Financial Statements for the Year Ended 30 June 1993

Abstract

[evdate 1993-06-30] Financial Statements 1992/93 For the year ended 30 June 1993

CONTENT THE HONG KONG UNIVERSITY OF SCIENCE AND TECHNOLOGY Treasurer's Report . .3

Auditors' Report.. .5

Balance Sheet .6

Income and Expenditure Statement.. .7

Cash Flow Statement.. .8

Reconciliation of Funding Surplus to Cash Flow from Operations.. .. .9

Notes to the Financial Statements 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. Significant Accounting Policies 10

Buildings and Construction-in-progress 12

Other Fixed Assets.. .13

Investments.. 14

Stocks 14

Government Holding Account 14

UPGC Holding Account.. 14

UPGC Triennium Equalization Account 15

Capital Account .I5

Capital Works Reserve Fund 16

Earmarked Grants from the Research Grants Council .. 16

Academic Exchanges with Institutions of Higher Education in China.. .17 Comparative Figures.. .17

Schedules to the Financial Statements 1. 2. 3. 4. 5. 6. 7. a. 9. Sundry Receivables . . . . . . . . . . . . . . . . . . . . . Accounts Payable and Accruals . . . Long-term Liabilities . . . . . . . . . . . . . . . . . . . . . Provisions and Reserves . . . . . . . . . . . . . University Funds . . . . . . . . . . . . . . . . . . . . . . . . . . Designated Endowment Funds . . . Government Subventions . . . . . . . . . . . . . Rental Recovery from Staff . . . . . . . . . . Expenditure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 20 23 .24 .24 25 THE HKUST STAFF SUPERANNUATION SCHEME Trustees Report

Auditors' Report

Balance Sheet..

Revenue Account..

Notes to the Financial Statements

Actuarial Certificate

Ill. THE HKUST ANCILLARY STAFF SUPERANNUATION SCHEME Trustees' Report Auditors' Report Balance Sheet Revenue Account.. Notes to the Financial Statements . Actuarial Certificate.. 29 30 31 32 33 35 39 40 41 42 43 45.THE HONG KONG UNIVERSITY OF SCIENCE AND TECHNOLOGY FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1993 The Hong Kong University of Science and Technology 1 TREASURER'S REPORT The University was still developing rapidly in 1992/93, with the total net assets increased

by 21% to $3,623.7 million as at the end of the financial year. 2. Construction work on the campus - Phases I and II was substantially completed and

buildings were handed over to the University by the end of June 1993. As at 30 June 1993,

86% of the approved budget of $3,548 million was actually spent. Of the total payments of

$3,058 million, 60% was met from donations from the Royal Hong Kong Jockey Club and 40%

was contributions from the Hong Kong Government. 3. On recurrent funding, 1991/92 was the first year when the University was funded directly

by the UPGC and in that year the University received a one-year earmarked grant. From 1992/

93 onward, the University began to operate as other UPGC-funded institutions with a triennial

block grant. Under the block grant funding arrangement, the University is given a 3-year grant

commencing from 1992/93 for recurrent expenditure and has greater flexibility in resource

allocation. 4. The total recurrent income for the year increased from $335.4 million to $726.5 million,

of which 93% was provided by the UPGC. Tuition fees income increased from $8.4 million to

$25.5 million, representing 4% of the total income and increasing largely as a result of the

growth in the student number. 5. The total recurrent expenditure for the year increased from $328.2 million to $659.1

million. Of the total expenditure, $369.2 million or 56% was for academic departments and

academic support centres, $117.3 million or 18% was for maintenance of premises and grounds,

$63.2 million or 9% was for administrative support, $50.9 million or 8% was for general education

expenditure, student facilities and amenities, and $58.5 million or 9% was for staff benefits and

miscellaneous. 6. In line with a general approval from the UPGC, transfers of $10.2 million were made

from the block grant to specific reserves. The year ended with an operating surplus (after

transfer to reserves) of $24.8 million and unspent balances totalling $31.7 million under indicated

grants, totalling $56.5 million. These are carried forward under the UPGC Triennium Equalization

Account for expenditure in 1993/94. 7. On furniture and equipment funding, $700 million was approved by the Government for

the acquisition of specialist equipment and facilities for Phases I and II and a total of $164.1

million or 23% was expended up to 30 June 1993. In addition, the Government approved $194

million to meet requirements for basic teaching equipment for Phase I and a total of $101 .l

million or 52% was expended up to 30 June 1993. The Government also approved $453 million

for the acquisition of furniture and general equipment for Phases I and II and a total of $258.1

million or 57% was expended up to 30 June 1993. Following an agreement with the Government

when funds for basic teaching equipment for Phase I were approved, the University has applied

for new funds for the acquisition of basic teaching equipment for Phase II. The Hang Kxc L 71 m;!y cf Suence and Tecnnoagy s.8. On research funding, in addition to funds for individual projects from the block grant,

the University continued to receive earmarked grants for research projects from the Research

Grants Council mainly through allocations in response to competitive bids made by individual

principal investigators from all UPGC-funded institutions. The University was given $12.6 million

($8.9 million in 1991/92) for competitive bids as well as a lump-sum grant of $3.5 million ($3

million in 1991/92) for distribution to individual research projects at the discretion of the University.

9. Apart from funding for individual research projects, the Research Grants Council also

approved an earmarked grant of $1.8 million towards the cost of a Laser Direct Write Lithographic

System in connection with microelectronics research activities jointly sponsored by The Hong

Kong University of Science and Technology, The University of Hong Kong, The Chinese

University of Hong Kong, Hong Kong Polytechnic and City Polytechnic of Hong Kong.

