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INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
ASXAppendix4D
RESULTSFORANNOUNCEMENTTOTHEMARKET
Currentreportingperiod: Halfyearended31December2008
Previouscorrespondingperiod: Halfyearended31December2007
EARNINGS
Percentage
change
UP(+)/DOWN()
Amount
$A
Revenuefromordinaryactivities 68% 7,593,136
Profitfromordinaryactivitiesaftertaxattributable
tomembers
0.1% 896,703
Netprofitfortheperiodattributabletomembers 0.1% 896,703
DIVIDENDS
Amount
pershare
Frankedamount
pershareat30%
2008FinalDividendPaid 2.2cents 2.2cents
Correspondingperiod
NETTANGIBLEASSETBACKING
31Dec2008
31Dec2007
Nettangibleassetbackingpersecurity 7.36 10.02
Thepreviouscorrespondingperiodrelatestotheinitial4.5monthstradingoftheCompany
under public listing. The Company acquired the foundation businesses of Talbot Olivier,
BrettDaviesLawyersandLawCentralCoPtyLtdatthetimeofpubliclisting. TheDirectors
consider this initial trading period to be an abnormal period of trading reflecting the
integrationofacquiredbusinessesandestablishmentasalistedcompany.
Consolidated operating revenues of $7,593,136 were 68% higher than the previous
corresponding halfyear which reported $4,510,136 operating revenues. Revenue from
ordinary activities increased due to a combination of organic growth and acquisitions of
newmemberfirms.
Forthehalfyearended31December2008,theconsolidatedentitygeneratedanetprofit
after tax of $896,703 (12% of operating revenues) compared to the halfyear ended 31
December2007of$895,412(20%ofoperatingrevenues).
This result was in line with expectations, the Directors having previously advised that the
Company would require an element of investment in the 2008/09 year to ensure that
memberfirmsarebestplaced to take advantage of futuregrowthopportunitiesavailabletothem.
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INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
ASXAppendix4D
RESULTSFORANNOUNCEMENTTOTHEMARKET
Inparticular,theCompanyscorporateexpenseshavenecessarilygrowninto2008/09. The
Company has made an important investment in senior management of the Company,
whomtheDirectorsbelievewillbeabletomanagetheCompanytoachievestronggrowth
intothefuture.
TheCompanynowhasafulltimeManagingDirectorbasedinSydney(effectiveMay2008)
as well as a Chief Financial Officer based in Perth (effective September 2007). Whilst we
anticipateaverysmallcorporateofficefortheCompanygoingforward,theeffectofthese
appointmentsmateriallyincreasesyearonyearcosts.
The Directors consider the current period to reflect a more normalised operating
profitabilityandmargin.
Earningspershare(weightedaverage)fortheperiodwere1.38centspershare,compared
totheyearended30June2008of2.66cents(31December2007halfyear:1.57cents).
The Company has maintained a strong balance sheet position, with cash holdings at 31
December 2008 of $2.25m ($5.63m at 30 June 2008), and a net tangible asset backing of
7.36centspershare(comparedwith11.71centspershareat30June2008).
DuringtheperiodtheCompanypaida2.2centspersharedividendwithrespecttotheyear
ended30June2008.
Further,theCompanyhasgrownstronglyandselectivelyexpandedduringtheperiod,with
theannouncementoftheacquisitionofitsfirsteastcoastlawfirm,TheArgylePartnership,
effective 1 November 2008, with annual revenue of approximately $6.5m. The business
wasacquiredthroughacombinationofcashandshares.
Duringthehalfyear,theGroupgainedcontrolofthefollowingentity:
EntityName Datecontrolgained
TheArgylePartnership Lawyers 1November2008
Thegroupdoesnothaveanyinterestsinassociatesoutsidethegroup,nordoesithaveany
interestinjointventures.
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INTEGRATEDLEGALHOLDINGSLIMITED
ACN120
394
194
(ASX:IAW)
HalfYearFinancialReport
forthehalfyearended31December2008
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INTEGRATEDLEGALHOLDINGSLIMITED
FINANCIALREPORTFORTHEHALF-YEARENDED
31DECEMBER2008
ACN120394194
Contents
Corporateinformation.............................................................................................................1
Directorsreport......................................................................................................................2
Consolidatedbalancesheet.....................................................................................................5
Consolidatedincomestatement..............................................................................................6
Consolidatedcashflowstatement..........................................................................................7
Consolidatedstatementofchangesinequity.........................................................................8
Notesto
and
forming
part
of
the
financial
report
...................................................................
9
Directorsdeclaration............................................................................................................20
Auditorsindependencedeclaration.....................................................................................21
Independentreviewreport....................................................................................................22
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INTEGRATEDLEGALHOLDINGSLIMITED
FINANCIALREPORTFORTHEHALF-YEARENDED
31DECEMBER2008
ACN120394194
CorporateInformation
1
ABN20
120
394
194
Directors
TheHonJohnDawkins,Chairman
AnneTregonning,NonexecutiveDirector
GraemeFowler,ManagingDirector
CompanySecretary
JeanMarieRudd
Registeredoffice
GroundFloor
201AdelaideTerrace
Perth WA 6000
Principalplaceofbusiness
HeadOffice
Level22
1MarketStreet
Sydney NSW 2000
Tel:(02)82636601
Share
Register
ComputershareInvestorServicesPtyLimited
Level2,45StGeorgesTerrace
Perth WA6000
Tel: (08)93232000
IntegratedLegalHoldingsLimitedsharesarelistedontheAustralianStockExchange.
