Slater & Gordon (ASX:SGH) share price lifts 5% on earnings report

The Slater & Gordon Limited (ASX: SGH) share price surged today after the company released its earnings report for the half year in FY21.

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The Slater & Gordon Limited (ASX: SGH) share price surged by as much as 11% today after the firm released its earnings report for the half year in FY21.

At the time of writing, Slater & Gordon shares were up 5.56% to 86 cents per share.

What did Slater & Gordon announce today

The law firm announced a net profit for the six months ending 31 December 2020 of approximately $3 million — a far better result than the $561,000 loss of the prior corresponding period (pcp).

Revenues rose by $10 million – including $8 million in net movement in Work in Progress (WIP). Concurrently, expenses rose by only $3.8 million. The company highlighted a 16% growth in enquiries and a 6% rise in active case files during the period.

The law firm also posted earnings before interest, tax, depreciation and amortisation (EBITDA) of $18.8 million, compared to $15.3 million in the pcp.

Earnings per share (EPS) for the firm equated to 2.2 cents. In the pcp, this was a half a cent loss. Operating cash flow was down by $900,000 on the pcp to $6.1 million. The firm’s net asset position improved to $167.8 million – on 30 June 2020 this was $162.3 million.

Slater & Gordon advised it would not pay a dividend for the half.

The firm also pointed out it neither sought nor received JobKeeper payments.

What does Slater & Gordon do?

Slater & Gordon is a large compensation, personal injury, and class action law firm. It was one of the first law firms in the world to become publicly listed on a stock exchange.

The firm has 40 sites across Australia and has a strong social justice ethos. It has deep relationships with many of Australia’s unions and regularly represents asylum seekers on a pro-bono basis. In its half-yearly report, the firm highlighted acquiring compensation for 1,300 asylum seekers.

Comments from the chair

James MacKenzie, Slater & Gordon chair, gave the following comments on the results:

The investment that we are making in our business, in innovation and in our people is delivering the growth evident in our results.

Pleasingly, despite the challenges of COVID-19, we have continued to progress matters on behalf of the thousands of Australians who need our help to access justice.

Impacts of COVID-19

The firm attributed part of its success to the impacts of COVID-19. In its announcement, Slater & Gordon stated the rise in WIP could be partly attributed to “a slow-down in some parts of the legal process caused by COVID-19 restrictions.”

The firm credited the “remarkable effort” of its people in delivering today’s result.

In its announcement, the firm said:

The Board and management remain cautious about the social, health and economic environment in which the Company operates, particularly as courts, government bodies and medico-legal practitioners work through backlogs arising from last year’s shutdowns.

Slater & Gordon share price snapshot

During intraday trade, the Slater & Gordon share price went as high as 92 cents, the highest it’s been in the current year to date. However, in August last year shares were trading at $1.34 and in 2015 were at nearly $700 a share!

At current levels, the Slater & Gordon share price is down around 10% on this time last year.

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Motley Fool contributor Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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