Financial Statements for the Year Ended 30 June 1994

Abstract

[evdate 1994-06-30] 1993/1994 THE HONG KONG UNIVERSITY OF SCIENCE AND TECHNOLOGY FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1994 CONTENTS I. THE HONG KONG UNIVERSITY OF SCIENCE AND TECHNOLOGY Treasurer's Report 3 Auditors' Report 8 Balance Sheet 9 Income and Expenditure Statement 10 Cash Flow Statement 11 Reconciliation of Funding Surplus/(Shortfall) to Net Cash Inflow from University Operations 12 Notes to the Financial Statements 1. Significant Accounting Policies 13 2. Capital Commitments 15 3. Comparative Figures 15 Schedules to the Financial Statements 1. Buildings 16 2. Construction-in-progress 17 3. Other Fixed Assets 18 4. Investments 19 5. Loans to Affiliated Companies 19 6. Sundry Receivables 19 7. Accounts Payable and Accruals 20 8. UPGC Holding Account 20 9. Building Fund 21 10. Capital Fund 22 11. Long-term Liabilities 22 12. Provisions and Reserves 23 13. Government Funds 24 13(a). UPGC Triennium Equalization Account 25 13(b). Capital Account 25 13(c). Capital Works Reserve Fund 26 13(d). Phase l/II Campus Development Project - Minor Modification Works 27 13(e). Earmarked Grants from Central Allocation Vote 1992-95 27 13(f). Earmarked Grants from the Research Grants Council 28 1 Academic Exchanges with Institutions of Higher Education in China 28 14. Non-Government Funds 29 15. UPGC Subventions 34 16. Expenditure 35

II. THE HONG KONG UNIVERSITY OF SCIENCE AND TECHNOLOGY STAFF SUPERANNUATION SCHEME Trustees' Report 39 Auditors' Report 41 Balance Sheet 42 Revenue Account 43 Notes to the Financial Statements 44 Full Actuarial Certificate 46 Ill. THE HONG KONG UNIVERSITY OF SCIENCE AND TECHNOLOGY ANCILLARY STAFF SUPERANNUATION SCHEME Trustees' Report 49 Auditors' Report 51 Balance Sheet 52 Revenue Account 53 Notes to the Financial Statements 54 Full Actuarial Certificate 56 ii

THE HONG KONG UNIVERSITY OF SCIENCE AND TECHNOLOGY FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1994 The Hong Kong University of Science and Technology 1

TREASURER'S REPORT

The financial year ended 30 June 1994 saw the University continuing its rapid growth both in terms of the student population as well as teaching and research activities. The magnitude and volume of financial transactions also increased, though at a relatively lower margin, with the total net assets as at 30 June 1994 rising by 4% to $3,757.99 million.

2. While the campus project (Phases I & II) has been satisfactorily completed, in 1993/94 the University started the construction of 66 additional senior staff quarters on campus, at an estimated cost of $135 million. The University has also decided to construct another 156 additional senior staff quarters, additional graduate residences with 1,080 places and a University Centre. All of these projects have been approved by the University and Polytechnic Grants Committee ("UPGC") and are to be funded by bank loans.

3. The recurrent expenditure primarily funded by the UPGC increased by 54% to reach $1,014.9 million for the year. Expenditure on equipment, facilities and furniture funded by the UPGC totalled $243.29 million for the year. Funding for research activities, both from the Government as well as from the private sector, has also grown substantially. The University continued to receive generous financial support from the commercial sector, private individuals and the community.

4. The University has established a wholly owned subsidiary company, HKUST RandD Corporation Limited, for the principal purpose of developing scientific and technical innovations produced by University research projects into commercial ventures.

5. The University has also contributed to the setting up of a company known as the Varsity Resources Corporation which has been formed with the objective to help Hong Kong to develop visions for technology-based industries through the active participation of the UPGC-funded institutions. The six participating institutions are Hong Kong Baptist College, Hong Kong Polytechnic, The Chinese University of Hong Kong, City Polytechnic of Hong Kong, The Hong Kong University of Science and Technology and The University of Hong Kong. The University is currently holding 50,000 shares of $1 each (one-sixth of the total share capital of the company) and has given, as have the other five participating institutions, $30,000 to the company in the form of an interest-free start-up loan.

CONSTRUCTION PROJECTS Campus Project - Phases I and II

6. Construction work on the campus (Phases I and II) was completed on-time and under budget. It is now anticipated that the final account could yield a saving compared to budget estimates of no less than $270 million. As at 30 June 1994, a total of $3,181.51 million was expended.

7. To enable the University to fine-tune certain facilities and correct minor design problems after the completion of the project, the UPGC has approved expenditure of $9.86 million as at 30 June 1994 out of a total sum of $20 million taken from the contingency provision under the approved cost estimate of the campus project. The Hong Kong University of Science and Technology 3

Additional Senior Staff Quarters

8. In agreeing with the University that there will be a shortage of senior staff quarters on campus, the UPGC has given full approval to develop on the University's campus 66 additional senior staff quarters with the full construction cost and legal and facility charges financed by a bank loan. The UPGC has also agreed that repayments of the bank loan over a number of years could come from the recurrent block grant, up to amounts equivalent to the rental value of leasing a similar number of such staff quarters from the market. A loan facility of $150 million was arranged in the name of the University. As at 30 June 1994, a total of $9.43 million was drawn to finance the amount of $9.5 million incurred on the project. The small shortfall between the amount spent and the loan drawn down as at 30 June 1994 was temporarily met from University funds and will be recovered from the loan.

9. In addition, the UPGC has given approval in principle to construct another 156 senior staff quarters on campus with funding arrangements similar to those for the 66 senior staff quarters now being constructed. As at 30 June 1994, a total of $0.09 million had been spent on professional fees. This was again temporarily met from University funds and will be recovered from the bank loan yet to be negotiated.

Graduate Residence and University Centre 10. In 1993/94, the UPGC has given approval in principle to construct additional graduate residences with 1,080 places and a University Centre. The project is to be constructed with funds from a bank loan. The bank loan will be repaid by the University over a number of years

primarily from rental charges to be collected from occupants. As at 30 June 1994, a total of $0.86 million had been spent on professional fees. This was temporarily met from University funds and will be recovered from the bank loan yet to be negotiated.

Dangerous Goods Stores, Engineering Laboratories and Microfabrication Centre

11. The UPGC has approved a total of $32.97 million to finance the construction of additional dangerous goods stores, the fitting out of and installation of environmental control for the engineering laboratories and the fitting out of the Microfabrication Centre in Phase II. As at 30 June 1994, there has been no expenditure on these projects.

RECURRENT INCOME AND EXPENDITURE FOR UPGC-FUNDED ACTIVITIES

Recurrent Income 12. The University is funded on the basis of a triennial recurrent block grant. The financial year 1993/94 was the second year of the triennium 1992-95.

13. The total recurrent income increased by 44% to $1,048.83 million, of which $944.94 million or 90% was provided by the Government through the UPGC: a recurrent block grant (which included an indicated equipment grant of $87.2 million and a language enhancement grant of $2.5 million) of $821.39 million, three reserved supplementary grants totalling $114.03 million to cover additional costs arising from general salary revisions for University staff in line 4 The Hong Kong University of Science and Technology

with annual salary adjustments approved for the Civil Service and $9.52 million for the reimbursement of property rates paid by the University.

14. The remainder of the recurrent income included $64 million of tuition fees, $16.36 million of bank interest, $20.68 million of rental recovery from staff who were provided with housing benefits and $2.85 million of miscellaneous income.

Recurrent Expenditure 15. The total recurrent expenditure for the year amounted to $1,014.9 million, of which $84.85 million or 8% was for Administration, $592.06 million or 58% was for Academic Departments and Academic Support Centres, $159.3 million or 16% was for Maintenance of Premises and Grounds, $61.06 million or 6% was for General Education, $20.95 million or 2% was for Student Facilities and Amenities and $96.68 million or 10% was for Miscellaneous. The continuous expansion of the University saw a downward trend of expenditure in relative terms for the Administration but an upward trend of expenditure in relative terms for Academic Departments and Academic Support Centres.

16. Of the total recurrent expenditure, salaries and superannuation/gratuities accounted for $574.09 million or 57%, and will continue to be by far the major item of recurrent expenditure.

Recurrent Surplus 17. The recurrent surplus for the year after transfers were made to reserves was $20.31 million. In accordance with general guidelines laid down by the UPGC, this surplus had been carried forward to and will be utilised in the last year of the triennium.

EQUIPMENT, FACILITY AND FURNITURE Basic Teaching Equipment - Phase I 18. In July 1990, the Government approved a grant of $194 million to meet requirements for basic teaching equipment for Phase I development of the University. As at 30 June 1994, a total of $160.41 million had been expended.

