Financial Statements for the Year Ended 30 June 1997

Abstract

[evdate 1997-06-30] CONTENTS Treasurer's Report......................................................... 1 Auditors' Report........................................................... 5 m!zkrn9R%B Balance Sheet.............................................................. 7 Income and Expenditure Statement........................................... 8 Cash Flow Statement........................................................ 9 Notes to the Financial Statements Significant Accounting Policies................................. 11 Fixed Assets.................................................... 14 lzi3ss Buildings....................................................... 15 Construction-in-progress........................................ 16 Loans to Affiliated Companies................................... 16 investments..................................................... 17 Current Assets.................................................. 18 Current Liabilities............................................. 19 Long-term Liabilities........................................... 20 Building Fund................................................... 20 Capital Fund.................................................... 21 General Funds................................................... 21 Reserves and Provisions......................................... 24 UGC Triennium Equalization Account.............................. 25 UGC Recurrent Grant............................................. 26 Fee Income...................................................... 26 Miscellaneous Income............................................ 26 Specific Income and Expenditure................................. 27 General Expenditure Administration..........,.................................... 28 Academic.................................................... 28 Maintenance of Premises..................................... 30 General Education........................................... 30 Student Facilities and Amenities............................ 31 Miscellaneous............................................... 31 Reconciliation of Funding Surplus to Net Cash Inflow............ 32 from University Operations Capital Commitments............................................. 33 Comparative Figures....................................;........ 33 THE HONG KONG UNIVERSITY OF SCIENCE AND TECHNOLOGY FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 1997 TREASURER'S REPORT The year 1996/97 marked the University's fifth anniversary. The University had undergone its start-up stage through a period of rapid growth and will enter into a period of consolidation. The financial results for the year reflected a continued, albeit slower, growth in the University's activities. As at 30 June 1997, the total net assets amounted to $4,105 million (1995/96: $4,03 1 million). General Income and Expenditure General income increased by 9% to $1,796 million (1995/96: $1,645 million), of which $1,434 million or 80% was provided by the Government through the University Grants Committee (UGC): a block grant of $1,23 1 million, three reserved supplementary grants amounting to $184 million to cover additional costs arising from salary revisions in line with the annual salary adjustments approved for the Civil Service and $19 million for the reimbursement of property rates and rents paid by the University. The remainder of general income included $250 million of tuition fees and others amounting to $112 million. The continued expansion of the University, while slower in pace, saw a continuous upward trend in expenditure. General expenditure, primarily funded by the UGC, increased by 14% to $1,725 million (1995/96: $1,508 million). This increase was mainly due to salary revisions, inflation and an increase in the actual student number from 6,077 in 1995196 to 6,720 in 1996/97. Out of the $1,725 million general expenditure, $137 million or 8% was for Administration, $1,006 million or 58% was for Academic Departments and Academic Support Centers, $280 million or 16% was for Maintenance of Premises, and others amounting to $302 million. The general income over general expenditure for the year after transfers had been made to reserves/provisions was $6.6 million. In accordance with general guidelines laid down by the UGC, this surplus will be carried forward to and utilised in the next financial year. Earmarked Grants The University received from the UGC a total of $109 million (1995/96: $78 million) of earmarked grants. out of the $109 million, $77 million was earmarked for research activities, $18 million was a block allocation for alterations, additions, repairs and improvements to the campus, and the remainder of $14 million was for other earmarked activities including language enhancement, teaching development and academic exchanges with institutions of higher education in China. Capital Grants A total of $130 million (1995/96: $180 million) in the form of capital grants was received from the UGC. These capital grants were for the acquisition of equipment and facilities for basic teaching and specialist uses, the construction of laboratories and facilities and the acquisition of general furniture and equipment. With the completion of most of the capital projects, there was a reduction in the levels of grant as well as related expenditure. Donations, Designated Funds and Other Operating Funds The University continued to receive a steady inflow of donations and designated funds, which, together with investment and interest income generated for the year, totalled $48.6 million (1995/96: $48.3 million). Out of the total income, 74% was for research activities, 13% for scholarships, bursaries and student loan funds, 7% for designated endowment and the remaining 6% for general purposes. A total of $108 million of other operating income was generated from self-financing activities and research contracts (1995/96: $130 million). Excluding the effect of two special one-off events in 1995/96, i.e. a transfer of $17 million from excess general income and the proceeds of $36 million from the sale of Hong Kong Supernet Limited, there was a substantial growth in other operating income. As at 30 June 1997, the total fund balance of donations, designated funds and other operating funds stood at $288 million (1995/96: $252 million).

Building Projects financed with Bank Loans ii8vmmz~rn~E%H With the approval of the UGC, the University has obtained three bank loan facilities of up to $150 million, $300 million and $250 million to finance respectively the construction of 66 additional senior staff quarters (Phase IIA), 156 additional senior staff quarters (Phase IIB) and additional graduate residences together with a University Center. The Phase IIA staff quarters were completed in July 1995, and both the Phase IIB staff quarters and the graduate residence together with the University Center were completed in January 1997. During the year, the University had drawn $222 million against the loan facilities and made a repayment of $75 million. As at 30 June 1997, the total balance of the three bank loans was $540 million (1995/96: $393 million). HKUST Annex The University has started to construct an extension to the academic building (HKUST Annex). The Annex is to S) 0 provide a home for R&D and technology transfer units. It is anticipated that the construction work will be ~110,000,000 completed by early 1999. The construction cost in the order of $110 million will be met with non-UGC funds and donations raised by the University. Investments During the year, $250 million of bank deposits were %%I 9 S 250,000,OOO uplifted and handed to investment managers for a fixed income portfolio. The transfer was reflected in and attributed primarily to the increase in investments from 224,000,OOO Z ;tQp ha 32 1996/97 + E @I

