costs of such inputs. Any irrecoverable VAT allocated to fixed assets is included in their cost.

The College subsidiaries are liable to Corporation Tax in the same way as any other commercial organisation.

Deferred tax is provided in full on timing differences which result in an obligation at the balance sheet date to pay more tax, or a right to pay less tax, at a future date, at rates expected to apply when they crystalize based on current rates and law. Timing differences arise from the inclusion of items of income and expenditure in taxation computations in periods different from those in which they are included in financial statements.

Deferred tax assets are more likely than not to be recovered. Deferred tax assets and liabilities are not discounted.

Other restricted reserves include balances where the donor has designated a specific purpose and therefore the College is restricted in the use of these funds.

Agency Arrangements

The College acts as an agent in the collection and payment of certain Student Support Funds. These funds are excluded from the College Income and Expenditure Account and movements have been disclosed in the notes to the accounts. Where the College has more discretion in the manner in which specific funds are disbursed, those funds do not meet the definition of agency funds, the income and expenditure relating to those funds are shown in the College Income and Expenditure Account.

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NORTH EAST SCOTLAND COLLEGE

Charity No: SC021174 Financial Statements for the year to 31 July 2025

Subsequent Expenditure on Fixed Assets

Where significant expenditure is incurred on tangible fixed assets it is charged to the income and expenditure account in the period it is incurred, unless it meets one of the following criteria, in which case it is capitalised and depreciated on the relevant basis:

• Where the subsequent expenditure provides an enhancement of the economic benefits of the tangible fixed asset in excess of the previously assessed standard of performance;

• Where a component of the tangible fixed asset that has been treated separately for depreciation purposes and depreciated over its individual useful economic life, is replaced or restored; or

• Where the subsequent expenditure relates to a major inspection or overhaul of tangible fixed asset that restores the economic benefits of the asset that have been consumed by the entity and have already been reflected in depreciation.

2. IMPACT OF DEPRECIATION BUDGET ON STATEMENT OF COMPREHENSIVE INCOME

Surplus/(deficit) before other gains and losses (FE/HE SORP basis) Add: Depreciation budget for government funded assets (net of deferred capital grant) for academic year Operating surplus/(deficit) on Central Government accounting basis	2024-25 £’000 2023-24 £’000 177 (2,850) 1,161 1,161
	1,338 (1,689)

Following reclassification, colleges received a non-cash budget to cover depreciation but this additional budget is not recognised under the FE/HE SORP accounting rules. Colleges may show a deficit equivalent to net depreciation as a result of having to meet Government accounting rules and the requirement to spend the entire cash allocation.

Under the FE/HE SORP, the college recorded an operating surplus of £177,000 for the year ended 31 July 2025. After adjusting for the non-cash allocation provided under government rules, the college shows an “adjusted” surplus of £1,338,000 on a Central Government accounting basis.

This demonstrates that the college is operating sustainably within its funding allocation.

3. TUITION FEES AND EDUCATION CONTRACTS

Full-time home and EU students Full-time International students Total fees paid by or on behalf of individual students Education contracts: Other Tuition Skills Development Scotland Total	Year ended 31 July 2025 £’000 Year ended 31 July 2024 £’000 Group College Group College 4,883 4,883 4,926 4,926 422 422 346 346
	5,305 5,305 5,272 5,272
	2,099 - 2,364 - 1,760 1,760 1,262 1,262
	3,859 1,760 3,626 1,262
	9,164 7,065 8,898 6,534

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NORTH EAST SCOTLAND COLLEGE

Charity No: SC021174

Financial Statements for the year to 31 July 2025

4. FUNDING BODY GRANTS

Recurrent grant Scottish Funding Council (SFC) Specific grants Childcare funds Release of capital grants Other SFC grants Total	Year ended 31 July 2025 £’000 Year ended 31 July 2024 £’000 Group College Group College 36,575 36,575 36,281 36,281 393 393 465 465 1,532 1,532 1,477 1,477 1,093 1,093 1,802 1,802 39,593 39,593 40,025 40,025

5. OTHER INCOME

5.OTHER INCOME
Residences, catering and conferences Farming activities Other income Accommodation recharge Total	Year ended 31 July 2025 Year ended 31 July 2024 £’000 £’000 Group College Group College 1,344 1,344 1,236 1,236 45 45 42 42 1,105 1,651 604 1,344 1,004 1,004 945 945
	3,498 4,044 2,827 3,567

6. INVESTMENT INCOME

6.INVESTMENT INCOME
Other investment income 7.STAFF COSTS Salaries Social security costs Other pension costs Restructuring costs Teaching departments Teaching support services Administration and central services Premises Analysed as: Staff on permanent contracts Restructuring costs Restructuring costs Restructuring costs		Year ended 31 July 2025 £’000 Year ended 31 July 2024 £’000 Group College Group College 1,592 1,590 1,609 1,604
		1,592 1,590 1,609	1,604
		Year ended 31 July 2025 £’000 Year ended 31 July 2024 £’000 Group College Group College 23,645 23,245 26,007 25,560 2,769 2,605 2,765 2,613 4,554 4,434 5,032 4,913 475 475 866 866
		31,443 30,759 34,670 33,952
		17,376 17,377 17,764 17,701 1,286 1,286 1,226 1,226 12,228 11,543 14,737 14,082 78 78 77 77
		30,968 30,284 33,804 33,086
		30,968 30,284 33,804 33,086 475 475 866 866
		31,443 30,759 34,670 33,952
		475 475 866 866
		475 475 866 866

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NORTH EAST SCOTLAND COLLEGE

Charity No: SC021174 Financial Statements for the year to 31 July 2025

The Other Pension Costs shown above include an amount of £155,000 (2023-24 £245,000 income) charged as part of Pension Fund adjustments.

