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Shine Lawyers issues a profit warning, its shares get dumped

Joe Raedle/Getty Images

Shares in Shine Lawyers dropped by 70% after the company issued a strong profit warning.

The company cut its guidance in half to between $24 million and $28 million, down from $54 million.

After coming out of a trading halt, the shares hit $0.62, a fall of 69%.

And Shine announced a provision of $17.5 million after a review of existing personal injury cases.

“Our underlying business model remains solid,” says managing director Simon Morrison.

“The increase in provisions will not impact operating cashflow in 1H FY2016 and protects the balance sheet against the risk of future write-downs.”

The review found that some current cases which will not ultimately succeed.

The company is due to release its first half results on February 23.

Another listed law firm, Slater and Gordon, has also seen its shares sold down hard after problems with its UK business. Slater and Gordon abandoned its earnings guidance.

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