The Review 2007

The University of Hong Kong Consolidated Income And Expenditure Statement For the Year Ended June 30, 2007 (Expressed in thousands of Hong Kong dollars) 53 An Extract from the University’s Annual Accounts 2006-07 Overview The financial year 2006-07 was the second year of the Triennium 2005-08. The results for the year were satisfactory with surplus increased by 8.5% as compared with that for last year. The Group’s financial position is well-positioned for the future. In preparing for the four-year structure of the curriculum reform to take effect from 2012, the University has taken proactive plans to recruit additional academic staff and develop its physical estates, which are made possible by prudence in managing University finance. In preparing the financial statements, the Group has adopted certain new/revised Hong Kong Accounting Standards (“HKAS”) and Hong Kong Financial Reporting Standards (“HKFRS”) (Collectively “HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants which are effective and relevant to the Group’s operation. The adoption of these new/revised standard during the year did not result in substantial changes to the Group’s accounting policies. Results for the year The Group’s consolidated results for the year ended June 30, 2007 are summarized as follows: 2007 2006 $ million $ million Income 6,519 6,153 Expenditure 5,079 4,821 Net Surplus for the year before 1,440 1,332 Share of Losses of Associates and Jointly Controlled Entities Reversal of Revaluation Deficit of 6 – Buildings in Prior years Share of Losses of Associates (5) (3) and Jointly Controlled Entities Net Surplus for the year after Share 1,441 1,329 of Losses of Associates and Jointly Controlled Entities The consolidated income for the year 2006-07 rose by $366 million, an increase of 5.9 per cent when compared with that of the previous year. This was mainly attributable to the considerable improvement in investment return by $482 million and the steady growth of tuition and programme fee by $90 million. The effect of increase in these two areas was partly offset by the decrease in donation of $224 million as compared with last year due to the introduction of the third Government Matching Grant Scheme before the last financial year ended and certain donations relating to this matching grant which was accounted for in 2005-06. The amount of block grant received during the year from the University Grants Committee (“UGC”), which was based upon the planned full-time equivalent (“FTE”) student number of 11,276 for 2006-07 (2005-06: 11,311 FTE), was $2,066 million (2005-06: $2,081 million). On the consolidated expenditure, a total of $5,079 million was incurred for the year (2005-06: $4,821 million), of which $3,838 million (2005-06: $3,632 million) was spent on teaching/learning and research activities of the Group. If the total depreciation and amortization charges of $308 million (2005-06: $300 million) was excluded, the expenditure incurred for the year was approximately 5.5 per cent higher than the previous year. Financial outlook The satisfactory result of the year lays a good foundation for the ensuring years approaching 2012 when the curriculum reform takes effect. The momentum in the recruitment of academic staff will accelerate in the coming years to prepare for the curriculum reform and to align the University’s strategic goal to scale new heights of academic excellence. In parallel with academic development strategic plan, the University also requires a concomitant increase in the physical space available for scholarly activities, and accommodation for the enlarged student population, both local and overseas, which call for a strategic campus development plan. The University prepares to make substantial and long-term investments to support our academic endeavours by mobilizing resources, including those built up previously if needed to bridge the gap before the eventual availability of UGC and other funds. The University’s Annual Accounts can be found at http://www.hku . hk/finance/financial_report . Any correspondence or feedback on this extract or the accounts should be addressed to e-mail: finance@ fo.hku.hk . 52 2007 2006 Income Government Subventions Subventions from UGC: • Block Grants and Non-accountable Supplementary Grants 2,066,244 2,081,382 • Earmarked Grants 351,405 373,873 • Rates and Government Rent Refund 33,683 31,993 • Capital Grants and Alteration, Additions and Improvements (“AA & I”) Block Allocation 65,946 70,505 2,517,278 2,557,753 Matching Grants 250,000 250,000 Grants from Government Agencies and Related Organisations 62,697 53,049 2,829,975 2,860,802 Tuition, Programmes and Other Fees • UGC-Funded programmes 552,297 528,385 • Non UGC-Funded programmes 1,154,501 1,088,201 1,706,798 1,616,586 Interest and Investment Income 1,194,289 712,385 Donations and Benefactions 314,407 538,075 Auxiliary Services • Residential Halls & Hostels 58,992 57,865 • University Press 4,392 4,492 • Rental Income & Rental Contribution from Staff 83,870 73,086 • Clinics and Chinese Medicine Pharmacies 21,880 20,762 • Others 11,543 10,020 180,677 166,225 Other Income • Contract Research 81,248 71,220 • Service Income 121,759 114,328 • Outside Practice 57,569 52,386 • Miscellaneous 32,457 20,985 293,033 258,919 6,519,179 6,152,992 Expenditure Learning and Research • Instruction and Research 3,394,065 3,209,960 • Library 177,866 179,541 • Central Computing Facilities 85,573 78,626 • Other Academic Services 179,999 163,852 3,837,503 3,631,979 Institutional Support • Management and General 332,899 289,839 • Premises and Related Expenses 656,569 693,669 • Student and General Education Services 157,753 146,175 • Other Activities 94,021 59,930 1,241,242 1,189,613 5,078,745 4,821,592 Surplus from Operations 1,440,434 1,331,400 Reversal of Revaluation Deficit of Buildings in Prior Years 5,548 - Share of Losses of Associates (1,640) (1,745) Share of Losses of Jointly Controlled Entities (2,979) (788) Surplus for the Year 1,441,363 1,328,867 Transfers To • Restricted Funds 439,335 203,872 • Other Funds 1,002,028 1,124,995 1,441,363 1,328,867