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← Board Of Management Of Inverness College

2025-07-31-accounts

Docusign Envelope ID: 5570C037-F97F-4D8E-AFD4-8FE339F67E12 Inverness College UHI

Financial Statements for the year ended 31st July 2025

Inverness College Annual Report & Financial Statements for the year ended 31 July 2025

SCOTTISH CHARITY NUMBER SC021197

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Docusign Envelope ID: 5570C037-F97F-4D8E-AFD4-8FE339F67E12 Inverness College UHI

Financial Statements for the year ended 31st July 2025

CONTENTS
PAGE		 CONTENTS
PAGE
Professional Advisors 3
Performance Report
 4
Accountability Report 19
Independent auditor’s report to the Board of Management of Inverness
College, the Auditor General for Scotland and the Scottish Parliament 46

Statement of Comprehensive Income		 51
Statement of Changes in Reserves 52
Balance Sheet 53
Statement of Cash Flows 54
Notes to the Financial Statements 55

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Docusign Envelope ID: 5570C037-F97F-4D8E-AFD4-8FE339F67E12 Inverness College UHI

Financial Statements for the year ended 31st July 2025

Professional Advisors

External Auditor - Deloitte
8thFloor, The Silver Fin Building
455 Union Street
Aberdeen
AB11 6DB
Internal Auditor - WBG Services LLP
168 Bath Street
Glasgow
G2 4TP
Bankers - Royal Bank of Scotland
Unit 1 and 2
Falcon Square
Inverness
IV2 3PP
Solicitors - Anderson Strathern
1 Rutland Court
Edinburgh
EH3 8EY
Insurers - Arthur J. Gallagher Insurance Brokers
Spectrum Building, 55 Blythswood Street
Glasgow
G2 7AT

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Docusign Envelope ID: 5570C037-F97F-4D8E-AFD4-8FE339F67E12 Inverness College UHI

Financial Statements for the year ended 31st July 2025

Performance Report

Principal’s Statement

UHI Inverness has maintained its position as one of the best performing colleges in Scotland. We perform well above Scottish Funding Council (SFC) sector benchmarks across all key measures. In 2024/25 we continued to build upon work undertaken over the last 5 years with all our colleagues to transform the performance and culture of our institution through:

Each of these approaches are under constant review to support continuous improvement and many have been highlighted as sector leading through external awards and charter marks and with demonstrable impact shown in SFC data.

Our Context

UHI Inverness is one of the largest academic partners of the University of the Highlands and Islands (UHI) and delivers over one-quarter of the region’s further education (FE) provision. The UHI is the Regional Strategic Body for FE in the Highlands and Islands region and distributes SFC credit funding to the partnership.

UHI Inverness delivers just under a fifth of the region’s further and higher education provision spanning across the entirety of the Scottish Credit and Qualifications Framework (SCQF) levels 1-12. The college currently has circa 5,539 learners, 3,296 of whom are currently enrolled on FE programmes, 1007 of which are modern apprentices (compared to 965 in 2023/24) and 2,243 of whom are on HE programmes as part of the University’s provision.

The college exceeded its FE Credit target of 26,442 in 2024/25 for the third-year running. Demand for full time (FT) FE continues to outstrip our credit allocation following the reduction of circa 10% in academic year (AY) 23/24. The chart below illustrates the College Enrolments over the past 5 years, previous years are year-end, 2024/25 is year-to-date:

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Docusign Envelope ID: 5570C037-F97F-4D8E-AFD4-8FE339F67E12 Inverness College UHI

Financial Statements for the year ended 31st July 2025

==> picture [406 x 192] intentionally omitted <==

----- Start of picture text -----
FE Credits
35000 120.0%
30000 100.0%
25000
80.0%
20000
60.0%
15000
40.0%
10000
5000 20.0%
0 0.0%
2020/21 2021/22 2022/23 2023/24 2024/25
Target 29439 32,009 29,620 26,442 26,442
Actual 23913 28,653 30,595 26,523 26,886
% of Target 81.2% 89.5% 103.3% 100.3% 101.7%
----- End of picture text -----

Our Learners

Over 44% of our learners are between the ages of 16 and 19 and 30% of our activity is delivered to learners living in remote and rural areas, 4% being delivered to those living in the 10% most deprived postcode areas, which reflects the Highland/Inner Moray Firth area demographic. The college currently delivers 3% of our activity to care experienced learners. Our learners are split between 43.3% female, 56.1% male, and 0.6% other.

Our Curriculum

Our curriculum is delivered through 5 broad curriculum Schools:

Within the 5 Schools, our provision covers 16 subject areas and includes specialist provision within the Scottish School of Forestry and a significant and growing number of work-based learners. We have a growing demand for Further Education courses and have witnessed a continued increase in applications over the last 5 years, both from the general population and senior phase school pupils. We are sadly unable to meet this growing demand, largely due to restrictions in our FE credit allocation and the introduction of an FE top-slice, which is taken off our overall FE grant by UHI as the regional strategic body (RSB).

Linking curriculum with regional skills demand is essential, particularly with the availability of FE credit funding being restrained. Thus, difficult decisions are often necessary, when planning our curriculum, offsetting the needs of one vocational sector against another, and those of different groups of students such as school senior phase, alongside the need to support specialist programmes.

In 2024/25, we extended our offer to senior phase school pupils by offering the opportunity to undertake a full time HNC. This provides school pupils with the potential to move directly into year 2 of a relevant degree or Graduate Apprenticeship programme. Circa 600 school pupils, aged 15-17, were enrolled on Senior Phase school-link programmes. These arose from almost 1000 applications, as shown in the chart below.

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Docusign Envelope ID: 5570C037-F97F-4D8E-AFD4-8FE339F67E12 Inverness College UHI

Financial Statements for the year ended 31st July 2025

==> picture [302 x 172] intentionally omitted <==

----- Start of picture text -----
Senior Phase Applications
1200
1000
800
600
400
200
0
2021/22 2022/23 2023/24 2024/25 2025/26
----- End of picture text -----

We continued to focus of the growth of our Modern and Graduate Apprenticeship offer as shown in the chart below:

==> picture [372 x 187] intentionally omitted <==

----- Start of picture text -----
Growth in Apprenticeships
1200 1,069
1000
750
800
600
303
400
200 13
0
2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26
Planned
Modern Apprentices Graduate Apprentices
----- End of picture text -----

Our HE enrolments continued to recover into 2025/26, driven by curriculum developments including the introduction of additional Graduate Apprenticeship programmes. In particular, our Graduate Apprenticeship enrolments have grown from 13 in 2019/20 to 189 enrolments in Academic Year (AY) 24/25 with further projected growth this AY.

The graph overleaf shows our 5 year trend for HE full-time enrolments.

==> picture [384 x 188] intentionally omitted <==

----- Start of picture text -----
HE Full Time Enrolments
1,450
1,400
1,350
1,300
1,250
1,200
1,150
1,100
1,050
2021/22 2022/23 2023/24 2024/25 2025/26 YTD
----- End of picture text -----

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Docusign Envelope ID: 5570C037-F97F-4D8E-AFD4-8FE339F67E12 Inverness College UHI

Financial Statements for the year ended 31st July 2025

Our Research

We have invested over two hundred thousand pounds in the further development of our two research centres. This investment has enabled the Institute for Biodiversity & Freshwater Conservation seeks continue its research which is of growing importance both regionally and globally, guiding responses to the biodiversity crisis. We have also continued to invest in the Centre for Living Sustainability, as it continues important research to amplify the voices of marginalised people in communities, both across the Highlands and Islands and internationally. In addition, our ‘Enquiring Minds’ programme has been developed to promote a culture of curiosity and research across our professional services and academic teams. This programme provides funding to buy out staff time to explore a research problem connected with their roles at UHI Inverness.

External Environment

Unemployment rates in Highland are very low at 2.4% (2,800 people) compared to 3.9% for GB (Nomis, March 2025). The demand for labour in and around Inverness poses an ongoing challenge to retention and progression particularly in Healthcare/Care, ICT, Construction, Forestry, and Hospitality. The college continues to note a correlation in the challenges around retention in some of these areas. We invested in the expansion of our Business Solutions Team, resulting in significant growth in apprentices to over 1,000 in response to employer demand. As a partnership, UHI is now the largest college provider of work-based learning in Scotland, with Inverness College being the lead deliverer. However, the lack of FE credit funding means that our ability to meet employer demand for Modern Apprenticeship places will be constrained.

There is expected to be a steep increase in demand for skills, in particular those associated with the construction of energy infrastructure and data centres. To date we have met increasing demand for higher level education and skills for construction and civil engineering, however as our FE credits are capped there will be limited capacity for continued growth in FE and inability to deliver full time courses prevents the development of a pipeline for skills.

[ClipSigned5E2B4E98FEAD4OD...by: &'Mal Professor Christopher O’Neil Principal and Chief Executive Officer

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Docusign Envelope ID: 5570C037-F97F-4D8E-AFD4-8FE339F67E12 Inverness College UHI

Financial Statements for the year ended 31st July 2025

Performance Report (contd.)

Legal Status

Inverness College was established under the Further and Higher Education (Scotland) Act 1992. The College is a registered charity (Scottish Charity Number SC021197) for the purposes of the Charity and Trustee Investment (Scotland) Act 2005.

Under the terms of the Office of National Statistics, reclassification of Scotland’s colleges was implemented on 1 April 2014. This means that the college for accounting purposes is now part of the Scottish Government’s financial accounts, meaning that funding is provided by the Scottish Government according to need, and that colleges’ financial statements are now included as part of the Scottish Government’s total budget. The College has its own independent board, but also is a delivery partner as part of the University of the Highlands and Islands for Higher Education. As such, it has been allowed to keep its financial year-end at 31 July, but reports in terms of financial information to the Scottish Government at 31 March. Colleges’ budgets must fall within government spending limits, and Colleges may no longer retain annual surpluses. Colleges have been permitted to transfer any income and expenditure surpluses they make to foundations, as reserves are no longer allowed to be built up in colleges. This assumes the necessary cash is available to transfer. On 1 August 2014, Inverness College was assigned to the University of the Highlands and Islands as Regional Strategic Body for the Highlands and Islands area, in terms of the Post 16 Education (Scotland) Act 2013. This assignation relates to fundable Further Education provision.

The Financial Statements cover all activities of the College.

Strategic Plan 2021-2025

Inverness College Board approved the Strategic Plan and its sub-strategies in December 2021. Each of the strategic aims in these plans is mapped to a KPI, reported through our KPI matrix at relevant Board Committees. Updates are published on a monthly basis.

Our Strategic Purpose states “As leaders in tertiary thinking and tertiary delivery, we will have a transformational impact on the development and prospects of the people, communities and economy of the Highlands and Islands. We will design and deliver an innovative, integrated curriculum that spans all levels and types of qualifications, providing world class education, training and research with local, national and international sustainable value.”

Core Values 2021-2025

The Strategic Aims cover: Tertiary Education; Organisational Development; Research and Innovation; Student Experience; and Finance and Sustainability.

Aim 1 Tertiary Education

“To increase our reputation and reach by offering a progressive and accessible tertiary curriculum that is relevant and attractive to local, national and international students, and which enables personal development, economic growth and social cohesion.

Tertiary Education and Research have a shared vision which guides the integrated and interdisciplinary approach in all aspects of delivery of curriculum and research activity.

We will be nationally and internationally recognised for impactful, interdisciplinary research and teaching in biodiversity, ecology, sustainability, culture, equity and social justice that informs innovative tertiary education. This will deliver on sustainable development goals which address the biodiversity and climate emergencies and empower communities across our region.”

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Docusign Envelope ID: 5570C037-F97F-4D8E-AFD4-8FE339F67E12 Inverness College UHI

Financial Statements for the year ended 31st July 2025

Performance in relation to this aim and each element in the sub-strategy is monitored by the Learning, Teaching & Research Committee.

Aim 2 Organisational Development

“We will attract and retain talented employees committed to achieving our shared goals. We will create a supportive, collaborative and dynamic environment where students and staff are inspired to learn and develop. Our high-performance culture will be underpinned by a distributed leadership model, which empowers teams to deliver; and share accountability for outcomes. We will support our workforce to be agile, resilient and responsive to opportunities.”

The development and implementation of our Talent Management strategy and framework is key to achieving this aim and the action plan for this is reviewed at the HR Committee.

Aim 3 Research and Innovation

“Research and innovation will define the tertiary environment and have relevance to and impact upon our staff, students and the communities we serve.” Performance against this aim is monitored by the Learning, Teaching & Research Committee.

Aim 4 Student Experience

“We will create a vibrant student experience that is underpinned by creative learning and teaching and proactive student support, designed through collaboration between students, staff and the wider community. We will ensure that all our students are supported at every stage of their journey to achieve their full potential.” Performance against this aim is monitored by the Learning, Teaching and Research Committee.

Aim 5 Finance and Sustainability

“We will continually review our service delivery to ensure our financial sustainability. We will plan and manage our resources to be efficient and effective, prioritising investment to improve our student experience and achieve our vision. We will respect and protect our environment, as we work towards achieving net zero carbon.

Financial sustainability is a priority aim, which underpins our entire strategy. Following the development of our course costing model, our new Curriculum Planning Review approach, together with Monthly Data Presentation meetings and KPI matrix, will enable us to monitor the efficiency of our service delivery. The Sustainability Working Group is leading the development of an environmental sustainability strategy, encompassing every aspect of our business, as we work towards our net zero carbon goal.”

Performance against this aim is monitored by the Finance and General Purposes Committee.

Principal Risks and Uncertainty

The College has robust risk management processes in place to ensure relevant risks are captured, assessed and (where possible) mitigated against. The College maintains a register of strategic risks which is reported on at each meeting of the Audit Committee as well as being reported to the Board of Management and to UHI as the Regional Strategic Body.

The main risks to Inverness College are: -

Current mitigating actions:

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Docusign Envelope ID: 5570C037-F97F-4D8E-AFD4-8FE339F67E12 Inverness College UHI

Financial Statements for the year ended 31st July 2025

Future mitigating actions:

Current mitigating actions:

Future mitigating actions:

Current mitigating actions:

Future mitigating actions: 

  - Range of strategies to reduce budget deficit for 2024/25.

  - Implementation of staff deployment record tool.

  - Finance and budget training for managers, budget reviews taking place.

  - Plan for reducing current budget deficit in future years to a break-even position at worst; achievability demonstrated in 2024/25

Future mitigating actions: None at present.

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Docusign Envelope ID: 5570C037-F97F-4D8E-AFD4-8FE339F67E12 Inverness College UHI

Financial Statements for the year ended 31st July 2025

Current mitigating actions:

Future mitigating actions: None at present.

Going Concern

The net assets include a pension provision for early retirements of £1,593,772 (2023/24 - £1,750,525) 5and a Pension Liability of £61,000 (2023/24 – pension asset £6,672,000) for the College’s share in the Highland Council Local Government Pension Scheme (LGPS). It is recognised that the College’s current position in the LGPS is a liability and this figure can change from year to year depending on actuarial assumptions, including assumptions about inflation and interest rates.

The College reported a deficit before other gains and losses of £842,992, compared with a surplus before other gains and losses of £157,062 in 2023/24 and an Adjusted Operating Position (AOP) deficit of £1,091,314, compared with an AOP deficit of £621,558 in 2023/24 (See table on Page 16). The college maintains cash balances of £4,755,214 at July 2025. Also see Page 55 for a fuller assessment of going concern.

