Q4 2026 Shine Justice Ltd Earnings Call
Speaker #2: Thank you for standing by, and welcome to the Shine Justice Limited FY26 four-year results call. All participants are in a listen-only mode. There will be a presentation, followed by a question-and-answer session.
Speaker #2: If you wish to ask a question, you will need to press the star key followed by the number 1 on your telephone keypad. I would now like to hand the conference over to Carolyn Barker, AM, Group Chief Executive Officer.
Speaker #2: Please go ahead.
Speaker #3: Oh, thank you very much. Well, welcome, everybody. It is a pleasure to be speaking with you again, this time at the full year. With me today is Mark Devine, our Chief Executive Officer, and also John George, our Investor Relations Adviser.
Speaker #3: Simon Morrison, who has undertaken many of these presentations to the market, has moved from Managing Director to Executive Director and Head of International Mass Torts.
Speaker #3: So, we'll be taking the meeting today, and Simon, no doubt, will be listening in his Head of International Mass Torts role, which is very exciting for the business.
Speaker #3: So what we're going to do is, obviously, take you through the results. You've got the pack downloaded, no doubt, so we will be referring to page numbers on the way through, should we need to.
Speaker #3: So everybody can keep up to speed or up to date with what we're discussing here in the room. We're in Brisbane, Queensland, Australia, at our head office for Shine Justice.
Speaker #3: So, we do have an improved result this year, FY26: revenue is up 2.3%, EBITDA is up 7%, and net profit is restored, which is very important.
Speaker #3: Of course. Now, I want to point out that's on a statutory basis. We will talk about the one-off transaction that has affected our results for this year.
Speaker #3: That will be clearly articulated in the presentation as we go through. But we ended the year—30 June '26—reporting high revenue, improved earnings, stable operating cash flow, and a well-funded balance sheet.
Speaker #3: And this improvement was driven by our growth in legal work, both in personal injury and in class actions, and the higher fees billed—higher average new file fees. Controlling still our back-end costs, our cost management was very important for us to keep a focus on, and then continuing to invest in emerging technology platforms, which we'll talk about. And, of course, international growth initiatives.
Speaker #3: You'll hear us talk about IMT—that is short, in Shine talk, for International Mass Torts—and we'll talk about that more in the presentation, as we have some exciting news about our international growth in that regard.
Speaker #3: So let me hand straight over to Mark Devine to take us through the numbers. Mark.
Speaker #4: Thank you, Carolyn. Good morning, everyone. As Carolyn said, we'll reference the slide deck as published on the IFEX this morning, and I'll give a brief overview of the high-level numbers.
Speaker #4: As Carolyn said, there are sort of two sets, if you like, statutory numbers, and we thought it very important to call out the impact of the announcement that we released last Friday—being that class action, the legacy class action, sorry—which we've had to impasse some revenue and some disbursements on, so I'll get to that in a minute.
Speaker #4: But on slide three, adjusted revenue of 209.2 million sorry, statutory revenue of 209.2 million which is up 2.3%, as Carolyn said, net work in progress is 366.6 million.
Speaker #4: So that's fairly stable. Obviously, we've added weapon build-off, which is great just in the company's history. We're at $12 billion-plus in damages recovered for our clients.
Speaker #4: Which is a great number. And we finished the year with around 900 staff in 50-plus offices, both in Australia, or rather, in Australia, New Zealand, Thailand, and the US.
Speaker #4: So, increasing our domestic footprint as well as evolving our international presence. If you move to slide four, we wanted to get this one up front and center and explain the impacts of the write-down on the legacy class action.
Speaker #4: So you'll see on the table there, where it really impacted was the revenue line. So, there was an $11.2 million increase in the constraint rate carried against that matter.
Speaker #4: What that basically means is that we had recognised revenue up to $11.2 million on that matter. And due to the outcome of the court proceeding—interlocutory proceeding, sorry—in the US, under accounting standards, we've had to provision against that.
Speaker #4: So that reduced the top-line revenue by $11.2 million. Without that transaction, the adjusted number is $220.4 million, which, on a like-for-like basis compared to last year, represents an increase of 7.8%.
Speaker #4: So we don't discount the adjustment that has occurred. But if it hadn't occurred, we would have been up around 8% on revenue for the year, which I think is a great outcome.
Speaker #4: The other part of that transaction was the disbursements that were carried on that matter, which Shine are currently carrying on their balance sheet. So again, we've had to sort of impair those down $1.8 million, which made our operating expenses $175.9 million for the year, which is a 5.6% increase on the previous year.