Solicitors
TalbotOliver
Level8,WesfarmersHouse
40
The
Esplanade
Perth WA 6000
Bankers
NationalAustraliaBankLimited
50StGeorgesTerrace
Perth WA 6000
Auditors
Ernst&Young
11MountsBayRoad
Perth
WA
6000
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INTEGRATEDLEGALHOLDINGSLIMITED
FINANCIALREPORTFORTHEHALF-YEARENDED
31DECEMBER2008
ACN120394194
DirectorsReport
2
The
directors
of
Integrated
Legal
Holdings
Limited
(the
Company)
submit
the
halfyear
financial
reportforthehalfyearended31December2008.
DIRECTORS
ThenamesoftheCompanysdirectorsinofficeduringthehalfyearanduntilthedateofthisreport
aresetoutbelow. Directorswereinofficeforthisentireperiodunlessotherwisestated.
TheHonJohnDawkinsAO(NonexecutiveChairman)
AnneTregonning(NonexecutiveDirector)
GraemeFowler(ManagingDirector)
REVIEWAND
RESULTS
OF
OPERATIONS
The previous corresponding period relates to the initial 4.5 months trading of the Company under
public listing. The Company acquired the foundation businesses of Talbot Olivier, Brett Davies
LawyersandLawCentralCoPtyLtd atthetime of public listing. The Directorsconsiderthis initial
tradingperiodtobeanabnormalperiodoftradingreflectingtheintegrationofacquiredbusinesses
andestablishmentasalistedcompany.
Consolidated operating revenues of $7,593,136 were 68% higher than the previous corresponding
halfyearwhichreported$4,510,136operatingrevenues. Revenuefromordinaryactivitiesincreased
duetoacombinationoforganicgrowthandacquisitionsofnewmemberfirms.
Forthehalfyearended31December2008,theconsolidatedentitygeneratedanetprofitaftertax
of $896,703 (12% of operating revenues) compared to the halfyear ended 31 December 2007 of
$895,412(20%ofoperatingrevenues).
Thisresultwas in linewithexpectations,theDirectorshavingpreviouslyadvisedthattheCompany
wouldrequireanelementofinvestmentinthe2008/09yeartoensurethatmemberfirmsarebest
placedtotakeadvantageoffuturegrowthopportunitiesavailabletothem.
In particular, the Companys corporate expenses have necessarily grown into 2008/09. The
Company has made an important investment in senior management of the Company, whom the
Directors
believe
will
be
able
to
manage
the
Company
to
achieve
strong
growth
into
the
future.
TheCompanynowhasafulltimeManagingDirectorbasedinSydney(effectiveMay2008)aswellas
aChiefFinancialOfficerbasedinPerth(effectiveSeptember2007). Whilstweanticipateaverysmall
corporate office for the Company going forward, the effect of these appointments materially
increasesyearonyearcosts.
The Directors consider the current period to reflect a more normalised operating profitability and
margin.
Earnings per share (weighted average) for the period were 1.38 cents per share, compared to the
yearended30June2008of2.66cents(31December2007halfyear:1.57cents).
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INTEGRATEDLEGALHOLDINGSLIMITED
FINANCIALREPORTFORTHEHALF-YEARENDED
31DECEMBER2008
ACN120394194
DirectorsReport
3
TheCompany
has
maintained
a
strong
balance
sheet
position,
with
cash
holdings
at
31
December
2008of$2.25m($5.63mat30June2008),andanettangibleassetbackingof7.36centspershare
(comparedwith11.71centspershareat30June2008).
DuringtheperiodtheCompanypaida2.2centspersharedividendwithrespecttotheyearended
30June2008.
Further, the Company has grown strongly and selectively expanded during the period, with the
announcementoftheacquisitionofitsfirsteastcoastlawfirm,TheArgylePartnership(nowtrading
asArgyleLawyers),effective1November2008,withannualrevenueofapproximately$6.5m. The
businesswasacquiredthroughacombinationofcashandshares.
ArgyleLawyersisahighlyregardedcommerciallawfirmwithofficesinSydneyandMelbourne. This
strategically important acquisition for the Company is the first of its east coast expansion having
listedinAugust2007withPerthbasedfoundationbusinesses.
TheDirectorsbelievethattheeffectofthetransactionwillbemateriallypositiveintermsofearnings
pershare,andwillenhancetheCompanysgrowthprospects. Thefullrevenueandprofitimpactof
theacquisitionwillbeachievedfromthe2009/10financialyear.
Operatingcashflowsfortheperiodwere$0.36m,comparedwith$1.12mforthefullyear2007/08
(firsthalf2007/08$0.47m).
Operatingcashflowsareadverselyaffectedbynewfirmacquisitions,asfundsfromoperationsare
investedinthebuildupofworkingcapital(debtorsandworkinprogress)postacquisitiontonormal
levels. The Company does not acquire debtors and work in progress as part of the acquisition.
Duringtheperiod,operatingcashflowswereadverselyaffectedbytheacquisitionofArgyleLawyers.
TheDirectorsarepleasedwiththeGroupsperformanceandthesignificantprogressthathasbeen
madeduringtheperiod.
TheDirectorsareoftheviewthattheCompany iswellplacedtocontinuegrowthbothorganically
and by acquisition by capitalising on the significant opportunity afforded by prevailing industry
issues,
including
succession
planning
and
availability
of
capital
to
fund
growth.
Long
term
competitiveadvantagecanbeachievedbytheCompanyinsupportingmemberfirmsindeveloping
scaletounderpinfuturegrowthandprofitability.
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INTEGRATEDLEGALHOLDINGSLIMITED
FINANCIALREPORTFORTHEHALF-YEARENDED
31DECEMBER2008
ACN120394194
DirectorsReport
4
AUDITORSINDEPENDENCE
DECLARATION
A copy of the auditors independence declaration in relation to the review for the halfyear is
providedwiththisreportonpage21.
Signedinaccordancewitharesolutionofthedirectors.
