The University made the safety and wellbeing of its community its top priority. It responded rapidly to the unprecedented COVID-19 challenge on numerous fronts, including by offering blended face-to-face and online education for students, implementing flexible work arrangements for staff, and adopting special measures to maintain a safe and healthy environment on campus. The University has made additional investments in online teaching and learning, increased spending on personal protective equipment as well as cleaning and sanitizing services, provided financial support to students, and offered rental waivers or concessions to students, caterers and tenants. This extra spending combined with revenue forgone amounted to HK$30.7 million (2019–20: HK$27.0 million).
Despite the pandemic, 2020–21 was another remarkable year in which the University delivered strong financial results. The University has been able to maintain its momentum by growing its tuition income while keeping its expenses at appropriate levels, resulting in a HK$652.9 million consolidated net surplus for 2020–21. Net cash generated from operating activities was HK$527.6 million. Consolidated net assets at the end of the financial year totalled HK$4,380.3 million, an increase of 17.5% from 2019–20.
Strong finances underpin the delivery of all our strategies. Consolidated income for the year was HK$1,538.6 million, of which HK$1,442.4 million was tuition fee income, an amount which benefitted from moderate growth in student numbers. The University's strong revenue streams have generated the cash necessary to deliver its long-term plans whilst enabling it to remain financially resilient.
Operating expenditure has been managed effectively within the approved budget. Total operating expenses were HK$1,114.9 million in 2020–21. The majority of these expenses (HK$733.6 million) were personnel costs, which comprised 65.8% (2019–20: 69.6%) of the total. The University has continued to invest in its staff to support growth in teaching and research, and to improve student to staff ratios.
Non-personnel costs fell below budget as a direct result of the pandemic-related reduction of campus activities, leading to a decrease in spending on travel, conferences, events, supplies, and a range of other items. These cost decreases were partially offset by multi-million-dollar investments in online teaching and learning facilities as well as public health measures for the campus, including spending on personal protective equipment, enhanced cleaning, and other pandemic-related items. Premises-related expenses were HK$153.8 million, which accounted for 13.8% (2019–20: 11.4%) of total operating expenses and reflected the opening of the IOH campus. Direct student costs were HK$41.2 million, representing 3.7% (2019–20: 3.5%) of total operating expenses.
The global market was extremely volatile during 2020–21 as a result of the COVID-19 pandemic and various geopolitical tensions. The global lockdown during the first wave of the COVID-19 pandemic triggered the strongest economic contraction since the 2009 financial crisis. Most economies recovered sharply as massive fiscal and monetary stimulus measures kicked in and lockdown restrictions were eased with the rolling-out of COVID-19 vaccinations. However, new waves of the pandemic driven by COVID-19 variants set the global economy back again, and the sustainability of economic recovery will depend on the effectiveness of further vaccine deployment and the impact of further vaccine investment. On the other hand, during the year US-China relations reached their lowest point in decades. Current trends portend steadily worsening relations over the long term, with increasingly adverse consequences for any parties involved.
Despite all these challenges, the University continued to do well, with its investment portfolios being managed under a prudent, risk-focused, and diversified strategy. HK$246.4 million in net interest and investment income was recorded in 2020–21. The value of the Group's investments as of 31 August 2021 was HK$ 2,343.2 million (2019-20: HK$2,084.8 million), an increase of 12.4% from the previous year.
Donations from individuals, corporations, and foundations are a vitally important source of funding for the University. In aggregate, HK$160.5 million in donations and grants was recorded for the year. Of this, HK$29.6 million was recorded as current-year grants and donations in support of operations, and an additional HK$130.9 million as deferred income for funding the University's long-term investment in physical infrastructure and providing resources for core activities for the future. This included HK$51.6 million in donations from the Hong Kong Jockey Club Charities Trust for the IOH and STEAM projects.
The financial results of the year reflect the exceptional expertise and dedication of all members of the University's community during a period of unprecedented turbulence. The University achieved a consolidated operating surplus of HK$423.7 million and net interest and investment income of HK$246.4 million, contributing to a HK$652.9 million overall net surplus, amongst the best in the University's history. Operating cash flow was a strong HK$527.6 million and net assets of the Group increased to HK$4,380.3 million. These results mean that the University remains financially robust and is able to respond to any challenges ahead.
The University provides its staff with two retirement schemes, namely the Occupational Retirement Schemes Ordinance (ORSO) Scheme and the Mandatory Provident Fund (MPF) Scheme. At year-end, the ORSO scheme had 371 members and the MPF scheme had 2,111 members. Their respective fund sizes were HK$412.0 million and HK$129.6 million.
With a strong financial position and a clear long-term development strategy in place, the University is committed to making further investments for the future. For example, the University will continue the development of the Hong Kong Metropolitan University (Zhaoqing) (MUZQ) Project together with the Zhaoqing Municipal Government and Zhaoqing University. The University has commenced preparatory work on academic planning, institutional structure and campus design and development with the mainland partners, and expects to secure approval from the relevant authorities shortly. A Steering Committee has been set up under the Council to oversee and monitor the MUZQ campus development. Occupying an area of 1.67 million square metres, MUZQ will offer professional and practical programmes contributing towards talent development in the Greater Bay Area. The project will help strengthen academic and research cooperation between Hong Kong and Zhaoqing, as well as boosting student exchanges.
As always, the University will explore opportunities to further enhance the quality of its teaching, expand its teaching facilities, and create a more conducive learning environment, in order to equip students with the skills they need to make a valuable contribution to society.
Global financial markets will continue to be volatile in 2021–22 because of the COVID-19 variants, fiscal policy uncertainty, geopolitical tensions, stretched investor sentiment, and a still-recovering job market. Despite all these factors, the University is confident about its long-term financial sustainability, which is essential for delivering its mission.
