Required:

Using the AREA framework, answer the following question:

the following media coverage of Slater and Gordon?s financial performance and position is published and available on Blackboard (together with the FY16 Slater and Gordon Annual Report and media announcements):

the sale of debt by major lenders who advanced funds to slater and Gordon; and the Class action against Slater and Gordon by shareholders who purchased shares during the period from 30 March 2015 to 24 February 2016

• in your opinion, do you think the audited statutory financial statements and MEDIA/ ASX Announcements adequately informed users of the underlying financial health of the business. In your response, consider:
• The Adequacy of legal or accounting standard requirements; and
• thesocialimpactofcorporatecollapsesandtheroleoffinancialreportingincapitalmarkets?
• 1.ANALYSE
• 2.RESEARCH
• 3.CONCLUSION

about:reader?url=https://www.linkedin.com/pulse/going-concern-under-enhanced-audit-reporting-standards-colin-parker?trk=hp-feed-article-... linkedin.com #Going-concern under enhanced #audit reporting standards Colin Parker While reporting of key audit matters (#KAMs) by listed entities has grabbed much recent attention, several other new changes will affect financial statements. They are new audit-report formatting and content, considering 'other information' to be presented with audited statements, disclosures, and the going-concern basis. The suite of enhanced standards apply to reporting periods ending after 15 December. Going-concern considerations can be among the most challenging and judgmental aspects of auditing. The enhanced standards: Give more prominence to the going-concern basis by a paragraph in the report (and in an auditor's description of management's responsibilities) Replace 'Emphasis of Matter' with 'Material Uncertainty - Going Concern Basis' Address the relationship between a material uncertainty and a key audit matter, and Push further disclosure considerations when events and conditions have been identified but no material uncertainty exists (the so-called 'near miss'). There is now an explicit going-concern statement in audit reports. To refresh your memory, it is: 'As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: 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 Company'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, 1 of 3 12/12/2016 8:29 pm about:reader?url=https://www.linkedin.com/pulse/going-concern-under-enhanced-audit-reporting-standards-colin-parker?trk=hp-feed-article-... future events or conditions may cause the Company to cease to continue as a going concern.' This statement and related changes to ASA 570 Going Concern require an auditor to have a thoughtful approach to the risk associated with using the going-concern basis generally and, in particular, where there is a related material uncertainty. In the latter case, an 'Emphasis of Matter' paragraph no longer applies. Instead, there is a new paragraph headed 'Material Uncertainty Related to Going Concern', which in part states: 'As stated in Note X, these events or conditions, along with other matters as set forth in Note X, indicate that a material uncertainty exists that may cast significant doubt on the Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter'. Audit reports reference relevant note(s) in financial statements (general-purpose or special-purpose) that need to comply with relevant accounting standards. In general-purpose statements, appropriate disclosure of a material uncertainty requires various considerations to tell the going-concern story. They include such matters as: The disclosure of material uncertainties (AASB 101 Presentation of Financial Statements) The concept of fair presentation, the judgements made in applying accounting policies, and capital management (AASB 101) Liquidity risk disclosure (AASB 7 Financial Instruments: Disclosure), and Subsequent events (AASB 110 Subsequent Events). The auditor needs to be satisfied that appropriate disclosures are made, otherwise a modified opinion will need to be issued concerning inadequate disclosure. An auditor must consider whether there is adequate disclosure of the following: The principal events or conditions that might cast significant doubt on the entity's ability to continue as a going concern Management's plans to deal with these events or conditions, and That there is a material uncertainty related to events or conditions that might cast significant 2 of 3 12/12/2016 8:29 pm about:reader?url=https://www.linkedin.com/pulse/going-concern-under-enhanced-audit-reporting-standards-colin-parker?trk=hp-feed-article-... doubt on the entity's ability to continue as a going concern and, therefore, that it might be unable to realise its assets and discharge its liabilities in the normal course of business. ASA 570 now addresses what is becoming known as a 'near miss': 'If events or conditions have been identified that may cast significant doubt on the entity's ability to continue as a going concern but, based on the audit evidence obtained the auditor concludes that no material uncertainty exists, the auditor must evaluate whether, in view of the requirements of the applicable financial reporting framework, the financial report provides adequate disclosures about these events or conditions'. The 'near miss' rule should result in the auditor's prompting the preparer to revisit the adequacy of disclosures around going concern. Near-miss disclosures revert back to the reporting framework being applied. Perplexingly, a 'near miss' can give to a key audit matter, but a material uncertainty related to going concern does not. The key-audit-matter section contains only a cross-reference to the materialuncertainty paragraph. Preparers need to take a good look at what the new audit reporting says about your responsibilities regarding going concern. Its application can be difficult. Preparers and auditors needs to be on top of their game, particularly where there are near misses or material uncertainties. Colin Parker is principal GAAP Consulting and team advisory and #litigation services. He is a former member of the #AASB and editor of GAAP Alert (www.gaap.com.au). Colin and Sonya Sinclair reviewed the going concern requirements in the December 8 #GAAPinar No.10 Enhanced Audit Reporting Standards - 31 December year ends. Recording are available. GAAP Consulting 2016 3 of 3 12/12/2016 8:29 pm https://insolvencyguardian.com.au/blog-view/anchorage-capital-group-buys-slater-gordon-debt-sources-the-australian-financial-review/ 1 of 2 10/12/2016 7:32 pm https://insolvencyguardian.com.au/blog-view/anchorage-capital-group-buys-slater-gordon-debt-sources-the-australian-financial-review/ 2 of 2 10/12/2016 7:32 pm ASIC emails reveal Slater & Gordon accounting concerns | afr.com Today's Paper Videos Infographics Markets Data http://www.afr.com/business/legal/asic-emails-reveal-slater--gordo... BRW Lists My Premium AFR Logout search the AFR PREMIUM NEWS BUSINESS MARKETS STREET TALK REAL ESTATE OPINION TECHNOLOGY PERSONAL FINANCE LEADERSHIP LIFESTYLE ALL Home / Business / Legal Aug 29 2016 at 11:45 PM Updated Aug 29 2016 at 11:45 PM SAVE ARTICLE PRINT REPRINTS & PERMISSIONS ASIC emails reveal Slater & Gordon accounting concerns Advertisement ASIC had multiple concerns with Slater & Gordon's accounting methods. Jessica Shapiro by Jonathan Shapiro Misa Han Senior staffers at the corporate watchdog expressed concerns that Slater & Gordon's accounting methods "did not appear fully consistent" with their analysis before the embattled law rm eventually booked multimillion-dollar write-downs. Documents obtained as a result of a Freedom of Information request reveal intense internal scrutiny among Australian Securities and Investments Commission staffers with regard to Slater & Gordon's accounting treatment of recognised revenues, work in progress (WIP) and goodwill, and deferred tax liabilities. "The WIP calculations are supported by undocumented judgments on estimated fees, probability of success