Slater & Gordon Ltd
Annual Report 2021
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Business Highlights
Our Business
Chair’s Report
CEO’s Report
People and Culture
Social Responsibility Report
Financial Statements
Directors’ Report
Auditor’s Independence Declaration
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Additional ASX Information
Corporate Directory
Contents
Slater & Gordon Ltd
ANNUAL REPORT 2021
Business Highlights
+14%
$197.4m
+38%
$48.6m
Net Revenue1
EBITDA2
+$16m
$14.5m
Net Profit After Tax
+12%
$179.5m
+410 Basis Points
24.6%
EBITDA Margin2
-43%
$14.5m
Net Tangible Assets
Gross Operating Cash Flow
-1
23
+9
64
Net Promoter Score3
Employee Engagement4
1. Statutory revenue.
2. EBITDA excluding specified items where specified items are certain cash and non-cash items relating to transformation and normalisation of the Company.
3. Source – Kantar, April 2021.
4. Source – Kincentric, March 2021.
01
Slater & Gordon LtdANNUAL REPORT 2021 Our Business
What we do
How we work
Why we do it
We access justice for all
people. We champion voices
struggling to be heard.
We unite to treat every
client with care and
commitment.
We make tomorrow start
today for our clients.
1
2
60 sites
Australia wide
24
15
1
17
Iconic and trusted brand
• ＋85+ years of caring for
Australians’ rights
• Maintained #1 prompted
and unprompted recall2
• Net Promoter Score of 233
Highly focused business model
• ＋Personal Injury4 89% of revenue
• ＋Class Actions5 7% of revenue
• ＋Emerging Services6 4% of revenue
Deep physical networks staffed by skilled, diverse team
Market-leading digital assets
• ＋~601 sites in VIC, NSW, ACT, QLD, NT and WA
• ＋Well represented in chosen market
• ＋Unions and other referral relationships
• ＋Online claim assessment tool
• ＋Outbound digital capability
• ＋
＋Advanced analytics supporting
business decisions
1. Includes permanent and visiting offices.
2. Source – Audience Group, March 2021. # 1Prompted and Unprompted brand awareness across Personal Injury law firms in VIC, NSW and WA.
3. Kantar, April 2021.
4. Personal Injury includes Motor Vehicle Accidents, Workers Compensation and Civil (made up of Medical Negligence, Public Liability, Asbestos and
Superannuation/TPD matters).
5. Includes mass tort, consumer protection, product liability, and employee rights.
6. Includes Compulsory Acquisition, Industrial & Employment.
02
Slater & Gordon LtdANNUAL REPORT 2021 Our iconic brand and focused business model ensures our clients receive
the care and compassion they deserve.
03
Slater & Gordon LtdANNUAL REPORT 2021 ANNUAL REPORT 2021
We are using the learnings from new ways of working as a result of the
pandemic to embed innovation and more efficient practices into the business
in ways which improve our clients’ experiences.
04 Slater & Gordon Ltd
Chair’s Report
Twelve months on from our 2020
Annual Report we are still battling
COVID-19 outbreaks and rolling
lockdowns. Our people at Slater &
Gordon Ltd (Slater & Gordon or
Company) have been incredible in
the way they have embraced the
challenges of the past 12 months,
have come together to support
each other and our clients and have
worked tirelessly to make tomorrow
start today for our clients. I sincerely
want to thank each and every one of
our people for the tenacity, strength
and resilience they have shown and
for their unwavering commitment
to achieving the best results for our
clients. I also want to thank our clients
for embracing new ways of engaging
with their legal teams and for the
support they have shown Slater &
Gordon and our people.
The COVID-19 pandemic does
not appear to have had a material
impact on the Company’s financial
performance during the financial year
ended 30 June 2021 (FY21). There are
more details about the Company’s
response to the COVID-19 pandemic
in the CEO’s Report and the Directors’
Report. While we have navigated
through the COVID-19 pandemic
well, we also believe it is in the best
interests of the community to be
vaccinated and we are providing our
people with flexibility and support
to enable them to attend vaccination
appointments during work hours.
COVID-19 has also presented
opportunities. We are using the
learnings from new ways of working
as a result of the pandemic to embed
innovation and more efficient practices
into the business in ways which
improve our clients’ experiences.
We are looking to build the law firm
of the future.
The FY21 results show the Company
continues to improve and continues
to lay strong foundations for future
growth. For the first time since
its recapitalisation in 2017, the
Company has returned to sustainable
profitability, with a net profit after tax
of $14.5m. This compares favourably
to the net loss after tax for the full
year ended 30 June 2020 of $1.2m and
was driven by an increase in work in
progress in both the personal injury
law and class actions practices.
The Company reported earnings
before interest, tax, depreciation
and amortisation (EBITDA) before
specified items1 of $48.6m, compared
to $35.3m in the financial year ended
30 June 2020 (FY20). Revenue was
$203.4m, compared to $178.3m in
the prior corresponding period.
Although our profit and revenue
results were pleasing, our cash
reserves are funding growth and
therefore total cash generation
was down on last year.
The Board and our management
team are managing this carefully
and we have a number of initiatives
under way aimed at strengthening
our balance sheet. Pleasingly this
year’s results demonstrate that the
Company’s strategy, endorsed by
the Board, is delivering value and
the Company is heading in the right
direction. Importantly, they indicate
the Company is returning to strong
organic growth. Our challenge
remains to be able to fund this
growth on terms which make sense
for the Company.
Slater & Gordon has a long and
proud history of leadership in
pursuing diversity and inclusion in
our workplace. In 2019 the Company
established the Inclusion Committee
to advise on mechanisms to address
inequities in the workplace as well as
the drivers of violence against women.
The Company continues to address
the gender pay gap and in FY21 also
introduced paid superannuation for all
employees on unpaid parental leave.
The Company has fair gender balance
at all layers of management. There
are more details on the Company’s
diversity and inclusion initiatives in
the People and Culture Report and
the Social Responsibility Report.
Our achievements over the past 12
months would not have been possible
without our people, our clients and
our supporters. I would like to thank
our people, our leadership team
and our Board for their unwavering
commitment to making tomorrow
start today for our clients through
what has been a year like no other.
Their passion for and the care they
provide to our clients, along with
their fierce determination to uphold
access to justice is what makes
Slater & Gordon who we are.
Our Chair is currently on leave while
he seeks treatment for a medical
condition and we look forward to his
speedy recovery and return. In his
absence, I am proud to act as Chair
for a company whose values are so
strongly entrenched.
I would also like to thank our
unions, regulators, industry bodies,
sponsorship partners and business
partners for their ongoing support.
It has been a tough and uncertain year
for many, so their ongoing support
has been all the more appreciated.
Overall, Slater & Gordon has had
a solid year with further progress
being made on the Company’s
transformation, but we know that
we still have more work to do. I look
forward to working with the Board,
management and, above all, our
people as we continue to build the
law firm of the future.
Elana Rubin
Acting Chair
1. Adjusted for Specified items are certain cash and non-cash items relating to transformation and normalisation of the Company.
05
Slater & Gordon LtdANNUAL REPORT 2021 ANNUAL REPORT 2021
CEO’s Report
When I read feedback from our clients
I am regularly reminded that it is the
care they received from their team
at Slater & Gordon that has had the
most profound impact on their legal
journey. This care and compassion has
never been more on display amongst
our people than it was in the past 12
months. I want to thank our people
who rallied around each other and our
clients to provide support, to ensure
we were able to continue to access
justice on behalf of our clients, and
to embrace new ways of working,
sometimes while also juggling home
schooling and caring responsibilities.
I am very proud of the way our core
values of respect, care and kindness,
as well as a fierce passion for social
justice, have radiated from our
people over the past 12 months.
Despite the challenges that COVID-19
presented, our people also saw
opportunities to set us up as a law
firm of the future. We embraced
digital ways of working and we
recognised that flexible and hybrid
ways of working are the way of the
future, implementing new systems
and policies to support our clients,
enhance flexibility and improve
efficiencies in matter processing which
are contributing to a better experience
for our clients. Our investment in
digital ways of working is also having
a positive environmental impact
as we move away from an historic
reliance on paper, physical files and
physical storage facilities. Further,
our investment in client facing digital
technology has delivered solid
organic growth.
Pleasingly 89% of our people participated
in our annual engagement survey and the
result saw a marked improvement, which puts
Slater & Gordon above the industry benchmark.
Gross Operating Cashflow was
$14.5m, compared to $25.3m in FY20
reflecting the Company’s growth in
Work in Progress (WIP), with fees
billed being slightly down on FY20
in part due to the impacts of
COVID-19, and the Company’s
ongoing investment in transformation
and future growth.
The financial report also shows the
Company ended the full year with:
• Total revenue and other income
from continuing operations of
$203.4m, compared to $178.3m
in the prior corresponding
period (PCP).
• Expenses relating to continuing
operations of $182.2m, compared
to $178.5m in the PCP, reflecting
increased labour costs and
investment in marketing and
technology to support growth
and the ongoing transformation
of the Company.
• A net profit before income tax from
continuing operations of $21.3m
(PCP: net loss of $0.2m).
• Operating cash inflows generated
from continuing operations of
$11.1m (PCP: $20.0m), reflecting
a reduction in fees billed.
• A net asset position of $180.5m
(PCP: $162.3m).
of state payroll tax and some rental
payments to landlords continued
in FY21, by agreement.
The COVID-19 pandemic does
not appear to have had a material
impact on the Company’s financial
performance during FY21. There has
been no impact to asset values and
total revenue has been at least in line
with the Company’s pre-COVID-19
trajectory. However, government
imposed restrictions and lockdowns
in FY21, in particular in Victoria,
had some impact on the Company’s
ability to progress its clients’ claims,
with medical panels and courts and
tribunals being hampered and delayed
in their activities due to the restrictions
and lockdowns. This had some
negative impact on the Company’s
fees billed and cash flows, although
WIP continued to improve.
In FY21 the Company continued its
work to strengthen its balance sheet,
and in September 2020 completed
a partial repayment of its Super
Senior Facility (SSF) as part of a
loan repayment tender process.
The Company repaid a total of $5m
to SSF lenders, but at less than 100
cents in the dollar, reducing the
amount outstanding under the SSF
(including principal and interest)
by approximately $5.4m.
In September 2020, the Company
also replaced its Disbursement Asset
Backed Facility with a new and more
favourable Working Capital Term
Loan Facility, part of which was used
to pay down the Disbursement Asset
Backed Facility.
As a result, the Company reported a
net profit after tax (NPAT) for FY21 of
$14.5m, and EBITDA before specified
items1 of $48.6m. Revenue on this
basis increased by 14.2% and costs
increased by 8.5%.
The Company did not receive
any support under the Federal
Government’s JobKeeper support
scheme. During FY21, no employee
was stood down due to COVID-19
related restrictions. Some deferral
1. Adjusted for Specified items are certain cash and non-cash items relating to transformation and normalisation of the Company.
06
Slater & Gordon LtdANNUAL REPORT 2021 extraordinary year. Our people’s
determination to advocate for and
achieve justice for our clients, the
care and compassion they have
demonstrated, and their commitment
to upholding Slater & Gordon’s values
goes to the very heart of who we are.
John Somerville
Managing Director and
Chief Executive Officer
The work on the Company’s balance
sheet is ongoing and a major focus of
the Board and leadership team.
Throughout the pandemic the health
and wellbeing of our people and our
clients has been our highest priority.
We conducted regular pulse surveys
as well as our annual engagement
survey, with our people telling us they
felt supported by the Company and
supported to work flexibly. Pleasingly
89% of our people participated in our
annual engagement survey and the
result saw a marked improvement,
which puts Slater & Gordon above
the industry benchmark.
Each year we undertake a national
client satisfaction survey to help us
better understand our clients’ needs,
measure their satisfaction with our
service and identify opportunities
to help make their tomorrow start
today. In addition to our annual
client satisfaction survey, throughout
FY21, we surveyed our clients
more frequently to help us better
understand their needs given the
impact of the COVID-19 pandemic on
their lives. Pleasingly, we were able
to identify additional opportunities
to support our clients, with an
overwhelmingly positive response
from our clients.
Over the past 12 months the Company
filed four new class actions, including
one against ANZ and OnePath, the
fifth in our Get Your Super Back
campaign through which we are
advocating for hundreds of thousands
of Australians who were gouged by
the big banks and were short-changed
on their retirement savings.
Social justice and helping the most
vulnerable in society underpin
everything we do. We are proud to
have secured findings of a privacy
breach affecting almost 10,000 people
seeking asylum after the Federal
Government accidentally leaked their
sensitive and personal information
in 2014, which will likely result in
many claims for compensation
being successful. It will likely be
the first time in Australian history
that compensation is awarded for a
mass data breach. Slater & Gordon
undertook this work pro bono and
many of our people dedicated
hundreds of hours of work to achieve
this outcome. As we continue to grow
and continue to build the law firm of
the future, we will continue to seek
out appropriate opportunities for
meaningful pro bono work.
Slater & Gordon also launched a
public-facing healthcare campaign
which advocated for support for
hospital, allied health, aged and
disability care workers and helped
them understand their legal rights.
The campaign gave a voice to many
of our clients in the healthcare sector
who have been injured at work and
provided a platform to tell their story.
Despite the challenges of COVID-19
it was a very busy year and the
Company achieved an enormous
amount as we continued to grow and
invest in our future. It is pleasing that
the Company’s strategy is delivering
results not only in our financial
performance, but for our people and
our clients. However, there is still
more work to do as we build the
law firm of the future.
Most importantly, our results reflect
the dedication and passion of our
people for making tomorrow start
today for our clients. I would like to
thank our people, our leadership
team and our Board for the support
they have shown the Company, each
other and our clients throughout an
07
Slater & Gordon LtdANNUAL REPORT 2021 We believe strongly in the advancement of gender equality and
continue to have strong female participation at all levels throughout
the Company. Our female employees continue to make up 77% of our
workforce and 85% of our promotions were awarded to women.
08 Slater & Gordon Ltd
ANNUAL REPORT 2021 People and Culture
Delivery on the Company’s strategy
is underpinned by our purpose-
driven and talented people who
are passionate and skilled and work
as one team to unlock justice for
everyday Australians.
Our national footprint grew this
year enabling our people to provide
specialist legal services to more clients
within their local communities. We
now service 60 locations throughout
Victoria, New South Wales,
Queensland, Western Australia,
ACT and Northern Territory.
COVID-19
We continued to support our
people and our clients to navigate
the enduring uncertainties arising
from COVID-19 and proudly did so
without any job losses, reduction in
our people’s pay and benefits, nor
the need to receive government
assistance (JobKeeper).
Our response to the pandemic
remained, and continues to remain,
focused on protecting the health and
wellbeing of our people and clients
and ensuring operational and financial
stability of our business, including:
• during lockdowns, our offices being
closed and employees working from
home, save for a small skeleton
staff to deal with mail, banking and
document retrieval; and
• investing in technology to enable
our people to continue to support
our clients remotely and obtain
their compensation entitlements
with minimal disruption.
A continued focus is to support our
people to work flexibly. Pleasingly,
the 2021 engagement results told us
that 86% of our people felt that the
Company takes health and safety
seriously and 76% felt supported
in making use of flexible work
arrangements.
Engagement and Delivery on
our Strategy
Our annual employee engagement
survey ensures we continue to listen to
and understand our employees when
it comes to their work experiences
and expectations. A record number
(89%) of our people participated in
this year’s engagement survey with
the Company’s engagement scores
again increasing and surpassing the
Australian industry benchmark.
Our people told us that the greatest
improvements were in the areas
the Company focused on in its
engagement action plans:
• investing in tools and resources to
enable our people, including in a
flexible work environment;
• building our people’s capability;
• effective communications –
communicating the right message,
at the right time and;
• building change capability to enable
the Company.
Diversity and Inclusion
A diverse and inclusive culture is a
fundamental element of who we are
as a Company. The 2021 engagement
Gender Participation Levels
survey results showed that 96% of
our people felt Slater & Gordon values
diversity and promotes inclusion across
gender, gender identity, sexuality,
race, religion, age and disability.
We believe strongly in the
advancement of gender equality
and continue to have strong female
participation at all levels throughout
the Company. Our female employees
continue to make up 77% of our
workforce and 85% of our promotions
were awarded to women. Gender
pay parity is reviewed regularly
and remains strong against
industry standards.
The Company’s Inclusion Committee
met regularly throughout the
year to promote and progress
several inclusion activities. Current
activities of the Committee include,
in partnership with the Victorian
Women’s Legal Services, initiatives
arising from the Starts With Us project
to prevent violence against women,
as well as monitoring the Company’s
gender pay parity performance
and recognising and participating
in celebrations of diversity such as
NAIDOC Week, Wear it Purple Day
and Refugee Week.
Employment level
Board
Senior Executive Team
Senior Management
Non-Management
Overall Organisation
30 June 2021
30 June 2020
Male
71%
45%
46%
20%
23%
Female
29%
55%
54%
80%
77%
Male
71%
45%
45%
18%
23%
Female
29%
55%
55%
82%
77%
Our long history of achievements is formidable.
It was built on hundreds of committed people being
innovative, determined, passionate and the best in
the legal profession. Our future will be built in the
same way by our people, who are the custodians
of our values, unique culture and vision.
09
Slater & Gordon LtdANNUAL REPORT 2021 Social Responsibility Report
In 2019 Slater & Gordon established
the Inclusion Committee to advise on
mechanisms that address inequities on the
basis of gender, gender identity, sexuality,
ethnicity, race, age and disability, and
includes preventing violence against
women and their children.
In January 2021 Slater & Gordon, on a pro
bono basis, along with the Refugee Advice
and Casework Service (RACS), secured
findings of a privacy breach affecting almost
10,000 people seeking asylum whose data
was accidentally leaked online.
Slater & Gordon is a member of the
Diversity Council of Australia and a
signatory to the UN LGBTIQ Global
Standards for Business.
Health Projects and Research Fund
Pro Bono Work
The Slater & Gordon Health Projects
and Research Fund is a philanthropic
grants initiative focused on improving
care and treatment for people
with asbestos-related illnesses,
occupation-caused cancers or with
significant disability caused by a
catastrophic injury. The fund also
provides small ongoing education
grants to medical and health
professionals who are dedicated
to the prevention, treatment, care
and support of people who have an
asbestos-related disease, work-
related cancer or a catastrophic spinal
or brain injury.
Slater & Gordon has a proud history
of providing pro bono and public
interest legal work in Australia.
Our lawyers undertake pro bono
work in many areas of law and
through that have assisted members
of the community, including people
with severe disabilities, charities,
community and indigenous groups,
as well as volunteering at community
legal centres. In January 2021 Slater
& Gordon, on a pro bono basis, along
with the Refugee Advice and Casework
Service (RACS) secured findings of
a privacy breach affecting almost
Slater & Gordon is founded on social
justice values and we are committed
to inclusion, diversity, social justice
and giving back.
One of the defining features of our
Company is our relationship with
the local communities in which we
operate. We encourage and support
that relationship through pro bono
legal support and other activities, as
well as giving staff the opportunity
to donate a portion of their wage
to our Staff Giving Program, which
goes towards funding local projects
throughout Australia via the
Slater & Gordon Community Fund.
Slater & Gordon also gives back
through its commitment to
philanthropic activity, having
established a Community Fund
in 2001 and an Asbestos Research
Fund in 2004.
In 2014 the Company broadened its
commitment to achieving outcomes
for people suffering disease and
disability by establishing the Health
Projects and Research Fund.
The Slater & Gordon
Community Fund
Our Community Fund is a
philanthropic fund which offers
grants to community groups in three
key areas of focus:
• assisting people with disease and
disability and promoting their
participation and inclusion;
• addressing inequality and
disadvantage; and
• encouraging young people to
engage in healthy activity and
lifestyles.
Financial support is given to projects
and initiatives which further these
objectives. The fund is supported by
donations from Slater & Gordon staff
via our Staff Giving Program as well as
the Company itself.
10
Slater & Gordon LtdANNUAL REPORT 2021 10,000 people seeking asylum whose
data was accidentally leaked online.
This will likely result in many claims
for compensation being successful.
It is believed the decision was an
Australian legal first and represents
hundreds of hours of pro bono work by
our legal teams across personal injury
and class actions practices.
Slater & Gordon Inclusion
Committee
In 2019 Slater & Gordon established
the Inclusion Committee to advise on
mechanisms that address inequities
on the basis of gender, gender
identity, sexuality, ethnicity, race,
age and disability, and includes
preventing violence against women
and their children by addressing
the drivers of violence in an holistic
way, with consideration to the
complex nuances associated with
diversity and workplace inclusion.
The Committee’s membership is
representative of the organisation as
a whole and brings valuable insights
of their lived experience to inform the
Committee. Through the Committee
the Company has partnered with the
Victorian Women’s Legal Service
in their Starts With Us project to
tackle the issues of sexism and gender
inequality in the Legal and Justice
Sector, and in particular the drivers
of violence against women.
Other Initiatives and Memberships
Slater & Gordon is a member of the
Diversity Council of Australia and a
signatory to the UN LGBTIQ Global
Standards for Business. Slater &
Gordon also supports and sponsors the
Next Generation Internship Program,
which is run by EMILY’s List Australia,
and in 2016 the Class Actions team
became a signatory to the Law Council
of Australia’s Equitable Briefing
Policy. The Company is in the process
of rolling this out more broadly across
the business.