$224 million in 1995/96 to $494 million in 1996/97. 494,000,000 75 O Outlook The University is entering a period of consolidation. Looking ahead to the 1998-200 1 triennium, it is likely that there will be a reduction in Government funding in view of the UGC's requirement to enhance the cost effectiveness of institutions of higher education. In addition, the University's approved student number will drop from 7,013 in 1997/98 to 6,705 by 2000/01. In anticipation of the funding reduction, in 1996/97 the University has started to implement -measures leading to cost savings and efficiency gains. These measures, however, aim to ensure as much as possible that there will not be any compromise on the quality of education. It remains the objective of the University to strive to enhance the cost effectiveness of its activities but at the same time maintain its high standards of teaching, research and community services. SIGNED Dr. LAU Wah-sum, JP Treasurer of the University, 14 November 1997 AUDITORS' REPORT t5G!a36%EB DeloitteTouche Tohmatsu To: The Council of the Hong Kong University of Science and Technology We have audited the financial statements on pages 7 to 33 which have been prepared in accordance with 33 accounting principles generally accepted in Hong Kong. Respective Responsibilities of the Council and Auditors The Council 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. We are engaged to form an independent opinion, based on our audit, on those statements and to report our 93 ' opinion to you. El 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 Council 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 prformed 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 1997 and of its excess of income over expenditure and cash flows for the year then ended. SIGNED Deloitte Touche Tohmatsu Certified Public Accountants Hong Kong 14 November 1997 6

Fixed Assets Loans to Affiliated Companies Investments Current Assets Less: Current Liabilities Net Current Assets BALANCE SHEET AS AT 30 JUNE 1997 1997~6)?j3OH Note 1997 494,517 223,715 163,077 312,208 Long-term Liabilities 9 (479,268) (368,228) 4,584,521 4,399,320 1996 $'OOO 3,863,367 TOTAL NET ASSETS 4,105,253 4,031,092 Building Fund General Funds Specific Funds Reserves and Provisions UGC Triennium Equalization Account 3,028,428 3,033,981 329,645 377,950 101,370 83,278 280,623 247,852 268,072 207,216 97,115 80,815 TOTAL FUNDS 4,105,253 4,031,092 Approved by the Council on 14 November 1997 Dr LAU Wah-sum Professor Chia-Wei WOO Norman W. Y. NGAI Treasurer of the University President Director of Finance

INCOME AND EXPENDITURE STATEMENT FOR THE YEAR ENDED 30 JUNE 1997 GENERAL INCOME UGC Recurrent Grant Rental Recovery from Staff Miscellaneous Income SPECIFIC INCOME TOTAL INCOME GENERAL EXPENDITURE Administration Academic Maintenance of Premises General Education Student Facilities and Amenities Miscellaneous SPECIFIC EXPENDITURE TOTAL EXPENDITURE EXCESS OF TOTAL INCOME OVER TOTAL EXPENDITURE Transferred from/(to) the UGC Holding Account Transferred (to) Reserves/Provisions Transferred (to) Specific Funds Transferred (to) General Funds SURPLUS TRANSFERRED TO THE UGC 18 19 20 137,333 124,316 21 22 1,005,608 279,790 885,250 236,362 23 20,796 20,246 24 37,698 32,998 25 243,716 19 1,724,941 338,872 209,305 1,508,477 303,973 1997 1996 $'OOO vooo 1,434,516 252,008 42,102 1,369,937 189,032 46,180 39,528 35,450 27,505 1,795,659 396,874 4,568 1,645,167 437,843 2,192,533 2,083,010 2,063,813 1,812,450 128,720 270,560 (6,843) 1,294 (64,198) (44,435) (32,921) (90,082) (18,092) (56,522) 6,666 80,815 CASH FLOW STATEMENT FOR THE YEAR ENDED 30 JUNE 1997 1996 $'OOO NET CASH INFLOW FROM UNIVERSITY OPERATIONS 26 307,209 430,493 NET CAPITAL (OUTFLOW)/INFLOW FROM DESIGNATED ENDOWMENTS (150) 190 RETURNS ON INVESTMENTS AND SERVICING OF FINANCE Investment/Interest Income Interest Element of Finance Lease Payments Bank Loan Interest Paid NET CASH INFLOW FROM RETURNS ON INVESTMENTS AND SERVICING OF FINANCE INVESTING ACTIVITIES (Increase)/Decrease in Bank Deposits Maturing after Three Months Payments to Acquire Fixed Assets Receipts from Sales of Other Fixed Assets Payments to Acquire Investments Receipt from Sales of Hong Kong Supernet Ltd. Repayment of Loans from HKUST R and D Corporation Ltd. NET CASH OUTFLOW FROM INVESTING ACTIVITIES NET CASH (OUTFLOW)/INFLOW BEFORE FINANCING 41,943 51,504 (47,374) 90,377 (370,603) (582,053) 16 5 (270,802) (18,386) 36,010 2,232 (688,763) (471,815) (339,761) 10,372

