Ann: FY16 H1 Financial Results, page-5

Review of Operations
The Group ended the half-year to 31 December 2015 with total revenue and other income of $487.5 million (2014 restated:
$267.7 million), a net loss after tax of $958.3 million (2014 restated: $49.3 million net profit) and operating cash flows used
of $83.3 million (2014 restated: $25.8 million positive). Excluding interest received, borrowing costs and income tax paid,
the Group ended the half-year with gross operating cash flows used of $62.5 million (2014 restated: $31.1 million positive).
The comparative 31 December 2014 profit and loss and cash flow figures were prior to the acquisition of Slater and Gordon
Solutions (SGS) in the United Kingdom on 29 May 2015. Following the acquisition of various business assets, activities
have expanded to include other services complementary to the processing and resolution of personal injury claims in the
UK. As a result the cost base for the current period reflects additional expenses relating to SGS including cost of sales
associated with service revenue, advertising, marketing and administration.
The half-year to 31 December 2015 result was impacted by:
• an $876.4 million impairment charge against the carrying value of goodwill;
• underperformance in the UK operations, in relation to both intake and resolution of personal injuries claims in Slater
and Gordon Lawyers (SGL) UK and Slater Gordon Solutions (SGS) including lower resolutions in respect of Noise
Induced Hearing Loss (NIHL);
• A$21.3 million of additional provisioning for debtors and disbursements across the UK and Australia;
• early adoption of the new accounting standard AASB 15 – Revenue from Contracts with Customers; and
• impact of restatements in relation to deferred consideration payable to vendors in accordance with AASB 3 – Business
Combinations.
In November 2015, the UK Government announced proposals which would restrict the right of people injured in road traffic
accidents to claim damages for minor soft tissue injuries. Together with a proposal to increase the limit of the Small Claims
Court from £1,000 to £5,000, these are referred to as “the Osborne Reforms.” The Company expects the foreshadowed
consultation process to commence shortly and has made its best effort to factor potential changes into its assessment of
the future cash flows even though results are not yet certain. Slater and Gordon maintains its view that SGS will be well
positioned to be a leading provider of services to people who require legal, car hire, car repair and rehabilitation services
assistance as a result of road traffic accidents and legal services for other fast track claims in the UK.
The Company is in compliance with its financial covenants and has agreed to present to the lenders and their financial
advisers proposals which may include amendments to the current finance facility. A comprehensive review including an
assessment of revised financial forecasts, and the implementation of performance improvement programmes have been
initiated across the group with the aim of improving the profitability and cash flow of the business and reducing the level of
debt.