HKUST Annual Report 2018-19

72 ANNUAL REPORT 2018-19 Appendices APPENDIX IV FINANCE OVERVIEW The financial year 2018/19 recorded a surplus of $343 million ($568 million for 2017/18). The lower surplus for 2018/19 reflected a lower interest and investment return against a fairly volatile investment environment, as partly compensated by increased contribution from Self-Financing Continuing Professional Education Programs (“CPEP”) and auxiliary services and other income. CONSOLIDATED INCOME AND EXPENDITURE The consolidated income increased by $71 million to $5,132 million in 2018/19 ($5,061 million in 2017/18), contributed by a growth in auxiliary services and other income for $33 million, additional University Grants Committee (“UGC”) supplementary grants for General Pay Adjustment (“GPA”) on salaries and an increase in tuition fee income, against a reduction in interest and investment income of $206 million compared to the previous year. The consolidated expenditure increased by $295 million to $4,791 million ($4,496 million in 2017/18) which was mainly attributable to higher salary costs arising from GPA, general increases in teaching and research activities, and growth in student expenses on studentship. SEGMENT RESULTS Commentary on the operating segments, analysed by UGC-Funded Activities and non-UGC Funded Activities, is as follows: UGC-Funded Activities UGC-Funded Activities showed a deficit of $26 million (surplus of $76 million for 2017/18). The 2018/19 deficit was affected by lower investment income and increase in operating expenses. As at 30 June 2019, the University had UGC reserves of $2,591 million ($2,617 million in 2017/18). Non-UGC Funded Activities Self-Financing Continuing Professional Education Programs, Research and Other Activities Self-financing CPEP activities contributed a surplus of $287 million ($171 million for 2017/18), mainly driven by higher student enrollment and higher tuition fees. Non-UGC funded research activities contributed a surplus of $16 million ($12 million for 2017/18), mainly arising from completed commercial research projects and government subsidies. Other activities achieved a surplus of $45 million ($193 million for 2017/18). In aggregate, the overall surplus of these operating segments amounted to $348 million ($376 million for 2017/18). Donations Activities Donations totalling $62 million were recorded as income for 2018/19 ($60 million for 2017/18). Overall the segment showed a surplus of $21 million ($116 million for 2017/18). The University has successfully secured $1,055 million new pledges in 2018/19 ($275 million in 2017/18). After the year end, the University received donations of $1,147 million and $600 million from the Government’s Eighth Matching Grant Scheme which will be recorded in 2019/20. In addition, the University received over $500 million of new pledges subsequent to the year end. Non-UGC Reserves Non-UGC reserve balances stood at $6,150 million at the end of 2018/19 ($5,733 million for 2017/18). The growth in the reserve balance was mainly contributed by the aforestated interest and investment income, self-financing activities and donations. CAPITAL EXPENDITURE A number of construction projects are underway to enhance the University’s facilities and infrastructure to cater for accommodation and amenity needs of students, as well as for academic and research activities. They include a multi-purpose auditorium, new student residences, indoor sports centre, waterfront facilities, animal care facility and the renovation of catering outlets and refurbishment of staff quarters. As at 30 June 2019, total commitments for approved construction projects and other capital items amounted to $4,621 million: $3,045 million of which will come from existing University’s Funds, $75 million by approved but yet to be received UGC grants, $438 million by pledged donations, and $1,063 million will be funded by deferred income on hand.