11
Slater & Gordon LtdANNUAL REPORT 2021 Financial Statements
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71
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78
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Directors’ Report
Auditor’s Independence Declaration
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Additional ASX Information
Corporate Directory
12
Slater & Gordon LtdANNUAL REPORT 2021 DIRECTORS REPORT
The Directors present their report, together with the financial report of the consolidated entity consisting of Slater & Gordon
Ltd (“the Company”) and its controlled entities (jointly referred to as “the Group”), for the financial year ended 30 June 2021
(“FY21”) and the auditor’s report thereon. This financial report has been prepared in accordance with Australian Accounting
Standards. Compliance with Australian Accounting Standards ensures compliance with International Financial Reporting
Standards (“IFRS”).
Directors
The Directors in office at any time during the financial year and up to the date of this report are:
• James MacKenzie – Chair
• Mark Dewar
• Merrick Howes
• Michael Neilson
• Elana Rubin
• John Somerville
• Jacqui Walters
Effective, 1 August 2021, James MacKenzie temporarily stepped down as Chair, to have treatment for a medical
condition. Elana Rubin is acting as Chair in the interim. It is expected that Mr MacKenzie will resume as Chair within a
few months.
Details of the skills, experience, expertise and special responsibilities of each Director are set out in the “Information on
Directors and Company Secretary” section of this report.
Principal Activities
The principal activity of the Group during the financial year was the operation of legal practices in Australia.
Review of Operations
The Slater & Gordon vision
The Company’s vision is to help everyday Australians secure a better future by accessing justice and championing those
who struggle to have their voices heard. The Company is united in its purpose to make tomorrow better than today for its
clients and treats every client with care and commitment.
The Company helps unlock justice for everyday Australians who it believes have a right of redress or compensation, where
there is a considerable power imbalance. The Company’s clients come to the Company at what is often the most vulnerable
time of their lives. Without the Company’s services, many of the Company’s clients would not be able to access justice.
The Company treats clients with compassion and respect and prides itself on being trusted legal advocates for, and
delivering the highest quality legal services to, clients. This absolute focus on client care and results makes the Company
fierce in its representation and permeates the firm.
The Company has a history of innovating and is active in protecting and enhancing the legal rights of clients. The
Company’s advocacy extends beyond individual cases to include the issues of social justice and individual rights more
broadly.
The Company has three core values:
+ Do it right – we are passionate about the quality of our work and always achieve the highest professional standards
in order to deliver the best outcome for our clients.
+ Work well with others – we share knowledge, experience and ideas. We encourage respect and collaboration
within the firm and the community.
+
Take the lead – we challenge ourselves to be the best, we strive for innovation and we are committed to doing
everything that can be done to help our clients.
Managing risks
The following details some of the material business risks that could affect the growth of the Company’s core services.
These are not listed in order of significance and do not comprise every risk that the Company may be exposed to.
Description of key risk
Key risk mitigation
Regulatory & Industry Reform
The Company’s operations are subject to extensive
regulation. Adverse regulatory or legislative changes may
adversely impact the Company’s operations, financial
performance and position.
Proactive and comprehensive stakeholder and community
engagement,
government
consultation to advocate our position, modelling of the
potential impact of changes and business model and the
optimisation of practice management service offerings.
discussion,
informed
Slater & Gordon
Page 1
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Slater & Gordon LtdANNUAL REPORT 2021
DIRECTORS REPORT
Description of key risk
Key risk mitigation
Operations and Systems
There are a number of key operational risks which arise
directly from the operations of the Company as a major
participant in the Australian legal services industry and
impacted by
the ongoing COVID-19 pandemic
environment. These include strategic and business
decisions, technology and cyber risk, reputation risk,
fraud, supplier disruption, increased digitisation and
changed employee working conditions, health and safety
risk, compliance with legal and regulatory obligations,
counterparty performance under outsourcing and referral
arrangements, business continuity planning, legal risk,
data privacy and integrity risk, client default risk, key
personnel risk and external events.
The Company’s financial performance and position have
been, and in the future may continue to be, impacted by
these risks.
Growth Strategy, Competition and Market Share
in a competitive market,
The Company operates
competing for its offering of personal injury, class actions
and/or other legal services. Competition is on the basis of
a number of factors, including the quality of advice and
service, innovation, reputation and price. The Company’s
marketing and service offerings may not generate
sufficient enquiries and opportunities to attract and retain
clients and commence class actions to support our growth
strategy.
Financial performance may be adversely impacted as a
result of these risks.
People
The Company has business performance improvement
programs in place designed to standardise, centralise,
optimise and promote efficient and innovative operating
platforms, IT systems and people strategies.
Periodic assessments are undertaken by subject matter
experts on the Company’s processes and systems to
support the development and implementation of required
action plans.
Business continuity and crisis management oversight and
response activities are in place for the health and safety of
the Company’s people and protection of critical business
functions. A workplace health and safety framework and
initiatives which supports the mental health and wellbeing
of the Company’s people.
Initiatives are being undertaken
to strengthen our
information security framework to enhance our resilience to
cyber-attacks and for the protection and privacy of the
Company’s data.
Strategic initiatives are designed and implemented to
support
including
the Company’s growth strategy,
diversification of service offerings and digitisation. The
Company monitors the markets in which it operates to
understand competitive activities and the ongoing demand
for the Company’s services whilst operating disciplined
pipeline processes for class actions. The Company also
protects and strengthens the Company’s brand and
maintains long-standing relationships with trade unions and
professional groups which provide a consistent source of
new client referrals.
The Company may be unable to attract, engage, retain
and develop talented and motivated people and maintain
the Company’s desired culture which may limit its ability
to deliver its growth initiatives.
People, culture and remuneration initiatives are undertaken
to support, engage and develop the Company’s people and
maintain its desired culture, deliver on its enterprise
agreements and address change in working conditions as
a result of the pandemic.
Capital Management
Funding and management of capital and liquidity remains
a key focus following the Company’s recapitalisation in
2017 with work being undertaken associated with the
significant work in progress receivable maintained on the
Company’s balance sheet and funding growth in service
offerings, particularly in class actions. Additional funds
may need to be obtained through capital raisings or cash
flow may need to be managed through seeking to
negotiate current debt and equity arrangements.
Implementation of a working capital management program
with due diligence of the Company’s service offering
the
funding requirements and close
Company’s lenders to ensure liquidity needs are monitored
closely and arrangements are put in place where necessary
to bridge short term liquidity needs. Assessment and
management of the Company’s capital and ownership
structure to align with delivery of strategic plan and
objectives.
involvement of
Refer to the Company’s Corporate Governance Statement for details of the Company’s risk management framework.
Slater & Gordon
14
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Slater & Gordon LtdANNUAL REPORT 2021
DIRECTORS REPORT
Financial review
The Group reported a net profit before tax from continuing operations of $21.3m for the year ended 30 June 2021, an
increase from a loss of $0.2m in the prior year. This was driven by an increase in work in progress in both the personal
injury law and class actions practices.
The Group reduced its outstanding secured debt and improved working capital through restructuring of the borrowing
facilities. As at 30 June 2021, the Group’s total borrowings were $89.2m (excluding lease liabilities), a reduction of $2.6m
from prior year. The Group has a positive net current asset balance of $120.8m and positive overall net asset balance of
$180.5m.
Significant Changes in the State of Affairs
COVID-19
During FY21, in response to the COVID-19 pandemic, all Australian state and territory governments imposed restrictions
on the movement of people, which impacted the operations of businesses and organisations. In particular, metropolitan
Melbourne, where the Company has a significant number of employees and offices, was subject to extended and significant
restrictions during the period from August to October 2020.
In response to these restrictions, the Company undertook actions to protect the health and wellbeing of its clients and
employees and to protect its business, including the following:
•
•
•
•
Offices being closed and employees working from home.
A small skeleton staff continuing to work in offices during periods of restriction to deal with mail, banking and document
retrieval.
Further laptops and software licenses were acquired to allow employees to continue to support clients and operate
the Company’s business with minimal disruption.
As restrictions eased in various states, offices were re-opened in a staged manner, in line with recommendations
from state governments and health officers.
The Company did not qualify for, apply for or receive any support under the Federal Government’s JobKeeper support
scheme. During FY21, no employees were stood down due to COVID related restrictions. Some deferral of state payroll
tax and some rental payments to landlords continued in FY21, by agreement.
The COVID-19 pandemic does not appear to have had a material impact on the Company’s overall financial performance
during FY21. There has been no impact to asset values and total revenue has been, at least, in line with the Company’s
pre-COVID-19 trajectory. However, government imposed restrictions and lockdowns in FY21, in particular in Victoria, had
some impact on the Company’s ability to progress its clients’ claims, with medical panels and courts and tribunals being
hampered and delayed in their activities due to the restrictions and lockdowns. This had some negative impact on the
Company’s fees billed and cash flows, although work in progress continued to improve.
Events Subsequent to Reporting Date
On 10 August 2021, the Company announced the resignation of its Chief Financial Officer, Scott Butterworth. Mr
Butterworth’s final departure date is under discussion and the process to recruit a replacement has commenced.
Likely Developments
The Group is focused on organically growing its core service areas of Personal Injury Law and Class Actions in Australia.
The continued impact of the COVID-19 pandemic, including in particular the continued imposition of government
restrictions and the broader impacts on the Australian economy, may impact the Company’s performance in FY22. That
impact (if any) cannot currently be determined with certainty.
The Board and Executive Leadership Team continues to monitor the situation closely and to take actions in response as
appropriate and as recommended by governments and health authorities.
Environmental Regulation
The Group’s operations are not subject to any significant environmental regulations or laws in Australia.
Environmental, Social and Corporate Governance
Pursuant to ASX Corporate Governance Principle and Recommendation 7.4, which provides that companies disclose any
material exposure to environmental or social risks, the Company does not consider that the operations are materially
exposed to such risk.
Dividends Paid, Recommended and Declared
The Group has not declared or paid any dividends in respect of the 30 June 2021 financial year.
Slater & Gordon
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The dividends paid and declared since the start of the financial year are as follows:
Dividends on ordinary shares
No interim dividend paid in 2021 (2020: No interim dividend paid)
No final dividend for 2020 (2019: No final dividend paid)
2021
$’000
-
-
-
2020
$’000
-
-
-
Share Options
As reported in the Remuneration Report, as part of the Long Term Incentive Plan (LTIP) and as approved by shareholders
at the 2019 Annual General Meeting, in FY20 the Company agreed to award 15,573,000 performance rights (Rights) to
certain Directors and members of the Executive Leadership Team subject to the satisfaction of specified vesting and other
conditions.
Once vesting conditions of awarded Rights are met and the required Exit Event has occurred those Rights are effectively
zero priced options. During FY21, the Exit Event occurred, and so all vested Rights are now exercisable.
During FY21, the Company issued a further 1,974,105 Rights to 33 senior employees. None of those Rights are yet vested.
In FY21, no further Rights were awarded to Directors or Key Management Personnel (KMP) of the Company. 16,716,545
Rights remained outstanding at the end of the financial year.
A full description of the LTIP, including the numbers of Rights agreed to be awarded to Directors and other KMP, is
contained in the Remuneration Report.
Indemnification and Insurance of Directors and Officers and Auditors
During the financial year, the Group has provided an indemnity or entered an agreement to indemnify, and paid insurance
premiums for a twelve-month period in respect of Directors, Officers and the Company Secretary of the Company against
a liability brought against such an Officer.
Further disclosure required under section 300(9) of the Corporations Act 2001 is prohibited under the terms of the contract.
The Group has agreed (in certain circumstances) to indemnify its auditors, Ernst & Young, as part of the terms of its audit
engagement agreement. No payment has been pursuant to any indemnity in favour of Ernst & Young during or since the
financial year.
Information on Directors and Company Secretary
The skills, experience, expertise and special responsibilities of each person who has been a Director of the Company at
any time during or since the end of the financial year is provided below, together with details of the Company Secretary as
at the year end.
James MacKenzie
B.Bus, FCA, FAICD
Chair1
Independent Non-
Executive Director
Experience
James is the Chair of Slater & Gordon, having joined the organisation in December 2017.
James is an experienced Australian Company director. He is currently the Chairman of
Victorian Funds Management Corporation, Development Victoria, the Suburban Rail Loop
Authority Advisory Board and the Interim Melbourne Arts Precinct Board. He is also a
Member of the MCG Trust and Director of Monivae College.
James was previously serving as the President of the Victorian Arts Centre Trust, Chair of
the Transport Accident Commission (TAC) and Worksafe Victoria, Managing Director of
Funds Management and Insurance at the ANZ Banking Group, Chief Executive Officer of
Norwich Union Australia, and TAC Chief Executive Officer. He has been a member of the
COAG Business Advisory Forum and a previous director of VFMC.
James has a Bachelor of Business from Swinburne University, and is a Fellow of the
Australian Institute of Company Directors and the Institute of Chartered Accountants
Australia and New Zealand.
In 2001, he was awarded the Centenary Medal for services to Public Administration.
James is Chair of the Board and is also a member of the Audit and Risk Committee and the
People and Culture Committee.
Other directorships of listed companies held in the last three years
None
Slater & Gordon
16
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Slater & Gordon LtdANNUAL REPORT 2021
DIRECTORS REPORT
Mark Dewar
B.Bus. Accounting
Chartered Accountant
Non-Independent Non-
Executive Director
Merrick Howes
BA LLB
Non-Independent Non-
Executive Director
Experience
Mark joined the Board of Slater & Gordon in May 2019 and comes from a Consulting
background as well as being a Non-Executive Director for other PE backed companies.
Mark is the Australian Practice Leader and is a Senior Managing Director in the Corporate
Finance segment at FTI Consulting. His experience is typically focussed in helping clients
who are undergoing significant change or embarking on a transformation and specialises in
advising companies, private equity investors or lenders across a range of industries including
financial services, mining, telecommunications, software, retail, engineering, building and
construction, and automotive.
Prior to joining FTI Consulting, Mark spent almost ten years with Ernst & Young, where he
commenced his career in Australia in the Audit practice before moving to London where he
was a director in the Corporate Finance practice.
Mark is a Chartered Accountant and a member of the Institute of Chartered Accountants of
Australia.
Other directorships of listed companies held in the last three years
None
Experience
Merrick founded Aviron Investment Management, a new Australian based private investment
fund, in May 2021 after nearly ten years as the head of Anchorage Capital Group LLC’s
operations in Australia. Previously, he worked at Aviron Capital, and was also the Co-founder
and Managing Director at Shearwater Capital, where he focused on special situations and
distressed debt investments. Prior to Shearwater, he was a Partner and Managing Director
in the Principal Investment Area at Goldman Sachs in Australia. Merrick was also a Managing
Director and European Head of Global Structured Products at Merrill Lynch in Hong Kong
and London. He also worked at Macquarie Bank Group from 1989 to 1998.
Merrick received a BA in Accounting and a Bachelor of Laws from the Australian National
University.
Merrick is Chair of Slater & Gordon’s People and Culture Committee.
Other directorships of listed companies held in the last three years
None
Michael Neilson
Experience
BA LLB GAICD FGIA
Executive Director and
Company Secretary
Michael is the Executive Director, Legal and Governance, having commenced at Slater &
Gordon in April 2018.
Prior to joining Slater & Gordon, Michael was at Crown Resorts Limited, where he was Group
General Counsel and Company Secretary for almost ten years and, prior to that, he was
General Counsel for Crown Melbourne.
From 1997 to 2004, Michael was at the Lend Lease Group where he was General Counsel
and Company Secretary of General Property Trust (which was then managed by Lend
Lease) and prior to that General Counsel of Lend Lease Property Management.
Michael started his career in the commercial practice at Herbert Geer & Rundle where he
spent ten years before moving in house.
Michael has a strong track record in implementing governance, legal and regulatory
frameworks in complex, multinational businesses as well as deep experience managing risk
and compliance in challenging environments.
Other directorships of listed companies held in the last three years
None
Elana Rubin AM
Experience
BA(Hons) MA SFFin
FAICD
Independent Non-
Executive Director1
Elana is a non-executive director at Slater & Gordon and was appointed to the Board in
March 2018.
Elana has over 20 years’ experience as a non-executive Company director, across diverse
sectors. She is currently Chair of Afterpay and a director of Telstra, as well as a number of
unlisted companies and/or government boards.
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Slater & Gordon LtdANNUAL REPORT 2021
DIRECTORS REPORT
Elana was previously the chair of Australian Super and WorkSafe Victoria, and a director of
the Transport Accident Commission (TAC) in Victoria. Other previous board roles covered
the financial services, insurance, infrastructure, professional services, and not-for-profit
sectors.
Before becoming a full time non-executive director, Elana worked for one of the (then) largest
industry funds and the Australian Council of Trade Unions (ACTU). She is a member of Chief
Executive Women and Women Corporate Directors International. Her career reflects an
understanding of corporate social licence to operate and a deep commitment to culture,
diversity, social equity and participation.
Elana is a member of the Audit and Risk Committee and the People and Culture Committee.
Other directorships of listed companies held in the last three years
Afterpay Limited (ASX:APT) (2017 to current)
Telstra Limited (ASX: TLS) (Feb 2020 to current)
Mirvac Limited (ASX:MGR) (2010 to Nov 2019)
John Somerville
Experience
BSC GDip Applied
Information Systems MBA
John is the Managing Director and Chief Executive Officer of Slater & Gordon, having joined
the organisation in February 2018.
Managing Director and
Chief Executive Officer
John is a passionate leader with a history of building and leading successful teams that
deliver strong business outcomes and people engagement. Prior to joining Slater & Gordon,
he was the National Managing Partner of KPMG (Advisory) Australia.
Prior to joining Slater & Gordon he spent 25 years advising some of Australia’s largest
corporations and governments combined with growing and leading businesses within
KPMG.
He believes business thrives when people help others be successful. This orientation
translates into delivering better outcomes for clients. He is passionate about getting the most
from diversity by creating an inclusive workforce.
John’s career has involved regional and global activity, including work in Europe, the US,
Asia as well as Australia.
Other directorships of listed companies held in the last three years
Jacqui Walters
Experience
None
BCom (Accounting and
Finance) GAICD
Independent Non-
Executive Director
Jacqui joined the Slater & Gordon Board in March 2018 and chairs the Audit and Risk
Committee. She has international experience across many industry sectors. Her work has
ranged from whole of organisation transformation and restructuring to highly specific areas
such as major capital project delivery, new product introduction, professional services
strategy and performance, and post-merger culture alignment.
Jacqui is a Partner of Era Innovation, an advisory firm enabling long-term resilience in
Australian organisations by creating systematic, disciplined innovation capability. She is also
a Partner of Era Ventures – investing in all aspects of scale-up for high value food
businesses.
Jacqui is Chair of CleanCo Queensland Ltd and a non-executive Director of Development
Victoria. She is on the Queensland Advisory Committee for the not-for-profit organisation,
Second Bite; and a Director of Pathways to Resilience, a youth well-being and resilience not-
for-profit organisation.
Other directorships of listed companies held in the last three years
None
1 Effective 1 August 2021, James MacKenzie temporarily stepped down as Chair to have treatment for a medical condition and Elana
Rubin was appointed Acting Chair. It is expected that James will resume as Chair within a few months.
Company Secretary
Michael Neilson
See above
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DIRECTORS REPORT
Directors’ Meetings
The number of meetings of the Board of Directors and of each Board committee held during the financial year and the
number of meetings attended by each Director were:
Board of Directors
Audit and Risk Committee1
Eligible to
attend
Attended
Eligible to
attend
Attended
People and Culture
Committee2
Eligible to
attend
Attended
13
13
13
13
13
13
13
13
13
13
13
13
12
13
4
-
-
-
4
-
4
4
-
-
-
4
-
4
4
-
4
-
4
-
-
4
-
4
-
3
-
-
J MacKenzie
M Dewar
M Howes
M Neilson
E Rubin
J Somerville
J Walters
1 All Directors who are not members of the Audit and Risk Committee also attended all meetings of the Committee as
invitees, except for one meeting which Mr Somerville was unable to attend.
2 All Directors who are not members of the People and Culture Committee also attended all meetings of the Committee as
invitees, except for one meeting which Mr Somerville was unable to attend.
Directors’ Interests in Shares
Directors’ relevant interests in shares of the Company as at the date of this report are detailed below.
Ordinary Shares of the Company
Performance Rights
J MacKenzie1
M Dewar
M Howes
M Neilson
E Rubin
J Somerville
J Walters
-
-
-
-
-
-
-
1,245,840
-
-
1,245,840
415,280
3,322,240
415,280
1 James Mackenzie’s Rights have been agreed to be awarded to a Company controlled by him, JACM Pty Ltd.
Directors’ Interest in Contracts
Directors’ interests in contracts are disclosed in Note 22 to the financial statements.
Auditor’s Independence Declaration
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 in relation
to the audit for the financial year is provided with this report.
Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on
behalf of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking
responsibility on behalf of the Company for all or part of those proceedings.
Non-Audit Services
Written approval for non-audit services is provided either by the Board of Directors or by the Audit and Risk Committee
and approval is notified to the Board of Directors. The Directors are satisfied that the provision of non-audit services during
the year by the auditor is compatible with the general standard of independence for auditors imposed by the Corporations
Act 2001. The nature and scope of each type of non-audit service provided means the auditor independence was not
compromised.
