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CITA ANNUAL REPORT 2007

Construction Industry Training Authority

Our Vision

To be the leader and pacesetter

in construction training and craft accreditation

Our Mission

We will achieve our vision by:

- setting standard of craft accreditation

- integrating technological advances

- delivering quality training

- fostering professional ethics

- nurturing safety awareness at work

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PAGE

CHAIRMANS REPORT 3-7

INTRODUCTION 8-9

MEMBERSHIP 10-12

EXECUTIVE DIRECTOR AND ADMINISTRATIVE STAFF 13

ESSENCE OF TRAINING OPERATIONS AND MANAGEMENT 14-21

COMMITTEE REPORTS 22-27

LEVY INCOME 28

INDEPENDENT AUDITORS' REPORT 29-30

INCOME AND EXPENDITURE ACCOUNT 31

BALANCE SHEET 32

STATEMENT OF CHANGES IN FUND AND RESERVES 33

CASH FLOW STATEMENT 34

NOTES TO THE FINANCIAL STATEMENTS 35-49

APPENDICES 50-68

CONTENTS

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Chairmans Report

Ir Edgar C .P. Kwa n, JP Chairman

I have great pleasure in submitting this report for the year 2003

on behalf of the Board of the Authority.

This is my first report since I took up chairmanship on the 5th

September 2003. It is indeed a great privilege for me to be appointed

as Chairman. I will uphold the dedication and commitment of ourimmediate past Chairman, Mr. Billy W.H. Wong, and other

distinguished past Chairmen in leading the Authority in its provision

of quality services to the construction industry.

During the past year, this Authority continued to implement

measures and initiatives in response to the recommendations made

in the Report of the Construction Industry Review Committee, which

are relevant to our work; and to make necessary arrangements for

the implementation of the reforms.

Enhancement and Revision of the Ful l - t ime Train ingCourses

Since the 2002/2003 training year, this Authority has extended

the training period of some of the Basic Craft Courses to two years,

and has incorporated a number of generic training elements. The

first batch of trainees also completed two site practices within the

year of 2003. With the support of many employers, all trainees were

able to acquire valuable practical experience. The Authority has

since reviewed the site practice arrangements, with the aim of

providing the best pre-employment training to the trainees. Besides,

in the past six months, we have conducted a review on the

Construction Supervisor Trainee/Technician Training Programme.

It is recommended to extend this one-year full-time course to two

years, update the course contents, enhance generic education and

In the year 2007, the Hong Kong economy attained a better

growth. The pick-up in wages and earnings, the improved job

prospects and the persistent surge in private sector construction

activities led to an increase in the receipt of construction levy. The

Chief Executive announced in the Policy Address in October 2007

that the Government would undertake 10 infrastructure projects toboost economic growth, including three transport related projects,

four cross-border projects and three urban redevelopment projects.

The economic benefits to be brought about by these infrastructure

projects would total more than $100 billion annually and some

250,000 jobs would be created. All these hammered out an optimistic

prospect for the construction industry. As the training institute for

the industry, this Authority has the responsibility to complement the

policy of the government by strengthening its training efforts to meet

the needs of the industry and the community at large.

One of the major tasks of this Authority in the year 2007 was to

prepare for the amalgamation of CITA and the Construction Industry

Council (the Council) scheduled for 1 January 2008. The statutoryfunctions performed by this Authority will then become those of the

Council. Some of the functions will be taken up by the Construction

Industry Council Training Academy, which will continue to provide

the services rendered by this Authority in the past three decades. In

the second half of the year, this Authority set up a working group on

amalgamation to ensure that every matter in connection with the

amalgamation could be smoothly implemented.

Being the last Chairman of this Authority, I would like to take

this opportunity to review its work in carrying out its statutory

functions, together with its developments over the past three decades:

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adopt a sandwich training mode. These measures will serve to

strengthen the training contents; and to enable the trainees to acquire

the supervision and management skills of construction supervisorsas well as practical experience before they join the industry on full-

time employ. New promotion strategies will be formulated to attract

young persons with high calibre to join the construction training.

Tra de Tests a nd Construction W ork ers Registration System

To complement the Construction Workers Registration System

(CWRS) expected to be introduced soon by the Government, this

Authority continued to expand in the year the scope of its trade testing

programme for skilled and semi-skilled workers. Those who passed

the tests would be issued certificates certifying their standards of

skills. They would be able to register as skilled or semi-skilled

workers accordingly. The Authority has also completed the vettingof the contents and requirements for all designated trades in the

building and civil engineering sector for which a person may be

registered as a registered skilled worker and registered semi-skilled

worker under the proposed CWRS. Up to the end of April 2004, a

total of 29,634 and 29,494 workers passed the trade tests and

intermediate trade tests respectively.

To assist the workers in preparation for taking the trade tests,

the Authority proposed to produce compact discs to make known

the contents of the practical tests; and to publish the questions of the

written part with answers for workers to do revision before taking

the written tests. As this Authority has agreed a few years ago to

assume the role of registration body under the proposed CWRS,

relevant representations and observations were submitted during the

consultation stage of the legislative process in the year.

Amendments to Ordinance for Levy on Electr ical andM echanical W orks

The Legislative Council passed in March 2004 the Construction

Industry Levy (Miscellaneous Amendments) Ordinance 2004,

empowering this Authority to collect levies from Electrical and

Mechanical (E&M) works for the provision of related training and

trade tests. The Authority studied several options for implementing

the expanded training and trade testing functions for E&M workersin the construction industry. The Vocational Training Council was

subsequently appointed as an agent for CITA in the provision of

these E&M training courses and trade tests for three years initially.

An agreement was signed by both parties at the end of March 2004.

Meanwhile, this Authority would formulate the strategies and develop

long term plans for the trade tests and skills enhancement programmes

for the E&M workers in the construction industry.

Construction Industry Council Bill

In its report published in 2001, the Construction Industry Review

Committee recommended to establish an industry co-ordinating body.

The functions of this statutory body would include: to tender advice

Estab lishme nt a nd M a intena nce of Industrial Tra iningCentres

This Authority was established in September 1975 by theenactment of the Industrial Training (Construction Industry)

Ordinance, and the levy collected from construction works undertaken

in Hong Kong was then spent on establishing and maintaining

industrial training centres to provide training courses for the

construction industry. Upon establishment of the first training centre

in Kowloon Bay in June 1977, the first batch of trainees were enrolled

and over 500 basic craft trainees completed training in the following

year. With the boom in the economy in the 80s, this Authority set

up its second training centre in Kwai Chung in 1982 and its third

training centre in Aberdeen in 1989. Following the commencement

of the operation of the fourth training centre in Sheung Shui, and the

takeover of the training activities of the Aberdeen Training Centre,the Aberdeen Training Centre was renamed as the Management

Training and Trade Testing Centre, and started to offer various kinds

of part-time management and safety training courses and to coordinate

the trade testing programme.

This Authority initially ran only one training centre and now

operates a total of four training and trade testing centres. Besides, it

also established four outdoor training grounds on land granted by

the government to provide practical training space for trainees and

to conduct various types of trade and certification tests. To better

utilize the spatial resources, this Authority conducted a thorough

review of the usage of the centres and the outdoor training grounds

in recent years. The types of training courses and trade tests to beconducted in the premises were redefined in 2007 so that the training

and trade testing could be more effectively conducted.

Provision o f Training Courses for Construction Ind ustry

In its early days, the Authority only provided basic craft courses

and short courses for training, respectively, youngsters who had

completed F.3 and adults who intended to join the construction

industry. From 1980 onwards, it offered a supervisor/technician

training programme for F.5 graduates. In the mid-90s, in response

to the development of the industry and the new legislative

requirements, the Authority introduced numerous continuing

education courses for in-service construction practitioners. Thecoverage of its training provisions was then extended from pre-

vocational to in-service training. The variety of the training courses

was also broadened from the teaching of craft skills to the imparting

of management know-how, safety knowledge, supervisory theories

and the like. At present, this Authority offers more than a hundred

types of training courses for persons intending to join the industry

and for in-service practitioners of various ranks.