Speaker #4: And, obviously, in the previous year there was an adjustment for a fair value loss of approximately $10 million that was included there as well.
Speaker #4: So, take all that into account. I think the headline number is the EBITDA. The statutory is $31.7. The adjusted EBITDA, taking into account backing out those transactions, is $44.7.
Speaker #4: So, 13.9% increase for the year, which again I think just is reflective of the focus on the business and how we're running both the personal injury and the class action business to get such a quite an impressive increase, outside of that issue.
Speaker #4: And net profit after tax, obviously, the bottom line on a statutory basis, is $6.7 million. Taking into account the adjusting items and the tax effect of those items, that actually adjusts to about $15.8 million, against $9.7 million adjusted for last year.
Speaker #4: So, a 62.9% increase, which is again a terrific result. And underneath that, we've got earnings per share statutory 5.74 against an adjusted of 11.19, an 87% increase on last year.
Speaker #4: So, quite a good result, with the exception of that legacy matter, which has had, obviously, a substantial impact. But I think we've considered that a one-off type scenario.
Speaker #4: Move to slide five. So, this gives you sort of the snapshot on the adjusted basis, which basically just covers all the numbers I've gone through: $220 million revenue, $44.7 million adjusted EBITDA, operating cash flow $19 million.
Speaker #4: That was stable for the year. There is some width that was built up, which we didn't build off during the year, which would have been nice to build off and increase the cash flow.
Speaker #4: And also, there were some investments, as Carolyn mentioned, in emerging technology and some of our operating costs to get in front of where we need to be from an emerging technology perspective.
Speaker #4: Move to slide six. So that's a two-segment business that Shine has: personal injury and class actions. The personal injury side had some good growth during the year.
Speaker #4: Both revenue and EBITDA grew whilst maintaining its cost base, and class actions again grew during the year on an adjusted basis. And obviously, on an adjusted basis, it made a loss.
Speaker #4: So for personal injury, EBITDA was $36.6 million, up 18.4% on last year's number. That's off a base of $181 million in revenue, which is up from $166 million in the previous year.
Speaker #4: Our current sort of footprint is 47 personal injury offices around Australia, and in New Zealand and the US, with around 540-plus personal injury staff. That's around 8.5% of the market share, according to the last IBIS Worldwide report, which was back in 2025.
Speaker #4: Which still means for us, which is the focus, there's still 73% of the market share outside the sort of the top three PI firms.
Speaker #4: So, still a lot of market share out there that Shine can go after and try to increase its percentage. Class actions, as I said, on the adjusted EBITDA of $8.2 million.
Speaker #4: Which was up from last year’s 7.7. So, a good increase. There has been investment in class actions during the year in investigation work.
Speaker #4: So, it's obviously work we recognise—or, sorry, work we do. We don't recognise it as revenue until such time as it reaches a test of being an active, funded matter.
Speaker #4: So, we did have a build-up of width on the class action side, which we're hoping, once we start to file some of these cases this year, it'll release into both the P&L and we'll get funded cash flows for them.
Speaker #4: Currently, the class actions team operates out of six Shine offices across Australia, New Zealand, and the US. There are 100-plus staff in the team.
Speaker #4: There's an intention to grow that as we get more of these matters through the pipeline, both domestically and through the international mass court space.
Speaker #4: Moving to slide seven. Just some high-level commentary on the result and what drove those results. Firstly, the adjusted revenue was up 7.8% to $220.4 million. Personal injury was a big part of that.
Speaker #4: What we saw during the year was we're getting more legal work per FTE out of our teams, which is great. The headcount that we budgeted for last year, we didn't actually achieve.
Speaker #4: But it was offset by that increase in legal work per Fiana. So that's a really good outcome and something that we're pushing to continue through FY27.
Speaker #4: And class actions, similar vein. A lot of work done on the legal work per FINA. They also increased. But some of that is investigation, which, as I said, we don't recognise any of that until such time as we can file it and have it funded and have lead plaintiffs and all sorts of things.
Speaker #4: Another positive during the year is staff turnover reduced. It was significantly higher than where it is at the moment—24 months ago, I think, when I joined—but the team worked really hard at retention.
Speaker #4: Keeping staff, changing the way we do things, and just making sure that Shine is a place people want to come and work.
Speaker #4: And positively as well, on that staff retention front, we have a lot of people that have left Shine that have been good leavers who wanted to come back.