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Docusign Envelope ID: 5570C037-F97F-4D8E-AFD4-8FE339F67E12 Inverness College UHI

Financial Statements for the year ended 31st July 2025

PERFORMANCE ANALYSIS

Student Activity Indicators

UHI Inverness delivers over one-quarter of the region’s further and higher education provision spanning across the entirety of the SCQF levels 1-12. The college currently has circa 5,539 learners, 3,296 of whom are currently enrolled on FE programmes, 1007 of whom are Modern Apprentices (compared to 965 in 2023/24), and 2,243 of whom are on HE programmes as part of the University’s provision.

We have seen a significant recovery post pandemic, and the college exceeded our credit target over the last three years. Demand for FT FE continues to outstrip our credit allocation following the continuation of a reduction of circa 10% in 2023/24.

Recruitment for Higher Education (HE) across UHI has been challenging, due to the cost-of-living crisis, competition across the sector and high employment levels. UHI Inverness responded by implementing a strategy to follow its traditional student base into the workplace, developing a range of Graduate Apprenticeship programmes, which align well to the skills and education needs of the region, with the introduction of two new Graduate Apprenticeship programmes planned for 2025/26. In addition, in 2024/25 the College offered the opportunity for Schools Senior Phase students in their 6[th] year to undertake a full time HNC programme.

The College participates fully in maximising opportunities at a regional level, working closely with our UHI academic partners to match resources with demand. As part of the University of the Highlands and Islands partnership, the College HE activity is measured in full time equivalents (FTEs) rather than credits.

Student
Activity		 Target
2024/25		 Outturn
2024/25		 Target 2023/24 Outturn 2023/24
FE Credits 26,442 26,886 26,442 26,523
HE UGT FTEs 1,319 1,309 1,418 1,259

Learner Satisfaction

The college has seen high rates of learner satisfaction in both the Early Student Experience Survey (ESES) remains high at 96% (60.6% participation rate), and the end of year Student Satisfaction and Engagement Survey (SSES) at 95% satisfaction (53.2% participation rate).

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Docusign Envelope ID: 5570C037-F97F-4D8E-AFD4-8FE339F67E12 Inverness College UHI

Financial Statements for the year ended 31st July 2025

Current and Future Developments

Learner Qualification Outcomes and Forecast for AY 24/25

Our 2023/24 student outcomes for full time further education students placed UHI Inverness 8.3% above the sector benchmark at 75.4%, and second out of comparable colleges for student success. Our key focus in AY 24/25 was on further improving student outcomes.

Full-Time Further Education outcomes have further improved to 76.4% and we forecast that UHI Inverness will remain in the top three performing colleges for full time further education provision.

As part of the UHI partnership, our Higher Education student outcomes are not reported separately publicly by the Scottish Funding Council, however internal data analysis indicates that there has been significant improvement in 2024/25. However, our success rates for HNC and HND students rose by 8.4% from 2023/24 to 2024/25, with a corresponding drop in withdrawals and partial success. The latest 2023/24 sector benchmark was 66.9%, in 2024/25 76.8% of HNC and HND students were successful at UHI Inverness. These are summarised in the chat below.

==> picture [387 x 196] intentionally omitted <==

----- Start of picture text -----
HNC & HND KPIs
HEFT - Withdrawal % HEFT - Partial Success % HEFT - Success %
76.8%
64.7% 66.7% 68.4%
21.8% 21.9% 20.8%
16.4%
13.5% 11.1% 10.5%
6.8%
2021/22 2022/23 2023/24 2024/25
----- End of picture text -----

Our People

The college employed 429 staff by headcount at Q4 in 2024/25. This equated to 331 FTE, with 307 being permanent and 24 being fixed-term contract staff. Academic staff accounted for 1.61 FTE, which includes academic management but does not include Assessor Trainers.

Staff turnover rates for core staff, excluding fixed term contracts, was 2.4%, which is in line with that for the previous year.

2024/25 saw the continuation of our Staff Wellbeing Committee and the introduction of our new Employee Engagement Group, both of which are designed to distribute leadership throughout the organisation and a mechanism for staff to have an influence upon our operations.

Investment in our Staff Professional Development

In support of our continued move to a distributed leadership model we continue to roll out a Collaborative Leaders programme to all operational and line managers.

We continue to make significant investments in the professional development of all our staff, as part of our Talent Management Strategy.

We are recognised by Education Scotland as being sector leading in our proportion of both Teaching Qualifications for Further Education (TQFE) qualified and General Teaching Council for Scotland (GTCS) registered staff.

The graphic below provides a summary of formal staff professional development activity, which is augmented by support for networking, participation in external events, staff development days and team development activities.

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Docusign Envelope ID: 5570C037-F97F-4D8E-AFD4-8FE339F67E12 Inverness College UHI

Financial Statements for the year ended 31st July 2025

Our award-winning ‘Enquiring Minds’ programme, provides a research pathway for all staff and is designed to embed a research culture across the whole organisation. In 2025/26 we held our second cohort of the programme, which offers the opportunity for staff across the curriculum and professional services to apply for sponsorship to undertake a research project which will have demonstrable impact upon student and/or staff experience.

Planning & Managing Performance

Our annual process for Curriculum Planning and Review, introduced in AY 21/22, encompasses a detailed review of course level data together with Sector Development Planning supported by our course costing and workforce planning tools.

KPI targets are set for each sub-strategy, contained in a single document. This document is updated on a monthly basis, with extracts presented to board committees and the full set of measures to the Board of Management. These are also presented to staff at regular briefings and available to all staff via SharePoint.

Monthly data presentations provide an opportunity for curriculum managers to analyse and present an annual cycle of measures to the Vice Principals and Tertiary Education Managers each month, together with actions where improvement is required. This process is refined each year to cover changing priorities and opportunities for improvement.

All budget holders present a review of their budget to the Vice Principals, the Operations and Commercial Manager and the Finance Director at Budget review meetings, with actions agreed to reduce costs and to identify any in-year variances.

2024/25 saw the setting of a planned deficit budget, due to the top-slice applied to FE funding by the RSB, the removal of Module Leadership funding by Executive Office and a planned deficit for our research activity. The deficit budget was approved by the Board together with a forecast to move towards a balanced budget. The plan makes use of positive cash balances, ensuring that we continue to meet local need as much as possible within capped credit allocations whilst growing our HE and commercial provision to reduce the operating deficit.

Quality Improvement

A range of mechanisms have been introduced to support our continuous improvement. A new approach to quality enhancement planning was introduced in AY 21/22 which saw the introduction of a live dashboard to monitor and track quality improvement activity across the entirety of the organisation. This has been identified by Education Scotland in successive reviews as highly effective practice and foundational to our continued cross-organisation quality culture. We have also worked closely with Curriculum Leaders to roll out new Curriculum Design Principles across all of our SCQF level 4/5 programmes which have levered out greater levels of successful outcomes as well as supporting the college’s approach to trauma-informed practice. Our design principles have been instrumental in the significant improvement in FT FE outcomes and, in particular, the outcomes of learners with care

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Docusign Envelope ID: 5570C037-F97F-4D8E-AFD4-8FE339F67E12 Inverness College UHI

Financial Statements for the year ended 31st July 2025

experience which improved from 59.6% in 2023/24 to 63.8% in 2024/25, and is above the latest sector benchmark. In parallel to this work, we rolled out a second year of our On Trend process has supported a range of programmes to identify solutions to their underlying reasons for underperformance. This solution focussed staff driven process has seen improved outcomes on all programmes involved.

Research

The following summarises current activity against the performance indicators of Research Excellence Framework, Post-Graduate Researchers, and Knowledge Transfer Partnerships. Strategically the College aims to further enhance our research excellence capacity to inform and develop the ‘currency’ of the curriculum.

1. Research Excellence Framework

The outcome of the 2021 Research Excellence Framework review was announced in May 2022. UHI as a whole achieved an exceptionally good outcome across nearly all Units of Assessment submitted. The Research Excellence Grant allocation for each of the UHI Academic Partners was finalised in July 2022, with Inverness receiving £130,000 for 2024/25. We are working toward the next REF return which will be in 2028/29.

2. Number of Postgraduate Research Students

The total number of Postgraduate Research Students in 2024/25 was 34, compared to 24 the previous year. 5 students successfully completed their research degrees in 2024/25, compared to 3 the previous year.

3. Number of Knowledge Transfer Partnerships (KTP)

One KTP was completed in 2024/25 and a new KTP commenced.

4. Research Centres

The work of the Institute to the Institute for Biodiversity and Freshwater Conservation continued to thrive under the leadership of Professor Bernd Haenfling, as did the Centre for Living Sustainability led by Professor Vicky Johnson. The availability of research grant funding has tightened and competition for these has increased, particularly since BREXIT, and research grants often provide little or no contribution to overhead. Both centres are subsidised by HE funding, in recognition of the value they bring to our tertiary curriculum, and commercial work is sought to reduce the college’s investment.

Financial Performance

Non-cash Allocation

This table shows the College’s underlying operating position for the year after adjusting for non-cash items.


items.
2024/25
£’000		 2023/24
£’000		 Notes
(Deficit)/Surplus before other gains and losses
(FE/HE SORP basis)for academicyear		 (843) 157 See SOCIE
Add:
Depreciation budget for government funded
assets (net of deferred capital grant) for
academic year		 1,129 (286) See Note 11 &
Note 18
Operating
Surplus/(deficit)
on
Central
Government accounting basis for the academic
year		 286 (129)

Following reclassification, incorporated 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

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Docusign Envelope ID: 5570C037-F97F-4D8E-AFD4-8FE339F67E12 Inverness College UHI

Financial Statements for the year ended 31st July 2025

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 a deficit before other gains and losses of £842,992 (2023/24 – surplus £157,062) for the year ended 31 July 2025. After adjusting for the non-cash allocation provided under government rules, the College shows an “adjusted” deficit of £1,091,314 (2023/24 - deficit of £621,261) on a Central Government accounting basis.

The deficit is attributable to other factors reflected in the adjusted operating position below.

Adjusted Operating Position (AOP) Note

SFC approval of the Adjusted Operating Position was given on 9 December 2025.

2024/25 2023/24



£’000 £’000
(Deficit)/Surplus before othergains and losses (843) 157
Add back:
Depreciation (net of deferred capital grant release) on both
government funded and privately funded assets including NPD assets
(Note 11)
Pension adjustment – Net service cost (Note 6)
Pension adjustment - Net interest cost (Note 9)
Pension adjustment - Early retirement Provision (Note 17)
Costs of middle management job evaluation exercise not matched by
revenue (Note 17)		 1,129
181
(329)
(14)
378		 (286)
198
(242)
126
367
Deduct:
Non-Government capital grants (e.g. ALF capital grant) (Note 4)
NPD income applied to reduce NPD balance sheet debt		 (561)
(1,032)		 (0)
(941)
Adjusted operating (deficit) (1,091) (621)

Financial results

The Statement of Comprehensive Income for the year ended 31 July 2025 shows a deficit of £842,992 before any pension adjustments, (2023/24 surplus £157,062). There were adjustments for the College’s share in Highland Council’s Pension Scheme amounting to a net credit of £148,000 (2023/24 – net credit of £44,000). There was an unfavourable actuarial movement of £6,881,000 in this same scheme (2023/24 – actuarial valuation increase of £1,738,000). Total income decreased to £30,097,172 (2023/24 £30,509,358) and expenditure has increased to £30,940,164 (2023/24 £30,352,296). The decrease in income is due to a reduction in funding council grants compared to the previous year and the increase in expenditure is related to the increase in staff costs due to the unfunded cost of living increases for both academic and professional staff and the increase in employers national insurance contributions.

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Docusign Envelope ID: 5570C037-F97F-4D8E-AFD4-8FE339F67E12 Inverness College UHI

Financial Statements for the year ended 31st July 2025

Creditor Payment Policy

The College seeks to comply with the CBI Prompt Payment Code and aims to pay its suppliers within 30 days of receipt of invoice unless the invoice is contested. The College’s average creditor payment period was 27 days over the 12 month period to July 2025, compared with the figure of 25 days in the 12 months to July 2024.

Sustainability Strategy

The Environmental Sustainability Strategy for Inverness College was approved by the Board in December 2022. The strategy covers four core areas to support our desire to reduce impact on the environment and achieve net zero carbon emissions by 2040:

Over the course of the year, we have:

The College reports on its performance in line with the requirements of the Climate Change (Scotland) Act 2009.

**Year ** Year type Scope 1 Scope 2 Scope 3 **Total **
2023/24 Academic 253.57 430.18 1,964.30 2,648.05
2024/25 Academic 169.85 328.88 1,808.25 2,306.98
Reduction
33%
24%
8%
13%

The 24/25 annual carbon emissions report to the Scottish Government has now been submitted.

The headline is that our emissions have reduced by 341 tonnes of CO2 equivalent (tCO2e) to 2,306tCO2e, a 13% reduction on last year.

We have seen a reduction across all three Scopes, with the largest percentage decrease coming from Scope 1 (direct emissions from gas and other fuel) which has dropped 33% to170tCO2e, a 84t reduction. This was driven by a reduction in gas usage at 1 Inverness Campus, which dropped from 1,183,733kWh to 749,963kWh. We believe this is due to the work undertaken by GTFM in trimming heating schedules.

Scope 2 (emissions from electricity) reduced by 101tCO2e from 430tCO2e, a 23.5% reduction. The reduction has again come from 1 Inverness Campus (Balloch and Burnett Road both increased their

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Financial Statements for the year ended 31st July 2025

electricity usage during the year), which saw a 12% reduction in kWh used. We believe this reduction has come from the LED lighting upgrade and the heating schedule alterations. The remainder of the reduction has come from an improved conversion factor as Defra recognise the grid is becoming greener.

Scope 3 (indirect emissions from things like staff travel and supply chain) had the largest actual decrease of 156tCO2e to 1,808.25tCO2e, an 8% reduction. This has primarily come from a reduction in spend on infrastructure projects compared to last year, but several other factors have influenced it, including a reduction in international flights. Our emissions from waste have also dropped significantly since we stopped sending waste to landfill, our waste emissions this year were just over 0.5tCO2e. Last year’s waste was 16tCO2e.

Disclosure of Information to Auditors

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

Approved by order of the members of the Board on 19 December 2025 and signed on its behalf by:

[ClipSigned5E2B4E98FEAD4OD...by: &'Mal Professor Christopher O’Neil Principal and Chief Executive Officer

Victoria Erasmus Chair of Board

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Financial Statements for the year ended 31st July 2025

Accountability Report Section One: Statement of Corporate Governance

DIRECTORS’ REPORT Members of the Board of Management

The UHI Inverness College Board of Management is populated by the College Principal, non-executive Board Members, two staff members and two student representatives taken from the Highlands and Islands Student Association (HISA).