Rounding of Amounts
The amounts contained in the Directors’ Report and Financial Report have been rounded to the nearest thousand dollars
(where rounding is applicable) under the option available to the Company under ASIC Corporations (Rounding in
Financial/Directors’ Reports) Instrument 2016/191.The Company is an entity to which the Class Order applies.
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The Directors’ Report and accompanying Audited Remuneration Report is signed in accordance with a resolution of the
Directors.
Elana Rubin
Acting Chair
Melbourne
26 August 2021
John Somerville
Managing Director and Chief Executive Officer
Slater & Gordon
20
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Directors’ Report
Audited Remuneration Report
1.0 Introduction
The COVID-19 pandemic does not appear to have had a material impact on the Company’s financial performance during
FY21, although government imposed restrictions and lockdowns in FY21, in particular in Victoria, had some impact on the
Company’s ability to progress its clients’ claims, with medical panels and courts and tribunals being hampered and delayed
in their activities due to the restrictions and lockdowns. This had some negative impact on the Company’s fees billed and
cash flows, although work in progress continued to improve. Reflecting this, Executive KMP were awarded an average of
103% of their Short-Term Incentive Plan (STIP) target bonus for performance against a balanced scorecard of measures
in FY21 compared to FY20 where an average of 120% of the Short-Term Incentive was paid. However, this award was
subject to further conditions, described in section 5.2.
The Company made no changes to its overall remuneration framework in FY21. However, the Board has established two
‘once off’ bonus pools from which bonuses will be paid, firstly, to employees on the Company’s Enterprise Agreements
and a small number of junior employees on Individual Employment Agreements and, secondly, to more senior employees
on individual Employment Agreements. These bonus pools have been established to reward employees for the Company’s
strong operational performance (measured in particular by its FY21 underlying EBITDA performance – see section 4.3
below) during the COVID-19 pandemic. The final distribution of those bonus pools will be determined by the Board during
the first half of FY22 and payments are expected to be made early in 2022.
No KMP will participate in these bonus pools.
As disclosed in the FY20 Remuneration Report, a Long-Term Incentive Plan (LTIP) was approved by shareholders at the
2019 Annual General Meeting. During FY21, no further Rights were awarded to Directors or Key Management Personnel
of the Company and the Exit Event occurred, and so all vested Rights are now exercisable. The Company issued further
Rights to 33 senior employees. None of those Rights are yet vested. A full description of the LTIP is disclosed in the
Remuneration Report.
The Company remains focused on delivering consistent performance year on year and remains optimistic but cautious
about the effects of COVID-19 on its business and the legal industry particularly as courts, government bodies and medico-
legal practitioners work through backlogs arising from shutdowns and the implications of ongoing restrictions. Management
remains committed to transparency and an ongoing dialogue with shareholders on remuneration.
2.0 Remuneration Report Overview
The Directors present the Remuneration Report (the Report) for the Company and its controlled entities for FY21. This
Report forms part of the Director’s Report and has been audited in accordance with section 300A of the Corporations Act
2001. The Report details the remuneration arrangements for the Company’s Key Management Personnel (KMP) which is
comprised of:
• Non-Executive Directors (NEDs)
• Executive Directors
• Other Executive KMP
KMP are those persons who, directly or indirectly, have authority and responsibility for planning, directing and controlling
the major activities of the Company.
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The table below outlines the KMP for FY21:
Name
Position
Term as KMP
Non-Executive Directors
James MacKenzie
• Chair of the Board
• Non-Executive Director (Independent)
Mark Dewar
• Non-Executive Director
Merrick Howes
• Non-Executive Director
Elana Rubin
• Non-Executive Director (Independent)
Jacqui Walters
• Non-Executive Director (Independent)
Executive Directors
John Somerville
• Managing Director and Chief
Executive Officer
Michael Neilson
• Executive Director, Legal and
Governance
Other Executive KMP
•
•
•
•
•
•
•
Full financial year
Full financial year
Full financial year
Full financial year
Full financial year
Full financial year
Full financial year
Scott Butterworth
• Chief Financial Officer
•
Full financial year
3.0 How remuneration is governed
The People and Culture Committee assists the Board to oversee the establishment and operation of appropriate policies
and strategies that provide the Company with the capability to achieve its short and long-term business objectives, including
recommending remuneration changes to the Board for NEDs, Executive Directors and Other Executive KMP.
3.1
Use of remuneration advisors
During FY21, the Company did not use remuneration advisors as defined under the Corporations Act 2001.
3.2
Claw back of remuneration
The claw back policy was introduced in June 2016. This policy enables the Company to claw back certain elements of an
Executive Director’s or Other Executive KMP’s (collectively Executive KMP) remuneration if there has been a misstatement
of the financial statements which resulted in the Executive KMP receiving a reward which exceeds the outcome that would
have been achieved had the misstatement not been made.
3.3
Share Trading Policy
The Company’s Share Trading Policy (Policy) applies to all Directors, officers, employees, contractors and consultants.
The Share Trading Policy outlines how and when Directors, officers, employees, contractors and consultants may deal in
Company securities.
Restricted Persons (as defined in the Policy) may only deal in securities in the Company during defined trading windows
and provided they do not possess inside information. There are some limited exceptions set out in the Policy.
If a Relevant Person (as defined in the Policy) acquires securities in the Company (other than via an employee share plan),
they should not sell or agree to sell any Company securities of that class for at least 30 days.
Directors are prohibited from entering margin loans under the Company’s Share Trading Policy. Relevant Persons require
prior approval to enter into a margin loan arrangement where the amount of shares mortgaged, provided as security, lent
or charged to a financier, amounts to 1% or more of the issued capital in the Company at the relevant time. A Restricted
Person must notify the Company Secretary immediately if they are given notice by their financier of an intention to make a
margin call and sell the Company’s securities during a prohibited trading period.
Relevant Persons must not enter into hedging arrangements in relation to securities in the Company that are unvested or
subject to disposal restrictions or minimum shareholding requirements.
The Company’s Share Trading Policy is available on the Company’s website www.slatergordon.com.au.
22
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3.4
Executive KMP employment agreements
Executive KMP are employed on individual employment agreements that outline the terms of their employment, which
include:
Length of
Contract
No fixed
term
Notice
Period
Employee
Six (6)
months
Notice Period
Slater &
Gordon1
Six (6)
months
Termination
Payment
Six (6)
months
Statutory Entitlements
Payment of statutory
entitlements of long
service leave and
annual leave applies in
all events of separation
1 The Company may also terminate at any time without notice for serious misconduct and/or breach of contract.
Post-Employment
Restraints
The employment
agreement contains a
restraint of trade
provision which applies
for a period of 9 months
and 12 months
3.5
Cessation and movement of Executive KMP
During FY21, there were no cessations or movement of NEDs or Executive KMP. As disclosed to the ASX on 10 August
2021, Chief Financial Officer, Scott Butterworth has resigned and will depart the Company during FY22.
3.6 Other transactions and balances with KMP and their related parties
During FY21, there were no additional transactions for Executive KMP and their related parties.
4.0 Overview of Executive KMP Remuneration
This section of the Remuneration Report outlines the principles applied to Executive KMP remuneration decisions and the
framework used to deliver the various components of remuneration, including explanation of the performance and
remuneration linkages.
4.1
How Executive KMP remuneration policies and structures are determined
The Company’s remuneration strategy is designed to motivate and focus our people on delivering the best possible
outcomes for our clients and shareholders in a manner that supports the growth and sustainability of the Company in the
short and long-term. To do this, the following principles are applied to fixed and variable pay:
• Aligns employee, client and shareholder interests;
• Attracts, retains and engages employees with the requisite skills, expertise and capabilities;
•
Fosters a high-performance culture which focuses and aligns short and long-term objectives;
• Reinforces a pay for performance culture based on both role requirements and performance against company
values;
•
Is compliant with current governance and legislative requirements related to remuneration practices; and
• Promotes pay parity and equity.
4.2
Executive KMP Remuneration Structures
The Company rewards Executive KMP in a way that secures quality executives for the long-term success of the Company,
while fostering a performance-oriented and risk management culture. The Company ensures remuneration packages are
equitable, motivating, competitive and affordable.
Executive KMP receive fixed remuneration and variable remuneration consisting of short-term and long-term incentive
opportunities. Executive KMP remuneration levels are reviewed annually by the People and Culture Committee with
reference to the Company’s remuneration principles, market movements and affordability.
4.3
Elements of remuneration
Fixed remuneration
Fixed remuneration is determined with reference to the size, scope and complexity of the role and relevant individual
experience, whilst also considering market positioning, internal equity, affordability and the Company’s ability to attract and
retain employees with required capabilities to achieve the Company’s objectives.
Fixed remuneration consists of base remuneration, superannuation (based on and up to the maximum of the statutory
guarantee level) and other non-monetary benefits. Fixed remuneration is reviewed annually with approved changes
effective 1 July or such other date as the Board may nominate. The following factors are taken into consideration when
reviewing executive remuneration:
• Annual company performance and affordability;
•
Individual performance and demonstration of company values tied to an annual Performance and Development
Review;
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•
The Total Target Reward (fixed remuneration and incentive opportunity) of an individual, including the pay mix of
fixed and variable reward;
• Economic climate and external market movement;
• Company and social responsibility; and
• Pay parity and equity.
Adjustments to Executive KMP remuneration are reviewed by the People and Culture Committee and approved by the
Board.
STIP
Under the STIP, all Executive KMP have the opportunity to earn an annual incentive award. The plan includes two
measures, company performance and individual performance. Company performance focuses executives on achieving
sustainable success for the enterprise. Individual performance rewards the employee’s own contribution towards Key
Performance Indicators (KPIs) and company success.
How are bonuses paid?
STIP bonuses are paid in cash.
How much can executives earn?
Executive KMP have a defined on-target STIP opportunity between 23% - 50% of their Full Time Equivalent base
remuneration and a maximum STIP opportunity of 200% of their on-target opportunity.
Executive KMP
STIP On -Target1
John Somerville2
Michael Neilson
Scott Butterworth
1Represents on-target for full plan year.
2 J Somerville STIP On-Target is set at 50% of base remuneration plus superannuation.
$275,000
$93,380
$104,535
% of Base
Remuneration
50%
23%
23%
Each Executive KMP’s Total Remuneration Pay Mix% (annualised at target) for FY21 is set out below.
Executive KMP
John Somerville
Michael Neilson
Scott Butterworth
1Includes superannuation
Total Fixed
Remuneration1
66.7%
82.1%
82.0%
How is performance measured?
Short Term
Incentive
33.3%
17.9%
18.0%
The STIP performance measures were chosen based on their ability to deliver sustainable company performance and
results for clients and shareholders. Company performance against financial targets (EBITDA and cashflow) act as a
gateway for rewarding individual performance against individually set KPI’s. For each individual KPI, a target is set.
Performance measures are validated and approved by the Board annually.
FY21 performance measures are set out below:
Executive KMP
Managing Director and Chief
Executive Officer
Executive Director, Legal and
Governance
Chief Financial Officer
Company Financial
Performance
Client Measure
People Measure
50%
50%
50%
20%
20%
20%
20%
20%
20%
Operational
Measure
10%
10%
10%
EBITDA and cashflow targets are the measures against which the Board and management assess the Company’s short
term financial performance.
Who sets STIP performance measures?
Financial performance measures are set by the Board, based on the recommendation of the People and Culture
Committee.
KPIs are set for the Chief Financial Officer and Executive Director, Legal and Governance by the Managing Director and
Chief Executive Officer, then reviewed and endorsed by the People and Culture Committee and Board.
Managing Director and Chief Executive Officer KPIs are set and approved by the Board.
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When are STIP bonuses paid?
The STIP outcome is determined after the end of the financial year and at the same time as the Financial Report is
approved. The Board approves the final STIP award for the Executive KMP, which is generally paid approximately three
months after the end of the performance period. However, the Board has some discretion as to when payment is made.
There are no deferral components.
What happens if an Executive KMP leaves?
The following details the treatment of STIP on termination:
Resignation and Dismissal: Any potential STIP payment is forfeited.
Retirement and Total and Permanent Incapacity: Any potential STIP will be calculated on a pro-rated basis for portion
of year worked within the plan year. Payment will be calculated in accordance with the normal timetable and based on the
end of year results.
Death: Payments will be made to the estate of a deceased employee pro-rated for the eligible period. Payment will be
calculated in accordance with the normal timetable and based on the end of year results.
Redundancy: If redundancy occurs during the first half of the financial year, any potential STIP will be forfeited. If
redundancy occurs during the second half of the financial year, any potential STIP will be calculated on a pro-rated basis
for portion of financial year worked. Payment will be calculated in accordance with the normal timetable and based on the
end of year results.
LTIP
The LTIP and the award of Rights to the independent NEDs and the Executive Directors was approved by shareholders at
the 2019 Annual General Meeting.
How is LTIP paid?
Under the terms of the LTIP, eligible participants are offered rights (Rights) to acquire ordinary shares in the Company at
no cost to them. Participants can acquire shares if they remain employed by the Company and satisfy the vesting conditions
and exercise conditions. While the Rights remain unexercised the participants do not have the same benefits as other
holders of shares in the Company, such as dividend and voting rights. However, once vesting conditions and the exercise
condition has been met and a participant exercises their Rights, then, as holders of shares, participants have the same
benefits as other holders of shares in the Company, such as dividend and voting rights.
In FY20, all Executive KMP were granted a specified number of Rights. Although no further Rights were offered to
Executive KMP in FY21, Rights were offered to 33 senior employees.
How much can executives earn?
The number of Rights granted to participants in the LTIP is determined by the Board. In FY20 five Directors (including
two Executive Directors) and nine members of the Executive Leadership Team were granted a specified number of
Rights from a pool of 15,573,000 Rights, or 75% of the pool of Rights available to be awarded under the LTIP.
Executive KMP LTIP opportunities were determined using a combination of factors, including scope, complexity and
responsibility of role, relative seniority, relative base remuneration and length of service with the Company post the
recapitalisation in December 2017. Set out below are the Rights awarded to Executive KMP in FY20:
Executive KMP
John Somerville
Michael Neilson
Scott Butterworth
Number of Rights
Awarded
3,322,240
1,245,840
1,453,480
How is performance measured?
Under the LTIP rules, the nature and content of any vesting conditions (including the vesting period) are determined by the
Board and may include conditions relating to any or all of:
•
•
•
•
•
•
continuing employment;
performance of the Participant;
performance of the Company;
the Company's share price;
the achievement of specific targets; or
the occurrence of specific events
The Rights granted to independent NEDs, Executive Directors and certain members of the Executive Leadership Team
vest in accordance with the following schedule, subject to continuing employment/engagement of services.
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Vesting Date
Tranche A: 30 June 2020
Tranche B: 30 June 2021
Tranche C: 30 June 2022
Tranche D: Date of ‘Exit Event’
Vesting Percentage
22%
22%
22%
34%
Vested Rights may only be exercised, i.e. converted to shares in the Company, after an Exit Event occurs. The terms of
the award provide that an Exit Event will occur if (a) the Company’s underlying Earnings Before Interest, Taxes,
Depreciation and Amortisation (EBITDA) reaches the target specified by the Board of $28.0m and as evidenced by the
audited Financial Statements for that financial year and (b) the Board being satisfied that the Company’s approved Budget
for the following Financial Year shows underlying EBITDA forecast at or better than the target set by the Board, subject
always to the Board’s discretion to ignore or waive any one off transactions or circumstances in calculating underlying
EBITDA for this purpose.
If an Exit Event had not occurred before the seventh anniversary of the grant of the Rights, then the Rights would have
expired. On 18 November 2020, the Board determined that the Exit Event had occurred as disclosed in section 7.3.
When is performance measured?
Vesting conditions and the Exit Event are measured at the end of each financial year during the term of the LTIP.
What happens if a participant leaves?
If a participant resigns or is terminated for cause, any unvested and vested but unexercised (as at the date their
employment ends) Rights are forfeited, unless otherwise determined by the Board.
If a participant ceases employment by reason of redundancy, ill health, death, or other circumstances approved by the
Board, unvested Rights will vest pro-rata based on the portion of the Vesting Period that has elapsed as at the cessation
date. The vested portion may be retained provided the participant exercises their vested Rights by delivering a signed
Exercise Notice to the Company by the earlier of: (i) the expiry date of the Rights; and (ii) the date which is three months
after the participant receives notification from the Company that the Exit Event has been achieved.
What happens if there is a change of control?
If there is a ‘Change of Control’ (as defined in the LTIP rules), all unvested Rights will automatically vest and the Exit Event
will be deemed to be satisfied so that participants can elect to either request the Company to buy-back their Rights or
exercise the vested Rights and dispose of the shares delivered to the participant.
Are Executives eligible for dividends?
Participants are not eligible to receive dividends on Rights, vested or unvested.
Can further awards be made under the LTIP?
There remains a pool of further Rights available for award under the LTIP at the Company’s discretion.
In February and April 2021, 33 senior employees were awarded a total of 1,974,105 Rights from the remaining pool of
Rights available to be awarded under the LTIP. Of the 33 employees who were awarded Rights in FY21, one was a new
senior leader and the other 32 were awarded Rights based on their contribution to the Company’s transformation program.
None of those Rights are yet vested and none of those further Rights were awarded to any KMP.
The remaining pool contains further Rights which are available for award under the LTIP at the Company’s discretion.
4.4
Changes for FY21
There were no material changes to the Executive Remuneration framework during FY21.
5.0 FY21 Executive KMP Performance and Remuneration Outcomes
5.1
Actual Remuneration earned by Executive KMP in FY21:
The actual remuneration earned by Executive KMP in FY21 is set out in section 7 below.
The FY21 cash bonus STIP and LTIP Rights awarded to Executive KMP is set out in section 7 below. The table in section
7 represents what has been awarded to Executive KMP under the STIP and LTIP, although the STIP has not yet been
paid.
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5.2
STIP Performance Measures for FY21
A combination of financial and non-financial measures is used to measure Executive KMP performance for STIP awards
which are underpinned by the Company’s values and behaviours. A summary and performance against each measure is
as follows:
Key: Below target At target Exceed target
Managing Director and Chief
Executive Officer
Company Financial
Performance
Cash Generation
Business Performance
Executive Director, Legal and
Governance
Cash Generation
Business Performance
Client satisfaction
Chief Financial Officer
Cash Generation
Business Performance
Client satisfaction
Client Measure
People Measure
Client satisfaction
Engagement &
compliance to people
activities
Engagement &
compliance to people
activities
Engagement &
compliance to people
activities
Operational
Measure
Strategic initiatives
Strategic initiatives
Strategic initiatives
The Company met and exceeded its Business Performance target (based on underlying EBITDA), but did not meet its
Cash Generation target (based on gross operational cashflow). The Executive KMP were assessed to have met or
exceeded their non-financial measures.
Based on this assessment, the Board determined that the average STIP bonus awarded to those Executive KMP who
were eligible for a STIP bonus in FY21 as a percent of target was 103%. The Chief Financial Officer had resigned and so
was not eligible for a STIP bonus in FY21.
However, the Board determined that all STIP bonuses are subject to a condition that the Company meet its Cash
Generation target for the first quarter of FY22. If this condition is not met, the STIP bonuses awarded in FY21 will be
reduced by 20%, including the bonus awarded to the Executive Director, Legal and Governance.
The Managing Director and Chief Executive Officer’s STIP bonus is contractually payable at target where his performance
rating has been assessed as meeting or exceeding his overall targets.
The table in section 7.1 discloses actual FY21 STIP awarded to Executive KMP and assumes the Cash Generation target
for the first quarter of FY22 is met.
5.3
LTIP Performance Measures and Vesting outcomes for FY21
On 30 June 2020, Tranche A of the LTIP vested in accordance with the terms of the award to independent NEDs and
Executive KMP.
Given the uncertainty around the impact of the COVID-19 pandemic on Australia’s economy and, in turn, the Company’s
financial performance in FY21, the Board deferred its consideration of whether an Exit Event had occurred under the LTIP
Rules to November 2020 and on 18 November 2020, determined that the Exit Event had occurred. As a result, Tranche D
vested and both Tranche A and Tranche D, became exercisable by the participants.
On 30 June 2021, Tranche B of the LTIP vested in accordance with the terms of the award to independent NEDs and
Executive KMP and also became exercisable.
The Company has valued the benefit to independent NEDs and Executive KMP of their participation in the LTIP in FY21
using the Black Scholes valuation method and that value has been added to each NED and Executive KMP’s remuneration
in the tables in sections 6 and 7. The value of these benefits does not represent cash received by the relevant participant
and these values may need to be adjusted over time, based on performance, changes in model parameters and LTIP
outcomes.
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5.4 Overview of company performance (FY17 to FY21)
The table below sets out information about the Company’s earnings and movements in shareholder wealth for the past
five years up to and including the current financial year.
