Login
Slater & Gordon’s net profit fell 85% in FY22, but ‘strong’ turnaround offers hope for FY23
Despite “signs of improvement” in the second half of the year, delivering an overall profit, Slater & Gordon’s net profit after tax has dropped from $14.5 million to $2.2 million, on the back of COVID-19 lockdowns in the big cities and corresponding fewer road and workplace accidents. The firm is, it says, “now back on its trajectory of improvement”.
Jerome Doraisamy
Results
However, the results also show that the firm is “now back on its trajectory of improvement”, with the second half of the last financial year seeing the firm move from a loss to an overall profit for FY22.
The firm has reported a net profit after tax (NPAT) of $2.2 million, down from $14.5 million in FY21, marking an 85 per cent drop. Net revenue also fell 10 per cent to $182 million.
It also reported earnings before interest, tax, depreciation and amortisation (EBITDA) of $29.3 million, compared to $48.6 million last year.
The firm also saw its gross operating cash flow down from last year’s figure of $15.4 million to $6 million this year, which it said reflected its ongoing investment in growth areas of the business, as well as the impact of the pandemic and prolonged lockdowns on the pace of file progression in the first half of the year.
Lawyers Weekly reported on the firm’s FY21 results here.
The news follows the release of the financial year 2022 results from fellow national plaintiff firm Shine Lawyers, which saw a net profit increase of 22 per cent; Clyde & Co, who revealed its Australian offices are bringing in the most revenue; Ashurst, which saw a 12 per cent revenue increase; Clifford Chance, which saw equity partner profits rise by 10 per cent; Herbert Smith Freehills, which recorded close to $2 billion in revenue; Pinsent Masons, which saw a PEP increase of 16 per cent; and IPH, which acquired a Canadian IP firm as it announced its end-of-year results.
Firm commentary
In its market update, Slater and Gordon said that COVID-19 lockdowns across metropolitan Melbourne, Sydney and Canberra during the first half of FY22 and the ongoing pandemic-inspired workplace restrictions “impacted” the company’s performance and end-of-year result.
“Those lockdowns and other restrictions, resulted in fewer road and workplace accidents, with those people with latent claims from the period prior to the lockdowns having already been identified and assisted during the FY20 and FY21 lockdown periods,” the firm wrote.
“These circumstances resulted in lower file openings and in delays in progressing existing claims during the first half of FY22.”
However, the firm went on, “with the lockdowns and other restrictions being relaxed toward the end of the first half and into the second half and with people returning to the road and workplace, enquiry levels returned to pre-pandemic levels”.
“The barriers to claims progression were also largely removed,” it said.
That second-half performance saw the company move from a $7.5 million loss to a profit of $2.2 million by year’s end.
Moreover, the company added, it did not qualify for or receive any JobKeeper support from the federal government.
The firm also noted that, in the past year, 73 of its employees volunteered to support Afghan refugees with immigration applications, and it was recognised by the Bar Association of Victoria as one of only 14 law firms that reached the Law Council’s Equitable Briefing target.
CEO reflections
Slater and Gordon chief executive John Somerville thanked the firm’s staff for their commitment, empathy and care shown to clients in an “unwavering” fashion in the last 12 months.
“When we reported our half-year results in February, we said we had started to see signs of improvement following the lifting of lockdowns, and we are pleased that the second half saw the continuation of that trend with the business returning to deliver an overall profit for the year,” he said.
“Our firm continues to make good progress on its improvement and growth plans, but we recognize we still have more work to do.”
Jerome Doraisamy
Jerome Doraisamy is the editor of Lawyers Weekly. A former lawyer, he has worked at Momentum Media as a journalist on Lawyers Weekly since February 2018, and has served as editor since March 2022. He is also the host of all five shows under The Lawyers Weekly Podcast Network, and has overseen the brand's audio medium growth from 4,000 downloads per month to over 60,000 downloads per month, making The Lawyers Weekly Show the most popular industry-specific podcast in Australia. Jerome is also the author of The Wellness Doctrines book series, an admitted solicitor in NSW, and a board director of Minds Count.
You can email Jerome at:
