Annual Report 2020
Shine Justice Ltd
ABN 93 162 817 905
Page 1
Shine Justice Ltd Annual Report 2020 Page 2
OUR PURPOSE
Shine a light on injustice
and make the world a
better place, one client
at a time
COVER IMAGE
Trees at Tiddalac – the qualities of Tiddalac encapsulate Shine’s
country heritage. It’s tranquil, peaceful and a natural habitat with
birds, wildlife, walking trails and trees. The trees at Tiddalac include
macadamia, grape vines, passionfruit, pecan, oranges, mandarins,
olives, pawpaw, bananas, avocados and cherry guavas.
Wendy Roche is an Australian impressionist photographer who
captures images that invoke use of movement, colour and light to
mesmerise and magnetise. She is also the wife of one of our
founders, Stephen Roche.
OUR VALUES
Always Stand Up for the Little Guy
— We stand up for the underdog, giving a voice
to those who would otherwise be unheard
— We are tenacious and never, ever give up
— We pride ourselves on not shying away from
the tough cases
Dare to be different
— We are not your typical law firm, we
challenge the ‘norms’ of traditional law firms
— We treat the impossible as an opportunity
— We think beyond the legal industry
Ahead of the pack
— We challenge the status quo and always
ask ‘why’?
— We are not afraid to pioneer new ways
— We always look to the future for
tomorrow’s opportunities
Page 4
5,600+
Client matters
settled in FY20
54
Branches in Australia
and New Zealand
44 years
Standing up
for the little guy
903
Team
members
$730m+
Damages for
our clients in FY20
Page 5
Shine Justice Ltd Annual Report 2020 CONTENTS
07
08
13
18
36
37
FY20 In Review
Letter from the Chairman
Directors’ Report
Remuneration Report
Auditor’s
Independence Declaration
Corporate
Governance Statement
44
Financial Report
150
Directors’ Declaration
151
Independent Auditor’s Report
159
Shareholder Information
161
Glossary
163
Corporate Directory
FY20 IN REVIEW
FY20
FY19
Variance %
Total Revenue
$183.03m
$177.90m
Net Profit After Tax (NPAT) (including impairment1 in FY19)
$21.55m
$14.03m
NPAT (pre-impairment in FY19, like-for-like)
$21.55m
$19.03m
Net Profit Before Tax (NPBT)
$32.19m
$22.58m
Earnings Before Interest and Tax (EBIT)2
$39.10m
$30.01m
Earnings Before Interest, Tax, Depreciation,
Amortisation and Impairment (EBITDAI)3
Net Operating Cash Flow (NOCF)
Gross Operating Cash Flow (GOCF)4
Final Dividend (cents per Share)
Interim Dividend (cents per Share)
Total Dividend (cents per Share)
Earnings Per Share (EPS – cents)
$51.15m
$47.44m
$24.75m
$20.64m
$34.56m
$31.25m
2.75
1.50
4.25
12.40
2.50
1.25
3.75
8.06
2.9%
53.6%
13.2%
42.6%
30.3%
7.8%
19.9%
10.6%
10.0%
20.0%
13.3%
53.8%
1 $5 million impairment in the Land, Energy and Resources practice in FY19, announced on 27 February 2019.
2 EBIT is not an IFRS calculation which appears in the Financial Report and accordingly, has not been audited.
3 EBITDAI is not an IFRS calculation which appears in the Financial Report and accordingly, has not been audited. The adoption of AASB 16 Leases on 1 July 2018
had an impact on EBITDAI and GOCF, resulting in previously reported operating leases now disclosed below EBITDAI as a combination of depreciation and
interest. On a like-for-like basis, EBITDAI was $42.52m (an increase of 10.9% from FY19).
4 GOCF is not an IFRS calculation which appears in the Financial Report and accordingly, has not been audited. GOCF is equal to NOCF with interest, finance
costs and income tax cash flows removed. On a like-for-like basis (see footnote 3), GOCF was $25.93m (an increase of 17.1% from FY19).
Page 7
Shine Justice Ltd Annual Report 2020 LETTER FROM THE CHAIRMAN
Graham Bradley AM
The tumultuous challenges faced by business and
the entire community in 2020 were met by the team at
Shine Justice with remarkable resilience and adaptability.
Dear Shareholders,
As the recently appointed Chairman
of Shine Justice Ltd, I am delighted
to present the Annual Report for the
financial year to 30 June 2020.
It was a privilege to be invited to join
the Board last May and to assume the
Chair role on 1 July. I was attracted to
Shine as a values-based organisation
that champions justice for its clients
and for the wider community. I have
been inspired by the passion and
commitment to these values by Shine
management and team members.
The tumultuous challenges faced by
business and the entire community in
2020 were met by the team at Shine
Justice with remarkable resilience
and adaptability. We have continued
to produce outstanding outcomes for
our clients.
Milestone
achievements
The Group settled or resolved
more than 5,600 cases during the
year and procured damages in
excess of $730 million.
A noteworthy result during the
year was the successful outcome
in court proceedings in one of
Australia’s largest product liability
class actions, commenced in 2012,
relating to faulty prolapse mesh and
tape implants. The court decision
followed a trial that ran from July 2017
until February 2018. The decision
is subject to an appeal which will be
vigorously defended. If ultimately
successful, the litigation is expected
to deliver justice for many thousands
of Australian women left with life
altering complications from the
defective implants.
Settlement was reached in class
actions against the Commonwealth
Department of Defence for residents
in the Queensland town of Oakey
and in Katherine in the Northern
Territory in relation to claims for
property and business losses due
to exposure to toxic firefighting
chemicals. An action has now been
filed for property losses affecting up
to 40,000 residents in seven other
affected Australian locations similarly
exposed to firefighting chemicals.
A class action has also been filed on
behalf of passengers and their families
affected by the deadly outbreak
of coronavirus on board the Ruby
Princess cruise ship early this year.
Our work is continuing to
compel governments to investigate
practices employed in stonemasonry
workshops, where dry cutting of
artificial stone is exposing workers
to the risk of the deadly lung
disease, silicosis.
Page 8
FEDERAL COURT
Successful outcome for victims of faulty prolapse implants.
Financial
performance
The Group achieved earnings
before interest, tax, depreciation,
amortisation and impairment
(EBITDAI) of $51.15 million, compared
with $47.44 million in the previous
year. Net profit after tax (NPAT) of
$21.55 million compared with
$14.03 million previously. Gross
operating cash flow (GOCF) of
$34.56 million represents a solid
outcome for the Group and an uplift
on the prior year as a percentage of
reported revenue.
The adoption of AASB 16 Leases
on 1 July 2018 had an impact on
EBITDAI and GOCF, resulting in
previously reported operating leases
now disclosed below EBITDAI as
a combination of depreciation and
interest. On a like-for-like basis,
EBITDAI was $42.52 million and
GOCF was $25.93 million.
The Directors are pleased to
declare a final dividend of 2.75 cents
per Share (unfranked). When added
to the 1.5 cents per Share unfranked
interim dividend declared in February
2020, dividends for the year totalled
4.25 cents per Share. Dividend
distribution was 34 percent of NPAT, in
line with our stated distribution policy.
Other
significant matters
In March 2020, shareholders
approved the change of the
Company’s name to Shine Justice
Ltd. The change was proposed as a
simple but significant step to reflect
the purpose, culture and values
which are important to our Group and
our strong commitment to justice.
Over the past year, the Group’s
leadership team has stabilised,
strengthening our capability at all
levels in the organisation to deliver
consistent, high-quality service
across all work types and regions.
We are refining our corporate
structure with the aim of improving
efficiencies, as well as further
integrating our brands under the
Shine Justice banner.
Our leadership embeds a culture
within the Group that respects our
history, embraces our values and
inspires high performance. We are
grateful to all our team members
for their willingness to adapt and
ensure continued delivery of
outstanding service throughout
a year like no other.
The Group’s philanthropic
initiative, the Shine A Light
Foundation, awarded a $15,000
grant to new charity partner, the Red
Rose Foundation, which actively
works to end domestic and family
violence related deaths in Australia,
including homicide, suicide and
accidental deaths.
Page 9
Shine Justice Ltd Annual Report 2020 Conclusion
I would like to take this opportunity
to thank retiring Directors for their
valuable contribution to the Group.
Tony Bellas, Carolyn Barker AM and
Greg Moynihan have ably guided the
business since listing in 2013 and their
leadership has left the business with a
solid foundation for future growth.
I welcome my new fellow Directors,
Teresa Dyson and David Bayes, each
of whom brings considerable skills,
experience and expertise to the
ongoing governance of the Group.
With a strong leadership team,
ably led by Managing Director
& CEO Simon Morrison, and the
dedication of all our people, I am
confident that Shine is well placed
for future success.
Graham Bradley AM
CHAIRMAN
28 August 2020
OUR NATIONAL PRACTICE LEADER
Lisa Flynn, outside the High Court after the George Pell appeal
ADMISSION DAY
for two of our team members
Page 10
We are grateful to all our team members for
their willingness to adapt and ensure continued
delivery of outstanding service throughout a
year like no other.
SHINE A LIGHT FOUNDATION
IS PROUD TO SUPPORT THE
RED ROSE FOUNDATION
Page 11
Shine Justice Ltd Annual Report 2020 Page 12
DIRECTORS’ REPORT
Your Directors present their report for Shine Justice Ltd (formerly Shine Corporate Ltd) for the Financial Year ended
30 June 2020.
The Directors during the Financial Year were:
Director
Position
Appointment
Graham Bradley AM
Teresa Dyson
David Bayes
Independent Chairman
Non-executive Director
1 July 2020 to present
28 May 2020 to present
Non-executive Director
28 February 2020 to present
Non-executive Director
28 February 2020 to present
Simon Morrison
Managing Director & CEO
13 March 2013 to present
Tony Bellas
Independent Chairman and
Non-executive Director
13 March 2013 to 30 June 2020
Carolyn Barker AM
Non-executive Director
13 March 2013 to 28 February 2020
Greg Moynihan
Non-executive Director
13 March 2013 to 30 June 2020
Meetings of Board and Committees
The number of Board meetings and meetings of Board Committees held1 and the number of meetings attended2 by
each Director during the Financial Year are listed below.
Table 1
Board and Committee Meetings
Director
Held
Attended
Held
Attended
Held
Attended
Board
Audit & Risk
Management Committee
Nomination and
Remuneration Committee
Graham Bradley AM
Teresa Dyson
David Bayes
Simon Morrison3
Tony Bellas
Greg Moynihan
Carolyn Barker AM
2
4
4
9
9
9
5
2
4
4
9
9
9
5
1
1
1
6
6
6
5
1
1
1
6 (invitee)
6
6
5
1
1
1
5
5
5
4
1
1
1
5 (invitee)
5
5
3
1 The number of meetings indicated as held for each Director are those meetings held during the period of their appointment as Director.
1 Attendance includes attendance as invitee prior to formal appointment to the Board or Committee (one Board meeting for Graham Bradley and one meeting
of each of the Committees for each of Teresa Dyson and David Bayes).
1 Simon Morrison attends Committee meetings as an invitee but does not attend during any discussions concerning his remuneration or other material
personal interests.
Page 13
Shine Justice Ltd Annual Report 2020 Graham Bradley AM
BA, LLB (Hons 1), LL.M (Harvard), FAICD
Teresa Dyson
BA, LLB (Hons), MTax, MAppFin, GAICD
Graham joined the Board in May 2020
as a Non-executive Director and was
appointed Chairman of Directors on
1 July 2020.
Graham is an experienced company director and
chairman. He is currently Non-executive Chairman of
United Malt Group Limited, HSBC Bank Australia Limited
and EnergyAustralia Holdings Ltd. He is also a Director of
The Hongkong & Shanghai Banking Corporation Limited,
Non-executive Chairman of Infrastructure NSW and a
member of the board of Tennis Australia.
Graham’s previous roles include Managing Director of
Perpetual Limited, National Managing Partner and CEO
of Blake Dawson (now Ashurst), a senior role at McKinsey
& Company, Chairman of Stockland Corporation Limited,
President of the Business Council of Australia and Deputy
President of the Takeovers Panel.
In addition to his role as Chairman of the Board,
Graham holds special responsibilities as Chairman of the
Nomination and Remuneration Committee and member
of the Audit & Risk Management Committee.
Other Australian listed company directorships held
in the past three years: GrainCorp Limited (March 2017
– March 2020) and United Malt Group Limited (March
2020 – present).
Teresa joined the Board as a Non-
executive Director in February 2020.
Teresa is an experienced company director, whose
career has spanned both the public and private sectors.
Teresa is an admitted lawyer and has previously been a
partner at a global law firm and professional services firm.
Teresa is currently a Director and Chair of the Audit and
Risk Committee of Seven West Media Limited, Director
and Chair of the Audit & Risk Management Committee
of Genex Power Limited, Director of Northern Territory
Power and Water Corporation, Energy Queensland,
National Housing Finance and Investment Corporation,
Gold Coast Hospital and Health Board, Energy Super and
the Foundation for Alcohol Research and Education and a
member of the Foreign Investment Review Board and the
Takeovers Panel. She is a former Director of UN Women
National Committee Australia Ltd and Opera Queensland
and a former Chair of each of the Board of Taxation and
the Business Law Section of the Law Council of Australia.
Special responsibilities include Chair of the Audit & Risk
Management Committee and member of the Nomination
and Remuneration Committee.
Other Australian listed company directorships held
in the past three years: Consolidated Tin Mines Ltd
(January 2019 – January 2020), Seven West Media
Limited (November 2017 – present) and Genex Power
Limited (May 2018 – present).
Page 14
David Bayes
FAICD
Simon Morrison
LLB
David joined the Board in February
2020 as a Non-executive Director.
David is Chairman of Plarre Foods Pty Ltd (trading as
Ferguson Plarre Bakehouses) and Non-executive Director of
Sigma Healthcare Limited. He has previously held a variety
of board and executive positions, including Chief Executive
Officer of Choice Hotels Australasia, Chief Operating
Officer of Mortgage Choice Limited, Chief Executive Officer
and Director of Bakers Delight, Non-executive Director of
Chiquita Brands South Pacific Ltd, Non-executive Director of
North Western Healthcare Network and Vice President and
Director of McDonald’s Australia.
David is a Non-executive Director of the Australian
Institute of Company Directors (AICD) and immediate past
President of the Victoria Council of the AICD.
Mr Bayes has over 40 years’ experience in multi-outlet
retail business.
Special responsibilities include member of the Audit and
Risk Management Committee and of the Nomination and
Remuneration Committee.
Other Australian listed company directorships held in
the past three years: Sigma Healthcare Limited (June
2007 – present).
Simon became the Managing Director
of Shine in 2012, having joined Shine
Lawyers in 1988 and having become
a partner of the firm in 1995.
Simon is a former National President of the Australian
Lawyers’ Alliance (ALA) and chaired the ALA’s National
Workers Compensation Special Interest Group and sits
on the Board of Governors of the American Association
of Justice. Simon has particular expertise in and is an
acknowledged leader in workers’ compensation and
is a Queensland Law Society Accredited Specialist in
personal injury law. He has given evidence at numerous
government inquiries, has assisted in drafting legislation
and is a regular speaker at national and state conferences
in this field.
Simon contributes skills and expertise to the Board
including executive management of a listed company,
strategy, industry experience, strategic marketing and
policy, regulation and stakeholder management.
Simon is Shine's Managing Director & CEO. Simon
has a standing invitation to attend meetings of the
Board’s Committees, but he does not participate in any
discussions in relation to his own remuneration.
Other Australian listed company directorships held in
the past three years: None other than Shine.
Shine Justice Ltd Annual Report 2020
Page 15
Ravin Raj
BCom, ACA, FFin, GAICD
Annette O’Hara
BA, LLB (Hons I), LLM, FGIA
Chief Financial Officer and Company Secretary
General Counsel and Company Secretary
Ravin joined the Group as Chief
Financial Officer, with responsibility for
the financial direction of the Group, in
November 2016.
Annette joined the Group in August
2016 as Senior Legal Counsel and
was appointed General Counsel and
Company Secretary in February 2017.
Ravin has extensive experience in the finance, professional
services and construction industries, having commenced
his career at accounting firm Touche Ross & Co before
joining Watpac Limited, where he held the position of
CFO for nearly two decades. Ravin is also experienced in
acquisition due diligence and valuation, taxation and
debt financing.
Previously, Annette had extensive experience as a senior
corporate lawyer at national law firm Corrs Chambers
Westgarth, advising a wide range of listed and unlisted
companies in relation to regulatory, governance and
general commercial matters.
Page 16
Page 17
Shine Justice Ltd Annual Report 2020 REMUNERATION REPORT
This Remuneration Report sets out
information about the remuneration
of Shine’s key management personnel
(KMP) for the Financial Year in
accordance with the Corporations
Act and its Regulations.
The information in this Remuneration
Report has been audited.
Page 18
Contents
19
20
21
21
22
24
25
26
27
28
1 Directors and KMP
2 Remuneration Framework
3 Fixed Remuneration
and Benefits
4 Short-Term Incentives
5 Long-Term Incentives
6 Company Performance
7 KMP Contractual Arrangements
8 Executive KMP Remuneration
9 Non-executive
Director Remuneration
10 Transactions with KMP
and related parties
1 Directors and KMP
The KMP of the Group (whose remuneration must be disclosed in this Report) refers to those persons having
authority and responsibility for planning, directing and controlling the activities of the Group, directly or indirectly,
including the Directors (whether executive or otherwise).
The Non-executive Directors and executives who were KMP for the whole of the Financial Year are identified in
Table 2.
Table 2
KMP – Full Financial Year
Name
Non-executive Directors
Tony Bellas
Greg Moynihan
Executive KMP
Simon Morrison
Ravin Raj
Position
Independent Chairman and Non-executive Director
Independent Non-executive Director
Managing Director & CEO
Chief Financial Officer (CFO) and Company Secretary
Table 3 identifies KMP for part only of the Financial Year.
Table 3
KMP – Part Financial Year
Name
Position
Dates
Non-executive Directors
Graham Bradley AM
Teresa Dyson
David Bayes
Independent Non-executive Director
Independent Chairman and Non-executive Director
28 May 2020 – present
1 July 2020 - present
Independent Non-executive Director
28 February 2020 – present
Independent Non-executive Director
28 February 2020 – present
Carolyn Barker AM
Independent Non-executive Director
Retired 28 February 2020
Executive KMP
Cath Evans
Group Chief Operating Officer
Resigned 27 November 2019
Page 19
Shine Justice Ltd Annual Report 2020 2 Remuneration Framework
Shine Justice’s remuneration practices and strategy are designed to attract and retain high calibre talent in order
to provide excellent service to, and maximise damages for, our clients and drive the creation of shareholder value.
The remuneration framework includes three potential components:
Fixed Remuneration that comprises base salary and other benefits, including superannuation
Short-Term Incentive that provides a cash component
Long-Term Incentive Plan that provides a deferred equity component
This structure is intended to provide an appropriate mix of fixed and variable remuneration, and a combination of
incentives intended to drive performance against the Company’s short and long term business objectives.
The Group’s KMP remuneration framework is aligned to the reward strategy of the organisation. The key elements
of the framework are set out in Table 4.
No remuneration consultants were engaged to provide remuneration recommendations during FY20.
Table 4
Key Elements of Remuneration Framework
Considerations
Performance Measure
Strategic Objective
Fixed
Remuneration
— Role responsibility
& accountabilities
Short Term
Incentive
— Experience and qualifications
— Market relativities
— Market relativities
— 12 month performance period
— Cash component
Long Term
Incentive
— Market relativities
— 3 year performance period
— Equity component
Financial, People & Values and/or
Operational and Strategic measures
tailored to the individual role taken
into account in annual review
To attract and retain top
talent focused on performance
and results
Financial, People & Values and/or
Operational and Strategic measures
tailored to the individual role
The Rights granted under the LTI
to date include a performance
hurdle mix of growth in EPS (70%),
and Relative Total Shareholder
Return (RTSR) based on the group
of companies in the S&P/ASX
Small Ordinaries Index, excluding
resource, mining and real estate
companies (30%)
Drives focus on delivering
key strategic initiatives and
outcomes by incentivising over
a 12 month period
Delivers financial benefits to
shareholders and aligns focus to
grow the firm through improved
capability of systems, processes
and people
To align total remuneration
package with the creation of
shareholder value over the long
term. Drives focus on delivering
longer term financial outcomes to
shareholders and is a
key retention tool
Page 20
3 Fixed Remuneration and Benefits
Fixed remuneration and employee benefits are
structured as a total employment cost package, which
may be delivered as a combination of cash and non-
financial benefits.
KMP are offered a competitive base remuneration
package, which is reviewed annually to ensure
remuneration remains competitive. There is no
guaranteed base remuneration increase included
in any contract.
KMP receive non-monetary benefits which may include
motor vehicle and car parking benefits. Superannuation
contributions are paid in accordance with relevant
government legislation, to employee nominated
superannuation funds.
KMP STI
KPIs were agreed with the CFO for FY20, including KPIs
based on Group financial performance (40%), operational
performance, including funding arrangements and the
integration of financial reporting across the Group (40%)
and people initiatives, including supporting corporate
culture and values (20%) for a maximum award of
$100,000, subject to behavioural expectations.
The Board considered these KPIs appropriate in order
to drive the delivery of financial benefits to the Group
and to achieve key strategic objectives in FY20.
The Board resolved that 75% of the maximum award
of $100,000 ($75,000) would be paid to the CFO on the
basis that the KPIs were partly, but not fully, achieved,
as indicated in the following diagram.
4 Short-Term Incentives
General Company
Performance (40%)
People (20%)
Operational
Performance (40%)
A Short-Term Incentive Plan (STIP) was in place for Shine
Lawyers for the Financial Year.
Performance
against budget
Department
turnover
The STIP was developed to reward short-term
performance with the following objectives:
increase employee motivation by establishing
a clear link between pay and performance
focus our peoples’ efforts on exceeding budgeted
performance targets and outcomes
improve business performance, with particular
emphasis on outcomes associated with
legal operations
create a desired workplace culture by
rewarding teamwork
The plan is reviewed annually. All Shine Lawyers legal
staff were eligible, subject to meeting behavioural
expectations, to participate in respect of FY20.
The key performance indicators which must be achieved
to earn an award under the plan are set at the beginning
of each financial year.
Rate of cash
conversion
Culture
and values
Meeting
banking
covenants
Disbursement
funding
processes
Financial
integration
of brands
File aquisition
support
Reduction
in write-offs
Not achieved
Achieved in part
Achieved in full
Under Cath Evans’ employment contract, the former
GCOO was eligible for an annual STI of up to 50% of her
base salary, subject to the achievement of KPIs which
were due for review, together with the base salary, at
the time of her departure from the Group. Due to that
departure, no STI is payable to Ms Evans for FY20.
Due to his substantial shareholding in the Company,
Managing Director & CEO Simon Morrison does not
receive any short-term incentives in addition to his
fixed remuneration.
Page 21
Shine Justice Ltd Annual Report 2020 30% of the Rights will vest if the Company ranks
in the 75th percentile or above of total shareholder
return achieved by companies in the S&P/ASX Small
Ordinaries Index, excluding resource, mining and
real estate companies, in the three year performance
period, with partial vesting (straight line vesting
between 50% and 100%) if the Company ranks in
the 50th to 75th percentile.
The hurdles are the same as those for the FY18 and
FY19 Rights (except that the performance period for
the FY20 Rights is the three year period from 1 July
2019) and were selected following a consideration of
appropriate targets to drive Group performance and of
market practice. The Board retains a discretion to relax
the performance measures if warranted by relevant
circumstances at the time of potential vesting.
The fair value of each FY20 Right granted subject to
the EPS performance hurdle has been assessed as
84 cents and the fair value of each FY20 Right granted
subject to the RTSR performance hurdle has been
assessed as 68 cents.
KMP LTI
A grant of 149,362 FY20 Rights was made to the
CFO (representing 30% of base remuneration) during
the Financial Year.
The vesting date for the FY20 Rights is on or about
31 August 2022.
A grant of 409,006 FY20 Rights was made to Cath Evans
(representing 50% of base remuneration) during the
Financial Year. As a consequence of her departure, all
Rights granted to Ms Evans have lapsed and will not vest.
In accordance with Ms Evans’ employment contract,
100,000 Shares were issued to her in November 2019.
The contract provided for a further issue of 100,000
Shares in November 2020, subject to continued
employment with the Group. The second tranche
of Shares will not be issued.
Due to his substantial shareholding in the Company,
Managing Director & CEO Simon Morrison does not
participate in the LTIP.
Non-executive Directors do not participate in the LTIP.
5 Long-Term Incentives
The LTIP, approved by shareholders at the 2016 and
2019 AGMs, provides for the offer of Performance Rights
to employees and consultants of the Group in order to
align remuneration with the creation of shareholder value
over the long term.
The LTIP is administered by the Board. The Board
determines the terms of offers of Performance Rights.
The vesting of each Performance Right results in the issue
or transfer of one Share. The Board has a discretion to
instead pay a cash amount based on the market value of
Shares on the vesting date of vested Performance Rights.
No payment is required for a grant of Performance Rights
or for Shares on the vesting of Performance Rights.
The value of a Share resulting from the vesting of a
Performance Right will depend on the market price of
Shares following vesting.
Performance Rights are not quoted on ASX and confer
no voting or dividend rights.
A grant of 2,575,198 Performance Rights was made in
December 2019 in relation to the Financial Year (of which
472,526 lapsed during FY20 due to the departure of
Plan participants from the Group). FY20 Rights were
granted to selected members of the Leadership Team,
National Principals and Branch, General and Department
Managers, taking into account various criteria, including
financial and leadership performance and behavioural
expectations, including upholding the Group’s values.
The number of FY20 Rights granted to each recipient
represented a percentage of base remuneration
determined for each role, taking into account the
average Share price on the 15 trading days preceding
and the 15 trading days following the announcement
of the FY19 financial results on 28 August 2019.
The vesting date for FY20 Rights is on or around
31 August 2022. No Performance Rights vested
during FY20. FY18 Rights have a vesting date on
or about 31 August 2020, with an assessment in
relation to the satisfaction of hurdles currently
being completed.
The FY20 Rights are subject to the following performance
hurdles being met during the three year performance
period from 1 July 2019:
70% of the Rights will vest if the Company achieves
earnings per share growth of an average of 10% per
annum during the three year performance period,
with partial vesting (straight line vesting between
50% and 100%) if 7-10% growth is achieved; and
Page 22
A summary of the percentages of fixed and variable remuneration for executive KMP is included in Table 5.
Non- executive Directors do not receive any performance based remuneration, so their remuneration is fixed
as to 100%.
Table 5
Proportional Remuneration Summary
Fixed remuneration
Remuneration linked to performance –
maximum potential award
Simon Morrison
Ravin Raj
Cath Evans
FY20
100%
66%
54%2
FY19
100%
68%
57%
FY20
0%
34%1
46%3
FY19
0%
32%
43%
1 Includes maximum STI and LTI described on pages 21 and 22.
2 Includes salary, superannuation and car parking value for full Financial Year and value of 100,000 Shares issued on 14 November 2019, based on the closing
price of Shares on ASX that day
3 Includes maximum STI and LTI as a percentage of base remuneration for the full Financial Year
SHINE JUSTICE'S CENTRE OF LEARNING
Tiddalac in the Upper Lockyer Valley, Queensland.
Page 23
Shine Justice Ltd Annual Report 2020 6 Company Performance
Tables 6 and 7 set out summary information about the Group’s earnings and movements in shareholder wealth for the
five financial years to 30 June 2020.