After in-depth discussion with related government departments

and organisations, subsequent to a serious crane incident in late July

2007, the Authority, in addition to offering regular courses, introduced

the Tower Crane Worker Silver Card Course. The first class was

then launched in August for in-service workers. Up to the end of

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and make recommendations to Government on strategic matters,

major policies and legislative proposals that may affect or are

connected with the construction industry; to promote the industryson-going development and improvement; to formulate codes of

conduct; to encourage research activities and the use of innovative

techniques, to name a few. The Government submitted the

Construction Industry Council (CIC) Bill to the Legislative Council

in early 2004. Upon passing of the Bill, the CIC will be established

and this Authority will then be subsumed and become a subsidiary

body under the CIC, and continue to assume the training and trade

testing role and functions. Collection of levies will come under the

CIC. In the year, this Authority also offered comments during the

legislative process of the said Bill, and rendered advice on

enhancement to the levy collection system and other provisions.

Open and Proactive Leadership to Accomplish Our Visiona nd M ission

To meet the Authoritys new challenges, all new and re-

appointed Members and management staff joined me in a brain-

storming session in end November 2003. We reviewed our vision

and mission, and agreed on the following seven objectives for the

coming year:

the Board to set clear and definite work objectives, gain the

commitment of all staff who will dedicate to accomplishing

the goals;

to establish a reliable and effective mechanism which

enhances the process of dissemination of information andpromotes two-way communications;

to unify the employment terms and conditions and to

complete the review on the staff appraisal system;

to complete the review on staff remuneration and benefits;

management staff to lead all staff to develop an enlightened,

cooperative, creative and positive work culture;

to formulate a plan for comprehensive review of the training

and trade testing functions, and to complete major revamps;

and

to review and redesign all major work processes and to

review the deployment of resources for optimum uses.

The management staff immediately initiated action plans to

achieve the above objectives. Up to now, firstfruits were evident in

many areas. As regards the formulation and implementation of the

work objectives, the Board and the management have established

effective communication mechanism. The Efficiency Enhancement

Committee continues to monitor their implementation and revises

them as and when necessary. In respect of staff communication, all

staff members were invited to attend a briefing on the seven work

objectives set for the year 2004 following the brain-storming session.

Besides, regular meetings of the Management Committee, Staff

Consultative Committee, and individual training centres were

resumed.

2007, a total of 20 classes were conducted and over 340 workers

were trained. Moreover, this Authority also thoroughly considered

offering a series of training courses in relation to the operation ofcranes, and planned to offer seven such courses in the years to come.

These included the Construction Materials Rigger Silver Card Course,

launched in October 2007, which by years end comprised a total of

nine classes, catering to more than 240 trainees. In addition, in line

with the growing interest of the community in heritage preservation

and repair, the Authority offered an Introductory Course on

Conservation Built Heritage. The Authority will actively pursue the

development of other training courses in relation to the preservation

of heritage.

Endeavours by the government to introduce the Qualifications

Framework, and the 3+3+4 new senior secondary academic structure

to be implemented in the 2009/10 school year, will affect intakes ofthe Basic Craft Courses and Supervisor/Technician Programme,

because most Form 3 students would be directly admitted to Form 4

and Form 5 graduates to Form 6. The Authority continued to actively

review the training courses, including training content, level, mode,

admission requirements and paths for further studies, in order to meet

future developments.

From 1977 to the end of 2007, this Authority trained a total of

1.16 million man times, out of which over 60,000 man times

completed the full-time courses and 1.1 million man times the part-

time courses. This clearly evidenced the popularity of the training

courses.

Certifica tion and Tra de Tests for Construction W ork ers

Since 1990, this Authority has been conducting trade tests for

construction craftsmen of six main trades. From 1998 onwards we

offered intermediate trade tests for semi-skilled construction workers

to ascertain the standards of their skills. Over this period, the number

of trades covered by the Authoritys Trade Testing Scheme increased

gradually in line with the contractual requirement that public works

projects must engage a certain percentage of qualified craftsmen on

construction sites. Later, we actively increased the number of building

and civil engineering trades covered by the Trade Testing Scheme

so as to complement the implementation of the construction workers

registration system by the government. At present, the number oftrades available for trade tests and intermediate trade tests has

increased to 54 and 28 respectively. In addition, from 1993 onwards,

we conducted certification tests and certification courses cum tests

for construction plant operators. These construction plants included

gondolas, builders lifts, cranes and load-shifting machines.

Subsequent to the amendment to the Ordinance, from 2005

onwards the Authority has introduced intermediate trade tests and

trade tests for a total of 12 construction related E&M trades.

By the end of 2007, a total of 63,000 trade tests and 46,000

intermediate trade tests were conducted for the building and civil

engineering trades. Whereas, 1,800 trade tests and 11,000

intermediate trade tests in total were conducted for the construction

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For the staff appraisal system, I was given to understand that a

review on the existing appraisal system, the format of the appraisal

forms and the mechanism of awarding annual increment were nearcompletion. Proposed changes would be submitted shortly for the

consideration of the relevant Committee. In line with the overall

work objectives of the Authority, the management is in the process

of developing a strategic human resources management plan and a

systematic staff training and development scheme.

Whilst the consultancy study on the remuneration, benefits and

employment conditions of the staff is still on-going, the management

has taken measures to contain the number of staff through flexible

and optimal deployment of staff. The related Committee would soon

initiate an overall review of the rationale for and the amount of

existing allowance with a view to bringing them in line with prevailing

practices in Hong Kong.

Since last December, the management adopted an open and

proactive attitude at work, which should cascade down to all levels

of staff. It also took a holistic and realistic approach in implementing

the policy proposals and work plans. This would help developing

an open and positive work culture. Regarding the comprehensive

review and rationalization of major work processes, individual cost

centres have completed the review of existing processes within their

responsibilities, and was in the midst of streamlining and proofreading

them.

I am confident that with the solid experience gained over the

years in carrying out reforms and with the full support of all membersof staff, we will achieve the desirable outcomes relevant to the work

objectives set by the Authority.

In line with the expanded statutory functions, the membership

of this Authority will be changed to include representatives from the

Hong Kong Federation of Electrical and Mechanical Contractors Ltd.

and the Union for Electrical and Mechanical Workers in the

construction industry. The end of the term of office of the current

Board Members will be advanced to the 31st May 2004. I would

like to thank my fellow Board Members for their invaluable advice

on the formulation of policies and mid- to long-term development

plans of the Authority. Not least for their active participation in thework of various committees in steering the implementation of major

work plans and policies. On behalf of the Authority, I would like to

record our gratitude to Mr. Wong Man-kai who will leave us at the

end of May 2004, and those members who retired in September 2003.

They included Mr. Louis H.W. Wong, Mr. Dominic K.K. Lam, Mr.

Fung Kin-chor and Dr. Howard C.H. Cheng; Mr. Chow Tung-shan,

the public officer who left the Board on transfer to another division

within his department; and Mr. Gordon W.F. Cho, the long-serving

Board Member who has taken up the post of Executive Director since

December 2003. I would also like to welcome Mr. Wan Koon-sun

who will join the Board in the coming June representing electrical

and mechanical workers in the construction industry.

related E&M trades. In addition, the number of certification tests

and re-validation tests conducted for construction plant operators

reached 70,000 man times.The Authority regularly reviewed and expanded the contents

and types of the trade tests with the related government departments

and organisations connected with the construction industry. In order

to enable construction workers to gain the recognised qualifications,

so as to meet the legislative requirements and enhance the status of

construction workers, the Authority offered the required trade tests

to set standards for various construction skills. Certification of the

skill levels of frontline construction workers will also help enhance

the overall quality of local construction work.

