Home' Slater and Gordon Annual Report : Slater and Gordon AR 2015 Contents 24
Annual Report 2015
Slater and Gordon Limited
Slater and Gordon Limited
Review of Operations (continued)
III. Conducting claims on behalf of individuals injured in the course of employment or in a public place (“EL/PL”).
One species of employers’ liability claim that SGS is currently conducting are personal injury claims for a large
group of people who allege noise induced hearing loss (“NIHL”) as a consequence of employment and who may
be entitled to compensation as a result. It is expected that these NIHL claims will be concluded in the next 1 to 3
IV. Services complementary to these claims processes, including:
A medical reporting service for claimant lawyers;
The assessment, triage and facilitation of rehabilitation services for not at fault parties injured in accidents;
A costing service for lawyers and law firms.
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 United Kingdom advised that it has 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 operations
of the assets comprising SGS. Those warranties are secured by a Warranty Escrow account holding £50m.
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.
Significant Changes in the State of Affairs
In April 2015 the Group raised additional funds through a 2 for 3 pro rata accelerated entitlement offer (“Entitlement
Offer”). Approximately 94.3 million new shares were issued under the Institutional Offer, 18.8 million shares under the
Retail Entitlement Offer, and 26.7 million shares under the Retail Shortfall Bookbuild. The total sum raised of $890.9
million funded the acquisition of SGS, along with drawdowns from a new Syndicated Debt Facility with the Group’s
financiers which replaced previous funding agreements and a new GBP denominated debt facility with the Group’s
financiers which replaced previous funding agreements.
The new Syndicated Debt Facility included loan facilities with three and five year terms with overall limits of £375.0
million and $90.0 million. At 30 June 2015 the net bank debt was $623.4 million with a gearing ratio (net bank debt to
/equity) of 43.0% .
The Group introduced in the financial period a broad-based ‘share saver’ offer to all employees and a new Employee
Equity Incentive Plan (“EIP”) which was approved by shareholders at the 2014 Annual General Meeting (“AGM”).
Subsequent to the AGM, offers were made to all employees in Australia and the United Kingdom to take up $500 or £375
of equity respectively, with the Company matching the allocation on a 1 for 1 basis. Offers were taken up by around 800
employees across the organisation, representing approximately 40% of eligible employees.
Under the terms of the EIP, performance rights offers were extended to executives in October 2014 and December 2014.
All executives across the Group have accepted the offers. Overall, 496,000 performance rights have been issued to
executives throughout the Group, including a shareholder approved allocation of 56,000 performance rights (combined)
to executive directors. Performance rights vest based on a three year service condition and the financial performance of
the Australian PIL, Australian GL, UK PIL, UK GL or Group operations (depending on the executive role) over the three
financial years FY15 to FY17. Performance measures include total shareholder return and earnings measures.
The EIP replaces the existing Employee Ownership Plan (“EOP”), without prejudice to the rights of current participants in
the EOP. Vesting of equity interests under the EOP continues based on performance in FY15 and the repayment of
loans associated with the EOP will continue throughout FY16 to FY18.
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