The Review 2013

Overview The financial year 2012-13 was the first year of the 2012-15 Triennium which marked the start of the 4-year curriculum structure in Hong Kong. The Group's consolidated financial results recorded a surplus of $2,337 million. It was largely attributable to the effect of the double cohort year which brought in additional Government grant and tuition fee for the additional number of students. The introduction of the sixth Matching Grant Scheme in August 2012 also caused the increase in donations. The recovery of the investment market in current year has also improved the investment position greatly. In preparing the consolidated 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. Results for the Year The consolidated income for the year 2012-13 has increased by $2,795 million. It was mainly due to the arrival of new UGC funding for the extra year of study under the 4-year curriculum structure and the increase in tuition fee for the additional number of students during the double cohort year. Also, there was a great increase in donation income during the year, upon the introduction of the sixth Matching Grant Scheme by the Government in August 2012. On the consolidated expenditure, a total of $7,481 million was incurred for the year (2011-12: $6,703 million), of which $5,425 million (2011-12: $5,076 million) was spent on teaching/learning and research activities of the Group. If the total depreciation and amortisation charges of $379 million (2011-12: $360 million) were excluded, the expenditure incurred for the year was approximately 12.0 per cent higher than that of the previous year. Financial Outlook As the financial year 2012-13 ends, the University has entered into the second year of the new 4-year curriculum structure. Excitement continues surrounding the University as a result of the opening of the Centennial Campus, completion of the student resident at Lung Wah Street, the additional cohort of fresh undergraduate students, as well as the functioning of Learning Commons and other state-of-art learning environments in the University which facilitate the enhancement of student learning experience. Parallel to this, however, the funding required to support the expanded infrastructure base, uphold the academic quality and administrative support, and enhance student-related projects, has brought significant stress to the recurrent budgets. Further, considerable resources are also required for capital and consequential works for the relocation of Faculties and redeployment of space for better utilisation, and enhancement of the information system infrastructure and administration systems for the enlarged student population. The University shall remain prudent and yet be creative and flexible in managing the strained finances to ensure adequate resources could still be found for initiatives on academic and research excellence under the challenging and rapidly changing environment both locally and globally. 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 ⎜ 49 An Extract from the University's Annual Accounts 2012-13 THE REVIEW 2013 2013 2012 $ million $ million Income 8,991 6,196 Expenditure (7,481) (6,703) Interest and Investment Gain / (Loss) 781 (183) Surplus / (Deficit) for the year before 2,291 (690) Share of Surplus of Associates and Jointly Controlled Entities Share of Surplus of Associates and 46 19 Jointly Controlled Entities Surplus / (Deficit) for the year 2,337 (671) For the year ended June 30, 2013 The University of Hong Kong Consolidated Statement of Comprehensive Income (Expressed in thousands of Hong Kong dollars) 2013 2012 Income Government Subventions • Subventions from UGC: - Block Grants and Non-accountable Supplementary Grants 3,192,265 2,600,699 - Earmarked Grants 335,158 324,075 - Rates and Government Rent Refund 48,665 45,408 - Capital Grants and Alteration, Additions and Improvements (‘AA & I’) Block allocation 225,044 114,098 3,801,132 3,084,280 • Matching Grants 565,439 - • Grants from Government Agencies and Related Organisations 135,311 121,908 4,501,882 3,206,188 Tuition, Programmes and Other Fees • UGC-Funded Programmes 909,093 685,105 • Non UGC-Funded Programmes 1,614,290 1,343,545 2,523,383 2,028,650 Donations and Benefactions 1,117,395 288,651 Auxiliary Services • Residential Halls and Hostels 95,484 67,850 • University Press 7,288 7,635 • Rental Income and Rental Contribution from Staff 143,966 129,099 • Clinics and Chinese Medicine Pharmacies 16,694 19,322 • Others 15,508 12,686 278,940 236,592 Other Income • Contract Research 103,043 119,260 • Service Income 281,140 186,172 • Outside Practice 67,053 59,816 • Miscellaneous 118,950 70,968 570,186 436,216 8,991,786 6,196,297 Expenditure Learning and Research • Instruction and Research 4,793,375 4,490,396 • Library 205,175 200,984 • Central Computing Facilities 168,177 140,041 • Other Academic Services 258,345 244,848 5,425,072 5,076,269 Institutional Support • Management and General 478,851 435,142 • Premises and Related Expenses 1,058,505 831,110 • Student and General Education Services 327,913 238,571 • Other Activities 190,597 122,522 2,055,866 1,627,345 7,480,938 6,703,614 Interest and Investment Gain / (Loss) 780,814 (182,706) Surplus / (Deficit) from Operations 2,291,662 (690,023) Share of Losses of Associates - (2) Share of Surplus of Jointly Controlled Entities 45,812 18,691 Surplus / (Deficit) for the Year 2,337,474 (671,334) Other Comprehensive Gain Items that may be recognised in the Consolidated Statement of Comprehensive Income • Exchange Differences 2,771 364 • Share of Changes in Fair Value of Available-for-Sale Investments of a Jointly Controlled Entity 88 11 2,859 375 Total Comprehensive Income / (Loss) for the Year 2,340,333 (670,959)