Specialist Equipment and Facilities 19. In June 1990, the Government approved a grant of $700 million for the acquisition of specialist equipment and facilities for both Phases I & II. As at 30 June 1994, a total of $276.33 million had been expended.

Furniture and General Equipment 20. In July 1990, the Government approved a grant of $453 million for the acquisition of furniture and general equipment for both Phases I & II. As at 30 June 1994, a total of $326.59 The Hong Kong University of Science and Technology 5

million had been expended.

EARMARKED GRANTS FROM THE RESEARCH GRANTS COUNCIL 21. During the year, the University received $28.71 million from the Research Grants Council (RGC) to fund research projects and the Co-operative Research Centres (CRC) pilot scheme. Earmarked Grants for Research Projects

22. A total of $26.61 million was received during the year from the RGC to fund research projects. Of this, $20.71 million was obtained on a competitive bid basis for individual projects. The remaining $5.9 million was given to the University in the form of a direct allocation grant to support individual research projects approved by the University.

Earmarked Grant towards the cost of a Laser Direct Write Lithographic System

23. The Laser Direct Write Lithographic System for microelectronics research was acquired at a cost of $2.8 million. The RGC has approved a grant of $1.8 million for this acquisition. The remainder was met by the University as well as from contributions made by the other institutions sponsoring this joint proposal.

Earmarked Grant for Co-operative Research Centres 24. The RGC has approved an earmarked grant of $2.1 million for the establishment of a CRC pilot scheme in wireless communication. As at 30 June 1994, a total of $0.19 million had been expended.

EARMARKED GRANTS FROM CENTRAL ALLOCATION VOTE 1992-95 25. The UPGC has approved $32.71 million from the UPGC Central Allocation Vote 1992-95 to fund projects proposed joint with other UPGC-funded institution(s), with the University as the "Coordinating Institution". As at 30 June 1994, there has been no expenditure on these projects.

NON-GOVERNMENT FUNDS 26. Income during the year amounted to $44.19 million, of which 71% is for research funding, 20% for the support of general University activities, 7% for scholarships, bursaries and student loans, and 2% for designated endowments. In addition, the University generated $31 .12 million from self-financing activities and others. With $8.07 million earned from interest and investment income and after expending/transferring $59.32 million, the balance of funds stood at $134.33 million as at 30 June 1994.

6 The Hong Kong University of Science and Technology

OUTLOOK FOR 1994/95 27. With the construction of the additional staff quarters, graduate residence and the University Centre, it is anticipated that the total assets will increase correspondingly against the carrying of an equivalent amount in bank loans. As the student population is set to grow by 37% and the staff number will expand by 21%, the total recurrent income and expenditure is expected to increase again substantially for the next financial year. In accordance with the financial plan, surpluses accrued in the first two years of the current triennium will be brought forward, and be fully utilised in justified areas to cover the projected budget deficit for the final year of the triennium.

28. The financial year under review has been a successful one. Taking this opportunity, I would like to thank my colleagues in the Council's Finance Committee and all parties involved in the management of the University's finances for their advice and contributions during the year.

SIGNED The Hon. LAU Wah-sum, OBE, JP Council Treasurer, 4 November 1994 The Hong Kong University of Science and Technology 7

AUDITORS' REPORT To: The Council of The Hong Kong University of Science and Technology

We have audited the financial statements of THE HONG KONG UNIVERSITY OF SCIENCE AND TECHNOLOGY (incorporated in Hong Kong under The Hong Kong University of Science and Technology Ordinance 1987) on pages 9 to 36 in accordance with Auditing Standards.

2. In our opinion, the financial statements give a true and fair view of the state of affairs of The Hong Kong University of Science and Technology as at 30 June 1994, and of its income and expenditure and cash flows for the year ended 30 June 1994, and have been properly prepared in accordance with The Hong Kong University of Science and Technology Ordinance 1987.

SIGNED Deloitte Touche Tohmatsu Certified Public Accountants Hong Kong 4 November 1994 8 The Hong Kong University of Science and Technology

BALANCE SHEET AS AT 30 JUNE 1994 30 June 1993 HK$'000

3,623,711 FIXED ASSETS Buildings Construction-in-progress

INVESTMENTS LOANS TO AFFILIATED COMPANIES CURRENT ASSETS Stocks Prepayments and Deposits Sundry Receivables Bank and Cash Balances 4LESS: CURRENT LIABILITIES Accounts Payable and Accruals UPGC Holding Account Bank Overdrafts 78326,139 NET CURRENT ASSETS TOTAL NET ASSETS 319,144 3,757,990 BUILDING FUND CAPITAL FUND LONG-TERM LIABILITIES PROVISIONS AND RESERVES GOVERNMENT FUNDS NON-GOVERNMENT FUNDS General Designated Designated Endowment 91TOTAL FUNDS 3,757,990 Schedule 30 June 1994 HK$'000 HK$'000 Approved by the Council on 4 November 1994 SIGNED SIGNED SIGNED The Hon. LAU Wah-sum Professor Chia-Wei WOO Norman W.Y. NGAI Council Treasurer Vice-Chancellor/President Director of Finance The accompanying notes and schedules are an integral part of the financial statements.

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INCOME AND EXPENDITURE STATEMENT For the year ended 30 June 1994

July 1992 July 1993 to to 30 June 1993 30 June 1994 HK$'OOO Schedule HK%'OOO INCOME 677,593 726 726,531 UPGC Subventions Tuition Fees Bank Interest Rental Recovery from Staff Miscellaneous TOTAL INCOME

EXPENDITURE Administration Academic Departments and Academic Support Centres Maintenance of Premises and Grounds General Education Student Facilities and Amenities Miscellaneous TOTAL EXPENDITURE

67,443 EXCESS OF INCOME OVER EXPENDITURE 1 ,014,900 33,933 (10,221) TRANSFERRED TO RESERVES 12 (11,799) (7091 TRANSFERRED TO THE UPGC HOLDING ACCOUNT 8 Cl,8191 56.513 SURPLUS TRANSFERRED TO THE UPGC TRIENNIUM EQUALIZATION ACCOUNT 13(a) 20.315 FOR THE YEAR ENDED 30 JUNE 1994 The accompanying notes and schedules are an integral part of the financial statements.

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CASH FLOW STATEMENT FOR THE YEAR ENDED 30 JUNE 1994

1 July 1992 1 July 1993 to to 30 June 1993 30 June 1994 HK$'OOO HK$'OOO 330,449

173 833 (161) NET CASH INFLOW/(OUTFLOW) FROM FINANCING 174,672 INCREASE IN CASH AND CASH EQUIVALENTS 343,340 CASH AND CASH EQUIVALENTS BROUGHT FORWARD 518,012 CASH AND CASH EQUIVALENTS CARRIED FORWARD 520,093 (2,081) 518.012 NET CASH INFLOW FROM UNIVERSITY OPERATIONS NET CAPITAL INFLOW FROM DESIGNATED ENDOWMENTS RETURNS ON INVESTMENTS AND SERVICING OF FINANCE Interest Income from UPGC-funded Recurrent Activities Investment/Interest Income from Other Sources Interest Element of Finance Lease Payments NET CASH INFLOW FROM RETURNS ON INVESTMENTS AND SERVICING OF FINANCE INVESTING ACTIVITIES Payments to Acquire Other Fixed Assets Receipts from Sales of Other Fixed Assets Payments to Acquire Investments Loans to Affiliated Companies Expenditure on Capital Projects NET CASH OUTFLOW FROM INVESTING ACTIVITIES NET CASH INFLOW BEFORE FINANCING FINANCING Capital Element of Finance Lease Payments Draw Down on Bank Loans (,256,918) -

ANALYSIS OF THE BALANCES OF CASH AND CASH EQUIVALENTS Cash at Bank and in Hand Bank Overdrafts 613,353 (8,225) 605,128 The Hong Kong University of Science and Technology 11

130 July 1992 to 1993 June HK$'OOO

RECONCILIATION OF FUNDING SURPLUS/(SHORTFALL) TO NET CASH INFLOW FROM UNIVERSITY OPERATIONS FOR THE YEAR ENDED 30 JUNE 1994

