(Registered under the Hong Kong Institute of Architects Incorporation Ordinance)

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1 Appendix C INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF THE HONG KONG INSTITUTE OF ARCHITECTS (Registered under the Hong Kong Institute of Architects Incorporation Ordinance) We have audited the consolidated financial statements of The Hong Kong Institute of Architects ( the Institute ) and its subsidiaries (collectively referred to as the Group ) set out on pages 6 to 39, which comprise the consolidated statement of financial position as at 31 March 2016, and the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in reserves and the consolidated statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes. Council's responsibility for the consolidated financial statements The Council of the Institute are responsible for maintaining proper accounts and the preparation of annual consolidated financial statement pursuant to the Hong Kong Institute of Architects Incorporation Ordinance that give a true and fair view in accordance with Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants and for such internal control as the Council determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. 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 Rule 64 of "The Rules of the Institute" 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 consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation of consolidated financial statements that give a true and fair view 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 of accounting policies used and the reasonableness of accounting estimates made by the council members, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. (To be continued) 4

2 INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF THE HONG KONG INSTITUTE OF ARCHITECTS (Registered under the Hong Kong Institute of Architects Incorporation Ordinance) (Continued) Limitation of audit scope Because of the absence of audited accounts of the associate, the Group had not adopted the equity method of accounting for the associate as required by "Investments in associates and joint ventures" (HKAS 28 (2011)). The financial effects of this departure could not be quantified. Qualified Opinion Except for the matters set out above, in our opinion, the consolidated financial position give a true and fair view of the financial position of the Institute and its subsidiaries as at 31 March 2016 and their financial performance and cash flows for the year then ended in accordance with Hong Kong Financial Reporting Standards and have been properly prepared in compliance with the Hong Kong Institute of Architects Incorporation Ordinance. Katon CPA Limited Certified Public Accountants Hong Kong Date: 24 November 2016 Lee Kit Wah Practising Certificate number P

3 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME Notes HK$ HK$ Revenue 4 18,159,368 17,760,392 Costs Functions costs (3,022,886) (3,245,944) Lecture and examination costs (1,650,658) (1,465,410) Publication costs (339,159) (140,025) Gross profit 13,146,665 12,909,013 Other revenue 4 675,771 1,358,747 Less: Employment costs 5 (5,593,070) (5,776,760) Other operating and administrative expenses 7 (5,188,292) (4,159,420) Surplus for the year 3,041,074 4,331,580 Other comprehensive income Items that may be reclassified to profit or loss Change in fair value of available-for-sale investments (577,513) 337,176 Other comprehensive income for the year (577,513) 337,176 Total comprehensive income for the year 2,463,561 4,668,756 6

4 CONSOLIDATED STATEMENT OF CHANGES IN RESERVES Investments General revaluation Capital Sinking Retained reserves reserve fund fund surplus Total HK$ HK$ HK$ HK$ HK$ HK$ At 1 April ,161 2,732,412 33, ,000 46,872,059 50,006, Surplus for the year ,331,580 4,331,580 Other comprehensive income for the year 0 337, ,176 Total comprehensive income for the year 0 337, ,331,580 4,668,756 Donation from members and students 11, , ,000 Transfer from retained surplus to sinking fund ,000 (50,000) 0 11, ,176 29,450 50,000 4,281,580 4,709, At 31 March ,711 3,069,588 63, ,000 51,153,639 54,716,364 7

5 CONSOLIDATED STATEMENT OF CHANGES IN RESERVES (continued) Investments General revaluation Capital Sinking Retained reserves reserve fund fund surplus Total HK$ HK$ HK$ HK$ HK$ HK$ At 1 April ,711 3,069,588 63, ,000 51,153,639 54,716, Surplus for the year ,041,074 3,041,074 Other comprehensive income for the year 0 (577,513) (577,513) Total comprehensive income for the year 0 (577,513) 0 0 3,041,074 2,463,561 Donation from members and students 21, , ,500 Transfer from retained surplus to capital fund ,563,850 0 (11,563,850) 0 Transfer from retained surplus to sinking fund ,000 (50,000) 0 21,200 (577,513) 11,592,150 50,000 (8,572,776) 2,513, At 31 March ,911 2,492,075 11,655, ,000 42,580,863 57,229,425 8

6 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH Notes HK$ HK$ HK$ ASSETS Non-current assets Property, plant and equipment 9 336, ,405 Available-for-sale investments 12 18,074,713 18,652,225 18,410,816 18,982,630 Current assets Inventories - Finished goods 20,248 83,815 Trade and other receivables 13 6,800,790 7,896,148 Amount due from a related company ,166 40,019 Bank balances and cash 35,744,296 32,409,929 43,358,500 40,429,911 TOTAL ASSETS 61,769,316 59,412,541 RESERVES AND LIABILITIES Members' funds General reserves , ,711 Investments revaluation reserve 2,492,075 3,069,588 Capital fund 11,655,576 63,426 Sinking fund 250, ,000 Retained surplus 42,580,863 51,153,639 57,229,425 54,716,364 Current liabilities Other payables 19 4,539,891 4,689,254 Obligations under finance leases ,923 4,539,891 4,696,177 TOTAL RESERVES AND LIABILITIES 61,769,316 59,412,541 Approved by the Council on 24 November Mr. Ng Wing Shun, Anthony Vincent, JP President Mr. Chu Hoi Shan Honorary Treasurer 9

7 CONSOLIDATED STATEMENT OF CASH FLOWS HK$ HK$ Operating activities Operating surplus 3,041,074 4,331,580 Adjustments for: Depreciation on property, plant and equipment 179, ,698 Gain on disposal of available-for-sale investments 0 (501,881) Interest paid 364 1,457 Interest received (278,975) (286,073) Donation from members and student 49,500 41,000 Operating cash flows before movements in working capital 2,991,387 3,766,781 (Increase)/Decrease in assets: Inventories 63, ,024 Trade and other receivables 1,095,358 (1,762,368) Amount due from a related company (753,147) (40,019) Increase/(Decrease) in liabilities: Other payables (149,363) (1,359,378) Amount due to a related company 0 (36,000) Net cash from operating activities 3,247, ,040 Investing activities Interest received 278, ,073 Proceeds on disposal of held-to-maturity investments 0 5,034,069 Purchases of property, plant and equipment (185,122) (340,829) Net cash from investing activities 93,853 4,979,313 Financing activities Interest paid (364) (1,457) Repayments of obligations under finance leases (6,924) (27,690) Net cash used in financing activities (7,288) (29,147) Net increase in cash and cash equivalents 3,334,367 5,659,206 Cash and cash equivalents at the beginning of the year 32,409,929 26,750,723 Cash and cash equivalents at the end of the year 35,744,296 32,409,929 Analysis of the balances of cash and cash equivalents Bank balances and cash 35,744,296 32,409,929 10

Audit of Financial Statements Prepared in Accordance with the Small and Medium-sized Entity Financial Reporting Standard

PN 900 (Revised) Issued December 2006; revised June 2010 Effective for audits of financial statements for periods beginning before 15 December 2009 Practice Note 900 (Revised) Audit of Financial Statements