Financial Statements for the Year Ended 30 June 1995

Abstract

[evdate 1995-06-30] FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1995 THE HONG KONG UNIVERSITY OF SCIENCE AND TECHNOLOGY

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 Figures15 Schedules to the Financial Statements Buildings.. 16 Construction-in-progress.. 17 Other Fixed Assets.. 18 Investments 19 Loans to Affiliated Companies 19 Sundry Receivables 19 UGC Holding Account 20 Accounts Payable and Accruals.. 20 Building Fund 21 Capital Fund 22 Long-term Liabilities 22 Provisions and Reserves 23 Government Funds 24 UGC Triennium Equalization Account 25 Capital Account 25 Capital Works Reserve Fund 26 Capital Grants 26 Phase l/II Campus Development Project - Minor Modification Works 27 Earmarked Grants from the UGC Central Allocation Vote 1992-95.. 27 Earmarked Grants from the Research Grants Council 28 Teaching Development Grant 1994/95 28 Academic Exchanges with Institutions of Higher Education in China 28 Non-Government Funds 29 UGC Subventions 34 Expenditure 35

II. THE HONG KONG UNIVERSITY OF SCIENCE AND TECHNOLOGY STAFF SUPERANNUATION SCHEME Trustees' Report 39 Auditors' Report 42 Balance Sheet 44 Revenue Account 45 Notes to the Financial Statements 46 Full Actuarial Certificate 48 Ill. THE HONG KONG UNIVERSITY OF SCIENCE AND TECHNOLOGY ANCILLARY STAFF SUPERANNUATION SCHEME Trustees' Report 51 Auditors' Report 54 Balance Sheet 56 Revenue Account 57 Notes to the Financial Statements 58 Full Actuarial Certificate 60 ii

THE HONG KONG UNIVERSITY OF SCIENCE AND TECHNOLOGY FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1995 The Hong Kong University of Science and Technology 1

TREASURER'S REPORT The financial year ended 30 June 1995 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 significantly with the total net assets as at 30 June 1995 rising by 5% to $3,928 million.

While the campus project (Phases I & II) has been satisfactorily completed, the University started in 1993/94 the construction on campus of 66 additional senior staff quarters (Phase IIA). This has been completed in 1994/95. The University Grants Committee ("UGC") has also approved the construction on campus of another 156 additional senior staff quarters (Phase IIB), additional graduate residences with 1,080 places and a University Centre. These projects other than the campus project (Phases I & II) have been financed by bank loans.

The recurrent expenditure primarily funded by the UGC increased by 42% to reach $1,438.22 million for the year. Expenditure on equipment, facilities and furniture funded by the UGC totalled $160.06 million for the year. Other non-recurrent expenditure funded by UGC amounted to $121.48 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.

CONSTRUCTION PROJECTS Campus Project - Phases I and II

Construction work on the campus (Phases I and II) was completed on-time and under budget. It is expected that the final account could yield a saving compared to budget estimates of no less than $270 million. As at 30 June 1995, a total of $3,224.03 million was expended.

To enable the University to fine-tune certain facilities and correct minor design problems after the completion of the project, the UGC has approved a total sum of $20 million taken from the contingency provision under the approved cost estimate of the campus project. The entire $20 million had been fully spent as at 30 June 1995.

Additional Senior Staff Quarters In agreeing with the University that there will be a shortage of senior staff quarters on campus, the UGC has given approval to develop on the University's campus 66 additional senior staff quarters (Phase IIA) and another 156 additional senior staff quarters (Phase IIB) with the full construction costs and legal and facility charges financed by two bank loans. The UGC has also agreed that repayments of the bank loans over a number of years could come from the recurrent grant, up to amounts equivalent to the rental value of leasing a similar number of such staff quarters from the market. Two loan facilities of up to $150 million and $300.20 million, respectively, were arranged in the name of the University. On 9 June 1995, the 66 additional senior staff quarters (Phase IIA) were completed on-time and under budget, and handed over to the University. As at 30 June 1995, a total of $116.65 million and $25.57 million were drawn to finance the costs of Phase IIA and Phase IIB respectively.

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Graduate Residence and University Centre In 1994/95, the UGC has also approved the construction of additional graduate residences with 1,080 places and a University Centre. The project. is funded by a bank loan facility of up to $250 million in the name of the University. The bank loan will be repaid by the University over a number of years primarily from rental charges to be collected from occupants as well as donations from the private sector. As at 30 June 1995, a total of $19.88 million had been drawn to finance the amount incurred thus far on the project.

Dangerous Goods Stores, Engineering Laboratories and Microfabrication Centre

The UGC has approved a capital grant of $32.97 million to finance the construction of additional dangerous goods stores, the fitting out and installation of environmental control for the engineering laboratories and the fitting out of the Microfabrication Centre in Phase II. As at 30 June 1995, a total of $11 .12 million had been spent on these projects.

RECURRENT INCOME AND EXPENDITURE FOR UGC-FUNDED ACTIVITIES

Recurrent Income

The University is funded on the basis of a triennial recurrent block grant. The financial year 1994/95 was the last year of the triennium 1992-95. Any recurrent surplus from the triennial recurrent block grant as at 30 June 1995 would have to be returned to the UGC. The total recurrent income increased by 33% to $1,392.90 million, of which $1 ,198.78 million or 86% was provided by the Government through the UGC: a recurrent block grant of $973.19 million (which is composed of a recurrent grant of $857.24 million, an indicated equipment grant of $111.95 million and a language enhancement grant of $4 million), four reserved supplementary grants totalling $206.27 million to cover additional costs arising from general salary revisions for University staff in line with annual salary adjustments approved for the Civil Service and $19.31 million for the reimbursement of property rates paid by the University.

The remainder of the recurrent income included $124.54 million of tuition fees, $36.82 million of investment and bank interest, $27.88 million of rental recoveries from staff who were provided with housing benefits and $4.89 million of miscellaneous income.

Recurrent Expenditure The total recurrent expenditure for the year amounted to $1,438.22 million, of which $107.30 million or 8% was for Administration, $848.69 million or 59% was for Academic Departments and Academic Support Centres, $232.53 million or 16% was for Maintenance of Premises and Grounds, $76.61 million or 5% was for General Education, $27.74 million or 2% was for Student Facilities and Amenities and $145.35 million or 10% was for Miscellaneous expenditure. The continued expansion of the University saw an upward trend of expenditure in both absolute and relative terms for Academic Departments and Academic Support Centres. The expenditure under Academic Departments and Academic Support Centres inclu ded $73.29 million for the

The Hong Kong University of Science and Technology

acquisition of equipment. Of the total recurrent expenditure, salaries and superannuation/gratuities accounted for $775.27 million or 54%, and will continue to be the major item of recurrent expenditure.

Recurrent Deficit The recurrent deficit for the year after transfers were made to reserves was $82.35 million. In accordance with general guidelines laid down by the UGC, this deficit had been offset against surpluses brought forward from 1992-94 and other minor prior year adjustments, leaving a very small surplus of $4,422 at the end of the triennium which would be returned to the UGC.

TEACHING DEVELOPMENT GRANT 1994/95 The UGC has approved a teaching development grant of $2.20 million for 1994/95 to encourage, promote and reward innovative approaches to teaching and/or improvements to the learning environment. As at 30 June 1995, a total of $1.45 million had been expended. The unspent balance has been approved by the UGC for carrying forward to the 1995-98 triennium in order to enable the completion of a teaching development project.

EARMARKED GRANTS FROM THE UGC CENTRAL ALLOCATION VOTE 1992-95

The UGC has approved $39.71 million from the UGC Central Allocation Vote 1992-95 to fund projects proposed jointly with other UGC-funded institution(s), with the University as the "Co-ordinating Institution (Cl Of this amount, a total of $38.78 million had been expended as at 30 June 1995. At the same time, the University is also the "Participating Institution" in two projects with the Chinese University of Hong Kong and City University of Hong Kong as the Cl, respectively. A total of $1.29 million has been granted to the University by these Cls, of which a total of $0.31 million had been expended. The unspent balances in these joint institutions' research projects had been approved by the UGC for carrying forward to the next triennium,

1995-98.

EQUIPMENT, FACILITY AND FURNITURE Basic Teaching Equipment

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 1995, a total of $166.06 million had been expended.

In February 1995, the UGC has also approved an additional provision of $120 million for the University to acquire basic teaching equipment required to meet the needs of its approved student number targets up to 1997/98.

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Specialist Equipment and Facilities 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 1995, a total of $352.79 million had been expended.

Furniture and General Equipment In July 1990, the Government approved a grant of $453 million for the acquisition of furniture and general equipment for both Phases I & II. In June 1995, the UGC revised downward the total provision for building-related items (within the originally approved $453 million) from $169 million to $164.72 million due to a downward Tender Price Index movement, thus reducing the grant for acquiring furniture and general equipment from the original $453 million to $448.72 million. As at 30 June 1995, a total of $397.50 million had been expended.

EARMARKED GRANTS FROM THE RESEARCH GRANTS COUNCIL During the year, the University received $58.64 million from the Research Grants Council ("RGC") to fund research projects, equipment and facilities, the Co-operative Research Centres (CRC) pilot scheme and postgraduate students' conferences and seminars.

Earmarked Grants for Research Projects A total of $56.61 million was received during the year from the RGC to fund research projects. Of this, $49.31 million was obtained on a competitive bid basis for individual projects. The remaining $7.30 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 from Central Allocation Vote 1994/95 A grant of $1.90 million was approved to support the establishment of "A Polymer Materials Development Processing and Characterization Laboratory". As at 30 June 1995, a total of $1.64 million had been expended and the unspent balance had been approved by the UGC for carrying forward to the next financial year.

Earmarked Grant for Co-operative Research Centres A grant of $2.10 million was received in 1993/94 for the establishment of a CRC pilot scheme in wireless communication. As at 30 June 1995, a total of $1.39 million (including $0.19 million spent in 1993/94) had been expended. The unspent balance had been approved by the UGC for carrying forward till 31 December 1995.

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Earmarked Grant for Postgraduate Students Conference/Seminar The University was given $0.13 million to support conferences and seminars to be organised by or for postgraduate research students and as at 30 June 1995, the entire amount had been expended.

NON-GOVERNMENT FUNDS Donations and income for general and designated purposes during the year amounted to $66.39 million, of which 89% is for research funding, 4% for the support of general University activities, 6% for scholarships, bursaries and student loans, and 1% for designated endowments. In addition, the University generated $42.33 million from self-financing activities and others. With $2.94 million earned from investment and bank interest income and after expending or transferring $78.77 million, the balance of funds stood at $167.21 million as at 30 June 1995.

OUTLOOK FOR 1995/96 With the construction of the additional 156 senior staff quarters, the graduate residence and

the University Centre, it is anticipated that total assets will increase correspondingly but against

the carrying of an equivalent amount in bank loans. Recurrent income and expenditure will continue to grow, although at a lower margin as the University will begin to move to a steady state. Donations and income for non-government funds will also increase, as the University will continue to be successful in attracting research funding. The financial year under review has been a smooth and successful one. I would like to take this opportunity to thank my colleagues in the University'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 Treasurer of the University, 2 November 1995 The Hong Kong University of Science and Technology 7

AUDITORS' REPORT To : The Council of The Hong Kong University of Science and Technology (Incorporated in Hong Kong under The Hong Kong University of Science and Technology

Ordinance 1987)

We have audited the financial statements on pages 9 to 36 which have been prepared in accordance with accounting principles generally accepted in Hong Kong.

Respective Responsibilities of the University and Auditors

The Hong Kong University of Science and Technology Ordinance 1987 requires the University to prepare financial statements which give a true and fair view. In preparing financial statements which give a true and fair view, it is fundamental that appropriate accounting policies are selected and applied consistently.

It is our responsibility to form an independent opinion, based on our audit, on those statements and to report our opinion to you.

Basis of Opinion We conducted our audit in accordance with Statements of Auditing Standards issued by the Hong Kong Society of Accountants. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgments made by the University in the preparation of the financial statements, and of whether the accounting policies are appropriate to the University's circumstances, consistently applied-and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance as to whether the financial statements are free from material misstatements. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements. We believe that our audit provides a reasonable basis for our opinion.

Opinion 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 1995 and of its income and expenditure and cash flows for the year then ended 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 2 November 1995 8 The Hong Kong University of Science and Technology

BALANCE SHEET AS AT 30 JUNE 1995 30 June 1994 HK$ '000 LESS: CURRENT LIABILITIES Accounts Payable and Accruals NET CURRENT ASSETS TOTAL NET ASSETS 3,928,OOO BUILDING FUND CAPITAL FUND LONG-TERM LIABILITIES PROVISIONS AND RESERVES GOVERNMENT FUNDS NON-GOVERNMENT FUNDS General Designated Designated Endowment TOTAL FUNDS 3,928,OOO FIXED ASSETS Buildings Construction-in-progress Other Fixed Assets INVESTMENTS LOANS TO AFFILIATED COMPANIES CURRENT ASSETS Stocks Prepayments and Deposits Sundry Receivables UGC Holding Account Bank and Cash Balances Approved by the Council on 2 November 1995 Schedule 6730 June 1995 SIGNED SIGNED SIGNED The Hon. LAU Wah-sum Professor Chia-Wei WOO Norman W.Y. NGAI Treasurer of the University 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 1995

July 1993 1 July 1994 To 30 June 1994 30 June 1995 HK$'OOO Schedule HK$'OOO 944,937 64,004 16,363 20,679 2,850 INCOME UGC Subventions Tuition Fees Investment and Bank Interest income Rental Recoveries from Staff Miscellaneous 15 1,198,775 TOTAL INCOME 1,392,899 EXPENDITURE Administration Academic Departments and Academic Support Centres Maintenance of Premises and Grounds General Education Student Facilities and Amenities Miscellaneous TOTAL EXPENDITURE SURPLUS/(DEFICIT) BEFORE TRANSFERS (45,319) (11.799) TRANSFERRED TO RESERVES 12 (37,031) r; 819) TRANSFERRED TO THE UGC HOLDING ACCOUNT 7 0 20.315 SURPLUS/(DEFICIT) TRANSFERRED TO THE UGC TRIENNIUM EQUALIZATION ACCOUNT 13(a) (82,350) INCOME AND EXPENDITURE STATEMENT FOR THE YEAR ENDED 30 JUNE 1995 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 1995 1 July 1993 to 30 June 1994 NET CASH INFLOW FROM UNIVERSITY OPERATIONS 690 NET CAPITAL INFLOW/(OUTFLOW) FROM DESIGNATED ENDOWMENTS

