HKUST Annual Report 2024-2025

73 A P P E N D I C E S Appendix IV Finance Overview The financial year 2024/25 recorded a surplus of $454 million ($1,162 million for 2023/24). The substantial reduction of surplus in 2024/25 was mainly due to the one-off refund of the General and Development Reserve Fund to University Grant Committee (UGC). By excluding the impact of investment return, the University recorded a deficit of $1,042 million in 2024/25 compared to a surplus of $73 million in 2023/24. The University has practised Environmental, Social and Corporate Governance (“ESG”) investing since 2018. Currently, over 75% of the investments are managed by fund managers who are signatories of United Nations Principles of Responsible Investment. As a result, the exposure of the University’s investments to fossil fuels is 80% lower than the benchmark and virtually zero exposure to controversial sectors such as tobacco and weapons. Through active engagement by the fund managers, the University aims to influence portfolio companies to align with the Net Zero objective. Consolidated Income and Expenditure Consolidated income decreased by $123 million to $7,394 million in 2024/25 ($7,517 million for 2023/24). The decrease was primarily driven by the one-off refund of the General and Development Reserve Fund to UGC. Additionally, there was an increase in interest and net investment income of $407 million resulting from robust performance of the University’s public equity, fixed income and hedge fund investments boosted by strong company earnings growth and the prospect of continued monetary easing by central banks. This was along with growth in tuition fees from more non-local students intake and Self-financing Continuing Professional Education Programs, which amounted to $216 million as compared to last year. Consolidated expenditure increased by $591 million to $6,935 million ($6,344 million for 2023/24). The increase was mainly attributable to higher salaries and benefits costs mainly due to salary increment and increase in headcounts, as well as the increase in operating expenses due to the growth in teaching, learning and research expenses. Segment Results Commentaries on operating segments, analysed by UGC-Funded Activities and non-UGC Funded Activities, are as follows: UGC-Funded Activities UGC-Funded Activities showed a deficit of $711 million for the year (surplus of $344 million for 2023/24). This notable shift from surplus to deficit was primarily due to the one-time refund of the General and Development Reserve Fund by UGC. Additionally, the deficit was driven by increased salary and benefits costs resulting from salary increments and a rise in headcount, as well as higher operating expenses linked to the growth in teaching, learning, and research activities. After excluding the interest and net investment income of $584 million ($449 million for 2023/24), the underlying result was a deficit of $1,295 million ($105 million for 2023/24). Non-UGC Funded Activities Self-Financing Continuing Professional Education Programs, Research and Other Activities Self-financing Continuing Professional Education Programs contributed a surplus of $462 million ($374 million for 2023/24). Research and other activities contributed a surplus of $354 million ($212 million for 2023/24). In aggregate, the overall surplus of these operating segments amounted to $816 million ($586 million for 2023/24). Donations Activities Donations totalling $183 million were recognised as income for 2024/25 ($163 million for 2023/24). Overall, this segment showed a surplus of $349 million ($232 million for 2023/24) as contributed by the increase in investment return. The University has successfully secured $299 million new pledges in 2024/25 ($764 million in 2023/24). Non-UGC Reserves Non-UGC reserve balances reached $11,190 million at the end of 2024/25 ($9,998 million for 2023/24). The increase in the reserve balance was mainly contributed by the afore-stated investment return, self-financing CPEP and other activities. Capital Expenditure Campus development continues both on and off-campus. Several capital projects are underway to enhance the University’s facilities and infrastructure, addressing the needs of students and supporting teaching, learning, and research. The Jockey Club i-Village Halls of Residence is completed and will be occupied in phases starting in the 2025-26 academic year. Construction of three new research buildings and the high-performance computing facilities is ongoing. To address the on-campus space constraints and facilitate further expansion needs, the University has leased office space and developed new educational facilities in Kwun Tong to create designated areas for learning and collaboration. Additionally, the University has recently acquired a property in Admiralty to facilitate University’s long term development in new education programs, alumni development, corporate outreach and communication engagement. Together, these developments underscore our commitment to providing an enriching environment that supports both academic excellence and student well-being. Outlook In response to the Hong Kong Government’s “Study in Hong Kong” campaign, HKUST has intensified its recruitment efforts. For the 2025/26 academic year, the University has received a record number of non-local undergraduate applications. This unprecedented influx is expected to bring HKUST’s non-local student intake for the 2025/26 academic year to the maximum of 40% allowed by the government. This diversity allows us to cultivate a multicultural campus that shapes leaders who thrive in a connected world. To foster innovation and entrepreneurship, the University has established the HKUST Redbird Innovation Fund (RIF) with a total commitment of $500 million. This fund aims to create multiple Venture Investment Fund (VIFs) worth $2 billion in collaboration with investment partners. In the past year, the inaugural VIF with a target fund size of $600 million has been established under the RIF framework. As of 30 June 2025, the University maintained a healthy reserve of $15.1 billion. The University will continue to be prudent and flexible in its financial planning, ensuring that adequate resources are available for future development. As we enter the new 2025-28 triennium, the University remains dedicated to offering world-class education and research, and delivering impact through internationalisation, innovation and interdisciplinarity. Stephen YIU Kin-Wah Treasurer of the University October 28, 2025