The world’s first stock exchange-listed law firm, Slater and Gordon, today officially posted a widely expected annual loss of $1.017 billion as it rebuilds its business.
The result includes a $879.5 million non-cash impairment against the value of goodwill after its UK business earnings were worse than expected.
Revenue was $908.18 million.
In early trade today on the ASX, Slater and Gordon shares dropped about 10% to $0.495.
The company is reorganising and cutting costs, meaning redundancies in the UK where it has 3950 of its 5350 staff.
Last year the shares hit a high of $8.07, valuing the company at $2.8 billion, but have been on steep slide because of its underperforming UK business and the British government plans to limit compensation for road accidents.
The shares last traded at $0.56.
The company says the environment has been challenging in Australia but fees are strong overall despite weakness in some parts of the personal injury law business and the conveyancing practice.
And the UK business has shown significant performance improvement in the second half and enters 2017 with positive momentum.
“We are confident we have the strategy and people in place to stabilise financial performance during the 2017 financial year,” says managing director Andrew Grech.
“The results for the first half were extremely disappointing and well below expectations. 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 law firm has adopted a new accounting standard to deal with revenue from contracts with customers.
This means a negative net movement in work in progress of $41.3 million was recorded in 2016 due to case settlements exceeding the number of new files opened in Australia and reduced case volumes in the UK.
The company also recorded $33.3 million in restructuring costs including consultants costs, redundancy and property rationalisation in the UK.