Professional Documents
Culture Documents
ACN120394194
(ASX:IAW)
FinancialReport
Fortheyearended30June2011
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
ContentstoFinancialReport
CorporateInformation.............................................................................................................1
DirectorsReport......................................................................................................................2
AuditorsIndependenceDeclaration.....................................................................................29
CorporateGovernanceStatement.........................................................................................30
ConsolidatedStatementofFinancialPosition.......................................................................40
ConsolidatedStatementofComprehensiveIncome.............................................................41
ConsolidatedStatementofCashFlows.................................................................................42
ConsolidatedStatementofChangesinEquity.......................................................................43
NotestotheConsolidatedFinancialStatements..................................................................44
DirectorsDeclaration..........................................................................................................108
IndependentAuditReport...................................................................................................109
ASXAdditionalInformation.................................................................................................111
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
CorporateInformation
ABN20120394194
Directors
TheHonJohnDawkins,NonexecutiveChairman
AnneTregonning,NonexecutiveDirector
GraemeFowler,ManagingDirectorandChiefExecutive
CompanySecretary
JeanMarieRudd
Registeredoffice
Level8,WesfarmersHouse
40TheEsplanade
PerthWA6000
Principalplaceofbusiness
HeadOffice
Level22
1MarketStreet
SydneyNSW2000
Tel:(02)82636600
ShareRegister
ComputershareInvestorServicesPtyLimited
Level2
45StGeorgesTerrace
PerthWA6000
Tel:(08)93232000
IntegratedLegalHoldingsLimitedsharesarelistedontheAustralianStockExchange.
Solicitors
TalbotOlivier
ArgyleLawyers
Level8,WesfarmersHouse
Level22
40TheEsplanade
1MarketStreet
PerthWA6000
SydneyNSW2000
Bankers
NationalAustraliaBankLimited
100StGeorgesTerrace
PerthWA6000
Auditor
Ernst&Young
11MountsBayRoad
PerthWA6000
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
DirectorsReport
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.
His other 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.
HeisagraduateinEconomicsfromtheUniversityofWesternAustralia,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(NonexecutiveDirector)
MsTregonninghasextensiveexperienceinfinanceandriskmanagementinbothpublicpracticeand
commerce. Senior positions previously held include General Manager Finance and Risk, Wealth
ManagementDivision,StGeorgeBank,DirectorGroupFinance,SealcorpHoldings(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
ofitsNationalCouncil,andapastdirectorofotherpubliccompanyandnotforprofit/professional
organisations.
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
DirectorsReport(continued)
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
ATregonning
GFowler
2,950,129
416,001
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.
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
DirectorsReport(continued)
PRINCIPALACTIVITIES
TheprincipalactivityoftheentitiesoftheconsolidatedGroupistheprovisionoflegalservicesand
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.
AtaGrouplevelthismeanssecuringmorememberfirmstosharethefixedoverheadburdenofthe
Corporateoffice.
Andatamemberfirmlevel,thismeansachievingorganicandacquisitiongrowthtooptimisetheuse
ofexistingpremises,andtosharetheprofessionalmanagementandinfrastructurecoststhatthese
firmsnowhaveinplace.
The Directors believe that longterm competitive advantage can be achieved by the Company
supportingmemberfirmsindevelopingscaletounderpinfuturegrowthandprofitability.
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
DirectorsReport(continued)
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.
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
DirectorsReport(continued)
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.
Assetandcapitalstructure
CONSOLIDATED
2011
2010
$
$
Netassets
Less:Cashandcashequivalentsnetof
overdrafts
Totalcapitalemployed
18,012,663
16,197,914
(2,435,615)
15,577,048
(1,948,949)
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).
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
DirectorsReport(continued)
RiskManagement
TheGrouptakesaproactiveapproachtoriskmanagement.TheBoardisresponsibleforensuring
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.
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.
Therehavebeennoothersignificantchangesinthestateofaffairsduringtheyearended30June
2011.
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
DirectorsReport(continued)
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
recorddateof14October2011andapaymentdateof4November2011.Therewillbeadividend
reinvestmentplanavailable.
RenewalofBankFundingFacilities
After balance 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.
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
DirectorsReport(continued)
ENVIRONMENTALREGULATION
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
AuditandRiskManagement
JDawkins
ATregonning
GFowler
Meetings
Eligibleto
attend
Attended
11
10
11
11
11
11
CommitteeMeetings
Eligibleto
attend
Attended
8
7
8
8
8
8
Committeemembership
As at the date of this report, the Company had an Audit and Risk Management Committee of the
BoardofDirectors.
TheAuditandRiskManagementCommitteecomprisesallmembersoftheBoardofdirectorsandis
chairedbyMsTregonning.
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
DirectorsReport(continued)
AUDITORINDEPENDENCEANDNONAUDITSERVICES
Acopyoftheauditorsindependencedeclarationreceivedbythedirectorsinrelationtotheaudit
fortheyearisprovidedwiththisreportonpage29.
NONAUDITSERVICES
Nonauditserviceswereprovidedbytheentitysauditor,Ernst&Young.Thedirectorsaresatisfied
thattheprovisionofnonauditservicesiscompatiblewiththegeneralstandardofindependencefor
auditors imposed by the Corporations Act 2001. The nature and scope of each type of nonaudit
serviceprovidedmeansthatauditorindependencewasnotcompromised.
Ernst&Youngreceivedorareduetoreceivethefollowingamountsfortheprovisionofnonaudit
services:
Taxcompliance
Taxationservices
CONSOLIDATED
2011
2010
$
$
17,500
31,453
5,500
17,500
36,953
10
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
DirectorsReport(continued)
REMUNERATIONREPORT(audited)
Thisremunerationreportfortheyearended30June2011outlinestheremunerationarrangements
oftheCompanyandtheGroupinaccordancewiththerequirementsoftheCorporationsAct2001
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
executivesoftheParentandtheGroup.
Theremunerationreportispresentedunderthefollowingsections:
1. Individualkeymanagementpersonneldisclosures
2. Remunerationataglance
3. Boardoversightofremuneration
4. Nonexecutivedirectorremunerationarrangements
5. Executiveremunerationarrangements
6. Companyperformanceandthelinktoremuneration
7. Executivecontractualarrangements
8. Equityinstrumentsdisclosures
1. Individualkeymanagementpersonneldisclosures
DetailsofKMPincludingthetopfiveremuneratedexecutivesoftheParentandtheGroupareset
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.
11
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
DirectorsReport(continued)
REMUNERATIONREPORT(audited)(continued)
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
talentmarkettoensureacompetitiveoffering.
Forthe2011performanceperiod,100%oftheshorttermincentivepaymentisbasedonattainment
of a financial measure (net profit before tax or earnings per share). In recognition of the
performanceoftheGroupandtheexecutivesduringtheyear,atotalof$704,234incashbonuses
waspaidtoGroupKMPsduringthe2011financialyear.
Long term incentive awards consisting of shares that vest on attainment of a predetermined
performancegoalareawardedtoselectedexecutives.TheCompanyusesearningspershareasthe
performancemeasurefortheshareawards.Nosharesvestednorwereawardedorissuedduring
the2011financialyear.
The remuneration of NEDs of the Company consists only of directors fees and committee fees.
Directorandcommitteefeeswereindexedforinflationovertheprioryearfees.
3. Boardoversightofremuneration
Remunerationassessmentandapprovalprocess
TheBoardofDirectorsoftheCompanyisresponsiblefordeterminingandreviewingremuneration
arrangementsfortheBoardandexecutives.
TheBoardwillassesstheappropriatenessofthenatureandamountofremunerationofNEDsand
executives on a periodic basis by reference to relevant employment market conditions, with the
overallobjectiveofensuringmaximumstakeholderbenefitfromtheretentionofahighperforming
directorandexecutiveteam.
12
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
DirectorsReport(continued)
REMUNERATIONREPORT(audited)(continued)
Remunerationstrategy
IntegratedLegalHoldingsLimitedsremunerationstrategyisdesignedtoattract,motivateandretain
employeesandNEDsbyidentifyingandrewardinghighperformersandrecognisingthecontribution
ofeachemployeetothecontinuedgrowthandsuccessoftheGroup.
To this end, key objectives of the Companys reward framework are to ensure that remuneration
practices:
arealignedtothegroupsbusinessstrategy;
offercompetitiveremunerationbenchmarkedagainsttheexternalmarket;
provideastronglinkagebetweenindividualandgroupperformanceandrewards;
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.
13
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
DirectorsReport(continued)
REMUNERATIONREPORT(audited)(continued)
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.
TheremunerationofNEDsforthefinancialyearisdetailedintable1onpage26ofthisreport.
5. Executiveremunerationarrangements
Remunerationlevelsandmix
TheGroupaimstorewardexecutiveswithalevelandmixofremunerationcommensuratewiththeir
positionandresponsibilitieswithintheGroupsoasto:
Reward executives for Group, subsidiary and individual performance against targets set by
referencetoappropriatebenchmarks;
Aligntheinterestsofexecutiveswiththoseofshareholders;and
Ensuretotalremunerationiscompetitivebymarketstandards.
Structure
In the 2011 financial year, the executive remuneration framework consisted of the following
components:
Fixedremuneration
Variableremuneration:
o Shorttermincentive(STI)
o Longtermincentive(LTI)
14
INTEGRATEDLEGALHOLDINGSLIMITED
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DirectorsReport(continued)
REMUNERATIONREPORT(audited)(continued)
The table below illustrates the structure of Integrated Legal Holdings Limiteds executive
remunerationarrangements:
Remuneration
Component
Vehicle
Fixedremuneration
Comprisesbasesalary,
superannuation
contributionsand
otherbenefits
STIcomponent
Awardsaremadein
theformofcash
paymentsorshare
basedpayments
(equitysettled).
LTIcomponent
Awardsaremadein
theformofcash
paymentsorshare
basedpayments
(equitysettled).
Purpose
Linkto
Performance
Setwithreferencetorole,
Remunerationlevelis
marketandexperience.
determinedannually
andisbasedona
Executivesaregiventhe
financialscalelinked
opportunitytoreceivetheir
toindividual
fixedremunerationina
performanceinthe
varietyofformsincluding
previousfinancial
cashandfringebenefits
year.
suchasparking.Itis
intendedthatthemanner
ofpaymentchosenwillbe
optimalfortherecipient
withoutcreatingunduecost
fortheGroup.
Rewardsexecutivesfor
Linkedtofinancial
theircontributionto
measuresincluding
achievementofGroupand
earningspershareand
businessunitoutcomes,as
achievementof
wellasindividualKPIs.
profitabilitytargets.
Rewardsexecutivesfor
Earningspershareis
theircontributiontothe
thekeyfinancial
creationofshareholder
metric.
valueoverthelongerterm.
Fixedremuneration
FixedremunerationisreviewedannuallybytheBoard.TheprocessconsistsofareviewofCompany,
subsidiaryandindividualperformance,relevantcomparativeremunerationexternallyandinternally
and,whereappropriate,externaladviceonpoliciesandpractices.TheBoardhasaccesstoexternal
adviceindependentofmanagement,whereappropriate.
Thefixedremunerationcomponentofexecutivesisdetailedintable1onpage26.
Variableremunerationshorttermincentive(STI)
TheobjectiveoftheSTIprogramistolinktheachievementoftheGroupsoperationaltargetswith
the remuneration received by the executives charged with meeting those targets. The total
potentialSTIavailableissetatalevelsoastoprovidesufficientincentivetotheexecutivetoachieve
theoperationaltargetsandsuchthatthecosttotheGroupisreasonableinthecircumstances.
15
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
DirectorsReport(continued)
REMUNERATIONREPORT(audited)(continued)
STIawardsvestattheendoftheperiodoverwhichtheperformancetargetsaremeasured,andare
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)payableincashorsharesatthediscretionoftheBoard,subjecttothe
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
daysafterthereleaseoftheauditedfinancialstatementseachfinancialyear.
16
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
DirectorsReport(continued)
REMUNERATIONREPORT(audited)(continued)
ChiefFinancialOfficerandCompanySecretary
Forthesixmonthperiodended31August2010,theChiefFinancialOfficerandCompanySecretary
wasentitledtoamaximumperformancebonusof$7,000.Ifachievementofperformancetargetsis
notsuccessful,alesseramountmaybepayableatthediscretionoftheManagingDirector,taking
intoaccounttheindividualcircumstancescontributingtononachievementofthosetargets.
Performance targets are achieved upon satisfaction of key deliverables involving the realisation of
budgetednetprofitbeforetaxandoperatingcashflows.
From1September2010,theChiefFinancialOfficerandCompanySecretaryisentitledtoamaximum
performancebonusof$17,600,payableincashorsharesatthediscretionoftheBoard,subjectto
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.
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.
STIawardsfor2011
ManagingDirectorandChiefExecutive
AfterconsiderationofperformanceagainstKPIs,theBoarddeterminedthattheamounttobepaid
to the Managing Director and Chief Executive would be $130,000 (2010: $64,000). Payment was
accruedat30June2011andpaidincashinSeptember2011.ThemaximumSTIbonusachievable
was$130,000andtheminimumwasnil.
TherewerenoalterationstotheManagingDirectorsSTIbonusplanduringtheyear.
17
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
DirectorsReport(continued)
REMUNERATIONREPORT(audited)(continued)
MemberFirmPrincipals
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
mayinclude feeincomeattributable toeachPrincipal,whichismeasuredusingfinancialreporting
information.
ThemaximumSTIcashbonusiscalculatedasapercentageofanamountbywhichprofitabilityofa
subsidiaryexceedsapredeterminedprofithurdleforthatsubsidiary.TheminimumSTIcashbonus
payableisnil.
Duringthe2011financialyear,thebonusachievedandvestedforMrTaylor,ManagingPrincipalof
TalbotOlivier,was$74,846(2010:$44,103),forMr Bobbin,ManagingPrincipalofArgyleLawyers,
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 after
considerationofperformanceagainstKPIs,theBoarddeterminedthattheamounttobepaidtothe
Chief Financial Officer and Company Secretary would be $17,600 (2010: $10,400). Payment was
accruedat30June2011andpaidincashinSeptember2011.ThemaximumSTIbonusachievable
was$17,600andtheminimumwasnil.
Other than the new arrangements from 1 September 2010 noted above, there were no other
alterationstotheChiefFinancialOfficerandCompanySecretarysSTIbonusplanduringtheyear.
18
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
DirectorsReport(continued)
REMUNERATIONREPORT(audited)(continued)
Variableremunerationlongtermincentives(LTI)
ChiefFinancialOfficerandCompanySecretary
TheLTIbenefitsaredeliveredonadiscretionarybasisbytheBoardintheformofordinarysharesin
theCompanyundertheDeferredEmployeesSharePlan.Suchgrantsareonlymadetoexecutives
who are able to influence the generation of shareholder wealth and thus have an impact on the
Groupsperformanceagainsttherelevantlongtermperformancehurdle.
NosharesweregrantedtotheChiefFinancialOfficerandCompanySecretaryduringtheyear(2010:
40,000shares).
Sharesissuedinprioryearswillvestinstagesduringthethreeyearperiodfromissuedatefollowing
thesuccessfulachievementoftheperformancecriteriaspecifiedbelow,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.
Shareswillcommencevestingafterachieving30%growthintheCompanysearningspershare.
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
TheCompanyhasinplaceasharetradingpolicywhichimposestradingrestrictionsonofficersand
employeesoftheCompanyanditsrelatedentitiesthatareconsideredtobeinpossessionofinside
information.
Executives and directors are prohibited from using derivatives or hedge instruments or otherwise
enteringintotransactions(includingmarginloans)thatoperateorareintendedtooperatetolimit
theeconomicriskofsecurityholdingsovervestedorunvestedsharesintheCompanywithoutthe
writtenpermissionoftheBoard.
ThisismonitoredbytheCompanySecretaryonamonthlybasisthroughreviewofstatementsfrom
theshareregistryserviceprovider,ComputershareInvestorServicesPtyLimited.
19
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
DirectorsReport(continued)
REMUNERATIONREPORT(audited)(continued)
Furthermore,executivesanddirectorsarerequired todeclaretheirintentiontotradeinsharesto
theCompanySecretary,whichisthenpresentedtotheBoard.
20
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
DirectorsReport(continued)
REMUNERATIONREPORT(audited)(continued)
6. Companyperformanceandthelinktoremuneration
IntegratedLegalHoldingsLimitedsremunerationpolicyaimstoconnecttheremunerationreceived
byexecutiveswithearningsandthecreationofshareholderwealth.
Group performance is reflected in the movement of the Groups EPS over time. The graph below
showsIntegratedLegalHoldingsLimitedsEPShistorysinceincorporationinJune2006:
10.00
2.66
0.89
1.18
1.41
2008
2009
2010
2011
EPS(cents/share)
0.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
(65.50)
2007*
Year
*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
increasedwiththefullyeareffectofthecostsofaManagingDirectorandChiefExecutiveandChief
Financial Officer and Company Secretary, the foundation member firms required additional
investment to take advantage of the growth opportunities available to them, the prevailing
economicconditionsnegativelyaffectedrevenues,andthedecisiontowriteoffanumberofaged
debtorbalanceswhichhadbecomeunrecoverableasaresultoftheeconomicenvironment.
The increase in EPS during the 2010 financial year represented the full year effect of business
acquisitionsintheprioryearandnormalisedtradingactivitiesacrosstheGroupandintheCorporate
office.
Inthe2011financialyear,EPScontinuedtobestrongwitha19%increaseovertheprioryear.The
increase was driven by growth in business performance (51% increase in net profit after tax) and
improvementinbestpracticestosupportimprovedmarginsandcostefficiencies.
21
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
DirectorsReport(continued)
REMUNERATIONREPORT(audited)(continued)
TheCompanyhasgoodbusinesseswithstrongmarketpositionsandgrowthprospects.
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
Closingshareprice
centspershareasat30June
Dividendspershare(cents)
Returnonequity
2007
50.0*
2008
11.0
2009
14.5
2010
10.0
2011
12.0
0.0
0%
2.2
20%
0.00
0%
0.75
8%
0.90
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;
CarryingoutsuchlawfuldirectionsasgivenbytheCompany;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
hissalaryatthetimenoticeisgiven.
22
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
DirectorsReport(continued)
REMUNERATIONREPORT(audited)(continued)
MemberFirmPrincipals
BDaviesManagingPrincipal,BrettDaviesLawyers(to31January2011)
Mr Davies is employed under an initial three year term contract and continues indefinitely unless
terminatedbyeitherpartywithsixmonthsnoticeinwritingoftermination.
MrDavieswaspaidasalaryof$200,000perannum(inclusiveofsuperannuation)(2010:$200,000)
upto31January2011,andpotentiallyabonuspaidasanadditionalsalary(thebonuspaymentis
calculated at a percentage of the amount by which the audited net profit before tax of the
Principalslawfirmexceedsapredeterminedprofithurdle).
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.
Mr Davies is subject to strict solicitation and competition restraints for a period of 12 months
followingtermination.
Inlieuofnotice,MrDavieswouldbeentitledtopaymentequivalenttosixmonthsofhissalaryat
thetimenoticeisgiven.
