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Slater and Gordon Grows Profits by 7.7%; ASIC Investigation Still in Progress

Slater and Gordon Grows Profits by 7.7%; ASIC Investigation Still in Progress
Aug 28, 2015 By Ben Visser

The highly anticipated full FY15 results for Slater and Gordon (ASX:SGH) have been announced. Changes have been made to its accounting policies and the ASIC investigation is not complete, however results came in strong and in line with expectations.

In normalised terms and excluding the one month impact of the Slater and Gordon Solutions (SGS) division, the company reported total revenue of $521.9 million, up 27 per cent on the previous corresponding period (pcp). Total EBITDA came in at $121.6 million, up 20.7 per cent and Net Profit after Tax came in at $70.7 million, up 7.7 per cent on the pcp. Earnings per share came in at 34 cents, up 12.4 per cent on the pcp.

The company’s net debt came in at $623 million as of 30 June 2015, equating to a gearing ratio of 43.0 per cent.

The company declared its final dividend of 5.5 cents per share, up 10 per cent on FY14.  The dividend will be 40 per cent franked and paid on 22 October 29, with record date 22 September 2015.

Whilst results were promising, investors are mostly anxious on feedback regarding the current ASIC investigation into Slater and Gordon. The company has provided a brief update, stating that it continues to co-operate with ASIC and expects the review process to conclude shortly. As a result the company has decided to alter certain accounting policies.

In regards to the consolidation error announced in June, the board can now reiterate and confirm that, as per that announcement, the consolidation error was an error only, with no impact on the net operating cash flows.

Looking into 2016, the company forecasts total group fees (including SGS) of $1,150+ million and Group EBITDAW of $205+ million. With the promising and forecasted results reported today, the company will likely experience a significant rally. However once the ASIC investigation concludes, investors will have much clearer indication on the future value of the firm.

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Ben Visser Author: Ben Visser Aug 28, 2015

Ben is a Wise-owl equity analyst focusing on ASX blue-chips stocks. Ben has a Bachelor of Business in Finance majoring in property valuations and management. In his role at Wise-owl Ben conducts in-depth fundamental and technical analysis which helps him to find profitable investment opportunities on the ASX and abroad.

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