Placement of Persons Completing Training Courses

To enable trainees to put into practice what they have learntand to join the construction industry upon graduation, this Authority

has been providing placement services for graduates of the full-time

training courses. In 1998, this Authority launched the Employers

Subsidy Scheme, encouraging employers to employ full-time

graduates on a monthly-salary basis, to sign apprenticeship contracts

with them and to provide in-service training. The Trainees Placement

Section of this Authority regularly visits and counsels the apprentices

to provide support. Since its launch, the Scheme has been well

received by the employers, and has enabled a significant number of

graduates to complete systematic on-the-job training.

Up to the end of 2007, a total of 1,994 applications for subsidy

were approved and 1,325 apprenticeship contracts were processedby the Authority. We continue to provide the placement service to

assist graduates to join the construction industry so as to replenish

the construction workforce.

Construction W ork ers Registration

The Authority was appointed as the Registrar of Construction

Workers in February 2005, and started to offer registration services

for construction workers through the Workers Registration Office

established in late 2005. The number of applications for registration

submitted by construction workers surged drastically before the

implementation, on 1st September 2007, of the Phase One Prohibition,

under which employers are prohibited from employing unregisteredworkers to carry out construction work on construction sites. This

Authority immediately put in place a number of contingency

measures. Resources and manpower were swiftly redeployed to

process over 20,000 applications for registration within a month, to

enable workers to register before the deadline.

By the end of the year 2007, over 220,000 applications for

registration were processed by the Workers Registration Office, and

efforts continue to be made to complement enforcement of the

Construction Workers Registration Ordinance.

In addition, at the request of the Construction Workers

Registration Authority (CWRA), four specified training courses were

offered specifically for registered skilled workers (provisional) in

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In closing, I would like to express my wholehearted appreciation

to members of staff of this Authority who worked hard and withdedication, and to the HKSAR Government and the industry for their

unfailing support. I sincerely hope that we can continue to count on

your support and guidance in discharging our existing and expanded

functions.

Edgar C.P. Kwan

Chairman

May 2004

July 2007, as a route other than the passing of relevant trade tests for

these workers to apply for registration as Registered Skilled Workers.

Up to the end of 2007, a total of 66 provisionally registered skilledworkers successfully completed the assessment and became eligible

to apply for registration as Registered Skilled Workers for the trades

concerned. This Authority will continue working with CWRA to

monitor provisional registration of the remaining trades and to

introduce the required specified training courses for workers to

complete within three years after provisional registration, so that they

can apply for registration as Registered Skilled Workers.

Financial Situation

Construction levy collected from the local construction projects

is the main source of operating income of the Authority. Throughout

the years, this Authority has strived to put in place various cost savingand efficiency enhancement measures to maintain a healthy financial

condition so that its operations would not be affected by the ups and

downs of the economy. Up to the end of 2007, the funds of this

Authority amounted to $380 million, and according to the

Construction Industry Council Ordinance all assets of this Authority

had to be vested in the Council on 1 January 2008 to carry out its

statutory functions for the construction industry.

Looking Ahead

I was appointed as Chairman of the Construction Industry

Training Authority in September 2003 and since then I have submitted

four reports on behalf of CITA. This report will be the last reportsubmitted by this Authority. I am deeply grateful to all Authority

Members and to the staff of CITA for their support, which resulted

in smooth implementation of various policies over the years.

Services provided by CITA over the last thirty years and the

efforts made in training and trade testing work have gained wide

recognition. With the imminent amalgamation with the Council, I

strongly believe that all the staff of CITA will continue to work hard

and discharge their duties diligently and enthusiastically in the new

organisation. I would also like to thank again all the past Authority

Members who served on CITA.

In closing, I on behalf of CITA would like to express sincere

gratitude to the industry and the HKSAR Government for theirstaunch support over the past three decades, without which this

Authority would not have been able to effectively carry out its

functions and to contribute to the development of the construction

industry.

Ir Edgar C.P. Kwan, JP

Chairman

December 2007

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Constitution

The Construction Industry Training Authority was established

in September 1975 by the enactment of the Industrial Training(Construction Industry) Ordinance 1975. The membership of the

Authority consists of a Chairman and twelve members, all of whom

are appointed by the Chief Executive. Consequent upon the

enactment of the Construction Industry Levy (Miscellaneous

Amendments) Ordinance 2004 on 1 June 2004, the constitution of

the Authority was revised as follows:

2 shall be persons nominated by the Hong Kong Construction

Association Limited;

1 shall be a person nominated by the Hong Kong Federation

of Electrical and Mechanical Contractors Limited;

1 shall be a person nominated by the Hong Kong Institute of

Architects;

1 shall be a person nominated by the Hong Kong Institute of

Surveyors;

1 shall be a structural engineer nominated by the Hong Kong

Institution of Engineers;

1 shall be a civil engineer nominated by the Hong Kong

Institution of Engineers;

1 shall be a person who holds office as an official of a trade

union representing workers employed in the construction

industry;

1 shall be a person who holds office as an official of a trade

union representing electrical and mechanical workers

employed in the construction industry;

1 shall be a person nominated by the Executive Director of

the Vocational Training Council;

2 shall be public officers; and

1 shall be a person, not being a public officer or person

connected with any of the above-mentioned organizations.

Statutory Functions

According to the Industrial Training (Construction Industry)

(Amendment) Bill 1999, the functions of the Authority include :

to establish and maintain industrial training centres;

to provide training courses for the construction industry; to assist, including to assist by way of financial provision,

in the placement of persons completing training courses;

to make recommendations with respect to the rate of levy;

and

to assess the standards of skills achieved by anyone in any

kind of work involving or in connection with the construction

industry, conduct examinations or tests, issue or award

certificate of competence and establish the standards to be

achieved in respect of such work.

Introduction

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Besides, the Authority is appointed in February 2005, under

the Construction Workers Registration Ordinance enacted in 2004,

as the Registrar of Construction Workers to perform the functions ofand exercise the powers conferred on the Registrar.

Committees

In the year, the Authority discharged its functions with the

advice of the following standing committees, which comprised

members of the Authority and co-opted members:

Committee on Construction Training Courses

Committee on Building and Facilities Management

Committee on Administration and Human Resources

Committee on Finance and Investment

Committee on Levy

Committee on Trade Testing

Committee on Employers Subsidy Scheme

There are also a number of boards of studies and course advisory

committees to advise on the relevant training programmes. The terms

of reference and membership of the Standing Committees are given

in Appendix 2 whilst those of the Boards of Studies and Course

Advisory Committees are given in Appendix 3.

Meetings

The Authority met 5 times, and its Standing Committees 14

times during the year 2007. The Boards of Studies and various Course

Advisory Committees also held a total of 3 and 28 meetingsrespectively.

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Membership(from 1 June 2006 to 31 December 2007)

Chairman

Ir KWAN Chi-ping, Edgar, JP

Nominated by the Hong Kong Construction Association Limited

Members

Ir LEE Wing-kee, Stephen

Nominated by the Hong Kong Construction Association Limited

Mr. CHONG Kin-lit, Paul

Nominated by the Hong Kong Federation of Electrical and

Mechanical Contractors Limited

Mr. CHOI Wun-hing, Donald

Nominated by the Hong Kong Institute of Architects

Mr. CHENG Wai-hung, Nelson

Nominated by the Hong Kong Institute of Surveyors

Ir KWAN Po-jen, Helen

A structural engineer nominated by the Hong Kong Institution of

Engineers

Ir YU Sai-yen

A civil engineer nominated by the Hong Kong Institution of Engineers

Mr. CHOI Chun-wa, MH

An official of a trade union representing workers employed in the

construction industry

Mr. WAN Koon-sun, MH

An official of a trade union representing electrical and mechanical

workers employed in the construction industry

Ir Dr. Chan Wan-ching, Lawrence (from June 2007)

Ir FU Siu-pun (up to May 2007)