Table 6
Group Earnings
Revenue
Net Profit Before Tax
Net Profit After Tax
Earnings Before Interest, Tax, Depreciation,
Amortisation and Impairment (EBITDAI)1
Gross Operating Cash Flow (GOCF)2
FY20
$M
183.0
32.2
21.6
51.2
34.5
FY19
$M
177.9
22.6
14.0
47.4
31.3
FY18
$M
179.4
28.8
19.1
37.7
21.9
1 EBITDAI is not an IFRS calculation which appears in the Financial Report and accordingly, has not been audited.
2 GOCF is not an IFRS calculation which appears in the Financial Report and accordingly, has not been audited.
Table 7
Movement in Shareholder Wealth
Share price at start of Financial Year* (cents)
Share price at end of Financial Year* (cents)
Interim Dividend (cents per Share)
Final Dividend (cents per Share)
Earnings Per Share (cents)
FY20
0.68
0.77
1.50
2.75
12.4
FY19
0.89
0.67
1.25
2.5
8.1
FY18
0.58
0.97
1.0
2.25
11.0
FY17
$M
165.0
25.5
20.2
36.5
19.2
FY17
1.05
0.55
0.6
2.0
11.6
FY16
$M
151.5
18.4
14.8
25.0
18.8
FY16
2.55
1.07
Nil
2.5
8.6
* Unless indicated otherwise, all Share price values set out in the above table are taken as at the close of trading and sourced from the ASX website.
Page 24
7 KMP Contractual Arrangements
Remuneration and other terms of employment for all Directors and executives are formalised in
employment agreements.
Non-executive Directors are appointed subject to election and re-election by shareholders, in accordance with
the Constitution and the Listing Rules.
Details of the standard termination provisions for each executive KMP contractual arrangement are summarised
in Table 8.
Base remuneration (annual salary and superannuation) is included in Table 10.
Table 8
Summary of KMP Contractual Arrangements
Non-executive Directors
Managing Director & CEO
CFO
Former GCOO
Notice
period
Payment
in lieu of
notice
Notice
period
Payment
in lieu of
notice
Notice
period
Payment
in lieu of
notice
Notice
period
Payment
in lieu of
notice
Resignation
None
None
6 months
6 months
6 months
6 months
6 months
6 months
Termination
for cause
Termination
without cause
None
None
None
None
None
None
None
None
Statutory
Statutory
6 months
6 months
3 months
3 months
3 months
3 months
Details of the number of Shares or Rights held directly, indirectly or beneficially by each member of KMP as at 30 June
2020 are set out in Table 9.
Table 9
KMP Holdings
Name
Balance at
start of FY20
Acquired during FY20
Disposed
during FY20
Balance at
end of FY20
Non-executive Directors
Graham Bradley AM
Nil
104,123 Shares
Teresa Dyson
David Bayes
Nil
Nil
19,000 Shares
31,104 Shares
Tony Bellas
140,000 Shares
Greg Moynihan
190,151 Shares
Executive KMP
Simon Morrison
43,313,704 Shares
–
–
–
Ravin Raj
153,498 FY18 Rights
126,541 FY19 Rights
149,362 FY20 Rights
–
–
–
–
–
–
–
104,123 Shares
19,000 Shares
31,104 Shares
140,000 Shares
190,151 Shares
43,313,704 Shares
153,498 FY18 Rights
126,541 FY19 Rights
149,362 FY20 Rights
Page 25
Shine Justice Ltd Annual Report 2020 8 Executive KMP Remuneration
Table 10
Executive KMP Remuneration
Short-term
employment benefits $
Long-term
employment benefits $
Post emp.
benefits $
Name
Year
Salary/
fees
Cash
incentives
Non-
monetary
benefits1
Share
based
payments
Long
service
leave
Share
based
payments
Super-
annuation
Other
Simon
Morrison
FY20
489,2882
FY19
489,288
–
–
25,324
31,195
FY20
401,4753
75,0004
10,882
FY19
389,475
58,0006
11,170
–
–
–
–
75,581
15,325
–
–
21,003
20,531
24,142
68,5835
21,003
1,701
56,148
20,531
Total
rem–
uneration
611,196
556,339
601,085
537,025
FY20
600,0807
–
5,003
73,000 8
–
(843,093) 9
21,003
37,80710
(106,200)
FY19
406,155
100,000
6,874
45,600
1,070
122,430
12,636
694,765
Ravin
Raj
Cath
Evans
1 Short-term non-monetary benefits include motor vehicle and car parking benefits
2 Annual salary of $489,288, subject to annual review, with no increase since 2016
3 Annual salary of $401,475 subject to annual review
4 STI award for FY20, to be paid in FY21
5 153,498 FY18 Rights (cost of $16,929 for FY20), 126,541 FY19 Rights (cost of $27,601 for FY20) and 149,362 FY20 Rights (cost of $24,053 for FY20)
6 STI award for FY19, paid in FY20, including an additional $8,000 awarded for FY19 performance
7 $600,080 in total salary paid, $270,080 in her role as GCOO until resignation on 27 November 2019, and $330,000 relating to the contractual six month
notice period, which represents a termination benefit in accordance with AASB 119
8 100,000 Shares issued on 14 November 2019
9 Cath Evans resigned on 27 November 2019. This amount represents the forfeiture of Performance Rights on termination
10 Leave balance paid following end of notice period
Page 26
9 Non-executive Director Remuneration
Non-executive Directors do not receive any performance-
based remuneration. All remuneration is fixed and there
are no additional fees payable for being a member of a
Board committee.
Non-executive Directors’ fees are determined within
an aggregate Directors’ fee pool limit, which must be
approved by shareholders. The maximum fee pool
currently stands at $700,000 per annum.
Fees and payments to Non-executive Directors reflect
the demands which are made on, and the responsibilities
Table 11
Non-Executive Directors’ Remuneration
of, the Directors. Non-executive Directors’ fees and
payments are reviewed annually by the Board. The
Chairman’s fees are determined independently to the
fees of the Non-executive Directors. The Chairman is
not present at any discussions relating to the
determination of his own remuneration.
The remuneration of the non-executive Directors of the
Group in FY20 is summarised in Table 11.
Name
Year
Fees
Non-monetary
benefits
Superannuation
Total
remuneration $
Short-term
employment benefits $
Post employment
benefits $
Graham Bradley AM
FY20
Teresa Dyson
FY20
David Bayes
Tony Bellas
Carolyn Barker AM
Greg Moynihan
FY20
FY20
FY19
FY20
FY19
FY20
FY19
11,147
40,656
40,656
180,000
120,000
80,000
80,000
120,000
80,000
–
–
–
–
–
–
–
–
–
1,059
3,862
3,862
17,100
11,400
7,600
7,600
11,400
7,600
12,206
44,518
44,518
197,100
131,400
87,600
87,600
131,400
87,600
Page 27
Shine Justice Ltd Annual Report 2020 10 Transactions with KMP and Related Parties
During the Financial Year amounts totalling $1,071,476
(FY19 $1,177,735) were paid to entities controlled or
influenced by Simon Morrison, primarily for leases over
and fitouts of commercial properties occupied by parts
of the Group. Entities controlled or influenced by Simon
Morrison paid for rent and services to Group entities
totalling $1,544,393 (FY19 $1,412,902) and paid interest
to Group entities totalling $311,717 (FY19 $254,889).
During the Financial Year, net funds totalling $667,970
(FY19 $277,621) were lent to a New Zealand company
affiliated with Shine, of which Simon Morrison is a director
and shareholder. Interest of $311,717 (FY19 $254,889)
was recognised on the loan during the year. The amount
(net of expected credit loss provisioning under AASB 9)
outstanding at the commencement of the Financial Year
was $3,404,395 and at the end of the Financial Year was
$4,384,082 (the highest amount of indebtedness during
the Financial Year). The loan attracts interest at the rate
equivalent to Shine Justice’s Australian working capital
facility loan rate plus 2%.
All transactions were on arm’s length, commercial terms.
Directors’ Interests
The following table sets out the Directors’ relevant
interests in the Company or a related body corporate as
at the date of this Report.
Table 12
Directors’ Relevant Interests
Director
Graham Bradley AM
Teresa Dyson
David Bayes
Simon Morrison
Number of Shares
104,123
19,000
31,104
43,313,704
End of Remuneration Report
Page 28
Page 29
Shine Justice Ltd Annual Report 2020 Officers’ Indemnities
and Insurance
The Constitution provides that the
Company must indemnify any person
who is, or has been, a Director or
executive officer of the Group, and
may indemnify other current or
former officers and auditors, against
liabilities incurred whilst acting as
such officers, to the extent permitted
by law.
The Company has entered into a
Deed of Access, Indemnity and
Insurance with each of the Directors
and Company Secretaries. The
Company has paid a premium for
insurance for the Directors and
officers of the Group against liabilities
for costs and expenses incurred by
them in defending legal proceedings
arising from their conduct while
acting in the capacity of Directors
and officers of the Group, other than
conduct involving a wilful breach
of duty in relation to the Group.
The total amount of Directors’ and
officers’ insurance contract premiums
paid for the Financial Year was
$693,841 (2019: $410,192).
Indemnifying
Auditors
To the extent permitted by law,
the Group has agreed to indemnify
its auditors, PwC, and its former
auditors, EY, against claims by third
parties arising from the audit (for an
unspecified amount). No payment
has been made to indemnify PwC
or EY during, or since the end of,
the Financial Year.
No leave to bring
proceedings on behalf
of the Company
No person has applied to Court for
leave to bring proceedings on behalf
of the Company or to intervene
in any proceedings to which the
Company is a party for the purpose
of taking responsibility on behalf of
the Company for all or any part of
those proceedings. The Group was
not a party to any such proceedings
during the Financial Year.
Shareholder
Class Action
As announced in September 2017,
the Company received a statement
of claim (Claim) filed on behalf
of representative plaintiffs and
members of a group relating to
alleged legislative breaches. As
announced on 29 May 2019, the
Claim was settled on confidential
terms without any admission of
liability, subject to the approval of
the Supreme Court of Queensland,
which was given on 21 August
2019. The Company’s contribution
to the settlement and the costs
of completing the matter was not
material and had no impact on the
Group’s earnings, cash position or
balance sheet.
Environmental
Regulation
The Group’s operations are
not subject to any significant
environmental regulation under the
laws of the Commonwealth or States.
Dividends
The Board’s dividend policy has
been structured in order to maintain
investor, creditor and market
confidence and to sustain future
development of the Group’s business.
The Group manages capital with
a view to ensuring that the goals
of continuing as a going concern
and the provision of acceptable
shareholder returns are met.
The amount of dividends declared
by the Board at any time will be
influenced by underlying financial
performance and cash flow, balance
sheet, debt and treasury risk
management, working capital needs
and competing internal and external
investment opportunities necessary
for growth.
The Company’s aim is to pay
between 30% and 50% of NPAT
as dividends each financial year.
To the extent the Company has
franking credits, it intends to
distribute them to shareholders
in the form of franked dividends.
The declaration of dividends is at the
sole discretion of the Board and no
guarantee can be given about the
amount of any dividends declared
or the level of franking or imputation.
In respect of the Financial Year, an
interim dividend of 1.5 cents per
Share (unfranked) was declared on
28 February 2020 and paid on 27
March 2020. A final dividend of
2.75 cents per Share (unfranked)
was declared on 28 August 2020
and is expected to be paid on 25
September 2020.
In respect of FY19, as detailed in the
Directors’ Report for that financial
year, a final dividend of 2.5 cents
per Share (unfranked) was declared
on 28 August 2019 and paid on 27
September 2019.
Page 30
State of Affairs
Non-Audit Services
In the opinion of the Directors, there were no significant
changes in the state of affairs of the Group that occurred
during the Financial Year.
The COVID-19 pandemic resulted in many of the Group’s
services being provided remotely, with the majority of
team members working from home for part of the second
half of the Financial Year. The transition to remote
working occurred with little disruption to the provision
of services.
Events since the end
of the Financial Year
The Directors are not aware of any events or
developments which are not set out in this Annual
Report that have, or would have, a significant effect
on the Group’s state of affairs, or its expected results
in future years.
The continuing COVID-19 pandemic may result in some
continued remote working arrangements reflecting
government and health authority recommendations.
Performance Rights
and Options
There are currently 1,281,083 FY18 Rights, 1,143,149 FY19
Rights and 2,003,156 FY20 Rights on issue. There are no
options on issue.
During the Financial Year, the Company’s former
auditor, EY, performed other services in addition to its
audit responsibilities. The engagement to perform non-
audit services was approved on the basis that it was more
cost-effective than engaging a firm without knowledge
of the Group. In addition, some of the non-audit services
were provided after EY had ceased to act as the
Company’s auditor.
The Company's current auditor, PwC, did not provide any
non-audit services during the Financial Year.
The Board, in accordance with advice from the Audit
& Risk Management Committee, is satisfied that the
provision of non-audit services by EY (or by another
person or firm on its behalf) during the Financial Year is
compatible with the general standard of independence
for auditors imposed by the Corporations Act because
the nature of the services provided does not compromise
the general principles relating to auditor independence in
accordance with APES 110: Code of Ethics for Professional
Accountants set by the Accounting Professional and
Ethical Standards Board.
No officer of the Company is a former partner or director
of PwC, and a copy of the Auditor’s Independence
Declaration as required under the Corporations Act is set
out in, and forms part of, this Report.
Details of the amounts paid or payable to PwC or EY for
non-audit services provided during the Financial Year are
set out in Table 13.
Table 13
Non-audit Services
Services
EY audit-related services
EY non-audit related services
EY Total
PwC auditing or reviewing financial reports
PwC non-audit services
PwC Total
FY20
$64,871
$60,000
$124,871
$379,338
–
$379,338
FY19
$755,750
$67,917
$823,667
–
–
–
Page 31
Shine Justice Ltd Annual Report 2020 Auditor’s
Independence Declaration
A copy of the Auditor’s independence
declaration required under section
307C of the Corporations Act is set
out on page 36.
the Financial Year, with many team
members working from home and
providing services remotely. The
transition to remote working was
implemented with minimal disruption
to the delivery of services.
Declarations
Simon Morrison (as Managing
Director & CEO) and Ravin Raj (as
Chief Financial Officer) have each
provided a declaration to the Board
in accordance with section 295A
of the Corporations Act that, in
their opinion, the financial records
of the Group have been properly
maintained, the financial statements
and notes in this Report comply with
the accounting standards and give
a true and fair view of the Group’s
financial position and performance
and that the opinion has been formed
on the basis of a sound system of
risk management and internal control
which is operating effectively.
Rounding of Amounts
In accordance with ASIC
Corporations (Rounding in Financial/
Directors’ Reports) Instrument
2016/191, amounts in the Directors’
Report and the financial statements
are rounded to the nearest thousand
dollars, unless otherwise indicated.
Operating and
Financial Review
Principal Activities
The principal activities of the Group
during the year were the provision
of legal services throughout
Queensland, Victoria, Western
Australia and New South Wales and
the conduct of an insurance recovery
consulting business in New Zealand.
No significant changes in the nature
of the Company’s principal activities
occurred during the Financial Year.
The COVID-19 pandemic impacted
the manner in which services were
provided during the second half of
Overview and Strategies
The objective of the Board is
to create and deliver long-term
shareholder value through the
provision of a range of diversified
legal services, both in terms of
service offerings and geographical
reach. Whilst each area of the
Group’s business activities
holds significant value and
makes a substantial contribution
towards achieving this objective,
management of the synergies arising
from the various business activities is
critical to achieving the objective.
Whilst the Company was founded
in Queensland, a core element of
the Group strategy is to continue
to extend its reach into other
jurisdictions to mitigate the impact
of exposure to a single market.
The Group has been successful in
achieving this with more than two
thirds of its revenue in FY20 earned
in markets outside Queensland
personal injuries. As the Group’s
personal injury products operate
under state government schemes,
diversification into other markets is
important in respect of managing
exposure to tort reform.
The Group also has a clear objective
of diversifying its product range
across Australia in plaintiff centric
damages based litigation.
The Board believes that the best
way to operate in the personal
injury markets in Australia is with the
benefit of scale and as a listed entity.
Through its critical mass, the Group
is able to leverage its investment
in technology and provide better
training and access to specialisation
for staff.
Review of Operations
The Group specialises primarily in
damages based plaintiff litigation
legal services, primarily relating to
personal injury.
The balance of the Financial Year’s
revenue was derived from other
practice areas, including class
actions, family law, medical law,
dust diseases and abuse law.
Measures were taken to further the
integration of all of our brands into
the Group, predominantly in the
areas of technology, growth, culture
and policy alignment.
Personal Injury
Shine Lawyers continued to
specialise in damages based plaintiff
litigation legal services, primarily
relating to personal injuries.
The Group continued to optimise
traditional and digital advertising,
adapting content to respond
to changing emphasis in client
concerns as the COVID-19 pandemic
evolved. We strengthened our brand
presence and recognition across all
regions, especially Queensland.
The Group’s Western Australian
businesses continued to perform
well. Stephen Browne Lawyers
experienced growth in its personal
injury business and commenced
work in superannuation and
disability insurance. Bradley
Bayly experienced strong growth
in abuse matters, following law
reform removing the limitation
period for childhood sexual abuse
compensation claims.
Sciacca’s Lawyers strengthened
and performed steadily during the
Financial Year.
New Practice Areas
Our class actions division continued
to grow in FY20.
We were delighted to announce
the successful outcome in court
proceedings in one of Australia’s
largest product liability class actions,
commenced in 2012, relating to faulty
Page 32
Damages Based Plaintiff Litigation
The Group continues to execute
its strategy to grow all areas of its
damages based plaintiff litigation
business, but with a focus on
growing other specialties at a
faster rate than the personal injury
practice area. The Group intends
to grow in the future organically and
through acquisitions.
Whilst personal injury litigation
remains a significant part of the
strategy, the Group also considers
other opportunities to broaden
its service offerings, including
in response to the business and
community impacts of the
COVID-19 pandemic.
Tort Reform
The New South Wales Government
passed regulatory reform in relation
to the compulsory third party scheme
in that State in FY18.
Although tort reform initiatives pose
risks for the Group’s business, it has
considerable experience adapting its
business model to regulatory change.
Tort reform presents opportunities,
particularly in the acquisition of
smaller practices which do not have
the systems in place to deal with
complex regulatory changes.
prolapse mesh and tape implants.
The decision is subject to an appeal
which will be vigorously defended.
If ultimately successful, the litigation
is expected to deliver justice for
many thousands of Australian women
left with life altering complications
from the defective implants.
Settlement was reached in class
actions against the Commonwealth
Department of Defence for residents
in the Queensland town of Oakey
and in Katherine in the Northern
Territory in relation to claims for
property and business losses due
to exposure to toxic firefighting
chemicals. An action has now
also been filed for property losses
affecting up to 40,000 residents
in seven other affected Australian
locations similarly exposed to
firefighting chemicals.
Class actions have now also been
filed on behalf of passengers and
their families affected by the deadly
outbreak of coronavirus on board
the Ruby Princess cruise ship, on
behalf of workers subject to “sham”
contracting arrangements rather
than employment arrangements with
incident benefits and on behalf of
insurance customers who received
unethical financial advice.
Shine Lawyers continued to be
a leading voice for the rights of
Australians subjected to institutional
abuse. We represented more than
1,200 victims in abuse compensation
claims (1,000 in FY19).
Through our work in representing
stonemasons with dust diseases,
we ignited a national conversation
about the nationwide silica exposure
epidemic sweeping through the
stonemason industry. We continue to
represent stonemasons whilst at the
same time urging ministers in all states
and territories, as well as at Federal
level, to act by implementing rigorous
regulation of the industry to safeguard
against deadly silica exposure. In July
2019, the Queensland Government
launched a register to record the
occurrence of silicosis and other
occupational dust diseases.
In May 2019, we launched an
innovative new product – an online
platform servicing small Queensland
motor vehicle claims under a
separate brand, Claimify. Building
on this technology and the learnings
provided, we have now launched
Super Online, a streamlined and
client-focused superannuation and
disability platform which will allow us
to expand our areas of practice to
include total and permanent disability
insurance claims, including assisting
clients with small entitlements. Super
Online is a digital disruptor in the
industry and as far as we are aware
is the only one of its kind in Australia.
The tool gives clients greater access
and flexibility in managing their claims
and absolute transparency as to
the process. It allows us to be more
efficient and thus provide quicker and
better outcomes and a user friendly
experience for our clients.
Our Queensland family law practice,
Best Wilson Buckley, was impacted
by personnel departures which
affected work levels. A number
of measures have now been
implemented to right-size the
business with a view to improved
performance in FY21.
Carr & Co, our family law practice in
Perth, was impacted by court closures
due to the COVID-19 pandemic,
but a return to greater productivity
is expected with the easing of
restrictions in Western Australia.
Risk Worldwide New Zealand
Limited continued to operate in the
loss adjusting and insurance policy
recovery business in New Zealand,
with a focus on residential claims
under the brand ‘My Insurance Claim’.
Our Land, Energy and Resources
business (Emanate) continued to
operate in a challenging sector.
Future Developments
and Prospects
The Group will seek to continue to
grow its business by concentrating
on the activities and strategies
outlined below.
Page 33
Shine Justice Ltd Annual Report 2020 International Opportunities
While the Directors believe there are
ample opportunities for the Group to
continue to grow domestically, they
will continue to monitor opportunities
internationally and maintain a
’watching brief‘ on the UK and
US legal markets.
Consolidated
Financial Conditions
The Group seeks to maintain an
optimal capital structure by ensuring
that there is an appropriate balance
of debt and equity. The current
target is a maximum interest-bearing
debt to equity ratio of 30%. At 30
June 2020, the ratio was 29%. The
Group utilises a combination of short
and long term debt to ensure that it
has an appropriate level of liquidity
available throughout the financial year.
The Group’s finance facilities with
the Commonwealth Bank of Australia
(CBA) continued substantially
unchanged for the Financial Year.
Details of these facilities are set out
in the Financial Report.
The finance facilities are subject
to financial covenants including a
gearing ratio (borrowings cannot
exceed 50% of net WIP) and debt to
EBITDA ratio (not to exceed 2.25:1).
The Group was in compliance with
these financial covenants as at
30 June 2020 and has headroom
available to increase funding levels
if required.
In addition to the CBA facilities,
the Group also has disbursement
funding providers that can support
eligible clients with funds to cover
disbursements in relation to their
claims. The use of disbursement
funding is expected to continue to
improve operating cash flow in future
years as client disbursements have
a diminishing impact on the Group’s
operating cash flows. Details of the
disbursement funding facilities are set
out in Note 7(f) in the Financial Report.
The Group will generally only seek
to raise new capital for material
events. No material events are
currently proposed.
Risk Management and
Governance Practices
The Group’s business is subject
to risk factors, both specific to its
business activities and risks of a
general nature. The risks the
Directors highlight below do not
represent all risks associated with
the Group, but represent, in the
Directors’ opinion, the material
business risks. The most significant
factors relating to future financial
performance are set out in the
following commentary.
Conflict of Duties
The Group, through those
subsidiaries engaged in the provision
of legal services, has a paramount
duty to the Court, first, and then to its
clients. Those duties prevail over the
Group’s duty to shareholders. There
may be instances where the Group
and its lawyers, in fulfilling their
duties to the Court or to the client
(or both), act other than in the best
interests of shareholders.
To mitigate this risk, the Group
has strong case management
systems and processes to identify
such conflicts so that they can be
avoided or appropriately managed.
COVID-19 Pandemic
The Group closely monitored and
responded to the potential impacts
on its business of the COVID-19
pandemic during the second half of
the Financial Year. The Group has
at all times acted, and continues to
act, in accordance with applicable
government and health authority
directions and advice in relation
to the pandemic in each of the
Australian States in which it operates
and in New Zealand. The majority
of team members transitioned
to effective working from home
arrangements and remote work
practices (including virtual client
meetings and court appearances),
with consistent support and guidance
from a dedicated response team,
with team members returning to the
office as and when appropriate.
The Group will continue to monitor
the evolving pandemic closely.
The Group’s strategy of growing all
areas of damages based plaintiff
litigation helps to diversify the
Group’s revenue stream and lessen
the impact of the pandemic on any
particular work type.
Regulatory Environment
The Group operates in a regulated
environment. Its business operations
could be adversely affected by
actions of State, Territory and
Commonwealth governments,
including changes in legislation,
guidelines and regulations that
affect the areas of law in which the
Group practises.
To mitigate this risk, the Group’s
senior legal practitioners seek
to meet with policymakers and
participate in stakeholder working
groups when reform is being
considered in the areas of law in
which the Group practises. This
Financial Year, the Group provided
submissions to the Parliamentary
Joint Committee on Corporations
and Financial Services inquiry into
Litigation Funding and the Regulation
of the Class Action Industry.
In addition, the Group’s strategy
of growing all areas of damages
based plaintiff litigation, helps to
diversify the Group’s revenue stream
and lessen the impact of individual
legislative reform.
The Group’s acquisitions in family
and class actions in FY19 assist by
diversifying into alternative areas of
practice and lessening the impact of
individual legislative reform.
WIP Recoverability
Because the Group operates largely
on a speculative fee basis and in
areas of law where the ultimate
recovery of fees is regulated, failure
Page 34
to recover WIP is a key risk. Given the
inherent uncertainty associated with
determining WIP recoverability, the
Group has taken measures to ensure
its case management systems and
processes are designed to mitigate
the risk of failing to realise booked
revenue. This exposure is greater
in relation to class actions as the
WIP exposure on a single matter is
higher. The Group seeks to mitigate
this risk by adopting appropriate case
selection methodologies and utilising
litigation funding.
To mitigate risk in relation to the
personal injuries practice area, and
as part of the Group’s commitment
to continuously improve its case
management systems and processes,
a new case management system
has been implemented to assist in
improving WIP recoverability
and predictability.
Growth and Integration Risk
There is a risk that the Group may be
unable to manage its future growth
successfully. Historically, the Group
has grown through a combination
of organic growth and acquisitions.
That growth strategy will continue,
and may include new practice areas
and locations. A variety of factors,
including unexpected integration
issues, might cause future growth
to be implemented less successfully
than it has in the past.
To mitigate this risk, the Group
continually refines its growth criteria
to ensure that strategic alignment,
adequate financial return and
integration risks are considered
before expansion opportunities
are approved.
Our People
The Group depends on the talent
and experience of its people.
In particular, the Group’s growth
is reliant on attracting and retaining
professional fee-earning staff.
Should any of its key people or a
significant number of other people
leave the Group, particularly to work
for a competitor, this may have an
adverse effect on the Group. It may
be difficult to replace them, or to do
so in a timely manner or at
comparable expense.
The Group continues to focus on
recruiting high calibre employees
closely aligned to its values.
The Group attracts, retains and
incentivises talent by promoting
its values based culture and
by providing an environment
where individuals and teams
are recognised, rewarded and
inspired to deliver outcomes for
clients. Celebrating successes and
milestones is encouraged.
Brand and Reputational Risk
The success of the Group is reliant
on its reputation and its brands.
Anything that diminishes the Group’s
reputation or its brands could have
a significantly adverse financial
effect. In particular, the actions of
the Group’s employees, including
breaches of relevant regulations
or negligence in the provision of
legal advice, could damage the
Group’s brands and diminish future
profitability and growth.
To mitigate this risk, the Group has
strong case management systems
and processes to identify cases
where brand and reputation risk could
emerge, particularly through the initial
case selection process. The Group
also has a disciplined public relations
process to ensure that the views of
the Group are not misrepresented.
As the Group has alliances with
high profile individuals, including
Erin Brockovich, any harm to the
reputation of those individuals may
also negatively impact the Group.
Professional Services Sector Risk
The Group operates in a sector of
the market place with few other listed
entities. As such, its Share price can
be impacted by events affecting other
participants in this sector.
Digital Disruption & Cybersecurity
The Group monitors threats from
digital technology in order to ensure
that, where possible, it is positioned
to respond appropriately.
The Group monitors cybersecurity
threats given the potential
consequences of a cybersecurity
breach, including but not limited to,
unauthorised access or disclosure
(inadvertent or otherwise) of
personal information held by the
Group. From time to time, the Group
engages cybersecurity experts to
provide an independent assessment
of the Group’s exposures and
protective measures.
The Group has strengthened
controls and training in response
to increased risks arising from the
COVID-19 pandemic.
Economic, Environmental and
Social Sustainability Risks
The material economic risks
associated with the Group’s business
are discussed above under ‘WIP
Recoverability’ and ‘Growth and
Integration Risk’.
The Directors do not believe the
Group has any material exposure
to environmental risk.
However, the Group recognises
that environmental sustainability is
a critical component in a responsible
and ethical management strategy
and has adopted an Environmental
Sustainability Policy to reflect its
commitment to conducting
business in an environmentally
responsible manner.
Other than the risks discussed under
‘Brand and Reputational Risk’ above,
the Directors do not believe the
Group has any material exposure
to social sustainability risk.
