by Peter Frankl.
An uneventful set of numbers
Shine Lawyers’ financial performance in the 2017/18 year lacked the excitement and drama that we occasionally see in the publicly listed law firm sector.
On the whole, investors were ok with this lack of excitement.
The ‘boring’ and stable journey through FY18 helped lift Shine’s share price by 26.4% over the past 12 months (from 29 August 2017 to 29 August 2018).
However, the uneventful financial results were a bit too uneventful for some investors. On the day of their release (29/8/18) the share price fell 4.592% to 93.5 cents. Some investors might have been taking a profit and some might have been looking for more exciting financial prospects elsewhere.
The profitability challenge
Annual revenue for FY 2018 was $179.4m which was up 8.7% compared to the previous year. Profit increased by 3.4% as measured by EBITDA growth. For EBITDA as a percentage of revenue, the company was slightly less profitable than in FY17.
Around 50% of the headline revenue number of the firm ends up as employee benefits. For FY18 employee benefits was $90 million. This is a professional services business. People are the main asset.
At Shine Lawyers, 847 people generated $179.4 million revenue in FY18. By contrast, at Intellectual Property firm IPH Limited, 660 people generated $226 million with an EBITDA of $74 million, compared to Shine’s $37.72 million.
Is it fair to compare a compensation firm with an IP firm? Maybe.
Technology to the rescue
What is unfolding is a very public experiment of Shine Lawyers’ ability to leverage technology for the benefit of clients, staff and productivity. IPH Limited has been a success story in this respect.
In June 2018, Thomson Reuters Elite announced that Shine Lawyers went live with its 3E® software. The firm is also utilizing a number of additional offerings from the 3E Enterprise Business Management Solution, including 3E MatterSphere®, 3E Workspace, and Xcelerate Budgeting and Forecasting, as well as partner solution Cosine Matter Planning.
Shine will also take advantage of Xcelerate Budgeting and Forecasting—powered by Elite partner OLAP Vision—which promises to unlock real-time insights into the firm’s revenue and expense budgets, forecasts, and other key targets. There was also the implementation of Cosine Matter Planning to help maximize the capabilities of the 3E platform through more accurate resourcing, pricing, and profitability of matters.
Technology takes center stage at Shine Lawyers and holds the promise for the firm of helping it to bust through its incremental improvements into the profit stardom territory of firms such as IPH.