Company Performance
Revenue from continuing
operations ($'000)
Profit before tax from continuing
operations ($'000)
Profit after tax from continuing
operations ($'000)
Basic earnings per share
(dollars)
Diluted earnings per share
(dollars) 2
Gross Operating Cash Flow less
CAPEX($'000)
Dividends per share - paid during
financial year (cents)
Total dividends paid during
financial year (cents)
20171
20181
2019
2020
2021
611,485
162,501
160,372
178,339
203,443
(551,149)
(29,044)
(141)
(199)
21,263
(546,831)
(31,722)
33,010
(1,660)
14,186
(15,542.50)
(0.84)
0.425
(0.013)
0.098
(15,542.50)
(0.84)
0.450
(0.013)
0.094
(34,308)
(682)
5,230
24,921
13,677
-
-
-
-
-
-
-
-
-
-
1. Financial performances were not restated for the discontinued operations that occurred in FY18. However, the basic earnings per share, diluted
earnings per share and share price at 30 June have been restated for the 100 to 1 share consolidation that took place on 8 December 2017.
2. Basic earnings per share and diluted earnings per share were restated for the impact of the 100 to 1 share consolidation that took place on 8
December 2017. 2018 earnings per share is shown excluding discontinued operations. Prior years are shown for the overall business and have not
been restated for discontinued operations.
6.0 Overview of Non-Executive Director remuneration
6.1 Overview of Non-Executive Director remuneration
The fees paid to the Company’s NEDs are designed to attract and retain high caliber directors who can discharge their
roles and responsibilities required in terms of good governance, strong oversight, independence and objectivity.
NED remuneration is based on fixed director fees and superannuation contributions and is reviewed annually by the People
and Culture Committee. The chairs of the Board and each Committee do not receive any additional committee fees in
addition to base fees.
6.2 Maximum aggregate NED fee pool
The maximum aggregate fee amount that may be paid to NEDs for their services is $950,000 during any financial year, as
approved by shareholders at the 2015 AGM held in November 2015. The table below summarises Board and Committee
fees paid to NEDs for FY21 (inclusive of superannuation).
1 July 2020 - 30 June 2021
Board Chair Fee
Board Director Fee
Committee Fees
Audit and Risk Committee
People and Culture Committee
Annual Fee Pool
Chair
Member
Chair
Member
$250,000
$175,0001
Nil
Nil
Nil
Nil
$950,000
1 Non- Executive Director Merrick Howes and Executive Directors John Somerville and Michael Neilson do not receive payment of Board director fees from
the Company.
6.3
FY21 NED Remuneration
The table below sets out the FY21 NED remuneration. The table includes an entry for short term benefits to Merrick Howes,
an executive who was employed by Anchorage Capital Group LLC (Anchorage) until May 2021. Anchorage is the parent
entity of the Group. Merrick ceased his employment with Anchorage in May 2021. The Company does not pay any
remuneration to Merrick Howes. Australian Accounting Standards require disclosure of fees for his role as a Director of the
Company, where he is paid by his employer. The fees paid by the Company to other NEDs are considered representative
of this. The Executive Directors do not receive Board director’s fees. Their remuneration does not count towards the total
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NED Annual Fee Pool. Please refer to table 7.1 KMP Remuneration: Statutory Remuneration Outcomes for Executive
Director remuneration.
Amounts $
Current NEDs
James MacKenzie (Chair)
Mark Dewar
Merrick Howes 1
Disclosure required by Australian Accounting Standards – no remuneration was actually paid by the
Company
Elana Rubin 2
Jacqui Walters
Total3
Short-term
benefits
Fees3,5
Post-employment
benefits
Superannuation
benefits 5
LTIP Value4
Rights
Total
236,962
221,927
165,872
155,207
159,817
158,375
181,630
162,361
165,872
155,207
750,336
694,702
21,276
20,520
15,758
14,745
-
-
-
7,591
15,758
14,745
52,792
57,601
260,999
384,341
-
-
-
-
87,000
128,114
87,000
128,114
434,999
640,569
519,237
626,788
181,630
169,952
159,817
158,375
268,630
298,066
268,630
298,066
1,238,127
1,392,872
Year
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY206
1 M Howes was employed by Anchorage until May 2021. He was not remunerated by the Company for his service as Non-Executive Director. The Company was not
charged for his service. Amounts shown in this table for M Howes are not included in the total NED Annual Fee Pool.
2 E Rubin received an exemption certificate from receiving Superannuation Guarantee contributions paid by the Company during FY21.
3 The fee shown attributable to M Howes is not counted towards the maximum aggregate NED Annual Fee Pool.
4 The Company has valued the benefit to independent NEDs of their participation in the LTIP in FY21 using the Black Scholes valuation method. The value of these
benefits does not represent cash received by the relevant participant. The value of the benefit under the LTIP does not count towards the total NED Annual Fee
Pool.
5 In FY21, the Company was required to pay fees and Superannuation Guarantee according to the required 27 pay periods compared to 26 pay periods in FY20.
6 As disclosed in FY20, the Director fees shown for FY20 reflect a temporary voluntary reduction to their base pay to assist the Company and potential impacts of the
COVID-19 pandemic.
In FY20 three of the NEDs were awarded Rights under the Company’s LTIP, as follows:
NED
James MacKenzie1
Elana Rubin
Jacqui Walters
Number of Rights
Awarded
1,245,840
415,280
415,280
1 James Mackenzie’s Rights were awarded to a company controlled by him, JACM Pty Ltd.
These awards were approved by shareholders at the Company’s 2019 Annual General Meeting. Section 4.3 and 5.3 contains
a description of the LTIP.
No further Rights were awarded to NEDs in FY21 and no NEDs exercised any vested Rights in FY21.
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30
Slater & Gordon LtdANNUAL REPORT 2021
Directors’ Report
Audited Remuneration Report
7.2
Executive KMP Equity Plans
As described in section 4.3, the LTIP is the only equity plan in which Executive KMP participated during FY21.
7.3
Vesting and Exercise of Performance Rights granted as Remuneration
As described in section 5.3, an Exit Event occurred on 18 November 2020 and Tranche D of the LTIP vested on that date in accordance
with the terms of the award to independent NEDs, Executive Directors and Other Executive KMP.
Tranche B of the LTIP vested and became exercisable on 30 June 2021 in accordance with the terms of the award to independent NEDs,
Executive Directors and Other Executive KMP. Given that an Exit Event has occurred, participants in the LTIP, including the Executive KMP,
may exercise their vested Rights by applying to have their Rights converted to shares.
No KMP exercised any vested Rights in FY21.
7.4 Shareholding of Executive KMP and NEDs
In accordance with the Corporations Act (section 205G (1)), the Company is required to notify the interests (shares and rights to shares) of
directors to the ASX. In the interests of transparency and completeness of disclosure, this information is provided for each NED (as required
under the Corporations Act) and all Executive KMP. Please refer section 3.3 for more information on prohibition on hedging and margin
lending.
The table below indicates shareholdings of the Executive KMP and NEDs:
KMP
James MacKenzie
Mark Dewar
Merrick Howes
Elana Rubin
Jacqui Walters
John Somerville
Michael Neilson
Scott Butterworth
Total
Number held at
1 July 2020
Acquisitions
Disposals
Number held at 30
June 2021
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7.5
Movement in Executive KMP Holdings: Performance rights over ordinary shares
During the financial year, the movement in the number of performance rights over ordinary shares of the Company acquired under the LTIP,
held by Executive KMP and NEDs is detailed below:
Acquisitions
Rights
Vested2
Rights
Exercisable
Rights
Exercised
KMP
James MacKenzie1
Mark Dewar
Merrick Howes
Elana Rubin
Jacqui Walters
John Somerville
Michael Neilson
Scott Butterworth
Number of
Rights at 1
July 2020
1,245,840
-
-
415,280
415,280
3,322,240
1,245,840
1,453,480
-
-
-
-
-
-
-
-
971,755
971,755
-
-
323,918
323,918
-
-
323,918
323,918
2,591,347
2,591,347
971,755
971,755
1,133,714
1,133,714
Total
6,316,407
8,097,960
1 James Mackenzie’s Rights were awarded to a company controlled by him, JACM Pty Ltd.
2 Rights vested comprise Tranches A, B and D as at 30 June 2021.
-
6,316,407
Number of
Rights at 30
June 2021
1,245,840
415,280
415,280
3,322,240
1,245,840
1,453,480
8,097,960
-
-
-
-
-
-
-
-
-
End of Remuneration Report
Slater & Gordon
Page 19
31
Slater & Gordon LtdANNUAL REPORT 2021
32
A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation Ernst & Young 8 Exhibition Street Melbourne VIC 3000 Australia GPO Box 67 Melbourne VIC 3001 Tel: +61 3 9288 8000 Fax: +61 3 8650 7777 ey.com/au Auditor’s independence declaration to the directors of Slater & Gordon Ltd As lead auditor for the audit of the financial report of Slater & Gordon Ltd for the financial year ended 30 June 2021, I declare to the best of my knowledge and belief, there have been: a. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and b. No contraventions of any applicable code of professional conduct in relation to the audit. This declaration is in respect of Slater & Gordon Ltd and the entities it controlled during the financial year. Ernst & Young David Shewring Partner Melbourne 26 August 2021 Slater & Gordon LtdANNUAL REPORT 2021 Consolidated Statement of Profit or Loss and
Other Comprehensive Income
For the Year Ended 30 June 2021
Revenue
Fee revenue
Net movement in work in progress
Revenue from contracts with customers
Other income
Total revenue and other income
Less expenses
Salaries and employee benefit expense
Administration and office expense
Advertising, marketing and new business development expense
Finance costs
Depreciation and amortisation expense
Consultant fees
Bad and doubtful debts
Rental expense
Other expenses
Total expenses
Profit / (Loss) before income tax expense from continuing operations
Income tax expense
Profit / (Loss) after income tax expense from continuing operations
Profit after income tax expense from discontinued operations
Profit / (Loss) after income tax expense for the year
Other comprehensive income for the year, net of tax
Total comprehensive income / (loss) for the year
Total comprehensive income / (loss) for the year is attributable to:
Continuing operations
Discontinued operations
Total comprehensive income / (loss) for the year
Earnings / (Loss) per share from continuing operations
Basic earnings / (loss) per share
Diluted earnings / (loss) per share
Earnings per share from discontinued operations
Basic earnings per share
Diluted earnings per share
Earnings / (Loss) per share
Basic earnings / (loss) per share
Diluted earnings / (loss) per share
Note 30 June 2021
$'000
30 June 2020
$'000
154,245
48,096
202,341
1,102
203,443
(113,068)
(17,511)
(12,319)
(11,791)
(7,978)
(5,540)
(4,983)
(2,689)
(6,301)
(182,180)
21,263
(7,077)
14,186
284
14,470
-
14,470
14,186
284
14,470
161,407
15,839
177,246
1,093
178,339
(107,969)
(17,992)
(11,207)
(12,713)
(9,444)
(7,680)
(4,849)
(1,766)
(4,918)
(178,538)
(199)
(1,461)
(1,660)
475
(1,185)
-
(1,185)
(1,660)
475
(1,185)
Cents
Cents
9.8
9.4
0.2
0.2
10.0
9.6
(1.3)
(1.3)
0.4
0.4
(0.9)
(0.9)
3
4
4
4
4
4
6
28
8
8
8
8
8
8
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying
notes
Slater & Gordon
Page 21
33
Slater & Gordon LtdANNUAL REPORT 2021
Consolidated Statement of Financial Position
As at 30 June 2021
Assets
Current assets
Cash and cash equivalents
Receivables
Work in progress
Other assets(1)
Assets held for sale
Total current assets
Non-current assets
Property, plant and equipment
Receivables
Work in progress
Right-of-use assets
Intangible Assets
Other assets(1)
Total non-current assets
Total assets
Liabilities
Current liabilities
Payables
Financing arrangements
Leases
Provisions
Total current liabilities
Non-current liabilities
Payables
Financing arrangements
Leases
Deferred tax
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Accumulated losses
Total equity
Note 30 June 2021
$'000
30 June 2020
$'000
16
10
11
12
13
10
11
18
9
14
17
18
15
14
17
18
6
15
20
20,697
57,098
122,577
10,981
-
211,353
2,690
23,096
163,554
15,572
907
1,428
207,247
26,461
63,894
107,460
11,047
1,375
210,237
3,643
21,288
131,753
19,705
1,618
318
178,325
418,600
388,562
60,758
-
6,628
23,154
90,540
13,317
89,214
16,542
22,418
6,114
147,605
54,833
8,415
8,185
20,333
91,766
8,889
83,435
24,110
15,219
2,810
134,463
238,145
226,229
180,455
162,333
1,435,177
9,293
(1,264,015)
1,434,793
6,025
(1,278,485)
180,455
162,333
(1) Other assets includes prepayments, professional indemnity insurance asset (see Note 15) and lease rental guarantees (see Note 26).
The above consolidated statement of financial position should be read in conjunction with the accompanying notes
Slater & Gordon
34
Page 22
Slater & Gordon LtdANNUAL REPORT 2021
Consolidated Statement of Changes In Equity
For the Year Ended 30 June 2021
Contributed
equity
$'000
Share-based
payment
reserve
$'000
Accumulated
losses
$'000
Total equity
$'000
Balance at 1 July 2019
1,351,533
9,933
(1,277,314)
84,152
Loss after income tax expense for the year
Other comprehensive income for the year, net of tax
Total comprehensive loss for the year
Transfer from share-based payments reserve
Issuance of shares under rights offer
Performance rights granted under LTIP
-
-
-
-
-
-
(1,185)
-
(1,185)
-
(1,185)
(1,185)
8,698
74,562
-
(8,712)
-
4,804
14
-
-
-
74,562
4,804
Balance at 30 June 2020
1,434,793
6,025
(1,278,485)
162,333
Contributed
equity
$'000
Share-based
payment
reserve
$'000
Accumulated
losses
$'000
Total equity
$'000
Balance at 1 July 2020
1,434,793
6,025
(1,278,485)
162,333
Profit after income tax expense for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Issuance of shares under rights offer
Performance rights granted under LTIP
-
-
-
384
-
-
-
-
(384)
3,652
14,470
-
14,470
-
14,470
14,470
-
-
-
3,652
Balance at 30 June 2021
1,435,177
9,293
(1,264,015)
180,455
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes
Slater & Gordon
Page 23
35
Slater & Gordon LtdANNUAL REPORT 2021
Consolidated Statement of Cash flows
For the Year Ended 30 June 2021
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Borrowing costs paid
Net cash flow from continuing operations
Net cash from operating activities of discontinued operations
Note 30 June 2021
$'000
30 June 2020
$'000
223,372
(208,853)
1,050
(4,429)
11,140
406
234,116
(208,848)
174
(5,451)
19,991
750
Net cash provided by operating activities
5
11,546
20,741
Cash flows from investing activities
Payment for software development
Payment for plant and equipment
Proceeds from disposal of business(1)
Proceeds from disposal of intangible asset
Net cash (used in) / provided by investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Payment of principal portion of lease liabilities
Transaction costs of rights issue
Net cash used in financing activities
Net (decrease) / increase in cash held
Cash and cash equivalents at the beginning of the financial year
-
(842)
839
-
(45)
(304)
884
1,000
(3)
1,535
5,676
(14,627)
(8,356)
-
19,500
(19,372)
(7,106)
(1,470)
(17,307)
(8,448)
(5,764)
26,461
13,828
12,633
Cash and cash equivalents at the end of the financial year
16
20,697
26,461
(1) Deferred consideration received for sale of client files. Refer to Note 12.
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes
Slater & Gordon
36
Page 24
Slater & Gordon LtdANNUAL REPORT 2021
Notes to the Financial Statements
For the Year Ended 30 June 2021
Note 1. Basis of Preparation
This note sets out the accounting policies adopted by Slater & Gordon Ltd (the “Company”) and its consolidated entities (the “Consolidated
Entity” or the “Group”) in the preparation and presentation of the financial report. Where an accounting policy is specific to one note, the
policy is described within the note to which it relates.
The financial report was authorised for issue by the Directors as at the date of the Directors’ Report on 26 August 2021.
The Company is limited by shares and is incorporated and domiciled in Australia. Its shares are publicly traded on the Australian Securities
Exchange.
1.1 Basis of Accounting
This financial report is a general purpose financial report, for a ‘for-profit’ entity, which has been prepared in accordance with Australian
Accounting Standards, Interpretations and other applicable authoritative pronouncements of the Australian Accounting Standards Board
and the Corporations Act 2001. The consolidated financial statements of Slater & Gordon Ltd also comply with the International Financial
Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”).
The financial report has been prepared under the historical cost convention, except where noted.
The consolidated financial statements provide comparative information in respect of the previous period.
Where necessary, comparative figures have been reclassified and repositioned for consistency with current year disclosures.
The parent entity and the consolidated entity have applied the relief available under ASIC Corporations (Rounding in Financial/Directors’
Reports) Instrument 2016/191 and accordingly, amounts in the consolidated financial statements and Directors’ Report have been rounded
off to the nearest thousand dollars, or in certain cases, to the nearest dollar.
Going Concern
The financial statements have been prepared using the going concern assumption which contemplates the realisation of assets and the
settlement of liabilities in the ordinary course of business.
As at 30 June 2021, the Group’s total borrowings (excluding lease liabilities), were $89.2m (30 June 2020: $91.9m). Of this, nil (30 June
2020: $8.4m) is presented as current liabilities, being due for repayment in the next 12 months. The remaining $89.2m (30 June 2020:
$83.4m) of debt is non-current. Furthermore, as at 30 June 2021, the Group has a positive net current asset balance of $120.8m (30 June
2020: $118.5m) and a positive overall net asset balance of $180.5m (30 June 2020: $162.3m).
The Group’s borrowings are subject to covenants which have been complied with as at 30 June 2021. These covenants are expected to
be complied with in the next 12 months based on the most recent forecast.
The Directors have assessed forecasts of the Group’s trading and cash flows. The potential impact of the COVID-19 pandemic on the
Group’s operations and potential cash flows has been considered, noting that the rapidly evolving nature of COVID-19 makes it inherently
difficult to forecast outcomes with certainty. Nevertheless, various mitigation strategies are able to be deployed to manage cash to
appropriate levels in the event an unfavourable outcome occurs.
On this basis, the Directors have concluded that there are reasonable grounds to believe that the Group will continue to be able to pay its
debts as and when they become due and payable, and the preparation of the 30 June 2021 financial report on a going concern basis is
appropriate.
Basis of Consolidation
The consolidated financial statements comprise the financial statements of the parent entity and of all entities which the parent entity
controls. The Group controls an entity when it is exposed, or has rights, to variable returns from its involvement with the entity and has the
ability to affect those returns through its power over the entity.
The financial statements of subsidiaries are prepared for the same reporting period as the parent entity. Adjustments are made to bring
into line any dissimilar accounting policies which may exist.
Slater & Gordon
Page 25
37
Slater & Gordon LtdANNUAL REPORT 2021
Notes to the Financial Statements
For the Year Ended 30 June 2021
Note 1. Basis of Preparation (continued)
All inter-company balances and transactions, including any unrealised profits or losses, have been eliminated on consolidation.
Subsidiaries are consolidated from the date on which control is established and are de-recognised from the date that control ceases.
Non-controlling interests in the results of subsidiaries are shown separately in the consolidated statement of profit or loss and other
comprehensive income and consolidated statement of financial position.
Any changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are
accounted for as equity transactions.
1.2 Foreign Currency Translations and Balances
Functional and Presentation Currency
The consolidated financial statements are presented in Australian dollars which is also the functional currency of the parent entity and all
Australian subsidiaries.
1.3 Adoption of New and Amended standards
The Group did not apply any new and/or amended standards as of 1 July 2020 that have a material impact on the financial statements of
the Group. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.
1.4 Significant Accounting Judgements, Estimates and Assumptions
In preparing these consolidated financial statements, management has made judgements, estimates and assumptions that affect the
application of the Group’s accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may
differ from these estimates. Estimates and underlying assumptions are regularly reviewed. Revisions to estimates are recognised
prospectively.
The significant judgements made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty
are outlined in detail within the specific note to which they relate.
Note 2. Segment Reporting
An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur
expenses, including revenue and expenses that relate to transactions with any of the Group's other components.
The Group has one reportable segment relating to provision of legal services in Australia. Information provided to the chief operating
decision maker for the purposes of making decisions about allocating resources to the segment and assessing its performance is consistent
with amounts presented in the consolidated financial statements. The Group’s revenues and assets are wholly based in Australia. The
Group is not reliant on any single customer.
Note 3. Revenue from Contracts with Customers
3.1 Accounting Policies
Provision of Legal Services – Personal Injury Law Claims
The Group's personal injury law practice operates on the basis of No Win – No Fee (“NWNF”) conditional fee arrangements, whereby fees
are earned only in the event of a successful outcome of a client’s claim. Fees may be fixed depending on the stage at which a matter
concludes or determined based on an agreed scale detailed within the legal cost agreement, which is often a mix between time-based
charging and set rates for certain activities.
Contracts with clients may comprise a single performance obligation, being the provision of services in pursuit of the successful settlement
of a customer’s claim, or may contain multiple performance obligations, such as legal services in respect of a statutory claim and a common
law claim, or initial pre-issue work and litigation work. In both circumstances, the transaction price is allocated to a single distinct
performance obligation given the services being performed are highly integrated.
Slater & Gordon
38
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Slater & Gordon LtdANNUAL REPORT 2021
Notes to the Financial Statements
For the Year Ended 30 June 2021
Note 3. Revenue from Contracts with Customers (continued)
The NWNF arrangement introduces transaction price variability as the final fees receivable under a contract are generally only known upon
the matter’s conclusion. Expected fees are only recognised as revenue to the extent that it is highly probable that the cumulative amount
of revenue recognised will not be subject to significant reversal when a matter is concluded.
