Financial Statements for the Year Ended 30 June 1992 Together with Auditors' Report

Abstract

[evdate 1992-06-30] To: The Council of The Hong Kong University of Science and Technology We have audited the financial statements of THE HONG KONG UNIVERSITY OF SCIENCEANDTECHNOLOGY (Incorporated in Hong Kong under The Hong Kong University of Science and Technology Ordinance 1987) set out on pages 2 to 19 in accordance with

Auditing Standards. 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 1992, and of its

income and expenditure under the Government Recurrent Account for the year ended 30

June 1992, and have been properly prepared in accordance with The Hong Kong University

of Science and Technology Ordinance 1987. SIGNED Arthur Andersen & Co. Hong Kong, 15 October 1992.

2 BALANCE SHEET AS AT 30 JUNE 1992 30 June 1991 HKf '000 I ,7 15,863 4 19,874 35 1,660 210,949 208,925 I ,924,789 1,663,636 52,227 0 31,770 125,017 107,865 / 2:z 1 32,892 19.247 1.924,789 FIXED ASSETS Buildings Construction-in-progress Other Fixed Assets INVESTMENTS CURRENT ASSETS 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 LlABlLlTlES PROVISIONS AND RESERVES GOVERNMENT FUNDS Capital Account Capital Works Reserve Fund Academic Exchanges with Institutions of Higher Education tn Chrna UNIVERSITY FUNDS General Funds Designated Funds DESIGNATED ENDOWMENT FUNDS Capital Accounts Recurrent Accounts TOTAL FUNDS Approved by the Council on 15 October 1992. 30 June 1992 Note Schedule HKS'OOO 2 I ,508,778 2 1.073.848 7 141,006 8 (33,333) 9 192 SIGNED SIGNED SIGNED The Hon. IAU Wah-Sum Professor Chia-Wei WOO Norman W.Y. NGAI Council Treasurer VrceChancellor/President Director of Finance HK$'OOO 2,582,626 160,771 2,743,397 35,576 2 12.3 13 2,99 1,286 2,582,626 160,771 1,230 71,094 4 19,237 28, I33 47,370 19,819 511 20.330 2.99 1,286 3 1 April 1990 to 31 March 1991 HK$'OOO 1 April 1991 to 30 June 1991 HK$'OOO 1 July 1991 to 30 June 1992 Note Schedule HKS'OOO 204,700 103,230 0 0 13,560 4,837 2,538 1,057 1,801 216 INCOME Government Subventions Tuition Fees Bank Interest Rent Recovered from Staff Miscellaneous 6 290,980 8,402 6,405 6,096 733 222.599 109,340 Total Income 3 12.6 16 56,030 22,379 7 117,177 23,977 11,758 124,007 60,082 1,384 0 3,922 3,015 EXPENDITURE Salaries and Graturtres - Senior Staff Salaries and Gratuities - Support Staff General Expenses General Office Equipment Research 8 61,092 9 123,76 I IO 876 5,903 209,320 97,234 Total Expenditure 308,809 13,279 12,106SURPLUS FOR THE PERIODS/YEAR 6 3,807 INCOME AND EXPENDlTURE STATEMENT GOVERNMENT FUND (RECURRENT ACCOUNT) FOR THE YEAR ENDED 30 JUNE 1992

4 NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 1992 1. SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting The Unlversrty 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 transactrons are recorded in separate fund accounts according to such

classifications. Government Subventions Recurrent Government subventions are accounted for on an accrual basis as they are approved by the

Government for the fiscal year. Capital Government subventions are accounted for on a cash received basis

over the commitment period. Expenditure and Commitments It is the policy of the University to take up, 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 caprtalised to the Building Fund at cost and is not depreciated. When

a building is completed and formally handed-over to the University, costs formerly recorded under the

construction-in-progress will be reclassified as Buildings which will be depreciated on a straight-line basis to

write off from the Building Fund the capitalised costs of the buildings at year end over their estimated useful

lives at 2% per annum. The campus site located at Tai PO Tsar, Sai Kung, N.T. 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

acqursrtron based on approved orders and then caprtalised to the Capital Fund on payment basis. Deprecratron

IS provided on a straight-line basis to write off from the Capital Fund the capitalised costs of other fixed assets

at year end over their estimated 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 caprtalrsed at the present value of the minimum payments at the

inception of the lease and depreciated on the same basis mentioned above. 5 1.6 Investments Listed and unlisted investments are stated at cost. Realised income and charges are dealt with through the

relevant fund accounts. 1.7 Library Books and Periodicals Library books and perrodicals are written off as expenditure against the respective fund accounts In the year

of acquisition. 1.8 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. 1.9 Taxation The University is exempted from payment of tax by virtue of Section 88 of the Inland Revenue Ordinance.