GFowler
ManagingDirector
Sydney,27February2009
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INTEGRATEDLEGALHOLDINGSLIMITED
FINANCIALREPORTFORTHEHALF-YEARENDED
31DECEMBER2008
ACN120394194
BalanceSheet
TheaboveconsolidatedBalanceSheetshouldbereadinconjunctionwiththeaccompanyingnotes.
5
Consolidated Consolidated
Note
Asat
31Dec2008
Asat
30June2008
$ $
ASSETS
CurrentAssets
Cashandcashequivalents 5 2,248,034 5,626,766
Tradeandotherreceivables 3,500,372 2,392,625
Prepayments 6 341,102 258,893
Workinprogress 1,463,436 1,084,352
TotalCurrent
Assets
7,552,944
9,362,636
NoncurrentAssets
Availableforsalefinancialassets 2,374 2,524
Plantandequipment 692,963 192,836
Goodwill 7 8,846,343 6,330,233
Intangibleassets 8 118,800 136,620
Deferredtaxassets 429,869 410,647
Prepayments 6 100,822
TotalNoncurrentAssets 10,191,171 7,072,860
TOTALASSETS 17,744,115 16,435,496
LIABILITIES
CurrentLiabilities
Tradeandotherpayables 1,387,977 1,081,009
Interestbearingloansandborrowings 137,481 169,764
Incometaxpayable 1,321,769 968,272
Provisions 455,174 173,111
TotalCurrentLiabilities 3,302,401 2,392,156
NoncurrentLiabilities
Interestbearingloansandborrowings 114,213 18,708
Provisions
158,245
119,986Otherliabilities 9 191,631
TotalNoncurrentLiabilities 464,089 138,694
TOTALLIABILITIES 3,766,490 2,530,850
NETASSETS 13,977,625 13,904,646
EQUITY
Contributedequity 10 30,317,493 29,729,975
Accumulatedlosses (16,338,206) (15,823,844)
Reserves (1,662) (1,485)
TOTALEQUITY 13,977,625 13,904,646
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INTEGRATEDLEGALHOLDINGSLIMITED
FINANCIALREPORTFORTHEHALF-YEARENDED
31DECEMBER2008
ACN120394194
IncomeStatement
TheaboveconsolidatedIncomeStatementshouldbereadinconjunctionwiththeaccompanying
notes.
6
Consolidated Consolidated
Note
Halfyear
ended
31Dec2008
Halfyear
ended
31Dec2007
$ $
Professionalfeesrevenue 7,203,303 4,269,939
Interestrevenue 139,068 237,830
Otherrevenue 4 250,765 2,367
Totalrevenue 7,593,136 4,510,136
Occupancyexpenses
644,543
233,783
Salariesandemployeebenefitsexpenses 4,186,881 1,926,317
Depreciationandamortisationexpenses 74,235 48,831
Impairmentlosses 215,826
Officeexpenses 1,146,455 594,759
Advertisingandmarketingexpenses 149,086 46,814
Otherexpenses 84,487 58,124
Interestexpenses 12,477 11,166
Totalexpenses 6,298,164 3,135,620
Profitbeforeincometax 1,294,972 1,374,516
Incometaxexpense 398,269 479,104
Profitafter
income
tax
896,703
895,412
Netprofitfortheperiod 896,703 895,412
Basicanddilutedearningspershareforprofit
attributabletotheordinaryequityholderoftheparent 1.38 1.57
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INTEGRATEDLEGALHOLDINGSLIMITED
FINANCIALREPORTFORTHEHALF-YEARENDED
31DECEMBER2008
ACN120394194
CashFlowStatement
TheaboveconsolidatedCashFlowStatementshouldbereadinconjunctionwiththeaccompanying
notes.
7
Consolidated Consolidated
Note
Halfyear
ended
31Dec2008
Halfyear
ended
31Dec2007
$ $
Cashflowsfromoperatingactivities
Receiptsfromcustomers 6,411,856 2,556,733
Paymentstosuppliersandemployees (6,397,647) (2,299,115)
Interestreceived 140,016 212,304
Rentreceived 108,597 818
Sundryincome
103,141
1,549
Interestandothercostsoffinancepaid (1,277) (5,220)
Netcashflowsfromoperatingactivities 364,686 467,069
Cashflowsfrominvestingactivities
Purchaseofplantandequipment (117,749) (9,950)
Proceedsfromthedisposalofplantandequipment 1,353 1,000
Paymentforavailableforsaleinvestments (3,982)
Paymentforacquisitionofbusinessesnetofcash
acquired (2,137,552) (6,652,695)
Netcashflowsusedininvestingactivities (2,253,948) (6,665,627)
Cashflowsfromfinancingactivities
Proceedsfromissueofshares 3,628,130
Paymentsforcapitalraisingcosts (944,763)
Proceedsfromborrowings 81,484
Repaymentsofborrowings (159,889) (18,175)
Paymentforthesettlementofliabilityassumedon
acquisitionofLawCentralCoPtyLtd (214,665)
Paymentofdividends (1,411,065)
Netcashflows(usedin)/fromfinancingactivities (1,489,470) 2,450,527
Netdecrease
in
cash
held
(3,378,732)
(3,748,031)
Cashandcashequivalentsatthebeginningofthe
period 5,626,766 8,788,735
Cashandcashequivalentsattheendoftheperiod 2,248,034 5,040,704
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INTEGRATEDLEGALHOLDINGSLIMITED
FINANCIALREPORTFORTHEHALF-YEARENDED
31DECEMBER2008
ACN120394194
StatementofChangesinEquity
TheaboveStatementofChangesinEquityshouldbereadinconjunctionwiththeaccompanying
notes.
