134.asx iaw oct 20 2011 14.00 annual report ye june 2011
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8/9/2019 134.ASX IAW Oct 20 2011 14.00 Annual Report YE June 2011
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INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
(ASX:IAW)
AnnualReport
Fortheyearended30June2011
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INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
CorporateInformation
1
ABN20120394194
DirectorsTheHonJohnDawkins,NonexecutiveChairman
AnneTregonning,NonexecutiveDirector
GraemeFowler,ManagingDirectorandChiefExecutive
CompanySecretary
JeanMarieRudd
Registeredoffice
Level8,WesfarmersHouse
40TheEsplanade
Perth
WA
6000
Principalplaceofbusiness
HeadOffice
Level22
1MarketStreet
Sydney NSW 2000
Tel: (02)82636600
ShareRegister
ComputershareInvestorServicesPtyLimited
Level2
45StGeorgesTerrace
Perth WA 6000
Tel: (08)93232000
IntegratedLegalHoldingsLimitedsharesarelistedontheAustralianStockExchange.
Solicitors
TalbotOlivier ArgyleLawyers
Level8,WesfarmersHouse Level22
40TheEsplanade 1MarketStreet
Perth
WA
6000
Sydney
NSW
2000
Bankers
NationalAustraliaBankLimited
100StGeorgesTerrace
Perth WA 6000
Auditor
Ernst&Young
11MountsBayRoad
Perth WA 6000
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ContentstoAnnualReport
2
ReportbyChairmanandManagingDirector...........................................................................................3
DirectorsReport....................................................................................................................................14
AuditorsIndependenceDeclaration.....................................................................................................39
CorporateGovernanceStatement.........................................................................................................40
ConsolidatedStatementofFinancialPosition.......................................................................................50
ConsolidatedStatementofComprehensiveIncome.............................................................................51
ConsolidatedStatementofCashFlows..................................................................................................52
ConsolidatedStatementofChangesinEquity.......................................................................................53
Notesto
the
Consolidated
Financial
Statements
...................................................................................54
DirectorsDeclaration.........................................................................................................................118
IndependentAuditReport..................................................................................................................119
ASXAdditionalInformation.................................................................................................................121
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3
2010/11FullYearResults
Continuingstrong
financial
performance
51%growthinnetprofitaftertax
19%earningspersharegrowth
20%growthinfullyfrankedfinaldividendforshareholders
Positionedforcontinuedorganicandacquisitiongrowth
Highlights
Netprofitaftertaxincreasedby51%to$1.29m.
Earningspershareincreasedby19%to1.41centspershare.
Operatingrevenueincreasedby19%to$28.5m.
Operatingcash
inflows
of
$1.23m.
Strongbalancesheet,cashreservesandconservativeborrowings.
20%growthinfinaldividendof0.60centspersharefullyfranked.
RecordDate14October2011;Payable4November2011.
Thedividendreinvestmentplanwilloperate.
Fullyear0.90centsfullyfranked20%growth
Continuedacquisitiongrowth.
WojtowiczKellyLegaleffective1February2011 $5.3mannualrevenue.
PLNLawyerseffective1August2011 $2mannualrevenue
Expectgrowthinearningspersharein2011/12.
1. ExecutiveSummary
IntegratedLegalHoldingsLimited(theCompanyorIntegrated)announcedon18August2011the
2010/11 Full Year Results, a net profit after tax of $1,286,670 for the 2010/11 financial year. This
comparedtoafullyear2009/10netprofitaftertaxof$853,494,anincreaseof51%.
Earningspersharefortheyearwere1.41centspershare,comparedtotheyearended30June2010
of1.18cents,anincreaseof19%.
TheDirectorsadvisethattheyarepleasedwiththefullyearresultsandconsiderthattheCompanyis
developingastrongandconsistenttrackrecordof growth inrevenue,earnings,earningspershare
anddividends.
FullYearResultsSummary
2010/11
$m
2009/10
$m
Growth
%
2008/09
$m
OperatingRevenue 28.48 23.87 19% 16.95
NetProfitafterTax 1.29 0.85 51% 0.59
EarningsperShare 1.41cents 1.18cents 19% 0.89cents
DividendperShare
Final 0.60cents
Interim 0.30cents
FullYear 0.90cents
Final 0.50cents
Interim 0.25cents
FullYear 0.75cents
20%
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4
HalfYearResultsAnalysis
TheCompany
achieved
a
net
profit
after
tax
for
the
2nd
half
of
2011
of
$0.53m,
compared
with
a
2nd
half2010profitof$0.47m,anda1sthalf2011profitof$0.76m.
2ndHalf
2010/11
$m
1stHalf
2010/11
$m
2ndHalf
2009/10
$m
1stHalf
2009/10
$m
OperatingRevenue 14.86 13.62 12.28 11.59
NetProfitafterTax 0.53 0.76 0.47 0.38
EarningsperShare 0.55cents 0.86cents 0.62cents 0.56cents
NewBusinessAcquisitions
TheCompanyhascontinuedtogrowbyacquisitionwiththefollowingannouncements.
AcquiredFirm AcquiredFirm Location
Annualised
Revenue
$m
EffectiveDate
WojtowiczKellyLegalMergerwithexistingMemberFirm
BrettDaviesLawyersPerth 5.3
1February
2011
PLNLawyersTuckinforexistingMemberFirm
ArgyleLawyersSydney 2.0 1August2011
Total 7.3
WojtowiczKellyLegal
In December 2010 the Company announced the acquisition of Wojtowicz Kelly Legal (WK) under
merger arrangements with the existing member firm Brett Davies Lawyers (incorporating Law
Central)(BDL).
WK isanestablishedandwellregardedPerthCBDbasedcommercial lawfirmdeliveringservicesto
commercial enterprises and private individuals predominantly in Western Australia, but also to
enterprisesbasedinSoutheastAsiawithAustralianinterests.
WK was established in 1994 and has developed a range of legal services including corporate and
commercial, property, litigation, family, migration advice, local government law and settlements
(conveyancing).
WKalsohasanofficeinRockinghamsouthofPerth,andarepresentativeofficeinSingapore.
ThefirmconsistedofthreePartners,GavanKelly,AnthonyQuaheandJohnWojtowicz,with40staff
andannualfeeincomeofapproximately$5.3m.
WK has merged with existing member firm BDL, with the merged firm having four Principals,
approximately54staffandannualfeeincomeofmorethan$7.5m.
BDLhasoperated inthePerthCBDforover15yearsand isaspecialist intax,successionplanning,
estate
planning
and
superannuation.
BDL
has
a
national
client
base
and
focuses
on
accountants,
financialplannersandlawyers.
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6
PLNLawyers(continued)
PLNis
an
award
winning
law
firm
having
won
the
2009
New
South
Wales
Exporter
of
the
Year
Award
inarecognisedservicesindustry,andinAugust2010wasnamedjointwinnerofthee.lawAsia
PacificBoxBreakeroftheYearAward,whichrecognisesthosethinkingoutsidethesquaretomeet
legalbusinesschallenges.
PLN will tuckin with existing member firm Argyle, with the combined firm having 6 Principals,
approximately40staffandannualfeeincomeofmorethan$10m.
John Ridgway willjoin Managing Principal Peter Bobbin, Principals Andrew Ireland, Mark Petrucco,
GlendaLaurenceandFionaSonntag,andPracticeDirectorJaniceDuncanastheseniormanagement
ofthebusiness,allofwhomarecommittedtogrowingArgylewithintheILHGroup.
PLNwillretainitsbrand,butoperategoingforwardundertheArgylebusinessumbrella. Thetuckin
arrangements promise a sound base for the growth and expansion of the PLN brand across Asia
PacificandviatheILHmemberfirmsinAustralia.
Under the tuckin arrangements, PLN will be relocated and integrated into the nearby offices of
Argyle.
Thetransactionwasfundedthroughsurpluscashreserves.
The Directors believe that PLN is a high quality business with strong growth prospects and will
provide
both
Argyle
and
ILH
with
a
platform
for
further
growth,
in
particular
strengthening
theorganisations commercial law service offerings, and providing new access to the Pacific and Asian
markets.
The Company expects to generate earnings improvements through cross referrals of client matter
opportunitiesaswellascostsynergiessuchaspremises.
The WK and PLN transactions are consistent with ILHs strategy of supporting the growth and
expansion of a limited number of core member firms into major businesses with competitive
advantagethroughthescopeandscaleoftheiroperations,aspartofapubliclylistedgroup.
Both acquisitions are structured with significant employment constraints and conditions,consistentwiththeCompanysdisciplinedacquisitionmodelandstrictcriteria.
The full revenue and profit impact of the WK and PLN acquisitions will be achieved from the
2011/12financialyear. TheDirectorsbelievethattheeffectofbothacquisitiontransactionswill
bemateriallypositiveintermsofearningspershareinthe2011/12financialyearandwillenhance
theCompanysgrowthprospects.
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7
BalanceSheet
The
Company
has
maintained
a
strong
balance
sheet
and
is
well
placed
to
continue
organic
and
acquisitiongrowth. Thefollowingpointsarehighlighted:
Cashposition(includingoverdrafts)at30June2011of$2.44m.
Bankloansof$1.95mat30June2011(debttoequityratio15%).
TheCompanyhadabankfacilityasat30June2010of$3.05m(drawndownto$1.95m).
At31July2011theCompanysbankfacilityincreasedto$3.50m.
TheCompanyachievedoperatingcashinflowsfortheyearof$1.23m.