1.10 Interest Income Interest income amounts are accounted for as they fall due. 4 2. BUILDINGS AND CONSTRUCTION-IN-PROGRESS The Campus ProJect for Phases I and II, estimated to cost HK$3,548 millron at the June 1990 price level, excluding

furniture cost, IS financed by a donation of HK$l,926 million from The Royal Hong Kong Jockey Club and a subvention

of HK.$l,622 millron by the Hong Kong Government. The subvention of HK$l,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 1992 represented the capitalised net book value of buildings and construction-in-progress.

COST Asat30June 1991 Additions Transfer to Buildings As at 30 June 1992 1.539.570 I .073,848 2.613.418 DEPRECIATION Asat30June 1991 Charges for the Year As at 30 June 1992 NET BOOK VALUE As at 30 June 1992 Asat30June 1991 Buildings HK$'OOO 0 I ,663,636 I ,663,636 0 949,782 949,782 1.539.570 (1.539.5701 0 0 30,792 30.792 1,508,778 Construction- in- progress HK$'OOO 0 0 30,792 I ,073,848 2,582,626 I ,663,636 I .663,636 Costs of the buildings and construction-in-progress of the campus project were financed by.

30June 1991 HK$'OOO 981,818 681.818 1,663,636 Royal Hong Kong Jockey Club Donation Government Subvention Total HK$'OOO 0 30,792 30June 1992 HK$'OOO 1,456,709 1.156.709 2,613,418 7 3. OTHER FIXED ASSETS COST Asat30June 1991 Additions Disposals/Written Off As at 30 June 1992 DEPRECIATION Asat30June 1991 Charges for the Year Disposals/Written Off As at 30 June 1992 NET BOOK VALUE As at 30 June 1992 Asat30June 1991 Computing, AudioNisual, Maintenance, Teaching and Sports Equipment HK$'OOO 25,452 I, 148 84,6 15 1,828 (90) (01 4 1,820 73,399 (671 109,977 2.976 115,152 7,830 27,410 (8) 35,232 74,745 1,779 84,247 160,77 I 17,622 688 33,9 17 52,227 Motor Vehicles HK$'OOO 460 737 (01 1,197 Office and Quarters Furniture and Equipment,and Electrical Appliances HKS'OOO 7,903 23,02 I (191 30.905 Total HKS'OOO 68,420 159,842 (1571 228,105 I 6, I 93 51,168 (271 67.334 Other fixed assets included one major photocopying machine leased during the year under finance lease:

HK$'OOO cost Less: Depreciation Charge for the Year Net Book Value as at 30 June 1992 4. INVESTMENTS 30 June 1991 30 June 1992 HK$'OOO HKS'OOO 0 Listed Investments with Investment Managers at Cost Unlisted Investments at Cost University & Polytechnic Computer Centre Ltd. 1 I share of HK$500 Fully Paid I 35,576 35,575 I The market value of listed investments as at 30 June 1992 was HK$38.548 million.