This Directors’ Report is signed
in accordance with a resolution of
Directors made pursuant to section
298(2) of the Corporations Act.
On behalf of the Directors,
Graham Bradley AM
Chairman
Brisbane, 28 August 2020
Page 35
Shine Justice Ltd Annual Report 2020
AUDITOR’S INDEPENDENCE DECLARATION
Page 36
CORPORATE GOVERNANCE STATEMENT
The Board recognises the positive relationship between
the creation and delivery of long-term shareholder
value and corporate governance. Shine’s corporate
governance framework fosters the values of integrity,
respect, trust and openness among and between the
Board members, management, employees, clients,
suppliers and shareholders.
The ASX Corporate Governance Council’s Corporate
Governance Principles and Recommendations (fourth
edition) (Principles and Recommendations) set out
recommended corporate governance practices for
ASX listed entities. The Principles and Recommendations
state that they are designed to ‘achieve good governance
outcomes and meet the reasonable expectations
of most investors in most situations’. The following
assessment of the Group’s practice against the Principles
and Recommendations as at 30 June 2020 has been
approved by the Board.
Principles and Recommendations
Shine Justice Group’s Compliance
Principle 1 Lay solid foundations for management and oversight: A listed entity should clearly delineate the respective roles and
responsibilities of its board and management and regularly review their performance.
1.1 A listed entity should have and
disclose a board charter setting out:
(a) the respective roles and
responsibilities of its board and
management; and
(b) those matters expressly reserved
to the board and those delegated
to management.
1.2 A listed entity should:
(a) undertake appropriate checks
before appointing a director
or senior executive or putting
someone forward for election
as a director; and
(b) provide security holders with
all material information in its
possession relevant to a decision
on whether or not to elect or re-
elect a director.
1.3 A listed entity should have a written
agreement with each director and
senior executive setting out the terms
of their appointment.
1.4 The company secretary of a listed
entity should be accountable directly
to the board on all matters to do with
the proper functioning of the board.
The Board is responsible for demonstrating leadership and for the overall
strategic guidance and corporate governance of the Shine Justice Group.
It has distinguished which functions and responsibilities are reserved for the
Board and those which are delegated to management. This is set out in the
Board Charter, which also sets out the role of the Chairman, Directors and
management. The Board Charter is available on the Company’s website
(www.shinejustice.com.au).
Shine Justice conducts appropriate checks to verify the suitability of
candidates considered for nomination to the Board, having regard to each
candidate’s character, experience, education and skills, in addition to any
interests and associations of the candidate.
Comprehensive biographical information is provided to shareholders in
notices of meeting to enable them to make an informed decision on whether
to elect or re-elect a Director.
All Directors and senior executives have a written agreement which formalises
the terms of their appointment.
Each Director commits to a letter of appointment which specifies the term
of their appointment, the envisaged time commitment, expectations and
duties relating to the position, remuneration, disclosure and confidentiality
obligations, insurance and indemnity entitlements, details of the Company’s
corporate governance policies and reporting lines.
Each member of the Leadership Team enters into a contract which describes
their role and duties, remuneration and termination rights and entitlements.
The Company Secretary is accountable to the Board for facilitating the
Company’s corporate governance processes and the functioning of the
Board. The Board is responsible for the appointment and removal of the
Company Secretary, and all Directors are able to access the advice and
services of the Company Secretary.
Details of the Company Secretary’s qualifications and experience are
available on the Company’s website and are set out on page 16.
Page 37
Shine Justice Ltd Annual Report 2020
Principles and Recommendations
Shine Justice Group’s Compliance
Shine Justice aims to actively promote a culture that supports diversity in the
workplace and in the composition of its Board and senior management and
throughout the Group. Shine Justice defines diversity as including, but not
limited to, diversity of gender, age, ethnicity and cultural background.
Shine Justice’s Diversity Policy is disclosed on the Company’s website and
sets out its objectives and reporting practices regarding diversity.
The Nomination and Remuneration Committee reviews and reports to the
Board on the Group’s diversity profile with a view to setting meaningful
targets for the advancement of diversity within the Group. Targets for
FY20 included to:
— target gender balance across all roles;
— meet or exceed a target of 30% female representation on the Board;
— analyse gender pay parity across the Group with a view to resolving any
inconsistencies by the end of FY22;
— identify and agree opportunities to align Shine Lawyers workforce to reflect
the general Australian population in areas such as (but not limited to) age,
gender, sexual orientation, disability and ethnicity;
— partner with an industry organisation to onboard First Nations People and
establish a targeted program by FY22 including the implementation of a
Reconciliation Action Plan; and
— introduce a formal Inclusion and Diversity Program by FY22.
Work continues to identify and achieve an appropriate gender balance
at all levels, to analyse and achieve gender pay parity and to introduce
a Reconciliation Action Plan and formal Inclusion and Diversity Program
during FY21.
As at 30 June 2020:
— 25% of the Board members were women
(30% of the Non-executive Directors);
— 58% of the Leadership Team were women; and
— 79% of the Group’s team members were women.
The Board regularly undertakes an evaluation process to assess its
performance, including periodic assessments conducted by an independent
third party consultant who seeks Board and management feedback on the
performance of the Board and Board committees, as well as feedback on
individual Directors and the Group’s reporting and governance practices.
The Board renewal process which was completed during 2020 included a
detailed internal evaluation of the skills, knowledge, experience, independence
and diversity required to ensure that the renewed Board and its Committees are
ideally placed to perform their governance and other functions.
Further information about the annual review process is outlined in the Board
Charter and the Nomination and Remuneration Committee Charter available
on the Company’s website.
The Nomination and Remuneration Committee is responsible for evaluating
the performance of the Leadership Team.
The Chairman is also responsible for periodically reviewing the performance
of the Managing Director & CEO.
A review of the performance of the Leadership Team and the Managing
Director & CEO in FY19 was undertaken during the Financial Year and a
review of their performance in FY20 is in progress.
1.5 A listed entity should:
(a) have and disclose a diversity policy;
(b) through its board or a committee
of the board set measurable
objectives for achieving gender
diversity in the composition of
its board, senior executives and
workforce generally; and
(c) disclose in relation to each
reporting period:
(1) the measurable objectives
set for that period to achieve
gender diversity;
(2) the entity’s progress towards
achieving those objectives; and
(3) relevantly, the respective
proportions of men and
women on the board, in senior
executive positions and across
the whole workforce.
1.6 A listed entity should
(a) have and disclose a process
for periodically evaluating the
performance of the board, its
committees and individual
directors; and
(b) disclose for each reporting
period whether a performance
evaluation has been undertaken
in accordance with that process
during or in respect of that period.
1.7 A listed entity should:
(a) have and disclose a process
for periodically evaluating the
performance of its senior executives
at least once every reporting period;
and
(b) disclose for each reporting period
whether a performance evaluation
was undertaken in accordance with
that process during or in respect of
that reporting period.
Page 38
Principles and Recommendations
Shine Justice Group’s Compliance
Principle 2 Structure the Board to add value: The board of a listed entity should be of an appropriate size and collectively have the
skills, commitment and knowledge of the entity and the industry in which it operates, to enable it to discharge its duties effectively
and to add value.
2.1 The board of a listed entity should:
(a) have a nomination committee which
has at least three members,
a majority of whom are independent
directors and is chaired by an
independent director; and
(b) disclose the charter, members
and meeting attendance of
the committee.
A Nomination and Remuneration Committee with its own charter and
consisting of all three of the independent Directors was in place during the
Financial Year. The Nomination and Remuneration Committee was chaired
at all times by an independent Director (by Tony Bellas during the Financial
Year and by Graham Bradley from 1 July 2020). Details of the Nomination
and Remuneration Committee’s functions are set out in the Nomination
and Remuneration Committee Charter which is available on the Company’s
website. Details of the number of meetings and attendance by the Directors at
those meetings is disclosed on page 13.
2.2 A listed entity should have and
disclose a board skills matrix, setting
out the mix of skills and diversity that
the board currently has or is looking to
achieve in its membership.
The skills, knowledge and experience set out in Table 14 below have been
identified as those that are required for the effective management of the
Group. The Board possesses broad coverage of these skills and attributes.
Further details regarding the skills and experience of each Director are
included on pages 14 and 15.
Table 14
Directors’ Skills Matrix
Directors’ Skill
Governance
Experience with listed company governance principles and practices.
Financial Literacy
Experience with public company financial reporting and accounting and internal financial controls.
Strategy Development
Experience in developing and implementing effective competitive strategies in service-based industries.
Public Policy and Regulation
Knowledge of the ethical principles and regulations applicable to professional legal services.
Risk and Compliance
Experience in oversight of business risks and regulatory compliance applicable to legal practices.
Industry Experience
Knowledge of the commercial and societal dynamics that determine supply and demand in the market for legal services.
People Management and Remuneration
Experience in managing a people-intensive business with a sound organisational culture and strong corporate values and designing
effective remuneration policies to support values and performance.
Innovation
Experience in overseeing technological change and innovation.
Mergers & Acquisitions
Experience in oversight of strategic acquisitions and integration of acquired businesses.
Page 39
Shine Justice Ltd Annual Report 2020
Principles and Recommendations
Shine Justice Group’s Compliance
2.3 A listed entity should disclose:
(a) the names of the directors that the
board considers to be independent
directors; and
(b) if a director has an interest,
position or relationship of the
type described in Box 2.3 of the
Principles and Recommendations,
but the board is of the opinion
that it does not compromise the
director’s independence, the
nature of the interest, position and
relationship and an explanation of
why the board is of that opinion.
2.4 A majority of the board should be
independent directors.
The Group currently has a four member Board, of whom three (Graham Bradley,
Teresa Dyson and David Bayes) are considered to be independent.
During the term of their appointments, former Chairman Tony Bellas and
former Non-executive Directors Carolyn Barker and Greg Moynihan were
considered to be independent.
None of the Directors who are considered to be independent has an
interest, position or relationship described in Box 2.3 of the Principles and
Recommendations.
The date of appointment of each Director and details of their skills and
experience are set out on pages 13 to 15 and on the Company’s website.
Three of the four Board members are considered to be independent –
Graham Bradley, Teresa Dyson and David Bayes.
In accordance with the Board Charter which is available on the Company’s
website, a Director is considered independent if the Director is independent of
management and free of any business or other relationship that could materially
interfere, or be perceived as interfering, with the exercise of an unfettered and
independent judgment in relation to matters concerning the Company.
2.5 The chairman of the board should be
an independent director and should
not be the CEO.
The Chairman, Graham Bradley, is an independent Non-executive Director.
Former chairman Tony Bellas, was an independent Non-executive Director
throughout FY20. Simon Morrison is the Group’s Managing Director & CEO.
2.6 A listed entity should have a program
for inducting new directors and for
periodically reviewing whether there
is a need for existing directors to
undertake professional development
to maintain the skills and knowledge
needed to perform their role as
directors effectively.
The Nomination and Remuneration Committee is responsible for induction
and continuous development programs for Directors. An induction program
has been conducted for Graham Bradley, Teresa Dyson and David Bayes
when they joined the Board during FY20. Directors are encouraged to
undertake continuing professional development activities each year and to
join appropriate professional associations in order to continually develop and
enhance their respective levels of industry knowledge, technical knowledge
and other skills required to discharge their role effectively.
Principle 3 Instil a culture of acting lawfully, ethically and responsibly: A listed entity should instil and continually reinforce a culture
across the organisation of acting lawfully, ethically and responsibly.
3.1 A listed entity should articulate and
disclose its values.
The Shine Justice Group’s values are integral to its operations at all levels.
They are included on its intranet and website, are embedded regularly
throughout the business in a variety of formats and are set out on page 4.
3.2 A listed entity should:
(a) have and disclose a code of
conduct for its directors, senior
executives and employees; and
(b) ensure that the board or a committee
of the board is informed of any
material breaches of that code.
3.3 A listed entity should:
(a) have and disclose a whistleblower
policy; and
(b) ensure that the board or a committee
of the board is informed of any material
incidents reported under the policy.
3.4 A listed entity should:
(a) have and disclose an anti-bribery
and corruption policy; and
(b) ensure that the board or a committee
of the board is informed of any
material breaches of that policy.
Shine Justice has a Code of Conduct for Directors, executives, employees,
consultants and contractors which sets out the fundamental principles of
business conduct expected by the Company. The Code of Conduct is
available on the Company’s website.
Any breaches of the Code of Conduct are reported to the Audit & Risk
Management Committee. No breaches were reported during FY20.
The Shine Justice Group has a Whistleblower Policy under which any unlawful,
unethical or improper conduct may be reported, including anonymously.
Any material incidents reported under the policy are reported to the Audit & Risk
Management Committee. No material incidents were reported during FY20.
The Shine Justice Group’s anti-bribery and corruption policy is included in its
Code of Conduct, which is available on the Company's website.
Any material breaches of the policy are reported to the Audit & Risk
Management Committee. No breaches were reported during FY20.
Page 40
Principles and Recommendations
Shine Justice Group’s Compliance
Principle 4 Safeguard the integrity of corporate reports: A listed entity should have appropriate processes in place to verify the integrity
of its corporate reports.
4.1
The board of a listed entity should:
(a) have an audit committee with at
least three members, all of whom
are non executive directors and a
majority of whom are independent
directors, is chaired by an
independent chairman who is not
the chair of the board; and
(b) disclose the charter of the
committee, the qualifications and
experience of its members and their
attendance at committee meetings.
4.2 The board should, before it approves
the financial statements for a financial
period, receive from its CEO and CFO
a declaration that, in their opinion, the
financial records of the entity have
been properly maintained and that the
financial statements comply with the
appropriate accounting standards and
give a true and fair view of the financial
position and performance of the entity
and that the opinion has been formed
on the basis of a sound system of risk
management and internal control which
is operating effectively.
4.3 A listed entity should disclose its
process to verify the integrity of any
periodic corporate report it releases
to the market that is not audited or
reviewed by an external auditor.
The Board has an Audit & Risk Management Committee, comprised of the
three independent Non-executive Directors and chaired by an independent
Non-executive Director (Greg Moynihan during FY20 and Teresa Dyson
from 1 July 2020). Further details about the membership of the Audit &
Risk Management Committee, including the names and qualifications of its
members, are set out on pages 14 and 15.
The Charter of the Audit & Risk Management Committee is available on the
Company’s website along with information about its members. The number
of meetings held by the Committee and the Directors’ attendance at meetings
is disclosed each year in the Group’s annual report and can be found on page
13 for FY20.
The Managing Director & CEO and the CFO each provide a statement to the
Board and the Audit & Risk Management Committee in advance of seeking
approval of any financial report to the effect that the Group’s risk management
and internal compliance and control systems are operating efficiently and
effectively in all material respects.
In accordance with the above, the Board has received a written assurance
that the declaration provided under section 295A of the Corporations Act is
based on a sound system of internal control and risk management, which is
operating effectively in all respects in relation to material business risks and
financial reporting.
The Group’s half year financial statements are reviewed by its external auditor
and its full year financial statements are audited by its external auditors.
A verification process is undertaken in relation to the Directors’ Report and
any part of this document which is not audited, to ensure that it is materially
accurate, balanced and provides investors with appropriate information to
make informed investment decisions. The process includes compiling a
record of verification material for any material statement of fact.
Principle 5 Make timely and balanced disclosure: A listed entity should make timely and balanced disclosure of all matters concerning it
that a reasonable person would expect to have a material effect on the price or value of its securities.
5.1 A listed entity should have and
disclose a written policy for complying
with its continuous disclosure
obligations under Listing Rule 3.1.
The Company has a Continuous Disclosure Policy which is designed to
ensure that all material matters are appropriately disclosed in a balanced and
timely manner and in accordance with the requirements of the Listing Rules.
The policy sets out the processes and practices that ensure compliance with
these requirements.
The Continuous Disclosure Policy is published on the Company’s website.
5.2 A listed entity should ensure that its
board receives copies of all material
market announcements promptly after
they have been made.
In accordance with the Continuous Disclosure Policy, material market
announcements are approved by each of the Directors in advance whenever
practicable. If for any reason that was not possible, they would receive a copy
immediately following release.
5.3 A listed entity that gives a new
and substantial investor or analyst
presentation should release a copy
of the presentation materials on the
ASX Markets Announcement Platform
ahead of the presentation.
New and substantial investor or analyst presentations are released to the
market ahead of presentation.
Page 41
Shine Justice Ltd Annual Report 2020
Principles and Recommendations
Shine Justice Group’s Compliance
Principle 6 Respect the rights of security holders: A listed entity should provide its security holders with appropriate information and
facilities to allow them to exercise their rights as security holders effectively.
6.1 A listed entity should provide
information about itself and its
governance to investors via
its website.
6.2 A listed entity should have an
investor relations program that
facilitates effective two-way
communication with investors.
The Company’s website contains extensive information about the Company,
its values and business activities and other information relevant to investors.
Investors may access copies of ASX announcements, notices of meeting and
annual reports, as well as general information about the Company, on the
Company’s website.
The Company conducts regular market briefings, including interim and full
year results presentations, investor roadshows and briefings and also attends
industry conferences in order to facilitate communication with investors and
other stakeholders. Presentation material is provided to ASX and uploaded
to the Company’s website to ensure that all shareholders have timely access
to information. The Company aims to ensure that all shareholders are well
informed of all major developments affecting the Group.
6.3 A listed entity should disclose
how it facilitates and encourages
participation at meetings of
security holders.
Shareholders are encouraged to attend the Company’s annual general
meeting and to ask questions of Directors. The notice of meeting includes
a process to enable shareholders to submit questions to the Board and the
Company’s auditor prior to the meeting.
6.4 A listed entity should ensure that all
All resolutions at the Company’s general meetings are decided by a poll.
substantive resolutions at a meeting of
security holders are decided by a poll
rather than by a show of hands.
6.5 A listed entity should give security
holders the option to receive
communications from, and send
communications to, the entity and
its security registry electronically.
Shine provides its investors with the option to receive communications
from, and send communications to, the Company and the share registry
electronically.
Principle 7 Recognise and manage risk: A listed entity should establish a sound risk management framework and periodically review the
effectiveness of that framework.
7.1
The board should
(a) have a committee to oversee risk
which has at least three members, a
majority of whom are independent
directors and is chaired by an
independent director; and
(b) disclose the charter, members
and meeting attendance of the
committee.
The Board has an Audit & Risk Management Committee, comprised of the
three independent Non-executive Directors and chaired by an independent
Non-executive Director. Further details about the membership of the Audit
& Risk Management Committee, including the names and qualifications of its
members, are set out on pages 14 and 15.
The Charter of the Audit & Risk Management Committee is available on the
Company’s website along with information about its members. The number of
meetings held by the Committee and the Directors’ attendance at meetings is
disclosed each year in the Group’s annual report and can be found on page 13
for FY20.
The Board is responsible for the oversight and management of risk,
including the identification of material business risks on an ongoing basis
and is assisted by the Audit & Risk Management Committee where required.
A review of material business risks has been conducted in the current
period, which concluded that controls over risk management processes were
adequate and effective.
7.2 The board or a committee of the
board should:
(a) review the entity’s risk
management framework with
management at least annually to
satisfy itself that it continues to
be sound and that the entity is
operating with due regard to the
risk appetite set by the board; and
(b) disclose, in relation to each
reporting period, whether such
a review has taken place.
Page 42
Principles and Recommendations
Shine Justice Group’s Compliance
7.3 A listed entity should disclose, if it
has an internal audit function, how
the function is structured and what
role it performs.
The Company has an Internal Audit function which reports directly to the
Chair of the Audit & Risk Management Committee in order to maintain its
independence. The Internal Audit & Risk Manager reviews the systems of
internal control and risk management to ensure compliance with the Group’s
published policies and procedures and its legal and regulatory obligations.
Reviews of specific areas of risk or control are undertaken by a combination
of internal and external parties on an ad-hoc basis and by the Company’s
internal and external auditors as required for the Group’s audit. Improvements
are made where identified to increase the effectiveness of the Group’s
internal controls.
7.4 A listed entity should disclose
whether the company has any material
exposure to environmental or social
risks and, if it does, how it manages or
intends to manage those risks.
The Group’s exposure to material business risks is disclosed in the Directors’
Report on pages 34 and 35. The Directors do not believe the Group has any
material exposure to environmental or social risks.
During FY20, the Group adopted an Environmental Sustainability Policy and
a Modern Slavery Policy (and supporting Supplier Code of Conduct), each of
which appear on the Group’s website.
Principle 8 Remunerate fairly and responsibly: A listed entity should pay director remuneration sufficient to attract and retain high quality
directors and design its executive remuneration to attract, retain and motivate high quality senior executives and to align their interests
with the creation of value for security holders and with the entity’s values and risk appetite.
8.1 The board should:
(a) have a remuneration committee
which has at least three members,
the majority of whom are
independent directors and which
is chaired by an independent
director; and
(b) disclose the charter, members
and meeting attendance of
the committee.
8.2 A listed entity should separately
disclose its policies and practices
regarding the remuneration of
non-executive directors, and the
remuneration of executive directors
and other senior executives.
8.3 A listed entity which has an equity-
based remuneration scheme should:
(a) have a policy on whether
participants are permitted to enter
into transactions (whether through
the use of derivatives or otherwise)
which limit the economic risk of
participating in the scheme; and
(b) disclose that policy or a summary
of it.
A Nomination and Remuneration Committee, consisting of all of the
independent Directors and chaired by an independent Director, assisted the
Board to discharge its responsibilities in relation to remuneration and issues
relevant to remuneration policies and practices, including those for senior
management and Non-executive Directors, during the Financial Year.
The number of meetings held by the Committee and the Directors’ attendance
at meetings is disclosed each year in the Group’s annual report and can be
found on page 13 for FY20. The Charter of the Committee is available on the
Company’s website.
The Company seeks to attract and retain high-performing Directors and
executives with the experience, skills and qualifications necessary to add
value to the Company and fulfil the roles required. Accordingly, the Company
seeks to recruit by offering remuneration which is competitive for comparable
executive roles.
Further information about key factors affecting Director and executive
remuneration are disclosed each year in the Remuneration Report which can
be found commencing on page 18.
Details of the Group’s equity based remuneration scheme are set out in the
Remuneration Report which can be found commencing on page 18.
The equity based remuneration scheme prohibits transactions which conflict
with the Group’s Securities Trading Policy (which prohibits Directors and
executives from entering into margin lending arrangements or short-term
trading in relation to Company securities). A copy of the Securities Trading
Policy is available on the Company’s website.
Page 43
Shine Justice Ltd Annual Report 2020
FINANCIAL REPORT
Page 44
The Group settled or resolved more than
5,600 cases during the year and procured
damages in excess of $730 million.
Page 46
Financial statements
These financial statements are
consolidated financial statements
for the Group consisting of Shine
Justice Ltd and its subsidiaries. A list
of subsidiaries is included in Note 14.
The financial statements are presented in
Australian currency.
Shine Justice Ltd is a company limited by shares,
incorporated and domiciled in Australia. Its registered
office and principal place of business is:
Shine Justice Ltd
Level 13, 160 Ann St
Brisbane QLD 4000
The financial statements were authorised for issue by
the directors on 28 August 2020. The Directors have the
power to amend and reissue the financial statements.
All press releases, financial reports and other
information are available at our Investors Centre
on our website www.shinejustice.com.au.
48
49
50
52
53
Consolidated statement
of profit or loss
Consolidated statement
of comprehensive income
Consolidated balance sheet
Consolidated statement
of changes in equity
Consolidated statement
of cash flows
Shine Justice Ltd Annual Report 2020
Page 47
Consolidated statement of profit or loss
Revenue from contracts with customers
Other income
Employee benefits expense
Depreciation and amortisation expense
Finance costs
Impairment expense
Other expenses
Profit before income tax
Income tax expense
Profit for the period
Profit is attributable to:
Owners of Shine Justice Ltd
Non-controlling interest
Earnings per share for profit attributable to the ordinary
equity holders of the company:
Basic earnings per share
Diluted earnings per share
Notes
3(a)
5(a)
4(a)
5(d)
4(b)
5(c)
6
14(b)
Notes
21(a)
21(b)
2020
$’000
180,799
2,233
(92,110)
(12,053)
(7,313)
–
(39,366)
32,190
(10,637)
21,553
21,476
77
21,553
2020
Cents
12.40
12.13
2019
$’000
175,991
1,912
(92,267)
(12,425)
(7,736)
(5,000)
(37,899)
22,576
(8,544)
14,032
13,953
79
14,032
2019
Cents
8.06
7.92
Page 48
Consolidated statement of comprehensive income
Notes
2020
$’000
2019
$’000
Profit for the period
Other comprehensive income
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations
9(c)
Other comprehensive income for the period net of tax
21,553
14,032
(270)
(270)
126
126
Total comprehensive income for the period
21,283
14,158
Total comprehensive income for the period is attributable to:
Owners of Shine Justice Ltd
Non-controlling interest
14(b)
21,206
77
21,283
14,079
79
14,158
Page 49
Shine Justice Ltd Annual Report 2020 Consolidated balance sheet
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Contract assets – work in progress
Income tax receivable
Unbilled disbursements
Other financial assets at amortised cost
Other current assets
Total current assets
Non-current assets
Trade receivables and other receivables
Contract assets – work in progress
Unbilled disbursements
Plant and equipment
Other financial assets at amortised cost
Right of use assets
Intangible assets
Total non-current assets
Notes
2020
$’000
2019
$’000
7(d)
7(a)
3(c)
8(e)
7(c)
7(b)
8(f)
7(a)
3(c)
7(c)
8(a)
7(b)
8(b)
8(c)
32,812
10,876
181,565
322
67,240
313
2,983
26,697
10,020
172,996
306
59,595
459
2,870
296,111
272,943
1,528
123,537
22,028
3,234
4,385
40,647
48,949
1,703
109,975
18,701
3,286
3,404
47,624
47,944
244,308
232,637
Total assets
2(d)
540,419
505,580
LIABILITIES
Current liabilities
Trade and other payables
Disbursement creditors
Borrowings
Lease liabilities
Other current financial liabilities
Current tax liabilities
Employee benefit obligations
Provisions
Total current liabilities
Page 50
7(e)
7(e)
7(g)
8(b)
7(e)
8(e)
8(g)
8(h)
13,485
83,644
4,075
7,549
154
215
7,619
214
14,503
65,441
3,581
7,484
1,090
247
6,453
283
116,955
99,082
Consolidated balance sheet (continued)
LIABILITIES
Non-current liabilities
Trade and other payables
Borrowings
Lease liabilities
Deferred tax liabilities
Employee benefit obligations
Provisions
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Share capital
Other reserves
Retained earnings
Capital and reserves attributable to the owners of Shine Justice Ltd
Non-controlling interests
Total equity
Notes
7(e)
7(g)
8(b)
8(d)
8(g)
8(h)
2020
$’000
2,535
48,424
40,898
91,649
1,293
1,445
2019
$’000
2,515
50,832
47,054
81,146
1,188
1,355
186,244
184,090
2(d)
303,199
283,172
237,220
222,408
53,223
380
183,514
237,117
103
53,150
187
168,966
222,303
105
237,220
222,408
9(a)
9(c)
9(d)
14(b)
Page 51
Shine Justice Ltd Annual Report 2020 Consolidated statement of changes in equity
Attributable to owners of Shine Justice Ltd
Share
capital
Other
reserves
Retained
earnings
Total
Non-
controlling
interests
Total
equity
Notes
$’000
$’000
$’000
$’000
$’000
$’000
Balance at 1 July 2018
53,150
(331)
165,321
218,140
Effect of adoption of new accounting standards
–
–
(4,247)
(4,247)
Balance at 1 July 2018 (restated)
53,150
(331)
161,074
213,893
Profit for the period
Arising from business combination
Other comprehensive income
9(c)
Total comprehensive income for the period
Transactions with owners in their
capacity of owners
Dividends paid
Employee share schemes –
value of employee services
13(b)
19(c)
–
–
–
–
–
–
–
–
–
–
79
26
–
218,140
(4,247)
213,893
14,032
26
126
13,953
13,953
–
–
–
126
–
–
126
126
13,953
14,079
105
14,184
–
(6,061)
(6,061)
392
–
392
392
(6,061)
(5,669)
–
–
–
(6,061)
392
(5,669)
Balance at 30 June 2019
53,150
187
168,966
222,303
105
222,408
Balance at 1 July 2019
Profit for the period
Other comprehensive income
9(c)
Total comprehensive income for the period
Transactions with owners in their
capacity of owners
Dividends paid
Deferred ordinary shares
Employee share schemes –
value of employee services
13(b)
19(c)
53,150
187
168,966
222,303
105
222,408
–
–
–
–
73
–
73
–
21,476
21,476
(270)
–
(270)
(270)
21,476
21,206
77
–
77
21,553
(270)
21,283
–
(6,928)
(6,928)
(79)
(7,007)
(45)
508
–
–
28
508
–
–
28
508
463
(6,928)
(6,392)
(79)
(6,471)
Balance at 30 June 2020
53,223
380
183,514
237,117
103
237,220
Page 52
Consolidated statement of cash flows
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Disbursements recovered
Disbursements paid
Interest received
Finance costs
Income taxes paid
Net cash inflow from operating activities
Cash flows from investing activities
Payments for plant and equipment
Payments for acquisition of subsidiary and payment for files
Purchase of receivables
Loans to related parties
Payment for intangible assets
Net cash outflow from investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Proceeds from disbursement funding
Repayment from disbursement funding
Principal elements of lease payments
Asset finance facility repayments
Dividends paid to company’s shareholders
13(b)
Dividends paid to non-controlling interests in subsidiaries
Net cash outflow from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at end of year
1 The 2019 cashflows relating to disbursement funding have been reclassified to be consistent with the current year presentation.
