Ann: 2023 Annual Report, page-8

The results were as expected. Bad. Credit to Shine that they did not pay a dividend and also accounted for the whole (32.4M) interest against EBITDA. Saner heads prevailed.

The interest issue vexes me though. My concern is that Shine owe $32m (which continues to grow), and at some point they need to find the cash to pay it. Cash is only $21m, so they cannot meet this debt from their current reserves. The payment of this debt would also smash through their banking covenants.

Shine do say that they are filing further submissions about the interest issue, but my opinion is that there is zero chance of any recovery, and a good chance that Shine open themselves up to substantial further pain from the court and the media. They need to take their medicine, pay off the disbursement funder, reset, and move on. This issue will cast a large shadow over the company until at least next year’s Annual Report, and investors and employees will find it hard think about anything else until it’s put behind them.

So let’s talk about cash. It is all that matters. GOCF from 36.57m to -3.91m. That is a 40.48m difference. I find it hard to fathom. Shine’s reasoning is that class action settlements have taken longer than they thought. I’m not buying it. 40m in settlement fees running a little late? Really?But even if that was right, would those settlement fees make up the 40m deficit? We are being told that these amounts are coming in late. Some time in the first half of FY24. So are we to assume that about 40m will come in in the coming months, and then in addition to that, Shine will make their usual 35-40m GOCF for FY24? I doubt it.

Shine also list ‘milestone achievements’. These are two small Victorian offices, hiring a couple of people from the UK, and settling 4 class actions which were commenced and run by run by people who have since left. They also tout filing three class actions in the financial year. A cruise action, which seems to have endless trouble according to reports in the media, a Star action (but they conveniently leave out that they are in competition with 3 other firms and Shine have little chance of running that one), and a covid action for only 25 people. If these are their great achievements for the year, I would hate to see what mediocrity looks like.

Still no news on the US. Maybe they benched the idea. That would be the rational thing to do after results like that.