TheCompanys2010/11interimdividendwasfullyunderwrittenbyTaylorCollison(Sharebrokers
andInvestmentAdvisers)withthesupportofaninstitutionalinvestor.TheCompanyissued2.1m
new shares at 12.5 cents per share in lieu of a cash dividend payment of $267,833. The
Companys
dividend
reinvestment
plan
for
the
interim
dividend
attracted
22%
re
investment
fromshareholdersbeforetheunderwriting.
OperatingCashFlow
Cash flows from operations were $1.23m during the period, compared with$1.45m for the period
ended30June2010.
ItshouldbenotedthatundertheIntegratedmodeltheCompanydoesnotacquiredebtorsandwork
inprogressaspartofanacquisition.Consequently,theCompanywillinvestfundsfromoperationsin
the buildup of working capital (including debtors and work in progress) to normal levels post
acquisition.
As
a
result,
net
operating
cash
flows
of
the
Company
will
generally
be
lower
in
the
periodfollowinganacquisition.
During the period, the WK acquisition required the buildup of working capital to generally
acceptablelevelsinthenormalcourseoftrading. Similarly,theacquisitionofPLNwillhaveaneffect
inthefirsthalfof2011/12.
DividendAnnouncement
TheDirectorshavedeclaredafullyfrankedfinaldividendof0.60cents.
Thedividend
will
have
a
record
date
of
14
October
2011
and
a
payment
date
of
4
November
2011.
Thedividendreinvestmentplanwilloperate.
Intotal,the Companyhasdeclared fully frankeddividendsof0.90centsper shareforthe2010/11
financialyear,havingpaidaninterimdividendof0.30centsfullyfrankedinMay2011.
Outlook
Overall, the Directors remain confident in the outlook for the Company given the strength and
underlyingqualityofitsmemberfirms,thesignificantopportunityfororganicgrowthandimproved
performance inthesefirms,andthesignificantpotentialtogrowbyselectiveacquisitionaspartof
thestrategy
of
developing
a
national
network
of
legal
services
businesses.
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8
Outlook(continued)
The
Directors
are
of
the
view
that
the
Company
is
well
placed
to
capitalise
on
the
significant
opportunity afforded by prevailing industry issues. Longterm competitive advantage can be
achievedbytheCompanyinsupportingmemberfirmsindevelopingscaletounderpinfuturegrowth
andprofitability.
Consistent with this position, the outlook for the Group is positive and the Directors expect the
Company to achieve earnings per share growth for 2011/12, providing reasonable business
conditionscontinuefortheyear.
2. BusinessPerformance
LegalServices
Division
The Legal Services division incorporates the businesses of Talbot Olivier (Perth), Argyle Lawyers
(Sydney/Melbourne)andCivicLegal(Perth,withnationalandinternationalcoverage).
Each of these businesses has highly competitive positions in their respective markets, and target
commercialclientsinthepubliclylisted,midmarket,governmentandSMEsegments,aswellashigh
networthindividualclients.
Talbot Olivier has a history of over 80 years and operates in commercial law, litigation, insurance,
property,estateplanningandfamilylawpredominantlyinthePertharea.
Argyle Lawyers commenced in 1982 and combines corporate, business, family, litigation, and
property law, with particular specialisation in key long term growth industries of financial services
andwealthmanagement,superannuationandtaxationandhighnetwealthestateplanning.
CivicLegalprovidesarangeoflegalservicesincludingcorporateandcommercial,property,litigation,
family,migrationadvice,localgovernmentlaw,settlementsandsuperannuation,taxationandestate
planningfirm.
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9
LegalServicesDivision(continued)
TheLegal
Services
division
employs
over
90
lawyers
across
4
offices
in
Sydney,
Perth
and
Melbourne,
andhasdevelopedabroadanddiversifiedrangeoflegalservicesshowninthefollowingtable.
BusinessAdvisoryServices PrivateClientServices
Corporate&Commercial WealthManagement
Property&Construction WealthProtection
CommercialLitigation Superannuation
InsuranceServices TaxationLitigation
Media&Defamation TaxationAdvice
Licensing,GamingandHospitality TaxationAudits
GovernmentServices EstatePlanning&Wills
Insolvency&
Corporate
Recovery
Succession
Planning
WorkplaceRelations Family
TaxationLitigation&Advice Property/Settlements
Compliance&Regulatory Immigration
DisputeResolution&Mediation Employment/WorkplaceRelations
Mergers&Acquisitions Criminal
Mining,Energy&Resources OnlineLegalDocumentPublishing
The Directors consider that the broad diversification of services offered by the Company provides
strong support to the ongoing revenue profile of the Company and assists in insulating against
marketdownturns.
TheCompanysstrategyfortheLegalServicesdivisionistodevelopanationalnetworkofleadinglaw
firms in the capital cities and other key centres across Australia, with a view to the growth and
improvement of these businesses, as well as the development of cross referral processes, national
tenders,strategicrelationshipsandscaleadvantageopportunities.
InformationTechnologyServicesDivision
The Information Technology Services division (IT Services) incorporates the Law Central business,
which is an internet based customised legal document publishing and information service. The
service is targeted towards accountants and financial planners and earns revenue based on the
sellingof
documents
and
subscriptions
to
the
service.
The Company strategy for IT Services is to grow and develop the business organically through the
expansionofonlineservices,andthebuildingofdeeperrelationshipswiththeexistingLawCentral
clientbase.
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10
3. IndustryOverview
TheDirectors
believe
that
the
legal
services
industry
is
currently
influenced
by
a
number
of
issues
whichprovideanopportunityfortheCompanytodevelopandgrowanetworkofleadinglawfirms.
There issignificantfragmentation intheindustrywithover11,000 legalfirms inAustraliaaccording
tothe2008IBISIndustryReport.
TheDirectorsconsiderthatthereareintherangeof150mediumsizedfirmsinAustralia,thesebeing
theCompanystargetgroupformemberfirms.
Formediumsizedlegalfirms,itisdifficulttoattractandretaingoodseniorlawyersanditishardto
providebroadservicestomeetclientneeds.
Growthisdifficultforthesebusinessesduetoavailabilityofcapital.
Further, succession planning is difficult with young lawyers increasingly reluctant to buy into
partnershipsgiventhecostoflivinginAustraliancities.
For small law firms, of which there are thousands, it isjust difficult to survive with challenges in
attractingandretainingstaff,providingtraining,providinganappropriateservicetoclients,finding
capitalandresourcesforgrowthandbusinesssuccessiongenerally.
Additionally, the Australian legal industry iscurrently undergoinganinternationalisation withthe
entryof
a
number
of
foreign
law
firms
into
key
Australian
markets.
Whilst the Directors are watchful of these developments, these changes are generally seen as
positive for the Company with the associated fragmentation, consolidation and evolution in
AustralianlawfirmsprovidingfurtheropportunitiesforIntegratedforexpansionthroughacquisition
andnewhiringoflawyers.
Againstthisbackground,theDirectorsconsiderthatILHprovidesanattractivevaluepropositionfor
firmstojointheCompany.
The Companys business model and strategy provides the basis for assisting member firms in
addressingthese
industry
issues.
Specifically, ILH looks to improve the financial and risk position of vendors, as well as unlock the
growthpotentialofalawfirm.
BusinessPhilosophiesandStrategy
ThekeybusinessphilosophiesoftheCompanyincludeaselectiveapproachtoacquisitions.
Thismeansselectivelyacquiringqualityfirmswithstronggrowthprospects,andwhoarecompatible
with existing member firm aspirations, culture and values, including a commitment to growth,
improvement
and
working
together.
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11
BusinessPhilosophiesandStrategy(continued)
Overthe
next
5
to
10
years,
we
intend
to
develop
a
national
network
of
legal
services
businesses
(memberfirms)byacquiring15 to20 highquality medium sized lawfirms inthe Australian capital
citiesandkeyregionalcentres.
Thebusinesseswetargetarebothmediumsizedcommerciallawfirmsandspecialistlawfirmsinkey
growthsegments.
Integratedsupportsthesememberfirmstowardsabovemarketrevenueandprofitgrowththrough
thedevelopmentofabroadrangeoflegalservices,organicgrowth,tuckinacquisitions,crossselling
andsuccessionplanning,
Integrated
also
supports
these
member
firms
towards
improved
and
sustainable
business
performance through improved business management, personnel management, best practice
businessprocesses,traininganddevelopment,shareplansandperformancebasedrewards.
Inthisregardthereareanumberofpotentialacquisitionswearecurrentlyspeakingwithwhichmay
ormaynotturnouttobetherightfitfortheGroup.
Growthwillbe incremental. TheCompanydoesnot intendtomakea largenumberofacquisitions
quickly,butratherensurethattheCompanysbusinessesaremanagedtothemaximumpotentialfor
shareholders.
The
model
is
one
of
freedom
within
boundaries,
where
member
firms
retain
their
branding
and
continue to develop the strategy and manage the business as they have previously done, but with
strategic,financialandriskmanagementboundaries.
Overtime,scaleadvantageisexpectedtosupportimprovedmarginsandweexpectbestpracticesto
helpdrivecostefficiencies.
Remuneration is performance based and aligned with shareholder interests, with profit share and
shareschemestoincentivisegrowthandimprovementinbusinessrevenueandearnings.
TheCorporateteamwillbekepttoaminimumandprovidesGroupmanagement,strategicdirection,
boundariesand
support,
as
well
as
providing
accountability
for
member
firms.
4. PositionedforGrowth
The Directors note their expectation of continued acquisition growth, organic growth and
operationalimprovementfrommemberfirmsintheperiodsahead,inparticularnoting:
TheCompanyhasgoodbusinesseswithstrongmarketpositionsandgrowthprospects.