10. During the year under review, $63.8 million was actually received from private

foundations, industries and individuals to fund activities in various areas. Of this, $2 million

was given to provide student scholarships, bursaries, prizes and loans, $47.6 million was directly

for research, $4.4 million was to support other University activities and $9.8 million was for

three designated endowments. These are in addition to income generated from self-financing

activities. 11. The University will continue to develop rapidly in 1993/94 and it is envisaged that total

funds as well as the recurrent income and expenditure will increase again by significant amounts.

12. 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, 20 October 1993. 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 6 to 26 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 1993, and of its income

and expenditure and cash flow for the year ended 30 June 1993, 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 20 October 1993 The Hong Kong University of Science and Technology 5.

Balance Sheet as at 30 June 1993 HK$'OOQ 2,743,397 35,576 351,664 139,351 212,313 2,991,286 2,582,626 160,771 1,230 71,094 0141,006 (33,333) 0192 107,865 47,270 20,430 2,991,286

BALANCE SHEET AS AT 30 JUNE 1993 FIXED ASSETS Buildings Construction-in-progress Other Fixed Assets INVESTMENTS CURRENT ASSETS Stocks Prepayments and Deposits Sundry Receivables Cash and Bank Balances LESS: CURRENT LIABILITIES Accounts Payable and Accruals Government Holding Account UPGC Holding Account NET CURRENT ASSETS NET ASSETS BUILDING FUND CAPITAL FUND LONG-TERM LIABILITIES PROVISIONS AND RESERVES GOVERNMENT FUNDS UPGC Triennium Equalization Account Capital Account Capital Works Reserve Fund Earmarked Grants from the Research Grants Council Academic Exchanges with lnstltutions of Higher Education in China UNIVERSITY FUNDS General Funds Designated Funds DESIGNATED ENDOWMENT FUNDS Capital Accounts Recurrent Accounts TOTAL FUNDS Approved by the Council on 20 October 1993 67238910 11 12 Schedule 30 June 1993 HK$'OOO HK%'OOO SIGNED The Hon. LAU Wah-Sum Professor Chia-Wei WOO Norman W.Y. NGAI Council Treasurer Vice-Chancellor/President Director of Finance

2,966,193 0 2,966,193 257,422 3,223,615 37,918 547,973 185,795 362,178 3,623,711 2,966,193 257,422 1,524 118,831 64,412 120,747 (17,865) 1.800 382 169,476 17,374 63,393 80.767 28,135 1,363 29,498 34623,711 The accompanying notes and schedules are an integral part of the financial statements.

The Hong Kong University of Science and Tecmology.1 July 1991 to 30 June 1992 HK$'OOO 313,281 8,402 6,405 6,615 733 INCOME UPGC Subventions Tuition Fees Bank Interest Rental Recovery from Staff Miscellaneous 335,436 TOTAL INCOME INCOME AND EXPENDITURE STATEMENT FOR THE YEAR ENDED 30 JUNE 1993 1 July 1992 to 30 June 1993 Note Schedule HK'000 7 677,593 25,502 10,251 8 12,459 726 726,531 43,870 168,442 48,653 20,145 5,312 41.797 EXPENDITURE Administration Academic Departments and Academic Support Centres Maintenance of Premises and Grounds General Education Student Facilities and Amenities Miscellaneous 963,186 369,215 117,300 38,638 12,240 58,509 328.219 TOTAL EXPENDITURE 659.088 7,217 (978) (6,239) 0EXCESS OF INCOME OVER EXPENDITURE TRANSFERRED TO RESERVES TRANSFERRED TO THE UPGC HOLDING ACCOUNT SURPLUS TRANSFERRED TO THE UPGC TRIENNIUM 67,443 (10,221) (709) EQUALIZATION ACCOUNT 8 56,513 The accompanying notes and schedules are an integral part of the financial statements.

The Hong Kopg University of Science and Technology. CASH FLOW STATEMENT FOR THE YEAR ENDED 30 JUNE 1993 1 July 1991 t0 1 July 1992

30 June 1992 30 June 1993 HK$'OOO H K$'OOO 101,556 819 18,900 (195,417) (74,142) (106) (74,248) Capital Element of Finance Lease Rental Payments INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 174,672 417.588 CASH AND CASH EQUIVALENTS BROUGHT FORWARD 343,340 343,340 CASH AND CASH EQUIVALENTS CARRIED FORWARD 518.012 NET CASH INFLOW FROM UNIVERSITY OPERATIONS CAPITAL INFLOW FROM ENDOWMENTS RETURNS ON INVESTMENTS AND SERVICING OF FINANCE Interest Income from University Operations Investment/Interest Income from Other Sources Interest Element of Finance Lease Rental 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 Investments NET CASH OUTFLOW FROM INVESTING ACTIVITIES NET CASH INFLOW/(OUTFLOW) BEFORE FINANCING CASH OUTFLOW FROM FINANCING - 344,295 (955) ANALYSIS OF THE BALANCES OF CASH AND CASH EQUIVALENTS Cash at Bank and in Hand Bank Overdrafts 343,340 518,012 330,449 8,216 10,251 12,054 (180) 22,125 (185,957) 174,833 (161) 520,093 (2,081) The Hong Kong University of Science and Technology. RECONCILIATION OF FUNDING SURPLUS TO NET CASH INFLOW FROM UNIVERSITY OPERATIONS 'FOR THE YEAR ENDED 30 JUNE 1993 1 July 1991 1 July 1992 t0 t0 30 June 1992 30 June 1993 HK$'OOO HK$'ooo 7,217 (3,344) (13,909) 0101 14,478 264 (2,410) 4,807 159,842 (6.40:) (12,647) 140,790 -I145,597 NET FUNDING SURPLUS 260,301 (3.32:) (2.715) INCREASE IN STOCKS INCREASE IN PREPAYMENTS AND DEPOSITS INCREASE IN SUNDRY RECEIVABLES INCREASE/(DECREASE) IN ACCOUNTS PAYABLE AND ACCRUALS (299) (877) (20,461) (61,346) INCLUDING OVERPROVISION FOR OUTSTANDING COMMITMENTS 70,427 (15,165: DECREASE IN GOVERNMENT HOLDING ACCOUNT (10,220: (15) DECREASE IN UPGC HOLDING ACCOUNT (6,421) 177 INCREASE IN DEFERRED GRATUITIES 483 38,346 INCREASE IN PROVISIONS 37,516 (44,041) 70,148 101,556 NET CASH INFLOW FROM UNIVERSITY OPERATIONS 330,449 FUNDING SURPLUS Surplus from University Operations Surplus/(Shortfall) from Other Sources Capital Account Capital Works Reserve Fund Earmarked Grants from the Research Grants Council Academic Exchanges with Institutions of Higher Education in China University Funds Endowment Recurrent Accounts TOTAL FUNDING SURPLUS ADJUSTMENTS Acquisition of Other Fixed Assets Disposal of Other Fixed Assets Interest Income from University Operations Investment/Interest Income from Other Sources TOTAL ADJUSTMENTS 67,443 (20,259) 15,468 1,800 190 33,497 852 31,548 98,991 161,310 The Hong Kong University of Science and Technology 9. NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 1993 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. 1.2 1.3 7.4 Government Subventions Recurrent Government subventions are accounted for on an accrual basis as they are and will be approved by the Government for the fiscal year. Capital Government subventions are accounted for on a cash received basis. 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. Buildings and Construction-in-progress Construction-in-progress of the campus is capitalised to the Building Fund at cost 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. 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. 10 The Hmg Kong University of Science and Technology.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 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 1.10 1.11 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. Taxation The University is exempted from payment of tax by virtue of Section 88 of the Inland Revenue Ordinance. Interest Income Interest income amounts are accounted for as they fall due. The Hong Kong University of Science and Technology 11. 2. BUILDINGS AND CONSTRUCTION-IN-PROGRESS The Campus Project Phases I and II, estimated to cost HK$3,548 million at the June