CASH FLOW STATEMENT (Cont'd) FOR THE YEAR ENDED 30 JUNE 1997 FINANCING Capital Element of Finance Lease Payments Draw Down on Bank Loans Repayment of Bank Loans NET CASH INFLOW FROM FINANCING (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS %!%i2EmB&x(a9)/m CASH AND CASH EQUIVALENTS BROUGHT FORWARD CASH AND CASH EQUIVALENTS CARRIED FORWARD ANALYSIS OF THE BALANCES OF CASH AND CASH EQUIVALENTS Bank Deposits Maturing within Three Months Other Bank and Cash Balances 146,712 230,754 (193,049) 241,126 670,518 429,392 477,469 670,518 479,931 626,148 (2,462) 44,370 477,469 670,518 10

NOTES TO THE FINANCIAL STATEMENTS 30 JUNE 1997 1997+6J!J3OEi 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 accrued 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 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 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 Expenditure Approved expenditure items include purchase orders placed with suppliers for goods or services not yet received at the balance sheet date. 1.3 Buildings and Construction-in-progress Construction-in-progress is capitalised at cost to the Building Fund 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.

1.4 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 :- Motor vehicles Computing, audio/visual, maintenance, teaching and sports equipment Furniture and other equipment 25% per annum 25% per annum 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 or, where shorter, over the terms of the finance leases. 1.5 Investments Listed and unlisted investments are stated at cost. Realised and accrued income and investment expenses are dealt with in the Income and Expenditure Statement. 1.6 Stocks Stocks held for resale in respect of self-financing operations are valued at the lower of cost and net realisable value. Cost is calculated using the average cost method. Net realisable value is calculated with reference to the actual or estimated selling price less the related cost of marketing, selling and distribution. Other stocks are written off against the related funds on acquisition. 1.7 Library Books and Periodicals Library books and periodicals are written off against the related tinds on acquisition. 1.8 Donations, Donated Services and In-kind Contributions Donations are accounted for on an accrual 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 8 8 of the Inland Revenue Ordinance. 1.10 Cash Equivalents Cash equivalents are defined as short-term, highly liquid investments which are readily convertible into known amounts of cash and which were within three months of maturity when acquired, less advances from banks repayable within three months from the date of the advance.

2. FIXED ASSETS As at 30 June 1996 EY996+6H3OE3 3,410,378 365,961 5,370 833,476 285,793 4,900,978 Additions 706 Transfers from Construction-in- progress Transfers to Buildings Disposals/Written Off 543,494 190,221 (543,494) (924) (3,258) As at 30 June 1997 3,954,578 12,688 4,834 982,366 310,083 5,264,549 DEPRECIATION As at 30 June 1996 Charged for the Year Disposals/Written Off (Note 3) Construction- (Note 4) uwsE4) Other Fixed Assets Motor Vehicles Computing, Audio/Visual, Maintenance, Teaching and sports Furniture and Other

$'OOO Total 290,922 79,092 0 370,014 0 4,116 716,596 246,926 1,337,652 532,010 210,260 189,131 39,691 (4,545) (3,025) As at 30 June 1997 R1997%6E30El NET BOOK VALUE As at 30 June 1997 3,584,564 12,688 718 265,770 63,157 3,926,897 t?l997%6H3OEl As at 30 June 1996 3,119,456 365,961 951 301,466 75,533 3,863,367

3. BUILDINGS COST As at 30 June 1996 El996%6B3OB Additions Transfers from Construction-in-progress As at 30 June 1997 1997~6H3OR DEPRECIATION Pm As at 30 June 1996 IiN 996%6H 30 El Charged for the Year Campus Senior Staff Quarters Graduate Residence and Universitv hases I and II Phase IIA Phase IIB 6JB%&%% $#UIAIQ j2XIBEDj $'OOO $'OOO $'OOO (Note a) (Note b) (Note b) $'OOO 3,276,793 613 30,280 3,307,686 133,678 286,300 286,300 226,914 3,954,578 Total m $'OOO 3,410,378 706 543,494 As at 30 June 1997 352,068 7,682 5,726 4,538 370,014 El 997%6fl30 El NET BOOK VALUE As at 30 June 1997 B1997+6B 30 B 2,955,618 125,996 280,574 222,376 3,584,564 As at 30 June 1996 2,990,879 128,577 0 0 ~1996+FSH308 3,119,456 Notes : a. The Campus Project - Phases I and II was financed by : The Hong Kong Jockey Club Donation Government Funds Total Expenditure at Cost Less: Accumulated Depreciation 1997 1996 I, 944,186 I, 944,186 I, 363,500 I, 332,607 3,307,686 3,276, 793 (352,068) <285,914) 2,955,618 2,990,879 b. With the approval of the UGC, the University has obtained three bank loan facilities of up to HK$150 million, HKS300.20 million and

HK$250 million to finance respectively the construction of 66 additional senior staflquarters (Phase IIA), 156 additional senior stafl

quarters (phase IIB) and additional graduate residences together with a University Center (GRUC).