5. GOVERNMENT HOLDING ACCOUNT Balance as at 30 June 199 I Recurrent Account - Surplus, 1990/9 I Recurrent Account - Surplus, 4-6/l 99 I Amount Refunded to Government During the Year Recurrent Account - Surplus, 4-61 I 99 I Approved Carried Forward to I 99 I /92 Over-provision for Outstanding Commitments for Previous Periods Balance as at 30 June 1992 6. UPGC HOLDING ACCOUNT Recurrent Account - Surplus, 199 I /92 Earmarked Grants - Rates Refund Shortfall Reserved Supplementary Grants - Excess Salary Revision with effect from I April I99 I Salary Revision with effect from I April 199 1 (Repot-t No. 26) Balance as at 30 June 1992 HK$'OOO 13,279 12,106 25,385 (I 3,279) (I 1,780) 9,894 10,220 Schedule I 1 HKf '000 3,807 (191 I2 1,926 I2 506 6,220 7. CAPITAL ACCOUNT Basic Teaching Interest Equipment Others Income Total HK$'OOO HKf '000 HKf'OOO HKf '000 Approved Commitments Subvention/Interest Received To30June 1991 During the Year To 30 June 1992 Expenditure To30June 1991 During the Year I 94,000 59,233 0 253,233 16 1,500 59,233 0 220,733 32.500 0 9.505 42,005 I 94,000 59,233 9.505 262,738 35,723 40,660 0 76,383 38,156 7,193 0 45,349 To 30 June I992 73.879 47.853 0 121,732 Balances as at 30 June 1992 120,12 I I 1,380 9,505 14 1,006 Balances as at 30 June 199 I 125,777 18,573 0 144,350 Interest income for all Government funds was included as interest income under the recurrent account in prior

periods. During the year ended 30 June 1992, interest income was allocated to respective fund accounts based

on fund balances.

9 8. CAPITAL WORKS RESERVE FUND Approved Commitments Subvention/interest Received To 30 June 1991 During the Year To 30 June 1992 Expenditure To 30 June 1991 During the Year To 30 June 1992 Balances as at 30 June 1992 Balances as at 30 June 199 1 Specialist Furniture Equipment and General and Facilities Equipment HK$'OOO HK$'OOO 700,000 19,500 53,370 47,988 88,325 Interest Income HK$'OOO 205 72,870 136.518 67,488 141,695 205 209,388 23,263 69,03 1 0 92.294 62.833 87.594 0 150.427 86.096 156,625 0 242,72 1 Total HK$'OOO Interest income for all Government funds was included as interest income under the recurrent account in prior

periods. During the year ended 30 June 1992, interest income was allocated to respective fund accounts based

on fund balances. The shortfalls as at 30 June 1992 will be offset against funding to be released to the University

in the next financial year. 9. ACADEMIC EXCHANGE'S WITH INSTITUTIONS OF HIGHER EDUCATION IN CHINA HKS'OOO Balance as at 30 June I99 1 91 Add: Subvention Received During the Year 157 248 Less: Expended During the Year !56j Balance as at 30 June 1992 192 10. COMPARATIVE FIGURES Certain comparative figures of the prewous per-rods have been reclassified to conform to the current year's

presentation.

SCHEDULES TO THE FlNANClAL STATEMENTS 30 JUNE 1992 1. ACCOUNTS PAYABLE AND ACCRUALS Balance as at 30 June 1991 HK$'OOO 0 Obligations Under Finance Lease (Within One Year) 161 14,532 Library Books Orders 2,759 490 Tuition Fees In Advance 1,646 28,77 1 UPGC Subvention In Advance 0 141,771 Other Accounts Payable and Accruals 1 18,341 185,564 TOTAL 122,907 2. LONG-TERM LIABILITIES Balance as at 30 June 1991 HKf '000 0 Deferred Gratuities Obligations Under Finance Lease 0 In the Second to Fifth Years Inclusive 0 After the Fifth Year Balance as at 30 June 1992 HKS'OOO Balance as at 30 June 1992 HKf '000 177 970 83 0 TOTAL 1,230

3. PROVISIONS AND RESERVES Contractual Passages Gratuities Leave Entitlement - Senior Staff Motor Vehicles 460 Student Residential Halls Furniture and Equipment General 0 0 Photocopying Machines Exchange Equalisation Research Projects TOTAL Balance as at 30 June 1991 HK$'OOO 3,160 19,873 2,600 0 0 5,677 17.99 1 (7.3871 16,281 31,770 57,432 (18,108) 71,094 Amount Amount Transferred Expended HKf '000 HK$'OOO 2,980 (1,384) 32,290 (8,796) 0 (54 1 J 300 (0) Balance l as at 30 June 1992 ' HK$'OOO 4,756 43,367 2,059 760 470 10) 470 1,323 (0) 1,323 678 (0) 678 1,400 1,400 The transfers to Student Residential Halls Reserves during the year were made from halls accounts which are self-

financing. All other transfers during the year were provided out of UPGC subventions. The balances for Contractual

Passages, Gratuities, and Leave Entitlement-Senior Staff included payments which may fall due before 30 June 1993.