1990 price level, excluding furniture cost, 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. The subvention of HK$1,622 million from the Hong Kong Government was approved by the Finance Committee of the Legislative Council on 1 June 1990. The Royal Hong Kong Jockey Club undertakes to supervise the construction

of the campus. The balance of the Building Fund as at 30 June 1993 represents the

capitalised net book value of buildings. Construction- in- progress HK$'OOO COST As at 30 June 1992 Additions Transfer to Buildings 1,539,570 1,073,848 2,613,418 0 444,729 444,729 1,518,577 (1,518,577) 0 As at 30 June 1993 3,058,147 0 3,058,147 DEPRECIATION As at 30 June 1992 30,792 0 Charges for the Year 61,162 0 As at 30 June 1993 91,954 0 NET BOOKVALUE As at 30 June 1993 2,966,193 0 2.966.193 As at 30 June 1992 1,508,778 1,073,848 2,582,626 Costs of the buildings of the campus protect were financed by: 30June1992 30June1993 HK$'OOO HK$'000 1,456,709 Royal Hong Kong Jockey Club Donation i ,834,aaa 1 .156.709 Government Subvention 1.223.259 Total HK$'OOO 30,792 61,162 91,954 2,613,418 3,05a.i47 12 The Hong Kong University of Science and Technology. 3. OTHER FIXED ASSETS COST As at 30June1992 Additions Disposals/Written Off As at 30 June 1993 233.645 3,586 184,377 421,608 DEPRECIATION As at 30 June 1992 Charges for the Year Disposals/ Written Off As at 30 June 1993 Computing, Audio/Visual, Maintenance, Teaching and Sports Equipment HK$'000 109,977 2,976 115,152 228,105 123,729 832 69,315 193,876 (61) (222) (90) (373) Motor Vehicles HKS'000 Office and Quarters Furniture and Equipment and Electrical Appliances HK$'000

HK$'000 35,232 1,197 30,905 67,334 59,369 850 36,873 97,092 (23) (180) (37) (240) 94,578 1,867 67,741 164,186 NET BOOK VALUE As at 30 June 1993 139,067 1,719 116,636 257,422 As at 30 June 1992 74,745 1,779 84,247 160,771 Other fixed assets include one large photocopying machine under a finance /ease:-

HK$'OOO COST As at 30 June 1993 1,320 DEPRECIATION As at 30 June 1992 Charges for the Year 264 264 As at 30 June 1993 528 NET BOOK VALUE As at 30 June 1993 792 As at 30 June 1992 1,056 Additions during the year included equipment of HK$l0.116 million which was considered by the Trustees

of the HKUST Educational Trust meeting on 30 November 7992 to have been given to the University.

The Hong Kong University of Science and Technology 13. 4. INVESTMENTS 30 June 1992 HK$'000 30 June 1993 HK'000 35,575 135,576 Listed Investments with Investment Managers at Cost Unlisted Investments at Cost University and Polytechnic Computer Centre Ltd. 1 share of HK$500 Fully Paid 37,917 137.91 a The market value of listed investments as at 30 June 1993 was HK$42.674 million (l991/92, HK$38.548

million). 5. STOCKS The value of stock on hand as at 30 June 1993 represented the closing balance of

stock at cost in the University's Souvenir Shop, which is a self-financing operation.

