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Download easyJet plc Results for the year ending 30 September 2021 and more Essays (high school) Accounting in PDF only on Docsity! Mount Royal University 2020/21 Annual Report aus MOUNT ROYAL UNIVERSITY 2 2020/21 Annual Report Table of contents Accountability statement Management’s responsibility for reporting Message from the Board Chair and the President and Vice-Chancellor Members of the Board of Governors Public Interest Disclosure (Whistleblower Protection) Act Operational overview Goals and performance measures Financial information Capital report Research, applied research and scholarly activities Appendix: 2020/21 consolidated financial statements 3 3 4 6 7 8 9 23 32 34 37 Mount Royal University is located in the traditional territories of the Niitsitapi (Blackfoot) and the people of Treaty 7, which includes the Siksika, the Piikani, the Kainai, the Tsuut’ina and the Îyârhe Nakoda. We are situated on land where the Bow River meets the Elbow River. The traditional Blackfoot name of this place is Mohkínstsis, which we now call the city of Calgary. The city of Calgary is also home to the Métis Nation. 52020/21 Annual Report or good, significantly higher than Canadian comparators. Work-integrated learning featured prominently in their time at Mount Royal, with 61% of graduating students participating in such an experience. We remain committed to meeting our accountability obligations and our role as a partner in the Campus Alberta system. We provide a quality education at a moderate cost, as evidenced by our total operating expenditures per Full-Load Equivalent (FLE) and the diversification of our revenue sources. We are grateful for our faculty and staff, particularly given the challenges faced over the past year. We care deeply about our community and we look forward to being able to operate in a world with fewer restrictions as the public health situation improves. Alex Pourbaix Chair, Board of Governors of Mount Royal University Tim Rahilly, PhD President and Vice-Chancellor, Mount Royal University 6 2020/21 Annual Report Members of the Board of Governors (Current as of November 3, 2021) Sue Riddell RoseBrenden Hunter Carrie Lonardelli Salimah Walji-Shivji Karl Johannson Morgan Loberg Alex Pourbaix, Chair Tim Rahilly, President and Vice-Chancellor Thomas P. O’Leary Kenna L. Olsen Denise Man Dawn Farrell, Chancellor Shannon Pestun David Routledge Shannon Ryhorchuk Spirit River Striped Wolf Chris Lee, Vice-Chair Jacqueline Musabende Joseph Nguyen [O rig in al si gn ed b y] 72020/21 Annual Report Public Interest Disclosure (Whistleblower Protection) Act Mount Royal University has a Protected Disclosure (Whistleblower) policy and procedures to guide employees who identify and seek to disclose potential wrongdoings as defined by the Public Interest Disclosure (Whistleblower Protection) Act. Eight disclosures were received in 2020/21. None of the disclosures met the threshold of the policy. No wrongdoing under the Protected Disclosure (Whistleblower) policy was found. Some of the disclosures were investigated under other policies and others were managed through more informal processes. [O rig in al si gn ed b y] 10 2020/21 Annual Report Develop microcredentials to meet student and labour market needs In 2021, Mount Royal responded to the Ministry’s first-ever call to develop microcredential programming. Two of Mount Royal’s proposals were successful and received funding: ESG (environmental, social, governance) Reporting and Applied Machine Learning, offered in collaboration with Supply Chain Canada. Both programs target new- and mid-career professionals seeking to upskill or reskill. As well, students who have successfully completed Mount Royal’s Bachelor of Business Administration may receive advanced standing in the Applied Machine Learning program. Both microcredential programs will be delivered through the Faculty of Continuing Education and are scheduled to launch in January 2022. Maximize course transferability across Mount Royal and other institutions Mount Royal continued to be a leader in the Campus Alberta system for depth and breadth of transfer agreements available through the Alberta Council for Admissions and Transfer (ACAT). Internally, broad-based course transferability is a hallmark of Mount Royal degree programs, where students’ completion of optional, elective and General Education courses delivered across multiple faculties are applied to graduation requirements. Academic programming requires maximization of internal course transferability. Increase four- and six-year degree graduation rates The six-year Fall 2014 cohort graduation rate was 65.6%, which is a slight increase as compared to the 65.1% rate for the Fall 2013 cohort. The four-year graduation rate for the Fall 2016 cohort dipped slightly to 35.4% as compared to the 39.5% rate for the Fall 2015 cohort. All data trends indicate that the overall graduation rates for Mount Royal students will continue to increase over time. Increase number of seats available to students in courses required for graduation From 2019/20 to 2020/21, there was a 1.1% increase in the number of seats available to students across all faculties. Since 2016/17, Mount Royal has increased its total seat offerings by 15.3%. Institutional goal: Indigenize our university OUTCOMES AND PERFORMANCE MEASURES PROGRESS REPORT Develop a research program led by Canada Research Chair (CRC) in Indigenous studies The CRC in Indigenous studies was paused while Mount Royal moved forward with a new Indigenous cluster hire. The new hires will provide a stronger research and scholarship environment to ensure success of the CRC. The position is posted to be filled in the next academic year. Increase faculty, staff and management awareness and understanding of Indigenous culture and issues A national search was conducted to fill the newly created position of associate vice- president of indigenization and decolonization. In this role, Dr. Linda ManyGuns, PhD, led several programs and activities to promote Indigenous cultural awareness in Fall 2021, as part of the new National Day of Truth and Reconciliation. 112020/21 Annual Report Continue implementation of an Indigenous student recruitment plan An Indigenous recruitment officer has continued to increase Mount Royal’s presence in urban and rural Indigenous communities and at events. In the long-term, establishing and maintaining meaningful connections with Indigenous communities, along with designating program seats through Indigenous admission targets, is expected to increase applications from self-declared Indigenous students. However, in 2020/21, pandemic-related health protocols restricted travel and in-person recruitment activities. Combined with the shift to remote course delivery, recruitment of new Indigenous students was significantly impacted. Increase number of applications by Indigenous students in all programs Applications to all programs from self-declared Indigenous students fell by 15.5% in Fall 2020 compared to Fall 2019. It is evident that application pressure and applicant- to-registrant yield for new self-declared Indigenous students have been greatly impacted by the pandemic. Specifically, mode of delivery (e.g., online courses) has been identified as a major determinant in decision-making processes for Indigenous students. With the resumption of in-person course delivery in 2021/22, it is anticipated that applications and registrations from new Indigenous students will return to previously established levels. Increase enrolment by Indigenous students in programs leading to credentials The percentage of students who self-identified as Indigenous fell to 5.5% in 2020/21, compared with 6.1% in 2019/20. As noted in Mount Royal’s 2019/20 Annual Report, the impact of the pandemic on Indigenous communities is expected to temporarily decrease Indigenous student enrolment. Enrolment from continuing Indigenous students remained steady in 2020/21, with the decrease in headcount stemming almost entirely from new Indigenous student admissions. With the return to in-person learning in Fall 2021 and a continued commitment to recruitment and retention of Indigenous students, it is anticipated that enrolment of Indigenous students in programs leading to credentials will return to levels seen in 2019/20. Increase retention rates of Indigenous students The retention rate among self-identified Indigenous students continued to equal the retention rate for non-Indigenous students. The six-year graduation rate for self- identified Indigenous students in the Fall 2014 cohort was 60.6% compared to 65.9% for non-Indigenous students. Taking into consideration the number of students in each cohort, this difference is not significant. Increase number of faculty, staff and management enrolled in Indigenous education and training courses Mount Royal launched an Indigenous education program for all campus community members. Four Seasons of Reconciliation is an educational tool for corporate, community and classroom anti-racist training, providing an introduction to reconciliation with authentic Indigenous voices. It is a three-hour program with 10 interactive modules. Participants who complete the program receive a certificate. Implement partnerships and MOUs between Mount Royal and Indigenous groups that contribute to curriculum development and indigenization We continue to work with Indigenous community partners on indigenizing and decolonizing the curriculum. Elders and community members were active participants in the recruitment and hiring process for the new associate vice-president of indigenization and decolonization. In addition, Mount Royal is advancing plans to offer a dual credit course with the Calgary Board of Education that will engage students in Indigenous community-engaged learning. 