Slater and Gordon serves up more bad news
INVESTORS in Slater and Gordon, the Australia-based consumer law firm which has snapped up a plethora of UK practices, have been served up yet more bad news.
Overnight the company, which has had a turbulent year, told the Australian stock market that it would not hit earnings targets for the current financial year due to its UK buisness performing below expectations.
A number of equity partners in firms such as Manchester-based Pannone took equity in Slater and Gordon as part of the deal to sell to the consolidator, so a further 17% fall in the value of the shares overnight will be keenly felt.
The market capitalisation of the business is now AUS $331m, down from AUS $2.8bn in April. The company’s net debt is AUS$650m.
As well as Pannone, Slater and Gordon has acquired Russell Jones & Walker and Fentons. Its biggest deal though was to pay £637m for the professional services division of troubled firm Quindell.
Slater and Gordon said it is reviewing its approach to financial forecasting and withdrawing its recently reaffirmed full year guidance for 2016 of revenue in excess of AUS $1.15bn.
“There is a significant risk that full year guidance will not be met and accordingly the company withdraws its previous full year guidance pending the outcome of the review,” the firm said in a statement.
Its 2016 financial year guidance was for AUS $1.15bn in fee revenue and $205m in earnings.
“It is now clear to us that the slower rate of case resolutions in the first half has had a larger impact than previously thought, and that this may well flow through to a reduced profit for the full year,” group managing director Andrew Grech said.