Speaker #4: And they are coming back, probably more than what we actually anticipated. As I said, earnings recovery—so net profit after tax is up, adjusted compared to last year.
Speaker #4: Adjusted impact is up compared to last year, and the basic EPS is also more or less double what it was last year as well.
Speaker #4: So, really good outcome on the adjusted basis. I'll speak briefly about cash generation. There were some positives underneath the, sort of, flat headline number.
Speaker #4: The fees billed during the year for personal injury were higher than last year. And we were seeing higher values per matter than what we were last year as well.
Speaker #4: So some of those lower quantum matters, we're sort of, I guess, working in a different way to get better outcomes from a cash perspective.
Speaker #4: Class actions improved their fees billed during the year, based off a number of resolutions that occurred and settlements that occurred during the year. And there's a couple more of those that are pushed into FY27, which we'll hopefully resolve and settle, and we get paid for in the next sort of six months.
Speaker #4: But it's for a comment there about towards normalized earnings. We don't really like to report adjusted numbers, and we'll only do so where they are material one-off events.
Speaker #4: But I think we dealt with the fair value loss of the further consideration last year. We've unfortunately had this $13 million impact this year, which we've called out.
Speaker #4: But it's our goal to, I guess, get the business in a position where the numbers are the numbers that we're reporting on. It's a stable business.
Speaker #4: It's growing. And yeah, hopefully just reporting normalized earnings, which is a goal of mine. That being said, I'll hand over to Carolyn now to go through Slide 9.
Speaker #2: Thank you, Mark. Great CFO overview—thank you. All right, I want to go into personal injury and also class actions. We'll get more detail.
Speaker #2: So, you'll see on slide nine we've put in our personal injury scorecard here with the numbers: $180.9 million in revenue and EBITDA for that segment of $36.6 million throughout the year.
Speaker #2: Throughout the 12 months, 4,000 clients have been compensated. So, we settled the matter and we paid them their money for the wrongs that befell them during the period that we had their file.
Speaker #2: The client is at the heart of everything we do at Shine. So we're delighted in these numbers. They're important to us. Damages secured for the year: $800 million plus.
Speaker #2: And then, of course, we've got to replenish the cabinet the whole time. So, 5,900 new files were opened during the period. As mentioned before, we're one of the largest PI practices in Australia.
Speaker #2: We've got a national scale. You will see through various reports there are sort of varying numbers about office numbers—meaning the number of offices that we had.
Speaker #2: And that's because we've adopted a forward-looking and, as flexible as one can be, property strategy for our business right up through Australia. We are in capital cities, as you know, we're in regional centres.
Speaker #2: Some would say a few rural, none remote as yet. However, what we are doing is: if we see a demographic shift, or there is a focus in an area that we know we can respond to and help people in need, then we will go there. But we will use a more flexible office location and outsource strategy.
Speaker #2: So this is not a pin drop. I'm not talking about that. It's about how we can have a presence in these areas, and that's important.
Speaker #2: You can see in the table on the pack to the left, there is the statutory PI revenue and EBITDA trend. Again, statutory because we want to show it in that way.
Speaker #2: Given this presentation, we have increased by $180.9 million. We did that because we continue with our disciplined approach. We have had success in turning around some of the business areas, the jurisdictions, and matter types that needed to have some special care, and we have done that, particularly in Victoria.
Speaker #2: It's a great success story for us. We've been there for 21 years. It's hugely important as part of our whole, and the Victorian team there have done outstanding work for our clients and for the PI practice in the state of Victoria.
Speaker #2: We've said before we've improved efficiency in the legal work by upping the legal work per fee earner and the recovery rates. And we have the highest fees billed on record in our company in FY26.
Speaker #2: We continue to really assiduously acquire new files—good quality new files. For specific branches in '26, we are going to be far more assertive about that in '27.
Speaker #2: And that will be talked about later in the forward-looking files. And then, of course, Mark talked about our lower turnover. This has been two years of a really focused, holistic approach to our staff, their well-being, and their connection and engagement with Shine.
Speaker #2: And we are thrilled that we have so many of our staff return. That was an overt program, so we meant to reconnect with our good leaders, and we are so thrilled that they're back.
Speaker #2: Lisa Plinn is the chief legal officer of PI and class actions, and so I believe she's listening today. We, though, have a head of class actions in Craig Alsop, who is doing an outstanding job in that segment of the business.
