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FO_R77871_HKUST Financial Statements Cover (4C) Outline.indd 1 24/10/2014 8:57:28

…………………………………………………………………………………………………… 1 - 3Treasurer's Report

…………………………………………………………………………………………… 4 - 5Independent Auditor's Report

…………………………………………………………………………………………… 6 - 7Consolidated Statement of Comprehensive Income

…………………………………………………………………………………………… 8 - 9Consolidated Balance Sheet

…………………………………………………………………………………………… 10 - 11Consolidated Statement of Changes in Fund Balances

…………………………………………………………………………………………… 12 - 13Consolidated Statement of Cash Flows

…………………………………………………………………………………………… 14 - 61Notes to the Consolidated Financial Statements

1. General Information2. Basis of Preparation3. Income and Expenditure by Segment3.1 Government Subventions and Grants3.2 Interest and Investment Income3.3 Auxiliary Services and Other Income3.4 Expenditure4. Remuneration of Higher Paid Staff5. Taxation6. Property, Plant and Equipment7. Intangible Assets8. Financial Assets9. Interest in an Associate10. Interest in a Joint Venture11. Accounts Receivable and Prepayments12. Cash and Cash Equivalents13. Accounts Payable and Accruals14. Provision for Staff Benefits15. Deferred Income16. Capital Reserves17. UGC Block Grant Reserves, Donations and Matching

Grants Reserves, and Other Reserves18.19. Financial Risk Management20. Commitments21. Related Party Transactions22.23. Critical Accounting Estimates and Judgements24. Principal Accounting Policies25. Possible Impact of new Standards, interpretations and

amendments published that are not yet effective26. Income and Expenditure Statement

(a) HKUST Fok Ying Tung Graduate School(b) HKUST Jockey Club Institute for Advanced Study

Pledged Donations

Subsidiaries

CONTENTS

OVERVIEW

Consolidated expenditure for the year increased to$3,604 million ($3,316 million for 2012/13) mainlydue to additional staffing and other resources forsupporting the increased student enrollmentpopulation, the enlarged campus and increasedresearch activities.

Consolidated income slightly increased to $4,198million for the year ($4,191 million for 2012/13) as aresult of the favourable investment returns, additionalearmarked / supplementary grants from UGC /Government, and an increase in tuition fee income butoffset by the decrease in donations and matching grantincome.

TREASURER'S REPORT

Year 2013/14 was the second year after the 4-yearundergraduate system was launched. It ended with asurplus of $602 million ($878 million for 2012/13).Investment returns amounted to $562 million ($318million for 2012/13) mainly generated from theUniversity's enlarged investment portfolio managed byinvestment managers in accordance with theUniversity's laid down investment strategies. With lessmatching grant available, donations and matchinggrants were down to $105 million ($543 million for2012/13).

CONSOLIDATED INCOME ANDEXPENDITURE

1

SEGMENT RESULTS

Donations and Related Activities

University Grants Committee ("UGC") Block Grant-funded Activities

The University continued to put in the plannedadditional resources on staffing and other requiredfacilities for operation of the 4-year undergraduateprogram. The surplus of $126 million has beentransferred to and retained in the General andDevelopment Reserve for future use.

This segment recorded a surplus of $272 million ($596million for 2012/13), as a result of lower donations andmatching grant income, partly off-set by an increase ininvestment returns. Had the operating results of thedonation activities segment been removed from theother segments, the year-on-year variance in theconsolidated operating result would be a favourable$48 million (surplus of $330 million for 2013/14 vssurplus of $282 million for 2012/13) instead of anunfavourable $276 million (surplus of $602 million for2013/14 vs surplus of $878 million for 2012/13).

Self-Financing Continuing Professional EducationPrograms ("CPEP"), Research and Other Activities

Primarily due to the favourable investment returnsgenerated from accumulated reserve funds, overallsurpluses of these operating segments for the yearincreased to $204 million ($134 million for 2012/13).

2

CAPITAL EXPENDITURE

OUTLOOK

John B. HARRISONTreasurer of the University29 October 2014

After completion of the 6th Matching Grant Scheme,the University foresees challenges in fund raisingactivities in the coming year. The University willcontinue to proactively manage its financial positionand ensure adequate resource allocation in supportingthe University's strategic initiatives and operationplans.

The Research and Academic Building completed inSeptember 2014 will further enhance the University'steaching and research facilities. Other in-progressconstruction projects include the Conference Tower,new on-site student residence and off-campus jointstudent hostel in Tseung Kwan O.

As at 30 June 2014, the total commitments for theapproved construction projects and other capital itemsamounted to $1,333 million: $786 million of whichwill be supported by approved but yet to be receivedUGC grants, $19 million by pledged donations and therest by the University’s reserves and deferred incomeon hand.

3

To :

Auditor's responsibility

INDEPENDENT AUDITOR'S REPORT

We have audited the consolidated financial statements ofThe Hong Kong University of Science and Technology(the "University") and its subsidiaries (together, the"Group") set out on pages 6 to 61, which comprise theconsolidated balance sheet as at 30 June 2014, and theconsolidated statement of comprehensive income, theconsolidated statement of changes in fund balances andthe consolidated statement of cash flows for the year thenended, and a summary of significant accounting policiesand other explanatory information.

The Council of The Hong Kong University ofScience and Technology

The Council's responsibility for the consolidatedfinancial statements

Our responsibility is to express an opinion on theseconsolidated financial statements based on our audit andto report our opinion solely to you, as a body, and for noother purpose. We do not assume responsibility towardsor accept liability to any other person for the contents ofthis report.

The Council of the University is responsible for thepreparation of consolidated financial statements that givea true and fair view in accordance with Hong KongFinancial Reporting Standards issued by the Hong KongInstitute of Certified Public Accountants, and for suchinternal control as the Council determines is necessary toenable the preparation of consolidated financialstatements that are free from material misstatement,whether due to fraud or error.

4

Opinion

PricewaterhouseCoopersCertified Public Accountants

Hong Kong, 29 October 2014

In our opinion, the consolidated financial statements givea true and fair view of the state of affairs of the Group asat 30 June 2014, and of the results and cash flows of theGroup for the year then ended in accordance with HongKong Financial Reporting Standards.

We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our auditopinion.

An audit involves performing procedures to obtain auditevidence about the amounts and disclosures in theconsolidated financial statements. The proceduresselected depend on the auditor's judgement, including theassessment of the risks of material misstatement of theconsolidated financial statements, whether due to fraud orerror. In making those risk assessments, the auditorconsiders internal control relevant to the entity'spreparation of consolidated financial statements that givea true and fair view in order to design audit proceduresthat are appropriate in the circumstances, but not for thepurpose of expressing an opinion on the effectiveness ofthe entity's internal control. An audit also includesevaluating the appropriateness of accounting policiesused and the reasonableness of accounting estimatesmade by the Council, as well as evaluating the overallpresentation of the consolidated financial statements.

We conducted our audit in accordance with Hong KongStandards on Auditing issued by the Hong Kong Instituteof Certified Public Accountants. Those standards requirethat we comply with ethical requirements and plan andperform the audit to obtain reasonable assurance aboutwhether the consolidated financial statements are freefrom material misstatement.

5

2014 2013

Notes $million $million

Income

3.1 2,081 2,155Government Subventions and Grants

948 882Tuition, Programmes and Other Fees

3.2 562 318Interest and Investment Income

84 344Donations and Benefactions

3.3 324 299Auxiliary Services and Other Income

16 / 24.15 199 193Transfers from Capital Reserves

4,198 4,191

3.4Expenditure

Learning and Research

2,257 2,107Instruction and Research

99 94Library

111 103Central Computing Facilities

88 80Other Academic Services

2,555 2,384

Institutional Support

215 196Management and General

567 516Premises and Related Expenses

237 189Student and General Education Services

30 31Other Activities

1,049 9323,604 3,316

594 875Surplus from operation for the year

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEFOR THE YEAR ENDED 30 JUNE 2014

6

2014 2013


9 8 3Share of Result of an Associate

602 878Surplus for the year before taxation

5 0 0Taxation

602 878Surplus for the year after taxation

Other comprehensive income / (loss) for the year

1 1Unrealised gain on Available-for-Sale Financial Assets

16 / 24.14 (199) (193)

(1) 5Exchange differences arising from retranslation

(199) (187)

403 691Total comprehensive income for the year

Transfers to / (from):

(201) (188)Capital Reserves

126 148

273 594Donations and Matching Grants Reserves

204 136Other Reserves

1 1Investment Revaluation Reserve

403 691

University Grants Committee ("UGC") Block Grant Reserves

Transfer from Capital Reserves to consolidated statement ofcomprehensive income

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (Cont'd)FOR THE YEAR ENDED 30 JUNE 2014

Items that may be reclassified subsequently to income andexpenditure:

7

2014 2013


Non-Current Assets

6 4,551 4,361Property, Plant and Equipment

7 21 34Intangible Assets

8 108 113Held-to-Maturity Financial Assets

8 19 18Available-for-Sale Financial Assets

8 4,295 2,853Financial Assets at Fair Value through Profit or Loss

9 66 61Interest in an Associate

10 0 0Interest in a Joint Venture

9,060 7,440

Current Assets

8 5 908Held-to-Maturity Financial Assets

1 1Inventories

11 257 331Accounts Receivable and Prepayments

1,375 700Bank Deposits with Original Maturity over Three Months

12 787 1,323Cash and Cash Equivalents

2,425 3,263

Current Liabilities

13 547 518Accounts Payable and Accruals

14 154 141Provision for Staff Benefits

15 604 559Deferred Income

2 2Tax Payable

1,307 1,220

1,118 2,043Net Current Assets

10,178 9,483Total Assets Less Current Liabilities

CONSOLIDATED BALANCE SHEETAS AT 30 JUNE 2014

8

2014 2013


Non-Current Liabilities

14 22 19Provision for Staff Benefits

10,156 9,464NET ASSETS

16 4,572 4,395Capital Reserves

17 1,255 1,125UGC Block Grant Reserves

17 2,811 2,625Donations and Matching Grants Reserves

17 1,513 1,315Other Reserves

5 4Investment Revaluation Reserve

10,156 9,464TOTAL FUNDS

Approved by the Council on 29 October 2014

John B. HARRISONTreasurer of the University

Tony F. CHANPresident

CONSOLIDATED BALANCE SHEET (Cont'd)AS AT 30 JUNE 2014

and Director of Finance

Philip S.P. WONGAssociate Vice-President forAdministration and Business

9

Total Funds

$million $million $million $million $million $million) ) ) )