Nominated by the Executive Director of the Vocational Training

Council

Mr. TONG Sek-por, David

Representing the Secretary for Development

Mr. TSO Sing-hin

Representing the Commissioner for Labour

Ir TAM King-leung

A person not being a public officer or person connected with any of

the organizations mentioned above

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Chairman and M embers of the Authority

Ir Edgar C.P . K wan, JP

M r. Paul K .L. C hong Ir Stephen W.K . Lee Ir Tam K ing Leung

M r. Donald W.H. C hoiIr Helen P.J. K wanM r. Nelson W.H . C heng

M r. C hoi C hun Wa, M H M r. Tso Sing H in M r. Wan K oon Sun, M H

Ir Fu Siu PunIr D r. C han Wan C hingM r. D avid S.P. TongIr Yu Sai Yen

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Chairm a n a nd M emb ers of the Construction Industry Training A uthority

(First row from left): Mr. Tso Sing Hin; Ir Tam King Leung; Ir Edgar C.P. Kwan, JP (Chairman); Mr. Wan Koon Sun, MH; Mr. David S.P. Tong

(Back row from left): Ir Yu Sai Yen; Ir Dr. Chan Wan Ching; Mr. Nelson W.H. Cheng

(Absent): Mr. Paul K.L. Chong; Ir Stephen W.K. Lee; I r Helen P.J. Kwan; Mr. Donald W.H. Choi; Mr. Choi Chun Wa, MH

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Executive Director

Mr. Charles D.Y. Wong

Administrative Staff

Mr. Wong Chi Lap - Senior Manager (Safety Training & Trade Testing)

Mr. Chu Yin Lin - Senior Manager (Construction Training)

Accounts Department

Mr. Alfred M.H. Wong - Accounting Manager

Mr. Fong Kam Shan - Information Technology Manager

Secretariat

Mrs. Sophie S.Y. Leung - Secretary to Authority

Human Resources Department

Miss Eliva M.Y. Au* - Human Resources Manager

Kowloon Bay Training Centre

Mr. Mok Peng Lam - Centre Manager

Kwai Chung Training Centre

Mr. Chu Yin Lin - Senior Manager (Construction Training)

Sheung Shui Training Centre

Mr. Ho Siu Kwan - Centre Manager

Management and Safety Training Centre

Mr. John W.T. Leung - Centre Manager

Trade Testing Centre

Mr. Edmond Y.W. Lam - Centre Manager

Trainees Recruitment and Placement Department

Mrs. Olivia M.C. Yiu - Trainees Recruitment & Placement Manager

Workers Registration Office

Mr. Law Sai Kit - Registration Manager

Executive Director and Administrative Staff(As at December 2007)

* Ms Au left in January 2008

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Essence of Tra ining O pera tions a nd M a na gem ent

Administration and Accounting

At the headquarters of the Authority are the Secretariat,

Accounts Department, Human Resources Department, TraineesRecruitment and Placement Department, and the Construction

Workers Registration Office.

The Secretariat provides committee services and administrative

support. The Accounts Department oversees the financial operations

of the Authority, and the assessment and collection of levy from

contractors. The Human Resources Department is responsible for

the management of human resources of the Authority.

The Trainees Recruitment and Placement Department is

responsible for the recruitment of trainees and the provision of

placement services to persons completing CITA training courses.

The Construction Workers Registration Office, which was established

subsequent to CITA being appointed as the Registrar of Construction

Workers, provides registration services to construction workers.

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Training and Trade Testing Centres

The Authority manages four construction training and trade

testing centres located in Kowloon Bay, Kwai Chung, Sheung Shui

and Aberdeen.

The Kowloon Bay Training Centre, opened in 1977, has a total

floor area of about 12,500 square metres. This Centre together with

the Sheung Shui Training Centre, which commenced operations in

1995 and has a total floor area of about 24,000 square metres, are

mainly used for conducting the Basic Craft Courses and the

Construction Supervisor/Technician Programme. Established in

1982, the Kwai Chung Training Centre has a total floor area of around

15,000 square metres. Most of the full-time adult short courses are

conducted in this Centre. The Management Training and Trade

Testing Centre commenced operation in early 1995 with a total floor

area of about 15,400 square metres. The Secretariat, Accounts

Department, Human Resources Department, Trainees Recruitment

and Placement Department, Construction Workers Registration

Office and two centres, i.e. the Management and Safety Training

Centre and the Trade Testing Centre are also housed in this Centre.

The Management and Safety Training Centre offers a wide range of

continuing education courses and safety training courses. The Trade

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Testing Centre conducts trade tests for construction craftsmen and

intermediate trade tests for semi-skilled workers.

This Authority also operates a total of 4 outdoor training

grounds. Two of them are located in Sheung Yuet Road and WaiLok Street in Kowloon Bay, with a total plan area of around 27,000

square metres. These two training grounds are mainly used for

conducting short courses, and for outdoor practical training of Basic

Craft Courses and Construction Supervisor/Technician Programme.

There is another training ground in Shatin with a plan area of around

24,000 square metres, where the certification tests of various

construction plants and related short courses are conducted. Some

trade testing activities are also conducted in the Shatin Training

Ground. Situated in Tuen Mun, the fourth outdoor training ground

has a plan area of 12,000 square metres. Certification tests for

loadshifting machinery operations and related short courses are

conducted in this training ground.

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Staff

At the end of the year 2007, the Authority employed a total of

373 full-time staff. An organization chart of the Authority is givenin Appendix 1.

During the year under review, a total of about $377,000 was

spent on financing over 1,100 staff development programmes, which

included industrial attachment, site visits, short courses and seminars,

courses/trade tests taken to fulfill CITAs requirements, and courses

on a part-time basis leading to a qualification.

Training Courses

The Authoritys training centres conduct three major categories

of training courses the one-year or two-year full-time courses, full-

time adult short courses and part-time courses. Safety awareness,safe practices at work and occupational ethics have been integrated

into these training courses.

A. One-year or Two-year Full-time Courses

The one-year or two-year full-time courses, which include the

Basic Craft Courses for Secondary Three school-leavers, and the

Construction Supervisor/Technician Programme for Secondary Five

school-leavers, aim at training new blood craftsmen and technicians/

supervisors.

(1) Basic Craf t Courses

The nine Basic Craft Courses on offer include the following:

Two-year programmes

Bricklaying , Plastering and Tiling

Carpentry and Joinery

Painting, Decorating and Sign-writing

Plumbing and Pipe-fitting

Metal Works

Marble-laying

One-year programmes

Construction Plant Maintenance and Repairs

Electrical Installation

Construction ScaffoldingTrainees enrolled on the Basic Craft Courses have to major in

one of the above nine key trades according to their interests and

abilities. Trainees learn the basic skills and knowledge of the selected

trade through practical training in workshops and underlying theories

in classroom. Two-year courses will also include site practice at

different stages of training for trainees to acquire site experience.

Besides, they have to learn another related trade.

The above trades of the Basic Craft Courses, with the exception

of Marble-laying and Metal Works, are all designated trades under

the Apprenticeship Ordinance. On completion of their training with

the Authority, trainees in the designated trades who are under 19

years of age are required by law to enter into apprenticeship contracts

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with their employers to receive more organized on-the-job training.

Having completed their apprenticeship and the associated technical

education, trainees will be recognized as a qualified craftsman in therespective trades.

In 2007/2008 training year, the total number of training places

for the one-year and two-year Basic Craft Courses was 631.

(2 ) Construction Supervisor / Technician Program meThis Programme consists of three 2-year diploma courses in

building construction, civil engineering and building services; and

one 1-year certificate course for quantity measurement technician.

Students would be sponsored to take a relevant IVE Part-time Higher

Diploma Course during the course of study at CITA. Site practice

will be arranged at different stages of training for trainees of 2-year

diploma courses to acquire site experience. On completion of this

programme, each trainee is expected to work with a contractor as a

supervisor/technician trainee to acquire hands-on practical

experience. All graduates whilst employed will have to complete

the relevant part-time Higher Diploma Course at the Hong Kong

Institute of Vocational Education to become a qualified supervisor/

technician.