Senior post-holders employed by the College:

	Year ended	31 July 2025	Year ended 31 July 2024	Year ended 31 July 2024
	Number Senior post-holders	Number other staff	Number Senior post-holders	Number other staff
£60,001 to £70,000	-	11	-	9
£70,001 to £80,000	-	2	-	9
£80,001 to £90,000	-	7	-	2
£90,001 to £100,000	-	-	-	-
£100,001 to £110,000	-	-	2	-
£110,001 to £120,000	2	-	-	-
£120,001 to £130,000	-	-	-	-
£130,001 to £140,000	-	-	-	-
£140,001 to £150,000	1	-	1	-

The number of persons (including senior post-holders) employed by the College as at 31[st ] July, expressed as full-time equivalents, was:

Average staff numbers by major category: Teaching departments Teaching support services Administration and central services Premises Analysed as: Staff on permanent contracts Staff on temporary contracts	Year ended 31 July 2025 Year ended 31 July 2024 245 277 46 58 198 146 2 3
	491 484
	478 472 13 12
	491 484

8. BOARD MEMBERS AND SENIOR POST-HOLDER EMOLUMENTS

The number of senior post-holders including the Principal was:	Year ended Year ended 31 July 2025 31 July 2024 No. No.
	3 3

The emoluments paid to Neil Cowie, Principal and Chief Executive, (who is also the highest paid senior postholder) were £147,000 (2023-24: £141,000) in salary, and £34,000 (2023-24: £32,000) in employer pension contributions to the Scottish Teachers’ Pension Scheme.

The senior post-holders are members of Scottish Teachers Superannuation Scheme or the North East Scotland Pensions Fund Scheme. The College's contributions to the Schemes in respect of senior postholders' are paid at the same rate as for other members of staff.

Regional Board

The total remuneration of the Regional Board including pension contributions, benefits in kind and bonuses but excluding the salaries of employee Board members for normal staff duties amounted to nil (2023-24: £0).

9. INTEREST AND OTHER FINANCE COSTS

Year ended Year ended 31 July 2025 31 July 2024 £’000 £’000 Group College Group College Pension cost allocation - - - - - -

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NORTH EAST SCOTLAND COLLEGE

Charity No: SC021174

Financial Statements for the year to 31 July 2025

10. ANALYSIS OF TOTAL EXPENDITURE BY ACTIVITY

Group Teaching activities Residences and catering Farm Premises Administration Other expenses Agency costs College Teaching activities Residences and catering Farm Premises Administration Other expenses Agency costs	Staff costs Other operating expenses Depreciation Interest Payable Year Ended 31 July 2025 Year Ended 31 July 2024 £’000 £’000 £’000 £’000 £’000 £’000 23,124 4,739 43 - 27,906 28,245 - 1,401 - - 1,401 1,207 - 18 - - 18 43 147 9,009 2,071 - 11,227 9,963 7,011 2,226 297 - 9,534 12,977 686 170 45 - 901 845 - 2,207 - - 2,207 2,063
	30,968 19,770 2,456 - 53,194 55,343
	23,126 4,199 43 - 27,368 27,562 - 1,401 - - 1,401 1,207 - 18 - - 18 43 147 9,009 2,071 - 11,227 9,963 7,011 1,945 297 - 9,253 12,776 - 170 - - 170 143 - 2,206 - - 2,206 2,038
	30,284 18,948 2,411 - 51,643 53,732

Other operating expenses include: Auditors' remuneration (including irrecoverable VAT) - external audit services Annual Accounts Other Returns - internal audit services	Year ended 31 July 2025 £’000 Year ended 31 July 2024 £’000 65 64 7 27 12
	92 83

11. TAXATION

Deferred tax

Increase/(Decrease) in deferred tax liability

Total tax expense

Year ended	Year ended
31 July 2025	31 July 2024
£’000	£’000
-	-
-	-

12. INVESTMENT PROPERTY

12. INVESTMENT PROPERTY
Investment Property–Gordon Centre At Beginning of Year Revaluation At Year End	Group and Group and College 31 July 2025 £’000 College 31 July 2024 £’000 2,260 2,450 (1,275) (190)
	985 2,260

The College’s property at Gordon Centre is not currently being used for operational purposes, and the College is looking to increase the actual income steams achievable from this property. This property was revalued, along with the other College properties revalued, at 31st July 2025, as per Note 13.

