A CLOSER LOOK: 2019-2020 STRUCTURE FINANCE GROWTH Founded over a century ago, aspires to be a beacon of learning and caring, dedicated to developing leaders of strong character thanks to our extraordinary community of students, parents, alumni and employees. This issue of A Closer Look provides an overview of Appleby’s current structure and finances, with a goal to answer some of the questions you may have as we focus on achieving our school’s mission: To educate and enable our students to become leaders of character, major contributors to, and valued representatives of their local, national and international communities. Who owns Appleby College? APPLEBY COLLEGE 2019-20 Appleby College was incorporated in private schools in our community, BOARD OF GOVERNORS 1911 as a not-for-profit organization by we have no shareholders or owners. CHAIR OF THE BOARD an Act of the Province of and is The Principal reports to the Board. Aubrey Baillie ’63 a registered charitable organization. Appleby is governed by a volunteer Appleby’s financial year corresponds to VICE CHAIR OF THE BOARD Board of Governors composed of the academic year, with a fiscal year-end Joanne McLaughlin alumni, current and past parents, of June 30th. This edition of A Closer VICE CHAIR OF THE BOARD business and community leaders. Our Look covers financial results that Gord McMillan Governors ensure that Appleby remains correspond to the fiscal year ended focused on its mission. Unlike some June 30, 2020. TREASURER & CHAIR, FINANCE COMMITTEE Vik Sachdev KEY 2019-20 FINANCIAL INFORMATION SECRETARY & CHAIR, ANNUAL REVENUE OPERATING EXPENSES GOVERNANCE COMMITTEE Allison Christilaw

CHAIR, ADVANCEMENT COMMITTEE Geoff Spidle ’87

CHAIR, PROPERTY COMMITTEE $42.9M $39.2M Joanne McLaughlin

CHAIR, RISK COMMITTEE William (Bill) Benson ’79

BOARD MEMBERS Wayne Carson Tuition 92% Salaries and Benefits 63% Andrew Cockwell ’93 Financial Assistance 11% Commercial Activities 4% Lisa Forwell Donations for Operating Purposes 2% Programme 8% Mark Gaskin ’78 Foundation Grant 2% Facilities and Contract Services 12% Chris Govan Other 6% Jacqueline Jabbour Janice Madon Jane Ngobia CAPITAL EXPENDITURES FINANCIAL ASSISTANCE SUPPORTED BY CHAIR, APPLEBY COLLEGE FOUNDATION John Platt ’78*

PRESIDENT, $5.7M $4.2M ALUMNI ASSOCIATION Jas Brar ’98*

PRESIDENT, PARENTS’ ASSOCIATION Sarah McMillan* A.W.B. Alumni Centre 49% Operating Budget 81% PRINCIPAL Other Renovations and Maintenance 34% Endowment 18% Innes van Nostrand* Technology 12% Gifts 1% Sustainability 4% *Ex-Officio COVID 1% Why does Appleby need philanthropic support?

At Appleby, we are committed to As we look to the future, aside from the Appleby will also continue to make continuously improving the breadth of repayment of the school’s outstanding enhancements to our educational experience for our students as we strive $8 million debt, our number one priority programming in the areas of Positive to keep annual tuition increases to a will be to build the school’s endowment. Education, wellness, leadership, minimum. We fund the school’s The endowment, which is just over $22 experiential and project-based learning. programmes through a mix of tuition million, contributes to the total revenue Longer term, we continue to plan for fees, commercial activities, grants from of the school, primarily by supporting facility improvements such as additional The Appleby College Foundation, and the school’s financial assistance lab space and a dedicated performing philanthropic gifts. Cash receipts programme. However, as reflected in the arts space. To achieve these aspirations, support operating and capital chart below, Appleby’s endowment is we require additional philanthropic expenditures, debt repayment and the well below that of many of our peers. support as the cost of these plans maintenance of adequate cash reserves exceeds what we can support with our to ensure that we are financially stable current funding model. even in challenging times. ENDOWMENT SIZE As we entered fiscal 2020, we had just * 2020 Endowment numbers listed in CAD$ completed the A.W.B. Alumni Centre for Athletics and Student Life at a cost of $36 million, built with the support of donors and bank financing of $8 million. Our plan was to pay off bank debt through donor receipts and operating surpluses by mid-2022. However, like many organizations, the COVID-19 pandemic has had a negative financial impact on the school with lost revenues to date of approximately 020406080 100 120 $6 million, COVID-19 related capital Appleby College EndowmentRidley College Size (Millions) Upper College investments of over $3 million and Branksome Hall St. Andrew’s College added operating expenses primarily Lakefield College School related to staffing.

