"There had been much discussion and, indeed, controversy over how the inspection process affected schools and, more particularly, the staff themselves," said Mr Kelly.
"Looking back I have to say I still have major misgivings about the brief nature of this activity which effectively condensed the assessment of the school into three days. I believe that such a brief encounter can only provide a snapshot of a school's activities, and inevitably, misses out much more.
"The judgement of the inspectorial team was, I felt, unduly harsh and did not fully recognise the improvements already undertaken.
"I can now tell you that their judgement is no longer simply harsh, it is now wrong, irrelevant.
"Because this year we saw a particularly strong performance in the diet of national exams. In Fourth Year, the proportion of pupils attaining five or more Credit passes rose for the fifth year in succession.
"It has now risen from 29% in 2006 to 42% in 2010, the best performance for 10 years, well above national average and now above average for Scottish Borders.
"When pupils join us in First Year, it is essentially the start of a journey which will see them through some of the most formative years of their lives.
"Time and again over the years we have welcomed young people who, on the face of it, are going to find life more challenging. And yet, at the end of their time with us we bid them farewell with some degree of confidence that they will make their way in the world.
"The culture which thrives in this school, the very positive ethos that is the key influence in everything we do has, I believe, made a substantial difference to many, many young people.
"The provision of opportunities, the adoption of a "can-do" philosophy, the nurturing of appropriate personal qualities and attitudes….. all of this has made a difference.
"Our school continues to foster those essential qualities in our pupils necessary in an ever-changing and ever more challenging world in which change is the only constant.
"From August, our First Year pupils started to follow courses within the new context of a Curriculum for Excellence.
"BHS staff have worked long and hard over this past session to create integrated programmes of learning.I am convinced that, at long last, the age of joined-up learning is just around the corner.
"But we have also entered an era of severe financial restriction. Schools will be required to be ever more resourceful and imaginative if we are to maintain and, indeed, to improve the quality of what we provide."
The economic downturn has also resulted in more fourth year pupils opting to stay on at school and there are now 225 pupils in Fifth and Sixth Years, 25 more than the previous year.
Concluding his address Mr Kelly said: "Despite all the gloom and doom that surrounds us these days, I remain optimistic.
"The future will bring challenges some of which we can anticipate, others we can't. but we will be ready for it.
"This is already a good school. Working together, I believe we can make it even better.
The Upper School prize winners were presented with their awards by former pupil and Cambridge graduate John Vandore at their annual awards ceremony for 2010.
School prize giving is now divided into two events one for the upper school and one for the lower school in what rector Rob Kelly explained is "in anticipation of a Curriculum for Excellence".
"Last year we decided to introduce a separate and distinct Upper School Ceremony, focusing on S4-6," he said.
For a full list of prizewinners see this week's Berwickshire News.