The Members, who served on the Board of Management during the year 2024/25, and up to the date of the accounts being signed on 19 December 2025 were as follows:

Name Designated Role Membership Start Date End Date
Victoria Erasmus Chair of Board of
Management		 Board of Management
Chairs Committee
Performance Review and
Remuneration Board
S&N Committee
Finance & General
Purposes Committee (ex
officio member)
Audit Committee (by open
invitation)
HR Committee (ex officio
member)
Learning, Teaching and
Research Committee (ex
officio member)		 01 January 2025
Dee Bird Vice Chair of the
Board of
Management
Chair of Learning,
Teaching and
Research
Committee
Interim Chair of Board
of Management		 Board of Management
Learning, Teaching and
Research Committee
Chairs Committee
S&N Committee
PR&R Committee
Board of Management		 26 March 2024
31 March 2022
08 July 2024		 31 December 2024
Chris O’Neil Principal Board of Management
Human Resources
Committee
Finance and General
Purposes Committee
Learning, Teaching and
Research
Audit Committee (by open
invitation)		 01 September
2017

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Financial Statements for the year ended 31st July 2025

Innis Montgomery Chair of Human
Resources
Committee
Senior Independent
Member		 Board of Management
Audit Committee
Human Resources
Committee
Chairs Committee
PR&R Committee
S&N Committee		 12 April 2017
Donald MacKenzie Chair of Finance
and General
Purposes
Committee
Independent
Member		 Board of Management
Finance and General
Purposes Committee
Chairs Committee
PR&R Committee
S&N Committee		 18 June 2020
Janette Campbell Chair of Audit
Committee
Independent
Member		 Board of Management
Audit Committee
Chairs Committee
S&N Committee
PR&R Committee		 19 December
2023
27 June 2023
Sally Blyth Vice Chair of Audit &
HR Committees
Independent
Member		 Audit Committee
Board of Management
HR Committee		 01 December
2019
Russell Edwards Vice Chair of Finance
and General
Purposes
Committee
Independent
Member		 Board of Management
Finance and General
Purposes Committee
Learning, Teaching and
Research Committee		 01 February 2021 05 November 2024
Arvinder Kainth Vice Chair Learning,
Teaching and
Research Committee
Independent
Member		 Board of Management
Learning, Teaching and
Research Committee		 01 February 2021
Gillian Galloway Independent
Member		 Board of Management
Audit Committee
Human Resources
Committee		 01 December
2019		 31 December 2024
Wendy Grindle Independent
Member		 Board of Management
Audit Committee
Learning, Teaching and
Research Committee		 27 June 2023
Rojan Kumar
Subramani		 Independent
Member		 Board of Management 31 March 2022

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Financial Statements for the year ended 31st July 2025

Finance and General
Purposes Committee
Michael Beveridge Co-opted Member
of the Audit
Committee		 Audit Committee
Board of Management		 31 March 2022 06 August 2024
Pauline Tuthill Professional
Services
Representative		 Board of Management
F&GP Committee
Learning, Teaching and
Research Committee		 27 June 2023
Matthew Millward Academic
Representative		 Board of Management
Learning, Teaching and
Research Committee		 17 March 2022 05 May 2024
Elizabeth Keegan Student
Representative		 Board of Management
LT&R Committee		 01 August 2023 31 July 2025
Holly Pearce Student
Representative		 Board of Management
LT&R Committee		 01 August 2023 31 July 2025
Jane Davidson Independent
Member
Co-opted Member
of the F&GP
Committee		 F&GP Committee
HR Committee
Board of Management		 13 March 2025
27 June 2023
Amy Goodbrand Co-opted Member
of the Audit
Committee		 Audit Committee
Board of Management		 01 January 2021 31 December 2024
Annie Nelson Independent
Member		 Learning, Teaching and
Research Committee
Audit Committee
HR Committee
Board of Management		 01 December 2024
David Stewart Independent
Member		 Learning, Teaching and
Research Committee
Audit Committee
HR Committee
Board of Management		 01 December 2024
Paul Shanks Trade Union
Representative
Academic		 Learning, Teaching and
Research Committee
Finance and General
Purposes Committee
Board of Management		 18 December 2024
Heather Keyes Academic
Representative		 Learning, Teaching and
Research Committee
Finance and General
Purposes Committee
Board of Management		 24 June 2025
Anthony Standing Co-Opted Member of
the Board of
Management		 Board of Management
Learning, Teaching and
Research Committee		 11 August 2025 10 August 2029

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Inverness College UHI

Financial Statements for the year ended 31st July 2025

Conrad Copeland Co-Opted Member of
the Board of
Management		 Board of Management
Audit Committee		 11 August 2025 10 August 2029
Lindsay Ferries Co-Opted Member of
the Board of
Management		 Board of Management
Audit Committee		 27 August 2025 26 August 2029
John Pocock Co-Opted Member of
the Board of
Management		 Board of Management
Learning, Teaching and
Research Committee		 11 August 2025 10 August 2029

A link to our Board of Management Register of Interests can be found here: April-2025-Board-ofManagement-Register-of-Interest.pdf

A summary of the Board members, and meetings attended during 2024/25 is shown below:

Member BoM HR Audit F&GP Chairs LT&R S&N PR&R Joint
Audit
&
FGP
Victoria
Erasmus		 4/5 2/4 2/3 2/4 2/4 1/4 0/2 1/3
Dee Bird 4/5 3/4 3/4 1/2 1/3
Chris O’Neil 5/5 4/4 1/3 3/4 3/4 4/4 1/2 1/3
Innis
Montgomery		 4/5 4/4 3/3 4/4 2/2 2/3 1/2
Donald
MacKenzie		 4/5 4/4 4/4 3/4 1/2 2/3 1/2
Janette
Campbell		 5/5 3/3 4/4 1/2 1/3 2/2
Sally Blyth 5/5 3/4 2/3 1/2
Russell
Edwards		 0/5 0/4 0/4 0/2
Arvinder Kainth 4/5 3/4
Gillian
Galloway		 2/5 1/4 1/3 1/2
Wendy Grindle 3/5 2/3 2/4 1/2
Rojan Kumar
Subramani		 3/5 4/4 1/2
Michael
Beveridge		 0/5 2/3
Pauline Tuthill 2/5 3/4 0/4 2/2
Matthew
Millward		 3/5 3/4
Elizabeth
Keegan		 5/5 3/4
Holly Pearce 5/5 3/4

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Inverness College UHI

Financial Statements for the year ended 31st July 2025

Jane Davidson 5/5 3/4 2/4 2/2
Amy
Goodbrand		 0/5 1/3 0/2
Annie Nelson 4/5 1/4
David Stewart 3/5 0/4
Paul Shanks 4/5 1/4 1/4
Heather Keys 1/5

Each of our Committees have allocated to them lead officers from the Executive Management Team (see below). All of the Executive Management Team are invited to attend Board of Management Meetings.

The Governance Officer for the Academic year 2024/25 was Ludka Orlowska-Kowal. The Governance Officer maintains a register of financial and personal interests of the Board members. The Register is available for inspection at:

UHI Inverness 1 Inverness Campus INVERNESS IV2 5NA or on the College Website - www.inverness.uhi.ac.uk/about-us/board-of-management

STATEMENT OF BOARD OF MANAGEMENT’S RESPONSIBILITIES

In accordance with the provisions of the Further and Higher Education (Scotland) Act 1992 (the Act) the Board of Management 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 Board of Management is responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the College and to enable it to ensure that the financial statements are prepared in accordance with the Act, the Statement of Recommended Practice on ‘Accounting in Further and Higher Education Institutions’ and other relevant accounting standards.

In addition, within the terms of the Financial Memorandum between the University of the Highlands and Islands (UHI) as the Regional Strategic Body, and the Board of Management, the Board is required to prepare financial statements for each reporting 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 are prepared in accordance with the Accounts Direction issued by the Scottish Funding Council, which brings together the provisions of the Financial Memorandum with other formal disclosures that the Scottish Funding Council require the Board of Management to make in the financial statements and related notes.

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Financial Statements for the year ended 31st July 2025

In causing the financial statements to be prepared, the Board of Management has ensured that:

The Board of Management has taken reasonable steps to:

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:

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

GOVERNANCE STATEMENT Statement of Compliance with the 2022 Code of Good Governance for Scottish Colleges

UHI Inverness complies with all principles of the 2022 Code of Good Governance for Scottish Colleges and has complied throughout the year ended 31 July 2025 and up to December 2025. The Code of Good Governance for Scotland’s Colleges “the Code” has been developed and is owned by the College Sector.

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Financial Statements for the year ended 31st July 2025

The Code establishes the standards of good governance for the Board and provides the essential foundations for compliance within the legislation framework. Part of the code requires that UHI Inverness has in place a robust self-evaluation process which comprises of an annual internal review and an externally facilitated effectiveness review every 3 to 5 years.

UHI Inverness carries out the annual review of the Code by asking Board Members to express a level of agreement with a series of statements representing good governance and practice. The information provided by Board Members informs our self-evaluation report and indicates areas of strength and highlights where further development for the Board is required. The review of the Code provides Board Members the opportunity to express their views with regards to how we comply with the code in respect of Leadership and Strategy, Quality of Student Experience, Accountability, Effectiveness and Relationships and Collaboration. This ensures that our evaluation report and any development actions are aligned to the requirements of the code.

In order to ensure that we are compliant with the Code our Annual Review is included within the Board’s yearly calendar of submissions and any recommendations which come out of this review are incorporated into the ongoing Board of Management Action Plan.

The Audit Committee have met with Auditors without the Executive Team present as part of the scheduled cycle of Board of Management meetings.

During autumn 2020 Professor Ron Hill, on behalf of Colleges Development Network (CDN) was commissioned to undertake an ‘Externally Facilitated Board Effectiveness Review’ of Inverness College. The final report dated 21 January 2021 and the development plan which the Board of Management has drawn up from this review is available on the College’s website. The development plan is reviewed and updated every 6 months.

Prior to the start of the academic year 2024/25 a review of each of our Committees took place. As part of this each Committee’s Terms of Reference were reviewed and updated to ensure that there was no duplication and that the aims and objectives of each Committee was clear. The language within each Committee’s Terms of Reference were updated to support, challenge and enhance the work of the College and to ensure a pro-active approach is taken by Board Members. They will next be reviewed in September 2025. The review of the Committees has also allowed for the creation of creative space within each meeting.

The College is committed to exhibiting best practice in all aspects of corporate governance. This summary describes the manner in which the College has applied the main principles set out in the Code of Good Governance for Scotland’s Colleges, the purpose being to help the reader of the financial statements understand how the principles have been applied.

The Board has adapted to a new way of working following the Covid-19 pandemic. All Committee meetings remain fully digital and are conducted via Microsoft Teams. Board Meetings are hybrid with members being encouraged to attend in person but with the option to dial in if needed. The induction process for new members remains online. The Board was able to come together for their Board Away Day in February 2025.

The Board undertook two successful recruitment campaigns in Autumn 2024 and were able to recruit two non-executive members, and in Spring 2025 with 4 new Co-Opted Members being ratified at the October 2025 Board of Management meeting.

Introduction

The Board has welcomed the value of the confidential closed sessions which has provided them with the space to discuss and identify areas of good practice and areas for development.

The focus of the Board this year has been in respect of finances with the reduction of funding, the impact of the cost-of-living crisis on both our students and staff, the development of our KPI Matrix. The Board

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Financial Statements for the year ended 31st July 2025

continues to be updated by management in respect of our efforts to manage the College with the Board remaining cognisant of the mitigating and ongoing actions being taken in respect of our delivery effectiveness.

BOARD OF MANAGEMENT

The College’s Board of Management meets four times per year and has a number of committees:

In addition, the Board of Management held development planning days and training events during the course of the year for the purposes of training, self-evaluation and development. The role of the Board of Management is the strategic overview of the College.

The core College Committees (Audit; Finance and General Purposes; Learning, Teaching and Research; and Human Resources) meet four times a year in line with the Board of Management cycle, with the Audit Committee also meeting with the College’s external and internal auditors as appropriate.

The College’s Internal Auditors monitor the systems of internal control, risk management controls and governance processes in accordance with an agreed plan of input and report their findings to both the Executive Management Team and the Audit Committee. The College Internal Auditors are still to complete the UHI Inverness Follow Up Report 2024/25.

The Executive Management Team is responsible for the implementation of agreed audit recommendations and Internal Auditors undertake periodic follow-up reviews to ensure that such recommendations have been implemented. The Committee considers detailed reports together with recommendations for the improvement of the College’s systems of internal control and management’s responses and implementation plans. It also receives and considers reports from the Scottish Funding Council as they affect the College’s business and monitors adherence to the regulatory requirements.

Whilst members of the Executive Management Team may attend meetings of the Audit Committee as necessary, they are not members of the Committee and at least once a year the Committee meets the External Auditors on their own for independent discussions.

TRANSPARENCY ARRANGEMENTS

The Board of Management conducts its business through a number of committees. Each committee has formally constituted Terms of Reference. Minutes of all Board of Management meetings are available from the Governance Officer at the following address or on the College’s website:

Inverness College 1 Inverness Campus Inverness IV2 5NA

The Governance Officer maintains a register of financial, personal interests and directorships of the members of the Board of Management. The register is available for inspection at the above address or on the College’s website.

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Financial Statements for the year ended 31st July 2025

ROLE OF COMMITTEES OF THE BOARD OF MANAGEMENT

Audit Committee

The Audit Committee has overall strategic responsibility for developing, monitoring and enhancing the following aspects of the College’s operations and to advise the Board appropriately on:

Specifically, the Audit Committee shall:

The Longman site was sold in December 2023, and the college audit committee is monitoring any future sale of the land, as per the sale agreement, for the next two years.

Human Resources Committee

The HR Committee has overall strategic responsibility for developing, monitoring and enhancing the direction and oversight of all personnel matters relating to the function of the Board of Management as employer of the College’s staff.

The Committee shall support, scrutinise and enhance the development and auditing of all human resource strategies and work streams and this shall include:

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Financial Statements for the year ended 31st July 2025

Learning, Teaching and Research Committee

The Learning, Teaching and Research Committee has overall strategic responsibility for developing, monitoring and enhancing the direction and performance of learning, teaching and research at the College, as part of delivering excellence in the overall student experience, research and impact.

The Learning, Teaching and Research Committee shall:

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Financial Statements for the year ended 31st July 2025

Finance and General Purposes Committee

The Finance and General Purposes Committee has overall responsibility (within the Financial Memorandum between the College and the Regional Strategic Body) for developing, monitoring and enhancing the direction and oversight of the College’s financial affairs. The Committee has strategic responsibility for developing, monitoring and enhancing the College’s existing buildings and estates. It shall:

Responsibilities – Estates

Chairs’ Committee

The Chairs’ Committee will consider the membership of the Board’s Standing Committees and the overall effectiveness of the Board’s Committee Structure and develop and recommend to the Board any amendments or additions considered appropriate.

The Committee will support and enhance the development and implementation of:

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Financial Statements for the year ended 31st July 2025

The Committee will at the special request of the Board, receive and consider matters of special interest which are not within the remit of another Standing Committee.

The Committee will support, scrutinise and enhance the functions of the Board in any cases of urgency of which the Chair of the Board, the Vice Chair or the Chair of a Standing Committee or the Senior Independent Member shall be the judge and where it is not practicable to convene a meeting of the Board of Management.

Search and Nomination Committee

The Search and Nomination committee shall:

Performance Review and Remuneration Committee (PR&R)

The PR&R Committee shall consider, support, scrutinise and implement the remuneration package and conditions of service and any changes thereof, of the College Principal and the Executive Management Team (EMT) as is considered appropriate taking into account that the Principal and the EMT should be fairly rewarded for their individual performance and contribution to the College’s overall performance and observing, recognising and considering the following:

The Committee shall support, scrutinise and enhance the development and implementation of the annual appraisal of the Principal and Chief Executive by the Chair of the Board and consider and observe the Principal and Chief Executive’s continuing professional development.