and percentage of completion," ASIC head of audit Doug Niven wrote in an email to commissioner John Price on September 9, 2015. "Subject to further discussion with the company, these judgements do not appear fully consistent with our own analysis of historical data and performance." Related articles WIP is the accounting measure of work engaged by the law rm but not yet invoiced to clients. As Slater & Gordon conducts much of its work on a no-win no fee basis, the 1 of 4 1/09/2016 7:52 am ASIC emails reveal Slater & Gordon accounting concerns | afr.com http://www.afr.com/business/legal/asic-emails-reveal-slater--gordo... WIP is a large portion of its revenues, but is subject to judgement. However, regulators also appeared concerned with other aspects of Slater & Gordon's accounts when it undertook an inquiry into its book-keeping. Drainage, design issues blamed for Brazil dam failure 12 mins ago ASX to open higher, S&P 500 rebounds An email from Mr Niven to Mr Price outlined that its inquiry had examined the 1 hr ago reliability of WIP estimates and recognition of revenue, adequacy of impairment ANZ's new open tech strategy calculations, the adequacy of provisions against old debtor balances, and "whether there is a problem in revenue recognition or tax payable". The email also agged further concerns in relation to the $1.3 billion Quindell acquisition that Slater & Gordon made in Britain in April 2015, with "analysts and others ... concerned with the integrity of the revenue gures given some unexplained Markets Live: ASX slumps on US rate worries LIVE Bain Capital considers MYOB stake; Reunion on deck differences in the unaudited preliminary nal gures". This and other correspondence shows an extensive investigation into Slater & Gordon's accounting, in particular how it assigns cash ows amongst various business units, how it evaluates whether an asset becomes impaired and its methods to calculate work-in-progress, which the company maintained was appropriate. Latest Stories Emailing from the pool is no longer cool 'What investors expect' An ASIC spokesman said the emails "show how it goes about its enforcement role and that if we think there are problems with accounts we will take action. That is what Former Barclays FX trader banned 3 mins ago A Slater & Gordon spokeswoman said the rm "co-operated fully with ASIC during its detailed and extensive nine-month review". Why PwC is telling staff to play Pokemon Go Advertisement investors expect." 5 mins ago The company pointed to ASIC's February statement that the review had been concluded, adding that it made no comments during the review process "and we do not intend on doing so now". On January 20, Mr Niven told colleagues Heidrie Leung and Chelsi Williams that Chris George from audit rm EY "has been encouraging the company to do whatever ASIC asks and take a hit for the Australian businesses for now". "Of course the main issue is the goodwill from the businesses acquired from Quindell for which he expects a write-down in the hundreds of millions ... It was a pity that [managing director] Andrew [Grech] was not available and that [chief nancial ofcer] Bryce [Houghton] joined so late." In an email to senior staff on February 19, Mr Niven said ASIC had met with Slater & Gordon who had informed them that the company would write down goodwill in the "high hundreds of millions" as a result of its UK acquisitions and fee revenue and work in progress in the "hundreds of millions". "These adjustments will be made retrospectively to the comparative gures but not characterised as errors," the email said. "Our concerns with the recoverability of Australian and UK debtors and disbursement assets will be addressed by increased provisioning." 'A most welcome development' 2 of 4 1/09/2016 7:52 am ASIC emails reveal Slater & Gordon accounting concerns | afr.com http://www.afr.com/business/legal/asic-emails-reveal-slater--gordo... "This seems to be a most welcome development," wrote Mr Price said in a response marking what appeared to be a victory of sorts for the corporate watchdog. On February 29, Slater & Gordon unveiled a $958 million rst-half loss as it booked $876 million of impairments, most of which related to its acquisition of Quindell earlier in the year. Last week, the company said its second-half loss would be more modest $59.3 million. Slater & Gordon reports its full-year results on Tuesday. While Slater & Gordon pushed for ASIC to wind up its investigation, which had been made public after Australian Financial Review reports, the corporate watchdog failed to gain sufcient comfort with the law rm's numbers until early this year. On September 28, 2015, Mr Niven told Mr Price that it "was unlikely that our concerns on the impairment of goodwill will be resolved" with Slater & Gordon before the 2015 year end accounts were due to be released. This was because business units were overvalued resulting in "cash ows from one part of the business being uses to support assets values in another past of the business" and inappropriate deductions of "a large tax liability". Slater & Gordon wanted ASIC to state that its enquiries are "concluded" and discuss future matters in private to allow them more time to demonstrate that their WIP calculations were reliable, according to Mr Niven's email on September 9 2015 to John Price. ASIC staffers debated whether or not to close the probe into Slater & Gordon's 2014 accounts whether it should alert the public that it would then examine the law-rm's 2015 numbers. In an email dated September 9, 2015, Mr Price told Mr Niven "I do not think we should publicly say we are closing our inquiries and then open a new 'secret' inquiry for later years. It may mislead the market." The once high ying law rm Slater & Gordon experienced a disastrous 2015 in which its share price plunged 86 per cent after admitting to several accounting errors while facing the ASIC probe. An ill-fated $1.3 billion acquisition in the United Kingdom and agged regulatory changes there hurt the stock further. While ASIC's investigation appears to have concluded, the rm still faces the threat of class actions from rival rm Maurice Blackburn and ACA Lawyers. Recommended US correction 'will drag down most of the market' From Around the Web 11 Rules For Building Wealth After 50 Motley Fool Australia Elon Musk's book choice sends 'Twelve Against The Gods' price skyrocketing Buyer of Melbourne's most expensive house ever sold pays $24.1 million and... Domain 3 of 4 1/09/2016 7:52 am ASIC emails reveal Slater & Gordon accounting concerns | afr.com http://www.afr.com/business/legal/asic-emails-reveal-slater--gordo... The great shame of Kevin Rudd Any Australian Moving Money Overseas Needs to Keep an Eye on This Mozo.com.au Quadrant Private Equity investors rush to $980m raising Bashing Aussie housing, Banducci's big chance Big Four bank shares look cheap, maybe even cheapest in two decades SMSF Investors: 7 Golden Rules to Keep in Mind Morningstar AMP Capital Recommended by MY FINANCIAL REVIEW FAIRFAX BUSINESS MEDIA My Alerts | Create alert Portfolio Account My Saved Articles (2) The Australian Financial Review Magazine BOSS BRW Lists Chanticleer Luxury Rear Window The Sophisticated Traveller TOOLS Markets Data Australian Equities World Equities Commodities Currencies Derivatives Interest Rates Share Tables CONTACT & FEEDBACK CONNECT WITH US YOUR OPINION IS IMPORTANT TO US GIVE FEEDBACK CHOOSE YOUR READING EXPERIENCE FAQ Contact us Letters to the Editor Give feedback Advertise Reprints & Permissions ABOUT About us Our Events Digital Subscription Terms Newspaper Subscription Terms Site Map Corporate Subscriptions Copyright 2016 Fairfax Media Publications Pty Ltd 4 of 4 | Privacy | Terms & Conditions of Use 1/09/2016 7:52 am For personal use only Annual Report 2016 For personal use only Slater and Gordon is the leading provider of consumer legal services in Australia and the UK Contents 1 Highlights 2 Chair and Group Managing Director's Report 4 \u0007Overview 5 Strategy 6 People and