How can the English Schools Foundation's two private independent schools sustain losses of HK$21.3 million without it having any impact on its 14 publicly-funded schools?
That is the question angry parents are asking, worried they have been 'indirectly but effectively subsidising' the colleges through fee increases over the past five years.
The foundation has opened its books on Renaissance College and Discovery College to explain how the HK$110 million it invested in building the former and HK$168 million paid towards construction of the latter is being repaid over a 20-year period.
ESF chief executive Heather Du Quesnay insists the schools will be able to repay the HK$278 million within the repayment period and that they were never expected to generate a profit in their first years of operation.
The HK$278 million, which was paid out from the ESF cash balance over several years before the launch of Renaissance College in 2006, is an investment repaid annually with a return based on the Hong Kong inter bank offer rate plus 1 per cent.
Vivian Cheung, the ESF's chief financial officer, said Renaissance College had repaid the full returns for its first four years of operation totalling HK$12.5 million as well as HK$20 million of the capital sum, leaving HK$90 million still to pay.
But Discovery College, which opened in 2007, had paid just HK$8.5 million of its three years of returns totalling HK$11.7 million, and none of its HK$168 million capital. Indeed, further investment increased the principal to HK$170 million.
