URA

MANAGEMENT DISCUSSION AND ANALYSIS 56 Financial Review (I) Review of 2017/18 Results (a) Revenue The revenue for the year ended 31 March 2018 was $13,868 million which comprised of upfront payments from tendered projects, share of surplus from joint development projects and proceeds from sale of flats at Kai Tak. The amount is higher than the revenue of $5,035 million in 2016/17 by $8,833 million. Three projects, namely Peel Street/Graham Street (Site C), Reclamation Street/Shantung Street and Fuk Chak Street/Li Tak Street, were tendered during the year. The total site area was 4,755 m 2 as compared with total site area of 2,202 m 2 from the three redevelopment projects tendered in 2016/17. The higher upfront payments in 2017/18 was as a result of the larger site area tendered and the rising property prices during the year. The share of sales proceeds from joint development projects of $1,128 million in 2017/18 (2016/17: $1,249 million) were revenue from projects where the sales proceeds exceeded the thresholds stipulated in the development agreements. The projects contributed to the surplus du r i ng t he y e a r a r e p r o j e c t s w i t h development agreements executed in prior years. Proceeds of $157 million from sales of residential flats at Kai Tak was recognized in 2017/18 (2016/17: $1,763 million). For 2017/18, the flats were sold primarily at prevailing market price. While for 2016/17, the flats were sold under Subsidised Sale Flat Scheme at 86% of the market value assessed by the URA. (b) Other income Of the $451 million (2016/17: $290 million) in other income for the year, $320 million (2016/17: $244 million) was interest income from bank deposits and fixed income investment products, with an average yield of 1.60% p.a. (2016/17: 1.38% p.a.). Other income also included rental income from certain properties retained by the URA. (c) Administrative expenses Administrative expenses for the year 2017/18 of $423 million (2016/17: $418 million) mainly covered staff costs, accommodation costs and office expenses. Cost control measures were implemented whenever possible to minimize administrative expenses. The staffing level was reduced from 516 at 31 March 2017 to 501 at 31 March 2018 resulting from recruitment freeze to enhance cost effectiveness and efficiency of manpower investment. Of the 501 staff, 15 (31 March 2017: 15) were employed on contracts of less than three years.