Back to our favourite Queensland law firm, Shine Lawyers, which was the talk of the Australian Workers' Union's national conference on the Gold Coast last week. Why?
Well all the way back in October 2014, Shine bought Sciaccas Lawyers and Sciaccas Family Lawyers from Sicilian Labor legend Con Sciacca, a minister in the Keating Government, for an "initial consideration" of $8.75 million. That ended up being $10.46 million after earn-outs. And $4.53 million of it (or 43 per cent) was "goodwill". That's 12 per cent of total goodwill now on Shine's balance sheet.
The acquisition wasn't short of accounting shenanigans, with Shine consolidating the Sciaccas businesses into group P&L from 1 July 2014, almost four months before the takeover was even announced. In the very next half, Sciaccas revenue collapsed by 29.2 per cent and Shine boosted group FY16 earnings by 4.8 per cent by writing off $1.24 million of its earn-out liability.
Sciaccas' biggest client by far? The Queensland division of the AWU. Team Ludwig is no small beer in the sunshine state – with 100 per cent coverage north of Bundaberg (where even dentists fear to tread).
But the union has quietly dropped Sciacca as its house law firm, switching to national class action and personal injury shop Maurice Blackburn – thus the chatter on the conference floor.
Hey, Shine derives only 4 per cent of group revenue from Sciaccas, so even the loss of its biggest account isn't material. But we'll certainly be hearing more about that goodwill.
SHJ Price at posting:
65.0¢ Sentiment: Buy Disclosure: Held
A personalised tool to help users track selected stocks. Delivering real-time notifications on price updates, announcements, and performance stats on each to help make informed investment decisions.
(20min delay)