Finance

The OUHK is a self-financing tertiary institution established by the Government back in 1989. Tuition fees have all long been its main source of income, which is prudently deployed to meet the resource requirements arising from operating activities. In all these years, ardent support has been received from donors and the Government to provide necessary funding for various types of capital, research and consultancy projects. To uphold the principle of offering sustainable and affordable high-quality programmes and courses to meet the education needs of the community, the University has adopted prudent but flexible financial management strategies to ensure that sufficient resources are channelled to support its many programmes and activities and to ensure long-term sustainability.

During the year, our student enrolment both to the distance learning and the face-to-face modes of programmes during the year has come to about 19,000. Mainly due to the adoption of a new academic calendar with three terms for student enrolment, there was a one-off increase in the number of credits taken by distance learning students, even though the actual student number has slightly dropped. On the other hand, the number of full-time face-to-face students has increased, amidst a situation where the number of eligible students has levelled off. To meet the changing needs of students, the University has enriched its programme offerings and educational resources, and improved the provision as well as the quality of physical facilities to strength teaching and learning support. Notwithstanding the pressure of inflation and resource requirements arising from improvement measures, the University continues to maintain student fees at a reasonably low level amongst self-financing institutions in Hong Kong, while maintaining the high quality of education.

The fee income of the OUHK (Group) for the year amounted to HK$955.2 million, an increase of 22.8% on the previous year’s figure of HK$777.7 million. The gain is mainly due to the increase in the enrolment in the face-to-face programmes and a higher number of credits recorded for the distance learning programmes.

The OUHK (Group) spent a total of HK$871.3 million, compared with HK$812.8 million in 2014-2015. The increase was mainly due to higher staff costs resulting from the annual pay adjustment, and higher depreciation charges for the physical facilities and the need to enhance support services.

The volatile financial market in the year has put pressure on the University’s investment portfolios and hence returns. Under the stewardship of the Council and Finance Committee, the University has reviewed its investment strategy and guidelines from a risk management perspective. The review once again confirmed that a long-term perspective will continue to be adopted in its investment strategy and portfolio performance should be more vigorously and frequently monitored. In the year, the OUHK (Group) recorded a loss of HK$10.2 million in interest and investment income, the first time recording an investment loss in the past seven years.

The University received a total of HK$11.6 million from the Education Bureau under the Government’s Scheme for Subsidy on Exchange (SSE) and Scheme for Subsidy on Exchange to ‘Belt and Road’ Regions (SSEBR). Under the scheme, eligible students could be better supported in their participation in exchange activities outside Hong Kong, especially in those ‘Belt and Road’ regions, aiming to improve our students’ understanding of countries in the regions from political, economic and cultural perspectives.

During the year, we have also received donations and Government grants amounting to HK$15.3 million for student scholarships and bursaries. These came from the Government and a number of philanthropists, corporations, charitable foundations and friends.

As of September 2015, we offered over 200 postgraduate, degree and sub-degree programmes in different modes of study. A total of HK$5.1 million was approved in the year for the development and updating of course materials.

The University’s subsidiary in Shenzhen achieved a profit after tax of HK$4.1 million for the year, compared with HK$3.5 million in the previous year. The subsidiary declared a total dividend of HK$5.9 million to the University, as a risk management measure, in order to reduce the subsidiary’s cash holdings.

The OUHK (Group) recorded an overall surplus of HK$71.8 million in 2015-16, compared with a deficit of HK$3.7 million in the previous year. The substantial improvement is not only due to the increase in enrolment and hence fee income collected, but also due to the concerted effort of members of the senior management team to achieve budget savings through consolidating the outcomes of various capital projects and new academic programmes, on the eve of a progressive decrease in secondary school leavers. The total funds and reserves of the University (Group) stood at HK$2,395.9 million, as at 31 March 2016, compared with HK$2,324.1 million on the same date of the previous year.

The OUHK provides two retirement schemes to staff, namely the Occupational Retirement Schemes Ordinance (ORSO) Scheme and the Mandatory Provident Fund (MPF) Scheme. At the year end, the ORSO Scheme had 672 members and the MPF Scheme had 1,401 members. Their respective fund size came to HK$396.2 million and HK$64.9 million.

The year also witnesses the University’s initiative to seek Government approval for a block of land for another campus building. The OUHK sees the need for additional physical space to meet the community’s growing expectation in nurturing talent and training professionals to meet Hong Kong’s need. The proposed campus site, located at Sheung Shing Street, Ho Man Tin right across the road opposite to our Ho Man Tin main campus, is the only remaining site in the vicinity for educational purposes. It forms a natural extension to our main campus and enables us to rationalize the use of the University’s space which is now scattered in a few buildings in Ho Man Tin. The University has plans on the drawing board to embark on new educational initiatives that are fully aligned with the Government’s policy priorities and community needs, a conscious decision to counteract the anticipated decrease in student number in the coming years.

Starting from the 2015/16 academic year, the OUHK has implemented a new tuition fee structure in which the fee levels of full-time programmes will remain unchanged, largely during the length of the students’ stay with the University. While students and parents will have a much better understanding of the resources required to complete their study, the University will also have a more secure, stable and predictable stream of income to facilitate its mid-range planning process.

The Study Subsidy Scheme for Designated Professions / Sectors (SSSDP) was implemented in September 2015. Government subsidies are provided to the University for 350 undergraduate places for three cohorts in such designated programmes as nursing, testing and certification and animation. The scheme brings positive impact to the long-term development of the University and also provides additional resources to enhance the academic quality of the programmes and students’ learning experience. Together with the Government subsidies, the University is committed to investing around HK$300.0 million to improve the staff-to-student ratio, enhance student and other support services, upgrade laboratories and renovate physical facilities from 2015 to 2021.

The continual drop in distance learning students and the projected decline in secondary school leavers until 2023 have posed a great deal of uncertainty and challenges to the University. Coupled with the keen competition in the tertiary education sector, to maintain the University’s long-term sustainability and competitiveness has become imperative.

The already implemented measures of improving programme quality, providing more and better physical facilities and enriching students’ campus life and learning experiences are important but may not be sufficient to attract and retain students and hence help to secure long-term sustainability. The University is mapping out a forward-looking strategy to make use of the new campus at Sheung Shing Street site not only to alleviate the space problem, but also to launch new programmes to nurture talent to meet community needs in alignment with Government policy priorities. Last but not least, the University will continue to adhere to prudent financial management practices, make suitable improvements to its financial management framework and maintain a balanced operating budget to support the University’s development in the coming years.

16 May 2016