SLATER & GORDON LOSS TO TOP $1B
Written on the 24 August 2016 by Nick Nichols
EMBATTLED legal firm Slater and Gordon (ASX:SGH) is headed for a full-year loss of more than $1 billion after racking up more losses in the second half.
However, managing director Andrew Grech (pictured) has highlighted improvements made in the second half performance as the company tries to rebuild its fortunes after its troubled acquisition in the UK last year.
The Melbourne-based company has revealed today that it is expecting to post a $59.3 million loss in the six months to the end of June, which comes on top of the record $958.3 million loss recorded in the first half of FY16.
"Accordingly the full-year net loss after tax is expected to be $1.017 billion, which includes a significant level of goodwill impairment, non-recurring restructuring expenditure and refinancing costs," says the company in a statement to the Australian Securities Exchange.
Slater and Gordon's FY16 financial result, which is expected to be released next Tuesday, is laden with writedowns related to its $1.3 billion acquisition of UK-based Quindell early last year.
However, Grech describes the profit figures as a 'story of two different halves'.
"The results for the first half were extremely disappointing and well below expectations," he says.
"In the second half we have taken significant steps towards turning around the performance of the UK business.
Whilst the UK performance improvement program is still in its early stages, the second-half results indicate that our efforts are beginning to bear fruit."
The UK acquisition will boost Slater and Gordon's full-year revenue to $908.2 million, from $521.9 million in FY15.
EBITDAW (earnings before interest, tax, depreciation, amortisation and movement in work in progress) in the latest half-year is expected to be $8.9 million, an improvement from the $58.3 million loss recorded in the first half.
On a normalised basis, full-year EBITDAW is expected to be $36.6 million.
However, Slater and Gordon's net debt is expected to be higher, rising to $682.3 million from $614.1 million compared to a year earlier. The cause is a sharp drop in the pound sterling following the Brexit vote.
Slater and Gordon says the estimates released today are still subject to approval by the board and to final audit clearance.
The company's shares slipped more than 6 per cent today on the announcement, with the shares trading around 54c.
Author: Nick Nichols