Report of the Treasurer to the Council on the Group's Consolidated Financial Statements for the Financial Year from 1 July 2007 to 30 June 2008

Overview

Under the leadership of the new President, the Institute is moving at full speed to develop into a regional education centre and to achieve university status. A significant number of initiatives as set out in the Development Blueprint to strengthen the Institute's academic strength and research profile are being carried out. Renowned scholars from around the world have recently been recruited, and top-notch research centres will soon be set up to strengthen cooperation with overseas institutions. Students' overseas learning experiences will also be enhanced, and service and civic/citizenship education will be strengthened. Apart from bolstering the Institute's academic, research and students' profile, various changes to improve the efficiency and effectiveness of the governance structure are also underway.

To implement these initiatives and changes, the Institute has earmarked more than $200 million from its General and Development Reserve Fund ("Reserves"), which has been accumulated through prudent financial management over the past years in response to the reduction in UGC Block Grants. In the current financial year, a total of about $53 million has been transferred from the Reserves to support these initiatives and changes.

A review of actual student numbers as compared with the UGC approved targets for the 2005-08 triennium was carried out, and an adjustment to the amount of grants received was made in the current year, which negatively affected the Reserves. Nonetheless, the Reserves remained at a healthy level of $480 million as at 30 June 2008, after taking into account the various initiatives, changes and adjustments.


Academic Programmes and Student Numbers

The total UGC-funded student number in Full-Time Equivalent ("FTE") terms studying at the Institute as at June 2008 reduced by 3.4% from 2006/07 to about 4,059 FTE. The decrease occurred mostly in in-service certificate programmes in Early Childhood Education ("ECE") and other professional development programmes. While the student numbers at the degree level remained at a level similar to last year (2,673 FTE students in 2007/08), there was an increase of about 24% to 519 FTE students at the post-graduate level. Other than the UGC-funded programmes, there were 361 FTE students enrolled in the Certificate of Kindergarten Education, a programme which was commissioned by the Education and Manpower Bureau.

Among the non UGC-funded programmes, the Master of Education continues to be popular with an intake of 242 students. Total FTE increased to 239 FTE students, 50 FTE up on last year and the Doctor of Education recorded an admission of 18 students. A total of 43 Mainland students were enrolled in these two higher degree programmes in 2007/08 and in addition, the Institute will proactively strengthen its cooperation with overseas universities, including Cambridge University, to offer Master's and Doctoral degree programmes.

Regionally, the Institute would form its first collaboration at postgraduate level with a Mainland university, the South China Normal University, to exchange teachers, researchers, and postgraduate students with mutual credit recognition. Three new self-funded programmes were also launched in September 2008, namely the Master of Arts in Chinese Studies (Language Education), Master of Arts in Teaching Chinese as an International Language, and Bachelor of Music in Education (Honours). The number of students enrolled in these new programmes for 2008/09 were 30, 30, and 33 respectively.

The HKIEd School of Continuing and Professional Education Limited continues to offer the Yi Jin programmes, with about 1,508 FTE students, and the Pre-Associate Degree and Associate Degree programmes with about 333 FTE students in 2007/08.




Income and Expenditure

The Institute had adopted the Hong Kong Financial Reporting Standard ("HKFRS") issued by the Hong Kong Institute of Certified Public Accountants in the 2005/06 financial year. Further updates from HKFRS were also incorporated into the Financial Statements for this year. For details of the changes in accounting policy in relation to the new standards, please refer to Note 2 of the Consolidated Financial Statements of the Institute.

Income
Apart from a reduction of about $67 million in UGC Block Grants, the Institute also experienced a slight decrease in subventions from the UGC earmarked grants and from the other government agencies for the Group compared to the 2006/07 level. However, Tuition, Programmes and Other Fees had increased by $23 million, and of this, about $7 million and $16 million came from UGC-funded and non-UGC funded programmes or courses respectively. Within the non-UGC funded income, sub-degree level programmes and courses contributed significantly to the increase.

Investment and interest income reported as "Other Gains – net" increased by $7 million to $59 million in spite of decreasing interest rates since the beginning of the financial year. The increase was mainly attributable to the early redemption of certain structured notes during the year.



Expenditure
The expenditure of the Institute had increased by $152 million to a total of about $1,048 million for the year. The increase was mainly due to an adjustment in grants of $62 million, which related back to 2005/06 and 2006/07 was recognised as expenses in accordance with the HKFRS under Instruction and Research. Expenditure on Management and General was contained at last year's level. An increase of about $8 million in Student and General Education Services was mainly attributable to an increase of $4 million in scholarships, bursaries and prizes to students as well as other extra-curricular activities. As for the extra-curricular activities, a significant increase of 88% compared to the previous year was spent mainly on new initiatives to foster active learning and all-round development of students. These initiatives included subsidising overseas learning experiences, non-teaching work internship programmes, Study Tour Organisers Award Scheme, and Academic Empowerment Project, etc.




Superannuation Scheme

Membership of The Hong Kong Institute of Education Superannuation Scheme ("Superannuation Scheme") stood at 350 and the Scheme had total net assets of about $391million as at 30 June 2008. During the year, 76 contract staff members joined the Superannuation Scheme. In addition, a total of 816 members of staff participated in the Mandatory Provident Fund Scheme with an approximate total net asset value of about $62 million as at 30 June 2008.


Outlook

"Education Matters". With the increasing number of students who select the Institute's programmes among their top choices in the Joint Universities Programmes Admission System (up 44% from last year), the idea that "Hong Kong needs a University of Education" seems well accepted by the community. Along the path to becoming a university of education, the Institute not only aims to be a key education research centre for Hong Kong and the Mainland, but also a research development network in the region.

With the new faculty structure established in September 2008, the newly appointed Chair Professors and Professors will be fully on board before February 2009, and the Institute is reinvigorated to positively facing changes and challenges ahead. The year 2009 will be the 15th anniversary of the Institute, and at the same time the 70th anniversary of The Northcote College of Education, the first college of education in Hong Kong. The history of teacher training has over time evolved into the training of whole-person development. I am confident that the Institute will continue to evolve and meet the changing needs of education now and into the future. By becoming a leading university of education in the region, and helping to transform Hong Kong into an education hub by bringing together the best of the East and the West, the Institute is poised to make an important and lasting contribution to the education of future generations to come.



Pang Yiu-kai, SBS, JP
Treasurer
The Council of The Hong Kong Institute of Education
4 December 2008