Australian-listed law firm Slater and Gordon revealed a loss in its half-year results today, pinning at least some of the blame on its reputation in the UK.
The firm reported a net loss after tax of AU$425.1m (£262.4m), an improvement of 56 per cent compared with AU$958.3m for the same period the year before. The most recent year's figure included a AU$350.3m impairment charge linked to its purchase of insurance claims processor Quindell's professional services division in 2015.
Revenues slipped to AU$322.7m, down 34 per cent compared with the prior year's AU$487.5m. The company dodged some of the impact of sliding sales by implementing a cost cutting programme to lower operating expenses, mainly in its UK operations.
Shares in the firm closed down 21.9 per cent at AU$0.12.
Why it's interesting
Slater and Gordon raised eyebrows when it picked up the professional services unit of Quindell, which is now known as Watchstone. In its results today, the company noted its UK division had underperformed thanks to "disruption caused by the transformation activity, staff turnover and the impact of negative sentiment on the business".
Not long after Slater and Gordon made its purchase, the Financial Conduct Authority (FCA), and then the Serious Fraud Office, opened an investigation into historic accounting practices at Quindell, which pre-date the purchase. The FCA probe has since been closed.
The Quindell purchase is not the only problem Slater and Gordon faces in its UK division. Just last week, the government surprised the industry when it presented parliament with legislation to put into action new whiplash claim reforms. The government had been consulting on this issue and was expected to publish its findings before April.
The government contends the proposals will block fraudulent claims, but others, including Slater and Gordon, argue it will also stop genuine cases going ahead, which would ultimately drag the firm's figures down further.
What Slater and Gordon said
Slater and Gordon group managing director Andrew Grech said:
This half year result continues to reflect a business that is still very much in the midst of a major transition.
While we have made progress in the UK in the past 12 months, the turnaround is taking longer than we anticipated and billed revenue performance in segments of the business is lower than expected. The full impact of the performance improvement initiatives will take time.