Sources: Endowment benchmarking survey (Hillfield Strathallan College), ucc.on.ca, branksome.on.ca, lcs.on.ca

The Need for Financial Assistance

A world class education not only requires annually as we strive to achieve our goal and future growth of this key deliverable. exceptional faculty, programmes and of 25 per cent while also significantly Over 90 per cent of Appleby’s financial facilities, it also demands a diverse increasing our provision for immediate assistance is directed through bursaries. socioeconomic student body. Having a COVID-19-related needs-based financial The remainder are loans or scholarships. talented range of students, regardless of assistance. This includes two of the school’s their backgrounds, is one of the central hallmark programmes – the Centennial hallmarks of great schools and it’s a vital However, compared to other leading Scholars Programme and Global Access part of the Appleby experience that independent schools, Appleby funds less Programme, which offer needs-based full benefits the whole community. of its financial assistance from support to recipients, including tuition philanthropy. In fact, over 80 per cent of costs, incidental fees and boarding costs. Appleby offers a combination of need- student financial assistance is funded based bursaries, loans and merit through the school’s operating budget. scholarships. In 2018-19 more than 18 This is a consequence of our relatively per cent of students received financial small endowment which makes up 18 assistance. In 2019-20 this number per cent of the funding. It is our goal for increased to more than 19 per cent. an increasing proportion of financial Thanks to generous donor support, we assistance to come from donations and are excited to see this number grow endowment, ensuring the sustainability FINANCFINANCIALFIIANLANC ASSIAISL ASSISTANCET ASSANCIESTANCE

Number ofNu Studentsmber of StudentsReceiving Receiving Financial FinancialAssistance Assistance Financial FiAsnsistaancialn ceAs Esistaxpenditurence Expenditure

210 210 7 7

190 190 6 6 170 170

150 150 5 5

130 130

4 4 110 110

90 90 Millions $ Millions 3 $ Millions 3 70 70 Number of Students of Number Students of Number

50 50 2 2

30 30 1 1 10 10

-10 -10 0 0 2013-14 2013-14 2014-15 2014-15 2015-16 2015-16 2016-17 2016-17 2017-18 2017-18 2018-19 2018-19 2019-20 2019-20 2020-21 2020-21 2021-22 2021-22

CENTENNIAL SCHOLARS GLOBAL ACCESS PROGRAMME Appleby’s financial assistance PROGRAMME For the past 12 years Appleby has programme changes lives, and with the Working with various community welcomed students from around the continued support of parents, alumni organizations, Appleby’s Centennial globe through the school’s Global and parents of alumni, financial Scholars Programme has provided full Access Programme. To date, Appleby assistance will continue to have an support to outstanding local students has hosted nine students and today extraordinary impact on the Appleby who are truly exceptional but face life works with Assist Scholars – a non-profit community for many years to come. challenges and financial barriers to organization that matches academically education. Over the past eight years, the talented, multi-lingual international programme has supported 40 students. students with North American independent secondary schools for a one-year stay, helping build diplomatic relationships and cultural understanding.

How much do student fees contribute to Appleby’s operating budget?