6. GOVERNMENT HOLDING ACCOUNT Balance as at 30 June 1992 HK%'OOO 10,220 Amount Refunded to the Government During the Year (10,220) Balance as at 30 June 1993 0 7. UPGC HOLDING ACCOUNT HKS'OOO Balance as at 30 June 1992 Amount Refunded to the UPGC During the year Amount of Rates Refund Shortfall (1992/93) Reserved Supplementary Grants for General Salary Revision, 1992/93 - Excess Balance as at 30 June 1993 6,224 (6,224) (197) 709 512 The balance under the UPGC Holding Account represents the excess of the UPGC grants over specified

expenditure and is to be refunded to the UPGC. 14 T<e Hong Kong University of Science and Technology. 8. UPGC TRIENNIUM EQUALIZATION ACCOUNT HK$'OOQ Block Grant Surplus, 1992/93 Recurrent Grant Indicated Equipment Grant Indicated Language Enhancement Grant 24,796 31,135 582 56,513 Overprovision for Outstanding Commitments Prior to the Year Ended 30 June 1991 For the Year Ended 30 June 1992 7.899 64.412 Balance as at 30 June 1993 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 1993, representing the excess of funds received over actual spending, is to be

carried forward for use in the remaining years in the triennium. Surplus on the block grant, if any at the end

of the triennium will be transferred to the UPGC Holding Account and refunded to the UPGC.

9. CAPITAL ACCOUNT Basic Teaching Equipment HK$'OOO Interest Income HK$'OOO Total HKS'OOO 253,233 Others HK$'OOO 59,233 59,233 9,505 0 7,171 59,233 16,676 47,853 226 48,079 11,154 11,380 0 121,732 0 27,430 0 149.162 16.676 120.747 9,505 141,006 Approved Commitments 194,000 Subvention/Interest Received To 30 June 1992 During the Year 194,000 0262,738 7.171 194,000 269,909 To 30 June 1993 Expenditure To 30 June 1992 During the Year 73,879 27,204 To 30 June 1993 101.083 92,917 Balances as at 30 June 1993 120,121 Balances as at 30 June 1992 Interest income for all Government funds was included as interest income under the recurrent account

prior to 30 June 199 1. From the year started 1 July 1997, interest income was allocated to respective

Government fund accounts based on their month-end fund balances. Unspent balances are to be carried

forward to the next financial year The Hong Kong Universit;/ of Science and Technology 15. 10. CAPITAL WORKS RESERVE FUND Approved Commitments 700,000 453,000 0 1,153,000 Subvention/Interest Received To 30 June 1992 During the Year To 30 June 1993 156.288 247,285 779 404,352 Expenditure To 30 June 1992 During the Year To 30 June 1993 164.107 258.110 0 422,217 Balances as at 30 June 1993 (7,819) (10,825) 779 (17,865) Balances as at 30 June 1992 (18.608) (14.930) 205 (33,333) Specialist Equipment . . . and Facilities HK$'000 Furniture and General Equipment HK%'000 Interest income HK$'OOO Ill&! HK.9000 67,488 141,695 205 209,388 88.800 105,590 574 194,964 86,096 156,625 0 242,721 78.011 101.485 0 179.496 interest income for all Government funds was included as interest income under the recurrent account

prior to 30 June 1991. From the year started 7 July 7991, interest income was allocated to respective

Government fund accounts based on their month-end fund balances. The shortfalls as at 30 June 1993

will be offset against funding to be released by the UPGC to the University in the next financial year

11. EARMARKED GRANTS FROM THE RESEARCH GRANTS COUNCIL Direct Allocation HK$'OOO Competitive Bids HKS'OOO Micro- electronics Research Equipment HK$'OOO Total HK$'000 Subvention Received During the Year 3,500 12,612 1,800 17,912 Less: Expended During the Year 3,500 12.612 0 16,112 Balance as at 30 June 1993 0 0 1,800 1,800 The unspent balance is to be carried forward to the next financial year. 16 The Hong Kong University of Science and Technology. 12. ACADEMIC EXCHANGES WITH INSTITUTIONS OF HIGHER EDUCATION IN CHINA Balance as at 30 June 1992 192 Add: Subvention Received During the Year 274 13. Less: Expended During the Year 466 84 Balance as at 30 June 1993 382 The unspent balance is to be carried forward to the next financial year. 13.COMPARATIVE FIGURES Certain comparative figures of the previous year have been reclassified to conform to

the current year's presentation. The Hong Kong University of Science and Technology 17 SCHEDULES TO THE FINANCIAL STATEMENTS 30 JUNE 1993 1. SUNDRY RECEIVABLES Balance As at 30June1992 HK$'OOQ 1,830 0300 4822 Current Account with Biotechnology Research Institute Backpayments in relation to Salary Revision w.e.f. 1.4.1993 for the Period April to June 1993 Staff Debtors Rates Recovery Other Sundry Receivables 2,956 TOTAL 23,417 2. ACCOUNTS PAYABLE AND ACCRUALS Balance As at 30June1992 30June1993 HK%'OOO HKSOOQ 161 2,759 1,646 00118,341 Obligations Under Finance Lease (Due Within One Year) Library Books Orders Tuition Fees In Advance Backpayments in relation to Salary Revision w.e.f. 1.4.1993 for the Period April to June 1993 Rates Other Accounts Payable and Accruals 189 1,561 5,214 9,980 10,042 158,297 122,907 TOTAL 185,283 3. LONG-TERM LIABILITIES Balance As at 30June1992 HK$'OOO 177 970 83 Deferred Gratuities Obligations Under Finance Lease In the Second to Fifth Years Inclusive After the Fifth Year Balance As at 30 June 1999 HK'000 1,461 9,980 377 10,240 1,359 Balance As at 30June1993 HKS'OOO 660 864 01.230 TOTAL 1,524 18 The Hong Kong University of Science and Technology. 4. PROVISIONS AND RESERVES Motor Vehicles Balance as at 30June 1992 HK$'OOO 760 0Amount Transferred HK$'000 328 3,879 Amount

