The financial year 2002-03, the second year of the triennium 2001-04, ended with a deficit of some HK$14 million, generally in line with the triennial plan for block-grant-funded activities. The University continued to strive to maintain its high-quality teaching and research activities while keeping costs down. In accordance with guidelines laid down by the University Grants Committee (UGC), the deficit will be transferred to the UGC Triennium Equalization Account together with the surplus of some HK$17 million brought forward from 2001-02.

General Income and Expenditure

General income for the year was HK$1,716 million (2001-02: HK$1,712 million). There were significant improvements on investment returns (HK$31 million in 2002-03 vs HK$5 million in 2001-02). However, the increase was offset by a reduction in the recurrent grant from UGC, mainly due to a downward cost-of-living revision of salaries in line with those of civil servants. Total income received from the UGC amounted to HK$1,386 million (2001-02: HK$1,406 million), the largest part being the block grant ($HK1,351 million). The remainder of general income, HK$330 million, included HK$291 million arising from tuition fees and other fees, and HK$31 million arising from interest and investment income.

General expenditure for the year was HK$1,729 million (2001-02: HK$1,695 million), the increase being primarily due to additional spending on the acquisition of academic equipment. Of the total expenditure, HK$1,225 million or 70.9% was for Academic Departments and Academic Support Centers, HK$262 million or 15.1% for Maintenance of Premises, HK$136 million or 7.8% for Administration, and HK$106 million or 6.2% for other items.

Earmarked Grants

The University received from the UGC a total of HK$285 million (2001-02: HK$280 million) in earmarked grants. Of this, HK$118 million was earmarked for research activities and HK$129 million was earmarked for staff housing arrangements under the Government Home Financing Scheme.

Capital Grants

A total of HK$92 million (2001-02: HK$93 million) was received from the UGC in the form of capital grants. These grants were for the acquisition of specialist equipment and facilities and the construction of a new student hostel with 527 places.

Donations, Designated Funds and Other Operating Funds

Income from donations and designated funds amounted to HK$111 million (2001-02: HK$89 million); and other operating income generated from self-financing activities and research contracts showed a total of HK$245 million (2001-02: HK$210 million).

As at 30 June 2003, the total fund balance of donations, designated funds and other operating funds stood at HK$585 million (2001-02: HK$577 million).

Reserves

As at 30 June 2003, the reserves and provisions stood at HK$792 million (2001-02: HK$777 million), of which HK$632 million (2001-02: HK$630 million) formed the General and Development Reserves.