67,443 31,548 98,991 TOTAL FUNDING SURPLUS/(SHORTFALL) (36,178) ADJUSTMENTS 183,760 (145) (10,251) (12,054) Acquisition of Other Fixed Assets 224,781 Disposal of Other Fixed Assets (441) Interest Income from UPGC-funded Recurrent Activities (16,363) Investment/Interest Income from Other Sources (12.991) 161,310 TOTAL ADJUSTMENTS 260 301 NET FUNDING SURPLUS 158,808 (299) (877) (20,461) INCREASE IN STOCKS INCREASE IN PREPAYMENTS AND DEPOSITS (INCREASE)/DECREASE IN SUNDRY RECEIVABLES INCREASE IN ACCOUNTS PAYABLES AND ACCRUALS INCLUDING 70,427 (10,220) (6.421) 483 37,516 OVERPROVISION FOR OUTSTANDING COMMITMENTS 135,165 DECREASE IN GOVERNMENT HOLDING ACCOUNT 0 DECREASE IN UPGC HOLDING ACCOUNT (505) INCREASE IN DEFERRED GRATUITIES 2,087 INCREASE IN PROVISIONS 11.319 70,148 330,449 FUNDING SURPLUS/(SHORTFALL) Surplus from UPGC-funded Recurrent Activities Surplus/(Shortfall) from Other Sources Capital Account Capital Works Reserve Fund Phase l/II Campus Development Project - Minor Modification Works Earmarked Grants from Central Allocation Vote 1992-95 Earmarked Grants from the Research Grants Council Academic Exchanges with Institutions of Higher Education in China Non-Government Funds 1 July 1993 to 30 June 1994 HK$'OOO 33,933 (70.111) 1 194,986 (1,037) (4,065) 3,133 NET CASH INFLOW FROM UNIVERSITY OPERATIONS 304,905 146,097 12 The Hong Kong University of Science and Technology

NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 1994

1. SIGNIFICANT ACCOUNTING POLICIES 1.1 Basis of Accounting The University has adopted fund accounting under which funds are classified according to their nature or specified objectives to ensure observance, where appropriate, of limitations and restrictions placed on the use of available resources. All financial transactions are recorded in separate fund accounts according to such classifications. The University has separately constituted a HKUST Educational Trust for the promotion and development of education and learning through teaching and research by the University, and independent Deeds of Trust for the University's two superannuation schemes. Their accounts are prepared and audited separately and are not included in

this set of financial statements. The University has not consolidated in this set of financial statements the financial activities of its wholly owned subsidiary company, HKUST RandD Corporation Limited, as its transactions are not material in the context of the University.

1.2 UPGC Subventions Recurrent subventions are accounted for on an accrual basis as they are and will be approved by the UPGC for the fiscal year. Capital subventions are accounted for on a cash received basis.

1.3 Expenditure and Commitments It is the policy of the University to recognise, as a liability, approved expenditure relating to items in respect of which purchase orders have been placed by the University with suppliers but for which goods or services have not been received at the balance sheet date.

1.4 Buildings and Construction-in-progress Construction-in-progress is capitalised to the Building Fund at cost on a payment basis but is not depreciated. When a building is completed and formally handed-over to the University, costs formerly recorded under the construction-in-progress are reclassified as Buildings and depreciated on a straight-line basis to write off from the Building Fund

the capitalised costs of the buildings at the year end over their useful lives at 2% per annum.

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The campus site located at Sai Kung of approximately 60 hectares was granted by the Government at a nominal rent for 58 years through 30 June 2047. The land grant, in the nature of an operating lease, is not recorded in the financial statements.

1.5 Other Fixed Assets The costs of other fixed assets acquired are first charged against the respective fund accounts in the year of acquisition based on approved orders and then capitalised to the Capital Fund on a payment basis. Depreciation is provided on a straight-line basis to write off from the Capital Fund the capitalised cost of other fixed assets at the year end over their useful lives at the following rates:-

Computing, audio/visual, maintenance, teaching and sports equipment 25% per annum

Motor vehicles 25% per annum Office and quarters furniture and equipment, and electrical appliances 20% per annum

Other fixed assets include those conferred by the HKUST Educational Trust. Assets leased under finance leases are capitalised at the present value of the minimum

payments at the inception of the lease and depreciated on the same basis as mentioned above.

1.6 Investments Listed and unlisted investments are stated at cost. Realised income and investment expenses are dealt with through the relevant fund accounts.

1.7 Stocks Stocks held for resale in respect of self-financing operations are valued at the lower of cost and net realisable value. Other stocks are written off as expenditure against the respective fund accounts in the year of acquisition.

1.8 Library Books and Periodicals Library books and periodicals are written off as expenditure against the respective fund accounts in the year of acquisition.

1.9 Donations, Donated Services and In-kind Contributions Donations are accounted for on a cash received basis. The value of donated services and in-kind contributions is not recorded in the financial statements except in cases where their monetary benefits are material and can be reasonably assessed.

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1 .I 0 Taxation The University is exempted from payment of tax by virtue of Section 88 of the Inland Revenue Ordinance.

1 .I1 Interest Income Interest income amounts are accounted for as they fall due.

2. CAPITAL COMMITMENTS As at 30 June 1994, there were outstanding capital commitments of $138.5 million in respect of capital works contracted for.

3. COMPARATIVE FIGURES Certain comparative figures of the previous year have been reclassified to conform to the current year's presentation.

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SCHEDULES TO THE FINANCIAL STATEMENTS 30 JUNE 1994 1. BUILDINGS Campus Project Phases I and II HK$'OOO COST As at 30 June 1993 3,058) 47 Additions 123.358 As at 30 June 1994 3,181,505 DEPRECIATION As at 30 June 1993 Charges for the Year 91,954 63,630 As at 30 June 1994 155,584 NET BOOK VALUE As at 30 June 1994 As at 30 June 1993 2,966,193 3.025-921 16 The Hong Kong University of Science and Technology

2. CONSTRUCTION-IN-PROGRESS COST As at 30 June 1993 0 0 0 0 Additions 9,859 9,589 855 20,303 As at 30 June 1994 9,859 9,589 855 20,303 Notes: 1. 2. 3. Campus Project Additional Phases I and II Senior Graduate Modification Staff Residence and Works University Centre Quarters Total HK$'OOO HK$'OOO K$'OOO H HK!'OOO (Note 1) (Note 2) (Note 3)

It has been agreed that a sum of $20 million is to be taken from the contingency provision under the approved cost estimate of the campus project to enable the University to fine-tune certain facilities and correct minor design problems after the completion of the project.

During the year; the UPGC approved a total capital project cost of $135 million to develop on the University's campus 66 additional senior staff quarters with the full construction cost and legal and facility charges financed by a bank loan. As at 30 June 1994, a total of $9.5 million had been incurred and was mainly financed by $9.43 million drawn from the bank loan. The small shortfall between the amount spent and the loan drawn down as at 30 June 1994 was temporarily met from University funds and will be recovered from the bank loan. In addition, the UPGC has given approval in principle to construct another 156 senior staff quarters on campus with funding arrangements similar to those for the 66 senior staff quarters now being constructed. As at 30 June 1994, a total of $0.09 million had been incurred and was temporarily met from University funds and will be recovered from the bank loan ye' Je negotiated.

The UPGC has given approval in principle to construct additional graduate residences with 1,080 places and a University Centre. The project is to be constructed with funds from a bank loan. The bank loan will be repaid by the University over a number of years primarily from rental charges to be collected from occupants. As at 30 June 1994, a total of $0.86 million had been incurred and was temporarily met from University funds and will be recovered from the bank loan yet to be negotiated.

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3. OTHER FIXED ASSETS COST As at 30 June 1993 Additions Disposals/Written Off 233,645 3,586 188,054 879 /1.300) (118) 421,608 224,825 (1,698) As at 30 June 1994 420,399 4,347 184,377 35,892 (280) 219,989 644.735 DEPRECIATION As at 30 June 1993 Charges for the Year Disposals/Written Off 94,578 1,867 103,851 1,005 (354) (118) As at 30 June 1994 NET BOOK VALUE As at 30 June 1994 198,075 2.754 67,741 164,186 43,812 148,668 (217) (689) 111,336 312,165 222.324 1,593 108.653 332,570 As at 30 June 1993 139,067 1.719 116,636 257,422 Computing, Audio/Visual, Maintenance, Teaching and Sports Equipment HK%'OOO Motor Vehicles HK%'OOO Office and Quarters Furniture and Equipment, and Electrical Appliances HK%'OOO Total HK$'OOO Other fixed assets included one large photocopying machine acquired under a finance /ease:-

COST 1320 DEPRECIATION As at 30 June 1993 Charges for the Year As at 30 June 1994 792 NET BOOK VALUE As at 30 June 1994 As at 30 June 1993 HK$'OOO 528 264 528 7.92 18 The Hong Kong University of Science and Technology

4. INVESTMENTS Balance as at 30 June 1993 HKS'OOO 30,927 6,990 0106,991 37.918 59,022 Listed Investments with Investment Managers at Cost, Including Accumulated Net Realised Income Unlisted Investments at Cost Unlisted Investments with Investment Manager HKUST RandD Corporation Ltd. 2 shares of HK $1 each University and Polytechnic Computer Centre Ltd. 1 share of HK $500 Varsity Resources Corporation 50,000 shares of HK $1 each Balance as at 30 June 1994 HK%'OOO 51,212 7,759 0150 7,810 The market value of investments with investment managers as at 30 June 1994 was HK $63.58 million