12 2020/21 Annual Report Institutional goal: Support student mental health and well-being OUTCOMES AND PERFORMANCE MEASURES PROGRESS REPORT Develop a suicide prevention framework to support mental health Mount Royal’s Suicide Prevention Strategic Framework has been developed through the work of a steering committee, with 161 campus members participating in community consultation sessions. The Framework includes 52 recommendations for implementation between 2021 and 2026 across four goal areas: strengthen and expand policy; supports and services; foster a thriving campus environment; increase community awareness and capacity; and develop sustainable implementation and evaluation mechanisms for the Framework. Provide access to information, training and awareness for students, staff, faculty and management, to increase mental health literacy skills to identify and respond to students experiencing mental health concerns Mount Royal focused on building mental health and dating, domestic and sexual violence (DDSV) information and awareness initiatives. Efforts included the integration of DDSV workshops into the Personal Skills Development and Capacity Building certificate program; the integration of DDSV information into the Mental Health Faculty Toolkit; and the continued distribution of mental health help and DDSV folders to students, staff, faculty and management. In response to the pandemic, programs and workshops were adapted to online formats wherever possible. In 2020/21, 406 campus members were trained in crisis and community support programming, with 342 focused on mental health and 64 focused on DDSV. There was continued significant uptake of naloxone and harm reduction workshops, as well as suicide awareness and prevention training. Participants agreed it improved their confidence (89%) and their knowledge (91%) in supporting a student with a mental health concern. Implement campus services to increase self-management and coping skills, including counselling groups and early support referrals (some specifically designed for sub- groups of students such as Indigenous, international and residence students) Numerous campus services and programs increased self-management and coping skills. Last year, 2,180 campus members participated in formal programs to improve coping skills and/or resiliency. The Early Support program continued to connect a diverse population of at-risk students with cultural, social and academic supports. Students had access to one-on-one counselling and specific counselling groups, such as the A-team for students on the autism spectrum, the Indigenous Womens’ Group and Students with Mental Illness in the Learning Environment, as well as student support webinars. The Iniskim Centre and the Pride Centre also offered student supports. The international student kitchen program in Residence and the Global Wellness Community for international students continued. Supports were adapted to online contexts, including Counselling’s Daring Greatly book club. 152020/21 Annual Report Institutional goal: Foster a safe and positive work environment OUTCOMES AND PERFORMANCE MEASURES PROGRESS REPORT Demonstrate evidence of broad cultural, ethnic, religious, sexual orientation, abilities, gender and age diversity among staff, faculty and management This has been identified as a priority as it relates to Mount Royal's ability to help provide and demonstrate a diverse and inclusive workplace. Mount Royal has begun to lay the groundwork for collecting the self-identification data necessary to understand the diversity of its community. Ensure workspaces are inspected for hazardous conditions at regular intervals and are conducive to a safe work environment Mount Royal’s campus is reviewed yearly by Facilities Management as a space audit, which includes looking for broken furniture equipment and general safety issues. Environmental Health and Safety (EH&S) inspects common areas throughout the campus; office and instruction areas are inspected when required. EH&S works with departments and individuals if issues arise. The Joint Occupational Health and Safety Committee (JOHSC) will leverage the new Safety Advisory Groups to reach and inspect department and office areas. Increase the percentage of employees who have completed the basic health and safety orientation The health and safety orientation is part of the onboarding process for new employees. By utilizing the EH&S Task and Training form, EH&S can directly target individuals who have not completed the required orientation and training. 16 2020/21 Annual Report Institutional goal: Provide high-impact or capstone work-integrated learning experiences OUTCOMES AND PERFORMANCE MEASURES PROGRESS REPORT Expand student work experience and work-integrated learning opportunities Work-integrated learning (WIL) placements increased from 543 in 2019/20 to 592 in 2020/21. Virtual and remote placements continued to be the preference among students and employers. In addition, there was an increase in placements conditional on WIL funding, as many employers continued to experience financial impacts resulting from the pandemic. Mount Royal disbursed $482,400 in federal Co-operative Education and Work-Integrated Learning (CEWIL) funding secured to support formal WIL placements, which resulted in increased participation in funded placements in 2020/21. Additional funding has been secured for disbursement in 2021/22. Many students delayed their work terms in order to experience in-person placements rather than virtual placements. Expand student community engagement and Community Service Learning opportunities There were 54 Community Service Learning (CSL) courses offered in 2020/21, which was consistent with the previous year’s total of 53. Typically, students contribute more than 300,000 hours of community service learning at over 500 community organizations. In 2021, 11% of graduating students at Mount Royal said they had participated in service learning as part of their program, which was consistent with 2018 results where 11% of graduands said they had participated in service learning. (Source: CUSC 2018 and 2021) Increase the number of students participating in internship, co-op, practicum and clinical placements From 2018 to 2021, the percentage of graduating students who said they had participated in WIL experiences was consistent (58% in 2018; 61% in 2021). (Source: CUSC 2021) Increase the number of graduates with Community Service Learning citation on their transcript The number of graduates with a CSL citation on their transcripts increased year-over- year, with 326 citations in 2019/20 and 387 in 2020/21. SYSTEM GOAL: DEVELOP SKILLS FOR JOBS 172020/21 Annual Report Institutional goal: Provide students with a liberal education OUTCOMES AND PERFORMANCE MEASURES PROGRESS REPORT Develop collaborative interdisciplinary programming The Department of General Education engaged in a reflective exercise as part of a periodic review of all programs on campus. The completed self-study document will form the foundation for an external peer review and an internal community engagement process, to ensure the long-term effectiveness of Mount Royal’s liberal education and interdisciplinary commitments within all of our degree programs. We also launched new program discussions founded on interaction between disciplines (e.g., data science between business and science). Maintain the high proportion of graduates reporting that they have strong critical thinking and problem-solving skills When asked about their ability to apply skills related to their employment as a result of their program, 96% of recent Mount Royal graduates who were employed said their program had at least moderately prepared them to analyze information, and 95% said they were at least moderately prepared to solve problems. (Source: Mount Royal 2020 Graduate Follow-up Survey) Implement the recommendations for General Education that resulted from the program review The General Education program review is ongoing. Institutional goal: Enrich the student academic experience through participation in research projects OUTCOMES AND PERFORMANCE MEASURES PROGRESS REPORT Ensure graduates have gained experience in conducting research and developed transferable analytical skills in the research process Despite the challenges created by the pandemic, Mount Royal was able to present a series of highly successful events during Research and Scholarship Days. These days were adapted to occur primarily online and included over 80 projects presented by over 130 students. These results are indicative of the high level of engagement by undergraduate researchers. Increase the number of students participating in research projects In 2020, 5% of first-year students and 21% of fourth-year students said they had worked with a faculty member on a research project, similar to 2017 results, where 3% of first- year students and 22% of fourth-year students said they had engaged in this activity. (Source: NSSE 2017 and 2020) 20 2020/21 Annual Report Institutional goal: Seek equitable, stable and predictable government/regulated funding and increase efficiency OUTCOMES AND PERFORMANCE MEASURES PROGRESS REPORT Develop a financial plan designed to achieve long-term strategic goals, with an operating budget that does not require the use of reserve funds to support base program and service delivery Mount Royal approved a three-year budget plan predicated on predictable provincial funding and enrolment growth. The fiscal plan prioritized resources for long-term strategic investment, efficient and effective service delivery models, faculty hiring in high-demand areas and containment of overall building operations costs through sustainability measures. The operating budget for 2021/22, 2022/23 and 2023/24 does not require the use of reserve funds to support base program and service delivery. While the pandemic is expected to be present in the 2021/22 fiscal year, it is not anticipated that the same financial impacts will be felt as in the 2020/21 fiscal year. Repurpose vacant and unusable spaces in the main building (former Library and Conservatory space) as a cost-effective means of increasing instructional capacity Funding was secured through the Government of Alberta and a private donor to renovate the spaces vacated in the Lincoln Park Building as a result of the construction of the Taylor Centre for the Performing Arts (TCPA) and the Riddell Library and Learning Centre (RLLC). A design/build RFP was awarded for the renovation of the former Conservatory spaces (W-Wing). Work is proceeding to complete the conceptual design on the former Library spaces (G-Wing). Reduce the cost of delivery per FLE Total operating expenditures per FLE, as reported in the Financial Information Reporting System (FIRS) and the consolidated financial statements, were reduced from $21,992 in 2019/20 to $18,521 in 2020/21. 