Slater & Gordon battles to stabilise firm as Quindell buyout and legal crackdown bite
SLATER & Gordon, the law firm that spent more than £600m on Quindell’s professional services arm last year, has reported a loss of more than A$1bn (£570m) as it battles to stabilise the company.
The Australian firm said the ailing Quindell business, now renamed Slater Gordon Solutions, brought in revenues of A$437m during its first full year within the company, but “significantly underperformed expectations” on the legal cases it handles on road traffic accidents and noise-induced hearing loss following a UK crackdown on such claims.
Shares in Slater & Gordon, one of the world’s few listed law firms, tumbled 15pc on the Australian Stock Exchange. The stock has lost more than 90pc of its value since the acquisition.
London-listed Quindell sold its claims business in March 2015 following the sudden departure of its boss Rob Terry after a share-dealing scandal and a botched attempt to move from Aim to the main stock market – an embarrassment that earlier this month led to a £530,000 fine for Cenkos, the firm’s broker.
Eight months after Slaters acquired the business, the UK government announced a crackdown on the personal injury claims that represent the bulk of Quindell’s work, cutting the value of Slaters’ shares in half.
For the year to June 30, Slaters wrote off A$879.5m of goodwill from the business, leading to a loss of A$1.02bn, compared with a profit of A$62.4m last year.
Slaters struck a deal with its lenders earlier this year to provide breathing space as the restructuring efforts continue. Overall, the group burned through A$104m in cash, having generated A$40.8m in the prior year, and ended the year with net debts up 11pc to A$682.3m.
Despite ending a key contract with the insurer Swinton last summer, Slaters said the UK business was starting to look up after recent jobs cuts and a lower marketing spend. The company has cut nearly one in six staff from its UK legal business and closed four offices, at a cost of A$33.3m.