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THREE long-time Slater and Gordon (ASX: SGH) directors are closing the book on the company, which has just confirmed a billion-dollar annual loss.
The Melbourne-based law firm pre-warned investors of the $1.017 billion loss, down to the dollar, last week.
Following a record $958.3 million loss for the first half of FY16, Slater and Gordon racked up $59.3 million in losses in the second half.
The company will lose three of its troops, as non-executive directors Erica Lane and Ian Court step down from their duties, and executive director Ken Fowlie leaving to focus on his role as CEO UK.
Lane and Court have been with the company for almost a decade, Fowlie for 13 years.
Tom Brown will join the company as a non-executive director and chair of the remuneration committee on September 1. He has held senior positions in companies including Mobil, BHP Billiton and Rolls Royce around the world, dealing with transformations in high growth and turnaround environments.
Slater and Gordon's full year result is riddled with writedowns related to its $1.3 billion acquisition of UK-based Quindell in early 2015.
For this, Slater and Gordon took a goodwill writedown of $879.5 million, with just $3 million of this recognised in its second half.
Other costs stemming from Quindell included $33.3 million towards restructuring UK operations, including redundancies, and adopting a new accounting standard.
Without writedowns, provisions, finance costs and restructuring charges, the company posted a loss of $48.7 million.
Slater and Gordon managing director Andrew Grech describes the result as 'a story of two different halves'.
"The results for the first half were extremely disappointing and well below expectations," says Grech.
"In the second half we have taken significant steps towards turning around the performance of the UK business. Whilst the UK performance improvement programme is still in its early stages, the second half results indicate that our efforts are beginning to bear fruit."
Earnings before interest, tax, depreciation, amortisation and movement in work in progress (EDITDAW) in the latest half year was $8.9 million, an improvement on the $58.3 million loss recorded in the first half.
On a normalised basis, full year EBITDAW totalled $36.6 million.
Grech says the operating environment in Australia has been challenging, but enquiry levels and fees have held strong, despite weakness in the firm's personal injury and conveyancing businesses, which they 'are in the throes of actively addressing'.
In the UK, a restructure related to office closures and reorganisations is expected to be complete in the first quarter of FY17.
This half saw a 14 per cent reduction in headcount in the UK.
"Clearly our key priority is to continue to put the UK business on a sounder footing and complete execution of the UK Performance Improvement Program (PIP)," says Grech.
"In Australia, we will focus on improving profitability and cash generation."
The company isn't offering any specific guidance.
In a conference call this afternoon, Grech flagged damaging shareholder value as a 'very serious concern to the board'.
Slater and Gordon shares took a dive following the loss announcement this morning, currently trading at 49c, down almost 12 per cent from their opening price.
Read more about the Slater and Gordon saga:
- Slater and Gordon hopes to put tough year behind (August 2015)
- Slater and Gordon faces class action on two fronts (December 2015)
- Banks to probe Slater and Gordon's books (January 2016)
- Slater and Gordon's week just got worse (March 2016)
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