Culture 8 Social Responsibility 10 \u0007Board of Directors 11 Operating and Financial Review 20 Financial Statements 21 Directors' Report 49 \u0007Auditor's Independence Declaration 50 \u0007 onsolidated Statement of Profit or C Loss and Other Comprehensive Income 51 \u0007Consolidated Statement of Financial Position 52\t\u0007 Consolidated Statement of Changes in Equity 53\t\u0007Consolidated Statement of Cash Flows 54 Notes to the Financial Statements 96 \u0007 later and Gordon Limited S Directors' Declaration 97 Independent Auditor's Report 99 Additional ASX Information 100 Corporate Directory The images in this report feature Slater and Gordon Ringwood (Australia) office staff. Slater and Gordon Limited Annual Report 2016 Highlights Results for the year For personal use only Total revenue Annual Report 2016 EBITDAW 1 EBITDAW - normalised 2 Net (loss)/profit after tax Net (loss)/profit after tax - normalised 3 Net operating cash flow Gross operating cash flow - normalised 4 2016 A$m 2015 A$m 908.2 598.2 (49.3) 92.6 36.6 69.3 (1,017.6) 62.4 (48.7) 39.1 (104.2) 40.8 (57.6) 56.0 1. \u0007 EBITDAW is defined as earnings before interest, tax, depreciation, amortisation and movement in work in progress and is presented prior to non- cash impairment. 2. Normalised for AASB-3 adjustments, additional debtor/disbursement provisioning and non-recurring restructuring costs. 3. Normalised for AASB-3 adjustments, goodwill impairment, additional debtor/ disbursement provisioning, non-recurring restructuring costs, finance costs and tax impact of normalisations. 4. Gross operating cash flow (GOCF) is defined as net cash (utilised)/provided by operating activities before interest received, borrowing costs paid, income tax paid and payments to former owners. GOCF has been normalised for nonrecurring restructuring payments to suppliers. EBITDAW, EBITDAW - normalised, gross operating cash flow - normalised and net (loss)/profit after tax - normalised balances presented in this report are unaudited non-IFRS measures that, in the opinion of the Directors, are useful in understanding and appraising the Company's performance. Key achievements + \u0007Slater and Gordon celebrates 80 years of continuous operations + \u0007Service provided to 395,000 clients across Australia and the UK + \u0007Improved financial reporting + \u0007Slater and Gordon lawyers brand achieves 28% brand awareness in the UK Slater and Gordon Limited 1 For personal use only Chair and Group Managing Director's Report John Skippen Chair Slater and Gordon's results for the financial year ended 30 June 2016 were disappointing and well below expectations. As announced in February 2016, a range of performance improvement initiatives were put in place in the second half of the year to improve profitability and cash performance across the business. These initiatives are on track in terms of implementation and delivery of benefits, but there is still more work to do. The second half results demonstrate the positive impact the activity to date has had on financial performance and we are confident that we have the strategy and people in place to restore the performance of the Group. Results Total revenue of $908.2 million did not translate meaningfully to the earnings line with a reported net loss after tax of $1,017.6 million. The result was heavily impacted by an $879.5 million impairment charge against the carrying value of goodwill, relating mainly to the $814.2 million write-down of goodwill in Slater Gordon Solutions (SGS), underperformance in the UK operations and an adverse movement in work in progress (WIP) of $41.3 million. The impairment charge was disappointing but necessary due to both the poorer than expected UK performance to date, and the increased risk associated with potential UK legislative change. There are several reasons for the UK underperformance including lower case resolutions from a disproportionately higher cost base in Slater and Gordon Lawyers UK (SGL UK), lower than anticipated road traffic accident and noise induced hearing loss resolutions in SGS, and lastly the impact of a range of significant nonrecurring restructuring costs. The recovery in second half performance is evident in the improvement in Group EBITDAW1 from a first half loss of $58.3 million to a second half profit of $9.0 million. Net operating cash outflow of $104.2 million for the full year was driven by the UK underperformance along with payments to external advisers in relation to the ASIC review, AASB-15 implementation and restructuring costs in relation to the UK operations and the Group's finance facilities. Gross operating cash flow (GOCF) improved materially in H2 FY16 to an outflow of $17.2 million (H1 FY16: outflow of $61.1 million). The Company recognises that significant improvement is still required to restore cash flow; however, the trend is positive with H2 GOCF just over breakeven when normalising nonrecurring restructuring payments. The Directors have not declared a dividend in respect of the year ended 30 June 2016. In May we announced the successful amendment of the Group's finance facilities. The limits and maturity profile of the amended facilities are substantially the same as the previous facilities providing us with the time and flexibility to put in place initiatives to improve the profitability of the business and reduce debt. Our focus in the 2017 financial year will be on achieving these objectives. Australian Operations The Australian business delivered a strong fee and services revenue performance in FY16 despite a challenging operating environment with increased activity by competitors and the ongoing impact of legislative change in Queensland. A solid result from the Personal Injury Law (PIL) 1. EBITDAW, EBITDAW - normalised, gross operating cash flow - normalised and net (loss)/profit after tax - normalised balances presented in this report are unaudited non-IFRS measures that, in the opinion of the Directors, are useful in understanding and appraising the Company's performance. 2 Slater and Gordon Limited business was supplemented by strong organic growth in the family law and business and specialised litigation practices. Pleasingly, results from recent independent research measuring client satisfaction showed increasing client satisfaction levels in 2016. A review of our operations across the UK and Australia identified more opportunity to improve the Australian business, so operational effectiveness initiatives will be rolled out over the 2017 financial year. UK Operations In the UK, performance in the first half of FY16 was significantly below expectations and a performance improvement program was commenced in the second half. The initial activity involves reorganising our legal services business to service three key client areas - fast track personal injury, serious and specialised personal injury, and general law. Our structures, processes and technology will be optimised to ensure we are able to provide world-class services efficiently and profitably in each of these areas. This has involved ceasing operations in some locations and resizing the workforce. This component of the performance improvement program will be substantially completed by early 2017. In November the 'Autumn 2015 Chancellor's Statement' included proposals that would limit the rights of people in the UK with lower value personal injury claims, if the proposals were implemented. Slater and Gordon will participate in the consultation process foreshadowed by the Ministry of Justice and also join with UK professional organisations and advocacy groups to oppose the changes proposed in the former Chancellor's Autumn Statement. The Company believes that the proposed changes, if implemented, will bring about a reduction in the rights of people in the UK to access fair compensation through the legal system. It is not clear what the impact of Brexit will be on either the announced proposals or the UK economy, although the outcome of the Brexit referendum itself is not likely to have any