Grech: stable base in the UK
Slater & Gordon (S&G) has announced UK revenues of just over £100m for its last financial year, and indicated that further acquisitions are to come in the coming 12 months.
Issuing its preliminary annual results to the Australian Stock Exchange, the alternative business structure showed the impact of its acquisition spree, as its UK revenue in the 2013 financial year was just £39m.
Overall S&G unveiled revenues of £231m (A$419m) across its Australian and UK operations for the year to 30 June 2014, up 40% on the previous year.
Net profit after tax was up 47% to £33.7m, of which £15.1m was attributable to its UK operations. The EBITDA margin was 24.6%.
The results showed 8% underlying growth in S&G’s UK business. While building a broad consumer brand, the firm is still heavily reliant on personal injury (PI) in the UK, which accounted for 77% of S&G’s UK revenues and was also far more profitable than general law services.
While PI slightly exceeded its target EBIDTA margin range of 25-28%, general law fell well below its 12-15% target range.
An investors presentation said S&G’s UK PI business delivered its 2014 targets, noting a “strong performance from Fentons” – one of its five acquisitions last year. A “stabilising” regulatory environment provided “opportunity to accelerate consolidation” in the PI market, it said; the priority is to increase S&G’s proportion of multi-track/serious injury work.
By October, the Fentons brand will have disappeared, as will the Pannone brand by next March.
So far as general law was concerned in the UK, investors were told that there were “strong opportunities to scale up smaller practices and optimise profitability levels”, along with “opportunities to broaden range and depth of competence across major regional centres”.
The pipeline of possible acquisitions in the UK was “strong”, with “good prospects” of more deals being completed in the current financial year.
The S&G board predicted that the 2014-15 financial year would see group revenues reach £276m, with the UK contributing £127m, “comprising the expected full year contribution of acquisitions completed in FY14 and 8% revenue growth from the underlying practices”.
S&G group managing director Andrew Grech said: “I am very pleased with the group’s financial performance for FY14. We have been able to deliver the results we promised while making great progress in each of the key areas of our growth strategy…
“The businesses acquired in the UK are running smoothly and the integration of all acquired firms is well progressed. We have been delighted by the response to the launch of the Slater & Gordon brand, which along with Claims Direct is delivering underlying revenue growth of 8% year on year.
“We have now established a stable base in the UK and have the people and initiatives in place to make the best of the opportunities which are continuing to open up in that market.”