8
CONSOLIDATED
Issued
Capital
Accumulated
Losses
Net
Unrealised
Gains
Reserve
Total
Equity
$ $ $ $
At1July2007 17,368,352 (17,368,147) 205
Netfairvaluelossesonavailablefor
saleinvestments (99) (99)
Totalincomeandexpenseforthe
periodrecogniseddirectlyinequity (99) (99)
Profitfortheperiod 895,412 895,412
Totalincomeandexpenseforthe
period 895,412 (99) 895,313
Equitytransactions
Sharesissued 13,045,708 13,045,708
Transactioncostsonshareissue (1,514,575) (1,514,575)
Incometaxonitemstakendirectlytoor
transferredfromequity 423,960 423,960
Balanceasat31December2007 29,323,445 (16,472,735) (99) 12,850,611
CONSOLIDATED
Issued
Capital
Accumulated
Losses
Net
Unrealised
Gains
Reserve
Total
Equity
$ $ $ $
At1July2008 29,729,975 (15,823,844) (1,485) 13,904,646
Netfairvaluelossesonavailablefor
saleinvestments (177) (177)
Totalincomeandexpenseforthe
periodrecogniseddirectlyinequity (177) (177)
Profitfor
the
period
896,703
896,703
Totalincomeandexpenseforthe
period 896,703 (177) 896,526
Equitytransactions
Dividendspaid (1,411,065) (1,411,065)
Sharesissued 580,000 580,000
Sharebasedpayments 7,518 7,518
Balanceasat31December2008 30,317,493 (16,338,206) (1,662) 13,977,625
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INTEGRATEDLEGALHOLDINGSLIMITED
FINANCIALREPORTFORTHEHALF-YEARENDED
31DECEMBER2008
ACN120394194
NotestoandformingpartoftheFinancialReport
9
1)
CORPORATEINFORMATION
ThegeneralpurposecondensedfinancialreportofIntegratedLegalHoldingsLimited(theCompany)
forthehalfyearended31December2008wasauthorisedforissueinaccordancewitharesolution
oftheDirectorson26February2009. IntegratedLegalHoldingsLimitedisacompanyincorporated
inAustraliaandlimitedbyshares,whicharepubliclytradedontheAustralianStockExchange(ASX).
2)
SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES
The halfyear financial report does not include all notes of the type normally included within the
annualfinancialreportandthereforecannotbeexpectedtoprovideasfullanunderstandingofthe
financial performance, financial position and financing and investing activities of the consolidated
entityas
the
full
financial
report.
Itisrecommendedthatthehalfyearfinancialreportbereadinconjunctionwiththeannualreport
fortheyearended30June2008andconsideredtogetherwithanypublicannouncementsmadeby
IntegratedLegalHoldingsLimitedanditscontrolledentities(theGroup)duringthehalfyearended
31 December 2008 inaccordance with the continuousdisclosure obligations undertheASXListing
Rules.
a)
Basisofpreparation
This general purpose condensed financial report for the halfyear ended 31 December 2008 has
been prepared in accordance with AASB 134 InterimFinancialReporting and theCorporationsAct
2001.
Thehalfyearfinancialreport isprepared inAustraliandollarsandonahistoricalcostbasis,except
foravailableforsaleinvestments,whichhavebeenmeasuredatfairvalue.
For the purposes of preparing the halfyear financial report, the halfyear has been treated as a
discretereportingperiod.
b) Significantaccountingpolicies
Apart from the adoption of new accounting policies noted in note 2(d) below, the accounting
policies adopted are consistent with those disclosed in the annual financial report for the period
ended
30
June
2008
which
are
in
accordance
with
accounting
standards
in
place
at
that
date.
The
adoption of new and amending standards and interpretations mandatory for annual periods
beginning on or after 1 July 2008 does not have a significant impact on the financial performance
andpositionoftheGroup.
c)
Basisofconsolidation
The halfyear consolidated financial statements comprise the financial statements of Integrated
LegalHoldingsLimitedanditssubsidiariesasat31December2008.
Subsidiariesareallthoseentities(includingspecialpurposeentities)overwhichtheGrouphasthe
power to govern the financial and operating policies so as to obtain benefits from their activities.
Theexistence and effect of potential voting rights thatarecurrently exercisable orconvertible are
consideredwhenassessingwhetheragroupcontrolsanotherentity.
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INTEGRATEDLEGALHOLDINGSLIMITED
FINANCIALREPORTFORTHEHALF-YEARENDED
31DECEMBER2008
ACN120394194
NotestoandformingpartoftheFinancialReport
10
d)
Sharebased
payment
transactions
i)
Equitysettledtransactions
TheGroupprovidesbenefitstoitsemployees(includingkeymanagementpersonnel)intheformof
sharebased payments, whereby employees render services in exchange for shares or rights over
shares(equitysettledtransactions).
Therearecurrentlytwoplansinplacetoprovidethesebenefits:
TaxExemptEmployeeSharePlan(TEESP),whichprovidesbenefitstoalleligibleemployees;
and
Deferred Employee Share Plan (DESP), which provides benefits to key employees and
directorsof
the
Group.
The cost of these equitysettled transactions with employees is measured by reference to the fair
valueoftheequityinstrumentsatthedateatwhichtheyaregranted. Thefairvalueisdetermined
byreferencetothemarketpriceofthesharesonthedateofgrant.
In valuing equitysettled transactions, no account is taken of any vesting conditions, other than
conditionslinkedtothepriceofthesharesofIntegratedLegalHoldingsLimited(marketconditions)
ifapplicable.
The cost of equitysettled transactions is recognised, together with a corresponding increase in
equity,over
the
period
in
which
the
performance
and/or
service
conditions
are
fulfilled
(the
vesting
period), ending on the date on which the relevant employees become fully entitled to the award
(thevestingdate).