Mr Davies ceased to be the Managing Principal of Brett Davies Lawyers and a KMP on 31 January
2011,whenthebusinessmergedwithnewlyacquiredmemberfirm,WojtowiczKellyLegal.Thenew
business trades under the name Civic Legal with Anthony Quahe as Managing Principal and Mr
DaviesasPrincipal.
BTaylorManagingPrincipal,TalbotOlivier
Mr Taylor is employed under an initial four year term contract and continues indefinitely unless
terminatedbyeitherpartywithsixmonthsnoticeinwritingoftermination.
MrTaylorispaidasalaryof$412,000perannum(inclusiveofsuperannuation)(2010:$400,000)and
potentiallyabonuspaidasanadditionalsalary(thebonuspaymentiscalculatedasashareofthe
TalbotOlivierbonuspool,beingapercentageoftheamountbywhichtheauditednetprofitbefore
taxofthePrincipalslawfirmexceedsapredeterminedprofithurdle).
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.
23
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
DirectorsReport(continued)
REMUNERATIONREPORT(audited)(continued)
MrTaylorisalsosubjecttostrictsolicitationandcompetitionrestraintsforaperiodof12months
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,areunabletoorareprohibitedfromholdingalicenseto
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
terminatedbyeitherpartywithsixmonthsnoticeinwritingoftermination.
Mr Quahe is paid a salary of $225,000 per annum (inclusive of superannuation) (2010: nil) and
potentiallyabonuspaidasanadditionalsalary(thebonuspaymentiscalculatedasashareofthe
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.
24
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
DirectorsReport(continued)
REMUNERATIONREPORT(audited)(continued)
MrQuaheisalsosubjecttostrictsolicitationandcompetitionrestraintsforaperiodof12months
followingtermination.
Inlieuofnotice,MrQuahewouldbeentitledtopaymentequivalenttosixmonthsofhissalaryat
thetimenoticeisgiven.
ChiefFinancialOfficerandCompanySecretary
TheChiefFinancialOfficerandCompanySecretaryhasastandardcontract.MrsRuddreceivesfixed
remunerationof$176,000perannum(inclusiveofsuperannuation)(2010:$160,000).
TheCompanymayterminatetheemploymentagreementbyprovidingonemonthwrittennoticeor
providingpaymentinlieuofthenoticeperiod(basedonthefixedcomponentofremuneration).The
Companymayterminatethecontractatanytimewithoutnoticeifseriousmisconducthasoccurred.
Whereterminationwithcauseoccurs,theexecutiveisonlyentitledtothatportionofremuneration
thatisfixed,andonlyuptothedateoftermination.
MrsRuddscontractcontainsstandardobligationstoperformthedutiesofanemployee.
Inlieuofnotice,MrsRuddwouldbeentitledtopaymentequivalenttoonemonthofhersalaryat
thetimenoticeisgiven.
8. Equityinstrumentsdisclosures
Unissuedshares
TheCompanyhasnotissuedanyoptionsduringtheyear.
25
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
DirectorsReport(continued)
REMUNERATIONREPORT(audited)(continued)
Remunerationofkeymanagementpersonnel(KMP)andthefivehighestpaidexecutivesoftheCompanyandtheGroup
Table1:Remunerationfortheyearended30June2011
Shortterm
Nonexecutivedirectors
JDawkins
ATregonning
Subtotalnonexecutivedirectors
PostEmployment
Salary&
Fees
Cash
Bonus
Non
monetary
benefits
Superannuation
LongService
benefits
62,662
42,168
104,830
30,000
22,696
52,696
19,150
19,150
15,199
50,000
50,000
50,000
45,000
11,009
14,312
235,520
307,366
Executivedirectors
GFowler1
Subtotalexecutivedirectors
Other
1
Benefits
$
Shares
Total
Performance
related
92,662
64,864
157,526
0.0%
0.0%
489,724
489,724
26.5%
520,341
663,186
663,756
424,792
94,326
135,479
202,602
2,704,482
3,351,732
14.4%
35.9%
35.9%
0.0%
0.0%
0.0%
11.2%
305,850
305,850
130,000
130,000
Otherkeymanagementpersonnel
BTaylor2
PBobbin2
MDouglass2
AIreland
AQuahe2
BDavies3
JMRudd2
SubtotalotherKMP
Total
Sharebased
Payment
Longterm
3,218
3,218
31,506
31,506
424,447
372,299
373,118
372,299
49,326
122,324
159,021
1,872,834
2,283,514
74,846
238,394
238,394
22,600
574,234
704,234
5,849
2,493
2,244
2,493
2,146
1,990
17,215
20,433
31,506
4,679
4,679
4,679
RelatestotheinterestfreecomponentofloanstoKMP(note27(c)).
Cashbonusesof$699,234accruedasat30June2011werepaidinthe2012financialyear.Afurther$5,000incashbonusesrelatingtotheyearended30June2011waspaidinthe2011financialyear.
2
MrQuahebecameaGroupexecutivefrom1February2011.
3
MrDaviesceasedtobeaGroupexecutiveon31January2011.
2
26
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
DirectorsReport(continued)
REMUNERATIONREPORT(audited)(continued)
Remunerationofkeymanagementpersonnel(KMP)andthefivehighestpaidexecutivesoftheCompanyandtheGroup
Table2:Remunerationfortheperiodended30June2010
Salary&
Fees
$
Nonexecutivedirectors
JDawkins
ATregonning
Subtotalnonexecutivedirectors
Executivedirectors
GFowler1
Subtotalexecutivedirectors
Otherkeymanagementpersonnel
BTaylor2
PBobbin2
MDouglass2,3
AIreland2,3
BDavies
JMRudd2
SubtotalotherKMP
Total
67,000
42,376
109,376
Post
Employment
Shortterm
Cash
Nonmonetary
Bonus
benefits
$
Superannuation
30,000
24,999
54,999
24,375
24,375
14,461
49,999
49,999
49,999
11,697
14,312
190,467
269,841
270,833
270,833
64,000
64,000
385,539
360,000
370,000
360,000
129,969
157,030
1,767,026
2,147,235
44,103
300,000
400,000
50,000
5,400
799,503
863,503
Longterm
LongService
Other
1
benefits
Benefits
$
$
Sharebased
Payment
Shares
Total
Performance
related
1,372
1,372
107,122
107,122
5,353
665
640
665
858
8,181
9,553
107,122
4,685
4,685
4,685
97,000
67,375
164,375
467,702
467,702
449,456
710,664
825,127
460,664
141,686
182,285
2,769,862
3,401,939
0.0%
0.0%
13.7%
9.8%
42.2%
48.5%
10.9%
0.0%
3.0%
RelatestotheinterestfreecomponentofloanstoKMP(note27(c)).
Cashbonusesof$841,440accruedasat30June2010werepaidinthe2011financialyear.Afurther$12,063incashbonusesrelatingtotheyearended30June2010waspaidinthe2010financialyear.
3
MrDouglassandMrIrelandbecameGroupexecutivesfrom1July2009.
2
27
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
DirectorsReport(continued)
Signedinaccordancewitharesolutionofthedirectors.
GFowler
ManagingDirector
Sydney,28September2011
28
G H Meyerowitz
Partner
28 September 2011
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
CorporateGovernanceStatement
The Board of directors of Integrated Legal Holdings Limited is responsible for the corporate
governanceoftheGrouphavingregardtotheASXCorporateGovernanceCouncil(CGC)published
guidelinesaswellasitscorporategovernanceprincipalsandrecommendations.TheBoardguides
and monitors the business and affairs of Integrated Legal Holdings Limited on behalf of the
shareholdersbywhomtheyareelectedandtowhomtheyareaccountable.
TheCorporateGovernancepoliciesdisclosedinthisreportrepresentsthelatestguidancereleased
bytheAustralianStockExchange(ASX)forwhich,applicationisnotmandatoryforthe2011financial
yearbutisrequiredforthe2012financialyear.
ThetablebelowsummarisestheCompanyscompliancewiththeCGCsrecommendations:
Recommendation
Principal1Laysolidfoundationsformanagementandoversight
Comply
Yes/No
ASXListing
Reference/
Rule/CGC
explanation recommendations
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
AmajorityoftheBoardshouldbeindependentdirectors.
Yes
(a)
ASXCGC2.1
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
measurableobjectivesforachievinggenderdiversityforthe
Boardtoassessannuallyboththeobjectivesandprogressin
achievingthem.
Yes
ASXCGC3.2
30
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
CorporateGovernanceStatement(continued)
Recommendation
Principal3Promoteethicalandresponsibledecisionmaking
(continued)
Comply
Yes/No
ASXListing
Reference/
Rule/CGC
explanation recommendations
3.3
Companiesshoulddiscloseineachannualreportthe
measurableobjectivesforachievinggenderdiversitysetby
theBoardinaccordancewiththediversitypolicyand
progresstowardsachievingthem.
Yes
ASXCGC3.3
3.4
Companiesshoulddiscloseineachannualreportthe
proportionofwomenemployeesinthewholeorganisation,
womeninseniorexecutivepositionsandwomenonthe
Board.
Yes
ASXCGC3.4
3.5
Companiesshouldprovidetheinformationindicatedinthe
guidetoreportingonPrincipal3.
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
Companiesshouldprovidetheinformationindicatedinthe
guidetoreportingonPrincipal4.
Yes
ASXCGC4.4
Principal5Maketimelyandbalanceddisclosure
5.1
Companiesshouldestablishwrittenpoliciesdesignedto
ensurecompliancewithASXListingRuledisclosure
requirementsandtoensureaccountabilityatasenior
executivelevelforthatcomplianceanddisclosethose
policiesorasummaryofthosepolicies.
Yes
ASXCGC5.1
5.2
Companiesshouldprovidetheinformationindicatedinthe
guidetoreportingonPrincipal5.
Yes
ASXCGC5.2
Principal6Respecttherightsofshareholders
6.1
Companiesshoulddesignacommunicationspolicyfor
promotingeffectivecommunicationwithshareholdersand
encouragingtheirparticipationatgeneralmeetingsand
disclosetheirpolicyorasummaryofthatpolicy.
Yes
ASXCGC6.1
6.2
Companiesshouldprovidetheinformationindicatedinthe
guidetoreportingonPrincipal6.
Yes
ASXCGC6.2
31
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
CorporateGovernanceStatement(continued)
Recommendation
Principal7Recogniseandmanagerisk
Comply
Yes/No
ASXListing
Reference/
Rule/CGC
explanation recommendations
7.1
Companiesshouldestablishpoliciesfortheoversightand
managementofmaterialbusinessrisksanddisclosea
summaryofthosepolicies.
Yes
ASXCGC7.1
7.2
TheBoardshouldrequiremanagementtodesignand
implementtheriskmanagementandinternalcontrolsystem
tomanagetheCompanysmaterialbusinessrisksandreport
toitonwhetherthoserisksarebeingmanagedeffectively.
TheBoardshoulddisclosethatmanagementhasreportedto
itastotheeffectivenessoftheCompanysmanagementof
thismaterialbusinessrisks.
Yes
ASXCGC7.2
7.3
TheBoardshoulddisclosewhetherithasreceivedassurance
fromtheCEO(orequivalent)andthechieffinancialofficer
(CFO)[orequivalent]thatthedeclarationprovidedin
accordancewithsection295AoftheCorporationsActis
foundedonasoundsystemofriskmanagementandinternal
controlandthatthesystemisoperatingeffectivelyinall
materialrespectsinrelationtofinancialreportingrisks.
Yes
ASXCGC7.3
7.4
Companiesshouldprovidetheinformationindicatedinthe
guidetoreportingonPrincipal7.
Yes
ASXCGC7.4
Principal8Remuneratefairlyandresponsibly
8.1
TheBoardshouldestablisharemunerationcommittee.
No
(d)
ASXCGC8.1
8.2
Theremunerationcommitteeshouldbestructuresothatit:
consistsofamajorityofindependentdirectors
ischairedbyanindependentchair
hasatleastthreemembers.
No
(d)
ASXCGC8.2
8.3
Companiesshouldclearlydistinguishthestructureofnon
executivedirectorsremunerationfromthatofexecutive
directorsandseniorexecutives.
Yes
ASXCGC8.3
8.4
Companiesshouldprovidetheinformationindicatedinthe
guidetoreportingonPrincipal8.
Yes
ASXCGC8.4
Integrated Legal Holdings Limiteds corporate governance practices were in place throughout the
yearended30June2011.
ThefollowingarereferencenotestothePrincipalRecommendationtable:
a) Whilst both nonexecutive directors of Integrated Legal Holdings Limited own shares in the
Company,theyareconsideredtobeindependentastheyareindependentofmanagementand
free from any business or other relationship that could materially interfere with or could
reasonably be perceived to materially interfere with the exercise of their unfettered and
independent judgement. The number of shares held by both nonexecutive directors are not
considered material by management or by the Chair of the Audit and Risk Management
Committee.
32
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
CorporateGovernanceStatement(continued)
b)
c)
d)
No formal nomination committee or procedures have been adopted for the identification,
appointmentandreviewoftheBoardmembership,buttheBoardiscommittedtoaninformal
assessment process, facilitated by the Chair in consultation with the Companys professional
advisors.
TheAuditandRiskManagementCommitteemembershipincludesanexecutivedirector,being
the Managing Director and Chief Executive. Inclusion of the Managing Director and Chief
Executiveisrequiredtosatisfytherecommendationthatthecommitteemustconsistofatleast
threemembers.
No formal remuneration committee has been appointed. The remuneration of an executive
director will be decided by the Board, without the affected executive director participating in
thatdecisionmakingprocess.Thedeterminationofanexecutivedirectorsremunerationwill
bemadebytheBoardhavingregardtotheinputsandvaluetotheGroupofthecontributions
bytheexecutivedirectorinconsultantwiththeCompanysprofessionaladvisors.
The total maximum remuneration of nonexecutive directors is the subject of a shareholder
resolution in accordance with the Companys constitution, the Corporations Act and the ASX
listingrules,asapplicable.Thedeterminationofnonexecutivedirectorsremunerationwithin
thatmaximumwillbemadebytheBoardhavingregardtotheinputsandvaluetotheGroupof
therespectivecontributionsbyeachnonexecutivedirector.
Variouscorporategovernancepracticesarediscussedwithinthisstatement.
Boardfunctions
The Board seeks to identify the expectations of the shareholders, as well as other regulatory and
ethical expectations and obligations. In addition, the Board is responsible for identifying areas of
significantbusinessriskandensuringarrangementsareinplacetoadequatelymanagethoserisks.
To ensure that the Board is well equipped to discharge its responsibilities it has established
guidelinesforthenominationandselectionofdirectorsandfortheoperationoftheBoard.
TheresponsibilityfortheoperationandadministrationoftheGroupisdelegatedbytheBoardtothe
Managing Director and Chief Executive and the executive management team. The Board ensures
thatthisteamisappropriatelyqualifiedandexperiencedtodischargetheirresponsibilitiesandhas
inplaceprocedurestoassesstheperformanceoftheManagingDirectorandChiefExecutiveandthe
executivemanagementteam.
Whilst at all times the Board retains full responsibility for guiding and monitoring the Group, in
dischargingitsstewardshipitmakesuseofsubcommittees.Specialistcommitteesareabletofocus
onaparticularresponsibilityandprovideinformedfeedbacktotheBoard.
To this end the Board has established an Audit and Risk Management Committee. The roles and
responsibilitiesofthiscommitteearediscussedthroughoutthisCorporateGovernanceStatement.
33
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
CorporateGovernanceStatement(continued)
TheBoardisresponsibleforensuringthatmanagementsobjectivesandactivitiesarealignedwith
theexpectationsandriskidentifiedbytheBoard.TheBoardhasanumberofmechanismsinplace
toensurethisisachievedincluding:
Boardapprovalofastrategicplandesignedtomeetstakeholdersneedsandmanagebusiness
risk;
Ongoingdevelopmentofthestrategicplanandapprovinginitiativesandstrategiesdesignedto
ensurethecontinuedgrowthandsuccessoftheentity;and
Implementationofbudgetsbymanagementandmonitoringprogressagainstbudgetviathe
establishmentandreportingofbothfinancialandnonfinancialkeyperformanceindicators.
OtherfunctionsreservedtotheBoardinclude:
Approvaloftheannualandhalfyearlyfinancialreports;
Approvingandmonitoringtheprogressofmajorcapitalexpenditure,capitalmanagement,and
acquisitionsanddivestitures;
Ensuringthatanysignificantrisksthatariseareidentified,assessed,appropriatelymanagedand
monitored;and
Reportingtoshareholders.
StructureoftheBoard
Theskills,experienceandexpertiserelevanttothepositionofdirectorheldbyeachdirectorinoffice
at the date of the annual report is included in the Directors Report. Directors of Integrated Legal
HoldingsLimitedareconsideredtobeindependentwhentheyareindependentofmanagementand
free from any business or other relationship that could materially interfere with or could
reasonably be perceived to materially interfere with the exercise of their unfettered and
independentjudgement.
In the context of director independence, 'materiality' is considered from both the Group and
individual director perspective. The determination of materiality requires consideration of both
quantitative and qualitative elements. An item is presumed to be quantitatively immaterial if it is
equaltoorlessthan5%oftheappropriatebaseamount.Itispresumedtobematerial(unlessthere
isqualitativeevidencetothecontrary)ifitisequaltoorgreaterthan10%oftheappropriatebase
amount.
34
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
CorporateGovernanceStatement(continued)
In accordance with the definition of independence above, and the materiality thresholds set, the
followingdirectorsofIntegratedLegalHoldingsLimitedareconsideredtobeindependent:
Name
Position
JDawkins
Chairman,NonexecutiveDirector
ATregonning
NonexecutiveDirector
TheBoardrecognisestheCorporateGovernanceCouncilsrecommendationsthattheChairshould
beanindependentdirector.
Thereareproceduresinplace,agreedbytheBoard,toenabledirectorsinfurtheranceoftheirduties
toseekindependentprofessionaladviceattheCompanysexpense.
Theterminofficeheldbyeachdirectorinofficeatthedateofthisreportisasfollows:
Name
TerminOffice
JDawkins
4years,11months
ATregonning
4years,11months
GFowler
3years,4months
ForadditionaldetailsregardingBoardappointments,pleaserefertoourwebsite.
Performance
TheperformanceoftheBoardandkeyexecutivesisreviewedregularlyagainstbothmeasurableand
qualitativeindicators.
The performance criteria against which directors and executives are assessed are aligned with the
financialandnonfinancialobjectivesofIntegratedLegalHoldingsLimited.
Directorswhoseperformanceisconsistentlyunsatisfactorymaybeaskedtoretire.
Tradingpolicy
UndertheCompanysShareTradingPolicyanexecutiveordirectormustnottradeinanysecurities
oftheCompanyatanytimewhentheyareinpossessionofunpublished,pricesensitiveinformation
inrelationtothosesecurities.
Beforecommencingtotrade,anexecutivemustfirstobtaintheapprovaloftheCompanySecretary
todosoandadirectormustfirstobtaintheapprovaloftheChairman.
AdditionalrestrictionsontradingintheCompanyssecuritiesapplytodirectorsoftheCompany,all
executives reporting directly to the Managing Director and any other employees of the Company
considered appropriate by the Managing Director and Company Secretary from time to time
(RestrictedPersons).
35
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
CorporateGovernanceStatement(continued)
Restricted Persons are prohibited from trading in the Companys securities during the following
closedperiods:
between 1 July and one trading day following the announcement of the Companys full year
results(preliminaryfinalreport);and
between 1 January and one trading day following the announcement of the Companys half
yearresults.
Restricted Persons are permitted to buy or sell Company shares during the closed periods in the
followingcircumstances:
Tradinginarightsissueduringarightstradingperiod;
Sharesareofferedpursuanttoanapprovedexecutiveoremployeeshareoroptionplan;
Sharesareofferedpursuanttoadividendreinvestmentplan;
Shares are transferred between related entities pursuant to an internal reorganisation of a
director,officerordesignatedemployee;or
WiththepriorwrittenclearanceoftheChairman.
AsrequiredbytheASXlistingrules,theCompanynotifiestheASXofanytransactionconductedby
directorsinthesecuritiesoftheCompany.
Diversitypolicy
TheCompanyvaluesdiversityandrecognisesthebenefitsitcanbringtotheorganisationsabilityto
achieveitsgoals.AccordinglytheCompanyhasdevelopedadiversitypolicy.Thispolicyoutlinesthe
Companys diversity objectives in relation to gender, age, cultural background and ethnicity. It
includesrequirementsfortheBoardtoestablishmeasurableobjectivesforachievingdiversity,and
fortheBoardtoassessannuallyboththeobjectives,andthecompanysprogressinachievingthem.
InaccordancewiththispolicyandASXCorporateGovernancePrinciples,theBoardhasestablished
thefollowingobjectivesinrelationtogenderdiversity.Theaimistoachievetheseobjectivesover
the coming five years as director and senior executive positions become vacant and appropriately
skilledcandidatesareavailable:
Actualasat30June2011
Number
127
71%
40%60%
NumberofwomenPrincipalsandinseniorexecutivepositions
28%
40%60%
NumberofwomenonmemberfirmsBoards
7%
40%60%
NumberofwomenonILHBoard
33%
40%60%
Numberofwomenemployeesinthewholeorganisation
Objective
36
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
CorporateGovernanceStatement(continued)
AuditandRiskManagementCommittee
The Board has established an Audit and Risk Management Committee, which operates under a
charter approved by the Board. It is the Boards responsibility to ensure that an effective internal
control framework exists within the entity. This includes internal controls to deal with both the
effectiveness and efficiency of significant business processes, the safeguarding of assets, the
maintenanceofproperaccountingrecords,andthereliabilityoffinancialinformationaswellasnon
financial considerations such as the benchmarking of operational key performance indicators. The
Boardhasdelegatedresponsibilityforestablishingandmaintainingaframeworkofinternalcontrol
andethicalstandardstotheAuditandRiskManagementCommittee.
The committee also provides the Board with additional assurance regarding the reliability of
financialinformationforinclusioninthefinancialreports.
ThemembersoftheAuditandRiskManagementCommitteeduringtheyearwere:
ATregonningChairman
JDawkins
GFowler
QualificationsofAuditandRiskManagementCommitteemembers
The qualifications and experience of the Audit and Risk Management Committee members are
notedintheDirectorsReport.
Risk
The Board has continued its proactive approach to risk management. The identification and
effective management of risk, including calculated risktaking is viewed as an essential part of the
Companysapproachtocreatinglongtermshareholdervalue.
In recognition of this, the Board determines the Companys risk profile and is responsible for
overseeingandapprovingriskmanagementstrategyandpolicies,internalcomplianceandinternal
control.IndoingsotheBoardhastakentheviewthatitiscrucialforallBoardmemberstobeapart
of this process and as such, all Board members are part of the Audit and Risk Management
Committee.
The Board oversees an annual assessment of the effectiveness of risk management and internal
compliance and control. The tasks of undertaking and assessing risk management and internal
control effectiveness are delegated to management through the Managing Director and Chief
Executive,includingresponsibilityforthedaytodaydesignandimplementationoftheCompanys
riskmanagementandinternalcontrolsystem.ManagementreportstotheBoardontheCompanys
keyrisksandtheextenttowhichitbelievestheserisksarebeingadequatelymanaged.
The Board has a number of mechanisms in place to ensure that managements objectives and
activities are aligned with the risks identified by the Board. These include the implementation of
Board approved operating plans and budgets and Board monitoring of progress against these
budgets, including the establishment and monitoring of KPIs of both a financial and nonfinancial
nature.
37
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
CorporateGovernanceStatement(continued)
As part of its duties, the Companys management conducts routine reviews with the objective of
providingassuranceon theadequacyoftheCompanysriskframeworkand the completenessand
accuracyofriskreportingbymanagement.
Tothisend,comprehensivepracticesareinplacethataredirectedtowardsachievingthefollowing
objectivesinrelationtotherequirementsofPrincipal7:
EffectiveandefficientuseoftheCompanysresources
Compliancewithapplicablelawsandregulations
Preparationofreliablepublishedfinancialinformation
ChiefExecutiveandCFOcertification
Inaccordancewithsection295AoftheCorporationsAct,theChiefExecutiveandCFOhaveprovided
awrittenstatementtotheBoardthat:
Their view provided on the Companys financial report is founded on a sound system of risk
management and internal compliance and control which implements the financial policies
adoptedbytheBoard;and
The Companys risk management and internal compliance and control system is operating
effectivelyinallmaterialrespects.
TheBoardagreeswiththeviewsoftheASXonthismatterandnotesthatduetoitsnature,internal
control assurance from the Chief Executive and CFO can only be reasonable rather than absolute.
This is due to such factors as the need for judgement, the use of testing on a sample basis, the
inherent limitations in internal control and because much of the evidence available is persuasive
rather than conclusive and therefore is not and cannot be designed to detect all weaknesses in
controlprocedures.
Remuneration
ItistheCompanysobjectivetoprovidemaximumstakeholderbenefitfromtheretentionofahigh
quality Board and executive team by remunerating directors and key executives fairly and
appropriatelywithreferencetorelevantemploymentmarketconditions.Toassistinachievingthis
objective,theBoardlinksthenatureandamountofexecutivedirectorsandofficersremuneration
totheCompanysfinancialandoperationalperformance.
Theexpectedoutcomesoftheremunerationstructureare:
Retentionandmotivationofkeyexecutives.
AttractionofhighqualitymanagementtotheCompany.
Performance incentives that allow executives to share in the success of Integrated Legal
HoldingsLimited.
For a full discussion of the Companys remuneration philosophy and framework and the
remuneration received by directors and executives in the current period, please refer to the
RemunerationReport,whichiscontainedwithintheDirectorsReport.
38
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
CorporateGovernanceStatement(continued)
Thereisnoschemetoprovideretirementbenefitstononexecutivedirectors.
The Board is responsible for determining and reviewing compensation arrangements for the
directorsthemselvesandtheexecutiveteam.
Shareholdercommunicationpolicy
IntegratedLegalHoldingsLimitediscommittedto:
Ensuring that shareholders and the financial markets are provided with full and timely
information about Integrated Legal Holdings Limiteds activities in a balanced and
understandableway.
ComplyingwithcontinuousdisclosureobligationscontainedinapplicableASXlistingrulesand
theCorporationsAct2001inAustralia.
Communicating effectively with its shareholders and making it easier for shareholders to
communicatewithIntegratedLegalHoldingsLimited.
ThroughthereleaseofinformationtothemarketviatheASX.
ThroughthedistributionoftheannualreportandNoticesofAnnualGeneralMeeting.
Throughshareholdermeetingsandinvestorrelationspresentations.
Throughlettersandotherformsofcommunicationsdirectlytoshareholders.
BypostingrelevantinformationonIntegratedLegalHoldingsLimitedswebsite.
The Companys website has a dedicated section for the purposes of publishing all important
Companyinformationandrelevantannouncementsmadetothemarket.
The external auditors are required to attend the Annual General Meeting and are available to
answer any shareholder questions about the conduct of the audit and preparation of the audit
report.
39
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
ConsolidatedStatementofFinancialPosition
ASAT30JUNE2011
ASSETS
CurrentAssets
Cashandcashequivalents
Tradeandotherreceivables
Workinprogress
Incometaxreceivable
TotalCurrentAssets
NonCurrentAssets
Plantandequipment
Prepayments
Goodwill
Intangibleassets
Deferredtaxassets
Financialassets
TotalNonCurrentAssets
TOTALASSETS
LIABILITIES
CurrentLiabilities
Tradeandotherpayables
Interestbearingloansandborrowings
Incometaxpayable
Provisions
Otherliabilities
TotalCurrentLiabilities
NonCurrentLiabilities
Tradeandotherpayables
Interestbearingloansandborrowings
Provisions
Deferredtaxliabilities
Otherliabilities
TotalNonCurrentLiabilities
TOTALLIABILITIES
NETASSETS
EQUITY
Issuedcapital
Accumulatedlosses
Reserves
TOTALEQUITY
Note
11
12
13
8(d)
14
15
16
8(d)
17
18
19&33
8(d)
20
21
18
19&33
20
8(d)
21
22
23
24
CONSOLIDATED
2011
2010
$
$
2,460,760
2,151,449
7,826,873
7,538,870
2,499,220
1,353,354
12,782
12,799,635
11,043,673
1,170,294
1,181,314
14,614
29,230
12,900,557
10,470,600
29,700
65,340
101,089
3,435
2,642
14,118,600
11,850,215
26,918,235
22,893,888
3,813,598
3,317,157
2,536,259
1,573,325
177,524
986,593
687,057
255,769
279,933
7,592,219
6,034,996
37,554
75,107
143,325
260,913
306,092
197,350
137,038
689,344
127,608
1,313,353
660,978
8,905,572
6,695,974
18,012,663
16,197,914
33,397,152
(16,926,589)
1,542,100
32,160,426
(16,688,184)
725,672
18,012,663
16,197,914
TheaboveConsolidatedStatementofFinancialPositionshouldbereadinconjunctionwiththe
accompanyingnotes.
40
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
ConsolidatedStatementofComprehensiveIncome
FORTHEYEARENDED30JUNE2011
Professionalfees
Interestrevenue
Dividendsreceived
Otherrevenue
Totalrevenue
Occupancyexpenses
Salariesandemployeebenefitsexpenses
Depreciationandamortisationexpenses
Advertisingandmarketingexpenses
Administrativeexpenses
Otherexpenses
Financecosts
Sharebasedpaymentsexpense
Totalexpenses
Profitbeforeincometax
Incometaxexpense
Profitafterincometax
Note
7(a)
7(b)
7(c)
7(d)
7(e)
8(a)
CONSOLIDATED
2011
2010
$
$
28,313,125
23,822,676
153,015
39,175
126
91
9,210
13,046
28,475,476
23,874,988
(2,338,627)
(2,114,280)
(18,579,646)
(16,149,830)
(412,841)
(343,759)
(359,123)
(222,928)
(3,335,793)
(2,889,908)
(1,351,267)
(742,175)
(143,193)
(160,597)
(41,415)
(19,243)
(26,561,905)
(22,642,720)
1,913,571
1,232,268
(626,901)
(378,774)
1,286,670
853,494
Netprofitfortheyear
1,286,670
853,494
Othercomprehensiveincome
Netgains/(losses)onavailableforsalefinancialassets
Othercomprehensiveincome/(losses)fortheyear,netoftax
Totalcomprehensiveincomefortheyear
792
792
1,287,462
(68)
(68)
853,426
1.41
1.41
1.18
1.18
Basicearningspershare(cents)
Dilutedearningspershare(cents)
10
10
TheaboveConsolidatedStatementofComprehensiveIncomeshouldbereadinconjunctionwith
theaccompanyingnotes.
41
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
ConsolidatedStatementofCashFlows
FORTHEYEARENDED30JUNE2011
Cashflowsfromoperatingactivities
Receiptsfromcustomers
Interestreceived
Dividendsreceived
Otherrevenue
Paymentstosuppliersandemployees
Interestandothercostsoffinancepaid
Incometaxreceived/(paid)
Netcashflowsfromoperatingactivities
Cashflowsfrominvestingactivities
Purchaseofplantandequipment
Proceedsfromthedisposalofplantandequipment
Paymentfortheacquisitionofbusinesses
Netcashflowsusedininvestingactivities
Cashflowsfromfinancingactivities
Proceedsfromloansreceived
Repaymentofborrowings
Dividendspaid
Proceedsfromissueofshares
Paymentsforshareissueexpenses
Netcashflowsfromfinancingactivities
Netincreaseincashheld
Cashandcashequivalentsatthebeginningofthefinancialyear
Cashandcashequivalentsattheendofthefinancialyear
Note
25(a)
29
11
CONSOLIDATED
2011
2010
$
$
30,069,018
24,249,661
153,015
39,175
126
57
9,210
13,046
(28,365,293)
(22,800,109)
(81,891)
(92,984)
(552,446)
39,315
1,231,739
1,448,161
(209,596)
(807,265)
5,136
(979,148)
(1,188,744)
(802,129)
1,546,545
993,027
(643,929)
(1,584,315)
(441,556)
(131,122)
1,674,510
(17,389)
(115,058)
443,671
837,042
486,666
1,483,074
1,948,949
465,875
2,435,615
1,948,949
TheaboveConsolidatedStatementofCashFlowsshouldbereadinconjunctionwiththe
accompanyingnotes.
42
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
ConsolidatedStatementofChangesinEquity
FORTHEYEARENDED30JUNE2011
CONSOLIDATED
Balanceasat1July2009
Issued
Capital
Accumulated
Losses
Net
Unrealised
Gains/(Losses)
Reserve
30,504,813
(16,641,034)
(1,373)
Profitfortheyear
853,494
Othercomprehensiveloss
(68)
Totalcomprehensiveincomefortheyear
Transactionswithownersintheircapacity
asowners
853,494
Transfertogeneralreserve
Dividendspaid
General
Reserve
Total
Equity
13,862,406
853,494
(68)
(68)
853,426
(900,644)
900,644
(173,531)
(173,531)
19,243
19,243
Issueofshares
1,716,910
1,716,910
Transactioncostsonissueofshares
Incometaxonitemstakendirectlytoor
transferredfromequity
(115,058)
(115,058)
34,518
34,518
32,160,426
(16,688,184)
(1,441)
727,113
16,197,914
Sharebasedpayments
Balanceasat30June2010
CONSOLIDATED
Balanceasat1July2010
Issued
Capital
Accumulated
Losses
Net
Unrealised
Gains/(Losses)
Reserve
32,160,426
(16,688,184)
(1,441)
General
Reserve
Total
Equity
727,113
16,197,914
1,286,670
1,286,670
Profitfortheyear
Othercomprehensiveincome
792
Totalcomprehensiveincomefortheyear
Transactionswithownersintheircapacity
asowners
792
1,286,670
1,287,462
792
Transfertogeneralreserve
(238,405)
238,405
Dividendspaid
(709,439)
41,415
41,415
1,207,483
1,207,483
(17,389)
(17,389)
5,217
5,217
Sharebasedpayments
Issueofshares
Transactioncostsonissueofshares
Incometaxonitemstakendirectlytoor
transferredfromequity
Balanceasat30June2011
(709,439)
33,397,152
(16,926,589)
(649)
1,542,749
18,012,663
TheaboveConsolidatedStatementofChangesinEquityshouldbereadinconjunctionwiththe
accompanyingnotes.
43
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements
FORTHEYEARENDED30JUNE2011
2) SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(continued)
1) CORPORATEINFORMATION
The consolidated financial report of Integrated Legal Holdings Limited for the year ended 30 June
2011wasauthorisedforissueinaccordancewitharesolutionofdirectorson28September2011.
Integrated Legal Holdings Limited (the parent) is a company limited by shares incorporated in
Australia whose shares are publicly traded on the Australian Stock Exchange. The company is
domiciledinAustralia.
The nature of the operations and principal activities of the Group are described in the Directors'
Report.
2) SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES
Basisofpreparation
The financial report is a general purpose financial report, which has been prepared in accordance
with the requirements of the Corporations Act 2001, Australian Accounting Standards and other
authoritative pronouncements of the Australian Accounting Standards Board. The financial report
has also been prepared on a historical cost basis, except for availableforsale investments, which
havebeenmeasuredatfairvalue.
ThefinancialreportispresentedinAustraliandollars.
a) CompliancewithIFRS
The financial report complies with Australian Accounting Standards and International Financial
ReportingStandards(IFRS)asissuedbytheInternationalAccountingStandardsBoard.
b) Newaccountingstandardsandinterpretations
From 1 July 2010, the Group has adopted all Australian Accounting Standards and Interpretations
mandatoryforannualperiodsbeginningonorafter1July2010.WhentheadoptionoftheStandard
or Interpretation is deemed to have an impact on the financial statements or performance of the
Group,itsimpactisdescribedbelow:
AnnualImprovementsProject:AASB20095andAASB20103
InMay2009andJune2010theAASBissuedanomnibusofamendmentstoitsStandardsaspartof
theAnnualImprovementsProject,primarilywithaviewtoremovinginconsistenciesandclarifying
wording.Thereareseparatetransitionalprovisionsandapplicationdatesforeachamendment.The
adoptionofthefollowingamendmentsresultedinchangestoaccountingpoliciesbutdidnothave
anyimpactonthefinancialpositionorperformanceoftheGroup:
44
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements
FORTHEYEARENDED30JUNE2011
2) SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(continued)
AASB 8 Operating Segments: clarifies that segment assets and liabilities need only be
reported when those assets and liabilities are included in measures that are used by the
chiefoperatingdecisionmaker.TheGroup'schiefoperatingdecisionmakerreviewssegment
assetsandliabilities,andassuchtheGrouphasdisclosedthisinformationinnote5.
AASB107StatementofCashFlows:statesthatonlyexpenditurethatresultsinrecognising
an asset can be classified as a cash flow from investing activities. This amendment will
impact the presentation in the Statement of Cash Flows as cash flows relating to costs
incurred on acquisition of a business combination will be disclosed as cash flows from
operatingactivitiesratherthaninvestingactivities.
AASB136ImpairmentofAssets:theamendmentclarifiesthatthelargestunitpermittedfor
allocatinggoodwill,acquiredinabusinesscombination,istheoperatingsegmentasdefined
inAASB8beforeaggregationforreportingpurposes.Theamendmenthasnoimpactonthe
Group as the annual impairment test is performed before aggregation of operating
segments.
AASB20098AmendmentstoAustralianAccountingStandardsGroupCashSettledSharebase
PaymentTransactions
The amendments clarify the scope of AASB 2 Sharebased Payment by requiring an entity that
receives goods or services in a sharebased payment arrangement to account for those goods or
services no matter which entity in the group settles the transaction, and no matter whether the
transaction is settled in shares or cash. The amendments incorporate the requirements previously
includedinInterpretation8ScopeofAASB2andInterpretation11AASB2GroupandTreasury
Share Transactions. This amendment did not have an impact on the financial position or
performanceoftheGroup.
Interpretation19ExtinguishingFinancialLiabilitieswithEquityInstruments
This interpretation clarifies that equity instruments issued to a creditor to extinguish a financial
liabilityareconsiderationpaidinaccordancewithparagraph41ofIAS39.Asaresult,thefinancial
liability is derecognised and the equity instruments issued are treated as consideration paid to
extinguishthatfinancialliability.