The Committee shall consider, support and enhance other such matters relating to the Board of Management which the Chair shall from time to time determine with consideration given to severance payments.

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Financial Statements for the year ended 31st July 2025

The Committee shall support, scrutinise and endorse any proposals for severance payments to EMT and any exceptional settlements which will require to be formally notified to the Board of Management.

CORPORATE STRATEGY

In respect of its strategic and development responsibilities, the full Board of Management meets at least annually to consider establishment of the College’s strategic plan, with monitoring against targets undertaken throughout the planning period.

ESTATES STRATEGY

Estates matters are reported to the Finance and General Purposes Committee of the College.

Space at Inverness College’s main campus, 1 Inverness Campus, has been under increasing pressure over recent years as demand for construction and engineering related skills has increased across the Highland Region. The recent announcement of the Cromarty and Inverness Green Free Port is projected to further increase demand for STEAM (Science, Technology, Engineering, Art and Mathematics) skills and knowledge exchange

Our Sector Development plan process has identified areas of priority for investment to support growth. These plans were accepted by EMT in November 2022 and the Board of Management in December 2022. Hybrid working patterns across the campus has allowed us to free up space to create new teaching workshops spaces.

Campus **Current Condition ** **Future Plan ** Priorities
Inverness
Campus		 Excellent Repurposing of staff
rooms to new flexible
teaching areas is now
complete.
On review of
estimated costings, a
new Sustainable
Construction Centre
within out 3rdcar park.
Was not viable.
A 10-year lease has
been secured as an
alternative to provide
equivalent facility.
Additional funding has
been secured from
SSE.		 Action to decrease carbon
footprint.
Asset management.
Maximise teaching space.
Robust maintenance and
replacement programme of
college assets – Holding
GTFM to contract.
Early Learning
and Childcare
Centre		 Excellent To continue to lease
the building to
external learning and
childcare service
provider		 Operate the building in line
with the agreed lease.
Scottish School of
Forestry		 Main building and
former tractor shed:
excellent
Outbuildings, E Block:
Poor		 To expand teaching
delivery for
construction and civil
engineering sectors.		 Optimise use of existing
buildings by supporting
delivery across other
curriculum areas
Maintain security of site

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Financial Statements for the year ended 31st July 2025

BOARD’S STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL

The College’s Board of Management is 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.

In the opinion of the Board of Management, the College is committed to implementing all provisions of the Code of Good Governance for Scotland’s Colleges. As at the date of approval of the annual report and financial statements, the College’s system of internal control is regularly subjected to scrutiny and review by the Audit Committee, reporting to the Board of Management, in a manner consistent with the internal control guidance for directors on the Code of Good Governance for Scotland’s Colleges.

The College’s Executive Management Team and the Audit Committee also receive regular reports from the internal audit function, which includes recommendations for improvement. The Audit Committee’s role in this area is confined to a high-level review of the arrangements for internal control. The Board of Management’s agenda includes a regular item for consideration of risk and control and receives reports thereon from the Executive Management Team and the Audit Committee.

The Board maintains a Risk Register, which records internal and external risks and identifies mitigating actions to reduce the threat of those risks and their impact.

GOING CONCERN

See Note 1 on the Financial Statements for a detailed consideration.

CONCLUSION

The College complies with all the principles of the 2022 Code of Good Governance for Scotland’s Colleges, and it has complied throughout the year ended 31 July 2025.

Approved by order of the members of the Board on 19 December 2025 and signed on its behalf by:

[ClipSigned5E2B4E98FEAD4OD...by: &'Mal Professor Christopher O’Neil Principal and Chief Executive Officer

Victoria Erasmus Chair of Board

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Financial Statements for the year ended 31st July 2025

Section Two: Remuneration and Staff Report

The information disclosed within the tables below are subject to audit by the College’s external auditor, and all other sections of the Remuneration and Staff Report are reviewed for consistency.

Remuneration Policy

Inverness College UHI Board of Management has responsibility for determining the Principal and Chief Executive’s salary, and on recommendation of the Principal, determining and agreeing the Executive Management Team pay. The Performance Review and Remuneration Committee of the Board of Management are tasked with conducting the review of pay considerations for these posts in line with the terms of reference of this Committee.

The Committee shall consider, support, scrutinise and implement the remuneration package and conditions of service, and any changes thereof, of the College Principal and the Executive Management Team (EMT) as is considered appropriate taking into account that the Principal and the EMT should be fairly rewarded for their individual performance and contribution to the College’s overall performance and observing, recognising and considering the following:

  1. In terms of EMT remuneration, where the College stands in relation to other comparable institutions in the sector ensuring consideration is given to organisations of a similar size and the local market;

  2. The Scottish Government’s approach to remuneration in the public sector.

  3. The relationship between the remuneration of the EMT and that of other employees of the College

  4. The benefits granted to the EMT; and

  5. The adequacy of pension arrangements and recognise the cost implication of pension arrangements including the pension effect of remuneration.

  6. The roles and responsibilities of each post

  7. Benchmarking data and the analysis of similar roles within the sector

  8. Cost of living uplifts and National Bargaining discussions affecting the salaries of other College staff

Remuneration (including salary) and Pension Entitlements

The following table provides detail of the remuneration and pension interests of senior management.

Salary entitlements

The following tables provides detail of the remuneration and pension interests of senior management.

Year ended 31 July 2025 Year ended 31 July 2025 Year ended 31 July 2025 Year ended 31 July 2024 Year ended 31 July 2024 Year ended 31 July 2024
Name Salary
£’000		 Pension
Benefit
£’000		 Total
£’000		 Salary
£’000		 Pension
Benefit
£’000		 Total
£’000
Principal
and Chief
Executive –
Chris
O’Neil		 130-135 68 200-205 145-150 65 210-215
Vice
Principal –
Curriculum,
Operations
& External
Relations		 95-100 40 135-140 105-110 59 165-170

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Inverness College UHI

Financial Statements for the year ended 31st July 2025

Georgina
Parker
Vice
Principal –
Curriculum,
Student
Experience
&
Quality –
Lindsay
Snodgrass		 95-100 40 135-140 105-110 57 165-170
Note - The salaries in the table above for the year ended 31 July 2024 represent the amount earned i
the financial year and include a back-dated pay award for the Principal and two Vice-Principal roles.
Fair Pay – Pay Multiples
The following table details the disclosures of the 25thand 75thpercentile pay ratios, their comparison to
the remuneration of the College’s highest paid official, percentage changes from the previous year and
explanations of any changes, as required by the 2021/22 FReM.
2024/25
£’000
2023/24
£’000
Change
%
Range of workforce remuneration
(excluding highest paid official)
23-98
22-97
Highest paid official remuneration
133
132
1%
Median (total pay and benefits)
46
41
12%
Median (salary only)
46
41
12%
Ratio
2.9:1
3.2:1
25thpercentile (total pay and
benefits)
33
32
3%
25thpercentile (salary only)
33
32
3%
Ratio
4.1:1
4.1:1
75thpercentile (total pay and
benefits)
48
43
12%
75thpercentile (salary only)
48
43
12%
Ratio
2.8:1
3.1:1
Explanation of changes (per FReM
6.5.26)
Increase is due to a 3 year pay
award agreed with Unions
2024/25
£’000		 2023/24
£’000		 Change
%
Range of workforce remuneration
(excluding highest paid official)		 23-98 22-97
Highest paid official remuneration 133 132 1%
Median (total pay and benefits) 46 41 12%
Median (salary only) 46 41 12%
Ratio 2.9:1 3.2:1
25thpercentile (total pay and
benefits)		 33 32 3%
25thpercentile (salary only) 33 32 3%
Ratio 4.1:1 4.1:1
75thpercentile (total pay and
benefits)		 48 43 12%
75thpercentile (salary only) 48 43 12%
Ratio 2.8:1 3.1:1
Explanation of changes (per FReM
6.5.26)		 Increase is due to a 3 year pay
award agreed with Unions

Note - The salaries in the table above for the year ended 31 July 2024 represent the amount earned in the financial year and include a back-dated pay award for the Principal and two Vice-Principal roles.

The following table details the disclosures of the 25[th] and 75[th] percentile pay ratios, their comparison to the remuneration of the College’s highest paid official, percentage changes from the previous year and explanations of any changes, as required by the 2021/22 FReM.

The banded remuneration of the highest paid official in the organisation in the financial year 2024/25 was £130,000 - £135,000 (2023/24 £130,000 - £135,000). This was 2.9 times (2023/24 – 3.2 times) the median remuneration of the workforce which was £46,310 (2023/24 £41,310). Please note that the ratios in the above table exclude the backdated pay award.

Accrued Pension Benefits

Pension benefits for employees are provided through the Scottish Teacher’s Superannuation Scheme (STSS), a defined benefit scheme, which is notionally funded and contracted out of State EarningsRelated Pension Scheme and the Local Government Pension Scheme (LGPS).

Both STSS and LGPS are Career Average Revalued Earnings (CARE) schemes. This means that pension benefits are based on the revalued average of pensionable years’ pay and the number of years that the person has been a member of the scheme.

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Financial Statements for the year ended 31st July 2025

Normal retirement age will be linked to the members individual State Pension Age.

Contribution rates are set annually for all employees and can be found in note 22.

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 final pensionable salary and years of pensionable service.

Senior Officials Pension

Pension benefits are provided to senior officials 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.

Name Accrued
pension
at
pension
age at 31
July
2025
Accrued
lump sum
at
pension
age 31
July 2025

Real
Increase
in pension
1
August
2024 to
31 July
2025
Real
Increase
lump sum 1
August
2024 to 31
July 2025
CETV
at 31
July
2025		 CETV
at 31
July
2024		 Real
Increase in
CETV
£’000 £’000 £’000 £’000 £’000 £’000 £’000
Principal and
Chief Executive –
Chris O’Neil		 65-70 0 - 5 0–2.5 0 - 2.5 1,240 1,170 51
Vice Principal –
Curriculum,
Operations &
External
Relations -
GeorginaParker		 15-20 0 - 5 0–2.5 0 – 2.5 270 232 32
Vice Principal –
Curriculum,
Student Experience
&
Quality – Lindsay
Snodgrass
15-20		 0 - 5 0–2.5 0 – 2.5 210 179 24

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 become 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 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 Local Government service and not just their current appointment.

In considering the accrued pension benefits figures the following contextual information should be taken into account:

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Docusign Envelope ID: 5570C037-F97F-4D8E-AFD4-8FE339F67E12 Inverness College UHI

Financial Statements for the year ended 31st July 2025

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.

Compensation for loss of office

No employees left under voluntary exit terms during 2024/25 or 2023/24.

Salaries and Related Costs

2025 2025 2025 2024
Directly Employed
Staff		 Seconded and
Agency Staff		 Total Total
Wages
and
salaries		 15,041,668 15,152 15,056,820 14,320,799
Social
Security
Costs		 1,615,955 - 1,615,955 1,540,710
Other
pension
costs		 3,093,883 - 3,093,883 3,134,930
FRS 102
Employer
Costs		 181,000 - 181,000 198,000
Total 19,932,506 15,152 19,947,658 19,194,439
Average
number
of FTE		 331 0 331 348

The College does not hold FTE data in respect of agency staff.

The College employed 265 females and 162 males as of 31 July 2025 (269 females and 158 males as at 31 July 2024).

In the year ended 31 July 2025 staff turnover was 2.35% (2.38% in 2023/24).

For the year to 31 July 2025, the College lost a total of 3,190 working days to sickness absence (2,628 days 2023/24). This is an average absence rate of 3.63% (2.98% in 2023/24).

Employee Matters

Employee and student representation is provided at Board level and the college operates a joint consultative committee structure for formal consultation with staff recognised trade unions. The College Committee structure also involves staff and students across the college (including trade union representation) in areas including equalities, diversity and inclusion and health, safety and wellbeing.

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Docusign Envelope ID: 5570C037-F97F-4D8E-AFD4-8FE339F67E12 Inverness College UHI

Financial Statements for the year ended 31st July 2025

The Audit Committee of the Board of Management oversees and scrutinises the performance of the College in light of the Health and Safety Management System. Quarterly Performance Indicators are reported to the Health, Safety and Wellbeing Committee, EMT and the Board of Management. The College, along with several other UHI partners, currently uses the AssessNET recording system from Riskex for incident recording and management and risk assessment recording. The contract for this system ends in January 2026 and work is underway to develop an inhouse replacement utilising Microsoft SharePoint and Power Platform.

Equality, Diversity and Inclusivity

A single Equality, Diversity and Inclusion Policy has been developed by the UHI partnership which UHI Inverness has played a key role in.

Inverness College UHI is committed to equality of opportunity and non-discrimination in all aspects of work and study. We recognise that individually we all have differences of some sort, from which we can share and learn. The broader a range of people we employ, the wider a perspective we can adopt; a diverse workforce not only ensures that we are legally compliant but makes good business sense.

As a provider of education and employment UHI Inverness values diversity and is committed to encouraging everyone to realise their full potential. To this end, UHI Inverness continues to work with students, staff, external agencies and the wider community to develop a positive and enabling culture of work and study.

Achievement of the above goals requires the promotion of practices to overcome any existing structural barriers (systems or processes that make entry to employment more difficult for a person/group), geographical isolation, and the provision of opportunities which reflect the linguistic and cultural diversity of the region. It also involves continuing to attract new and diverse people to the Highlands and Islands, to add to the culture and economy, and help the UHI Inverness reach our full potential.

This policy allows the UHI Inverness to carry out its general and specific public sector equality duties, and work to improve the experience of all staff and students, regardless of an individual’s protected characteristics.

UHI Inverness conduct our statutory duties under the Equality Act (Specific Duties) (Scotland) Regulations 2012, demonstrating our commitment to mainstreaming equality and diversity by:

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Inverness College UHI

Financial Statements for the year ended 31st July 2025

The College will provide equality of opportunity in the recruitment and selection of vacant posts and ensure applicants are treated on the basis of merit and ability. In doing so the College will promote recruitment and selection practices which do not discriminate on any unfair or unlawful grounds, for example because of sex, race, disability, marital status, sexual orientation, gender reassignment, age, pregnancy or maternity and/or religion or belief.

Inverness College UHI aims to be an inclusive organisation where everyone is treated with respect and dignity, and where there is equal opportunity for all. The College respects and values the diversity of its staff and applicants. The College recognises that we all have complex identities made up of many strands. These can include, but are not limited to, ethnicity, gender, sexual orientation, age, physical and mental aptitudes, nationality, socio-economic status, and religious, political or other beliefs. The College embraces and celebrates these differences in a positive environment and is committed to engaging with the needs of our diverse staff and users to enable us, both individually and corporately, to achieve our aims. Inverness College will tackle barriers to participation and create a culture in which equal opportunities and equal treatment are a priority for all staff and users. In the recruitment, training, pay and management of staff, and in our day-to-day work with both colleagues and users, we seek to create an environment where attitudes and biases that hinder the progress of individuals and groups are dismantled, and where we work together in mutual respect and tolerance.

As part of the Inverness College UHI’s commitment to equal opportunities, we guarantee to interview any disabled applicant who fully meets the essential minimum criteria details on the person specification for the posts.