C. The net book value of buildings was represented andfinanced by the Building Fund, Bank Loans andAccounts Payable.

4. CONSTRUCTION-IN-PROGRESS 4T333u-s Camuus yooo COST As at 30 June 1996 R1996~6b'30 El Additions ransfers to Buildings As at 30 June 1997 R1997%6H 30 El 25,483 179,245 160,156 4,797 107,055 66,758 (30,280) (286,300) (226,914) 0 0 0 11,490 1,198 12,688 Senior Staff Quarters Phase IIB $'OOO Graduate Environ- Residence mental/ and Geotechnical University Research Center Facility $'OOO $'OOO 1,077 10,413 0 HKUST Annex 32lIssz Total %'OOO 0 1,198 0 365,961 190,221 (543,494) 5. LOANS TO AFFILIATED COMPANIES l-iRmim~RXB3 1997 1996 %'OOO Varsity Resources Corporation Ltd. 6. INVESTMENTS 1997 1996 Listed Investments with Investment Managers at Cost (Note) Unlisted Investments at Cost Bonds and Cash/Bank Deposits with Investment Managers (Note) Joint Universities Computer Centre Ltd. 1 share of HK$500 Varsity Resources Corporation Ltd. 50,000 shares of HK$l each 166,318 85,404 328,148 138,260 Investment in Wholly-owned Subsidiaries at Cost 0 0 HKUST R and D Corporation Ltd. 2 shares of 0 0 Note : The market value of listed and unlisted investments with investment managers as at 30 June 1997 was HK$535.23 million

(I 996: HK$245.20 million). The net profits of the subsidian'es not consolidated but attributable to the University were:

Previous Years Since Acauisition 1997 !2izEF- : Dealt with in the Financial Statements of the University 0 0 Not dealt with in the Financial Statements of the University 17 949 87

7. CURRENT ASSETS Stocks Bit Accounts Receivable Amount Due from The HKUST Educational Trust Amount Due from HKUST Properties Ltd. Amount Due from HKUST R and D Corporation Ltd. ther Accounts Receivable UGC Holdiw Account Reserved Supplementary Grants for Salary Revisions hortfall in Rates Reimbursement 5f35%42SBl;iJ Over-provision of Outstanding Commitments (Excess)/Shortfall from Reserved Supplementary Grants for Salary Revisions (Excess) from Alteration, Additions and Improvements Projects Bank and Cash Balances Bank Deposits Maturing within Three Months Maturing after Three Months 729 864 133 20 17 85 40,321 40,576 17,862 4,125 (6,437) (6,365) (142) 9,043 479,931 85,173 565,104 (2,462) 562,642 708,317 400 15 0 289 22,764 23,468 17,800 3,572 764 0 18,807 626,148 37,799 663,947 44,370 TOTAL 623,841 &!a- 784,260 18

8. CURRENT LIABILITIES 1997 1996 $'OOO yooo Accounts Pavable and Accruals Amount Due to HKUST R and D Corporation Ltd. Backpayments in relation to Salary Revisions Bank Loans (Due Within One Year) Gratuities (Due Within One Year) Obligations Under Finance Lease (Due Within One Year) Other Accounts Payable and Accruals 0 79 17,862 17,800 60,772 30,149 3,267 3,175 107,799 98,722 0 302 271,064 321,825 460,764 472,052

9. LONG-TERM LIABILITIES Lls$Ela Bank Loans (Note) Balance as at 1 July Loans Drawn during the Year Repayment during the Year Amounts Repayable within One Year Transferred to Current Liabilities Balance as at 30 June SH3OEl%%S Deferred Gratuities (Due Beyond One Year) Obligations Under Finance Lease Repayable in the Second Year Note : 1997 1996 (60,772) 393,106 (30,149) 479,268 362,957 5,188 83 479,268 368,228 With the approval of the UGC, three term loan facilities of up to HIS150 million, HI0300.20 million and HK$250 million

were obtained by the University to finance respectively the construction of 66 additional senior staff quarters (Phase HA),

I56 additional senior staff quarters (Phase IIB) and additional graduate residences together with a University Center

(GRUC). 10. BUILDING FUND Balance as at 30 June 1996 1996%6FI3OEG Additions/Depreciation Written Off Additions Depreciation Written Off 3,033,981 73,539 (79,092) Balance as at 30 June 1997 1997 20 3,028,428

11. CAPITAL FUND Balance as at 30 June 1996 1996%6El3OEl;t$GB 377,950 Additions/Depreciation Written Off %B/M%RB Additions 172,644 Depreciation Written Off (220,949) Balance as at 30 June 1997 1997~6H3OB 329,645 The balance of the Capital Fund as at 30 June 1997, representing the net book value of other fixed assets, was funded by:

Government Non-Government Fundr funds Total Accumulated Cost 1,175,647 221,636 I,2977283 Less: Accumulated Depreciation 888,149 79,489 967,638 Balance as at 30 June 1997 (Note) 287,498 42,247 329,645 Note : The balance of Non-Government Funds included HK$l1,664,000 being net book value of other fixed assets conferred by the

HKUST Educational Trust. 12. GENERAL FUNDS General Donations University Development Fund Departmental Discretionary Fund TOTAL 1996 $'OOO Amount Received/ Transferred %'OOO 15,821 2,000 0 64,905 20,298 7,712 9,177 83,738 2,552 1,640 0 941 3,251 Investment/ Interest Income Amount Expended/ Transferred iii!B?lH/ $'OOO 3,440 1997 $'OOO 14,381 83,278 23,938 7,712 13,558 101,370 21

13. SPECIFIC FUNDS 1996 $'OOO Earmarked Grants Alterations, Additions & Improvements Block Allocation Research Grants 82,454 Language Enhancement Grant 1,528 Teaching Development Grant 5,145 Academic Exchanges with Institutions of Basic Teaching Equipment - Phase I Basic Teaching Equipment - Phase II Dangerous Goods Stores Fitting Out and Environmental Control of Engineering Laboratories Furniture and General Equipment Microfabrication Center Specialist Equipment and Facilities Others ml!3 Note: R&T: The unspent balances are to be carried forward to the next financial year and the shortfalls as at 30 June 1997 will be o.#set

against funding to be released by the UGC to the University in the nextfinancial year.

0 Amount Investment/ Amount Received/ Interest Expended/ Transferred Income Transferred $'OOO $'OOO $'OOO 18,099 0 19,836 76,804 0 58,593 8,800 0 7,280 5,341 0 3,951 631 0 403 1997 $'OOO (1,737) 100,665 3,048 6,535 228 89,127 109,675 0 90,063 108,739 47,368 0 (7,732) 24,700 447 0 2,937 0 (4,986) 21,100 1,307 4,522 (49,347) 76,900 0 0 3,062 13,348 37,082 22,118 (5,150) 169 278 2,861 76 21,129 (5,015) 3,488 2,341 71,752 (44,199) (18) 18 (10,006) 127,222 3,062 134,847 (14,569) 22

13. SPECIFIC FUNDS (Cont'd) 1996 $'OOO Amount Investment/ Amount Received/ Interest Expended/ Transferred Income Transferred $'OOO !yooo $'OOO $'OOO Desimated Donations and Endowment Recurrent Accounts Designated Funds Scholarships and Bursary Funds Student Loan Funds Designated Endowment Recurrent Accounts Other Oneratine Funds 41,028 75,765 2,857 56,548 63,102 Desienated Endowment Canital Accounti TOTAL 92,557 32,993 4,041 43,548 86,043 1,836 5,759 42 5,724 1,913 3 593 0 585 11 4,682 712 2,503 988 6,909 99,078 40,057 6,586 50,845 94,876 28,625 0 0 150 28,475 247,852 352,719 12,505 332,453 280,623 23

14. RESERVES AND PROVISIONS Building-related Reserves 39,364 Amount Extended $'000 0 vooo 15,341 1997 $'OOO 54,705 Non-building-related Reserves Computer Equipment General and Academic Equipment Motor Vehicles 28,249 37,978 944 56,020 67,171 Staff-related Reserves Contractual Passages Gratuities 2L%w Leave Pay 9,964 7,466 6,396 8,894 44,081 11,200 107,799 0 105,532 41,814 65,245 115,265 28,945 140,873 90,853 Student Residential Halls General Furniture and Equipment !2!zREGB Major Redecoration 2,205 6,046 4,899 0 K 0 0 0 0 5 921 1,617 Provisions for Research Projects ?m3E! El 13,150 2,000 31,437 6,847 19,997 Exchange Equalization 1,914 33,346 TOTAL 207,216 115,270 176,126 268,072 Note : The total amount of HK$I 76,126,OOO transferred from generalhpecljk funds included HIS1 11,928,OOO from general expenditure

and HK$64,198,000 f rom excess of income over expenditure. 1996 $'OOO Amount Transferred from/(to) General/ Saecific Fund@ 24

15. UGC TRIENNIUM EQUALIZATION ACCOUNT Balance as at 3 0 June 1996 Recurrent Account, 1996/97 $'OOO 80,815 6,666 1995/96 Excess Income Written Back 844 Over-provision of Outstanding Commitments for the Triennium 1995-98 8,790 Balance as at 30 June 1997 97,115 Under the block grant arrangement, the difference between funds released by the UGC plus other general income and the

actual amount spent/transferred by the University is dealt with through the UGC Triennium Equalization Account. The

balance as at 30 June 1997, representing the excess of the General Income over actual spending/transfers, is to be carried

2.5

1997 1996 $4' 000 Giiii Block Grant 1% Supplementary Grant for Additional Research Postgraduate Reserved Supplementary Grants for Salary Revisions Rates FEE INCOME Tuition Fees 9s Graduation Fees Application Fees 1,181,280 49,800 1,230,874 23,600 1,231,080 1,254,474 184,262 99,700 19,174 15,763 1,434,516 1,369,937 1997 %'ooo 1996 $'OOO 250,298 187,670 500 396 1,210 966 252,008 189,032 18. MISCELLANEOUS INCOME 1997 1996 Others 20,580 0 6,925 4,568 27,505 4,568 26

19. SPECIFIC INCOME AND EXPENDITURE 1997 1996 $'OOO $'OOO INCOME Earmarked Grants Capital Grants Donations and Designated Endowment Income Other Operating Income 109,675 78,560 130,284 180,972 48,643 48,357 108,272 129,954 396,874 437,843 EXPENDITURE Expenditure met from Earmarked Grants Expenditure met from Capital Grants Expenditure funded by Donations and Designated Endowment Income Other Operating Expenditure SURPLUS FOR THE YEAR TRANSFERRED (TO) RESERVES/PROVISIONS TRANSFERRED (TO) THE UGC HOLDING ACCOUNT TRANSFERRED (TO) GENERAL FUNDS TRANSFERRED (TO) SPECIFIC FUNDS 89,921 54,020 134,847 160,937 54,285 47,717 59,819 . 41,299 338,872 303,973 58,002 133,870 (6,847) (4,687) (142) 0 (18,092) (56,522) (32,921) (72,661) 0 0 27