(Note 16) (Note 17) (Note 17) (Note 17)

4,395 1,125 2,625 1,315 4 9,464Balance as at 1 July 2013

Total comprehensive income / (loss) for the year

0 126 272 204 0 602Surplus for the year after taxation

Other comprehensive income / (loss)

0 0 0 0 1 1Unrealised gain on Available-for-Sale Financial Assets

(199) 0 0 0 0 (199)

(2) 0 1 0 0 (1)Exchange differences arising from retranslation

(201) 126 273 204 1 403

289 0 0 0 0 289Transfer from Deferred Income

128 (2) (110) (16) 0 0

(39) 6 6 27 0 0

89 4 (104) 11 0 0

0 0 17 (17) 0 0Other inter-fund transfer

4,572 1,255 2,811 1,513 5 10,156Balance as at 30 June 2014

CONSOLIDATED STATEMENT OF CHANGES IN FUND BALANCES

CapitalReserves

OtherReserves

InvestmentRevaluation

Reserve

FOR THE YEAR ENDED 30 JUNE 2014

UGC BlockGrant Reserves

Inter-fund transfer in connection with capital expenditure(Notes 16 / 24.14)

Donationsand

MatchingGrants

Reserves

Transfer to consolidated statement of comprehensiveincome

Amounts equivalent to additions to Property, Plant andEquipment and Intangible Assets

Amounts equivalent to depreciation and amortisationcharges

10

Total Funds

$million $million $million $million $million $million) ) ) )

(Note 16) (Note 17) (Note 17) (Note 17)

4,079 967 2,065 1,204 3 8,318Balance as at 1 July 2012

Total comprehensive income / (loss) for the year

0 148 596 134 0 878Surplus for the year after taxation

Other comprehensive income / (loss)

0 0 0 0 1 1Unrealised gain on Available-for-Sale Financial Assets

(193) 0 0 0 0 (193)

5 0 (2) 2 0 5Exchange differences arising from retranslation

(188) 148 594 136 1 691

455 0 0 0 0 455Transfer from Deferred Income

96 (6) (70) (20) 0 0

(47) 16 6 25 0 0

49 10 (64) 5 0 0

0 0 30 (30) 0 0Other inter-fund transfer

4,395 1,125 2,625 1,315 4 9,464Balance as at 30 June 2013

Amounts equivalent to additions to Property, Plant andEquipment and Intangible Assets

Amounts equivalent to depreciation and amortisationcharges

CONSOLIDATED STATEMENT OF CHANGES IN FUND BALANCES (Cont'd)

Inter-fund transfer in connection with capital expenditure(Notes 16 / 24.14)

Transfer to consolidated statement of comprehensiveincome

FOR THE YEAR ENDED 30 JUNE 2014

Donationsand

MatchingGrants

ReservesUGC Block

Grant Reserves

InvestmentRevaluation

ReserveOther

ReservesCapital

Reserves

11

2014 2013

$million $million

Cash Flows from Operating Activities

602 878Surplus for the year before taxation

Adjustments for:

238 240Depreciation and Amortisation

(562) (318)Interest and Investment Income

(2) (4)Amortisation of discount on Held-to-Maturity Financial Assets

(8) (3)Share of results of an Associate

(199) (193)Transfers from Capital Reserves

69 600Operating cash flow before movements in working capital

68 (74)Decrease / (Increase) in Accounts Receivable and Prepayments

31 23Increase in Accounts Payable and Accruals

45 (63)Increase / (Decrease) in Deferred Income

16 22Increase in Provision for Staff Benefits

229 508Net Cash Generated from Operating Activities

CONSOLIDATED STATEMENT OF CASH FLOWSFOR THE YEAR ENDED 30 JUNE 2014

12

2014 2013

$million $million

Cash Flows from Investing Activities

(414) (524)Payment for purchase of Property, Plant and Equipment

(5) (3)Payment for purchase of Intangible Assets

(675) (106)Increase in Bank Deposits with Original Maturity over Three Months

(1,165) (260)Purchase of Financial Assets at Fair Value through Profit or Loss

910 409Proceeds from redemption of Held-to-Maturity Financial Assets

218 28Proceeds from sale of Financial Assets at Fair Value through Profit or Loss

75 79Interest and investment income received

(1,056) (377)Net Cash Used in Investing Activities

Cash Flows from Financing Activities

289 455

289 455Net Cash Generated from Financing Activities

(538) 586Net (Decrease) / Increase in Cash and Cash Equivalents

1,323 739Cash and Cash Equivalents at the Beginning of the Year

2 (2)Effect of Foreign Exchange Rate Changes

787 1,323Cash and Cash Equivalents at the End of the Year

Subventions and Grants and donations received for purchase of Property,Plant and Equipment and Intangible Assets

CONSOLIDATED STATEMENT OF CASH FLOWS (Cont'd)FOR THE YEAR ENDED 30 JUNE 2014

13

1. 1. GENERAL INFORMATION

2. 2. BASIS OF PREPARATION

Financial statements for the University havebeen prepared separately.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The Hong Kong University of Science andTechnology is incorporated under The HongKong University of Science and TechnologyOrdinance (Chapter 1141, Laws of Hong Kong)as a technological university dedicated to theadvancement of learning and scholarship, withspecial emphasis on research, postgraduateeducation, and close collaboration with businessand industry. The principal activities and otherparticulars of the University's subsidiaries are setout in note 22.

The preparation of consolidated financialstatements in conformity with HKFRS requiresthe use of certain critical accounting estimates.It also requires management to exercise itsjudgement in the process of applying the Group'saccounting policies. The areas involving ahigher degree of judgement or complexity, orareas where assumptions and estimates aresignificant to the consolidated financialstatements, are disclosed in note 23.

The University's registered address and principalplace of operation is Clear Water Bay, HongKong.

The consolidated financial statements have beenprepared under the historical cost convention, asmodified by the revaluation of Available-for-SaleFinancial Assets and Financial Assets at FairValue through Profit or Loss which are carried atfair value.

These consolidated financial statements arepresented in Hong Kong dollars ("HKD"), whichis the Group's presentation currency. Theseconsolidated financial statements have beenapproved for issue by the Council on 29 October2014.

The consolidated financial statements have beenprepared in accordance with Hong KongFinancial Reporting Standards ("HKFRS")issued by the Hong Kong Institute of CertifiedPublic Accountants ("HKICPA").

14

3.INCOME AND EXPENDITURE BY SEGMENT

(a)Consolidated Segment Income and Expenditure (By accounting nature)

Sub-total Total Net Total Sub-total Total Net Total

$million $million $million $million $million $million $million $million $million $million $million $million $million $million $million $million $million $million

Income

1,758 0 222 80 2,060 21 2,081 0 2,081 1,718 0 174 64 1,956 199 2,155 0 2,155

522 426 0 0 948 0 948 0 948 487 395 0 0 882 0 882 0 882

128 0 1 136 265 297 562 0 562 90 0 0 74 164 154 318 0 318Interest and Investment Income (Note 3.2)

0 0 0 0 0 84 84 0 84 0 0 0 0 0 344 344 0 344Donations and Benefactions

47 10 107 157 321 3 324 0 324 46 9 96 140 291 8 299 0 299

84 0 15 57 156 43 199 0 199 72 0 23 55 150 43 193 0 193

77 6 0 112 195 3 198 (198) 0 69 3 0 94 166 3 169 (169) 0Overhead Recovery / Inter-segment Income

2,616 442 345 542 3,945 451 4,396 (198) 4,198 2,482 407 293 427 3,609 751 4,360 (169) 4,191

Expenditure (Note 3.4)

1,709 103 129 89 2,030 43 2,073 0 2,073 1,631 81 116 100 1,928 38 1,966 0 1,966Salaries and Benefits

684 139 146 239 1,208 85 1,293 0 1,293 610 142 108 184 1,044 66 1,110 0 1,110Other Operating Expenses

90 0 19 80 189 49 238 0 238 88 0 25 77 190 50 240 0 240Depreciation and Amortisation

7 127 48 14 196 2 198 (198) 0 5 106 39 18 168 1 169 (169) 0Overhead Recovery / Inter-segment Expenditure

2,490 369 342 422 3,623 179 3,802 (198) 3,604 2,334 329 288 379 3,330 155 3,485 (169) 3,316

126 73 3 120 322 272 594 0 594 148 78 5 48 279 596 875 0 875Surplus from operation for the year

0 0 0 8 8 0 8 0 8 0 0 0 3 3 0 3 0 3Share of Result of an Associate

126 73 3 128 330 272 602 0 602 148 78 5 51 282 596 878 0 878Surplus for the year

Auxiliary Services and Other Income (Note 3.3)

Transfers from Capital Reserves

Tuition, Programmes and Other Fees

Government Subventions and Grants (Note 3.1)

