Slater and Gordon has issued a profit warning to the Australian Stock Exchange.
The firm, which bought out Quindell’s legal services division in the first half of this year, has been plagued with difficulties since taking on the claims management company’s caseload of noise induced hearing loss (NIHL) claims.
In a statement issued today, it told shareholders that a “poorer than expected” case resolution profile would hurt its cash flow results for the six months running up to 31 December 2015. The firms reiterated that settlements of NIHL claims had been slower than anticipated when they were first bought from Quindell. It said it would provide an assessment of the impact of those results in January next year.
In November, the firm admitted that it would take on less personal injury cases in 2016 than it first planned to back in March due to the UK Government’s plans to reform low value claims.
The firm’s share price closed down 17% following the announcement and has dropped by almost 90% this year.
“We have previously advised the market that the performance of our UK operations during the first half has not been in line with our expectations,” said Andrew Grech, the firm’s managing director.
“It is now clear to us that the slower rate of case resolutions in the first half has had a larger impact than previously thought, and that this may well flow through to a reduced profit for the full year. For this reason we have withdrawn our full year guidance and we are conducting a review of our forecasting methods so that we can provide the market with more clarity moving forward.”
However, he said that the performance of the UK business had been improving over the last few months and was expected to contribute positively to cash flow over the rest of the financial year.