material adverse impact on the local performance of the UK operations of the Company. Annual Report 2016 Board and Senior Management Changes For personal use only There has been a significant amount of change across the Slater and Gordon Group aimed at improving the performance and governance of a now much larger entity. In December we welcomed James M. Millar to the Board as a Non-Executive Director and Chair of the Audit, Compliance and Risk Management Committee. James brings a wealth of experience to Slater and Gordon and will be a key part of our program to build greater capacity and confidence in our audit process. Tom Brown has been appointed to the Slater and Gordon Board as a Non-Executive Director and Chair of the Remuneration Committee, commencing 1 September 2016. Tom is one of Australia's most senior human resources executives with extensive experience in global listed companies and over 20 years board level experience across multiple industrial sectors. We very much look forward to Tom's contribution heading into the new financial year. Erica Lane and Ian Court will retire as Non-Executive Directors effective 30 August 2016. We would like to thank Erica and Ian for their contribution to the Board over the past eight and nine years respectively and wish them every success for the future. Hayden has over 20 years' experience in legal services and is very capable of undertaking the change program underway to ensure we make the most of the opportunity available to us in Australia having built the most wellknown brand for consumer legal services. Delivering for our Clients It is important to remember that despite a poor financial performance in 2016, we have continued to deliver a great service and some exceptional outcomes for over 395,000 clients across Australia and the UK. In Australia, service highlights included: securing a significant settlement for a man injured in a head-on collision with a truck, who suffered a major head injury, permanently restricting his mobility and ability to work; successfully representing a young man who suffered severe burns to over 60% of his body while attending a friend's birthday celebrations. We were able to obtain a significant settlement to assist our client to obtain the best available medical treatment as he undergoes extensive and repeated surgical procedures; and signing an appeal launched by one of Australia's largest residential builders against a couple forced to live in a substandard house for the past six years. Ken Fowlie has chosen to step down from his position as an Executive Director effective 30 August 2016. Ken and the Board believe that at this point in time his full attention should be devoted to his role as Chief Executive Officer UK. We also thank Ken for his significant contribution to the Board over the past 13 years. In the UK, service highlights included: A process to supplement the Board with an additional Non-Executive Director continues and we will update the market in due course. securing a significant settlement to pay for the full-time care of a teenage boy who suffered devastating injuries after being knocked off his bike by a car. We also bolstered our senior management team during the year with the appointment of Group Chief Financial Officer, Bryce Houghton, and Hayden Stephens as CEO, Australia. Bryce has extensive CFO experience and has already made significant improvements to our finance function. Annual Report 2016 exposing serious failings in medical care that led to a mother's death, and successfully representing her family in a clinical negligence case against the hospital responsible; successfully representing a police officer who was the victim of racial discrimination; and Successful outcomes like these make a difference to our clients' lives and the feedback provided by our clients is testament to the quality of service we provide. It pleases us immensely to see words like professionalism, knowledge and dedication consistently used in Andrew Grech Group Managing Director the feedback we receive from our clients. Our work can and does make a difference and our purpose remains as strong today as it was when we were founded in 1935. Thank you to all of our staff for their hard work and dedication serving our clients during the past 12 months. Outlook The Board and management team firmly believe that the challenges Slater and Gordon are facing can be overcome and that the business can be reset to deliver strong financial results as it has done consistently prior to FY16. We remain convinced that taking a leadership position in both the Australian and UK consumer legal services market best places us to deliver long-term value for our shareholders. We thank you for your continued support of Slater and Gordon and look forward to updating you on our progress. John Skippen Chair Andrew Grech Group Managing Director Slater and Gordon Limited 3 Overview For personal use only Who We Are Employees Australia UK 1,330 3,310 Locations Australia UK 61 25 Australia Personal Injury Law (PIL) Provides expert legal services in a range of personal injury areas including motor vehicle accidents, workers' compensation and civil liability law. General Law (GL) GL is made up of Personal Legal Services (PLS) and Business and Specialised Litigation Services (B&SLS). PLS comprises family law, conveyancing, wills, estate planning and probate practices. B&SLS comprises business law, property law, Brands UK Slater and Gordon invests in a suite of key brands to drive client enquiries. Services estate, employment and professional negligence litigation, class or group actions and criminal defence work. FY16 Revenue A$908.2 million Claims Our Slater Gordon Solutions claims business deals with the origination, assessment and resolution of personal injury claims with a focus on road traffic accidents. Motor and Health services Slater Gordon Solutions also provides motor vehicle accident management support and rehabilitation and medical reporting management solutions. Slater and Gordon Lawyers Australia 26% Slater and Gordon Lawyers UK 24% Slater Gordon Solutions 50% 4 Slater and Gordon Limited Annual Report 2016 For personal use only Strategy Our Mission To give people easy access to worldclass legal services Annual Report 2016 Our Strategy Our Objectives B \u0007 uild an effective operating platform in the UK \u0007Continue to improve our Australian business C \u0007 ontinue to lead the consolidation of consumer legal services markets in Australia and the UK Satisfy our clients Engage our staff U \u0007 se increased cash earnings to reduce debt \u0007Deliver improved returns to our shareholders Our Values \u0007Do it right \u0007Work well with others \u0007Take the lead Slater and Gordon Limited 5 People and Culture For personal use only Slater and Gordon is a people business and everyone across the organisation plays a pivotal role in enabling us to deliver a great service to our clients. Whilst FY16 has presented a number of challenges, we have continued to invest in our Australian and UK teams to build a values-led, highperformance culture that will enable us to achieve our mission of providing people with easy access to world-class legal services. Culture and Values A revised set of values was launched across the Group in FY15 to underpin the culture we are striving to embed. The last 12 months have seen a number of initiatives implemented to integrate these values into our performance and reward framework. This is helping to create a business where everyday activity is guided by these behaviours to create a strong culture across both Australia and the UK. Building Capability We have continued to review and develop our recruitment and retention processes to ensure we attract and keep the best people. By investing in designing and delivering a broader learning curriculum, the business has made significant progress in ensuring that our people have the skills and confidence to deliver a great client experience. Not only have we enhanced our leadership and professional development programs, but we have also begun work to develop a talent management framework to help prepare those with high potential for future roles within our business. Employee Wellbeing In recognition of the importance of creating a working environment where our people feel supported to perform and maximise their potential both personally and professionally, we have placed significant emphasis on providing a wide range of initiatives to support the health and wellbeing of our employees. Up-skilling our people leaders to proactively identify potential issues, mitigating risks and providing access to support resources remain integral to our commitment to our people. 