12 4. UNIVERSITY FUNDS Balance Amount Investment/ Amount Balance as at Received/ Interest Expended/ as at 30 June 199 1 Transferred Income Transferred 30 June 1992 GENERAL FUNDS Lam Woo Fund Leung Yat Sing Fund Srno Land Fund The S.H. Ho Foundation Ltd. Fund Others Total General Funds HKf '000 0 2,016 5,036 0 347 7,399 DESIGNATED FUNDS Research Funds Battery Monrtorrng Project 0 Croucher Foundatton - Epstein Barr Virus 733 Croucher Foundation - Role of Oncogence 593 Croucher Foundation - Wastewater Treatment 0 Exxon Research & Engineering Company 83 Hand - Dug Caisson Dust Abatement System 0 MTR - Rail Failure Study 0 NEC Corporation 0 Sub-total (I) 1,409 HK$'OOO HKS'OOO HKf'OOO HK$'OOO 1,250 0 0 10,000 70 9 0 107 16 233 0 174 0 1 0 534 16 1,259 2,107 5,269 10,174 428 1 1,320 415 385 460 83 215 56 16 68 948 1,650 4. UNIVERSITY FUNDS (Cont'd) HK$'OOO HK$'OOO ScholarshipsIBursary Funds Asea Brown Boveri Scholarship AST Research (Far East) Limited Scholarship CGCC (Foundation) Limited Bursar-y Citibank Scholarship Du Pont Scholarship Duty Free Shoppers Scholarship Elizabeth (Libby) Fuhrrman Gardner ScholarshIp 0 9 0 10 0 90 0 16 0 35 0 10 Epson Foundation Scholarship Hong Kong Two/Ten International Footwear Foundation Scholarship InterCham Scholarship Jardine Matheson Limited Scholarship Joyce M. Kuok Foundation Scholarship Leslie Fay International (S.E.A.) Limited Scholarship 42 58 0 12 Miss Leung Pui Han Scholarship Providence Foundation MBA ScholarshIp Shell Hong Kong Limited Scholarship Sir Edward Youde Memorial Fellowship Sumitomo Electric Asia Limited Scholarship The Incorporated Trustees of Chiap Hua Cheng's Foundation Bursar-y The Incorporated Trustees of Chiap Hua Cheng's Foundation Scholarship The Incorporated Trustees of Hsin Chong K.N. Godfrey Yeh Education Fund Bursar-y Yoshie Hiraoka Memorial Scholarship Sub-total (Ill) 0 116 Balance as at 30June 199 1 Amount Investment/ Amount Balance , Received/ Interest Expended/ as at Transferred Income Transferred 30June 1992 HK$'OOO HK$'OOO HK$'OOO

14 4. UNIVERSITY FUNDS (Cont'd) Balance Amount Investment/ Amount Balance as at Received/ Interest Expended/ as at 30June 199 1 Transferred Income Transferred 30June 1992 Self-financing Activities Undergraduate Halls Summer Letting of Dormitory Places - Undergraduate Halls Postgraduate Halls Summer Letting of Dormitory Places - Postgraduate Halls Visitors Centre Subtotal (IV) 0 3,827 90 Others British Council Fund Croucher Foundation - Visitorship Fund Departmental Dtscretionary Fund Hsin Chong K.N. Godfrey Yeh Education Fund Institute for Advanced Materials Fund Intercurrent Program - Biology Society Fund International Workshop on Technology for Hong Kong's Infrastructure Development Fund Mrs Y.S. Cheong Memorial Fund Providence Foundation Limited Fund Sir SK. Tang Library Fund VC/P Discretionary Fund 5. DESIGNATED ENDOWMENT FUNDS Balance Amount Investment/ Amount Balance as at Received/ Interest Expended/ as at 30June 199 1 Transferred Income Transferred 30June 1992 HK$'OOO HKf '000 HK$'OOO HK$'OOO HK$'OOO CAPITAL ACCOUNTS HK Telecommunication Institute of Information Technology Fund HKUST Arts Endowment Fund Wei Lun Fund Subtotal (I) RECURRENT ACCOUNTS HK Telecommunication Institute of Information Technology Fund HKUST Arts Endowment Fund Wei Lun Fund Sub-total (II) TOTAL (l ll) 6. GOVERNMENT SUBVENTIONS 1 April 199 1 to 30 June 1991 HK$'OOO 1 April 1990 to 31 March 1991 HK$'OOO Recurrent Account - Surplus, 4-6/l 99 1 Approved Brought Forward to 199 l/92 Recurrent Grant TOTAL