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NORTH EAST SCOTLAND COLLEGE

Charity No: SC021174

Financial Statements for the year to 31 July 2025

13. TANGIBLE FIXED ASSETS

Group Cost or Valuation At 1 August 2024 Additions Disposals Revaluation Transfers At 31 July 2025 Depreciation At 1 August 2024 Charge for the year Disposals Revaluation At 31 July 2025 Net Book Value At 31 July 2025 At 31 July 2024 Inherited Financed by capital grant Other At 31 July 2025 College Cost or Valuation At 1 August 2024 Additions Disposals Revaluation At 31 July 2025 Depreciation At 1 August 2024 Charge for the year Disposals Revaluation At 31 July 2025 Net Book Value At 31 July 2025 At 31 July 2024	Freehold Land and Buildings Fixtures, Fittings and Equipment £’000 £’000 105,350 5,289 1,813 569 - (90) (3,038) -	Total £’000 110,639 2,382 (90) (3,038)
	104,125 5,768	109,893
	50 4,003 1,939 518 - (90) (1,989) -	4,053 2,457 (90) (1,989)
	- 4,431	4,431
	104,125 1,337	105,462
	105,300 1,286	106,586
	43,577 933 60,548 404	44,510 60,952
	104,125 1,337	105,462
	105,350 3,552 1,813 569 - (90) (3,038) -	108,902 2,382 (90) (3,038)
	104,125 4,031	108,156
	50 2,391 1,939 472 - (90) (1,989) -	2,441 2,411 (90) (1,989)
	- 2,773	2,773
	104,125 1,258	105,383
	105,300 1,162	106,462

At 31 July 2025, freehold land and buildings included £7.025m (2024: £8.82m) in respect of freehold land and is not depreciated.

Land and Buildings were revalued at 31st July, 2025 by FG Burnett, Chartered Surveyors, in the capacity of independent valuer and in accordance with the Royal Institution of Chartered Surveyors’ Appraisal and Valuation Manual. As the majority of the College’s buildings are specialised buildings, open market value is not an appropriate basis of valuation. Accordingly, land and buildings are valued on the basis of depreciated replacement cost. Land is not depreciated and buildings are depreciated over their estimated useful life as identified by the valuer. More information is given on the valuation of property in Note 26.

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NORTH EAST SCOTLAND COLLEGE

Charity No: SC021174

Financial Statements for the year to 31 July 2025

14. NON-CURRENT INVESTMENTS

Subsidiary Companies £’000

At 1 August 2024 and 31 July 2025

30

The College had transactions with a number of agricultural co-operatives. These organisations award shares based on the level of trading activity undertaken. The value of these shares is not considered material and is included in the accounts at nil value.

The Regional Board owns 100% of the issued ordinary £1 shares of Aberdeen Skills and Enterprise Training Limited, a company incorporated in Great Britain and registered in Scotland. The principal business activity of Aberdeen Skills and Enterprise Training Limited is the provision of quality education and training.

The Regional Board owns 100% of the issued ordinary £1 shares of Clinterty Estates Limited, a company incorporated in Great Britain and registered in Scotland. The principal business activity of Clinterty Estates Limited is the management of the College’s teaching farms. The company ceased to trade on 30 April 1998. The company’s Directors decided upon this course of action in the light of adverse trading conditions facing agricultural sector.

15. STOCK

Catering Stock At Year End	Group and College 31 July 2025 £’000 Group and College 31 July 2024 £’000 15 10
	15 10

16. TRADE AND OTHER RECEIVABLES

Amounts falling due within one year Other trade receivables Other receivables Amounts owed by subsidiary undertakings Prepayments and accrued income	31 July 2025 Group College £’000 £’000 508 333 - - - 147 2,058 2,031	31 July 2024 Group College £’000 £’000 566 407 - - - 147 1,629 1,573
	2,566 2,511	2,195 2,127

17. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

Trade payables Accruals and deferred income	31 July 2025 31 July 2024 Group College Group College £’000 £’000 £’000 £’000 646 646 196 196 7,372 6,978 8,649 8,236
	8,018 7,624 8,845 8,432

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NORTH EAST SCOTLAND COLLEGE

Charity No: SC021174 Financial Statements for the year to 31 July 2025

18. DEFERRED TAX

The deferred tax liability recognised in the financial statements is as follows:

Asset/ (Liability) brought forward Other movement in balance Income and Expenditure movement in period Asset/ (Liability) carried forward	31 July 2025 31 July 2024 Group £’000 - College £’000 - Group £’000 - College £’000 - - - - - - - - -
	- - - -

19. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR

Deferred income 20. PROVISIONS Group and College At Beginning of Year Additional/ (reduced) provision in period At Year End	Pension costs arising from Job early Evaluation 2025 retirement Exercise Total £’000 £’000 £’000 3,982 3,817 7,799 - 645 645	31 July 2025 31 July 2024 Group College Group College £’000 £’000 £’000 £’000 44,468 44,418 43,660 43,572
		44,468 44,418 43,660 43,572
		Pension costs arising Job from early Evaluation 2024 retirement Exercise Total £’000 £’000 £’000 3,982 - 3,982 - 3,817 3,817
	3,982 4,462 8,444	3,982 3,817 7,799

An amount of £3,982,000 (2023-24: £3,982,000) represents future pension costs arising from early retirements. The amount of £4,462,000 (2023-24: £3,817,000) represents a provision made for costs in relation to the national Job Evaluation exercise.