6 Slater and Gordon Limited We have continued to review and develop our recruitment and retention processes to ensure we attract and keep the best people. Annual Report 2016 For personal use only Annual Report 2016 Slater and Gordon Limited 7 Social Responsibility For personal use only Increasing the affordability and accessibility of legal services and products for consumers is central to everything we do at Slater and Gordon. Over the years we have actively responded to changes in the legal industry and consumer expectations and addressed unmet needs through innovations such as the pioneering introduction of 'No win - No fee' arrangements, fixed fees and online legal service offerings. We seek to make a positive contribution to the communities where we operate and offer opportunities for our people through our social responsibility program. Our social responsibility program has three key areas of focus: 1. Assisting people with disease and disability. 2. Addressing inequality and disadvantage. 3. Encouraging people to engage in healthy activity and lifestyles. During FY16 we continued our significant investment in supporting individuals, communities and organisations aligned to our program objectives in Australia, while in the UK we consulted across relevant business units and practice groups to develop a cohesive and aligned strategy for implementation in FY17. FY16 highlights included: distributing $117,000 to medical research organisations in Australia and 50,000 to health or research groups in the UK from the Slater and Gordon Health Projects and Research Fund; being awarded the largest corporate team title at both the Melbourne and Brisbane Mother's Day Classic events held in Australia; supporting the Spinal Injuries Association and sponsoring road safety and victim support charities such as BRAKE, Headway and Roadpeace in the UK; increasing the donations collected through the Slater and Gordon Staff Giving Program in Australia; operating two 'Give-As-You-Earn' charity schemes in the UK with many employees donating to St Ann's Hospice in Manchester or making contributions through the Charitable Aid Foundation; partnering with a foundation and encouraging staff to volunteer with a program assisting the homeless and disadvantaged in Melbourne; UK fundraising efforts for Children in Need and Macmillan Cancer Relief; providing two grants for the Tracey McGuckin Travel Award, an award named in honour of a former employee providing financial support to help cover travel and accommodation expenses for an educational, charitable or community building project in the UK or abroad; partnering with the Brisbane Broncos on a number of initiatives including giving 1,000 children across Queensland the opportunity to participate in the Broncos Mini League; and supporting athletes and officials in the lead up to the Rio 2016 Olympic Games, as the official supplier of legal services to the Australian Olympic Team. We also undertook the provision of pro bono support to many individuals and community groups in Australia and the UK including: the Cancer Council's pro bono legal referral scheme; advocacy for asylum seekers currently in detention; Environmental Responsibility Slater and Gordon Group recognises that it has an obligation to reduce the Company's impact on the environment and to imbed sustainable work practices. Since priorities and reduction targets were established in the Company's FY14 Environment and Sustainability Strategic Plan (Australia), we have been measuring and monitoring data to ensure that we are on track and that targets are appropriate and reasonably achievable. The strategy focuses on reductions across four key areas: paper, electricity, travel and waste, as well as general sustainability matters. This work is overseen by an environment management team in the Australian business, which is made up of representatives of key business units. Activity is also undertaken in consultation with our employee Environmental Consultation Committee. While progress has been made in achieving the key deliverables set for FY16, including surpassing our FY17 target for energy use, a review of current data shows that improvements need to be made to travel and paper use to meet targets. As part of our pledge to improve our external environmental reporting, our overall environmental footprint was published in the Australian Legal Sector Alliance's annual report. We will use this tool to provide greater visibility to our efforts and to drive further improvements in our key impact areas. volunteering at a Lesbian Gay Bisexual Transgender Intersex (LGBTI) community legal clinic; and participating on legal panels for Aftermath, the Limbless Association, Mesothelioma UK and various asbestos support groups in the UK. donating $94,000 to community groups in Australia from the Slater and Gordon Community Fund; 8 Slater and Gordon Limited Annual Report 2016 For personal use only The team behind the team. Annual Report 2016 Slater and Gordon Limited 9 For personal use only Board of Directors John Skippen Chair since 2012, Non-Executive Director since 2010. Chair of the Nomination Committee and member of the Audit, Compliance and Risk Management Committee. Ken Fowlie1 Chief Executive Officer, UK. Executive Director since 2003. Andrew Grech Group Managing Director since 2000, Executive Director since 2001. Erica Lane1 Non-Executive Director since 2008. Chair of the Remuneration Committee. Member of the Audit, Compliance and Risk Management Committee. Ian Court1 Non-Executive Director since 2007. Member of the Audit, Compliance and Risk Management and Remuneration Committees. James M Millar Non-Executive Director since 2015. Chair of the Audit, Compliance and Risk Management Committee. Rhonda O'Donnell Non-Executive Director since 2013. Member of the Audit, Compliance and Risk Management, Remuneration and Nomination Committees. In FY17 Tom Brown was appointed to the Slater and Gordon Board as a Non-Executive Director and Chair of the Remuneration Committee commencing 1 September 2016. An additional Non-Executive Director will be appointed in the course of FY17. For detailed information on each Director see pages 23 to 26. 1. Retired from board of directors 30 August 2016. 