#127 February 2019 SHINE CORPORATE LTD FY19 Half Year Results Investor Presentation Simon Morrison MANAGING DIRECTOR Ravin Raj CHIEF FINANCIAL OFFICER ABN 93 162 817 905#2SHINE CORPORATE LTD Disclaimer This presentation contains certain forward-looking statements with respect to the financial condition, results of operations and business of Shine Corporate Ltd and certain plans and objectives of the management of Shine Corporate Ltd. Such forward-looking statements involve both known and unknown risks, uncertainties, assumptions and other important factors which are beyond the control of Shine Corporate Ltd and could cause the actual outcomes to be materially different from the events or results expressed or implied by such statements. Shine Corporate Ltd and none of its officers, advisers or any other person makes any representation, assurance or guarantee as to the accuracy or likelihood of fulfilment of any forward looking statements or any outcomes expressed or implied by any forward looking statements. The information contained in this presentation does not take into account investment objectives, financial situation or particular needs. Before making an investment decision, investors should consider their own needs and situation and, if necessary, seek professional advice. To the maximum extent permitted by law, none of Shine Corporate Ltd, its directors, employees or agents, nor any other person accepts any liability for any loss arising from the use of this presentation or its contents or otherwise arising out of, or in connection with it. FY19 H1 Results Presentation 2#3Agenda 1 FY19 H1 Highlights 2 FY19 H1 Financial Results 3 Strategic Priorities 4 Outlook 5 Questions SHINE CORPORATE LTD FY19 H1 Results Presentation 3#4SHINE CORPORATE LTD Highlights Simon Morrison - Managing Director IMAGE The Darling Downs - the birthplace of Shine - in Southern Queensland FY19 H1 Results Presentation 4#5Always Pursue Justice "Take it from me... now more than ever our community needs people to stand up for them against wrongdoing." ERIN BROCKOVICH SHINE CORPORATE LTD FY19 H1 Results Presentation 5#6Corporate Overview Shine Group of Companies O SHINE LAWYERS RIGHT WRONG. bestwilsonbuckley Sciaccas STEPHEN BROWNE PERSONAL PURY LAWYERS B BRADLEY BAYLY LEGAL CARR & CO DIVORCE & FAMILY LAWYERS emanate RW Risk Worldwide my insurance claim LEGAL SHINE CORPORATE LTD One of Australia's largest diversified providers of litigation and specialist resolution services Continues an 'inch wide mile deep' strategy of litigation Highly experienced leadership team driving disciplined execution of our proven strategy Organic and acquisition synergistic offering for strong growth opportunities Market and innovation leader with customer- focused technology platform Shine Lawyers Personal Injury (motor vehicle, workplace, public liability) Emerging Practice Areas Lean, standard, major claims Super and disability • Abuse law Class actions Professional and medical negligence Personal Injury (motor vehicle, workplace, public liability) Land, Energy & Resources Family Law • Employment Law • Commercial Litigation Loss Adjustment • Sciaccas (QLD) SB Law t/as Stephen Browne (WA) Bradley Bayly (WA) Emanate Legal Services (QLD) Shine Lawyers Best Wilson Buckley Family Law (QLD) Carr & Co (WA) Risk Worldwide (NZ) My Insurance Claim (NZ) FY19 H1 Results Presentation CO 6#7FY19 H1 Highlights - H1 Group Results $86.39m $19.56m $7.21m $2.21m $6.62m Revenue EBITDAI1* NPAT (pre-Impairment) NPAT GOCF1* Revenue $86.393m $88.231m EBITDAI NPAT $2.21m $19.556m $7.826m $16.477m SHINE CORPORATE LTD 1.25 cps Interim Dividend (unfranked) GOCF $6.618m $6.489m 50 60 70 80 90 100 0 5 10 15 20 0 5 10 ■1H 2019 ■1H 2018 1H 2019 1H 2018 1H 2019 1H 2018 3 4 5 6 7 8 9 ■1H 2019 ■1H 2018 1. EBITDAI means Earnings Before Interest, Tax, Depreciation, Amortisation