The transaction price for revenue recognition is estimated using the expected value method basis using the Group’s historical experience
in similar contracts and is influenced by the following factors:
Factor
Basis
Sensitivity
expected fee
historical fee data
success rate
risk adjustment
historical rates of successful and unsuccessful
outcomes of similar matters
simulated at each reporting period using a Monte
Carlo method
The higher the expected fee, the higher the estimated
revenue.
The higher the success rate, the higher the estimated
revenue.
The higher the risk adjustment, the lower the estimated
revenue.
The additional risk adjustment is applied to consider the variability of the final outcomes of contracts in a particular group of matters and
determines a percentage adjustment that should be applied to the expected outcome in order to satisfy that it is ‘highly probable that a
significant reversal of revenue recognised will not occur’ when the uncertainty associated with the amount of variable consideration is
resolved.
Where historical averages are not predictive of the probability of outcomes for a given contract, or where the Group has limited historical
experience with similar contracts, the expected amount of variable consideration is estimated using a 'most likely amount' approach on a
contract by contract basis. In such circumstances, a level of judgement is required to determine the likelihood of success of a given matter,
as well as the estimated amount of fees that will be recovered in respect of the matter.
Revenue is recognised when control of a service is transferred to the client. The Group recognises revenue in respect of personal injury
matters 'over time' (as opposed to at a 'point in time') using a milestone-based approach. The percentage completion is determined:
●
●
by calculating the average fee received for matters that resolve at a particular status code as a percentage of the average fee received
for matters that resolve at that status and any later status; or
by use of defined completion allocations based on historical performance.
Estimates of revenues (including interim billing), costs or extent of progress toward completion are revised if circumstances change. Any
resulting increases or decreases in estimated revenues or costs are reflected in profit or loss in the period in which the circumstances that
give rise to the revision become known by management.
The Group also arranges for the disbursement activities provided by third parties on behalf of the client where the Groups acts as an agent
because the Group does not control the output from those activities and cannot influence the content of the medical reports or certain court
filings. No profit margin is recognised on the activities when clients are charged the direct cost incurred by the Group. The amount
recognised for the expected reimbursement does not exceed the relevant costs incurred. Disbursements are treated as a separate asset
reduced by an allowance for non-recovery based on past experience. Refer to Note 10.
Provision of Legal Services – Litigation and Emerging Services
The Group earns revenue from the provision of general legal services, including project litigation. Revenue for general legal services is
recognised over time in the accounting period when services are rendered. Revenue recognised is carried as ‘Work in progress’ until the
matter is finalised and a client invoice is raised.
Fee arrangements from general legal services include NWNF arrangements, fixed fee arrangements, and partially or fully funded litigation.
NWNF arrangements: Revenue is estimated using a most likely amount approach on a contract by contract basis. Management makes
a detailed assessment of the amount of revenue expected to be received and the probability of success of each case. Variable
consideration is included in revenue only to the extent that it is highly probable that a significant reversal will not occur.
Partially or fully funded litigation: The Group enters into arrangements with third party funders to provide a portion of the fees on a
matter over time as services are performed. In such arrangements, the funded portion of fees, referred to as time and materials, is billed
regularly over time and is not contingent on the successful outcome of the litigation. The remaining portion of fees is variable consideration
which is conditional on the successful resolution of the litigation. The variable consideration is included in revenue as services are
performed only to the extent that it is highly probable that the amount will not be subject to significant reversal when the uncertainty is
resolved.
Slater & Gordon
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39
Slater & Gordon LtdANNUAL REPORT 2021
Notes to the Financial Statements
For the Year Ended 30 June 2021
Note 3. Revenue from Contracts with Customers (continued)
Fixed fee arrangements: Revenue is recognised based on the stage of completion tracked on a contract by contract basis using a
milestone-based approach, similar to Personal Injury Law Claims as explained above.
As in the case of personal injury claims, estimates of revenues, costs or extent of progress toward completion are revised if circumstances
change. Any resulting increases or decreases in estimated revenues or costs are reflected in profit or loss in the period in which the
circumstances that give rise to the revision become known by management.
The Group has determined that no significant financing component exists in respect of all its revenue streams. This is because:
●
●
a substantial amount of the consideration promised by the client is variable subject to the occurrence or non-occurrence of a future
event that is not substantially within the control of the client or the Group; and
for fixed and funded fee arrangements, the period between when the entity transfers a promised good or service to a client and when
the client pays for that good or service will be one year or less.
A receivable in relation to the Group’s services is recognised when a bill has been invoiced, as this is the point in time that the consideration
is unconditional because only the passage of time is required before the payment is due. When an invoice is raised, the amount receivable
is transferred from ‘Work in progress’ to ‘Accounts receivable’.
Contract Costs
Applying the practical expedient in paragraph 94 of AASB 15 Revenue from Contracts with Customers, the Group recognises the
incremental costs of obtaining contracts as an expense when incurred.
Critical Accounting Estimates and Judgements
Area
Detail
Identifying the performance
obligation
As referred to above, some Personal Injury Law Claims contracts contain multiple deliverables. The
Group has assessed that these multiple deliverables represent a single distinct performance obligation,
given there is a significant integration between the various deliverables provided to clients.
Estimating the variable
consideration on NWNF
arrangements
As referred to above, the uncertainty around the fees ultimately receivable under these types of
contracts is generally only fully resolved when a matter is concluded. To estimate the revenue
recognised over the period of the contract, significant estimation is employed by the Group as described
above.
Measuring the stage of
completion
As referred to above, the Group recognises revenue in respect of personal injury matters 'over time'
(as opposed to at a 'point in time'). The determination on the stage of completion involves significant
estimation as described above.
3.2 Disaggregation of Revenue from Contracts with Customers
The Group derives revenue from the transfer of goods and services over time and at a point in time, in the major product lines of Personal
Injury Law and Litigation and Emerging Services and the geographical regions of Australia:
30 June 2021
Type of contract
No Win - No Fee
Time and Materials
Fixed Fee
Revenue from contracts with customers
Personal
Injury Law
$'000
Litigation and
Emerging
Services
$'000
Total
$'000
175,726
-
-
13,046
13,537
32
188,772
13,537
32
175,726
26,615
202,341
Slater & Gordon
40
Page 28
Slater & Gordon LtdANNUAL REPORT 2021
Notes to the Financial Statements
For the Year Ended 30 June 2021
Note 3. Revenue from Contracts with Customers (continued)
30 June 2020
Type of contract
No Win - No Fee
Time and Materials
Fixed Fee
Revenue from contracts with customers
Note 4. Expenses
4.1 Accounting Policies
Personal
Injury Law
$'000
Litigation and
Emerging
Services
$'000
Total
$'000
156,156
-
-
5,527
15,123
440
161,683
15,123
440
156,156
21,090
177,246
Expenses are recorded in the period in which the goods or services are received or used.
Interest
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest
method. Amortised cost is calculated by taking into account any issue costs, and any discount or premium on settlement.
Depreciation
The depreciable amounts of all property, plant and equipment, excluding land, are depreciated over their estimated useful lives,
commencing from the time the asset is held ready for use. Leased right of use assets are depreciated over the shorter of the lease term
and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term.
The depreciation rates used for each class of assets are:
Class of Fixed Asset
Depreciation Rates
Depreciation Method
Plant and equipment
Right of use asset
Low value asset pool
Amortisation
5.00 - 66.67%
10.00 - 50.00%
18.75 - 37.50%
Straight Line and Diminishing Value
Straight Line
Diminishing Value
Amortisation is calculated using a straight-line method to allocate the cost of intangible assets over their estimated useful lives. Amortisation
commences when the intangible asset is available for use.
The amortisation rates used for each class of assets are:
Class of Intangible Asset
Amortisation Rates
Amortisation Method
Software and development
Client lists
Share Based Payments
33.33%
33.33%
Straight Line
Straight Line
The accounting policy for share based payments is included in Note 21.
Slater & Gordon
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41
Slater & Gordon LtdANNUAL REPORT 2021
Notes to the Financial Statements
For the Year Ended 30 June 2021
Note 4. Expenses (continued)
4.2 Expense Analysis
Profit / (Loss) before income tax from continuing operations includes the following specific expenses:
30 June 2021
$'000
30 June 2020
$'000
Salaries and employee benefit expense
Wages and salaries
Post-employment benefits
Share based payment expense
Redundancy costs
Administration and office expense
IT and computer
Professional fees
Utilities and insurance
Printing, postage and stationery
Sundry
Finance costs
Interest and fees on loans (includes costs of borrowing)
Interest on lease obligations
Interest on make good and hire purchases
Depreciation and amortisation
Right of use assets
Property, plant and equipment
Software development
Bad and doubtful debts
Disbursements
Trade receivables
Work in progress
101,122
7,525
3,652
769
93,970
7,122
4,804
2,073
113,068
107,969
5,546
4,068
3,611
2,222
2,064
4,959
2,841
4,090
3,066
3,036
17,511
17,992
10,195
1,544
52
10,273
2,436
4
11,791
12,713
5,485
1,782
711
7,978
5,064
240
(321)
4,983
5,643
3,246
555
9,444
5,252
107
(510)
4,849
Slater & Gordon
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Page 30
Slater & Gordon LtdANNUAL REPORT 2021
Notes to the Financial Statements
For the Year Ended 30 June 2021
Note 5. Cash Flow Information
Reconciliation of profit for the period to cash flows from operating cash flows
Profit / (Loss) after income tax expense for the year
Adjustments for:
Interest expense capitalised
Depreciation and amortisation
Bad and doubtful debts
Share based payment expenses
Foreign exchange loss
Change in operating assets and liabilities:
Decrease in receivables
Increase in work in progress
Increase in other assets
Increase in payables
Increase in provisions and other liabilities
Increase in net deferred tax
30 June 2021
$'000
30 June 2020
$'000
14,470
(1,185)
8,338
7,978
4,983
3,652
-
5,764
(45,803)
(1,759)
3,446
3,278
7,199
8,260
9,444
4,849
4,804
985
4,522
(15,834)
(2,133)
3,296
1,993
1,740
Net cash provided by operating activities
11,546
20,741
Slater & Gordon
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43
Slater & Gordon LtdANNUAL REPORT 2021
Notes to the Financial Statements
For the Year Ended 30 June 2021
Note 6. Income tax expense
6.1 Accounting Policies
Income and other taxes consist of income tax and goods and services tax.
Income Tax
Current income tax expense or benefit for the current and prior periods is measured at the amount expected to be recovered from or paid
to the tax authorities. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end
of the reporting period in the countries where the Group operates.
Deferred tax assets and liabilities are recognised for temporary differences at the applicable tax rates when the assets are expected to be
recovered or liabilities are settled. Deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Except for
those arising from right-of-use assets and lease liabilities, deferred tax is also not recognised if it arises from initial recognition of an asset
or liability in a transaction that is not a business combination and does not affect accounting profit or taxable profit.
Deferred tax assets are recognised for unused tax losses to the extent that management considers the similar business test to have been
satisfied and only if management considers it is probable that future taxable amounts will be available to utilise those temporary differences
and losses.
Deferred tax assets are reviewed at each reporting date. Unrecognised deferred tax assets are reassessed at each reporting date.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the
liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Current and deferred tax for the year are recognised in profit or loss, except when they relate to items that are recognised in other
comprehensive income or directly in equity, in which case the current and deferred tax are also recognised in other comprehensive income
or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax
effect is included in the accounting for the business combination.
Goods and Services Tax (“GST”)
Revenue and expenses are recognised net of the amount of GST, except where the GST incurred is not recoverable from the Australian
Taxation Office (“ATO”), and is therefore recognised as part of the asset’s cost or as part of the expense item. Receivables and payables
are stated inclusive of GST.
The net amount of GST recoverable from, or payable to, the ATO is included as part of receivables or payables in the consolidated
statement of financial position.
Critical Accounting Estimates and Judgements
Area
Detail
No adverse change will occur in
the income tax legislation
Deferred tax assets and liabilities are based on the assumption that no adverse change will occur in the
income tax legislation in Australia and the anticipation that the Group will derive sufficient future
assessable income to enable the benefit to be realised and comply with the conditions of deductibility
imposed by the law.
Recognition of deferred tax
assets
Deferred tax assets are recognised only if management considers it is probable that future taxable
amounts will be available to utilise those temporary differences and losses.
Slater & Gordon
44
Page 32
Slater & Gordon LtdANNUAL REPORT 2021
Notes to the Financial Statements
For the Year Ended 30 June 2021
Note 6. Income tax expense (continued)
6.2 Income Tax Expense
The major components of income tax expense are:
Income tax expense
Adjustment for tax expense relating to prior periods
Deferred income tax expense
Aggregate income tax expense
Income tax expense is attributable to:
Profit / (Loss) from continuing operations
Profit from discontinued operations
Aggregate income tax expense
The prima facie tax payable on profit before tax differs from the income tax expense as follows:
Profit / (Loss) before income tax expense from continuing operations
Profit before income tax expense from discontinued operations
Tax at the statutory tax rate of 30%
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Non-deductible expenses
Income tax expense before prior period adjustments
Adjustment for tax expense relating to prior periods
Income tax expense
Deferred income tax expense included in income tax expense:
Increase in deferred tax assets
Increase in deferred tax liabilities
30 June 2021
$'000
30 June 2020
$'000
(401)
7,600
7,199
7,077
122
7,199
21,263
406
21,669
6,501
1,099
7,600
(401)
7,199
23
1,717
1,740
1,461
279
1,740
(199)
754
555
167
1,550
1,717
23
1,740
30 June 2021
$'000
30 June 2020
$'000
(4,052)
11,251
(8,036)
9,776
7,199
1,740
Slater & Gordon
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45
Slater & Gordon LtdANNUAL REPORT 2021
Notes to the Financial Statements
For the Year Ended 30 June 2021
Note 6. Income tax expense (continued)
6.3 Recognised Tax Assets and Liabilities
Deferred tax assets
Lease liabilities
Employee benefits
Provision for impairment
Accruals
Property, plant and equipment
Solicitor liability provision
Provision for make good
Blackhole tax asset(1)
Other
Revenue losses carried forward(2)
Total
Offset of deferred tax assets and deferred tax liabilities
Balance at the end of the year
30 June 2021
$'000
30 June 2020
$'000
6,901
5,972
4,940
3,264
2,604
1,737
953
923
110
52,905
80,309
9,689
5,519
4,724
3,121
2,720
1,254
170
1,760
247
47,053
76,257
(80,309)
(76,257)
-
-
(1) Blackhole tax asset relates to capital expenditures which are not deductible immediately during the period it was incurred, but instead,
deductible over 5 years using the straight-line method under the income tax regime.
(2) The Group’s revenue losses carried forward arose in prior periods and are available indefinitely for offsetting against future taxable
profits, subject to compliance with the Similar Business Test.
Deferred tax liabilities
Work in progress
Unrendered disbursements
Right of use asset
Sub-lease receivable
Professional indemnity insurance asset
Other
Total
Offset of deferred tax assets balance
Net deferred tax liability balance at the end of the year
Note 7. Dividends
30 June 2021
$'000
30 June 2020
$'000
(87,077)
(8,836)
(4,671)
(1,080)
(744)
(319)
(102,727)
(73,488)
(9,909)
(5,912)
(1,525)
(397)
(245)
(91,476)
80,309
76,257
(22,418)
(15,219)
No interim or final dividend was paid, declared or proposed for the years ended 30 June 2021 or 30 June 2020.
Note 8. Earnings / (Loss) per Share
The following reflects the profit/(loss) and share data used in the calculations of basic and diluted profit/(loss) per share:
Slater & Gordon
46
Page 34
Slater & Gordon LtdANNUAL REPORT 2021
Notes to the Financial Statements
For the Year Ended 30 June 2021
Earnings / (Loss) per share from continuing operations
Profit / (Loss) after income tax
Note 8. Earnings / (Loss) per Share (continued)
Earnings per share from discontinued operations
Profit after income tax
Earnings / (Loss) per share
Profit / (Loss) after income tax
30 June 2021
$'000
30 June 2020
$'000
14,186
(1,660)
30 June 2021
$'000
30 June 2020
$'000
284
475
30 June 2021
$'000
30 June 2020
$'000
14,470
(1,185)
2021
'000
2020
'000
Weighted average number of ordinary shares used in calculating basic earnings / (loss) per share
Adjusted weighted average number of ordinary shares used in calculating diluted earnings / (loss) per
share
145,219
124,810
151,161
124,810
Note 9. Intangible Assets
9.1 Accounting Policies
Goodwill
Goodwill is initially measured at cost (being the excess of the aggregate of the consideration transferred and the amount recognised for
non-controlling interests) and any previous interest held over the net identifiable assets acquired and liabilities assumed.
Goodwill is not amortised, but it is tested annually for impairment or more frequently if events or changes in circumstances indicate that it
might be impaired.
Software Development Costs
Development costs are capitalised when it is probable that the project will be a success considering its commercial and technical feasibility;
the entity is able to use or sell the asset; the entity has sufficient resources and intent to complete the development and its costs can be
measured reliably. Capitalised development expenditure is stated at cost less accumulated amortisation and accumulated impairment
losses. See Note 4 for the amortisation policy.
Slater & Gordon
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47
Slater & Gordon LtdANNUAL REPORT 2021
Notes to the Financial Statements
For the Year Ended 30 June 2021
Note 9. Intangible Assets (continued)
Non-current assets
Goodwill - at cost
Software development - at cost
Less: Accumulated amortisation
Client Lists - at cost
Less: Accumulated amortisation
Total intangible assets
30 June 2021
$'000
30 June 2020
$'000
879
879
15,898
(15,898)
-
102
(74)
28
907
15,898
(15,221)
677
102
(40)
62
1,618
Total
$'000
2,155
45
(556)
(26)
1,618
(711)
907
Movement in carrying amounts:
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below
Balance at 1 July 2019
Additions
Amortisation expense
Disposals
Balance at 30 June 2020
Amortisation expense
Balance at 30 June 2021
9.2 Impairment Testing of Goodwill
Goodwill
$'000
Software
development
$'000
Client lists
$'000
879
-
-
-
879
-
879
1,179
45
(521)
(26)
677
(677)
-
97
-
(35)
-
62
(34)
28
For the purposes of impairment testing, assets are grouped at the lowest levels for which there are separately identifiable, largely
independent, cash inflows (cash generating units “CGU’s”).
Impairment testing is completed at least annually for goodwill, or more frequently if events or changes in circumstances indicate that the
asset may be impaired.
An impairment loss is recognised where the carrying amount of the asset or CGU exceeds its recoverable amount. The recoverable amount
of an asset or CGU is defined as the higher of its fair value less costs of disposal and value-in-use.
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Slater & Gordon LtdANNUAL REPORT 2021
Notes to the Financial Statements
For the Year Ended 30 June 2021
Note 9. Intangible Assets (continued)
Critical Accounting Estimates and Judgements
Area
Detail
Impairment of Goodwill
Determining whether goodwill is impaired requires an estimation of the value-in-use or fair-value less
cost of disposal of the CGU’s to which goodwill has been allocated. The value-in-use calculation
requires management to estimate the future cash flows expected to arise from the CGU and a post-tax
discount rate that reflects the current market assessments of the time value of money and the risks
specific to the asset in order to calculate present value. A material impairment loss may arise where the
present value of future cash flows as currently assessed are less than expected.
Key assumptions and inputs into the determination of the recoverable value of the Group’s CGUs such
as forecast cash flows and discount rates, are subject to significant estimation.
Sensitivity considerations
Sensitivities to the key assumptions were also tested and the Group has determined that no reasonably possible changes would give rise
to impairment at 30 June 2021.
9.3 Impairment Losses Recognised
As at 30 June 2021, the Group did not recognise an impairment expense (30 June 2020: nil).
Note 10. Receivables
10.1 Accounting Policies
Trade receivables are amounts due from customers for services performed in the ordinary course of business. Other receivables are non-
derivative financial assets with fixed or determinable payments that are not quoted in an active market. Other receivables are mainly related
to deferred consideration for sale of client files. If collection of the amounts is expected in one year from the reporting date or less, they
are classified as current assets. If not, they are presented as non-current assets.
Disbursements receivables are only recognised when it is assessed that a reimbursement will be received from the client or on his or her
behalf. The disbursements are initially recognised at the amount disbursed. The disbursements are treated as a separate asset.
Current assets
Trade receivables
Provision for Impairment
Trade receivables, net
Disbursements
Provision for Impairment
Disbursements, net
Other receivables
Total current assets
Non-current assets
Disbursements
Provision for impairment
Disbursements, net
Other receivables
Total non-current assets
Slater & Gordon
30 June 2021
$'000
30 June 2020
$'000
31,474
(5,403)
26,071
31,912
(3,376)
28,536
39,984
(5,958)
34,026
31,104
(3,185)
27,919
2,491
1,949
57,098
63,894
33,778
(13,503)
20,275
30,429
(12,739)
17,690
2,821
3,598
23,096
21,288
Page 37
49
Slater & Gordon LtdANNUAL REPORT 2021
Notes to the Financial Statements
For the Year Ended 30 June 2021
Note 10. Receivables (continued)
Collectability of trade receivables is reviewed at each reporting period. The Group applies the AASB 9 Financial Instruments simplified
approach to measuring the expected credit loss (“ECL”) for all receivables, which uses a lifetime expected loss allowance. Where there is
no reasonable expectation of recovery, receivables are written off.