The Equality Act (2010) defines a disability as a physical or mental impairment which has a substantial and long term (i.e. lasted or likely to last for 12 months or more) adverse effect on a person’s ability to carry out normal day-to-day activities. Further guidance in relation to the meaning or disability is accessible on the Equality and Human Rights commission website:

http://www.equalityhumanrights.com

If an applicant wishes to be considered under the Guaranteed Interview scheme, they are advised to complete the ‘Disability’ section of the College’s application form and indicate ‘ Yes’ that they wish to be considered under the scheme.

To enable all applicants to fully participate in our selection process we will make reasonable adjustments.

Our commitment to an active Equal Opportunities Policy doesn't just cover our recruitment and selection procedures, but runs right through learning and development, professional development and review, and promotion opportunities. We work hard to cultivate an environment free from discrimination, harassment and victimisation. At Inverness College UHI, everyone can achieve their full potential, regardless of:

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Financial Statements for the year ended 31st July 2025

The college has a duty under the Equality Act 2010 to make reasonable adjustments for disabled employees and students, to ensure they are not put at a disadvantage in the course of their employment or study when compared with non-disabled employees or students. Reasonable adjustments may include changes to either working practices or the physical working environment, at the request of the individual or following advice from a medical professional. The reasonableness of an adjustment will be dependent upon the situation. The college is committed to reviewing requests or recommendations for reasonable adjustments on a case-by-case basis .

As an employer, education provider and public service provider, Inverness College UHI is subject to, and welcomes, the requirements of the Public Sector Equality Duty (PSED) 2011.

The public sector equality duty as set out in the Act, is referred to as the “general equality duty”. It requires us to have due regard to the need to:

Advancing equality of opportunity involves having:

Specific duties of the Act require us to report on mainstreaming the equality duty and publish equality outcomes and report progress.

We have an active Equality, Diversity and Inclusion committee and we published our Public Sector Equality Duty Mainstreaming and Outcomes Report in April 2025. This report highlights some of the work we do to embed equalities within and across our tertiary setting and the progress we have made with our equality outcomes since our last report in 2023. We are passionate in creating a truly inclusive environment, valuing and respecting diversity and ensuring equality of opportunity for every individual across every aspect of our work.

This commitment is encapsulated by our values of being Ambitious, Bold and Creative and these values underpin our organisational culture, empowering our staff and students to achieve such positive outcomes. We take pride in being sector leading in various aspects of our work and have taken significant strides forward in progressing our equalities work.

As the work we have completed under our previous outcomes becomes fully embedded and ‘business as usual’, the next four years will see us embrace the new National Equality Outcomes on this next stage of our equalities journey.

The publication of the new National Equality Outcomes by the Scottish Funding Council and the Equality and Human Rights Commission in November 2024, highlights the inequalities still experienced in colleges and universities in Scotland. We welcome these new outcomes and feel they provide a useful framework to support this next stage of our equalities work.

The purpose of the NEOs is to address the persistent inequalities across the key themes of:

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Docusign Envelope ID: 5570C037-F97F-4D8E-AFD4-8FE339F67E12 Inverness College UHI

Financial Statements for the year ended 31st July 2025

The NEOs will support us in having a more granular focus on, for example:

UHI Inverness welcomes the NEOs and value the crucial role they will play in bringing practical improvements to the lives of those who experience discrimination and disadvantage. Although not a protected characteristic nor included in the NEOs, we are very keen to recognise the additional barriers to learning experienced by many learners with care experience.

UHI Inverness is committed to the principle of equal pay for all our employees and to reducing occupational segregation and the pay gap. We aim to ensure that procedures are in place to determine pay and conditions of employment which do not discriminate unlawfully and are free from gender, race and disability bias, and that do not discriminate on the basis of protected characteristics. The college currently pays the Living Wage as a minimum to its staff and is an accredited Living Wage employer.

In line with our Equality and Diversity Inclusivity Policy, we recognise and support the principles and objectives of equal pay for work of equal value regardless of their ‘protected characteristic’ under the Equality Act (2010) and personal circumstances, as a critical element of fairness and equality within the workplace.

The College recognises that in order to achieve equal pay for employees carrying out equal work we should operate a pay system which is transparent, based on objective criteria and free from unlawful bias on any grounds. This is a fundamental principle which is central to College policy on equality and diversity and pay-related policies and practices. We use an analytical job evaluation system for all non-teaching professional services roles across the College to promote equal pay, along with a clear national salary framework for all academic posts.

We have a duty to publish gender pay gap information. The gender pay gap as published in April 2025 was 6.7%, (April 2024 6.7%).

Our 2021/22-2025/26 Strategic Plan embodies these themes and sets out our ambitions for how the College will develop during this 4-year period

Our plan continues to be underpinned by the principles of providing access to a high-quality educational experience for students which provides tailored support to meet the needs of individuals in the context of a positive declaration environment. For our staff, we will continue to provide a supportive workplace which encourages staff to develop to their full potential with our support.

Our approach to Equalities underpins and guides all we do and provides an umbrella under which every aspect of the student and staff journey is encompassed. We believe that leadership is a shared responsibility and empower our staff to work together and in partnership with our students to meet their aspirations.

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Docusign Envelope ID: 5570C037-F97F-4D8E-AFD4-8FE339F67E12 Inverness College UHI

Financial Statements for the year ended 31st July 2025

Inverness College UHI recognises that that its people are its greatest asset and therefore attracting, developing and retaining talented staff is a high priority. Labour shortages across the UK and real terms reductions in government funding for tertiary education require innovative talent management approaches. These approaches support our collaborative pattern of leadership, where our people are empowered to work together to achieve our shared goals.

Our Talent Management Strategy will ensure that the College, now and into the future, has a constructive, demand led approach to recruiting, developing, recognising and retaining talented individuals and teams, who are Ambitious, Bold and Creative in meeting the needs of our communities. Our Talent Management Strategy is based around a Talent Management Framework which will encompass all of our people related activities: Workforce Planning, Talent Attraction, Induction and Ongoing Engagement, Professional Development, Succession Planning and Organisational Performance Management.

The UHI Inverness Talent Management Strategy identifies staff professional development as a key factor in attracting and retaining talented staff. We achieve this by ensuring staff have the appropriate time and funding available for their development, in line with the Professional Development policy and procedure. All staff engage in a mandatory induction programme and ongoing training on essential topics such as Information Security & GDPR, Safeguarding and Health & Safety. Teaching staff are supported to achieve recognised teaching qualifications and all staff have access to comprehensive digital skills training, including on the use of AI within their roles. All managers participate in a collaborative leadership programme, designed specifically for our organisation. Training is delivered flexibly, online, on campus and hybrid to maximise opportunities for staff to engage. Specific staff development days and an annual staff conference promote a positive learning culture with a wide range of relevant training and wellbeing events. As part of our aim to embed a research culture, all staff now also have the opportunity to apply for funding to develop their research skills and explore a topic related to their work that will enhance the student or staff experience.

Wider Enhancements around Equality, Diversity and Inclusion

Although the college moved to a new campus in August 2015, through our Equality, Diversity and Inclusion committee, we have an on-going focus on considering further ways to make our campus inclusive and accessible to all. Much of our enhancement work has been driven by the student voice, both through the Student’s Association and through our twice a year key surveys. During this period, there have been various accessibility improvements made to the College campus. This has included, for example, introducing a ‘yellow brick road’ in the form of a new floor tile arrangement which has been put in place to allow a clearer pathway around busy routes, of particular importance to those with visual impairment.

The college have also made significant modifications to a number of doors around the main campus and adaptations to disabled toilets. Automatic ‘touch to open doors’ have improved wheelchair accessibility and movement around the campus. We have also successfully lobbied our bus companies to divert their routes around the back of our campus providing a more direct route from public transport into the campus. This has been particularly beneficial to those with mobility challenges.

More recently, in response to the Supreme Court ruling on sex, the college have carried out an audit of all toilets, changing rooms and shower facilities with a view to ensuring we not only meet but also go beyond the requirements, so all staff and students feel supported and safe. Following some modification work at our Balloch campus, we are now satisfied that across both campus sites we have a range of single sex, gender neutral and accessible facilities.

Through our Equality, Diversity and Inclusion committee we have identified several further enhancements which are under way and which we will report on in our next report. This includes, for example, the planned introduction of a Chaplaincy service for both staff and student use, as well as plans for a new staff wellbeing space. A further planned accessibility audit of the campus will take place later this year to inform any further enhancements.

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Docusign Envelope ID: 5570C037-F97F-4D8E-AFD4-8FE339F67E12 Inverness College UHI

Financial Statements for the year ended 31st July 2025

Trade Union Facility Time

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 March 2025.

Relevant union officials

Number of employees who were relevant union Full-time equivalent employee number officials during the relevant period

Relevant union officials
Number of employees who were relevant union
officials during the relevant period		 Full-time equivalent employee number
9 9
Percentage of time spent on facility time
Percentage Number of employees
0% -
1%-50% 9
51%-99% -
100% -
Percentage of pay bill spent on facility time
Total cost of facility time £21,758
Totalpaybill £19,947,658
Percentage of the total pay bill spent on facility
time		 0.11%

Paid trade union activities

Time spent on trade union activities as a
percentage of total paid facility time hours		 5%

Fair Work

Fair work is work that offers all individuals an effective voice, opportunity, security, fulfilment and respect. It balances the rights and responsibilities of employers and workers. It generates benefits for individuals, organisations and society.

Our fair work journey links in many ways with our new Talent Management Strategy and will help our organisation to take the next steps within the 5 dimensions of The Fair Work Framework. Our Talent Management Strategy, which is a sub-strategy of our Strategic Plan, is a new strategy, which will ensure that the College, now and into the future, has a demand led approach to recruiting, developing, recognising and retaining talented individuals and teams.

Below are some examples of our activities under the five dimensions of the Fair Work Framework.

Effective Voice

At Inverness College UHI, we have created a culture whereby we are open and transparent and listen to our workforce and have formal and informal processes in place to capture ideas and initiatives.

Across Inverness College UHI, we use a variety of methods of gathering feedback and supporting ongoing dialogue with staff as part of our commitment to ensuring everyone feels valued, heard and has the opportunity to provide feedback.

Supportive practices for Effective Voice include:

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Docusign Envelope ID: 5570C037-F97F-4D8E-AFD4-8FE339F67E12 Inverness College UHI

Financial Statements for the year ended 31st July 2025

Opportunity

Supportive practices to promote Opportunity include:

Security

Supportive practices to promote Security include:

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Docusign Envelope ID: 5570C037-F97F-4D8E-AFD4-8FE339F67E12 Inverness College UHI

Financial Statements for the year ended 31st July 2025

Fulfilment

Supportive practices to promote Fulfilment include:

We will achieve this by:

Respect

Supportive practices to promote Respect include:

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Docusign Envelope ID: 5570C037-F97F-4D8E-AFD4-8FE339F67E12 Inverness College UHI

Financial Statements for the year ended 31st July 2025

of their own physical and mental health, recognising that additional support may be required when staff are experiencing negative effects on their health and wellbeing.

Parliamentary Accountability Report

There is nothing to report under the above for Inverness College for 2024/25 or 2023/24.

Signed by: Signed by: . ! . [ClipSE2B4E98FEAD4OD...O'Mal [Vidar2B50843449AA4CF.... Erasmus Professor Christopher O’Neil Victoria Erasmus Principal and Chief Executive Officer Chair of Board

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Docusign Envelope ID: 5570C037-F97F-4D8E-AFD4-8FE339F67E12 Inverness College UHI

Financial Statements for the year ended 31st July 2025

Independent auditor’s report to the Board of Management of Inverness College, the Auditor General for Scotland and the Scottish Parliament

Reporting on the audit of the financial statements

Opinion on financial statements

We have audited the financial statements in the annual report and accounts of Inverness College 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 Statement of Comprehensive Income, Statement of Changes in Reserves, Balance Sheet, and Statement of Cash Flows 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 our opinion the accompanying financial statements:

Basis for opinion

We conducted our 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. Our responsibilities under those standards are further described in the auditor’s responsibilities for the audit of the financial statements section of our report. We were appointed by the Auditor General on 18 May 2022. Our period of appointment is five years, covering 2022/23 to 2026/27. We are independent of the college in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK including the Financial Reporting Council’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. Non-audit services prohibited by the Ethical Standard were not provided to the college. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern basis of accounting

We 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 we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the ability of the college 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. However, we report on the college’s arrangements for financial sustainability in a separate Annual Audit Report available from the Audit Scotland website.

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Financial Statements for the year ended 31st July 2025

Risks of material misstatement

We report in our separate annual audit report the most significant assessed risks of material misstatement that we identified and our judgements thereon.

Responsibilities of the Board of Management for the financial statements

As explained more fully in the Statement of the Board of Management's Responsibilities, the Board of Management 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 Board of Management 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 Board of Management is responsible for assessing the ability of the college 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 college’s operations.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the decisions of users taken on the basis of these financial statements.

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

The extent to which our 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.

We obtained an understanding of the legal and regulatory framework that the body operates in, and identified the key laws and regulations that:

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Docusign Envelope ID: 5570C037-F97F-4D8E-AFD4-8FE339F67E12 Inverness College UHI

Financial Statements for the year ended 31st July 2025

As a result of performing the above, we identified the greatest potential for fraud was in relation to the risk that the year-end expenditure transactions may be subject to potential manipulation in an attempt to operate within the resource limit allocated by the Scottish Funding Council. In response to this risk, we obtained confirmation of the resource limit allocated by the Scottish Funding Council and tested a sample of accruals, prepayments and invoices received around the year-end to assess whether they have been recorded in the correct period.

In common with audits under ISAs (UK) we are also required to perform specific procedures to respond to the risk of management override. In addressing the risk of fraud through management override of controls, we tested the appropriateness of journal entries and other adjustments, assessed whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluated the business rationale of any significant transactions that are unusual or outside the normal course of business.

In addition to the above, our procedures to respond to the risks identified included the following:

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 our auditor’s report.

Reporting on regularity of expenditure and income

Opinion on regularity

In our 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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Financial Statements for the year ended 31st July 2025

Responsibilities for regularity

The Board of Management is responsible for ensuring the regularity of expenditure and income. In addition to our responsibilities in respect of irregularities explained in the audit of the financial statements section of our report, we are 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

We have audited the parts of the Remuneration and Staff Report described as audited. In our 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 Board of Management 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.

Our 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 our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Our opinion on the financial statements does not cover the other information and we 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 our opinion, based on the work undertaken in the course of the audit:

Matters on which we are required to report by exception

We are required by the Auditor General for Scotland to report to you if, in our opinion:

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Financial Statements for the year ended 31st July 2025

We have nothing to report in respect of these matters.