7. SALARIES AND GRATUITIES - SENIOR STAFF 1 April 1990 1 April 1991 1 July 1991 to to to 31 March 1991 30 June 1991 30 June 1992 HK$'OOO HK$'OOO HK$'OOO 16,637 4,935 Administration 18,387 9,659 5,25 1 Academic Departments 50,37 1 25,463 10,523 Academic Support Centres 4 1,083 3,467 1,193 Estates Management 5,183 804 477 Student Affairs 2,153 56,030 22,379 TOTAL 8. SALARIES AND GRATUITIES - SUPPORT STAFF 1 April 1990 lApril1991 1 July1991 to to to 31 March 1991 30 June 199 1 30 June 1992 HK$'OOO HK$'OOO HK$'OOO Administration Academic Departments Academic Support Centres Estates Management Student Affairs TOTAL 9. GENERAL EXPENSES 1 April 1990 1 April 199 1 to to 31 March 1991 30 June 1991 HK$'OOO HK$'OOO 1 July 1991 ' to 30 June 1992 HK$'OOO 407 92 ADMINISTRATION Audit and Legal Fees General Advertisements General Office Expenses Official Publications Postages Vehicles Running Expenses MAINTENANCE OF PREMISES AND GROUNDS Cleaning Expenses General Office Expenses Insurance Premiums Repairs and Maintenance Security Expenses Utility Charges GENERAL EDUCATION EXPENDITURE Consultancles and Advisory Committees Meetings Contractual Passages Duty Visits Examinations Executive Programmes Postgraduate Studentships Staff Training and Development Subscriptions to International Education Associations Workshops and Seminars 18 9. GENERAL EXPENSES (Cont'd) 1 April 1990 to 31 March 1991 HK$'OOO 1 April 1991 to 30 June 1991 STUDENT FACILITIES AND AMENITIES 10 General Office Expenses 0 Grants to Student Bodies 0 Physical Education Facilities 0 Student Activities 0 Student Health 0 Student Residential Halls 33 10 Sub-total (V) 998 MISCELLANEOUS EXPENDITURE Council Meetings Education Allowances Housing Benefits Medical and Dental Benefits Minor Works Official Entertainment Outreach Programmes to Schools Publicity Expenses Recruitment Expenses Removal Expenses and Hire of Vehicles School Passages Staff Uniforms and Laundry Subsidies for Staff Buses Miscellaneous 30,544 11,091 Subtotal (VI) 49,676 124,007 60,082 TOTAL (l ll lll lV v Vl) 10. GENERAL OFFICE EQUIPMENT 1 April 1990 lApril1991 1 July1991 to to to 31 March 1991 30June 1991 30 June 1992 HKS'OOO HKS'OOO HK$'OOO 1,384 0 GENERAL OFFICE EQUIPMENT 1 July 1991 to 30 June 1992 HK$'OOO

11. EARMARKED GRANTS Research Grants Direct Competitive Allocation Bids HK$'OOO HKf '000 Rates Refund HK$'OOO Grants Received Less: Amount Expended TRANSFER TO UPGC HOLDING ACCOUNT 3,000 8,947 1,011 (3,000) (8,947) !I.0301 0 0 1191 -es 12. RESERVED SUPPLEMENTARY GRANTS INCOME Grants Received Rent Recovered from Staff Salary Revisions With Effect From lApril1991 lApril1991 (Report No.26) HK$'OOO HK$'OOO 19,28 1 1,990 519 0 19.800 1,990 EXPENDITURE Salaries and Gratuities Senior Staff Support Staff 1 1,404 0 6.470 1,484 17,874 1.484 TRANSFER TO UPGC HOLDING ACCOUNT 1,926 506 In addition to the annual general salary revision effective 1 April 1991, the Government accepted the Report No.

26 by the Standing Commission on Civil Service Salaries and Conditions of Service which revised upward, also

effective 1 April 799 1, salary scales for various selected ranks. The University decided to follow these one-off scale revisions. As a result, two reserved supplementary grants were obtained from the UPGC.