Theinterpretationstatesthatequityinstrumentsissuedaspaymentofadebtshouldbemeasured
atthefairvalueoftheequityinstrumentsissued,ifthiscanbedeterminedreliably.Ifthefairvalue
of the equity instruments issued is not reliably determinable, the equity instruments should be
measured by reference to the fair value of the financial liability extinguished as of the date of
extinguishment.Thisamendmentdidnothaveanimpactonthefinancialpositionorperformanceof
theGroup.
AustralianAccountingStandardsandInterpretationsthathaverecentlybeenissuedoramendedbut
arenotyeteffectivehavenotbeenadoptedbytheGroupfortheannualreportingperiodended30
June2011.Theseareoutlinedinthefollowingtable.
45
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
2)
b)
SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(continued)
Newaccountingstandardsandinterpretations(continued)
Reference
AASB9
Title
FinancialInstruments
Summary
AASB9includesrequirementsfortheclassificationand
measurementoffinancialassetsresultingfromthefirst
partofPhase1ofthelASB'sprojecttoreplaceIAS39
FinancialInstruments:RecognitionandMeasurement
(AASB139FinancialInstruments:Recognitionand
Measurement).
Application
dateof
standard
1January2013
ImpactonGroupfinancialreport
TheGrouphasnotyetdeterminedtheimpactofthe
amendments,ifany.
Application
datefor
Group
1July2013
Theserequirementsimproveandsimplifytheapproachfor
classificationandmeasurementoffinancialassets
comparedwiththerequirementsofAASB139.Themain
changesfromAASB139aredescribedbelow.
(a) Financialassetsareclassifiedbasedon(1)the
objectiveoftheentity'sbusinessmodelformanaging
thefinancialassets;(2)thecharacteristicsofthe
contractualcashflows.Thisreplacesthenumerous
categoriesoffinancialassetsinAASB139,eachof
whichhaditsownclassificationcriteria.
(b) AASB9allowsanirrevocableelectiononinitial
recognitiontopresentgainsandlossesoninvestments
inequityinstrumentsthatarenotheldfortradingin
othercomprehensiveincome.Dividendsinrespectof
theseinvestmentsthatareareturnoninvestmentcan
berecognisedinprofitorlossandthereisno
impairmentorrecyclingondisposaloftheinstrument.
c)
Financialassetscanbedesignatedandmeasuredatfair
valuethroughprofitorlossatinitialrecognitionif
doingsoeliminatesorsignificantlyreducesa
measurementorrecognitioninconsistencythatwould
arisefrommeasuringassetsorliabilities,or
recognisingthegainsandlossesonthem,ondifferent
bases.
46
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
2)
b)
SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(continued)
Newaccountingstandardsandinterpretations(continued)
Reference
AASB200911
Title
AmendmentstoAustralian
AccountingStandardsarisingfrom
AASB9
[AASB1,3,4,5,7,101,102,108,
112,118,121,127,128,131,132,
136,139,1023&1038and
Interpretations10&12]
Summary
TheseamendmentsarisefromtheissuanceofAASB9
FinancialInstrumentsthatsetsoutrequirementsfor
theclassificationandmeasurementoffinancialassets.
TherequirementsinAASB9formpartofthefirst
phaseoftheInternationalAccountingStandards
BoardsprojecttoreplaceIAS39Financial
Instruments:RecognitionandMeasurement.
ThisStandardshallbeappliedwhenAASB9isapplied.
Application
dateof
standard
1January2013
ImpactonGroupfinancialreport
TheGrouphasnotyetdeterminedtheimpactofthe
amendments,ifany.
Application
datefor
Group
1July2013
47
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
2)
b)
SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(continued)
Newaccountingstandardsandinterpretations(continued)
Reference
AASB124
(Revised)
Title
RelatedPartyDisclosures
(December2009)
Summary
TherevisedAASB124simplifiesthedefinitionofarelated
party,clarifyingitsintendedmeaningandeliminating
inconsistenciesfromthedefinition,including:
Application
dateof
standard
1January2011
ImpactonGroupfinancialreport
TheGrouphasnotyetdeterminedtheimpactofthe
amendments,ifany.
Application
datefor
Group
1July2011
(a) Thedefinitionnowidentifiesasubsidiaryandan
associatewiththesameinvestorasrelatedpartiesof
eachother
(b) Entitiessignificantlyinfluencedbyonepersonand
entitiessignificantlyinfluencedbyaclosememberof
thefamilyofthatpersonarenolongerrelated
partiesofeachother
(c) Thedefinitionnowidentifiesthat,wheneveraperson
orentityhasbothjointcontroloverasecondentity
andjointcontrolorsignificantinfluenceoverathird
party,thesecondandthirdentitiesarerelatedto
eachother.
Apartialexemptionisalsoprovidedfromthedisclosure
requirementsforgovernmentrelatedentities.Entities
thatarerelatedbyvirtueofbeingcontrolledbythesame
governmentcanprovidereducedrelatedparty
disclosures.
48
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
2)
b)
SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(continued)
Newaccountingstandardsandinterpretations(continued)
Reference
AASB200912
Title
AmendmentstoAustralian
AccountingStandards
[AASB5,8,108,110,112,119,133,
137,139,1023&1031and
Interpretations2,4,16,1039&
1052]
AASB1054
AustralianAdditionalDisclosures
Summary
Thisamendmentmakesnumerouseditorialchangestoa
rangeofAustralianAccountingStandardsand
Interpretations.
Application
dateof
standard
ImpactonGroupfinancialreport
Application
datefor
Group
1January2011
TheGrouphasnotyetdeterminedtheimpactofthe
amendments,ifany.
1July2011
1July2011
TheGrouphasnotyetdeterminedtheimpactofthe
amendments,ifany.
1July2011
Inparticular,itamendsAASB8OperatingSegmentsto
requireanentitytoexercisejudgementinassessing
whetheragovernmentandentitiesknowntobeunderthe
controlofthatgovernmentareconsideredasinglecustomer
forthepurposesofcertainoperatingsegmentdisclosures.
Italsomakesnumerouseditorialamendmentstoarangeof
AustralianAccountingStandardsandInterpretations,
includingamendmenttoreflectchangesmadetothetextof
IFRSbytheIASB.
Thisstandardisasaconsequenceofphase1ofthejoint
TransTasmanConvergenceprojectoftheAASBandFRSB.
ThisstandardrelocatesallAustralianspecificdisclosures
fromotherstandardstooneplaceandrevisesdisclosures
inthefollowingareas:
(a) CompliancewithAustralianAccountingStandards
(b) Thestatutorybasisorreportingframeworkforfinancial
statements
(c) Whetherthefinancialstatementsaregeneralpurposeor
specialpurpose
(d) Auditfees
(e) Imputationcredits.
49
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
2)
b)
SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(continued)
Newaccountingstandardsandinterpretations(continued)
Reference
AASB20104
Title
Summary
FurtherAmendmentstoAustralian
AccountingStandardsarisingfrom
theAnnualImprovementsProject
Emphasisestheinteractionbetweenquantitativeand
qualitativeAASB7disclosuresandthenatureandextent
ofrisksassociatedwithfinancialinstruments.
[AASB1,AASB7,AASB101,AASB
134andinterpretation13]
Clarifiesthatanentitywillpresentananalysisofother
comprehensiveincomeforeachcomponentofequity,
eitherinthestatementofchangesinequityorinthenotes
tothefinancialstatements.
Application
dateof
standard
ImpactonGroupfinancialreport
Application
datefor
Group
1January2011
TheGrouphasnotyetdeterminedtheimpactofthe
amendments,ifany.
1July2011
1January2011
TheGrouphasnotyetdeterminedtheimpactofthe
amendments,ifany.
1July2011
1July2011
TheGrouphasnotyetdeterminedtheimpactofthe
amendments,ifany.
1July2011
Providesguidancetoillustratehowtoapplydisclosure
principlesinAASB134forsignificanteventsand
transactions.
Clarifiesthatwhenthefairvalueofawardcreditsis
measuredbasedonthevalueoftheawardsforwhichthey
couldberedeemed,theamountofdiscountsorincentives
otherwisegrantedtocustomersnotparticipatinginthe
awardcreditscheme,istobetakenintoaccount.
AASB20105
AmendmentstoAustralian
AccountingStandards
[AASB1,3,4,5,101,107,112,118,
119,121,132,133,134,137,139,
140,1023and1038and
interpretations112,115,127,132&
1042]
AASB20106
AmendmentstoAustralian
AccountingStandardsDisclosures
onTransfersofFinancialAssets
[AASB1&AASB7]
ThisStandardmakesnumerouseditorialamendmentstoa
rangeofAustralianAccountingStandardsand
Interpretations,includingamendmentstoreflectchanges
madetothetextofIFRSbytheIASB.
Theseamendmentshavenomajorimpactonthe
requirementsoftheamendedpronouncements.
Theamendmentsincreasethedisclosurerequirementsfor
transactionsinvolvingtransfersoffinancialassets.
Disclosuresrequireenhancementstotheexistingdisclosures
inIFRS7whereanassetistransferredbutisnot
derecognisedandintroducenewdisclosuresforassetsthat
arederecognisedbuttheentitycontinuestohavea
continuingexposuretotheassetafterthesale.
50
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
2)
b)
SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(continued)
Newaccountingstandardsandinterpretations(continued)
Reference
AASB20107
Title
AmendmentstoAustralian
AccountingarisingfromAASB9
(December2010)
[AASB1,3,4,5,7,101,102,108,
112,118,120,121,127,128,131,
132,136,137,139,1023&1038and
interpretations2,5,10,12,19&
127]
Summary
Therequirementsforclassifyingandmeasuringfinancial
liabilitieswereaddedtoAASB9.Theexistingrequirements
fortheclassificationoffinancialliabilitiesandtheabilityto
usethefairvalueoptionhavebeenretained.However,
wherethefairvalueoptionisusedforfinancialliabilitiesthe
changeinfairvalueisaccountedforasfollows:
Thechangeattributabletochangesincreditriskare
presentedinothercomprehensiveincome(OCI)
Theremainingchangeispresentedinprofitorloss.
Application
dateof
standard
ImpactonGroupfinancialreport
Application
datefor
Group
1January2013
TheGrouphasnotyetdeterminedtheimpactofthe
amendments,ifany.
1July2013
1July2011
TheGrouphasnotyetdeterminedtheimpactofthe
amendments,ifany.
1July2011
Ifthisapproachcreatesorenlargesanaccounting
mismatchintheprofitorloss,theeffectofthechangesin
creditriskarealsopresentedinprofitorloss.
AASB20111
AmendmentstoAustralian
AccountingarisingfromtheTrans
TasmanConvergenceproject
ThisStandardmakesamendmentstomanyAustralian
AccountingStandards,removingthedisclosureswhichhave
beenrelocatedtoAASB1054.
[AASB1,AASB5,7,AASB101,AASB
107,AASB108,AASB121,AASB128,
AASB132,AASB134,Interpretation
2,Interpretation112,Interpretation
113]
51
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
2)
b)
SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(continued)
Newaccountingstandardsandinterpretations(continued)
Reference
AASB10
Title
ConsolidatedFinancialStatements
Summary
AASB10establishesanewcontrolmodelthatappliestoall
entities.ItreplacespartsofIAS27Consolidatedand
SeparateFinancialStatementsdealingwiththeaccounting
forconsolidatedfinancialstatementsandSIC12
ConsolidationSpecialPurposeEntities.
Application
dateof
standard
ImpactonGroupfinancialreport
Application
datefor
Group
1January2013
TheGrouphasnotyetdeterminedtheimpactofthe
amendments,ifany.
1July2013
Thenewcontrolmodelbroadensthesituationswhenan
entityisconsideredtobecontrolledbyanotherentityand
includesnewguidanceforapplyingthemodeltospecific
situations,includingwhenactingasamanagermaygive
control,theimpactofpotentialvotingrightsandwhen
holdinglessthanamajorityvotingrightsmaygivecontrol.
Thisislikelytoleadtomoreentitiesbeingconsolidatedinto
thegroup.
AASB12
DisclosureofInterestsinOther
Entities
AASB12includesalldisclosuresrelatingtoanentitys
interestsinsubsidiaries,jointarrangements,associatesand
structuresentities.Newdisclosureshavebeenintroduced
aboutthejudgementsmadebymanagementtodetermine
whethercontrolexists,andtorequiresummarised
informationaboutjointarrangements,associatesand
structuredentitiesandsubsidiarieswithnoncontrolling
interests.
1January2013
TheGrouphasnotyetdeterminedtheimpactofthe
amendments,ifany.
1July2013
AASB20117
AmendmentstoAustralian
AccountingStandardsarisingfrom
theConsolidationandJoint
ArrangementStandards
ConsequentialamendmentstoAASB127SeparateFinancial
StatementsandAASB128InvestmentsinAssociatesasa
resultoftheadoptionofAASB10ConsolidatedFinancial
Statements,AASB11JointArrangementsandAASB12
DisclosureofInterestsinOtherEntities.
1January2013
TheGrouphasnotyetdeterminedtheimpactofthe
amendments,ifany.
1July2013
52
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
2)
b)
SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(continued)
Newaccountingstandardsandinterpretations(continued)
Reference
AASB13
Title
FairValueMeasurement
Summary
AASB13establishesasinglesourceofguidanceunder
AustralianAccountingStandardsfordeterminingthefair
valueofassetsandliabilities.AASB13doesnotchange
whenanentityisrequiredtousefairvalue,butrather,
providesguidanceonhowtodeterminefairvalueunder
AustralianAccountingStandardswhenfairvalueisrequired
orpermittedbyAustralianAccountingStandards.
Applicationofthisdefinitionmayresultindifferentfair
valuesbeingdeterminedfortherelevantassets.
Application
dateof
standard
ImpactonGroupfinancialreport
Application
datefor
Group
1January2013
TheGrouphasnotyetdeterminedtheimpactofthe
amendments,ifany.
1July2013
1January2013
TheGrouphasnotyetdeterminedtheimpactofthe
amendments,ifany.
1July2013
AASB13alsoexpandsthedisclosurerequirementsforall
assetsorliabilitiescarriedatfairvalue.Thisincludes
informationabouttheassumptionsmadeandthe
qualitativeimpactofthoseassumptionsonthefairvalue
determined.
AASB20118
AmendmentstoAustralian
AccountingStandardsarisingfrom
theFairValueMeasurement
Standard
ConsequentialamendmentstoexistingAustralian
AccountingStandardsasaresultoftheadoptionofAASB13
FairValueMeasurement.
53
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
2)
b)
SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(continued)
Newaccountingstandardsandinterpretations(continued)
Reference
AASB20119
Title
AmendmentstoAustralian
AccountingStandardsPresentation
ofItemsofOtherComprehensive
Income
[AASB1,5,7,101,112,120,121,
132,133,134,1039&1049]
Summary
Themainchangeresultingfromtheamendmentsrelatesto
theStatementofProfitorLossandOtherComprehensive
Incomeandtherequirementforentitiestogroupitems
presentedinothercomprehensiveincomeonthebasisof
whethertheyarepotentiallyreclassifiabletoprofitorloss
subsequently(reclassificationadjustments).The
amendmentsdonotremovetheoptiontopresentprofitor
lossandothercomprehensiveincomeintwostatements.
Application
dateof
standard
1July2012
ImpactonGroupfinancialreport
TheGrouphasnotyetdeterminedtheimpactofthe
amendments,ifany.
Application
datefor
Group
1July2012
Theamendmentsdonotchangetheoptiontopresentitems
ofOCIeitherbeforetaxornetoftax.However,iftheitems
arepresentedbeforetaxthenthetaxrelatedtoeachofthe
twogroupsofOCIitems(thosethatmightbereclassifiedto
profitorlossandthosethatwillnotbereclassified)mustbe
shownseparately.
54
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
2)
c)
SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(continued)
Basisofconsolidation
The consolidated financial statements comprise the financial statements of Integrated Legal
HoldingsLimitedanditssubsidiaries(asoutlinedinnote26(a))asat30Juneeachyear(theGroup).
SubsidiariesareallthoseentitiesoverwhichtheGrouphasthepowertogovernthefinancialand
operatingpoliciessoastoobtainbenefitsfromtheiractivities.Theexistenceandeffectofpotential
votingrightsthatarecurrentlyexercisableorconvertibleareconsideredwhenassessingwhethera
groupcontrolsanotherentity.
The financial statements of the subsidiaries are prepared for the same reporting period as the
parentcompany,usingconsistentaccountingpolicies.
In preparing the consolidated financial statements, all intercompany balances and transactions,
income and expenses and profit and losses resulting from intragroup transactions have been
eliminatedinfull.
Subsidiaries are fully consolidated from the date on which control is obtained by the Group and
ceasetobeconsolidatedfromthedateonwhichcontrolistransferredoutoftheGroup.
The acquisition of subsidiaries prior to 1 July 2009 is accounted for using the purchase method of
accounting. The purchase method of accounting involves allocating the cost of the business
combination to the fair value of the assets acquired and the liabilities and contingent liabilities
assumedatthedateofacquisition.
d) Businesscombinations
Business combinations are accounted for using the acquisition method. The consideration
transferredinabusinesscombinationshallbemeasuredatfairvalue,whichshallbecalculatedas
the sum of the acquisitiondate fair values of the assets transferred by the acquirer, the liabilities
incurredbytheacquirertoformerownersoftheacquireeandtheequityissuedbytheacquirer,and
the amount of any noncontrolling interest in the acquiree. For each business combination, the
acquirer measures the noncontrolling interest in the acquiree either at fair value or at the
proportionateshareoftheacquireesidentifiablenetassets.
Acquisitionrelatedcostsareexpensedasincurred,andincludedasadministrativeexpenses.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for
appropriate classification and designation in accordance with the contractual terms, economic
conditions, the Groups operating or accounting policies and other pertinent conditions as at the
acquisition date. This includes the separation of embedded derivatives in host contracts by the
acquiree.
If the business combination is achieved in stages, the acquisition date fair value of the acquirers
previously held equity interest in the acquiree is remeasured to fair value at the acquisition date
throughprofitorloss.
55
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
2) SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(continued)
d)Businesscombinations(continued)
Anycontingentconsiderationtobetransferredbytheacquirerwillberecognisedatfairvalueatthe
acquisition date. Subsequent changes to the fair value of the contingent consideration which is
deemedtobeanassetorliabilitywillberecognisedinaccordancewithAASB139eitherinprofitor
lossorasachangetoothercomprehensiveincome.Ifthecontingentconsiderationisclassifiedas
equity,itshouldnotberemeasureduntilitisfinallysettledwithinequity.
e) Operatingsegments
Anoperatingsegmentisacomponentofanentitythatengagesinbusinessactivitiesfromwhichit
may earn revenues and incur expenses (including revenues and expenses relating to transactions
withothercomponentsofthesameentity),whoseoperatingresultsareregularlyreviewedbythe
entitys chief operating decision maker to make decisions about resources to be allocated to the
segmentandassessitsperformanceandforwhichdiscretefinancialinformationisavailable.This
includesstartupoperationswhichareyettoearnrevenues.Managementwillalsoconsiderother
factorsindeterminingoperatingsegmentssuchastheexistenceofalinemanagerandthelevelof
segmentinformationpresentedtotheBoardofDirectors.