20. GENERAL EXPENDITURE - ADMINISTRATION --BBZ - ?5@ Salaries and Gratuities/Superannuation - Senior Staff Salaries and Gratuities/Superannuation - Support Staff Audit and Legal Fees Financial Charges General Advertisements -RBE General Office Expenses Official Publications Postage Vehicle Running Expenses 4%a%lz 21. GENERAL EXPENDITURE - ACADEMIC -RB54: - &S Academic Departments Salaries and Gratuities/Superannuation - Senior Staff Salaries and Gratuities/Superannuation - Support Staff General Office/Laboratory Expenses Postgraduate Studentships Salaries and Gratuities/Superannuation - Senior Staff Salaries and Gratuities/Superannuation - Support Staff Book Binding General Office Expenses Library Books and Periodicals lliEBES~Bfg3T!J Library On-line Search Others Jw4 1997 47,320 1996 43,323 82,686 73,956 880 911 193 330 147 129 1,676 1,813 1,941 1,479 1,212 1,123 1,278 1,252 137,333 124,316 1997 1996 466,975 413,219 91,370 78,013 36,280 37,695 66,341 45,218 574,145 660,966 18,144 19,155 21,751 18,946 590 650 952 960 30,000 24,000 1,002 854 1,776 1,513 74,215 66,078 28

21. GENERAL EXPENDITURE - ACADEMIC (Cont'd) Research Grants !i&3%2% Computer Facilities Academic Support Centers Advanced Engineering Materials Facility EBIsti+4RBFfi Center of Laboratory Supplies Computer Aided Design and Manufacturing Facility Deans' Offices Educational Technology Center Electrical and Mechanical Services Facility Geotechnical Centrifuge Facility Glassblowing Facility Industrial Training Center Language Center Liquid Helium Facility Materials Characterisation and Preparation Facility Microelectronics Fabrication Facility Office of Contract and Grant Administration Research Center echnology Transfer Center 1997 1996 $'OOO $'OOO 27,468 20,933 55,008 50,848 2,377 381 12,428 3,691 34,284 16,388 7,438 46 37 8,451 28,661 230 12,754 10,151 12,984 4,948 22,734 4,850 5,118 1,254 0 22,526 2,666 28,742 15,969 4,355 0 0 8,864 23,908 0 9,849 7,814 12,476 4,557 19,759 4,724 5,783 187,951 173,246 1,005,608 885,250 29

22. GENERAL EXPENDITURE - MAINTENANCE OF PREMISES --BMZ - @M Salaries and Gratuities/Superannuation - Senior Staff Salaries and Gratuities/Superannuation - Support Staff Insurance Premiums Cleaning Expenses Furniture and Equipment General Office Expenses -&gfi9GZBH Minor Works Rates 2Gl Repairs and Maintenance Security Expenses Ri2Z& Staff Uniforms and Laundry Utility Charges 23. GENERAL EXPENDITURE - GENERAL EDUCATION Admission Expenses Jf3el32m Advisory Committees Meetings/Accreditation Association of East Asian Research Universities and a Europe Institute & a German Center Center for the Arts Consultancies Duty Visits and Staff Development Examinations Subscriptions to International Education Associations Workshops and Seminars 30 1997 16,053 91,085 79,373 2,211 2,183 10,096 8,774 3,618 477 1,647 1,351 24,495 22,621 19,174 15,763 53,984 42,625 8,276 7,229 303 306 48,848 41,116 1996 14,544 279,790 236,362 1997 1996 00 143 1,047 1,167 108 0 1,250 498 4,977 5,463 11,617 10,714 112 163 51 61 1,534 2,037 20,796 20,246

24. GENERAL EXPENDITURE - STUDENT FACILITIES AND AMENITIES Grants to Student Bodies Physical Education Facilities ff4eEm Student Affairs Offrce Student Health 25. GENERAL EXPENDITURE - MISCELLANEOUS Congregation Expenses Education Allowances Home Purchase Scheme Housing Benefits Medical and Dental Benefits Insurance Premiums Offkial Entertainment Passages icity Expenses ecruitment Expenses Removal Expenses and Hire of Vehicles Subsidies for Staff Buses Miscellaneous 1997 1996 415 391 252 249 32,383 28,258 4,648 4,100 37,698 32,998 1997 1996 %looo $'ooo 637 604 104 184 9,675 7,938 2,634 1,795 182,033 155,401 22,483 20,232 2,817 2,467 539 496 12,321 12,580 3,369 2,223 3,288 4,269 2,771 655 456 581 589 243,716 (120) 209,305 31

26. RECONCILIATION OF FUNDING SURPLUS TO NET CASH INFLOW FROM UNIVERSITY OPERATIONS FUNDING SURPLUS ADJUSTMENTS Acquisition of Fixed Assets Disposal of Other Fixed Assets Disposal of Hong Kong Supernet Ltd. tiEHong Kong Superne tgP.&&EJ 1995/96 Excess Income Transferred frorn/(to) Specific Income Investment/Interest Income Amount Transferred to Building Fund L ADJUSTMENTS DECREASE IN STOCKS INCREASE)/DECREASE IN PREPAYMENTS AND DEPOSITS (INCREASE) IN ACCOUNTS RECEIVABLE (INCREASE) IN THE UGC HOLDING ACCOUNT (DECREASE) IN ACCOUNTS PAYABLE AND ACCRUALS INCREASE/@ECREASE) IN DEFERRED GRATUITIES INCREASE/(DECREASE) IN RESERVES AND PROVISIONS 1997 $'OOO 128,720 176,147 (16) 0 844 (58,821) 93,912 212,066 340,786 135 21,953 (17,108) (515) (29,512) (5,188) (3,342) 1996 %'ooo 270,560 268,074 (5) (36,010) (17,421) (60,598) 35,061 189,101 459,661 149 (1,186) (16,233) (730) 18,575 2,483 4,924 (33,577) (29,168) NET CASH INFLOW FROM UNIVERSITY OPERATIONS 7k9emmm 32 307,209 430,493

