National firm Slater and Gordon is in talks about raising fresh capital as it strives to return to profitability following another year of hefty losses.
Slater and Gordon UK Holdings Limited reported that it lost almost £18m before tax during the year ended December 2021. It made a £20.3m loss the previous year.
In 2021, the group spent £2.1m on redundancy payments and almost £10m on restructuring: this included £5.6m on office closures, relocations and technology, and around £4.2m on provisions and contracts relating to discontinued operations.
It was noted by Slater's auditors that the availability of a working capital facility ‘remains uncertain and is a key judgement in relation to going concern’ at the date of the accounts being signed off.
The directors said they have carried out a going concern assessment and said the group will have access to at least £25m of working capital funding, on similar terms to the current arrangement. Discussions with the current and other lenders remain ongoing, and the current lender has expressed a non-legally binding intention to continue the facility through to December 2023.
But the company’s auditor Deloitte states in its assessment of the business – signed off earlier this month – that ongoing discussions with lenders, as well as revenue issues, indicated that a ‘material uncertainty exists that may cast significant doubt on the company’s ability to continue as a going concern’.
In response, the firm said it is in the process of agreeing with new terms with its current funder and with several new providers. This forms part of a strategy to optimise future funding.
The 2021 accounts show that revenue from legal services fell 15% to £98.3m, as chief executive Nils Stoesser reflected in his overview that there was ‘no denying that 2021 was hugely challenging for the whole of the consumer legal services industry, particularly in the personal injury market’.
Stoesser told the Gazette that the continued impact of Covid-19, legislation affecting the PI market and wider industry trends had created a ‘perfect storm in many ways’. But he struck an optimistic tone in describing the future of the group, which last summer split its business into two sections for ‘essential’ and ‘specialist’ legal services.
Stoesser added: ‘I have been hugely impressed by the professionalism, dedication and enthusiasm of my colleagues across the business. Their tireless commitment to our clients and to delivering the best possible levels of service is key to Slater and Gordon’s success and allows us to approach the future with confidence.
‘Looking forward to this financial year, the outlook is considerably more promising. Our ground-breaking £193m collective action emissions case against VW, in which S+G represented more than 70,000 of the 91,000 claims, has allowed the organisation to approach 2023 with confidence and optimism.’
He added that the firm is continuing to successfully progress with its strategy outlined by continuing investment in the sectors ‘where we can have a competitive advantage, incorporating innovation and high levels of customer service into everything we do’.
The group cut headcount by 8% to 1,579 during 2021, mainly by halving the number of legal support staff. Fee earner numbers actually increased from 650 to 692.
Remuneration received by the highest-paid director fell from £576,000 to £363,000.
The group’s net assets fell from £108m to £85m and cash reserves came down from £13.8m to £11.5m.