The Company is successfully building a strong culture of likeminded people, with common
aspirationsforabovemarketgrowthandbusinessimprovement.
TheCompanysmemberfirmshavehighqualityandlongtermclientrelationshipswithpublicly
listed companies, midmarket businesses, government entities, SMEs and high net worth
individuals,whichprovidesasignificantelementofrecurringfeeincomefortheGroup.
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12
4. PositionedforGrowth(continued)
The
Company
has
demonstrated
an
ability
to
achieve
strong,
consistent
and
above
marketrevenuegrowth.
Integratedisnowatop40Australianlawfirmbyfeeincome.
TheCompanywasnominatedthefastestgrowinglegalfirmbyfeeincomeinAustraliain2009
andsecondfastestgrowingin2010(Source:AustralasianLegalBusiness),andranked4thinthe
2011BRWMagazineFastStarters,and5thin2010.
Significant organic and acquisition growth opportunities exist for the Group and for member
firms.
The
Company
is
aiming
to
acquire
one
new
member
firm
and
a
number
of
smaller
tuckin
acquisitionsineach12monthperiod,whichwouldcontributeapproximately$10minannualised
revenue.
TheCompanyhasastrongbalancesheetandconservativeborrowing.
There is significant scope for business operational performance improvement in all member
firms,providinganopportunityforincreasedprofitabilityovertime.
Furthermore,anopportunityexistsforincreasedprofitabilitybyachievingincreasedscaleat
bothaGroupandmemberfirmlevel.
Ata
Group
level
this
means
securing
more
member
firms
to
share
the
fixed
overhead
burden
of
theCorporateoffice.
Andatamemberfirmlevel,thismeansachievingorganicandacquisitiongrowthtooptimisethe
useofexistingpremises,andtosharetheprofessionalmanagementandinfrastructurecosts
thatthesefirmsnowhaveinplace.
TheDirectorsbelievethatlongtermcompetitiveadvantagecanbeachievedbytheCompanyin
supportingmemberfirmsindevelopingscaletounderpinfuturegrowthandprofitability.
Significantly,thefutureprofitabilityoftheCompanyisunderpinnedbylongtermemployment
contracts, restraints and noncompetition arrangements with vendor Principals of member
firms.
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13
5. Outlook
TheCompanys
priorities
for
the
period
ahead
remain
unchanged:
Workingwithexistingmemberfirmsforcontinuedgrowthanddevelopment.
Thisincludesorganicrevenuegrowthandcontinuedbusinessoperationalimprovement,witha
focusonbusinessleadershipandmanagement,workingcapitalmanagementandbestpractice
development.
ExtendingtheGroupsgeographiccoverageandservicestobuildscale.
TheDirectorsremainconfidentintheoutlookfortheCompanygiventhestrengthandunderlying
qualityof
its
member
firms,
the
significant
opportunity
for
organic
growth
and
improved
performanceinthesefirms,andthesignificantpotentialtogrowbyselectiveacquisitionaspartof
thestrategyofdevelopinganationalnetworkoflegalservicesbusinesses.
TheeffectivedeliveryoftheCompanysstatedstrategyofdevelopinganationalnetworkofleading
mediumsizedlawfirmswilltaketime. TheCompanyremainsfocusedonincrementallyand
selectivelyacquiringgoodbusinesseswithlikemindedpeopleandworkingwiththemtowards
qualityandsustainablegrowthandimprovement.
Consistentwiththisposition,theoutlookfortheGroupispositiveandtheDirectorsexpectthe
Companytoachieveearningspersharegrowthfor2011/12,providingthatreasonablebusiness
conditionscontinue
for
the
year.
TheHonJDawkins
Chairman
GFowler
ManagingDirector
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DirectorsReport
14
Yourdirectorssubmittheirreportfortheyearended30June2011.
DIRECTORS
The names and details of the Companys directors in office during the financial year and until the
date of this report are as follows. Directors were in office for this entire period unless otherwise
stated.
Names,qualifications,experienceandspecialresponsibilities
TheHonJohnDawkins,AO,B.Ec(NonexecutiveChairman)
MrDawkinswasChairmanofLawCentralfromitsearlybeginningsinMarch2000untilMarch2006.
Hisother
board
appointments
include
Chairman
of
the
Archer
Exploration
Ltd,
TVET
Australia
Ltd
andSovereignGoldLtdandDirectorofM&CSaatchiDirectPtyLtd. Forover10years,until2005,he
served on the board of Sealcorp Holdings, now Asgard Wealth Solutions, and he is a former
chairmanofEldersRuralBankandRetailEnergyMarketCompanyLtd.
MrDawkinshasconsultedtoseverallargeAustralianandoverseascompanies,theWorldBankand
the OECD. Until his retirement from politics in 1994 he served as a Minister in the Federal
Governmentfor10yearsandintheHouseofRepresentativesfor18years.
He isagraduate inEconomicsfromtheUniversityofWesternAustralia,andhehasbeenawarded
honorary doctorates from The University of South Australia and the Queensland University of
Technology.
Duringthepastthreeyears,MrDawkinsservedasadirectorofthefollowinglistedcompanies:
MGMWirelessLtdappointed17August2010*
ArcherExplorationLtdappointed30April2010*
SovereignGoldCompanyLimitedappointed16September2010*
GeneticTechnologiesLtdappointed24November2004;resigned19November2010
*denotescurrentdirectorship
AnneTregonning,B.Com,FCA,
GAICD
(Non
executive
Director)
MsTregonninghasextensiveexperienceinfinanceandriskmanagementinbothpublicpracticeand
commerce. Senior positions previously held include General Manager Finance and Risk, Wealth
Management Division,St George Bank, Director Group Finance, Sealcorp Holdings (now ASGARD
WealthSolutions),andSeniorManagerCorporateBanking,BankWest.
Ms Tregonning is a nonexecutive director of Retail Energy Market Company Ltd and the Breast
Cancer Research Centre Western Australia. She is a past executive director of ASGARD Capital
ManagementLimited,apastStateChairmanoftheInstituteofCharteredAccountantsandmember
of itsNationalCouncil,andapastdirectorofotherpubliccompanyandnotforprofit/professional
organisations.
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15
Ms Tregonning is a graduate of The University of Western Australia, a Fellow of The Institute of
CharteredAccountantsandgraduateoftheAustralianInstituteofCompanyDirectors.
MsTregonningdidnothaveanydirectorshipsinotherlistedcompaniesduringthepastthreeyears.
GraemeFowler,B.Bus,CPA,MAICD(ManagingDirectorandChiefExecutive)
Mr Fowler was previously Chief Executive Officer of listed accounting and financial services
consolidator WHK Group Limited. He brings specific experience in the successful consolidation of
professionalservicesfirms.Hespentover15yearsinseniormanagementroleswiththeBTFinancial
GroupincludingGroupChiefFinancialOfficer,ChiefExecutiveOfficerofBTFundsManagementNZ,
and Chief Executive Officer of BT Portfolio Services (including BT Wrap). Mr Fowler is also non
executivedirectorofCountplusLimited.
Mr Fowler is a business studies graduate of The University of Technology, Sydney and a Certified
PracticingAccountant.
Duringthepastthreeyears,MrFowlerservedasadirectorofthefollowinglistedcompany:
CountplusLimitedappointed19August2010*
*denotescurrentdirectorship
Beneficialinterestsinthesharesofthecompanyandrelatedbodiescorporate
Asatthedateofthisreport,thebeneficialinterestsofthedirectorsinthesharesofIntegratedLegal
HoldingsLimitedwere:
Numberof
OrdinaryShares
JDawkins 2,950,129
ATregonning 416,001
GFowler 4,860,613
COMPANYSECRETARY
JeanMarieRudd,B.Com,CA,GAICD
MrsRuddisalsotheChiefFinancialOfficer(CFO)oftheIntegratedLegalHoldingsLimitedgroupof
companies.
Mrs Rudd was previously the Western Australian Finance Director of national law firm, Minter
Ellison, bringing industryspecific experience to her roles with Integrated Legal Holdings Limited.
Mrs Rudd has over 20 years experience in CFO/Company Secretary roles including senior
managementroleswiththeHeytesburyGroupandThinkSmartLimited.
MrsRuddisagraduateofCurtinUniversity,Perth,aCharteredAccountantandagraduateofthe
AustralianInstituteofCompanyDirectors.
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PRINCIPALACTIVITIES
Theprincipal
activity
of
the
entities
of
the
consolidated
Group
is
the
provision
of
legal
services
and
onlinelegaldocumentservicesinAustralia.
OPERATINGANDFINANCIALREVIEW
GroupOverview
AdetailedreviewoftheoperationsoftheGroupduringthefinancialyear,itsfinancialpositionand
businessstrategiesandprospectsforfuturefinancialyearsissetoutbelow.
OperatingResultsfortheYear
Consolidated operating revenues of $28,475,476 were 19% higher than the previous year which
reported $23,874,988 operating revenues. Revenue from ordinary activities increased due to a
combinationoforganicgrowthandtheacquisitionofWojtowiczKellyLegalinFebruary2011.
For the year ended 30 June 2011, the consolidated entity generated a net profit after tax of
$1,286,670comparedtotheyearended30June2010of$853,494,anincreaseof51%.
Earningspersharefortheyearwere1.41centspershare,comparedto1.18centspershareforthe
yearended30June2010,anincreaseof19%.
