Underlying profits have soared at the University of Law Ltd since Britain’s first for-profit university was created with the sale to private equity of the former charitable College of Law.
Meanwhile, a strategy of selling property assets is helping pay down hefty debts piled on to the institution in November 2012 when Montagu Private Equity took it over.
Underlying profits (defined as earnings before interest, tax, depreciation and amortisation) climbed to £18.5m in the year to 31 July 2014, newly published accounts show. This compares with £14.1m in 2013 and £11.8m in 2012.
Net income edged up to £70.3m last year from £69.6m in the previous 12 months.
At the pre-tax level, however, UoL Ltd posted a loss of £5.6m, down from £7.7m in 2013. This was attributed to the accounting treatment of purchased goodwill, which is being written off over five years. No dividend was paid.
Directors’ pay (excluding pension payments and amounts paid to third parties) totalled £1,416,000 in the year to 31 July, the accounts disclose. The figure for the 18 months to 31 July 2013 was £791,000, though it is understood that the 2013 total relates to a 10-month trading period only.
The highest-paid director, whose identity is not disclosed, received £366,000 (up from £236,000). One director, identity undisclosed, was paid £125,000 in compensation for loss of office in 2013/14.
John Latham, formerly of Laureate Education Inc., joined the UoL’s board as president and chief executive officer two months after the start of the financial year, on 30 September 2013. Nigel Savage, who retired as president of the University of Law in April 2014, resigned as a director of UoL Ltd on 21 February last year.
Writing in the annual report, Latham says: ’Underlying EBITDA has improved again [in 2013/14], with benefits being generated from process improvements and ensuring best value for money in procurement, yielding further opportunities for reinvestment in the service for students. This is demonstrated by the significant increase in capital expenditure this year [of 250%].’
As the Times Higher Education Supplement reported a year ago, the last government recommended the University of Law as a model that publicly funded universities may wish to follow. But education sector observers have expressed concern, comparing the sale to the kind of leveraged buyouts seen in Premier League football. UoL Ltd is now ultimately owned by L-J Holdco, a company registered in Guernsey.
UoL Ltd ended the accounting year with net debt of £142m, down from £161m a year earlier. Montagu Private Equity was reported to have paid £200m for the university.
Gross bank debt was cut from £70m to £60m in 2013/14, ’due to the strong cash-generating performance of the university and the proceeds of [a] sale and leaseback transaction for the Birmingham centre, completed in July 2014’.
There have been more asset disposals since the accounting year end, including the sale of a freehold property in York last September following the relocation of operations to a new centre in Leeds. More significantly, last December the university raised £68m through a sale-and-leaseback of its prestigious Bloomsbury, London campus (pictured). The proceeds of those sales should show up in the 2015 accounts.
In March this year the university was granted an alternative business structure licence, allowing it to expand its Legal Advice Clinic, where trainee solicitors provide legal advice on a pro-bono basis to members of the public in various areas of social welfare law, supervised by experienced solicitors.