The ECL is based on three main parameters: probability of default, loss given default and exposure at default. These parameters are
generally derived from internally developed statistical models combined with historical, current and forward-looking information, including
macro-economic data:
Parameter
Detail
Probability of default (“PD”)
Lifetime PD represents the expected point-in-time probability of a default, based on conditions existing
at the balance sheet date and future economic conditions that affect credit risk. Debtors that roll into an
above 90 days overdue category are assumed to have a PD of 100%.
Loss given default (“LGD”)
Represents expected loss conditional on default.
Exposure at default (“EAD”)
Represents the expected exposure at default, taking into account the repayment of outstanding amounts
from the balance sheet date to the default event.
The provision matrix is initially based on the Group’s historical observed default rates. The Group calibrates the matrix to adjust the
historical credit loss experience with forward-looking information. At every reporting date, the historical observed default rates are updated
and changes in the forward-looking estimates are analysed. The use of forward-looking information such as macro-economic forecasts
increases the degree of judgement required to assess how changes in these data points will affect ECLs. The assumptions, including any
forecasts of future economic conditions, are reviewed regularly.
Disbursements and work in progress (Note 11) relate to unbilled work in progress and have substantially the same risk characteristics as
zero days past due trade receivables for the same types of contracts. ECLs related to disbursements and work in progress are discounted
at the risk free rate.
The recoverability of debtors at 30 June 2021 has been assessed considering the impact of the COVID-19 pandemic. The methodology
of the Group's ECL calculation was updated as at 30 June 2021. No material recoverability issues have been identified.
The ECL as at 30 June 2021 and 30 June 2020 was determined as follows:
Total
$'000
<30 days
$'000
30-60 days
$'000
61-90 days
$'000
91-180 days
$'000
>180 days
$'000
Trade receivables
30 June 2021
Gross carrying amount
Provision for impairment
30 June 2020
Gross carrying amount
Provision for impairment
Trade receivables - provision for impairment
Opening balance as at 30 June
Receivables written off as uncollectible
(Increase) / release of provisions
Closing Balance as at 30 June
31,474
5,403
39,984
5,958
20,051
402
19,560
359
2,980
171
8,076
775
1,492
320
4,403
798
1,517
410
2,683
556
2021
$'000
5,434
4,100
5,262
3,470
2020
$'000
(5,958)
(11,013)
775
(220)
4,524
531
(5,403)
(5,958)
Slater & Gordon
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Slater & Gordon LtdANNUAL REPORT 2021
Notes to the Financial Statements
For the Year Ended 30 June 2021
Note 10. Receivables (continued)
Critical Accounting Estimates and Judgements
Area
Detail
Provision for ECL of trade
receivables and billed
disbursements
As referred to above, the Group uses a provision matrix to calculate ECLs for trade receivables and
billed disbursements. The ECL is calculated based on the PD, LGD and EAD, generally derived from
internally developed statistical models combined with historical, current and forward-looking information,
including macro-economic data.
The assessment of the correlation between historical observed default rates, forecast economic
conditions and ECL involves significant estimation.
Note 11. Work in progress
11.1 Accounting Policies
Work in progress represents client cases which have not yet reached a conclusion and comprises personal injury cases, services
performed ancillary to personal injury cases, non-personal injury cases and project litigation cases. Refer to Note 3 for further details.
Contracts for legal services are billed based on time incurred or regulated prices. As permitted under AASB 15, the transaction price
allocated to the unsatisfied or partially unsatisfied performance obligations under these contracts has not been disclosed.
The Group allocates work in progress between current and non-current classifications based on a historical analysis of the Group’s work
in progress balances and case velocity rates to determine expected timing of settlements.
The Group maintains a provision to take account of potential errors in the data input of the work in progress of the personal injury law
practice.
Current assets
Personal Injury
Litigation and emerging services
Provision for impairment
Total current assets
Non-current assets
Personal injury
Litigation and emerging services
Provision for impairment
Total non-current assets
30 June 2021
$'000
30 June 2020
$'000
112,853
10,549
(825)
105,550
2,901
(991)
122,577
107,460
160,186
6,668
(3,300)
130,419
5,296
(3,962)
163,554
131,753
The ECL for work in progress is calculated using the same methodology as described in Note 10. The closing provision for impairment for
work in progress as at 30 June 2021 reconciles to the opening provision for impairment as follows:
Opening balance as at 30 June
Change in provisions
Closing balance
Slater & Gordon
30 June 2021
$'000
30 June 2020
$'000
4,953
5,463
(828)
(510)
4,125
4,953
Page 39
51
Slater & Gordon LtdANNUAL REPORT 2021
Notes to the Financial Statements
For the Year Ended 30 June 2021
Note 11. Work in progress (continued)
Critical Accounting Estimates and Judgements
Area
Detail
Valuation of work in progress
Refer to the disclosures made in Note 3.
Provision for ECL of work in
progress
Refer to the disclosures made in Note 10.
Note 12. Assets held for sale
Current assets
Assets held for sale
30 June 2021
$'000
30 June 2020
$'000
-
1,375
In June 2020, the Group performed a restructure of its Commercial and General Litigation, Estate Litigation, and Compulsory Acquisition
department. As part of the restructure, departing employees in the Estate Litigation and Commercial and General Litigation practice areas
purchased several of those practices’ client files. Sale agreements were executed on 11 September 2020. Work in progress for these
practices was disposed and the discounted deferred consideration was recognised as a receivable. The credit risk associated with the
transaction has been captured in the expected credit loss according to AASB 9.
Note 13. Property, plant and equipment
13.1 Accounting Policies
Property, plant and equipment is measured at cost less accumulated depreciation and any accumulated impairment losses.
An asset’s residual value and useful life is reviewed, and adjusted if appropriate, at the end of each reporting period. Any depreciation and
impairment losses of an asset are recognised in profit or loss – see Note 4.1 for the depreciation policy.
Gains and losses on disposal are determined by comparing the proceeds obtained for the disposal with the carrying value of the relevant
asset. These gains and losses are included in profit or loss when the asset is derecognised.
Non-current assets
Plant and equipment - at cost
Less: Accumulated depreciation
Carrying value
Low Value Asset Pool - at cost
Less: Accumulated depreciation
Carrying value
Total
30 June 2021
$'000
30 June 2020
$'000
27,520
(25,130)
2,390
3,102
(2,802)
300
26,707
(23,545)
3,162
3,107
(2,626)
481
2,690
3,643
Slater & Gordon
52
Page 40
Slater & Gordon LtdANNUAL REPORT 2021
Notes to the Financial Statements
For the Year Ended 30 June 2021
Note 13. Property, plant and equipment (continued)
Reconciliations
Movements in the written down values at the beginning and end of the current and previous financial year are set out below:
Balance at 1 July 2019
Additions
Disposals
Depreciation expense
Balance at 30 June 2020
Additions
Disposals
Depreciation expense
Balance at 30 June 2021
Note 14. Payables
14.1 Accounting Policies
Plant &
Equipment
$'000
Low Value
Asset Pool
$'000
5,945
238
(44)
(2,977)
3,162
842
(12)
(1,602)
2,390
685
66
(1)
(269)
481
-
(1)
(180)
300
Total
$'000
6,630
304
(45)
(3,246)
3,643
842
(13)
(1,782)
2,690
Trade creditors and accruals are carried at amortised cost and represent future amounts payable for goods and services provided to the
Group prior to the end of the financial year. They arise when the Group becomes obliged to make future payments in respect of the
purchase of these goods and services.
Legal creditors are carried at amortised cost and represent disbursements payable by the Group. Most of the balance is related to counsel
fees which will not be paid until the Group receives payment from settlement proceeds on the matter.
Current liabilities
Legal creditors
Trade creditors and accruals
Third party disbursements
Balance
Non-current liabilities
Third party disbursements
Balance
30 June 2021
$'000
30 June 2020
$'000
26,727
21,449
12,582
28,360
17,518
8,955
60,758
54,833
13,317
13,317
8,889
8,889
The Group has an agreement with a third-party disbursement funder, Equal Access Funding Proprietary Limited (“EAF”), who funds
disbursements in respect of certain individual matters. They are reimbursed out of any settlement proceeds on the matter. The Group has
provided a financial guarantee to EAF for the repayment of clients’ obligations in certain circumstances.
In July 2018, the Group entered into an Exclusive Service Provider Deed with MAF Credit Pty Ltd ("MAF") to provide disbursement funding
to clients. The funding facility was initially available for 36 months. On 8 January 2021, the Group extended the terms of the funding for an
additional 18 months expiring on 2 January 2023. The Group has provided a financial guarantee to MAF for the repayment of clients’
obligations in certain circumstances.
Slater & Gordon
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53
Slater & Gordon LtdANNUAL REPORT 2021
Notes to the Financial Statements
For the Year Ended 30 June 2021
Note 14. Payables (continued)
Both disbursement funding facilities are presented in the statement of financial position within payables with a corresponding financial
asset in receivables. An assessment of the financial asset has been performed in line with AASB 9 and a provision has been recognised
against the asset in accordance with the impairment policy described.
Note 15. Provisions
15.1 Accounting Policies
Non-employee related provisions are recognised when the Group has a present obligation (legal or constructive) as a result of past events,
for which it is probable that an outflow of economic benefits will result in an amount that can be reliably measured. Employee related
provisions are recognised by the Group in line with the requirements of AASB 119 Employee Benefits.
Solicitor Liability Claims
A provision for solicitor liability claims is made for the potential future cost of claims brought against the Group by former clients. The
provision relates to open claims and potential future claims as identified at the end of the reporting period. The provision is determined
based on historical data, taking into account the nature of existing claims. The estimate includes the estimated maximum amount payable
by the Group under its Professional Indemnity Insurance Policy on all claims notified to its insurer.
Employee Benefits
Liabilities arising in respect of wages and salaries, annual leave and any other employee benefits expected to be settled within twelve
months of the reporting date are measured at the amounts based on remuneration rates which are expected to be paid when the liability
is settled. Liabilities arising later than one year have been measured at the present value of the estimated future cash outflows to be made
for those benefits. These estimated future cash flows have been discounted using market yields, at the reporting date, on high quality
corporate bonds with matching terms to maturity.
A bonus provision is recognised when it is payable in accordance with the employee’s contract of employment and the amount can be
reliably measured.
A provision for termination benefits is recognised when the entity can no longer withdraw the offer of those benefits, or if earlier, when the
termination benefits are included in a formal restructuring plan that has been announced to those affected by it.
Employee benefit obligations are presented as current liabilities if the entity does not have an unconditional right to defer settlement for at
least twelve months after the reporting date, regardless of when the actual settlement is expected to occur.
The Group has reviewed its provisions for employee benefits in light of the economic environment created by COVID-19. As a result, the
Group has increased its provision for annual leave due to the lower attrition rates and lower leave rates that have been experienced during
the COVID-19 period.
Make Good
For the Group’s obligation to dismantle and remove a leased asset or restore the underlying asset to the condition required by the terms
and conditions of the lease, a provision is recognised and measured under AASB 137 Provisions, Contingent Liabilities and Contingent
Assets. This includes costs of removing furniture and fixtures, equipment, partitions and signage within the Group’s leased offices.
Adjustments to the make good provision are generally included in the Group’s right-of-use asset under AASB 16 Leases. However, if the
make good obligation specifically relates to leasehold improvements undertaken by the Group, the make good provision is capitalised as
part of the relevant leasehold improvement asset rather than to the right-of-use asset.
Slater & Gordon
54
Page 42
Slater & Gordon LtdANNUAL REPORT 2021
Notes to the Financial Statements
For the Year Ended 30 June 2021
Note 15. Provisions (continued)
Unexpired Risk Liability
In certain legal proceedings the Company’s client may be liable to pay the legal costs of the defendant if the matter is unsuccessful (also
known as an adverse cost order (“ACO”)). In certain cases, the Group indemnifies the client against an ACO.
The unexpired risk liability represents the costs for expected future claims from the indemnities provided to the client. The liability
recognised at 30 June 2021 reflects management’s best estimate of potential adverse costs payable under each indemnity.
As at 30 June 2021, no outstanding claims are associated with these current indemnities. To manage its adverse cost exposure, the Group
regularly assesses its indemnified cases and may enter into insurance arrangements when necessary. The Group recognised an unexpired
risk liability expense of $0.6m during 30 June 2021 (30 June 2020: nil) included as part of other expenses in the consolidated statement
of profit or loss.
15.2 Provisions
Current
Employee benefits
Solicitor liability claims
Provision for make good
Unexpired risk liability
Balance
Non-current
Employee benefits
Solicitor liability claims
Provision for make good
Unexpired risk liability
Balance
30 June 2021
$'000
30 June 2020
$'000
19,056
3,024
906
168
17,013
3,294
26
-
23,154
20,333
1,246
2,136
2,269
463
6,114
1,384
886
540
-
2,810
There have been no significant COVID-19 related provisions identified as a result of the assessment performed by management for the
balances as at 30 June 2021.
Note 16. Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, deposits held at call with banks and short-term deposits with an original maturity of
three months or less. For the purposes of the consolidated statement of cash flows, cash and cash equivalents consist of cash and cash
equivalents as defined above, net of outstanding banking overdrafts.
Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of investing and financing
activities, which are disclosed as operating cash flows.
Cash and cash equivalents
Cash in hand
Cash in bank
Balance
30 June 2021
$'000
30 June 2020
$'000
26
20,671
20,697
26
26,435
26,461
Slater & Gordon
Page 43
55
Slater & Gordon LtdANNUAL REPORT 2021
Notes to the Financial Statements
For the Year Ended 30 June 2021
Note 17. Financing arrangements
17.1 Accounting Policies
Borrowing Costs
Borrowing costs can include interest expense, finance charges in respect of finance leases, amortisation of loan discounts or premiums,
ancillary costs relating to borrowings, and exchange differences arising from foreign currency borrowings to the extent that they are
regarded as an adjustment to interest costs.
17.2 Financing arrangements
Debt facilities
At the reporting date, the Group had the following debt facilities:
(a) Super Senior Facility ($65.0m) with a termination date of 31 July 2023. The facility incurs fixed fees and a fixed interest rate, with a
portion of the interest payable in cash at regular intervals since 1 January 2021. The remaining interest owing will be capitalised to
the loan balance. From 1 January 2023, all interest will be payable in cash at regular intervals. The balance is $79.9m at 30 June
2021 (30 June 2020: $80.5m). The total undrawn amount of the facility is nil at 30 June 2021 (30 June 2020: nil).
(b) Term Loan ($15.0m) – the facility size increased from $10.0m to $20.0m in July 2020, of which $5m of the facility commitment was
lapsed on a voluntary basis as at 31 December 2020. It is secured against a borrowing base of eligible receivables and has a
termination date of 6 February 2023. Of the $15.0m outstanding facility commitment, $3.0m is revolving credit and $12.0m is term
loan. The facility incurs fixed fees and a fixed interest rate, with interest payable monthly in arrears. The balance is $10.0m as at 30
June 2021 (30 June 2020: $5.5m). The total available undrawn amount of the facility is $5.0m as at 30 June 2021 (30 June 2020:
$4.5m) and is available until 30 September 2021, subject to availability of eligible receivables.
Net Debt
As at 30 June 2021, the Group has fully drawn its Super Senior Facility.
The Group had cash on hand of $20,697,000 (30 June 2020: $26,461,000), offset by debt of $112,384,000 (including lease liabilities of
$23,170,000), resulting in net debt of $91,687,000 (30 June 2020: $98,099,000).
Covenants position
The Group was in compliance with all financial covenants as at 30 June 2021.
Debt reconciliation
Balance at 30 June 2020
Drawdowns
Repayments
Borrowing costs
Lease non-cash movements
Gain on repayment
Borrowing costs unwind
Accrued interest
Balance at 30 June 2021
Super senior
facility
$'000
Term loan
$'000
Disbursement
asset backed
facility
$'000
Lease
liabilities
$'000
Insurance
Premium
financing
$'000
Total
$'000
80,507
-
(6,967)
-
-
(368)
-
6,756
79,928
4,896
4,500
-
(425)
-
-
315
-
9,286
6,448
32,294
-
124,145
-
(6,448)
-
-
-
-
-
-
(10,258)
-
(768)
-
-
1,902
1,176
(1,212)
-
-
-
-
36
5,676
(24,885)
(425)
(768)
(368)
315
8,694
-
23,170
-
112,384
17.3 Summary of Borrowing Arrangements
At reporting date, the following banking facilities had been executed and were available:
Slater & Gordon
56
Page 44
Slater & Gordon LtdANNUAL REPORT 2021
Notes to the Financial Statements
For the Year Ended 30 June 2021
Note 17. Financing arrangements (continued)
Total banking facilities
Maturity
Super senior facility
Term loan
Disbursement asset backed facility
Total credit facilities
Disbursement asset backed facility
Super senior facility
29 Dec 2020
31 Jul 2023
Total credit facilities - current
Super senior facility(1)
Term Loan
Total credit facilities - non-current
31 Jul 2023
6 Feb 2023
(1) Includes interest capitalised to the loan balance.
2021
$'000
65,000
15,000
-
2020
$'000
65,000
10,000
33,000
80,000
108,000
-
-
-
79,928
9,286
89,214
6,448
1,967
8,415
78,539
4,896
83,435
Slater & Gordon
Page 45
57
Slater & Gordon LtdANNUAL REPORT 2021
Notes to the Financial Statements
For the Year Ended 30 June 2021
Note 18. Leases
18.1 Accounting Policies
The Group assesses whether a contract is or contains a lease, at inception of the contract. The Group recognises a right-of-use asset and
a corresponding lease liability with respect to all lease arrangements in which it is the lessee. This approach excludes short-term leases
(defined as leases with a lease term of 12 months or less, and leases of low value assets such as laptop computers, small items of office
furniture and telephones). For these leases, the Group recognises the lease payments as an operating expense.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted
by using the rate implicit in the lease. If this rate cannot be readily determined, the Group uses its incremental borrowing rate (“IBR”).
Lease payments included in the measurement of the lease liability comprise:
●
●
●
●
●
Fixed lease payments (including in-substance fixed payments), less any lease incentives receivable;
Variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date;
The amount expected to be payable by the lessee under residual value guarantees;
The exercise price of purchase options, if the lessee is reasonably certain to exercise the options; and
Payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate the lease.
The lease liability is presented as a separate line in the consolidated statement of financial position.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability and by reducing the
carrying amount to reflect the lease payments made.
The Group remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use asset) whenever:
●
●
●
The lease term has changed or there is a significant event or change in circumstances resulting in a change in the assessment of
exercise of an option, in which case the lease liability is remeasured by discounting the revised lease payments using a revised
discount rate.
The lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed residual value,
in which case the lease liability is remeasured by discounting the revised lease payments using an unchanged discount rate
A lease contract is modified, and the lease modification is not accounted for as a separate lease, in which case the lease liability is
remeasured based on the lease term of the modified lease by discounting the revised lease payments using a revised discount rate
at the effective date of the modification.
The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the
commencement day, less any lease incentives received and any initial direct costs. They are subsequently measured at cost less
accumulated depreciation and impairment losses; and adjusted for remeasurement of the lease liability.
Whenever the Group incurs an obligation for costs to dismantle and remove a leased asset or restore the underlying asset to the condition
required by the terms and conditions of the lease, a provision is recognised and measured under AASB 137. To the extent that the costs
relate to a right-of-use asset, the costs are included in the related right-of-use asset.
Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset. If the lease transfers
ownership of the underlying asset to the Group by the end of the lease term or if the cost of the right-of-use asset reflects that the Group
expects to exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset. The
depreciation starts at the commencement date of the lease.
The Group applies AASB 136 to determine whether a right-of-use asset is impaired and accounts for any identified impairment loss as
described in Note 13.
Variable rents that do not depend on an index or rate are not included in the measurement of the lease liability and the right-of-use asset.
The related payments are recognised as an expense in the period in which the event occurs and are included in the line Other expenses
in profit or loss.
As a practical expedient, AASB 16 permits a lessee not to separate non-lease components, and instead account for any lease and
associated non-lease components as a single arrangement. The Group has not used this practical expedient.
In light of COVID-19, the Group has reassessed all of the assumptions contained within the impairment model for AASB 16 right-of-use
assets. No impairment was identified or recognised as at 30 June 2021 as a result of this process.
Slater & Gordon
58
Page 46
Slater & Gordon LtdANNUAL REPORT 2021
Notes to the Financial Statements
For the Year Ended 30 June 2021
Note 18. Leases (continued)
18.2 Right of use assets
At 1 July 2019
Additions
Disposals
Lease adjustments
Depreciation charge
Depreciation charge - discontinued operations
At 30 June 2020
Additions
Lease adjustments(1)
Depreciation charge
Makegood recognised
As at 30 June 2021
Buildings
Plant &
Equipment
$'000
$'000
25,036
23
(177)
485
(5,643)
(19)
19,705
1,125
(2,341)
(5,447)
2,296
-
-
-
-
-
-
-
272
-
(38)
-
Total
$'000
25,036
23
(177)
485
(5,643)
(19)
19,705
1,397
(2,341)
(5,485)
2,296
15,338
234
15,572
(1) Reassessment of lease term. The extension period for some of the offices is no longer expected to be taken up.