212020/21 Annual Report Institutional goal: Diversify our revenue sources and capitalize current assets OUTCOMES AND PERFORMANCE MEASURES PROGRESS REPORT Review opportunities for strategic incorporation of commercial amenities in planning for new development or renovations of existing facilities, to enhance revenue generation Business and Retail Services has prepared two documents that outline future opportunities to streamline operations: a business case for License Plate Recognition for Parking and Transportation Services (PTS), and a Cougars Campus Store (CCS) analysis. The CCS analysis highlights how the CCS compares to other campus retail operations across Canada from a performative perspective, how the CCS must meet current challenges to remain operationally relevant, and what specific needs are required for the CCS to meet forecasted goals. PTS implemented new parking management software that has increased operational efficiencies and reduced labour expenditures. In addition, MRU Camps has resumed after two years of cancellation due to the pandemic. Maximize revenue generation through rental of the Bella Concert Hall and other campus spaces to external groups External bookings and concerts utilizing the Bella Concert Hall had increased to target levels prior to the pandemic. During the pandemic, arrangements were made to ensure continued use through online streaming and recording of performances and events to support continued client connections. As provincial health restrictions have eased, expressions of booking interests and planned activity levels have increased. A return to 2018/19 attendance levels and revenues are part of a two-year recovery plan that will see a wide range of artists and events in the Bella Concert Hall. Also, advancements have been made with the filming industry that has resulted in new revenue streams from indoor and outdoor space rentals for films and television programs. Increase revenue from sales of services and products PTS has prepared parking bylaws as required by the Post-Secondary Learning Act to allow for internal enforcement to increase revenues associated with parking violations. Previously, enforcement was outsourced to the Calgary Parking Authority, which caused two significant challenges: lack of consistent enforcement and loss of parking violation revenue. 22 2020/21 Annual Report Institutional goal: Promote environmental sustainability OUTCOMES AND PERFORMANCE MEASURES PROGRESS REPORT Enhance environmental sustainability practices through educational campaigns that are designed to change the behaviours of building users Educational campaigns were suspended due to the pandemic and the resulting reduction in building capacity. They will resume later in 2021. Reduce consumption and cost per square foot Activities leading to the reduction in utility consumption are ongoing and successful. There is no major investment happening but incremental changes have had a major cumulative impact. These include modifications to the building automation systems and replacing existing light bulbs with LEDs. Achieve a ‘gold’ level rating in the Association for the Advancement of Sustainability in Higher Education’s (AASHE) Sustainability Tracking, Assessment and Rating System (STARS) program for environmental sustainability Mount Royal achieved a High Silver STARS rating in its first submission to AASHE and is confident that a Gold STARS rating will be secured after the next submission in 2023. 252020/21 Annual Report continues. These include estimates for revenue and the related expenses for planned activity levels. This budget plans for a further 2.5% decrease to provincial grant funding, modest enrolment growth and a 7.0% increase from student tuition and fees (partially offset with the University’s commitment to divert some of these funds to scholarships). As well, new collective agreements with the Mount Royal Staff Association and Mount Royal Faculty Association are currently in negotiation in a constrained and uncertain fiscal environment. Fiscal year results 2020/21 consolidated financial results Budget assumptions for 2020/21 included the anticipated Fall 2020 reopening of the campus and the resulting return to near pre-pandemic conditions. This was not the case and the effects of campus closures continued to have a significant impact on the revenues and expenses related to on-campus sales and services. At the consolidated level, total operating revenues exceed expenses by $9.5 million, excluding $1.2 million of internally restricted fund spending. Revenues decreased by $16.6 million over 2019/20 levels primarily due to the reduction in commercial sales, rentals and services as a consequence of the pandemic. Compared to 2019/20, expenses decreased by $23.6 million in operations, excluding spending activity of $1.2 million from internally restricted sources for special projects and strategic investments. Positive expenditure variances were achieved through changes in accounting estimates and response to pandemic conditions by way of organizational restructuring and curtailment of non- discretionary spending. Revenue Total revenue for the period ended June 30, 2021 was $212.8 million, compared to $229.4 million in 2019/20. Revenues through Government of Alberta grants and student tuition and fees increased slightly to 89.2% of Mount Royal’s income stream in 2020/21, compared to 89.1% in 2019/20. This change is a reflection of both the increase to student tuition and fees, and the decrease in sales of services and products. Grant funding streams Provincial grant revenue totalled $105.0 million, reflecting a 2.5% year-over-year decrease to Mount Royal’s operating grant. The general operating grant accounted for $94.6 million of this total. The remaining balance is grants from other provincial agencies. A variety of federal and other government grants contributed more than $2.1 million to program-specific activities, including externally funded research activities. Sales of services and products Total revenues from sales of services and products were $10.4 million. The pandemic continued to limit on-campus activities and the cancellation of activities that could not be offered or adapted for an online environment. This resulted in $11.4 million lower-than- 26 2020/21 Annual Report budgeted revenues most significantly in the ancillary areas of parking, residence services, conferences and events, and Cougar athletics and recreation. With the return to in-person delivery in Fall 2021, much of this activity has restarted. Student tuition and fees Over 2020/21, Mount Royal continued to experience strong enrolment and high application pressure, including the unanticipated continuance of international enrolment when international learning regulations opened to include online learning. This contributed to a 5.3% increase in enrolment and the addition of $6.7 million in domestic and international credit tuition and fees revenue over budget. Offsetting this growth in revenue was lower-than-budgeted non-credit tuition revenue as the pandemic continued to limit that activity. Investment income Investment income of $6.6 million was slightly over budget and the overall rate of return increased to 4.66% from that of 4.35% in 2019/20. In April 2021, it was announced that all prior restrictions of redemptions from the real estate fund were lifted. Normal trading operations resumed and outperformed its benchmark by 1.9%. Mount Royal continues to monitor and consult regularly with its advisors and fund managers to monitor conditions for impact to its investment portfolio. 49% Total revenue by source 2020/21 3%2% 5% 40% 1% Government of Alberta grants Sales of services and products Federal and other government grants Donations and other grants Student tuition and fees Investment income 272020/21 Annual Report Expense Total expenses for the period ended June 30, 2021 were $204.5 million, $14.2 million less than budgeted. Salary and benefit expense Similar to prior years’ spending profiles, compensation expenses totalled 71.4% of Mount Royal’s operations in 2020/21 continue to represent its single largest expense and, including benefits, was $6.8 million under budget. These savings resulted primarily from a change in the estimated vacation liability as well as savings where positions had limited work or could not perform work remotely due to the pandemic. Materials, supplies and services Materials, supplies and services expenditures were under budget by $3.3 million due to reduced on-campus activities, limited travel and external meetings, and concerted efforts to reduce discretionary spending to offset budget challenges. Cost of goods sold The negative variance in cost of goods sold resulted from unplanned price increases and increased textbook sales due to enrolment growth and the successful shift to online sales and operations. 