RETURNS ON INVESTMENTS AND SERVICING OF FINANCE Investment/Interest Income from UGC-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/(OUTFLOW) BEFORE FINANCING FINANCING Capital Element of Finance Lease Payments Draw Down on Bank Loans NET CASH INFLOW FROM FINANCING INCREASE/( DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS BROUGHT FORWARD 605,128 CASH AND CASH EQUIVALENTS CARRIED FORWARD 1 July 1994 t0 30 June 1995

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RECONCILIATION OF FUNDING SURPLUS/(SHORTFALL) TO NET CASH INFLOW FROM UNIVERSITY OPERATIONS 1 July 1993 to 30 June 1994 HK$'OOO FOR THE YEAR ENDED 30 JUNE 1995 1 July 1994 to 30 June 1995

FUNDING SURPLUS/(SHORTFALL) Surplus/(Shortfall) from UGC-funded Recurrent Activities Surplus/(Shortfall) from Other Sources Capital Account Capital Works Reserve Fund Capital Grants Phase l/II Campus Development Project - Minor Modification Works Earmarked Grants from the UGC Central Allocation Vote 1992-95 Earmarked Grants from the Research Grants Council Teaching Development Grant 1994/95 Academic Exchanges with Institutions of Higher Education in China Non-Government Funds 33,273 1 (4.081) (36,178) TOTAL FUNDING SHORTFALL (49,400) ADJUSTMENTS 224,781 (441) q(16,363) 12,991 Acquisition of Other Fixed Assets Disposal of Other Fixed Assets Investment/Interest Income from UGC-funded Recurrent Activities Investment/Interest Income from Other Sources 194.986 TOTAL ADJUSTMENTS 223.502 158,808 NET FUNDING SURPLUS 174,102 (INCREASE)/DECREASE IN STOCKS INCREASE IN PREPAYMENTS AND DEPOSITS (lNCREASE)/DECREASE IN SUNDRY RECEIVABLES INCREASE IN ACCOUNTS PAYABLES AND ACCRUALS INCLUDING OVERPROVISION FOR OUTSTANDING COMMITMENTS DECREASE IN THE UGC HOLDING ACCOUNT INCREASE/(DECREASE) IN DEFERRED GRATUITIES INCREASE IN PROVISIONS

304,905 NET CASH INFLOW FROM UNIVERSITY OPERATIONS 324,609 12 The Hong Kong University of Science and Technology

NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 1995 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 or 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

these financial statements.

The University has not consolidated in these financial statements the financial activities of its wholly owned subsidiary companies, HKUST R and D Corporation Limited and HKUST Properties Limited, as the transactions of the HKUST R and D Corporation Limited are not material in the context of the University while HKUST Properties Limited is a dormant company.

1.2 UGC Subventions

Recurrent subventions are accounted for on an accrual basis as they are and will be approved by the UGC 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 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 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 .10 Taxation The University is exempted from payment of tax by virtue of Section 88 of the Inland Revenue Ordinance.

1 .11 Interest Income Interest income amounts are accounted for as they fall due.

2. CAPITAL COMMITMENTS As at 30 June 1995, there were outstanding capital commitments of $488.42 million in respect of capital works contracted for.

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

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SCHEDULES TO THE FINANCIAL STATEMENTS 30 JUNE 1995 1. BUILDINGS Campus Project Phases I and II Modification Phases I and II Works HK $'000 HK $'000 Senior Staff Quarters - Phase IIA HK $'OOO Total HK $'OOO COST As at 30 June 1994 Additions As at 30 June 1995 DEPRECIATION As at 30 June 1994 Charges for the Year As at 30 June 1995 NET BOOK VALUE As at 30 June 1995 As at 30 June 1994 16 The Hong Kong University of Science and Technology

2. CONSTRUCTION-IN-PROGRESS Campus Project Phases I Senior Senior and II Staff Staff Modification Quarters - Quarters - Works Phase IIA Phase IIB (Note 1) (Note 2) (Note 3) Fitting Out and Graduate Environ- Residence mental and Dangerous Control of. Micro- University Goods Engineering fabrication Centre Stores Laboratories Centre Total (Note 4) (Note 5) (Note 5) (Note 5) COST As at 30 June 1994 9,859 9,498 91 855 0 0 0 20,303 Additions 5,795 107,303 26,439 19,321 34 10,113 969 169,974 Transfers to Buildings (15,654) (116,801) 0 0 0 0 0 (132,455) As at 30 June 1995 0 0 26,530 20,176 34 10,113 969 57,822 Notes: 1. It has been agreed that a sum of HK $20 million is to be taken from 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.

2. During the year, the UGC approved a total capital project cost of HKS 135 million to develop on the University's campus 66 additional senior staff quarters (Phase IIA) with the full construction cost and legal and facility charges financed by a bank loan (of HK$150 million). As at 30 June 1995, a total of HK$1 16.80 million had been incurred and was mainly financed by HK$116.65 million drawn from the bank loan. The small shortfall between the amount spent and the loan drawn down as at 30 June 1995 was temporarily met from University funds and would be recovered from the bank loan.

3. The UGC also approved the construction of another 156 senior staff quarters (Phase IIB) on campus with funding arrangements similar to those for the 66 senior staff quarters (Phase I/A). A bank loan of HK$300.20 million has been obtained. As at 30 June 1995, a total of HK$26.53 million had been incurred and was mainly financed by HKS25.57 million drawn from the bank loan. The shortfall between the amount spent and the loan drawn down as at 30 June 1995 was temporarily met from University funds and would be recovered from the bank loan.

4. Similarly, the UGC approved the construction of additional graduate residences with 1,080 places and a University Centre. The project is also financed by a bank loan. As at 30 June 1995, a total of HK$20.18 million has been incurred and was mainly financed by HK$19.88 million drawn from the bank loan (of HK$250 million). The small shortfall between the amount incurred and the loan drawn down was temporarily met from University funds and would be recovered from the bank loan.

5. The UGC approved a total of HK$32.97 million to finance the construction of additional dangerous goods stores, the fitting out and installation of environmental control for the engineering laboratories and the fitting out of the Microfabrication Centre in Phase II.

