Troubled law firm reports near £500m half year loss
TROUBLED Australian law firm Slater & Gordon has reported a loss of nearly £500m after a massive writedown on the value of its UK business.
The listed company suffered another sharp fall in its share price on the news, which prompted the company to begin talks with its lenders over its debt pile of Aus $741m (£380.4m).
The stock was down as much as 43.4% in morning trading, falling below A$0.50 for the first time since the company listed in 2007, but later recovered to be 27.7% lower at A$0.60.
S&G, which has hundreds of staff in Manchester and Liverpool after it acquired a slew of consumer-facing firms such as Pannone, Fentons and Russell Jones & Walker, swung to a net loss after tax for the six months to December 31 of A$958.34m, (£492m) from a A$59.88m profit a year earlier, thanks mostly to a A$876.45m impairment of intangible assets.
The lion’s share of that was an A$814.2m writedown on its acquisition of the Liverpool-based professional services arm of Quindell, the British insurance claims processor, which it acquired almost a year ago for £673m and was financed by an A$890m equity capital raising.
S&G’s must now come up with a plan – and having its banking syndicate and financial advisers agree to it by the end of April – to repay its debt. If an agreement can’t be reached, the lenders will bring forward the payment of all debts to March 2017.
For the six months to December 31, S&G lifted revenue by 82% to A$487.47m. The company will not pay a dividend. In December, the company scaled-back its earnings guidance, provided only in November, that it expected revenue of A$1.15bn and ebitda and other items of A$250m for the 12 months to June 2016.
Andrew Grech, the company’s managing director, who reports said has offered to resign over the crisis at the company, said: “Our primary management focus now is on reinforcing the financial position of the group and improving the operational performance of the UK business.”
S&G’s shares plunged fell by about 86% n 2015, and have lost more than a quarter of their value again this year.