105,576 80,173 21,760 2,458 4,134 6,456 104,964 84,771 10,391 2,140 3,909 6,615 111,486 78,154 26,551 2,552 3,860 6,756 Federal and other government grants Government of Alberta Student tuition and fees Sales of services and products Donations and other grants Investment income Total revenue by source – 2020/21 budget, actual and prior year Budget 2020/21 2019/20 $0 $20,000 $40,000 $60,000 $80,000 $100,000 $120,000$ thousands 30 2020/21 Annual Report 89,769 43,102 31,485 27,909 3,660 4,533 18,244 86,260 41,729 28,165 28,490 4,018 4,418 14,432 91,508 43,582 34,516 30,190 4,196 5,012 21,630 Expense by function – 2020/21 budget, actual and prior year Academic and student support Sponsored research Institutional support Instruction and non- sponsored research Ancillary services Facility operations and maintenance Restricted and endowment activities Budget 2020/21 2019/20 41% 20% 14% 14% 7% 2% 2% Expense by function 2020/21 Instruction and non-sponsored research Institutional support Academic and student support Ancillary services Restricted and endowment activities Facility operations and maintenance Sponsored research $0 $20,000 $40,000 $60,000 $80,000 $100,000$ thousands 312020/21 Annual Report The University as at June 30, 2021 he 2020/21 annual surplus contributed to an increase in the accumulated surplus presented on the Statement of Financial Position. This balance represents the accumulation of available resources, including endowments and internal investment in physical infrastructure from prior years. The $127.7 million total accumulated surplus at the close of 2020/21 comprises 48.2% in endowed balances that are restricted in their use ($61.6 million), 33.4% in Mount Royal’s net investment in existing tangible capital assets ($42.6 million), 17.3% in internally restricted surplus ($22.1 million) and the balance of 1.1% ($1.5 million) in unrestricted net assets. Mount Royal was able to realize a net increase to the internally restricted balance. Funds are needed to support institutional strategic priorities. The financial position of Mount Royal upon conclusion of the 2020/21 fiscal year reflects the revenue and expense activities described above. The exercise of flexibility and responsiveness within the employment terms of staff through the pandemic and further efforts to constrain expenditures led to the positive financial outcome for the University despite the challenges. Mount Royal improved its net financial asset position and its net assets overall as at June 30, 2021. The priorities are to support the academic mission and put in place protocols that protect the health and safety of the campus community during the pandemic. It is uncertain what the ongoing impact of the pandemic will have on revenues and what to expect from provincial government funding. While these factors challenge the University’s objectives to grow to meet demand for its programs, Mount Royal remains focused on achieving its strategic goals in the face of uncertainty. Accumulated surplus from operations Internally restricted surplus Investment in tangible capital assets Endowments 109.294 118.017 127.733 127.855 147.683 $ millions 2017 2018 2019 2020 2021 0 30 60 90 120 150 5 year trend of total accumulated surplus 32 2020/21 Annual Report Capital report Approved project — Major construction A $50 million capital grant from the Government of Alberta was approved in support of Mount Royal’s highest priority capital project of repurposing spaces vacated in the Lincoln Park Building following the opening of the Taylor Centre for the Performing Arts in 2015 and the Riddell Library and Learning Centre in 2017. A private donor added another $15 million to support the project. This capital investment is critical to the University in meeting its goal to increase student enrolment and to enhance support for student success. The scope of the project includes repurposing of the vacated Conservatory space (W-Wing) into classrooms and the vacated Library space (G-Wing) to include a new student centre, study spaces, classrooms and centralized student services. This project will also revitalize Main Street and update aging building systems. Planning - Science and Technology A Facility Assessment was completed for the Faculty of Science and Technology B-Wing in July 2021. The report includes analysis of the building infrastructure and systems (structural, mechanical and electrical) and code reviews. Along with it, a masterplan engagement and functional program assessment of the Science and Technology spaces was also conducted. These reports will assist the University in planning and prioritizing the development of this area. Next steps involve securing the funding for the renovations to commence. Internally funded capital initiatives A number of underused smaller classrooms were renovated to create six larger classrooms which provide support for physically distanced learning spaces and increased student intake. Using internal capital and reserve funding, renovations to three classrooms were completed in 2019/20 and the remaining three were completed in 2020/21. 352020/21 Annual Report Research and scholarship at Mount Royal is enhanced through the leadership of institutes and centres. The University will continue to enhance its research capacity through the acquisition of external grants, scholarly partnerships and the growth of research chairs. The quality and impact of scholarly activity take precedence over purely quantitative counts of output. Tri-Agency, Canada Foundation for Innovation and other sponsored research Mount Royal formally met all of the matching funding requirements to accept and implement the first Canada Foundation for Innovation awards for the institution. Three projects have been fully funded including: Forensics of wildfire debris using GCxGC TOF (Gwen O’Sullivan - $546,000), Digital dialogues: Podcasting for knowledge mobilization and community building (Meg Wilcox and Brad Clark - $75,000) and The unstable ankle: Uncovering the mechanisms of foot-ankle stability (Michael Asmussen - $780,000). These awards will provide significant enhancement to institutional research infrastructure, including renovations for adequate laboratory space. New Tri-Agency awards were granted to six Mount Royal faculty members with a value of over $360,000. Growing success in these applications is supported by dedicated resources in the Office of Research, Scholarship and Community Engagement. Another area of progress in enhancing research capacity is in the appointment of post-doctoral fellows (PDFs). Mount Royal has an approved set of terms and conditions that provide for high quality PDF opportunities. During the reporting year we continued one existing PDF, added a new Mitacs-funded PDF in human physiology and posted an additional opportunity in the area of the scholarship of teaching and learning. Canada Research Chairs (CRCs) Three new CRCs were successfully awarded and commenced work in the reporting year: Ranjan Datta, PhD, in community disaster research, Cherie Woolmer, PhD, in the scholarship of teaching and learning and Michael Asmussen, PhD, in human physiology. These new chairs represent a significant opportunity to increase Mount Royal’s scholarly capacity and reputation. Chairs will be research leaders on campus. We were unsuccessful in a nomination for a CRC in design thinking and have reallocated that position in the area of global supply management. Competitions for this and a CRC in Indigenous studies will be launched in the next academic year. Tracking research and scholarship activity Mount Royal implemented a new faculty annual reporting system in 2020/21 that will greatly assist in our ability to document and report the research and scholarship activities of our community. Faculty-180 is a system used widely across the North American post-secondary ecosystem and provides a secure and effective platform for faculty members to curate their work. We have already benefited from the new system in an accreditation application 36 2020/21 Annual Report from our business school. The authors of the accreditation documents estimate that they were able to include at least 20% more research and scholarly activity than was available in the previous tracking system. Mount Royal institutes 2020/21 was a challenging year for the conduct of community-engaged research due to the global pandemic; however, our institutes continued to demonstrate their ability to adapt and provide applied research solutions to the region. For example, The Trico Changemakers Studio pivoted from a focus on engagement on the Mount Royal campus and worked closely with communities on the following projects: • The Life Long Learning and Youth Belonging Labs in the Crowsnest Pass engaged over 150 community members ranging from elementary school students to retirees, local politicians and business owners. • The Mental Health Systems Mapping project engaged 75 participants from across Calgary’s mental health landscape, along with staff from the Calgary Foundation and experts in funding systems change from across North America. • The newly launched Nonprofit Resilience Lab will engage hundreds of stakeholders, actors and community members from across the social sector in Calgary and beyond. 2020/21 Annual Report Appendix The audited financial statements of Mount Royal University for the year 2020/21 are provided as an appendix to this Annual Report and include the independent auditor’s report, consolidated financial statements and notes to the consolidated financial statements. 