Approximately 92 per cent of our Our largest operating expense is our capital infrastructure, which included revenues are generated by tuition. In investment in people, and reflects an completion of the A.W.B. Alumni Centre 2019-20, fee income totaled nearly educational philosophy grounded in for Athletics and Student Life build, $40 million, only a slight increase over outstanding teaching. We offer an purchase of new computer equipment, the prior year as tuition increases were enriching and innovative educational and multiple boarding house renovations and offset by $1.4 million in tuition rebates co-curricular programme which is best sustainable investments in LED retrofits related to the Spring 2020 Remote achieved with low student-to-teacher among many projects. Learning Programme. Other revenues ratios in the classroom, and exceptional came from commercial activities, a faculty, supported by strong professional In 2020-21, we anticipate $4.5 million grant from the endowment held by development. In 2019-20 our budget for in capital investments, over half of The Appleby College Foundation, and salaries and benefits totaled almost which is in response to COVID-19 health philanthropic gifts. $25 million. and safety requirements. This includes the introduction of Hyflex learning These revenues must cover operating Each year, we must also invest in technology and the addition of 12 expenses and offset investments in maintaining our facilities, technology, portable classrooms to support our capital infrastructure, both of which and equipment infrastructure. In COVID-19 response. totaled almost $45 million in 2019-20. 2019-20, we invested $5.7 million in Does Appleby maintain an operating surplus?

Appleby operates in an efficient and prudent financial manner, employing best business practices. Our annual budgets are set with a view to the longer term and we plan for operating surpluses to partially fund capital initiatives, repay bank debt and ensure adequate cash reserves to safe-guard financial stability through challenging periods. Prior to the pandemic, our long-term financial plan STATEMENT OF OPERATIONS February 2021 foresaw sustained operating surpluses Projections in the $3.5 to $4 million range to pay 2018-19 2019-20 2020-21 2021-22 off bank debt associated with the A.W.B. Alumni Centre in early 2022. Revenues 43,088 42,947 43,528 46,963

In fiscal 2019-20, our operating Operating Expenses (38,330) (39,169) (40,728) (44,003) surplus before capital amortization and Operating Surplus 4,758 3,778 2,800 2,960 financing costs dropped from $4.7 in the prior year to $3.8 million, before Contingency (500) (500) interest and depreciation. This drop was anticipated as a large fundraising Net Interest Income 133 (248) (211) (159) gala was held in the prior fiscal and Amortization of capital assets (2,925) (3,777) (4,700) (3,800) additional investments were planned for Amortization of capital educational programming and financial 506 680 900 900 assistance. Our net income after interest donations Excess of Revenues over and depreciation was $433,000. 2,472 433 (1,711) (599) Expenses The impact of the pandemic on our financial position has been significant. OPERATING SURPLUS & CAPITAL INVESTMENT With a fiscal year end of June 30th, Surplus Before Capital Capital Investment Surplus BeforeSurplus Capita Before l Capita l Capital Investment Capital Investment Projected the full impact will be seen in 2020-21 ProjectedProjected and beyond. Lost revenues from tuition 21 2121 rebates and commercial activities have only been partially buffered by 19 1919 reduced expenditures on programme, while costs have increased with more 14 1414 families requiring financial assistance and increased expenditures on health 12 1212 and safety measures. The above chart outlines our current and expected

$ 10 $ 10 $ 10 financial performance through 2021-22.

Our long-term financial plan is to return 8 8 Millions 8 to annualized operating surpluses of Millions Millions $3.5 to $4 million by 2022-23. 6 66

In light of the significant negative 4 44 impact COVID-19 has had on the school’s finances, we have made 2 application for support under the 2 2 Canada Emergency Wage Subsidy 0 (CEWS) program. As applications 0 0 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 are still being processed, this is not 10 1110 1211 1312 1413 1514 1615 1716 1817 1918 2019 2120 21 reflected in our forecasts. Fiscal Year Ending Fiscal YearFiscal Ending Year Ending

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2010 20112010 2012 2011 20132012 20142013 20152014 20162015 20172016 20182017 20192018 20202019 2020 How does Appleby generate additional revenue?

Appleby relies on funding from tuition NEW COMMITMENTSNew Commitments & RECEIPTED 5-Year GIVING Rolling AverageBY YEAR 5-Year Rolling Average (New Commitments) (Cash Received) fees, grants from The Appleby College as of February Cash 28,Received 2021* New Commitments Cash Received Foundation, philanthropic gifts and, prior to the onset of the COVID-19 14 pandemic, income from commercial activities. 12