(1993, HK $42.67 million). 5. LOANS TO AFFILIATED COMPANIES Balance as at 30 June 1993 HK $'OOO 0 HKUST RandD Corporation Ltd. G Varsity Resources Corporation Balance as at 30 June 1994 HK $'OOO 1,000 3c 1.030 6. SUNDRY RECEIVABLES Balance as at 30 June 1993 HK $'OOO 0

Amount Due from the HKUST RandD Corporation Ltd. Backpayments in relation to General Salary Revision with effect from 1 April 1993 for the Period April to June 1993 Backpayments in relation to General Salary Revision with effect from 1 April 1994 for the Period April to June 1994 Amount Due from the HKUST Educational Trust Rates Reimbursable from the UPGC Staff Debtors Other Sundry Receivables Balance as at 30 June 1994 HK $OOO 247 013,591 345 4,625 401 1,075 20,284 The Hong Kong University of Science and Technology 19

7. ACCOUNTS PAYABLE AND ACCRUALS Balance Balance as at as at 30 June 1993 30 June 1994 HK $'OOO HK $'OOO Backpayments in relation to General Salary Revision 9,980 with effect from 1 April 1993 for the Period April to June 1993 Backpayments in relation to General Salary Revision 001,657 5,992 1,561 189 10,042 155,862 with effect from 1 April 1994 for the Period April to June 1994 Deferred Gratuities Income In Advance Library Books Orders Obligations Under Finance Lease (Due Within One Year) Rates Other Accounts Payable and Accruals 13,591 2,754 5,252 2,971 221 2,565 288,734 185.283 316.088 8. UPGC HOLDING ACCOUNT HK $'OOO Balance as at 30 June 1993 512 Amount Refunded to the UPGC During the Year (512) Reserved Supplementary Grants for General Salary Revision with effect from 1 April 1992 for 1993/94 - Excess Reserved Supplementary Grants for General Salary Revision with effect from 1 April 1993 for 1993/94 - Excess 91 q1.728 1,819 Direct Allocation Grant for Research - Excess 7 Balance as at 30 June 1994 1,826 The balance under the UPGC Holding Account represented the excess of UPGC grants over specified

expenditure and is to be returned to the UPGC. 20 The Hong Kong University of Science and Technology

9. BUILDING FUND Balances as at 30 June 1993 2,966,193 0 2,966,193 Additions/Depreciation Written Off Additions Depreciation Written Off Net Additions Balances as at 30 June 1994 3,025,921 9,859 3,035,780 Notes: 1. Campus Project Phases I Phases I and II and II Modification Works Total HK $'OOO HK $'OOO HK $'OOO (Note 1) (Note 2) The Campus Project - Phases I and II, estimated to cost $3,548 million excluding furniture cost, at the June 1990 price level is financed by a donation of $1,926 million from the Royal Hong Kong Jockey Club and a subvention of $1,622 million from the Hong Kong Government. As at 30 June 1994, the total expenditure for the project stood at $3,18 1.5 1 million and was financed by: 30 June 1993 30 June 1994

HK$'OOO HK$'OOO 1.834.888 Royal Hong Kong Jockey Club Donation 1223 259 Hong Kong Government 3 058 147 Total Expenditure 1,908.903 1.272,602 3.181,505 (91,954) Less: Accumulated Depreciation (155,584) 2,966,193 Building Fund 3,025,921 2. It has been agreed that a sum of $20 million is to be taken from the contingency provision under the approved cost estimate of the campus project to enable the University to fine-tune certain facilities and correct minor design problems after the completion of the project.

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10. CAPITAL FUND HK$'004 Balance as at 30 June 1993 257,422 Additions/Depreciation Written Off Additions Depreciation Written Off Net Additions ' Balance as at 30 June 1994 75,148 332,570 The balance of the Capital Fund as at 30 June 1994, representing the net book value of other fixed assets, was funded by:

30 June 1993 30 June 1994 HK $OOO HK $OOO 421,608 Government Funds Non-Government Funds 644,735 (3 12,165) 332,570 The cost of Non-Government Funds included those other fixed assets conferred by the HKUST Educational

Trust. 11. LONG-TERM LIABILITIES Balance Balance as at as at 30 June 1993 30 June 1994 HK $OOO HK $ OOO 0660 864 Bank Loan (Note 1) Deferred Gratuities Obligations Under Finance Lease In the Second to Fourth Years Inclusive 1,524 12,817 Note: 9,427 2,747 643 1. A term loan facility of up to HK$ 7 50 million was obtained by the University to finance the construction of 66 additional senior staff quarters, with repayments coming from the recurrent block grant over a number of years, up to amounts equivalent to the rental value of leasing a similar number of such staff quarters.

2. 3. 22 The Hong Kong University of Science and Technology

12. PROVISIONS AND RESERVES Motor Vehicles Maintenance of Premises Maintenance/Renovation of Staff Quarters Air Conditioner Plant Household Furniture/Appliances Photocopying Machines Contractual Passages Balance Amount Amount Balance as at Received/ Expended/ as at 30 June 1993 Transferred Transferred 30 June 1994 HK $OOO HK $000 HK $OOO HK $OOO 1,088 423 0 3,879 4,267 0 1,669 2,091 0 1,041 1,041 0 2,601 3,039 0 1,381 938 0 11,659 11,799 0 6,130 6,370 4,454 66,139 64,243 76,847 1,416 0 1,416 Gratuities Leave Entitlement - Senior Staff Student Residential Halls General 1,511 681 799 Furniture and Equipment 521 Major Redecoration Exchange Equalization 020 2,482 2.334 1.677 Research Projects 28.932 45.548 24.862 49 618 - TOTAL 118,831 131,919 108,801 141.949 Transfers to Student Residential Halls Reserves were made from self-financing Halls Accounts. All other transfers were provided out of the UPGC subventions. The balance for Contractual Passages included payments which were expected to fall due before 30 June 1995.

The Hong Kong University of Science and Technology 23

13. GOVERNMENT FUNDS Balance as at 30 June 1993 HK $'OOO 64,412 120,747 (17,865) 0001,800 382 UPGC Triennium Equalization Account Capital Account Capital Works Reserve Fund Capital Grant (Note 1) Phase l/II Campus Development Project - Minor Modification Works Earmarked Grants from Central Allocation Vote 1992-95 Earmarked Grants from the Research Grants Council Academic Exchanges with Institutions of Higher Education in China Schedule Balance as at 30 June 1994 HK $'OOO 13(a) 13(b) 13(c) 88,966 62,906 (92,091) 013(d) 5,400 13(e) 32,710 13(f) 1,914 13(g) 741 169.476 100.546 Note: 1. The UPGC has approved a total of 332.9 7 million to finance the construction of additional dangerous goods stores, the fitting out of and installation of environmental control for the engineering laboratories and the fitting out of the Microfabrication Centre in Phase II. As at June 1994, there

was no expenditure on these projects.

24 The Hong Kong University of Science and Technology

13(a). UPGC TRIENNIUM EQUALIZATION ACCOUNT HK $'OOO Balance as at 30 June 1993 Block Grant Surplus, 1993/94 Recurrent Grant 64,412 Indicated Equipment Grant Indicated Language Enhancement Grant 20,315 Over-provision for Outstanding Commitments, 1993/94 Prior to the Year Ended 30 June 1991 For the Year Ended 30 June 1991 and thereafter Balance as at 30 June 1994 88,966

Under the block grant arrangement, the difference between funds released by the UPGC and the actual amount spent by the University is dealt with through the UPGC Triennium Equalization Account. The balance as at 30 June 1994 representing the excess of funds received over actual spending, is to be carried forward for use in the remaining year in the triennium. Surplus on the block grant, if any, at the end of the triennium will normally be transferred to the UPGC Holding Account and refunded to the UPGC.