37 STATEMENT OF MANAGEMENT RESPONSIBILITY The consolidated financial statements of Mount Royal University ("the University") have been prepared by management in accordance with Canadian public sector accounting standards. The consolidated financial statements present fairly the financial position of the University as at June 30, 2021 and the results of its operations, change in net financial assets, remeasurement gains and losses and cash flows for the year then ended. In fulfilling its responsibilities and recognizing the limits inherent in all systems, management has developed and maintains a system of internal control designed to provide reasonable assurance that the University's assets are safeguarded from loss and that the accounting records are a reliable basis for the preparation of the consolidated financial statements. The Board of Governors is responsible for reviewing and approving the consolidated financial statements, and overseeing management's performance of its financial reporting responsibilities. The Board of Governors carries out its responsibility for review of the consolidated financial statements principally through its Audit and Risk Committee. With the exception of the President, all members of the Audit and Risk Committee are not employees of the University. The Audit and Risk Committee meets with management and the external auditors and internal auditors to discuss the results of audit examinations and financial reporting matters. The external and internal auditors have full access to the Audit and Risk Committee, with and without the presence of management. These consolidated financial statements have been reported on by the Auditor General of Alberta, the auditor appointed under the Post-secondary Learning Act. The Independent Auditor's Report outlines the scope of the audit and provides the audit opinion on the fairness of presentation of the information in the consolidated financial statements. ______________________________ ___________________________________ President and Vice-Chancellor Vice-President, Finance and Administration 1 Classification: Protected B Independent Auditor’s Report To the Board of Governors of Mount Royal University Report on the Consolidated Financial Statements Opinion I have audited the consolidated financial statements of Mount Royal University (the Group), which comprise the consolidated statement of financial position as at June 30, 2021, and the consolidated statements of operations, remeasurement gains and losses, change in net financial assets, and cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies. In my opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at June 30, 2021, and the results of its operations, its remeasurement gains and losses, its changes in net financial assets, and its cash flows for the year then ended in accordance with Canadian public sector accounting standards. Basis for opinion I conducted my audit in accordance with Canadian generally accepted auditing standards. My responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of my report. I am independent of the Group in accordance with the ethical requirements that are relevant to my audit of the consolidated financial statements in Canada, and I have fulfilled my other ethical responsibilities in accordance with these requirements. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion. Other information Management is responsible for the other information. The other information comprises the information included in the Annual Report, but does not include the consolidated financial statements and my auditor’s report thereon. The Annual Report is expected to be made available to me after the date of this auditor’s report. My opinion on the consolidated financial statements does not cover the other information and I do not express any form of assurance conclusion thereon. In connection with my audit of the consolidated financial statements, my responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or my knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work I will perform on this other information, I conclude that there is a material misstatement of this other information, I am required to communicate the matter to those charged with governance. 2 Classification: Protected B Responsibilities of management and those charged with governance for the consolidated financial statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with Canadian public sector accounting standards, and for such internal control as management determines is necessary to enable the preparation of the consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless an intention exists to liquidate or to cease operations, or there is no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Group’s financial reporting process. Auditor's responsibilities for the audit of the consolidated financial statements My objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with Canadian generally accepted auditing standards, I exercise professional judgment and maintain professional skepticism throughout the audit. I also: • Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for my opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. • Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If I conclude that a material uncertainty exists, I am required to draw attention in my auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of my auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. 3 Mount Royal University CONSOLIDATED STATEMENT OF OPERATIONS YEAR ENDED JUNE 30, 2021 Budget 2021 2020 Revenues Government of Alberta grants (note 20) $ 105,576 $ 104,964 $ 111,486 Federal and other government grants (note 20) 2,458 2,140 2,552 Sales of services and products 21,760 10,391 26,551 Student tuition and fees 80,173 84,771 78,154 Donations and other grants 4,134 3,909 3,860 Investment income 6,456 6,615 6,756 220,557 212,790 229,359 Expenses (note 17) Instruction and non-sponsored research 89,769 83,260 91,508 Academic and student support 43,102 41,729 43,582 Facility operations and maintenance 31,485 28,165 34,516 Institutional support 27,909 28,490 30,190 Ancillary services 18,244 14,432 21,630 Sponsored research 3,660 4,018 4,196 Restricted and endowment activities 4,533 4,418 5,012 218,702 204,512 230,634 Annual operating surplus (deficit) 1,855 8,278 (1,275) Endowment contributions (note 11) 350 811 Endowment capitalized investment income (note 11) 351 - Annual surplus (deficit) 1,855 8,979 (464) Accumulated surplus, beginning of year 118,748 118,748 119,212 Accumulated surplus, end of year $ 120,603 $ 127,727 $ 118,748 The accompanying notes are an integral part of these consolidated financial statements. 6 Mount Royal University CONSOLIDATED STATEMENT OF CHANGE IN NET FINANCIAL ASSETS YEAR ENDED JUNE 30, 2021 (thousands of dollars) Budget 2021 2020 Annual surplus (deficit) $ 1,855 $ 8,979 $ (464) Acquisition of tangible capital assets (5,769) (5,287) (6,899) Proceeds from sale of tangible capital assets 5 16 Amortization of tangible capital assets 17,460 15,410 19,393 Loss on disposal of tangible capital assets 6 15 Change in inventories of supplies (20) (3) Change in prepaid expenses 37 102 Change in spent deferred capital contributions (note 9) (9,167) (6,875) (10,941) Change in accumulated remeasurement gains 10,849 586 Increase in net financial assets 4,379 23,104 1,805 Net financial assets, beginning of year 43,058 43,058 41,253 Net financial assets, end of year $ 47,437 $ 66,162 $ 43,058 The accompanying notes are an integral part of these consolidated financial statements. 7 Mount Royal University CONSOLIDATED STATEMENT OF REMEASUREMENT GAINS AND LOSSES YEAR ENDED JUNE 30, 2021 (thousands of dollars) 2021 2020 Accumulated remeasurement gains, beginning of year $ 9,107 $ 8,521 Unrealized gains attributable to: Portfolio investments - non-endowment 11,409 1,384 Amounts reclassified to the consolidated statement of operations: Portfolio investments - non-endowment (560) (798) Accumulated remeasurement gains, end of year $ 19,956 $ 9,107 The accompanying notes are an integral part of these consolidated financial statements. 8 Mount Royal University NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2021 (thousands of dollars) 2. Summary of significant accounting policies and reporting practices (continued) b. Valuation of financial assets and liabilities (continued) The purchase and sale of cash and portfolio investments are accounted for using trade date accounting. The University does not use foreign currency contracts or any other type of derivative financial instruments for trading or speculative purposes. Management evaluates contractual obligations for the existence of embedded derivatives and elects to either designate the entire contract for fair value measurement or separately measure the value of the derivative component when characteristics of the derivative are not closely related to the economic characteristics and risks of the contract itself. Contracts to buy or sell non-financial items for the University’s normal purchase, sale or usage requirements are not recognized as financial assets or liabilities. The University does not have any embedded derivatives. c. Revenue recognition All revenues are reported on the accrual basis of accounting. Cash received for which goods or services have not been provided by year end is recognized as deferred revenue. Government grants, non-government grants and donations Government transfers are referred to as government grants. Restricted grants and donations are recognized as deferred revenue if the terms for the use, or the terms along with the University’s actions and communications as to the use, create a liability. These grants and donations are recognized as revenue as the terms are met. If the grants and donations are used to acquire or construct tangible capital assets, revenue will be recognized over the useful life of the tangible capital assets. Government grants without terms for the use of the grant are recognized as revenue when the University is eligible to receive the funds. Unrestricted non-government grants and donations are recognized as revenue in the year received or in the year the funds are committed to the University if the amount can be reasonably estimated and collection is reasonably assured. In-kind donations of services, materials and tangible capital assets are recognized at fair value when such value can reasonably be determined. Transfers of tangible capital assets from related parties are recognized at the carrying value. Grants and donations related to land Grants and donations for the purchase of land are recognized as deferred revenue when received, and recognized as revenue when the land is purchased. The University recognizes in-kind contributions of land as revenue at the fair value of the land when a fair value can be reasonably determined. When the University cannot determine the fair value, it recognizes such in-kind contributions at nominal value. Endowment contributions Endowment contributions are recognized as revenue in the consolidated statement of operations in the year in which they are received, and are required by donors to be maintained intact in perpetuity. Investment income Investment income includes dividends, interest income and realized gains or losses on the sale of portfolio investments. Investment income from restricted grants and donations is recognized as deferred revenue when the terms for use create a liability, and is recognized as investment income when the terms of the grant or donation are met. The endowment spending allocation portion of investment income earned by endowments is recognized as deferred revenue when the terms for the use by the endowment create a liability. Realized investment income allocated to endowment balances for the preservation of endowment capital purchasing power is recognized in the consolidated statement of operations. d. Endowments Endowments consist of:  Externally restricted donations received by the University, the principal of which is required to be maintained intact in perpetuity. 