18.3 Lease Liabilities
The closing lease liability balances are shown below. Movements in the overall lease liabilities are outlined in Note 17.
Current liabilities
Lease liability
Total current
Non-current liabilities
Lease liability
Total non-current
Refer to note 19 for further information on financial risk management.
18.4 Amounts recognised in profit and loss
The amounts shown below are recognised in the consolidated statement of profit or loss.
Depreciation and amortisation
Depreciation expense of right-of-use assets
Finance costs
Interest expense on lease liabilities
Income from sub-leasing of right-of-use assets
Slater & Gordon
30 June 2021
$'000
30 June 2020
$'000
6,628
6,628
8,185
8,185
16,542
24,110
16,542
24,110
30 June 2021
$000
30 June 2020
$000
5,485
5,643
1,902
(357)
2,911
(475)
Page 47
59
Slater & Gordon LtdANNUAL REPORT 2021
Notes to the Financial Statements
For the Year Ended 30 June 2021
Note 18. Leases (continued)
Rental expense
Expenses relating to short term leases
Expenses relating to variable payments not included in lease liability
Critical Accounting Estimates and Judgements
Area
Detail
815
1,515
457
1,454
Estimating the IBR
The Group cannot readily determine the interest rate implicit in the lease, therefore, it uses its IBR to
measure lease liabilities. The Group estimates the IBR using observable inputs (e.g. market interest
rates) when available and is required to make certain entity-specific estimates (e.g. Group’s credit
rating).
Determining the lease term of
contracts with renewal options
The Group has several property lease contracts that include extension options. These options are
negotiated by management to provide flexibility in managing the leased-asset portfolio and align with
the Group’s business needs. Management exercises significant judgement in determining whether
these extension options are reasonably certain to be exercised.
As at 30 June 2021, the undiscounted potential future rental payments relating to periods following the
exercise date of extension options that are not included in the lease term amounted to $33.7m.
Note 19. Financial Risk Management
19.1 Accounting Policies
The Group’s principal financial instruments comprise cash and cash equivalents, receivables, work in progress, trade payables and loans.
The classification of financial instruments depends on the purpose for which the instruments were acquired. Management determines the
classification of its financial instruments at initial recognition.
Financial assets
Under AASB 9, the Group assesses which of its financial assets are measured at fair value through other comprehensive income, fair
value through profit or loss, or amortised cost. The classification is generally based on the business model in which a financial asset is
managed and its contractual cash flow characteristics. The determination of the business model within which a financial asset is held has
been made on the basis of the facts and circumstances that existed at the date of initial application.
Based on the necessary assessments, the Group has designated all its financial assets to be measured at amortised cost.
Receivables are non-interest bearing, non-derivative financial assets with fixed or determinable payments that are not quoted in an active
market. These are initially recognised based on fair value plus directly attributable transaction costs that are subsequently measured using
the effective interest method at amortised cost and are subject to impairment.
Financial assets are tested for impairment on a forward-looking basis to calculate the associated ECL and to establish whether there is
any objective evidence of resulting impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified
or impaired. The impairment loss is reversed through profit or loss if the amount of the impairment loss decreases in a subsequent period
and the decrease can be related objectively to an event occurring after the impairment was recognised.
Financial liabilities
Under AASB 9, the Group assesses which of its financial liabilities are measured at either fair value through profit or loss or at amortised
cost. Financial liabilities include trade payables, other creditors and loans from third parties including loans from or other amounts due to
director-related entities.
Based on the necessary assessments, the Group has designated all its financial liabilities to be measured at amortised cost.
Financial liabilities are recognised at amortised cost, comprising original debt, net of directly attributable transaction costs less principal
payments and amortisation using the effective interest rate method. The implied interest expense is recognised in profit or loss.
Slater & Gordon
60
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Slater & Gordon LtdANNUAL REPORT 2021
Notes to the Financial Statements
For the Year Ended 30 June 2021
Note 19. Financial Risk Management (continued)
19.2 Interest Rate Risk
The Group's exposure to interest rate risk and the effective interest rates of non-derivative financial assets and financial liabilities both
recognised and unrecognised at the end of the reporting period are as follows:
Variable
interest rate
2021
$'000
Variable
interest rate
2020
$'000
Fixed interest
rate
2021
$'000
Fixed interest
rate
2020
$'000
Total
2021
$'000
Total
2020
$'000
Financial assets
Financial assets held at amortised
cost
Cash and bank guarantees on
deposit
Total financial assets
Financial liabilities
Financial liabilities held at
amortised cost
Lease liabilities
Disbursement backed asset facility
Super senior facility
Term Loan
Total financial liabilities
25,581
25,581
30,638
30,638
-
-
-
-
25,581
25,581
30,638
30,638
-
-
-
-
-
-
-
-
-
-
23,170
-
79,928
9,286
32,294
6,448
80,507
4,896
23,170
-
79,928
9,286
32,294
6,448
80,507
4,896
112,384
124,145
112,384
124,145
The Group manages the exposure through the ongoing monitoring of interest rates.
19.3 Foreign Exchange Risk
The Group has no significant exposures to foreign exchange risk.
19.4 Credit risk
The main exposure to credit risk in the Group is represented by receivables (debtors and disbursements) owing to the Group. The Group’s
exposure to credit risk arises from the potential default of the counterparty, with a maximum exposure equal to the carrying amount of
those assets as disclosed in the statement of financial position and notes to the financial statements.
The Group held cash and cash equivalents and restricted bank guarantees on deposit of $25,581,000 at 30 June 2021 (30 June 2020:
$30,638,000). The credit risk associated with cash and cash equivalents is considered minimal as the cash and cash equivalents are held
with Authorised Deposit Institutions in Australia which are regulated by the Australian Prudential Regulatory Authority.
Receivables
Once client matters are billed, a significant portion of receivables are considered low risk. This is because these receivables are collected
directly from settlements that are mainly paid by insurers or government bodies or litigation funders into trust accounts held on behalf of
the Group’s clients. The Group applies the AASB 9 simplified approach to measuring the ECL for receivables, which uses a lifetime
expected loss allowance for ECL for all receivables, see Note 10 for further details.
Management of Credit Risk
The Group actively manages its credit risk by:
●
●
●
●
●
●
where applicable, assessing the capability of a client to meet its obligations under the fee and retainer agreement;
periodically reviewing the reasons for bad debt write-offs in order to improve the future decision-making process;
maintaining an adequate provision against the future recovery of debtors and disbursements;
including in management key performance indicators (KPIs) measures in respect of debtors, disbursements and collections;
holding regular meetings with relevant teams on debtor profiling, including ageing of the portfolios; and
where necessary, pursuing the recovery of debts owed to the Group through external mercantile agents and the courts.
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Slater & Gordon LtdANNUAL REPORT 2021
Notes to the Financial Statements
For the Year Ended 30 June 2021
Note 19. Financial Risk Management (continued)
Due to the nature of the NWNF arrangements applicable to the majority of the legal matters managed by the Group there can be
considerable time between initiation and settlement of a matter. While time increases the ageing profile of receivables, particularly
disbursements, it does not always increase the associated credit risk.
Management performs periodic assessment of the recoverability of receivables, and provisions are calculated based on historical write-
offs of the receivables as well as any known circumstances relating to the matters in progress.
Management has revisited the assumptions underlying the recoverability of receivables and calculation of provisions at 30 June 2021 in
light of the impact of the COVID-19 pandemic. No material changes to management’s assessment of credit risk have been identified.
19.5 Liquidity risk
The Group’s objective is to maintain a balance between the continuity of funding and flexibility through the use of operating cash flows and
committed available credit facilities. The Group actively reviews its funding position to ensure the available facilities are adequate to meet
its current and anticipated needs.
The Group manages liquidity risk by monitoring forecast cash flows and ensuring that adequate borrowing facilities are maintained. Refer
to the statement of cash flows and Note 5, for further information on the historical cash flows. Further information in relation to debt facilities
available and utilised are outlined in Note 17.
Maturity Analysis
The table below represents the estimated and undiscounted contractual settlement terms for financial instruments and management’s
expectation for settlement of undiscounted maturities. Cash flows for floating rate financial instruments have been presented based on the
rate prevailing at the balance date.
2021
Non-derivative financial liabilities
Payables
Borrowings
Lease liabilities
Financial liability maturities
2020
Non-derivative financial liabilities
Payables
Borrowings
Lease liabilities
< 12 Months
$'000
1 - 5 years
$'000
> 5 years
$'000
Total
contractual
cash flows
$'000
Carrying
amount
$'000
60,758
6,225
8,207
13,317
107,014
18,135
75,190
138,466
-
-
530
530
74,075
113,239
26,871
74,075
89,214
23,170
214,185
186,459
54,833
10,625
10,329
8,889
111,690
26,767
-
-
1,421
63,722
122,315
38,517
63,722
91,850
32,294
Financial liability maturities
75,787
147,346
1,421
224,554
187,866
Note 20. Contributed equity
Ordinary shares - fully paid
139,093,565
138,428,817
1,435,177
1,434,793
30 June 2021
Shares
30 June 2020 30 June 2021
$'000
Shares
30 June 2020
$'000
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Slater & Gordon LtdANNUAL REPORT 2021
Notes to the Financial Statements
For the Year Ended 30 June 2021
Note 20. Contributed equity (continued)
Movements in ordinary share capital
Details
Balance
Transfer from share based payment reserve
Conversion of warrants
Issuance of shares under rights issue
Balance
Issue of shares under LTIP
Balance
Ordinary shares
Date
1 July 2019
30 June 2020
Shares
$'000
69,527,235
-
3,156,535
65,745,047
138,428,817
664,748
1,351,533
1,273
7,425
74,562
1,434,793
384
30 June 2021
139,093,565
1,435,177
Ordinary shares participate in dividends and the proceeds on winding up of the Company in proportion to the number of shares held. At
shareholders meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on a
show of hands.
During the period, the Company issued 664,748 shares for nil consideration as part of the Long Term Incentive Plan ("LTIP").
The Company did not pay any dividends during the financial year ended 30 June 2021 (30 June 2020: nil).
For the purpose of the Group’s capital management, capital includes issued capital. The primary objective of the Group’s capital
management is to maximise the shareholder value.
Note 21. Share-based payments
21.1 Accounting policies
The consolidated entity operates a share-based payment employee share scheme.
Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity
instruments at the grant date.
The fair value of the equity to which employees become entitled is measured at grant date and recognised as an expense over the vesting
period, with a corresponding increase to an equity account. In respect of share-based payments that are dependent on the satisfaction of
performance conditions, the number of shares and options expected to vest is reviewed and adjusted at each reporting date. The amount
recognised for services received as consideration for these equity instruments granted is adjusted to reflect the best estimate of the number
of equity instruments that eventually vest.
Equity-settled share-based payment transactions with parties other than employees are measured at the fair value of the goods or services
received, except where that fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity
instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service.
21.2 Employee Equity Incentive Plan
The Company has one employee Equity Incentive Plan (the Plan), which was approved by the shareholders of the Company at the Annual
General Meeting held on 14 November 2019.
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Slater & Gordon LtdANNUAL REPORT 2021
Notes to the Financial Statements
For the Year Ended 30 June 2021
Note 21. Share-based payments (continued)
The Plan provides participants with a nil-exercise price right to acquire shares in the Group which are subject to restrictions to be
determined by the Board. There have been three issuances (Tranches 1 to 3) to date related to the Plan as follows:
Tranche 1: The Rights under Tranche 1 are provided to participants in four tranches, A through D. The number of Rights that will vest in
Tranches A to C is based on the fulfillment of service conditions, while Rights vesting for Tranche D depend on the occurrence of a
performance-based exit event condition. That same exit event condition must be met for all tranches to become exercisable.
Tranche 2: The Rights under Tranche 2 will vest based on the fulfillment of a service condition of remaining in the Group’s employ to 1
January 2022.
Tranche 3: The Rights under the Plan are provided to participants in three tranches, A through C. The number of Rights that will vest in
Tranches A to C is based on the fulfillment of service conditions as well as the achievement of a performance-based condition.
(i) Recognition
The Group’s Plan is an equity-based share-based payment, in accordance with the definition under AASB 2 Share-based Payment (AASB
2). Equity-settled share-based payments are measured at the grant date fair value for employee services. Equity-settled share-based
payment transactions are not subsequently re-measured once the grant date fair value has been determined. Where unallocated Rights
exist at year end, these will not be recognised until the allocation occurs, as no obligation is attached to these rights as at 30 June 2021.
AASB 2 requires the fair value of equity instruments granted to be based on market price, if available, and to consider the terms and
conditions which those equity instruments were granted. The cost of the Rights issued is recognised as an expense from the Grant date
over the defined vesting period. Management assumptions of service conditions (i.e. employment retention) are based on best estimate
and reflected in the employee expenses recognised for the respective financial year.
(ii) Valuation
A Black Scholes option pricing model has been used to value Rights given the performance hurdle is a non-market hurdle, being the
underlying Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA). The grant date fair values of the Rights have been
determined to be $9,000,000, $812,463 and $348,750 for Tranches 1, 2 and 3, respectively, using the following inputs:
Exercise Price (AUD$)
Spot price (AUD$)
Time to maturity (years)
Dividend yield
Discounted for lack of control
Valuation date (i.e. grant date)
Tranche 1
Tranche 2
Tranche 3
0.00
0.89
7.00
0.00%
28%
13 December 2019
0.00
0.80
0.91
0.00%
25%
5 February 2021
0.00
0.75
1.22 to 3.22
0.00%
25%
12 April 2021
The employment termination of the participant will forfeit his/her rights to the share options, unless the participant is assessed to be a 'good
leaver'. The Group estimates the following departures for each of the tranches:
Tranche 1: 7% of the participants will leave throughout the subsequent 2 years, with no departure at the end of first year (30 June 2020).
Tranche 2: 6% of the participants will leave throughout the subsequent 1 year, with no departure at the end of first year (30 June 2021).
Tranche 3: the participant is not expected to leave the Group throughout the vesting period.
The estimated percentage of employee departure will be reassessed at the end of each respective financial year.
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Slater & Gordon LtdANNUAL REPORT 2021
Notes to the Financial Statements
For the Year Ended 30 June 2021
Note 21. Share-based payments (continued)
(iii) Measurement
The Plan is a staged vesting plan, with the following tranches:
Vesting date / event
Vesting percentage
Cumulative value of vested
award ($)
Tranche 1
Tranche A
Tranche B
Tranche C
Tranche D
30 June 2020
30 June 2021
30 June 2022
Date of 'Exit Event'
Tranche 2
1 January 2022
Tranche 3
Tranche A
Tranche B
Tranche C
1 July 2022
1 July 2023
1 July 2024
22%
22%
22%
34%
100%
33%
33%
34%
1,980,000
3,960,000
5,940,000
9,000,000
812,463
116,250
232,499
348,750
The following table illustrates the expected vesting of the LTIP, considering that estimates described under (ii) above:
Vesting Date ($)
30 June 2020
30 June 2021
30 June 2022
30 June 2023
30 June 2024
1,980,000
729,474
447,097
1,647,692
-
-
-
-
-
1,216,697
638,026
1,412,308
346,220
20,043
10,967
7,549
-
-
685,341
-
415,464
96,207
52,641
36,234
-
-
-
-
-
-
52,641
36,234
-
-
-
-
-
-
-
36,234
Total
cumulative
expense
1,980,000
1,946,171
1,770,464
3,060,000
761,684
116,250
116,249
116,251
Tranche 1A
Tranche 1B
Tranche 1C
Tranche 1D
Tranche 2
Tranche 3A
Tranche 3B
Tranche 3C
Total
4,804,263
3,651,810
1,285,887
88,875
36,234
9,867,069
A $3.7m share based payment expense was recognised at 30 June 2021.
(iv) Movements during the year
The following table illustrates the number and movements in Rights during the year:
Balance at 1 July
Granted during the year
Forfeited/Lapsed during the year
Exercised during the year
Expired during the year
Outstanding at 30 June
Exercisable at 30 June
All of the Rights under the LTIP have a nil exercise price.
30 June 2021
(Number)
30 June 2020
(Number)
15,573,000
1,974,105
(165,812)
(664,748)
-
-
15,573,000
-
-
-
16,716,545
15,573,000
11,499,103
-
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Slater & Gordon LtdANNUAL REPORT 2021
Notes to the Financial Statements
For the Year Ended 30 June 2021
Note 22. Related Party Disclosures
22.1 Equity Interests in Related Parties
The table below lists the primary operating controlled entities of the Group. Individual controlled entities that are dormant have not been
listed. All are owned 100% unless noted.
Country of Incorporation
Australia:
Slater and Gordon (TML) Queensland Pty Ltd
Slater & Gordon Lawyers NSW Pty Limited
Conveyancing Works (Qld) Pty Limited
Schultz Toomey O'Brien Pty Ltd
All States Legal Co Pty Ltd
SG NSW Pty Ltd
% Equity % Equity
interest
2021
interest
2020
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
The Immediate Parent Entity of the Group is AIO V Finance (Ireland) DAC, incorporated in Ireland. The Ultimate Parent Entity is Anchorage
Capital Group LLC incorporated in the United States of America.
22.2 Guarantees for S&G UK lease obligations
The Company and Slater and Gordon (UK) 1 Limited (“S&G UK”) entered into certain transitional arrangements that are governed by a
business separation agreement (“BSA”) to effect the separation of the Group’s previous UK operations and subsidiaries from its Australian
operations under the Senior Lender Scheme entered into in December 2017.
The transitional arrangements required the parties to the BSA to seek to procure that the Company be released from parent guarantees
and other forms of security and financial support that it has provided to the UK operations. Any potential material contingent liability relates
to parent guarantees for UK leases for the major office premises used by the UK operations.
The BSA provides that S&G UK must use reasonable endeavours to have the parent guarantees released and that this must be completed
within 18 months of the date of implementation of the Recapitalisation on 15 December 2017 (or such longer period as agreed between
the Company and S&G UK). This due date was first extended by agreement until 22 June 2020. Subsequently in June 2020, the Company
and S&G UK agreed to extend this period by six further terms of one month each in return for the payment of a guarantee fee equal to 5%
of the monthly guaranteed amount, payable in advance of each one month extension. The final extension expired on 22 December 2020
and no further extension has been agreed to. Despite the failure of S&G UK to meet its obligations under the BSA to have the parent
guarantees released by the extended due date, S&G UK remains under a continuing obligation to use its reasonable endeavours to have
the parent guarantees released.
During the year ended 30 June 2021, S&G UK surrendered its lease of its Watford office and agreed to sub lease three of the eight floors
at its Manchester office to a government sub tenant. While the sub lease does not terminate the parent company guarantee in respect of
those premises, it does reduce the risk of default. The Manchester office leases are the only remaining leases for which parent company
guarantees have been given by the Company.
If S&G UK defaults on the UK leases subject to the parent guarantees, and those parent guarantees have not yet been released, the
Company may be liable for any unpaid amounts under those leases at the time of default. Any contingent liability has the potential to be
material in the event that the UK operations were in default and the parent guarantees were called upon and the Company was unable to
take steps that are typically commercially available to mitigate its loss, such as sub-leasing. At 30 June 2021, the aggregate unpaid
amounts under these lease agreements for the remainder of the lease term expiring on 1 January 2030 are $67,578,492 (GBP 36,993,837),
(30 June 2020: $82,200,842; GBP 45,823,188).
It is not currently possible for the Company to estimate any liability or contingent liability under these guarantees as there would need to
be an event of default by the UK operations to cause any liability. In addition, numerous factors would impact the extent of any potential
liability in that event, such as when the guarantee would be called and the amounts outstanding at that time, the Company’s ability to take
steps to mitigate loss, including subleasing the premises, and its capacity to negotiate with the third parties who have the right to call on
those guarantees. Liability in respect of these guarantees will only arise if the UK operations default on their obligations under the leases
and other material contracts subject to a parent guarantee, prior to an agreement being made to release that guarantee.
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Slater & Gordon LtdANNUAL REPORT 2021
Notes to the Financial Statements
For the Year Ended 30 June 2021
Note 22. Related Party Disclosures (continued)
22.3 Deed of Cross Guarantee
All Australian entities are parties to a deed of cross guarantee under which each company guarantees the debts of the others. By entering
into the deed, the wholly-owned entities have been relieved from the requirement to prepare a financial report and directors’ report under
Corporations Instrument 2016/785 dated 17 December 2016 issued by the Australian Securities and Investments Commission.
22.4 Key Management Personnel Compensation
Compensation by category
Short-term employee benefits
Post-employment benefits
Other long-term employment benefits
Share based payments
Total
22.5 Transactions with AIO V Finance (Ireland) DAC (Immediate Parent Entity)
Loans from Immediate Parent Entity
Opening balance
Repayments
Interest capitalised
Closing balance outstanding
30 June 2021
$
30 June 2020
$
2,588,893
117,874
21,200
1,696,495
2,602,127
120,610
16,721
2,498,217
4,424,462
5,237,675
30 June 2021
$'000
30 June 2020
$'000
45,220
(4,120)
3,795
42,008
(1,105)
4,317
44,895
45,220
The loan facilities are advanced by the Immediate Parent Entity as one of the lenders under the super senior facility, on the same terms
as those agreed with the other lenders. The facilities are unsecured, and repayable in cash on maturity. Further details of the terms of the
facilities are provided in Note 17.2.