Speaker #2: He leads practice leaders across the east coast of Australia, for what we call domestic class actions. He and his people also, yeah, also work with him tirelessly on that.
Speaker #2: Now, the CFO has just pointed out that I have finger-fumbled one of the slides. I'm going to let it go, though, because people can read that.
Speaker #2: And it talks about our upside opportunity in our deep pipeline. But I want to go to our Class Action scorecard. So the slide—just so I haven't mucked everyone around—the slide is 11.
Speaker #2: That's where I am. Good. I hope you are too, out there. Okay, so continuing on that slide, our first class action was one in New Zealand.
Speaker #2: And it was for Hino. That's a real breakthrough. We have six in-principle settlement agreements reached for over $219 million, and so that's going to be an inflow.
Speaker #2: We have greater focus on investigation-to-filing velocity, so moving the matters through more quickly. We have tighter portfolio governance. Craig's Office of the Head of Class Actions has been supplemented.
Speaker #2: By some more specialist staff, especially looking at prospects to investigation, and investigation to filing matters. And that's to really drive domestic class actions. So, we want to make sure that that continues to be driving along the PI as the engine of our Australian business.
Speaker #2: And then, when we move to what we're doing with international mass torts, that will help us out there incredibly. Okay, so let's move to slide 12.
Speaker #2: And when I talked about, just before, the upside opportunity in the deep pipeline, we've got 48 letters open. I've talked about pipeline momentum. We've talked about the adjusted revenue.
Speaker #2: And we've had talks about portfolio funding in the half. Now, portfolio funding is our term for looking internationally for funding opportunities. We were successful—and we did report this in the half—in securing a $40 million funding arrangement with an international funder to drive our Talc Australia matter forward.
Speaker #2: And that's being actively worked on at the moment. So, with portfolio funding, we are talking to a number of funders who will look at matters that we have on hand and will help us with additional funding from different and separate sources to actually really drive our business.
Speaker #2: What we're showing here is that we have a deep pipeline that we can flow those matters into that type of funding regime. And also, I'd like to point out that we are diversified across a number of class action sectors.
Speaker #2: So we're not just dependent on one or two. You can see those on the right side—little chart there—where, across environmental, medical, very good work in First Nations, and social justice.
Speaker #2: That's a real key, heartfelt area for us—consumer, employment, shareholder—a lot of people in shareholder, and financial services. So we're in that area.
Speaker #2: But our diversification helps us manage our concentration risk. So let's move to the next slide, number 13. I talked earlier about IMT, or International Mass Torts.
Speaker #2: And this is where we sit at the moment. We have a USA hub. It's a hub-and-spoke model. The hub is in the USA.
Speaker #2: It's in New York. And that hub finds works with, defines sources of funding for funding for, and then exports as our term again to these to its international spokes, its international spokes if you're sitting from a US hub perspective.
Speaker #2: Would be to Australia. We already have a very mature, well-functioning class actions business. So as well as domestic class actions, we will be looking, and are looking, at internationally funded spoke class actions.
Speaker #2: That's our terminology. Just thought I'd explain it a little bit more. The same with New Zealand—we're already in New Zealand, and we've developed a class actions business there.
Speaker #2: And it was thrilling to get our first successful resolution there with Hino. And then our Asia spoke—Asia spoke is Thailand. We have an office in Thailand.
Speaker #2: We have employees in Thailand, and we are working up cases in investigation in Thailand. There are plans to make this even more broad in years to come.
Speaker #2: And we'll tell you about that, and we may be able to perhaps share some other news in the half about that. Just repeating that Simon Morrison has moved from Managing Director to Executive Director.
Speaker #2: And the head of IMT, International Mass Tours, so he is running that for the business. Shine Justice. And there is no stopping, so okay.
Speaker #2: Moving to the next slide. It's about strategy and growth. Everybody's talking about AI. We prefer to talk about emerging technology. In that, AI is a subset, but emerging technologies are larger and broader than just AI.
Speaker #2: But it also is important that organizations get a grip on all of this. So our roadmap, which we shared previously, was a three-year roadmap.
Speaker #2: We said in FY25 that we're going to set the foundations and figure out what was going on. Everybody did, in the world, actually.
Speaker #2: From a corporate perspective, we created the Emerging Technology Center so that activity could happen all around the business, but we had clear sight on what that activity was.
Speaker #2: So that we can then bring it into a channel, which allows us to determine how we might replicate, or how we might fail fast.