Notes
2020
$’000
2019 1
$’000
5(a)
10(a)
8(a)
175,566
(144,389)
23,685
(24,570)
406
(5,657)
(287)
24,754
(1,085)
(258)
(678)
(980)
(3,441)
(6,442)
2,259
(1,891)
24,103
(19,834)
(7,528)
(2,281)
(6,928)
(79)
(12,179)
6,133
26,697
(18)
32,812
174,517
(148,959)
23,630
(20,954)
301
(7,673)
(224)
20,638
(950)
(4,238)
–
(531)
(1,009)
(6,728)
3,000
(65)
52,433
(49,415)
(7,616)
(2,093)
(6,061)
–
(9,817)
4,093
22,549
55
26,697
Page 53
Shine Justice Ltd Annual Report 2020 Contents of the notes of
the financial statements
The notes include information which
is required to understand the financial
statements and is material and relevant
to the operations, financial position and
performance of the Group. Information
is considered material and relevant if,
for example:
— The amount in question is significant because of its
size or nature
— It is important for understanding the results of the
Group
— It helps to explain the impact of significant changes
in the Group’s business – for example, acquisitions,
disposals and impairment write downs, and
— It relates to an aspect of the Group’s operations that
is important to its future performance
Significant and other accounting policies that summarise
the measurement basis used and are relevant to an
understanding of the financial statements are provided
throughout the notes to the financial report.
Page 54
56
Note 1 Significant changes in
the current reporting period
How numbers are calculated
58
63
67
68
70
72
86
Note 2 Segment information
Note 3 Revenue
Note 4 Material profit or
loss information
Note 5 Other income and
expense items
Note 6 Income tax expense
Note 7 Financial assets and
financial liabilities
Note 8 Non-financial assets
and non-financial liabilities
103
Note 9 Equity
106
Note 10 Cash flow information
Risk
110
111
Further details
Note 11 Critical estimates,
judgements and errors
130
Note 18 Related party
transactions
Note 12 Financial risk
management
133
Note 19 Share-based payments
119
Note 13 Capital management
of auditors
138
Note 20 Remuneration
Group structure
139
Note 21 Earnings per share
122
Note 14 Interests in other entities
141
Note 22 Deed of cross guarantee
Unrecognised items
144
Note 23 Parent entity
financial information
126
Note 15 Contingent liabilities and
contingent assets
146
Note 24 Summary of other
significant accounting policies
127
Note 16 Commitments
149
128
Note 17 Events occurring after
the reporting period
Note 25 Changes in
accounting policies
Shine Justice Ltd Annual Report 2020
Page 55
Note 1
Significant changes in the current reporting period
The Group remains well placed to grow revenue
through ongoing practice innovation.
It has sufficient headroom to enable it to conform to
covenants on its existing borrowings and sufficient
working capital and undrawn financing facilities to
service its operating activities.
The Group settled or resolved more than 5,600
cases during the year and procured client damages
in excess of $730 million.
Bayly experienced strong growth in abuse matters,
following law reform removing the limitation period
for childhood sexual abuse compensation claims.
Emerging business risks
The Group has reviewed its exposure to emerging
business risks, that could impact the financial
performance or financial position of the Group
as at 30 June 2020 as follows:
New Practice Area segment
An increase in revenue was primarily as a result of
significant growth in the Abuse and the Disability and
Super business as well as the contribution of Carr and
Co full first year revenue as a result of the acquisition of
the business on 1 January 2019.
During the year, our class actions division continued to
grow. We were delighted to announce the successful
outcome in court proceedings in one of Australia’s
largest product liability class actions, commenced in
2012, relating to faulty prolapse mesh and tape implants.
The decision is subject to an appeal but if ultimately
successful, the litigation is expected to deliver justice
for many thousands of Australian women left with life
altering complications from the defective implants.
Settlement was reached in class actions against the
Commonwealth Department of Defence for residents
in the Queensland town of Oakey and in Katherine in
the Northern Territory in relation to claims for property
and business losses due to exposure to toxic
firefighting chemicals.
Personal Injury segment
A decrease in revenue was primarily as a result of
slight underperformance compared to the previous
comparative period.
Shine Lawyers continued to specialise in damages-
based plaintiff litigation legal services, primarily relating
to personal injuries. We continued to optimise traditional
and digital advertising, adapting content to respond to
changing emphasis in client concerns as the COVID-19
pandemic evolved. We strengthened our brand
presence and recognition across all regions,
especially Queensland.
The Group’s Western Australian businesses continued
to perform well. Stephen Browne Lawyers experienced
growth in its personal injury business and commenced
work in superannuation and disability insurance. Bradley
COVID-19 Pandemic Impact
The Group closely monitored and responded to the
potential impacts on its business of the COVID-19
pandemic during the second half of the year. There has
been limited impact from COVID-19 on the operations and
financial results of the Group highlighting the following:
The COVID-19 pandemic impacted the way services
were provided during the second half of the year, with
many staff working from home and providing services
remotely. The transition to remote working was
implemented with minimal disruption to the delivery
of services or impact on enquiries, case management
or settlements
Financial results for FY20 were slightly above forecast
(including Q4)
The Group had $28.7 million net cash at bank (cash
at bank less short-term borrowings), and sufficient
liquidity in its banking facilities
Liquidity levels remain consistent, with the net current
asset position remaining unchanged at $179 million
(31 December 2019: $179 million)
The pipeline of new work is tracking well, with
new case numbers through Q3 and Q4 remaining
consistent with prior year numbers
There was a favourable spike in new enquiries
occurring in June 2020 due to an increase in motor
vehicle claims as drivers took to the road after
lockdown, but also due to a number of Mesh class
action cases being recorded, and
Carr & Co, our family law practice in Perth, was
impacted by court closures due to the COVID-19
pandemic, but a return to productivity is expected
with the easing of restrictions in Western Australia.
There were no other significant business risks that
impacted the financial performance or financial position
of the Group as at 30 June 2020.
For a detailed discussion about the Group’s performance
and financial position please refer to our operating and
financial review on pages 32 to 35.
Page 56
How numbers are calculated
This section provides additional
information about those individual
line items in the financial statements
that the directors consider most relevant
in the context of the operations of the
entity, including:
(a) accounting policies that are relevant for an
understanding of the items recognised in the financial
statements. These cover situations where the
accounting standards either allow a choice or do not
deal with a particular type of transaction
(b) analysis and subtotals, including segment
information, and
(c) information about estimates and judgements made
in relation to particular items.
58
63
67
68
70
72
86
Note 2 Segment information
Note 3 Revenue
Note 4 Material profit or
loss information
Note 5 Other income and
expense items
Note 6 Income tax expense
Note 7 Financial assets and
financial liabilities
Note 8 Non-financial assets
and non-financial liabilities
103
Note 9 Equity
106
Note 10 Cash flow information
Shine Justice Ltd Annual Report 2020
Page 57
Note 2
Segment information
(a) Description of segments
and principal activities
The Group’s Managing Director examines the Group’s
performance from a legal service perspective and has
identified two reportable segments of its business:
(i) Personal Injury
In addition, brands included within this segment are:
Emanate Legal Services Pty Ltd
Best Wilson Buckley Family Law Pty Ltd
Shine NZ Services Pty Ltd
Risk Worldwide New Zealand Limited
My Insurance Claim Pty Ltd
Personal injury remains the core business in damages-
based plaintiff litigation.
Carr & Co Divorce and Family Lawyers Pty Ltd, and
files acquired within ACA Lawyers Pty Limited.
The Shine Lawyers Core PI business includes:
motor vehicle accidents
workers’ compensation
public liability, and
catastrophic injuries
In addition, brands included within this segment are:
SB Law Pty Ltd
Sciacca’s Lawyers Pty Ltd
Bradley Bayly Holdings Pty Ltd, and
files acquired within Claims Consolidated Pty Ltd
(ii) New Practice Areas
The business undertaken by Risk Worldwide New
Zealand Limited and My Insurance Claim does not meet
the specific criteria in AASB 8 Operating Segments which
means it is not considered as its own reporting segment.
Therefore, as both businesses currently account for
significantly less than 10% of the Group revenue, profit
or assets, this business has been grouped under New
Practice Areas, as permitted under AASB 8.
(iii) Other
The column includes corporate head office and
Group services.
The Managing Director primarily uses a measure of
adjusted earnings before interest, tax, depreciation
Shine Justice's New Practices Areas was renamed from
Emerging Practices Area during the year.
and amortisation (EBITDA), and
gross operating cash flow (GOCF)
to assess the performance of the operating segments.
However, the Managing Director also receives
information about the segments’ revenue and assets on
a monthly basis.
Information about segment revenue is disclosed in
Note 3.
The Shine Lawyers NPA business includes:
abuse law
disability insurance and superannuation claims
asbestos and dust disease
Federal compensation law
medical law
class actions
commercial disputes
employment, and
private client services
Accounting policy
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision maker.
The Managing Director assesses the financial performance and position of the Group and makes
strategic decisions.
Page 58
Segment information
(b) EBITDA
Interest income and finance costs are not allocated to segments, as this type of activity is driven by the Group finance
function, which manages the cash position of the Group.
EBITDA is not an IFRS measure and excludes those costs which are managed by the Group finance function.
EBITDA reconciles to operating profit after income tax as follows:
Profit after income tax
Finance costs – net
Depreciation and amortisation
Goodwill impairment
Income tax expense
Interest revenue
EBITDA
EBITDA based on the operations of the segments is shown below:
Personal Injury
New Practice Area
Other
2020
$’000
21,553
7,313
12,053
–
10,637
(406)
51,150
2020
$’000
32,844
17,720
586
51,150
2019
$’000
14,032
7,736
12,425
5,000
8,544
(301)
47,436
2019
$’000
35,820
12,138
(522)
47,436
Page 59
Shine Justice Ltd Annual Report 2020 Segment information
(c) GOCF
The CODM utilises GOCF as a key measure to monitor cashflow generated from operations.
GOCF is not an IFRS measure and excludes those costs which are managed by the Group finance function.
GOCF reconciles to Net cash inflows from operating activities as follows:
Cash inflow from operating activities
Net cashflows from disbursement funding
Finance costs paid
Income taxes paid
Interest received
GOCF
2020
$’000
2019
$’000
24,754
20,638
4,269
5,657
287
(406)
3,018
7,673
224
(301)
34,561
31,252
(d) Segment assets
Segment assets are measured in the same way as in the financial statements. These assets are allocated based on the
operations of the segment.
Personal Injury
New Practice Areas
Other
2020
$’000
305,948
233,449
1,022
540,419
The total of non-current assets other than financial instruments, broken down by location of the assets, is
shown below.
2020
$’000
209,817
3,719
213,536
Australia
New Zealand
Page 60
2019
$’000
309,983
185,724
9,873
505,580
2019
$’000
204,019
4,809
208,828
Segment information
(e) Segment liabilities
Segment liabilities are measured in the same way as in the financial statements. These liabilities are allocated based
on the operations of the segment.
The Group’s borrowings and are not considered to be segment liabilities but are managed by the Group
finance function.
Personal Injury
New Practice Areas
Other
Total segment liabilities
Unallocated:
Deferred tax liabilities
Borrowings
Total liabilities as per the balance sheet
2020
$’000
99,394
55,816
4,487
2019
$’000
94,705
53,308
507
159,697
148,520
91,649
51,853
303,199
81,146
53,506
283,172
Page 61
Shine Justice Ltd Annual Report 2020
Note 3
Revenue
(a) Revenue from contracts with customers
The Group derives revenue from the transfer of services over time under contracts that are either no-win-no-fee or
time and materials based, with a fee that is either fixed or variable in the following major segment lines:
Personal Injury
New Practice Areas
Other
Total
2020
2019
2020
2019
2020
2019
2020
2019
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Legal services
No-win-no-fee variable
114,117
118,385
41,034
34,879
No-win-no-fee fixed fee
Time and materials
–
–
–
–
6,123
4,454
19,525
18,273
Revenue from external customers
114,117
118,385
66,682
57,606
–
–
–
–
–
–
–
–
155,151
153,264
6,123
4,454
19,525
18,273
180,799
175,991
(b) Other revenue
Personal Injury
New Practice Areas
Other
Total
2020
2019
2020
2019
2020
2019
2020
2019
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Interest income
Service management fee
Other revenue
–
–
192
192
–
–
70
70
–
–
90
90
–
–
128
128
406
1,545
–
301
1,413
–
406
1,545
282
301
1,413
198
1,951
1,714
2,233
1,912
(c) Total segment revenue
Personal Injury
New Practice Areas
Other
Total
Total segment revenue
114,309
118,455
66,772
57,734
1,951
1,714
183,032
177,903
Revenue from external customers come from the provision of legal services. The revenue from both Personal Injury
and New Practice Areas relates to the Shine Lawyers brand as well as other major brands.
Page 62
The Group does not derive any revenue from any single external customer which is greater than 10% of total revenue.
The amount of revenue from external customers broken down by location of the customers is shown below.
Revenue
Australia
New Zealand
2020
$’000
178,820
1,979
180,799
(d) Assets and liabilities related to contracts with customers
The Group has recognised the following assets and liabilities related to contracts with customers:
Current contract assets relating to work in progress
Non-current contract assets relating to work in progress
Total contract assets
There are no liabilities relating to contracts with customers.
2020
$’000
181,565
123,537
305,102
2019
$’000
174,239
1,752
175,991
2019
$’000
172,996
109,975
282,971
Accounting policy
Work in progress (WIP) represents costs incurred and profit recognised on client cases that are in progress and
have not yet been invoiced at the end of the reporting date. The recoverability of these amounts is assessed by
management and any amounts in excess of the net recoverable value are provided for.
The Company recognises WIP where it is highly probable that the WIP will be recovered on completion of the
matter. In assessing the probability of a significant reversal of revenue and hence WIP, Shine reviews the historical
recovery rates of closed cases across similar matter types and stages of completion for the past 12 months. The
calculated closed file recovery rate includes both matters that were billed and those that were closed with no fee.
Shine incorporates actuarial methodologies to assist in analysing its WIP recoverability rates. Cases that have
been identified as unlikely to be successful but not yet closed are not considered to be highly probable and no
WIP or revenue is recognised for these matters.
WIP and revenue recognition on some larger cases, such as class actions and major claims, consider the specific
aspects of each case or class action, including any third-party funding arrangements that may be applicable to
the action. Where there is a risk of a material reversal of revenue in a future period the revenue and associated
work in progress in relation to those matters are not recognised in the current reporting period. Historical
experience and knowledge of the client cases has been used to determine the net realisable value of work
in progress at balance date and the classification between current and non-current.
Page 63
Shine Justice Ltd Annual Report 2020 Revenue
(iii) Legal services: Time and materials
The Group earns revenue through a broad range of
disciplines within its New Practice Areas segment.
Fee arrangements include fixed fee arrangements
and unconditional fee for service arrangements (time
and materials). Revenue is recognised over time in the
accounting period when services are rendered.
For unconditional time and materials contracts, revenue is
recognised in line with the amount of fees that the Group
is entitled to invoice for services performed to date based
on contracted rates. The Group has taken advantage
of the practical expedient as set out in AASB 15 as the
Group has a right to consideration from a customer in an
amount that corresponds directly with the value to the
customer of the Group’s performance completed to date
(as matters are billed for a fixed amount for each hour of
service provided) and as such the Group has recognised
revenue in the amount to which the Group has a right to
invoice less any constraint on variable consideration.
(e) Revenue streams
(i) Legal services: No-win-no-fee variable
This revenue stream operates based on contingent fee
arrangements, whereby fees are earned only if there is
a successful outcome of a matter. Revenue is recognised
on a time recorded and materials basis net of any
constraint of variable consideration.
Certain larger matters including some class actions are
undertaken on a partially or fully funded basis. The Group
has arrangements with third party funders to provide a
portion of the fees receivable over time as services are
performed. In such arrangements, the funded portion of
fees is billed and recognised as revenue regularly over
time and is not contingent on the successful outcome
of the matter. The remaining portion of fees is variable
consideration which is conditional on the successful
resolution of the litigation. The variable consideration is
included in revenue as services are performed only to
the extent that it is highly probable that the amount will
not be subject to significant reversal when the uncertainty
is resolved.
(ii) Legal services: No-win-no-fee fixed
This revenue stream operates based on contingent fee
arrangements, whereby fees are earned only if there is a
successful outcome of a matter.
Revenue is recognised on a time recorded and materials
basis net of any constraint of variable consideration.
Certain larger matters including some class actions are
undertaken on a partially or fully funded basis. The Group
has arrangements with third party funders to provide a
portion of the fees receivable over time as services are
performed. In such arrangements, the funded portion of
fees is billed and recognised as revenue regularly over
time and is not contingent on the successful outcome
of the matter. The remaining portion of fees is variable
consideration which is conditional on the successful
resolution of the litigation. The variable consideration is
included in revenue as services are performed only to
the extent that it is highly probable that the amount will
not be subject to significant reversal when the uncertainty
is resolved.
Page 64
Revenue
Accounting policies and significant judgements
(i) Estimating variable consideration
Where consideration in respect of a contract is
variable, revenue can only be recognised to the
extent that it is highly probable that the cumulative
amount of revenue recognised in respect of a contract
will not be subject to a significant reversal when the
uncertainty associated with the variable consideration
is subsequently resolved (this is referred to as the
‘constraint’ requirement).
The Group has determined statistically that its existing
modelling for expected losses for contingent matters
is materially compliant with the constraint requirements
for variable consideration.
(ii) Performance obligations
Performance obligations within contracts outline the
specific goods and services that are to be delivered
to the customer over the life of the contract. For legal
services, contracts with clients generally comprise
a single distinct performance obligation, being the
provision of services in pursuit of the successful
settlement of a customer’s claim, and the transaction
price is allocated to this single performance obligation.
Some contracts contain multiple deliverables – for
example in respect of a statutory claim and a common
law claim, or initial pre-issue work and litigation work.
In such circumstances, these multiple deliverables are
considered to represent a single distinct performance
obligation, given there is a significant level of
integration performed by the Group in delivering
these services.
(iii) Transaction price – variable
The Group provides various services based on
contingent fee arrangements. The uncertainty around
the fees ultimately receivable under these types of
contracts is generally only fully resolved when a matter
is concluded.
Where the Group has sufficient historical experience
in similar contracts in order to be able to estimate the
expected outcome of a Group of existing contracts
reliably, revenue is estimated using the “expected
value” method. Revenue is recognised only to the
extent that it is highly probable that the cumulative
amount of revenue recognised in respect of a contract
at the end of a reporting period will not be subject to
significant reversal when a matter is concluded.
To determine the probability of success of a case using
the expected value method, a level of judgement
is required to be applied based on past experience
and historical performance of similar matters. The
estimated amount of variable consideration is based
on the expected fee for the nature of the legal service
provided with reference to historical fee levels and
relative rates of successful and unsuccessful outcomes.
Where historical averages are not predictive of the
probability of outcomes for a given contract, or where
the Group has limited historical experience with
similar contracts, the expected amount of variable
consideration is estimated using a most likely amount
approach on a contract by contract basis. In such
circumstances, a level of judgement is required to
determine the likelihood of success of a given matter,
as well as the estimated amount of fees that will be
recovered in respect of the matter.
Estimates of revenues, costs or extent of progress
toward completion are revised if circumstances
change. Any resulting increases or decreases in
estimated revenues or costs are reflected in profit or
loss in the period in which the circumstances that give
rise to the revision become known by management..
(iv) Measuring progress of completion
Revenue is recognised when control of a service is
transferred to the customer. The Group recognises
revenue in matters ‘over time’ (as opposed to at a
‘point in time’) as the customer receives and consumes
the benefits of the contract as the Group provides the
promised goods and services. A stage of completion
approach is used to measure progress towards
completion of the performance obligation.
The stage of completion is determined using either:
— Time recorded productivity adjusted for potential
billing write-offs and unsuccessful matters, or
— Judgement based estimates of percentage
completion. The percentage of completion is
determined by comparing the work performed
to date against the expected fee to be billed at
the conclusion of the matter, considering the
approximate amount of time incurred and any
potential uplifts/downsides that may be present
upon completion.
(v) Disbursements
Disbursements (costs from third parties in relation
to matters) are arranged on behalf of the client.
The Group cannot influence the services or goods
provided by disbursement suppliers, therefore no
Page 65
Shine Justice Ltd Annual Report 2020 Revenue
paying for goods and services in arrears, the Group is
effectively providing financing to the customer.
The Group has determined that no significant financing
component exists in respect of its revenue streams.
The reasoning for this decision is as follows:
— For contingent matters, a substantial amount of the
consideration promised by the customer is variable
subject to the occurrence or non-occurrence of
a future event that is not substantially within the
control of the customer or the Group, and
— With respect to fee for service and fixed fee
arrangements, the period between when the entity
transfers a promised good or service to a customer
and when the customer pays for that good or
service will be one year or less.
profit margin is recognised on the activities when
clients are on-charged the cost incurred by the
Group. The Group acts as an agent for disbursements
and no revenue is recognised. The disbursements
recoverable at the end of the matter are treated as a
separate financial asset measured at fair value through
the profit or loss.
(vi) Conversion of WIP to receivable
The conversion of WIP to a receivable in relation to
services is recognised when a bill has been raised, as
this is the point in time that the consideration becomes
unconditional because only the passage of time is
required before the payment is due. For no-win-no-fee
matters, billing occurs when the matter is successfully
resolved. For non-contingent revenue contracts,
billing occurs over the life of the contract in line with
contractual terms.
(vii) No significant financing component
Generally, the Group provides services to customers
over multiple accounting periods. When a customer is
Page 66
Note 4
Material profit or loss information
The Group has identified several items which are material due to the significance of their nature and/or amount.
These are listed separately here to provide a better understanding of the financial performance of the Group.
Profit for the period includes the following items that are unusual
because of their nature, size or incidence
(a) Depreciation and amortisation expense
Plant and equipment
Right of use assets
Transformation project costs
Computer software
Erin Brockovich agreement
Non-contractual client relationships
Other
(b) Impairment expense
Goodwill
Notes
2020
$’000
2019
$’000
8(a)
8(b)
8(c)
8(c)
8(c)
8(c)
951
8,669
1,788
79
104
464
(2)
1,020
9,214
1,729
–
113
348
1
12,053
12,425
–
5,000
Page 67
Shine Justice Ltd Annual Report 2020 Note 5
Other income and expense items
This note provides a breakdown of the items included in other income, other gains/(losses), costs and an analysis of
expenses by nature. Information about specific profit and loss items (such as gains and losses in relation to financial
instruments) is disclosed in the related balance sheet notes.
(a) Other income
Services management fee
Interest income
Other
(i) Interest income
2020
$’000
1,545
406
282
2,233
2019
$’000
1,413
301
198
1,912
Interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset
except for financial assets that subsequently become credit impaired. For credit impaired financial assets, the effective
interest rate is applied to the net carrying amount of the financial asset (after deduction of the loss allowance).
(ii) Services management fee
Sales of goods, rent and services to Shine Lawyers New Zealand, an affiliated entity of the Group. Refer to Note 18 for
further detail.
(b) Other gains/(losses)
Net gain/(loss) on disposal of plant and equipment
Net foreign exchange gains/(losses)
2020
$’000
207
17
224
2019
$’000
(67)
34
(33)
Page 68
Other income and expense items
(c) Breakdown of expenses by nature
Notes
Premises
Marketing
HR
IT and computer
Printing, postage and stationery
Professional fees
Fair value losses on unbilled disbursements
7 (h)
Motor vehicle and travel
Bad and doubtful debts
Sundry
(d) Finance costs
2020
$’000
4,030
12,733
2,717
5,657
1,513
3,846
5,870
1,205
1,098
697
2019
$’000
4,202
11,843
3,041
5,060
2,169
5,268
4,090
1,267
899
60
39,366
37,899
Interest and finance charges paid/payable for lease liabilities
Disbursement funding related interest
Transformation Project Funding facility interest
Interest on other loans
Other
Notes
8(b)
2020
$’000
2,816
1,493
387
2,420
197
7,313
2019
$’000
3,015
1,029
485
3,096
111
7,736
Page 69
Shine Justice Ltd Annual Report 2020 Note 6
Income tax expense
This note provides an analysis of the Group’s income tax expense, shows what amounts are recognised directly in
equity and how the tax expense is affected by non-assessable and non-deductible items. It also explains significant
estimates made in relation to the Group’s tax position.
(a) Income tax expense
Current tax
Current tax on profits for the year
Total current tax expense
Deferred income tax
(Increase) in deferred tax assets
Increase in deferred tax liabilities
Total deferred tax expense
Notes
8(d)
8(d)
2020
$’000
156
156
(2,362)
12,843
10,481
2019
$’000
173
173
(1,110)
9,481
8,371
Total income tax expense
10,637
8,544
(b) Numerical reconciliation of income tax expense to prima facie tax payable
income tax expense
2020
$’000
2019
$’000
Profit before income tax expense
32,190
22,576
Tax at the Australian tax rate of 30% (2019: 30%)
9,657
6,773
Tax effect of amounts which are not deductible (taxable) in calculating taxable income:
Goodwill impairment
Movement in work in progress
Amortisation of intangibles
Non-allowable items
Adjustments for current tax of prior periods
–
304
139
57
480
1,500
–
104
51
116
Income tax expense
10,637
8,544
Page 70
(c) Tax losses
Australia
Tax losses for which a deferred tax asset has been recognised
Potential tax benefit @ 30%
New Zealand
Tax losses for which a deferred tax asset has been recognised
Potential tax benefit @ 30%
Income tax expense
2020
$’000
49,387
14,816
2,101
630
2019
$’000
44,517
13,355
2,666
800
Accounting policy
Current income tax
The income tax expense or credit for the period is the
tax payable on the current period’s taxable income
based on the applicable income tax rate for each
jurisdiction adjusted by changes in deferred tax assets
and liabilities attributable to temporary differences
and to unused tax losses. The current income tax
charge is calculated based on the tax laws enacted or
substantively enacted at the end of the reporting period
in the countries where the company and its subsidiaries
and associates operate and generate taxable income.
Management periodically evaluates positions taken in
tax returns with respect to situations in which applicable
tax regulation is subject to interpretation. It establishes
provisions where appropriate based on amounts
expected to be paid to the tax authorities.
Deferred income tax
Deferred income tax is provided in full, using the
liability method, on temporary differences arising
between the tax bases of assets and liabilities and
their carrying amounts in the consolidated financial
statements. However, deferred tax liabilities are not
recognised if they arise from the initial recognition of
goodwill. Deferred income tax is also not accounted
for if it arises from initial recognition of an asset
or liability in a transaction other than a business
combination that at the time of the transaction affects
neither accounting nor taxable profit or loss. Deferred
income tax is determined using tax rates (and laws)
that have been enacted or substantially enacted by
the end of the reporting period and are expected to
apply when the related deferred income tax asset is
realised or the deferred income tax liability is settled.