and Impairment. EBITDAI is not an IFRS measurement and has not been reviewed by the Group's external auditors. GOCF means Gross Operating Cash Flow (net cash provided by operating activities excluding finance costs and income tax). GOCF is not an IFRS measurement and has not been reviewed by the Group's external auditors. #. H1 EBITDAI result improved through adoption of AASB16 and, on a like-for-like basis EBITDAI was $15.15m *. H1 GOCF result improved through adoption of AASB16 and, on a like-for-like basis GOCF was $2.21m FY19 H1 Results Presentation 10 7#8FY2019 H1 Highlights Executive Summary . FY19 H1 earnings consistent with historical seasonal experience. • Outlook for 2019 remains on track • • • • Impairment of Goodwill ($5m before income tax) for Land, Energy and Resources due to delay in major infrastructure initiatives and national and State energy reforms. No impact to underlying NPAT, debt facilities or bank covenants. Non-cash in nature Enhanced marketing strategy has improved quality and quantity of new organic work across the Group Negotiated strategic acquisitions of ACA Lawyers and Carr & Co which will be earnings accretive and boost growth in the future in Class Actions and Family Law Elite practice management system integration completed in Shine Lawyers (Australia) with subsidiary rollout continuing in 2019/2020 • New disbursements funding facilities in place • Competitive Class Action funding options • Class Action pipeline growing Revenue Diversification Personal Injury Emerging Practice Areas SHINE CORPORATE LTD FY 19 H1 31% 69% FY 19 H1 34% QLD PI 66% All other Revenue FY19 H1 Results Presentation 8#9Driving and Diversifying Revenue Growth Investment in our people and culture remains our competitive advantage Organic Growth Strong growth in new file openings and conversion Shine digital marketing campaign delivers lead position Family Law Strategic Acquisitions Carr & Co acquisition is a key step in developing the national family strategy High margins and efficient cost structure Strong GOCF conversion rate Becoming one of the largest Class Action firms in Australia Robust growth in digital enquiries Brand growing on national basis with diversified offering Class Actions Strong increase of new class action files in finance, environment and health sectors SHINE CORPORATE LTD FY19 H1 Results Presentation 9#10Organic Growth - Investment to Drive Growth · Increase in total file openings to 31 December 2018 Focus on driving actionable enquiries, increased conversion of file openings, and underlying improvement in organic. growth rate Improvements and lift in quality of digital enquiries YoY conversion of enquiries improved as a result of focused initiatives on servicing our clients Diversified and agile channel strategy with work coming from different sources FY18 H1 FY18 H1 File Openings Pl 7% growth vs PCP EPA 38% growth vs PCP FY19 H1 FY19 H1 SHINE CORPORATE LTD 10 FY19 H1 Results Presentation 10#11Growth through Acquisition Overview of ACA Lawyers Established in 2013 Strong management and reputation as Corporate Class Action specialists Integrated with Shine Class Actions team in Sydney Overview of Carr & Co • Specialist family law practice • Established in 1995 • Strong management team SHINE CORPORATE LTD • Located in central business district in Perth Consistently ranked as a top tier family law firm in Perth Key Terms Currently leading some of the largest Class Action lawsuits in Australia Key Terms • • Acquisition effective 1 October 2018 • Purchase price funded through working capital Earnings accretive FY19 • • Acquisition effective January 2019 • Purchase price $3.6m for 80% of the shares in Carr & Co Majority of purchase price debt funded Expected to be earnings accretive FY19 Strategic Rationale Strategic Rationale New litigation