0Maintenance of Premises Balance as at 30Ju e 993 HK:'O;O 1,088 3,879 Maintenance/Renovation of Staff Quarters Air Conditioner Plants Household Furniture/ Appliances Photocopying Machines 000678 1,669 1,041 2,601 1,381 0Contractual Passages Gratuities Leave Entitlement - Senior Staff 1,438 4,756 43,367 2,059 1,669 1,041 2,601 703 10,221 4,058 46,875 02,684 24,103 643 11,659 6,130 66,139 1,416 Student Residential Halls General 1,323 0 470 963 0 1,040 1,400 0 16,281 28,332 333 Furniture and Equipment 0 Major Redecoration 0 Exchange Equalization 308 Research Projects 15,681 990 1,433 1,040 1,092 28,932 TOTAL 71,094 91,489 43.752 118.831 The transfers to Student Residential Halls Reserves during the year were made from halls accounts which

are se/f-financing. All other transfers during the year were provided out of the UPGC subventions. The

balances for Contractual Passages, Gratuities and Leave Entitlement include payments which fall due

before 30 June 1994. The Hong Kong University of Science and Technology 19. 5. UNIVERSITY FUNDS GENERAL FUNDS Lam Woo Fund Leung Yat Sing Fund The S.H. Ho Foundation Limited Fund TVB Fund Others Total General Funds DESIGNATED FUNDS Draanlzed Research Units Asian Financial Market Centre Economic Development Centre Hong Kong Telecommunication Institute of Information Technology Joyce M. Kuok Laser and Photonics Laboratory Sino Software Research Centre William Mong Semiconductor Clusters Laboratory Zheng Ge Ru Thin Film Physics Laboratory Sub-total (I) Individual Research Proiects Croucher Foundation Hong Kong Supernet Lightwave Technology Mobile Telephone Remote Sensing Studies Telecommunication Network Others Sub-total (II) Sir S.K. Tana Library Fund Sub-total (Ill) Balance Amount Investment/ Amount Balance as at Received/ Interest Expended/ as at 30 June 1992 Transferred Income Transferred 30 June 1993 HKS'OOO HK$'OOO UKS'OOQ UK%'000 HK$'OOQ 1,259 2,107 10,174 0428 13,968 1,767 1,767 1,489 0 1,750 17 0 0 1,750 17 0 0 12,700 6 11,217 5,288 2,500 229 890 5,269 5,000 215 4,084 0 3,000 78 2,003 5.287 2,500 227 2,293 15,844 29,200 789 20,487 25,346 7,127 6,400 1,075 5.721 1,250 20 0 70 0 161 2,500 0 0 7 3,750 258 39 2,490 184 1,993 335 10,000 0 2,500 44 391 602 17,374 1.260 0 36 290 1,006 0 1,500 8 150 1,358 0 8.500 0 312 8,188 0 1,200 0 0 1,200 0 2,480 5 0 2,485 0 1,500 0 192 1,308 390 3.229 8 1.001 2.626 1,650 18,409 57 1,945 18,171 14,607 0 949 0 15,556 20 The Hong Kong University of Science and Technology. 5. UNIVERSITY FUNDS (Cont'd) Investment/ 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 Digital Equipment HK Limited Scholarship Du Pont Scholarship Duty Free Shoppers Scholarship Epson Foundation Scholarship Ernst and Young Education Subsidy Gammon Construction Limited Scholarship HK Society of Accountants Scholarship Hong Kong Two/Ten International Footwear Foundation Scholarship Hsin Chong K.N. Godfrey Yeh Bursary IEEE H.K. Section Scholarship INC Trustees of Chiap Hua Cheng's Foundation Scholarship Indian Chamber of Commerce - 40th Anniversary Scholarship InterCham Scholarship Jardine Matheson Limited Scholarship Joyce M. Kuok Foundation Scholarship Lam Woo Scholarship Legend Technology Limited Scholarship Leslie Fay International (S.E.A.) Limited Scholarship Leung Yat Sing Scholarship Li PO Chun Charitable Trust Scholarship Miss Leung Pui Han Scholarship Motorola Semiconductors HK Limited Scholarship Parfums Christian Dior Scholarship Shell Hong Kong Limited Scholarship Sir Edward Youde Memorial Scholarship Sumitomo Electric Asia Limited Scholarship The Incorporated Trustees of Chiap Hua Cheng's Foundation Bursary Yoshie Hiraoka Memorial Scholarship Sub-total (IV) as at Received/ 30 June 1992 Transferred Interest income HK$'000

HKS'OOQ HK$'000 9 9 0 10 20 0 90 90 0 10 10 0 28 28 0 24 40 0 22 22 0 35 35 0 12 12 0 12 12 0 10 10 0 36 36 0 5 5 0 10 10 0 213 213 0 1 1 0 135 135 0 5 5 0 35 35 0 47 44 25 300 303 0 10 10 0 12 12 0 24 24 0 7 7 0 58 58 0 75 86 37 23 23 0 25 25 0 30 30 0 216 216 0 5 10 0 120 141 58 2 5 148 328 1,656 " 1,722 268 0022 3