TheDirectorsconsiderthattheCompanyiswellplacedforthefuture,inparticularnoting:
TheCompanyhasgoodbusinesseswithstrongmarketpositionsandgrowthprospects.
The Company is successfully building a strong culture of likeminded people, with common
aspirationsforabovemarketgrowthandbusinessimprovement.
TheCompanyhasdemonstratedanabilitytoachievestrongandconsistentrevenuegrowth.
OrganicandacquisitiongrowthopportunitiesfortheGroupandformemberfirms.
TheCompanyhasastrongbalancesheetandavailablefundingforfurthergrowth.
Scopeforbusinessperformanceimprovementinallmemberfirms,providinganopportunityfor
increasedprofitabilityovertime.
In particular, an opportunity exists to increase profitability by achieving increased scale at both a
Groupandmemberfirmlevel.
AtaGrouplevelthismeanssecuringmorememberfirmstosharethefixedoverheadburdenofthe
Corporateoffice.
Andatamemberfirmlevel,thismeansachievingorganicandacquisitiongrowthtooptimisetheuse
ofexistingpremises,andtosharetheprofessionalmanagementandinfrastructurecoststhatthese
firmsnowhaveinplace.
The
Directors
believe
that
longterm
competitive
advantage
can
be
achieved
by
the
Company
supportingmemberfirmsindevelopingscaletounderpinfuturegrowthandprofitability.
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AfullercommentaryontheresultsforthereportingperiodiscontainedintheASXreleasedated18
August2011.
ShareholderReturns
TheCompanysreturntoshareholdersisasfollows:
Growth 2011 2010
Basicanddilutedprofitpershare(cents) 19% 1.41 1.18
PerformanceIndicators
Management
and
the
Board
monitor
the
Groups
overall
performance,
from
the
execution
of
its
strategic plan through to the performance of the Group against operating plans and financial
budgets.
The Board, together with management have identified key performance indicators (KPIs) that are
used to monitor performance. Directors receive the KPIs for review prior to each monthly Board
meetingallowingalldirectorstoactivelymonitortheGroupsperformance.
ReviewofFinancialCondition
LiquidityandCapitalResources
The statement of cash flows illustrates that there was a net cash inflow of $1,231,739 from
operatingactivitiesduringtheyear(2010:$1,448,161).
Cashflowsusedforinvestingactivitiesamountedto$1,188,744(2010:$802,129)ofwhich$209,596
related to the acquisition of plant and equipment (2010: $802,129) and $979,148 related to the
acquisitionofbusinessesduringtheyear(2010:nil).
Totalcashinflowsweresupplementedby$546,545(2010:$766,027)receivedtofinanceequipment
acquisitions and annual professional indemnity insurance premiums and $1,000,000 (2010:
$227,000)additionaldrawdownofbankfloatingbillfacilitiesearlyinthefinancialyear.
Finally, there was a cash outflow of $441,556 (2010: $131,122) for the payment of dividends and
paymentsforshareissueexpensesof$17,389(2010:$115,058).
ThenettangibleassetbackingoftheGroupwas5.23centspershare(2010:6.54cents)areduction
of20%overtheprioryear. ThisreductionisprimarilyduetotheacquisitionofWojtowiczKellyLegal
(refer note 29) in February 2011 which is not expected to add materially to profitability until the
2012financialyear.
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Assetandcapitalstructure
CONSOLIDATED2011 2010
$ $
Netassets 18,012,663 16,197,914
Less:Cashandcashequivalentsnetof
overdrafts (2,435,615) (1,948,949)
Totalcapitalemployed 15,577,048 14,248,965
The level of gearing in the Company is within acceptable limits set by the directors given the
implicationsofthebusinessacquisitionsandpaymentoftaxliabilitiesduringtheyear.
Shareissuesduringtheyear
TheCompanyhasissued10,679,662shares(2010:17,138,488shares)duringtheyear:
884,550sharestoemployeesundertheDeferredEmployeeSharePlan;
2,143,112 shares to shareholders under the dividend reinvestment plan for the 2011 interim
dividend(May2011);
1,800,000 shares to the vendors of The Argyle Partnership in final satisfaction of deferred
considerationpayable(September2010);
125,000sharesinpartsatisfactionof2010profitshareentitlements(December2010);and
5,727,000sharestovendorsofthelegalpracticeofWojtowiczKellyLegal(February2011).
RiskManagement
The Group takes a proactive approach to risk management. The Board is responsible forensuring
thatrisks,andalsoopportunities,areidentifiedonatimelybasisandthattheGroupsobjectivesand
activitiesarealignedwiththerisksandopportunitiesidentifiedbytheBoard.
The Board has established a separate Audit and Risk Management Committee. With respect to
recognisingandmanagingrisk,theCommitteeisresponsibleforensuringtheCompanyhasasound
system of risk oversight, management and internal control. This system is designed to identify,
analyse, action, monitor and report risks; including governance, strategic, operational and
compliancerisk;andinformtheBoardofmaterialchangestotheGroupsriskprofile.
The Board has a number of mechanisms in place to ensure that managements objectives and
activitiesarealignedwiththerisksidentifiedbytheBoard. Theseincludethefollowing:
Boardapprovalofastrategicplan,whichencompassestheGroupsvision,mission,strategies,
goalsandpriorities,designedtomeetstakeholdersneedsandmanagebusinessrisk;
Implementation of Board approved budget and Board monitoring of progress against budget,
includingtheestablishmentandmonitoringoffinancialKPIs;and
Theestablishmentofcommitteestoreportonspecificbusinessrisks.
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SIGNIFICANTCHANGESINTHESTATEOFAFFAIRS
The
acquisition
of
Wojtowicz
Kelly
Legal
on
1
February
2011
has
further
strengthened
the
legal
services division of the Group. Wojtowicz Kelly Legal (incorporating Civic Legal, the Simpson Kelly
Group,GibsonTovey&Associates,AllPropertyConveyancingandJanSimpsonSettlements)merged
with existing member firm Tax Lawyers Australia Pty Ltd trading as Brett Davies Lawyers and the
mergedbusinessnowtradesasCivicLegal.
Wojtowicz Kelly Legal is an established and well regarded Perth CBD based commercial law firm
delivering services to commercial enterprises and private individuals predominantly in Western
Australia,butalsotoenterprisesbasedinSoutheastAsiawithAustralianinterests. Thebusinesswas
establishedin1994andhasdevelopedarangeoflegalservicesincludingcorporateandcommercial,
property,litigation,family,migrationadvice,localgovernmentlawandsettlements(conveyancing).
TheCivicLegalbusinessalsohasanofficeinRockingham,southofPerth,andarepresentativeoffice
inSingapore.
Therehavebeennoothersignificantchanges inthestateofaffairsduringtheyearended30June
2011.
SIGNIFICANTEVENTSAFTERTHEREPORTINGDATE
AcquisitionoflegalpracticeofPLNLawyers
On 1 August 2011 the Company acquired the legal practice of PLN Lawyers (PLN) under tuckin
arrangementswiththeexistingmemberfirmArgyleLawyers.
PLNisanestablishedandhighlyregardedSydneybasedcommerciallawfirm.PLNsmissionistobe
the leading provider of legal and business advisory services to corporations and international
institutions operating in the Pacific region. PLNs clients include Australian, Asian, American and
European based companies and financial institutions with business interests in the AsiaPacific
region.
PLNprovidesarangeoflegalservicesincludingCorporateandFinancialServices,TravelandTourism,
Aviation
Industry
services,
Infrastructure
and
Development,
Insurance,
Insolvency,
Mergers,AcquisitionsandIPO's,MiningandPetroleum,TelecommunicationsandInformationTechnology.
PLN will tuckin with existing member firm Argyle, with the combined firm having 6 Principals,
approximately40staffandannualfeeincomeofmorethan$10m.
Furtherdetailsoftheacquisitionareprovidedinnote33andintheASXreleaseon1August2011.
DeclarationofFinalDividend
The Directors have declared a fully franked final dividend of 0.6 cents. The dividend will have a
recorddate
of
14
October
2011
and
a
payment
date
of
4
November
2011.
There
will
be
a
dividend
reinvestmentplanavailable.
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RenewalofBankFundingFacilities
Afterbalance
date
the
Company
renegotiated
bank
funding
facilities
which
were
due
to
expire
in
September2011.
As at 30 June 2011, the Company had $3.05m in bank funding facilities available of which $1.95m
was drawn down. After balance date, the facilities were renegotiated with an increased limit of
$3.50m,withrenewaldatesofSeptember2012andSeptember2013.
Furtherdetailsareprovidedinnote33.
LIKELYDEVELOPMENTSANDEXPECTEDRESULTS
Integrated Legal Holdings Limited will continue to seek growth in earnings per share through the
developmentandgrowthofexistingmemberfirmsandtheacquisitionofadditionalmemberfirms
throughoutAustralia.
ENVIRONMENTALREGULATION
The Groups operations are not subject to any significant environmental, Commonwealth or State,
regulationsorlaws.
INDEMNIFICATIONANDINSURANCEOFDIRECTORSANDOFFICERS
Each of the directors and secretary of the Company has entered into a deed with the Company
wherebytheCompanyhasprovidedcertaincontractualrightsofaccesstobooksandrecordsofthe
Company to those directors and secretary and to effect and maintain insurance in respect of the
directorsandofficersliabilityandprovidecertainindemnitiestoeachofthedirectors,totheextent
permittedbysection199BoftheCorporationsAct2001.
The Company has put in place Prospectus Insurance and Directors and Officers Liability Insurance.
The contract prohibits the disclosure of the nature of the liability and/or the amount of the
premium.