funding options • High quality acquisition and strong strategic fit . Consolidate class action expertise and growth - diversity of experience Higher margin and growth areas . Operating synergies across existing business operations in Perth National law - opportunity to deploy skills and resources across Shine Group FY19 H1 Results Presentation 11#12SHINE CORPORATE LTD FY19 H1 Financial Results Ravin Raj - Chief Financial Officer FY19 H1 Results Presentation 12#13FY19 H1 Financial Results: Detailed Profit and Loss FY19 H1 ($m) FY18 H1 ($m) Variance Variance ($m) (%) • Revenue 86.393 88.231 (1.838) (2.08%) NPAT1 (pre-impairment) 7.209 7.826 (0.617) (7.88%) Impairment charge (5.0) • NPAT1 2.209 7.826 (5.617) (71.77%) EBITDAI² 19.556 16.477 3.079 18.69% Employee Benefits (46.344) (45.336) (1.008) (2.22%) Expense Overheads (29.655) (30.750) 1.095 3.56% 1 NPAT means Net Profit After Tax SHINE CORPORATE LTD Marginal drop in Group revenue, but revenue growth in core business EBITDAI growth due to adoption of new AASB16 accounting standard, which requires re-classifying operating lease payments as depreciation and interest Overheads being maintained at or below FY18 Impairment relates to Land, Energy and Resources practice. Write down of balance sheet goodwill. Underlying operations unaffected 2 EBITDAI means Earnings Before Interest, Tax, Depreciation, Amortisation and Impairment. EBITDAI is not an IFRS measurement and has not been reviewed by the Group's external auditors. FY19 H1 Results Presentation 13#14FY19 H1 Results Overview: Financial Highlights FY19 H1 FY18 H1 Variance (%) EBITDAI11 ($m) 19.556m 16.477m 18.69% Gross Operating Cash Flow2 ($m) (GOCF) 6.618m 6.487m 2.01% EPS³ (cents) 1.28¢ 4.52¢ (77.81%) Dividend per share (cents) 1.25¢ (unfranked) 1.0¢ (franked) SHINE CORPORATE LTD Reportable EBITDAI and GOCF result improved by adoption of new AASB16 accounting standard, whereby operating lease payments are removed from operating cash outflows and reclassified as depreciation (non-cash) and interest (financing cash flow) Half year GOCF impacted by approximately $4.2m of Class Action billings due 31 December 2018, with majority paid in early January 2019 Medium term aim to improve GOCF to 60- 70% of EBITDA on track Underlying (Pre-impairment) EPS 4.16¢ Interim dividend increased as outlook for underlying operations continues to improve 1 3 EBITDAI means Earnings Before Interest, Tax, Depreciation, Amortisation and Impairment. EBITDA lis not an IFRS measurement and has not been reviewed by the Group's external auditors. GOCF means Gross Operating Cash Flow (net cash provided by operating activities excluding finance costs and income tax). GOCF is not an IFRS measurement and has not been reviewed by the Group's external auditors. EPS means Earnings Per Share. FY19 H1 Results Presentation 14#15FY19 H1 Financial Results: Balance Sheet SHINE CORPORATE LTD AS AT ($'000) 31 Dec 18 30 Jun 18 • Cash 13,613 22,549 Receivables 19,293 13,424 • Work in progress 268,548 257,037 Unbilled disbursements 83,358 78,083 PP&E and other 5,662 10,330 Right of use assets 46,302 • Intangibles 45,000 48,291 Total assets 481,776 429,714 Trade payables 16,414 13,167 Disbursement creditors 62,880 55,390 Cash on hand at 31 December 2018 - lower than expected, offset by higher receivables Operational Balance sheet items consistent with 30 June 2018 New Balance sheet items on adoption of new AASB16 accounting standard Marginal reduction in borrowings due to some repayment, plus AASB16 re-classification Drop in Group Net Assets due to adoption of AASB16 plus payment of FY18 final dividend and impairment recorded at 31 December 2018 Borrowings 50,887 57,464 Lease liabilities 52,530 Deferred tax liabilities 76,182 74,786 Provisions 8,867 9,894 Other liabilities 1,059 873 Total liabilities 268,809 211,574 Net assets 