Shares in law firm Slater & Gordon slid by as much as 17 per cent after the company appeared to have missed its self-imposed deadline to update investors about its closely watched cash flows.
In a statement to the Australian Stock Exchange on Thursday morning, Slater & Gordon said although it had previously advised that it would provide an update on its gross operating cash flow for the first half of the financial year in January, the company "continues to work with its auditors and advisors" to finalise the first half year result.
Slater & Gordon said that the process of reviewing its approach to financial forecasting was also proceeding as planned under its new chief financial officer Bryce Houghton.
Slater & Gordon shares closed 14.3 per cent lower at 63¢ after falling as much as 17 per cent in early trade as investors questioned why the company had delayed an update on its cash flows.
Earlier this month, Slater & Gordon confirmed media reports that accounting advisory and insolvency firm McGrathNicol had been appointed as an adviser to the company's lenders.
"In the course of this process the company is considering its expectations for operating performance and cash flows for the balance of the financial year," the statement said.
Issues to deal with
Slaters' embattled finance team has several live issues to deal with including the adoption of new accounting standards, the forecasting review, the appointment of a new audit firm and the presence of McGrathNicol.
On December 18, Slater & Gordon dropped its earnings guidance after twice reassuring investors in the prior weeks that it would deliver a full-year earnings before interest tax depreciation and movements in work-in-progress of $205 million.
The earnings guidance was affirmed despite the company flagging a negative cash flow of $30 million to $40 million in the first of the year, leading to scepticism amongst analysts that the law-firm would hit the number.
Ahead of the statement, shares in Slater & Gordon have been on a strong run. The shares gained 36 per cent in three trading sessions to close on Wednesday at 73.5¢, the highest price in two months.
The shares are, however, still down 90 per cent over a one-year period in which the company faced scrutiny from regulators and short sellers over its accounting policies and controversial $1.3 billion acquisition of Quindell in the UK.
The company said it would report its audited first half financial results on February 29, an update which has assumed critical importance for investors.
Meanwhile, investors are still waiting for rival listed personal injury firm Shine Corporate to emerge from a voluntary suspension after it told investors it was conducting a review on its work in progress and provisioning.
Shine flagged a "material" reduction in its earnings as a result of the review and expects to resume trading on January 29.