Running a self-financial non-profit institution means standing on our own feet and in the meantime finding the energy to go forward. The OUHK was able to make great progress in this regard during the year. By implementing sound financial management principles, we ensured we are well positioned to thrive in an increasingly competitive self-financing higher education sector. Our operating activities were mainly financed by a combination of tuition fee income, ad hoc grants from the Government and philanthropic contributions from the community. We managed our resources prudently and efficiently while our business stayed sensitive and adaptable to changing environments. We also made conscious decisions and took timely actions to capitalise on market opportunities and enhance our facilities and boost our capacity for our future development.

Our student enrolment during the year totalled around 18,000. There was a slight decrease in the number of distance learning students, while the number of full-time face-to-face students once again increased. To address the decline in the distance learning sector, meet changing needs and provide better support to our students, we increased our programme offerings and educational resources and continued to invest in our technological infrastructure and physical facilities. Keeping open access and students’ interest at our heart, we maintained our tuition fees at a reasonable, affordable and yet competitive level, without compromising the quality of our teaching and learning.

Turnover

The fee income of the OUHK (Group) for the year amounted to HK$616.0 million, an increase of 2.4% on the previous year’s figure of HK$601.3 million. The rise was mainly due to a small increase in the number of enrolments for face-to-face programmes and other agency programmes.

Expenditure

The OUHK (Group) spent a total of HK$620.9 million, compared with HK$581.0 million in 2011-2012. The increase was mainly due to higher staff costs resulting from a pay rise in line with the civil servant pay adjustment, and an increase in staff numbers in order to deliver more academic programmes as well as to enhance support services and academic quality.

Interest and investment income

Amidst a volatile financial market, the OUHK (Group) implemented a prudent investment strategy that allowed it to achieve a gain of HK$72.4 million in interest and investment income during the year.

Surplus for the year, funds and reserves

The OUHK (Group) recorded an overall surplus of HK893.7 million during the year, compared with a surplus of HK$53.6 million in the previous year. This was mainly due to the proceeds collected from the sale of the learning centre in Sheung Wan. The total funds and reserves of the University (Group) stood at HK$2,538.0 million, as at 31 March 2013, compared with HK$1,647.5 million on the same date of the previous year.

Donations and matching grants

The University received matching grants of $64.5 million under the Government’s Sixth Matching Grant Scheme, as a result of a total of $73.6 million that we received in eligible donations from a number of alumni, students, staff and friends in the community. Except for those with designated purposes, the matching grants and donations will be used to finance the development of our campus and other endeavours to enhance academic quality, develop courses and programmes and support our students.

During the year, we also received donations amounting to HK$5.9 million for student scholarships and bursaries. These came from a number of philanthropists, corporations, charitable foundations and friends.

Funding for course development

As of October 2012, we offered 256 postgraduate, degree and sub-degree programmes. A total of HK$13.4 million was approved for the development and updating of 42 courses.

Retirement schemes

The OUHK provides two retirement schemes for staff, namely the Occupational Retirement Schemes Ordinance (ORSO) Scheme and the Mandatory Provident Fund (MPF) Scheme. At the year-end, the ORSO Scheme had 550 members and the MPF Scheme had 1,484 members. Their respective funds amounted to HK$397.4 million and HK$48.6 million.

Chung Hau Street project

The building works for the Chung Hau Street project in Ho Man Tin are making steady progress. Its 12-storey building is scheduled for completion in early 2014, and it will offer fulltime programmes in creative arts, testing and certification, and medical services for more than 2,400 students. The new buildings will incorporate environmentally conscious design features, energy-saving and high-quality facilities and building materials, in order to reduce their electricity consumption to meet the very high green building standards under BEAM Plus.

While the project, provisionally named as the ‘New College’, demonstrates our commitment to providing high-quality education to more students in Hong Kong, the University faces the challenge of rising construction costs. These have surged from the original estimate of $634.0 million to the latest estimate of $710.0 million. To support the project, the University has secured an interest-free loan of HK$317.0 million from the Government. The Hong Kong Jockey Club Charities Trust has also given us a grant of HK$200.7 million, of which HK$190.0 million will be used to fund the construction of the project, and the remaining HK$10.7 million will be used to launch a Jockey Club Community Healthcare Education Programme. The University is also grateful to a number of long-standing supporters for their generous donations towards the project.

New learning centre and headquarters for LiPACE

To cope with the rapid development of the Li Ka Shing Institute for Professional and Continuing Education (LiPACE) in recent years, the University has acquired five floors of a new commercial property in Kwai Chung at a total cost of about HK$860 million. The Kwai Hing Learning Centre (KHLC) will serve as a permanent learning centre for LiPACE and it will provide additional teaching facilities for our other programmes. The acquisition process was completed in June 2013 and the centre will be ready for use in September 2013. To finance the project, the University has disposed of its Island Learning Centre (ILC) at Shun Tak Centre in Sheung Wan. The replacement of the ILC by the KHLC will result in an almost threefold increase in floor space.

Mainland activities

The University’s subsidiary in Shenzhen achieved a profit after tax of HK$1.9 million for the year, compared with HK$4.1 million in the previous year. The subsidiary declared a total dividend of HK$3.0 million for the year.

Outlook

The prevailing inflationary situation will continue to pose challenges for our operations under the self-sustaining model. Keeping student fees at a reasonable, affordable and yet competitive level is always a challenge. In the face of greater competition resulting from an increase in the number of private and self-financing institutions, we are dedicated to exploring new initiatives to enhance the OUHK’s teaching and learning activities and enriching our programmes to cope with the diverse learning needs of our students.

The commissioning of the New College campus and the new learning centre at Kwai Chung in the coming months demonstrates our commitment to offering more new programmes and courses that will help to nurture talents in the community. We will continue to adhere to prudent financial management practices and maintain a balanced operating budget to support our future development.