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3. OTHER FIXED ASSETS COST As at 30 June 1994 Additions Disposals/Written Off As at 30 June 1995 DEPRECIATION As at 30 June 1994 Charges for the Year Disposals/Written Off As at 30 June 1995 NET BOOK VALUE As at 30 June 1995 As at 30 June 1994 Computing, Audio/Visual, Maintenance, Teaching and Sports Equipment Motor Vehicles Office and Quarters Furniture and Equipment, and Electrical Appliances Total

Other fixed assets included one large photocopying machine acquired under a finance lease:-

As at 30 June 1994 Charges for the Year 792 264 As at 30 June 1995 1.056 NET BOOK VALUE As at 30 June 1995 x4 As at 30 June 1994 528 18 The Hong Kong University of Science and Technology

4. INVESTMENTS Balance as at 30 June 1994 Balance as at 30 June 1995 51,212 Listed Investments with Investment Managers at Cost, Including Accumulated Net Realised Income Unlisted Investments at Cost Bonds and Cash/Bank Deposits with Investment Managers University and Polytechnic Computer Centre Ltd. 1 share of HK$500 Varsity Resources Corporation Ltd. 50,000 shares of HK$1 each Investment in Wholly-owned Subsid HKUST Properties Ltd. 2 shares of HK$1 each HKUST R and D Corporation Ltd. 2 shares of HK$1 each liaries at Cost

The market value of investments with investment managers as at 30 June 1995 was HK $220.21 million

(1994: HK $63.58 million). The net profits (losses) of the subsidiaries not consolidated but attributable to the University are:

Previous Years Since Acquisition 1995 0 Dealt with in the Financial Statements of the University (492) Not dealt with in the Financial Statements of the University 01.071 5. LOANS TO AFFILIATED COMPANIES Balance as at 30 June 1994 1 000 HKUST R and D Corporation Ltd 30 Varsity Resources Corporation Ltd Balance as at 30 June 1995 HK$'OOO 2,232 30 1,030 2.262 6. SUNDRY RECEIVABLES Balance Balance as at as at 30 June 1994 30 June 1995 247 Amount Due from the HKUST R and D Corporation Ltd. 52 Backpayments in relation to General Salary Revision 0 with effect from 1 April 1993 for the Year July 1994 to June 1995(Note) 666 Backpayments in relation to General Salary Revision 13,591 with effect from 1 April 1994 for the Period April to June 1994 0 Backpayments in relation to General Salary Revision 0 with effect from 1 April 1995 for the Period April to June 1995 19,180 345 Amount Due from the HKUST Educational Trust 335 0 Amount Due from the HKUST Properties Ltd. 15 4,625 Rates Reimbursable from the UGC 56 401 Staff Debtors 415 1,075 Other Sundry Receivables 2,936 20,284 23,655 Note: The UGC has withheld HK$9 million for likely surplus from Reserved Supplementary Grants for 1994/95.

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7. UGC HOLDING ACCOUNT Balance as at 30 June 1994 Amount Refunded to the UGC During the Year Excess of Direct Allocation Grant for Research written back to the UGC Triennium Equalization Account Reserved Supplementary Grants for General Salary Revision with effect from 1 April 1992 for 1994/95 - Deficit Reserved Supplementary Grants for General Salary Revision with effect from 1 April 1993 for 1994/95 Reserved Supplementary Grants for General Salary Revision with effect from 1 April 1994 for 1994/95 - Excess Shortfall in Rates Reimbursement (1994/95) Amount Transferred from the UGC Triennium Equalization Account Balance as at 30 June 1995 HK$'OOO 04,226 4,226 (4) 4.222 The balance under the UGC Holding Account represented the excess of specified expenditure over UGC

grants or recoveries and is to be reimbursed by the UGC. 8. ACCOUNTS PAYABLE AND ACCRUALS Balance Balance as at as at 30 June 1994 30 June 1995 Backpayments in relation to General Salary Revision with effect from 1 April 1994 for the Period April to June 1994 Backpayments in relation to General Salary Revision with effect from 1 April 1995 for the Period April to June 1995 Deferred Gratuities Gratuities (Due Within One Year) Income In Advance Library Books Orders Obligations Under Finance Lease (Due Within One Year) Rates Other Accounts Payable and Accruals 019,180 2,773 90.117 6 827 8.834 258 0351,426 20 The Hong Kong University of Science and Technology

9. BUILDING FUND Fitting Out Campus Project and Phases I Senior Environmental and II Staff Dangerous Control of Micro- Phases I Modification Quarters - Goods Engineering fabrication and II Works Phases IIA Stores Laboratories Centre Total (Note 1) (Note 2) (Note 3) (Note 4) (Note 4) (Note 4) Balances as at 30 June 1994 3,025,921 9,859 0 0 0 0 3,035,780 Additions/Depreciation Written Off Additions Depreciation Written Off Net Additions (21,953) 5,482 (2,336) 34 10,113 969 (7,691) Balances as at 30 June 1995 3,003,968 15,341 (2,336) 34 10,113 969 X028,089 Notes: 1. The Campus Project - Phases I and II, estimated to cost HK$3,548 million excluding furniture cost at the June 1990

price level is financed by a donation of HK$1,926 million from the Royal Hong Kong Jockey Club and a subvention

of HK$1,622 million from the Hong Kong Government. An additional funding of HK$21 million has been allocated by the Royal Hong Kong Jockey Club to fund the project team cost overrun. AS at 30 June 1995, the total expenditure for the project stood at HK$3,224 million and was financed by: 30 June 1994

HK$'OOO 30 June 1995 HKS'OOO 1,908.903 Royal Hong Kong Jockey Club Donation 1.941695 1.272602 Hong Kong Government 282338 3,181,505 Total Expenditure 3224,033 (155,584) 3,025,921 Less: Accumulated Depreciation Building Fund (220,0651 3,003,968 2. Please refer to Schedule 2 Note 1 on page 17. 3. A loan facility of HK$150 million was arranged in the name of the University to finance the construction of 66

additional senior staff quarters (Phase IIA). 4. Please refer to Schedule 2 Note 5 on page 17.

The Hong Kong University of Science and Technology 21

10. CAPITAL FUND HK$ OOO Balance as at 30 June 1994 332,570 Additions/Depreciation Written Off Additions Depreciation Written Off Net Additions 264,898 I/ 207,316 57,582 Balance as at 30 June 1995 390,152 The balance of the Capital Fund as at 30 June 1995, representing the net book value of other fixed assets,

was funded by: 30 June 1994 HK$'OOO 30 June 1995 HK$'OOO Government Funds Non-Government Funds (312,165) Less: Accumulated Depreciation (519,481) 3?2,570 Capital Fund 390,752 The cost of Non-Government Funds included that relating to other fixed assets conferred by the HKUST

Educational Trust. 11. LONG-TERM LIABILITIES Balance Balance as at as at 30 June 1994 30 June 1995 HK$'OOO HK$'OOO 9 427 2 747 643 Bank Loans (Note) Deferred Gratuities Obligations Under Finance Lease In the Second to Third Years Inclusive 12.817 165.184 162.094 2,705 385 Note: Apart from the term loan facility of up to HK$150 million to finance the construction of 66 additional senior staff quarters (Phase I/A), two additional term loan facilities of up to HK$300.20 million and HK$250 million were obtained by the University to finance the construction of 156 additional senior staff quarters (Phase IIB) and additional graduate residences with 1,080 places together with a University Centre respectively. Repayments of the two bank loans for senior staff quarters will come from the recurrent grant over a number of years, up to amounts equivalent to the rental value of leasing a similar number of such staff quarters from the market, while the third bank loan will be repaid by the University over a number of years primarily from rental charges to be collected from occupants.

