Report of the Treasurer to the Council on the Group’s Financial Statements for the Financial Year from 1 July 2010 to 30 June 2011
Overview
The Institute continued to move steadily towards becoming an Education-focused,
multidisciplinary and research-strong institution. After the launching of new
UGC-funded non-Education degree programmes, the Institute was in the process
of launching new self-financed non-Education programmes, at both undergraduate
and postgraduate levels, to enrich the range of programmes offered to the
community.
Following the significant reduction in expenditure of last year (2009/10) as
compared with the previous year (2008/09) after the strengthening of various cost
controls, the expenditure in current year (2010/11) continued to decrease, in spite
of an increase in income. As a result, the Institute had turned the net funding
deficit of $62 million in 2009/10 to a net surplus of $82 million for this year.
Academic Programmes and Student Numbers
There were five new progammes launched during the year. New UGC-funded
programmes were Bachelor of Arts (Honours) in Language Studies and Bachelor
of Social Sciences (Honours) in Global and Environmental Studies. For the
self-financed programmes, they were Bachelor of Health Education (Honours),
International Executive Master of Arts in Educational Leadership and Change, and
Master of Arts in Music Education.
The total number of UGC-funded students in Full-Time Equivalent (“FTE”) terms
studying at the Institute as at June 2011 increased by about 6.5% from 2009/10
to about 4,897 FTE students in 2010/11. The increase mainly came from
undergraduate programmes, of about 8.4%, but was slightly offset by a decrease of
about 1.6% in students at postgraduate level.
Among the non UGC-funded programmes, the Master of Education continued to be
the most popular programme with student enrolment of about 421 FTE students.
The Doctor of Education programme had 76 FTE students.

The HKIEd School of Continuing and Professional Education Limited (“SCPE”)
continued to offer the Project Yi Jin Programmes (“PYJ”), with about 1,013 FTE
students, and the Pre-Associate Degree Foundation Certificate Programmes (“Pre-
AD”) and Associate Degree Programmes (“AD”) with about 526 FTE students in
2010/11.
Income and Expenditure
The Group adopts the Hong Kong Financial Reporting Standards (“HKFRS”) issued
by the Hong Kong Institute of Certified Public Accountants. 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
There were net increases in the UGC Block Grants and Earmarked Grants of about
$42 million and $29 million respectively, as compared to 2009/10. The increase
in UGC Block Grants was mainly due to increased student enrolment, whilst the
increase in UGC Earmarked Grants was mainly because of the receipt of Matching
Grant during the period and the increase in research projects. However, there was a
decrease in donation of about $7 million. With the growth in student numbers, Tuition,
Programmes and Other Fees of the Institute had increased by about $32 million.
Regarding investment, the Institute continued to invest in bank deposits with a diversity
of banks, as the global economy remained to be unstable. With the anticipation of
appreciation of the Renminbi, new deposits in Renminbi had been made over the year
which had contributed positively to the investment return for the year. The Institute
will continuously oversee its investment strategy and will make adjustments where
appropriate in response to the changing global economic conditions.
At the subsidiary level, the SCPE had a total income of about $70.3 million in
2010/11, which was $7.9 million lower than that of 2009/10 and was mainly due
to lower student intake.
Over the year, the Group’s non-UGC-funded income had steadily increased by
$12 million to about $293 million. The increase was mainly attributable to
increase in tuition fees from self-financed programmes and more tendered training
and consultancy contracts awarded by several government agencies.


Expenditure
The expenditure of the Group decreased by about $43 million as compared to last
year to a total of about $1,116 million. The expenditure at the Institute reduced
by about $33 million while the expenditure of its subsidiaries decreased by about
$10 million in 2010/11.
At the Institute, all of the expenditure categories had experienced decreases, except
for Other Academic Services which showed a small increase. The decrease of about
$14 million in Learning and Research was mainly due to the reduction in staff
costs following the retirement of academic staff members as well as staff turnover.
With regard to the small increase in Other Academic Services, more resources were
deployed to support the new academic programmes and the preparation for the
New Undergraduate Programme under the 3+3+4 Academic Structure.
Under Institutional Support, a total saving of about $19 million was achieved. The
majority of the savings was contributed by a reduction in Premises and Related
Expenses of about $11 million, as a result of a decrease in repair and maintenance
works, utilities, cleaning and security expenses, after a review of the service
requirements done in April 2010.
At the subsidiary level, the SCPE had a total expenditure of about $61.9 million
in 2010/11 which was $9.9 million lower than that of 2009/10. The decrease
was mainly due to decreased course fees paid to PYJ partners as a result of the
decreased number of PYJ students, and lower staff costs.

Superannuation Scheme
Membership of The Hong Kong Institute of Education Superannuation Scheme
(“Superannuation Scheme”) stood at 393 and the Superannuation Scheme had
total net assets of approximately $482 million as at 30 June 2011.
In addition, a total of 1,575 members of staff participated in the Mandatory
Provident Fund Scheme with an approximate total fund balance of $82 million as
at 30 June 2011.
Outlook
Through prudent financial planning, the Institute has maintained a healthy
financial position, and is ready to meet the challenges of curriculum reform in
the next triennium. Contingency funding is built into the 2011/12 budget, to
empower management to make swift decisions to address any unforeseeable risks
in the preparation for the double cohort in 2012. Under the 3+3+4 Academic
Structure, students of our core Bachelor of Education programme will experience a
new five-year undergraduate curriculum, whereas students pursuing other Bachelor
degree programmes will study for four years. This will be an exciting journey for
the Institute in providing our students with different pathways, which enhance the
breadth and depth in their learning to meet the changing needs of contemporary
society in the era of globalisation and knowledge revolution.


Dr Eric LI Ka-cheung, GBS, JP
Treasurer
The Council of The Hong Kong Institute of Education
14 October 2011
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