Ann: FY18 Half Year Results Announcement Date, page-89

Hi Tim,

Yes, interesting the Slaters strategy. It is typical of a distressed business to "refocus on core operations" and get rid of anything lower margin or potentially distracting to management. Whereas in a growing business (particularly listed), you are looking for any and all marginal revenue to keep the growth story going. So even if the margin in family law is significantly lower than personal injury, it makes sense for SHJ as it grows revenue and continues the story of de-risking the business through diversification.

Ultimately, personal injury law is a structurally declining industry - as cars become safer, workplaces become safer, etc the frequency and size of most personal injury claims will decline and only the castastrophic claims will increase. However, SHJ aims to grow its share of the overall pie (at the expense of smaller firms) and diversify into other complimentary areas of law. Family law makes sense for SHJ because they have a competitive advantage over many smaller firms - that is that they can use their balance sheet to adopt a similar deferred payment philosophy to family law cases as they do for the no-win, no-fee PI cases. That is potentially very attractive to people going through a family separation where a lot of their wealth is tied up in assets that are to be sold etc and maybe they need to preserve their cash for living expenses.

Regarding AASB15, I agree with your assertion that conservatism and consistency are the key. My point was that the accounting standard shouldn't be a reason for any significant change in revenue. But you're right, the company could potentially use the new standard to flush out something else, like poor performance.