Conclusions on wider scope responsibilities

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

Use of our 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, we do not undertake to have responsibilities to members or officers, in their individual capacities, or to third parties.

|[Sava.] DocuSigned[ MoCo] by:

Sarah McGavin CA (for and on behalf of Deloitte LLP) 455 Union Street Aberdeen AB11 6DB United Kingdom 19 December 2025

50

Docusign Envelope ID: 5570C037-F97F-4D8E-AFD4-8FE339F67E12 Inverness College UHI

Financial Statements for the year ended 31st July 2025

Statement of Comprehensive Income

Year Ended 31 July 2025

Notes
Income
Funding Council Grants
2
Tuition fees and education contracts
3
Other income
4
Investment income
5
Total Income
Expenditure
Staff costs
6
Other operating expenses
8
Depreciation
11
Interest payable
9
Total Expenditure
(Deficit)/Surplus before other gains and losses
Loss on disposal of fixed assets
Deficit before tax
Corporation tax
Deficit for the year
Actuarial (loss)/gain in respect of pensions
22
Unrealised Surplus on revaluation of land and buildings
Represented by:
Unrestricted funds
Revaution reserve
Total Comprehensive Income for the year
Total Comprehensive Income for the year		 2025
£
21,841,478
4,908,087
3,178,085
169,522
30,097,172
19,947,658
6,928,389
1,612,186
2,451,931
30,940,164
(842,992)
0
(842,992)
0
(842,992)
(6,881,000)
0
(7,723,992)
(7,723,992)
0
(7,723,992)		 2024
£
22,482,839
4,603,800
3,241,951
180,768
30,509,358
19,194,439
7,147,792
1,393,762
2,616,303
30,352,296
157,062
(467,000)
(309,938)
0
(309,938)
1,738,000
2,720,025
4,148,087
1,428,062
2,720,025
4,148,087

The Statement of Comprehensive Income is prepared under the FE/HE SORP. The SORP does not permit colleges to reflect non-cash budget for depreciation in the Statement of Comprehensive Income. The NonCash Allocation and Adjusted Operating Position as disclosed in the Performance Report, provide the details of the Adjusted Operating Position on a Central Government accounting basis. There were no other recognised gains or losses other than those listed above and the net income for the year. All income and expenditure derives from continuing activities.

51

Docusign Envelope ID: 5570C037-F97F-4D8E-AFD4-8FE339F67E12 Inverness College UHI

Financial Statements for the year ended 31st July 2025

Statement of Changes in Reserves Year Ended 31 July 2025

Statement of Changes in Reserves
Year Ended 31 July 2025
Balance at 31st July 2023
Deficit for the year
Revaluation of Land & Buildings
Actuarial surplus in respect of pensions
Total Comprehensive Gain for year
Balance at 31st July 2024
Balance at 1st August 2024
Deficit for the year
Revaluation of Land & Buildings
Actuarial loss in respect of pensions
Total Comprehensive Loss for year
Balance at 31st July 2025		 Revaluation
Reserve
£
12,506,641
0
2,720,025
0
2,720,025
15,226,666
15,226,666
0
0
15,226,666		 Unrestricted
Funds
£
7,339,539
(309,938)
0
1,738,000
1,428,062
8,767,601
8,767,601
(842,992)
0
(6,881,000)
(7,723,992)
1,043,609		 Total
Funds
£
19,846,180
(309,938)
2,720,025
1,738,000
4,148,087
23,994,267
23,994,267
(842,992)
0
(6,881,000)
(7,723,992)
16,270,275

52

Docusign Envelope ID: 5570C037-F97F-4D8E-AFD4-8FE339F67E12 Inverness College UHI

Financial Statements for the year ended 31st July 2025

Balance Sheet

As at 31 July 2025

Balance Sheet
As at 31 July 2025
Restated (Note
17)
2025 2024
Notes £ £
Non-current assets
Tangible fixed assets 11 57,081,111 57,868,608
Pension asset 0 6,672,000
57,081,111 64,540,608
Current assets
Stocks 12 43,331 50,580
Debtors 14 979,288 1,199,440
Cash and cash equivalents 4,755,214 8,619,232
5,777,833 9,869,252
Creditors: 15 (4,881,355) (7,551,936)
amounts falling due within one year
Net current assets 896,478 2,317,316
Total assets less current liabilities 57,977,589 66,857,924
Creditors: 16 (37,655,185) (39,093,480)
amounts falling due after one year
Provisions 17 (4,052,129) (3,770,177)
Total net assets 16,270,275 23,994,267
Represented by:
Property revaluation reserves 15,226,666 15,226,666
Unrestricted reserves 1,043,609 8,767,601
16,270,275 23,994,267

The accounts were approved by the Board of Management on 19 December 2025 and signed on its behalf by:

Professor Christopher O'Neil Principal and Chief Executive Officer

Victoria Erasmus Chair of the Board

53

Docusign Envelope ID: 5570C037-F97F-4D8E-AFD4-8FE339F67E12 Inverness College UHI

Financial Statements for the year ended 31st July 2025

Statement of Cash Flows

Year Ended 31 July 2025

2025
Notes
£
Cashflow from Operating Activities
Deficit for the year
(842,992)
Adjustment for non-cash items
Depreciation
11
1,612,185
Impairment
13
0
Pension costs less contributions payable
181,000
(Increase) / Decrease in stock
12
7,249
(Increase)/Decrease in debtors
14
220,152
Increase/(Decrease) in creditors – less than one year
15
(2,769,787)
(Decrease) in creditors – more than one year
16
(306,511)
Increase / (Decrease) in early retirement & provisions
17
220,952
Adjustments for investing or financing activities
Interest receivable
9
(329,000)
Interest elements of NPD finance lease
9
2,780,931
Investment Income
(169,522)
Net cash inflow from operating activities
604,657
Cash flows from investing activities
Interest receivable
9
0
Investment Income
169,522
Proceeds from sales of fixed assets
13
0
Payments made to acquire fixed assets
11
(824,689)
(655,167)
Cash flows from financing activities
Interest element of NPD finance lease
9
(2,780,931)
Capital element of NPD finance lease
(1,032,577)
(3,813,508)
(Decrease)/Increase in cash in the year
(3,864,018)
Cash at the beginning of the year
8,619,232
Cash at the end of the year
4,755,214		 2024
£
(309,938)
1,393,762
0
(44,000)
(2,787)
(50,038)
1,724,555
(1,201,239)
347,087
(242,000)
2,858,303
(180,768)
4,292,937
242,000
180,768
1,240,000
(311,642)
1,351,126
(2,858,303)
(941,231)
(3,799,534)
1,844,529
6,774,703
8,619,232

During the current year the members have separated component parts of cashflows between investing and financing, including comparative amounts, rather than as one total. The amounts presented for each class of cash flow are not changed by this revised presentation, which is consistent with FRS 102's requirements.

54

Docusign Envelope ID: 5570C037-F97F-4D8E-AFD4-8FE339F67E12 Inverness College UHI

Financial Statements for the year ended 31st July 2025

Notes to the Financial Statements for the Year Ended 31 July 2025

1. STATEMENT OF ACCOUNTING POLICIES

Basis of Preparation

The financial statements are prepared in accordance with the Further & Higher Education (Scotland) Act 1992, the 2019 Statement of Recommended Practice (SORP) 2019: Accounting in Further and Higher Education and in accordance with applicable Accounting Standards, including Financial Reporting Standard 102 (FRS 102) and the Government Financial Reporting Manual 2024/25 (FReM).The financial statements conform to the accounts direction published by the Scottish Funding Council (SFC) in August 2025.

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

Basis of Accounting

Going Concern

The accounts are prepared on a going concern basis. The net assets position prior to longer term provisions at July 2025 is £20,322,404 (£21,092,444 at 31 July 2024). The pension provision includes a provision for early retirements of £1,593,772 (£1,750,772 at July 2024) and a pension liability of £61,000 (asset of £6,672,000 at July 2024),for the College’s share in the Highland Council Local Government Pension Scheme (LPGS). Once these are accounted for the College’s overall net asset position at July 2025 is £16,270,275 (£23,994,267 at July 2024).

Net assets also include the outstanding amount under Non-Profit Distributing (NPD) finance. As at 31 July 2025 this amounted to £32,797,203 (2023/24 £33,829,780). Projection of income and expenditure and cashflow to 31 July 2025 and projections to 31 July 2026 indicate that compliance with loan repayments will continue.

The net current assets position at 31 July 2025 is £896,478 (2023/24 £2,317,317). The college considers that with careful financial monitoring, its cash position will be manageable in 2025/26 and throughout the period to December 2026. The college held cash at 31 July 2025 of £4,755,214 (2023/24 £8,619,232). Current cashflow projections through to 31 October 2025 projects cash at 31 July 2026 of £2.2 million, with the reduction in cash balances due to several factors, including academic staff backpay and capital funding for capital projects progressing during 2025/26. The bank throughout this period may fluctuate due to drawing down of funding from the Scottish Funding Council.

The current financial position of the college is a precarious one, with forecasts being prepared at a time when there are significant and unprecedented financial pressures on all colleges and universities within Scotland, as well as financial sustainability issues for all UHI colleges within the UHI partnership. However, growth is being forecast in our HE delivery for 2025/26 and beyond, but with FE delivery continuing to see flat funding there continues to be unmet demand at the college for our FE courses.

At a time where both FE and HE funding levels continue to fall below current inflation levels and consequently, year after year, lead colleges having real term cuts in their grant funding, rising staff and non-staff costs are making things even more difficult when trying to move to a more financially sustainable position.

There are a number of both sectoral and UHI specific additional costs/loss of income which are impacting on the college budget for 2025/26 and beyond, these include:

55

Docusign Envelope ID: 5570C037-F97F-4D8E-AFD4-8FE339F67E12 Inverness College UHI

Financial Statements for the year ended 31st July 2025

It is clear that major changes are required in terms of the UHI funding model and the wider sectoral funding model as well. However, the above noted UHI EO top slice, which continues to be taken from the college for HE, FE and research activity, should be revised now. This alone would go a significant way to reduce the operating deficit of the college and begin to move it to a position of financial sustainability.

Finally, as a public body the College is presumed to be a going concern unless there is a stated intention to withdraw the statutory services it provides under legislation. We have not been informed by the Scottish Government of any such intention.

Useful economic lives of buildings

Buildings are depreciated over their expected remaining useful economic life as assessed by an independent, qualified valuer. Buildings owned by the College are split into components and each component is valued and depreciated separately. Land owned by the College is not depreciated.

Buildings under NPD Over 60 Years Older Buildings Over 10 Years Property Additions Over 4 Years

Stocks

Stocks are valued at the lower of cost or net realisable value.

Recoverable amount of trade debtors

Trade debtors are reviewed by appropriately experienced senior management team members with appropriate provision for non-payment of debt being charged to the financial statements as required.

Obligations under defined benefit pension schemes

The Board of Management has relied on the actuarial assumptions of qualified actuaries which have been reviewed and are considered reasonable and appropriate.

Recognition of Income

Income from grants, contracts and other services rendered is recognised in the income and expenditure account in proportion to the extent of completion of the contract or service concerned. All income from short-term deposits is credited to the income and expenditure account in the period in which it is earned. The main annual recurrent grant from SFC, which is intended to meet recurrent costs, is credited directly to the income and expenditure account.

Tuition fees are credited to the Income and Expenditure Account in the year in which they are earned. The College operates a fee waiver policy that provides free access to education to students where they have special educational needs, or they or their partner is receiving a form of recognised benefit.

Government Capital grants

Government Capital Grants, as amounts approved by The Scottish Government or government agency, are paid to the College as required to meet its liabilities during the development process. This is treated as a deferred capital grant and is released to income in accordance with the accrual model as permitted by FRS 102 over the useful life of the asset it relates to on completion of the development phase. The accrual model requires the College to recognise income on a systematic basis over the period in which the College recognises the related costs for which the grant is intended to compensate.

Government revenue grants

Government revenue grants are recognised using the accrual model which means the College recognises the grant in income on a systematic basis over the period in which the College recognises the related costs for which the grant is intended to compensate.

Non-Government grants

Non-government capital and revenue grants are recognised using the performance model. If there are no performance conditions attached the grants are recognised as revenue when the grants are received or receivable.

56

Docusign Envelope ID: 5570C037-F97F-4D8E-AFD4-8FE339F67E12 Inverness College UHI

Financial Statements for the year ended 31st July 2025

A grant that imposes specific future performance related conditions on the recipient is recognised as revenue only when the performance related conditions are met.

A grant received before the revenue recognition criteria are satisfied is recognised as a liability.

Tangible Fixed Assets - Land and Buildings

Current Campuses

The College procured its current campus buildings at Balloch and Inverness using the Scottish Futures Trust’s Non-Profit Distributing (NPD) model (additionally see Service Concession Arrangements note to the accounts, below). The buildings were handed over to the College in July and August 2015 in time for the 2015/16 academic year.

These NPD assets were capitalised in 2015/16 and are included as fixed assets under land and buildings. The buildings will be depreciated over their expected useful lives of 60 years on a straight-line basis. The NPD assets were revalued by J & E Shepherd, Chartered Surveyors using the UKGN2 Depreciated Replacement Cost method of valuation as at 31 July 2024.

The related debt is included in the balance sheet as a creditor and is repaid over a 25 year term. The College makes monthly unitary charge payments which include the capital element of the loan together with interest, facilities management and building lifecycle costs which are reported in the income and expenditure account. The Scottish Funding Council provides the College with grants to fund the unitary charge payments with the exception of the facilities management costs and 50% of the building lifecycle costs.

Assets held for sale

Properties which are on the market to sell are included at the lower of market value or depreciated replacement cost.

Valuation of buildings

College buildings are of a specialist nature and are valued on a periodic basis by an independent, qualified valuer. Land and buildings should be valued frequently enough so that carrying amounts are not materially misstated. To address this the college has an interim revaluation every three years; and a full revaluation every five years. The College had a full revaluation at 31 July 2024 carried out by Shepherds, Registered Valuers.

Tangible Fixed Assets - Equipment

Individual items of equipment costing £5,000 or more (£30,000 or more for grouped items) are capitalised as Fixed Assets on the Balance Sheet. Equipment costing less than these amounts are written off to the income and expenditure account in the period of acquisition. Equipment is depreciated over its expected useful economic life, on a straight-line basis with a full year of depreciation charged in the year of acquisition, as follows:


acquisition, as follows:
Equipment 4 years (25% per year)
Fixtures and Fittings 4 years (25% per year)
Computer equipment
Additions such as laptops are debited to revenue in the year of
acquisition. Larger IT purchases such as servers are written off
over 3 years.

Where Fixed Assets are acquired with the aid of specific grants, they are capitalised and depreciated as above. The related grant is credited to a deferred income account and is released to the income and expenditure account over the expected useful economic life of the related asset, on a basis consistent with the depreciation policy or in the case of an NPD asset over the unitary charge payments period.

57

Docusign Envelope ID: 5570C037-F97F-4D8E-AFD4-8FE339F67E12 Inverness College UHI

Financial Statements for the year ended 31st July 2025

Subsequent Expenditure on Existing 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:

Leased Assets

Costs in respect of operating leases are charged on a straight-line basis over the lease term.

Leasing agreements, which transfer to the college substantially all the benefits and risks of ownership of an asset are treated as if the asset had been purchased outright. The assets are included in fixed assets and the capital elements of the leasing commitments are shown as obligations under finance leases. The lease rentals are treated as consisting of capital and interest elements. The capital element is applied to reduce the outstanding obligations and the interest element is charged to the income and expenditure account in proportion to the reducing capital element outstanding. Assets held under finance leases are depreciated over the shorter of the lease term or the useful economic lives of equivalent owned assets.

Assets which are held under hire purchase contracts, which have the characteristics of finance leases, are depreciated over their useful economic lives.

Service Concession Arrangements

Fixed assets held under service concession arrangements were revalued in the year ended 31 July 2024 and no impairment has been recognised for the year ended 31 July 2025.

Payments under the service concession arrangement are allocated between service costs, finance charges and financial liability repayments to reduce the financial liability to nil over the life of the arrangement.

