The University of Law (UoL) has boosted infrastructure investment tenfold since it was bought by a private equity house, figures from the institution’s first financial results since the sale was revealed.
Ramped up capital spending on buildings and technology partially accounts for the university’s £7.7m loss lodged in statutory accounts at the end of this week. However, according to the UoL, profits at the year ending 31 July 2013 increased from £11.8m to £14.1m – on revenues that were up from £67.4m to £69.6m.
However, the formal loss was registered after interest, goodwill amortisation and other transaction costs incurred from the purchase were factored in.
London-based European private equity house Montagu paid £177m for the then-College of Law in spring of last year. A university spokesman said the net assets of the business – such as property – have been subtracted from that figure, leaving about £121m of goodwill.
The business has elected to write off that figure on its profit and loss accounts over forthcoming years. Commented a spokesman: “That means every year over the next five years, no matter what the business does from an underlying trading perspective, there’s going to be £24m of loss added.” He pointed out that the practice conformed with the UK’s generally accepted accounting practice standards.
UoL officials revealed to The Lawyer that the business spent £1.2m on capital investment – for example, on buildings and technology improvements – over the last year, compared with £100,000 by the College of Law in the 12 months preceding sale.
The business also trumpeted a slight increase in student numbers, up by nearly 200 to a total of some 7,250. There was considerable growth in undergraduates, with the figure of LLB students rising from 115 to 200 this September. Much of that increase was attributed to overseas students.
University officials pointed to employability figures as giving the business a market edge. They claim that 89 per cent of students are employed in the legal sector within six months of graduating, with that number rising to 92 per cent when all forms of employment are considered. However, the university does not provide a figure of those going into qualified jobs.
Commenting on employability, the university’s president, Nigel Savage said: “Those who come to us have a better chance of getting a job than if they’d gone anywhere else. That’s because we put more investment into employability. Students – when thinking about a legal practice course provider – should do a lot more due diligence and ask about employability rates. We are one of only a few LPC providers that publishes its employability rates. A lot in the public sector don’t.”
Post-purchase structural changes have also hit the university’s pocketbook following evolution from charity to for-profit business. Officials point out that the institution has adopted the quoted companies alliance’s good governance code, part of which has involved the creation of new remuneration, nominations and academic standards committees.
Three independent non-executive directors have been recruited for the board to support the governance structure: Sir Tim Wilson, former vice-chancellor of the University of Hertfordshire, Leslie MacDonagh, former managing partner of pre-merger City law firm Lovells and now a consultant on the board of accountancy practice BDO, and Liz Catchpole, the chief financial officer of building company Avant Homes.
Commenting on the figures, UoL chairman, Alan Bowket, who is also chairman of Norwich City Football Club, said he was “satisfied with the financial results”.