48 78 146 5f? Expended/ as at Transferred 30 June 1993 The Hong Kong University of Science and Technology 21. 5. UNIVERSITY 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 University Development Fund Others Sub-total (VI) Total Designated Funds (l ll lll lv V vl) TOTAL UNIVERSITY FUNDS Balance Amount Investment/ Amount Balance as at Received/ Interest Expended/ as at 30 June 1992 Transferred Income Transferred SO June 1993 HK$'OOO HK$'OOO HK%'OOO HK$'OOO HK$'OOO 103 10 190 014 0303 0I7 000103 70190 293 14 229 7 252 162 0 1,445 25 1,470 0 180 (114 114 0019 492 869 275 1,167 1,800 1,151 1,494 585 3,246 7 116 11 335 10 1,223 1 862 12 1,031 352 10 27 3,376 543 13,838 346 729 701 290 475 946 389 16,464 4,038 33,302 66,032 2,344 38,285 63,393 47,270 69,782 2,602 38,887 80,767 22 The Hong Kong University of Science and Technology. 6. DESIGNATED ENDOWMENT FUNDS CAPITAL ACCOUNTS Dow Hong Kong Scholarships Endowment Fund Elizabeth (Libby) Fuhriman Gardner Endowment Fund HK Telecommunication Institute of Information Technology Endowment Fund HKUST Arts Endowment Fund Lee Hysan Foundation Endowment Fund Wei Lun Endowment Fund Sub-total (I) RECURRENT ACCOUNTS Dow Hong Kong Scholarships Endowment Fund Elizabeth (Libby) Fuhriman Gardner Endowment Fund HK Telecommunication Institute of Information Technology Endowment Fund HKUST Arts Endowment Fund Lee Hysan Foundation Endowment Fund Wei Lun Endowment Fund Sub-total (II) Balance as at 30 June 1992 HK'OOO Amount Investment/ Received/ Interest Transferred Income HK%'OOO HK$'OOO Amount Balance Expended/ as at Transferred 30 June 993 HK$'OOO ,K$'O:O 800 100 0 14,000 819 05,000 19,919 6,000 03,000 09,800 0 0 0 26 12 14 0 2 8 10 0 253 19 0239 6 1,270 832 83 28 25 0 37 0 0 338 67 91 1,707 946 697 105 37 510 511 TOTAL (I II) 20,430 9.891 1.707 2.530 29.498 0000000 800 2 98 1,500 18,500 82 737 0 3,000 0 5,000 1,584 28,135 1,363 The Hong Kong University of Science and Technology 23. 7. GOVERNMENT SUBVENTIONS I July1991 to 30JuneI992 HK$'OOO 11,780 Recurrent Account, Surplus, April - June 1991 279,200 00279,200 615,146 1,990 19,281 21,271 1.030 313.281 TOTAL 677.593 Recurrent Grant Indicated Equipment Grant Indicated Language Enhancement Grant Reserved Supplementary Grants Report No.26 With Effect From 1 April 1991 Salary Revision With Effect From 1 April 1991 Salary Revision With Effect From 1 April 1992 Salary Revision With Effect From 1 April 1993 (for April - June 1993) Rates 8. RENTAL RECOVERY FROM STAFF I July1991 I July1992 to to 30JuneI992 30JuneI993 HKS'OOO HK$'OOO 6.096 Recurrent Grant 519 00Reserved Supplementary Grants Salary Revision With Effect from 1 April 1991 Salary Revision With Effect from 1 April 1992 Salary Revision With Effect from 1 April 1993 (for April - June 1993) 6,615 TOTAL 12,459 I July1992 to 3OJu e 993 HKi'O;O 10,739 01,400 320 24 The Hong Kong University of Science and Technology. 9. EXPENDITURE I July 1991 to 30 June 1992 HK$'000 20,308 20,357 372 96 1,043 873 467 354 43,870 66,226 183,752 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 34,439 22,826 5.903 Computer Facilities Research Grants Academic Support Centres Centralised and Departmental Laboratories Deans' Offices Educational Technology Centre Industrial Training Centre Language Centre Materials Characterisation and Preparahon Centre Microelectronics Fabrication Centre Off ice of Contract and Grant Administration PVC(AA) Off ice PVC(R&D) Office Research Centre Technology Transfer Centre 11,569 9,146 200 541 30,722 3,000 2,508 725 692 59,103 34,525 12,220 8.378 5.641 4,207 4.26; 1,019 553 88 9,709 1,838 3,142 206 15,050 15,669 8,928 1,859 9,470 7,294 3,997 1,064 6,974 3,478 4,655 1,177 39.048 168,442 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 Maintenance General Office/Laboratory Expenses Purchase of Equipment Sub-total (II) 1 July 1992 to 30June 993 HK$O:, 27,675 30,864 240 145 1,485 1,401 638 738 63,186 133,023 20,665 694 8,215 21155 L79,615 369:215 The Hong Kong University of Science and Technology 25. 9. EXPENDITURE (Cont'd) I July 1991 I July 1992 to to 305

30 June 993

5,724 17,400 1,172 356 8,497 1,030 1,394 1,451 149 11,480 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 (III) 8,922 36,242 8,190 608 8,716 10,932 13,732 5,060 535 24,363 48,653 601 3,039 5,171 4,400 60 6,220 25 629 20.145 60 49 4,471 732 5,312 Sub-total (V) 12,240 329 1,697 198 27,209 569 3,460 402 47 939 3,903 1,243 68 711 1.022 41.797 Sub-total (VI) 58,509 117.300 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) 746 5,593 7,868 6,372 54 16,458 46 1,501 38,638 STUDENT FACILITIES AND AMENITIES Grants to Student Bodies Physical Education Facilities Student Affairs Off ice Student Health MISCELLANEOUS Council Meetings Education Allowances General Off ice Equipment 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 85 108 10,717 1,330 206 2,913 038,133 1,164 6,053 436 26 1,054 4,968 1,738 107 873 838 328.219 TOTAL (l ll lll lV V VI) 659,088.

THE HKUST STAFF SUPERANNUATION SCHEME FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1993 The HKUST Staff Superannuation Scheme 27.

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 The Hong Kong University of Science and Technology

("HKUST") staff members 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: Prof. CHEN Jay-chung Mr. CHENG Hon-kwan Mr. LEE Hon-chiu Mr. PANG Tak-ming 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 Prof.