Tuition fee revenue is limited by our 10 desire to maintain student-teacher ratios at 16:1. We appreciate that the cost of an Appleby education is a considerable $ 8 financial commitment for families. As Forecasted a school we are committed to keeping Millions 6 Year-End tuition fee increases aligned with our $4.4M continuous efforts to manage operating 4 and capital expenditures as best as possible while continuing to provide our 2 students with an exceptional educational experience. 0 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21* Philanthropic gifts are also a key source Fiscal Year Ending of funding for Appleby and play an important role in furthering the school’s mission and in shaping the lives of our Prior to 2019-20, income from students. Donations via Major Gifts and commercial activities had been the Appleby Fund are directed towards strategically increasing. When not in three general areas: operating revenue, use for school programmes, we actively capital projects and The Appleby College rent our facilities. Our local day camps Foundation. In 2018-19 the school for summer and March Break are well welcomed over 1,000 donors with recognized and we offer a range of $8.2 million dollars in new other residential programmes in the commitments and $7.5 million in summer for international students. receipted gifts. In 2019-20 the school Over the course of the past decade experienced a decrease with 603 donors the net income generated from these and approximately $3 million in new programmes has grown to over commitments and over $6 million of $2 million and has been a significant receipted gifts. While donors continue supplement to support operating to come forward in support, new expenses. Due to COVID-19, most commitments and gift receipts are commercial programmes have been anticipated to be down in 2020-21. cancelled or significantly scaled back Grants from endowed funds in The with the resulting loss in income. While Appleby College Foundation now we are slowly resuming these activities, provide Appleby almost $800,000 it will take several years to achieve full per year. These grants are funded by contribution. earnings from invested endowed funds, and primarily support the financial assistance programme. Philanthropic gifts designated to increasing the size of Appleby’s endowment will ensure growth of the Foundation’s asset base, and thereby its annual grant to Appleby College. This will result in decreased reliance on the school’s operating budget which currently funds over 80 per cent of Appleby’s financial assistance programme. What is The Appleby College Foundation?

Established in 1959, The Appleby APPLEBY COLLEGE FOUNDATION Foundation Assets Grant to Appleby College College Foundation is a registered Foundation Assets Grant to Appleby College charity, governed by its own board of 1.25 trustees, to which the school’s endowed 20 22 funds are entrusted to be invested 1.25 appropriately and disbursed to Appleby 18 20 for specific purposes. 18 1.00 16 The Foundation’s principal purpose is 16 1.00 to support and encourage education 14 14 at Appleby by receiving, investing, $ $ stewarding and disbursing Appleby’s 12 0.75 0.75 12 endowed funds. While working to

Millions 10 Millions increase the capital value of the school’s$ 10 endowment, each year, the Foundation 0.50 8 $ directs a grant to Appleby for the 0.50

Millions 8 financial assistance programme, merit- 6 based entrance scholarships, prizes and Millions 4 0.25 awards, and supplementary funding 6 to support opportunities for faculty to 2 0.25 develop and pilot innovative and special 4 0 0 programmes. 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2 Fiscal Year Ending The Foundation disburses on average 0 4.5 per cent of its assets to the school 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 each year. Annual growth of the AVERAGE ANNUAL RETURN ON INVESTMENT (%) endowment has averaged 9 per cent * Pre-audit Fiscal Year Ending over the past decade. The Foundation’s endowed fund was valued at 20 $22.5 million at June 30, 2020 and reached $25 million in March 2021. 18 16 15.6

By the end of fiscal year 2020, the 14 school’s need-based assistance 12 increased to 149 students, with over 10.8 10.1 9.4 $4.1 million in financial assistance 10 8.4 8.1 extended. The pandemic has presented 8 7.2 a period of challenge, increasing 5.6 6 4.9 financial assistance needs for many of Investment Return % 4.1 4 our families and we are thankful that with the support of donors we have been 2 able to further increase support to 0

$4.8 million in 2020-21 and $5.4 million (2) in 2021-22. An Appleby education would 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 be out of reach for many were it not for Fiscal Year Ending the support provided by the Foundation. Philanthropic gifts designated to increasing the size of Appleby’s endowment ensure continued growth of the Foundation’s asset base, and thereby its annual grant to Appleby as well as decreased reliance on the school’s operating budget to fund student financial assistance. APPLEBY COLLEGE, 540 LAKESHORE ROAD WEST, OAKVILLE, ONTARIO, CANADA L6K 3P1 www.appleby.on.ca