Speaker #2: Typical stuff. So, in that year, we put the infrastructure in place and there was an investment to do so. The years we're talking about now, FY26, we informed you all that it was a proof of concept year.
Speaker #2: That we weren't going to go for big solutions, huge activity in mainstream systems, etc., etc. That claim they could solve the world with their AI plugins.
Speaker #2: We said we were going to look at proof of concept throughout our business, throughout the jurisdiction, throughout the matter type, and throughout the supporting business services inputs.
Speaker #2: And that is what we've done. We have noticed improved productivity, we have insights, and we have our operational efficiency. But that is yet to come through in the results.
Speaker #2: That will be through '27 and '28. '27 is the acceleration year, where we will get sustainable productivity and service improvements that we can quantify.
Speaker #2: And the maturity of 28, it's embedded, it's done. We will continue to evolve as the industry does, but we have got a total grasp of it.
Speaker #2: So that the other half of the page that talks about where we are now is really giving some colour to the FY26 year. We've got the Emerging Technology Center.
Speaker #2: We have put in AI guardrails and a governance structure, which is incredibly important. We are looking at agentic and automation platforms, and we have created our own agents where they impact our business.
Speaker #2: And we're very happy with where we are in this regard. Our client intake platform continues to be Salesforce, and we are utilizing AgentForce extension, the AI, and other automation extension.
Speaker #2: Of Salesforce, and that is linking to other systems and other agents and connectors in the business. We are getting our data in very good order.
Speaker #2: And it's going into a foundational data platform. We're a Microsoft shop; we're using Microsoft Fabric. That project is very well advanced, so we have good, clean data.
Speaker #2: So, we can get good, clean reporting at the desktop happening as we accelerate in FY27. And then, just to mention our people platform—that is not agentic, but it is a new platform that will help fuel all of these activities.
Speaker #2: Hence, we call it the Emerging Technology Center, because it has these inputs in it. Okay, Mark, last—16, if I've got the slide number right.
Speaker #2: And over to you.
Speaker #1: Thank you, Carolyn. So, slide 16 is just a very high-level summary of the balance sheet position. As we said, at 30 June, the net assets position is $260 million.
Speaker #1: A little bit down on last year. Obviously, that takes into account the legacy issue we spoke about earlier. Cash equivalents were down for the year from $18.1 million to $12.5 million.
Speaker #1: Again, probably an investment in the emerging technologies and some other IT platforms there, as well as the investment in IMT matters, as well as some class actions, which will come to be realized as cash in ’27 and beyond.
Speaker #1: Net debt increased slightly in FY25. I think that net debt should hopefully reduce going forward. The increase is due in some part to the movement of a final tranche of disbursement funding loan disbursements that we now carry into our core debt stack.
Speaker #1: Debt, there's definitely an interest saving on the back end of that. And obviously, net work in progress—I spoke about it earlier—is pretty flat on where we're at.
Speaker #1: But the focus for '27 is to definitely, as much as we love file intake—which we need to build some of it off as well.
Speaker #1: So, looking forward to that through FY27. Just a couple of other comments there: the group has $119.7 million of financing facilities available. We've got headroom at the moment of $41.4 million.
Speaker #1: And our majority of facilities run to March 28, so there's still plenty of time before we need to renew those. Importantly, the group complied with all our banking covenants during the year.
Speaker #1: Tracking credits are still available, which is good. That supports the continuation of franked dividends. As you would have seen, the company has declared a dividend for the year.
Speaker #1: And net debt, as said, yeah, increased a bit. But hopefully, as we increase the work in progress being realized as fees, we'll start to actually reduce that a little bit going forward.
Speaker #1: On slide 17, I spoke then around the dividends. So, a 2.5 cent fully franked final dividend has been declared for the year, payable in October. So again, I think that's representative of the board's commitment to return value where we can to shareholders.
Speaker #1: This takes the total dividend for the FY26 year to 4 cents per share. You mentioned the franking credits earlier. In total, thus far, the company has bought back 3.87 million shares.
Speaker #1: That was in the scheme up to September 25. We didn't actually acquire any in the scheme that was started in October 25, just due to the balancing of the capital requirements.
Speaker #1: With some of the investment we've done during the year—capital allocation framework there—I'd just call out the growth investment. So, we have invested in the Emerging Technology Center and international expansion.
Speaker #1: We did buy some personal injury files, which we're looking to continue to do more of. And as I said, it's a balance between growth of the business versus returns to shareholders.