11 Mount Royal University NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2021 (thousands of dollars) 2. Summary of significant accounting policies and reporting practices (continued) d. Endowments (continued)  Investment income earned (excluding unrealized income) by the endowments in excess of the amount required for spending allocation is capitalized to maintain and grow the real value of the endowments. Benefactors as well as University policy stipulate that the economic value of the endowments must be protected by limiting the amount of income that may be expended and by reinvesting unexpended income. Under the Post-secondary Learning Act, the University has the authority to alter the terms and conditions of endowments to enable:  Income earned by the endowments to be withheld from distribution to avoid fluctuations in the amounts distributed, generally to regulate the distribution of income earned by the endowments.  Encroachment on the capital of the endowments to avoid fluctuations in the amounts distributed and generally to regulate the distribution of investment income earned by the endowments if, in the opinion of the Board of Governors, the encroachment benefits the University and does not impair the long-term value of the fund. In any year, if the investment income earned on endowments is insufficient to fund the spending allocation, the spending allocation is funded from the accumulated capitalized investment income. However, for individual endowments without sufficient accumulated capitalized investment income, endowment principal is used in that year and is expected to be recovered by future investment income. e. Inventories held for sale Inventories held for sale are valued at the lower of cost and expected net realizable value and are determined using the first in, first out (FIFO) method. Inventories of supplies are valued at cost. f. Tangible capital assets Tangible capital assets are recognized at cost, which includes amounts that are directly related to the acquisition, design, construction, development, improvement or betterment of the assets. Cost includes overhead directly attributable to construction and development, as well as interest costs that are directly attributable to the construction of new buildings. Work in progress, which includes facilities and improvement projects and development of information systems, is not amortized until after the project is complete and the asset is in service. Leases of tangible capital assets which transfer substantially all the benefits and risks of ownership are accounted for as leased tangible capital assets. Capital lease liabilities are recognized at the present value of future minimum lease payments at the inception of the lease, excluding executor costs (e.g. insurance, maintenance costs, etc.). The discount rate used to determine the present value of the lease payments is the lower of the University’s rate for incremental borrowing or the interest rate implicit in the lease. The cost, less residual value, of the tangible capital assets, excluding land, is amortized on a straight-line basis over the estimated useful lives as follows: Asset category Estimated useful lives Buildings 20 - 50 years Learning resources 10 years Furnishings, equipment and systems 3- 20 years Tangible capital asset write-downs are recognized when conditions indicate they no longer contribute to the University’s ability to provide services, or when the value of future economic benefits associated with the tangible capital assets are less than their net book value. Net write-downs are recognized as expenses. Intangible assets, works of art, historical treasures and collections are expensed when acquired and not recognized as tangible capital assets because a reasonable estimate of the future benefits associated with such property cannot be made. In previous years, University buildings have been amorized on a straight line basis over 20 - 40 years. In the current year 2021, management concluded that the useful life on its buildings should be revised to 20 - 50 years the impact of which is a reduction of $3.4M in amortization expense in the current year and future years until fully amortized. g. Foreign currency translation Transaction amounts denominated in foreign currencies are translated into their Canadian dollar equivalents at exchange rates prevailing 12 Mount Royal University NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2021 (thousands of dollars) 2. Summary of significant accounting policies and reporting practices (continued) g. Foreign currency translation (continued) at the transaction dates. Carrying values of monetary assets and liabilities and non-monetary items included in the fair value category reflect the exchange rates at the consolidated statement of financial position date. Unrealized foreign exchange gains and losses are recognized in the consolidated statement of remeasurement gains and losses. In the period of settlement, foreign exchange gains and losses are reclassified to the consolidated statement of operations, and the cumulative amount of remeasurement gains and losses is reversed in the consolidated statement of remeasurement gains and losses. Foreign exchange gains and losses are not significant and are therefore not disclosed separately in the consolidated statement of remeasurement gains and losses. h. Employee future benefits Pension The University participates with other employers in the Local Authorities Pension Plan (LAPP). This pension plan is a multi-employer defined benefit pension plan that provides pensions for the University’s participating employees based on years of service and earnings. The University does not have sufficient plan information on the LAPP to follow the standards for defined benefit accounting, and therefore follows the standards for defined contribution accounting. Accordingly, pension expense recognized for the LAPP is comprised of employer contributions to the plan that are required for its employees during the year, which are calculated based on actuarially pre- determined amounts that are expected to provide the plan’s future benefits. Long-term disability The cost of providing non-vesting and non-accumulating employee future benefits for compensated absences under the University's long- term disability plans is charged to expense in full when the event occurs which obligates the University to provide the benefits. The cost of these benefits is actuarially determined using the accumulated benefit method, a market interest rate and management's best estimate of the retirement ages of employees, expected health care costs and the period of employee disability. Actuarial gains or losses on the accrued benefit obligation are recognized immediately. Administrative leave and deferred salary plans The University provides for certain executives to accrue a paid leave of absence at the end of their administrative appointment. The expense for these plans is estimated using the projected benefit method prorated on service. Gains and losses on the accrued benefit obligation are recognized immediately. Effective June 30, 2020, there were no more eligible employees. The University provided compensated absences for its employees under deferred salary plans. The deferred salary plan for management and support staff is wholly self-funded by participating employees who contributed between 15% and 20% of their pre-tax annual salary for four years and then draw on the accumulated sum during their year of leave. This benefit has been discontinued as of July 1, 2018. Amounts owing to previously eligible employees are included in these financial statements. Supplementary executive retirement plan (SERP) - defined benefit The University has a former executive member participating in a defined benefit pension that is self-funded. The actuarial value of this liability is included in these statements. The pension expense for this plan is actuarially determined using the projected benefit method prorated over the expected remaining service life. Actuarial gains or losses on the accrued benefit obligation are amortized over the remaining expected average service life of the plan. Supplementary executive retirement plans (SERP) - defined contribution The University provides non-contributory defined benefit supplementary executive retirement benefits under a defined contribution plan to certain executive members. The pension expense for the defined contribution supplementary executive retirement plan is the employer's current year contribution to the plan as calculated in accordance with the plan rules. 13 Mount Royal University NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2021 (thousands of dollars) 3. Portfolio investments 2021 2020 Portfolio investments - non-endowment $ 100,758 $ 84,769 Portfolio investments - restricted for endowments 75,196 66,175 $ 175,954 $ 150,944 The composition of portfolio investments measured at fair value is as follows: 2021 Market yield Level 1 Level 2 Level 3 Total Portfolio investments at fair value Pooled investments in bonds Canadian bonds %(2.39) $ - $ 32,744 $ - $ 32,744 Pooled investments in equities Canadian equities %33.96 - 29,624 - 29,624 Foreign equities %25.96 - 80,976 - 80,976 Pooled real estate units %7.33 - - 32,489 32,489 Other(a) 106 - 15 121 Total portfolio investments 106 143,344 32,504 175,954 0.06 % 81.47 % 18.47 % 100 % 2020 Market yield Level 1 Level 2 Level 3 Total Portfolio investments at fair value Pooled investments in bonds Canadian bonds %7.88 $ - $ 31,533 $ - $ 31,533 Pooled investments in equities Canadian equities %(2.20) - 21,289 - 21,289 Foreign equities %6.61 - 67,838 - 67,838 Pooled real estate units %4.51 - - 30,270 30,270 Other(a) - - 14 14 Total portfolio investments - 120,660 30,284 150,944 %- %80 %20 %100 (a) Other portfolio investment is composed of a donated life insurance policy (level 3) and cash pending investment (level 1) by the University Student Investment Fund established in 2021. 