10 Slater and Gordon Limited Annual Report 2016 Operating and Financial Review Review of Operations - Business Model For personal use only Overview Slater and Gordon Group is a marketleading consumer legal services organisation with 4,640 staff operating in 86 locations across Australia and the UK. The Group provides legal services in two main areas of consumer law - Personal Injury Law (including motor vehicle accidents, workers' compensation/employers liability, industrial disease and civil liability law) and General Law (including family law, conveyancing, wills, estate planning, probate, business and specialised litigation, class actions, real estate, crime and regulation, employment, reputation and professional discipline). Slater and Gordon became the world's first listed law firm in 2007 and after successfully pursuing a strategy of geographic and practice area diversification in Australia, expanded into the UK in 2012. The UK business has since grown, organically and through further acquisition, into a leading UK consumer law firm with strong brand awareness. In FY15 the Group acquired a number of business assets from Watchstone Group Plc (formerly known as Quindell Plc), and has since re-branded it as Slater Gordon Solutions (SGS). The Group has three main operating segments: Slater and Gordon Lawyers Australia (SGL Australia), Slater and Gordon Lawyers UK (SGL UK) and SGS. The UK business is currently undergoing a major reorganisation to realign the business to serve the markets it operates in efficiently and to improve profitability. Business Model Slater and Gordon's mission is to provide people with easier access to world-class legal services. This is achieved by operating in segments of the legal market to which high levels of process and systems engineering can be applied to build operations of scale and capability that provide highly specialised services with a great deal of price certainty for clients. Annual Report 2016 Revenue is generated from providing legal and associated services to approximately 395,000 individual clients across Australia and the UK annually and is not reliant on any one key customer or case outcome. In FY16, 64% of fee and services revenue was derived from Personal Injury Law (PIL) and 72% of fee and services revenue came from the UK. Most PIL work is performed on a conditional fee basis ('No Win - No Fee') where legal fees are paid on the successful conclusion of a client's matter. In line with Australian accounting standards (AASB - 15 Revenue from Contracts with Customers), PIL revenue is recognised over the life of a case using a stage of completion basis, which relates to specific claimrelated milestones for each matter. Recognising revenue on this basis gives rise to a corresponding asset on the balance sheet - work in progress (WIP) that represents the value of work completed but unbilled at the end of the period. The majority of General Law (GL) work is conducted on a fee for service basis. Class actions are largely funded by third parties on a fee for service basis. The Motor Services and Health Services divisions of SGS earn services revenue by providing car hire and repair services and medical report procurement and rehabilitation services respectively. Major Events During the Year Quindell Plc (now renamed Watchstone Group Plc) On 5 August 2015, Quindell Plc, the vendor of SGS, published qualified financial statements in which the current directors and auditors of Quindell Plc explained, inter alia, that relevant information relating to transactions entered into by the former directors that could impact on the accounting, intention, commercial purpose or value of certain transactions was not available to them. On 5 August 2015 the Serious Fraud Office in the UK advised that it had opened a criminal investigation into the business and accounting practices of Quindell Plc. The acquisition of SGS was structured as an acquisition of the various entities rather than an acquisition of the common stock of Quindell Plc. Moreover, Quindell Plc provided detailed warranties to the Company in relation to the operation of the assets comprising SGS. Those warranties are secured by a Warranty Escrow account holding 50 million. The Directors are confident that the Company has no liability as a result of the matters described above. In the course of preparing these financial statements, the Directors have sought to identify, understand and properly account for all relevant prior transactions undertaken by entities within SGS. Despite reasonable inquiries, including of current directors of Quindell Plc, the Directors are unable to identify or rationalise every historic transaction undertaken by the former directors of the various entities and have made fair value adjustments as appropriate. The Directors believe that none of the known transactions relate to the fundamental business activities or economics of SGS and none of the known transactions are material in value or effect. Accounting Changes In August 2015, Slater and Gordon announced several accounting changes to enhance financial reporting including the early adoption of AASB-15, the new accounting standard for revenue recognition, at 31 December 2015. The new standard requires that revenue under 'No Win - No Fee' arrangements only be recognised when it is 'highly probable that a significant reversal of revenue recognised will not occur'. Prior to the adoption of AASB-15, Slater and Gordon had applied AASB-118 which requires that revenue only be recognised when it is 'probable' that the economic benefits associated with a transaction will flow to a company. Slater and Gordon Limited 11 Operating and Financial Review continued Review of Operations - Business Model continued For personal use only To reflect the requirements of the new standard, the Company, in consultation with accounting and actuarial advisers has refined its methodology for measuring work in progress (WIP). The new methodology is underpinned by a more data driven approach to valuing WIP and specifically, the determination of average fees per file and probability of success. Consistent with the previous standard, revenue continues to be recognised over time, or the life of a case, using a basis that relates to specific claim-related milestones for each client matter. The Company has adopted the new accounting standard on a fully retrospective basis. This necessitated derivation of WIP balances under the new standard as at 1 July 2014, 31 December 2014, 30 June 2015 and 31 December 2015. WIP balances under AASB-15 are lower than the previously existing AASB -118 balances by approximately 15% to 20% throughout that date range. This outcome provides comfort that the previous methodology, which had an inherent requirement for higher levels of management judgement, provides sound outcomes given the lower probability thresholds which previously applied. Application of AASB -15 will provide greater consistency and a more systematic approach to generating reported values of revenue and WIP. Potential UK Legislative Changes In November 2015 the 'Autumn 2015 Chancellor's Statement' included proposals that if implemented, would impact on the rights of people to obtain compensation in minor soft tissue injury claims and also see the limit of the Small Claims Court increase from 1,000 to 5,000. 12 Slater and Gordon Limited The Company will participate in the consultation process foreshadowed by the Ministry of Justice and has made its best effort to factor potential changes into its assessment of the carrying value of goodwill and the resultant impairment losses recorded at 31 December 2015, even though results are not yet certain. Slater and Gordon maintains its view that SGS will be well positioned to be a leading provider of services to people who require legal, car hire, car repair and rehabilitation services assistance as a result of road traffic accidents and legal services for other fast track claims in the UK. Goodwill Impairment In the first half of the year ended 30 June 2016, the Company recognised a non-cash impairment charge of $876.4 million against the carrying value of its goodwill. The majority of this is accounted for by the $814.2 million impairment in goodwill from the SGS acquisition. This arises from a downward revision in the expectation for future performance of SGS having regard for the poorer than anticipated financial performance since acquisition and the assessment of its prospects going forward. In addition, the proposed changes to UK laws and the associated uncertainty of the future earnings trajectory of the UK business have been assessed and the assumptions addressing these issues have contributed to 27% of the impairment. There was also a $52.7 million impairment charge in the Australian business. $13.9 million of this related to the General Law cash-generating unit and $38.8 million arose in the PIL cash generating unit as a result of moving to a methodology based on the performance of state based rather than national cash-generating units for assessing goodwill impairment. An additional $3.1 million impairment was recognised in PIL in the