Operatingsegmentshavebeenidentifiedbasedontheinformationprovidedtothechiefoperating
decisionmakersbeingtheexecutivemanagementteam.
The Group aggregates two or more operating segments when they have similar economic
characteristics,andthesegmentsaresimilarineachofthefollowingrespects:
Natureoftheproductsandservices;
Natureoftheproductionprocesses;
Typeorclassofcustomerfortheproductsandservices;
Methodsusedtodistributetheproductsorprovidetheservices;and,ifapplicable
Natureoftheregulatoryenvironment.
Operating segments that meet the quantitative criteria as prescribed by AASB 8 are reported
separately. However, an operating segment that does not meet the quantitative criteria is still
reportedseparatelywhereinformationaboutthesegmentwouldbeusefultousersofthefinancial
statements.
Informationaboutotherbusinessactivitiesandoperatingsegmentsthatarebelowthequantitative
criteriaarecombinedanddisclosedinaseparatecategoryforallothersegments.
56
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
2) SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(continued)
f) Cashandcashequivalents
Cashandcashequivalentsinthestatementoffinancialpositioncomprisecashatbankandinhand
andshorttermdepositswithanoriginalmaturityofthreemonthsorlessthatarereadilyconvertible
toknownamountsofcashandwhicharesubjecttoaninsignificantriskofchangesinvalue.
Forthepurposesofthestatementofcashflows,cashandcashequivalentsconsistofcashandcash
equivalents as defined above, net of outstanding bank overdrafts. Bank overdrafts are included
within current interestbearing loans and borrowings in current liabilities on the statement of
financialposition.
g) Tradeandotherreceivables
Trade receivables are initially recognised at the original fee amount. An estimate is made for
doubtfuldebtswhencollectionofthefullamountisnolongerprobable.Baddebtsareincludedin
the statement of comprehensive income when identified. The Groups standard terms for
settlementfortradereceivablesare30to60days.
Collectabilityoftradereceivablesisreviewedonanongoingbasis.Individualdebtsthatareknown
to be uncollectible are written off when identified. An impairment allowance is recognised when
thereisobjectiveevidencethattheGroupwillnotbeabletocollectthedebt.
Financial difficulties of the debtor, default payments or debts more than 90 days overdue are
consideredobjectiveevidenceofimpairment.Theamountoftheimpairmentlossisthereceivable
carryingamountcomparedtothevalueofestimatedfuturecashflows.
Theabovepolicyappliestointercompanyreceivables.Intercompanyreceivablesarerepayableon
demand.
h) Workinprogress
Work in progress represents costs incurred and includes profit recognised to date on the value of
workcompletedonmattersthatareinprogressatreportingdate.Costsincludebothvariableand
fixedcostsdirectlyrelatedtomatters.
Workinprogressisvaluedatnetrealisablevalueafterprovidingforanyforeseeablelosses.
57
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
2) SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(continued)
i) Investmentsandotherfinancialassets
Investments and financial assets in the scope of AASB 139 Financial Instruments: Recognition and
Measurementarecategorisedaseitherfinancialassetsatfairvaluethroughprofitorloss,loansand
receivables, heldtomaturity investments, or availableforsale financial assets. The Group
determines the classification of its financial assets upon initial recognition and, when allowed and
appropriate,reevaluatesthisdesignationateachfinancialyearend.
When financial assets are recognised initially, they are measured at fair value, plus, in the case of
assetsnotatfairvaluethroughprofitorloss,directlyattributabletransactioncosts.
RecognitionandDerecognition
Allregularwaypurchasesandsalesoffinancialassetsarerecognisedonthetradedatei.e.thedate
thattheGroupcommitstopurchasetheasset.Regularwaypurchasesorsalesarepurchasesorsales
offinancialassetsundercontractsthatrequiredeliveryoftheassetswithintheperiodestablished
generallybyregulationorconventioninthemarketplace.Financialassetsarederecognisedwhen
the right to receive cash flows from the financial assets has expired or when the entity transfers
substantiallyalloftherisksandrewards,itderecognisestheassetifithastransferredcontrolofthe
assets.
Availableforsalesecurities
Availableforsaleinvestmentsarethosenonderivativefinancialassets,principallyequitysecurities
thataredesignatedasavailableforsaleorarenotclassifiedasfinancialassetsatfairvaluethrough
profit or loss, loans and receivables, or held to maturity investments. After initial recognition
availableforsalesecuritiesaremeasuredatfairvaluewithgainsorlossesbeingrecognisedasother
comprehensive income/loss until the investment is derecognised or until the investment is
determinedtobeimpaired,atwhichtimethecumulativegainorlosspreviouslyreportedasother
comprehensiveincomeisrecognisedinprofitorloss.
Thefairvaluesofinvestmentsthatareactivelytradedinorganisedfinancialmarketsaredetermined
byreferencetoquotedmarketbidpricesatthecloseofbusinessonthereportingdate.
LoansandReceivables
Loansandreceivablesarenonderivativefinancialassetswithfixedordeterminablepaymentsthat
are not quoted in an active market. Such assets are carried at amortised cost using the effective
interestmethod.Gainsandlossesarerecognisedinthestatementofcomprehensiveincomewhen
theloansandreceivablesarederecognisedorimpaired,aswellasthroughtheamortisationprocess.
58
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NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
2) SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(continued)
j) Plantandequipment
Plantandequipmentisstatedathistoricalcostlessaccumulateddepreciationandanyaccumulated
impairmentlosses.Suchcostincludestheacquisitioncostorcostofreplacingpartsthatareeligible
forcapitalisationwhenthecostofreplacingthepartisincurred.Allotherrepairsandmaintenance
arerecognisedinprofitorlossasincurred.
Depreciationratesusedforeachclassofassetsareasfollows:
Classoffixedasset
Plantandequipment
Leasedequipment
Useful
life
310years
Depreciation
rates
10.0033.33%
Termoflease
Depreciation
method
Straightline
Straightline
The assets residual values, useful lives and amortisation methods are reviewed, and adjusted if
appropriate,ateachreportingdate.
Derecognition
Anitemofplantandequipmentisderecognisedupondisposalorwhennofurtherfutureeconomic
benefitsareexpectedfromitsuseordisposal.
Anygainorlossarisingonderecognitionoftheasset(calculatedasthedifferencebetweenthenet
disposalproceedsandthecarryingamountoftheasset)isincludedinprofitorlossintheyearthe
assetisderecognised.
k) Leases
Groupasalessee
Finance leases, which transfer to the Group substantially all the risks and benefits incidental to
ownership of the leased item, are capitalised at the inception of the lease at the fair value of the
leasedassetor,iflower,atthepresentvalueoftheminimumleasepayments.Leasepaymentsare
apportioned between the finance charges and reduction of the lease liability so as to achieve a
constantrateofinterestontheremainingbalanceoftheliability.Financechargesarerecognisedas
anexpenseinprofitorloss.
Capitalisedleasedassetsaredepreciatedovertheshorteroftheestimatedusefullifeoftheasset
andtheleasetermifthereisnoreasonablecertaintythattheGroupwillobtainownershipbythe
endoftheleaseterm.
59
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
2) SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(continued)
k)Leases(continued)
Operatingleasepaymentsarerecognisedasanexpenseinthestatementofcomprehensiveincome
onastraightlinebasisovertheleaseterm.Operatingleaseincentivesarerecognisedasaliability
whenreceivedandsubsequentlyreducedbyallocatingleasepaymentsbetweenrentalexpenseand
reductionoftheliability.
l) Impairmentofnonfinancialassetsotherthangoodwill
Otherassetsaretestedforimpairmentwhenevereventsorchangesincircumstancesindicatethat
thecarryingamountmaynotberecoverable.
The Group conducts an annual internal review of asset values, which is used as a source of
information to assess for any indicators of impairment. External factors, such as changes in
expectedfutureprocessesandeconomicconditions,arealsomonitoredtoassessforindicatorsof
impairment.Ifanyindicationofimpairmentexists,anestimateoftheassetsrecoverableamountis
calculated.
Animpairmentlossisrecognisedfortheamountbywhichtheassetscarryingamountexceedsits
recoverableamount.Recoverableamountisthehigherofanassetsfairvaluelesscoststoselland
valueinuse.Forthepurposesofassessingimpairment,assetsaregroupedatthelowestlevelsfor
whichthereareseparatelyidentifiablecashinflowsthatarelargelyindependentofthecashinflows
from the other assets orgroups of assets (cash generating units). Nonfinancial assets other than
goodwill that suffered impairment are tested for possible reversal of the impairment whenever
eventsorchangesincircumstancesindicatethattheimpairmentmayhavereversed.
m) Goodwillandintangibles
i) Goodwill
Goodwillacquiredinabusinesscombinationisinitiallymeasuredatcostbeingtheexcessofthecost
of the business combination over the Groups interest in the net fair value of the acquiree's
identifiableassets,liabilitiesandcontingentliabilities.
Followinginitialrecognition,goodwillismeasuredatcostlessanyaccumulatedimpairmentlosses.
For the purpose of impairment testing, goodwill acquired in a business combination is, from the
acquisitiondate,allocatedtoeachoftheGroupscashgeneratingunits,orgroupsofcashgenerating
units,thatareexpectedtobenefitfromthesynergiesofthecombination,irrespectiveofwhether
other assets or liabilities of the Group are assigned to those units or groups of units. Each unit or
groupofunitstowhichthegoodwillissoallocated:
represents the lowest level within the Group at which the goodwill is monitored for internal
managementpurposes;and
is not larger than an operating segment determined in accordance with AASB 8 Operating
Segments.
60
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
2) SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(continued)
m)Goodwillandintangibles(continued)
Impairmentisdeterminedbyassessingtherecoverableamountofthecashgeneratingunit(groupof
cash generating units), to which the goodwill relates. When the recoverable amount of the cash
generatingunit(groupofcashgeneratingunits)islessthanthecarryingamount,animpairmentloss
isrecognised.Whengoodwillformspartofacashgeneratingunit(groupofcashgeneratingunits)
andanoperationwithinthatunitisdisposedof,thegoodwillassociatedwiththeoperationdisposed
ofisincludedinthecarryingamountoftheoperationwhendeterminingthegainorlossondisposal
oftheoperation.Goodwilldisposedofinthismannerismeasuredbasedontherelativevaluesof
theoperationdisposedofandtheportionofthecashgeneratingunitretained.
Impairmentlossesrecognisedforgoodwillarenotsubsequentlyreversed.
ii) Intangibles
Intangibleassetsacquiredseparatelyorinabusinesscombinationareinitiallymeasuredatcost.The
cost of an intangible asset acquired in a business combination is its fair value as at the date of
acquisition.Followinginitialrecognition,intangible assetsarecarriedat cost lessanyaccumulated
amortisationandanyaccumulatedimpairmentlosses.
The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets
withfinitelivesareamortisedovertheusefullifeandtestedforimpairmentwheneverthereisan
indicationthattheintangibleassetmaybeimpaired.Theamortisationperiodandtheamortisation
method for an intangible asset with a finite useful life are reviewed at least at each financial year
end.Changesintheexpectedusefullifeortheexpectedpatternofconsumptionoffutureeconomic
benefitsembodiedintheassetareaccountedforprospectivelybychangingtheamortisationperiod
ormethod,asappropriate,whichisachangeinaccountingestimate.Theamortisationexpenseon
intangible assets with finite lives is recognised in profit or loss in the expense category consistent
withthefunctionoftheintangibleasset.
Gains or losses arising from derecognition of an intangible asset are measured as the difference
betweenthenetdisposalproceedsandthecarryingamountoftheassetandarerecognisedinprofit
orlosswhentheassetisderecognised.
n) Tradeandotherpayables
Tradepayablesandotherpayablesarecarriedatamortisedcost.However,duetotheirshortterm
nature, they are not discounted. They represent liabilities for goods and services provided to the
Group prior to the end of the financial year that are unpaid and arise when the Group becomes
obliged to make future payments in respect of the purchase of these goods and services. The
amountsareunsecuredandareusuallypaidwithin30daysofrecognition.
61
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
2) SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(continued)
o) Interestbearingloansandborrowings
Allloansandborrowingsareinitiallyrecognisedatthefairvalueoftheconsiderationreceivedless
directlyattributabletransactioncosts.
After initial recognition, interestbearing loans and borrowings are subsequently measured at
amortisedcostusingtheeffectiveinterestmethod.Feespaidontheestablishmentofloanfacilities
thatareyieldrelatedareincludedaspartofthecarryingamountoftheloansandborrowings.
BorrowingsareclassifiedascurrentliabilitiesunlesstheGrouphasanunconditionalrighttodefer
settlementoftheliabilityforatleast12monthsafterthereportingdate.
p) Borrowingcosts
q) Provisions
ProvisionsarerecognisedwhentheGrouphasapresentobligation(legalorconstructive)asaresult
of a past event, it is probable that an outflow of resources embodying economic benefits will be
required to settle the obligation and a reliable estimate can be made of the amount of the
obligation.
When the Group expects some or all of a provision to be reimbursed, for example under an
insurance contract, the reimbursement is recognised as a separate asset but only when the
reimbursement is virtually certain. The expense relating to any provision is presented in the
statementofcomprehensiveincomenetofanyreimbursement.
Provisions are measured at the present value of management's best estimate of the expenditure
required to settle the present obligation at the reporting date. If the effect of the time value of
moneyismaterial,provisionsarediscountedusingacurrentpretaxratethatreflectsthetimevalue
of money and the risks specific to the liability. The increase in the provision resulting from the
passageoftimeisrecognisedinfinancecosts.
r) Employeebenefits
i) Wages,salaries,annualleaveandsickleave
Liabilitiesforwagesandsalaries,includingnonmonetarybenefitsandannualleaveexpectedtobe
settledwithin12monthsofthereportingdatearerecognisedinrespectofemployees'servicesup
tothereportingdate.Theyaremeasuredattheamountsexpectedtobepaidwhentheliabilitiesare
settled. Expenses for nonaccumulating sick leave are recognised when the leave is taken and are
measuredattheratespaidorpayable.
62
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
2) SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(continued)
r)Employeebenefits(continued)
ii) Longserviceleave
The liability for long service leave is recognised and measured as the present value of expected
futurepaymentstobemadeinrespectofservicesprovidedbyemployeesuptothereportingdate.
Consideration is given to expected future wage and salary levels, experience of employee
departures,andperiodsofservice.Expectedfuturepaymentsarediscountedusingmarketyieldsat
thereportingdateonnationalgovernmentbondswithtermstomaturityandcurrenciesthatmatch,
ascloselyaspossible,theestimatedfuturecashoutflows.
s) Sharebasedpaymenttransactions
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
DeferredEmployeeSharePlan(DESP),whichprovidesbenefitstokeyemployeesanddirectors
oftheGroup.
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.
At each subsequent reporting date until vesting, the cumulative charge to the statement of
comprehensiveincomeistheproductof:
Thegrantdatefairvalueoftheaward;
The current best estimate of the number of awards that will vest, taking into account such
factorsasthelikelihoodofemployeeturnoverduringthevestingperiodandthelikelihoodof
nonmarketperformanceconditionsbeingmet;and
Theexpiredportionofthevestingperiod.
63
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
2) SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(continued)
s)Sharebasedpaymenttransactions(continued)
Thechargetothestatementofcomprehensiveincomefortheperiodisthecumulativeamountas
calculated above less the amounts already charged in previous periods. There is a corresponding
entrytoequity.
EquitysettledawardsgrantedbyIntegratedLegalHoldingsLimitedtoemployeesofsubsidiariesare
recognised in the parents separate financial statements as an additional investment in the
subsidiarywithacorrespondingcredittoequity.Asaresult,theexpenserecognisedbyIntegrated
LegalHoldingsLimited inrelationtoequitysettledawardsonlyrepresentstheexpenseassociated
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
condition is considered to vest irrespective of whether or not that market condition is fulfilled,
providedthatallotherconditionsaresatisfied.
Ifthetermsofanequitysettledawardaremodified,asaminimumanexpenseisrecognisedasif
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 original
award,asdescribedinthepreviousparagraph.
t) Contributedequity
Ordinarysharesareclassifiedasequity.Incrementalcostsdirectlyattributabletotheissueofnew
sharesoroptionsareshowninequityasadeduction,netoftax,fromtheproceeds.
u) Revenuerecognition
Revenueisrecognisedandmeasuredatthefairvalueoftheconsiderationreceivedorreceivableto
theextentitisprobablethattheeconomicbenefitswillflowtotheGroupandtherevenuecanbe
reliably measured. The following specific recognition criteria must also be met before revenue is
recognised:
i) Renderingofservices
Revenuefromtheprovisionoflegalservicesisrecognisedonanaccrualbasisintheperiodinwhich
thelegalserviceisprovidedandiscalculatedwithreferencetotheprofessionalstaffhoursincurred
oneachmatter.
64
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
2) SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(continued)
u)Revenuerecognition(continued)
ii) Onlinelegalandnonlegaldocumentsandpublications
Revenuefromtheprovisionofonlinelegalandnonlegaldocumentsandpublicationsisrecognised
onanaccrualsbasisatthetimeofdeliveryofthedocumentstocustomers.
iii) Subscriptionincome
Revenue from memberships granting the subscriber access to the knowledge base of weekly legal
bulletins,onlinetools,calculatorsandservicesisrecognisedonastraightlinebasiswhichreflects
thetiming,natureandbenefitprovided.Allmembershipshaveasubscriptionperiodofeitherthree
ortwelvemonths.
iv) Interestrevenue
Revenueisrecognisedasinterestaccruesusingtheeffectiveinterestmethod.Thisisamethodof
calculating the amortised cost of a financial asset and allocating the interest revenue over the
relevantperiodusingtheeffectiveinterestrate,whichistheratethatexactlydiscountsestimated
futurecashreceiptsthroughtheexpectedlifeofthefinancialassettothenetcarryingamountofthe
financialasset.
v) Dividends
RevenueisrecognisedwhentheGroupsrighttoreceivethepaymentisestablished.
vi) Rentalrevenue
Rentalrevenuefrominvestment propertiesisaccountedforonastraightlinebasisoverthelease
term.Contingentrentalincomeisrecognisedasincomeintheperiodsinwhichitisearned.Lease
incentivesgrantedarerecognisedasanintegralpartofthetotalrentalincome.
v) Incomeandothertaxes
Current tax assets and liabilities for the current and prior periods are measured at the amount
expected to be recovered from or paid to the taxation authorities based on the current period's
taxableincome.Thetaxratesandtaxlawsusedtocomputetheamountarethosethatareenacted
orsubstantivelyenactedbythereportingdate.
Deferredincometaxisprovidedonalltemporarydifferencesatthereportingdatebetweenthetax
basesofassetsandliabilitiesandtheircarryingamountsforfinancialreportingpurposes.