UGC BlockGrant -funded

Activities


Activities

2014 2013

Inter-segmentTransactionElimination

Donationsand

RelatedActivities

Self-financing

CPEPActivities

Non-BlockGrantfunded

ResearchActivities

Donationsand

RelatedActivities

Self-financing

CPEPActivities

OtherActivities



ResearchActivities

OtherActivities

15

3.INCOME AND EXPENDITURE BY SEGMENT (Cont'd)

(b)Consolidated Segment Income and Expenditure (By function)

Sub-total Total Net Total Sub-total Total Net Total

$million $million $million $million $million $million $million $million $million $million $million $million $million $million $million $million $million $million

Income

1,758 0 222 80 2,060 21 2,081 0 2,081 1,718 0 174 64 1,956 199 2,155 0 2,155

522 426 0 0 948 0 948 0 948 487 395 0 0 882 0 882 0 882

128 0 1 136 265 297 562 0 562 90 0 0 74 164 154 318 0 318Interest and Investment Income (Note 3.2)

0 0 0 0 0 84 84 0 84 0 0 0 0 0 344 344 0 344Donations and Benefactions

47 10 107 157 321 3 324 0 324 46 9 96 140 291 8 299 0 299

84 0 15 57 156 43 199 0 199 72 0 23 55 150 43 193 0 193

77 6 0 112 195 3 198 (198) 0 69 3 0 94 166 3 169 (169) 0Overhead Recovery / Inter-segment Income

2,616 442 345 542 3,945 451 4,396 (198) 4,198 2,482 407 293 427 3,609 751 4,360 (169) 4,191

Expenditure (Note 3.4)


1,560 239 294 102 2,195 62 2,257 0 2,257 1,476 220 249 105 2,050 57 2,107 0 2,107Instruction and Research

/ / 290 0 0 5 295 3 298 0 298 267 2 0 8 277 0 277 0 277


174 0 0 17 191 24 215 0 215 166 0 0 13 179 17 196 0 196Management and General

371 1 0 148 520 47 567 0 567 346 1 0 120 467 49 516 0 516Premises and Related Expenses

88 2 0 106 196 41 237 0 237 74 0 0 84 158 31 189 0 189Student and General Education Services

0 0 0 30 30 0 30 0 30 0 0 0 31 31 0 31 0 31Other Activities

7 127 48 14 196 2 198 (198) 0 5 106 39 18 168 1 169 (169) 0Overhead Recovery / Inter-segment Expenditure

2,490 369 342 422 3,623 179 3,802 (198) 3,604 2,334 329 288 379 3,330 155 3,485 (169) 3,316

126 73 3 120 322 272 594 0 594 148 78 5 48 279 596 875 0 875Surplus from operation for the year

0 0 0 8 8 0 8 0 8 0 0 0 3 3 0 3 0 3Share of Result of an Associate

126 73 3 128 330 272 602 0 602 148 78 5 51 282 596 878 0 878Surplus for the year

Library / Central Computing Facilities / OtherAcademic Services

Government Subventions and Grants (Note 3.1)


Auxiliary Services and Other Income (Note 3.3)

Transfers from Capital Reserves

Self-financing

CPEPActivities


ResearchActivities

2013


Donationsand

RelatedActivities

OtherActivities


Activities

Self-financing

CPEPActivities

Donationsand

RelatedActivities


OtherActivities


ResearchActivities


Activities

2014

16

3.1GOVERNMENT SUBVENTIONS AND GRANTS

Total

$million $million $million $million $million

1,725 146 80 0 1,951

0 0 0 21 21Matching Grants

0 76 0 0 76Grants from Government Agencies (Note 15)

33 0 0 0 33Rates and Government Rent Refunds

1,758 222 80 21 2,081

1,687 123 64 0 1,874

0 0 0 199 199Matching Grants

0 51 0 0 51Grants from Government Agencies (Note 15)

31 0 0 0 31Rates and Government Rent Refunds

1,718 174 64 199 2,155

3.2INTEREST AND INVESTMENT INCOME

2014 2013

$million $million

49 54Interest income

112 16Realised gains of Financial Assets at Fair Value through Profit or Loss

400 247Change in fair value of Financial Assets at Fair Value through Profit or Loss

1 1Investment income on Available-for-Sale Financial Assets

562 318

UGC Recurrent Block Grant and Earmarked Grants(Note 15)

Donationsand

RelatedActivities

Non-BlockGrant funded

ResearchActivities

UGC Recurrent Block Grant and Earmarked Grants(Note 15)

UGC BlockGrant-funded

ActivitiesOther

Activities

17

3.3AUXILIARY SERVICES AND OTHER INCOME

Total

$million $million $million $million $million $million

0 0 78 0 0 78Research Contract

0 0 0 91 0 91Residence Halls

6 0 0 42 0 48Rental Income

36 0 0 0 0 36Rental Contribution from Staff

3 9 4 22 3 41

0 0 25 0 0 25Projects Sponsorships (Note 15)

2 1 0 2 0 5Miscellaneous

47 10 107 157 3 324

0 0 72 0 0 72Research Contract

0 0 0 82 0 82Residence Halls

6 0 0 41 0 47Rental Income

33 0 0 0 0 33Rental Contribution from Staff

5 6 4 15 5 35

0 0 20 0 0 20Projects Sponsorships (Note 15)

2 3 0 2 3 10Miscellaneous

46 9 96 140 8 299

Services Fees, Workshop Income andOther Sponsorships

Services Fees, Workshop Income andOther Sponsorships

OtherActivities

Donationsand

RelatedActivities

Self-financing

CPEPActivities


ResearchActivities

UGCBlock

Grant-funded

Activities

18

3.4EXPENDITURE

Depreciationand

Amortisation Total

$million $million $million $million


1,506 669 82 2,257Instruction and Research

53 45 1 99Library

63 28 20 111Central Computing Facilities

73 14 1 88Other Academic Services

1,695 756 104 2,555Sub-total


160 53 2 215Management and General

138 298 131 567Premises and Related Expenses

77 159 1 237Student and General Education Services

3 27 0 30Other Activities

378 537 134 1,049Sub-total

2,073 1,293 238 3,604Total Expenditure


1,422 596 89 2,107Instruction and Research

51 43 0 94Library

62 20 21 103Central Computing Facilities

66 12 2 80Other Academic Services

1,601 671 112 2,384Sub-total


154 38 4 196Management and General

132 260 124 516Premises and Related Expenses

75 114 0 189Student and General Education Services

4 27 0 31Other Activities

365 439 128 932Sub-total

1,966 1,110 240 3,316Total Expenditure

Salaries andBenefits

OperatingExpenses

Included in Salaries and Benefits was a total sum of $165 million (2013: $154 million) representing the University's contributions towards defined contributionretirement benefits schemes.

19

4.REMUNERATION OF HIGHER PAID STAFF

2014 2013

Annual Equivalent Remuneration

HK$ 1,800,001 - 1,950,000 48 51HK$ 1,950,001 - 2,100,000 44 47HK$ 2,100,001 - 2,250,000 42 46HK$ 2,250,001 - 2,400,000 36 23HK$ 2,400,001 - 2,550,000 17 15HK$ 2,550,001 - 2,700,000 15 12HK$ 2,700,001 - 2,850,000 14 6HK$ 2,850,001 - 3,000,000 4 6HK$ 3,000,001 - 3,150,000 4 2HK$ 3,150,001 - 3,300,000 2 5HK$ 3,300,001 - 3,450,000 2 1HK$ 3,450,001 - 3,600,000 0 2HK$ 3,600,001 - 3,750,000 2 0HK$ 3,750,001 - 3,900,000 1 0HK$ 4,200,001 - 4,350,000 0 1HK$ 4,350,001 - 4,500,000 1 0HK$ 4,500,001 - 4,650,000 1 2HK$ 4,650,001 - 4,800,000 1 0HK$ > 4,800,001 1 1

Number of Employees

Remuneration includes salary, gratuity, contribution to retirement schemes, consultancy fees paid by theGroup, housing and other benefits. For staff who are provided with quarters, their housing benefits arecalculated by reference to the rateable values assessed by the Rating and Valuation Department of theGovernment of The Hong Kong Special Administrative Region.

20

5.TAXATION

2014 2013

$million $million

594 875Surplus from operation for the year

98 144Tax calculated at a tax rate of 16.5% (2013: 16.5%)

(673) (676)Tax effect of non-taxable income

573 529Tax effect of non-deductible expenses

2 3Other differences

0 0Taxation charge

Deferred income tax assets are recognised for tax losses carried forward to the extent that the realisation of therelated tax benefit through future taxable profits is probable. The PRC subsidiaries of the Group have notrecognised deferred income tax assets of approximately $23.7 million (2013: $24.7 million) in respect ofcumulative losses amounting to approximately $96.2 million (2013: $97.5 million). The tax losses for the PRCsubsidiaries will expire on various dates up to 2019. The unrecognised tax loss of approximately $4.8 million(2013: $5.6 million) for a Hong Kong subsidiary has no expiry date.

No People's Republic of China ("PRC") enterprise income tax has been provided (2013: Nil) for non-tax exemptPRC subsidiaries as there are no assessable profits for the year.

The tax on the surplus from operation for the year differs from the theoretical amount that would arise using thetax rate applicable to the surplus of the Group as follows:

No Hong Kong profits tax has been provided (2013: Nil) for a non-tax exempt subsidiary in Hong Kong as thatsubsidiary has sufficient tax losses brought forward to offset against estimated assessable profits for the year.

No taxation is provided for the operation of the University and one of its subsidiaries in Hong Kong, which areexempt from taxation by virtue of Section 88 of the Inland Revenue Ordinance.