Ateachsubsequentreportingdateuntilvesting,thecumulativechargetothe incomestatement is
theproductof:
i.
Thegrantdatefairvalueoftheaward;
ii. Thecurrentbestestimateofthenumberofawardsthatwillvest,taking intoaccountsuch
factorsasthe likelihoodofemployeeturnoverduringthevestingperiodandthe likelihood
ofnonmarketperformanceconditionsbeingmet;and
iii.
The
expired
portion
of
the
vesting
period.
The charge to the income statement for the period is the cumulative amount as calculated above
lesstheamountsalreadychargedinpreviousperiods. Thereisacorrespondingentrytoequity.
EquitysettledawardsgrantedbyIntegratedLegalHoldingsLimitedtoemployeesofsubsidiariesare
recognised in the parents separate financial statements as an additional investment in the
subsidiarywithacorrespondingcredittoequity. Asaresult,theexpenserecognisedbyIntegrated
Legal Holdings Limited in relation to equitysettled awards onlyrepresents the expense associated
withgrantstoemployeesoftheparent. TheexpenserecognisedbytheGroupisthetotalexpense
associatedwithallsuchawards.
Until an award has vested, any amounts recorded are contingent and will be adjusted if more or
fewer awards vest than were originally anticipated to do so. Any award subject to a market
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INTEGRATEDLEGALHOLDINGSLIMITED
FINANCIALREPORTFORTHEHALF-YEARENDED
31DECEMBER2008
ACN120394194
NotestoandformingpartoftheFinancialReport
11
condition
is
considered
to
vest
irrespective
of
whether
or
not
that
market
condition
is
fulfilled,providedthatallotherconditionsaresatisfied.
Iftheterms of an equitysettledawardaremodified,asa minimum an expense isrecognisedas if
the terms had not been modified. An additional expense is recognised for any modification that
increasesthetotalfairvalueofthesharebasedpaymentarrangement,orisotherwisebeneficialto
theemployee,asmeasuredatthedateofmodification.
Ifanequitysettledawardiscancelled,itistreatedasifithadvestedonthedateofcancellation,and
anyexpensenotyetrecognisedfortheawardisrecognisedimmediately. However,ifanewaward
issubstitutedforthecancelledawardanddesignatedasareplacementawardonthedatethatitis
granted,
the
cancelled
and
new
award
are
treated
as
if
they
were
a
modification
of
the
originalaward,asdescribedinthepreviousparagraph.
3)
SEGMENTINFORMATION
TheGroupsprimarysegmentreportingformatisbusinesssegmentsastheGroupsrisksandreturns
areaffectedpredominantlybydifferencesinlegalproductsandservicesperformed.
Theoperatingbusinessesareorganisedandmanagedseparatelyaccordingtothenatureofthelegal
productsandservicesprovided,witheachsegmentrepresentingastrategicbusinessunitthatoffers
differentlegalproductsandservesdifferentmarkets.
TheLegalServicesdivisionisanoperatoroflegalpracticesthroughoutAustralia.
TheInformationTechnologydivisionprovidesaninternetportaldesignedtoprovideeasyaccesstoa
rangeof legalandotherdocumentstothe legalprofessionandpublicalikeand informationabout
variousareasoflaw.
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INTEGRATEDLEGALHOLDINGSLIMITED
FINANCIALREPORTFORTHEHALF-YEARENDED
31DECEMBER2008
ACN120394194
NotestoandformingpartoftheFinancialReport
12
Businesssegments
Thefollowingtablepresentsrevenueandprofitinformationforbusinesssegmentsforthehalfyears
ended31December2008and31December2007.
Halfyearended31December2008
Legal
Services
$
Information
Technology
$
Total
$
Revenue
Professionalfees 6,827,259 376,044 7,203,303
Otherrevenue 247,597 3,108 250,705
Intersegmentrevenue 7,074,856 379,152 7,454,008
Unallocatedrevenue
139,128
Totalconsolidatedrevenue 7,593,136
Result
Segmentresult 1,715,780 104,177 1,819,957
Unallocatedexpenses (457,006)
Profitbeforetaxandfinancecosts 1,362,951
Financecosts (67,979)
Profitbeforeincometax 1,294,972
Incometaxexpense (398,269)
Netprofitafterincometax 896,703
Halfyearended31December2007
Legal
Services
$
Information
Technology
$
Total
$
Revenue
Professionalfees 3,965,344 304,595 4,269,939
Otherrevenue 2,367 2,367
Intersegmentrevenue 3,967,711 304,595 4,272,306
Unallocatedrevenue 237,830
Totalconsolidatedrevenue 4,510,136
Result
Segmentresult 1,398,767 142,563 1,541,330
Unallocatedexpenses (135,222)
Profitbeforetaxandfinancecosts 1,406,108
Financecosts (31,592)
Profitbeforeincometax 1,374,516
Incometaxexpense (479,104)
Netprofitafterincometax 895,412
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INTEGRATEDLEGALHOLDINGSLIMITED
FINANCIALREPORTFORTHEHALF-YEARENDED
31DECEMBER2008
ACN120394194
NotestoandformingpartoftheFinancialReport
13
4)
OTHERREVENUE
Consolidated Consolidated
Halfyear
ended
31Dec2008
Halfyear
ended
31Dec2007
$ $
Compensationreceivable 139,000
Rentalrevenue 108,597 818
Sundryincome 3,108 1,549
Dividendsreceived 60
250,765
2,367
5)
CASHANDCASHEQUIVALENTS
Consolidated Consolidated
At
31Dec2008
At
30Jun2008
$ $
Forthepurposesofthehalfyearcashflowstatement,cashand
cashequivalentsarecomprisedofthefollowing:
Cashatbankandinhand 2,248,034 941,045
Shortterm
deposits
4,685,721
2,248,034 5,626,766
6)
PREPAYMENTS
Consolidated Consolidated
At
31Dec2008
At
30Jun2008
CURRENT $ $
UnsecuredLoanGFowler(1) 75,712
Otherprepayments
265,390
258,893
341,102 258,893
NONCURRENT
UnsecuredLoanGFowler(1) 100,822
100,822
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INTEGRATEDLEGALHOLDINGSLIMITED
FINANCIALREPORTFORTHEHALF-YEARENDED
31DECEMBER2008
ACN120394194
NotestoandformingpartoftheFinancialReport
14
(1)
Underthe
terms
of
his
employment
contract,
Mr
Fowler
(Managing
Director)
was
provided
withaninterestfreeloanof$189,036pertainingtothetaxliabilityofsharesintheCompany
issuedonhisappointment.Thetermsoftheloanareasfollows:
the loanwillbeforgiven ifMrFowlerremainsemployedbytheCompanyforat least3
yearsfromthedateofcommencementofemployment;
50%oftheloanwillbewaivedifMrFowlerterminateshisemploymentwithin23years;
and
0%oftheloanwillbewaivedifMrFowlerterminateshisemploymentwithin2years.
