Capital Funding 14 December 2009
Sustainability
Robert BennettCFO
Outline
• 10 year sustainability profile
• Importance of setting precedents
• ESF Funding Strategy - Capital Projects
Age and Floor Area of ESF Schools
Age and Floor Area of ESF Schools
SustainabilityR&M expenditures from 1998 - 2008
0
50
100
150
200
250
School Year
HK
$ (m
ln)
Non-capitalised 61.43 53.68 55.95 64.43 41.27 45.26 33.30 44.61 42.33 63.68 107.77
Capitalised 100.71 20.68 36.63 48.60 109.14 164.28 21.81 14.23 1.99 13.93 22.47
Total 162.14 74.36 92.58 113.03 150.41 209.54 55.11 58.84 44.31 77.61 130.24
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
SC/SJS $60M
SIS $26M
WIS $52M
SIS $75M
Gov’t Funding Status
• Current Projects (First 10 years)– KJS $420M
• ESF could fund, but Gov’t funding imperative• Establish the precedent
– KGV $240M• ESF could fund – Gov’t funding level to be tested
– IS $600-800++M• ESF cannot fund without strain on resources
ESF Funding - Balanced Approach
• Current Funding Options– Cash available for Capital Projects
• $150M• Free cash flow ~ $60M per year
– Capital Levy (Stakeholder Contribution)• @$25k per student = $300M
– Refundable – Years 1 & 7 (6 year collection plan)
– Secured Borrowings• $300M approved by Fin Com against Property
ESF must demonstrate the ability to fund a share of future sustainability
ESF Funding
• Capital Levy• @$25k per student, $10k for 3rd child onward• Generate Cash of $300M over 6 years• Commences Aug 2011 for Years 1 & 7 only• Each new year 1 & Year 7 entrant pays in
subsequent years• Current enrolled year 6 & above exempt• Applies to staff with some payment support• New students at any level pay after Aug 2011• Fully Refundable (subject to no fees outstanding)• Not applicable to PIS or Kindergartens
Funding Components
Government Capital Grants
Refundable Capital Levy
ESF Cash Flow & Commercial Borrowings
Refundable Levy CollectionCurrent
ESF Student Status
Will Pay Levy when
entering
New ESF Student Status
2009/10 Year 7 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18Year 1 2015/16 Year 1 Levy Levy Levy Levy Levy Levy LevyYear 2 2014/15 Year 2 Levy Held Levy Held Levy Held Levy Held Levy Held Levy HeldYear 3 2013/14 Year 3 Levy Held Levy Held Levy Held Levy HeldYear 4 2012/13 Year 4 Levy Held Levy Held Levy HeldYear 5 2011/12 Year 5 Levy Held Levy HeldYear 6 No Levy Year 6 Levy HeldYear 7 No Levy Year 7 Levy Levy Levy Levy Levy Levy Levy HeldYear 8 No Levy Year 8 Levy Held Levy Held Levy Held Levy Held Levy Held Levy HeldYear 9 No Levy Year 9 Levy Held Levy Held Levy Held Levy Held Levy HeldYear 10 No Levy Year 10 Levy Held Levy Held Levy Held Levy HeldYear 11 No Levy Year 11 Levy Held Levy Held Levy HeldYear 12 No Levy Year 12 Levy Held Levy HeldYear 13 No Levy Year 13 Levy Held
Levy = New Students entering ESF pay LevyLevy Held = Students paid levy in a prior year
No Levy = Students will not need to pay the Levy
Refundable Levy AccumulationHK$ Mil
ESFEnrolment 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18
Year 1 1020 24.7MYear 2 1020 24.7MYear 3 1020 24.7MYear 4 1020 24.7MYear 5 1020 24.7MYear 6 1020 24.7M
6120
Year 7 1031 25.0MYear 8 1016 24.6MYear 9 1008 24.4MYear 10 1019 24.7MYear 11 942 22.8MYear 12 872 21.1MYear 13 765 18.6M
6653
12773 49.7M 49.3M 49.1M 49.4M 47.5M 45.8M 18.6M
2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/1849.7M 99.0M 148.1M 197.5M 245.0M 290.8M 309.4MTotal Levy Held
Questions?
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