13(b). CAPITAL ACCOUNT Approved Commitments 194,000 59.233 0 Subvention/Interest Received To 30 June 1993 During the Year To 30 June 1994 Expenditure To 30 June 1993 During the Year To 30 June 1994 Balances as at 30 June 1994 Balances as at 30 June 1993 Basic Teaching Equipment HK $'OOO 194.000 59.233 16 676 269,909 0 0 4,743 4.743 Others HK$'OOO Interest Income HK!{????}OOO Total K$'OOO H 253,233

11,154 16,676 120,747 The unspent balances are to be carried forward to the next financial year:

The Hong Kong University of Science and Technology 25

13(c). CAPITAL WORKS RESERVE FUND Specialist Furniture Equipment and General and Facilities Equipment HK $'000 H HK $'OOO Interest Income HK $'OOO Total HK OOO Approved Commitments 700,000 453,000 0 1,153,ooo Subvention/Interest Received To 30 June 1993 During the Year 156,288 66,200 To 30 June 1994 222,488 Expenditure To 30 June 1993 164,107 During the Year 112,227 To 30 June 1994 276,334 Balances as at 30 June 1994 (53,846) Balances as at 30 June 1993 (7,819) 247,285 40,100 287,385 779 180 959 404,352 106,480 510.832 258,110 0 422,217 68,479 0 180,706 326,589 (39,204) (10.825) 0959 779 602,923 (92,091) (17.865) The shortfalls as at 30 June 1994 will be offset against funding to be released by the UPGC to the University

in the next financial year: 26 The Hong Kong University of Science and Technology

13(d). PHASE VII CAMPUS DEVELOPMENT PROJECT- MINOR MODIFICATION WORKS Approved Commitments 20,000 Subvention Received During the Year 15,259 Less: Expended During the Year 9.859 Balance as at 30 June 1994 5,400 The unspent balance is to be carried forward to the next financial year: HK $'000 13(e). EARMARKED GRANTS FROM CENTRAL ALLOCATION VOTE 1992-95 Joint Institution Job Placement Institute of System Micro Systems HK$"OOO HK $'OOO Total HK$'OOO Approved Commitments 2,710 30,000 32,710 Subvention Received During the Year 2,710 30,000 32,710 Less: Expended During the Year 0 0 0 Balances as at 30 June 1994 2.710 30.000 32,710 The unspent balances are to be carried forward to the next financial year:

The Hong Kong University of Science and Technology 27

13(f). EARMARKED GRANTS FROM THE RESEARCH GRANTS COUNCIL Micro-electronic Co-operative Direct Competitive Research Allocation Bids Equipment Centres

Balances as at 30 June 1993 0 0 1,800 0 Add : Subvention Received/Transferred During the Year 5,900 20,706 0 2,100 Total 1,800 28,706 1,800 2,100 Less: Expended transferred During the Year 5,893 20,706 1,800 186 28,585 7 0 0 1,914 1,921 Less: Transferred to the UPGC Holding Account 7 0 0 0 7 Balances as at 30 June 1994 0 0 0 1,914 1,914 The unspent balance is to be carried forward to the next financial year: 13(g). ACADEMIC EXCHANGES WITH INSTITUTIONS OF HIGHER EDUCATION IN CHINA HK$'OOO Balance as at 30 June 1993 382 Add: Subvention Received During the Year 498 Less: Expended During the Year Balance as at 30 June 1994 The unspent balance is to be carried forward to the next financial year: 880 139 741 28 The Hong Kong University of Science and Technology

14. NON-GOVERNMENT FUNDS GENERAL FUNDS Chow Yei Ching Fund 0 5,000 0 1,500 3,500 Lam Woo Fund 2,490 1,250 0 1,500 2,240 Leung Yat Sing Fund 1,993 0 0 0 1,993 The S.H. Ho Foundation Limited Fund 10,000 0 0 0 10,000 TVB Fund 2,500 2,500 0 4,025 975 Others 391 0 0 0 391 Total General Funds 17,374 8,750 0 7,025 19,099 DESIGNATED FUNDS Organized Research Units

Centre for Asian Financial Markets Centre for Economic Development Hainan Institute Hongkong Telecom Institute of Information Technology Institute for Infrastructure Development Joyce M. Kuok Laser and Photonics Laboratory 1,767 0 1,767 0 0 3,000 62 0 1,829 62 0 1,829 0 223 2,777 12,185 9,323 0 11,276 10,232 0 2,096 0 389 1,707 Sino Software Research Centre William Mong Semi-conductor Clusters Laboratory Zheng Ge Ru Thin Film Physics Laboratory Sub-total (I) 7,127 2.590 274 3,837 6,064 3.53; 5, co12 420 2.043 12,911 1.075 5,721 3,coo 76 592 2.500 277 2.016 27,419 1.171 20,376 3,559 6.482 39,176 47,390 Individual Research Projects Croucher Foundation Remote Sensing Studies Others Sub-total (II) Sir S.K. Tang Library Fund Sub-total (Ill) 4,341 4,012 0 4,336 4,017 15,556 0 1,878 0 17,434 Balance Amount Investment/ Amount Balance as at Received/ Interest Expended/ as at 30 June 1993 Transferred Income Transferred 30 June 1994 The Hong Kong University of Science and Technology 29

14. NON-GOVERNMENT FUNDS (Cont'd) Balance Amount Investment/ Amount Balance Scholarships/Bursary Funds Asea Brown Boveri Scholarship AST Research (Far East) Limited Scholarship CGCC (Foundation) Limited Bursary CGCC (Foundation) Limited Scholarship Chinese Manufacturer's Association of HK Scholarship Citibank Scholarship Coopers and Lybrand Scholarship Croucher Foundation Bursary Du Pont Scholarship Duty Free Shoppers Scholarship Epson Foundation Scholarship Ernst and Young Education Subsidy Gammon Construction Limited Scholarship Grant Thornton Byrne Scholarship Hong Kong Society of Accountants Scholarship Hong Kong Two/Ten International Footwear Foundation Scholarship 0 27 0 34 0 17 0 100 0 16 0 17 0 15 0 20 0 51 0 12 0 6

HKMA IT Management Club Scholarship Hsin Chong K.N. Godfrey Yeh Bursary Indian Chamber of Commerce - 40th Anniversary Scholarship International Bechtel Incorporated Scholarship Jardine Matheson Limited Scholarship Kwong On Bank Scholarship Legend Technology Limited Scholarship Li Po Chun Charitable Trust Scholarship Miss Leung Pui Han Bursary Miss Leung Pui Han Scholarship Moot Court Scholarship Motorola Semi-conductors HK Limited Scholarship 0 12 0 43 25 30 0 20 0 17 0 5a 0 41 37 25 0 97 0 63 as at Received/ Interest Expended/ as at 30 June 1993 Transferred Income Transferred 30 17 0 6 0 90 0 10 0 27 0 34 0 17 0 94 6 16 0 17 0 15 0 20 0 51 0 12 0 6 0 70 0 7 0 152 0 12 0 20 23 25 30 20 0 17 0 58 0 41 0 37 25 0 97 63 0 30 The Hong Kong University of Science and Technology

14. NON-GOVERNMENT FUNDS (Cont'd) Scholarships/Bursary Funds [Cont'd) Parfums Christian Dior Scholarship RUST/JRP Scholarship Shell Hong Kong Limited Scholarship Shun Hing Group Scholarship Sir Edward Youde Memorial Fellowship and Scholarship So Hok Scholarship Sony Corporation of Hong Kong Limited Scholarship Sumitomo Electric Asia Limited Scholarship Sun Hing Steel Furniture Factory Limited Scholarship Taipei Trade Centre Scholarship The Hongkong Bank Foundation Scholarship The Incorporated Trustees of Chiap Hua Cheng's Foundation Bursary The Incorporated Trustees of Chiap Hua Cheng's Foundation Scholarship Tian San Construction Company Limited Scholarship UDL Scholarship Uniform Knitters Limited Scholarship Yoshie Hiraoka Memorial Scholarship Zheng Ge Ru Foundation Scholarship Zonta Club of Hong Kong East Scholarship Sub-total (IV) Balance Amount Investment/ Amount Balance as at _ Received/ 30 June 19% Transferred 25 17 30 30 0 364 0 17 0 34 0 6 0 17 0 80 0 20 58 150 0 255 000148 00268 50 50 80581 80 2,827 Interest income

Expended/ as at Transferred 30 June 1994 2,694 401 The Hong Kong University of Science and Technology 31

14. NON-GOVERNMENT FUNDS (Cont'd) Student Loan Funds Kiangsu and Chekiang Residents (HK) Association Education Fund The American Women's Association of Hong Kong Limited Winsor Education Foundation Sub-total (V) Self-financing Activities and Others Undergraduate Halls Summer Letting of Dormitory Places - Undergraduate Halls Postgraduate Halls Summer Letting of Dormitory Places - Postgraduate Halls Visitors Centres Conference and Workshops Executive Programmes and Classes MBA Programmes Souvenir Shop University Development Fund Others Sub-total (VI) Total Designated Funds 63,393 65,835 4,727 51,315 82,640 Balance Amount Investment/ Amount Balance as at Received/ Interest Expended/ as at 30 June 1993 Transferred Income Transferred 30 June 1994 014 014 457 0 465 6 0162 09,930 181 10,111 0 925 24 204 907 3,043 49 3,092 0 939 34 49 1,270 1,811 0 485 2,055 1,536 0 1,745 492 2,002 0 836 1,456 2,429 0 782 2,122 2,120 0 2,266 212 577 1,387 18 2,892 5,808 3 3,856 1,986 4.038 31.120 1.678 23,444 13.392 346 729 701 290 475 358 946 31