TheCompanywillmeetanyFBTobligationsarisingfromthistransaction.
This loan has been assessed as prepaid employee benefits in accordance with AASB 119
EmployeeBenefits.
The
amortisation
of
the
balance
has
been
recognised
in
the
Income
Statementinthelineitemsalariesandemployeebenefitsexpenses.
7) GOODWILL
Consolidated Consolidated Consolidated
At
31Dec2008
At
30Jun2008
At
31Dec2007
$ $ $
Openingbalance 6,330,233
Additions(note12) 2,516,110 6,546,059 6,546,059
Impairment (215,826) (215,826)
Closingbalance 8,846,343 6,330,233 6,330,233
a) DescriptionoftheGroupsgoodwill
After initial recognition, goodwill acquired in a business combination is measured at cost less any
accumulated impairment losses. Goodwill isnotamortisedbut issubjectto impairmenttestingon
anannualbasisorwheneverthereisanindicationofimpairment.
8)
INTANGIBLEASSETS
Consolidated Consolidated Consolidated
At
31
Dec
2008
At
30
Jun
2008
At
31
Dec
2007
$ $ $
Openingbalance 136,620
Additions 163,254 163,254
AmortisationExpense (17,820) (26,634) (8,814)
Closingbalance 118,800 136,620 154,440
a)
DescriptionoftheGroupsotherintangibleassets
Otherintangiblesrepresentthevalueofleasedpremisesacquiredupontheacquisitionofthe legal
practiceofPeterMarkson19September2007andiscarriedatcostlessaccumulatedamortisation.
Thisintangible
asset
has
been
assessed
as
having
a
finite
life
and
is
amortised
using
the
straight
line
methodovertheremainingtermofthe lease. Theamortistionhasbeenrecognised inthe income
statementinthelineitemdepreciationandamortisationexpenses.
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INTEGRATEDLEGALHOLDINGSLIMITED
FINANCIALREPORTFORTHEHALF-YEARENDED
31DECEMBER2008
ACN120394194
NotestoandformingpartoftheFinancialReport
15
9)
OTHERNON
CURRENT
LIABILITIES
Consolidated Consolidated
At
31Dec2008
At
30Jun2008
$ $
Deferredconsiderationpayable(1) 79,526
Leaseincentiveobligation(2) 112,105
191,631
(1)
DeferredconsiderationpayableontheacquisitionofTheArgylePartnership Lawyers(refer
note12)
(2)
Operating lease incentives are recognised as a liability when received and subsequently
reducedbyallocating leasepaymentsbetweenrentalexpenseandreductionoftheliability
toensurerentalexpenseisrecognisedonastraightlinebasisovertheleaseterm. Nolease
paymentsweremadeforthehalfyearended31December2008.
10)
ISSUEDCAPITAL
a)
Ordinaryshares
Consolidated Consolidated Consolidated Consolidated
31Dec2008 30Jun2008 31Dec2008 30Jun2008
Shares Shares $ $
Fullypaidshares 67,681,177 63,538,320 30,264,538 29,729,975
Partlypaidshares(1) 398,334 7,518
68,079,511 63,538,320 30,272,056 29,729,975
(1) DeferredEmployeeSharePlan Informationrelatingtotheemployeeshareplan, including
detailsofsharesissuedundertheschemeissetoutinnote13.
b)
Movementsinordinarysharecapital
Consolidated Shares $
Openingbalance
at
1
July
2007
34,736,704
17,368,352
Issueofsharestosubscribersofinitialpublicofferingon
17August2007at50centspershare 24,833,320 12,416,660
IssueofsharestoshareholdersofLawCentralCoPtyLtd
atadeemedvalueof50centspershareaspartofthe
considerationfortheacquisitionofthecompany 1,258,096 629,048
Costsassociatedwiththecapitalraising (1,514,575)
Incometax
benefit
on
items
taken
directly
to
equity
capitalraisingcosts 423,960
Balanceasat31December2007 60,828,120 29,323,445
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INTEGRATEDLEGALHOLDINGSLIMITED
FINANCIALREPORTFORTHEHALF-YEARENDED
31DECEMBER2008
ACN120394194
NotestoandformingpartoftheFinancialReport
16
Consolidated
Shares
$
Openingbalanceasat1July2008 63,538,320 29,729,975
Issueofsharesat14centspershareon4November2008
tothevendorsofTheArgylePartnership Lawyers 4,142,857 580,000
IssueofsharesundertheDeferredEmployeeSharePlan
(refernote13) 398,334 7,518
Balanceasat31December2008 68,079,511 30,317,493
11)
CONTINGENTLIABILITIESANDCONTINGENTASSETS
Therearenocontingentliabilitiesorassetsasat31December2008.