21

6.PROPERTY, PLANT AND EQUIPMENT

Buildings Total

$million $million $million $million

COST4,759 778 1,800 7,337

Balance as at 30 June 2012

1 435 112 548Additions

964 (964) 0 0Transfers

0 0 (71) (71)Disposals

5 0 1 6Exchange translation difference

5,729 249 1,842 7,820Balance as at 30 June 2013

17 268 127 412Additions


(2) 0 (1) (3)Exchange translation difference


ACCUMULATED DEPRECIATION1,664 0 1,643 3,307


115 0 107 222Charge for the year


0 0 1 1Exchange translation difference


116 0 104 220Charge for the year


0 0 (1) (1)Exchange translation difference


NET BOOK VALUE3,849 517 185 4,551


3,950 249 162 4,361Balance as at 30 June 2013

Fixtures and equipment are depreciated on a straight-line basis at 20% - 25% per annum.

On 21 December 2012, a piece of land situated in Tseung Kwan O of approximately 3,490 square metres was granted to the University and The Hong KongBaptist University in the proportion of 370:150 by the Government of the HKSAR at a nominal rent for the construction of a joint student hostel for a lease of 50years up to 20 December 2062.

The University campus is situated on approximately 60 hectares of land in Sai Kung under lease from the Government of The Hong Kong Special AdministrativeRegion ("HKSAR") at a nominal rent for 58 years through 30 June 2047. The campus buildings are depreciated on a straight-line basis at 2% per annum.

A piece of land situated at Shenzhen of approximately 7,437 square metres was granted at a nominal amount to HKUST R&D Corporation (Shenzhen) Limited, asubsidiary of the Group, by the Shenzhen Municipal Government for the construction of an Industry-Education-Research base for 50 years through 28 June 2057.The respective building is depreciated over the remaining lease term.

Constructionin progress

Fixtures andequipment

22

7.INTANGIBLE ASSETS

$million

COST

97Balance as at 30 June 2012

3Additions

(2)Disposals


5Additions

(6)Disposals


AMORTISATION


18Amortisation charge for the year

(2)Disposals


18Amortisation charge for the year

(6)Disposals


NET BOOK VALUE



Computer software is amortised on a straight-line basis at 25% per annum.

ComputerSoftware

23

8.FINANCIAL ASSETS

2014 2013

$million $million

Held-to-Maturity Financial Assets, at amortised cost

4 55Listed

109 966Unlisted

113 1,021

5 908Maturing within one year

108 113Maturing after one year

113 1,021

Financial Assets at Fair Value through Profit or Loss (Note a)

1,455 1,445Listed Equity Funds

634 94Unlisted Equity Funds

324 310Listed Fixed Income Funds

818 459Unlisted Fixed Income Funds

667 405Unlisted Real Assets Funds

392 140Unlisted Hedge Funds

5 0Unlisted Private Investment

4,295 2,853

Available-for-Sale Financial Assets

1 1Unlisted Equity Securities, at cost (Note b)

18 17Listed Equity Securities, at market value

19 18

Financial assets are mainly denominated in Hong Kong dollars and United States dollars.

Notes :

The fair value was determined by reference to bid prices quoted in active markets or by fund managers.

The unlisted available-for-sale equity securities at cost represent an investment in an unlisted equity security issued by aprivate entity. It is measured at cost less impairment at each balance sheet date. The range of reasonable fair value of theasset is quite wide. Management of the Group is of the opinion that its fair value cannot be measured reliably.

24

9.INTEREST IN AN ASSOCIATE

2014 2013

$million $million

66 61Share of net assets

Proportion ofNominal Value of

Form of Issued CapitalBusiness Held by Class ofStructure the Group Shares Held Principal Activity

33%

2014 2013

$million $million

The summarised financial information in respect of the associate is set out below:

246 240Total assets

(46) (54)Total liabilities

200 186Net assets

66 61Group's share of net assets of the associate

42 38Turnover

24 8Profit for the year

8 3Group's share of results of the associate for the year

To engage in technologycommercialization,incubation of start-upcompanies, provision ofresearch and technologymanagement services,training of seniormanagement andadministrative executives.

CapitalContribution

Place of Incorporationand

Operation

InstitutionalOrganization

People's Republic ofChina

PKU-HKUSTShenzhen-HongKong Institution

Name ofAssociate

25

10.INTEREST IN A JOINT VENTURE

2014 2013

$million $million

0 0Share of net assets (Note)

Proportion ofPlace of Nominal Value

Form of Incorporation of Issued Percentage ofBusiness and Class of Capital Held by Voting PowerStructure Operation Shares Held the Group of the Board

51% 60%

Note:

Nature ofBusiness

People'sRepublic of

China

Capitalcontribution

The Group's share of losses exceeded its interest in the joint venture and the Group does not have an obligation to make up the losses.

The Group holds 51% of the share capital of ZAMI and has appointed 3 out of 5 directors in the Board representing 60% of voting power ofthe Board. However, under the memorandum and articles of association and shareholders' agreement of ZAMI, all significant eventsincluding financial and operating policies must be mutually agreed by the Group and the other significant shareholder. Therefore, ZAMI isclassified as a joint venture of the Group.

Sino-foreignjoint venture

Promotion ofresearch formanufacturingbusiness

Zhejiang AdvancedManufacturing Institute ofHKUST Co. Ltd.("ZAMI")

Name of Joint Venture

26

11.ACCOUNTS RECEIVABLE AND PREPAYMENTS

2014 2013

$million $million

26 22Prepayments and Deposits

231 309Accounts Receivable

257 331

�Accounts receivable are repayable on demand.

�

�The accounts receivable are mainly denominated in Hong Kong dollars.

In determining the recoverability of accounts receivable, the Group considers any change in thecredit quality of the accounts receivable from the date credit was initially granted up to thefinancial statements' report date. The accounts receivable past due but not provided for wereeither subsequently settled as at the date of this report or without historical default of payments bythe respective debtor. Accordingly, the Council believes that there is no impairment provisionrequired on these accounts receivable as at the balance sheet date. The Group does not hold anycollateral over these balances.

27

12.CASH AND CASH EQUIVALENTS

2014 2013

$million $million

599 1,096Bank Deposits with Original Maturity within Three Months

188 227Cash at Banks and in Hand

787 1,323

13.ACCOUNTS PAYABLE AND ACCRUALS

2014 2013

$million $million

547 518Accounts Payable and Accruals

The accounts payable and accruals are mainly denominated in Hong Kong dollars.

28

14.PROVISION FOR STAFF BENEFITS

2014 2013

$million $million

74 63Gratuities

102 97Leave Pay and Others

176 160

Payable:

154 141Within 1 year

22 19After 1 year

176 160

29

15.DEFERRED INCOME

Total

$million $million $million $million $million

99 269 231 23 622Balance as at 30 June 2012

Amount received / receivable

- 0 0 0 30 30Pledged Donations (Note 18)

- 1,654 304 352 7 2,317Others

Credited to consolidated statement of comprehensive income

- (1,687) (174) (64) 0 (1,925)Government Subventions and Grants (Note 3.1)

- 0 (20) 0 (11) (31)Projects Sponsorships (Note 3.3) or Donations

(1,687) (194) (64) (11) (1,956)

(66) (18) (350) (21) (455)

0 1 0 0 1


Amount received / receivable

- 0 0 0 13 13Pledged Donations (Note 18)

- 1,804 305 272 2 2,383Others

Credited to consolidated statement of comprehensive income

- (1,725) (222) (80) 0 (2,027)Government Subventions and Grants (Note 3.1)

- 0 (25) 0 (9) (34)Projects Sponsorships (Note 3.3) or Donations

(1,725) (247) (80) (9) (2,061)

(79) (25) (177) (8) (289)

0 (1) 0 0 (1)


OtherActivities

Donationsand Related

Activities

Exchange differences arising fromretranslation

Exchange differences arising fromretranslation

Transfer to Capital Reserves (Note 16)

Non-BlockGrant funded

ResearchActivities


Activities

Transfer to Capital Reserves (Note 16)

30

16.CAPITAL RESERVES

ComputerSoftware Total

$million $million $million) )

(Note 6) (Note 7)

4,030 49 4,079Balance as at 1 July 2012

(i)Items funded through Deferred Income Account (Notes 24.14 / 24.15)

452 3 455

(175) (18) (193)

(ii)Items funded by unspent income retained in reserves (Notes 24.14 / 24.15)

Transferred from / (to) respective reserves:

Amounts equivalent to additions to Property, Plant and Equipment and Computer Software

6 0 6UGC Block Grants Reserves

70 0 70Donations and Matching Grants Reserves

20 0 20Other Reserves

96 0 96

Amounts equivalent to depreciation and amortisation charges

(16) 0 (16)UGC Block Grants Reserves

(6) 0 (6)Donations and Matching Grants Reserves

(25) 0 (25)Other Reserves

(47) 0 (47)

49 0 49Net transfer from respective reserves (Remark)

(iii) 5 0 5Exchange differences arising from retranslation

4,361 34 4,395Balance as at 30 June 2013

Remark:

Net Transfer from / (to):

(10) 0 (10)UGC Block Grants Reserves (Note 17)

64 0 64Donations and Matching Grants Reserves (Note 17)

(5) 0 (5)Other Reserves (Note 17)

49 0 49

Amounts equivalent to additions to Property, Plant and Equipment and Computer Softwaretransferred from Deferred Income (Note 15)

Amounts equivalent to depreciation and amortisation charges transferred to ConsolidatedStatement of Comprehensive Income

Property,Plant &

Equipment

31

16.CAPITAL RESERVES (Cont'd)

ComputerSoftware Total

$million $million $million) )

(Note 6) (Note 7)

4,361 34 4,395Balance as at 1 July 2013

(i)Items funded through Deferred Income Account (Notes 24.14 / 24.15)

285 4 289

(181) (18) (199)

(ii)Items funded by unspent income retained in reserves (Notes 24.14 / 24.15)

Transferred from / (to) respective reserves:

Amounts equivalent to additions to Property, Plant and Equipment and Computer Software

2 0 2UGC Block Grants Reserves

110 0 110Donations and Matching Grants Reserves

15 1 16Other Reserves

127 1 128

Amounts equivalent to depreciation and amortisation charges

(6) 0 (6)UGC Block Grants Reserves

(6) 0 (6)Donations and Matching Grants Reserves

(27) 0 (27)Other Reserves

(39) 0 (39)

88 1 89Net transfer from respective reserves (Remark)

(iii) (2) 0 (2)Exchange differences arising from retranslation

4,551 21 4,572Balance as at 30 June 2014

Remark:

Net Transfer from / (to):

(4) 0 (4)UGC Block Grants Reserves (Note 17)

104 0 104Donations and Matching Grants Reserves (Note 17)

(12) 1 (11)Other Reserves (Note 17)

88 1 89

Amounts equivalent to depreciation and amortisation charges transferred to ConsolidatedStatement of Comprehensive Income

Property,Plant &

Equipment

Amounts equivalent to additions to Property, Plant and Equipment and Computer Softwaretransferred from Deferred Income (Note 15)

32

17.UGC BLOCK GRANT RESERVES, DONATIONS AND MATCHING GRANTS RESERVES, AND OTHER RESERVES

Sub-total Endowments Designated Unspecified Sub-total Total

$million $million $million $million $million $million $million $million $million

866 101 967 690 425 950 2,065 1,204 4,236Balance as at 30 June 2012

198 (50) 148 127 79 390 596 134 878Surplus / (Deficit) for the year after taxation

0 10 10 0 (29) (35) (64) 5 (49)Transfer from / (to) Capital Reserves (Note 16 / 24.14)

0 0 0 0 (2) 0 (2) 2 0Exchange difference arising from retranslation

(22) 22 0 25 10 (5) 30 (30) 0Other inter-fund transfer

1,042 83 1,125 842 483 1,300 2,625 1,315 5,065Balance as at 30 June 2013

161 (35) 126 49 (29) 252 272 204 602Surplus / (Deficit) for the year after taxation

0 4 4 0 (45) (59) (104) 11 (89)Transfer from / (to) Capital Reserves (Note 16 / 24.14)

0 0 0 0 1 0 1 0 1Exchange difference arising from retranslation

(30) 30 0 5 21 (9) 17 (17) 0Other inter-fund transfer

1,173 82 1,255 896 431 1,484 2,811 1,513 5,579Balance as at 30 June 2014

ResearchProjects and

Others

General andDevelopment

Reserve Other

Reserves

UGC Block Grant Reserves Donations and Matching Grants Reserves

33

18.PLEDGED DONATIONS

Total

$million $million $million

83 302 385Outstanding amount as at 30 June 2012

23 7 30New pledges

(45) (213) (258)

(20) (10) (30)

(8) 0 (8)Less: Excess pledges not utilised


0 51 51New pledges

0 (11) (11)

(7) (6) (13)


Amounts received during the year credited toDeferred Income (Note 15)

Donationsfor OtherActivities

Donationsfor Capital

Projects

Amount received during the year recognised inconsolidated statement of comprehensive income

Amounts received during the year credited toDeferred Income (Note 15)

Amount received during the year recognised inconsolidated statement of comprehensive income

34

19.FINANCIAL RISK MANAGEMENT

19.1CATEGORIES OF FINANCIAL INSTRUMENTS

2014 2013

$million $million

Financial Assets

Loans and Receivables

236 313Accounts receivable and deposits

1,375 700Bank deposits

787 1,323Cash and cash equivalents

19 18Available-for-Sale Financial Assets

4,295 2,853Financial Assets at Fair Value through Profit or Loss

113 1,021Held-to-Maturity Financial Assets

6,825 6,228

Financial Liabilities

Other Financial Liabilities at Amortised Cost

297 309Accounts Payable and Accruals

19.2 19.2 FINANCIAL RISK FACTORS

The Group's activities expose it to a variety offinancial risks: market risk (including foreigncurrency risk, interest rate risk and price risk), creditrisk and liquidity risk. The Group's overall riskmanagement focuses on controlling the impact arisingfrom unpredictability of financial markets and seeksto minimise potential adverse effects on the Group'sfinancial performance. The Administration assumesthe risk management responsibility and monitorsregularly the risk exposures of the Group.

35

貸款及應收款

19. 19. FINANCIAL RISK MANAGEMENT (Cont'd)

19.2 19.2 FINANCIAL RISK FACTORS (Cont'd)

(a) (a) Market risk

(i) (i) Foreign currency risk

(ii) (ii) Interest rate risk

Since currency movements tend to have a muchsmaller impact on portfolio performance in thelong run, no hedging for non-USD currencyexposure will be arranged under normalcircumstances. Such currency exposuremanagement policy is subject to periodic reviewand hedging may be arranged when situationwarrants.

As at 30 June 2014, the percentages of financialassets denominated in HKD, USD, RMB andother currencies to total financial assets were29% (2013: 46%), 66.2% (2013: 50%), 4.7%(2013: 2.4%) and 0.1% (2013: 1.6%),respectively.

The Group is exposed to fair value interest raterisk in relation to its fixed deposits. As the fixeddeposits usually mature within three to sixmonths, the risk exposure is considered notmaterial. If interest rates had been 50 basispoints higher / lower, with all other variables heldconstant, the Group's surplus for the year ended30 June 2014 would increase / decrease byapproximately $9.9 million (2013: $9 million).

Market risk represents the risk that the value offinancial assets will decrease as a result ofmovements in market variables such as foreigncurrency exchange rates, interest rates and stockprices. The Group is exposed to market risk mainlythrough the investment funds it holds. The Group'sinvestments comprise equities, debt securities,investment funds, hedged funds, private investmentsand fixed deposits. The investment strategy of theGroup is to invest prudently in order to preservecapital and achieve optimal risk diversification whilegenerating a stable return and the required liquidity.The Group employs external investment managers tomanage a proportion of its investments, and delegatesthe Finance Office of the University to manage fixeddeposits and some of the fixed income instruments.

The Group is exposed to foreign currency risksprimarily arising from its United States dollars("USD") denominated investments that aremanaged by investment managers. As HKD ispegged to the USD, the Group considers the riskfrom movements in exchange rates between theHKD and USD to be insignificant.

36


19.2 19.2 FINANCIAL RISK FACTORS (Cont'd)

(a) (a) Market risk (Cont'd)

(iii) (iii) Price risk

(b) (b) Credit risk

(c) (c) Liquidity risk

Most of the Group's liabilities are within six monthsfrom the respective balance sheet date. To managethe liquidity risk, the Group monitors and maintains alevel of cash and cash equivalents to fulfill the normalliquidity needs.

Cash and cash equivalents and bank deposits areplaced with counterparties with credit-ratingsassigned by international credit-ratings agencies.Held-to-maturity financial assets, financial assets atfair value through profit or loss and available-for-salefinancial assets are rated investment grade or above.

The Group has no significant concentration of creditrisk, with exposure spread over a number ofcounterparties.

The Group's maximum exposure to credit risk in theevent of the counterparties' failure to perform theirobligations as at 30 June 2013 and 30 June 2014 inrelation to each class of recognised financial assets isthe carrying amount of those assets as stated in theconsolidated balance sheet.

The Group is mainly exposed to securities pricerisk from its investments managed by investmentmanagers. Securities price risk is managed bydiversification of investments in differentmarkets, sectors and assets types. At 30 June2014, if the prices of the respective investmentshad been 5% higher / lower, with all othervariables held constant, the Group's surplus forthe year ended 30 June 2014 would increase /decrease by approximately $216 million (2013:$143 million).

The Group's principal financial assets are cash andcash equivalents, bank deposits, accounts receivable,held-to-maturity financial assets, available-for-salefinancial assets and financial assets at fair valuethrough profit or loss.

The Group's credit risk is primarily attributable to itsaccounts receivable. The amounts represented in theconsolidated balance sheet are net of allowances fordoubtful receivable, estimated by the Group'smanagement based on past experience and theirassessment of the current economy.

37


19.3 19.3 CAPITAL MANAGEMENT

19.4 19.4 FAIR VALUE ESTIMATION

� �

� �

� �

Level 1 Level 2 Level 3 Total$million $million $million $million

As at 30 June 2014

3,459 831 5 4,295 3,459 831 5 4,295

18 0 1 19 18 0 1 19

As at 30 June 2013

2,465 388 0 2,853 2,465 388 0 2,853

17 0 1 18 17 0 1 18Available-for-salefinancial assets

Financial assets atfair value throughprofit or loss

The Group's funds consist of Capital Reserves, UGC Block GrantReserves, Donations and Matching Grants Reserves, Other Reservesand Investment Revaluation Reserve, which are set up for variousdesignated purposes as described in notes 16 and 17. It is theGroup's objective to maintain sufficient reserves to support theGroup's current and future operating expenditure requirements. TheGroup's overall strategy remains unchanged from prior years.

The Group manages its capital structure and makes adjustments to itin light of changes in economic conditions and the riskcharacteristics of its activities.

Quoted prices in active markets for identical assets or liabilities(level 1)

Available-for-salefinancial assets

Inputs other than quoted prices included within level 1 that areobservable for the asset or liability, either directly or indirectly(level 2)

16 17

The tables below provide an analysis of the Group's financialinstruments that are measured at fair value in the consolidatedbalance sheet, grouped by level of the following fair valuemeasurement:

Inputs for the asset or liability that are not based on observablemarket data (level 3)

Financial assets atfair value throughprofit or loss

38


19.4 19.4 FAIR VALUE ESTIMATION (Cont'd)

2014 2013 2014 2013$million $million

1 1 As at 1 July 1 1

4 0 Acquisitions 4 0

1 0 1 0

6 1 As at 30 June 6 1

1 0 1 0

1 0 1 0Total gains or losses for the year included inConsolidated Statement of ComprehensiveIncome, under Interest and InvestmentIncome

Specific valuation techniques including discounted cash flowanalysis, earning multiple and net equity method are used todetermine fair value for the Level 3 financial instruments.

