Sir Edward Youde Memorial Fund

Sir Edward Youde Memorial Fund Report of the Board of Trustees for the Period 1 April 2006 to 31 March 2007

The Sir Edward Youde Memorial Fund was established in 1987 with donations by the Hong Kong community to commemorate the governorship of Sir Edward Youde (1982- 1986). It is administered in accordance with Chapter 1140 of the Laws of Hong Kong for the purpose of providing for and encouraging the education or learning of, or research by, the people of Hong Kong.

2. The Fund is vested in a Board of Trustees, the membership of which during the year under review was as follows –

Mr. Luk Koon-hoo, Roger, BBS, JP (Chairman) Lady Youde The Secretary for Home Affairs (ex officio)

Ms Yau Siu-fee, Sylvia, JP Mr Ip Sik-on, Simon, JP (up to 31.8.2006) Mr KWOK Chi-hang, Lester, JP (from 15.12.2006)

3. Secretarial services to the Board of Trustees are provided by the Trust Funds, Temples and Cemeteries Joint Secretariat, which also maintains the books of accounts for the Fund. HSBC Investments Holdings (Bahamas) Limited advises the Board on investments, and the Director of Audit is appointed by the Chief Executive as the auditor of the Fund’s accounts.

4. Grants from the Fund are determined by the Sir Edward Youde Memorial Fund Council, the membership of which during the year under review was as follows –

Dr Wong, Lawrence T (Chairman) Lady Youde The Secretary for Education and Manpower (ex officio) Professor Lee Pui-leung, Rance, JP Mrs Ling Lee Ching-man, Eleanor, SBS, JP Professor LEE Chack-fan, SBS, JP Ms HO Suk-yin, Junia, JP

5. Secretarial services to the Council are provided by the Student Financial Assistance Agency. /During… - 2 -

6. During the year the following categories of the Sir Edward Youde Memorial Awards were granted – HK$ HK$

For Fellowships Local 20 @ $30,000 600,000 Overseas 13 totalling 2,625,000 3,225,000

For Scholarships Local 73 @ $20,000 1,460,000 Overseas 8 totalling 1,856 ,000 3,316,000

Medals (including a medal, a certificate and a Cash Prize of $5,000) 6 totalling 31,680

Awards for Disabled Students 21 totalling 494,456

Prizes for senior secondary students 789 @ $1,000 789,000

Sponsorship for the Young Friends of the 2007 Hong Kong Arts Festival 400,000

Awards for Self-improvement for Working Adults 5 @ $5,000 25,000

Outstanding Apprentice Awards 2 @ $5,000 10,000

Distinguished Lecture Series 54,517 ______8,345,653 ======7. The audited Financial Statements of the Fund is produced at the Appendix.

(Philip Po-him Wu) Chairman Board of Trustees of the Sir Edward Youde Memorial Fund 27 September 2007 Appendix

SIR EDWARD YOUDE MEMORIAL FUND

BALANCE SHEET AS AT 31 MARCH 2007

Note 2007 2006 HK$ HK$

CURRENT ASSETS Financial assets at fair value through 4 133,122,704 112,567,029 profit or loss Accounts receivable 5 841,161 984,278 Prepayment - 47 Student interest-free loan 285,300 378,700 Bank deposits 104,632 18,206,425 Cash at bank 230,282 154,461

134,584,079 132,290,940

CURRENT LIABILITIES Provision for staff gratuity 6 24,590 19,655 Provision for untaken leave 4,498 4,265 Accounts payable 7 169,256 7,417,813

198,344 7,441,733 ______NET CURRENT ASSETS 134,385,735 124,849,207 ======

ACCUMULATED FUND Capital 84,387,824 84,377,824 Accumulated surplus 49,997,911 40,471,383 ______134,385,735 124,849,207 ======

The accompanying notes 1 to 9 form part of these financial statements.