12)
BUSINESSCOMBINATIONS
Acquisition
of
The
Argyle
Partnership
Lawyers
(provisional
calculation)
On4November2008,IntegratedLegalHoldingsLimited,throughitswhollyownedsubsidiary,Argyle
LawyersPtyLtd,acquiredthelegalpracticeofTheArgylePartnership Lawyers. Thetransactionis
effective from 1 November 2008. Since acquisition, the business commenced trading under the
name,ArgyleLawyers.
Theconsiderationfortheacquisitionwasacombinationofcashplus4,142,857shares issuedat14
cents per share (based on the quoted price of shares of Integrated Legal Holdings Limited at
completiondate)andissubjecttosignificantemploymentrestraintsandconditions. Partofthecash
component will be deferred until the end of the 2010 financial year and is subject to financial
performanceinthatyear. Thecashcomponentofthepurchaseconsiderationhasbeenfundedfrom
surpluscashreserves.
Accountingforthebusinessacquisitionremainsprovisionallydeterminedbecauseallcircumstances
andfactorsaffectingfairvaluesoftheidentifiablenetassetsacquiredhaveyettobefinalisedatthe
endoftheperiod.
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INTEGRATEDLEGALHOLDINGSLIMITED
FINANCIALREPORTFORTHEHALF-YEARENDED
31DECEMBER2008
ACN120394194
NotestoandformingpartoftheFinancialReport
17
Thefollowing
constitutes
the
provisional
calculation
of
the
consideration
given
and
the
fair
value
of
netassetsacquired:$
Consideration
Cash 2,050,000
Deferredcashconsideration 79,526
Directcostsrelatingtotheacquisition 87,552
Totalcashconsideration 2,217,078
Sharesissuedatfairvalue 580,000
Totalacquisitioncost 2,797,078
Fair
Value
$
Carrying
Amount
$Netassetsacquired
Assets
Plantandequipment 454,741 454,741
Prepayments 107,350 107,350
Securitybond 2,720 2,720
Netdeferredtaxasset 63,993
Totalassetsacquired 628,804 564,811
Liabilities
Provisionforemployeeentitlements 216,836 216,836
Interestbearingloansandborrowings 131,000 131,000
Totalliabilitiesacquired 347,836 347,836
Netassetsacquired 280,968 216,975
Goodwillonacquisition 2,516,110
Thefactorscontributingtogoodwillrecognisedrelatetothesynergiesexistingwithintheacquired
businessanditscombinedprofessionalworkforce.
Fromthedateofacquisition,ArgyleLawyershascontributed$19,701tothenetprofitaftertaxof
theGroup.
Asthefinancial informationofArgyleLawyerspriortoacquisitionwasnotprepared inaccordance
withAustralianAccountingStandardsandsignificantpostacquisitionrestructuringhasoccurred,itis
impracticable for the Group to disclose the total revenue and profit for the combined entity as
thoughthe
acquisition
had
taken
place
at
the
beginning
of
the
period.
$
Thecashoutflowonacquisitionisasfollows:
Netcashacquiredwiththebusiness
Cashpaid 2,137,552
Netconsolidatedcashoutflow 2,137,552
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INTEGRATEDLEGALHOLDINGSLIMITED
FINANCIALREPORTFORTHEHALF-YEARENDED
31DECEMBER2008
ACN120394194
NotestoandformingpartoftheFinancialReport
18
13)
SHAREBASED
PAYMENTS
Recognisedsharebasedpaymentexpenses
Theexpenserecognisedforemployeeservicesreceivedduringtheyearisshowninthetablebelow:
Consolidated Consolidated
31Dec2008 31Dec2007
$ $
Expensearisingfromequitysettledsharebasedtransactions 7,518
Typesofsharebasedpaymentplans
Taxexemptemployeeshareplan(TEESP)
AllemployeesareeligibletoparticipateintheTEESPiftheymeetthefollowingcriteria:
i. TheyareapermanentfulltimeorpermanentparttimeemployeeoftheGroup;
ii.
Theyhavemettheprobationperiodunderthetermsoftheiremploymentcontract;
iii.
Theyareatleast18yearsofage;and
iv. TheyareanAustralianresidentfortaxpurposes.
Employeeswhoparticipate intheTEESPcannominatetocontributeupto$1,000perannumfrom
their pretax wages or salary by way of an effective salary sacrifice towards acquiring fully paid
ordinarysharesintheCompany.
InaccordancewiththerulesoftheTEESP,sharesacquiredundertheplanmustnotbewithdrawnor
otherwise dealt with, commencing from the date the employee acquires a beneficial interest in
thosesharesuntiltheearliestofthedatethat:
i. Isthreeyearsaftertheacquisitiondate;or
ii. TheemployeeceasestobeanemployeeoftheGroup.
The rules of the TEESP do not contain any provisions that could result in an employee forfeiting
ownershipofsharesundertheplan.
Deferredemployee
share
plan
(DESP)
Shares are granted to key employees and directors of the Group. The DESP is designed to align
participantsinterestswiththoseofshareholdersbyincreasingthevalueoftheCompanysshares.
EmployeesareeligibletoparticipateintheDESPiftheymeetthefollowingcriteria:
i.
TheyareapermanentfulltimeorpermanentparttimeemployeeoftheGroup;
ii. Theyhavemettheprobationperiodunderthetermsoftheiremploymentcontract;
iii.
Theyareatleast18yearsofage;and
iv.
TheyareanAustralianresidentfortaxpurposes.
Underthe
DESP,
senior
employees
are
invited
to
receive
fully
paid
ordinary
shares
in
the
Company
subject to the achievement of a number of key performance indicators such as contribution to
earningspersharefortheGroup.