32 The Hong Kong University of Science and Technology

14. NON-GOVERNMENT FUNDS (Cont'd) Balance Amount Investment/ Amount Balance DESIGNATED ENDOWMENT FUNDS Capital Accounts

Andrew Vee Say Shaw Memorial Scholarships Endowment Fund Dow Hong Kong Scholarships Endowment Fund Elizabeth (Libby) Fuhriman Gardner Endowment Fund Hongkong and Kowloon Electrical Appliances Merchants Association Scholarships Endowment Fund Hongkong Telecom Institute of Information Technology Endowment Fund HKUST Arts Endowment Fund Lee Hysan Foundation Endowment Fund Wei Lun Endowment Fund Sub-total (I) as at Received/ Interest Expended/ as at 30 June 1993 Transferred Income Transferred 30 June 1994 Recurrent Accounts Andrew Vee Say Shaw Memorial Scholarships Endowment Fund Dow Hong Kong Scholarships Endowment Fund Elizabeth (Libby) Fuhriman Gardner Endowment Fund Hongkong and Kowloon Electrical Appliances Merchants Association Scholarships Endowment Fund

Hongkong Telecom Institute of Information Technology Endowment Fund HKUST Arts Endowment Fund 105 Lee Hysan Foundation Endowment Fund Wei Lun Endowment fund 29 65 37 91 128 510 668 1,108 Sub-total (II) 1,363 L" 3,341 966 3.764 Total Designated Endowment Funds 29,498 726 3,341 976 32,589 TOTAL NON-GOVERNMENT FUNDS 110,265 75,311 8,068 59,316 134,328 600 00 600 800 800 98 88 0 100 18,500 18,500 737 737 3,000 3,000 5,000 5,000 28,135 700 28,825 17 0 17 4 28 20 26 i0 3 10 3 1 1 The Hong Kong University of Science and Technology 33

15. UPGC SUBVENTIONS 1 July 1992 1 July 1993 to to 30 June 1993 30 June 1994 Block Grant Recurrent Grant Indicated Equipment Grant Indicated Language Enhancement Grant 615,146 821,390 41,535 General Salary Revisions with effect from 1 April 1992 9,980 General Salary Revisions with effect from 1 April 1993 0 General Salary Revisions with effect from 1 April 1994 (for April - June 1994)

51,515 10.932 Reserved Supplementary Grants 50,192 50,245 13,591 114,028 9,519 677,593 944,937 33 The Hong Kong University of Science and Technology

16. EXPENDITURE I July 1992 I July 1993 to to 30 June 1993 30 June 1994 27,675 30,864 240 145 1,485 1,401 638 738 ADMINISTRATION Salaries and Gratuities/Superannuation-Senior Staff Salaries and Gratuities/Superannuation-Support Staff Audit and Legal Fees General Advertisements General Office Expenses Official Publications Postage Vehicle Running Expenses Sub-total (I) 33,410 45,437 641 118 1,913 1,565 772 997 63,186 186,708 11,569 9,146 200 541 30.722 3 000 2.508 725 692 59.103 12,220 34.525 15,050 12,713 8,928 1 859 9.470 7 294 3,997 1.064 6.974 3,224 4,909 1,177 76,659 369.215 Sub-total (II) ACADEMIC DEPARTMENTS AND ACADEMIC SUPPORT CENTRES Academic Departments Salaries and Gratuities/Superannuation-Senior Staff Salaries and Gratuities/Superannuation-Support Staff Equipment Equipment Maintenance General Office/Laboratory Expenses Library Salaries and Gratuities/Superannuation-Senior Staff Salaries and Gratuities/Superannuation-Support Staff Book Binding General Off ice Expenses Library Books and Periodicals Library Electronic Media Library Media Resources Library On-line Search Others Research Grants Computer Facilities Academic Support Centres Centralised and Departmental Laboratories Deans' Off ices Educational Technology Centre Industrial Training Centre Language Centre Materials Characterisation and Preparation Centre Microelectronics Fabrication Centre Off ice of Contract and Grant Administration PVC(AA) Office PVC( R&D) Office Research Centre Technology Transfer Centre 84,853 229,818 35,486 36,564 8,114 16,952 326,934 13,948 11,998 815 1,049 26,979 4.000 4,021 1,250 883 64,943 19,685 58.795 21,929 16,564 12,001 5,797 16.775 12,253 6,641 3,122 9,012 3,801 10,076 1 3,727 1 121,698 592,055 The Hong Kong University of Science and Technology 35

16. EXPENDITURE (Cont'd) 1 July 1992 1 July 1993 to to 30 June 1993 30 June 1994 8,922 36,242 8,190 608 8,716 10,932 13,732 5,060 535 24,363 117,300 MAINTENANCE OF PREMISES AND GROUNDS Salaries and Gratuities/Superannuation-Senior Staff Salaries and Gratuities/Superannuation-Support Staff Cleaning Expenses General Off ice Expenses Minor Works Rates Repairs and Maintenance Security Expenses Staff Uniforms and Laundry Utility Charges Sub-total (Ill) 10,843 52,814 7,967 1,065 11,134 9,519 25,944 5,978 305 33,730 159,299 746 5,593 7,868 6,372 54 16,458 46 1,501 38,638 GENERAL EDUCATION Advisory Committees Meetings/Accreditation Consultancies Contractual Passages Duty Visits and Staff Development Examinations Postgraduate Studentships Subscriptions to International Education Associations Workshops and Seminars Sub-total (IV) 732 4,732 11,511 9,124 44 33,006 54 1,855 61,058 85 108 10.7i7 i,33c 12,240 STUDENT FACILITIES AND AMENITIES Grants to Student Bodies Physical Education Facilities Student Affairs Office Student Health Sub-total (V) MISCELLANEOUS Congregation Expenses Court/Council Meetings Education Allowances Home Purchase Scheme Housing Benefits Insurance Premiums Medical and Dental Benefits Official Entertainment Outreach Programmes to Schools Publicity Expenses Recruitment Expenses Removal Expenses and Hire of Vehicles School Passages Subsidies for Staff Buses Miscellaneous Sub-total (Vi) 36 The Hong Kong University of Science and Technology

THE HONG KONG UNIVERSITY OF SCIENCE AND TECHNOLOGY STAFF SUPERANNUATION SCHEME FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1994

TRUSTEES' REPORT The Hong Kong University of Science and Technology Staff Superannuation Scheme ("the Scheme") was introduced from 1 July 1992. The main purpose of the Scheme is to provide a lump-sum cash retirement benefit for staff members of The Hong Kong University of Science and Technology ("HKUST") who are eligible to participate in the Scheme.

2. The Scheme has been constituted under a Deed of Trust and individual Trustees are appointed by the University Council. As at the end of the financial year there were seven Trustees who together formed a Board of Trustees:

Chairman: The Hon. LAU Wah-sum Members: Dr. CHENG Hon-kwan Mr. LEE Hon-chiu Mr. PANG Tak-ming Mr. TAN Chuen-yan, Paul Dr. Raymond Sze-chung WONG Prof. WOO Chia-Wei

While Messrs. Lau Wah-sum, Cheng Hon-kwan, Lee Hon-chiu, Tan Chuen-yan, Paul and Prof. Woo Chia-Wei were appointed directly by the University Council, the appointments of Mr. Pang Tak-ming and Dr. Raymond Sze-Chung Wong were made on the basis of the results of elections which were open to all eligible Scheme Members.

3. In the second year of operation of the Scheme, professionals appointed by the Trustees continued to provide various services to the Scheme. The investment managers were Aetna Investment Management (Hong Kong) Limited ("AEtna") and Barclays de Zoete Wedd Investment Management (Hong Kong) Limited ("Barclays Their performance for the year had been satisfactory, with AEtna and Barclays achieving time-weighted returns of 25% and 15% respectively. The Scheme Administrator was Bermuda Trust (Far East) Limited. The Actuary, Towers Perrin, who was appointed by the University Council on the recommendation of the Trustees continued to serve the Scheme.

4. During the year, the Deed of Trust had been varied so as to accept transfer payments from the HKUST Ancillary Staff Superannuation Scheme. This took effect on 25 March 1994. The Scheme had since then and up to 30 June 1994 accepted transfer payments from the HKUST Ancillary Staff Superannuation Scheme in respect of three ancillary staff members.

5. As at the end of the financial year, the total net assets of the Scheme was $51.92 illion of which $48.76 million represented HKUST and Members' Balances. The Scheme had General Reserve of $3.16 million as at 30 June 1994. The total number of Scheme Members s at the end of the financial year stood at 1 ,018, a net increase of 326 Members when compared with the membership at 30 June 1993. Of the total number of Scheme Members, 30 and 988 were otherwise Terms A and Terms B staff members of HKUST respectively.