Deferred tax assets are recognised only if it is
probable that future taxable amounts will be available
to utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised
for temporary differences between the carrying
amount and tax bases of investments in foreign
operations where the company is able to control the
timing of the reversal of the temporary differences and
it is probable that the differences will not reverse in the
foreseeable future.
Deferred tax assets and liabilities are offset where there
is a legally enforceable right to offset current tax assets
and liabilities and where the deferred tax balances
relate to the same taxation authority. Current tax assets
and tax liabilities are offset where the entity has a
legally enforceable right to offset and intends either to
settle on a net basis, or to realise the asset and settle
the liability simultaneously. Current and deferred tax is
recognised in profit or loss, except to the extent that
it relates to items recognised in other comprehensive
income or directly in equity. In this case, the tax is also
recognised in other comprehensive income or directly
in equity, respectively.
Leases
The Group’s lease payments are deductible upon
payment for tax purposes. In accounting for the
deferred tax relating to the lease, the Group considers
both the lease asset and the lease liability separately.
The Group separately accounts for the deferred
taxation on the taxable temporary differences and the
deductible temporary difference, which upon initial
recognition are equal and offset to zero. Deferred tax
is recognised on subsequent changes to the taxable
and temporary differences as net on the balance sheet.
Page 71
Shine Justice Ltd Annual Report 2020 Note 7
Financial assets and financial liabilities
This note provides information about the Group’s financial instruments, including:
an overview of all financial instruments held by the Group
specific information about each type of financial instrument
accounting policies, and
information about determining the fair value of the instruments, including judgements and estimation
uncertainty involved.
The Group holds the following financial instruments:
Financial assets
Assets at amortised cost
Trade and other receivables
Other financial assets
Cash and cash equivalents
Assets at fair value
Unbilled disbursements
Financial liabilities
Liabilities at amortised cost
Trade and other payables
Disbursement creditors
Other financial liabilities
Borrowings
Lease liabilities
Notes
7(a)
7(b)
7(d)
7(c)
Notes
7(e)
7(e)
7(e)
7(g)
8(b)
2020
$’000
12,404
4,698
32,812
49,914
2019
$’000
11,723
3,863
26,697
42,283
89,268
139,182
78,296
120,579
2020
$’000
16,020
83,644
154
52,499
48,447
200,764
2019
$’000
17,018
65,441
1,090
54,413
54,538
192,500
The Group’s exposure to various risks associated with the financial instruments is discussed in Note 12.
The maximum exposure to credit risk at the end of the reporting period is the carrying amount of each
class of financial assets mentioned above.
Page 72
Financial assets and financial liabilities
Accounting policy
Investments and other financial assets
(i) Classification
The Group classifies its financial assets in the following
measurement categories:
— those to be measured subsequently at fair value
(either through other comprehensive income (OCI)
or fair value through profit or loss (FVTPL), and
— those to be measured at amortised cost.
The classification depends on the entity’s business
model for managing the financial assets and the
contractual terms of the cash flows.
For assets measured at fair value, gains and losses
will either be recorded in profit or loss or OCI. For
investments in equity instruments that are not held
for trading, this will depend on whether the Group
has made an irrevocable election at the time of initial
recognition to account for the equity investment at fair
value through other comprehensive income (FVOCI).
The Group reclassifies debt investments when and
only when its business model for managing those
assets changes.
(ii) Recognition and derecognition
Regular way purchases and sales of financial assets are
recognised on trade date, being the date on which the
Group commits to purchase or sell the asset. Financial
assets are derecognised when the rights to receive
cash flows from the financial assets have expired or
have been transferred and the Group has transferred
substantially all the risks and rewards of ownership.
(iii) Measurement
At initial recognition, the Group measures a financial
asset at its fair value plus, in the case of a financial
asset not at FVTPL, transaction costs that are directly
attributable to the acquisition of the financial asset.
Transaction costs of financial assets carried at FVTPL
are expensed in profit or loss.
(iv) Impairment
The Group assesses on a forward-looking basis
the expected credit loss associated with its trade
receivables carried at amortised cost. The impairment
methodology applied depends on whether there has
been a significant increase in credit risk.
The Group applies the simplified approach permitted
by AASB 9, which requires expected lifetime losses
to be recognised from initial recognition of the
receivables, see Note 12(c) for further details.
Page 73
Shine Justice Ltd Annual Report 2020 Financial assets and financial liabilities
(a) Trade and other receivables
Current
Trade receivables from contracts with customers
Loss allowance
Other receivables
Notes
12(c)
Non-current
Trade receivables from contracts with customers
Loss allowance
12(c)
2020
$’000
12,078
(1,664)
10,414
462
10,876
2,106
(578)
1,528
2019
$’000
10,080
(1,306)
8,774
1,244
10,018
2,246
(543)
1,703
12,404
11,721
(i) Transferred receivables
The Group has factoring arrangements with private third parties to factor certain trade receivables. Under this
arrangement, the Group has transferred the relevant receivables to the factor in exchange for cash. These amounts
have been derecognised in the balance sheet. The cash flows from the debtor factoring appears within Receipts from
Customers in the Consolidated Statement of Cash Flow. Future receipts from the factored debtors will be received by
the Group as agent and forwarded on to the factored on a monthly basis, this being the only ongoing involvement of
the Group with the trade receivables derecognised.
The relevant amounts are as follows:
Transferred receivables
Received from factorer
2020
$’000
–
–
2019
$’000
(2,119)
1,822
(ii) Fair values of trade receivables
Due to the short-term nature of the current receivables, their carrying amount is the same as their fair value.
(iii) Impairment and risk exposure
Information about the impairment of trade receivables and the Group’s exposure to credit risk and foreign currency risk
can be found in Notes 12(c) and 12(b).
Page 74
Financial assets and financial liabilities
Accounting policy
Trade and other receivables are amounts due from customers for services performed in the ordinary course of
business. Trade receivables expected to be collected within 12 months of the end of the reporting period are
classified as current. All other trade receivables are classified as non-current.
Trade and other receivables are recognised initially at the amount of consideration that is unconditional unless
they contain significant financing components, when they are recognised at fair value. The Group holds the
trade receivables with the objective of collecting the contractual cash flows and therefore measures them
subsequently at amortised cost using the effective interest method less loss allowance. Details about the
Group’s impairment policies and the calculation of the loss allowance are provided in Note 12(c).
(b) Other financial assets at amortised cost
Financial assets at amortised cost include the following debt investments:
Notes
Current
Loans to related parties (i)
Non-current
Loans to related parties (i)
Less: allowance for expected credit losses
12 (c)
Total
2020
$’000
313
313
4,406
(21)
4,385
4,698
2019
$’000
459
459
3,425
(21)
3,404
3,863
(i) Loans to related parties
Further information relating to loans to related parties is set out in Note 18.
(ii) Impairment and risk exposure
Information about the impairment of loans to related parties and the Group’s exposure to credit risk can be found in
Note 12(c).
Accounting policy
The Group classifies its financial assets as at amortised cost only if both of the following criteria are met:
— the asset is held within a business model whose objective is to collect the contractual cash flows, and
— the contractual terms give rise to cash flows that are solely payments of principal and interest.
Page 75
Shine Justice Ltd Annual Report 2020 (c) Unbilled disbursements
Current
Non-current
Financial assets and financial liabilities
Notes
7(h)
2020
$’000
67,240
22,028
89,268
2019
$’000
59,595
18,701
78,296
(i) Classification as unbilled disbursements
The Group determines the classification between current and non-current by evaluating the expected timing of
settlements and billings of each case, considering historical trends and average length of time that cases are open.
(ii) Fair values of unbilled disbursements
The losses on these assets held at FVTPL are disclosed separately at Note 5(c). It has been assessed whether the
that unbilled disbursements are held at 'at risk' could impact the analysis that Shine is the agent rather than principal
in respect of the disbursements under AASB 15.
In assessing the indicators that an entity might be principal from AASB 15, the Group:
is not responsible for fulfilling the promise of providing the good or service (e.g. Shine is not responsible for
providing a medical report)
does not have inventory risk in respect of the underlying good or service (e.g. in respect of a medical report), and
does not have price discretion in respect of the disbursements (as this sits with the disbursement provider
e.g. the doctor).
None of these indicators are impacted by the fact that the disbursements receivable is at risk, and therefore it has
been assessed as appropriate that Group continues to be considered a principal in respect of disbursements.
See Note 7(h) for more detail relating to the recognition of fair value measurements.
Accounting policy
Disbursements represent costs incurred on behalf of clients during a matter that are recovered from clients.
A fair value adjustment is made to unbilled disbursements based on the Group's history of amounts not
recovered over previous years and a specific assessment of the recoverability of disbursements on major
No-win-no-fee cases such as class actions.
Page 76
(d) Cash and cash equivalents
Current assets
Cash at bank and in hand
Restricted cash
Financial assets and financial liabilities
Notes
10(b)
2020
$’000
31,994
818
32,812
2019
$’000
25,879
818
26,697
(i) Reconciliation to cash flow statement
The above figures reconcile to the amount of cash shown in the statement of cash flows at the end of the financial year
as follows:
Balances as above
Balance per statement of cash flows
Notes
10(b)
2020
$’000
32,812
32,812
2019
$’000
26,697
26,697
(ii) Classification as cash equivalents
Term deposits are presented as cash equivalents if they have a maturity of three months or less from the date of
acquisition and are repayable with 31 days’ notice with an interest adjustment based on the percentage of the original
term elapsed as at the end of the 31 day notice period.
(iii) Restricted cash
The cash and cash equivalents disclosed above and in the statement of cash flows include $818,000 (2019: $818,000)
which are held by Shine Justice Ltd. These deposits are subject to restrictions and are therefore not available for
general use by the other entities within the Group.
During the previous financial year, $818,000 was receipted regarding a matter acquired as part of the ACA Lawyers
acquisition. These funds are held until another specific matter is secured and funding achieved. These conditions had
not been met at 30 June 2020 and therefore $818,000 of cash at bank remains restricted.
Accounting policy
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on
hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original
maturities of three months or less that are readily convertible to known amounts of cash and which are subject
to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in
current liabilities in the balance sheet.
Page 77
Shine Justice Ltd Annual Report 2020 Financial assets and financial liabilities
(e) Trade and other payables
Current
Trade and other payables
Trade payables
Sundry payables and accrued expenses
Staff related payables
Unbilled disbursement creditors
Disbursement funding creditors
Disbursement creditors
Other financial liabilities
Non-current
Notes
7(f)
Deferred consideration – vendor liabilities on acquisition (i)
12(d)
2020
$’000
5,676
2,644
5,165
2019
$’000
6,693
2,608
5,202
13,485
14,503
71,977
11,667
83,644
154
97,283
2,535
2,535
54,543
10,898
65,441
1,090
81,034
2,515
2,515
99,818
83,549
(i) Deferred consideration - vendor liabilities on acquisition
At 30 June 2020, there was $2,515,272 of contingent consideration with respect to the ACA Lawyers acquisition
still outstanding.
Interest has been accrued on the balance amounting to $19,396.
(ii) Disbursement funding creditors
See Note 7(f) for further details.
Page 78
Financial assets and financial liabilities
(iii) Unbilled disbursements creditors
Disbursements payable by Shine which are not funded by an external disbursement funder. These include speculative
matters which are payable on the settlement of a case.
Accounting policy
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial
year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.
Trade and other payables are presented as current liabilities unless payment is not due within 12 months after
the reporting period.
They are recognised initially at their fair value and subsequently measured at amortised cost using the effective
interest method.
Page 79
Shine Justice Ltd Annual Report 2020 (f) Disbursement funding
30 June 2020
Third Party Disbursement Funding Facility
Deferred payment agreement
Principal
Accrued interest
Credit contracts and Exclusive Service Provider Deed
Principal
Accrued interest and fees
Financial assets and financial liabilities
Facility limit
(Principal)
Total facility
balance
Undrawn limit
available
Notes
$’000
$’000
$’000
57,500
n/a
n/a
n/a
n/a
n/a
(52,867)
(14,204)
(67,071)
(4,098)
(808)
(4,906)
7(e)
n/a
(71,977)
30 June 2019
Third Party Disbursement Funding Facility
Deferred payment agreement
Principal
Accrued interest
Deferred settlement agreement
Credit contracts and Exclusive Service Provider Deed
Deed of residential claim disbursements
Deed of assignment disbursement funding
7(e)
47,250
n/a
n/a
1,765
n/a
260
564
n/a
(46,009)
(5,390)
(51,399)
(1,765)
(555)
(260)
(564)
(54,543)
Page 80
4,633
n/a
n/a
n/a
n/a
n/a
n/a
1,241
n/a
n/a
–
n/a
–
–
n/a
Financial assets and financial liabilities
Deferred Payment Agreement
In June 2018, Shine Lawyers entered into a Deferred Payment Agreement with a third party to fund disbursements
incurred on behalf of Shine’s clients. The disbursement funder reimburses Shine for disbursements incurred in respect
of individual client matters. The disbursement funder is subsequently repaid out of settlement proceeds on completion
of the matter. Should there be insufficient proceeds on settlement of a case or a case be unsuccessful Shine has the
primary responsibility to repay the disbursement.
The principal drawdown on the Deferred Payment Agreement at 30 June 2020 is $52,866,718 (2019: $46,008,431)
reflecting total disbursements that are funded. Total accrued interest is $14,204,140 (2019: $5,390,297). The principal
and interest in aggregate represents the Group’s maximum potential exposure.
The facility has a maturity date of 31 December 2020.
Credit contracts and Exclusive Service Provider Deed
In September 2018, Shine Justice Ltd and Shine Lawyers entered into an Exclusive Service Provider Deed to create a
disbursement funding facility with a third party.
Disbursement loans are provided to clients of the Group by the funder for the sole purpose of funding disbursements.
The funding agreement is between the client and the funder. Should there be insufficient proceeds on settlement of a
case or a case be unsuccessful Shine has guaranteed to repay the disbursement on behalf of the client.
There is no limit to the total value of client loans that can be approved by the third party. The total principal drawdown
at 30 June 2020 was $4,098,286 (2019: $357,560).
Accounting policy
The amount of disbursements funded under these facilities is recognised within disbursement funding creditors
(see Note 7(e)) and an offsetting amount is recognised in unbilled disbursements.
A provision is recognised against unbilled disbursements to reflect the value of unrecoverable disbursements
and funding fees which were not expected to be recovered from clients. See Note 7(c) for further detail.
Page 81
Shine Justice Ltd Annual Report 2020 (g) Borrowings
Financing arrangements
The Group’s borrowing facilities were as follows:
Floating rate – bank loans
Expiring within one year
Expiring beyond one year
Transformation project costs loan
Expiring within one year
Expiring beyond one year
Vendor finance
Expiring within one year
Financial assets and financial liabilities
Notes
12(b)
2020
$’000
1,341
45,000
46,341
2,409
3,424
5,833
2019
$’000
908
45,000
45,908
2,283
5,832
8,115
325
390
52,499
54,413
Current
Non-current
10(b)
10(b)
4,075
48,424
3,581
50,832
(i) Compliance with loan covenants
Shine Justice Ltd has complied with the financial covenants of its borrowing facilities during the 2020 and 2019
reporting period, see Note 13(a) for details.
(ii) Fair value
For most of the borrowings, the fair values are not materially different from their carrying amounts, since the interest
payable on those borrowings is either close to current market rates or the borrowings are of a short-term nature.
(iii) Risk exposures
Details of the Group’s exposure to risks arising from current and non-current borrowings are set out in Note 12.
Page 82
Financial assets and financial liabilities
Accounting policy
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently
measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption
amount is recognised in profit or loss over the period of the borrowings using the effective interest method.
Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent
that it is probable that some or all the facility will be drawn down. In this case, the fee is deferred until the draw-
down occurs. To the extent there is no evidence that it is probable that some or all the facility will be drawn
down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility
to which it relates.
Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged,
cancelled or expired. The difference between the carrying amount of a financial liability that has been
extinguished or transferred to another party and the consideration paid, including any non-cash assets
transferred or liabilities assumed, is recognised in profit or loss as other income or finance costs.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement
of the liability for at least 12 months after the reporting period.
Page 83
Shine Justice Ltd Annual Report 2020 Financial assets and financial liabilities
(h) Recognised fair value measurements
(i) Fair value hierarchy
This section explains the judgements and estimates made in determining the fair values of the financial instruments
that are recognised and measured at fair value in the financial statements. To provide an indication about the reliability
of the inputs used in determining fair value, the Group has classified its financial instruments into the three levels
prescribed under the accounting standards. An explanation of each level follows underneath the table.
Recurring fair value measurements
At 30 June 2020
Financial assets
Unbilled disbursements
Total financial assets
Recurring fair value measurements
At 30 June 2019
Financial assets
Unbilled disbursements
Total financial assets
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
–
–
–
–
–
–
–
–
89,268
89,268
89,268
89,268
78,296
78,296
78,296
78,296
There were no transfers into or out of Level 3 fair value measurements during the twelve months ended 30 June 2020.
The Group’s policy is to recognise transfers into and out of fair value hierarchy levels as at the end of the reporting period.
Level 1: The fair value of financial instruments traded in active markets (such as publicly traded derivatives and equity
securities) is based on quoted market prices at the end of the reporting period. The quoted market price used for
financial assets held by the Group is the current bid price. These instruments are included in Level 1.
Level 2: The fair value of financial instruments that are not traded in an active market (for example, over-the-counter
derivatives) is determined using valuation techniques which maximise the use of observable market data and rely as
little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable,
the instrument is included in Level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3.
(ii) Valuation techniques used to determine fair values
Specific valuation techniques used to value financial instruments include:
The use of quoted market prices or dealer quotes for similar instruments
For foreign currency forwards – present value of future cash flows based on the forward exchange rates at the
balance sheet date, and
For other financial instruments – discounted cash flow analysis.
All the resulting fair value estimates are included in Level 3.
Page 84
Financial assets and financial liabilities
(iii) Fair value measurements using significant unobservable inputs
The following table presents the changes in Level 3 items for the periods ended 30 June 2020 and 30 June 2019:
Opening balance 1 July 2018
Impact on adoption of AASB 9
Net additions and settlements
Losses recognised in profit or loss
Interest
Closing balance 30 June 2019
Net additions and settlements
Losses recognised in profit or loss
Interest
Closing balance 30 June 2020
Unbilled
disbursements
Notes
$’000
–
76,236
6,243
(4,090)
(93)
78,296
16,842
(5,870)
–
89,268
7(c)
5(c)
7(c)
(iv) Transfers between levels and changes in valuation techniques
There were no transfers between the levels of the fair value hierarchy in the twelve months to 30 June 2020.
There were also no changes made to any of the valuation techniques applied as of 30 June 2019.
(v) Valuation inputs and relationships to fair value
The following table summarises the quantitative information about the significant unobservable inputs used in Level 3
fair value measurements (see (ii) above for the valuation techniques adopted).
Description
Fair value at 30 June 2020
Unobservable inputs
Relationship of unobservable
inputs to fair value
$’000
Unbilled disbursements
89,268
Internal historical recovery rates
Qualitative individual matters
If the recovery rate was 1%
(higher) or lower, the fair value
would (decrease)/increase by
$938,410
Page 85
Shine Justice Ltd Annual Report 2020 Note 8
Non-financial assets and non-financial liabilities
This note provides information about the Group’s non-financial assets and non-financial liabilities, including:
specific information about each type of non-financial asset and non-financial liability
— plant and equipment: Note 8(a)
— leases: Note 8(b)
— intangible assets: Note 8(c)
— deferred tax balances: Note 8(d)
— current tax balances: Note 8(e)
— other assets: Note 8(f)
— employee benefit obligations: Note 8(g)
— provisions: Note 8(h)
accounting policies
information about determining the fair value of the assets and liabilities, including judgements and estimation
uncertainty involved.
Page 86
Non-financial assets and non-financial liabilities
(a) Plant and equipment
Fixtures
and
fittings
Leased
plant and
equipment
Office
furniture
and
equipment
Computer
equipment
and
software
Make good
allowance
on leased
premises
Total
Notes
$’000
$’000
$’000
$’000
$’000
$’000
NON-CURRENT
Year ended 30 June 2019
Cost or fair value
Accumulated depreciation
Net book amount
6,078
(3,912)
2,166
38
(38)
–
1,941
(1,221)
720
Opening net book amount
4,829
293
1,923
Exchange differences
Additions
Disposals
Acquisition of subsidiary
Depreciation charge
4(a)
Reclassification to right of use assets
Closing net book amount
Year ended 30 June 2020
Cost or fair value
Accumulated depreciation
Net book amount
Opening net book amount
Exchange differences
Additions
Reclassifications
Disposals
Depreciation charge
4(a)
Closing net book amount
6
612
–
27
(609)
(2,699)
2,166
6,853
(4,668)
2,185
2,166
(10)
596
25
–
(592)
2,185
–
–
–
–
(2)
(291)
–
–
–
–
–
–
–
–
–
–
–
(2)
147
–
63
(286)
(1,125)
720
2,306
(1,697)
609
720
3
67
(25)
(3)
(153)
609
816
(416)
400
327
–
191
(1)
4
(121)
–
400
1,014
(574)
440
400
–
422
–
(176)
(206)
440
42
(42)
8,915
(5,629)
–
3,286
263
7,635
–
–
–
–
4
950
(1)
94
(2)
(1,020)
(261)
(4,376)
–
–
–
–
–
–
–
–
–
–
–
3,286
10,173
(6,939)
3,234
3,286
(7)
1,085
–
(179)
(951)
3,234
Page 87
Shine Justice Ltd Annual Report 2020 Non-financial assets and non-financial liabilities
(i) Depreciation methods and useful lives
Depreciation is calculated using the straight-line method to allocate the cost or revalued amounts of the assets, net
of their residual values, over their estimated useful lives or, in the case of leasehold improvements and certain leased
plant and equipment, the shorter lease term.
The depreciation rates are as follows:
Fixtures and fittings
Office and computer and equipment
Vehicles
Leased plant and equipment
Makegood
2.5 – 67%
2 – 67%
20%
10 – 50%
12 – 67%
Accounting policy
The Group’s accounting policy for plant and equipment is stated at historical cost less depreciation. Historical
cost includes expenditure that is directly attributable to the acquisition of the items. Cost may also include
transfers from equity of any gains or losses on qualifying cash flow hedges of foreign currency purchases of
property, plant and equipment.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits associated with the item will flow to the Group and the
cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate
asset is derecognised when replaced. All other repairs and maintenance are charged to profit or loss during the
reporting period in which they are incurred.
The depreciation methods and periods used by the Group are disclosed above.
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each
reporting period.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount
is greater than its estimated recoverable amount (Note 25(c)).
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included
in profit or loss. When revalued assets are sold, it is Group policy to transfer any amounts included in other
reserves in respect of those assets to retained earnings.
Page 88
Non-financial assets and non-financial liabilities
(b) Leases
This note provides information for leases where the Group is a lessee.
(i) Amounts recognised in the balance sheet
The balance sheet shows the following amounts relating to leases:
Right-of-use-assets
Premises
Equipment
Lease liabilities
Current
Non-current
Additions to the right-of-use assets during the 2020 financial year were $2,435,257.
(ii) Amounts recognised in the statement of profit or loss
Notes
4(a)
5(d)
Depreciation charge of right-of-use-assets
Premises
Equipment
Interest expense (included in finance cost)
Expense relating to short-term leases (included in other expenses)
Expense relating to leases of low-value assets that are not shown
above as short-term leases (included in other expenses)
The total cash outflow for leases in 2020 was $10,343,855.
2020
$’000
38,021
2,626
40,647
7,549
40,898
48,447
2020
$’000
(7,505)
(1,164)
(8,669)
(2,816)
(119)
(18)
2019
$’000
45,106
2,518
47,624
7,484
47,054
54,538
2019
$’000
(7,800)
(1,414)
(9,214)
(3,015)
(116)
(15)
Page 89
Shine Justice Ltd Annual Report 2020 Non-financial assets and non-financial liabilities
(iii) The Groups leasing activities and how these are
To determine the incremental borrowing rate, the Group:
accounted for
The Group leases various office premises and equipment.
Rental contracts are typically made for fixed periods of
12 months to 5 years, but may have extension options as
described in (iv) below.
Contracts may contain both lease and non-lease
components. The Group allocates the consideration
in the contract to the lease and non-lease components
based on their relative stand-alone prices. However,
for leases of real estate for which the Group is a lessee,
it has elected not to separate lease and non-lease
components and instead accounts for these as a single
lease component.
Lease terms are negotiated on an individual basis and
contain a wide range of different terms and conditions.
The lease agreements do not impose any covenants
other than the security interests in the leased assets that
are held by the lessor. Leased assets may not be used as
security for borrowing purposes.
Assets and liabilities arising from a lease are initially
measured on a present value basis. Lease liabilities include
the net present value of the following lease payments:
fixed payments (including in-substance fixed
payments), less any lease incentives receivable
where possible, uses recent third-party financing
received by the individual lessee as a starting point,
adjusted to reflect changes in financing conditions
since third party financing was received
uses a build-up approach that starts with a risk-free
interest rate adjusted for credit risk for leases held by
Shine Justice Ltd, which does not have recent third
party financing, and
makes adjustments specific to the lease, e.g. term,
country, currency and security.
The Group is exposed to potential future increases in
variable lease payments based on an index or rate, which
are not included in the lease liability until they take effect.
When adjustments to lease payments based on an index
or rate take effect, the lease liability is reassessed and
adjusted against the right-of-use asset.
Lease payments are allocated between principal and
finance cost. The finance cost is charged to profit or
loss over the lease period so as to produce a constant
periodic rate of interest on the remaining balance of the
liability for each period.
Right-of-use assets are measured at cost comprising
the following:
variable lease payment that are based on an index or
a rate, initially measured using the index or rate as at
the commencement date
the amount of the initial measurement of lease liability
any lease payments made at or before the
commencement date less any lease incentives received
amounts expected to be payable by the Group under
any initial direct costs, and
residual value guarantees
restoration costs.
the exercise price of a purchase option if the Group is
reasonably certain to exercise that option, and
payments of penalties for terminating the lease, if the
lease term reflects the Group exercising that option.
Lease payments to be made under reasonably certain
extension options are also included in the measurement
of the liability.
The lease payments are discounted using the interest
rate implicit in the lease. If that rate cannot be readily
determined, which is generally the case for leases in the
Group, the lessee’s incremental borrowing rate is used,
being the rate that the individual lessee would have to
pay to borrow the funds necessary to obtain an asset of
similar value to the right-of-use asset in a similar economic
environment with similar terms, security and conditions.
Right-of-use assets are generally depreciated over the
shorter of the asset’s useful life and the lease term on
a straight-line basis. If the Group is reasonably certain
to exercise a purchase option, the right-of-use asset is
depreciated over the underlying asset’s useful life.
Payments associated with short-term leases of equipment
and vehicles and all leases of low-value assets are
recognised on a straight-line basis as an expense in
profit or loss. Short-term leases are leases with a lease
term of 12 months or less. Low-value assets comprise IT
equipment and small items of office furniture.
(iv) Extension and termination options
Extension and termination options are included in a
number of property and equipment leases across the
Group. These are used to maximise operational flexibility
in terms of managing the assets used in the Group’s
operations. The majority of extension and termination
options held are exercisable only by the Group and not
by the respective lessor.
Page 90
Non-financial assets and non-financial liabilities
Critical judgements in determining the lease term
In determining the lease term, management considers all facts and circumstances that create an economic
incentive to exercise an extension option, or not exercise a termination option. Extension options (or periods
after termination options) are only included in the lease term if the lease is reasonably certain to be extended
(or not terminated).
For leases of office premises and equipment, the following factors are normally the most relevant:
— If there are significant penalties to terminate (or not extend), the Group is typically reasonably certain to
extend (or not terminate)
— If any leasehold improvements are expected to have a significant remaining value, the Group is typically
reasonably certain to extend (or not terminate), and
— Otherwise, the Group considers other factors including historical lease durations and the costs and business
disruption required to replace the leased asset. Most extension options in offices and vehicles leases have
not been included in the lease liability, because the Group could replace the assets without significant cost
or business disruption.