Maintenance of Premises

The College annually determines its maintenance programme based on prioritisation of requirements. The College has an Estates Strategy in place to meet the aims of the Strategic Plan. The cost of maintenance is charged to the income and expenditure account in the period in which it is incurred.

Foreign Currency Translation

Transactions denominated in foreign currencies are recorded at the rate of exchange. Monetary assets and liabilities denominated in foreign currencies are translated into sterling either at year-end rates or, where there are related forward foreign exchange contracts, at contract rates. The resulting exchange differences are dealt with in the determination of income and expenditure for the financial year.

Provisions

Provisions are recognised when the College has a present legal or constructive obligation as a result of a past event, it is probable that a transfer of economic benefit will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

Where the effect of the time value of money is significant, the estimated cash flows are discounted using the discount rate prescribed by the Scottish Funding Council.

Unfunded pensions are accounted for under FRS 102 as required by the Accounts Direction issued by the Scottish Funding Council.

Taxation

As a registered charity the college benefits by being broadly exempt from corporation tax on income it receives from tuition fees, interest and rents. The College is exempted from levying VAT on most of the

58

Docusign Envelope ID: 5570C037-F97F-4D8E-AFD4-8FE339F67E12 Inverness College UHI

Financial Statements for the year ended 31st July 2025

services it provides to students. For this reason, the College is generally unable to recover input VAT it suffers on goods and services purchased.

Agency Arrangements

The College acts as an agent in the collection and payment of certain Student Support Funds. These funds are excluded from the 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, and these 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.

Financial instruments

Financial instruments are recognised in the Balance sheet when the College becomes party to the contractual provisions of the instrument. All of the College’s financial instruments are classified as ‘basic’ in accordance with Chapter 11 of FRS102. All of the College’s financial instruments are initially measured at transaction price. At the end of each reporting period, basic financial instruments are measured at amortised cost using the effective interest rate method.

Financial assets are derecognised when the contractual rights to the cash flows from the asset expire or when the College has transferred substantially all the risks and rewards of ownership. Financial liabilities are derecognised only once the liability has been extinguished through discharge, cancellation or expiry.

Employee 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.

Cash and cash equivalents

Cash includes cash in hand, deposits repayable on demand and overdrafts. Deposits are repayable on demand if they are in practice available within 24 hours without penalty. Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash with insignificant risk of change in value.

Interest receivable

Interest income is recognised in the Statement of Comprehensive Income using the effective interest method.

Debtors

Short term debtors are measured at transaction price, less any impairment.

Creditors

Short term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.

Revaluation Reserve

Surpluses arising on the revaluation of the College's properties are transferred to the Revaluation Reserve.

Pension Schemes

The College participates in two multi-employer defined benefit pension schemes, more details are in note 22.

The Scottish Teachers’ Superannuation Scheme

Teaching staff may join the Scottish Teachers’ Superannuation Scheme (STSS) which is administered by the Scottish Public Pensions Agency (SPPS). Inverness College is unable to identify its share of the underlying assets and liabilities of the STSS on a consistent and reasonable basis and therefore, as

59

Docusign Envelope ID: 5570C037-F97F-4D8E-AFD4-8FE339F67E12 Inverness College UHI

Financial Statements for the year ended 31st July 2025

required by FRS 102, accounts for its participation in the STSS as if it were a defined contribution scheme. The contributions are determined by qualified actuaries on the basis of periodic valuations and are recognised in the accounting periods in which they arise. As a result, the amounts charged to the Statement of Comprehensive Income represent the contributions payable to the scheme in the year.

Local Government Pension Scheme

Support and Research staff may join the Local Government Pension Scheme (LGPS) which is administered by Highland Council. The fund is a defined benefit pension scheme. 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) are borne, in substance, by the College. The College recognises a liability for its obligations under defined benefit plans net of plan assets. This 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 is performed by a qualified actuary using the projected unit credit method.

The future long-term obligation in respect of early retirees who retired in the 1990s, which is not funded by the aforementioned pension schemes, is provided for on the Balance Sheet. This provision is valued annually in accordance with guidance issued by the Scottish Funding Council.

Where the defined benefit liability is negative, i.e. an asset, a limit is applied to the amount that may be recognised as an asset on the balance sheet, this limit is termed the asset ceiling. If an adjustment is required to reduce the total asset to the amount of the asset ceiling, the amount is included within other comprehensive income.

60

Docusign Envelope ID: 5570C037-F97F-4D8E-AFD4-8FE339F67E12 Inverness College UHI

Financial Statements for the year ended 31st July 2025

2.
Funding Council Grants
SFC / RSB Further Education Recurrent Grant
UHI Recurrent Grant - HE provision
Childcare funds
Other specific SFC / RSB Grants - FE
Other specific UHI Grants - HE
Release of deferred grants (note 18)
3.
Tuition fees and education contracts
Higher Education - Home and EU
Higher Education - Overseas
Further Education - UK
Further Education - EU and Non-EU
Education contracts
4.
Other income
Other income generating activities
Research Income
Other income
Foundation grant income
5.
Investment income
Bank interest
6.
Staff costs		 2025
£
9,776,277
5,429,759
81,821
5,554,948
515,883
482,790
21,841,478
2025
£
2,609,860
186,037
52,238
20,907
2,039,045
4,908,087
2025
£
814,250
846,510
956,162
561,163
3,178,085
2025
£
169,522		 2024
£
9,758,006
5,080,287
83,929
5,307,168
573,796
1,679,653
22,482,839
2024
£
2,440,998
178,551
129,918
5,970
1,848,363
4,603,800
2024
£
1,144,995
849,693
1,247,263
0
3,241,951
2024
£
180,768

The average monthly number of persons (including senior post-holders) employed by the College during the period, expressed as full-time quivalents was:

Academic/Teaching departments
Academic/Teaching services
Research grants and contracts
Administration and central services
Premises
Residences and catering
Other expenditure		 2025
Number
162
18
15
112
8
13
3
331		 2024
Number
171
24
17
114
7
12
3
348

61

Docusign Envelope ID: 5570C037-F97F-4D8E-AFD4-8FE339F67E12 Inverness College UHI

Financial Statements for the year ended 31st July 2025

Staff costs for the above persons:
Wages and salaries
Social security costs
Other pension costs
Pension adjustment - Net Service Cost
Academic/Teaching departments
Academic/Teaching services
Research grants and contracts
Administration and central services
Premises
Residences and catering
Pension adjustment - Net Service Cost
Staff costs on permanent contracts
Staff costs for short-term and temporary contracts		 2025
£
15,056,820
1,615,955
3,093,883
181,000		 2024
£
14,320,798
1,540,710
3,134,930
198,000
19,947,658 19,194,439
2025
£
10,418,871
1,452,908
1,005,132
6,116,822
340,899
432,026
181,000		 2024
£
10,795,215
1,725,822
1,066,515
4,596,259
417,208
395,421
198,000
19,947,658 19,194,439
19,735,541
212,117
19,947,658		 19,060,608
133,831
19,194,439
The number of staff, including senior post-holders and the Principal, who received emoluments (including The number of staff, including senior post-holders and the Principal, who received emoluments (including The number of staff, including senior post-holders and the Principal, who received emoluments (including
benefits in kind but excluding pension contributions) in the following ranges was:
2025 2024
Number Number
£60,001 to £70,000 0 1
£70,001 to £80,000 4 4
£80,001 to £90,000 1 1
£90,001 to £100,000 2 2
£100,001 to £110,000 0 0
£110,001 to £120,000 0 0
£120,001 to £130,000 0 0
£130,001 to £140,000 1 1
7.
Senior post-holders' emoluments		 2025 2024
Number Number
Number of senior post-holders including the Principal 3 3
Senior post-holders emoluments are as follows: £ £
Salaries 329,625 361,065
Pension contributions 68,259 73,970
397,884 435,035

62

Docusign Envelope ID: 5570C037-F97F-4D8E-AFD4-8FE339F67E12 Inverness College UHI

Financial Statements for the year ended 31st July 2025

Emoluments payable to the Principal, who is also the highest paid senior post-holder:

Salary
Pension contributions		 2025
£
133,625
34,743
168,368		 2024
£
146,713
35,066
181,779

The Principal is an ordinary member of the Scottish Teachers' Superannuation Scheme. The College's contributions to the scheme, in relation to the Prinicipal, are paid at the same rate as for other members of Academic Staff. The Principal started in post on 1 September 2017. The Principal has not received any benefits in addition to his remuneration.

The members of the Board of Management, other than the Principal and staff, did not receive any payment from the College other than reimbursement of travel and subsistence expenses incurred in the course of their duties.

8.
Other operating expenses
Academic/Teaching departments and services
Research grants and contracts
Administration and central services
Premises
Residences and catering
Other expenditure
Childcare Funds to Students
Other operating expenses include:
Auditors remuneration (including irrecoverable VAT)
Internal audit
External audit
Disbursements of Childcare Funds to Students
Depreciation
Rents under operating leases:
Land and buildings
Other assets
9.
Net Interest payable
Interest on pension liabilities
Interest on finance lease NPD concession		 2025
£
1,893,710
143,301
952,759
2,895,809
476,417
484,572
81,821
6,928,389
25,937
31,061
81,821
1,612,185
152,523
2,470
2025
£
(329,000)
2,780,931
2,451,931		 2024
£
1,930,879
66,243
1,179,897
2,928,555
435,211
523,078
83,929
7,147,792
24,826
29,142
83,929
1,393,762
186,522
3,040
2024
£
(242,000)
2,858,303
2,616,303

10. Taxation

As a registered charity, the College is exempt from Corporation Tax on the income it receives from tuition fees and other income, including interest and rents and therefore the College Board believes it has no liability in this regard.

63

Docusign Envelope ID: 5570C037-F97F-4D8E-AFD4-8FE339F67E12 Inverness College UHI

Financial Statements for the year ended 31st July 2025

11.
Tangible fixed assets
Cost or valuation
At 1 August 2024
Additions
Revaluations
Disposals
At 31 July 2025
Depreciation
At 1 August 2024
Depreciation charge for year
Revaluations
Disposals
At 31 July 2025
Net book value at 31 July 2025
Net book value at 31 July 2024
12.
Stocks
Stocks
13.
Assets held for sale
At 1 August
Disposal
Assets held for sale		 Land and
Buildings
Equipment
£
£
62,787,965
6,403,590
473,272
351,418
0
0
0
0
63,261,237
6,755,008
5,228,418
6,094,530
1,409,061
203,126
0
0
0
0
6,637,479
6,297,656
56,623,758
457,352
57,559,548
309,060
2025
43,331
2025
0
0
0		 Total
£
69,191,555
824,689
0
0
70,016,244
11,322,948
1,612,185
0
0
12,935,133
57,081,111
57,868,608
2024
50,580
2024
1,240,000
(1,240,000)
0

The Longman site was classified as an Asset held for sale. The site was sold in December 2023.

14.
Debtors
Trade debtors
Accrued income
Financial instrument assets
Prepayments
Other Debtors
15.
Creditors: Amounts falling due within one year
Trade creditors
Service concession NPD creditor (see note 16)
Accruals
Financial instrument liabilities
Deferred income
Deferred capital grant - SFC
Deferred capital grant - Non SFC
Payroll taxes and social security
Other Creditors		 2025
£
395,716
320,207
715,923
252,937
10,428
979,288
2025
£
275,984
1,131,783
1,816,292
3,224,059
910,315
243,843
116,196
380,433
6,509
4,881,355		 2024
£
563,344
280,396
843,740
320,466
35,234
1,199,440
2024
£
302,377
1,032,577
3,454,035
4,788,989
1,693,765
316,420
123,238
618,598
10,926
7,551,936

64

Docusign Envelope ID: 5570C037-F97F-4D8E-AFD4-8FE339F67E12 Inverness College UHI

Financial Statements for the year ended 31st July 2025

16.
Creditors: Amounts falling due after one year
Service concession NPD creditor (see note below)
Financial instrument liabilities
Deferred capital grant - SFC
Deferred capital grant - Non SFC		 2025
£
31,665,420
31,665,420
5,602,605
387,160
37,655,185		 2024
£
32,797,203
32,797,203
5,773,954
522,323
39,093,480

Service Concession Arrangements

The new Campuses are held under a Service Concession Arrangement which, at a minimum, will be repaid as follows:

NPD liability creditor repayment
Interest thereon
Service charges
VAT		 Within
Two - Five
More than
One Year
Years
Five Years
£
£
£
1,131,783
5,700,436
25,964,984
2,696,049
9,761,427
12,932,243
893,571
3,803,330
11,052,356
944,281
3,853,039
9,989,916
5,665,684
23,118,232
59,939,499		 Total
£
32,797,203
25,389,719
15,749,257
14,787,236
88,723,415

Under the arrangements the College makes monthly Service Charge "Unitary Charge" payments. These include capital repayment element of the liability which reduces the amount outstanding in Creditors in the Balance Sheet.

Also within the Unitary Charge are charges for interest on the debt outstanding, together with premises service charges, both of which are included within the Statement of Comprehensive Income, under Interest Payable and Other Operating Expenses respectively.

The term of the debt is 25 years and the contract end date is 30 April 2040. The contract expires automatically at the end of the term, at which point the assets pass into the College's ownership.

The College can deduct amounts where Availability and Performance fall short of contract, during the full term of the contract.

The Scottish Funding Council provides the College with grants to fund the Unitary Charge, including hard facilities management costs, and 50% of lifecycle maintenance costs.

65

Docusign Envelope ID: 5570C037-F97F-4D8E-AFD4-8FE339F67E12 Inverness College UHI

Financial Statements for the year ended 31st July 2025

17. Early Retirement and Other Provisions

At 1 August 2023 (as restated)
Expenditure in period
Provision in period
Interest charged
At 31 July 2024 (as restated)
At 1 August 2024 (as restated)
Expenditure in period
Provision in period
Interest charged
At 31 July 2025		 Restated
Note 22
Note 22
Early
Defined
Other
Retirement
Pension
Provisions
Pension
Liability/(Asset)
£
£
£
1,770,142
0
1,652,948
(145,416)
0
0
125,799
0
366,704
1,750,525
0
2,019,652
1,750,525
0
2,019,652
(143,071)
0
0
(13,682)
61,000
377,705
1,593,772
61,000
2,397,357		 Total
£
3,423,090
(145,416)
492,503
0
3,770,177
3,770,177
(143,071)
425,023
0
4,052,129

The Early Retirement Provision has been revalued using actuarial tables supplied by the Scottish Funding Council. The net interest rate applied was 0.75%. The above liability is in respect of future pension liabilities arising from early retirals.

The pension liability is as per the actuarial report valuation.

Other provisions relates to Support Staff Job Evaluation

During the current year the members have re-assessed the classification of the defined pension asset, concluding the asset should have been presented separately on the face of the Balance Sheet as a non-current asset. This has the effect of increasing noncurrent assets by £6,672,000 and increasing provisions by the same amount, the total net assets are not impacted by this reclassification.