Speaker #1: With that, I'll hand back to Carolyn to discuss the strategy, growth, and outlook.
Speaker #2: All right. Let's go straight to the FY27 outlook in the orange box. We are continuing to have momentum in our personal injury segment. We are going to build on our improved legal work for Fiona.
Speaker #2: We are going to look at containing our write-offs, just in the way that we look at how we manage the conduct of the matter and the files that go through.
Speaker #2: We've got a more disciplined focus on that. And it has always had focus, but this has really been a point for us to concentrate on.
Speaker #2: And we have. We've done very well in fees billed compared to previous years. That will continue. And we are obviously sorting out the client. Our resolution quantum is going to continue to be very, very strong.
Speaker #2: We'll continue to pursue acquisitions, as both Mark and I have alluded to. They must align, though, to a strategic plan. It's very easy to buy.
Speaker #2: Files and businesses that don't add value to the extent that we want them to. But we are going to have a stronger focus on that in '27.
Speaker #2: Class Actions is focusing, or will focus, on filing more matters and increasing investigation-to-filing velocity. We've got the processes, the people, and the systems now in place.
Speaker #2: Better to do that. We, in our domestic class actions, continue to see it as the engine with PI, to be the sort of the business that sits atop that as we then focus on our international mass torts strategy.
Speaker #2: So that we can give Simon the time and the space to really make great leaps and balance in that area—our International Mass Torts Hub.
Speaker #2: Remember, that's in the USA, in New York. We're going to continue to source and develop matters in Australia, New Zealand, and Thailand. There will be other jurisdictions that we're looking at in '27.
Speaker #2: I must mention we also have a personal injury law firm in the state of Arizona. That allows an alternative business structure to be set up—ABS—and we, even though we're a law firm, are considered to be an ABS in that state.
Speaker #2: And so we have an active PI business that has now been stood up. It has staff, it has files, it has outcomes.
Speaker #2: It has, it is a good little business. And that is managed, if you like, in the bulk of our PI activity, by Luz of Lynn as CLO.
Speaker #2: But, of course, within the American jurisdiction. I must say managed— I should say administratively supported. It's managed totally independently, of course, in the USA.
Speaker #2: But we can use our systems to help support administratively. So, we delivered growth in Q4 '26. We did have that one-off transaction that has been talked about quite a few times.
Speaker #2: That shows how well we did underpinning in '26. And we are expecting to see growth again in both personal injury and class actions, and in profitability, alongside an increasing cash flow.
Speaker #2: So, that is where we end up. I must finish by talking about the fact that it has been our 50th year this year. Kept it to last.
Speaker #2: Shine 50 is the banner under which we operate this whole year—this whole year, calendar 2026, of operations. We've had external outreach. We've had stakeholder and staff interaction.
Speaker #2: We've had tours around regional, rural, and remote areas. There's a little car that we've kitted out called the Shine Mobile. It might sound a bit funny and interesting saying this in a presentation to the market.
Speaker #2: But we cannot let our 50th year go by. We started in 1976, from humble beginnings, through the East Coast, through Australia, and now internationally.
Speaker #2: In this, our calendar and financial 26th year. And so we're very proud of that as a company and a firm. So, with that in mind, we will look at taking questions.
Speaker #3: Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two.
Speaker #3: If you’re on a speakerphone, please pick up the handset to ask your question. Your first question comes from Tom Tweedy with Moelis Australia. Please go ahead.
Speaker #4: Good morning, team. Well done on the result, and thanks for taking my questions. Just a couple from me. On the outlook, you've obviously called out an expected increase in group cash flow.
Speaker #4: I just want to narrow it down on PI, just given it's a little bit more predictable. Should we be thinking that cash flow grows with segment profitability, or is emerging technology going to mean a faster WIP conversion, and maybe we see a step change in the cash conversion versus segment profitability there?
Speaker #4: Yeah. Within PI.
Speaker #5: Thanks, Tom. On the PI side, obviously there are a few competing priorities, for want of a better word, at the moment—being that we want to grow the business.
Speaker #5: So, that file acquisition opportunity is something we want to really push harder on. It will obviously consume cash if we can identify files that we want to acquire.
Speaker #5: But generally, yeah, growth in PI should lead to higher fees billed and more cash in the door. I guess we've just got to remember some of the work we've done to sharpen focus and execution—these matters are long-term matters.
Speaker #5: We're also looking at velocity—trying to get velocity in, so matters are closing up earlier. Some of the actions we're taking now will show through.