22 The Hong Kong University of Science and Technology PROVISIONS AND RESERVES Balance Amount as at Received/ 30 June 1994 Transferred HK $'000 HK S'000 Amount Balance Expended/ as at Transferred 30 June 1995 Air Conditioner Plant 2,082 Air Conditioner Plant (Small Unit) 514 Household Furniture/Appliances 5,126 Lifts 0 Maintenance of Premises 8,146 Maintenance/Renovation of Staff Quarters 3,760 Computer Equipment 0 General and Academic Equipment 2,319 Motor Vehicles 1.511 Contractual Passages Gratuities Student Residential Halls General Furniture and Equipment Major Redecoration Exchange Equalization Research Projects

Transfers to Student Residential Halls Reserves were made from self-financing Halls Accounts. All other transfers were provided out of the UGC subventions. The balance for Contractual Passages included payments which were expected to fall due before 30 June 1996.

The Hong Kong University of Science and Technology 23

13. GOVERNMENT FUNDS Balance as at 30 June 1994 UGC Triennium Equalization Account Capital Account Capital Works Reserve Fund Capital Grants Phase l/II Campus Development Project - Minor Modification Works Earmarked Grants from the UGC Central Allocation Vote 1992-95 Earmarked Grants from the Research Grants Council Teaching Development Grant 1994/95 Academic Exchanges with Institutions of Higher Education in China 100.546 (25,774) Schedule Balance as at 30 June 1995 HK $'000 24 The Hong Kong University of Science and Technology

13(a). UGC TRIENNIUM EQUALIZATION ACCOUNT HK$ '000 Balance as at 30 June 1994 Amount Refunded to the UGC During the year Opening balance of Over-provision of Outstanding Commitments in Earmarked Grant for Research - RGC adjusted to Accounts Payable Excess of Direct Allocation Grant for Research written back from the UGC Holding Account Block Grant Surplus, 1994/95 Recurrent Grant Indicated Equipment Grant Indicated Language Enhancement Grant Over-provision for Outstanding Commitments, 1994/95 Prior to the Year Ended 30 June 1992 1 For the Year Ended 30 June 1992 and thereafter El 2,078 2,079 Amount Transferred to the UGC Holding Account 0 Balance as at 30 June 1995 0

Under the block grant arrangement, the difference between funds released by the UGC and the actual amount spent by the University is dealt with through the UGC Triennium Equalization Account. The surplus on this account at the end of the 1992-95 triennium, that is 1994195, had been transferred to the UGC Holding Account.

13(b). CAPITAL ACCOUNT Approved Commitments Subventions/Investment/Interest Received Up to 30 June 1994 During the Year Up to 30 June 1995 Expenditure Up to 30 June 1994 During the Year Up to 30 June 1995 Balances as at 30 June 1995 Balances as at 30 June 1994 Basic Teaching Equipment Investment/ Interest Income

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 Equipment and Facilities HK$ '000 Approved Commitments 700,000 Subventions/Investment/Interest Received Up to 30 June 1994 222,488 During the Year 79,800 Up to 30 June 1995 302,288 Expenditure Up to 30 June 1994 276,334 During the Year 76,459 Up to 30 June 1995 352,793 Balances as at 30 June 1995 (50,505) Balances as at 30 June 1994 (53,846) Furniture Investment/ and General Interest Equipment Income

The UGC revised downward the total provision for building-related items in relation to the loose furniture and non-teaching equipment ( whithin the originally approved HK $453 million for furniture and general equipment) from HK $769 million to HK $164.72 million due to a downward Tender Price Index movement. The shortfalls as at 30 June 1995 will be offset against funding to be released by the UGC to the University in the next financial year.

13(d). CAPITAL GRANTS Approves Commitments Subventions Received Up to 30 June 1994 During the Year Up; to 30 June 1995 Expenditure Up to 30 June 1994 During the Year Up to 30 June 1995 Balances as at 30 June 1995 Balances as at 30 June 1994 Fitting Out and Environmental Control of Dangerous Engineering Goods Stores Laboratories Microfabrication Centre The shortfalls as at 30 June 1995 will be offset against funding to be released by the UGC to the University in the next financial year.

26 The Hong Kong University of Science and Technology

13(e). PHASE l/II CAMPUS DEVELOPMENT PROJECT - MINOR MODIFICATION WORKS Approved Commitment 20,000 Subvention Received Up to 30 June, 1994 During the Year Up to 30 June 1995 Expenditure Up to 30 June 1994 During the Year Up to 30 June 1995 Balance as at 30 June 1995 HBalance as at 30 June 1994 5,400

13(f). EARMARKED GRANTS FROM THE UGC CENTRAL ALLOCATION VOTE 1992-95 Hong Kong Centrifuge Chinese Joint Facility for Medicine Institution Institute Geotechnical and Other Job Placement of Micro Characterization Natural System Systems and Modelling Products

(Note 1) (Note 1) (Note 1) (Note 2) Action Learning Project HK$'OOO (NoteP) Total HK$'OOO Approved Commitments 2,710 30,000 7.000 512 779 41.001 Subventions Received Up to 30 June 1994 During the Year Up to 30 June 1995 Expenditure Up to 30 June 1994 During the Year Up to 30 June 1995

Balances as at 30 June 1995 (Note 3) 935 0 0 209 770 1,914 Balances as at 30 June 1994 2,710 30,000 0 0 0 32,710 Notes: 1. The HKUST is the Co-ordinating Institution for these projects. 2. The HKUST is the Participating institution for these projects. 3. The unspent balances have been approved by the UGC for carrying forward to the next triennium.

The Hong Kong University of Science and Technology 27

13(g). EARMARKED GRANTS FROM THE RESEARCH GRANTS COUNCIL Postgraduate Central Co-operative Students Direct Competitive Allocation Research Conference/ Allocation m Vote 1994/95 Centres Seminar (Note I) (Note 2) Balances as at 30 June 1994 0 0 0 1,914 0 Add : Subventions Received/Transferred During the Year 7,300 49,313 1,900 0 125 Total 1,914 58,638 Less: Expended/Transferred During the Year 7,300 49,313 1,640 1,199 125 59,577 Balances as at 30 June 1995 0 0 260 715 0 975 Notes: (1) The UGC has approved carrying forward the unspent balance of the Central Allocation Vote 1994/95 to the next financial year.

(2) The UGC has approved an earmarked grant of HK $2.10 million of which HK $O. 19 million and HK$ 1.20 million had been spent in 1993/94 and 1994/95 respectively. The unspent balance had been approved by the UGC for carrying forward till 31 December 1995.

13(h). TEACHING DEVELOPMENT GRANT 1994/95 Balance as at 30 June 1994 Add: : Subvention Received During the Year Less: Expended During the Year Balance as at 30 June 1995 The unspent balance has been approved by the UGC for carrying forward to the next triennium.

2

13(i). ACADEMIC EXCHANGES WITH INSTITUTIONS OF HIGHER EDUCATION IN CHINA Balance as at 30 June 1994 741 Add : Subvention Received During the Year 0 741 Less: Expended During the Year 118 Balance as at 30 June 1995 623 The unspent balance is to be carried forward to the next financial year.

