Financial Report

1. Financial Report AIT ASIAN INSTITUTE OF TECHNOLOGY 27 April 2006

2. Contents • Financial Reporting – Main Issues, Initiatives & Results • Net Loss Trend – Overview • Un-audited FY2005 • Measures to Address Financial Results • FY 2006 Proposed Budget

3. Financial Reporting – Main Issues 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

4. Financial Reporting – Initiatives • 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

5. Financial Reporting – Initiatives • Close inactive accounts & completed • sponsored programs • Identify overspending/losses in agency fund & Baht 66 mil write-off • Revise management reporting

6. Financial Reporting – Results • Financial statements give actual state of • financial affairs • can be relied upon for future planning

7. Net Results Trend Analysis (2002–2005) • Major factor: Tuition fees ↓ 20% in Aug 2003 • Net tuition fees: ↓ Baht 260 Mio over 3 years • Student enrolments:↑but not enough • Other factors: AITfellowships, salaries, overhead recovery from sponsored programs • AIT Fellowships: ↑ • Salaries: ↑ • Overhead recovery: ↓ • Trend: NET LOSS ↑

8. Student Enrolments (excluding students on exchange & extension)

9. Net Tuition Fees

10. Overhead Income • (from sponsored programs)

11. F10 Headcount (Faculty & Staff)

12. Salaries – Operating Fund • (Fund10)

13. Profit & Loss – Operating Fund (Fund 10)

14. Comparison of Semi-annual Results (all funds)

15. Comparison of 1st Quarter Results (all funds)

16. 2005 Measures Taken • 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

17. Institutional Assessment By KPMG Sweden • 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

18. 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

19. 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

20. Financial Situation CRITICAL

21. 2006 Immediate Measures • 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%

22. 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

23. 2006 Proposed Operating Budget

24. 2006 Proposed Operating Budget by Fund

25. 2006 Proposed School F10 Operating Budget (excluding indirect costs & depreciation)

26. 2006 Proposed Admin Offices F10 Operating Budget (excluding depreciation)

27. 2006 Projected Cash & Reserves

28. 2006 Proposed Capital Budget

29. AIT ASIAN INSTITUTE OF TECHNOLOGY