65
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
2) SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(continued)
v)Incomeandothertaxes(continued)
Deferredincometaxliabilitiesarerecognisedforalltaxabletemporarydifferencesexcept:
when the deferred income tax liability arises from the initial recognition of goodwill or of an
assetorliabilityinatransactionthatisnotabusinesscombinationandthat,atthetimeofthe
transaction,affectsneithertheaccountingprofitnortaxableprofitorloss;or
Deferredincometaxassetsarerecognisedforalldeductibletemporarydifferences,carryforwardof
unusedtaxcreditsandunusedtaxlosses,totheextentthatitisprobablethattaxableprofitwillbe
availableagainstwhichthedeductibletemporarydifferencesandthecarryforwardofunusedtax
creditsandunusedtaxlossescanbeutilised,except:
whenthedeferredincometaxassetrelatingtothedeductibletemporarydifferencearisesfrom
theinitialrecognitionofanassetorliabilityinatransactionthatisnotabusinesscombination
and, at the time of the transaction, affects neither the accounting profit nor taxable profit or
loss;or
Thecarryingamountofdeferredincometaxassetsisreviewedateachreportingdateandreduced
totheextentthatitisnolongerprobablethatsufficienttaxableprofitwillbeavailabletoallowallor
partofthedeferredincometaxassettobeutilised.
Deferredincometaxassetsandliabilitiesaremeasuredatthetaxratesthatareexpectedtoapplyto
theyearwhentheassetisrealisedortheliabilityissettled,basedontaxrates(andtaxlaws)that
havebeenenactedorsubstantivelyenactedatthereportingdate.
Deferredtaxassetsanddeferredtaxliabilitiesareoffsetonlyifalegallyenforceablerightexiststo
setoffcurrenttaxassetsagainstcurrenttaxliabilitiesandthedeferredtaxassetsandliabilities
relatetothesametaxableentityandthesametaxationauthority.
Incometaxesrelatingtoitemsrecogniseddirectlyinequityarerecognisedinequityandnotinprofit
orloss.
66
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
2) SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(continued)
v)Incomeandothertaxes(continued)
i) Taxconsolidationlegislation
Integrated Legal Holdings Limited and its whollyowned Australian controlled entities have
implementedthetaxconsolidationlegislation.
Theheadentity,IntegratedLegalHoldingsLimitedandthecontrolledentitiesinthetaxconsolidated
groupcontinuetoaccountfortheirowncurrentanddeferredtaxamounts.TheGrouphasapplied
thegroupallocationapproachindeterminingtheappropriateamountofcurrenttaxesanddeferred
taxestoallocatetomembersofthetaxconsolidatedgroup.
In addition to its own current and deferred tax amounts, Integrated Legal Holdings Limited also
recognisesthecurrenttaxliabilities(orassets)andthedeferredtaxassetsarisingfromunusedtax
lossesandunusedtaxcreditsassumedfromcontrolledentitiesinthetaxconsolidatedgroup.
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are
recognisedasamountsreceivablefromorpayabletootherentitiesintheGroup.Detailsofthetax
fundingagreementaredisclosedinnote6).
Any difference between the amounts assumed and amounts receivable or payable under the tax
funding agreement are recognised as a contribution to (or distribution form) whollyowned tax
consolidatedentities.
ii) Othertaxes
Revenues,expensesandassetsarerecognisednetoftheamountofGSTexcept:
whentheGSTincurredonapurchaseofgoodsandservicesisnotrecoverablefromthetaxation
authority,inwhichcasetheGSTisrecognisedaspartofthecostofacquisitionoftheassetoras
partoftheexpenseitemasapplicable;and
receivablesandpayables,whicharestatedwiththeamountofGSTincluded.
ThenetamountofGSTrecoverablefrom,orpayableto,thetaxationauthorityisincludedaspartof
receivablesorpayablesinthestatementoffinancialposition.
CashflowsareincludedinthestatementofcashflowsonagrossbasisandtheGSTcomponentof
cashflowsarisingfrominvestingandfinancingactivities,whichisrecoverablefrom,orpayableto,
thetaxationauthorityisclassifiedaspartofoperatingcashflows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or
payableto,thetaxationauthority.
67
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
2) SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(continued)
w) Earningspershare
Basicearningspershareiscalculatedasnetprofitattributabletomembersoftheparent,adjusted
to exclude any costs of servicing equity (other than dividends), divided by the weighted average
numberofordinaryshares,adjustedforanybonuselement.
Diluted earnings per share is calculated as net profit attributable to members of the company,
adjusted for costs of servicing equity (other than dividends) divided by the weighted average
numberofordinarysharesanddilutivepotentialordinaryshares,adjustedforanybonuselement.
68
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
3) FINANCIALRISKMANAGEMENTOBJECTIVESANDPOLICIES
The Groups principal financial instruments comprise receivables, payables, bank loans and
overdrafts,financeleasesandcash.
TheGroupmanagesitsexposuretokeyfinancialrisks,includinginterestrateriskinaccordancewith
theGroupsfinancialriskmanagementpolicy.Theobjectiveofthepolicyistosupportthedelivery
oftheGroupsfinancialtargetswhilstprotectingfuturefinancialsecurity.
The main risks arising from the Groups financial instruments are interest rate risk, credit risk and
liquidityrisk.TheGroupusesdifferentmethodstomeasureandmanagedifferenttypesofrisksto
which it is exposed. These include monitoring levels of exposure to interest rate risk and
assessmentsofmarketforecastsforinterestrates.Ageinganalysesandmonitoringofspecificcredit
allowances are undertaken to manage credit risk, and liquidity risk is monitored through the
developmentoffuturerollingcashflowforecasts.
TheBoardreviewsandagreespoliciesformanagingeachoftheserisksassummarisedbelow.
RiskExposuresandResponses
Interestraterisk
TheGroupsexposuretomarketinterestratesrelatesprimarilytotheGroupscashandshortand
longtermdebtobligations,withafloatinginterestrate.Thelevelofdebtisdisclosedinnote19).
At reporting date, the Group had the following mix of financial assets and liabilities exposed to
Australianvariableinterestraterisk:
Financialassets
Cashandcashequivalents
Financialliabilities
Bankoverdrafts
Bankloans(note33)
NETEXPOSURE
CONSOLIDATED
2011
2010
$
$
2,460,760
2,151,449
(25,145)
(202,500)
(1,950,000)
(950,000)
(1,975,145)
(1,152,500)
485,615
998,949
TheGroupregularlyanalysesitsinterestrateexposuretoensurethatthebestreturnsareachieved
while balancing the long term and short term cash flow requirements for the Groups business
strategies. Within this analysis, consideration is given to the Groups future cash requirements,
alternativecashdepositinganddebtfundingfacilitiesandthemixoffixedandvariableinterestrates
onbankbalances.TheBoardofDirectorsoverseethemanagementofcashfundsbymanagement
andinvestmentopportunitiesthroughtheacquisitionoflawfirms.
The following sensitivity analysis is based on the interest rate risk exposures in existence at the
reportingdate.
69
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
3) FINANCIALRISKMANAGEMENTOBJECTIVESANDPOLICIES(continued)
At30June2011and30June2010,ifinterestrateshadmoved,asillustratedinthetablebelow,with
allothervariablesheldconstant,posttaxprofitandothercomprehensiveincomewouldhavebeen
affectedasfollows:
Judgementsofreasonablypossible
movements:
Consolidated
+0.5%(2010:+0.5%)
0.25%(2010:0.25%)
PostTaxProfit
Higher/(Lower)
2011
2010
$
$
4,281
645
(2,140)
(323)
OtherComprehensiveIncome
Higher/(Lower)
2011
2010
$
$
The movements in profit are due to higher/lower interest costs from variable rate debt and cash
balances. The sensitivity is higher in 2011 due to a higher exposure to interest rate risk from
increasedborrowings.
Managementconsiders+50basispointsand25basispointsasreasonablypossiblemovementfor
thenexttwelvemonthsbasedonmanagementsexpectationsoffutureinterestratemovements.
Creditrisk
CreditriskarisesfromthefinancialassetsoftheGroup,whichcomprisecashandcashequivalents,
tradeandotherreceivablesandworkinprogress.TheGroupsexposuretocreditriskarisesfrom
potentialdefaultofthecounterparty,withamaximumexposureequaltothecarryingamountof
theseinstruments.Exposureatreportingdateisaddressedineachapplicablenote.
TheGroupdoesnotholdanycreditderivativestooffsetitscreditexposure.
The Group manages its credit risk by trading with recognised, trustworthy third parties. In some
instancessecurityovertradereceivableshasbeenrequestedfromspecificclients(eg.moniesheldin
trust,securityoverpropertyorbankguarantee),usuallydependentonthetypeoflegalworkbeing
undertaken, as an added measure to guarantee payment in the event of an unsuccessful legal
outcomeoraprotractedmatter.
It is the Groups policy that all clients who wish to trade on credit terms are subject to credit
verificationproceduresincludinganassessmentoftheirindependentcreditrating,financialposition
andpastexperienceonacasebycasebasis.
Inaddition,receivablebalancesaremonitoredonanongoingbasiswiththeresultthattheGroups
exposuretobaddebtsisnotsignificant.
There are no significant concentrations of credit risk within the Group and financial instruments
includingcashandcashequivalentsarespreadbetweenreputablefinancialinstitutionstominimise
theriskofdefaultofcounterparties.
AnanalysisoftheGroupstradereceivablesisincludedinnote12.
70
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
3) FINANCIALRISKMANAGEMENTOBJECTIVESANDPOLICIES(continued)
Liquidityrisk
TheGroupsobjectiveistomaintainadequateliquiditytomeettheoperatingrequirementsofthe
businessandtofacilitatetheGroupsongoingacquisitionplans.
The table below reflects all contractually fixed amounts for settlement, repayments and interest
resultingfromrecognisedfinancialliabilities.Undiscountedcashflowsfortherespectiveupcoming
fiscal years are presented. Cash flows for financial liabilities without fixed amount or timing are
basedontheconditionsexistingat30June2011.
TheremainingcontractualmaturitiesoftheGroupsfinancialliabilitiesare:
CONSOLIDATED
30June2011
Tradeandotherpayables
Financeleases/HPagreements(gross)
Insurancepremiumfundingfacilities
Bankloans(secured)refernote33
Interestexpensebankloans
Rentguarantees
Total
30June2010
Tradeandotherpayables
Financeleases/HPagreements(gross)
Insurancepremiumfundingfacilities
Bankloans(secured)refernote33
Interestexpensebankloans
Rentguarantees
Total
At
Call
$
6
months
$
3,813,598
106,590
260,382
1,950,000
33,962
6,164,532
3,317,157
106,331
236,113
950,000
14,433
4,624,035
612
months
$
92,034
125,862
217,896
105,807
7,901
113,707
15
years
$
37,554
146,887
592,721
777,162
75,107
268,186
592,721
936,014
Total
$
3,851,152
345,511
386,244
1,950,000
33,962
592,721
7,159,590
3,392,264
480,324
244,014
950,000
14,433
592,721
5,673,756
Liquidity risk is managed on the basis of the businesses needs and is overseen by senior
management.TheGroupmakesuseofdailyandmonthlycashflowanalysistoconsidertheGroups
overall liquidity risk and to monitor existing financial liabilities as well as effective controlling of
futurerisks.
71
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
4) SIGNIFICANTACCOUNTINGJUDGEMENTS,ESTIMATESANDASSUMPTIONS
The preparation of the financial statements requires management to make judgements, estimates
and assumptions that affect the reported amounts in the financial statements. Management
continually evaluates its judgements and estimates in relation to assets, liabilities, contingent
liabilities, revenue and expenses. Management bases its judgements and estimates on historical
experienceandonother variousfactorsitbelievestobereasonableunder the circumstances,the
result of which forms the basis of the carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results may differ from these estimates under different
assumptionsandconditions.
Management has identified the following critical accounting policies for which significant
judgements,estimatesandassumptionsaremade.Actualresultsmaydifferfromtheseestimates
under different assumptions and conditions and may materially affect financial results or the
financialpositionreportedinfutureperiods.
Further details of the nature of these assumptions and conditions may be found in the relevant
notestothefinancialstatements.
i) Significantaccountingestimatesandassumptions
Impairmentofgoodwill
The Group determines whether goodwill is impaired at least on an annual basis. This requires an
estimation of the recoverable amount of the cash generating units, using a value in use or fair
valuelesscoststoselldiscountedcashflowmethodology,towhichthegoodwillisallocated.No
impairment loss (2010: nil) was recognised in the current year. The assumptions used in the
estimation of recoverable amount and the carrying amount of goodwill including a sensitivity
analysisarediscussedinnote15.
Sharebasedpaymenttransactions
TheGroupmeasuresthecostofequitysettledtransactionswithemployeesbyreferencetothefair
valueoftheequityinstrumentsatthedateatwhichtheyaregranted.Thefairvalueisdetermined
basedonthemarketpriceofanIntegratedLegalHoldingsLimitedshareatthegrantdate.
72
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
5) SEGMENTINFORMATION
TheGrouphasidentifieditsoperatingsegmentsbasedontheinternalmanagementreportingthatis
used by the executive management team (the chief operating decision maker) in assessing
performanceandallocatingresources.IntegratedLegalHoldingsLimitedsoperatingsegmentshave
been identified based on how the financial and operating results of the Group are monitored and
presentedinternallytotheexecutivemanagementteam.
TheGroupsreportablesegmentsareidentifiedbymanagementbasedonthenatureofthebusiness
andthesimilaritiesofservicesprovided,methodofdeliveryandtypeofclientsastheGroupsrisks
andreturnsareaffectedpredominantlybydifferencesinlegalproductsandservicesperformed.
Theoperatingbusinessesareorganisedandmanagedseparatelyaccordingtothenatureofthelegal
productsandservicesprovided,witheachsegmentrepresentingastrategicbusinessunitthatoffers
differentlegalproductsandservesdifferentmarkets.
Thefollowingreportablesegmentshavebeenidentifiedbymanagement:
LegalServicesDivision
OperatoroflegalpracticesthroughoutAustralia.
InformationTechnologyDivision
Provides an internet portal designed to provide easy access to a range of legal and other
documentstothelegalprofessionandpublicalikeandinformationaboutvariousareasoflaw.
Intersegmentsales
Intersegmentsalesarerecognisedatcostwithnomarginbuiltintotheintersegmenttransactions,
andaimstoencourageintersegmentworkreferrals.
Unallocatedrevenueandassets
Corporateitemsarenotallocatedtooperatingsegmentsastheyarenotconsideredpartofthecore
operationsofanysegments.
73
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
5)SEGMENTINFORMATION(continued)
The following tables present revenue and profit information for operating segments for the years
ended30June2011and30June2010.
Yearended30June2011
Revenue
Professionalfees
Interestrevenue
Otherrevenue:
Advertisingrevenue
Sundryrevenue
Totalsegmentrevenue
Unallocatedrevenue:
Interestreceived
Dividendsreceived
Totalunallocatedrevenue
Intersegmentelimination
Totalrevenueperstatementofcomprehensive
income
Result
Segmentprofit
Unallocateditems:
Interestrevenue
Salariesandemployeebenefitsexpenses
Administrativeexpenses
Otherunallocateditems
Totalunallocateditems
Profitbeforetaxandfinancecosts
Financecosts
Profitbeforeincometax
Incometaxexpense
Netprofitafterincometax
Legal
Services
$
27,448,512
79,112
7,960
27,535,584
3,471,878
Information
Technology
$
864,613
2
1,250
865,865
345,444
Total
$
28,313,125
79,114
1,250
7,960
28,401,449
73,901
126
74,027
28,475,476
3,817,322
73,901
(1,044,323)
(662,617)
(127,519)
(1,760,558)
2,056,764
(143,193)
1,913,571
(626,901)
1,286,670
74
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
5)SEGMENTINFORMATION(continued)
Yearended30June2010
Revenue
Professionalfees
Interestrevenue
Otherrevenue:
Advertisingrevenue
Sundryrevenue
Totalsegmentrevenue
Unallocatedrevenue:
Interestreceived
Dividendsreceived
Totalunallocatedrevenue
Intersegmentelimination
Totalrevenueperstatementofcomprehensive
income
Result
Segmentprofit
Unallocateditems:
Interestrevenue
Salariesandemployeebenefitsexpenses
Administrativeexpenses
Otherunallocateditems
Totalunallocateditems
Profitbeforetaxandfinancecosts
Financecosts
Profitbeforeincometax
Incometaxexpense
Netprofitafterincometax
Legal
Services
$
22,980,838
11,890
3,699
22,996,427
2,427,771
Information
Technology
$
841,838
7,372
1,975
851,185
290,200
Total
$
23,822,676
11,890
7,372
5,674
23,847,612
27,285
91
27,376
23,874,988
2,717,971
27,285
(860,664)
(407,209)
(84,518)
(1,325,106)
1,392,865
(160,597)
1,232,268
(378,774)
853,494
75
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
5)SEGMENTINFORMATION(continued)
Totalassetshaveincreasedby18%(2010:19%)sincethelastannualreport.Segmentassetsforthe
yearsended30June2011and30June2010areasfollows:
Asat30June2011
Segmentassets
Segmentoperatingassets
Unallocatedassets:
Cashandcashequivalents
Deferredtaxassets
Prepayments
Availableforsalefinancialassets
Plantandequipment
Incometaxreceivable
Totalunallocatedassets
Intersegmenteliminations
Totalassetsperstatementoffinancialposition
Legal
Services
$
Information
Technology
$
Total
$
23,247,332
2,149,281
25,396,613
2,218,461
118,855
11,173
3,435
4,003
12,782
2,368,709
(847,087)
26,918,235
Asat30June2010
Segmentassets
Segmentoperatingassets
Unallocatedassets:
Cashandcashequivalents
Deferredtaxassets
Prepayments
Availableforsalefinancialassets
Plantandequipment
Totalunallocatedassets
Intersegmenteliminations
Totalassetsperstatementoffinancialposition
Legal
Services
$
18,476,679
Information
Technology
$
2,157,378
Total
$
20,634,057
2,134,217
214,582
42,523
2,642
3,735
2,397,699
(137,868)
22,893,888
76
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
5)SEGMENTINFORMATION(continued)
Segmentliabilitiesfortheyearsended30June2011and30June2010areasfollows:
Asat30June2011
Segmentliabilities
Segmentoperatingliabilities
Unallocatedliabilities:
Tradeandotherpayables
Interestbearingloansandborrowings
Provisions
Totalunallocatedliabilities
Intersegmenteliminations
Totalliabilitiesperstatementoffinancialposition
Legal
Services
$
Information
Technology
$
20,947,948
Total
$
154,868
21,102,816
451,929
2,030,031
23,302
2,505,262
(14,702,506)
8,905,572
Asat30June2010
Segmentliabilities
Segmentoperatingliabilities
Unallocatedliabilities:
Tradeandotherpayables
Interestbearingloansandborrowings
Incometaxpayable
Provisions
Totalunallocatedliabilities
Intersegmenteliminations
Totalliabilitiesperstatementoffinancialposition
Legal
Services
$
Information
Technology
$
Total
$
16,806,395
137,679
16,944,074
131,386
1,921,081
177,524
10,964
2,240,955
(12,489,055)
6,695,974
77
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
6) PARENTENTITYINFORMATION
a) InformationrelatingtoIntegratedLegalHoldingsLimited:
Currentassets
Totalassets
Currentliabilities
Totalliabilities
Issuedcapital
Accumulatedlosses
Generalreserve
Accumulatedlossesonavailableforsaleassets
Totalshareholdersequity
Profitoftheparententity
Totalcomprehensiveincomeoftheparententity
2011
$
2,242,416
19,674,783
2,496,662
3,535,540
33,397,152
(18,800,008)
1,542,748
(649)
16,139,243
1,286,670
1,287,462
2010
$
2,187,052
16,575,762
1,281,884
2,251,267
32,160,426
(18,561,603)
727,113
(1,441)
14,324,495
832,598
832,710
b) Guaranteesenteredintobytheparententityinrelationtothedebtsofitssubsidiaries
Theparententityhasissuedguaranteesinrelationtothedebtsofitssubsidiaries.Refertonote31
forfurtherdetailsoftheguarantees.
i) Membersofthetaxconsolidatedgroupandthetaxsharingarrangement
Integrated Legal Holdings Limited and its subsidiaries have formed a tax consolidated Group.