The Hong Kong University of Science and Technology Staff Superannuation Scheme 39

6. It is envisaged that both the assets of the Scheme and the number of Scheme Members will continue to grow in pace with the expansion of HKUST in 1994/95. It is also envisaged that more staff members who are gradually completing their two or three-year employment contracts will join the Superannuation Scheme.

7. The Board would like to take this opportunity to thank all parties involved in the management of the Scheme for their advice and contributions during the year.

Board of Trustees,31 October 1994

AUDITORS' REPORT

To: The Trustees of The Hong Kong University of Science and Technology Staff Superannuation Scheme

We have audited the financial statements of THE HONG KONG UNIVERSITY OF SCIENCE AND TECHNOLOGY STAFF SUPERANNUATION SCHEME in respect of the year ended 30 June 1994 on pages 42 to 45 in accordance with Auditing Standards.

In our opinion: 1) Proper accounts and records have been kept during the year ended 30 June 1994 as regards the assets, liabilities and financial transactions of the Scheme.

(ii) The financial statements show a true and fair view of the disposition of the Scheme's assets and liabilities at 30 June 1994 and of its financial transactions during the year then ended.

(iii) Contributions have been made during the year ended 30 June 1994 in accordance with the terms of the Scheme.

(iv> As at 30 June 1994 none of the assets of the Scheme were subject to any assignment, charge, pledge or other encumbrance.

SIGNED Deloitte Touche Tohmatsu Certified Public Accountants Hong Kong 31 October 1994 The Hong Kong University of Science and Technology Staff Superannuation Scheme 41

BALANCE SHEET AS AT 30 JUNE 1994

1993 HK $'OOO 15.004 INVESTMENTS 3 1,767 3,560 LESS : CURRENT LIABILITIES Accounts Payable Benefits Payable

CURRENT ASSETS Accounts Receivable Bank Balances 1,663 NET CURRENT ASSETS 3,255 16.667 NET ASSETS 51.916 12,004 HKUST BALANCE 36,583 4,001 MEMBERS BALANCE 12,177 662 GENERAL RESERVE 3.156 16.667 TOTAL FUNDS 51.916 Approved by the Board of Trustees on 31 October 1994 SIGNED SIGNED Chairman, Secretary, Board of Trustees Board of Trustees 2& The accompanying notes are an integral part of the financial statements. 48,661 16.667 TOTAL FUNDS 51.916

REVENUE ACCOUNT FOR THE YEAR ENDED 30 JUNE 1994

CONTRIBUTIONS AND WITHDRAWALS

HKUST Contributions Members' Contributions Transfer in from HKUST Ancillary Staff Superannuation Scheme Interest Credited to HKUST Balance and Members' Balance 24,987 8,329 50 2,060 35,426 Less: Withdrawals of Contributions and Interest on Members Leaving Service of HKUST Forfeitures of Contributions and Interest on Members Leaving Service of HKUST 2,671 Add: Claims on Insurance Less: Payment of Benefit on Death and Permanent Incapacity in Employment NET AMOUNT TRANSFERRED TO HKUST BALANCE AND MEMBERS' BALANCE 32,755 INCOME AND EXPENDITURE INCOME Forfeitures of Contributions and Interest on Members Leaving Service of HKUST Interest Income Investment Income Profit on Sale of Investments Unrealised Gain on Revaluation of Investments 5,653 LESS: EXPENDITURE General Off ice Expenses Audit Fee Actuary's Fee Scheme Administration Fee Other Professional Fees Investment Managers Fee and Expenses Death and Disability Insurance Premium Interest Credited to HKUST Balance and Members' Balance Loss on Exchange

EXCESS OF INCOME OVER EXPENDITURE TRANSFERRED TO GENERAL RESERVE INCREASE IN SCHEME FUND DURING THE YEAR ADD : SCHEME FUND BALANCE BROUGHT FORWARD FROM PREVIOUS YEAR The accompanying notes are an integral part of the financial statements. The Hong Kong University of Science and Technology Staff Superannuation Scheme 43

NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 1994 1. BACKGROUND The Hong Kong University of Science and Technology Staff Superannuation Scheme ("the Scheme") was established with effect from 1 July 1992 under a Deed of Trust. The Scheme starts on a defined contribution basis and moves after six years of a Scheme Member's service to become a defined benefit scheme, with both staff members and The Hong Kong University of Science and Technology ("HKUST") contributing to the Scheme.

2. SIGNIFICANT ACCOUNTING POLICIES 2.1 Investments Listed investments are stated at market value. All gains and losses arising from revaluation of investments are recorded in the Revenue Account.

2.2 Interest and Investment Income Income from fixed interest investments and bank deposits is accounted for on the accrual basis. Dividend income is accounted for when declared.

2.3 Foreign Currencies Foreign currency balances have been translated into Hong Kong dollars at the market rates of exchange ruling at the balance sheet date. Foreign currency transactions during the year were translated into Hong Kong dollars at the rates ruling at the transaction dates. Differences arising on transactions in and translation of foreign currencies are dealt with in the Revenue Account.

44: The Hong Kong University of Science and Technology Staff Superannuation Scheme

3. INVESTMENTS AT COST, INCLUDING ACCUMULATED NET REALISED INCOME AT MARKET VALUE Equities (Direct Investment) Hong Kong Japan South East Asia United States Australasia Equities (Unit Trusts) Hong Kong Japan South East Asia United States United Kingdom Europe Australasia Bonds (Direct Investment) United States Europe Bonds (Unit Trusts) Europe Global Cash 3,250 2.181 AEtna Investment Management (Hong Kong) Limited Barclays de Zoete Wedd Investment Management (Hong Kong) Limited Total

The Hong Kong University of Science and Technology Staff Superannuation Scheme 45

FULL ACTUARIAL CERTIFICATE Prepared pursuant to paragraph 2(a) of Part 3 of Schedule 1 in the Occupational Retirement Schemes Ordinance

Name of Scheme : THE HONG KONG UNIVERSITY OF SCIENCE & TECHNOLOGY STAFF SUPERANNUATION SCHEME

Date of Actuarial Certificate: 17 October 1994 Date of Actuarial Review : 30 June 1994 Representative Employer : The Hong Kong University of Science & Technology Relevant Employer(s) : The Hong Kong University of Science & Technology I hereby certify that:-

An actuarial review has been conducted as regards the Scheme as of the Date of Actuarial Review.

In the course of the review I have had regard to the financial condition of the Scheme.

The review included a valuation of the Scheme's liabilities (including contingent and prospective liabilities) and the basis of the valuation, assumptions used, results and commentary on those results are detailed in a report dated October 1994.

As at the Date of Actuarial Review the Scheme's assets were sufficient to meet the Scheme's aggregate vested liability.

Following the review I have made recommendations as regards funding of the Scheme for the next three years as follows:-

Monthly For the period regular contributions by - members: 5% of salaries 1 July 1994 to 30 June 1997 - Relevant Employer: 15% of salaries 1 July 1994 to 30 June 1997

Following the review I have received a copy of a written undertaking by the Relevant Employer of the Scheme to the administrator of the Scheme to contribute to the Scheme's funds in accordance with those recommendations.

(A) Provided the Scheme is funded in accordance with those recommendations, I would expect that the Scheme's assets would continue to be sufficient to meet the Scheme's aggregate vested liability throughout the period of 3 years from the Date of Actuarial Review; and

(B) As at the Date of Actuarial Review the Scheme's assets were sufficient to meet the Scheme's aggregate past service liability.

Signature : SIGNED Date : 17 October 1994 Name : Sydney Maurice Bone Qualification : Fellow of The Institute of Actuaries of Australia Address : Towers Perrin 1310-1313 Two Pacific Place 88 Queensway Hong Kong

46 The Hong Kong University of Science and Technology Staff Superannuation Scheme

THE HONG KONG UNIVERSITY OF SCIENCE AND TECHNOLOGY ANCILLARY STAFF SUPERANNUATION SCHEME FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1994 The Hong Kong University of Scince and and Technology Staff Superannuation Scheme 47

TRUSTEES' REPORT The Hong Kong University of Science and Technology Ancillary Staff Superannuation

Scheme ("the Scheme") was introduced from 1 July 1992. The main purpose of the Scheme is to provide a lump-sum cash retirement benefit for staff members of The Hong Kong University of Science and Technology ("HKUST") who are eligible to participate in the Scheme.