Most extension options in offices and equipment leases have not been included in the lease liability, because
the Group could replace the assets without significant cost or business disruption.
The lease term is reassessed if an option is actually exercised (or not exercised) or the Group becomes
obliged to exercise (or not exercise) it. The assessment of reasonable certainty is only revised if a significant
event or a significant change in circumstances occurs, which affects this assessment, and that is within the
control of the lessee.
During the current financial year, the financial effect of revising termination options was an decrease in
recognised lease liabilities and right-of-use assets of $487,384.
There was no exercising of extensions during the year that were not already taken up in the lease liability.
(v) Residual value guarantees
To optimise lease costs during the contract period, the
Group sometimes provides residual value guarantees in
relation to equipment leases.
Estimating the amount payable under
residual value guarantees
The Group initially estimates and recognises
amounts expected to be payable under residual
value guarantees as part of the lease liability.
Typically the expected residual value at lease
commencement is equal to or higher than the
guaranteed amount, so the Group does not
expect to pay anything under the guarantees.
At the end of each reporting period, the expected
residual values are reviewed to reflect actual
residual values achieved on comparable assets
and expectations about future prices.
Page 91
Shine Justice Ltd Annual Report 2020 Non-financial assets and non-financial liabilities
(c) Intangible assets
Non–
contractual
client
relationships
Comp-
uter
software
Trans–
formation
Project
costs
Erin
Brockovich
Agreement
Website
dev.
Trademarks,
patents and
intellectual
property
Total
Goodwill
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Year ended
30 June 2019
Cost
Accumulated
amortisation
and impairment
46,158
4,653
462
14,332
1,130
18
186
66,939
(10,000)
(3,610)
(418)
(3,748)
(1,026)
(18)
(175)
(18,995)
Net book amount
36,158
1,043
44
10,584
104
Opening net
book amount
Exchange differences
Additions
37,650
10
–
–
–
–
Acquisition of business
3,498
1,391
Transfer
–
Impairment charge
(5,000)
–
–
Amortisation charge
–
(348)
141
10,278
217
(3)
47
–
(141)
–
–
–
1,894
–
141
–
–
–
–
–
–
(1,729)
(113)
Closing net
book amount
Year ended
30 June 2020
Cost
Accumulated
amortisation
and impairment
36,158
1,043
44
10,584
104
46,152
4,653
4,769
13,471
1,130
(10,000)
(4,074)
(497)
(5,536)
(1,130)
Net book amount
36,152
579
4,272
7,935
–
Opening net
book amount
Exchange differences
Additions
Transfer
Amortisation charge
Closing net
book amount
36,158
1,043
(6)
–
–
–
–
–
–
(464)
44
–
3,445
862
(79)
10,584
104
–
–
(862)
(1,787)
–
–
–
(104)
36,152
579
4,272
7,935
–
–
1
–
–
–
–
–
(1)
–
–
–
–
–
–
–
–
–
–
11
47,944
4
–
7
–
–
–
–
48,291
7
1,948
4,889
–
(5,000)
(2,191)
11
47,944
186
70,361
(175)
(21,412)
11
48,949
11
47,944
–
–
–
–
(6)
3,445
–
(2,434)
11
48,949
Page 92
Non-financial assets and non-financial liabilities
(i) Amortisation methods and useful lives
The Group amortises intangible assets with a limited
useful life using the straight-line method over the
following periods:
Transformation Project costs
8 years
Non-contractual Client Relationship
1.5 years
Patents and trademarks
IT development and software
Erin Brockovich agreement
10 years
3 years
10 years
See Note 24(c) for the Group’s policy
regarding impairments.
Transformation Project Costs
This is amortised on a straight-line based on the extent
that it will deliver future economic benefits and these
benefits can be measured reliably.
Non-contractual Client Relationship
This relates to a file asset acquisition. The asset is
representative of the premium paid to access profits
expected to be obtained and is amortised over the life
of the individual matters with an expected maximum
amortisation period of between 1.5 to 3 years.
Erin Brockovich Agreement
Accounting policy
Trademarks, licences and customer contracts
Separately acquired trademarks and licences are
shown at historical cost. Trademarks, licences
and customer contracts acquired in a business
combination are recognised at fair value at the
acquisition date. They have a finite useful life and
are subsequently carried at cost less accumulated
amortisation and impairment losses.
Software
Costs associated with maintaining software
programmes are recognised as an expense as
incurred. Development costs that are directly
attributable to the design and testing of identifiable
and unique software products controlled by the
Group are recognised as intangible assets where
the following criteria are met:
— it is technically feasible to complete the software
so that it will be available for use
— management intends to complete the software
and use or sell it
— there is an ability to use or sell the software
— it can be demonstrated how the software will
generate probable future economic benefits
This agreement is amortised on a straight-line based on
the extent that it will deliver future economic benefits and
these benefits can be measured reliably.
— adequate technical, financial and other
resources to complete the development and to
use or sell the software is available, and
— the expenditure attributable to the
software during its development can
be reliably measured.
Directly attributable costs that are capitalised as
part of the software include employee costs and
an appropriate portion of relevant overheads.
Capitalised development costs are recorded as
intangible assets and amortised from the point at
which the asset is ready for use.
Page 93
Shine Justice Ltd Annual Report 2020 Non-financial assets and non-financial liabilities
(ii) Impairment tests for goodwill
Goodwill is monitored by management at the level of the two operating segments identified in Note 2(a).
A summary of the goodwill allocation by segment is presented below:
Goodwill carrying amount
Personal Injury
New Practice Areas
2020
$’000
16,646
19,506
36,152
2019
$’000
16,646
19,512
36,158
Significant estimate: key assumptions used for value-in-use calculations
The Group tests whether goodwill has suffered any impairment on an annual basis. For the 2020 and 2019
reporting periods, the recoverable amount of the cash-generating units (CGUs) was determined based on value-
in-use calculations which require the use of assumptions. The calculations use cash flow projections based
on financial budgets approved by management covering a five-year period. Cash flows beyond the five-year
period are extrapolated using the estimated growth rates stated below. These growth rates are consistent with
forecasts included in industry reports specific to the industry in which each CGU operates.
The following table sets out the key assumptions for those CGUs that have significant goodwill allocated to them:
Personal Injury
New
Practice Areas
5.0
5.0
3.0 to 3.7
3.0 to 3.7
3.0
13.9
3.0
15.1
5.0
5.0
3.0 to 3.7
3.0 to 3.7
3.0
12.7
3.0
13.4
2020
Revenue volume (% annual growth rate)
Operating costs (% annual growth rate)
Long-term growth rate (%)
Pre-tax discount rate (%)
2019
Revenue volume (% annual growth rate)
Operating costs (% annual growth rate)
Long-term growth rate (%)
Pre-tax discount rate (%)
Page 94
Non-financial assets and non-financial liabilities
Management has determined the values assigned to each of the above key assumptions as follows:
Assumption
Revenue volume
Other operating costs
Long-term growth rate
Approach used to determine values
Average annual growth rate over the five year forecast period;
based on past performance and management’s expectations of
market development.
Fixed costs of the CGUs, which do not vary significantly with revenue
volumes or prices. Management forecasts these costs based on the
current structure of the business, adjusting for inflationary increases but
not reflecting any future restructurings or cost- saving measures. The
amounts disclosed above are the average operating costs for the five
year forecast period.
This is the weighted average growth rate used to extrapolate cash
flows beyond the budget period. The rates are consistent with forecasts
included in industry reports.
Pre-tax discount rates
Reflect specific risks relating to the relevant segments and the
jurisdictions in which they operate.
(iii) Significant estimate: impairment charge
Based on the impairment testing performed, the results of the impairment testing of each CGU concluded that no
impairment charge against goodwill is to be recognised at 30 June 2020.
(iv) Significant estimate: impairment if changes in key assumptions
The Directors and management have considered and assessed reasonably possible changes for all key assumptions
and have not identified any instances that could cause the carrying amount of the Personal Injury CGU and the New
Practice Areas CGU to exceed its recoverable amount.
Personal Injury CGU
The recoverable amount of the Personal Injury CGU of $342,434,304 is estimated to exceed the carrying amount of
the CGU of $257,237,806 at 30 June 2020 by $85,196,498 (2019: $60,080,000).
Although there are no reasonable possible changes in key assumptions that would indicate an impairment, the
recoverable amount of this CGU would equal its carrying amount if the key assumptions were to change as follows
with all other assumptions remaining constant:
Revenue volume (% annual growth rate)
Long-term growth rate (%)
Pre-tax discount rate (%)
2020
2019
From
5.0
3.0
13.9
To
2.3
-4.9
17.8
From
5.0
3.0
12.7
To
3.3
-0.9
15.0
Page 95
Shine Justice Ltd Annual Report 2020 Non-financial assets and non-financial liabilities
New Practice Areas CGU
The recoverable amount of the New Practice Areas CGU of $217,305,752 is estimated to exceed the carrying amount
of the CGU of $180,051,670 at 30 June 2020 by $37,254,082 (2019: $46,420,000).
Although there are no reasonable possible changes in key assumptions that would indicate an impairment, the
recoverable amount of this CGU would equal its carrying amount if the key assumptions were to change as follows
with all other assumptions remaining constant:
2020
2019
From
5.0
3.0
15.1
To
2.9
-3.7
18.2
From
5.0
3.0
13.4
To
2.4
-1.2
9.2
Revenue volume (% annual growth rate)
Long-term growth rate (%)
Pre-tax discount rate (%)
Accounting policy
Goodwill
Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill is not amortised, but it is
tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might be
impaired and is carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity
include the carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to
those cash-generating units or groups of cash-generating units that are expected to benefit from the business
combination in which the goodwill arose. The units or groups of units are identified at the lowest level at which
goodwill is monitored for internal management purposes, being the operating segments (Note 2).
Page 96
(d) Deferred tax balances
(i) Deferred tax balances
Deferred tax assets
Deferred tax liabilities
(ii) Deferred tax assets
The balance comprises temporary differences attributable to:
Tax losses
Provisions
Other
Leases
Sundry
Non-financial assets and non-financial liabilities
2020
$’000
23,661
(115,310)
(91,649)
2020
$’000
15,446
5,714
21,160
2,341
160
2,501
2019
$’000
21,321
(102,467)
(81,146)
2019
$’000
14,155
5,356
19,511
1,693
117
1,810
23,661
21,321
Significant estimates
The deferred tax assets include an amount of $14,815,959 (2019: $13,355,045) which relates to Australian carried-
forward tax losses. New Zealand carry forward tax losses amount to $630,320 (2019: $799,853). The Group has
concluded that the deferred assets will be recoverable using the estimated future taxable income based on the
approved business plans and budgets for the Group. The losses can be carried forward indefinitely and have no
expiry date. See Note 6(c) for more details.
Page 97
Shine Justice Ltd Annual Report 2020 Non-financial assets and non-financial liabilities
Tax losses
Provisions
$’000
$’000
Leases
$’000
Sundry
$’000
Total
$’000
MOVEMENTS
At 1 July 2018
Adjustment on adoption of new accounting standards
(Charged)/credited
to statement of comprehensive income
to statement of financial position
11,032
–
3,110
13
5,253
97
(173)
179
2,634
1,223
(2,164)
–
(207)
–
337
(13)
18,712
1,320
1,110
179
At 30 June 2019 and 1 July 2019
14,155
5,356
1,693
117
21,321
(Charged)/credited
to statement of comprehensive income
to statement of financial position
1,291
–
358
–
648
–
At 30 June 2020
15,446
5,714
2,341
65
(22)
160
2,362
(22)
23,661
(iii) Deferred tax liabilities
The balance comprises temporary differences attributable to:
Work in progress and disbursements
Intangible assets
Plant and equipment
2020
$’000
2019
$’000
114,349
101,774
844
117
515
178
115,310
102,467
Page 98
Non-financial assets and non-financial liabilities
Offsetting within tax consolidated Group
Shine Justice Ltd and its wholly owned Australian subsidiaries have applied the tax consolidation legislation which
means that these entities are taxed as a single entity. Consequently, the deferred tax assets and deferred tax liabilities
of these entities have been offset in the consolidated financial statements.
WIP and
Disburs.
Intangible
assets
Plant and
equipment
$'000
$'000
$'000
MOVEMENTS
At 1 July 2018
Adjustment on adoption of new accounting standards
(Charged)/credited
to statement of comprehensive income
to statement of financial position
At 30 June 2019 and At 1 July 2019
(Charged)/credited
to statement of comprehensive income
At 30 June 2020
92,848
(531)
9,438
19
101,774
12,575
114,349
322
–
193
–
515
329
844
(e) Current tax balances
Current tax receivable
Current tax liabilities
These tax balances are in different tax jurisdictions and are not off settable.
Accounting policy
See Note 6 for more detail on the Group’s income tax accounting policy.
Total
$'000
93,498
(531)
9,481
19
102,467
12,843
328
–
(150)
–
178
(61)
117
115,310
2020
$’000
322
(215)
2019
$’000
306
(247)
Page 99
Shine Justice Ltd Annual Report 2020
Non-financial assets and non-financial liabilities
(f) Other assets
Other current assets
Prepayments
(g) Employee benefit obligations
2020
$’000
2,983
2,983
2020
2019
Current
Non-current
$’000
$’000
7,619
7,619
1,293
1,293
Total
$’000
8,912
8,912
Current
Non-current
$’000
$’000
6,453
6,453
1,188
1,188
Leave obligations (i)
(i) Leave obligations
2019
$’000
2,870
2,870
Total
$’000
7,641
7,641
The leave obligations cover the Group’s liabilities for long service leave and annual leave which are classified as either
other long-term benefits or short-term benefits.
The current portion of this liability includes all the accrued annual leave, the unconditional entitlements to long service
leave where employees have completed the required period of service and for those employees who are entitled to pro-
rata payments in certain circumstances. The entire amount of the provision of $7,619,375 (2019 - $6,455,332) is presented
as current, since the Group does not have an unconditional right to defer settlement for any of these obligations.
However, based on past experience, the Group does not expect all employees to take the full amount of accrued leave
or require payment within the next 12 months. The following amounts reflect leave that is not expected to be taken or
paid within the next 12 months.
2020
$’000
2019
$’000
Current leave obligations expected to be settled after 12 months
5,525
5,544
Page 100
Non-financial assets and non-financial liabilities
Accounting policy
Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave
that are expected to be settled wholly within 12 months after the end of the period in which the employees
render the related service are recognised in respect of employees’ services up to the end of the reporting
period and are measured at the amounts expected to be paid when the liabilities are settled.
The liabilities are presented as current employee benefit obligations in the balance sheet.
Other long-term employee benefit obligations
The Group also has liabilities for long service leave and annual leave that are not expected to be settled
wholly within 12 months after the end of the period in which the employees render the related service. These
obligations are therefore measured as the present value of expected future payments to be made in respect of
services provided by employees up to the end of the reporting period using the projected unit credit method.
Consideration is given to expected future wage and salary levels, experience of employee departures and
periods of service. Expected future payments are discounted using market yields at the end of the reporting
period of high-quality corporate bonds with terms and currencies that match, as closely as possible, the
estimated future cash outflows.
The obligations are presented as current liabilities in the balance sheet if the entity does not have an
unconditional right to defer settlement for at least 12 months after the reporting period, regardless of when
the actual settlement is expected to occur.
(h) Provisions
Make good provision (i)
2020
2019
Current
Non-current
$’000
$’000
214
214
1,445
1,445
Total
$’000
1,659
1,659
Current
Non-current
$’000
$’000
283
283
1,355
1,355
Total
$’000
1,638
1,638
(i) Information about individual provisions and significant estimates
Make good provision
Shine Justice Ltd is required to restore the leased premises of its offices and branches to their original condition at the
end of the respective lease terms. A provision has been recognised for the present value of the estimated expenditure
required to remove any leasehold improvements. These costs have been capitalised as part of the cost of leasehold
improvements and are amortised over the shorter of the term of the lease and the useful life of the assets.
Page 101
Shine Justice Ltd Annual Report 2020 Non-financial assets and non-financial liabilities
Makegood
provision
$’000
1,638
95
(74)
1,659
(ii) Movements in provisions
2020
Carrying amount at start of year
(Charged)/credited to profit or loss
additional provisions recognised
unused amounts reversed
Carrying amount at end of year
Accounting policy
Provisions for make good obligations are recognised when the Group has a present legal or constructive
obligation as a result of past events, it is probable that an outflow of resources will be required to settle the
obligation and the amount can be reliably estimated. Provisions are not recognised for future operating losses.
Where there are several similar obligations, the likelihood that an outflow will be required in settlement is
determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood
of an outflow with respect to any one item included in the same class of obligations may be small.
Provisions are measured at the present value of management’s best estimate of the expenditure required to
settle the present obligation at the end of the reporting period. The discount rate used to determine the present
value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific
to the liability. The increase in the provision due to the passage of time is recognised as interest expense.
Page 102
Note 9
Equity
(a) Share capital
Ordinary shares
Fully paid
Total share capital
(i) Movements in ordinary shares
Details
Opening balance 1 July 2018
Balance 30 June 2019
Deferred ordinary shares issued
Balance 30 June 2020
(ii) Ordinary shares
2020
2019
2020
2019
Shares
Shares
$’000
$’000
173,261,812
173,161,812
173,261,812
173,161,812
53,223
53,223
53,150
53,150
Number of shares
(thousands)
#
Total
$’000
173,162
53,150
173,162
100
173,262
53,150
73
53,223
Ordinary shares entitle the holder to participate in dividends, and to share in the proceeds of winding up the Company
in proportion to the number of and amounts paid on the shares held.
On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote,
and on a poll each share is entitled to one vote.
Ordinary shares have no par value and the Company does not have a limited amount of authorised capital.
(iii) Dividend reinvestment plan
The Company does not currently operate a dividend reinvestment plan.
(iv) Employee share scheme issues
Information relating to the Shine Justice Performance Rights Plan, including details of performance rights issued,
exercised and lapsed during the financial year and rights outstanding at the end of the reporting period, is set out in
Note 19.
(v) Share buy-back
There is no current on-market buy-back.
Page 103
Shine Justice Ltd Annual Report 2020
Equity
Accounting policy
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction,
net of tax, from the proceeds.
Where any Group company purchases the Company’s equity instruments, for example as the result of a share
buy-back or a share-based payment plan, the consideration paid, including any directly attributable incremental
costs (net of income taxes) is deducted from equity attributable to the owners of Shine Justice Ltd as treasury
shares until the shares are cancelled or reissued. Where such ordinary shares are subsequently reissued, any
consideration received, net of any directly attributable incremental transaction costs and the related income
tax effects, is included in equity attributable to the owners of Shine Justice Ltd.
Shares held by the Shine Justice Employee Share Trust are disclosed as treasury shares and deducted from
contributed equity.
(b) Other equity
(i) Treasury shares
Treasury shares are shares in Shine Justice Ltd that are held by the Shine Justice Employee Share Trust for the
purpose of issuing shares under the Shine Justice Performance Rights Plan (see Note 19 for further information).
There has been no issue or purchase of treasury shares in 2020 (2019: nil)
Page 104
(c) Other reserves
The following table shows a breakdown of the balance sheet line item ‘other reserves’ and the movements in these
reserves during the year. A description of the nature and purpose of each reserve is provided below the table.
Equity
Equity
Share-based
payments
Foreign currency
translation
Total other
reserves
Notes
$’000
$’000
$’000
At 1 July 2018
Currency translation difference
Other comprehensive income
Transactions with owners in their capacity as owners
Share-based payment expenses
19(c)
At 30 June 2019
At 1 July 2019
Currency translation difference
Other comprehensive income
Transactions with owners in their capacity as owners
Share-based payment expenses
19(c)
At 30 June 2020
(i) Nature and purposes of reserves
Share-based payments
The share-based payments reserve is used to recognise:
the grant date fair value of shares issued to employees
41
–
–
392
433
433
–
–
463
896
(372)
126
126
–
(246)
(246)
(270)
(270)
–
(516)
(331)
126
126
392
187
187
(270)
(270)
463
380
the grant date fair value of deferred shares granted to employees but not yet vested, and
the issue of shares held by the Shine Justice Ltd Employee Share Trust to employees.
Transactions with non-controlling interests
This reserve is used to record the differences described in Note 14(a)(ii) which may arise as a result of transactions with
non-controlling interests that do not result in a loss of control.
Foreign currency translation
Exchange differences arising on translation of the foreign controlled entity are recognised in other comprehensive
income as described in Note 24(b) and accumulated in a separate reserve within equity. The cumulative amount is
reclassified to profit or loss when the net investment is disposed of.
Page 105
Shine Justice Ltd Annual Report 2020 Equity / Cash flow information
Notes
13(b)
2020
$’000
168,966
21,476
(6,928)
183,514
2019
$’000
161,074
13,953
(6,061)
168,966
(d) Retained earnings
Movement in retained earnings were as follows:
Balance 1 July
Net profit for the period
Dividends
Balance 30 June
Note 10
Cash flow information
(a) Reconciliation of profit after income tax to net cash inflow from operating activities
Notes
4(a)
4(b)
2020
$’000
2019
$’000
21,553
14,032
12,053
–
(17)
304
(108)
(21,911)
(10,971)
12,212
(154)
10,504
1,289
24,754
12,425
5,000
(67)
(433)
(280)
(17,248)
(8,430)
7,194
(64)
8,384
125
20,638
Profit for the period
Adjustments for
Depreciation and amortisation
Impairment of goodwill
Net gain on sale of non-current assets
Changes in operating assets and liabilities
Decrease/(increase) in trade and other receivables
(Increase) in other assets
(Increase) in work in progress
(Decrease) in disbursements
Increase in trade creditors and accruals
(Decrease) in income taxes payable
Increase in deferred tax liabilities
Increase in provisions
Net cash inflow from operating activities
Page 106
(b) Net debt
This section sets out an analysis of debt for each of the periods presented.
Cash and cash equivalents
Borrowings – repayable with one year (including overdraft)
Lease liabilities – repayable within one year
Borrowings – repayable after one year
Lease liabilities – repayable after one year
Net debt
Cash and cash equivalents
Gross debt – fixed interest rates
Gross debt – variable interest rates
Net debt
Notes
7(d)
7(g)
8(b)
7(g)
8(b)
7(d)
7(g)
Cash flow information
2020
$’000
32,812
(4,075)
(7,549)
(48,424)
(40,898)
(68,134)
32,812
(54,605)
(46,341)
(68,134)
2019
$’000
26,697
(3,581)
(7,484)
(50,832)
(47,054)
(82,254)
26,697
(63,043)
(45,908)
(82,254)
Page 107
Shine Justice Ltd Annual Report 2020 (c) Reconciliation of liabilities arising from financing activities to financing cashflows
Cash flow information
Liabilities from financing activities
Disbursement
funding
Borrowings
$’000
$’000
(45,580)
(53,539)
–
(3,018)
–
–
–
–
–
(842)
–
(32)
–
–
Leases
$’000
(3,925)
(50,489)
7,616
(8,796)
(788)
1,832
12
Total
$’000
(103,044)
(50,489)
3,756
(8,796)
(820)
1,832
12
(48,598)
(4,269)
(54,413)
1,914
–
–
–
–
–
–
(54,538)
(157,549)
7,527
(2,453)
970
47
5,172
(2,453)
970
47
At 1 July 2018
Adoption of AASB 16
Cash flows
Acquisitions
Leases
Subsidiaries
Terminations – leases
Foreign exchange adjustments
At 30 June 2019
Cash flows
Acquisitions – leases
Terminations – leases
Foreign exchange adjustments
At 30 June 2020
(52,867)
(52,499)
(48,447)
(153,813)
Page 108
Risk
This section of the notes discusses
the Group’s exposure to various
risks and shows how these could
affect the Group’s financial position
and performance.
110
111
Note 11 Critical estimates,
judgements and errors
Note 12 Financial
risk management
119
Note 13 Capital management
Shine Justice Ltd Annual Report 2020
Page 109
Note 11
Critical estimates, judgements and errors
The preparation of financial statements requires the use
of accounting estimates which, by definition, will seldom
equal the actual results. Management also needs to
exercise judgement in applying the Group’s accounting
policies.
This note provides an overview of the areas that involved
a higher degree of judgement or complexity, and of
items which are more likely to be materially adjusted due
to estimates and assumptions turning out to be wrong.
Detailed information about each of these estimates
and judgements is included in other notes together
with information about the basis of calculation for each
affected line item in the financial statements. In addition,
this note also explains where there have been actual
adjustments this year as a result of an error and of
changes to previous estimates.
(a) Significant estimates and judgements
The areas involving significant estimates or
judgements are:
estimated fair value of certain financial assets: Note 7(h)
estimation uncertainties and judgements made in
relation to lease accounting: Note 8(b)
estimated goodwill impairment: Note 8(c)
estimated useful life of intangible assets: Note 8(c)
r ecognition of revenue and allocation of transaction
price: Note 3
recognition of deferred tax asset for carried-forward
tax losses: Note 8(d)
impairment of financial assets: Note 12(c)
Estimates and judgements are continually evaluated.
They are based on historical experience and other
factors, including expectations of future events that may
have a financial impact on the entity and that are believed
to be reasonable under the circumstances.
Page 110
Note 12
Financial risk management
This note explains the Group’s exposure to financial risks and how these risks could affect the Group’s future financial
performance. Current year profit and loss information has been included where relevant to add further context.
Risk
Exposure arising from
Measurement
Management
Market risk –
foreign exchange
— Future commercial transactions
— Recognised financial assets
— Cash flow forecasting
— Sensitivity analysis
Not applicable
and liabilities not denominated
in Australian dollars
Market risk –
interest rate
Credit risk
— Long-term borrowings at
— Sensitivity analysis
Not applicable
variable rates
— Cash and cash equivalents,
trade receivables and
contract assets
— Aging analysis
— Credit ratings
Liquidity risk
— Borrowings and other liabilities
— Rolling cash flow forecasts
— Diversification of bank
deposits, credit limits and
letters of credit
— Availability of committed credit
lines and borrowing facilities
The Group’s financial risk management is predominantly controlled by the Group finance department under policies
approved by the board of Directors. Group finance identifies, evaluates and hedges financial risks in close co-
operation with the Group’s operating units.
The board provides written principles for overall risk management, as well as policies covering specific areas, such as:
foreign exchange risk
interest rate risk
credit risk
use of derivative financial instruments and non-derivative financial instruments, and
investment of excess liquidity.
(a) Derivatives
The Group does not currently have any derivative financial instruments.
Page 111
Shine Justice Ltd Annual Report 2020 Financial risk management
(b) Market risk
(i) Foreign exchange risk
Exposure
The Group’s exposure to foreign currency risk at the end of the reporting period was as follows:
Cash and cash equivalents
Trade receivables
Trade payables
Lease liabilities
Other
The aggregate net foreign exchange gains/losses recognised in profit or loss were:
Net foreign exchange gain in other gains/(losses)
Exchange gains on foreign currency borrowing included in finance costs
Total net foreign exchanges gain recognised in profit before income tax for the period
2020
NZD
$’000
1,109
332
(396)
(1,434)
(58)
2020
NZD
$’000
46
9
55
2019
NZD
$’000
1,361
244
(1,379)
(1,698)
280
2019
NZD
$’000
8
47
55
Instruments used by the Group
The Group operates internationally and is exposed to foreign exchange risk, primarily the New Zealand dollar.
Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in
a currency that is not the functional currency of the relevant Group entity.
There is currently no hedging of the foreign exchange risk.
Sensitivity
The Group is primarily exposed to changes in NZ/AUD exchange rates. The sensitivity of profit or loss to changes
in the exchange rates arises mainly from NZ dollar-denominated financial instruments and the impact on other
components of equity is currently considered immaterial.
(ii) Cash flow and fair value interest rate risk
The Group’s main interest rate risk arises from long-term borrowings with variable rates, which expose the Group to
cash flow interest rate risk.
Page 112
Financial risk management
The Group’s borrowings and receivables are carried at amortised cost. The borrowings are periodically contractually
repriced (see below) and to that extent are also exposed to the risk of future changes in market interest rates.