27. CAPITALCOMMITMENTS As at 30 June 1997, capital works contracted for but not yet executed amounted to $3 1.39 million ( $184.77 million). (1996 : 184,770,OOOn;) 0 28. COMPARATIVE FIGURES 28. Certain comparative figures have been reclassified to conform to the current year's presentation. 33

目錄 司庫報告 核數師報告書 資產負債表 收支報表 現金流動表 財務報表附註 主要會計政策 固定資產 樓宇 在建工程 聯屬公司所欠貸款 投資 流動資產 流動負債 長期負債 樓宇基金 其他固定資產基金 一般基金 i 特定基金 儲備及備付金 大學教育資助委員會撥款結算賬 大學教育資助委員會經常撥款 各項收費 其他收入 特定收支 一般開支 行政 教學 校舍保養 一般教育 學生事務及福利設施 其他 資金盈餘與大學營運淨現金流入之對賬 資本承擔 比較數字

ii 香港科技大學 截至1997年6月30日止年度 財務報表 司庫報告 1996/l997年度為大學成立五週年。大學經歷了 起步及急速發展的階段，現將進入鞏固期。本 年度之財政結算顯示大學的活動繼續平穩增 長。於1997年6月30日，總資產淨値為 4,105,000,000元〔1995/96年度為 4,031,006,000元〕。 一般收支 本年度一般收入為1,796,000,000元，較去年 增長9%〔1995/96年度為1,645,000,000元〕。 其中80%即1,434,000,000元是由政府經大學 教育資助委員會〔教資會〕撥出，包括整筆撥款 1,231,000,000元，三項合共184,000,000元 的薪酬調整增補撥款以支付因跟隨公務員薪 金調整而產生的額外支出及19,000,000元以 償付大學所支出的物業差餉及地租。餘下的一 般收入包括學費250,000,000元及其他收入 112,000,000元。 大學的擴展速度雖已減緩，開支方面仍持續增 長。主要由教資會撥款支付的一般開支為 1,725,000,000元，較去年增長14%(1995/96 年度為1,508,000,000元〕，主要原因包括： 薪金調整、通貨膨脹及實際學生人數由 1995/96年度的6,077人增至1996/97年度的 6,720人。1,725,000,000元的一般開支包 括：行政費用137,000,000元(8%);教學及輔 助部門的開支1,006,000,000元(58);校舍 保養費用280,000,000元(16%)及其他開支 302,000,000元。 除轉撥至儲備/備付金外，本年度的一般收入 高於一般開支的剩額為6,600,000元。根據教 資會所訂的一般指引，該項盈餘將結轉至下年 度使用。 指定撥款 大學獲教資會撥出共109,000,000元的指定撥 款〔1995/96年度為78,000,000〕，其中 77,000,000元用於資助研究活動； 18,000,000元為一整筆撥款，用作校舍改建、 加建、維修及改善工程；其餘14,000,000元 用作其他指定活動，包括語文培訓、教學發展 及與中國高等教育院校之間的學術交流等 等。 建設撥款 教資會撥出共130,000,000元的建設撥款予大 學〔1995/96年度為180,000,000元〕。該撥款 是用作購置基本教學用途及專用之設備及設 施，興建實驗室及設施和購置一般傢具及設 備。隨著大部分建設項目相繼完成，有關的撥 款及開支亦逐漸減少。 捐款、指定基金及其他營運基金 大學一直獲得穩定的捐款及指定基金。本年度 的捐款及指定基金，加上投資及利息的收入共 48,600,000元〔1995/96年度為48,300,000 元〕。其中74%用於資助研究活動，13%用作奬 學金、助學金及學生貸款基金，7%用作指定留 本基金，其餘6%用作一般用途。 大學由自籌資金活動及研究合約所得的其他 營運收入為108,000,000元〔1995/96年度為 130,000,000元〕。若剔除1995/96年度內的兩 項特殊收入〔即轉撥自超額之一般收入 17,000,000元及出售Hong Kong Supernet Limited的收入36,000,000元〕，其他營運收 入於本年度有顯著增長。 於1997年6月30日，捐款、指定基金及其他 營運基金的總額達288,000,000元〔1995/96 年度為252,000,000元〕。 銀行貸款支付的建築項目 經教資會批准，大學取得三項分別最高達 150,000,000元， 300,000,000元及 250,000,000元之銀行貸款，增建66個高級教 職員宿舍〔第IIA期〕， 156個高級教職員宿舍 〔第IIB期〕及研究生宿舍連大學中心。第IIA 期教職員宿舍於1995年7月落成，而第IIB 期教職員宿舍及研究生宿舍連大學中心於 1997年1月落成。年內，大學共動用 222,000,000元的貸款額並已償還75,000,000 元。於1997年6月30日，銀行貸款總結餘為 540,000,000元〔1995/96年度為393,000,000 元〕。 科大新翼 大學學術大樓擴建工程已開始動工〔科大新 翼〕。新翼將成為研究與發展及各技術轉移單 位的所在地。該項工程預期於1999年初竣工。 共110,000,000元的建築費用將由非教資會資 金及大學所籌集的各項捐款來支付。 投資 年內，共250,000,000元的銀行存款已轉交予 投資經理投資於一個固定收入的投資組合。該 項轉撥導致大學的投資總額由1995/96年度的 224,000,000元增加至1996/97年度的 494,000,000元。 展望 大學將踏入鞏固期。展望1998-2001三年度， 由於教資會要求各高等院校提高成本效益，政 府的撥款將會縮減。此外，教資會所批准的大 學學生人數將由1997/98年度的7,013人減少 至2000/01年度的6,705人。大學已於1996/97 年度開始實施一系列應對措施以降低成本、提 高效益。大學已盡可能在不影響教學素質的情 況下，實施有關的措施。大學一貫宗旨都是於 努力改進成本效益的同時，亦保持高素質的教 學、研究及社會服務。