21. RESTRICTED RESERVES

Reserves with restrictions are as follows:

Balance at 1 August 2024 New Donations Expenditure At 31 July 2025 Analysis of other restricted funds/donations by type of purpose: Prize funds Donation for Fraserburgh	2025 Group and College £’000 2024 Group and College £’000 306 248 200 200 (174) (142)
	332 306
	2025 Group and College £’000 2024 Group and College £’000 5 5 327 301
	332 306

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NORTH EAST SCOTLAND COLLEGE

Charity No: SC021174 Financial Statements for the year to 31 July 2025

22. CASH AND CASH EQUIVALENTS

	At	1 August 2024	Cash Flows	At 31 July 2025
Group		£’000	£’000	£’000
Cash and Cash Equivalents		8,287	1,159	9,446
		8,287	1,159	9,446
	At	1 August 2024	Cash Flows	At 31 July 2025
College		£’000	£’000	£’000
Cash and Cash Equivalents		7,961	1,155	9,116
		7,961	1,155	9,116

23. CAPITAL AND OTHER COMMITMENTS

Provision has not been made for the following capital commitments at 31 July 2025

Capital Commitments authorised and not contracted for Capital Commitments contracted for	Year ended 31 July 2025 Year ended 31 July 2024 Group College Group College £’000 £’000 £’000 £’000 - - - - 810 810 1,360 1,360
	810 810 1,360 1,360

24. CONTINGENT LIABILITIES

There are no contingent liabilities at 31 July 2025 (2023-24: none).

25. LEASE OBLIGATIONS

At the period end the Group and College had annual commitments under non-cancellable operating leases as follows:

Group Payable during the year Future minimum lease payments due: Not later than 1 year Later than 1 year and not later than 5 Total lease payments due College Payable during the year Future minimum lease payments due: Not later than 1 year Later than 1 year and not later than 5 Total lease payments due	Year ended 31 July 2025 Vehicles Plant & Machinery Total 31 July 2024 £’000 £’000 £’000 £’000 54 31 85 36 36 - 36 56 30 - 30 57
	66 - 66 113
	Year ended 31 July 2025 Plant & 31 July Vehicles £’000 Machinery £’000 Total £’000 2024 £’000 54 31 85 33 36 - 36 54 30 - 30 57
	66 - 66 111

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NORTH EAST SCOTLAND COLLEGE

Charity No: SC021174 Financial Statements for the year to 31 July 2025

26. ACCOUNTING ESTIMATES AND JUDGEMENTS

The financial statements contain estimated figures that are based on assumptions made by the College about the future or that are otherwise uncertain. Estimates are made taking into consideration historical experience, current trends and other relevant factors based on the information available to the College at the time of preparing the financial statements. However, because balances cannot be determined with certainty, actual results could be materially different from the assumptions and estimates.

The items in the College’s Balance Sheet at 31 July 2025 for which there is a significant risk of material adjustment in the forthcoming financial year are as follows:

(a) Pensions Liability

Estimation of the net liability to pay pensions depends on a number of complex judgements relating to the discount rate used, the rate at which salaries are projected to increase, changes in retirement ages, mortality rates and expected returns, on pension fund assets. A firm of consulting actuaries is engaged to provide the College with expert advice about the assumptions to be applied by the College in estimating these values at the balance sheet date.

The actuarial inputs into the pension liability valuation are subject to annual review, and have a significant impact on the potential valuation. Historically it is common for small changes in the discount rate, salary assumption rate and pension rate to have material impacts on the year-end valuations on a year-to-year basis. Given the history of significant changes to liability valuations in the past, the ongoing sensitivity to future changes, and the requirement to update assumptions annually, the College expects future liabilities to continue to change significantly going forward.

More information on the key assumptions used in the actuarial valuation of the estimates is available in Note 30 to the accounts, including information on the key assumptions, risks and sensitivities.

(b) Valuation of Property

The valuation of the College’s estate which is subject to revaluation are subject to significant estimation due to a number of factors, including ongoing changes to estimates around the costs of replacing existing assets, the market value fluctuation of comparable assets used for valuation, the current condition and future maintenance costs of assets, changes to regulatory standards and the remaining useful economic lives of the assets. Given the material nature of the College’s assets, there is a high likelihood that changes in these estimates will result in material changes in the valuation of assets on the balance sheet. The total value of the College’s assets at 31 July 2025 is outlined and broken down by asset category at note 13. Land and Buildings were independently valued for the purpose of the financial statements by F G Burnett, Property Consultants in 2024/25.

27. SUBSIDIARY UNDERTAKINGS

The subsidiary companies (all of which are registered in Scotland), wholly-owned or effectively controlled by the College, are as follows:

Company	Principal Activity	Status
Aberdeen Skills & Enterprise Training Ltd	Provision of quality education and training	100% owned
Clinterty Estates Ltd	Management of College’s teaching farms	100% owned

28. RELATED PARTY TRANSACTIONS

Due to the nature of the College’s operations and the composition of its Regional Board (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 College’s Regional Board may have an interest. All transactions involving organisations in which a member of the Regional Board may have a material interest are conducted at arm’s length and in accordance with normal project and procurement procedures.

The College had transactions during the period or worked in partnership with the following publicly funded or representative bodies in which members of the Regional Board hold or held official positions. The bodies that the College had transactions with that were over £5,000 were, Aberdeen Foyer, Colleges Scotland, the Robert Gordon University, and Aberdeenshire Council.

