The Malta Independent 11 August 2022, Thursday

AUM registers another €3.3m in losses in 2020

Albert Galea Sunday, 13 February 2022, 08:30 Last update: about 7 months ago

The company which owns and runs the American University of Malta (AUM) registered €3.3m in financial losses in 2020, accounting records seen by The Malta Independent on Sunday show.

Financial records show that Sadeen Education Investment Limited registered a loss of €3.39m in 2020 – a significant deficit, even if it is less than the losses registered in the previous two years.

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The company registered €5.37m in losses in 2019 and another €5.89m in losses in 2018, meaning that it has now registered a grand total of €14.66m in losses in three years.

Auditors RSM drew attention to the fact that the company had suffered a loss of €3,395,877 and that its total liabilities exceeded its total assets by €24,041,647.

“These conditions indicate the existence of a material uncertainty which may cast significant doubt on the company’s ability to continue as a going concern,” the auditors wrote.

However, it is noted, that the ultimate shareholder of the company has written to the directors “outlining his commitment and ability to continue to fund all losses and commitments of the company as and when the need arises”.

In fact, the said shareholder pumped almost €4m into the company in 2020 alone, which means that the company has now borrowed a total of €29.7m from the said shareholder, an amount which it still owes.

The company also owes a further €9.2m to “related parties”, which, like in the case of the shareholder, are “unsecured, interest-free and repayable on demand”.

Jordanian hotel developer and construction magnate Hani Hasan Naji Salah is the brains behind the company, but a number of new directors were appointed to Sadeen Education Investment Ltd in December 2020.

They include a number of other Jordanians, but also one Maltese man, Kevin Deguara.

Deguara is a senior partner at law firm DF Advocates and has long been a legal adviser to Sadeen Group in Malta. He has also represented Pilatus Bank, is a director of Dizz Group and recently had his offices raided as part of investigations into the public concession to award three state hospitals to Vitals Global Healthcare, for whom he had also provided legal services.

The size of the 2020’s financial loss was, in truth, less than in previous years. That is mainly down to a cut in expenditure where it succeeded in reducing its administrative expenses from €5.85m to €4.31m.

While that means that the company ended the year with an operating loss which was around €1.5 less than in 2019, the company’s revenue from tuition fees remained pretty much at the same level.

Indeed, the company only made €223,725 from tuition fees in 2020, compared to €257,185 in the previous year.

It should be noted that 2020 was the first year of the Covid-19 pandemic, which would have ultimately affected any AUM effort to attract foreign students to the University.

The much-vaunted AUM was announced by Joseph Muscat’s government in May 2015, with the intention of rejuvenating the dock area in Cospicua. It was officially established in September 2016 and welcomed its first batch of students in September 2017. The agreement saw the Dock 1 campus transferred to AUM, where the university has carried out extensive rehabilitation works and where it currently operates.

A sizeable plot of land at Zonqor Point was also part of the controversial agreement, however, former Prime Minister Muscat said that the project there will only start when the Cospicua campus is full.

The Zonqor element was always the most controversial point of the project, but the university’s failure to seemingly attract anywhere near enough students has also been a topic of significance.

As of October 2019, only 143 students were enrolled at the university and AUM has failed to answer questions on the number of students it hosts since, despite repeated attempts by this newsroom.

Judging by the lack of fluctuation in the revenue received from tuition fees, however, it is not likely that this number has changed all that much – at least up until the end of 2020.

Former Prime Minister Muscat had said, in March 2019, that if AUM does not reach the stipulated target of 4,000 students up to four years after all construction and embellishment phases are completed in 2025, then all its facilities and land will return to government.

Regardless of the numbers and the financial situation, the university still wants to undertake works on the Knights Building in Cospicua.

Many residents, and even a government MP, objected to the proposed development, and it was in fact refused by the Planning Authority. The appeal process filed by Sadeen is still ongoing, with the next tribunal sitting scheduled for 29 March.

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