已簽署 大學司庫 劉華森博士，太平紳土 1997年11月14日 核數師報告書

德勤 關黃陳方 會計師行

致：香港科技大學校董會 本核數師行已完成審核刊於第7首至第 33頁的財務報表，該等財務報表乃按照香 港普遍採納之會計原則編製。 校董會及會計師的個別責任 貴校董會須負責編製眞實與公平的財務 報表。在編製該等財務報表時，貴校董 會必須貫徹採用合適的會計政策。 本行的責任是根據本行審核工作的結 果，對該等財務報表表達獨立的意見，並 向貴校董會作出報告。 意見的基礎 本行是按照香港會計師公會頒佈的核數 準則進行審核工作。審核範圍包括以抽查 方式查核與財務報表所載數額及披露事 項有關的憑證，亦包括評估貴校董會於 編製該等財務報表時所作的重大估計和 判斷，所釐定的會計政策是否適合大學的 具體情況，及有否貫徹應用並足夠地被露 該等會計政策。 本行在策劃和進行審核工作時，均以取得 一切本行認為必需的資料及解釋為目 標，使本行能獲得充份的憑證，就該等財 務報表是否存有重要錯誤陳述，作出合理 的確定。在表達意見時，本行亦已衡量該 等財務報表所載的資料在整體上是否足 夠。本行相信，本行的審核工作已為下列 意見建立了合理的基礎。

意見

本行認為上述的財務報表均眞實與公平 地反映香港科技大學於1997年6月30日 的財務狀況及截至該日止年度的收入高 於開支的盈餘和現金流動。

已簽署 德勤．關黃陳方會計師行 香港執業會計師 1997年1l月14日 財務報表附註 1997年6月30日 1. 主要會計政策 1.1 會計基準 大學採用會計基準為將資金按其性 質或特定用途分類，以確保遵守有 關資源之使用限制及規限。所有財 務交易均按該等分類以應計基準入 個別之資金賬內。 大學設有旨在透過教學及研究以推 動及發展教育與學術之香港科大教 育信託基金，及兩個設立於獨立信 託契約下之公積金計劃。其賬目已 個別編製及審核，並無列入本財務 報表。 由於香港科大研究開發有限公司之 收支金額並不多，而香港科大地產 有限公司則為無營業之公司，故大 學並無於財務報表綜合以上兩間全 資附屬公司之財務活動。 1.2 開支 核准開支內包括已向供應商發出訂 單但於結算日仍未收取之貨品或服 務。 1.3 樓宇及在建樓宇 在建工程按成本在樓宇基金內撥作 資本，惟不計算折舊。於樓宇落成 並正式移交大學後，原本記錄於在 建工程內之成本會被重新分類為樓 宇，並按直線法計算折舊，依照使 用年限以每年2%之速度撇銷在樓宇 基金內已資本化之樓宇成本。 大學座落於西貢約66公頃之土地， 由政府按名義租金批出，為期58 年，至2047年6月30日止。該土地批 授屬經營租賃性質，並無列入本財 務報表。 1.4 其也固定資產 其他固定資產之成本，基於已批准 之訂單，均於支銷年度首先在有關 資金賬戶內開銷，然後按付款基準 在其他固定資產基金內資本化。其 他固定資產按直線法計算折舊，依 照使用年限以下列之速度撇銷在其 他固定資產基金內已資本化之資產 成本： 車輛 每年25% 計算機、影音、保養、 教學及體育設備 每年25% 傢具及其他設備 每年20% 其他固定資產包括由香港科大教育 信託基金所授予之資產。由融資租 賃方式所租賃之資產會以租賃時最 低付款額之現値，將其資本化，並 按以上所述之同樣方式，或以融資 租賃期為期，兩者之中較短者計算 折舊。 1.5 投資 上市及非上市投資按成本入賬。已 實現與應計收益及投資費用已被列 入收支報表內。 1.6 存貨 自籌資金業務持作轉售之存貨按成 本及可變現淨値兩者較低者入賬。 成本是以平均成本法計算。可變現 淨値乃參照實際或估計售價減去市 場推廣、銷售及分銷之有關成本而 計算。其他存貨於購入時在有關基 金內撇銷。 1.7 圖書館書書籍及期刊 圖書館書籍及期刊於購入時在有關 基金內撇銷。 1.8 捐贈、捐贈之服務及捐贈之實物 捐贈按應計基準入賬。除非捐贈之 貨幣利益重大並可合理評估，否則 捐贈之服務及捐贈之實物並無列入 財務報表。 1.9 稅項 大學根據香港稅務條例第88條之規 定獲豁免繳付稅項。 1.10 等同現金 等同現金乃三個月內到期之短期投 資減去三個月內到期之銀行借貸， 該等短期投資可隨時變現為已知數 額之現金。 27. 資本承擔 於1997年6月30日，已訂約但未施行 之建設工程總値31，390，000元 (1996：184,770,000元〕。 28. 比較數字 若