18. Deferred Capital Grants

18.
Deferred Capital Grants
At 1 August 2024
Land and Buildings
Equipment
Cash received
Land and Buildings
Equipment
Released to income and expenditure
Land and Buildings
Equipment
Repayment of grant on disposal
Release on disposals
At 31 July 2025:
Land and Buildings
Equipment
Due < 1 year (Note 15)
Due > 1 year (Note 16)		 SFC
Other
£
£
6,090,374
459,554
0
186,008
96,659
0
0
0
(340,585)
(80,202)
(62,003)
0
0
0
0
5,846,448
503,357
5,846,448
379,352
0
124,005
5,846,448
503,357
243,843
116,196
5,602,605
387,160
5,846,448
503,356		 Total
£
6,549,928
186,008
96,659
0
(420,787)
(62,003)
0
0
6,349,805
6,225,800
124,005
6,349,805
360,039
5,989,766
6,349,805

66

Docusign Envelope ID: 5570C037-F97F-4D8E-AFD4-8FE339F67E12 Inverness College UHI

Financial Statements for the year ended 31st July 2025

19. Financial Commitments

The College had annual commitments under non-cancellable operating leases:

Land and buildings:
Expiring within one year
Expiring between two and five years
Expiring after five years
Other:
Expiring within one year
Expiring between two and five years
Expiring after five years		 2025
£
154,617
441,734
450,000
1,046,351
1,556
0
0
1,556		 2024
£
45,000
33,750
0
78,750
1,556
1,556
0
3,112

20. Further Education Bursary and Other Student Support Funds

2025
Further
Education
Bursary
£		 2025
FE
Disc
£		 2025
EMA
£		 2025
Other
HE
Disc
£		 2025
Total
£		 2024
Total
£
Balance b/fwd 0 0 (1,650) 16,728 15,078 11,247
Allocation received in
year		 2,083,498 213,588 77,190 0 2,374,276 2,651,586
Expenditure (1,796,472) (213,588) (77,190) 0 (2,087,250) (2,152,895)
Repaid to Funding
Council as clawback		 0 0 0 0 0 0
College Contribution to
funds		 87 0 1,650 (16,728) (14,991) 0
Intra-region allocations 0 0 0 0 0 0
Virements 0 0 0 0 0 0
Balance c/fwd 287,113 0 0 0 287,113 509,938
Represented by:
Repayable to Funding
Council as clawback		 287,113 0 0 0 287,113 579,257
Repayable to region 0 0 0 0 0 0
Retained by College for
Students		 0 0 0 0 0 (69,319)

67

Docusign Envelope ID: 5570C037-F97F-4D8E-AFD4-8FE339F67E12 Inverness College UHI

Financial Statements for the year ended 31st July 2025

20. Further Education Bursary and Other Student Support Funds (continued)

2025
Total
£		 2024
Total
£
Balance b/fwd 0 0
Allocation received inyear 35,006 83,929
Expenditure (35,006) (83,929)
Repaid to FundingCouncil as clawback 0 0
College Contribution to funds Intra-region allocations 0 0
Virements 0 0
Balance c/fwd 0 0
Represented by:
Repayable to FundingCouncil as clawback 0 0
Repayable to region 0 0
Retained byCollege for Students 0 0

21. Capital Commitments

At 31st July 2025, Inverness College had capital commitments of £313,269 (2024 - £874,432) for Equipment and Estates projects.

68

Docusign Envelope ID: 5570C037-F97F-4D8E-AFD4-8FE339F67E12 Inverness College UHI

Financial Statements for the year ended 31st July 2025

22. Pension Provisions

Pension benefits for employees are provided through a) the Scottish Teachers' Superannuation Scheme (STSS), a defined benefit scheme, which was a nationally funded and contracted out of State Earnings-Related Pension Scheme until 1 April 2016 when it stopped being contracted out; and b) the Local Government Pension Scheme (LGPS).

Both STSS and LGPS were final salary pension schemes until 31 March 2015. From 1 April 2015 they are Career Average Revalued Earnings (CARE) pension schemes. This means that pension benefits are based on the final year's pay and the number of years that the person has been a member of the scheme.

The scheme's normal retirement age is 60 or 65 depending on the length of membership in the scheme. Contribution rates are set annually for all employees.

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 pernsion based on final pensionable salary and years of pensionable service.

Scottish Teachers Superannuation Scheme (STSS)

The STSS scheme is an unfunded defined benefits scheme. Contributions on a pay as you go basis are credited to the Exchequer under arrangements governed by the Superannuation Act 1972. A notional asset value is ascribed to the Scheme for the purpose of determining contribution rates.

Under the definitions set out in the Financial Reporting Standard 102, the STSS is a multi-employer Pension Scheme. The College is unable to identify its share of the underlying assets and liabilities of the scheme. Accordingly, the College has accounted for its contributions as if it were a Defined Contribution Scheme. The agreed contribution rates for future years are variable rates for employees based on salary ranges. Employers contribution rates are 26%.

Local Government Pension Scheme

The Highland Council Pension Fund is a funded Defined Benefits Scheme, with the assets held in separate trustee administered funds. Employers contribution rates are 18.6% from 1st April 2023 to 31st March 2024 and 17.1% from 1st April 2024.

The last triennial valuation was performed 31st March 2023. Contributions for both schemes are set out below:-

Pension Scheme contributions

Pension Scheme contributions
The total cost to the College was:
Contributions to Scottish Public Pensions Agency
Contributions to Highland Council Pension Scheme
Total pension cost		 Year Ended
31 July 2025
£
1,914,950
1,178,934
3,093,884		 Year Ended
31 July 2024
£
1,873,668
1,261,262
3,134,930

69

Docusign Envelope ID: 5570C037-F97F-4D8E-AFD4-8FE339F67E12 Inverness College UHI

Financial Statements for the year ended 31st July 2025

22. Pension Provisions (continued)

Assumptions

31 July 2025 31 July 2024
Rate of Increase in Salaries 3.55% 3.55%
Rate of Increase in Pensions 2.75% 2.75%
Inflation Assumption (RPI) 3.00% 3.05%
Inflation Assumption (CPI) 2.75% 2.75%
Discount rate for scheme liabilities 5.80% 5.00%
The estimated split of investments in the scheme at the Balance Sheet Date were as follows:
Equities 54% 68%
Bonds 25% 10%
Property 14% 15%
Cash 7% 7%
The assumed life expectations on retirement age 65 are:-
31 July 2025 31 July 2024
Years Years
Retiring Today
Males 20.4 20.2
Females 23.4 23.4
Retiring in 20 Years
Males 21.6 21.4
Females 25.3 25.3
The Employer contributions for the year to 31 July 2025 were approximately £1,198,000 (2024 £1,242,000) for the LGPS.
The amounts recognised in the Statement of Comprehensive Income are as follows:
Charged to staff costs: 31 July 2025 31 July 2024
Current service costs (1,387,000) (1,448,000)
Employers contribution 1,198,000 1,242,000
Estimate contributions in respect of unfunded benefits paid 8,000 8,000
Total charged to staff costs (181,000) (198,000)
Credit/charge for net return on pension scheme:
Interest income 2,049,000 1,874,000
Internest costs (1,720,000) (1,632,000)
Net interest charged 329,000 242,000
Return on assets 1,005,000 1,301,000
Other experience 290,000 (939,000)
Gains and losses arising on charges in financial assumptions 4,929,000 1,317,000
Gains and losses arising on changes in demographic assumptions (90,000) 59,000
Restriction of plan assets under FRS102 (13,015,000) 0
Actuarial Gain/(Loss) (6,881,000) 1,738,000
Total charge to the SOCIE (6,733,000) 1,782,000
Analysis of the movement in surplus during the year:
Surplus in scheme at start of year 6,672,000 4,890,000
Service Costs (1,387,000) (1,448,000)
Employer contributions 1,206,000 1,250,000
Net interest costs 329,000 242,000
Actuarial gain/(loss) 6,134,000 1,738,000
Restriction of plan assets under FRS102 (13,015,000) 0
Surplus in scheme at end of year (61,000) 6,672,000

In the current year the present value of Employer's future contributions are expected to exceed the future sevice cost, therefore in accordance with FRS 102 the plans assets are restricted to £nil, resulting in the adjustment of £13,015,000.

70

Docusign Envelope ID: 5570C037-F97F-4D8E-AFD4-8FE339F67E12 Inverness College UHI

Financial Statements for the year ended 31st July 2025

22. Pension Provisions (continued)

Current Service Cost
Interest on obligation
Interest Income on Plan assets
Total
Other Comprehensive Income
Remeasurements (assets and liabilities)
Restriction of plan under FRS102
Present Value of the Defined Benefit Obligation
Present Value of Unfunded Benefit Obligations
Fair Value of Plan Assets
Restriction of plan assets under FRS102
Net (Liability)/Asset
Reconciliation of present value of defined benefit obligations
Opening Defined Benefit Obligation
Service Cost
Interest on Pension Liability
Contibutions by Scheme Participants
Actuarial Gains
Unfunded Benefits Paid
Benefits Paid
Closing Defined Benefit Obligation
Reconciliation of Movements in the Fair Value of Scheme Assets
Opening Fair Value of Scheme Assets
Interest on Plan Assets
Contributions by Scheme Participants
Contributions by Employer
Contributions in respect of Unfunded Benefits
Expected Return on Scheme Assets
Unfunded Benefits paid
Benefits paid
Closing Fair Value of Scheme Assets
The assets and liabilities recognised in the Balance Sheet are as follows:		 31 July 2025
£
(1,387,000)
(1,720,000)
2,049,000
(1,058,000)
6,134,000
(13,015,000)
(6,881,000)
(31,409,000)
(61,000)
(31,470,000)
44,424,000
(13,015,000)
(61,000)
31 July 2025
£
33,967,000
1,387,000
1,720,000
424,000
(5,129,000)
(8,000)
(891,000)
31,470,000
40,639,000
2,049,000
424,000
1,198,000
8,000
1,005,000
(8,000)
(891,000)
44,424,000		 31 July 2024
£
(1,448,000)
(1,632,000)
1,874,000
(1,206,000)
1,738,000
0
1,738,000
(33,902,000)
(65,000)
(33,967,000)
40,639,000
0
6,672,000
31 July 2024
£
31,869,000
1,448,000
1,632,000
417,000
(437,000)
(8,000)
(954,000)
33,967,000
36,759,000
1,874,000
417,000
1,242,000
8,000
1,301,000
(8,000)
(954,000)
40,639,000

In June 2023, the UK High Court issued a ruling in the case of Virgin Medial Limited v NTL Pension Trustees II Limited and other relating to the validity of certain historical pension changes. This case may have implications for other defined schemes in the UK. The impact of the case is continuing to be assessed and any potential impact on the College accounts will be considered in future years.

Sensitivity Analysis

The sensitivities regardiang the principal assumptions used to measure the scheme obligations are set out below:

Approximate %
increase to Approximate
Defined Benefit monetary
Change in assumptions at 31 July 2025: Obligation amount (£000)
0.1% decrease in Real Discout Rate 2% 601
1 year increase in member life expenctancy 4% 1,259
0.1% increase in the Salary Increase Rate 0% 40
0.1% increase in the Pension Increase/Revaluation Rate (CPI) 2% 577

The principal demographic assumption is the longevity assumption (i.e. member life expectancy). For sensitivity purposes, we estimate that a one year increase in life expectancy would approximately increase the Employer's Defined Benefit Obligation by around 3-5%. In practice the actual cost of a one year increase in life expectancy will depend on the structure of the revised assumption 9i.e. if improvements to survival rates predominantly apply at younger or older ages).

The provided sensitivity figures can be used to estimate the impact of adopting different financial assumptions (e.g. an Employer considering alternative accounting assumptions or to help an Employer complete an ESFA accounts return).

In order to quantify the impact of a change in the financial assumptions used, we have calculated and compared the value of the scheme obligations at the accounting date on varying bases. The approach taken is consistent with that adopted to derive the accounting figures provided in this report, based on the profile (average member ages, retirement ages etc) of the Employer as at the date of the most recent valuation.

71

Docusign Envelope ID: 5570C037-F97F-4D8E-AFD4-8FE339F67E12 Inverness College UHI

Financial Statements for the year ended 31st July 2025

23. Post Balance Sheet Events

There are no Post Balance Sheet Events to report for the year ended 31 July 2025.

24. Contingent Liabilities

There are no contingent liabilites at the year end.

25. Related Party Transactions

Due to the nature of the College's operation and the composition of its Board of Management (being drawn from local public and private sector organisations), it is possible that transactions will take place with organisations in which a member of the College's Board of Management may have an interest. All transactions involving organisations in which a member of the Board of Management may have an interest are conducted at arms length in accordance with normal project and procurement procedures.

We have reviewed all transactions and identified below those related party transactions that could be considered material to either party.

Organisation Member(s) Income
2024-25
£		 Expenditure
2024-25
£		 Balance
Due From
at 31 Jul 25
£		 Balance
Due to
at 31 Jul 25
£
NatureScot Sally Blyth 200 0 0 0
Skills
Development
Scotland		 Victoria
Erasmus		 3,459 0 0 0

No Board of Management members, with the exception of the Principal and staff, receive emoluments other than travel and subsistence expenses. The volume of voluntary commitment made was considerable and is greatly appreciated.

The Board of Management of Inverness College is a body incorporated under the Further and Higher Education (Scotland) Act 1992 sponsored by The Scottish Funding Council (SFC). SFC is regarded as a related party. During the year Inverness College had various material transactions with SFC and with other entities for which SFC is regarded as the sponsor Department eg Student Awards Agency for Scotland. On the basis of guidance from the SFC these transactions do not require to be disclosed.

During the period the College had various material transactions with the University of the Highlands & Islands, which received university title on 2 February 2011. The College receives funding for higher education activity through UHI Executive Office. Funding in respect of further education activity is distributed by UHI Executive Office acting as the Regional Strategic Body to which the College has been assigned.

72

Docusign Envelope ID: 5570C037-F97F-4D8E-AFD4-8FE339F67E12 Inverness College UHI

Financial Statements for the year ended 31st 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:

Pension 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. We have outlined the potential impact of future changes below. The pension liability at 31 July 2025 following the updated actuarial valuation was £61,000, compared to a pension asset of £6,672,000 at 31 July 2024.

Given the history of significant changes to asset/ liability valuations in the past, the ongoing sensitivity to future changes, and the requirement to update assumptions annually, the College expects future assets 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 22 to the accounts, including information on the key assumptions, risks and sensitivities.

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 11.

Land and Buildings were independently valued for the purposes of the financial statements by J & E Shepherd, Chartered Surveyors. The basis of valuation was depreciated replacement cost. The latest full valuation for the full fixed asset portfolio was undertaken as at 31 July 2024 and confirmed that there was no impairment to the properties to be recognised in these financial statements. The College did not apply any annual indexation to its fixed asset portfolio at 31 July 2025.

Job Evaluation

The National Job Evaluation Scheme is an ongoing exercise whereby both roles and salary costs are being reviewed for support staff across the College sector. Any changes to salary costs would be effective from 1 September 2018 and therefore any revisions would be backdated. Colleges Scotland prepared estimated costings of the exercise in February 2019 which the Scottish Funding Council has utilised to inform Colleges of the expected grant award to fund the cost of implementing and cost to be accounted for. In line with SFC guidance, the College has made a provision for the estimated backdated pay costs.

73

Docusign Envelope ID: 5570C037-F97F-4D8E-AFD4-8FE339F67E12 Inverness College UHI

Financial Statements for the year ended 31st July 2025

Accounts direction for Scotland’s colleges 2024/25

  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] .

  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 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. This applies to all references made to Glasgow Colleges’ Regional Board throughout this document.

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