212,967 218,140 FY19 H1 Results Presentation 15#16FY19 H1 Financial Results: Gross Operating Cash Flow Gross Operating Cash Flow (GOCF) for each Half year Period ($m) SHINE CORPORATE LTD 10.1 9.7 14.0 15.2 15.4 6.5 6.6 5.2 3.3 3.5 FY 14 FY 15 FY 16 FY 17 FY 18 FY 19 1H 2H * * Includes impact of AASB16 leases and delay in Class Actions billing recovery. FY19 H1 Results Presentation 16#17Strategic Priorities SHINE CORPORATE LTD FY19 H1 Results Presentation 17#18Committed to Our Long Term Strategy Organic Growth Growth opportunities in Emerging Practice Areas and Personal Injury Build on our national brand and support revenue pipeline Invest in high end / niche markets Innovative solutions Customer experience B BRADLEY BAYLY LEGAL SHINE LAWYERS SHINE CORPORATE LTD CARR & CO DIVORCE & FAMILY LAWYERS Earnings Growth Improving customer experience with a focus on quality Invest in organic growth Optimise cost structure and operating efficiency while growing our investments High margin niche opportunities Elite benefits and Innovation hub RW Risk Worldwide RIGHT WRONG. STEPHEN BROWNE PERSONAL INJURY LAWYERS Financial Consistent cash flows and strong balance sheet Disciplined capital management Grow geographic revenue streams and address new customer segments and services with appropriate investment emanate LEGAL Sciaccas LAWYERS Pty Ltd bestwilsonbuckley FAMILY LAW my insurance claim Acquisitions Pipeline Develop national family law practice Strategic acquisitions aligned to financial metrics FY19 H1 Results Presentation 18#19Outlook SHINE CORPORATE LTD FY19 H1 Results Presentation 19#20Outlook 2019 INVEST Invest in growth reflecting opportunities in EPA and PI Strong balance sheet Operational improvements across Group • • • GROW Establish national family law practice Align acquisition pipeline and opportunities to geographic footprint and service offerings Capitalise on legal services areas that are fragmented STRENGTHEN Revenue growth remains a key objective whilst improving margins and GOCF Build national brand and support revenue pipeline with marketing and digital technology strategy and initiatives INNOVATE SHINE CORPORATE LTD CHAMPION THE CLIENT . Elite integration and • other technological Improve customer experience initiatives • Provide end to end client Invest in high end / niche markets . and file management solutions Multiple business development initiatives to generate growth, leveraging innovative solutions Guidance Reaffirm expectation of modest increase in EBITDA (excluding Impairment and AASB16) for the full year over the result for FY18 FY19 H1 Results Presentation 20 20#21Questions IMAGE SHINE CORPORATE LTD The Darling Downs - the birthplace of Shine - in Southern Queensland FY19 H1 Results Presentation 21#22Appendices SHINE CORPORATE LTD FY19 H1 Results Presentation 22 22#23PI Market Profile Market Share 76% 6% 9% Client Market Segmentation % of Firms / State TAS 2% ACT 1% SA 7% 23% WA 32% 13% 9% 45% ■Shine Corporate Ltd ■Over 55 ■ Maurice Blackburn ■ Slater & Gordon ■35 to 54 ■Under 35 ■ Other Source: IBISWorld Industry Report OD5519: Personal and Workplace Injury Lawyers in Australia May 2018 QLD 20% SHINE CORPORATE LTD NSW 31% ■Tasmania ■Australian Capital Territory ■ New South Wales ■ Victoria VIC 26% ■ Queensland ■ Western Australia FY19 H1 Results Presentation ■South Australia 23 23#24Sustainability and Community Social Impact Social and physical initiatives to improve well being and mental illness SHINE A LIGHT FOUNDATION Supply Chain Working with commercial and community to develop a sustainable supply chain Ś E Shine a Light Shine A Light Foundation supports charitable organisations that promote prevention, rehabilitation, education and safety programs for people impacted by injury, injustice and adversity. 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