Slater & Gordon has revealed a loss of A$958.3m (£493m) during the first six months of the 2015/16 financial year.
The loss was primarily attributed to a A$876.5m impairment of intangible assets caused by a write-down of goodwill. This was largely attributed to Slater & Gordon’s acquisition of insurance outsourcer Quindell’s professional services arm.
Slater & Gordon acquired Quindell for £700m last year but following the purchase the FCA launched an investigation into an overstatement of Quindell’s 2014 profits. The FCA later ended its investigation in order to allow the Serious Fraud Office to begin its own criminal investigation.
Despite the loss the firm’s income for the half year grew 82 per cent from A$267.7m to A$487.5m.
Last year Slater & Gordon’s total borrowings exceeded its total revenue from the year. Currently, its long term borrowings stand at A$789.3m but its facilities can extend to A$850.3m.
The group has agreed to present an operating plan and restructuring proposal to its banking syndicate. As a result of the proposals Slater & Gordon could see amendments made to its syndicated facility agreement.
If the lenders require amendments to be put in place Slater & Gordon would have to implement them within the next two months. Failure to do so could see the firm’s repayment dates brought forward to March 2017.
Managing director Andrew Grech said: “Clearly our key priority for the 2016 financial year is reducing debt and focusing on re-establishing a sustainable capital structure to support the transformation programme. We’ve a clear plan which we’ve begun to implement which will place our UK business on a sounder footing and which is responsive to the evolving market environment. The changes we’re making, whilst difficult, will help to ensure that our UK business is sustainable and thrives over the long term”
Slater & Gordon suspended the trading of its shares last week after delaying the release of its half-year results. Trading of the firm’s shares resumed following the announcement.
The Australian listed firm’s shares fell 31 per cent as a result of today’s announcement, from A$0.83 to A$0.57.