LONDON: Shares in Australian-listed law firm Slater and Gordon have plummeted after the group admitted to misreporting revenues from its UK business for more than three years, although it says the errors have no impact on net cash results for the division.
Slater and Gordon shares dropped 26 per cent to $3.73 at the 10.15am (AEST) market open — the stock’s biggest fall on record.The company (SGH) said today it had identified errors in the reporting of its cash flows from its UK operations going back to the 2012 financial year, as part of a detailed analysis of its financial information to be provided to the Australian Securities and Investments Commission.
The corporate watchdog had examined Slater and Gordon’s auditor Pitcher Partners as part of ASIC’s routine review of publicly listed company audits.
Salter and Gordon said Pitcher Partners on Friday told it that ASIC was planning to “raise some queries” with the firm
In April, Slater and Gordon acquired London firm Quindell’s Professional Services Division for $1.3 billion with the assistance of EY auditors, which the firm reiterated following reports the corporate watchdog had questioned whether Pitcher Partners had the resources to conduct an “extensive and complex” international audit.
Slater and Gordon said the contentions in the report were “incorrect and misleading”.
On Thursday, the firm’s shares suffered their biggest plunge on record after the UK’s Financial Conduct Authority started an investigation into the accounts of Quindell.
Quindell said its accounting policies were “largely acceptable but were at the aggressive end of acceptable practice” in a release to the London stock exchange.
Slater and Gordon said in a statement today that there were two errors in the method used to report receipts from customers and payments to suppliers and employees by the UK business, reporting receipts on a gross, rather than net, basis.
Slater and Gordon identified a consolidation error in the historical cashflows from its UK operations, but said the mistakes have no impact on net cash results for the division.
The firm said any findings made against Quindell would not expose Slater and Gordon to any material financial risk.
The firm provided a draft note which it will affix its full-year financial statements, which Slater and Gordon had been advised was the usual way of dealing with such errors.
Slater and Gordon stock has fallen around 40 per cent in its last four sessions, and has now lost more than half its value since hitting a peak of near $8 earlier this year.
