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.