Changes in unrealized gains or losses forthe year included in Consolidated Statementof Comprehensive Income at the end of theyear

The movements of the Level 3 financial instruments measured at fairvalue during the year are as follows:

Total gains or losses recognized underInterest and Investment Income inConsolidated Statement of ComprehensiveIncome

39

20.COMMITMENTS

2014 2013

$million $million(a)

Capital Commitments

526 566Contracted for

807 982Authorised but not contracted for

1,333 1,548

Funding support for the above outstanding capital commitments:

2014 2013

$million $million

- 86 52Amounts recognised as Income and retained in UGC Block Grant Reserves

- 390 478Other amounts representing other reserves to be allocated

52 12Amounts received and reflected as deferred income as at 30 June

786 * 979Amounts in respect of UGC Grants approved but not yet received

19 27Amounts pledged by donors

1,333 1,548

*

2014 2013

$million $million(b)

Operating Lease Commitments

(i)

12 17In one year

6 7In the second to fifth years inclusive

18 24

(ii)

3 3In one year

Outstanding capital commitments not provided for in the financial statements wereas follows:

As at 30 June, the Group had future aggregate minimum lease income undernon-cancellable operating leases as follows:

As at 30 June, the Group had future aggregate minimum lease payments undernon-cancellable operating leases payable as follows:

Amounts to be financed by the Group's Resources

Amount includes an estimated UGC funding of $590 million for a Council-authorised and UGC supported new studenthostel construction project.

40

21.RELATED PARTY TRANSACTIONS

2014 2013

$million $million

56 57Salaries and other short-term employee benefits

4 5Post employment benefits

60 62

All transactions including procurement of goods and services as well as donations involvingmembers of the University Council or key management personnel or organisations in whichthey may have an interest are conducted on an arm's length basis and in accordance with theUniversity's regulations and procedures.

Below is the compensation of the key management personnel whom have also been includedin Note 4 - Remuneration of Higher Paid Staff:

41

22.SUBSIDIARIES

At 30 June 2014, the University's principal subsidiaries were as follows:

Place / Countryof

Incorporation

Direct Indirect

100% -Hong Kong Dormant

100% -HKUST Properties Limited Hong Kong Dormant

100% -Hong Kong

- 100%HKUST R and D Corporation(Guangzhou) Limited

- 100%

- 100%

100% -The HKUST Shenzhen Research Institute

of Issued / Registered CapitalNominal ValueProportion of

Principal Activity

To engage in technologycommercialisation includingindustrial contracting, licensing,incubation of start-up companiesand research and technicalservices in the Pearl River DeltaArea.

HKUST College of Lifelong LearningLimited

People'sRepublic of

China

HKUST R and D Corporation(Shenzhen) Limited

People'sRepublic of

China

Hong Kong University of Science andTechnology R and D Corporation Limited

Held by the UniversitySubsidiary

Facilitation of the University'seducation, training, research andincubation activities in thePeople's Republic of China.

Guangzhou HKUST Fok Ying TungResearch Institute

People'sRepublic of

China

People'sRepublic of

China

To engage in basic scientificresearch, technology innovationand associated research anddevelopment activities, as well astraining of management andadvanced technology personnel.

42

23. 23.

Held-to-maturity financial assets

Depreciation of property, plant and equipment andamortisation of computer software

CRITICAL ACCOUNTING ESTIMATES ANDJUDGEMENTS

In determining the carrying amounts of some assets andliabilities, the Group makes assumptions of the effects ofuncertain future events on those assets and liabilities atthe balance sheet date. These estimates involveassumptions about such items as risk adjustment to cashflows or discount rates used, future changes in salariesand future changes in prices affecting other costs. TheGroup's estimates and assumptions are based on historicalexperience and expectations of future events and arereviewed periodically. In addition to assumptions andestimations of future events, judgements are also madeduring the process of applying the Group's accountingpolicies.

The Group determines the estimated useful lives forrelated depreciation charges for property, plant andequipment and amortisation of computer software.Management will revise the depreciation or amortisationcharges where useful lives are different to previouslyestimated.

The provisioning policy for bad and doubtful debts of theGroup is based on the evaluation of collectability andageing analysis of the receivables and on management'sjudgement. Judgement is required in assessing theultimate realisation of these receivables, based on thecurrent creditworthiness and the past collection history ofeach debtor. If the financial conditions of debtors of theGroup was to deteriorate, resulting in an impairment oftheir ability to make payments, additional allowances maybe required.

Provision for doubtful receivables

Valuation of investments

The fair values of financial instruments traded in activemarkets are based on quoted bid prices at the balancesheet date. The fair values of financial instruments thatare not traded in an active market are determined usingestablished valuation techniques. The Group uses itsjudgement to select a variety of methods and makeassumptions that are mainly based on market conditionsexisting at the end of each reporting period.

Non-derivative financial assets with fixed or determinablepayments and fixed maturity are classified as held-to-maturity financial assets if the Group has the intention andability to hold them until maturity. In evaluating whetherthe requirements to classify a financial asset as held-to-maturity are met, management makes significantjudgements. Failure in correctly assessing the Group'sintention and ability to hold specific investments untilmaturity may result in reclassification of the wholeportfolio as available-for-sale financial assets.

43

24.PRINCIPAL ACCOUNTING POLICIES

24.1Adoption of new / revised HKFRS

( )

Amendments to HKFRSs Annual improvements to HKFRSs 2009-2011 Cycle

Amendments to HKFRS 1

Amendments to HKFRS 7

HKFRS 10 Consolidated Financial Statements

HKFRS 11 Joint Arrangements

HKFRS 12 Disclosure of Interests in Other Entities

HKFRS 13 Fair Value Measurement

HKAS 27 (Revised 2011) Separate Financial Statements

)

HKAS 28 (Revised 2011) Investments in Associates and Joint Ventures

Disclosures – Offsetting Financial Assets andFinancial Liabilities

Amendments to HKFRS 10, HKFRS11 and HKFRS 12

Consolidated Financial Statements, JointArrangements and Disclosure of Interests in OtherEntities: Transition Guidance

For the year ended 30 June 2014, the Group has adopted the following new and revised standards andamendments to HKFRS that are effective and relevant to the operations of the Group.

The Group has assessed the impact of the adoption of these amendments and interpretation and consideredthat there was no significant impact on the Group's results and financial position nor any substantial changesto the Group's accounting policies and presentation of the financial statements.

The principal accounting policies applied in the preparation of the financial statements of the Group are setout below. These policies have been consistently applied to all the years presented, unless otherwise stated.

First-time Adoption of Hong Kong FinancialReporting Standard – Government Loans

44

24. 24.

24.2 24.2 Basis of Consolidation

24.3 24.3 Interest in an Associate

PRINCIPAL ACCOUNTING POLICIES (Cont'd)

A subsidiary is an entity (including a structured entity)over which the group has control. The group controlsan entity when the group is exposed to, or has rightsto, variable returns from its involvement with theentity and has the ability to affect those returnsthrough its power over the entity. Subsidiaries areconsolidated from the date on which control istransferred to the group. They are deconsolidated fromthe date that control ceases.

Where necessary, adjustments are made to thefinancial statements of subsidiaries to bring theiraccounting policies into line with those used by othermembers of the Group.

Unrealised gains on transactions between the Groupand its associates are eliminated to the extent of theGroup's interest in the associates. Unrealised lossesare also eliminated unless the transaction providesevidence of an impairment of the asset transferred.Accounting policies of associates have been changedwhere necessary to ensure consistency with thepolicies adopted by the Group.

All significant intercompany transactions and balanceswithin the group are eliminated on consolidation.

An associate is an entity over which the Group hassignificant influence and that is neither a subsidiarynor an interest in a joint venture.

The results and assets and liabilities of an associateare incorporated in the consolidated financialstatements using the equity method of accounting.Interest in an associate is carried in the consolidatedbalance sheet at cost as adjusted by post-acquisitionchanges in the Group's share of the net assets of theassociate, less any impairment loss.

The consolidated financial statements include thefinancial statements of the University and entitiescontrolled by the University made up to 30 June eachyear.

45

24. 24.

24.4 24.4 Interest in a Joint Venture

24.5 24.5 Property, Plant and Equipment

PRINCIPAL ACCOUNTING POLICIES (Cont'd)

Joint ventures are accounted for using the equitymethod and are initially recognised at cost andadjusted thereafter to recognise the Group's share ofthe post-acquisition profits or losses and movementsin other comprehensive income. The Group'sinvestments in joint ventures include goodwillidentified on acquisition. Upon the acquisition of theownership interest in a joint venture, any differencebetween the cost of the joint venture and the Group'sshare of the net fair value of the joint venture'sidentifiable assets and liabilities is accounted for asgoodwill. When the Group's share of losses in a jointventure equals or exceeds its interests in the jointventures (which includes any long-term interests that,in substance, form part of the Group's net investmentin the joint ventures), the Group does not recognisefurther losses, unless it has incurred obligations ormade payments on behalf of the joint ventures.

Depreciation of property, plant and equipment, otherthan construction in progress, is calculated using thestraight-line method to allocate their costs to theresidual values over the estimated useful lives. Fullyear depreciation is charged for property, plant andequipment in the year when it is ready for use.Annual depreciation is charged against theconsolidated income and expenditure under therespective segments.

A joint venture is a contractual arrangement wherebythe Group and other parties undertake an economicactivity that is subject to joint control, that is when thestrategic financial and operating policy decisionsrelating to the activities require the unanimous consentof the parties sharing control.

Property, plant and equipment, other than constructionin progress, are stated at cost less accumulateddepreciation and accumulated impairment losses.

Unrealised gains on transactions between the Groupand its joint venture are eliminated to the extent of theGroup's interest in the joint venture. Unrealised lossesare also eliminated unless the transaction providesevidence of an impairment of the asset transferred.Accounting policies of the joint venture have beenchanged where necessary to ensure consistency withthe policies adopted by the Group.

46

24. 24. PRINCIPAL ACCOUNTING POLICIES (Cont'd)

24.5 24.5 Property, Plant and Equipment (Cont'd)

24.6 24.6 Intangible Assets

Computer software

Computer software under development is notamortised until ready for use.

Computer software costs are capitalised on the basisof the costs incurred to acquire and bring to use thespecific software and are stated in the consolidatedbalance sheet at cost less accumulated amortisation.

Amortisation of computer software is charged to theconsolidated statement of comprehensive income on astraight-line basis over the assets' estimated usefullives. Full year amortisation is charged for computersoftware in the year when it is ready for use. Annualamortisation is charged against the consolidatedincome and expenditure under the respectivesegments.

Construction in progress is stated at cost less anyidentified impairment loss and is not depreciated untilcompletion of construction. Cost of completedconstruction works is transferred to appropriatecategories of property, plant and equipment.

An item of property, plant and equipment isderecognised upon disposal or when no futureeconomic benefits are expected to arise from thecontinued use of the asset. The gain or loss arisingfrom derecognition of an asset, representing thedifference between the sales proceeds and the carryingamount of that asset is first booked through the CapitalReserves and subsequently transferred to theconsolidated statement of comprehensive income inaccordance with accounting policies 24.15.

47


24.7 24.7 Financial Assets

(a) (a) Loans and receivables

(b) (b) Held-to-maturity investments

Held-to-maturity investments are non-derivativefinancial assets with fixed or determinable paymentsand fixed maturities where the Group has the positiveintention and ability to hold to maturity. They areincluded in non-current assets unless managementintends to dispose of the investments within 12months from the balance sheet date.

Loans and receivables are non-derivative financialassets with fixed or determinable payments that arenot quoted in an active market. They are included incurrent assets, except for maturities greater than 12months after the balance sheet date, which areclassified as non-current assets. Bank deposits aretreated as loans and receivables and are disclosed asbank deposits or cash and cash equivalents. Loansand receivables are recognised initially at fair valueand subsequently measured at amortised cost using theeffective interest method, less provision forimpairment.

The Group classifies its financial assets in thefollowing categories: loans and receivables, held-to-maturity investments, financial assets at fair valuethrough profit or loss and available-for-sale financialassets. The classification depends on the purpose forwhich the financial assets were acquired.Management determines the classification of itsfinancial assets at initial recognition and re-evaluatesthis designation at every reporting date.

48


24.7 24.7 Financial Assets (Cont'd)

(b) (b) Held-to-maturity investments (Cont'd)

(c) (c)

(d) (d) Available-for-sale financial assets

This category comprises financial assets designated atfair value through profit or loss at inception. Assets inthis category include listed and unlisted securities anddebt securities. At the end of the reporting periodsubsequent to initial recognition, these financial assetsare carried at fair value. Gains and losses arising fromchanges in fair value are recognised in theconsolidated statement of comprehensive income.

At subsequent reporting dates, debt securities that theGroup has the intention and ability to hold to maturity(held-to-maturity debt securities) are measured atamortised cost using the effective interest rate method,less any impairment loss recognised to reflectirrecoverable amounts. An impairment loss isrecognised in the consolidated statement ofcomprehensive income when there is objectiveevidence that the asset is impaired, and is measured asthe difference between the investment's carryingamount and the present value of estimated future cashflows discounted at the effective interest rate at initialrecognition. Impairment losses are reversed insubsequent periods when an increase in theinvestment's recoverable amount can be relatedobjectively to an event occurring after the recognitionof the impairment loss, subject to the restriction thatthe carrying amount of the investment at the date theimpairment is reversed shall not exceed what theamortised cost would have been had the impairmentnot been recognised.

Financial assets at fair value through profit orloss

Available-for-sale financial assets are non-derivativesthat are either designated in this category or notclassified under other financial assets categories.They are included in non-current assets unlessmanagement intends to dispose of the investmentswithin 12 months from the balance sheet date.

49


24.7 24.7 Financial Assets (Cont'd)

(d) (d) Available-for-sale financial assets (Cont'd)

The Group assesses at each balance sheet datewhether there is objective evidence that a financialasset or a group of financial assets is impaired. In thecase of equity securities classified as available-for-sale, a significant or prolonged decline in the fairvalue of the security below its cost is considered anindicator that the securities are impaired. If any suchevidence exists for available-for-sale financial assets,the cumulative loss – measured as the differencebetween the acquisition cost and the current fair value,less any impairment loss on that financial assetspreviously recognised in the consolidated statement ofcomprehensive income – is removed from equity andrecognised in the consolidated statement ofcomprehensive income. Impairment losses recognisedin the consolidated statement of comprehensiveincome on equity instruments are not reversed throughthe consolidated statement of comprehensive income.

Regular way purchases and sales of investments arerecognised on the trade-date – the date on which theGroup commits to purchase or sell the financial assets.Financial assets carried at fair value through profit orloss are initially recognised at fair value andtransaction costs are expensed in the consolidatedstatement of comprehensive income. All otherfinancial assets are initially recognised at fair valueplus transaction costs. Available-for-sale financialassets are subsequently carried at fair value.

Unrealised gains and losses arising from changes inthe fair value of available-for-sale financial assets arerecognised in equity. When investments classified asavailable-for-sale are sold or impaired, theaccumulated fair value adjustments are included in theconsolidated statement of comprehensive income asgains and losses from investment.

50


24.8 24.8

24.9 24.9 Inventories

24.10 24.10 Cash and cash equivalents

24.11 24.11

24.12 24.12 Provisions

Accounts receivable are recognised initially at fairvalue and subsequently measured at amortised costusing the effective interest method, less provision forimpairment. A provision for impairment ofreceivables is established when there is objectiveevidence that the Group will not be able to collect allamounts due according to the original terms ofreceivables. The amount of the provision is thedifference between the asset's carrying amount and thepresent value of estimated future cash flows,discounted at the effective interest rate. Accountsreceivable in the consolidated balance sheet are statednet of such provision.

Provisions are recognised when the Group has apresent obligation as a result of a past event, and it isprobable that the Group will be required to settle thatobligation. Provisions are measured at management'sbest estimate of the expenditure required to settle theobligation at the balance sheet date, and arediscounted to present value where the effect ismaterial.

Inventories held for resale in respect of self-financingoperations are valued at the lower of cost and netrealisable value. Cost is calculated using the weightedaverage method.

Cash and cash equivalents comprise cash on hand anddeposits available on demand with an original maturityof three months or less.

Accounts payable and accruals and deferredincome

Accounts receivable

Accounts payable and accruals and deferred incomeare initially measured at fair value, and aresubsequently measured at amortised cost, using theeffective interest rate method.

51


24.13 24.13 Impairment

24.14 24.14 Capital Reserves

� �

� �

Paragraphs 24.15(a1)(iii) or 24.15(b1) for itemsfunded through Deferred Income Account.

Paragraphs 24.15(a2) or 24.15(b2) for itemsfunded by unspent income retained in reserves.

Capital Reserves, representing the funding forproperty, plant and equipment as well as computersoftware, are accounted for according to theaccounting policies as stated in:

Where an impairment loss subsequently reverses, thecarrying amount of the asset is increased to the revisedestimate of its recoverable amount, such that theincreased carrying amount does not exceed thecarrying amount that would have been determined hadno impairment loss been recognised for the asset inprior years. A reversal of an impairment loss isrecognised as income immediately.

At each balance sheet date, the Group reviews thecarrying amounts of its assets to determine whetherthere is any indication that those assets have sufferedan impairment loss. If the recoverable amount of anasset is estimated to be less than its carrying amount,the carrying amount of the asset is reduced to itsrecoverable amount. Impairment loss is recognised inthe consolidated statement of comprehensive incomeimmediately.

52


24.15 24.15 Recognition of Income

(a) (a) Government subventions and grants

(a1) (a1) Other than Matching Grants

(i) (i)

(ii) (ii)

(iii) (iii)

� �

� �

Amounts incurred in relation to capitalexpenditure on related property, plant andequipment as well as computer softwareare transferred to the Capital Reserves.

Subsequently, each year, amountsequivalent to the depreciation charges ofthe related property, plant and equipment,amortisation charges of the computersoftware and any net gain on disposeditems are transferred from the CapitalReserves to the consolidated statement ofcomprehensive income.

in respect of subventions and grants intendedfor capital expenditure:

The amounts are initially credited to the DeferredIncome Account when received or receivable.Amounts are then transferred from the DeferredIncome Account in the following manner:

in respect of subventions and grants intendedfor other expenditure: amounts equivalent to theexpenditure incurred during the year aretransferred to the consolidated statement ofcomprehensive income.

in respect of the recurrent block grant: allgrants, other than those intended for capitalexpenditure, received in respect of the year aretransferred to the consolidated statement ofcomprehensive income. In the event that theaccumulated surpluses from block grantsexceeded the maximum limit permitted byUGC, the transfer to the consolidated statementof comprehensive income will be reduced byany amount refundable to the government.

53


24.15 24.15 Recognition of Income (Cont'd)

(a) (a) Government subventions and grants (Cont'd)

(a2) (a2) Matching Grants

� �

� �

� �

� �

(b) (b)

(b1) (b1)

(i) (i)

Amounts equivalent to the net gain or loss ofdisposed items are transferred from the CapitalReserves to the consolidated statement ofcomprehensive income.