DIRECTORSMEETINGS
Thenumberofmeetingsofdirectors(includingmeetingsofcommitteesofdirectors)heldduringthe
yearandthenumberofmeetingsattendedbyeachdirectorwasasfollows:
Directors
Meetings
AuditandRiskManagement
CommitteeMeetings
Eligibleto
attend Attended
Eligibleto
attend Attended
JDawkins 11 10 8 7
ATregonning 11 11 8 8
GFowler 11 11 8 8
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Committeemembership
Asat
the
date
of
this
report,
the
Company
had
an
Audit
and
Risk
Management
Committee
of
the
BoardofDirectors.
TheAuditandRiskManagementCommitteecomprisesallmembersoftheBoardofdirectorsandis
chairedbyMsTregonning.
AUDITORINDEPENDENCEANDNONAUDITSERVICES
Acopyoftheauditors independencedeclarationreceivedbythedirectors inrelationtotheaudit
fortheyearisprovidedwiththisreportonpage39.
NONAUDITSERVICES
Nonauditserviceswereprovidedbytheentitysauditor,Ernst&Young. Thedirectorsaresatisfied
thattheprovisionofnonauditservicesiscompatiblewiththegeneralstandardofindependencefor
auditors imposed by theCorporationsAct2001. The nature and scope of each type of nonaudit
serviceprovidedmeansthatauditorindependencewasnotcompromised.
Ernst&Youngreceivedorareduetoreceivethefollowingamountsfortheprovisionofnonaudit
services:
CONSOLIDATED
2011 2010
$ $
Taxcompliance 17,500 31,453
Taxationservices 5,500
17,500 36,953
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REMUNERATIONREPORT(audited)
Thisremuneration
report
for
the
year
ended
30
June
2011
outlines
the
remuneration
arrangements
oftheCompanyandtheGroup inaccordancewiththerequirementsoftheCorporationsAct2001
anditsRegulations. Thisinformationhasbeenauditedasrequiredbysection308(3C)oftheAct.
The remuneration report details the remuneration arrangements for key management personnel
(KMP) of the Group who are defined as those persons having authority and responsibility for
planning, directing and controlling the major activities of the Company and the Group, directly or
indirectly, including any director (whether executive or otherwise) of the parent company, and
includesthefiveexecutivesintheParentandtheGroupreceivingthehighestremuneration.
For the purposes of this report, the term executive encompasses the Chief Executive and senior
executivesof
the
Parent
and
the
Group.
Theremunerationreportispresentedunderthefollowingsections:
1.
Individualkeymanagementpersonneldisclosures
2. Remunerationataglance
3. Boardoversightofremuneration
4.
Nonexecutivedirectorremunerationarrangements
5.
Executiveremunerationarrangements
6. Companyperformanceandthelinktoremuneration
7. Executivecontractualarrangements
8.
Equityinstruments
disclosures
1. Individualkeymanagementpersonneldisclosures
DetailsofKMP including the topfive remuneratedexecutivesof theParent and the Groupare set
outbelow:
i) Directors
JDawkins NonExecutiveChairman(nonexecutive)
ATregonning NonExecutiveDirector
GFowler ManagingDirectorandChiefExecutive
ii) Executives
BTaylor ManagingPrincipal,TalbotOlivier
PBobbin ManagingPrincipal,ArgyleLawyers
MDouglass(1)
Principal,ArgyleLawyers(to31August2011)
ManagingPrincipal,SignetLawyers(from1September2011)
AIreland Principal,ArgyleLawyers
BDavies ManagingPrincipal,BrettDaviesLawyers(to31January2011)
AQuahe ManagingPrincipal,CivicLegal(from1February2011)
JMRudd ChiefFinancialOfficerandCompanySecretary
(1) MarkDouglass,PrincipalofArgyleLawyersto31August2011,becametheManagingPrincipalof
specialist taxation litigation and advice legal firm known as Signet Lawyers which commenced
tradingon1September2011.
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23
There
were
no
other
changes
to
KMP
after
the
reporting
date
and
before
the
date
the
financial
reportwasauthorisedforissue.
2.
Remunerationataglance
IntegratedLegalHoldingsLimitedsremunerationstrategyisdesignedtoattract,motivateandretain
employees and nonexecutive directors (NEDs) by identifying and rewarding high performers and
recognisingthecontributionofeachemployeetothecontinuedgrowthandsuccessoftheGroup.
The remuneration policy is to position total employment cost close to the median of its defined
talentmarket
to
ensure
a
competitive
offering.
Forthe2011performanceperiod,100%oftheshorttermincentivepaymentisbasedonattainment
of a financial measure (net profit before tax or earnings per share). In recognition of the
performanceoftheGroupandtheexecutivesduringtheyear,atotalof$704,234 incashbonuses
waspaidtoGroupKMPsduringthe2011financialyear.
Long term incentive awards consisting of shares that vest on attainment of a predetermined
performancegoalareawardedtoselectedexecutives. TheCompanyusesearningspershareasthe
performancemeasurefortheshareawards. Nosharesvestednorwereawardedor issuedduring
the2011financialyear.
The remuneration of NEDs of the Company consists only of directors fees and committee fees.
Directorandcommitteefeeswereindexedforinflationovertheprioryearfees.
3.
Boardoversightofremuneration
Remunerationassessmentandapprovalprocess
TheBoardofDirectorsoftheCompany isresponsiblefordeterminingandreviewingremuneration
arrangementsfortheBoardandexecutives.
TheBoardwillassesstheappropriatenessofthenatureandamountofremunerationofNEDsand
executives on a periodic basis by reference to relevant employment market conditions, with the
overallobjectiveofensuringmaximumstakeholderbenefitfromtheretentionofahighperforming
directorandexecutiveteam.
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Remunerationstrategy
IntegratedLegalHoldingsLimitedsremunerationstrategyisdesignedtoattract,motivateandretain
employeesandNEDsbyidentifyingandrewardinghighperformersandrecognisingthecontribution
ofeachemployeetothecontinuedgrowthandsuccessoftheGroup.
To this end, key objectives of the Companys reward framework are to ensure that remuneration
practices:
arealignedtothegroupsbusinessstrategy;
offercompetitiveremunerationbenchmarkedagainsttheexternalmarket;
providea
strong
linkage
between
individual
and
group
performance
and
rewards;
aligntheinterestsofexecutiveswithshareholdersthroughmeasurementofshareholderreturn;
haveaportionofexecutiveremunerationatrisk;and
establishappropriate,demandingperformancehurdlesforvariableexecutiveremuneration.
Remunerationstructure
In accordance with best practice corporate governance, the structure of NED and executive
remunerationisseparateanddistinct.
4.
Nonexecutivedirectorremunerationarrangements
Remunerationpolicy
TheBoardseekstosetaggregateremunerationatalevelthatprovidestheCompanywiththeability
to attract and retain directors of the highest calibre, whilst incurring a cost that is acceptable to
shareholders.
The amount of aggregate remuneration sought to be approved by shareholders and the fee
structure is reviewed annually against inflation and fees paid to NEDs of comparable companies.
TheBoardmayalsoconsideradvicefromexternalconsultantswhenundertakingtheannualreview
process.
The Companys Constitution and the ASX Listing Rules specify that the aggregate remuneration of
NEDs shall be determined from time to time by a general meeting. The current aggregate
remuneration level for nonexecutive directors, as approved by shareholders, is $250,000 (2010:
$250,000)perannum.
TheBoardwillnotseekanyincreasefortheNEDspoolatthe2011AGM.
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Structure
The remuneration of NEDs consists of directors fees and committee fees. NEDs do not receive
retirementbenefits,nordotheyparticipateinanyincentiveprograms.
EachNEDreceivesabasefeeof$46,597(2010:$45,000)forbeingbothadirectoroftheCompany
and member of the Audit and Risk Management Committee. An additional fee of $46,597 (2010:
$45,000)isalsopaidiftheDirectoristheChairmanoftheBoardand$18,639(2010:$18,000)ifthe
directorisaChairmanoftheAuditandRiskManagementCommittee.
TheremunerationofNEDsforthefinancialyearisdetailedintable1onpage36ofthisreport.
5.
Executiveremunerationarrangements
Remunerationlevelsandmix
TheGroupaimstorewardexecutiveswithalevelandmixofremunerationcommensuratewiththeir
positionandresponsibilitieswithintheGroupsoasto:
Reward executives for Group, subsidiary and individual performance against targets set by
referencetoappropriatebenchmarks;
Alignthe
interests
of
executives
with
those
of
shareholders;
and
Ensuretotalremunerationiscompetitivebymarketstandards.
Structure
In the 2011 financial year, the executive remuneration framework consisted of the following
components:
Fixedremuneration
Variableremuneration:
o
Shorttermincentive(STI)
o
Longterm
incentive
(LTI)
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The
table
below
illustrates
the
structure
of
Integrated
Legal
Holdings
Limiteds
executive
remunerationarrangements:
Remuneration
ComponentVehicle Purpose
Linkto
Performance
Fixedremuneration Comprisesbasesalary,
superannuation
contributionsand
otherbenefits
Setwithreferencetorole,
marketandexperience.
Executivesaregiventhe
opportunitytoreceivetheir
fixedremunerationina
varietyofformsincluding
cashand
fringe
benefits
suchasparking.Itis
intendedthatthemanner
ofpaymentchosenwillbe
optimalfortherecipient
withoutcreatingunduecost
fortheGroup.
Remunerationlevelis
determinedannually
andisbasedona
financialscalelinked
toindividual
performanceinthe
previousfinancial
year.