S Elston is a Board Member of College Scotland, and a Board Member of Robert Gordon University. The College made payments of £79,892 during the year (2023-24 - £77,010) to Colleges Scotland, and for Robert

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NORTH EAST SCOTLAND COLLEGE

Charity No: SC021174 Financial Statements for the year to 31 July 2025

Gordon’s University the College made payments of £391,790 (2023-24 - £205,222) and received income of £508,169 during the year (2023-24 - £456,645).

D Cockburn is Deputy Vice Chancellor (Resources) at the Robert Gordon University. The College made payments of £391,790 (2023-24 - £205,222) and received income of £508,169 during the year (2023-24 - £456,645).

J Gifford is a Councillor with Aberdeenshire Council. For Aberdeenshire council, the College made payments of £9,580 (2023-2024 - £8,922) and received income of £16,435 during the year (2023-2024 - £49,535).

L McDermid is Chief Executive of Aberdeen Foyer. The college made payments of £322,643 (2023-2024 - £414,249) and received no income during the year (2023-2024 - nil).

Member Organisation Position S. Elston College Scotland Board Member Robert Gordon University Board Member D. Cockburn Robert Gordon University Deputy Vice Chancellor (Resources) J. Gifford Aberdeenshire Council Councillor L. McDermid Aberdeen Foyer Chief Executive

29. STUDENT SUPPORT FUNDS

Bursaries and other student support funds

					Year	Year
					ended 31	ended 31
		Bursary	Hardship	EMA	July 2025	July 2024
		£’000	£’000	£’000	£’000	£’000
At 1 August 2024		54	-	-	54	1,262
Allocation received in	period	6,106	2,870	277	9,253	9,360
Repaid to SFC		(57)	-	-	(57)	(1,262)
Expenditure in period		(5,955)	(2,870)	(277)	(9,102)	(9,306)
At 31 July 2025		148	-	-	148	54
Represented by:
Pre received income	(to repay)	148	-	-	148	54
	(to be used in 25/26)	-	-	-	-
		148	-	-	148	54

Scottish Funding Council grants are available solely for students, the College acts as paying agent. The Scottish Funding Council has this year accounted for these funds strictly within the allocations per academic and fiscal years.

FE and HE Childcare Funds

E and HE Childcare Funds
At 1 August 2024 Allocation received in period Repaid to SFC Expenditure in period At 31 July 2025 Represented by: Pre received income	Year ended Year ended 31 July 2025 £’000 - 31 July 2024 £’000 - 393 - (393) 465 (465)
	- -
	- -
	- -

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NORTH EAST SCOTLAND COLLEGE

Charity No: SC021174 Financial Statements for the year to 31 July 2025

Childcare Fund transactions are included within the College Income and Expenditure Account. The income is included within Funding Body Grants, and the expenditure is included within Other Operating Expenses in accordance with the Accounts Direction issued by the Scottish Funding Council.

30. PENSION CONTRIBUTIONS

The College’s employees belong to one of two principal pension schemes, the Scottish Teachers’ Pension Scheme 2015 (STPS), and the North East Scotland Pensions Fund Scheme (NESPF), both are defined benefit schemes. The STPS schemes is a notional fund and there are specific regulations regarding the basis on which the actuarial valuation should be carried out. The assets of the NESPF scheme are held in a separate, trustee-administered fund.

Pension Estimates

As a result of a High Court decision on 26 October 2018, pension schemes which have members with Guaranteed Minimum Pensions (GMPs) must take action to address inequalities in those GMPs if they were contracted-out of the State scheme between 1978 and 1997. The High Court ruling on 26 October 2018 creates an obligation on that date for the Trustees to amend the scheme rules to reflect the consequences of the ruling. As the Government believe the judgement itself will not affect benefits, there is no specific allowance for GMP equalization in the accounting liabilities for the year ended 31 July 2025.

In December 2018 the Court of Appeal in England and Wales upheld claims that the transitional protections afforded to older members of public service pension schemes were unlawfully age discriminatory. Transitional protection is the policy which allowed some older workers to stay in the old, unreformed pension schemes, instead of being moved to new career-average schemes with higher pension ages in 2015. In most schemes transitional protection meant that those within 10 years of their schemes’ normal pension age as at 1 April 2012 retained membership of their pre-2015 scheme, the majority of which were final-salary schemes. The Employment Tribunal has now to determine how this discrimination should be rectified in those schemes. In an announcement made on 15 July 2019, the Government accepted that the McCloud judgement means discrimination must also be rectified in the wider public service. Our actuaries have included an allowance for this judgement within the figures disclosed in this note.

More general information is given on the estimation of the pension liability in note 26.

North East Scotland Pensions Fund Scheme (NESPF)

The North East Scotland Pension Fund is a statutory multi-employer defined benefit scheme. It is administered by Aberdeen City Council in accordance with the Local Government Pension Scheme (Scotland) Regulations 2008, as amended.

A formal triennial valuation of the North East Scotland Pension Fund was last carried out at 31 March 2023 by Mercers.

The principal actuarial assumptions used by the actuary, Hymans Robertson, are as follows:

	31 July 2025	31 July 2024
	% pa	% pa
Pension increase rate	2.8%	2.7%
Salary increase rate	4.3%	4.1%
Discount rate	5.75%	4.9%
Average future life expectancies at age 65 are summarised below for a
male (female):
Current pensioners male/(female)		21.3 (23.5)
Future pensioners (figures assumed members aged 45 as at the last		22.6 (25.1)
formal valuation date)

The employer contributions for year to 31 July 2026 will be approximately £1,201,000.