(Philip Po-him Wu) Chairman Board of Trustees of the Sir Edward Youde Memorial Fund 27 September 2007

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INCOME AND EXPENDITURE ACCOUNT FOR THE YEAR ENDED 31 MARCH 2007

Note 2007 2006 HK$ HK$

INCOME Dividends - 1,233,580 Interest 8 2,964,016 3,316,247 Gains on disposal of financial assets at 217,793 7,264,033 fair value through profit or loss Net unrealised gains on financial assets 14,453,609 - at fair value through profit or loss Refund of grants 950,952 277,000 Other income - 187

18,586,370 12,091,047

EXPENDITURE Fellowships, scholarships, prizes and 8,345,653 9,404,586 memorial medals/awards Net unrealised losses on financial - 768,446 assets at fair value through profit or loss Staff costs 279,417 234,525 Investment management fees and other 429,912 429,233 operating expenses Exchange losses 4,860 20,335

9,059,842 10,857,125 ______SURPLUS FOR THE YEAR 9,526,528 1,233,922 ======

The accompanying notes 1 to 9 form part of these financial statements. - 4 - SIR EDWARD YOUDE MEMORIAL FUND

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH 2007

Accumulated Capital surplus Total HK$ HK$ HK$

Balance at 1 April 2005 84,370,944 39,237,461 123,608,405

Surplus for the year 2005-06 - 1,233,922 1,233,922

Donation received during the year 6,880 - 6,880 2005-06 ______Balance at 31 March 2006 84,377,824 40,471,383 124,849,207

Donation received during the year 10,000 - 10,000 2006-07

Surplus for the year 2006-07 - 9,526,528 9,526,528 ______Balance at 31 March 2007 84,387,824 49,997,911 134,385,735 ======

The accompanying notes 1 to 9 form part of these financial statements. - 5 - SIR EDWARD YOUDE MEMORIAL FUND CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2007

2007 2006 HK$ HK$

CASH FLOWS FROM OPERATING ACTIVITIES Surplus for the year 9,526,528 1,233,922 Dividends - (1,233,580) Interest income (2,964,016) (3,316,247) Net unrealised (gains)/losses on financial assets at fair value (14,453,609) 768,446 through profit or loss Gains on disposal of financial assets at fair value (217,793) (7,264,033) through profit or loss Decrease/(Increase) in accounts receivable 58,452 (59,074) Decrease/(Increase) in prepayments 47 (47) Decrease in student interest-free loan 93,400 63,850 Increase in provision for staff gratuity 4,935 19,225 Increase in provision for untaken leave 233 3,497 Increase in accounts payable 64,551 19,491 NET CASH USED IN OPERATING ACTIVITIES (7,887,272) (9,764,550)

CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of financial assets at fair value through profit (25,519,297) (73,158,330) or loss Proceeds from disposal of financial assets at fair value 12,321,916 84,502,402 through profit or loss Dividends received 243,134 1,230,241 Interest received 2,805,547 3,205,944 NET CASH (USED IN)/FROM INVESTING ACTIVITIES (10,148,700) 15,780,257

CASH FLOWS FROM FINANCING ACTIVITIES Donation received 10,000 6,880 NET CASH FROM FINANCING ACTIVITIES 10,000 6,880

NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (18,025,972) 6,022,587 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 18,360,886 12,338,299 CASH AND CASH EQUIVALENTS AT END OF YEAR 334,914 18,360,886

ANALYSIS OF THE BALANCES OF CASH AND CASH EQUIVALENTS Bank deposits with original maturity within three months 104,632 18,206,425 Cash at bank 230,282 154,461 334,914 18,360,886

The accompanying notes 1 to 9 form part of these financial statements.

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NOTES TO THE FINANCIAL STATEMENTS

1. GENERAL

The financial statements of the Sir Edward Youde Memorial Fund (the Fund) are prepared in accordance with section 14(1) of the Sir Edward Youde Memorial Fund Ordinance (SEYMFO - Cap. 1140). The Fund was established in 1987 for the general purpose of providing for and encouraging the education or learning of, or research by, the people of Hong Kong and, in particular, for making grants, or loans with or without interest:

(a) for the furtherance of education, learning or research inside or outside Hong Kong; and

(b) to educational institutions within Hong Kong for the furtherance of education, learning or research,

in accordance with section 6 of the Sir Edward Youde Memorial Fund Ordinance.

The address of the Fund’s principal place of business is 22nd Floor, Wu Chung House, 213 Queen’s Road East, Wan Chai, Hong Kong.

