Slater and Gordon still struggling - ABC At first blush, a...

Slater and Gordon still struggling - ABC

At first blush, a headline profit from distressed law firm Slater and Gordon might seem an extraordinary turnaround, but it is not as good as it first sounds.
The company reported a full-year profit of $114 million — a considerable improvement on last year's $547 million loss — but this was largely due to the one-off gain from bailing out of its calamitous foray into the UK.
Exiting the UK delivered a net profit after tax of discontinued operations of $146 million, compared to the $472 million millstone it was in 2017.
Total revenue from the firm's continuing operations fell 12 per cent to $159 million, largely due to the business shrinking itself.
On an underlying basis, stripping out the one-off benefit of the UK retreat, Slater and Gordon made a $32 million loss.
Chairman James Mackenzie said, while the result represents a significant transformation of the business, there was still a long way to go.
"We have implemented a strong program of initiatives we believe will set us up for long term sustainability," he said.
The program to right the sinking ship included a massive recapitalisation by debt holders and private equity giant Anchorage Capital that now own around 95 per cent of the company, while the holdings of existing shareholders were massively diluted.
Slater and Gordon now has a market capitalisation of $236 million, down from its peak of almost $2.8 billion.
In its filing to ASX, Slater and Gordon noted accounting firm KPMG valued its shares at between 30 cents and $1.10 after the 1-for-100 share split and dilution, compared to the current price of $3.38.
The firm warned current trading volumes were low and the free float (those shares traded on the ASX) represented a small portion of issued capital.