DIRECTORS DEPART AS SLATER AND GORDON POSTS BILLION-DOLLAR LOSS

Written on the 30 August 2016 by Laura Daquino

DIRECTORS DEPART AS SLATER AND GORDON POSTS BILLION-DOLLAR LOSS

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:


Author: Laura Daquino Connect via: Twitter LinkedIn

Latest News

OROTON GOES CLICKS AND BRICKS AS PROFITS SLIDE

TWO former Aussie lawyers have turned their passion for fashion into a $15 million dollar international business six ...

MANTRA'S SHARE PRICE SURGE INDICATES 'SUITORS ARE CIRCLING' THE HOTEL GROUP

THE rumour mill surrounding a high-level takeover of Mantra Group (ASX: MTR) is in full production with its shares su...

MELBOURNE CBD GEMS SELL FOR $17 MILLION, MARKING A NEW PROPERTY HOTSPOT

LITTLE Lonsdale Street in the heart of Melbourne's CBD has become a favourite for investors in 2017, following th...

CAN GOOGLE RECOVER FROM GLOBAL CONTROVERSY OVER ITS PROGRAMMATIC ADVERTISING SYSTEM?

IT'S the story that has rocked the world of advertising. The lucrative Google (NASDAQ: GOOGL) advertising system ...

Related News

RAY OF HOPE FOR SLATER AND GORDON AS LENDERS STEP IN

EMBATTLED law firm Slater and Gordon (ASX: SGH) has announced to the ASX that it has launched confidential discussion...

SPROUTX PROVIDES THE SEED FOR AGTECH STARTUPS

AGTECH innovation fund SproutX has opened applications for its first accelerator round, backed by $10 million from...

GAS PRICES MAY FORCE BRICKWORKS TO TAKE MANUFACTURING OVERSEAS

BRICKWORKS Limited (ASX:BKW) chairman Robert Millner says soaring energy prices may force the company to turn to offs...

CHINA CONTINUES TO COLLECT AUSSIE PROPERTY ASSETS

CHINESE coin continues to dominate Australia's offshore real estate investment market, accounting for almost h...

EVENTS COMING UP

 

Contact us

Email News Update Sign Up Contact Details
Subscriptions

PO Box 2087
Brisbane QLD 4001

LoginTell a FriendSign Up to Newsletter