Chen Jay-chung and Mr. Pang Tak-ming were made on the basis of the results of elections

which were open to all eligible Scheme Members. 3. During the first year of the Scheme's operation, the Trustees have appointed two

investment managers (AEtna Investment Management (Hong Kong) Limited and Barclays de

Zoete Wedd Investment Management (Hong Kong) Limited) to manage the assets of the

Scheme, Bermuda Trust (Far East) Limited as the Scheme Administrator, and Towers Perrin to

advise on investment and scheme administration matters. Following the recommendation of

the Trustees, the University Council has also appointed Towers Perrin as the Scheme Actuary

until 30 June 1994. 4. The Scheme is structured on a defined contribution basis for the first 6 years of a

Scheme Member's service, and moves to a defined benefit formula thereafter. As at the end of

the financial year, the total net assets of the Scheme was $16.67 million, of which $16.01

million was HKUST and Members' Balances. The Scheme has a General Reserve which stood at $0.66 million as at 30 June 1993. The total number of Scheme Members as at the end

of the financial year was 692. Of this, 9 and 683 were otherwise Terms A and Terms B staff

members of HKUST respectively. 5. As HKUST continues to expand its staff members during 1993/94, and with staff members

gradually completing their 2- or 3-year employment contracts and moving to the Scheme, it is

envisaged that both the assets of the Scheme and the number of Scheme Members will grow

rapidly. 6. Taking this opportunity, the Board would like to thank all parties involved in the successful

introduction and the subsequent management of the Scheme for their advice and contributions

during the year. Board of Trustees, 13 October 1993 The HKUST Staff Superannuation Scheme 29

AUDITORS' REPORT To: The Trustees of The HKUST Staff Superannuation Scheme We have audited the financial statements of THE HONG KONG UNIVERSITY OF SCIENCE AND TECHNOLOGY STAFF SUPERANNUATION SCHEME on pages 31 to 34 in accordance with Auditing Standards. 2. In our opinion, the financial statements show a true and fair view of the disposition of

the net assets of the Scheme at 30 June 1993 and of its transactions for the year then ended.

3. In our opinion, the contributions payable to the Scheme during the year have been paid

in accordance with the scheme rules and with the recommendation of the actuary. SIGNED Deloitte Touche Tohmatsu Certified Public Accountants Hong Kong 13 October 1993 30 The HKUST Staff Superannuation Scheme.INVESTMENTS CURRENT ASSETS Bank Balances LESS: CURRENT LIABILITIES Accounts Payable NETCURRENTASSETS NET ASSETS HKUSTBALANCE 12,004 MEMBERS' BALANCE 4,001 BALANCE SHEET AS AT 30 JUNE 1993 GENERAL RESERVE TOTALFUNDS Approved by the Board of Trustees on 13 October 1993 SIGNED Chairman, Board of Trustees The accompanying notes are an integral part of the financial statements. Note HK$'000 3 15,004 1,767 104 1,663 16,667 16,005 SIGNED Secretary, Board of Trustees 662 16,667 The HKUST Staff Superannuation Scheme 31. REVENUE ACCOUNT FOR THE YEAR ENDED 30 JUNE 1993 CONTRIBUTIONS AND WITHDRAWALS HKUST Contributions Members' Contributions 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 NET AMOUNT TRANSFERRED TO HKUST BALANCE AND MEMBERS' BALANCE INCOME AND EXPENDITURE INCOME Forfeitures of Contributions and Interest on Members Leaving Service of HKUST Bank Interest Investment Income Profit on Sale of Investments Unrealized Gain on Revaluation of Investments LESS: EXPENDITURE 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 TOTAL FUNDS 16,667 The accompanying notes are an integral part of the financial statements.HKS'000 16,683 678 16,005 508 13638 456 137 1,275 319 17 57 13 305 188 11 613 662 32 The HKUST Staff Superannuation Scheme.

NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 1993 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. The HKUST Staff Superannuation Scheme 33

3. INVESTMENTS AEtna Investment Management (Hong Kong) Limited Barclays de Zoete Wedd Investment Management (Hong Kong) Limited TOTAL HK$'OOO HK$'OOO HK$'OOO EQUITIES (DIRECT INVESTMENT) Hong Kong South East Asia Excluding Hong Kong North America EQUITIES (UNIT TRUSTS) Hong Kong South East Asia Excluding Hong Kong Japan North America Europe BONDS (DIRECT INVESTMENT) Japan BONDS (UNIT TRUSTS) North America Europe Global CASH 1,163 263 1,42 1,367 5,069 6,b36 401 401 401 401 jl j r?J jl j r?J 1,057 1,057 (940 (940 21997 21997 7,732 7,272 15,004 34 The HKUST Staff Superannuation Scheme.

ACTUARIAL CERTIFICATE Name of Scheme : THE HKUST STAFF SUPERANNUATION SCHEME Principal Employer : THE HONG KONG UNIVERSITY OF SCIENCE AND TECHNOLOGY Effective Date of this Certificate : 30 JUNE 1993 An actuarial review of the above Scheme has been conducted as at 30 June 1993. The valuation

included a valuation of the Scheme's liabilities (including contingent and prospective) and due

regard was given to the financial condition of the Scheme. A recommendation has been given

as to the contributions to be payable after the valuation date in a report dated September 1993.

Part 1 Security of vested rights As at the Effective Date the ratio of the assets to the aggregate vested liabilities

of the Scheme was 4.03. The amount of surplus at the Effective Date was HK$12.5 million. Part 2 Security of accrued rights As at the Effective Date the ratio of the assets to the aggregate past service liabilities of the Scheme was 1.16. Part 3 Security of prospective rights In my opinion the resources of the Scheme are likely in the normal course of events to meet in full the liabilities of the Scheme as they fall due. In giving this opinion, I have assumed that the following amounts will be paid to

the Scheme: by Members : 5.0% of salaries by the Employer : 15.0% of salaries Part 4 Undertaking I confirm that I have received a written undertaking from the Principal Employer

that contributions shall be paid in accordance with the recommendations in the valuation report referred to above. Signature : SIGNED Date : 6 October 1993 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 HKUST Staff Superannuation Scheme 35.

THE HKUST ANCILLARY STAFF SUPERANNUATION SCHEME FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1993 The HKUST Ancillary Staff Superannuation Scheme 37.