Speaker #5: Maybe not all in this FY27, but definitely FY28 and beyond—you'll see the benefit of that from a cash perspective. From the emerging technology side of things, we have not banked or baked any upside from a revenue or cash perspective into our books for FY27.
Speaker #5: Referring back to the roadmap, we've sort of started FY25, developed the emerging technology center in FY26, and have some really good things in our minds.
Speaker #5: And also starting to actually become reality. We'll try and push those out in FY27, and again, FY28 should start to see some benefit from that.
Speaker #5: But it won't happen in FY27. But at a point in time, I think most companies worldwide that are dealing with emerging technology and the commercial realities of what the outputs of that are, at a point in time, there has to be either efficiency savings, which means we can push more files through.
Speaker #5: Or other benefits that come from it.
Speaker #4: Appreciate that, thanks. Second question is just on class actions—again, on the cash conversion. You called out the $40 million of funding from an external funder.
Speaker #4: I'm just trying to get a sense of the cash benefits of the external funding from that $40 million for FY27. Is that expected to materially drive operating cash conversion, just because you're not carrying the matter yourselves?
Speaker #4: And then secondly, with the pipeline of other matters you want to move into an external funding mechanism, can you just step us through the benefits across the business there from a cash perspective that you expect?
Speaker #5: Yeah, so I mean, I won't give you dollar values. But just theoretically, which is what we're actually seeing come through. So, the $40 million we announced back in February—obviously, that's not $40 million dropped into our bank account and off you go.
Speaker #5: So we're drawing down on that amount each month as we go through the matter. The matter, obviously, again is expected to last a couple of years.
Speaker #5: So, that funding will last along that same timeframe as well. Class actions in general—we're still carrying some old matters where Shine had fully funded or Shine had partially funded.
Speaker #5: And in some cases, we're still funding those ourselves to get to the settlement of the matter. But every new matter that we're bringing online, the ideal scenario for Shine is, if there's one that we want funded, to go out and get funding for it.
Speaker #5: We've obviously got the carrier that we normally keep on all those class actions that we get returned to us at the end of the matter.
Speaker #5: But the idea is that we get all funded matters moving forward. So we're still in that sort of 50/50 bucket. We've got old matters we're trying to resolve and finalize and get our investment back, which could be sizable from those.
Speaker #5: As well as getting that fluid monthly, quarterly cash flow coming in from new matters that we're running and that are funded, so it's a bit of both.
Speaker #5: So you'll see it up, taking 27 from the class actions fees, because we're moving to that. You'll also probably see some settlements coming, which gives us a little bit of a, not lift in cash, because we're getting the whip back from the previous two or three years.
Speaker #5: So you’ve still got that sort of unevenness coming through. But each year, moving forward now, it should flatten a lot more—which I know will make me happy, knowing that we’ve got all funded matters that are fairly stable.
Speaker #5: And then at the end, you still get these uplifts where we're successful on either a GTO basis or there's an uplifting component.
Speaker #4: Great. Thanks for taking my questions.
Speaker #5: Thanks, Tom.
Speaker #2: Thank you. Once again, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced.
Speaker #2: Your next question comes from Peter Drew with Carter Bar Securities. Please go ahead.
Speaker #6: Oh, morning. Thanks for the presentation. Just a question on the outlook. You've guided to revenue growth across PI and class actions. I'm just wondering, PI grew at 8% fairly consistently through FY26?
Speaker #6: Is that sort of high single-digit level achievable in FY27?
Speaker #5: Yeah, we think so. As I said, there are a number of parts to the PI strategy, being our growth branches, footprint increases that we've done. We've actually stepped back away from some areas which weren't performing that well for us.
Speaker #5: And obviously, the big part is the file acquisitions and how heavily we can get into that. So, look, I think there's still growth there for sure.
Speaker #5: Around that same level I'm comfortable with, but it would depend on some of those other factors as to whether or not we can push it up higher.
Speaker #5: In '27, it'll get there eventually. But to go and acquire files is not a process you can do in a month or two months.
Speaker #5: It sometimes takes a bit longer, so it just depends on what opportunities we can capitalize on and when.
Speaker #6: Yeah, thanks, Mike. And just on class actions, I’m just curious—what sort of growth are you thinking you can achieve there? I’m just looking at the number of class actions actually filed, and it’s fairly flat, or actually down, year on year.
Speaker #6: And so, I'm just wondering where the growth is coming from? And then, within that question, with the IMT strategy, has that actually contributed any revenue to date?