Amounts equivalent to the expenditure onproperty, plant and equipment or computersoftware are transferred out of the relatedreserves to the Capital Reserves.

In respect of subsequent spending of the reserves oncapital expenditure:

Amounts are recognised as income when received orreceivable. Any recognised but unspent income istransferred to the related reserves.

Each year, amounts equivalent to thedepreciation charges for the related property,plant and equipment and amortisation chargesfor the computer software (which have beencharged against the consolidated statement ofcomprehensive income thus reducing therespective reserves) are transferred back fromthe Capital Reserves to the respective reservesto reflect the reduction in value of the relevantproperty, plant and equipment and computersoftware.

in respect of donations earmarked for capitalexpenditure on property, plant and equipment,the same accounting policies as stated inparagraph 24.15(a1)(iii) apply.

The amounts are initially credited to the DeferredIncome Account when received or receivable.Amounts are then transferred from the DeferredIncome Account in the following manner:

Earmarked donations

Donations

Amounts equivalent to the net book value ofdisposed items are transferred back from theCapital Reserves to the respective reserves.

54


24.15 24.15 Recognition of Income (Cont'd)

(b) (b)

(b1) (b1)

(ii) (ii)

(b2) (b2)

(b3) (b3) Pledged donations

(c) (c)

(d) (d) Interest income

(e) (e) Research contract income

Tuition fees, auxiliary services and rentalincome

Outstanding pledges are not recognised as income.Where the University does not have the ability toenforce a pledged donation, the donation is recognisedwhen received.

Other donations

Donations (Cont'd)

in respect of donations earmarked for researchprojects, the same accounting policies as statedin paragraph 24.15(a1)(ii) apply.

The amounts are recognised as income when receivedor receivable. Any recognised but unspent income istransferred to the related reserves. In respect ofsubsequent spending of the reserves on capitalexpenditure, the same accounting policies as thosestated in paragraphs 24.15(a2) apply.

Earmarked donations (Cont'd)

Interest income from a financial asset is accrued on atime basis, by reference to the principal outstandingand at the interest rate applicable, which is the ratethat exactly discount the estimated future cash receiptsthrough the expected life of the financial asset to thatasset's net carrying amount.

The amounts are recognised when services areprovided.

Income from contract research, whose outcome can bereliably estimated, is recognised based on thepercentage of completion. Where the outcome of thecontract research projects cannot be reliably estimated,project income is recognised to the extent of theexpenses incurred that are expected to be recoverableuntil the completion of projects when the uncertaintiesthat prevent reliable estimation of the outcome of theprojects no longer exist. Licencing income isrecognised upon assignment of the licence / patent oron a straight line basis over the period of the licence /patent granted.

55


24.16 24.16 Operating Leases

(a) (a) The Group as lessor

(b) (b) The Group as lessee

24.17 24.17 Retirement Benefits Costs

24.18 24.18 Foreign Currencies

Foreign currency transactions are translated into thefunctional currency using the exchange ratesprevailing at the dates of the transactions. Foreignexchange gains and losses resulting from thesettlement of such transactions and from thetranslation at year-end exchange rates of monetaryassets and liabilities denominated in foreign currenciesare recognised in the consolidated statement ofcomprehensive income.

Items included in the financial statements of each ofthe Group's entities are measured using the currency ofthe primary economic environment in which the entityoperates ("the functional currency"). The consolidatedfinancial statements are presented in Hong Kongdollars, which is the Group's presentation currency.

Rentals payable under operating leases are charged tothe consolidated statement of comprehensive incomeon a straight-line basis over the term of the relevantlease. Benefits received and receivable as an incentiveto enter into an operating lease are also spread on astraight-line basis over the lease term.

Rental income from operating leases is recognised ona straight-line basis over the term of the relevant lease.

Payments to defined contribution retirement benefitplans are recognised in the consolidated statement ofcomprehensive income when employees haverendered service entitling them to the contribution.

56


24.18 24.18 Foreign Currencies (Cont'd)

� �

� �

24.19 24.19 Segment Reporting

In order to present a clearer picture of the financialresults of the Group's operations, segment reporting ispresented showing the major sources of income for theGroup and the expenditure incurred in relation thereto.This is a voluntary disclosure and the requirements ofHKFRS 8 are not applicable.

Assets and liabilities for each balance sheetpresented are translated at the closing rate at thedate of that balance sheet.

Income and expenditure for each statement ofcomprehensive income are translated at averageexchange rates (unless this average is not areasonable approximation of the cumulativeeffect of the rates prevailing on the transactiondates, in which case income and expenses aretranslated at exchange rates at the dates of thetransactions); and all resulting exchangedifferences are recognised as a separatecomponent of equity.

The results and financial position of all Group entities(none of which has the currency of a hyperinflationaryeconomy) that have a functional currency differentfrom the presentation currency are translated into thepresentation currency as follows:

57

25.

Amendments to HKFRSs Annual Improvements to HKFRSs 2010-2012 Cycle2

Amendments to HKFRSs Annual Improvements to HKFRSs 2011-2013 Cycle2

Amendment to HKAS 32

Amendment to HKAS 36

HKFRS 9 Financial Instruments5

HKFRS 15 Revenue from Contracts with Customers4

Amendment to HKFRS 11

POSSIBLE IMPACT OF NEW STANDARDS, INTERPRETATIONS AND AMENDMENTSPUBLISHED THAT ARE NOT YET EFFECTIVE

The Group has not early adopted the following new and revised standards, amendments, andinterpretations which have been issued and are relevant to its operations but are not yet effective, in thesefinancial statements:-

Offsetting Financial Assets and Financial Liabilities1

Financial Instruments: Recoverable AmountDisclosures for Non-Financial Assets1

Amendments to HKAS 16 andHKAS 38

Clarification of Acceptable Methods of Depreciationand Amortisation3

Accounting on Acquisitions of Interests in JointOperation3

58

25.

1

Effective for accounting periods beginning on or after 1 January 2014.

2

Effective for accounting periods beginning on or after 1 July 2014.

3


4


5

Management is currently assessing the impact of the above new standards, amendments andinterpretations on the Group's financial statements and is not yet in a position to state whether there willbe substantial changes in accounting policies and presentation of the financial statements.

Mandatory effective date not yet determined.

POSSIBLE IMPACT OF NEW STANDARDS, INTERPRETATIONS AND AMENDMENTSPUBLISHED THAT ARE NOT YET EFFECTIVE (Cont'd)

59

26.INCOME AND EXPENDITURE STATEMENT

(a)HKUST Fok Ying Tung Graduate School

Sub-total Total Sub-total Total

$million $million $million $million $million $million $million $million $million $million $million $million $million $million

Income

1 0 16 0 17 0 17 1 0 11 0 12 0 12

0 8 0 0 8 0 8 0 4 0 0 4 0 4

0 0 0 0 0 9 9 0 0 0 0 0 10 10Interest and Investment Income

0 0 10 0 10 1 11 0 1 7 0 8 4 12

0 0 0 3 3 0 3 0 0 0 4 4 0 4Overhead Recovery / Inter-segment Income

1 8 26 3 38 10 48 1 5 18 4 28 14 42

Expenditure

1 1 4 1 7 23 30 1 1 3 0 5 21 26Salaries and Benefits

0 4 16 1 21 10 31 0 3 9 1 13 10 23Other Operating Expenses

0 0 2 0 2 4 6 0 0 1 0 1 4 5Depreciation and Amortisation

0 0 3 0 3 0 3 0 0 4 0 4 0 4Overhead Recovery / Inter-segment Expenditure

1 5 25 2 33 37 70 1 4 17 1 23 35 58

0 3 1 1 5 (27) (22) 0 1 1 3 5 (21) (16)(Deficit) / Surplus from operation for the year

2013


ResearchActivities


ResearchActivities


Activities

Self-financing

CPEPActivities


ActivitiesOther

Activities


ActivitiesOther

Activities

Government Subventions and Grants


2014


Activities

Self-financing

CPEPActivities

Auxiliary Services and Other Income

60

26.INCOME AND EXPENDITURE STATEMENT (CONT'D)

(b)HKUST Jockey Club Institute for Advanced Study

Sub-total Total Sub-total Total

$million $million $million $million $million $million $million $million $million $million $million $million $million $million

Income

18 0 0 3 21 0 21 13 0 0 3 16 7 23

0 2 0 0 2 0 2 0 0 0 0 0 0 0Tuition, Programmes and Other Fees

0 0 0 0 0 9 9 0 0 0 0 0 9 9Interest and Investment Income

0 0 0 0 0 1 1 0 0 0 0 0 11 11Donations and Benefactions

0 3 0 0 3 0 3 0 0 0 0 0 0 0Auxiliary Services and Other Income

18 5 0 3 26 10 36 13 0 0 3 16 27 43

Expenditure

9 0 0 3 12 1 13 6 0 0 3 9 1 10Salaries and Benefits

9 4 0 0 13 1 14 7 0 0 0 7 0 7Other Operating Expenses

18 4 0 3 25 2 27 13 0 0 3 16 1 17

0 1 0 0 1 8 9 0 0 0 0 0 26 26Surplus from operation for the year


ResearchActivities

Self-financing

CPEPActivities

2014 2013


ActivitiesOther

Activities


Activities


ActivitiesOther

Activities

Government Subventions and Grants


ResearchActivities


Activities

Self-financing

CPEPActivities

61

PTC

-R77

871

FO_R77871_HKUST Financial Statements Cover (4C) Outline.indd 1 24/10/2014 8:57:28

fo r77871 hkust financial statements cover (4c) … financial statements...notes to the consolidated...

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