The Council strives to achieve a balanced budget and practices strict financial discipline to meet internal guidelines for resource allocation. TDC had expenditures of HK$1,406 million in 2001/2002, covering all promotional activities and trade support services, and income of HK$1,409 million. The excess income over expenditures was nearly HK$3 million.

While a non-profit organisation, TDC is empowered to charge fees to recover costs and generate income. This is ploughed back into trade promotion. In 2001/02, this income financed 76.6 per cent of the total cost of providing activities under our nine programme areas: product promotion, services promotion, research, business information and training, local exhibitions, trade publications, e-commerce, customer service and corporate relations as well as trade matching and the TDC Design Gallery. Less than 24 per cent came from Government subvention. In other words, for each dollar we received from subvention, TDC created about three dollars in added value.

To ensure the bulk of TDC's funds are spent on promotional work, the Council has a budget rule that administrative costs should not exceed 50 per cent of total expenditures. In 2001/02, we again outperformed this guideline by a considerable margin, with administrative costs - inclusive of staff costs and overheads - at 38 per cent of total expenditures.

In preceding pages we explained how we spent our funds. This financial report details what we spent our funds on. An Income and Expenditure Account and Balance Sheet are shown on pages 64 and 65.

TDC reached a new funding arrangement with Government in 2001. Starting from the financial year 2002/03, annual subventions to TDC will be based on 60 per cent of the gross yield received from the total Trade Declaration Charge on imports, domestic exports and re-exports. It is estimated that the subvention for 2002/03 will be around HK$374 million.

This new funding arrangement will be reviewed in five years in the light of rapidly changing trade patterns.