STIcomponent Awardsaremadein
theformofcash
paymentsorshare
basedpayments
(equitysettled).
Rewardsexecutivesfor
theircontributionto
achievementofGroupand
businessunitoutcomes,as
wellas
individual
KPIs.
Linkedtofinancial
measuresincluding
earningspershareand
achievementof
profitabilitytargets.
LTIcomponent Awardsaremadein
theformofcash
paymentsorshare
basedpayments
(equitysettled).
Rewardsexecutivesfor
theircontributiontothe
creationofshareholder
valueoverthelongerterm.
Earningspershareis
thekeyfinancial
metric.
Fixedremuneration
FixedremunerationisreviewedannuallybytheBoard.TheprocessconsistsofareviewofCompany,
subsidiaryandindividualperformance,relevantcomparativeremunerationexternallyandinternally
and,where
appropriate,
external
advice
on
policies
and
practices.
The
Board
has
access
to
external
adviceindependentofmanagement,whereappropriate.
Thefixedremunerationcomponentofexecutivesisdetailedintable1onpage36.
Variableremuneration shorttermincentive(STI)
TheobjectiveoftheSTIprogramistolinktheachievementoftheGroupsoperationaltargetswith
the remuneration received by the executives charged with meeting those targets. The total
potentialSTIavailableissetatalevelsoastoprovidesufficientincentivetotheexecutivetoachieve
theoperationaltargetsandsuchthatthecosttotheGroupisreasonableinthecircumstances.
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STIawards
vest
at
the
end
of
the
period
over
which
the
performance
targets
are
measured,
and
are
forfeitedifemploymentisterminatedbeforethevestingdate. However,theBoardhasdiscretionto
approveproratapaymentsuptotheterminationdate,takingintoaccountthecircumstances.
ManagingDirectorandChiefExecutive
The Managing Director and Chief Executive is entitled to a maximum performance bonus of
$130,000 (2010:$160,000)payable in cashorshares at the discretionof theBoard, subject tothe
achievementofspecificearningspershare(EPS)performancetargets,calculatedbasedonearnings
beforeperformancebonusexpenserecognisedforthe2011financialyear. Thetargetsforthe2011
financialyearwere:
ThemaximumperformancebonusispayablewheretheGroupachieves25%EPSgrowth.
WheretheGroupachievesbetween15%and25%EPSgrowth,theamountpayableis40%ofthe
maximumbonus,plusanadditional6%(ofmaximumbonus)forevery1%inexcessof15%EPS
growth,toamaximumof100%bonusat25%EPSgrowth.
Wherethegroupachievesbetween10%and15%EPSgrowth,theamountpayableis20%ofthe
maximumbonus,plusanadditional4%(ofmaximumbonus)forevery1%inexcessof10%EPS
growth,toamaximumof40%bonusat15%EPSgrowth.
Where
the
Group
achieves
less
than
10%
EPS
growth
for
the
2011
financial
year,
any
bonus
payableisatthediscretionoftheBoard.
These targets are measured using financial reporting information and reviewed by the Board. If
performancetargetsarenotachieved,theperformancebonusmaystillbepaidatthediscretionof
theBoard,takingintoaccountthecircumstances.
MemberFirmPrincipals
Actual STI payments are granted to subsidiary member firms dependent on the extent to which
specific performance hurdles are met. The STI payments are calculated as a percentage of an
amount
by
which
profitability
of
a
subsidiary
exceeds
a
predetermined
profit
hurdle
for
that
subsidiary.
ProfithurdlesareapprovedbytheBoardatthetimeofacquisitionofamemberfirm.
The STI payment for a subsidiary is then allocated between Principals of that subsidiary based on
predeterminedKPIs,includingfeeincomeattributabletoeachPrincipal.
STI payments may be paid as a cash bonus, up to a maximum of 40% of the accrued bonus, at
quarterly intervals during the financial year subject to satisfaction of member firm KPI targets.
Accruedbonusesthatremainunpaidatyearendaredeliveredasacashbonusorshareswithin10
daysafter
the
release
of
the
audited
financial
statements
each
financial
year.
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DirectorsReport(continued)
REMUNERATIONREPORT(audited)(continued)
28
ChiefFinancial
Officer
and
Company
Secretary
Forthesixmonthperiodended31August2010,theChiefFinancialOfficerandCompanySecretary
wasentitledtoamaximumperformancebonusof$7,000. Ifachievementofperformancetargetsis
not successful,a lesser amount may bepayable atthediscretion of the Managing Director, taking
intoaccounttheindividualcircumstancescontributingtononachievementofthosetargets.
Performance targets are achieved upon satisfaction of key deliverables involving the realisation of
budgetednetprofitbeforetaxandoperatingcashflows.
From1September2010,theChiefFinancialOfficerandCompanySecretaryisentitledtoamaximum
performancebonus
of
$17,600,
payable
in
cash
or
shares
at
the
discretion
of
the
Board,
subject
to
the achievement of specific earnings per share (EPS) performance targets, calculated based on
earningsbeforeperformancebonusexpenserecognisedforthe2011financialyear. Thetargetsfor
the2011financialyearwere:
ThemaximumperformancebonusispayablewheretheGroupachieves25%EPSgrowth.
WheretheGroupachievesbetween15%and25%EPSgrowth,theamountpayableis40%ofthe
maximumbonus,plusanadditional6%(ofmaximumbonus)forevery1%inexcessof15%EPS
growth,toamaximumof100%bonusat25%EPSgrowth.
Wherethe
group
achieves
between
10%
and
15%
EPS
growth,
the
amount
payable
is
20%
of
the
maximumbonus,plusanadditional4%(ofmaximumbonus)forevery1%inexcessof10%EPS
growth,toamaximumof40%bonusat15%EPSgrowth.
Where the Group achieves less than 10% EPS growth for the 2011 financial year, any bonus
payableisatthediscretionoftheBoard.
These targets are measured using financial reporting information and reviewed by the Board. If
performancetargetsarenotachieved,theperformancebonusmaystillbepaidatthediscretionof
theBoard,takingintoaccountthecircumstances.
STIawards
for
2011
ManagingDirectorandChiefExecutive
AfterconsiderationofperformanceagainstKPIs,theBoarddeterminedthattheamounttobepaid
to the Managing Director and Chief Executive would be $130,000 (2010: $64,000). Payment was
accruedat 30June2011 and paid in cash inSeptember2011.ThemaximumSTI bonus achievable
was$130,000andtheminimumwasnil.
TherewerenoalterationstotheManagingDirectorsSTIbonusplanduringtheyear.
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DirectorsReport(continued)
REMUNERATIONREPORT(audited)(continued)
29
MemberFirm
Principals
The Managing Director reviews the STI bonus payments for a subsidiary for subsequent allocation
between Principals of that subsidiary based on predetermined key performance indicators, which
may include fee income attributable to each Principal,which is measured using financial reporting
information.
ThemaximumSTIcashbonusiscalculatedasapercentageofanamountbywhichprofitabilityofa
subsidiaryexceedsapredeterminedprofithurdleforthatsubsidiary. TheminimumSTIcashbonus
payableisnil.
Duringthe
2011
financial
year,
the
bonus
achieved
and
vested
for
Mr
Taylor,
Managing
Principal
of
Talbot Olivier, was $74,846 (2010: $44,103), forMr Bobbin, Managing Principal of Argyle Lawyers,
was$238,394(2010:$300,000),forMrDouglass,PrincipalofArgyleLawyers,was$238,394(2010:
$400,000), for Mr Ireland, Principal of Argyle Lawyers, was nil (2010: $50,000), for Mr Davies,
Managing Principal of Brett Davies Lawyers (to 31 January 2011), was nil (2010: nil) and for Mr
Quahe,ManagingPrincipalofCivicLegal(from1February2011),wasnil(2010:n/a).
The bonuses achieved and vested during 2011 will be paid within 10 days after the release of the
2011AnnualReport,subjecttoachievementofKPItargetsinrelationtofirmdebtormanagement.
TherehavebeennoalterationstotheSTIbonusplanduringtheyear.
ChiefFinancialOfficerandCompanySecretary
TheManagingDirectorapprovedtheSTIbonuspaymentforthesixmonthsended31August2010.
Themaximumcashbonusis$7,000andtheminimumisnil.
$5,000(2010:$5,400)ofSTIawardsinrespectofthesixmonthperiodended31August2010vested
during the 2011 financial year with 29% (2010: 10%) forfeited. Board discretion was given to the
payment of a cash bonus given that performance conditions were not fully met. This was paid in
cashinOctober2010.
Under
the
new
STI
bonus
arrangements,
commencing
from
1
September
2010
and
afterconsiderationofperformanceagainstKPIs,theBoarddeterminedthattheamounttobepaidtothe
Chief Financial Officer and Company Secretary would be $17,600 (2010: $10,400). Payment was
accruedat30June2011andpaid incash inSeptember2011. ThemaximumSTIbonusachievable
was$17,600andtheminimumwasnil.
Other than the new arrangements from 1 September 2010 noted above, there were no other
alterationstotheChiefFinancialOfficerandCompanySecretarysSTIbonusplanduringtheyear.
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INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
DirectorsReport(continued)
REMUNERATIONREPORT(audited)(continued)
30
Variableremuneration
long
term
incentives
(LTI)
ChiefFinancialOfficerandCompanySecretary
TheLTIbenefitsaredeliveredonadiscretionarybasisbytheBoardintheformofordinarysharesin
theCompanyundertheDeferred EmployeesSharePlan. Suchgrantsareonlymadeto executives
who are able to influence the generation of shareholder wealth and thus have an impact on the
Groupsperformanceagainsttherelevantlongtermperformancehurdle.