IntegratedLegalHoldingsLimitedistheheadentityofthetaxconsolidatedGroup.Membersofthe
Group have entered into a tax funding agreement that provides for the allocation of income tax
liabilities between the entities should the head entity default on its tax payment obligations. No
amountshavebeenrecognisedinthefinancialstatementsinrespectofthisagreementonthebasis
thatthepossibilityofdefaultisremote.
ii) Taxeffectaccountingbymembersofthetaxconsolidatedgroup
MeasurementmethodadoptedunderUIG1052TaxConsolidationAccounting
The head entity and the controlled entities in the tax consolidated Group continue to account for
theirowncurrentanddeferredtaxamounts.TheGrouphasappliedthegroupallocationapproach
indeterminingtheappropriateamountofcurrenttaxesanddeferredtaxestoallocatetomembers
of the tax consolidated Group. The current and deferred tax amounts of the members of the
consolidatedGrouparerecognisedbytheCompany(asheadentityinthetaxconsolidatedGroup).
78
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
6)PARENTENTITYINFORMATION(continued)
Natureofthetaxfundingagreement
MembersofthetaxconsolidatedGrouphaveenteredintoataxfundingagreement.Amountsare
recognisedaspayable to orreceivableby theCompanyandeachmemberofthetaxconsolidated
Groupinrelationtothetaxcontributionamountspaidorpayablebetweentheparententityandthe
other members of the tax consolidated Group in accordance with this agreement. Where the tax
contribution amount recognised by each member of the tax consolidated Group for a particular
period is different to the aggregate of the current tax liability or asset and any deferred tax asset
arisingfromunusedtaxlossesandtaxcreditsinrespectofthatperiod,thedistributionisrecognised
asacontributionfrom(ordistributedto)equityparticipants.
Taxconsolidationcontributions/(distributions)
Integrated Legal Holdings Limited has recognised the following amounts as taxconsolidation
contributionadjustments.
PARENT
2011
$
2010
$
TotalincreasetotaxpayableofIntegratedLegalHoldingsLimited
1,153,115
902,133
TotalincreasetointercompanyassetsofIntegratedLegalHoldingsLimited
1,153,115
902,133
79
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
7) REVENUEANDEXPENSES
a)
CONSOLIDATED
2011
2010
$
$
9,210
13,046
9,210
13,046
17,119,151
1,460,495
18,579,646
14,848,185
1,301,645
16,149,830
371,633
5,568
35,640
412,841
305,209
2,910
35,640
343,759
Otherexpenses
Authorroyaltyfees
Consultingfees
Badanddoubtfuldebts
Bankfees
Otherexpenses
84,032
119,503
930,772
202,143
14,817
1,351,267
81,773
242,591
274,365
137,687
5,759
742,175
Financecosts
Interestexternalentities
Interestaccretion
128,718
14,475
143,193
146,458
14,139
160,597
Otherrevenue
Sundryincome
b)
Salariesandemployeebenefitsexpense
Salariesandwagesexpense
Superannuationexpense
c)
Depreciationandamortisationexpenses
Depreciationofplantandequipment
Amortisationof:
Equipmentunderfinancelease
Intangibleassets
d)
e)
80
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
8) INCOMETAX
a)
Incometaxexpense
Themajorcomponentsofincometaxexpenseare:
Statementofcomprehensiveincome
Currentincometax
Currentincometaxcharge
Adjustmentinrespectofcurrentincometaxofpreviousyears
Deferredincometax
Relatingtooriginationandreversaloftemporarydifferences
Adjustmentinrespectofdeferredincometaxofpreviousyears
Incometaxexpensereportedinthestatementofcomprehensiveincome
CONSOLIDATED
2011
2010
$
$
403,836
364,220
(41,696)
(383,022)
246,903
(9,237)
17,858
406,813
626,901
378,774
b)
c)
Amountschargedorcrediteddirectlytoequity
Deferredincometaxrelatedtoitemscharged/(credited)directlytoequity
Capitalraisingcosts
Numericalreconciliationbetweenaggregatetaxexpenserecognisedin
thestatementofcomprehensiveincomeandtaxexpensecalculatedper
thestatutoryincometaxrate
Areconciliationbetweentaxexpenseandtheproductofaccountingprofit
beforeincometaxmultipliedbytheGroupsapplicableincometaxrateisas
follows:
Accountingprofitbeforeincometax
Totalaccountingprofitbeforeincometax
AttheParentEntitysstatutoryincometaxrateof30%(2010:30%)
Adjustmentsinrespectofincometaxofpreviousyears
Entertainment
Interestaccretion
Sharebasedpaymentsexpense
Investmentallowance
Borrowingcosts
Other
Aggregateincometaxexpense
(5,217)
(5,217)
(34,518)
(34,518)
1,913,571
1,913,571
1,232,448
1,232,268
574,071
(23,838)
35,893
767
12,425
16
27,567
626,901
369,680
23,791
21,251
4,242
5,773
(43,656)
(2,307)
378,774
81
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
8) INCOMETAX(continued)
CONSOLIDATED
Recogniseddeferredtaxassetsandliabilities
Openingbalance
Acquisitions
(Charged)/creditedtoincome
Chargedtoequity
Otherpayments/(receipts)
Closingbalance
d)
2011
2011
2010
2010
$
Current
Income
Tax
$
Current
Income
Tax
Deferred
IncomeTax
Deferred
IncomeTax
(177,524)
101,089
(157,011)
464,147
21,417
(362,140)
(264,761)
18,802
5,217
(397,576)
34,518
552,446
(39,315)
12,782
(137,038)
(177,524)
101,089
626,901
378,774
817,092
628,799
(954,130)
(527,710)
(137,038)
101,089
Taxexpense/(benefit)instatementof
comprehensiveincome
Amountsrecognisedinthestatementof
financialposition:
Deferredtaxassets
Deferredtaxliabilities
Deferredtaxliabilities(net)
Deferredincometaxasat30June2011relatestothefollowing:
CONSOLIDATED
i) Deferredtaxassets
Employeeprovisions:
Annualleave
Longserviceleave
Doubtfuldebts
Prepayments
Amortisationintangibleassets
Leaseliabilities
Accruedauditfees
Unpaidsuperannuation
Leaseincentive
Capitalraisingcosts
Grossdeferredtaxassets
Setoffofdeferredtaxliabilities
Deferredtaxassets(net)
ii)
Deferredtaxliabilities
Workinprogress
Plantandequipment
Deferredconsiderationprovisions
Identifiedintangibleatacquisition
Leasedassets
Prepayments
Grossdeferredtaxliabilities
Setoffofdeferredtaxassets
Deferredtaxliabilities(net)
STATEMENTOF
FINANCIALPOSITION
2011
2010
$
$
242,582
162,451
145,224
102,871
125,909
39,902
3,783
40,066
1,218
27,030
70,737
76,347
5,857
74,873
63,029
85,061
178,951
817,092
628,799
(817,092)
(749,766)
(1,088)
(23,324)
(48,976)
(130,976)
(954,130)
(527,710)
101,089
(406,006)
(1,088)
(19,604)
(1,670)
(99,342)
(527,710)
817,092
(137,038)
527,710
At30June2011,therearenounrecognisedtemporarydifferencesandtaxlossesfromprioryears.
82
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
9)
a)
DIVIDENDSDECLARED
Unrecognisedamounts
CONSOLIDATED
2011
$
Dividendsonordinarysharesfinalfrankeddividendfor2011:
0.6centspershare(2010:0.5centspershare)
2010
$
582,986
432,423
b)
PARENT
Frankingcreditbalance
Theamountoffrankingcreditsavailableforthesubsequentfinancialyearare:
Frankingaccountbalanceasattheendofthefinancialyearat30%(2010:30%)
Netfrankingcreditsthatwillarisefromthepayment/(receipt)ofincometax
payable/(receivable)asattheendofthefinancialyear
Theamountoffrankingcreditsavailableforfuturereportingperiods
Impactonthefrankingaccountofdividendsproposedordeclaredbeforethe
financialreportwasauthorisedforissuedbutnotrecognisedasadistributionto
equityholdersduringtheperiod
2011
$
2010
$
835,889
590,224
(12,782)
823,107
177,524
767,748
(249,851)
573,256
(185,324)
582,424
c) Taxrates
Thetaxrateatwhichpaiddividendshavebeenfrankedis30%(2010:30%).
Dividendsproposedwillbefrankedattherateof30%(2010:30%).
83
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
10) EARNINGSPERSHARE
Thefollowingreflectstheincomeusedinthebasicanddilutedearningspersharecomputations:
a)
Earningsusedincalculatingearningspershare
Forbasicanddilutedearningspershare:
Netprofitattributabletoordinaryequityholdersoftheparent
b)
Weightedaveragenumberofshares
Weightedaveragenumberofordinarysharesforbasicanddilutedearningspershare
CONSOLIDATED
2011
2010
$
$
1,286,670
853,494
2011
2010
No.
No.
91,303,476
72,253,529
No instruments (eg. share options) existed at reporting date which could potentially dilute basic
earningspershareineitheroftheperiodspresented.
Therehavebeennotransactionsinvolvingordinarysharesorpotentialordinarysharesthatwould
significantly change the number of ordinary shares or potential ordinary shares outstanding
betweenthereportingdateandthedateofcompletionofthesefinancialstatements.
11) CASHANDCASHEQUIVALENTS
Cashatbankandinhand
CONSOLIDATED
2011
2010
$
$
2,460,760
2,151,449
Cashatbankearnsinterestatfloatingratesbasedondailybankdepositrates.Thecarryingamounts
ofcashandcashequivalentsapproximatesfairvalue.
Reconciliationtostatementofcashflows
Forthepurposesofthestatementofcashflows,cashandcashequivalents
comprisethefollowingat30June:
Cashatbankandinhand
Shorttermdeposits
Bankoverdrafts(note19)
CONSOLIDATED
2011
2010
$
$
1,532,538
928,222
(25,145)
2,435,615
2,151,449
(202,500)
1,948,949
84
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
12) TRADEANDOTHERRECEIVABLES
Tradereceivables
Allowancefordoubtfuldebts(a)
Unbilledclientdisbursements
Prepayments
Otherreceivables
Carryingamountoftradeandotherreceivables
CONSOLIDATED
2011
2010
$
$
7,042,390
6,854,442
(419,696)
(133,006)
6,622,694
6,721,436
235,537
190,847
942,059
589,361
26,583
37,226
7,826,873
7,538,870
a) Allowancefordoubtfuldebts
Tradereceivablesarenoninterestbearingandaregenerallyon3060dayterms.Anallowancefor
doubtfuldebtsisrecognisedwhenthereisobjectiveevidencethatanindividualtradereceivableis
impaired.Badanddoubtfuldebtsof$930,772(2010:$274,365)hasbeenrecognisedbytheGroup
in the current year which includes bad debts expense recognised of $644,082 (2010: $246,197).
Theseamountshavebeenincludedinotherexpenses.
Movementsintheallowanceforimpairmentlosswereasfollows:
Openingbalanceatthebeginningoftheyear
Chargefortheyear
Closingbalanceattheendoftheyear
CONSOLIDATED
2011
2010
$
$
133,006
104,839
286,690
28,167
419,696
133,006
Asat30June2011,theaginganalysisoftradereceivablesisasfollows:
Total
030
days
3160
days
6190
Days
PDNI*
6190
Days
CI*
+91
Days
PDNI*
+91
Days
CI*
2011
Consolidated
7,042,390
2,555,282 1,215,725
653,561
2,198,126
419,696
2010
Consolidated
6,854,442
3,424,020
399,106
1,965,525
133,006
*PDNIpastduenotimpaired
932,785
CIconsideredimpaired
Receivables past due but not considered impaired are $2,851,687 (2010: $2,364,361). Each
operatingunithasbeenindirectcontactwiththerelevantdebtorandissatisfiedthatpaymentwill
bereceivedinfull.
Otherbalanceswithintradeandotherreceivablesdonotcontainimpairedassetsandarenotpast
due.Itisexpectedthattheseotherbalanceswillbereceivedwhendue.
Unbilled client disbursements are incurred only where sufficient assets are in trust or subject to
recovery.Assuch,noimpairmentissuesarenoted.
85
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
12)TRADEANDOTHERRECEIVABLES(continued)
b) Fairvalueandcreditrisk
Duetotheshorttermnatureofthesereceivables,theircarryingvalueisassumedtoapproximate
theirfairvalue.
Themaximumexposuretocreditriskisthecarryingvalueofreceivables.
13) WORKINPROGRESS
Workinprogress
CONSOLIDATED
2011
2010
$
$
2,499,220
1,353,354
Allowanceforrecoverableamount
Workinprogressisvaluedatitsnetrealisablevalueafterprovidingforanyforeseeablelossesthat
havebeencalculatedusinghistoricaldata.
14) PLANTANDEQUIPMENT
Reconciliationofcarryingamountsatthebeginningandendoftheperiod
Plantand
equipment
$
CONSOLIDATED
Leased
equipment
$
Yearended30June2011
Balanceasat1July2010netofaccumulateddepreciation
Additions
Acquisitionofsubsidiary
Depreciationchargefortheyear
Balanceasat30June2011netofaccumulateddepreciation
Total
$
1,175,746
209,596
156,585
(371,633)
1,170,294
5,568
(5,568)
1,181,314
209,596
156,585
(377,201)
1,170,294
Asat30June2011
Cost
Accumulateddepreciation
Netcarryingamount
2,075,802
(905,508)
1,170,294
10,907
(10,907)
2,086,709
(916,415)
1,170,294
86
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
14)PLANTANDEQUIPMENT(continued)
Plantand
equipment
$
CONSOLIDATED
Leased
equipment
$
Yearended30June2010
Balanceasat1July2009netofaccumulateddepreciation
Additions
Disposals
Depreciationchargefortheyear
Balanceasat30June2010netofaccumulateddepreciation
Total
$
682,882
807,265
(9,192)
(305,209)
1,175,746
8,478
(2,910)
5,568
691,360
807,265
(9,192)
(308,119)
1,181,314
Asat30June2010
Cost
Accumulateddepreciation
Netcarryingamount
1,709,621
(533,875)
1,175,746
10,907
(5,339)
5,568
1,720,528
(539,214)
1,181,314
15) GOODWILL
a) Reconciliationofcarryingamountsatthebeginningandendoftheperiod
Yearended30June
Balanceasat1Julynetofaccumulatedimpairment
Acquisitionofsubsidiary(note29)
Other(1)
Deferredconsiderationachieved
Balanceasat30Junenetofaccumulatedimpairment
CONSOLIDATED
2011
2010
$
$
10,470,600
10,372,263
2,417,757
12,200
98,337
12,900,557
10,470,600
Asat30June
Cost(grosscarryingamount)
Accumulatedimpairment
Netcarryingamount
13,566,383
(665,826)
12,900,557
11,136,426
(665,826)
10,470,600
(1)RelatestotheacquisitionofTheArgylePartnership.
b) DescriptionoftheGroupsgoodwill
After initial recognition, goodwill acquired in a business combination is measured at cost less any
accumulatedimpairmentlosses.Goodwillisnotamortisedbutissubjecttoimpairmenttestingon
anannualbasisorwheneverthereisanindicationofimpairment(refertosection(c)ofthisnote).
87
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
15)GOODWILL(continued)
c) Impairmenttestsforgoodwillwithindefiniteusefullives
(i)Descriptionofthecashgeneratingunitsandotherrelevantinformation
Goodwill acquired through business combinations has been allocated to four individual cash
generatingunitsforimpairmenttestingasfollows:
TalbotOliviercashgeneratingunit(legalservicesreportablesegmentrefernote5);
CivicLegalcashgeneratingunit(legalservicesreportablesegmentrefernote5);
LawCentralcashgeneratingunit (informationtechnologyreportablesegmentrefernote
5);and
ArgyleLawyerscashgeneratingunit(legalservicesreportablesegmentrefernote5).
Therecoverableamountsofthecashgeneratingunits,excludingLawCentral,havebeendetermined
based on a value in use calculation using cash flow projections as at 30 June that is based on a
discountedcashflowmethodologyapprovedbytheBoardcoveringafiveyearperiod.
TherecoverableamountoftheLawCentralcashgeneratingunithasbeendeterminedbasedonthe
fairvaluelesscoststosellcalculationusingcashflowprojectionsasat30June2011thatisbasedon
financial budgets approved by the Board covering a fiveyear period. This method calculates the
bestestimatethatanindependentthirdpartywouldpaytopurchasethecashgeneratingunitless
applicablesellingcostsatthereportingdate.Thevaluationisbasedoncashflowprojectionsusing
assumptions that represent managements best estimate of the range of business and economic
conditionsatthistime.
ThevaluationshavebeenreviewedandapprovedbytheBoard.
Thevalueinuseandfairvaluelesscoststosellvaluationsarecomparedtothenetcarryingamount
of goodwill recognised in the accounts. If the calculated recoverable amount exceeds the net
carryingamount,noimpairmentlossisrecorded.
88
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
15)GOODWILL(continued)
(ii)Keyassumptionsusedinrecoverablevaluecalculations
Thekeyassumptionsmadebymanagementindeterminingtherecoverablevalueinclude:
Civic
Legal(1)
Talbot
Oliver
Law
Central
$4,602,567
$3,121,757
$3,106,233
$2,070,000
Pretaxnominaldiscountrate
Growthinfees2012
Growthinfees2013
Growthinfees20142016
Yearended30June2010
Goodwillrecognised
17.0%
3.0%
18.0%
5.0%
$4,590,367
17.0%
16.0%
18.0%
5.0%
$704,000
17.0%
10.0%
6.0%
5.0%
$3,106,233
17.0%
16.0%
5.0%
5.0%
$2,070,000
Pretaxnominaldiscountrate
Growthinfees2011
Growthinfees20122015
17.0%
18.0%
5.0%
17.0%
16.0%
5.0%
17.0%
21.0%
5.0%
17.0%
16.0%
5.0%
Yearended30June2011
Goodwillrecognised
Argyle
Lawyers
(1) Comparative information relates to Brett Davies Lawyers cash generating unit only, the operations of which were
mergedwiththenewlyacquiredlegalpracticeofWojtowiczKellyLegal(note29)toformCivicLegalduringtheyear.
Discountrate
Growthinfees
The forecast growth in fees is calculated on historical fees adjusted for budgeted fee increases,
anticipatedinflationandfeegrowthtobegeneratedfromtheclientbaseinlinewithmarkettrends.