16 Mount Royal University NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2021 (thousands of dollars) 3. Portfolio investments (continued) The fair value measurements are those derived from: Level 1 – Quoted prices in active markets for identical assets or liabilities; Level 2 – Fair value measurements are those derived from inputs other than quoted prices included within level 1 that are observable for the assets, either directly (i.e. as prices) or indirectly (i.e. derived from prices); Level 3 – Fair value measurements are those derived from valuation techniques that include inputs for the assets that are not based on observable market data (unobservable inputs). The following table reconciles the changes in fair value of level 3 investments: 2021 2020 Balance, beginning of year $ 30,284 $ 29,650 Proceeds on sale - (700) Unrealized gains 2,220 1,192 Gain on sale - 142 Balance, end of year $ 32,504 $ 30,284 4. Financial risk management The University is exposed to the following risks: a. Market price risk The University is exposed to market price risk - the risk that the value of a financial instrument will fluctuate as a result of changes in market prices, whether those changes are caused by factors specific to the individual security, its issuer or general market factors affecting all securities. To manage this risk, the University has established an investment policy with a target asset mix that is diversified by asset class with individual issuer limits and is designed to achieve a long-term rate of return that in real terms equals or exceeds total endowment expenditures with an acceptable level of risk. At June 30, 2021, the impact of a change in the rate of return on the investment portfolio is as follows: Fair value 2.5% decrease 1.0% decrease 1.0% increase 2.5% increase Canadian bonds $ 32,744 $ (819) $ (327) $ 327 $ 819 Canadian equities 29,624 (741) (296) 296 741 Foreign equities 80,976 (2,024) (810) 810 2,024 Real estate 32,489 49 19 (19) (49) $ 175,833 $ (3,535) $ (1,414) $ 1,414 $ 3,535 17 Mount Royal University NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2021 (thousands of dollars) 4. Financial risk management (continued) b. Foreign currency risk Foreign currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The University is exposed to foreign exchange risk on investments that are denominated in foreign currencies. The University is also exposed to foreign currency risk on a United States dollar operating bank account. The University does not use foreign currency forward contracts or any other type of derivative financial instruments for trading or speculative purposes. The University's exposure to foreign exchange risk is very low due to minimal business activities conducted in a foreign currency. The impact of a change in the most material value of the portfolio denominated in foreign currency is shown below: Fair value 2.5% decrease 1.0% decrease 1.0% increase 2.5% increase US dollar $ 49,104 $ (744) $ (298) $ 298 $ 744 Euro 7,077 (15) (6) 6 15 British pound 3,045 (3) (1) 1 3 Japanese yen 4,907 (7) (3) 3 7 Chinese yuan 3,976 (5) (2) 2 5 $ 68,109 $ (774) $ (310) $ 310 $ 774 c. Credit risk Counterparty credit risk is the risk of loss arising from the failure of a counterparty to fully honour its financial obligations with the University. The University is exposed to credit risk on investments and has established an investment policy with required minimum credit quality standards and issuer limits to manage this risk. The credit risk from non-tuition accounts receivable is low as the majority of balances are due from government agencies and corporate sponsors. Credit risk from tuition is managed through restricted enrolment activities for students with delinquent balances and maintaining standard collection procedures. The credit risks on investments held are as follows: 2021 2020 Credit rating AAA %36.23 %35.71 AA 35.32 36.96 A 15.59 14.85 BBB 12.84 12.46 Not rated 0.02 0.02 %100.00 %100.00 d. Liquidity risk Liquidity risk is the risk that the University will encounter difficulty in meeting obligations associated with its financial liabilities. The University maintains a short-term line of credit of $40 million that is designed to ensure that funds are available to meet current and forecasted financial requirements in the most cost-effective manner. At June 30, 2021, the University has not committed any borrowing facilities (2020 - $9,715). 18 Mount Royal University NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2021 (thousands of dollars) 6. Employee future benefit liabilities (continued) The expense and financial position of these employee future benefit plans are as follows: 2021 Long-term disability Administrative leave Defined benefit Defined contribution Expense Current service cost $ 259 $ - $ - $ 20 Interest cost - - 8 - Amortization of net actuarial loss - - 13 - Total expense $ 259 $ - $ 21 $ 20 Financial position Accrued benefit obligation: Balance, beginning of year $ 1,807 $ 166 $ 192 $ 99 Current service cost 259 - - 20 Interest cost - - 8 - Amortization of net actuarial loss - - 13 - Benefits paid - (166) (39) (72) Balance, end of year $ 2,066 $ - $ 174 $ 47 2020 Long-term disability Administrative leave Defined benefit Defined contribution Expense Current service cost $ (57) $ 30 $ - $ 48 Interest cost - - 9 - Amortization of net actuarial loss - - 12 - Total expense $ (57) $ 30 $ 21 $ 48 Financial position Accrued benefit obligation: Balance, beginning of year $ 1,864 $ 136 $ 209 $ 66 Current service cost (57) 30 - 48 Interest cost - - 9 - Amortization of net actuarial loss - - 12 - Benefits paid - - (38) (15) Balance, end of year $ 1,807 $ 166 $ 192 $ 99 21 Mount Royal University NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2021 (thousands of dollars) 6. Employee future benefit liabilities (continued) The significant actuarial assumptions used to measure the accrued benefit obligation are as follows: 2021 2020 Long-term disability Defined benefit Long-term disability Defined benefit Accrued benefit obligation: Discount rate %1.70 %3.20 %2.45 %3.20 Benefit cost: Discount rate %2.50 %3.20 %2.45 %3.20 Inflation (long-term) %2.00 %2.00 %2.00 %2.00 Estimated average remaining service life n/a 8 years n/a 8 years The University plans to use its working capital to finance these future obligations. e. Multi-employer pension plans The Local Authority Pension Plan (LAPP) is a multi-employer contributory defined benefit pension plan for University members and is accounted for on a defined contribution basis. At December 31, 2020, the LAPP reported an actuarial surplus of $4,961,337 (2019 - $7,913,621). An actuarial valuation of the LAPP was carried out as at December 31, 2019 and was then extrapolated for December 31, 2020. The pension expense recorded in the consolidated financial statements is $11,451 (2020 - $11,806). 22 Mount Royal University NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2021 (thousands of dollars) 7. Debt Debt is measured at amortized cost and is comprised of the following: 2021 2020 Collateral(1) Maturity Interest rate % Amortized cost Amortized cost Debentures payable to the Department of Treasury Board and Finance: West Student Residence 1 August 15, 2027 %6.1250 $ 14,562 $ 16,190 Taylor Centre for the Performing Arts 1 March 17, 2029 %3.1250 7,383 8,184 Mount Royal University Parkade 1 September 24, 2035 %4.8675 15,074 15,775 MRU Student Association's Wyckham Student Centre (note 5) 1 June 15, 2037 %5.0030 9,191 9,559 Short-term line of credit %1.7000 - 9,715 Liabilities under capital leases (note 16) %(1.8835) 1,545 1,723 Balance, end of year $ 47,755 $ 61,146 (1) Collateral consists of cash flows from activities carried out in the facilities. Principal and interest repayments are as follows: Year Principal Interest Total 2022 $ 4,399 $ 2,399 $ 6,798 2023 4,331 2,222 6,553 2024 4,331 2,040 6,371 2025 4,329 1,704 6,033 2026 4,521 1,483 6,004 Thereafter 25,844 5,686 31,530 $ 47,755 $ 15,534 $ 63,289 Interest expense on debt is $1,888 (2020 - $2,104) and is included in the consolidated statement of operations. The University has a short-term line of credit, unsecured, with an authorized limit of $40 million (2020 - $40 million). The interest rate is prime less 0.75% (2021 - 1.7%, 2020 - 2.45%), payable monthly. The principal is due on demand or at the borrower's discretion. 