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Slater & Gordon posts $16.7m profit amid takeover offer
Listed national law firm Slater & Gordon has seen a “rebound” in its fortunes from the last reporting period, with a 323 per cent increase in its net profit, as it moves towards being acquired by a private equity firm.
Jerome Doraisamy
Earlier this morning (Friday, 24 February), Slater & Gordon (ASX: SGH) confirmed it had signed a bid implementation agreement (BIA) with a subsidiary of Allegro Funds, providing for a recommended off-market takeover for 100 per cent of the listed company shares at $0.55 per share, for an approximate price tag of $78 million.
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The directors of Slater & Gordon “unanimously support” the offer made by Allegro, the firm said, and recommend that its shareholders accept the offer, in the absence of a superior proposal and subject to independent expert guidance.
At the same time, the listed firm posted its FY23 half-year financial results, showing a 37 per cent increase in net revenue to $110 million, resulting in net profit of $16.7 million — a 323 per cent markup on its $7.7 million net loss in the prior corresponding period (PCP).
The net profit increase was driven, the firm detailed, by higher personal injury law fee revenue.
“Matter velocity improved, in part due to post-COVID normalisation,” it said.
Elsewhere, Slater & Gordon’s gross operating cash flow jumped by 640 per cent to $5.5 million, compared to $1 million in the PCP, again driven by stronger receipts in personal injury.
The firm also saw earnings before interest, tax, depreciation and amortisation (EBITDA) grow to $35.7 million compared to $3.9 million in the PCP, driven by “improved Work in Progress growth and higher fee revenue”.
Speaking about the results, Slater & Gordon chief executive John Somerville said that the firm’s results are “positive” and that they reflect the “ongoing rebound” from the impacts of the age of coronavirus on the business.
It also reflects, he said, “the hard work of our people on behalf of our clients, and the improvements that we are continuing to make to how we operate”.
“Over the past five years, we have made good progress, however we still have more work to do to continue to improve and deliver on our strategy,” Mr Somerville continued.
“Pleasingly, we have seen our ability to progress our clients’ claims return to pre-pandemic levels following the challenges of lockdowns.
“I want to thank our people for their ongoing commitment and care they have provided to our clients and to each other, and for the terrific outcomes they achieve for the thousands of Australians each year who need our help.”
Last financial year, Slater & Gordon’s net profit after tax dropped from $14.5 million to $2.2 million, on the back of COVID-19 lockdowns in the big cities and corresponding fewer road and workplace accidents. At the time, however, the firm said that it is “now back on its trajectory of improvement”.
The news comes as fellow listed national plaintiff firm Shine Lawyers (ASX: SHJ) posted its half-yearly results, showing a drop in net profit of 18 per cent.
