Chapter VII

Despite the continued impact of COVID-19 and external factors, such as inflation, rising interest rates, and geopolitics, on the University's finances this past year, the University delivered a robust financial performance in 2022–23 driven by income growth and control of costs. Consolidated net surplus increased from HK$213.8 million in 2021–22 to HK$513.4 million in 2022–23. A strong balance sheet was maintained, with consolidated net assets at HK$5,107.6 million and significant levels of cash and investments of HK$5,254.1 million being held.


Consolidated income for the year increased by 0.3% to HK$1,705.3 million (2021‒22: HK$1,700.7 million). Tuition income grew by 0.2% to HK$1,626.2 million (2021‒22: HK$1,623.6 million), primarily because the increase in tuition income from postgraduate programmes was roughly offset by the decrease in tuition income from distance-learning programmes. The strong revenue streams strengthened the financial footing of the University, enabling us to keep investing in people and in our strategic priorities.

Operating expenditure

Total consolidated operating expenses rose by 12.8% to HK$1,342.5 million (2021‒22: HK$1,190.2 million). The majority of these expenses were personnel costs, which comprised 63.2% of the total operating expenses. Overall personnel costs increased by 11.2% to HK$848.9 million (2021‒22: HK$763.2 million) as a result of salary revision and increased headcount to support the growth in teaching and research activities, partly offset by higher than average levels of position vacancies. The difficulty in hiring people was a common problem across the industry this past year. To enhance our competitiveness in the employment market, the University engaged a consultant to review and revise the pay packages for full-time staff.

Non-personnel expenses were impacted by the resumption of travel and the resurgence of on-campus and other activities, as well as inflationary effects on expense categories such as utilities and capital expenses. Premises-related expenses were HK$206.4 million (2021‒22: HK$174.1 million), which accounted for 15.4% of total operating expenses, largely reflecting higher depreciation from leased assets and fixed assets. Direct student costs and student activity expenses were HK$125.9 million (2021‒22: HK$108.6 million), representing 9.4% of the total operating expenses.

Interest and investment income

As of 31 August 2023, 39% (2021‒22: 43%) of the University's investments were diversified portfolios of actively managed funds, and 61% (2021‒22: 57%) were self-managed cash invested in the deposit pool according to guidelines on diversification, exposure and credit rating as agreed by the Finance Committee. The portfolio investment is designed to optimise long-term returns, dampen volatility and mitigate the risk of permanent loss of capital via diversification and prudent financial management. The high cash allocation was a result of de-risking measures to secure stable interest income in the global rate-hike cycle.

During the year, the University made ongoing efforts to upgrade its investment firm roster to enhance performance relative to benchmark results. Our efforts included building closer relationships with partners that demonstrate superior investment judgment, thorough processes, sound ethics, and a strong alignment of interests with the University. In addition, the University is committed to prioritising investments aligned with environmental, social and corporate governance (ESG) values without compromising returns or diversification. The University invested in an ESG fund which targets companies with sustainable returns, strong ESG characteristics and attractive valuations.

Investment returns were higher than forecast, with the value of investments recovering from a fall in 2021–22 and showing strong gains in the year. Consolidated interest and investment income showed a gain of HK$192.3 million in 2022‒23 (2021‒22: -HK$269.3 million). These results highlighted the volatility of investment returns from one year to the next against the backdrop of high interest rate and inflation, ongoing effects of Russia's invasion of Ukraine and geopolitical tensions, US financial sector turmoil and government credit rating downgrade, and China's real estate crisis. The value of the total consolidated cash and investments as of 31 August 2023 was HK$5,254.1 million (2021‒22: HK$4,618.7 million).

Donations and Government grants

The remarkable generosity of the University's alumni and friends — including individuals, corporations, and foundations — provides essential funding for student financial aid, investments in research, and every aspect of the University's operations. In aggregate, a total of HK$124.9 million in donations and grants was recorded for the year (2021‒22: HK$121.9 million), with HK$32.2 million reflected as current year grants and donations in support of operations, and an additional HK$92.7 million recorded as deferred income for funding the University's long-term investment in physical infrastructure and providing resources for core activities for future generations.

Results of the year

Throughout the year, the University navigated complex markets to deliver a continued positive financial performance. The University ended the year with a consolidated operating surplus of HK$321.1 million (2021‒22: HK$483.1 million), which is amongst the best in the University's history. Consolidated interest and investment income showed a gain of HK$192.3 million (2021‒22:-HK$269.3 million), driven by strong performance in the financial markets. Robust operating and investment performance contributed to growth in net assets of HK$513.4 million, ending the year at a record HK$5,107.6 million (2021‒22: HK$4,594.2 million). Consolidated net operating cash flow was a strong HK$649.3 million (2021‒22: HK$868.8 million), paving the way for the University to meet investment commitments and embrace new investment opportunities.

Retirement scheme

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 256 members and the MPF scheme had 1,700 members. Their respective fund sizes were HK$215.9 million and HK$120.1 million.

Way forward

The University will celebrate its 35th anniversary in 2024. This will be a good opportunity for the University to showcase its achievements, enhance its brand and image, and inspire actions to support its educational and research mission. The University will hold a year-long series of celebratory activities, and invite students, staff, alumni and local community to celebrate with us.

While the most significant impacts of COVID-19 appear to be over, the world continues to face many challenges, including high interest rates, sustained cost inflation, increasing risk of recession, the war in Ukraine and other conflicts around the globe. Notwithstanding these uncertainties, the University has a solid financial position and is well placed to meet these challenges, weather uncertainties, and be financially able to drive forward our strategic priorities. We will look into opportunities to further enhance our quality of teaching, expand our teaching facilities, and create a more conducive learning environment for our students in order to equip them with the necessary skills to make valuable contributions to society.