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NORTH EAST SCOTLAND COLLEGE

Charity No: SC021174

Financial Statements for the year to 31 July 2025

The assets in the scheme are:

Equities Private (Equity & Debt) Government Bonds Property Infrastructure Cash Other	Asset allocation value at 31 July 2025 Asset allocation value at 31 July 2024 £’000 £’000 61,446 64,785 9,453 10,241 7,090 6,011 8,272 8,348 9,453 9,907 8,272 3,228 14,179 8,794
	118,165 111,314

The total pension cost to the College in the period was £206,000 (2023-24: £14,000). The difference is mainly due to a higher current service cost, as per the figures in the table, below.

The contribution rate payable was 12.6% for the year (2023-24: 18.73%).

The amounts recognised in the SOCIE are as follows:

he amounts recognised in the SOCIE are as follows:
	Year ended	Restated
	31 July 2025	Year ended
	£’000s	31 July 2024
		£’000s
Charged to staff costs:
Current Service Costs	(1,468)	(1,287)
Admin Expenses	(38)	(34)
Curtailments	0	(51)
Total Charged to Staff Costs	(1,506)	(1,372)
Credit/charge for net return on pension scheme:
Interest Income	5,403	5,194
Interest Cost	(4,103)	(3,836)
Net Interest Earned/(Charged)	1,300	1,358
Credit/charge to other comprehensive income:
Return on Assets - gain	3,435	6,619
Other Experience – gain/(loss)	(745)	(4,208)
Gain/(loss) arising on changes in financial assumptions	9,365	(2,344)
Actuarial Gain, but not recognised in accounts	12,055	67
Total charge to the SOCI	(206)	(14)
Analysis of the movement in deficit during the year
Surplus in scheme at start of year, but not recognised in accounts	27,353	25,547
Service Costs	(1,506)	(1,321)
Employer contributions	1,351	1,662
Curtailments	0	(51)
Net interest income	1,300	1,358
Actuarial gain/(loss)	12,055	67
Movement in PV of unfunded obligations during 2024/25	13	91
Surplus in scheme at end of year, but not recognised in accounts	40,566	27,353

The Board has considered the surplus position of £40,566,000 on the defined pension scheme, and in accordance with FRS 102 Section 28.22 have elected not to recognise this surplus on the basis that the College does not have an unconditional right to a refund on exiting the scheme and the value of future economic benefits through reduced future contributions are uncertain.

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NORTH EAST SCOTLAND COLLEGE

Charity No: SC021174 Financial Statements for the year to 31 July 2025

Changes in the present value of the defined benefit obligation are as follows:

hanges in the present value of the defined benefit obligation are as follows:
Opening defined benefit obligation Current service cost Interest cost Contribution by members Re-measurement of liabilities Effect of curtailments Benefits paid Closing defined benefit obligation	Year ended Year ended 31 July 2025 £’000 83,961 31 July 2024 £’000 74,699 1,468 1,287 4,103 3,825 608 527 (8,641) 6,427 0 51 (3,900) (2,855)
	77,599 83,961

*excludes unfunded benefits

History of experience gains/(losses) Scheme assets Defined benefit obligation Impact of asset ceiling Net Pension Liability	Year ended 31 July 2025 £’000 Year ended 31 July 2024 £’000 118,165 111,314 (77,599) (83,961) (40,566) (27,353)
	- -

The transactions in respect of the North East Scotland Pension Fund which are now included in the accounts as required by FRS 102 are as follows:

Analysis of the amount charged to staff costs (Note 7)

Current service cost Admin Expenses Curtailments Total operating charge	Year ended Year ended 31 July 2025 31 July 2024 £’000 £’000 1,468 1,287 38 34 0 51
	1,506 1,372

– Scottish Teachers Superannuation Scheme (STSS) reformed from April 2015 Scottish Teachers’ Pension Scheme 2015 (STPS)

The College participates in the Scottish Teacher’s Superannuation Scheme and the Scottish Teachers’ Pension Scheme 2015. The schemes are unfunded statutory public service pension schemes, with benefits underwritten by the UK Government. The schemes are financed by payments from employers and from those current employees who are members of the schemes and paying contributions at progressively higher marginal rates based on pensionable pay, as specified in the regulations. The rate of employer contributions is set with reference to a funding valuation undertaken by the scheme actuary. The 2016 valuation set employer contribution rates at 23.0% from 1 September 2019 until 31 March 2023, although the UK Government has since stated that the rates would continue until 31 March 2024. Member contributions continued at the same rates within a range of 7.2% to 11.9% and are anticipated to deliver a yield of 9.4%.

The valuation carried out as at 31 March 2020 confirmed that an increase in the employer contribution rate from 22.4% to 26.0% will be required from 1 April 2024 to 31 March 2027. In addition, member pension contributions since 1 April 2024 have been paid within a range of 7.35% to 12.14% and have been anticipated to deliver a yield of 9.6%.

The College has no liability for other employers’ obligations to the multi-employer schemes.