second half subsequent to the New South Wales Government announcing proposed changes to motor vehicle accident compensation. The proposals are not expected to have a material impact on the Group's performance. UK Performance Improvement Program In February 2016 the Company commenced execution of a comprehensive performance improvement program in the UK. As a part of this program, the Company will accelerate a reorganisation of its legal services businesses and operate through three specialised legal services divisions across the UK. It intends to continue to offer motor, health and other services adjacent to the delivery of services by its legal services divisions. The program is on track in terms of implementation and delivery of benefits. The organisational restructure is progressing to plan with office closures and reorganisations substantially due for completion by the first quarter of 2017. Restructure of Finance Facilities In May 2016, the Group announced the successful agreement of amendments to its existing Syndicated Facility Agreement ('Facility') with its lending group. The limits and maturity profile of the amended facility are substantially the same as the previous facility. The facility includes a number of terms and conditions usual for a facility of this nature. These include increased frequency of reporting to the lending group, semi-annual debt amortisation and no declaration or payment of dividends. Vesting Convertible Redeemable (VCR) Share Loans The repayment of loans attached to all Vesting Convertible Redeemable (VCR) ordinary shares at 30 June 2016 has been extended to 30 June 2018. Annual Report 2016 For personal use only Annual Report 2016 Slater and Gordon Limited 13 Operating and Financial Review continued Review of Operations - Profit and Financial Position For personal use only A summary of Slater and Gordon's results for the year ended 30 June 2016 and the prior corresponding period are shown below. Total Revenue EBITDAW 1 EBITDAW - normalised 2 Net (loss)/profit after tax Net (loss)/profit after tax - normalised 3 Net operating cash flow Gross operating cash flow - normalised4 FY16 A$m FY15 A$m 908.2 598.2 (49.3) 92.6 36.6 69.3 (1,017.6) 62.4 (48.7) 39.1 (104.2) 40.8 (57.6) 56.0 1. EBITDAW is defined as earnings before interest, tax, depreciation, amortisation and movement in work in progress and is presented prior to non-cash impairment. 2. Normalised for AASB -3 adjustments, additional debtor/disbursement provisioning and non-recurring restructuring costs. 3. Normalised for AASB -3 adjustments, goodwill impairment, additional debtor/disbursement provisioning and non-recurring restructuring costs, finance costs and tax impact of normalisations. 4. Gross operating cash flow (GOCF) is defined as net cash (utilised)/provided by operating activities before interest received, borrowing costs paid, income tax paid and payments to former owners. GOCF has been normalised for non-recurring restructuring payments to suppliers. EBITDAW, EBITDAW - normalised, gross operating cash flow - normalised and net (loss)/profit after tax - normalised balances presented in this report are unaudited non-IFRS measures that, in the opinion of the Directors, are useful in understanding and appraising the Company's performance. Slater and Gordon reported a $1,017.6 million loss for the year ended 30 June 2016. The full year result was impacted by: $879.5 million non-cash impairment charge against the carrying value of goodwill, $876.4 million of which was recognised in the first half of the financial year; application of a revised accounting policy for revenue recognition as a result of early adoption of new accounting standard AASB-15 (Revenue from Contracts with Customers). A negative net movement in work in progress (WIP) of $41.3 million was recorded in FY16 due to case settlements exceeding the number of new files opened in Slater and Gordon Lawyers (SGL) Australia and reduced case volumes in SGL UK; $33.3 million of non-recurring restructuring costs including consultants costs, redundancy and property rationalisation costs associated with the Group's UK operations; $33.2 million of cash and sharebased payments to former owners recognised under the Group's accounting policies for acquisition consideration (AASB-3 Business Combinations), which were adopted in FY15; $18.7 million of additional provisioning for debtors and disbursements across the Group; underperformance in the UK operations, in relation to resolution of personal injuries claims in Slater and Gordon Lawyers (SGL UK) and Slater Gordon Solutions (SGS) including lower resolutions in respect of Noise Induced Hearing Loss (NIHL) claims; finance costs of $42.5 million, which included $14.9 million in non-recurring facility establishment and amendment fees; and a tax credit of $11.9 million derived from UK current year tax losses and prior year fair value adjustments, noting that goodwill impairment is not tax deductible. The consolidated statement of profit or loss and other comprehensive income contains a number of transactions that have been normalised to provide greater clarity to the underlying operational results. The normalisation items for FY16 and the FY15 comparative period are: i. impairment charge against the carrying value of goodwill; ii. payments to former owners reclassified as remuneration under the new accounting treatment for deferred consideration under AASB-3; iii. restructuring costs in relation to the UK business reorganisation; iv. additional provisioning for debtors and disbursements following a thorough review of provisioning policies; v. gain from bargain purchase in FY15 resulting from the change in accounting policy in relation to the treatment of deferred consideration under AASB-3 Business Combinations; and vi. costs relating to acquisitions. 14 Slater and Gordon Limited Annual Report 2016 For personal use only The impact of these normalisations on net (loss)/profit after tax is as follows: FY16 A$m Net (loss)/profit after tax - reported (1,017.6) FY15 A$m 62.4 Normalisation adjustments: Goodwill impairment charge 879.5 - Payments to former owners 33.2 25.4 Non-recurring restructuring costs 33.3 - Additional debtor/disbursement provisioning 18.7 - Finance costs 14.9 - Gain from bargain purchase - Costs associated with acquisitions 0.7 Tax implications of above Net (loss)/profit after tax - normalised Total revenue and other income increased by 51.8% due mainly to a full year contribution from SGS, acquired in May 2015. This increase was partly offset by reduced total revenue from SGL Australia and SGL UK, both of which were impacted by negative movements in WIP during the period. Fee and services revenue, excluding the movement in work in progress, prior year gain from bargain purchase and other income increased in SGL Australia and SGL UK by 8.1% and 1.8% respectively. SGL Australia and SGL UK segment results are discussed in more detail from page 17. Total revenue in the consolidated statement of profit or loss and other comprehensive income includes an item shown separately as 'Services revenue'. This amount represents the revenue associated with the SGS Motor and Health Services businesses. The 'Cost of sales' line item also relates to the SGS Motor and Health Services businesses. The largest components of operating costs are salaries and employee benefits. These also increased materially in FY16 due to a full year contribution from SGS. There are also material marketing and advertising expenses to support the Slater and Gordon suite of brands, with brand awareness being a key driver of client enquiries. Advertising and marketing expense also now includes other new business acquisition costs for SGS. SGS acquires new business from strategic partners including insurance industry participants and claims management companies and seeks to turn them into successfully resolved outcomes in a relatively short space of time. After disappointing and unacceptable performance in the first half of the financial year the Company