Here’s the piece
http://www.theaustralian.com.au/business/legal-affairs/slater–gordon-investors-brace-for-the-worst/news-story/7b41937d64daefff4d614d0ba69672ba
Slater & Gordon investors are bracing for goodwill writedowns at the law firm’s British operations, with the company requesting a suspension of trade from the bourse as it finalises a review ahead of releasing first-half accounts on Monday.
Moana Weir, the law firm’s company secretary, wrote to the Australian Securities Exchange requesting the suspension because there were “certain material items in the half-year results which are not yet finalised, including, as foreshadowed in December, testing and assessment of goodwill values for impairment of the UK business”.
“Slater & Gordon considers it appropriate that it enters into voluntary suspension so that it can manage its continuous disclosure obligations in relation to the above matters and to avoid trading in its shares happening on a basis that is not reasonably informed,” Ms Weir wrote.
The company had around $1.15 billion in goodwill in its last accounts, for the year ending June 2015.
Before the announcement, Slater & Gordon shares had rallied, rising 30 per cent to 83c since last Wednesday, but still significantly short of higher valuations last year.
The law firm has been criticised for its acquisition of British firm Quindell’s professional services division in a $1.23bn deal early last year, although Slater & Gordon management — led by managing director Andrew Grech — have continued to insist appropriate due diligence was conducted.
A significant part of the acquisition cost — about $700 million — was consideration for goodwill.
At the time, the company raised $890m in capital to finance the deal, which Mr Grech hailed as “transformational”. Since then, its financiers have called in McGrathNicol to provide an independent line of sight into an internal review of its accounting practices, which is being led by PwC. McGrathNicol has in turn appointed FTI Consulting in Britain.
The process is being led by recently appointed chief financial officer Bryce Houghton.
Slater & Gordon’s poor performance has led to the possibility of at least two class action lawsuits led by rival firms Maurice Blackburn and ACA Lawyers, with investors claiming to have been misled about profit expectations, ditched by the company in December.
The company last month informed more than 50 staff in its British operation — providing legal and support services — that they could be made redundant as it considers the closure of offices in Manchester and Derby, both of which were added to Slater & Gordon through acquisitions of other law firms, Fentons Solicitors and Flint Bishop’s personal injuries team respectively.
Slater & Gordon announced in December it intended to provide guidance on cashflow generation, widely seen as inadequate by the company’s critics, but later decided against this.