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INTEGRATEDLEGALHOLDINGSLIMITED
FINANCIALREPORTFORTHEHALF-YEARENDED
31DECEMBER2008
ACN120394194
NotestoandformingpartoftheFinancialReport
19
Sharesmay
either
be
acquired
on
market
by
the
Group
or
issued
by
the
Parent.
During
the
half
year
ended31December2008,398,334shareswereissuedbytheParentwiththecostbeingexpensed
overavesting period of three years. Thefairvalueofthe shares isset atthe marketprice of the
sharesonthedateofgrant. Theimpactontheprofitandlossforthehalfyearended31December
2008is$7,518(2008:nil).
Whenaparticipantceasesemploymentpriortothevestingoftheirshares,thesharesareforfeited
in full unless otherwise determined by the Board. In the event of a change of control, the
performance period end date will be brought forward to the date of the change of control and
awardswillvestsubjecttoperformanceoverthisshortenedperiod.
Thereare
no
cash
settlement
alternatives.
SummaryofsharesgrantedunderTEESPandDESParrangements
NosharesweregrantedundertheTEESPduringthehalfyearended31December.
The following table illustrates the number of and movements in shares granted during the period
undertheDESP:
Consolidated Consolidated
31Dec2008 30Jun2008
No. No.
Openingbalanceat1July2008
Grantedduring
the
period
398,334
Closingbalanceasat31December2008 398,334
Weightedaverageremainingvestingperiod
Theweightedaverageremainingvestingperiodasat31December2008forthesharesissuedduring
theperiodis2.63years(30June2008:nil).
Weightedaveragefairvalue
Theweightedaveragefairvalueofsharesgrantedduringtheperiodwas16cents(30June2008:nil).
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INTEGRATEDLEGALHOLDINGSLIMITED
FINANCIALREPORTFORTHEHALF-YEARENDED
31DECEMBER2008
ACN120394194
DirectorsDeclaration
20
InaccordancewitharesolutionoftheDirectorsofIntegratedLegalHoldingsLimited,Istatethat:
Intheopinionofthedirectors:
a.
Thefinancialstatementsandnotestothefinancialstatementsoftheconsolidatedentity
areinaccordancewiththeCorporationsAct2001,including:
i. givingatrueandfairviewoftheconsolidatedentitysfinancialpositionasat31
December2008andtheperformanceforthehalfyearendedonthatdate;
ii.
complying
with
Australian
Accounting
Standard
AASB
134Interim
Financial
ReportingandtheCorporationsRegulations2001;and
b. Therearereasonablegroundstobelievethatthecompanywillbeabletopayitsdebts
asandwhentheybecomedueandpayable.
ThisdeclarationismadeinaccordancewitharesolutionoftheDirectors.
OnbehalfoftheBoard,
GFowler
Director
Sydney,27February2009
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Liability limited by a scheme approved
under Professional Standards LegislationGHM:NR:ILH:031
Auditors Independence Declaration to the Directors of Integrated Legal
Holdings Limited
In relation to our review of the financial report of Integrated Legal Holdings Limited for the half-year
ended 31 December 2008, 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
Perth
27 February 2009
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Liability limited by a scheme approved
under Professional Standards LegislationGHM:NR:ILH:030
To the members of Integrated Legal Holdings Limited
Report on the Half-Year Financial Report
We have reviewed the accompanying half-year financial report of Integrated Legal Holdings Limited, which
comprises the balance sheet as at 31 December 2008, and the income statement, statement of changes in
equity and cash flow statement for the half-year ended on that date, other selected explanatory notes and
the directors declaration of the consolidated entity comprising the company and the entities it controlled
at the half-year end or from time to time during the half-year.
Directors Responsibility for the Half-Year Financial Report
The directors of the company are responsible for the preparation and fair presentation of the half-year
financial report in accordance with Australian Accounting Standards (including the Australian Accounting
Interpretations) and the Corporations Act 2001. This responsibility includes establishing and maintaining
internal controls relevant to the preparation and fair presentation of the half-year financial report that is
free from material misstatement, whether due to fraud or error; selecting and applying appropriate
accounting policies; and making accounting estimates that are reasonable in the circumstances.
Auditors Responsibility
Our responsibility is to express a conclusion on the half-year financial report based on our review. We
conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of
Interim and other Financial Reports Performed by the Independent Auditor of the Entity , in order to state
whether, on the basis of the procedures described, we have become aware of any matter that makes usbelieve that the financial report is not in accordance with the Corporations Act 2001including: giving a
true and fair view of the consolidated entitys financial position as at 31 December 2008 and its
performance for the half-year ended on that date; and complying with Accounting Standard AASB 134
Interim Financial Reportingand the Corporations Regulations 2001. As the auditor of Integrated Legal
Holdings Limited and the entities it controlled during the half-year, ASRE 2410 requires that we comply
with the ethical requirements relevant to the audit of the annual financial report.
A review of a half-year financial report consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review procedures. A review is
substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and
consequently does not enable us to obtain assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not express an audit opinion.
Independence
In conducting our review, we have complied with the independence requirements of the Corporations Act
2001. We have given to the directors of the Company a written Auditors Independence Declaration, a
copy of which is included in the financial report.
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Conclusion
Based on our review, which is not an audit, we have not become aware of any matter that makes us believe
that the half-year financial report of Integrated Legal Holdings Limited is not in accordance with the
Corporations Act 2001, including:
i giving a true and fair view of the consolidated entitys financial position as at 31 December 2008
and of its performance for the half-year ended on that date; and
ii complying with Accounting Standard AASB 134 Interim Financial Reportingand the Corporations
Regulations 2001.
Ernst & Young
G H Meyerowitz
Partner
Perth
27 February 2009
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