2. SIGNIFICANT ACCOUNTING POLICIES

(a) Statement of compliance

The financial statements have been prepared in accordance with applicable Hong Kong Financial Reporting Standards (HKFRSs) issued by the Hong Kong Institute of Certified Public Accountants and accounting principles generally accepted in Hong Kong.

(b) Basis of preparation

The financial statements have been prepared on an accrual basis and under the historical cost convention except that financial assets at fair value through profit or loss are stated at fair value as explained in the accounting policy set out in note 2(d) below.

(c) Adoption of new/revised HKFRSs

The Fund has adopted all new/revised HKFRSs which are effective and relevant to the Fund for the current accounting period.

The Fund has not early applied any HKFRS that is not yet effective for the current accounting period. The Fund has considered that these HKFRSs may not have a significant impact on its results of operations and financial position.

- 7 - (d) Financial assets at fair value through profit or loss

Financial assets classified as held for trading are included in the category “financial assets at fair value through profit or loss”. Financial assets are classified as held for trading if they are acquired for the purpose of sale in the near term. Financial assets under this category are carried at fair value based on their quoted market prices at the balance sheet date. Changes in the fair value are included in the income and expenditure account in the period in which they arise. Gains or losses on disposal are also recognised in the income and expenditure account.

(e) Foreign currency translation

Hong Kong dollar is the currency of the primary economic environment in which the Fund operates. Foreign currency transactions during the year are translated into Hong Kong dollars at the exchange rates ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated into Hong Kong dollars at the exchange rates ruling at the balance sheet date. Exchange gains and losses are dealt with in the income and expenditure account.

(f) Revenue recognition

Interest income is recognised on an accrual basis. Dividend income is recognised when the Fund’s right to receive payment is established.

(g) Cash and cash equivalents

Cash and cash equivalents comprise cash on hand, demand deposits and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value, having been within three months of maturity when acquired.

3. RISK MANAGEMENT

The Fund’s major financial instruments include financial assets at fair value through profit or loss. The main risks associated with these financial instruments are market risk and credit risk. Market risk is the risk that changes in market variables such as interest rates, equity prices and exchange rates may affect the fair value or cash flows of a financial instrument. Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. To minimise the potential adverse effects of such risks, the Board of Trustees monitors the Fund’s investment management activities and stipulates the investment guidelines and strategy of the Fund. Operating within the investment guidelines and strategy endorsed by the Board of Trustees, the fund manager (appointed under section 7(b) of the SEYMFO) conducts the day-to-day investment management and risk management activities of the Fund and provides professional advice in relation to the investment of funds.

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4. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS Equity Funds – at fair value Unlisted 83,268,657 69,358,806 Debt Securities – at fair value Listed in Hong Kong 11,094,800 11,408,300 Listed outside Hong Kong 38,759,247 31,799,923

49,854,047 43,208,223 ______133,122,704 112,567,029 ======

5. ACCOUNTS RECEIVABLE Interest 826,785 668,316 Interest purchased on bonds 14,015 9,226 Dividends - 243,134 Refund of scholarships - 63,602 Miscellaneous 361 - ______Balance at 31 March 2007 841,161 984,278 ======

6. PROVISION FOR STAFF GRATUITY Balance at 1 April 2006 19,655 430 Provision for the year 23,657 20,511 Payments for the year (18,722) (1,286) ______Balance at 31 March 2007 24,590 19,655 ======

7. ACCOUNTS PAYABLE Grants, fellowships and scholarships 54,517 - Purchase of financial assets at fair value - 7,313,108 through profit or loss Investment management fees 85,669 79,087 Miscellaneous 29,070 25,618 ______Balance at 31 March 2007 169,256 7,417,813 ======- 9 - 2007 2006 HK$ HK$

8. INTEREST Interest on bank deposits 311,947 588,705 Interest on bonds 2,652,069 2,727,542 ______2,964,016 3,316,247 ======

9. COMMITMENTS

As at 31 March 2007, the financial commitments for approved overseas fellowships and scholarships subject to the successful completion of studies and reapplication for the awards pending payment were HK$3,960,084 (2006: HK$4,480,000).

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