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Shares in Slater & Gordon (ASX: SGH) have surged 27 per cent in early trade as it released details of operational changes under a new structure with its UK operations to be divested and handed over to US private equity owners.
The listed legal services company, which has endured a year of chaos and a falling share price, rebounded from a first half loss $425 million in 2016 to a profit of $141.2 million for the six months to December 2017.
Total revenue from operations fell from $117.8 million to $96.3 million for the first half.
Thanks to shareholders giving their blessing to recapitalise debt facilities, the group is now in an improved net asset position of $90.1 million, compared to the end of 2016 when the company had net liabilities of $248.8 million.
Slater & Gordon says these results demonstrate there's still a way to go before the firm is well and truly back on its feet.
"The financial position at 31 December 2017 demonstrates that the fundamentals of the underlying business are strong, and will benefit further from the transformation program," says Slater & Gordon in its first-half results announcement.
Shareholders have responded positively to this transformation program, with shares up 27 per cent to $2.30 at around 11.45 AEDT.
These results represent the beginning of Slater & Gordon's attempts to turn around the ailing company, which has suffered from a series of misfortunes stemming from its failed attempts to expand operations into the UK.
The main cause of the company's fall from grace was the $1.3 billion acquisition of British professional services firm Quindell in 2015 which led to two class actions by aggrieved shareholders. One of these class actions was settled in July 2017 for $36.5 million.
Slater & Gordon posted a loss of $546.8 million for the 2016-17 financial year, coming on the back of the previous year's impairment-heavy loss of $1.01 billion.
During the first-half the group finally separated the UK operations and subsidiaries from the Australian branch of Slater & Gordon. The UK operations have been transferred to a new UK holding company enabling both businesses to focus independently on recovering from the mishandled venture.
During the half, the company was also hit by multiple class actions from shareholders relating to the group's operations in the UK. The company says the shareholder class actions are now resolved by a Shareholder Claimant Scheme which is now being implemented.
At the beginning of February 2017, Slater & Gordon announced its CEO Hayden Stephens was stepping down ahead of a major overhaul of its operations.
John Somerville was named the new CEO, with Stephens remaining on the board to assist during the transition period.
The company also announced at the time that it was going to downsize its general law business by winding down a number of practice areas including succession, criminal, and family law.
The company says these changes to practice areas will allow the group to focus on delivering a premium product for its clients.
"These changes are intended to enhance value in our firm and help ensure it is able to provide the best possible service to our clients," the company says.
"Slater and Gordon is committed to implementing this program of business strengthening and modernisation so the firm can continue doing what it has done successfully for more than 80 years."
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