As a self-financing, non-profit-making university in Hong Kong, the OUHK has made continuous efforts to fulfil its mission of making higher education available to students. The importance of offering sustainable and affordable high-quality programmes and courses has always been at the centre of the University’s financial management, amid the challenges of decreasing student numbers on distance learning programmes and increasing operating costs.

Nowadays, universities are operating in an ever-changing environment, and the OUHK is no exception. To cope with the changes and to further enhance the quality and delivery of programmes and courses, the University has been investing in such areas as physical facilities improvement, an innovative student-oriented learning environment and various information technology projects. Financing all these projects would not have been possible without generous donations from friends, alumni and staff of the University, government grants – including the first ever Matching Grant of $68.6 million from the Hong Kong Government – and an encouraging level of interest and investment income.

After witnessing a few years of decline in the number of distance learning students, the trend appears to have levelled off and there were signs of a slight improvement in the enrolment figures for new students in 2007–08. The number of students on full-time programmes has also continued to climb during the year. These developments have made positive contributions to a steady stream of income to enable the University to fulfil its mission and further enhance its programmes.

Turnover

The fee income of the OUHK Group amounted to $439.9 million, as compared with $387.3 million in the previous year, representing an increase of 13.6%. This was mainly due to the increase in student numbers of face-to-face and non-credit bearing courses.

Expenditure

The total operating expenditure of the OUHK Group was $410.3 million, as compared with $385.2 million in 2006–07. The increase arose mainly from additional direct costs and overheads to cope with the expanding full-time student population.

Interest and investment income

Owing to the volatile investment market in the last quarter of the financial year, the OUHK Group recorded a decrease in interest and investment income by 9.7% to $72.9 million, as compared with $80.8 million in the previous year.

Surplus for the year, and funds and reserves

In spite of a drop in investment income, an overall surplus of $197.8 million for the OUHK Group was achieved, as compared with $77.8 million in the previous year. The total funds and reserves of the OUHK Group as at 31 March 2008 stood at $1,232 million, as compared with $1,035 million in 2006–07.

Course development

A total of $26.6 million was approved for the development of 57 new courses. The total number of postgraduate, degree and sub-degree programmes stood at 191 in October 2007.

Retirement schemes

In compliance with the Occupational Retirement Schemes Ordinance (ORSO) and the Mandatory Provident Fund Schemes Ordinance (MPF), the OUHK has been providing two retirement schemes for staff. At the year end, the 443-member ORSO Scheme and the 842-member MPF Scheme had a fund size of $301.1 million and $25.7 million respectively.

Mainland activities

The University’s operations in Shenzhen achieved a profit after tax of $4 million for the year, as compared with $4.7 million in the previous year. The total income dropped by 7.1% to $10.5 million, while the total cost increased by 1.7% to $6 million. The subsidiary declared an interim dividend of $3 million, the same as in 2006–07.

Outlook

2007/08 was certainly a rewarding year in terms of financial performance. Looking ahead, the likely increase in the number of institutions offering self-financed degree courses and top-up degree places will have a significant impact on the University’s operations. The increase in the cost of living may also lead to an upsurge in operating costs. Positive steps will be taken to strike a balance between maintaining student fees at an affordable level and containing growth in expenditure, reinforcing the key management objective of maintaining a balanced operating budget.