)
SHARES in Shine Corporate (ASX:SHJ) continue to remain volatile after falling as much as 19 per cent in early trade on the back of poor profit results for the first half of FY16.
The Brisbane-based law firm's bottom line profit has slumped 90 per cent to $1.3 million for the six months to the end of December from $13.3 million a year earlier.
Underlying earnings performed just as badly, with earnings before interest, tax, depreciation and amortisation (EBITDA) falling to just $2.1 million from $20.7 million previously, as revenue slid 12.6 per cent to $64 million.
The results follow a challenging few months for the legal firm, including the announcement on January 29 that Shine had initiated a review which resulted in an additional provision of $17.5 million taken up in the first half of FY16.
At the time, shares crashed to a low of 47c from $2, and followed weeks of trading limbo for the company after its suspension from trading after an initial trading halt on January 19.
"The major feature impacting the first half result was the additional provisions totalling $17.5 million which were regarded against work in progress, disbursements and debtors," says Shine managing director Simon Morrison (pictured).
"These additional provisions are regarded as one off, the majority of which have been taken up to reflect the risk that some matters, other than those for which a provision is already held, will ultimately not result in a fee for Shine."
Morrison insists the recoverability situation will improve by the end of the financial year.
"Despite the result of the half year, we remain confident in the Shine business model and are focusing on improving the levels of recoverability and improving the results," he says.
Shine has reaffirmed FY16 EBITDA in the range of $24-$28 million.
Today's profit release led to a wild ride for Shine's shares, which fell as much as 14c to a low of 60c, before they regained ground to trade steady at 74c by the early afternoon.
Shine has not declared an interim dividend.
)
)
)
)
)