As the schemes are unfunded, there can be no deficits or surpluses to distribute on the winding up of the schemes or withdrawal from the schemes.

The schemes are an unfunded multi-employer defined benefit schemes.

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NORTH EAST SCOTLAND COLLEGE

Charity No: SC021174

Financial Statements for the year to 31 July 2025

It is accepted that the schemes can be treated for accounting purposes as defined contribution schemes in circumstances where the College is unable to identify its share of the underlying assets and liabilities of the schemes.

The employer contribution rate for the period from 1 April 2024 is 26% of pensionable pay. The employee rate applied is variable and is anticipated to provide a yield of 9.6% of pensionable pay.

While a valuation was carried out as at 31 March 2016, it is not possible to say what deficit or surplus may affect future contributions. Work on the valuation was suspended by the UK Government pending the decision from the Court of Appeal (McCloud (Judiciary scheme)/Sargeant (Firefighters’ Scheme) cases) that held that the transitional protections provided as part of the 2015 reforms was unlawfully discriminated on the grounds of age. Following consultation and an announcement in February 2021 on proposals to remedy the discrimination, the UK Government confirmed that the cost control element of the 2016 valuations could be completed. The UK Government has also asked the Government Actuary to review whether, and to what extent, the cost control mechanism is meeting its original objectives. The 2020 actuarial valuations will take the report’s findings into account. The interim report is complete (restricted) and is currently being finalised with a consultation.

Group Personal Pension Plan

In addition, the subsidiary company operates a group personal pension plan for employees providing benefits based on defined levels of contribution. These are accounted through the SOCI as payments to the plan.

Appendix 1: Scottish Funding Council – Accounts Direction

1. It is the Scottish Funding Council’s direction that institutions 1 comply with the 2019 Statement of Recommended Practice: Accounting for Further and Higher Education (SORP) in preparing their annual report and accounts.

2. Institutions must comply with the accounts direction in the preparation of their annual report and accounts in accordance with the Financial Memorandum with the Scottish Funding Council (SFC) or the Regional Strategic Body (RSB) (for assigned colleges).

3. Incorporated colleges and Glasgow Colleges’ Regional Board 2 are also required to comply with the Government Financial Reporting Manual 2024-25 (FReM) where applicable. In cases where there is a conflict between the FReM and the SORP, the latter will take precedence.

4. Incorporated colleges and Glasgow Colleges’ Regional Board must send two copies of their annual report and accounts to the Auditor General for Scotland by 31 December 2025.

5. The annual report and accounts should be signed by the chief executive officer/Executive Director and by the chair, or one other member of the governing body.

6. Incorporated colleges and Glasgow Colleges’ Regional Board should reproduce this Direction as an appendix to the annual report and accounts.

Scottish Funding Council 14 August 2025

1 The term “institutions” includes colleges and Glasgow Colleges’ Regional Board

2 Glasgow Colleges’ Regional Board was dissolved on 30 July 2025. The Scottish Funding Council will be responsible for preparing the 2024-25 accounts.

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NORTH EAST SCOTLAND COLLEGE 7

Principal and Chief Executive: Neil Cowie

11 December 2025

Anne MacDonald Senior Audit Manager Audit Scotland Woodhill House Annexe Westburn Road Aberdeen AB16 5GB

Dear Anne

North East Scotland College Financial Statements 2024/25

1. This representation letter is provided about your audit of the annual report and accounts of North East Scotland College and its group, hereafter referred to as ‘Nescol’ or ‘the college’ for the year ended 31 July 2025 for the purpose of expressing an opinion as to whether the financial statements give a true and fair view in accordance with the financial reporting framework, and for expressing other opinions on the regularity of income and expenditure, remuneration and staff report, performance report and governance statement.

2. I confirm to the best of my knowledge and belief, and having made such enquiries as I considered necessary, the following representations given to you in connection with your audit of Nescol’s financial statements for the year ended 31 July 2025.

General

3. I have fulfilled my responsibilities for the preparation of the 2024/25 annual report and accounts. All the accounting records, documentation and other matters which I am aware are relevant to the preparation of the annual report and accounts have been made available to you for the purposes of your audit. All transactions undertaken by Nescol have been recorded in the accounting records and are properly reflected in the financial statements.

4. I confirm that the effects of any uncorrected misstatements are immaterial, individually and in aggregate, to the financial statements as a whole. I am not aware of any uncorrected misstatements.

Regularity of Income and Expenditure

5. I confirm that, in all material respects, income was applied and expenditure was incurred in accordance with applicable enactments and guidance issued by the Scottish Ministers.

North East Scotland College, Aberdeen City Campus, Gallowgate, Aberdeen AB25 1BN Tel [phone] • Email [e-mail] • Web www.nescol.ac.uk Recognised as a Scottish charity - number SC021174 Letter of Representation (ISA 580)

...

Financial Reporting Framework

6. The financial statements have been prepared in accordance with the Further and Higher Education (Scotland) Act 1992 and section 44(1)(c) of the Charities and Trustee Investment (Scotland) Act 2005.

7. I have ensured that the financial statements give a true and fair view of the financial position of Nescol at 31 July 2025 and the transactions for 2024/25.

Accounting Policies and Estimates

8. All significant accounting policies applied are as shown in the note included in the financial statements. The accounting policies are determined by the Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice) and the Charities SORP. All accounting policies applied are appropriate to Nescol’s circumstances and have been consistently applied.

