The Review 2006

The Review 2006 38 The Review 2006 Overview The financial year of 2005-06 was the first in the 2005-08 triennium in which the UGC- funded institutions were able to consolidate after having sailed through the Hong Kong SAR Government’s funding cut and a difficult economic period. The University continued to be prudent in managing its finance so that it can set aside such resources as required to meet the challenges arising from the areas of strategic focus, in particular the transition to a 3+3+4 academic structure (see The Review 2006 ). In the preparation of the financial statements, the Hong Kong Accounting Standards (HKAS) and Hong Kong Financial Reporting Standards (HKFRS) have been adopted and interpretation of HKFRS issued by Hong Kong Institute of Certified Public Accountants which are effective and relevant to our operation. Results for the year The consolidated results for the year ended June 30, 2006 are summarised as follows: As Restated 2006 2005 $ million $ million Income 6,153 5,146 Expenditure 4,821 4,652 Net Surplus for the year before Share of Losses of Associates and Jointly Controlled Entities 1,332 494 Share of Losses of Associates and Jointly Controlled Entities (3) - Net Surplus for the year 1,329 494 Consolidated income increased by 19.6% when compared with that of the previous year. This was largely due to the increase in donations, the effect of which has been magnified by the implementation of the second matching grant scheme during the year. Tuition and programme fees also recorded a steady growth of 6.7% when compared with last year. The improved investment return and the change in accounting policy for recognition and measurement of financial instruments also accounted for 15% of the increase from last year. The amount of block grant received during the year from the UGC, which was based upon the planned full-time equivalent (FTE) student number of 11,311 for 2005-06 was $2,081 million. On the consolidated expenditure, a total of $4,821 million was incurred for the year, of which $3,632 million, representing more than 75% of total expenditure, was spent on teaching/learning and research activities. Financial Outlook The Hong Kong SAR Government has reassured the sector and the wider community that there will be no reduction in recurrent grants for the UGC-funded institutions in the 2005- 08 triennium. This gives the University a relatively stable financial environment to implement its future development and to tackle challenges ahead. To sustain this development, we need to make substantial and long-term investments (see The Review 2006 ). In addition to support from the Government, the University continues to work in partnership with the corporate and private sectors, as well as individuals. Results for the year so far have been encouraging and the University will remain pragmatic and prudent in its financial planning as we move forward in realising our potential. The University’s Annual Accounts can be found at http://www.hku.hk/finance/financial_ report/indixz.htm. Any correspondence or feedback on this extract or the accounts should be addressed to e-mail: finance@fo.hku.hk . An extract from the University’s Annual Accounts 2005-06 ii