22.6 Transactions with Other Related Parties
The shareholdings of related parties and remuneration of KMP are disclosed in the Directors’ Report.
Note 23. Parent Entity Disclosures
As at, and throughout, the financial year ended 30 June 2021 the parent entity of the Group was Slater & Gordon Ltd. Investments in
subsidiaries are accounted for at cost, less any impairment recognised since acquisition.
Statement of profit or loss and other comprehensive income
Profit / (Loss) after income tax
Total comprehensive income / (loss)
30 June 2021
$'000
Parent
30 June 2020
$'000
13,754
(1,951)
13,754
(1,951)
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Slater & Gordon LtdANNUAL REPORT 2021
Notes to the Financial Statements
For the Year Ended 30 June 2021
Note 23. Parent Entity Disclosures (continued)
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Contributed equity
Share-based payments reserve
Accumulated losses
Total equity
30 June 2021
$'000
Parent
30 June 2020
$'000
140,815
118,709
343,934
292,204
109,603
88,421
247,782
213,458
1,435,124
9,309
(1,348,281)
1,434,740
6,041
(1,362,035)
96,152
78,746
Note 24. Auditor's Remuneration
The auditor of the Group for the year ended 30 June 2021 is Ernst & Young (30 June 2020: Ernst & Young).
Fees to Ernst & Young
Fees for auditing the statutory financial report of the parent covering the group and auditing the
statutory financial reports of any controlled entities
Fees for other assurance and agreed-upon-procedures services under other legislation or contractual
arrangements where there is discretion as to whether the service is provided by the auditor or another
firm
· Trust account audits
Fees for other services
· Other non-audit services
Total
2021
$
2020
$
555,000
585,000
112,000
92,000
50,000
-
717,000
677,000
Note 25. Accounting Standards issued but not yet effective at 30 June 2021
At the date of authorisation of the financial statements, there are a number of amendments to accounting standards that become applicable
for annual reporting periods commencing on or after 1 July 2021, but they do not have a material effect on the Group's financial statements.
Note 26. Unrecognised Items
26.1 Guarantees
The Group has entered into lease rental guarantees and performance guarantees with a face value of $4,884,105 (30 June 2020:
$4,177,712). Refer to Note 22 for details of the lease guarantees the Company has provided for certain offices located in the United
Kingdom.
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Slater & Gordon LtdANNUAL REPORT 2021
Notes to the Financial Statements
For the Year Ended 30 June 2021
Note 26. Unrecognised Items (continued)
26.2 Contingent Liabilities – Class Action Proceedings
On 12 October 2016 legal proceedings were filed against the Company in the Federal Court of Australia (“Federal Court”) by Matthew Hall
on behalf of an open class of the Company’s shareholders (the “Hall proceeding”). The class action proceeding asserted that the Company
engaged in misleading or deceptive conduct and breached its continuous disclosure obligations during the period from 30 March 2015 to
24 February 2016 and sought compensation or refund of investments, plus interest and costs. This class action proceeding was settled by
agreement in July 2017 through a Federal Court mediation, subject to creditor, shareholder and Court approval of a shareholder claimant
and senior lender scheme of arrangement.
On 20 June 2017, the Company announced that legal proceedings were filed against it by Babscay Pty Ltd (the “Babscay proceeding”) on
behalf of persons who acquired an interest in shares of the Company between 24 August 2012 and 19 November 2015. The statement of
claim asserted that the Company’s financial statements for the financial years ended 30 June 2013, 2014 and 2015 contained false or
misleading statements. This claim was later amended to also include the Company’s financial statements for the financial year ended 30
June 2012. The allegations focus on the way in which the Company recognised revenue and, in financial year 2015, accounted for
acquisitions in accordance with Australian Accounting Standards.
On 14 December 2017 the Federal Court approved a scheme of arrangement between the Company and all shareholder claimants
(“Shareholder Claimant Scheme”), including claimants in the Hall and Babscay proceedings. The Shareholder Claimant Scheme resolves
and compromises all potential shareholder claims against the Company and its officers. The Shareholder Claimant Scheme became legally
effective on 15 December 2017. Under the Scheme, shareholder claimants have released the Company and officers from any shareholder
claims and the Scheme can be pleaded as a bar to any shareholder claim.
On 14 December 2017 the Federal Court also approved the settlement of the Hall proceeding and dismissed that proceeding. The
Company’s contribution to this settlement of $5.0m was recognised as a provision at 30 June 2017. The Hall proceeding settlement is
implemented by the Shareholder Claimant Scheme. The Babscay proceeding has not yet been formally dismissed or discontinued,
however the Shareholder Claimant Scheme releases the Company and its officers and bars the prosecution of that claim.
The Shareholder Claimant Scheme limits the ability of a shareholder claimant to bring proceedings against third parties and also provides
for an indemnity from the shareholder claimants in favour of the Company and its directors and officers in the event that a shareholder
claimant brings a permitted claim against a third party and that third party then brings a claim against the Company.
On 1 November 2017, class action legal proceedings were filed against the Company’s former auditors, Pitcher Partners, by Babscay Pty
Ltd (the “Babscay Pitcher proceeding”). On 23 February 2018, Pitcher Partners served a cross claim on the Company and certain former
directors and officers.
On 31 July 2018, further class action legal proceedings were filed against the Company’s former auditors, Pitcher Partners, by Matthew
Hall (the “Hall Pitcher proceedings”). On 26 October 2018 Pitcher Partners served a cross claim in the Hall Pitcher proceedings on the
Company and certain former directors and officers.
The Company has filed defences against both cross claims and has, in turn, filed cross claims against the plaintiffs, claiming the benefit of
the indemnity in the Shareholder Claimant Scheme.
In May 2019, Pitcher Partners brought a further cross claim against another party.
In November 2020, the Babscay Pitcher proceeding was discontinued by the plaintiff and the plaintiff has been ordered to pay Pitchers
and the Company their legal costs.
In September 2019, class action proceedings were commenced against the Company’s former solicitors, Arnold Bloch Leibler, by Matthew
Hall on behalf of an open class of the Company’s shareholders (the “Hall ABL proceedings”). In December 2020, Arnold Bloch Leibler
brought a cross claim against the Company and a former director and a former officer of the Company. The Company has filed its Defence
to the Cross Claim and has, in turn, filed a cross claim against the plaintiff, claiming the benefit of the indemnity in the Shareholder Claimant
Scheme.
Evidence in both proceedings is being prepared. A trial of the Hall Pitcher Proceedings has been scheduled for November 2021 and it is
expected that the Hall ABL proceedings will be heard at the same time.
A mediation will take place before the trial. If the trial proceeds, the Company will be defending both cross claims against it and will be
relying on its own cross claims against the plaintiffs to enforce the indemnity under the Shareholder Claimant Scheme.
26.3 Contingent Liabilities – Solicitor liability
Entities within the Group are defendants from time to time in legal proceedings arising from the conduct of their business. There are
contingent liabilities in respect of claims, potential claims and court proceedings against entities of the Group.
Slater & Gordon
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Slater & Gordon LtdANNUAL REPORT 2021
Notes to the Financial Statements
For the Year Ended 30 June 2021
Note 26. Unrecognised Items (continued)
26.4 Contingent Liabilities – Prior year acquisition (ProLearn)
The Financial Statements for the financial year ending 30 June 2020 referred to a contingent liability relating to a further payment as part
of the Pre-Legal acquisition in May 2019. The final payment of $366,868 excluding GST has now been paid and no contingent liability
remains.
Note 27. Events after the reporting period
Subsequent events
On 10 August 2021, the Company announced the resignation of its Chief Financial Officer, Scott Butterworth. Mr Butterworth’s final
departure date is under discussion and the process to recruit a replacement has commenced.
Other than the matter described above, no matters have arisen since the end of the year which have significantly affected or may
significantly affect, the operations of the Group, the results of those operations or the state of affairs of the Group in future financial periods.
Note 28. Discontinued operations
Summary of financial performance of discontinued operations
This note shows the results of the discontinued operations. Discontinued results represent one major operation:
●
Downsize of General Law business, following the internal review on 7 February 2018.
For further information, refer to the Financial Statements for the year ended 30 June 2018.
Revenue
Other income
Total revenue
Expenses(1)
Profit before income tax expense
Income tax expense
Profit after income tax expense
Net loss from disposal of discontinued operations
Income tax benefit
Loss on disposal after income tax benefit
Profit after income tax expense from discontinued operations
(1) Reversal of bad debt provision.
30 June 2021
$'000
30 June 2020
$'000
63
3
66
379
445
(134)
311
(39)
12
(27)
284
81
12
93
838
931
(279)
652
(177)
-
(177)
475
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Slater & Gordon LtdANNUAL REPORT 2021
Directors’ declaration
For the Year Ended 30 June 2021
In the Directors' opinion:
●
●
●
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the Corporations
Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes comply with International Financial Reporting Standards as issued by the International
Accounting Standards Board as described in note 1 to the financial statements;
the attached financial statements and notes give a true and fair view of the Group's financial position as at 30 June 2021 and of its
performance for the financial year ended on that date; and
●
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
The Directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of Directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the Directors
___________________________
Elana Rubin
Acting Chair
26 August 2021
___________________________
John Somerville
Managing Director and Chief Executive Officer
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Slater & Gordon LtdANNUAL REPORT 2021
Ernst & Young
8 Exhibition Street
Melbourne VIC 3000 Australia
GPO Box 67 Melbourne VIC 3001
Tel: +61 3 9288 8000
Fax: +61 3 8650 7777
ey.com/au
Independent Auditor's Report to the Members of Slater & Gordon Ltd
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Slater & Gordon Ltd (the Company) and its subsidiaries
(collectively the Group), which comprises the consolidated statement of financial position as at 30
June 2021, the consolidated statement of profit or loss and other comprehensive income,
consolidated statement of changes in equity and consolidated statement of cash flows for the year
then ended, notes to the financial statements, including a summary of significant accounting policies,
and the directors' declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
a) giving a true and fair view of the consolidated financial position of the Group as at 30 June
2021 and of its consolidated financial performance for the year ended on that date; and
b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial report of the current year. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
a separate opinion on these matters. For each matter below, our description of how our audit
addressed the matter is provided in that context. We have determined the matters described below to
be the key audit matters to be communicated in our report.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of
material misstatement of the financial report. The results of our audit procedures, including the
procedures performed to address the matters below, provide the basis for our audit opinion on the
accompanying financial report.
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Slater & Gordon LtdANNUAL REPORT 2021
Work in Progress and Associated Revenue Recognition
Why significant
How our audit addressed the key audit matter
Work in progress (WIP) is significant to the Group,
comprising 68% of total assets. Movements in WIP are
included in revenue recognised for the year.
The Group’s disclosures regarding WIP and the
associated revenue recognised are included in Notes 3
and Note 11 of the financial report.
Our procedures included the following:
Considered whether the Groups’ accounting policy
for WIP complied with Australian Accounting
Standards, in particular AASB 15 Revenue from
Contracts with Customers.
Obtained details of WIP recognised for each revenue
The directors’ determination of the carrying value of
WIP and its associated revenue streams involves
significant judgement, data analysis and complexity.
stream at balance date and applied sampling
techniques to select individual legal matters
(“cases”) for testing.
The Group considers each revenue stream in isolation
and makes judgements in relation to:
The identification of a contract
The identification of the performance obligations as
part or within a contract
Obtained evidence to support the case status that
had been allocated to each of these case files by the
responsible legal professional. Evidence obtained
was assessed against the coding guidelines of the
Group.
Considered the assumptions supporting the key
judgements that were made in the data models.
Determination of the transaction price, particularly
for revenue streams accounted under a “no win no
fee” basis
Assessed the movements in the legal case profile
including changes in status and ageing.
Allocation of the transaction price
Recognition of revenue when a performance
obligation is satisfied
Involved our data quality specialists to assess the
mathematical accuracy of the models. This involved
data analytic procedures to reperform, re-calculate
and test key calculations.
To validate the judgements made in relation to WIP, the
Group develops a series of data models based on
historical information over a two-year period. Data
included in these models provides a methodology to
determine the valuation status.
Considered the adequacy of the disclosures
contained in Notes 3 and Note 11, of the financial
report, in particular those regarding assumptions to
which the outcome of the data models is most
sensitive.
Accordingly, this was considered a Key Audit Matter.
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Slater & Gordon LtdANNUAL REPORT 2021
Going concern
Why significant
As disclosed in Note 1.1 to the financial report the
directors concluded that in their opinion, there are
reasonable grounds to believe that the Group has the
ability to pay its debts as and when they fall due. The
financial report has been prepared on a going concern
basis.
In making this assessment, consideration has been given
to potential impacts of COVID-19 on the Group’s
operations and forecast cash flows based on best
estimates within a range of future market scenarios,
noting that the evolving nature of COVID-19 makes it
inherently difficult to forecast outcomes with certainty.
For the year ended 30 June 2021, the Group generated
a net profit after tax of $14.5 million, had $20.7 million
of cash on hand and had $5.0 million of undrawn debt
facilities.
The going concern assumption is fundamental to the
basis of preparation of the financial report. Given the
judgment involved in the preparation of cash flow
forecasts to support the going concern conclusion, this
was considered a Key Audit Matter.
How our audit addressed the key audit matter
Our procedures included the following:
Evaluated the assumptions made in the budget and
the cash flow forecasts approved by the Board.
Assessed the reasonableness of the assumptions
included in the cash flow model with statements
related to future plans and commitments contained
in the approved FY22 budget.
Considered the historical accuracy of the Group’s
cash flow forecasting by reference to actual results
in prior periods.
Considered the impact of a range of sensitivities to
the cash flow model to assess the breakeven
position, including reference to financial covenants
related to the Group’s borrowing facilities.
Assessed the adequacy of the going concern
disclosures contained in Note 1.1.
Recoverability of Trade Receivables and Disbursements and Associated Provisioning
Why significant
How our audit addressed the key audit matter
Trade receivables and disbursements are significant to
the Group, comprising 18% of total assets, net of
provisions for impairment.
The recoverability of trade receivables and
disbursements is a subjective area due to the nature of
the legal case profile and the level of judgement applied
by the Group in determining provisions.
The timing of the recognition of disbursements is also
subject to judgement as it is relates to the progress and
expectation of successful case outcomes.
In accordance with AASB 9 Financial Instruments, a
forward-looking expected credit loss (ECL) impairment
model was applied by the Group. This involved
judgement as to expected credit losses.
The Group’s disclosures are included in Note 10 of the
financial report which outlines the accounting policy for
determining the allowance for doubtful debts and details
of the period on period movement in gross and net trade
receivables.
Accordingly, this was considered a Key Audit Matter.
Our procedures included the following:
Considered whether the Group’s provisioning policy
was in accordance with the requirements of AASB 9.
Assessed the assumptions used to calculate the
trade receivables and disbursements provisions for
impairment.
For a sample of disbursements we obtained evidence
to support the case status for ongoing matters.
Performed analyses of the ageing of receivables and
disbursements, collection history, future collections
strategies and assessment of significant overdue
individual trade receivables and disbursements.
Assessed the incremental overlay to the specific and
general ECL provisions to address the additional and
future credit risks on the Group’s customer portfolio
as a result of the current economic downturn due to
COVID-19.
Considered the adequacy of the associated
disclosures contained in Note 10 of the financial
report.
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Information Other than the Financial Report and Auditor’s Report Thereon
The directors are responsible for the other information. The other information comprises the
information included in the Company’s 2021 Annual Report other than the financial report and our
auditor’s report thereon. The Company’s 2021 Annual Report is expected to be made available to us
after the date of this auditor’s report. We obtained the Directors’ Report that is to be included in the
Annual Report, prior to the date of this auditor’s report, and we expect to obtain the remaining
sections of the Annual Report after the date of this auditor’s report.
Our opinion on the financial report does not cover the other information and we do not and will not
express any form of assurance conclusion thereon, with the exception of the Remuneration Report
and our related assurance opinion.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information obtained prior to the date of this
auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters relating to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
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Slater & Gordon LtdANNUAL REPORT 2021
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in
our auditor’s report to the related disclosures in the financial report or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up
to the date of our auditor’s report. However, future events or conditions may cause the Group to
cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events
in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated to the directors, we determine those matters that were of most
significance in the audit of the financial report of the current year and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
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77
A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation Report on the Audit of the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in the directors' report for the year ended 30 June 2021. In our opinion, the Remuneration Report of Slater & Gordon Ltd for the year ended 30 June 2021, complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. Ernst & Young David Shewring Partner Melbourne 26 August 2021 Slater & Gordon LtdANNUAL REPORT 2021 Additional ASX Information
In accordance with the Australian Stock Exchange Limited Listing Rules, the Directors provide the following information as at
27 August 2021.
(a) Distribution of shareholders and option holders
Holding
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – Over
Number of Ordinary Shareholders
1,098
474
120
117
18
There are 753 shareholders holding less than a marketable parcel of 589 shares each (i.e. less than $500 per parcel of shares).
(b) Twenty largest shareholders
Shareholder
AIO V FINANCE (IRELAND) DAC
CITICORP NOMINEES PTY LIMITED
TCA OPPORTUNITY INVESTMENTS SARL
PERPETUAL CORPORATE TRUST LIMITED
RIVER BIRCH MASTER FUND LP
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-GSCO ECA
PA VIEW OPPORTUNITY IV LIMITED
NATIONAL NOMINEES LIMITED
1
2
3
4 MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
5
6
7
8
9
10 MRS CAROLYN NOUMERTZIS
11
12
13
14 MR PETER JOHN KLASEN
15
16 MR ALEXANDER JUNE + MS LILIAN LYNE
17 MR PENG REN
18 MR ANDREW SEYMOUR
19 MR XIANG LIU
20 MR FRANK CHUNG LEUNG NG + MRS GLORIA MAN YUNG NG
IRWIN BIOTECH NOMINEES PTY LTD
RIZZO SUPER PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
RIZZO PTY LTD
TOTAL: Top 20 holders of Fully Paid Ordinary Shares
(c) Substantial shareholders
Number of Shares Held
74,371,573
17,915,047
12,988,257
9,020,425
7,408,982
6,023,362
2,426,073
889,563
768,339
480,692
250,000
220,000
198,090
181,110
140,000
120,023
109,000
102,000
98,942
97,292
133,808,770
% Held
53.47
12.88
9.34
6.49
5.33
4.33
1.74
0.64
0.55
0.35
0.18
0.16
0.14
0.13
0.10
0.09
0.08
0.07
0.07
0.07
96.20
A substantial shareholder is one who has a relevant interest in 5% or more of the total issued shares in the Company.
Following are the substantial shareholders in the Company based on notifications provided to the Company under the
Corporations Act 2001:
Shareholder
AIO V FINANCE (IRELAND) DAC
TCA OPPORTUNITY INVESTMENTS SARL
YORK GLOBAL FINANCE BDH LLC
1
2
3
4 MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
5
PERPETUAL CORPORATE TRUST LIMITED
Number
37,100,2442
6,190,7362
5,802,8772
9,020,6083
3,591,5002
Ordinary Shares
%1
53
9
8
7
5
1. Percentage of shares in which a relevant interest is held based on total issued capital of the Company at the time a substantial shareholder notice was provided
to the Company.
2. Substantial shareholder notice received pre entitlement offer completed on 20 September 2019 and based on issued shares of 69,527,235.
3. Substantial shareholder notice received post entitlement offer completed on 20 September 2019 and based on issued shares of 138,428,817.
(d) Voting rights
All issued ordinary shares carry one vote per share.
(e) Corporate Governance Statement
The Company’s Corporate Governance Statement can be found on the Company’s website at:
https://www.slatergordon.com.au/the-firm/governance
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Slater & Gordon LtdANNUAL REPORT 2021 Corporate Directory
Directors
James MacKenzie, Chair
Mark Dewar
Merrick Howes
Michael Neilson
Elana Rubin
John Somerville
Jacqui Walters
Company Secretary
Michael Neilson
Registered Office and
Corporate Office
Level 12
485 La Trobe Street
Melbourne Victoria 3000
Telephone: (03) 9602 6888
Facsimile: (03) 9600 0290
Company Website
www.slatergordon.com.au
Company Numbers
ACN 097 297 400
ABN 93 097 297 400
Auditors
Ernst & Young
8 Exhibition Street
Melbourne Victoria 3000
Bankers
Macquarie Bank
Level 23
101 Collins Street
Melbourne Victoria 3000
Solicitors
MinterEllison
Level 20
447 Collins Street
Melbourne Victoria 3000
Securities Exchange Listing
Slater & Gordon Ltd
shares are listed on the
Australian Securities
Exchange. The Home
Exchange is Melbourne.
ASX Code: SGH
Share/Security Registers
The Registrar
Computershare Investor
Services Pty Ltd
Yarra Falls
452 Johnston Street
Abbotsford Victoria 3067
GPO Box 2975
Melbourne Victoria 3001
Telephone
Toll Free 1300 850 505
(Australia)
+61 3 9415 4000
(Overseas)
Investor Centre Website
www.computershare.com.au
Email
web.queries@computershare.com.au
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Slater & Gordon LtdANNUAL REPORT 2021