Slater and Gordon, the Australian law firm which stepped in last year to buy the professional services of beleaguered UK insurer Quindell
, has suffered a heavy annual net loss in its earnings report released today.
The Sydney-based group saw shares drop almost a fifth following a net loss of A$1.02 billion – that compares to a net profit of A$62.4 million one year earlier. At the heart of the losses was a A$879.5 million impairment charge. As a result, stocks slid by 17.9% at one point this morning – meaning the firm has lost 92.5% of its value since reaching its peak back in April, 2015.
According to a Financial Times
report, however, the loss was largely expected. It states that the majority of its impairment loss came from the purchase of insurance claims processor Quindell
, which cost £673 million.
Shortly after the purchase from Slater & Gordon, Quindell
fell under investigation from the Serious Fraud Officer in the UK because of its accounting and business practices. Now renamed Watchstone, the company was also hit back in November when plans were outlined by the UK Government to limit personal injury claims.
Speaking about the results, Slater & Gordon managing director Andrew Grech commented that the UK business was being restructured and that this was on track – and that the financial results were a “story of two halves”.
“The results for the first half were extremely disappointing and well below expectations,” he is reported to have said in The Financial Times
. “In the second half we have taken significant steps towards turning around the performance of the UK business. Whilst the UK performance improvement programme is still in its early stages, the second half results indicate that our efforts are beginning to bear fruit.”
In addition, the company announced executive changes – including Ken Fowlie giving up his executive director position to focus on his role as chief executive of the UK business.
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