implemented a performance (72.5) 23.8 (11.4) - (48.7) 39.1 improvement program in the second half, to improve profitability and cash performance across the business. These initiatives have had a positive impact on second half financial performance with Group EBITDAW of $9.0 million in the second half, compared to a $58.3 million first half loss. Cash Flow Net operating cash flow improved materially in H2 FY16 to an outflow of $20.9 million (H1 FY16: outflow of $83.3 million). The Company recognises that significant improvement is still required to restore cash flow, however the trend is positive with H2 FY16 GOCF just over breakeven when normalised for nonrecurring restructuring payments. Financial Position A summary of key items relating to the Group's financial position is provided below. Net assets FY 16 A$m FY15 A$m 305.1 1,350.2 Net debt 682.3 614.1 Loan and overdraft facilities - denominated 376.0 376.0 94.0 95.0 Loan and overdraft facilities - A$ denominated Annual Report 2016 Slater and Gordon Limited 15 Operating and Financial Review continued For personal use only Review of Operations - Profit and Financial Position continued Net Assets The Group has net assets of $305.1 million, which has decreased by $1,045.1 million since 30 June 2015 primarily due to a goodwill impairment charge of $879.5 million, mainly relating to impairment of goodwill from the SGS acquisition. The significant balance sheet items are: WIP - representing the value of work completed but unbilled; Receivables - including trade receivables and disbursements to support a client matter that are reimbursed at settlement; Borrowings (see Debt section below); and lastly Payables - including trade payables and legal creditors where Slater and Gordon has arranged deferred conditional payment terms on behalf of the client in relation to the disbursements incurred on a client matter. Debt At 30 June 2016, gross debt was $764.8 million and net debt $682.3 million. In May 2016, the Group announced amendments to its existing Syndicated Facility Agreement ('Facility') with its lending group. The facility included loan facility, bank guarantees and/or letter of credit with an overall limit of 375 million and $90 million with expiry dates between May 2018 and March 2019. As at 30 June 2016, the Group remains in compliance with all undertakings under the Facility. iii. where a significant transaction has occurred, such as the drawdown of borrowings for the Slater Gordon Solutions transaction, the cash flow translates at the exchange rate at the transaction date. As such, there is a translation difference for the impact the foreign exchange movement between the transaction date and the year-end exchange rate. In the balance sheet, foreign currency balances are translated at the spot rate at the 30 June 2015 and 2016 reporting dates. This accordingly has a foreign exchange translation impact upon the reported debt balances in a number of ways: Dividends Directors have not declared a dividend for the 2016 financial year consistent with its undertakings in the Facility amendments. i. movement in the foreign exchange rate from one period to another where the exchange rate (or spot rate) has changed (i.e. the impact the foreign exchange movement has on the opening balance); Off Balance Sheet Items The balance sheet does not include a value for WIP associated with the portfolio of noise induced hearing loss (NIHL) cases acquired as part of the SGS acquisition. Once stronger evidence is collected in relation to the likely success rates of the NIHL cases, an appropriate value for the WIP will be revisited. ii. a differential in the exchange rate from the cash flow from financing activities for proceeds or repayment of borrowings as a result of using an average exchange rate. Where the proceeds or repayments of borrowings are individually immaterial, an average foreign exchange rate is used, and as such there is a translation difference between the average rate and the year-end exchange rate; and Review of Operations - Segment Performance A summary of revenue and earnings by segment is provided below. FY16 A$m FY15 A$m Variance % SGL Australia 265.6 245.7 8.1 SGL UK 230.0 226.0 1.8 SGS 437.2 35.0 1,149.1 Group 932.8 506.7 84.1 FY16 A$m FY15 A$m Variance % (100.9) 78.3 (228.9) (64.4) 21.0 (406.7) SGS (822.6) (6.0) Group (987.9) 93.3 EBITDAW - Normalised FY16 A$m FY15 A$m SGL Australia 35.9 41.6 (13.7) SGL UK (2.6) 33.3 (107.8) (5.6) (158.9) Fee and services revenue1 (Loss)/Profit before tax and net finance expense SGL Australia SGL UK SGS Group 3.3 36.6 69.3 (13,610.0) (1,158.8) Variance % (47.2) 1. Fee and services revenue is revenue from contracts with customers less movement in WIP. 16 Slater and Gordon Limited Annual Report 2016 Slater and Gordon Lawyers Australia (SGL Australia) For personal use only Overview of Operations SGL Australia is a market-leading provider of consumer legal services enjoying approximately 25% market share in the Personal Injury Law (PIL) market and a growing share in key areas of the General Law (GL) market. SGL Australia employs 1,330 staff across 61 locations. The PIL business provides legal services to people in a range of areas including motor vehicle accidents, workers compensation and civil liability law. The PIL practice contributed 77% of SGL Australia's FY16 fee and services revenue. The GL business is made up of Personal Legal Services (PLS) and Business and Specialised Litigation Services (B&SLS) practice areas. PLS comprises family and relationship law, conveyancing, wills, estate planning and probate practices. Work is predominantly performed on a fixed fee basis. B&SLS comprises commercial, estate, employment and professional negligence litigation, class or group actions and criminal defence work. The GL practice contributed 23% of SGL Australia's FY16 fee and services revenue. The Australian consumer legal services market is highly regulated, with regulations varying state by state. SGL Australia has used its scale and strong brand awareness to deliver stable revenues and earnings by successfully responding to legislative change as and when it arises. Strategic priorities for SGL Australia are protecting and improving operating leverage in PIL and significantly growing market share and achieving scale in selected areas of GL. Annual Report 2016 FY16 Performance Review Total fee and services revenue growth of 8.1% was an encouraging result comprising growth in PIL and GL. PIL growth was driven by strong performances in Victoria, South Australia and Western Australia. Performance in New South Wales was stable while Queensland continued to adjust to the impact of workers compensation legislative change. The GL business delivered 13.4% growth in fee and services revenue in FY16 due to growth in the B&SLS and family law practices. The conveyancing practice continued to perform below expectations and a strategic review will be completed shortly. Despite the strong operating revenue performance, total SGL Australia revenue declined in FY16 due to a $27.8 million adverse movement in the value of WIP. The net loss before tax and interest includes $55.8 million of goodwill impairment, a $27.8 million adverse movement in WIP and $22.1 million of non-recurring restructuring costs and debtors/disbursement provisioning. Normalised EBITDAW declined due to underperformance in some PIL practice groups, a deteriorating performance in conveyancing and an increase in the cost base associated with labour costs, IT costs, audit fees, legal fees and other corporate expenses. Slater and Gordon UK The Slater and Gordon Group entered the UK market in 2012 and has established a circa 300 million turnover integrated legal and allied services business with a leading position in each of the markets it serves, built on service excellence and innovation, strategic partnerships and growing brand awareness. The Group operates in the UK as Slater and Gordon Lawyers (SGL UK) and Slater Gordon Solutions (SGS) employing 3,310 staff across 25 locations. SGS is compri