NosharesweregrantedtotheChiefFinancialOfficerandCompanySecretaryduringtheyear(2010:
40,000shares).
Sharesissuedinprioryearswillvestinstagesduringthethreeyearperiodfromissuedatefollowingthesuccessfulachievementoftheperformancecriteriaspecifiedbelow,andprovidedthattheChief
Financial Officer and Company Secretary remains in the employment of the Company for each
vestingperiod. ShouldtheChiefFinancialOfficerandCompanySecretaryceaseemploymentprior
tothisdate,unvestedshareswillbeforfeited.
Performancecriteriaattachedtothesharesareasfollows:
100% of shares will vest if cumulative growth in the Companys earnings per share over the
threeyeartermis45%ormore.
Shareswill
commence
vesting
after
achieving
30%
growth
in
the
Companys
earnings
per
share.
50% of shares will vest at 30% growth in earnings per share, with an additional 5% of shares
vestingforevery1.5%ofearningspersharegrowthabove30%.
Ifperformancetargetsarenotachieved,thesharesmaystillvestatthediscretionoftheBoard,
takingintoaccountthecircumstances.
Performance criteria will be measured using financial reporting information. At 30 June 2011, no
sharesundertheLTIplanhavevested(2010:nil)andnonewereforfeited(2010:nil).
Executivesharetradingpolicy
TheCompany
has
in
place
a
share
trading
policy
which
imposes
trading
restrictions
on
officers
and
employeesoftheCompanyanditsrelatedentitiesthatareconsideredtobeinpossessionofinside
information.
Executives and directors are prohibited from using derivatives or hedge instruments or otherwise
entering intotransactions(includingmargin loans)thatoperateorare intendedtooperateto limit
theeconomicriskofsecurityholdingsovervestedorunvestedshares intheCompanywithoutthe
writtenpermissionoftheBoard.
ThisismonitoredbytheCompanySecretaryonamonthlybasisthroughreviewofstatementsfrom
theshareregistryserviceprovider,ComputershareInvestorServicesPtyLimited.
Furthermore, executives and directors are required to declare their intention totrade in shares totheCompanySecretary,whichisthenpresentedtotheBoard.
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INTEGRATEDLEGALHOLDINGSLIMITED
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DirectorsReport(continued)
REMUNERATIONREPORT(audited)(continued)
31
6.
Companyperformanceandthelinktoremuneration
IntegratedLegalHoldingsLimitedsremunerationpolicyaimstoconnecttheremunerationreceived
byexecutiveswithearningsandthecreationofshareholderwealth.
Group performance is reflected in the movement of the Groups EPS over time. The graph below
showsIntegratedLegalHoldingsLimitedsEPShistorysinceincorporationinJune2006:
*Fortheperiodfromincorporationon26June2006to30June2007
The2007EPSresultof65.50wasaffectedbythevaluationofsharesissuedtofoundationpartners
and supporters at a deemed value of 50 cents per share prior to listing of the Company and
acquisitionoflegalpractices.
In the 2008 financial year, the EPS was positively impacted through the acquisition of four legal
practicesandaninformationtechnologybusiness.
Inthe2009financialyearanumberoffactorsinfluencedthereductionofEPS. Corporateexpenses
increasedwith
the
full
year
effect
of
the
costs
of
a
Managing
Director
and
Chief
Executive
and
Chief
Financial Officer and Company Secretary, the foundation member firms required additional
investment to take advantage of the growth opportunities available to them, the prevailing
economicconditions negativelyaffectedrevenues, andthedecisiontowriteoff anumberofaged
debtorbalanceswhichhadbecomeunrecoverableasaresultoftheeconomicenvironment.
The increase in EPS during the 2010 financial year represented the full year effect of business
acquisitionsintheprioryearandnormalisedtradingactivitiesacrosstheGroupandintheCorporate
office.
Inthe2011financialyear,EPScontinuedtobestrongwitha19%increaseovertheprioryear. The
increasewas
driven
by
growth
in
business
performance
(51%
increase
in
net
profit
after
tax)
and
improvementinbestpracticestosupportimprovedmarginsandcostefficiencies.
(65.50)
2.66 0.89 1.18 1.41
70.00
60.00
50.00
40.00
30.00
20.00
10.00
0.00
10.00
2007* 2008 2009 2010 2011
EPS
(cents/share)
Year
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INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
DirectorsReport(continued)
REMUNERATIONREPORT(audited)(continued)
32
TheCompany
has
good
businesses
with
strong
market
positions
and
growth
prospects.
The directors believe that the business model remains strong and the company is on target to
achieveitsobjectives.
ThetablebelowsummarisestheconsequenceoftheGroupsperformanceonshareholdervaluefor
the financial year and the previous four financial years in the form of changes in share price and
returnonequity(inaccordancewiththerequirementsoftheCorporationsAct2001):
Financialyearended30June 2007 2008 2009 2010 2011
Closingshareprice
centspershareasat30June
50.0* 11.0 14.5 10.0 12.0
Dividendspershare(cents) 0.0 2.2 0.00 0.75 0.90
Returnonequity 0% 20% 0% 8% 8%
*The2007sharepricehadadeemedvalueof50centspersharepriortolistingoftheCompanyandacquisitionoflegal
practices.
7. Executivecontractualarrangements
ManagingDirectorandChiefExecutive
ThereisanemploymentcontractinplacebetweenMrFowlerandIntegratedLegalHoldingsLimited
for Mr Fowlers appointment as Managing Director and Chief Executive of the Company. The
contractcommencedon28April2008andcontinuesindefinitelyunlessterminatedaccordingtothe
provisionsofthecontract.
Mr Fowler receives fixed remuneration of $325,000 (2010: $272,500) per annum (inclusive of
superannuation).
Underthetermsofthecontract,MrFowlersdutiesinclude,butarenotlimitedto:
ImplementingthebusinessplanasdeterminedbytheCompany;
Carrying
out
such
lawful
directions
as
given
by
the
Company;
and
Expandinganddevelopingthebusiness.
TheagreementmaybeterminatedwithoutnoticebyIntegratedLegalHoldingsLimitedif:
MrFowlercommitsaseriousbreachoftheagreement;
MrFowlercommitsanyactthatamountstoarepudiationoftheagreement;
MrFowlerengagesinseriousorwilfulmisconduct;or
Itispermittedforanyreasonunderrelevantlegislation.
The agreement may also be terminated by either party with six months notice in writing of
termination. Inlieuofnotice,MrFowlerwouldbeentitledtopaymentequivalenttosixmonthsof
hissalary
at
the
time
notice
is
given.
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INTEGRATEDLEGALHOLDINGSLIMITED
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DirectorsReport(continued)
REMUNERATIONREPORT(audited)(continued)
34
MrTaylor
is
also
subject
to
strict
solicitation
and
competition
restraints
for
a
period
of
12
months
followingtermination.
Inlieuofnotice,MrTaylorwouldbeentitledtopaymentequivalenttosixmonthsofhissalaryatthe
timenoticeisgiven.
PBobbinManagingPrincipal,ArgyleLawyers
AIrelandandMDouglassPrincipals,ArgyleLawyers
Messrs Bobbin, Ireland and Douglass are employed under an initial four year term contract and
continue indefinitely unless terminated by either party with six months notice in writing of
termination.
Messrs Bobbin, Ireland and Douglass are paid a salary of $422,300 per annum (inclusive of
superannuation) (2010: $410,000) and potentially a bonus paid as an additional salary (the bonus
payment is calculated at a share of the Argyle Lawyers bonus pool, being a percentage of the
amount by which the audited net profit before tax of the Principals law firm exceeds a pre
determinedprofithurdle).
The employment contracts may be terminated without notice if the employees commit a serious
breachofanyprovisionoftheircontract,areunabletoorareprohibitedfromholdinga licenseto
practicelaw,commitsanyactthatamountstorepudiationofthecontractorengagesinseriousand
wilfulmisconduct.
MessrsBobbin,IrelandandDouglassarealsosubjecttostrictsolicitationandcompetitionrestraints
foraperiodof12monthsfollowingtermination.
Inlieuofnotice,MessrsBobbin,IrelandandDouglasswouldbeentitledtopaymentequivalenttosix
monthsoftheirsalaryatthetimenoticeisgiven.
AQuaheManagingPrincipal,CivicLegal
Mr Quahe is employed under an initial four year term contract and continues indefinitely unless
terminatedby
either
party
with
six
months
notice
in
writing
of
termination.
Mr Quahe is paid a salary of $225,000 per annum (inclusive of superannuation) (2010: nil) and
potentiallyabonuspaidasanadditionalsalary(thebonuspayment iscalculatedasashareofthe
CivicLegalbonuspool,beingapercentageoftheamountbywhichtheauditednetprofitbeforetax
ofthePrincipalslawfirmexceedsapredeterminedprofithurdle).
The employment contract may be terminated without notice if the employee commits a serious
breach of any provision of their contract, is unable to or is prohibited from holding a license to
practicelaw,commitsanyactthatamountstorepudiationofthecontractorengagesinseriousand
wilfulmisconduct.
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INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
DirectorsReport(continued)
REMUNERATIONREPORT(audited)(continued)
35
MrQuahe
is
also
subject
to
strict
solicitation
and
competition
restraints
for
a
period
of
12
months
followingtermination.
