HONG KONG URBAN COUNCIL
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deficit calculated? What accounting system (whether accrual basis or cash basis) is adopted by Wembley International, whether the $175 million contributed by the Council in 1994 towards the fitting-out costs of the Stadium is regarded as an accumulated deficit, whether BOG has formulated a five-year forecast on the financial position of the Stadium, and whether deficit is envisaged? If so, whether the BOG has considered how the deficit would have impact on the Management Agreement signed between Council and Wembley International?
In accordance with clause 16.4 of the Management Agreement between Wembley International (HK) Ltd. and the Urban Council, the Agreement may be terminated by the Urban Council if there shall be a deficit in the net operating income for any three consecutive years (unless such deficits can reasonably be regarded as having arisen from events wholly outside the control of the Manager).
Net operating income is defined in the Agreement as ‘the difference between Gross Operating Income and Operating Expenses'.
The statutory accounts for the Urban Council are maintained on a cash accounting basis. However, the accounts for the Stadium prepared by the Manager are maintained on an accrual basis. These accounts are audited by a private auditor.
The fitting-out costs of $175 million were approved by the Standing Committee of the Whole Council on 2 November 1993 and paid by the Urban Council to the Royal Hong Kong Jockey Club.
The BOG have endorsed the Five-Year Forecast of Revenue and Expenditure for the period 1995/96 to 1999/2000 for the Stadium on 7 July 1995. Preparation of this forecast adopted both bases, i.e. both on a cash and accrual basis. There are both projected deficits and surpluses over these five years, but there is no projected deficit for three consecutive years.
MISS ADA Wong Ying-kay (in Cantonese):—This is a detailed reply, but I have five follow-up questions. Firstly, paragraph 2 of the reply states that the existing policies and procedures of the Urban Council were not designed for the management of the new Stadium. I want to know in more concrete terms which aspects of our existing policies and procedures are not applicable to the management of the Stadium.
My second follow-up question has to do with paragraph 6 of the reply which states that the Consultant's report suggested that the Urban Council appointed a private management company to manage the Hong Kong Stadium. I want to know if the Consultant proposed that the Council make the USD as the liaison link, and whether the existing three-tier system of Wembley, USD and UC was originally proposed by the Consultant. We see now that the USD participates in many areas, including—for finance, an Assistant Director to answer Members'
Page 21 of 498
Page 21 of 498
Page 21 of 498
HONG KONG URBAN COUNCIL
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deficit calculated? What accounting system (whether accrual basis or cash basis) is adopted by Wembley International, whether the $175 million contributed by the Council in 1994 towards the fitting-out costs of the Stadium is regarded as an accumulated deficit, whether BOG has formulated a five-year forecast on the financial position of the Stadium, and whether deficit is envisaged? If so, whether the BOG has considered how the deficit would have impact on the Management Agreement signed between Council and Wembley International?
In accordance with clause 16.4 of the Management Agreement between Wembley International (HK) Ltd. and the Urban Council, the Agreement may be terminated by the Urban Council if there shall be a deficit in the net operating income for any three consecutive years (unless such deficits can reasonably be regarded as having arisen from events wholly outside the control of the Manager).
Net operating income is defined in the Agreement as ‘the difference between Gross Operating Income and Operating Expenses'.
The statutory accounts for the Urban Council are maintained on a cash accounting basis. However, the accounts for the Stadium prepared by the Manager are maintained on an accrual basis. These accounts are audited by a private auditor.
The fitting-out costs of $175 million were approved by the Standing Committee of the Whole Council on 2 November 1993 and paid by the Urban Council to the Royal Hong Kong Jockey Club.
The BOG have endorsed the Five-Year Forecast of Revenue and Expenditure for the period 1995/96 to 1999/2000 for the Stadium on 7 July 1995. Preparation of this forecast adopted both bases, i.e. both on a cash and accrual basis. There are both projected deficits and surpluses over these five years, but there is no projected deficit for three consecutive years.
MISS ADA Wong Ying-kay (in Cantonese):—This is a detailed reply, but I have five follow-up questions. Firstly, paragraph 2 of the reply states that the existing policies and procedures of the Urban Council were not designed for the management of the new Stadium. I want to know in more concrete terms which aspects of our existing policies and procedures are not applicable to the management of the Stadium.
My second follow-up question has to do with paragraph 6 of the reply which states that the Consultant's report suggested that the Urban Council appointed a private management company to manage the Hong Kong Stadium. I want to know if the Consultant proposed that the Council make the USD as the liaison link, and whether the existing three-tier system of Wembley, USD and UC was originally proposed by the Consultant. We see now that the USD participates in many areas, including—for finance, an Assistant Director to answer Members'
Page 21 of 498
Page 21 of 498
Page 21 of 498,
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