In the 2007/2008 training year, the total number of training

places for the three 2-year diploma supervisor courses and the 1-

year certificate technician course was 249.

B. Full-time Adult Short Courses

Short courses are designed for adults who wish to acquire aspecific construction skill in a relatively short period to enable them

to join the industry. The course duration varies from several weeks

to 6 months and classes are conducted on a need basis. In 2007/2008

training year, a total of about 900 full-time Adult Short Courses

training places would be provided.

C. Part-time Training Courses

The Authority offers a wide range of part-time courses. These

courses are intended for in-service construction personnel who seek

re-training and up-grading in technical skills, or supervisory or

technical knowledge. Whilst some of these part-time courses areopen to the public, some are tailor-made to suit the specific needs of

individual construction companies and other related organizations.

The part-time courses offered by the Authority can be classified

into five main categories:

(i) Skills Enhancement;

(ii) Safety Related;

(iii) Technology and Supervision Related;

(iv) Trade Test Related; and

(v) Commissioned.

Some training courses in categories (ii), (iii) and (iv) are

recognized by a number of Hong Kong professional institutions as

satisfying their Continuing Professional Development Requirements.

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Trade Tests and Certification Tests

At present, the trade tests and certification tests conducted by

the Authority are as follows:

(A ) Tr a d e Te s ts Fo r C o n s tr u c ti o n C r a f tsm e n a n dIntermediate Trade Tests

The Authority has been conducting trade tests for craftsmen of

the construction industry since 1990. In the year 2007, the

number of building and civil engineering trades covered by the

Trade Testing Scheme and Intermediate Trade Testing Scheme

were 54 and 28 respectively. To complement the

implementation of the Construction Workers Registration

Ordinance, the Authority provides relevant trade tests for those

trades designated under the Ordinance.

In the year under review, the Authority conducted a total of

4,663 trade tests and 2,837 intermediate trade tests with 2,631

and 2,081 man-times having passed the respective tests. Details

of the trade tests and intermediate trade tests conducted and

their respective passing rates are given in Appendices 4 and 5.

(B) Cert i f ica t ion Tests a nd Cert i f ica t ion Courses ForConstruction Plant Operators

Since 1993, the Authority has been conducting certification tests

and certification courses with certification tests for construction

plant operators. At present, the certification tests and courses

on offer include:

(i) certification tests and re-validation tests for crane operators;

(ii) certification course and re-validation course for person

working on temporary suspended working platform

(gondola);

(iii) certification course and re-validation course for operator

working on builders lift; and

(iv) certification tests and re-validation tests for loadshifting

machine operators.

In the year under review, the Authority conducted a total of

2,072 certification tests / certification courses and 2,339 re-

validation tests / re-validation courses for construction plantoperators with 1,791 and 2,316 man-times having passed the

respective tests / courses.

(C) Trade Tests for Electrical a nd M echanical W orkers andIntermediate Trade Tests

The Construction Industry Levy (Miscellaneous Amendments)

Ordinance passed in 2004 empowers CITA to collect levies

from Electrical and Mechanical works to fund the provision of

related trade tests and training. The Authority started to offer

intermediate trade tests and trade tests for construction related

E&M trades respectively in January and November 2005.

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In the year 2007, the Authority conducted a total of 835 trade

tests and 3,203 intermediate trade tests for E&M workers with

496 and 2,570 man-times having passed the respective tests.

At the commencement of the 2007/2008 training year, the

recruitment results of the Basic Craft Courses were satisfactory. The

total number of trainees on roll of the Basic Craft Courses was 401,

representing 91% of the total capacity of 440. By end of December

2007, the total number of trainees still on roll was 279. The dropout

rate is 30%.

At the start of the programme, the number of trainees on roll of

the Construction Supervisor / Technician Programme was 141,

representing 100% of the capacity of 140. Up to the end of 2007, the

number of trainees on roll was 117 and the dropout rate is 17%.

From 1 September to 31 December 2007, the total intake of

trainees on full-time adult short courses was 253, against the capacity

of 300 planned for the same period.

In the 2007/2008 training year, the Authority provides a monthly

basic allowance of $1,400 to trainee of the one-year Basic Craft

courses and first-year trainees of the two-year Basic Craft courses.

The monthly allowance will be slightly increased for trainees in their

second year of the Basic Craft studies.

For the Construction Supervisor/ Technician Programme, eachtrainee will receive a monthly allowance of $2,165.

With the exception of the short course on Computer Aided

Drafting, all trainees of the full-time adult short courses will receive

a daily allowance of $60.

At the end of the 2006/2007 training year, 174 trainees of the

two-year Basic Craft Courses, 157 trainees of the one-year Basic

Craft Courses, 78 trainees of the two-year Construction Supervisor

Diploma Programme, 22 trainees of the one-year Construction

Certificate Technician Programme and 656 trainees of the Full-timeAdult Short Courses completed their training.

In the year under report, the placement results of the graduates

of full-time courses of the Authority was considered satisfactory.

Of the 1,087 graduates of various full-time training courses, 1,049

or 97% of them were placed within the first three months after

graduation. Details of the placement results of the graduates for the

2006/2007 training year are given in Appendix 6.

Open Day and Career Talks

To complement trainees recruitment efforts, centres offering

Basic Craft Courses will hold Open Days annually in the first quarter

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to inform members of the general public, community organizations

and secondary schools of the various training programmes provided

by the Authority.In addition, CITA staff regularly visit secondary schools to give

talks on training courses available to youngsters as well as job

opportunities in the construction industry.

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Comm ittee Reports

Committee on Construction Training Courses

During the year under review, the Committee met three times

to assess the capacity of training courses and to examine the proposalfor new courses in line with the needs of the construction industry.

In early 2007, the Committee, having reviewed the trainee

enrolment and placement rates for 2006/07, decided to continue to

follow the recommendations contained in the Report of the Strategic

Development Plan, as endorsed by the Authority in August 2005,

for setting the training capacity of full-time and part-time courses in

the 2007/2008 training year. In addition, the Committee also agreed

to make reference to the recent Consumer Price Index in revising

upwards the trainee allowances of all full-time courses, in an attempt

to attract new trainees and to encourage existing trainees to learn

diligently.

Regarding the introduction of new training courses, the

Committee discussed and agreed to offer an Introductory Course on

Conservation Built Heritage. The course, aimed at enhancing the

knowledge of in-service practitioners in heritage conservation, would

be in line with the training needs arising from the growing interest of

the community in heritage preservation and repair.

As for the provision of new safety training courses, the

Committee in mid-2007 approved the introduction of a revalidation

course to cater for the needs of construction personnel who had

completed the one-day Gas Welding Safety Training Course and

had to retake the course upon expiry of the five-year validity period

of their certificates. In response to the tower crane incident in July

2007, the Committee approved the introduction of a two-day Tower

Crane Worker (Installation, Dismantling, and Lifting & Lowering)

Silver Card Course to further enhance the safety of tower crane

operation. In addition, the Committee also approved the introduction

of a Construction Materials Rigger Silver Card Course in October

2007 to enhance the safety awareness of in-service riggers. In order

to continue to meet the training needs of the industry in the safe

operation of tower cranes, the Committee accepted the proposal to

introduce in stages, in the coming years, a number of relevant training

courses including a training course for competent persons in

supervising erection, dismantling and alteration of tower cranes, a

basic skills course in installing tower cranes for junior workmen,

and a training course for derrick crane operators.

Committee on Building and Facilities Management

In the year under review, a number of decisions were made

through circulation of papers on repair/maintenance works to be

carried out in training centres. Towards the end of the year, the

Committee met once to review the progress of these works and of IT

development projects.