2. The Scheme has been constituted under a Deed of Trust and individual Trustees are appointed by the University Council. As at the end of the financial year there were seven Trustees who together formed a Board of Trustees: Chairman:

Members: The Hon. LAU Wah-sum Dr. CHENG Hon-kwan Mr. LEE Hon-chiu Mr. LEUNG Tit-ming Mr. LIU Kew-kin Mr. TAN Chuen-yan, Paul Prof. WOO Chia-Wei

While Messrs. Lau Wah-sum, Cheng Hon-kwan, Lee Hon-chiu, Tan Chuen-yan, Paul and Prof. Woo Chia-Wei were appointed directly by the University Council, the appointments of Messrs. Leung Tit-ming and Liu Kew-kin were made on the basis of the results of elections which were open to all eligible Scheme Members.

3. In the second year of operation of the Scheme, professionals appointed by the Trustees continued to provide various services to the Scheme. The investment managers were Aetna Investment Management (Hong Kong) Limited ("AEtna") and Barclays de Zoete Wedd Investment Management (Hong Kong) Limited ("Barclays Their performance for the year had been satisfactory, with AEtna and Barclays achieving time-weighted returns of 25% and 15% respectively. The Scheme Administrator was Bermuda Trust (Far East) Limited. The Actuary, Towers Perrin, who was appointed by the University Council on the recommendation of the Trustees continued to serve the Scheme.

4. During the year, the Deed of Trust had been varied so that a Scheme Member, upon promotion and hence ceasing to be a Member of the Scheme, is permitted to transfer the entire accrued retirement benefits to the HKUST Staff Superannuation Scheme. This took effect on 25 March 1994 and three Scheme Members had benefited from this variation.

5. As at the end of the financial year, the total net assets of the Scheme was $3.66 million and the total number of Scheme Members was 173, all of whom were otherwise Terms C staff members of HKUST.

6. It is envisaged that both the assets of the Scheme and the number of Scheme Members will continue to grow, though at a relatively slower pace than the expansion of HKUST, in 1994/95.

The Hong Kong University of Science and Technology Ancillary Staff Superannuation Scheme 49

7. The Board would like to take this opportunity to thank all parties involved in the management of the Scheme for their advice and contributions during the year.

Board of Trustees, 31 October 1994

50 The Hong Kong University of Science and Technology Anciliary Staff Superannuation Scheme

AUDITORS' REPORT To: The Trustees of The Hong Kong University of Science and Technology Ancillary Staff Superannuation Scheme

We have audited the financial statements of THE HONG KONG UNIVERSITY OF SCIENCE AND TECHNOLOGY ANCILLARY STAFF SUPERANNUATION SCHEME in respect of the year ended 30 June 1994 on pages 52 to 55 in accordance with Auditing Standards.

In our opinion: 1) Proper accounts and records have been kept during the year ended 30 June 1994 as regards the assets, liabilities and financial transactions of the Scheme.

(ii) The financial statements show a true and fair view of the disposition of the Scheme's assets and liabilities at 30 June 1994 and of its financial transactions during the year then ended.

(iii) Contributions have been made to the Scheme in accordance with actuarial recommendations dated 6 October 1993.

(iv) As at 30 June 1994 none of the assets of the Scheme were subject to any assignment, charge, pledge or other encumbrance.

SIGNED Deloitte Touche Tohmatsu Certified Public Accountants Hong Kong 31 October 1994 The Hong Kong University of Science and Technology Ancillary Staff Superannuation Scheme 51

BALANCE SHEET AS AT 30 JUNE 1994 1993 1,221 INVESTMENTS CURRENT ASSETS 146 qBank Balances LESS : CURRENT LIABILITIES 13 Accounts Payable 133 NET CURRENT ASSETS 146 1,354 NET ASSETS 3,656 1,354 TOTAL FUNDS 3.656 Approved by the Board of Trustees on 31 October 1994 SIGNED SIGNED Chairman, Secretary, Board of Trustees Board of Trustees The accompanying notes are an integral part of the financial statements. Note 3 3,510 179 33 52 The Hong Kong University of Science and Technology Ancillary Staff Superannuation Scheme

REVENUE ACCOUNT FOR THE YEAR ENDED 30 JUNE 1994 1993 HK$ 1,316 01,316 CONTRIBUTIONS Contributions Received from HKUST Less: Transfer out to HKUST Staff Superannuation Scheme 58 38 EXCESS OF INCOME OVER EXPENDITURE 235

INCOME AND EXPENDITURE INCOME Interest Income Investment Income Profit on Sale of Investments Unrealised Gain on Revaluation of Investments LESS: EXPENDITURE General Off ice Expenses Audit Fee Actuary's Fee Scheme Administration Fee Other Professional Fees Investment Managers' Fee and Expenses Loss on Exchange INCREASE IN SCHEME FUND DURING THE YEAR 2,302 ADD : SCHEME FUND BALANCE BROUGHT FORWARD FROM PREVIOUS YEAR

1 354 TOTAL FUNDS 3.656 The accompanying notes are an integral part of the financial statements. The Hong Kong University of Science and Technology Ancillary Staff Superannuation Scheme

NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 1994 1. BACKGROUND The Hong Kong University of Science and Technology Ancillary Staff Superannuation Scheme ("the Scheme") was established with effect from 1 July 1992 under a Deed of Trust. The Scheme is a defined benefit scheme, with only The Hong Kong University of Science and Technology ("HKUST") making contributions.

2. SIGNIFICANT ACCOUNTING POLICIES 2.1 Investments Listed investments are stated at market value. All gains and losses revaluation of investments are recorded in the Revenue Account. arising from

2.2 Interest and Investment Income Income from fixed interest investments and bank deposits is accounted for on the accrual basis. Dividend income is accounted for when declared.

2.3 Foreign Currencies Foreign currency balances have been translated into Hong Kong dollars at the market rates of exchange ruling at the balance sheet date. Foreign currency transactions during the year were translated into Hong Kong dollars at the rates ruling at the transaction dates. Differences arising on transactions in and translation of foreign currencies are dealt with in the Revenue Account.

The Hong Kong University of Science and Technology Ancillary Staff Superannuation Scheme

3 INVESTMENTS AT COST, INCLUDING ACCUMULATED NET REALISED INCOME AT MARKET VALUE Equities (Direct Investment) Hong Kong Japan South East Asia United States Australasia Equities (Unit Trusts) Hong Kong Japan South East Asia United States United Kingdom Europe Australasia Bonds (Direct Investment) United States Europe Bonds (Unit Trusts) Europe Global Cash 236 157 393 Barclays AEtna de Zoete Wedd Investment Investment Management Management (Hong Kong) (Hong Kong) Limited Limited Total 1,816 1,631 3,447 1,152 0 1.152 166 1.286 1.452 /g: m /I 140 0 140 138 235 373 1,832 1,678 3,510 The Hong Kong University of Science and Technology Ancillary Staff Superannuation Scheme 55

FULL ACTUARIAL CERTIFICATE Prepared pursuant to paragraph 2(a) of Part 3 of Schedule 1 in the Occupational Retirement Schemes Ordinance

Name of Scheme : THE HONG KONG UNIVERSITY OF SCIENCE & TECHNOLOGY ANCILLARY STAFF SUPERANNUATION SCHEME

Date of Actuarial Certificate: 17 October 1994 Date of Actuarial Review : 30 June 1994 Representative Employer : The Hong Kong University of Science & Technology Relevant Employer(s) : The Hong Kong University of Science & Technology I hereby certify that:- 0) (ii) (iii) An actuarial review has been conducted as regards the Scheme as of the Date of Actuarial Review. In the course of the review I have had regard to the financial condition of the Scheme.

(iv) (v> The review included a valuation of the Scheme's liabilities (including contingent and prospective liabilities) and the basis of the valuation, assumptions used, results and commentary on those results are detailed in a report dated October 1994.

As at the Date of Actuarial Review the Scheme's assets were sufficient to meet the Scheme's aggregate vested liability.

Following the review I have made recommendations as regards funding of the Scheme for the next three years as follows:-

(vi> Monthly For the period regular contributions by - members: 0% 1 July 1994 to 30 June 1997 - Relevant Employer: 15% of salaries 1 July 1994 to 30 June 1997

Following the review I have received a copy of a written undertaking by the Relevant Employer of the Scheme to the administrator of the Scheme to contribute to the Scheme's

funds in accordance with those recommendations.

(vii! (A) Provided the Scheme is funded in accordance with those recommendations, I would expect that the Scheme's assets would continue to be sufficient to meet the Scheme's aggregate vested liability throughout the period of 3 years from the Date of Actuarial Review; and

(B) As at the Date of Actuarial Review the Scheme's assets were sufficient to meet the Scheme's aggregate past service liability.

Signature : SlGNED Date : 17 October 1994 Name : Sydney Maurice Bone Qualification : Fellow of The Institute of Actuaries of Australia Address : Towers Perrin 131 O-l 313 Two Pacific Place 88 Queensway Hong Kong The Hong Kong University of Science and Technology Ancillary Staff Superannuation Scheme