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 The Hong Kong University of Science and

Technology ("HKUST") staff members 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: Mr. CHENG Hon-kwan Mr. LEE Hon-chiu Mr. LEUNG Kwok-leung Mr. LEUNG Tit-ming 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 Kwok-leung and Leung Tit-ming were made on the basis of the results of elections

which were open to all eligible Scheme Members. 3. During the first year of the Scheme's operation, the Trustees have appointed two

investment managers (AEtna Investment Management (Hong Kong) Limited and Barclays de

Zoete Wedd Investment Management (Hong Kong) Limited) to manage the assets of the

Scheme, Bermuda Trust (Far East) Limited as the Scheme Administrator, and Towers Perrin to

advise on investment and scheme administration matters. Following the recommendation of

the Trustees, the University Council has also appointed Towers Perrin as the Scheme Actuary

until 30 June 1994. 4. The Scheme is non-contributory and is structured on a defined benefit basis. As at the

end of the financial year, the total net assets of the Scheme was $1.35 million. The total number

of Scheme Members as at the end of the financial year was 163, all of whom were otherwise

Terms C staff members of HKUST. 5. As HKUST continues to expand its staff members during 1993/94, it is envisaged that

both the assets of the Scheme and the number of Scheme Members will continue to grow.

6. Taking this opportunity, the Board would like to thank all parties involved in the successful

introduction and the subsequent management of the Scheme for their advice and contributions

during the year. Board of Trustees, 13 October 1993 The HKUST Ancillary Staff Superannuation Scheme 33.

AUDITORS' REPORT To: The Trustees of The HKUST Ancillary Staff Superannuation Scheme We have audited the financial statements of THE HONG KONG UNIVERSITY OF SCIENCE AND TECHNOLOGY ANCILLARY STAFF SUPERANNUATION SCHEME on pages 41 to 44 in accordance with Auditing Standards. 2. In our opinion, the financial statements show a true and fair view of the disposition of

the net assets of the Scheme at 30 June 1993 and of its transactions for the year then ended.

3. In our opinion, the contributions payable to the Scheme during the year have been paid

in accordance with the scheme rules and with the recommendation of the actuary. SIGNED Deloitte Touche Tohmatsu Certified Public Accountants Hong Kong 13 October 1993 40 The HKUST Ancillary Staff Superannuation Scheme

.BALANCE SHEET AS AT 30 JUNE 1993 INVESTMENTS CURRENT ASSETS Bank Balances LESS: CURRENT LIABILITIES Accounts Payable NET CURRENT ASSETS NET ASSETS SCHEME FUND BALANCE Approved by the Board of Trustees on 13 October 1993 SIGNED Chairman, Board of Trustees The accompanying notes are an integral part of the financial statements. 3 1,221 146 13 133 1.354 1,354 SIGNED Secretary, Board of Trustees The HKUST Ancillary Staff Superannuation Scheme 41

REVENUE ACCOUNT FOR THE YEAR ENDED 30 JUNE 1993 CONTRIBUTIONS RECEIVED FROM HKUST INCOME AND EXPENDITURE INCOME Bank Interest Investment Income Profit on Sale of Investments Unrealized Gain on Revaluation of Investments LESS: EXPENDITURE Audit Fee Actuary's Fee Scheme Administration Fee Other Professional Fees Investment Managers' Fee and Expenses Loss on Exchange EXCESS OF INCOME OVER EXPENDITURE SCHEME FUN0 BALANCE The accompanying notes are an integral part of the financial statements. HK$'OOQ HK$'OOO 1,316 7338 1,354 42 The HKUST Ancillary Staff Superannuation Schem.

NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 1993 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. The HKUST Ancillary Staff Superannuation Scheme 43.

3 INVESTMENTS EQUITIES (DIRECT INVESTMENT) Hong Kong South East Asia Excluding Hong Kong North America EQUITIES (UNIT TRUSTS) Hong Kong South East Asia Excluding Hong Kong Japan North America Europe BONDS (DIRECT INVESTMENT) Japan 33 33 BONDS (UNIT TRUSTS) North America Europe Global CASH 94 24 118 AEtna Investment Management (Hong Kong) Limited HK%'OOO 86 Barclays de Zoete Wedd Investment Management (Hong Kong) Limited HK%'OOO 126 76 352 88 69 41157 157 TOTAL HK$'OOQ 522 243 629 592 1.221 44 The HKUST Ancillary Staff Superannuation Scheme.

ACTUARIAL CERTIFICATE Name of Scheme : THE HKUSTANCILLARY STAFF SUPERANNUATION SCHEME Principal Employer : THE HONG KONG UNIVERSITY OF SCIENCE AND TECHNOLOGY Effective Date of this Certificate : 30 JUNE 1993 An actuarial review of the above Scheme has been conducted as at 30 June 1993. The valuation

included a valuation of the Scheme's liabilities (including contingent and prospective) and due

regard was given to the financial condition of the Scheme. A recommendation has been given

as to the contributions to be payable after the valuation date in a report dated September 1993.

Part 1 Security of vested rights As at the Effective Date the assets exceeded the aggregate vested liabilities of

the Scheme. The amount of surplus at the Effective Date was HK$1.35 million. Part 2 Security of accrued rights As at the Effective Date the ratio of the assets to the aggregate past service liabilities of the Scheme was 180%. Part 3 Security of prospective rights In my opinion the resources of the Scheme are likely in the normal course of events to meet in full the liabilities of the Scheme as they fall due. In giving this opinion, I have assumed that the following amounts will be paid to

the Scheme: by Members : 0% of salaries by the Employer : 15.0% of salaries Part 4 Undertaking I confirm that I have received a written undertaking from the Principal Employer

that contributions shall be paid in accordance with the recommendations in the valuation report referred to above. Signature : SIGNED Date : 6 October 1993 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 HKUST Ancillary Staff Superannuation Scheme