28 The Hong Kong University of Science and Technology

14. NON-GOVERNMENT FUNDS GENERAL FUNDS Chow Yei Ching Fund 3,500 0 0 0 3,500 Lam Woo Fund 2,240 1,250 0 0 3,490 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 975 1,730 0 858 1,847 Others 391 0 0 0 391 Total General Funds 19,099 2,980 0 858 21,221 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 Sino Software Research Centre William Mong Semi-conductor Clusters Laboratory Zheng Ge Ru Thin Film Physics Laboratory Sub-total (I)

Individual Research Projects /Action Learning Projects Croucher Foundation Projects Industrial Support Fund Projects Others Sub-total (II) Sir S.K. Tang Library Fund Sub-total (Ill) Balance Amount Investment/ Amount Balance as at Received/ Interest Expended/ as at 30 June 1994 Transferred Income Transferred 30 June 1995

The Hong Kong University of Science and Technology 29

14. NON-GOVERNMENT FUNDS (Cont'd) Balance Amount Investment/ Amount Balance as at Received/ 30 June 1994 Transferred Interest Income Expended/ as at Transferred 30 June 1995 HKPOOO HK$'OOO Scholarships and 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 Deloitte Touche Tohmatsu Scholarship Du Pont Scholarship DHL/WED MBA Scholarship Epson Foundation Scholarship Ernst and Young Education Subsidy Exxon Energy Limited Scholarship Financial Executive Institute HK Limited Scholarship Gammon Construction Limited Scholarship Grant Thornton Byrne Scholarship Hong Kong Institute of Company Secretaries Prize Hong Kong Institute of Human Resource Management Scholarship Hong Kong Society of Accountants Scholarship 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

30 The Hong Kong University of Science and Technology

14. NON-GOVERNMENT FUNDS (Cont'd) Balance Amount Investment/ Amount Balance Scholarships and Bursary Funds (Cont'd)

McDonald's Green and Growing Scholarship Miss Leung Pui Han Scholarship Mobile Oil Hong Kong Limited Scholarship Moot Court Scholarship Motorola Semi-conductors HK Limited Scholarship Price Waterhouse Scholarship Providence Foundation Scholarship Rust Asia Pacific Limited Scholarship Shanghai Commercial Bank Limited Scholarship Shell Hong Kong Limited Scholarship Shun Hing Group Scholarship Sir Edward Youde Memorial Fellowships Scholarship So Hok Scholarship Sony Corporation of Hong Kong Limited Scholarship Sumitomo Electric Asia Limited Scholarship Swire Scholars Taipei Trade Centre Scholarship The George K Lee Foundation 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 Uniform Knitters Limited Scholarship University Lodge of HK Golden Jubilee Bursary Yoshie Hiraoka Memorial Scholarship Zheng Ge Ru Foundation Scholarship Zonta Club of Hong Kong East Scholarship Sub-total (IV) 401 3,585 0 3,666 320 . as at Received/ 30 Transferred Interest Income Expended/ as at Transferred 30 June 1995

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) 6 432 0 423 15 Self-financing Activities and Others Departmental Discretionary Fund Hall Accounts Summer Letting of Dormitory Places - Undergraduate Halls Summer Letting of Dormitory Places - Postgraduate Halls Visitors Centres Conference and Workshops Executive Programmes and Classes MBA Programmes Souvenrr Shop University Development Fund Others 3 907 1,270 1,026 81 669 1,708 2,055 2,593 0 2,912 1,736 592 4,473 1 3,497 1,569 1,283 7,052 0 6,371 1,964 2,122 4,236 0 2.312 4,046 212 2,194 0 2 121 285 2.892 327 862 59E 3.485 1.719 1.991 9 1.77E 1.943 Sub-total (VI) 13,392 42,331 1,265 37,295 19.693 Total Designated Funds 82,640 105,149 2,387 75.417 114.759 Balance Amount Investment/ Amount Balance as at Received/ Interest Expended/ as at 30 June 1994 Transferred Income Transferred 30 June 1995

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 Sub-total (I) Wei Lun Endowment Fund as at Received/ 30 June 1994 Transferred 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 Lee Hysan Foundation Endowment Fund Wei Lun Endowment Fund Sub-total (II) 17 0 26 18 25 26 0 20 41 Interest Income HK$ Expended/ as at Transferred 30 June 1995

3,764 588 553 2,109 Total Designated Endowment Funds 32,589 588 553 2,499 31,231 TOTAL NON-GOVERNMENT FUNDS 134,328 108.717 2,940 78,774 167,211

The Hong Kong University of Science and Technology 33

15. UGC SUBVENTIONS 1 July 1993 1 July 1994 to to 30 June 1994 30 June 1995 Block Grant Recurrent Grant Indicated Equipment Grant Indicated Language Enhancement Grant Reserved Supplementary Grants General Salary Revisions with effect from 1 April 1992 General Salary Revisions with effect from 1 April 1993 General Salary Revisions with effect from 1 April 1994 General Salary Revisions with effect from 1 April 1995 (for April - June 1995)

34 The Hong Kong University of Science and Technology

16. EXPENDITURE 1 July 1993 1 July 1994 to 30 June 1994 30 June 1995

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) 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

58.795 Library Salaries and Gratuities/Superannuation-Senior Staff Salaries and Gratuities/Superannuation-Support Staff Book Binding General Office Expenses Library Books and Periodicals Library Electronic Media Library Media Resources Library On-line Search Others Research Grants

Computer Facilities Academic Support Centres Computer Aided Design and Manufacturing Centre Centralised and Departmental Laboratories Centre for Advanced Engineering Materials Deans' Offices Educational Technology Centre Industrial Training Centre Language Centre Materials Characterisation and Preparation Centre Microelectronics Fabrication Centre Office of Contract and Grant Administration VP-AA Office VP-RD Office Research Centre Technology Transfer Centre 3,535 185,738 Sub-total (II) 848,694

The Hong Kong University of Science and Technology 35

16. Expenditure (Cont'd) 1 July 1993 1 July 1994 to to 30 June 1994 30 June 1995

MAINTENANCE OF PREMISES AND GROUNDS Salaries and Gratuities/Superannuation-Senior Staff Salaries and Gratuities/Superannuation-Support Staff Cleaning Expenses Furniture and Equipment General Office Expenses Minor Works Rates Repairs and Maintenance Security Expenses Staff Uniforms and Laundry Utility Charges Sub-total (Ill)

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)

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 1995

The Hong Kong 'University of Science and Technology Staff Superannuation Scheme 37

TRUSTEES' REPORT 1. Introduction The Hong Kong University of Science and Technology Staff Superannuation Scheme ("the Scheme") was established on 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 Trustees 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 Dr. LEE Hon-chiu Mr. PANG Tak-ming Mr. TAN Chuen-yan Paul Dr. WONG Sze-chung Raymond Prof. WOO Chia-Wei

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

3. Deed of Trust and Registration of the Scheme During the year, the Deed of Trust was slightly varied so as to comply with provisions in the Occupational Retirement Schemes Ordinance and enable registration of the Scheme. No change was made to the Rules of the Scheme which, inter alia, stipulate benefits for Scheme Members. The Scheme was registered with the Office of the Registrar of Occupational Retirement Schemes on 8 March 1995.

