Slater’s shares on wild ride
Fresh concerns over Slater and Gordon’s recently acquired UK business sent the law firm’s shares on a wild ride and left the market awaiting explanation.
Slater and Gordon on Thursday tried to reassure investors that it won’t face future liabilities in relation to a business it bought from UK insurance claims processor Quindell, which is now being investigated for fraud.
Slater and Gordon’s shares plunged by 18.9 per cent to $2.65 at the open of trade on the Australian share market.
But they managed to claw back much of their losses to close 10 cents, or 3.06 per cent, lower at $3.17.
The initial falls were sparked by news that Britain’s Serious Fraud Office and Financial Reporting Council was investigating Quindell, just weeks after the Financial Conduct Authority launched a probe.
The UK-listed Quindell, meanwhile, stunned investors by reporting a full year loss of STG375 million ($A795.42 million) for the year ended December 31, 2014, and revising its previous financial results.
The revised results showed that discontinued operations – assets sold to Slater and Gordon – made a STG133,200 loss.
Slater and Gordon has defended the checks it did before acquiring Quindell’s professional services division PSD for $1.2 billion in March.
“Given the acquisition of the PSD was structured as an acquisition of the PSD entities rather than an acquisition of the common stock of Quindell, Slater and Gordon is confident that it has no liability in relation to those ongoing investigations into Quindell by various authorities,” it said.
IG market strategist Evan Lucas said PSD was supposed to be Slater and Gordon’s flagship for growth in the UK.
Mr Lucas said Slater and Gordon staff had contributed to the $890 million capital raising used to partially fund the acquisition of PSD, and those staff investors had seen much of the value of their investment evaporate.
Slater and Gordon said it didn’t rely on Quindell’s accounting policies when it examined the PSD’s books with the help of Ernst & Young.
“The publication of these statutory accounts does not alter Slater and Gordon’s view of the PSD, nor the economic benefits Slater and Gordon expects the business to generate,” it said.
Slater and Gordon managing director Andrew Grech was not immediately available to comment on Thursday.