The exposure of the Group’s borrowings to interest rate changes at the end of the reporting period are as follows:
Variable rate borrowings
2020
2019
$’000
% of total
loans
46,341
46,341
86%
86%
$’000
45,000
45,000
% of total
loans
83%
83%
An analysis by maturities is provided in Note 13(a). The percentage of total loans shows the proportion of loans that are
currently at variable rates in relation to the total amount of borrowings.
Instruments used by the Group
There is currently no instrument used by the Group to manage this risk.
Sensitivity
Profit or loss and other components of equity is sensitive to higher/lower interest income from cash and cash
equivalents as a result of changes in interest rates.
Impact on
post-tax profit
Impact on other
component of equity
2020
$'000
(457)
457
2019
$'000
(315)
315
2020
$'000
(457)
457
2019
$'000
(315)
315
Interest rates – increase by 100 basis points (2019: 100bps)*
Interest rates – decrease by 100 basis points (2019: 100bps)*
*Holding of other variables constant
Collectability risk
One of the Group’s main risks arises from unbilled disbursements where there is a risk of irrecoverability for legal
matters that are taken up on a no-win no-fee basis. This risk is mitigated through the case selection process which
includes review of likelihood of success during the life of the matter which exposes the Group to collectability risk.
Page 113
Shine Justice Ltd Annual Report 2020 The exposure of the Group’s unbilled disbursements to provision rate changes at the end of the reporting period are
as follows:
Financial risk management
Impact on
post-tax profit
Impact on other
component of equity
2020
$'000
(923)
923
2019
$'000
(576)
576
2020
$'000
(923)
923
2019
$'000
(576)
576
While cash and cash equivalents are also subject to
the impairment requirements of AASB 9, the identified
impairment loss was immaterial.
Trade receivables
The Group applies the AASB 9 simplified approach to
measuring expected credit losses which uses a lifetime
expected loss allowance for all trade receivables.
To measure the expected credit losses, trade receivables
have been Grouped based on shared credit risk
characteristics and the days past due.
The expected loss rates are based on the corresponding
historical credit losses experienced. The historical loss
rates are adjusted to reflect current and forward-looking
information on macroeconomic factors affecting the
ability of the customers to settle the receivables. The
Group has identified the following to be the most relevant
factors in determining expected loss rates:
unemployment rate
inflation, and
Reserve Bank of Australia cash rate
Provision rates – increase by 1% (2019: 1%)*
Provision rates – decrease by 1% (2019: 1%)*
*Holding of other variables constant
(c) Credit risk
Credit risk arises from:
cash and cash equivalents
deposits with banks and financial institutions, and
credit exposures to customers, including
outstanding receivables.
(i) Risk management
Credit risk is managed on a Group basis. For banks and
financial institutions, only independently rated parties
with a minimum rating of ‘A’ are accepted.
There are no significant concentrations of credit risk,
whether through exposure to individual customers,
specific industry sectors and/or regions.
(ii) Security
For some trade receivables the Group may obtain security
in the form of guarantees, deeds of undertaking or letters
of credit which can be called upon if the counterparty is in
default under the terms of the agreement.
(iii) Impairment of financial assets
The Group has three types of financial assets that are
subject to the expected credit loss model:
trade receivables from the provision of legal
services, and
contract assets relating to the provision of
legal services.
Page 114
Financial risk management
On that basis, the loss allowance as at 30 June 2020 and 30 June 2019 was determined as follows for
trade receivables:
More than
30 days
past due
More than
60 days
past due
More than
90 days
past due
More than
120 days
past due
Current
Total
30 June 2020
Expected loss rate (%)
Gross carrying amount ($’000)
Loss allowance ($’000)
30 June 2019
Expected loss rate (%)
Gross carrying amount ($’000)
Loss allowance ($’000)
0%
3,837
–
0%
4,421
23
0%
1,755
5
0%
680
3
4%
632
28
0%
1,007
6
20%
821
164
0%
1,191
29
29%
7,139
2,045
36%
5,027
1,788
The loss allowance for trade receivables as at 30 June reconcile to the opening loss allowance as follows:
Opening loss allowance as at 1 July
Increase in loss allowance recognised in profit or loss during the year
Adoption of AASB 9
Acquisition of subsidiary
Receivables written off during the year as uncollectable
Closing loss allowance at 30 June
2020
$’000
1,849
1,002
–
–
(609)
2,242
14,184
2,242
12,326
1,849
2019
$’000
2,016
878
38
64
(1,147)
1,849
Trade receivables are written off where there is no reasonable expectation of recovery. Indicators that there is no
reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan
with the Group, and a failure to make contractual payments for a period of greater than 90 days past due.
Impairment losses on trade receivables are presented as net impairment losses within operating profit. Subsequent
recoveries of amounts previously written off are credited against the same line item.
Page 115
Shine Justice Ltd Annual Report 2020 Contract assets – work in progress
The loss allowance for work in progress as at 30 June reconciles to the opening loss allowance as follows:
Financial risk management
Opening loss allowance as at 1 July 2018
Expected credit loss on adoption of AASB 9
Net loss allowance measured at an amount equal to lifetime expected credit losses
Reductions due to collections
Closing loss allowance as at 30 June 2019
Increase in the allowance recognised in profit or loss during the period
Closing loss allowance as at 30 June 2020
$’000
–
542
(60)
(158)
(324)
–
(324)
Other financial assets at amortised cost
Other financial assets at amortised cost include loans to related parties and other receivables.
The loss allowance for other financial assets at amortised cost as at 30 June reconciles to the opening loss allowance
as follows:
Opening loss allowance as at 1 July 2018
Increase in the allowance recognised in profit or loss during the period
Closing loss allowance as at 30 June 2019
Increase in the allowance recognised in profit or loss during the period
Closing loss allowance as at 30 June 2020
Related parties
$’000
Total
$’000
–
21
21
–
21
–
21
21
–
21
(iv) Significant estimates and judgements
Impairment of financial assets
The loss allowances for financial assets are based on assumptions about risk of default and expected loss rates.
The Group uses judgement in making these assumptions and selecting the inputs to the impairment calculation,
based on the Group’s past history and existing market conditions as well as forward-looking estimates at the end
of each reporting period. Details of the key assumptions and inputs used are disclosed in the tables above.
Page 116
Financial risk management
(d) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an
adequate amount of committed credit facilities to meet obligations when due. At the end of the reporting period
the Group held term deposits at call of $9,083,815 (2019: $nil) that are expected to readily generate cash inflows for
managing liquidity risk. Due to the dynamic nature of the underlying businesses, Group finance maintains flexibility
in funding by maintaining availability under committed credit lines. Management monitors rolling forecasts of the
Group’s liquidity reserve (comprising the undrawn borrowing facilities below) and cash and cash equivalents (Note 7(d))
based on expected cash flows. This is generally carried out at local level in the operating companies of the Group in
accordance with practice and limits set by the Group. These limits vary by location to take into account the liquidity of
the market in which the entity operates. In addition, the Group’s liquidity management policy involves projecting cash
flows in major currencies and considering the level of liquid assets necessary to meet these, monitoring balance sheet
liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans.
(i) Financing arrangements
The Group had access to the following undrawn borrowing facilities at the end of the reporting period:
Floating rate
Expiring within one year (line of credit)
Expiring beyond one year (bank loans)
2020
$’000
1,500
26,805
28,305
2019
$’000
1,600
24,500
26,100
The line of credit may be drawn at any time and may be terminated by the bank without notice. The CBA facility may
be drawn at any time and is subject to annual review. Subject to the continuance of satisfactory credit ratings, the bank
loan facilities may be drawn at any time.
Page 117
Shine Justice Ltd Annual Report 2020
Financial risk management
(ii) Maturities of financial liabilities
The tables below analyse the Group’s financial liabilities into relevant maturity groupings based on their contractual
maturities for all non-derivative financial liabilities.
The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal
their carrying balances as the impact of discounting is not significant.
Within
1 year
$'000
Between
1 and 5 years
$'000
Over
5 years
$'000
Total
contractual
cash flows
Carrying
amount
$'000
$'000
Contractual maturities
of financial liabilities
At 30 June 2020
Non-derivatives
Trade and other payables(1)
Borrowings
Deferred consideration
Lease liabilities
At 30 June 2019
Non-derivatives
Trade and other payables
Borrowings
Deferred consideration
Lease liabilities
97,283
1,341
–
7,982
–
49,131
2,535
27,655
–
–
–
12,810
97,283
50,472
2,535
48,447
97,283
52,499
2,535
48,447
106,606
79,321
12,810
198,737
200,764
86,680
908
–
7,417
95,005
2,543
51,053
2,515
28,689
84,800
–
–
–
18,432
18,432
89,223
51,961
2,515
54,538
81,034
54,413
2,515
54,538
198,237
192,500
1 Includes disbursement creditors which is classed as all current as becomes due and payable as soon as the case ends with no certainty on the timing.
Page 118
Note 13
Capital management
(a) Risk management
The Group’s objectives when managing capital are to:
safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders
and benefits for other stakeholders, and
maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may:
adjust the amount of dividends paid to shareholders
return capital to shareholders
issue new shares, or
sell assets to reduce debt.
Consistent with others in the industry, the Group monitors capital based on the following gearing ratio:
Net debt as per Note 10(b)
divided by
Total ‘equity’ (as shown in the balance sheet, including non-controlling interests).
The gearing ratios at 30 June 2020 and 30 June 2019 were as follows:
Net debt
Total equity
Net debt to equity ratio
1 Restated to include impact of leases on adoption of AASB 16.
Notes
10(b)
2020
$’000
68,134
237,220
29%
2019 1
$’000
82,254
222,408
37%
(i) Loan covenants
Under the terms of the major borrowing facilities, the Group is required to comply with the following
financial covenants:
Total bank debt not to exceed 50% of the Group’s total work in progress, and
Total bank debt must be no more than 2.25 times Group EBITDA on a rolling 12 month basis.
The Group has complied with these covenants throughout the reporting period.
Page 119
Shine Justice Ltd Annual Report 2020 (b) Dividends
(i) Ordinary shares
Notes
Final dividend for the year ended 30 June 2019 of 2.25 cents
(2018 – 2.00 cents) per fully paid share
Interim dividend for the year ended 30 June 2020 of 1.50 cents
(2019 – 1.25 cents) per fully paid share
Total paid during the year
9(d)
(ii) Dividends not recognised at the end of the reporting period
Capital management
2020
$’000
4,329
2,599
6,928
2020
$’000
2019
$’000
3,896
2,165
6,061
2019
$’000
In addition to the above dividends, since year end the Directors have recommended the
payment of a final dividend of 2.75 cents per fully paid ordinary share (2019: 2.25 cents).
The aggregate amount of the proposed dividend expected to be paid on 25 September
2020 out of retained earnings at 30 June 2020, but not recognised as a liability at year end, is:
4,765
3,896
(iii) Franked dividends
The dividends recommended after 30 June 2020 will be 100% unfranked. There are no existing franking credits within
the Group nor any franking credits arising from the payment of income tax in the year ending 30 June 2021.
Accounting policy
Provision is made for any dividend declared, being appropriately authorised and no longer at the discretion of
the entity, on or before the end of the reporting period but not distributed at the end of the reporting period.
Page 120
Group structure
This section provides information
which will help users understand how
the Group structure affects the financial
position and performance of the Group.
In particular, there is information about:
— changes to the structure that occurred during
the year, and
— transactions with non-controlling interests.
A list of subsidiaries is provided in Note 14.
122
Note 14 Interests in other entities
Shine Justice Ltd Annual Report 2020
Page 121
Note 14
Interests in other entities
(a) Subsidiaries
The Group’s subsidiaries at 30 June 2020 are set out below. Unless otherwise stated, they have share capital
consisting solely of ordinary shares that are held directly by the Group, and the proportion of ownership interests
held equals the voting rights held by the Group. The country of incorporation or registration is also their principal
place of business.
Ownership interest
held by the Group
Proportion of
controlling
interests
2020
2019
2020
2019
Place of business/
country of
incorporation
(%)
(%)
(%)
(%)
Principal
activities
Name of entity
Shine Lawyers Pty Ltd
My Insurance Claim Pty Ltd
Shine DIR Pty Ltd
Shine (U.S.) Pty Ltd
Emanate Legal Services Pty Ltd
SB Law Pty Ltd
Sciacca’s Lawyers Pty Ltd
Australia
Australia
Australia
Australia
Australia
Australia
Australia
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Sciacca’s Family Lawyers Pty Ltd
Australia
100%
100%
Shine NZ Services Pty Ltd
Bradley Bayly Holdings Pty Ltd
Australia
Australia
100%
100%
100%
100%
Best Wilson Buckley Family Law Pty Ltd
Australia
100%
100%
Claims Consolidated Pty Ltd
Australia
100%
100%
Risk Worldwide New Zealand Limited
New Zealand
100%
100%
Nerve Solutions Group Pty Ltd
Australia
100%
100%
My Insurance Claim Limited
New Zealand
100%
100%
ACA Lawyers Pty Ltd
Australia
100%
100%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Legal services
Legal services
Legal services
Legal services
Legal services
Legal services
Legal services
Legal services
Legal services
Legal services
Legal services
Legal services
Loss adjusters
Legal services
Loss adjusters
Legal services
Carr & Co Divorce & Family
Lawyers Pty Ltd
Nerve Legal Pty Ltd
Australia
Australia
80%
80%
20%
20%
Legal services
100%
100%
–
–
Legal services
Page 122
Interests in other entities
Accounting policy
(i) Principles of consolidation
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an
entity where the Group is exposed to, or has rights to, variable returns from its involvement with the entity and can
affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from
the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.
Inter-company transactions, balances and unrealised gains on transactions between Group companies are
eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment
of the transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure
consistency with the policies adopted by the Group.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated
statement of profit or loss, statement of comprehensive income, statement of changes in equity and balance
sheet respectively.
(ii) Changes in ownership interests
The Group treats transactions with non-controlling interests that do not result in a loss of control as transactions
with equity owners of the Group. A change in ownership interest results in an adjustment between the carrying
amounts of the controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any
difference between the amount of the adjustment to non-controlling interests and any consideration paid or
received is recognised in a separate reserve within equity attributable to owners of Shine Justice Ltd.
Page 123
Shine Justice Ltd Annual Report 2020 Interests in other entities
(b) Non-controlling interests (NCI)
Set out below is summarised financial information of Carr & Co Divorce & Family Lawyers Pty Ltd, the only subsidiary
that has non-controlling interests. The amounts disclosed are before inter-company eliminations.
2020
$’000
970
(1,064)
(94)
960
(353)
607
513
103
2020
$’000
5,070
383
383
77
79
2019
$’000
1,242
(1,166)
76
781
(333)
448
524
105
2019
$’000
2,633
395
395
79
–
Summarised balance sheet
Current assets
Current liabilities
Current net assets
Non-current assets
Non-current liabilities
Non-current net assets
Net assets
Accumulated NCI
Summarised statement of comprehensive income
Revenue
Profit for the period
Total comprehensive income
Profit allocated to NCI
Dividends paid to NCI
Page 124
Unrecognised items
This section of the notes provides
information about items that are not
recognised in the financial statements
as they do not (yet) satisfy the
recognition criteria.
There is no requirement to highlight separately any
unrecognised items. However, we believe that this
information is useful for users in assessing the financial
performance and position of the Group.
126
127
128
Note 15 Contingent liabilities and
contingent assets
Note 16 Commitments
Note 17 Events occurring after
the reporting period
Shine Justice Ltd Annual Report 2020
Page 125
Note 15
Contingent liabilities and contingent assets
(a) Bank guarantees
Bank guarantees are contracts that are measured in accordance with AASB 137 Provisions, Contingent Liabilities and
Contingent Assets. The Group’s bank guarantees are as follows:
Bank Guarantee Facility
Limit
Unused
(b) Contingent liabilities
2020
$’000
4,500
1,550
2019
$’000
4,600
1,547
The Group has received a small number of individual notifications submitted by former clients against the Group. When
each notification is received, the Group assesses the likelihood that the potential notice will proceed to a legal claim.
The Group’s estimate of the notifications that may progress to a claim and the excess that may need to be paid to its
insurers to cover such potential claims at 30 June 2020 is $40,000 (2019: $nil).
(c) Contingent assets
The Group had no contingent assets at 30 June 2020.
Page 126
Note 16
Commitments
(a) Capital commitments
There was nil significant capital expenditure contracted for at the end of the reporting period but not recognised as
liabilities (2019: $nil).
(b) Commitments
The Group has payment commitments to suppliers under vendor financing arrangements as follows:
Non-cancellable payments
Not later than 12 months
Between 12 months and 5 years
2020
$’000
2,022
2,328
4,350
2019
$’000
900
342
1,242
Page 127
Shine Justice Ltd Annual Report 2020
Note 17
Events occurring after the reporting period
(a) Dividend recommendation
(c) Litigation Funding Legislation Changes
Due to a legislation change which is taking place as
of 22 August 2020, it is expected that there may be
additional challenges in obtaining litigation funding
going forward. Consequently, there was a drive in July
and August 2020 to secure a number of matters that are
expected to advance in the coming year.
Refer to Note 13(b) for the final dividend recommended
by the Directors, to be paid on 25 September 2020.
(b) COVID-19 Impact
There has been limited impact from COVID-19 on the
operations and financial results of the Group. This has
continued to be the case through to 30 June 2020.
However, as a result of the renewed lockdown in
Victoria, the Group is continuing to monitor lead
indicators for potential impacts on performance in
the short to medium term.
At the date of the signing of the accounts, the Group
is comfortable that performance to date in FY21 does
not suggest that there will be a material impact on the
business in the near term.
Page 128
Further details
This section of the notes includes other
information that must be disclosed to
comply with the accounting standards
and other pronouncements, but that is
not immediately related to individual line
items in the financial statements.
130
133
138
139
141
144
146
149
Note 18 Related
party transactions
Note 19 Share-based payments
Note 20 Remuneration
of auditors
Note 21 Earnings per share
Note 22 Deed of
cross guarantee
Note 23 Parent entity
financial information
Note 24 Summary of significant
accounting policies
Note 25 Changes in
accounting policies
Shine Justice Ltd Annual Report 2020
Page 129
Note 18
Related party transactions
(a) Parent entities
The Group is controlled by the following entity:
Ownership interest
Name
Type
Place of
incorporation
2020
2019
Shine Justice Ltd
Immediate and ultimate
Australian parent entity
Australia
100%
100%
(b) Subsidiaries
Interests in subsidiaries are set out in Note 14(a).
(c) Key management personnel compensation
Short-term employee benefits
Post-employment benefits
Long-term employment benefits
Share-based payments
2020
$
2019
$
1,607,052
1,492,157
100,816
99,723
(701,510)
53,698
18,096
224,178
1,106,081
1,788,129
Detailed remuneration disclosures are provided in the remuneration report on pages 18 to 28.
Page 130
Related party transactions
(d) Transactions with other related parties
The following transactions occurred with a related party, Shine Lawyers NZ Limited which is an affiliated company of
which Simon Morrison and Stephen Roche, are Directors and controlling shareholders:
Sales and purchases of goods and services
Sale of goods, rent and services to entity controlled by key management personnel
Purchases of premises rent from entity controlled by key management personnel
Interest received from related parties
2020
$
2019
$
1,544,393
1,071,476
311,717
1,412,902
1,177,735
254,889
(i) Purchases from entities controlled by key management personnel
The Group acquired the following goods and services from entities that are controlled by a member of the Group’s key
management personnel:
Leases over and fit outs of commercial properties occupied by parts of the Group.
(e) Loans to related parties
The following occurred with a related party, Shine Lawyers NZ Limited which is an affiliated company of which Simon
Morrison and Stephen Roche are Directors and controlling shareholders:
Beginning of the year
Loans advanced
Loans repayments received
Interest charged
Loss allowance
End of year
2020
$
2019
$
3,404,395
1,438,524
2,894,219
1,636,047
(770,554)
(1,360,210)
311,717
–
254,889
(20,550)
4,384,082
3,404,395
No loss allowance was recognised in relation to loans to related parties during the year, see Note 12(c) for further
information. A loss allowance of $20,550 was recognised in expense in 2019.
Page 131
Shine Justice Ltd Annual Report 2020
(f) Liabilities associated with right to use assets provided by related parties
Related party transactions
Beginning of the year
Impact of change in accounting policy AASB 16
Interest charged
Repayments received
Additional commitments
Early terminations
End of year
2020
$
6,482,443
–
370,471
(763,449)
355,519
–
2019
$
–
7,173,914
392,603
(767,257)
218,771
(535,588)
6,444,984
6,482,443
(g) Terms and conditions
Goods were sold to related parties during the year based on the price lists in force and terms that would be available
to third parties.
All other transactions were made on normal commercial terms and conditions and at market rates.
The loans to other related parties are repayable two years from the reporting date. The loan attracts interest at the
rate equivalent to Shine Justice’s Australian working capital facility loan rate plus 2%. The interest rate on loans during
the year was 8.5% (2019: 8.5%).
Outstanding balances are unsecured and are repayable in cash.
(h) Consultancy fees
During the year, consultancy fees were paid to Stephen Roche of $240,000 (2019: $220,000).
Page 132
Note 19
Share-based payments
(a) Employee Share long-term
incentive scheme
The amount of rights that will vest depends on Shine
Justice Ltd:
The establishment of the Shine Justice Ltd Performance
Rights Plan (the Plan) was approved by shareholders at
the 2016 and 2019 annual general meetings.
The Plan is designed to provide long-term incentives
for senior managers and above to deliver long-term
shareholder returns. Under the Plan, participants are
granted rights which only vest if certain performance
standards are met.
Participation in the Plan is at the board’s discretion and
no individual has a contractual right to participate in the
scheme or to receive any guaranteed benefits.
Since the current reporting period, the Plan is
also administered by the Shine Board. This trust
is consolidated in accordance with Note 14(a)(i).
earnings per share (EPS) – 70% weighting, based
on the average annual growth in the EPS of Shine
Justice. Pro-rata vesting commences if average
annual EPS growth is over 7% per annum over a three-
year period from the date of issue, and
total shareholder return (TSR) – 30% weighting,
including share price growth, dividends and capital
returns, ranking within a peer Group of selected
companies that are listed on the Australian Securities
Exchange (ASX) Small Ordinaries Index over a three-
year period, and
Rights are granted under the plan for no consideration
and carry no dividend or voting rights. When vested, each
right converts into one ordinary share.
The price on which the number of rights granted is based
on the weighted average price at which the Company’s
shares are traded on the ASX on 15 days before plus 15
days after the release of the Shine Justice Ltd Annual
Report in the financial year to which they relate ($0.92 for
rights granted on 29 November 2019 and $0.91 for the
rights granted in December 2018).
Page 133
Shine Justice Ltd Annual Report 2020 Set out below are summaries of rights granted under the Plan:
FY18 issuance
As at 1 July
Forfeited during the year
As at 30 June
FY19 issuance
As at 1 July
Granted during the year
Forfeited during the year
As at 30 June
FY20 issuance
As at 1 July
Granted during the year
Forfeited during the year
As at 30 June
Share-based payments
2020
Number of rights
2019
Number of rights
EPS
TSR
EPS
TSR
1,330,634
570,271
1,402,045
600,876
(365,084)
(156,464)
(71,411)
(30,605)
965,550
413,807
1,330,634
570,271
1,206,647
517,135
–
–
–
–
1,261,498
540,642
(360,507)
(154,503)
(54,851)
(23,507)
846,140
362,632
1,206,647
517,135
–
–
1,824,042
781,732
(352,172)
(150,930)
1,471,870
630,802
–
–
–
–
–
–
–
–
–
–
Vested at 30 June
–
–
Page 134
Share rights outstanding at the end of the year have the following expiry of performance period:
Share-based payments
Expiry date of
performance period
Number of rights
2020
Number of rights
2019
30 June 2020
30 June 2021
30 June 2022
1,379,357
1,208,772
2,102,672
2,002,921
1,802,140
–
4,690,801
3,805,061
expiry date of performance period:
30 June 2022 (2019: 30 June 2021)
share price at grant date: $0.94 (2019: $0.71)
expected price volatility of the company’s shares:
47.09% (2019 – 50%)
expected dividend yield: 4.01% (2019: 4.5%)
risk-free interest rate: 0.66% (2019: 2.0%)
The expected price volatility is based on the historic
volatility (based on the remaining life of the rights),
adjusted for any expected changes to future volatility due
to publicly available information.
The fair value of the EPS and TSR rights at grant date $0.84
(2019 – $0.63) and $0.68 (2019 – $0.38) respectively was
estimated by taking the market price of the company’s
shares on that date less the present value of expected
dividends that will not be received by the executives on
their rights during the three-year performance period.
Grant date
8 June 2018
14 December 2018
29 November 2019
(i) Fair value of rights granted
The assessed fair value at grant date of rights granted
during the year ended 30 June 2020 was:
EPS, $0.84 per right (2019: $0.63)
TSR, $0.68 per right (2019: $0.38)
EPS
The fair value at grant date is independently determined
using a Black-Scholes Model (BSM). Under this approach
the value is based on the share price at the valuation date
with an adjustment for the dividends foregone during the
vesting period.
TSR
The fair value at grant date is independently determined
using an adjusted form of the BSM which includes a
Monte Carlo simulation model that considers the:
term of the rights
impact of dilution (where material)
share price at grant date
expected price volatility of the underlying share
expected dividend yield
risk-free interest rate for the term of the right, and
correlations and volatilities of the peer
Group companies.
The model inputs for rights granted during the year
ended 30 June 2020 included:
rights are granted for no consideration and vest based
on Shine Justice Ltd TSR ranking within a peer group of
selected companies over a three-year period.
grant date: 29 November 2019
(2019: 14 December 2018)
Page 135
Shine Justice Ltd Annual Report 2020 Share-based payments
(b) Deferred shares – Group Chief Operating Officer
Under her employment contract, the former Group Chief Operating Officer, who left the company in December 2019,
was entitled to receive in the form of deferred shares of Shine Justice Ltd:
100,000 shares which was issued on 14 November 2019, and
100,000 shares to be issued on 14 November 2020. These shares have now been forfeited
The issuing of the shares was conditional upon being employed by Shine Justice Ltd on the date of issue and not
being within a notice period given by either party.
They automatically convert into one ordinary share each on vesting at an exercise price of nil. The executive does not
receive any dividends and is not entitled to vote in relation to the deferred shares during the vesting period.
If the executive ceases to be employed by the Group within this period, the rights will be forfeited.
The following table shows the deferred shares granted and outstanding at the beginning and end of the reporting period:
As at 1 July
Granted during the year
Vesting during the year
Forfeited during the year
As at 30 June
2020
Number of shares
2019
Number of shares
100,000
100,000
(100,000)
(100,000)
–
100,000
–
–
–
100,000
Page 136
(c) Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transactions recognised during the period as part of employee
benefit expense were as follows:
Share-based payments
Rights issued under Employee Share long-term incentive scheme
Deferred shares issued
2019
$
2019
$
508,000
–
508,000
325,000
67,000
392,000
Accounting policy
Share-based compensation benefits are provided to employees via the Shine Justice Performance
Rights Plan.
Employee options
The fair value of rights granted under the Shine Justice Performance Rights Plan is recognised as an employee
benefits expense with a corresponding increase in equity. The total amount to be expensed is determined by
reference to the fair value of the options granted:
— including any market performance conditions (e.g. the entity’s share price)
— excluding the impact of any service and non-market performance vesting conditions (e.g. profitability, sales
growth targets and remaining an employee of the entity over a specified time period), and
— including the impact of any non-vesting conditions (e.g. the requirement for employees to save or hold shares
for a specific period of time).
The total expense is recognised over the vesting period, which is the period over which all the specified vesting
conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of options
that are expected to vest based on the non-market vesting and service conditions. It recognises the impact of
the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity.
The Performance Rights Plan is administered by the Shine Employee Share Trust, which is consolidated in
accordance with the principles in Note 14(a)(i). When the performance rights vest, the shares may be issued
by the Company. The Company can issue to the Trust or pay for it to acquire shares. The Board also has the
discretion to pay cash instead. The proceeds received net of any directly attributable transaction costs are
credited directly to equity.
Page 137
Shine Justice Ltd Annual Report 2020 Note 20
Remuneration of auditors
During the year, the company engaged a new auditor, PricewaterhouseCoopers Australia who replaced Ernst
and Young.
