The Review 2009

An Extract from the University’s Annual Accounts 2008-09 60 Overview The financial year 2008-09 was the rollover year extended from the Triennium 2005-08. The results for the year were largely affected by the negative investment return as the aftermath of the financial crises that intensified to early 2009 which also negatively impacted upon the University’s fundraising activities. The University has been combating within this difficult economic environment and continued to accelerate the momentum in preparing for the four- year structure curriculum reform in the ensuing years to 2012 which resulted in an increased expenditure despite stringent financial conditions. 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 accounting standards 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, 2009 are summarised as follows: 2009 2008 $ million $ million Income 5,269 5,790 Expenditure (6,001) (5,518) Interest and Investment (Loss) / Gain (977) 286 (Deficit) / Surplus for the year before (1,709) 558 Share of Surplus of Associates and Jointly Controlled Entities Share of Surplus of Associates and 6 15 Jointly Controlled Entities (Deficit) / Surplus for the year (1,703) 573 The consolidated income for the year 2008-09 dropped by $521 million. This was mainly attributable to the decrease in donations and benefactions as a result of global economic downturn after the financial tsunami in 2008. 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 11,329 for 2008-09 (2007-08: 11,270 FTE), was $2,200 million (2007-08: $2,132 million). On the consolidated expenditure, a total of $6,001 million was incurred for the year (2007-08: $5,518 million), of which $4,466 million (2007-08: $4,132 million) was spent on teaching/learning and research activities of the Group. If the total depreciation and amortization charges of $414 million (2007-08: $330 million) was excluded, the expenditure incurred for the year was approximately 7.7 per cent higher than the previous year. Financial Outlook With the end of the financial year 2008-09, the University has entered the last triennium of the three-year structure curriculum. While planning for the four-year structure curriculum reform has been progressing on schedule, the University community as a whole is getting more excited as the year 2012 is approaching and the momentum of recruitment of academic staff continues to accelerate. On the physical campus development, the construction of the Centennial Campus building will be completed in time for the intake of the double cohort of students in the academic year 2012-13. Projects for hostels for the enlarged student population are also underway. In addition, there are other development and consequential works for relocation and space re-organisation which require substantial resources. However, avenues for the exploration of additional financial resources through investment and fundraising activities have been constrained while the economy is recovering from the financial crises. A prudent and yet accommodating financial management strategy is required to strike a balance between limited available resources on one hand and increasing demand for expansion and diversification in different ways on the other. 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. The University of Hong Kong Consolidated Income and Expenditure Statement For the year ended June 30, 2009 (Expressed in thousands of Hong Kong dollars) 2009 2008 Income Government Subventions • Subventions from UGC: – Block Grants and Non-accountable Supplementary Grants 2,200,003 2,132,118 – Earmarked Grants 350,596 342,015 – Rates and Government Rent Refund 39,203 36,647 – Capital Grants and Alteration, Additions and Improvements (‘AA & I’) Block Allocation 36,277 46,843 2,626,079 2,557,623 • Matching Grants – 250,000 • Grants from Government Agencies and Related Organisations 51,816 68,751 2,677,895 2,876,374 Tuition, Programmes and Other Fees • UGC-Funded Programmes 606,759 580,890 • Non UGC-Funded Programmes 1,177,018 1,157,374 1,783,777 1,738,264 Donations and Benefactions 210,399 576,464 Auxiliary Services • Residential Halls and Hostels 60,406 55,825 • University Press 4,884 5,049 • Rental Income and Rental Contribution from Staff 101,246 95,814 • Clinics and Chinese Medicine Pharmacies 22,907 22,291 • Others 10,911 10,772 200,354 189,751 Other Income • Contract Research 97,928 90,150 • Service Income 178,240 145,725 • Outside Practice 84,245 66,721 • Miscellaneous 36,749 107,092 397,162 409,688 5,269,587 5,790,541 Expenditure Learning and Research • Instruction and Research 3,959,621 3,666,876 • Library 197,662 179,959 • Central Computing Facilities 110,000 84,954 • Other Academic Services 199,002 200,710 4,466,285 4,132,499 Institutional Support • Management and General 366,003 346,386 • Premises and Related Expenses 838,899 760,425 • Student and General Education Services 193,201 169,998 • Other Activities 136,116 108,924 1,534,219 1,385,733 6,000,504 5,518,232 Interest and Investment (Loss)/Gain (977,474) 285,614 (Deficit)/Surplus from Operations (1,708,391) 557,923 Share of Losses of Associates (25) (2,614) Share of Surplus of Jointly Controlled Entities 5,892 18,108 Surplus for the Year (1,702,524) 573,417 Transfers (From)/To: • Restricted Funds (550,723) (67,291) • Other Funds (1,151,801) 640,708 (1,702,524) 573,417 61