4. Membership of the Scheme The total number of Scheme Members as at the end of the financial year stood at 1,272 representing a net increase of 254 Members when compared with the 'membership at 30 June 1994. Of the total number of Scheme Members, 55 and 1,217 were otherwise Terms A and Terms B staff members of HKUST respectively.

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

5. Assets of the Scheme There was significant growth in the assets of the Scheme during the year. As at the end of the financial year, the total net assets of the Scheme were $102.63 million, an increase of $50.71 million when compared with the amount of net assets at the end of the last financial year. The increase was attributable primarily to net contributions amounting to $48.25 million during the year. Of the net assets of $102.63 million, $97.36 million represented both the HKUST Balance and Members' Balance. The Scheme had a General Reserve of $5.27 million as at 30 June 1995.

6. Professional Advisers In this third 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 BZW Investment Management Hong Kong Limited ("BZW The Scheme Administrator was Bermuda Trust (Far East) Limited. The Actuary, Towers Perrin, appointed by the University Council on the recommendation of the Trustees continued to serve the Scheme. The auditors of the Scheme were Messrs. Deloitte Touche Tohmatsu.

7. 8. Investment Performance For the year ended 30 June 1995, AEtna achieved a time-weighted return of 1.4% (1993/94: 25%) and BZW achieved a return of 8.8% (1993/94: 15 The median return as measured by the Wyatt Measurement of Investment Performance Survey for Hong Kong Retirement Schemes was 6% for the same year, while the median return as measured by the Towers Perrin Investment Monitoring Service was 7%.

Actuarial Valuation An actuarial valuation as at 30 June 1995 was performed by the Actuary on the funding position of the Scheme. The funding position was guided by two ratios; the solvency ratio and the adequacy ratio. Solvency ratio compares the net assets to the aggregate vested benefits payable if all members were to leave the Scheme at the valuation date. Adequacy ratio, on the other hand, compares the net assets to the aggregate present value of benefit entitlements which all members could reasonably be expected to receive

from the Scheme. According to the actuarial valuation performed on 30 June 1995, the solvency ratio and the adequacy ratio of the scheme were 192% and 104% respectively.

9. Outlook for 1995/96 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 1995/96. It is also envisaged that more Terms A staff members who are gradually completing their two or three-year employment contracts will join the Superannuation Scheme.

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

10. 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, 27 September 1995

The Hong Kong University of Science and Technology Staff Superannuation Scheme 41

AUDITORS' REPORT To: The Trustees of The Hong Kong University of Science and Technology Staff Superannuation Scheme (Registered under the Occupational Retirement Schemes Ordinance)

We have audited the financial statements on pages 44 to 47 which have been prepared in accordance with accounting principles generally accepted in Hong Kong.

Respective Responsibilities of the Trustees and Auditors The Trustees are responsible for the preparation of financial statements which give a true and fair view. In preparing financial statements which give a true and fair view it is fundamental that appropriate accounting policies are selected and applied consistently.

It is our responsibility to form an independent opinion, based on our audit, on those statements and to report our opinion to you.

Basis of Opinion We conducted our audit in accordance with Statements of Auditing Standards issued by the Hong Kong Society of Accountants. An audit includes examination. on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the Trustees in the preparation of the financial statements, and of whether the accounting policies are appropriate to the Scheme's circumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance as to whether the financial statements are free from material misstatement. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the

financial statements. We believe that our audit provides a reasonable basis for our opinion.

Opinion In our opinion: i) Proper accounts and records have been kept during the year ended 30 June 1995 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

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

assets and liabilities at 30 June 1995 and of its financial transactions during the year then ended.

(iii) Contributions have been made during the year ended 30 June 1995 in accordance with the terms of the Scheme.

(iv) As at 30 June 1995 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 27 September 1995 The Hong Kong University of Science and Technology Staff Superannuation Scheme 43

BALANCE SHEET AS AT 30 JUNE 1995 1994 48,661 INVESTMENTS 3 98,373 3,560 4,572 II 305 LESS: CURRENT LIABILITIES Accounts Payable Benefits Payable 3,255 NET CURRENT ASSETS 4,261 51,916 NET ASSETS 102,634 CURRENT ASSETS Accounts Receivable Bank Balances 36,583 HKUST BALANCE 12,177 MEMBERS' BALANCE 3,156 GENERAL RESERVE 51.916 TOTAL FUNDS Approved by the Board of Trustees on 27 September 1995 SlGNED SIGNED Chairman, Secretary, Board of Trustees Board of Trustees The accompanying notes are an integral part of the financial statements. 73,048 24,318 5.268 102.634 44 The Hong Kong University of Science and Technology Staff Superannuation Scheme

REVENUE ACCOUNT FOR THE YEAR ENDED 30 JUNE 1995

CONTRIBUTIONS AND WITHDRAWALS HKUST Contributions Members' Contributions Transfer in from HKUST Ancillary Staff Superannuation Scheme Interest Credited to HKUST Balance and Members' Balance Less: Withdrawals of Contributions and Interest on Members Leaving Service of HKUST Forfeitures of Contributions and Interest on Members Leaving Service of HKUST Add: Claims on Insurance Less: Payment of Benefit on Death and Permanent Incapacity in Employment NET AMOUNT TRANSFERRED TO HKUST BALANCE AND MEMBERS' BALANCE INCOME AND EXPENDITURE INCOME Forfeitures of Contributions and Interest on Members Leaving Service of HKUST Interest Income Investment Income Unrealised Gain on Revaluation of Investments LESS: EXPENDITURE General Office 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 (Profit)/Loss on Sale of Investments 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 TOTAL FUNDS The accompanying notes are an integral part of the financial statements.

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

NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 1995

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.

46 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 South East Asia Japan United States Equities (Unit Trusts) Hong Kong South East Asia Japan Australasia United States United Kingdom Europe Bonds (Direct Investment) Hong Kong United States Bonds (Unit Trusts) Global United Kingdom Europe Cash 4.142 1,810 5.952 AEtna BZW Investment Investment Management Management (Hong Kong) Hong Kong Limited Limited Total

The Hong Kong University of Science and Technology Staff Superannuation Scheme 47

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 : 19 September 1995 Date of Actuarial Review : 30 June 1995 Representative Employer : The Hong Kong University of Science & Technology Relevant Employer(s) : The Hong Kong University of Science & Technology hereby certify that:- (i) An actuarial review has been conducted as regards the Scheme as of the Date of

Actuarial Review. (ii) In the course of the review I have had regard to the financial condition of the Scheme.

(iii) 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 September 1995.

(iv) 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 three years as follows:-

Monthly For the period regular contributions by - members:' 5% of salaries 1 July 1995 to 30 June 1998 - Relevant Employer: 15% of salaries 1 July 1995 to 30 June 1998

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, 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 : 19 September 1995 Name : Greg J Cooper Qualification : Fellow of The Institute of Actuaries of Australia Address : Towers Perrin Tel ': 2523-3193 13101 313 Two Pacific Place 88 Queensway Fax : 2868-l 517 Hong Kong

48 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 1995

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

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

2. The Trustees 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 Dr. 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 have been appointed directly by the University Council, the appointments of Mr. Leung Tit-ming and Mr. Liu Kew-kin have been made on the basis of the results of elections which were open to all eligible Scheme Members.