9. The methodology, significant assumptions and data used in making accounting estimates are reasonable and have been properly reflected and disclosed in the financial statements. Judgements used in making estimates have been based on the latest available, reliable information. Estimates have been revised where there are changes in the circumstances on which the original estimate was based or as a result of new information or experience.

Going Concern Basis of Accounting

10. I have assessed Nescol’s ability to continue to use the going concern basis of accounting and have concluded that it is appropriate. I am not aware of any material uncertainties that may cast significant doubt on the college’s ability to continue as a going concern.

Assets

11. All assets at 31 July 2025 of which I am aware have been reported in the financial statements.

12. Where a rolling programme of asset valuations has been used, I have satisfied myself that the carrying amount of assets at 31 July 2025 does not differ materially from that which would be determined if a revaluation had been carried out at that date.

13. I carried out an assessment at 31 July 2025 as to whether there is any indication that an asset may be impaired and have recognised any impairment losses in the financial statements.

14. I have provided you with all information of which I am aware regarding any valuation exercises carried out after 31 July 2025.

15. There are no plans or intentions that are likely to affect the carrying value or classification of the assets recognised within the financial statements.

16. Owned assets are free from any lien, encumbrance or charge except as disclosed in the financial statements.

17. Banking facilities are provided by the Royal Bank of Scotland with whom five business accounts are held (Income, expenditure, student support, holding and short-term investment). No other accounts were held by the college during the period from 1 August 2024 to date.

Liabilities

18. All liabilities at 31 July 2025 of which I am aware have been recognised in the financial statements. Older balances have been removed from pre-received income carried forward in creditors where clawback by the Scottish Funding Council is unlikely due to the passage of time.

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19. Provisions have been recognised in the financial statements for all liabilities of uncertain timing or amount at 31 July 2025 of which I am aware where the conditions specified in IAS 37 have been met. The amount recognised as a provision is the best estimate of the expenditure likely to be required to settle the obligation at 31 July 2025. Where the effect of the time value of money is material, the amount of the provision has been discounted to the present value of the expected payments.

20. Provisions recognised in previous years have been reviewed and adjusted, where appropriate, to reflect the best estimate at 31 July 2025 or to reflect material changes in the assumptions underlying the calculations of the provisions.

21. Pre-received income has been carried as deferred income where grant conditions have not been met at 31 July 2025. Where conditions have been met, grant income has been fully recognised as 2024/25 income.

22. The accrual recognised in the financial statements for untaken leave by 31 July 2025 has been estimated on a reasonable basis.

23. There are no plans or intentions that are likely to affect the carrying value or classification of the liabilities recognised in the financial statements.

Contingent Liabilities

24. There are no significant contingent liabilities arising either under formal agreement or through formal undertakings requiring disclosure in the financial statements. All known contingent liabilities have been fully and properly disclosed in accordance with IAS 37.

Litigation and Claims

25. All known actual or possible legal claims have been disclosed to you and have been accounted for and disclosed in the financial statements.

Fraud

26. I understand my responsibilities for the design, implementation, and maintenance of internal control to prevent fraud and I believe I have appropriately fulfilled those responsibilities.

27. I have provided you with all information in relation to:

• my assessment of the risk that the financial statements may be materially misstated because of fraud

• any allegations of fraud or suspected fraud affecting the financial statements

• fraud or suspected fraud that I am aware of involving management, employees who have a significant role in internal control, or others that could have a material effect on the financial statements.

Laws and Regulations

28. I have disclosed to you all known instances of non-compliance or suspected noncompliance with laws and regulations whose effects should be considered when preparing financial statements.

Related Party Transactions

29. All material transactions with related parties have been appropriately accounted for and disclosed in the financial statements in accordance with IAS24. I have made available to you the identity of all of Nescol’s related parties and all the related party relationships and transactions of which I am aware.

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Remuneration and Staff Reports

30. The Remuneration and Staff Reports have been prepared in accordance with the requirements and directions made by Scottish Ministers, and all required information of which I am aware has been provided to you.

Performance report

31. I confirm that the Performance Report has been prepared in accordance with requirements and directions made by Scottish Ministers, and the information is consistent with the financial statements.

Corporate Governance

32. I have fulfilled my responsibilities for Nescol’s corporate governance arrangements. I have disclosed to you all deficiencies in internal control identified from this review or of which I am otherwise aware.

33. I confirm that the Governance Statement has been prepared in accordance with requirements and directions made by Scottish Ministers, and the information is consistent with the financial statements. There have been no changes in the corporate governance arrangements or issues identified since 31 July 2025 which require to be reflected in the Governance Statement or the annual report and accounts.

Group Accounts

34. I have identified all the entities in which Nescol has an interest and have classified and accounted for them in accordance with the requirements. Any significant issues with the financial statements of group entities, either potential or actual, have been advised to you. I am not aware of any significant differences between the amounts consolidated in the group accounts and the component entities results for the 2024/25 financial year.

Events Subsequent to the Date of the Statement of Financial Position

35. All events subsequent to 31 July 2025 for which the SORP/FRS102 requires adjustment or disclosure have been adjusted or disclosed.

Yours sincerely

Neil Cowie Principal and Chief Executive

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