During the year the following fees were paid or payable for services provided by the auditor of the parent entity,
Shine Justice Ltd, its related practices and non-related audit firms:
(A) PRICEWATERHOUSECOOPERS AUSTRALIA
(i) Audit and other assurance services
Audit and review of financial statements
Total remuneration for audit and other assurance services
Total remuneration of PricewaterhouseCoopers Australia
(B) ERNST AND YOUNG
(i) Audit and other assurance services
Audit and review of financial statements
Total remuneration for audit and other assurance services
(ii) Taxation services
Taxation compliance services
Total remuneration for taxation services
2020
$
379,338
379,338
379,338
64,871
64,871
60,000
60,000
2019
$
–
–
–
755,750
755,750
67,917
67,917
Total remuneration of Ernst and Young
124,871
823,667
(C) NON PRICEWATERHOUSECOOPERS AUDIT FIRMS
(i) Audit and other assurance services
Audit of trust accounts and work in progress
Total remuneration of non-PricewaterhouseCoopers audit firms
Total auditor’s remuneration
33,689
33,689
24,700
24,700
537,898
848,367
Page 138
Note 21
Earnings per share
(a) Basic earnings per share
2020
Cents
2019
Cents
Attributable to the ordinary equity holders of the company
12.40
8.06
(b) Diluted earnings per share
Attributable to the ordinary equity holders of the company
12.13
7.92
2020
Cents
2019
Cents
(c) Reconciliation of earnings used in calculated earnings per share
Basic earnings per share
Profit attributable to the ordinary equity holders of the company used
in calculating basic earnings per share
Diluted earnings per share
Profit attributable to the ordinary equity holders of the company used
in calculating diluted earnings per share
(d) Weighted average number of shares used as the denominator
2020
$'000
2019
$'000
21,476
13,953
21,476
13,953
2020
Number
2019
Number
Weighted average number of ordinary shares used as the denominator in calculating basic
earnings per share
173,224,654
173,161,812
Adjustments for calculation of diluted earnings per share:
Deferred shares
3,760,463
3,047,948
Weighted average number of ordinary shares and potential ordinary shares used as the
denominator in calculating diluted earnings per share
176,985,117
176,209,760
Page 139
Shine Justice Ltd Annual Report 2020
Earnings per share
(e) Information concerning the classification of securities
(i) Deferred shares
Rights to deferred shares granted to executives and employees under the Group’s long-term incentive scheme are
included in the calculation of diluted earnings per share assuming all outstanding rights will vest. The rights are not
included in the determination of basic earnings per share. Further information about the rights is provided in Note 19.
Accounting policy
Basic earnings per share
Basic earnings per share is calculated by dividing:
— the profit attributable to owners of the company, excluding any costs of servicing equity other than
ordinary shares
— by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus
elements in ordinary shares issued during the year and excluding treasury shares.
Diluted earnings per share
Adjusts the figures used in the determination of basic earnings per share to consider:
— the after-income tax effect of interest and other financing costs associated with dilutive potential ordinary
shares, and
— the weighted average number of additional ordinary shares that would have been outstanding assuming the
conversion of all dilutive potential ordinary shares.
Page 140
Note 22
Deed of cross guarantee
Shine Justice Ltd and its subsidiaries listed below are
parties to a deed of cross guarantee under which each
company guarantees the debts of the others. By entering
into the deed, the wholly owned entities have been
relieved from the requirement to prepare a financial
report and Directors’ report under ASIC Corporations
(Wholly owned Companies) Instrument 2016/785.
The subsidiaries are listed below:
Shine Lawyers Pty Ltd
My Insurance Claim Pty Ltd
Shine DIR Pty Ltd
Shine (U.S.) Pty Ltd
Emanate Legal Services Pty Ltd
SB Law Pty Ltd
Sciacca’s Lawyers Pty Ltd
Sciacca’s Family Lawyers Pty Ltd
Shine NZ Services Pty Ltd
Bradley Bayly Holdings Pty Ltd
Best Wilson Buckley Family Law Pty Ltd
Claims Consolidated Pty Ltd
Nerve Solutions Group Pty Ltd
ACA Lawyers Pty Ltd
Nerve Legal Pty Ltd
(a) Consolidated statement of profit or loss, statement of comprehensive income
and summary of movements in consolidated retained earnings
The above companies represent a ‘closed group’ for the purposes of the instrument, and as there are no other parties
to the deed of cross guarantee that are controlled by Shine Justice Ltd, they also represent the ‘extended closed group’.
Set out below is a consolidated statement of profit or loss, a consolidated statement of comprehensive income and
a summary of movements in consolidated retained earnings for the year ended 30 June 2020 of the closed Group
consisting of Shine Justice Ltd and its subsidiaries.
Consolidated statement of comprehensive income
Profit before income tax
Income tax expense
Profit for the period
Summary of movements in consolidated retained earnings
Retained earnings at the beginning of the financial year
Profit for the period
Change in accounting policies – AASB 9, 15 and 16
Dividends paid or provided for
Retained earnings at the end of the financial year
2020
$’000
33,042
(10,119)
22,923
170,565
22,923
–
(6,928)
186,560
2019
$’000
22,950
(8,651)
14,299
166,538
14,299
(4,211)
(6,061)
170,565
Page 141
Shine Justice Ltd Annual Report 2020 Deed of cross guarantee
(b) Consolidated balance sheet
Set out below is a consolidated balance sheet as at 30 June 2020 of the closed group consisting Shine Justice Ltd
and its subsidiaries listed above.
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Contract assets – work in progress
Income tax receivable
Unbilled disbursements
Other assets
Total current assets
Non-current assets
Trade and other receivables
Contract assets – work in progress
Unbilled disbursements
Plant and equipment
Right of Use Assets
Intangible assets
Investments in subsidiaries
Total non-current assets
2020
$’000
2019
$’000
31,690
20,409
175,761
322
70,716
2,921
26,397
18,284
169,884
306
59,898
2,792
301,819
277,561
5,932
118,702
24,067
2,935
39,804
45,209
3,600
240,249
4,409
107,196
17,907
3,124
46,724
44,201
3,600
227,161
Total assets
542,068
504,722
LIABILITIES
Current liabilities
Trade and other payables
Disbursement creditors
Borrowings
Lease liabilities
Other current financial liabilities
Provisions
Total current liabilities
Page 142
9,644
81,795
1,612
9,575
5,224
7,520
115,370
9,712
64,461
1,223
9,434
5,162
6,382
96,374
Non-current liabilities
Trade and other payables
Borrowings
Lease liabilities
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Share capital
Other reserves
Retained earnings
Total equity
Deed of cross guarantee
2020
$’000
2,535
45,000
43,847
91,936
2,670
2019
$’000
2,515
45,000
52,302
81,819
2,496
185,988
184,132
301,358
280,506
240,710
224,216
53,223
927
186,560
240,710
53,150
501
170,565
224,216
Page 143
Shine Justice Ltd Annual Report 2020 Note 23
Parent entity financial information
(a) Summary financial information
The individual financial statements for the parent entity, Shine Justice Ltd, show the following aggregate amounts:
2020
$’000
36,293
186,999
5,394
46,064
132,627
896
7,412
2019
$’000
32,005
190,140
663
44,768
132,554
433
12,385
140,935
145,372
1,868
1,868
26,253
26,253
Balance sheet
Current assets
Total assets
Current liabilities
Total liabilities
Shareholders’ equity
Issued capital
Reserves
Retained earnings
Profit for the period
Total comprehensive income
Page 144
Parent entity financial information
(b) Guarantees entered into by the
(ii) Tax consolidation
parent entity
The parent entity has provided financial guarantees in
respect of bank guarantees amounting to $2,949,823
(2019: $3,053,000).
The parent entity has also given secured guarantees in
respect of:
Bank loans which are secured by a fixed and floating
charge over the assets of the Group, and
Lease and hire purchase liabilities secured by the
underlying assets.
In addition, there are cross guarantees given by Shine
Justice Ltd and its subsidiaries as described in Note 22.
No deficiencies of assets exist in any of these companies.
No liability was recognised by the parent entity or the
Group in relation to these last two guarantees, as the
fair value of the guarantees is immaterial.
(c) Contingent liabilities of the parent entity
The parent entity did not have any contingent liabilities as
at 30 June 2020 or 30 June 2019. For information about
guarantees given by the parent entity, please see above.
(d) Contractual commitments for the
acquisition of plant or equipment
The parent entity did not have any contractual
commitments for the acquisition of plant or equipment as
at 30 June 2020 or 30 June 2019.
(e) Determining the parent entity
financial information
The financial information for the parent entity has been
prepared on the same basis as the consolidated financial
statements, except as set out below.
(i) Investments in subsidiaries
Investments in subsidiaries are accounted for at cost in
the financial statements of Shine Justice Ltd.
Shine Justice Ltd and its wholly owned Australian
controlled entities have implemented the tax
consolidation legislation.
The head entity, Shine Justice Ltd, and the controlled
entities in the tax consolidated Group account for their own
current and deferred tax amounts. These tax amounts are
measured as if each entity in the tax consolidated Group
continues to be a stand-alone taxpayer.
In addition to its own current and deferred tax amounts,
Shine Justice Ltd also recognises the current tax liabilities
(or assets) and the deferred tax assets arising from
unused tax losses and unused tax credits assumed from
controlled entities in the tax consolidated Group.
The entities have also entered into a tax funding
agreement under which the wholly-owned entities fully
compensate Shine Justice Ltd for any current tax payable
assumed and are compensated by Shine Justice Ltd
for any current tax receivable and deferred tax assets
relating to unused tax losses or unused tax credits
that are transferred to Shine Justice Ltd under the tax
consolidation legislation. The funding amounts are
determined by reference to the amounts recognised in
the wholly owned entities’ financial statements.
The amounts receivable/payable under the tax funding
agreement are due upon receipt of the funding advice from
the head entity, which is issued as soon as practicable
after the end of each financial year. The head entity may
also require payment of interim funding amounts to assist
with its obligations to pay tax instalments.
Assets or liabilities arising under tax funding agreements
with the tax consolidated entities are recognised as
current amounts receivable from or payable to other
entities in the Group.
Any difference between the amounts assumed and
amounts receivable or payable under the tax funding
agreement are recognised as a contribution to (or
distribution from) wholly owned tax consolidated entities.
(iii) Financial guarantees
Where the parent entity has provided financial
guarantees in relation to loans and payables of
subsidiaries for no compensation, the fair values of
these guarantees are accounted for as contributions and
recognised as part of the cost of the investment.
Page 145
Shine Justice Ltd Annual Report 2020 Note 24
Summary of other significant accounting policies
This note provides a list of the significant accounting
policies adopted in the preparation of these consolidated
financial statements to the extent they have not already
been disclosed in the other notes above. These policies
have been consistently applied to all the years presented,
unless otherwise stated. The financial statements
are for the Group consisting of Shine Justice Ltd
and its subsidiaries.
(a) Basis of preparation
These general-purpose financial statements have been
prepared in accordance with:
Australian Accounting Standards
Interpretations issued by the Australian Accounting
Standards Board, and
the Corporations Act 2001.
Shine Justice Ltd is a for-profit entity for the purpose of
preparing the financial statements.
(i) Compliance with IFRS
The consolidated financial statements of the Shine
Justice Ltd Group also comply with International Financial
Reporting Standards (IFRS) as issued by the International
Accounting Standards Board (IASB).
(ii) Historical cost convention
The financial statements have been prepared on a
historical cost basis, except for the following:
certain financial assets – measured at fair value
(iii) New and amended standards adopted by the Group
The Group has applied the following standards and
amendments for the first time for their annual reporting
period commencing 1 July 2019:
Interpretation 23 Uncertainty over
Income Tax Treatments
The Interpretation addresses the accounting for income
taxes when tax treatments involve uncertainty that affects
the application of AASB 112 and does not apply to taxes
or levies outside the scope of AASB 112, nor does it
specifically include requirements relating to interest
and penalties associated with uncertain tax treatments.
The Interpretation specifically addresses the following:
Whether an entity considers uncertain tax
treatments separately
The assumptions an entity makes about the
examination of tax treatments by taxation authorities
How an entity determines taxable profit (tax loss), tax
bases, unused tax losses, unused tax credits and tax
rates, and
How an entity considers changes in facts and
circumstances.
The Group does not apply significant judgement in
identifying uncertainties over income tax treatments.
However, since the Group does operate in a multinational
environment, this Interpretation was assessed to see if
there was any impact on its financial report.
Upon adoption of the Interpretation, the Group
considered whether it had any uncertain tax positions,
however, given there are no particularities in the
business, it was concluded that the Interpretation did
not have an impact on the financial report.
AASB 2018-1 Amendments to Australian Accounting
Standards – Annual Improvements 2015-2017 Cycle
This standard makes amendments to (with assessment
made by the Group relating to the impact on the financial
report in brackets):
AASB 3 Business Combinations (no impact)
AASB 11 Joint Arrangements (not applicable)
AASB 112 Income Taxes (no impact), and
AASB 123 Borrowing Costs (no impact).
(iv) New standards and interpretations not yet adopted
Certain new accounting standards and interpretations
have been published that are not mandatory for 30 June
2020 reporting periods and have not been early adopted
by the Group. The Group has assessed that these new
standards and interpretations are not expected to have
a material impact on the entity in the current or future
reporting periods and on foreseeable future transactions.
AASB amends the definition of a business
(AASB 2018-6)
AASB amends the definition of material (AASB 2018-7)
Interest rate benchmark reform on hedge accounting
(AASB 2019-3)
Revised Conceptual Framework for Financial
Reporting (AASB 2019-1)
Disclosure of the effect of new IFRS standards not yet
issued in Australia (AASB 2019-5)
AASB approves removal of special purpose financial
reports and new simplified disclosures (AASB 2020-2
and AASB 1060)
Page 146
Summary of other significant accounting policies
Classification of liabilities as current or non-current
(iii) Group companies
(AASB 2020-1)
Narrow scope amendments issued for IAS 16, IAS 37,
IFRS 3 and Annual Improvements to IFRS Standards
2018-2020 affecting IFRS 1, IFRS 9, IFRS 16 and IAS 41.
(b) Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of each of t
he Group’s entities are measured using the currency of
the primary economic environment in which the entity
operates (‘the functional currency’).
The consolidated financial statements are presented in
Australian dollar ($), which is Shine Justice Ltd’s functional
and presentation currency.
The results and financial position of foreign operations
(none of which has the currency of a hyperinflationary
economy) that have a functional currency different
from the presentation currency are translated into the
presentation currency as follows:
assets and liabilities for each balance sheet presented
are translated at the closing rate at the date of that
balance sheet
income and expenses for each statement of profit
or loss and statement of comprehensive income are
translated at average exchange rates (unless this is
not a reasonable approximation of the cumulative
effect of the rates prevailing on the transaction dates,
in which case income and expenses are translated at
the dates of the transactions), and
all resulting exchange differences are recognised in
(ii) Transactions and balances
other comprehensive income.
On consolidation, exchange differences arising from the
translation of any net investment in foreign entities, and
of borrowings and other financial instruments designated
as hedges of such investments, are recognised in other
comprehensive income. When a foreign operation is sold
or any borrowings forming part of the net investment
are repaid, the associated exchange differences are
reclassified to profit or loss, as part of the gain or loss
on sale.
Goodwill and fair value adjustments arising on the
acquisition of a foreign operation are treated as assets
and liabilities of the foreign operation and translated at
the closing rate.
Foreign currency transactions are translated into the
functional currency using the exchange rates at the
dates of the transactions. Foreign exchange gains and
losses resulting from the settlement of such transactions
and from the translation of monetary assets and liabilities
denominated in foreign currencies at year end
exchange rates are generally recognised in profit
or loss. They are deferred in equity if they relate to
qualifying cash flow hedges and qualifying net
investment hedges or are attributable to part of
the net investment in a foreign operation.
Foreign exchange gains and losses that relate to
borrowings are presented in the statement of profit or
loss, within finance costs. All other foreign exchange
gains and losses are presented in the statement of profit
or loss on a net basis within other gains/(losses).
Non-monetary items that are measured at fair value in
a foreign currency are translated using the exchange
rates at the date when the fair value was determined.
Translation differences on assets and liabilities carried
at fair value are reported as part of the fair value gain
or loss. For example, translation differences on non-
monetary assets and liabilities such as equities held at
fair value through profit or loss are recognised in profit or
loss as part of the fair value gain or loss and translation
differences on non-monetary assets such as equities
classified as at fair value through other comprehensive
income are recognised in other comprehensive income.
Page 147
Shine Justice Ltd Annual Report 2020 Summary of other significant accounting policies
(c) Impairment of assets
(f) Classification in the cash flow statement
Goodwill and intangible assets that have an indefinite
useful life are not subject to amortisation and are tested
annually for impairment, or more frequently if events
or changes in circumstances indicate that they might
be impaired. Other assets are tested for impairment
whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. An
impairment loss is recognised for the amount by which
the asset’s carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an
asset’s fair value less costs of disposal and value in use.
The Group’s loans to related parties were presented
as trade receivables in the balance sheet. However,
management considers it to be more relevant if all loans
to related parties are presented under other financial
assets at amortised cost in one separate line item in the
balance sheet. Prior year comparatives as at 30 June
2019 have been restated by reclassifying $459,000 from
current trade receivables to current other financial assets
at amortised cost and $3,404,000 from non-current trade
receivables to non-current other financial assets
at amortised cost.
For the purposes of assessing impairment, assets
are grouped at the lowest levels for which there are
separately identifiable cash inflows which are largely
independent of the cash inflows from other assets or
groups of assets (cash-generating units).
Non-financial assets other than goodwill that suffered
an impairment are reviewed for possible reversal of the
impairment at the end of each reporting period.
(g) Rounding of amounts
The Company is of a kind referred to in ASIC Legislative
Instrument 2016/191, relating to the ‘rounding off’
of amounts in the financial statements. Amounts in
the financial statements have been rounded off in
accordance with the instrument to the nearest thousand
dollars, or in certain cases, the nearest dollar.
(d) Reclassification of employee
(h) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of
the amount of associated GST, unless the GST incurred
is not recoverable from the taxation authority. In this case
it is recognised as part of the cost of acquisition of the
asset or as part of the expense.
Receivables and payables are stated inclusive of the
amount of GST receivable or payable. The net amount
of GST recoverable from, or payable to, the taxation
authority is included with other receivables or payables
in the balance sheet.
Cash flows are presented on a gross basis. The GST
components of cash flows arising from investing or
financing activities which are recoverable from, or
payable to the taxation authority, are presented as
operating cash flows.
benefit obligations
The Group’s liabilities for accumulating sick leave and
other long-term employee benefit obligations were
previously presented as provisions in the balance sheet.
However, management considers it to be more relevant
if all employee benefit obligations are presented in
one separate line item in the balance sheet. Prior year
comparatives as at 30 June 2019 have been restated
by reclassifying $6,453,000 from current provisions to
current employee benefit obligations and $1,188,000
from non-current provisions to non-current employee
benefit obligations.
(e) Reclassification of loans to related parties
The Group’s loans to related parties were presented
as trade and other receivables in the balance sheet.
However, management considers it to be more relevant
if all loans to related parties are presented under other
financial assets at amortised cost in one separate line
item in the balance sheet. Prior year comparatives as
at 30 June 2019 have been restated by reclassifying
$459,000 from current trade and other receivables
to current other financial assets at amortised cost and
$3,404,000 from non-current trade and other receivables
to non-current other financial assets at amortised cost.
Page 148
Note 25
Changes in accounting policies
Adoption of AASB 9 Financial Instruments, AASB 15 Revenue from Contracts with Customers,
and AASB 16 Leases
These standards were adopted by the Group on 1 July 2018 and replaced the guidance in AASB 139 Financial
Instruments: Recognition and Measurement, AASB118 Revenue and AASB 117 Leases respectively.
The impact of the adoption of these standards on the Group’s financial statement and disclosures of the accounting
policy that applied from 1 July 2018 was therefore disclosed in the prior financial year. Refer to the 2019 Annual Report
for more detail.
There were no other changes in accounting policies during the year.
Page 149
Shine Justice Ltd Annual Report 2020 DIRECTORS’ DECLARATION
In the Directors’ opinion:
(a) the financial statements and notes set on pages 44 to 149 are in accordance with the Corporations Act
2001, including:
(i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional
reporting requirements; and
(ii) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2020 and of its
performance for the financial year ended on that date, and;
(b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become
due and payable; and
(c) at the date of this declaration, there are reasonable grounds to believe that the members of the extended closed
Group identified in Note 22 will be able to meet any obligations or liabilities to which they are, or may become,
subject by virtue of the deed of cross guarantee described in Note 22.
Note 24(a) confirms that the financial statements also comply with International Financial Reporting Standards as issued
by the International Accounting Standards Board.
The directors have been given the declarations by the chief executive officer and chief financial officer required by
section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of the Directors made pursuant to section 295(5) of the Corporations
Act 2001.
Simon Morrison
MANAGING DIRECTOR & CEO
Brisbane, 28 August 2020
Page 150
Shine Justice Ltd Annual Report 2020
Page 151
Page 152
Shine Justice Ltd Annual Report 2020
Page 153
Page 154
Shine Justice Ltd Annual Report 2020
Page 155
Page 156
Shine Justice Ltd Annual Report 2020
Page 157
Page 158
SHAREHOLDER INFORMATION
The following information is current as at 24 August 2020.
Holding Distribution
Category
(size of holding)
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
294
373
189
273
56
Total
1,185
Unmarketable Parcels
Shareholders
Holders
FY18 Rights
Holders
FY19 Rights
Holders
FY20 Rights
0
0
0
39
1
40
0
0
10
39
1
50
0
0
0
62
1
63
The number of shareholders holding less than a marketable parcel of Shares is 211.
Substantial Holders
Substantial Holder
Relevant Interests of Substantial Holder and Associates
Stephen Roche and Associates
Simon Morrison and Associates
FIL Limited and Associates
Cadence Asset Management Entities
84,979,804
84,979,804
17,109,888
12,849,105
*As disclosed in substantial shareholder notices received by the Company.
Voting Rights
Each Share entitles its holder to one vote on a poll. Each member present at a meeting in person or by proxy has one
vote on a show of hands. Performance Rights do not confer voting rights.
Performance Rights
The following Performance Rights are held by the following number of holders:
Performance Rights
FY18
Number of Rights
1,281,083
Number of holders
40
FY19
1,143,149
50
FY20
2,003,156
63
Page 159
Shine Justice Ltd Annual Report 2020 No Current On-Market Buy-Back
No Restricted Securities or Voluntary Escrow
The Company is not currently conducting an
on-market buy-back.
No securities in the Company are restricted securities or
are subject to voluntary escrow.
Top 20 Holders Of Shares
Name
Simon Morrison
Stephen Roche
HSBC Custody Nominees (Australia) Limited
JP Morgan Nominees Australia Pty Limited
National Nominees Limited
BNP Paribas Nominees Pty Ltd
BNP Paribas Noms Pty Ltd
Torrito Pty Ltd
NCH Pty Ltd
Jodie Willey
1
2
3
4
5
6
7
8
9
10
Citicorp Nominees Pty Limited
11
Stephen Francis Roche
12
Ankla Pty Ltd
13
CHSL Thompson Pty Ltd
14
Binya Park Pty Ltd*
15
Stuart Macleod
16
Mercury Holdings Pty Ltd
17
Neweconomy Com Au Nominees Pty Limited
18
Timothy Wilson
19
Lara Schliebs
20
Grant Zeller
Total Top 20 Holders
Balance of Register
Total Shares
* Binya Park Pty Ltd is a company controlled by Simon Morrison
Page 160
Number of Shares Held
% of issued capital
42,339,902
42,339,902
25,417,513
11,277,062
7,453,056
6,179,573
5,870,573
2,728,021
1,777,649
1,512,957
1,018,070
973,802
833,936
821,107
673,802
664,744
625,000
616,003
557,376
526,479
500,000
154,706,527
18,555,285
173,261,812
24.44
24.44
14.67
6.51
4.30
3.57
3.39
1.57
1.03
0.87
0.59
0.56
0.48
0.47
0.39
0.38
0.36
0.36
0.32
0.30
0.29
89.29
10.71
100.00
GLOSSARY
AGM
ASIC
ASX
Annual general meeting
Australian Securities & Investments Commission
ASX Limited ACN 008 624 691 or the securities
exchange operated by it
Best Wilson Buckley
Best Wilson Buckley Family Law Pty Ltd ACN 139 493 039 or the
business conducted by it
Board
Bradley Bayly
Carr & Co
CFO
Chairman
The board of Directors of the Company
Bradley Bayly Holdings Pty Ltd ACN 123 603 805 or the business
conducted by it
Carr & Co Divorce & Family Lawyers Pty Ltd ACN 114 924 168 or the
business conducted by it
Chief Financial Officer
The chairman of Directors
Company/Shine/Shine Justice
Shine Justice Ltd ACN 162 817 905
Company website
www.shinejustice.com.au
Constitution
COO
The constitution of the Company
Chief Operating Officer
Corporations Act
Corporations Act 2001 (Cth)
Director
EBITDA
Emanate
EPS
FY18
FY19
A director of the Company
Earnings before interest, income tax, depreciation, amortisation
and impairment
Emanate Legal Services Pty Ltd ACN 169 229 752 or the business
conducted by it
Earnings per share
The financial year ended 30 June 2018
The financial year ended 30 June 2019
FY20/Financial Year
The financial year ended 30 June 2020
FY18 Right
FY19 Right
FY20 Right
A Performance Right issued in June 2018 in respect of FY18
A Performance Right issued in December 2018 in respect of FY19
A Performance Right issued in November 2019 in respect of FY20
Group/Shine Justice Group
The Company and its Subsidiaries
KMP
Key Management Personnel, being those persons having authority
and responsibility for planning, directing and controlling the
activities of the Group, directly or indirectly, including any Director
(whether executive or otherwise)
Page 161
Shine Justice Ltd Annual Report 2020 Leadership Team
A management team, the members of whom report directly or
through one person to the Managing Director & CEO
Listing Rules
The listing rules of ASX
LTI
LTIP
Long Term Incentive
Long Term Incentive Plan
Non-executive Director
A Director other than the Managing Director & CEO
NPAT
Net profit after tax
Performance Right/Right
An unquoted performance right issued under the LTIP
PwC
RTSR
Sciacca’s
Share
Shine Lawyers
PricewaterhouseCoopers
Relative Total Shareholder Return
Sciacca’s Lawyers Pty Ltd ACN 126 179 084 or the business
conducted by it
A fully paid ordinary share in the Company
Shine Lawyers Pty Ltd ACN 134 702 757 or the
business conducted by it
Stephen Browne Lawyers
SB Law Pty Ltd ACN 169 699 183 or the business conducted by it
STI
STIP
Subsidiaries
WIP
Short Term Incentive
Short Term Incentive Plan
The wholly owned subsidiaries of the Company as set out in
Note 14 to the Financial Statements
Work-in-progress, being the amount of time recorded and not yet
invoiced and recovered in relation to a matter
Page 162
CORPORATE DIRECTORY
Directors
Graham Bradley AM
Independent Non-executive Chairman
Teresa Dyson
Independent Non-executive Director
David Bayes
Independent Non-executive Director
Simon Morrison
Managing Director & CEO
Chief Financial Officer |
Company Secretary
Ravin Raj
General Counsel |
Company Secretary
Annette O’Hara
Registered Office
Principal Administrative Office
Level 13
160 Ann Street
Brisbane QLD 4000
Phone +61 7 3006 6000
Fax +61 7 3229 1999
ASX Listing
ASX Code SHJ
Company Numbers
ABN 93 162 817 905
ACN 162 817 905
Auditors
PricewaterhouseCoopers
480 Queen Street
Brisbane QLD 4000
Phone +61 7 3257 5000
Fax +61 7 3257 5999
Bankers
Commonwealth Bank of Australia
Level 21
180 Ann Street
Brisbane QLD 4350
Share Registry
Link Market Services Limited
Level 21, 10 Eagle Street
Brisbane QLD 4000
registrars@linkmarketservices.com.au
Phone +61 1300 554 474 (toll free)
Page 163
Shine Justice Ltd Annual Report 2020 Page 164