In the first half of the year, the Committee accepted the tender

lists in relation to works projects approved in late 2006 and early

2007, including the demolition of two practice structures and the

renovation of two workshops at the Kowloon Bay Training Centre;

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together with the replacement of soil pipes and the roof waterproofing

system at the Kwai Chung Training Centre. Related contracts had

been vetted and then awarded by the Committee, and all the aboveprojects were completed in the year.

In respect of the proposal made in 2006, to phase in the

maintenance and repair of all lift installations in all CITA centres

under one term contract, the tender was awarded in the first quarter

of the year 2007, upon receiving approval from the Committee. Since

then, the maintenance and repair of lift installations in the Kowloon

Bay Training Centre, the Sheung Shui Training Centre and the

Management and Trade Testing Centre have been taken over in stages

by the selected contractor; whereas the take over of the lift in the

Kwai Chung Training Centre was scheduled for September 2008.

The Committee also approved a five-year maintenance plan to

re-paint the external walls of all centres. A proposal to employ aconsultant to re-design the main entrances and lobbies of the centres

was approved to enhance public interface facilities, particularly in

regard to the Workers Registration Offices. In view of the

amalgamation of CITA with the Construction Industry Council on 1

January 2008, the Committee endorsed the proposal to change the

signage on the external walls of CITA buildings.

The Committee also reviewed the progress of a number of IT

projects including the Trade Test and Training Course Information

System, Trade Test Management System and Training Course

Management System, and agreed to reorder the priorities of the

projects. In addition the Committee approved the IT Security Study

Project and its related expense, which had been endorsed by the ITWorking Group under the purview of the Committee, in order to

enhance security of information.

Committee on Administration and Human Resources

During the year under review, the Committee met four times to

continue to discuss and examine various administrative and human

resources policies.

The Committee reviewed entry requirements for the posts of

Lecturer (Architect) and Accountant after consideration of the market

trend and the needs of the organisation. The purpose was to attract

the right people. It also reviewed the staff establishment of the threecraft training centres, the Management and Safety Training Centre

and the Trade Testing Centre, having regard to the training and trade

testing needs of the industry.

The Committee proposed to adjust the salaries of staff members,

with reference to adjustment of civil service pay. The proposal to

revise upwards the salaries of staff members in rank by 4.62% or

4.96% from the 1st April 2007 was accepted by the Board of CITA.

The Committee searched for a suitable candidate to fill the position

of Executive Director through open recruitment. The successor was

on board in August 2007.

Having considered the manpower shortage and recruitment

difficulties faced by the Information Technology Section, the

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Committee agreed that the Authority collaborate with the local

university for sponsorship of final year students to enhance its system

development. In order to ensure that the job title could reflect theduty of the post, the Committee reviewed job titles at officer grade

and agreed to revise the titles of Personnel Officer, Administration

Officer and Executive Assistant to Personnel Officer I, Personnel

Officer II and Executive Officer respectively, on condition that all

terms and conditions remained unchanged. The Committee also

commended eight staff members in recognition of their outstanding

performance in the year.

With a view to smooth transition, the Committee reviewed the

organisations General Insurance and Group Medical Insurance

Scheme and agreed to extend the relevant policies up to 30 June

2008. In the Group Medical Insurance Scheme, the maximum

reimbursement of out-patient benefits (non-network doctors) wasincreased slightly.

Committee on Finance and Investment

The total income for the year 2007 was $293.31 million,

representing an increase of 13.56% when compared with $258.29

million in 2006. The total expenditure for the year 2007 was $201.01

million. The operating results for the year showed a net surplus of

$92.30 million.

Construction levy, which accounted for about 81.64% of the

total income of the year, was the main source of income of the

Authority. It increased by 15.58% from $207.19 million in 2006 to

$239.46 million in 2007. The increase is mainly due to more income

received from building and civil engineering works undertaken in

private sector. The investment and interest income increased by

26.11% to $14.39 million due to the interest earned from placing

more time deposits into banks. Course fees and related income is

another major type of income for the Authority, increased by 10.40%

from $20.38 million in 2006 to $22.50 million in 2007. The 2007

trade testing income decreased by 28.59% from $7.59 million in

2006 to $5.42 million in 2007 due to less workers taking trade tests

in the year.

Recurrent expenditure in 2007 increased to $201.01 million

representing an increase of 5.31% compared with $190.88 millionin 2006. The major items included:-

Staff costs amounted to $133.59 million in 2007 representing

a slight increase of 2.26% as compared with $130.64 million

in 2006. The increase was mainly due to the salary increment

effective from April 2007

Training expenses increased from $26.59 million in 2006 to

$28.85 million in 2007, representing an increase of 8.50%.

The increase was mainly due to increase in the subsidies

paid under Employer Subsidy Scheme and the staff costs

paid to part-time lecturers

Workshop expenses slightly decreased by 0.95% from

$11.52 million in 2006 to $11.41 million in 2007

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General and administrative expenses increased by 24.96%

from $11.34 million in 2006 to $14.17 million in 2007 which

was mainly due to the legal and consultancy fee incurredduring the year

At the end of 2007, the Authority held a total of $386.43 million

as reserves, an increase of 31.07% over 2006. The Authority

continued to place most of the funds in time deposits and bonds with

licensed banks in Hong Kong, and invest a limited sum in listed

shares.

In accordance with the Industrial Training (Construction

Industry) Ordinance, the Authority submitted its annual report for

the year ended 31 December 2006 to the Government of the Hong

Kong Special Administrative Region in June 2007, together with

the audited financial statements for the same period and the auditors

report. These were subsequently tabled and accepted by theLegislative Council.

Committee on Levy

Total levy income of the Authority for the year 2007 was

$239.46 million. This amount represents an increase of 15.58%

compared with $207.19 million in 2006. Levies assessed on the value

of the construction works in the private sector, the public sector and

the Port & Airport Development were $156.95 million, $76.69 million

and $5.74 million respectively, representing 65.55%, 32.02% and

2.40% of the total levy income. In addition, penalty received on

overdue levy was $0.08 million (0.03% of the total levy income).

The resolution of the Legislative Council to increase the levy

rate from 0.25% to 0.4% applies to construction works the tenders

for which were submitted on or after 10 January 2000. Among the

total levy income of $239.45 million in 2007, $1.91 million was

assessed at a rate of 0.25% and $237.54 million was assessed at the

rate of 0.4%.

The Government had appointed 1 June 2004 as the date on which

a levy was to be imposed on the E&M works in the construction

industry to support the expanded construction related E&M training

and trade tests. Construction operations the tenders for which were

submitted after 1 June 2004 would be affected by this amendment.

On 24 February 2005, CITA was appointed as the Registrarunder the Construction Workers Registration Ordinance (Cap 583)

for providing registration services for construction workers, and

performing the levy assessment and collection service for CWRA,

except for the handling of objection cases. The levy imposed is at

the rate of 0.03%.

Committee on Trade Testing

During the year under review, the Committee met once to

continue studying the content of the trade tests for individual trades,

and to monitor the development of various types of trade tests in line

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with that of the industry. In addition, the Sub-committee on E&M

Trade Testing under this Committee also met twice in the year to

review the test contents of E&M trades and to make recommendationsfor consideration by the Committee.

Whilst maintaining the quality and standard of the trade tests,

the Committee examined and subsequently accepted the proposal to

introduce an optional practical test paper for the bar-bending trade,

which carries a different weighting for the two parts of fixing and

cut and bend skill-sets of workers to better reflect the actual work

situation.

In addition, the Committee reviewed the selection criteria of

trade test invigilators. As instructors deployed to training centres

would be transferred to the trade testing centre, to serve as invigilators

when necessary, the Committee considered that the selection criteria

of trade test invigilators and instructors should be unified. It wasagreed that, whether or not invigilators and instructors of a trade had

to go through the technical and/or theoretical assessments in the

recruitment process would depend on the nature of the different trades.