Speaker #6: And what's the thinking in terms of contribution for '27?
Speaker #5: Thanks. So I'll probably start at your last part of your question. So the IMT strategy and what it's contributed — it has. I mean, obviously, Simon's been in the States now for a couple of years.
Speaker #5: On and off. We've spent his time between Australia and the States. There are matters that he has sourced from the States that he's pushed into Australia.
Speaker #5: And there's definitely opportunity for others that we're looking at for New Zealand, and as we said, Thailand. So there's a contribution there for FY26.
Speaker #5: It's by no means material, or what it can be in the future. But again, the whole point of the IMT strategy was to get cases that were run and won, or run and looked like being won in the US, and bring them out to other locations where we can run them off the same information, the same evidence, whatnot.
Speaker #5: So there is upside. We continually are working on IMT and sourcing that for Australia, New Zealand, Thailand, and other places. And it could be these are not—they're not domestic class actions on the lower end, which could be a $20 or $30 million settlement.
Speaker #5: These are quite material and large cases that are run in the US, and we're hoping we can monetize that in all those different regions as well.
Speaker #6: And just the growth piece on the class actions—sort of, what's going to drive the revenue growth this year?
Speaker #5: Well, again, there's a fair amount of WIP locked up that is not yet that which we recognize due to the accounting standards and whatever.
Speaker #5: So, the investigation WIP. There's a lot of that that should come out in FY27, which we funded matters that we can recognize the WIP and then start to be paid the fees for.
Speaker #5: And there are still a lot of matters in class actions domestically in New Zealand and Thailand individually. So that's where the growth has come from.
Speaker #5: I think from the class action side of things, we have spent a lot of time in '26 working on some of these IMT matters and getting those worked up.
Speaker #5: So the class actions team is looking at expanding resource-wise. We're looking at how best to go and track talent in that team, and once we get that in, obviously, we can run more matters.
Speaker #5: So, it's that balance of 'Field of Dreams'—if you build it, they'll come. We know there's work there. We know we can grow it.
Speaker #5: We just need to go find the matters that we've got, and then get them funded, and away we go.
Speaker #6: Yeah, right. So it sounds like you've already got a fair bit of revenue growth already baked in.
Speaker #5: Well, there's an amount in investigation WIP, which, once we tick all the boxes to be able to recognize it from an accounting standpoint, will hit the P&L. Obviously, as we do that, we've got to go and find more investigations and work through the pipeline.
Speaker #5: So I guess that's maybe a different way of saying it is ideally, you want investigations to be run to then convert into matters to go get funding, and then you're away, run the matter, settle the matter, and just have that pipeline continually flowing.
Speaker #5: And I think we've made steps towards that in '26, and we'll continue to push that in '27. I think in '26, we also then focused on the IMT side and getting some of those matters ready to run as well.
Speaker #5: So, they've had a really good unitization team and the work they've done has been strong. Unfortunately, the financials, with what's happened, probably aren't completely reflective of that.
Speaker #5: But again, I think it puts them in a really good position for '27 and beyond.
Speaker #6: Yeah. Okay, thanks, Mike. And then just the last one, just in terms of cash conversion generally—I mean, if I look at your operating cash to EBITDA, it was sort of around 42 to 43 percent.
Speaker #6: What should we be thinking in terms of conversion for '27?
Speaker #5: Again, I won't give you a number, but improvement.
Speaker #6: An improvement on that?
Speaker #5: Yeah. In '26, there was we did invest in emerging technologies, and we probably spent some money on not a lot, but some money on emerging technologies more so than we will in other years because we're at that investigative phase.
Speaker #5: I think we've got our plan now and know where we want to get to, so that should help. But also, just the conversion from what we've done—more efficient legal services, the legal work per fee out of increasing, getting more out of the cost base, I guess, as well.
Speaker #5: So it'll definitely improve as we move forward, yeah.
Speaker #6: Yeah. Great. Thanks very much.
Speaker #5: All right. Thanks, Peter.
Speaker #1: Thank you. There are no further questions at this time. I'll now hand back to Ms. Barker for closing remarks.
Speaker #2: Thank you, everyone. Much appreciated. We will remain open to your further queries. John George, I'll tap you to talk, as he usually does around this time.
Speaker #2: And we can answer those queries outside of this meeting. So we really thank you very much, and we'll be talking to you formally again at the half coming up.
Speaker #2: Thank you.
Speaker #5: Thank you all.
