Slater & Gordon (S&G) has announced yet another eye-watering loss for its last financial year, mainly due to yet another write-down of goodwill – this time of £215m – following the acquisition of Quindell’s professional services division.
It is also to spin off its UK operation into a separate business so as “to enable both the Australian and UK operations to succeed in their own right”.
The separation – part of an amended recapitalisation agreement  with its senior lenders – came on the same day that the business announced an overall A$547m (£335m) loss for the year ended 30 June 2017.
It said major factors in addition to the write-down were “underperformance across the UK and Australian operations in relation to resolution of personal injuries claims”, restructuring costs, finance costs and a “negative movement” in work in progress.
When these are stripped out, the ‘normalised’ net loss was £46m, up from £30m the year before.
Turnover for the UK operation – excluding SGS, the business it bought from Quindell – fell from £141m to £97m, while its loss grew 50% to £60m for the year.
S&G told the Australian Stock Exchange that £10m of the loss was due to restructuring costs, and another £10m due to “adverse movement in WIP connected with the planned transition of fast-track claims from SGL UK to SG Claims”.
But it added: “Despite a reduction in overall marketing investment, prompted brand awareness has continued to strengthen, with the SGL brand now recognised by 35% of UK survey respondents.” It was 28% last year.
SGS fared even worse, its turnover down 38% to £165m – due to the loss of two key accident management contracts and a deliberate reduction in road traffic accident case intakes – and losses of £205m due to the goodwill impairment, which was first announced earlier this year .
In the previous financial year, the goodwill impairment was nearly £500m.
SGS actually improved on the profit measure of EBITDAW (earnings before interest, tax, depreciation and changes in work in progress), increasing five-fold to £10m.
Under the recapitalisation scheme of arrangement, all UK operations will be separated from S&G and transferred to a new UK holding company, which will be wholly owned by the senior lenders. This means existing S&G shareholders will cease to have any interest in the UK business. Working capital facilities will be separated too.
The senior lenders have agreed to increase S&G’s existing £25m working capital facility by a further £31m.
S&G is suing  the company formerly known as Quindell for £600m on the basis that, but for fraudulent misrepresentation, it would not have agreed the deal.