Shine Justice Ltd Restructures and Refocuses for Future Growth
SHINE JUSTICE LTD (SHJ) Share Update October 2024 Tuesday 22nd
Shine Justice Ltd Restructures for Future Growth Amid Challenging FY24
Shine Justice Ltd (ASX: SHJ) has announced a strategic restructuring to focus on core areas of personal injuries and class actions, following a challenging fiscal year 2024.
Instant Summary:
- Divested non-core work types to focus on personal injuries and class actions.
- FY24 adjusted EBITDA decreased by 26.7% to $45 million.
- Resolved over 5,000 cases, securing damages exceeding $810 million.
- Declared a final dividend of 4 cents per share, totaling 5.5 cents for the year.
- Initiated an on-market share buy-back for up to 10% of issued capital.
Year in Review
Shine Justice Ltd faced a challenging FY24, prompting a strategic refocus on its core strengths in personal injuries and class actions. The company divested non-core areas such as employment and travel law, estate litigation, and sold its Queensland family law practice. This decision was part of a broader initiative to streamline operations and improve cash flow management.
Financial Performance
Despite these efforts, Shine Justice reported a 26.7% decrease in adjusted EBITDA to $45 million, down from $61.4 million in FY23. However, net profit after tax rose to $6.0 million from $3.3 million, driven by a significant improvement in gross operating cash flow, which increased to $51.8 million from a negative $3.9 million in the previous period.
Key Achievements and Settlements
The company resolved more than 5,000 cases, securing over $810 million in damages for clients. Notable class action settlements included $168.7 million against the Commonwealth Department of Defence and an agreement to settle a class action for up to $180.4 million against the Western Australian Government for Stolen Wages, pending court approval.
Dividend and Share Buy-Back
Shine Justice declared a final dividend of 4 cents per share, bringing the total dividend for the year to 5.5 cents per share, reflecting confidence in future earnings. Additionally, the company initiated an on-market share buy-back for up to 10% of its issued capital, with 176,056 shares already repurchased.
FY25 Outlook
Looking ahead, Shine Justice expects the positive impacts of its cost reduction program to improve EBITDA and cash flow in FY25. The company plans to leverage its strong position in personal injuries and class actions to drive growth in existing and new markets.
The restructuring and focus on core areas are expected to position Shine Justice for future growth, potentially improving investor confidence. However, the decrease in adjusted EBITDA may weigh on short-term stock performance.
Investor Reaction:
Analysts are likely to view the strategic refocus positively, as it aligns with the company's strengths. However, the drop in adjusted EBITDA may raise concerns about short-term profitability.
Conclusion:
Investors should consider Shine Justice's strategic focus and potential for growth in FY25. Monitoring the company's execution of its restructuring plan will be crucial for assessing long-term investment potential.