Listen to this article
Slater & Gordon warned on Monday that negative publicity and sentiment is undermining management’s attempts to turnround the business following its disastrous foray into the UK market.
The Melbourne-based law firm reported a A$425.1m ($326.4m) net loss for the six months to end December, down from a A$958.3m loss in the same period a year earlier.
An A$350.3m impairment charge relating to its 2015 acquisition of the professional services arm of UK-based Quindell, which is now known as Watchstone Group, weighed on the results. But the firm reported a continuing underperformance across the UK and Australian operations in relation to personal injury claims.
“While we have made progress in the UK in the past 12 months, the turnaround is taking longer than we anticipated and billed revenue in segments of the business is lower than expected,” said Andrew Grech, S&G managing director.
“In Australia, our business leaders have had to combat almost two years of the effects of the negative publicity and sentiment.”
S&G, one of the world’s first publicly listed law firms, faces a fight for survival with total liabilities of A$1.3bn, compared to A$1.2bn in assets. The company said it is engaged in talks with its lenders to agree a refinancing with a deadline of May 26.
The law firm’s financial difficulties can be traced back to March 2015 when it said it would buy most of troubled UK insurance claims provider Quindell for £673m, and announced an A$890m equity raising to help fund the deal. Not long after the purchase, which S&G had billed as “transformational” for the firm, Quindell came under investigation by the UK’s Serious Fraud Office for its historic business and accounting practices.