The impairment is effectively recognition that Shine over paid for Emanate (based on 20-20 hindsight). Of course this is based on the assumption that the market conditions for mining and resources will remain the same. On a long enough timescale its likely this sector will eventually pick up again, after all mining is a large part of the Australian economy.
A few additional points:
I joined the analyst call this morning. It was mostly a verbatim read of the presentation pack. One point of interest was regarding acquisitions - they're in no hurry. I'd consider that a positive. Also the priority for acquisition is confirmed to be in family law.
Having has some more time to absorb the numbers it's of note that while financial costs (cash) have doubled, they have significantly paid down debt. The have paid down 11% of borrowings since the 2018 full year report. This is in spite of Carr and Co purchase being funded from debt. Notably ACA acquisition was paid from working capital and NOT debt - which is great and was not my expectation.
Despite revenue being down current WIP assets are up by 12% (non-current WIP is flat)
While the dividend has (technically) increased from last year note that it is unfranked, whereas last year's dividend was franked. As a result in real terms (depending on the impact of franking credits on your tax) the dividend may actually be seen as flat (i.e. not an increase) from the perspective of the shareholder.
That said -contrary to DannyBoyLIAC - my preference is for Shine to retain capital and not increase the dividend; at least until the borrowings are further reduced and dependent on capital reinvestment opportunities available to Shine.
SHJ Price at posting:
63.0¢ Sentiment: Buy Disclosure: Held
(20min delay)
