Financial Report AIT ASIAN INSTITUTE OF TECHNOLOGY 27 April 2006.

Financial Report

AIT ASIAN INSTITUTE OF TECHNOLOGY

27 April 2006

Contents

• Financial Reporting – Main Issues, Initiatives & Results

• Net Loss Trend – Overview• Un-audited FY2005• Measures to Address Financial

Results• FY 2006 Proposed Budget

To ensure that financial statements: • provide a true & fair view of the financial

results and position • are presented in accordance with

generally acceptable accounting principles

Financial Reporting – Main Issues

Presentation of statutory reporting

is line with reporting of Higher Education Institutions in the US & UK and

IFRS

Rectify incorrect past accounting practices

- agency fund as custodian fund

- separation of UNEP.RRC.AP

- excess funds of active sponsored programs record as

advances/debtors

- all residuals in general reserve fund

Financial Reporting – Initiatives

Close inactive accounts & completed

sponsored programs

Identify overspending/losses in agency fund &

Baht 66 mil write-off

Revise management reporting

Financial Reporting – Initiatives

Financial Reporting – Results

Financial statements give actual state of

financial affairs

can be relied upon for future planning

Major factor: Tuition fees ↓ 20% in Aug 2003

Net tuition fees: ↓ Baht 260 Mio over 3 years

Student enrolments: ↑↑ but not enough

Other factors: AIT fellowships, salaries, overhead recovery from sponsored programs

AIT Fellowships: ↑↑

Salaries: ↑↑

Overhead recovery: ↓

Trend: NET LOSS ↑↑

Net Results Trend Analysis (2002–2005)

Student Enrolments(excluding students on exchange & extension)

0200400600800100012001400160018002000

2002 2003 2004 2005

AITCV

AIT Thailand

Net Tuition Fees

0

100

200

300

400

500

600

2002 2003 2004 2005

AITCV

AIT Thailand

Overhead Income(from sponsored programs)

0

10

20

30

40

50

60

2002 2003 2004 2005

Overhead Income

F10 Headcount(Faculty & Staff)

0

100

200

300

400

500

600

700

800

2002 2003 2004 2005

Staff

Faculty

Salaries – Operating Fund(Fund10)

370380390400410420430440450460470

2002 2003 2004 2005

Salaries

Profit & Loss – Operating Fund(Fund 10)

-200

-100

0

100

200

300

400

500

600

700

2002 2003 2004 2005

Revenue

Expenses

Net Results

Comparison of Semi-annual Results

(all funds)

-200

-100

0

100

200

300

400

500

600

700

800

1H2003 2H2003 1H 2004 2H2004 1H2005 2H2005

Revenue

Expenses

Operating Results

Net Results

Comparison of 1st Quarter Results

(all funds)

-50050100150200250300350400450500

1Q2003 1Q2004 1Q2005 1Q2006

Revenue

Expenses

Operating Results

Net Results

Announce financial problems in July 2005 2005 budget ↓ 10% Salary freeze in 2006 Recruitment freeze for resignations/retirements Set up 3 task forces Appoint KPMG Sweden for institutional assessment Restructure central administration Revise 2006 budget process Revise 2006 overhead recovery & faculty honorarium

formula for sponsored programs

2005 Measures Taken

Major Findings & Recommendations Governance, internal control & risk

management Efficiency of administrative processes Relations between schools & administration Roles of administrative offices Financial management processes Responsibility Centre Management concept

Institutional Assessment By KPMG Sweden

Major Findings Management information system Employee & compensation structure Program management processes AITCV Strategic planning & budgeting process

Implementation of recommendations by June 06

Institutional Assessment By KPMG Sweden

2005 Un-audited Results

Revenue ↓ Bht 29 Mio (3%) to Bht 1,121 Mio

Expenses ↑↑ Bht 1 Mio to Bht 1,222 Mio

Operating deficit ↑↑ Bht 30 Mio (42%) to Baht 101 Mio

Net deficit ↑↑ Bht 12 mio (8%) to Baht 172 Mio

Cash ↓ Bht 231 Mio (35%) to Baht 423 Mio

Reserves ↓ Bht 179 Mio (62%) to Baht 109 Mio

Financial Situation

CRITICAL

2006 interim cost budget ↓ 4% Provident Fund Contribution ↓ from 10% to

5% (savings Bht 13 mio) Salary ↓ by up to 10% (savings Bht 20 mio) Downsize admin & support staff headcount ↓

by up to 24% Tuition fees for new intake ↑↑ 14% in Aug 2006 Interim capital budget ↓ 43%

2006 Immediate Measures

Proposed 2006 Budget - Overview

• Total Operating Revenue Baht 1.3 Bil• Total Operating Expenses Baht 1.2 Bil• Operating Surplus Baht 56 Mil• Net Deficit Baht 42 Mil• Capital Budget Baht 25 Mil

2006 Proposed Operating Budget

-200

0

200

400

600

800

1000

1200

1400

2006 Proposed

Budget

2006 Interim

Budget

2005 Unaudited

Operating Revenue

Operating Expenses

Operating Results

Net Results

2006 Proposed Operating Budget by Fund

-200

-150

-100

-50

0

50

100

2006 Proposed Budget2006 Interim Budget 2005 Unaudited

F10

F21

F30

F41

Total

2006 Proposed School F10 Operating Budget(excluding indirect costs & depreciation)

0

100

200

300

400

500

600

2006 Proposed

Budget

2006 Interim

Budget

2005 Unaudited

Operating Revenue

Operating Expenses

Operating Results

2006 Proposed Admin Offices F10 Operating Budget(excluding depreciation)

0

50

100

150

200

250

2006 Proposed

Budget

2006 Interim

Budget

2005 Unaudited

Provision for downsizing

Net Operating Expenses

2006 Projected Cash & Reserves

0

100

200

300

400

500

600

2006 Proposed Budget 2005 Unaudited

Cash

Reserves

2006 Proposed Capital Budget

0

5

10

15

20

25

30

35

40

45

2006 Proposed Budget 2006 Interim Budget

Schools

Library

Centres/Offices

Total

AIT ASIAN INSTITUTE OF TECHNOLOGY