In lieuofnotice,MrQuahewouldbeentitledtopaymentequivalenttosixmonthsofhissalaryat
thetimenoticeisgiven.
ChiefFinancialOfficerandCompanySecretary
TheChiefFinancialOfficerandCompanySecretaryhasastandardcontract.MrsRuddreceivesfixed
remunerationof$176,000perannum(inclusiveofsuperannuation)(2010:$160,000).
TheCompany
may
terminate
the
employment
agreement
by
providing
one
month
written
notice
or
providingpaymentinlieuofthenoticeperiod(basedonthefixedcomponentofremuneration).The
Companymayterminatethecontractatanytimewithoutnoticeifseriousmisconducthasoccurred.
Whereterminationwithcauseoccurs,theexecutiveisonlyentitledtothatportionofremuneration
thatisfixed,andonlyuptothedateoftermination.
MrsRuddscontractcontainsstandardobligationstoperformthedutiesofanemployee.
In lieuofnotice,MrsRuddwouldbeentitledtopaymentequivalenttoonemonthofhersalaryat
thetimenoticeisgiven.
8.
Equityinstrumentsdisclosures
Unissuedshares
TheCompanyhasnotissuedanyoptionsduringtheyear.
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INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
DirectorsReport(continued)
REMUNERATIONREPORT(audited)(continued)
Remunerationofkeymanagementpersonnel(KMP)andthefivehighestpaidexecutivesoftheCompanyandtheGroupTable1:Remunerationfortheyearended30June2011
Shortterm PostEmployment Longterm
Salary&
Fees
Cash
Bonus
Non
monetary
benefits Superannuation
LongService
benefits1
Other
Benefits
$ $ $ $ $ $
Nonexecutivedirectors
JDawkins 62,662 30,000
ATregonning 42,168 22,696
Subtotalnonexecutivedirectors 104,830 52,696
Executivedirectors
GFowler1 305,850 130,000 19,150 3,218 31,5
Subtotalexecutivedirectors 305,850 130,000 19,150 3,218 31,5
Otherkeymanagementpersonnel
BTaylor2 424,447 74,846 15,199 5,849
PBobbin2 372,299 238,394 50,000 2,493
MDouglass2 373,118 238,394 50,000 2,244
AIreland 372,299 50,000 2,493
AQuahe3 49,326 45,000
BDavies4 122,324 11,009 2,146
JMRudd2 159,021 22,600 14,312 1,990
SubtotalotherKMP 1,872,834 574,234 235,520 17,215
Total 2,283,514 704,234 307,366 20,433 31,5
1 RelatestotheinterestfreecomponentofloanstoKMP(note27c)).
2Cashbonusesof$699,234accruedasat30June2011werepaidinthe2012financialyear. Afurther$5,000incashbonusesrelatingtotheyearended30June2011wa
3 MrQuahebecameaGroupexecutivefrom1February2011.
4 MrDaviesceasedtobeaGroupexecutiveon31January2011.
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INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
DirectorsReport(continued)
REMUNERATIONREPORT(audited)(continued)
Remunerationofkeymanagementpersonnel(KMP)andthefivehighestpaidexecutivesoftheCompanyandtheGroupTable2:Remunerationfortheperiodended30June2010
Shortterm
Post
Employment Longterm
Salary&
Fees
Cash
Bonus
Nonmonetary
benefits Superannuation
LongService
benefits
O
Be
$ $ $ $ $
Nonexecutivedirectors
JDawkins 67,000 30,000
ATregonning 42,376 24,999
Subtotalnonexecutivedirectors 109,376 54,999
Executivedirectors
GFowler1 270,833 64,000 24,375 1,372 1
Subtotalexecutivedirectors 270,833 64,000 24,375 1,372 1
Otherkeymanagementpersonnel
BTaylor2 385,539 44,103 14,461 5,353
PBobbin2 360,000 300,000 49,999 665
MDouglass2,3
370,000 400,000 49,999 640
AIreland2,3
360,000 50,000 49,999 665
BDavies 129,969 11,697
JMRudd2 157,030 5,400 14,312 858
SubtotalotherKMP 1,767,026 799,503
190,467 8,181
Total 2,147,235 863,503 269,841 9,553 1
1 RelatestotheinterestfreecomponentofloanstoKMP(note27(c)).
2Cashbonusesof$841,440accruedasat30June2010werepaidinthe2011financialyear. Afurther$12,063incashbonusesrelatingtotheyearended30June2010waspaidinthe2010fina
3MrDouglassandMrIrelandbecameGroupexecutivesfrom1July2009.
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Liability limited by a scheme approved
under Professional Standards LegislationGHM:MJ:ILH:063
Auditors Independence Declaration to the Directors of Integrated Legal
Holdings Limited
In relation to our audit of the financial report of Integrated Legal Holdings Limited for the financial year
ended 30 June 2011, to the best of my knowledge and belief, there have been no contraventions of the
auditor independence requirements of the Corporations Act 2001or any applicable code of professional
conduct.
Ernst & Young
G H Meyerowitz
Partner
28 September 2011
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INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
CorporateGovernanceStatement
40
The Board of directors of Integrated Legal Holdings Limited is responsible for the corporate
governance oftheGrouphaving regardtotheASX CorporateGovernance Council(CGC) published
guidelinesas
well
as
its
corporate
governance
principals
and
recommendations.
The
Board
guides
and monitors the business and affairs of Integrated Legal Holdings Limited on behalf of the
shareholdersbywhomtheyareelectedandtowhomtheyareaccountable.
TheCorporateGovernancepoliciesdisclosed inthisreportrepresentsthe latestguidancereleased
bytheAustralianStockExchange(ASX)forwhich,applicationisnotmandatoryforthe2011financial
yearbutisrequiredforthe2012financialyear.
ThetablebelowsummarisestheCompanyscompliancewiththeCGCsrecommendations:
RecommendationComplyYes/No
Reference/explanation
ASXListing
Rule/CGCrecommendations
Principal1Laysolidfoundationsformanagementandoversight
1.1 Companiesshouldestablishthefunctionsreservedtothe
Boardandthosedelegatedtoseniorexecutivesanddisclose
thosefunctions.
Yes ASXCGC1.1
1.2 Companiesshoulddisclosetheprocessforevaluatingthe
performanceofseniorexecutives.
Yes ASXCGC1.2
1.3 Companiesshouldprovidetheinformationindicatedinthe
guidetoreportingonPrincipal1.
Yes ASXCGC1.3
Principal2StructuretheBoardtoaddvalue
2.1
Amajority
of
the
Board
should
be
independent
directors.
Yes
(a)
ASX
CGC
2.1
2.2 Thechairshouldbeanindependentdirector. Yes (a) ASXCGC2.2
2.3 Therolesofchairandchiefexecutiveofficer(CEO)shouldnot
beexercisedbythesameindividual.
Yes ASXCGC2.3
2.4 TheBoardshouldestablishanominationcommittee. No (b) ASXCGC2.4
2.5 Companiesshoulddisclosetheprocessforevaluatingthe
performanceoftheBoard,itscommitteesandindividual
directors.
Yes ASXCGC2.5
2.6 Companiesshouldprovidetheinformationindicatedinthe
guidetoreportingonPrincipal2.
Yes ASXCGC2.6
Principal3Promoteethicalandresponsibledecisionmaking
3.1 Companiesshouldestablishacodeofconductanddisclose
thecodeorasummaryofthecodeasto:
thepracticesnecessarytomaintainconfidenceinthe
Companysintegrity
thepracticesnecessarytotakeintoaccounttheirlegal
obligationsandthereasonableexpectationsoftheir
stakeholders
theresponsibilityandaccountabilityofindividualsfor
reportingandinvestigatingreportsofunethicalpractices.
Yes ASXCGC3.1
3.2 Companiesshouldestablishapolicyconcerningdiversityand
disclosethepolicyorasummaryofthatpolicy. Thepolicy
shouldincluderequirementsfortheBoardtoestablish
measurableobjectivesforachievinggenderdiversityfortheBoardtoassessannuallyboththeobjectivesandprogressin
achievingthem.
Yes ASXCGC3.2
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INTEGRATEDLEGALHOLDINGSLIMITED
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CorporateGovernanceStatement(continued)
41
Recommendation
Comply
Yes/No
Reference/
explanation
ASXListing
Rule/CGC
recommendations
Principal3Promoteethicalandresponsibledecisionmaking
(continued)
3.3 Companiesshoulddiscloseineachannualreportthe
measurableobjectivesforachievinggenderdiversitysetby
theBoardinaccordancewiththediversitypolicyand
progresstowardsachievingthem.
Yes ASXCGC3.3
3.4 Companiesshoulddiscloseineachannualreportthe
proportionofwomenemployeesinthewholeorganisation,
womeninseniorexecutivepositionsandwomenonthe
Board.
Yes ASXCGC3.4
3.5 Companiesshouldprovidetheinformationindicatedinthe
guideto
reporting
on
Principal
3.
Yes ASXCGC3.5
Principal4Safeguardintegrityinfinancialreporting
4.1 TheBoardshouldestablishanauditcommittee. Yes ASXCGC4.1
4.2 Theauditcommitteeshouldbestructuredsothatit:
consistsonlyofnonexecutivedirectors
consistsofamajorityofindependentdirectors
ischairedbyanindependentchair,whoisnotchairofthe
Board
hasatleastthreemembers.
No (c) ASXCGC4.2
ASXLR12.7
4.3 Theauditcommitteeshouldhaveaformalcharter. Yes ASXCGC4.3
4.4
Companiesshould
provide
the
information
indicated
in
the
guidet
top related