Update: May 8 Informal Meeting Board - Parents

Chairman of the Board and Board Treasurer accepted to meet 3 parents on May 8, further to list of questions sent.

A detailed communication on budget will be sent shortly aiming at explaining why operating expenses are increasing while revenue is down (2020/21 budget vs. 2019/20 forecast).

Below are the minutes of this meeting for the benefit of the wider community. Another update will be sent post the aforementioned budget communication from FIS Board.

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Attendees

• Guillaume Goriot – Board Chairman
• Thomas Decouvelaere – Board Treasurer
• Julien Cailloce – Parent
• Philippe de Viel Castel – Parent
• Dan Healy – Parent

Topics discussed & answers by FIS Board

"Fond des amis"

• There was 5 million in the pot, almost 3 million has been allocated
• They are encouraging more applications
• The panel of assessment is the CFO, the current headmaster, and the future headmaster
• No board members are on the assessment panel
• There is a consistent set of criteria against which they assess the applications
• Acknowledged the criteria specifics haven’t been shared to date and that it would be beneficial to provide transparency on key eligibility screening thresholds
• They are not a public body and are not mandated to share, but the board understands more can be done to give visibility and it will be discussed again at next weeks board meeting
• Acknowledge that the current assessment looks at historic financial evidence, rather than future cash flow issues caused by parents being subjected to salary reduction in future months
• Outside the Fond des amis there is support for parents in need with school fees in the form of delayed or phased payments. A request can be lodged with the receivables team that you need help in the form of a payment delay
• It is mentioned in the video communication very subtly, but it was missed by most people, and they recognized this could be more loudly communicated

Current vs Future Budget, Financial Position of FIS, rebates

• With respect to rebates, they maintain the position that there are no funds to facilitate rebates today, however, it is being assessed daily
• They are thoroughly reviewing the proposition of subsidies from AEFE and the Hong Kong Government, so situation can change
• The Hong Kong Government subsidy application window has not started (start June 1, 2020 for January-April period), and they do not have visibility as to whether they will receive anything from AEFE. So cannot commit to funds from here but acknowledged that whatever comes should be fairly given back.
• If Hong Kong Government subsidies are accepted, there will be an undertaking to not reduce headcounts as per government scheme conditions. However the salaries reduction are something that can be considered as part of the plan as the condition is on total number of headcounts. Also the period of time during which this will apply hasn’t been specified yet.
• FIS have contacted more than 12 other international schools in HK, and all have consistently taken the same position in not reducing teacher salaries
• There is still uncertainty on student numbers for next year, so this is another reason that today they cannot commit.
• They will continue to review the situation closely, but were transparent that if anything can be done it would more likely take the form of a Term 1 credit for next year, than a credit against this years Term 3
• More transparency on the budget was given through discussion and for those who are interested in a deeper look at financials, there will be a more detailed budget breakdown circulated by the board to all on Monday. This will compare the initial Budget to Forecast view, with a more developed Budget to Budget view (current year vs future year)
• In previous meetings they have stated that there is not a war chest of funds in cash reserves. They talked through previous cash positions and current
• Within the school governance there is a minimum cash position that must be maintained to de-risk yearly cash flow fluctuations and things such as debenture returns etc. They do have reserves, however it is slightly below their minimum level of risk tolerance. This again deters them from rebating parents at the moment will enhance the risk
• They responded to the questions around increased operating costs, despite falling revenues
• Some elements are linked with revenues, for example Extra Curricular Activities (ECA), were down this year due to closures but will increase next year. This is cost, but it is compensated through revenue payments
• There are operating cost increases due to new staff of circa 4 million HKD, 3 million of this are to cover staff for two new classes at TKO. Remaining 1 million is for other new contracts
• There have been some savings made with the removal of the Executive Director role being removed
• They want the school to run in an efficient and streamlined manner and part of the mandate of Francois Xavier is to optimize the operating model
• The rest of costs increase are driven by various maintenance and operational expenses. This will be fully fledged in Monday’s communication
• No further staff changes will be made at this time as most contracts are now issued

Summer classes

• It is not technically or academically possible to extend the school year into summer, however they are working closely with teachers to explore the possibility of summer camps.
• They stressed the point of difference between delaying school finish into summer vs summer camp as it avoids issues with academic calendar
• They are currently confirming the re-entry into school by phase and getting EDB approval, and then they will need to act quickly to confirm any summer camp
• There may be some additional cost to the school in order to host and run summer camps which is another reason why they need to ensure cash flow positions at this moment