3. Deed of Trust and Registration of the Scheme During the year, the Deed of Trust was slightly varied so as to comply with provisions in the Occupational Retirement Schemes Ordinance and enable registration of the Scheme. No change was made to the Rules of the Scheme which, inter alia, stipulate benefits for Scheme Members. The Scheme was registered with the Office of the Registrar of Occupational Retirement Schemes on 27 March 1995.

4. Membership of the Scheme The total number of Scheme Members as at the end of the financial year stood at 194 representing a net increase of 21 Members when compared with the membership at 30 June 1994. All the Members were otherwise Terms C staff members of HKUST.

The Hong Kong University of Science and Technology Ancillary Staff Superannuation Scheme 51

5. Assets of the Scheme There was growth in the assets of the Scheme during the year. As at the end of the financial year, the total net assets of the Scheme were $6.47 million, an increase of $2.82 million when compared with the amount of net assets at the end of the last financial year. The increase was attributable primarily to net contributions amounting to $2.6 million during the year.

6. Professional Advisers In this third 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 BZW Investment Management Hong Kong Limited ("BZW The Scheme Administrator was Bermuda Trust (Far East) Limited. The Actuary, Towers Perrin, appointed by the University Council on the recommendation of the Trustees continued to serve the Scheme. The auditors of the Scheme were Messrs. Deloitte Touche Tohmatsu.

7. Investment Performance For the year ended 30 June 1995, AEtna achieved a time-weighted return of 1.4% (1993/94: 25%) and BZW achieved a return of 8.8% (1993/94: 15 The median return as measured by the Wyatt Measurement of Investment Performance Survey for Hong Kong Retirement Schemes was 6% for the same year, while the median return as measured by the Towers Perrin Investment Monitoring Service was 7%.

8. Actuarial Valuation An actuarial valuation as at 30 June 1995 was performed by the Actuary on the funding position of the Scheme. The funding position was guided by two ratios: the solvency ratio and the adequacy ratio. Solvency ratio compares the net assets to the aggregate vested benefits payable if all members were to leave the Scheme at the valuation date. Adequacy ratio, on the other hand, compares the net assets to the aggregate present value of benefit entitlements which all members could reasonably be expected to receive

from the Scheme. According to the actuarial valuation performed on 30 June 1995, the adequacy ratio of the scheme was 184%. Solvency ratio does not apply at 30 June 1995 as none of the Members had attained five years or more of Scheme service.

9. Outlook for 1995/96 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 1995/96.

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

10. 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, 27 September 1995 The Hong Kong University of Science and Technology Ancillary Staff Superannuation Scheme 53

AUDITORS' REPORT To: The Trustees of The Hong Kong University of Science and Technology Ancillary Staff Superannuation Scheme (Registered under the Occupational Retirement Schemes Ordinance)

We have audited the financial statements on pages 56 to 59 which have been prepared in accordance with accounting principles generally accepted in Hong Kong.

Respective Responsibilities of the Trustees and Auditors The Trustees are responsible for the preparation of financial statements which give a true and fair view. In preparing financial statements which give a true and fair view it is fundamental that appropriate accounting policies are selected and applied consistently.

It is our responsibility to form an independent opinion, based on our audit, on those statements and to report our opinion to you.

Basis of Opinion We conducted our audit in accordance with Statements of Auditing Standards issued by the Hong Kong Society of Accountants. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the Trustees in the preparation of the financial statements, and of whether the accounting policies are appropriate to the Scheme's circumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance as to whether the financial statements are free from material misstatement. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the

financial statements. We believe that our audit provides a reasonable basis for our opinion.

Opinion In our opinion: i) Proper accounts and records have been kept during the year ended 30 June 1995 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

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

assets and liabilities at 30 June 1995 and of its financial transactions during the year then ended.

(iii) Contributions have been made during the year ended 30 June 1995 in accordance with the terms of the Scheme.

(iv) As at 30 June 1995 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 27 September 1995

The Hong Kong University of Science and Technology Ancillary Staff Superannuation Scheme 55

1994 HK $'000 3,510 INVESTMENTS BALANCE SHEET AS AT 30 JUNE 1995 179 q33 CURRENT ASSETS Bank Balances LESS: CURRENT LIABILITIES Accounts Payable 146 NET CURRENT ASSETS 187 3,656 NET ASSETS 6,472 Note 33,656 TOTAL FUNDS 6.472 Approved by the Board of Trustees on 27 September 1995 SIGNED Chairman, Board of Trustees The accompanying notes are an integral part of the financial statements: 6,285 222 35 SIGNED Secretary, Board of Trustees

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

REVENUE ACCOUNT FOR THE YEAR ENDED 30 JUNE 1995

CONTRIBUTIONS Contributions Received from HKUST Less: Transfer out to HKUST Staff Superannuation Scheme

INCOME AND EXPENDITURE INCOME Interest Income Investment Income Unrealised Gain on Revaluation of Investments Profit/(Loss) on Sale of Investments 319 LESS: EXPENDITURE General Office Expenses Audit Fee Actuary's Fee Scheme Administration Fee Other Professional Fees Investment Managers' Fee and Expenses Loss on Exchange 5235 EXCESS OF INCOME OVER EXPENDITURE 214 2,302 INCREASE IN SCHEME FUND DURING THE YEAR 2,816 1.354 ADD: SCHEME FUND BALANCE BROUGHT FORWARD FROM PREVIOUS YEAR 3.656 3.656 TOTAL FUNDS 6 472 The accompanying notes are an integral part of the financial statements

The Hong Kong University of Science and Technology Ancillary Staff Superannuation Scheme 57

NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 1995

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 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.

58 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 South East Asia Japan United States Equities (Unit Trusts) Hong Kong South East Asia Japan Australasia United States United Kingdom Europe Bonds (Direct Investment) Hong Kong United State: Bonds (Unit Trusts) AEtna Investment Management (Hong Kong) Limited BZW Investment Management Hong Kong Limited Total Global United Kingdom Europe Cash 266 115 381 242 3,129 3.156 6.285

The Hong Kong University of Science and Technology Ancillary Staff Superannuation Scheme 59

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 : 19 September 1995 Date of Actuarial Review : 30 June 1995 Representative Employer : The Hong Kong University of Science & Technology Relevant Employer(s) : The Hong Kong University of Science & Technology I hereby certify that:- (i) An actuarial review has been conducted as regards the Scheme as of the Date of

Actuarial Review.

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

(iii) 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 September 1995.

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

(v) Following the review I have made recommendations as regards funding of the Scheme

for three years as follows:- Monthly For the period regular contributions by - members: 0% of salaries 1 July 1995 to 30 June 1998 - Relevant Employer: 15% of salaries 1 July 1995 to 30 June 1998 (vi) 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, 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 : 19 September 1995 Name : Greg J Cooper Qualification : Fellow of The Institute of Actuaries of Australia Address : Towers Perrin Tel : 2523-3193 1310-1313 Two Pacific Place 88 Queensway Fax : 2868-1517 Hong Kong

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