SLATER & GORDON HOPES TO PUT TOUGH YEAR BEHIND
Written on the 28 August 2015 by Nick Nichols
SLATER & Gordon (ASX:SGH) will be hoping to have put a tumultuous year behind it after today posting a 5.6 per cent lift in annual profit to $82.3 million.
The company, which has been hit by an ASIC investigation into an accounting irregularity in its books and by a fraud squad investigation into the business practices of UK acquisition Quindell Plc, has delivered earnings in line with expectations.
The latest result has been built on a 40.6 per cent surge in revenue to $623.3 million, which includes one month's revenue from Quindell, now referred to as the Professional Services Division.
Slater & Gordon says it is in the process of reviewing the businesses and assets within the division in order to "gain a better understanding" of them. The directors also say they don't believe the company has any liability in relation to the UK fraud investigation.
The company says acquisitions have performed in line with expectations and are on track to be fully integrated into the group this financial year.
"We have put a lot of effort into business improvement initiatives throughout the year and it is satisfying to see this effort translating into improved client satisfaction, deeper brand awareness and improved financial performance," says managing director Andrew Grech.
"The underlying operational performance across Australia and the UK is strong and we have again delivered what we promised at both a strategic and operational level.
"The results are even more pleasing having regard to the intensive acquisition activity and additional scrutiny our team has had to contend with."
Slater and Gordon is forecasting another big jump in revenue in FY16 which will benefit fully from the acquisition program. The company is targeting at least $1.15 billion in revenue and normalised group EBITDA of at least $205 million.
"Our guidance reflects our confidence in the future of both Slater and Gordon Lawyers and Slater Gordon Solutions," says Grech, who also indicates no new acquisitions are on the horizon.
"We now have a commanding market share lead in both Australia and the UK. Free from the demands of near-term acquisition activity, we will be able to focus our efforts on continuing to improve operating effectiveness."
Slater and Gordon says it has since reviewed a number of its accounting policies following revelations of the irregularities. The move will lead to the reclassification of the purchase price of some of its completed transactions for accounting purposes only.
The company says these changes have "absolutely no effect on the underlying business of the company's financial performance".
The company says it continues to co-operate fully with ASIC to complete its review process, which is expected to be done shortly.
It says the consolidation error announced to the market on June 29 has been confirmed as an "error only with no impact on net operating cash flows".
The company is paying a dividend of 5.5c a share, franked to 40 per cent and payable on October 29. This is up from 5c a year earlier and brings the full-year payout to 9c, up from 8c.
Author: Nick Nichols