In addition, the Committee also had an in-depth discussion over

possible inclusion of the installation of Brackets in the test paper

of the trade of Bamboo Scaffolder, to enhance safety awareness of

in-service practitioners. The Committee also accepted the

recommendation made by the Sub-committee on E&M Trade Testing

to revise the written part of the trade test for Mechanical Fitter

according to the four principles set.

During the year, the Authority continued to conduct various

tests for construction practitioners. As at 31 December 2007, a totalof 4,663 trade tests, 2,837 intermediate trade tests, 835 E&M trade

tests and 3,203 E&M intermediate trade tests were conducted. In

the meantime, the Authority also conducted a total of 728, 79, 952

and 313 certification tests respectively for operators of gondolas,

builders lifts, cranes and loadshifting machines.

Committee on Employers Subsidy Scheme

During the year under review, the Committee continued to

consider and approve applications for subsidy by employers of

apprentices, and to monitor the implementation and progress of the

subsidy scheme.In early 2007, the Committee set the qualifications required of

trainers of construction supervisor/technician apprentices, to be in

possession of a Higher Certificate/Higher Diploma of related

disciplines or above, or equivalent professional qualification. This

would enable prospective employers to better understand the

Authoritys requirement regarding persons assigned to supervise

apprentices. In addition, the Committee adjusted the guidelines on

salary levels for the scheme, in accordance with the level of basic

salary earned by graduates of the Basic Craft Courses and the Full-

time Adult Short Courses on the first job in the previous year, so that

the guidelines would be in line with the salary level of the construction

industry. Towards the end of the year, the Committee also reviewed

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and revised the starting points of the monthly basic salary guidelines

for the reference of employers in remunerating graduates of the

Construction Supervisor/Technician Programme engaged undercontracts of different duration, having referred to the 2007 Payment

Adjustment Guidelines for Technician Apprentices issued by the

Hong Kong Construction Association.

In the year under review, the Committee approved 153

applications in total. These included 32 apprenticeship contracts of

11/2years to three years in duration for Basic Craft graduates and 121

apprenticeship contracts of 21/2years to four years in duration for

construction supervisor/technician graduates. Employers of these

apprentices would receive a monthly subsidy of $1,800 or $2,000

for each apprentice employed in the first year of the apprenticeship

contracts. As at 31 December 2007, a total of 146 CITA graduates

were still receiving apprenticeship training under the scheme.

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Levy Income

The Legislative Council passed a resolution on 8 December

1999 to uplift the rate of construction industry levy imposed under

the Industrial Training (Construction Industry) Ordinance (Cap. 317)from 0.25% to 0.4%. Construction works the tenders for which were

submitted on or after 10 January 2000 would be levied based on the

new rate. However, construction projects the value of which does

not exceed HK$1 million are exempted.

Following the amendments to the Industrial Training

(Construction Industry) Ordinance (ITCIO) which came into

operation on 1 June 2004, all exempt items previously not leviable

would be subject to levy assessment and levy in respect of term

contracts would be assessed based on the aggregate value of all

construction operations carried out as required by works orders issued

under a term contract.

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Independent Auditors ReportTO THE M EM BERS O F

C O N STRUCTIO N IN DUSTRY CO UN C IL (THE "C O UN C IL")

(Established under the C onstruction Industry C ouncil O rdinance, Hong K ong

Special Administrative Region)

We have audited the financial statements of Construction

Industry Training Authority (the "Authority") set out on pages 31 to

49, which comprise the balance sheet as at 31 December 2007, and

the income and expenditure account, statement of changes in fund

and reserves and cash flow statement for the year then ended, and a

summary of significant accounting policies and other explanatory

notes.

The Councils responsibility for the financialstatements

The Council is responsible for the preparation and the true and

fair presentation of these financial statements in accordance with

Hong Kong Financial Reporting Standards issued by the Hong Kong

Institute of Certified Public Accountants and the Construction

Industry Council Ordinance. This responsibility includes designing,

implementing and maintaining internal control relevant to the

preparation and the true and fair presentation of the financial

statements that are free from material misstatement, whether due to

fraud or error; selecting and applying appropriate accounting policies;

and making accounting estimates that are reasonable in the

circumstances.

Auditor's responsibility

Our responsibility is to express an opinion on these financial

statements based on our audit and to report our opinion solely to

you, as a body, in accordance with section 82(2)(a) of the Construction

Industry Council Ordinance, and for no other purpose. We do not

assume responsibility towards or accept liability to any other person

for the contents of this report. We conducted our audit in accordance

with Hong Kong Standards on Auditing issued by the Hong Kong

Institute of Certified Public Accountants. Those standards require

that we comply with ethical requirements and plan and perform the

audit to obtain reasonable assurance as to whether the financialstatements are free from material misstatement.

An audit involves performing procedures to obtain audit

evidence about the amounts and disclosures in the financial

statements. The procedures selected depend on the auditor's

judgment, including the assessment of the risks of material

misstatement of the financial statements, whether due to fraud or

error. In making those risk assessments, the auditor considers internal

control relevant to the entity's preparation and true and fair

presentation of the financial statements in order to design audit

procedures that are appropriate in the circumstances, but not for the

purpose of expressing an opinion on the effectiveness of the entity's

internal control. An audit also includes evaluating the appropriateness

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of accounting policies used and the reasonableness of accounting

estimates made by the Authority, as well as evaluating the overall

presentation of the financial statements.We believe that the audit evidence we have obtained is sufficient

and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements give a true and fair view

of the state of the Authority's affairs as at 31 December 2007 and of

its surplus and cash flows for the year then ended in accordance with

Hong Kong Financial Reporting Standards and have been properly

prepared in accordance with the Construction Industry Council

Ordinance.

Deloitte Touche Tohmatsu

Certified Public Accountants

Hong Kong 2 May 2008

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The financial statements on pages 31 to 49 were approved and

authorised for issue by the Construction Industry Council on 2 May

2008 and were signed on its behalf by:

Mr. Billy W.H. Wong, JP

CHAIRMAN, CONSTRUCTION INDUSTRY TRAINING BOARD

Ir Edgar C.P. Kwan, JP

MEMBER, COMMITTEE ON ADMINISTRATION AND FINANCE

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NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2007

1 . G EN ERA L

The Construction Industry Training Authority (the

"Authority") was established in Hong Kong Special

Administrative Region under the Industrial Training

(Construction Industry) Ordinance. The Authority was a not-

for-profit organisation and its principal functions were to

provide training courses for the construction industry; establish

and maintain industrial training centers; assist, including to

assist by way of financial provision, in the placement of

persons completing training courses; make recommendations

with respect to rate of levy and assess the standards of skills

achieved by anyone in any kind of work involving or in

connection with the construction industry; conduct

examinations or tests, issue or award certificate of competence

and establish the standards to be achieved in respect of such

work.

The Construction Industry Council Ordinance (the

Ordinance ) was enacted by the Legislative Council on 23

May 2006 and came into operation on 1 January 2008. Under

the Ordinance, the Construction Industry Council (the

"Council") is established as a statutory body. Amongst other

functions, it provides guidance to the Authority and set

directions for its work. Moreover, the construction levieswould also be used to support the daily operations of the

Council as well as other activities that will benefit the

construction industry at large. On 1 January 2008, the

Authority was dissolved and subsumed under the Council as

a committee named as the Construction Industry Training

Board.

The address of the registered office and principal place of

operation of the Authority was 95 Yue Kwong Road,

Aberdeen, Hong Kong.

The financial statements are presented in Hong Kong dollars,

which is also the functional currency of the Authority.

2. APPLICATION OF N EW AN D REVISED HON G KON GFIN AN CIAL REPORTIN G STAN DARDS

In the current year, the Authority had applied, for the first

time, a number of new standards, amendments and

interpretations (new HKFRSs) issued by the Hong Kong

Institute of Certified Public Accountants (the HKICPA),

which are effective for the financial year beginning from 1

January 2007. The adoption of the new HKFRSs has results

in the following areas:

The impact of application of HKFRS 7 Financial

instruments: Disclosures has been to expand the

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disclosures provided in the financial statements regarding

the Authority's financial instruments, especially on the

sensitivity analysis to market risk. The impact of application of HKAS 1 (Amendment) "Capital

Disclosures" has been to disclose information regarding its

objectives, policies and processes for managing capital.