23 Mount Royal University NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2021 (thousands of dollars) 11. Net assets Accumulated surplus from operations Internally restricted surplus Investment in tangible capital assets(1) Endowments Total Net assets, as at June 30, 2019 $ 9,805 $ 17,275 $ 40,607 $ 60,046 $ 127,733 Annual operating (deficit) (1,275) - - - (1,275) Endowments New donations - - - 811 811 Tangible capital assets Amortization of tangible capital assets 7,027 - (7,027) - - Acquisition of tangible capital assets (4,110) (1,363) 5,473 - - Debt repayment (4,200) - 4,200 - - Debt - new financing 647 - (647) - - Net book value of tangible capital asset disposals 31 - (31) - - Operating expenses funded from internally restricted surplus 3,701 (3,701) - - - Net Board appropriation to internally restricted surplus (2,000) 2,000 - - - Change in accumulated remeasurement gains 586 - - - 586 Net assets, beginning of year 10,212 14,211 42,575 60,857 127,855 Annual operating surplus 8,278 - - - 8,278 Endowments New donations - - - 350 350 Capitalized investment income - - - 351 351 Tangible capital assets Amortization of tangible capital assets 6,124 - (6,124) - - Acquisition of tangible capital assets (2,446) (430) 2,876 - - Debt repayment (4,280) - 4,280 - - Debt - new financing 972 - (972) - - Net book value of tangible capital asset disposals 11 - (11) - - Operating expenses funded from internally restricted surplus 1,199 (1,199) - - - Net Board appropriation to internally restricted surplus (9,500) 9,500 - - - Change in accumulated remeasurement gains 10,849 - - - 10,849 Net assets, as at June 30, 2021 $ 21,419 $ 22,082 $ 42,624 $ 61,558 $ 147,683 (1) Investment in tangible capital assets represents the amount of the University's accumulated operating surplus that has been invested in the University's tangible capital assets. Net assets is comprised of: Accumulated surplus $ 1,463 $ 22,082 $ 42,624 $ 61,558 $ 127,727 Accumulated remeasurement gains 19,956 - - - 19,956 $ 21,419 $ 22,082 $ 42,624 $ 61,558 $ 147,683 26 Mount Royal University NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2021 (thousands of dollars) 12. Internally restricted surplus Internally restricted accumulated surplus represent amounts set aside by the University's Board of Governors for specific purposes. Those amounts are not available for other purposes without the approval of the Board and do not have interest allocated to them. Internally restricted net assets with significant balances include: 2021 Balance at beginning of year Appropriations from unrestricted net assets Disbursements during the year Balance at end of year Appropriations for capital activities Capital renewal $ 3,765 $ - $ 468 $ 3,297 Commercial operations project planning 1,988 - 314 1,674 Residence 838 - 104 734 6,591 - 886 5,705 Appropriations for operating activities Research and special projects 1,925 - 135 1,790 Academic strategic development 1,054 - 88 966 University effectiveness and community needs 4,434 9,500 517 13,417 Scholarships and bursaries 207 - 3 204 7,620 9,500 743 16,377 Total $ 14,211 $ 9,500 $ 1,629 $ 22,082 2020 Balance at beginning of year Appropriations from unrestricted net assets Disbursements during the year Balance at end of year Appropriations for capital activities Capital renewal $ 5,192 $ - $ 1,427 $ 3,765 Commercial operations project planning 2,290 - 302 1,988 Residence 1,190 - 352 838 8,672 - 2,081 6,591 Appropriations for operating activities Research and special projects 2,299 - 374 1,925 Academic strategic development 1,169 - 115 1,054 University effectiveness and community needs 4,924 2,000 2,490 4,434 Scholarships and bursaries 211 - 4 207 8,603 2,000 2,983 7,620 Total $ 17,275 $ 2,000 $ 5,064 $ 14,211 27 Mount Royal University NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2021 (thousands of dollars) 13. Contingent assets The University initiated legal matters and insurance claims where possible assets are being sought. While the outcomes of these claims cannot be reasonably estimated at this time, the University believes that any settlement will not have a material effect on the financial position or the results of operations of the University. These contingent assets are not recognized in the consolidated financial statements. 14. Contingent liabilities a. The University is a defendant in a number of legal proceedings arising in the normal course of business. While the ultimate outcome and liability of these proceedings cannot be reasonably estimated at this time, the University believes that any settlement will not have a material adverse effect on the financial position or the results of operations of the University. Management has concluded that none of the claims meets the criteria for recording a liability. b. The University has identified potential asset retirement obligations related to the existence of asbestos in a number of its facilities. Although not a current health hazard, upon renovation or demolition of these facilities, the University may be required to take appropriate remediation procedures to remove the asbestos. As the University has no legal obligation to remove the asbestos in these facilities as long as the asbestos is contained and does not pose a public health risk, the fair value of the obligation cannot be reasonably estimated due to the indeterminate timing and scope of the removal. The liability for these assets will be recorded in the period in which there is certainty that a capital project will proceed and there is sufficient information to estimate fair value of the obligation. 15. Contractual rights Contractual rights are rights of the University to economic resources arising from contracts or agreements that will result in both assets and revenues in the future when the terms of those contracts or agreements are met. Estimated amounts that will be received or receivable for each of the next five years and thereafter are as follows: Operating leases Other contracts Total 2022 $ 47 $ 3,065 $ 3,112 2023 51 1,989 2,040 2024 37 1,471 1,508 2025 - 975 975 2026 - 453 453 Thereafter - - - Total at June 30, 2021 $ 135 $ 7,953 $ 8,088 Total at June 30, 2020 $ 173 $ 5,558 $ 5,731 28 Mount Royal University NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2021 (thousands of dollars) 20. Government transfers 2021 2020 Grants from Government of Alberta Advanced Education: Operating $ 94,664 $ 99,395 Capital 5,000 - Other 6,691 4,346 Total Advanced Education $ 106,355 $ 103,741 Other post-secondary institutions $ 18 $ 99 Other Government of Alberta departments and agencies: Ministry of Culture, Multiculturalism and Status of Women 54 134 Ministry of Community and Social Services 100 50 Ministry of Jobs, Economy and Innovation 590 15 Ministry of Children's Services 342 1,080 Ministry of Labour - 110 Ministry of Health 87 53 Total other Government of Alberta departments and agencies 1,173 1,442 Total contributions received 107,546 105,282 Expended capital recognized as revenue 7,099 9,507 Less: deferred revenue (9,681) (3,303) $ 104,964 $ 111,486 Accounts receivable Advanced Education $ 350 $ - Other Government of Alberta departments and agencies 29 11 $ 379 $ 11 Federal and other government grants Contributions received $ 2,511 $ 1,450 Expended capital recognized as revenue 764 1,394 Less: deferred revenue (1,135) (292) Revenue $ 2,140 $ 2,552 The University has liabilities with the Department of Treasury Board and Finance as described in note 7. 31 Mount Royal University NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2021 (thousands of dollars) 21. Salary and employee benefits 2021 2020 Base salary(2) Other cash benefits(3) Other non-cash benefits (4)(5) Total Total Governance(1) Chair of the Board of Governors $ - $ - $ - $ - $ - Members of the Board of Governors - - - - - Executive President and Vice-Chancellor Current term commenced May 1, 2019 $ 294 $ 6 $ 54 $ 354 $ 367 Past term ended April 30, 2019 - - - - 15 Total $ 294 $ 6 $ 54 $ 354 $ 382 Provost and Vice-President Academic Current term commenced June 8, 2020 $ 241 $ - $ 30 $ 271 $ 18 Past term ended June 3, 2020 - 27 20 47 647 Total $ 241 $ 27 $ 50 $ 318 $ 665 Vice-President Finance and Administration $ 241 $ - $ 32 $ 273 $ 280 Vice-President University Advancement $ 207 $ 22 $ 32 $ 261 $ 265 Vice-President Student Affairs and Campus Life Position Abolished November 25, 2019 - - - - 440 (1) Effective July 1, 2015, all members of the Board of Governors elected to forego honoraria, redirecting resources to improved electronic reporting systems for Board members. (2) Base salary includes pensionable base pay. (3) Other cash benefits include housing allowances, vacation payout, car allowances, professional development, cash travel allowances and severance. No cash bonuses were paid in 2021 or 2020. (4) Other non-cash benefits include: the employer's share of all employee benefits and contributions or payments made on behalf of employees, including pension, health care, extended health care, health spending, dental care, long-term disability and group life insurance. The other non-cash benefits also include the employer's share of the cost of additional benefits, including administrative leaves or other special leaves with pay, club and professional memberships, and fair market value of parking. (5) Under the terms of the supplementary executive retirement plan (SERP), executive officers may receive supplemental payments. Retirement arrangement costs, as detailed below, are not cash payments in the period but are the period expense for rights to future compensation. Costs shown reflect the defined annual contributions to the plan on behalf of the plan member, including accrued interest on the accrued liability in the plan. 32 Mount Royal University NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2021 (thousands of dollars) 21. Salary and employee benefits (continued) The current service cost and accrued obligation for each executive under the SERP is outlined in the following table: Accrued obligation June 30, 2020 Payments Current service cost Accrued obligation June 30, 2021 President and Vice-Chancellor $ 27 $ - $ 20 $ 47 Provost and Vice-President Academic Past term ended June 3, 2020 $ 72 $ 72 $ - $ - $ 99 $ 72 $ 20 $ 47 The current service cost and accrued obligation for each executive under the Administrative leave plans is outlined in the following table: Accrued obligation June 30, 2020 Payments Current service cost Accrued obligation June 30, 2021 Provost and Vice-President Academic Past term ended June 3, 2020 $ 166 $ 166 $ - $ - 22. Budget figures Budgeted figures have been provided for comparison purposes and have been derived from the University’s Comprehensive Institutional Plan as approved by the Board of Governors. Certain budget figures from the University's 2020-2021 Comprehensive Institutional Plan have been reclassified to conform with the presentation adopted in the 2021 consolidated financial statements. 23. Approval of consolidated financial statements The consolidated financial statements were approved by the Board of Governors of Mount Royal Unversity on October 7, 2021. 24. Comparative figures Certain comparatives figures have been reclassified to conform to current year presentation. 33