The application of the remaining new HKFRSs has had no

material effect on how the results and financial position of the

Authority for the current or prior accounting periods were

prepared and presented. Accordingly, no prior period

adjustment has been required.

The Authority did not early adopt the following new or revised

standards or interpretations that have been issued but are not

yet effective. The Authority had assessed the potential impact

and so far concluded that the application of these standards or

interpretations would have no material impact on the results

and financial position of the Authority.

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3 . SIG N IFICA N T A CCO U N TIN G PO LICIES

The financial statements have been prepared on the historical

cost basis except for certain financial instruments which aremeasured at fair values and in accordance with Hong Kong

Financial Reporting Standards, issued by the HKICPA. The

principal accounting policies adopted are as follows:

Recognition of income

Income is measured at the fair value of the consideration

received or receivable.

Levy income is accounted for on an accrual basis and is

recognised upon the assessment of the value of construction

works by the Authority.

Course fee and related income and trade testing income are

recognised over the period of instruction or testing.

Registration service fee income is recognised when the

services are rendered.

Dividend income from investments is recognised when the

Authority's right to receive payment has been established.

Interest income from a financial asset is accrued on a time

basis, by reference to the principal outstanding and at the

effective interest rate applicable, which is the rate exactly

discounts the estimated future cash receipts through the

expected life of the financial asset to that asset's net carrying

amount.

Property, plant and equipment

Property, plant and equipment are stated at cost less subsequent

accumulated depreciation and accumulated impairment losses.

Depreciation is provided to write off the cost of items of

property, plant and equipment over their estimated useful lives

and after taking into account of their estimated residual value,

using the straight-line method.

An item of property, plant and equipment is derecognised upon

disposal or when no future economic benefits are expected to

arise from the continued use of the asset. Any gain or loss

arising on derecognition of the asset (calculated as the

difference between the net disposal proceeds and the carryingamount of the item) is included in the income and expenditure

account in the year in which the item is derecognised.

Impairment

At each balance sheet date, the Authority reviewed the carrying

amounts of its assets to determine whether there is any

indication that those assets have suffered an impairment loss.

If the recoverable amount of an asset is estimated to be less

than its carrying amount, the carrying amount of the asset is

reduced to its recoverable amount. An impairment loss is

recognised immediately in the income and expenditure

account.

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Where an impairment loss subsequently reverses, the carrying

amount of the asset is increased to the revised estimate of its

recoverable amount, but so that the increased carrying amountdoes not exceed the carrying amount that would have been

determined had no impairment loss been recognised for the asset

in prior years. A reversal of an impairment loss is recognised

immediately in the income and expenditure account.

Financial Instruments

Financial assets and financial liabilities are recognised on the

balance sheet when the Authority became a party to the

contractual provisions of the instruments. Financial assets and

financial liabilities are initially measured at fair value.

Transaction costs that are directly attributable to the acquisition

or issue of financial assets and financial liabilities are added to

or deducted from the fair value of the financial assets or financialliabilities, as appropriate, on initial recognition.

Financial assets

The Authority's financial assets are classified into one of the

following categories, including loans and receivables, held-to-

maturity investments and available-for-sale financial assets. All

regular way purchases or sales of financial assets are recognised

and derecognised on a trade date / settlement date basis. Regular

way purchases or sales are purchases or sales of financial assets

that require delivery of assets within the time frame established

by regulation or convention in the marketplace.

Effective interest method

The effective interest method is a method of calculating the

amortised cost of a financial asset and of allocating interest

income over the relevant period. The effective interest rate is

the rate that exactly discounts estimated future cash receipts

(including all fees on points paid or received that form an integral

part of the effective interest rate, transaction costs and other

premiums or discounts) through the expected life of the financial

assets, or , where appropriate, a shorter period.

Loans and receivables

Loans and receivables are non-derivative financial assets with

fixed or determinable payments that are not quoted in an activemarket. At each balance sheet date subsequent to initial

recognition, loans and receivables (including levy receivables,

other receivables, amount due from Construction Industry

Council and cash and deposits at banks) are carried at amortised

cost using the effective interest method, less any identified

impairment losses (see accounting policy on impairment loss

on financial assets below).

Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets

with fixed or determinable payments and fixed maturities that

the Authority's management has the positive intention and ability

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to hold to maturity. At each balance sheet date subsequent to

initial recognition, held-to-maturity investments are measured

at amortised cost using the effective interest method, less anyidentified impairment losses (see accounting policy on

impairment loss on financial assets below).

Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are

either designated or not classified as financial assets at fair

value through profit or loss, loans and receivables or held-to-

maturity investments.

At each balance sheet date subsequent to initial recognition,

available-for-sale financial assets are measured at fair value.

Changes in fair value are recognised in the investment

revaluation reserve, until the financial asset is disposed of or

is determined to be impaired, at which time, the cumulative

gain or loss previously recognised in the investment

revaluation reserve is removed from the reserve and recognised

in the income and expenditure account (see accounting policy

on impairment loss on financial assets below).

Impairment of financial assets

Financial assets, other than those at fair value through profit

or loss, are assessed for indicators of impairment at each

balance sheet date. Financial assets are impaired where there

is objective evidence that, as a result of one or more events

that occurred after the initial recognition of the financial asset,

the estimated future cash flows of the financial assets havebeen impacted.

For an available-for sale equity investment, a significant or

prolonged decline in the fair value of that investment below

its cost is considered to be objective evidence of impairment.

For all other financial assets, objective evidence of impairment

could include:

significant financial difficulty of the issuer or counterparty;

or

default or delinquency in interest or principal payments;

or

it becoming probable that the borrower will enter

bankruptcy or financial re-organisation.

For certain categories of financial asset, such as levy

receivables, other receivables and amount due from

Construction Industry Council, assets that are assessed not to

be impaired individually are subsequently assessed for

impairment on a collective basis. Objective evidence of

impairment for a portfolio of receivables could include the

Authority's past experience of collecting payments, an increase

in the number of delayed payments in the portfolio past the

average credit period, observable changes in national or local

economic conditions that correlate with default on receivables.

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For financial assets carried at amortised cost, an impairment

loss is recognised in the income and expenditure account when

there is objective evidence that the asset is impaired, and ismeasured as the difference between the asset's carrying amount

and the present value of the estimated future cash flows

discounted at the original effective interest rate.

For financial assets carried at cost, the amount of the impairment

loss is measured as the difference between the asset's carrying

amount and the present value of the estimated future cash flows

discounted at the current market rate of return for a similar

financial asset. Such impairment loss will not be reversed in

subsequent periods.

The carrying amount of the financial asset is reduced by the

impairment loss directly for all financial assets with the

exception of levy receivables, other receivables, and amountdue from Construction Industry Council, where the carrying

amount is reduced through the use of an allowance account.

Changes in the carrying amount of the allowance account are

recognised in the income and expenditure account. When a

levy receivable, other receivables and amount due from

Construction Workers Registration Authority and amount due

from Construction Industry Council is considered uncollectible,

it is written off against the allowance account. S u b s e q u e n t

recoveries of amounts previously written off are credited to the

income and expenditure account.

For financial assets measured at amortised cost, if, in a

subsequent period, the amount of impairment loss decreases

and the decrease can be related objectively to an event occurring

after the impairment losses was recognised, the previously

recognised impairment loss is reversed through income and

expenditure account to the extent that the carrying amount of

the asset at the date the impairment is reversed does not exceed

what the amortised cost would have been had the impairment

not been recognised.

Impairment losses on available-for-sale equity investments will

not be reversed in the income and expenditure account in

subsequent periods. Any increase in fair value subsequent

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