(iii)Sensitivitytochangesinassumptions
With regards to the assessment of the value in use of the Argyle Lawyers, Civic Legal and Talbot
Olivier and the fair value less costs to sell of the Law Central cash generating units, management
consider that no reasonably possible change in any of the key assumptions in (ii) above would
significantly erode the headroom calculated and cause the carrying value of the cash generating
unitstoexceeditsrecoverableamount.Thisassurancehasbeenobtainedbytheanalysisperformed
in the recoverable value calculations whereby management assessed the results of the Group not
meetingfeerevenuegrowthtargetsandapplyingthehighestreasonablypossiblediscountrates.
89
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
16) INTANGIBLEASSETS
a) Reconciliationofcarryingamountsatthebeginningandendoftheperiod
Openingbalancenetofaccumulatedamortisation
Amortisation
Closingbalancenetofaccumulatedamortisation
Cost(grosscarryingamount)
Accumulatedamortisation
Netcarryingamountattheendofthefinancialyear
CONSOLIDATED
2011
2010
$
$
65,340
100,980
(35,640)
(35,640)
29,700
65,340
163,254
(133,554)
29,700
163,254
(97,914)
65,340
b) DescriptionoftheGroupsidentifiedintangibleassets
Intangibleassetsrepresentthevalueofleasedpremisesacquiredupontheacquisitionofthelegal
practice of Peter Marks in the 30 June 2008 financial year and is carried at cost less accumulated
amortisation.Thisintangibleassethasbeenassessedashavingafinitelifeandisamortisedusing
the straight line method over the remaining term of the lease. The amortisation has been
recognised in the statement of comprehensive income in the line item depreciation and
amortisationexpense.
17) FINANCIALASSETS
Availableforsalefinancialassets
Sharesinlistedsecuritiesatfairvalue
CONSOLIDATED
2011
2010
$
$
3,435
2,642
3,435
2,642
Availableforsale investments consist of investments in ordinary shares. The fair value of listed
availableforsaleinvestmentshasbeendeterminedbasedonquotedmarketprices(Level1).
Quotedmarketpricerepresentsthefairvaluebasedonquotedpricesonactivemarketsasatthe
reportingdatewithoutanydeductionfortransactioncosts.
90
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
18) TRADEANDOTHERPAYABLES
Current
Tradepayables
Otherpayablesandaccruals
NonCurrent
Tradepayables
CONSOLIDATED
2011
2010
$
$
1,342,028
719,856
2,471,570
2,597,301
3,813,598
3,317,157
37,554
37,554
75,107
75,107
a) Fairvalue
Duetotheshorttermnatureofthesepayables,theircarryingvalueisassumedtoapproximatetheir
fairvalue.
b) Interestrateandliquidityrisk
Informationregardinginterestrateandliquidityriskexposureissetoutinnote3.
19) INTERESTBEARINGLOANSANDBORROWINGS
Current
Bankoverdraft
Obligationsunderfinanceleasesandhirepurchasecontracts(note30(i))
Insurancepremiumfunding(unsecured)
Bankloan(secured)(note33)
NonCurrent
Obligationsunderfinanceleasesandhirepurchasecontracts(note30(i))
CONSOLIDATED
2011
2010
$
$
25,145
202,500
174,869
176,811
386,245
244,014
1,950,000
950,000
2,536,259
1,573,325
143,325
143,325
260,913
260,913
The carrying amount of the Groups current and noncurrent borrowings approximate their fair
value.Detailsregardingliquidityriskaredisclosedinnote3.
91
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
19)INTERESTBEARINGLOANSANDBORROWINGS(continued)
a) Assetspledgedassecurity
The carrying amounts of assets pledged as security for current and noncurrent interest bearing
liabilitiesare:
Financelease
Leasedofficeequipment(note30(i))
Totalassetspledgedassecurity
CONSOLIDATED
2011
2010
$
$
5,568
5,568
Inaddition,the$1,950,000bankloanissecuredbyafixedandfloatingchargeoverthetotalassets
ofthegroup.
b) Defaultsandbreaches
Duringtheyeartherewerenodefaultsorbreachesonanyoftheloans.
20) PROVISIONS
Current
Longserviceleave
Annualleave
NonCurrent
Longserviceleave
CONSOLIDATED
2011
2010
$
$
177,986
145,554
808,607
541,503
986,593
687,057
306,092
306,092
197,350
197,350
92
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
21) OTHERLIABILITIES
Current
Deferredconsiderationpayable(1)
Contingentconsiderationobligation(1)
Leaseincentiveobligation(2)
NonCurrent
Contingentconsiderationpayable(1)
Leaseincentiveobligation(2)
CONSOLIDATED
2011
2010
$
$
125,000
197,444
48,280
82,489
82,489
255,769
279,933
522,255
167,089
689,344
127,608
127,608
(1) Deferred and contingent consideration payable on the acquisition of Wojtowicz Kelly Legal (see note 29) (2010:
contingentconsiderationpayableontheacquisitionofTheArgylePartnership).
(2) Operating lease incentives are recognised as a liability when received and subsequently reduced by allocating lease
paymentsbetweenrentalexpenseandreductionoftheliabilitytoensurerentalexpenseisrecognisedonastraight
linebasisovertheleaseterm.
22) ISSUEDCAPITAL
Consolidated
Consolidated
Consolidated
2011
2010
2011
Shares
Shares
$
Fullypaidshares
95,908,111
86,139,666
33,321,656
Partlypaidshares(1)
1,256,217
371,667
75,496
(2)
(26,667)
Forfeitedsharesheldintrust
97,164,328
86,484,666
33,397,152
(1)SharesissuedundertheDeferredEmployeeSharePlanthatvestoverthreeyears(note28).
(2)SharesissuedbutforfeitedundertheDeferredEmployeeSharePlan,heldintrust(note28).
Consolidated
2010
$
32,126,345
34,081
32,160,426
Fullypaidordinarysharescarryonevotepershareandcarrytherighttodividends.Theshareshave
noparvalue.
Movementinordinarysharesonissue:
Shares
Openingbalanceasat1July2010
86,484,666
32,160,426
1,800,000
180,000
125,000
15,000
IssueofsharestovendorsofWojtowiczKellyLegalon1February2011
5,727,000
744,600
IssueofsharesunderDividendReinvestmentPlanon2May2011
CostsassociatedwithsharesissuedontheacquisitionofWojtowiczKellyLegal,netof
tax
IssueofsharesundertheDeferredEmployeeSharePlanduringtheyear
(484,550shareson1July2010and400,000shareson1February2011)
2,143,112
267,883
(12,172)
884,550
41,415
97,164,328
33,397,152
Balanceasat30June2011
93
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
22)ISSUEDCAPITAL(continued)
Shares
Openingbalanceasat1July2009
69,346,178
30,504,813
7,000,000
700,000
353,488
42,410
IssuesofsharesunderSharePlacement(Tranche2)on12May2010
4,100,000
410,000
IssuesofsharesunderSharePurchasePlanon26May2010
5,645,000
564,500
(80,540)
40,000
19,243
86,484,666
32,160,426
IssueofsharesunderSharePlacement(Tranche1)on8April2010
IssuesofsharesunderDividendReinvestmentPlanon9April2010
Costsassociatedwiththecapitalraising,netoftax
IssueofsharesundertheDeferredEmployeeSharePlanon1July2009
Balanceasat30June2010
a) Capitalmanagement
TheGroupsobjectiveswhenmanagingcapitalaretosafeguardtheGroupsabilitytocontinueasa
going concern, in order to provide returns to shareholders, and to maintain an optimal capital
structure to allow the Group to pursue its future acquisition activities. Capital is comprised of
shareholdersequityasdisclosedinthestatementoffinancialposition.
Inordertomaintainoradjustthecapitalstructure,theGroupmayadjusttheamountofdividends
paidtoshareholdersandincreaseordecreasetheGroupsdebt,subjecttothecapitalrequirements
oftheGroupsoperationsatthetime.
During the year, the Directors paid a dividend of $709,439 (2010: $173,532) of which $441,556
(2010: $131,113) was paid in cash and the balance of $267,883 (2010: $42,419) was issued as
ordinarysharesundertheCompanysdividendreinvestmentplan.
TheDirectorshavedeclaredafinaldividendof0.60centspershare($582,986)forthe2011financial
year(2010:$432,423).Thedividendreinvestmentplanwillbeofferedforthisdividend.
TheGroupmonitorscapitalonthebasisofthegearingratio.ThelevelofgearingintheCompanyis
withintheacceptablelimitssetbytheDirectorsgiventheimplicationsofthebusinessacquisitions
andpaymentoftaxliabilitiesduringtheyear.
23) ACCUMULATEDLOSSES
Accumulatedlosses
Balanceatbeginningofyear
Netprofitfortheyear
Dividendspaid
Transfertogeneralreserve(note24)
Balanceatendoftheyear
CONSOLIDATED
2011
2010
$
$
(16,349,358)
(16,688,184)
(238,405)
(16,926,589)
(16,688,184)
(16,641,034)
853,494
(173,531)
(727,113)
(16,688,184)
94
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
24) RESERVES
Accumulatedlossesonavailableforsalefinancialassets
Generalreserve
Balanceatendoftheyear
CONSOLIDATED
2011
2010
$
$
(649)
(1,441)
1,542,749
727,113
1,542,100
725,672
Generalreserve
Due to accumulated losses incurred prior to the listing of the company on 17 August 2007, the
Directors resolved to isolate profits derived from trading activities since listing through the
establishmentofaGeneralReserve.
Duringtheperiod,$238,405,representingtradingprofitsto30June2010lessdividendspaid,was
transferredtotheGeneralReservefromAccumulatedLosses.
25) CASHFLOWRECONCILIATION
a) Reconciliationofnetprofitaftertaxtonetcashflowsfromoperations
Netprofit
Adjustmentsfor:
Dividendsreceivedasshares(DRP)
Depreciationandamortisationexpenses
Sharebasedpaymentsexpense
Changesinassetsandliabilities:
Increaseintradeandotherreceivables
(Increase)/decreaseinworkinprogress
(Increase)/decreaseinavailableforsaleassets
Increaseintradeandotherpayables
Increase/(decrease)inincometaxpayable
Increaseinnetdeferredtaxliabilities
Increaseinprovisions
Increaseinotherliabilities
Netcashfromoperatingactivities
b)
CONSOLIDATED
2011
2010
$
$
1,286,670
853,494
(34)
412,841
343,759
41,415
19,243
(273,387)
(1,765,021)
(1,145,866)
16,858
(793)
35
458,889
1,348,935
(190,306)
20,513
137,038
363,058
408,278
247,321
96,960
1,231,739
1,448,161
Noncashfinancingandinvestingactivities
Settlementofsubsidiarypurchasewithshares
744,600
95
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
26) RELATEDPARTIES
a) Subsidiaries
TheconsolidatedfinancialstatementsincludethefinancialstatementsofIntegratedLegalHoldings
Limitedandthesubsidiarieslistedinthefollowingtable:
Name
ArgyleLawyersPtyLtd
CivicLegalPtyLtd
(formerlyTaxLawyersAustraliaPtyLtd)
TalbotOlivierPtyLtd
LawCentralCoPtyLtd
Countryof
Incorporation
Australia
%EQUITYINTEREST
2011
2010
100%
100%
Australia
Australia
Australia
100%
100%
100%
100%
100%
100%
INVESTMENT
2011
2010
2
1
1
712,884
712,888
1
1
712,884
712,888
AllsubsidiariesaredomiciledinAustralia.
b) Ultimateparent
IntegratedLegalHoldingsLimitedistheultimateAustralianparententityandtheultimateparentof
theGroup.
c) Keymanagementpersonnel
DetailsrelatingtoKMP,includingremunerationpaid,areincludedinnote27.
d) Transactionswithrelatedparties
The following table provides the total amount of transactions that were entered into with related
partiesfortherelevantfinancialyear:
RelatedParty
CONSOLIDATED
Associates:
DaviesServiceTrust
operatingleaserelatingtopremisesoccupiedby
BrettDaviesLawyersandLawCentral
PeterBobbinandAndrewIreland
Deferredconsiderationpayableonacquisitionof
TheArgylePartnershipLawyers(1)
2011
2010
2011
Purchases
from
Related
Parties
$
Salesto
Related
Parties
$
2010
(1)Deferredconsiderationwasaccruedateachreportingdateandwaspaidinthe2011financialyear.
Other
Transactions
withRelated
Parties
$
93,650
170,635
111,607
96
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
26)RELATEDPARTIES(continued)
Termsandconditionsoftransactionswithrelatedparties
Sales to and purchases from related parties are made in arms length transactions both at normal
marketpricesandonnormalcommercialterms.
Outstandingbalancesatyearendareunsecured,interestfreeandsettlementoccursincash.
27) KEYMANAGEMENTPERSONNEL
a) CompensationofKeyManagementPersonnel
Shorttermemployeebenefits
Postemploymentbenefits
Otherlongtermbenefits
Sharebasedpayment
2011
$
2,987,748
307,366
51,939
4,679
3,351,732
2010
$
3,010,738
269,841
116,675
4,685
3,401,939
b) ShareholdingsofKeyManagementPersonnel
OrdinarysharesheldinIntegratedLegalHoldingsLimited:
Deferred
Considerationon
Acquisitionof
Business
Balance
1July2010
Dividend
Reinvestment
Plan
Net
Change
Other
Balance
30June2011
Directors
JDawkins
2,910,282
39,847
2,950,129
406,251
9,750
416,001
4,810,559
50,054
4,860,613
ATregonning
GFowler
Executives
(1)
BTaylor
(2)
PBobbin
(3)
3,074,681
3,544,768
1,000,000
MDouglass
1,333,334
AIreland(4)
1,736,428
BDavies
(5)(6)
(7)
AQuahe
JMRudd
Total
3,074,681
108,924
4,653,692
1,333,334
800,000
2,536,428
7,820,478
(7,820,478)
1,909,000
293,073
4,274
1,800,000
212,849
25,929,854
1,909,000
297,347
(5,911,478)
22,031,225
(1)1,022,780sharesaresubjecttovoluntaryescrowrestrictionuntil16August2011.
(2)565,476sharesaresubjecttovoluntaryescrowrestrictionuntil4November2011.
(3)444,445sharesaresubjecttovoluntaryescrowrestrictionuntil13March2012.
(4)565,476sharesaresubjecttovoluntaryescrowrestrictionuntil4November2011.
(5)2,518,472sharesaresubjecttovoluntaryescrowrestrictionuntil16August2011.
(6)BDaviesceasedtobeaKMPfrom31January2011.
(7)AQuahebecameaKMPfrom1February2011.
97
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
27)KEYMANAGEMENTPERSONNEL(continued)
Balance
1July2009
Remuneration
Dividend
Reinvestment
Plan
Share
Placement&
Share
PurchasePlan
250,000
2,910,282
Grantedas
(6)
Directors
JDawkins
1,626,398
33,884
1,000,000
300,000
6,251
100,000
2,710,200
57,359
ATregonning
GFowler
Executives
BTaylor(1)
3,068,340
1,807,727
7,562,916
102,500
40,000
17,178,081
40,000
PBobbin(2)
MDouglass
AIreland
(3)(7)
(4)(7)
BDavies(5)
JMRudd
Total
45,684
Balance
30June2010
406,251
2,000,000
43,000
4,810,559
Net
Change
Other
6,341
3,074,681
1,300,000
391,357
3,544,768
1,333,334
1,333,334
40,000
1,696,428
1,736,428
157,562
100,000
7,820,478
573
150,000
293,073
301,313
4,690,000
3,720,460
25,929,854
(1)1,022,780sharesaresubjecttovoluntaryescrowrestrictionuntil16August2011.
(2)565,477sharesaresubjecttovoluntaryescrowrestrictionuntil4November2010and565,476sharesaresubjecttovoluntaryescrow
restrictionuntil4November2011.
(3)444,444sharesaresubjecttovoluntaryescrowrestrictionuntil13March2011and444,445sharesaresubjecttovoluntaryescrow
restrictionuntil13March2012.
(4)565,476sharesaresubjecttovoluntaryescrowrestrictionuntil4November2010and565,476sharesaresubjecttovoluntaryescrow
restrictionuntil4November2011.
(5)2,518,472sharesaresubjecttovoluntaryescrowrestrictionuntil16August2011.
(6)AcquiredundertheDeferredEmployeeSharePlan(note28).
(7)MDouglassandAIrelandbecomeKMPsfrom1July2009.
c) OthertransactionswithKeyManagementPersonnelandtheirrelatedparties
LeaseofBusinessPremises
BrettDaviesLawyersandLawCentralCoPtyLtdsharedbusinesspremisesat201AdelaideTerrace,
Perthuntil31January2011.ThesepremiseswereleasedfromTheDaviesServiceTrust,anentity
thatiscontrolledbyMrDavies,whowasManagingPrincipalofBrettDaviesLawyersatthattime.
Monthlyleaserentalsforeachoftheseentitieshavebeencalculatedatcommercialmarketrates.
AmountsrecognisedatthereportingdateinrelationtoothertransactionswithKMP:
Revenueandexpenses
Rentpaid
2011
$
93,650
93,650
2010
$
170,635
170,635
98
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
27)KEYMANAGEMENTPERSONNEL(continued)
LoanstoKeyManagementPersonnel
Underthetermsofhisemploymentcontract,MrFowler(ManagingDirector)wasprovidedwithan
interestfreeloanof$189,036pertainingtothetaxliabilityofsharesintheCompanyissuedonhis
appointmentinApril2008.Thetermsoftheloanareasfollows:
the loan will be forgiven if Mr Fowler remains employed by the Company for at least 3 years
fromthedateofcommencementofemployment;
50%oftheloanwillbewaivedifMrFowlerterminateshisemploymentwithin23years;and
0%oftheloanwillbewaivedifMrFowlerterminateshisemploymentwithin2years.
TheCompanywillmeetanyFBTobligationsarisingfromthistransaction.
ThisloanhasbeenassessedasprepaidemployeebenefitsinaccordancewithAASB119Employee
Benefits.Amortisationexpenseof$31,506(2010:$107,122)hasbeenrecognisedinthestatement
ofcomprehensiveincomeinthelineitemsalariesandemployeebenefitsexpenses.
28) SHAREBASEDPAYMENTPLANS
a) Recognisedsharebasedpaymentexpenses
Theexpenserecognisedforemployeeservicesreceivedduringtheyearisshowninthetablebelow:
Expensearisingfromequitysettledsharebasedpaymenttransactions
CONSOLIDATED
2011
2010
$
$
41,415
19,243
The sharebased payment plans are described below. There have been no cancellations or
modificationstoanyoftheplansduringtheyear.
b) Typesofsharebasedpaymentplans
Taxexemptemployeeshareplan(TEESP)
AllemployeesareeligibletoparticipateintheTEESPiftheymeetthefollowingcriteria:
Theyhaveanadjustedtaxableincomeoflessthan$180,000perannum;
TheyareapermanentfulltimeorpermanentparttimeemployeeoftheGroup;
Theyhavemettheprobationperiodunderthetermsoftheiremploymentcontract;
Theyareatleast18yearsofage;and
TheyareanAustralianresidentfortaxpurposes.
EmployeeswhoparticipateintheTEESPcannominatetocontributeupto$1,000perannumfrom
their pretax wages or salary by way of an effective salary sacrifice towards acquiring fully paid
ordinarysharesintheCompany.
99
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
28)SHAREBASEDPAYMENTPLANS(continued)
InaccordancewiththerulesoftheTEESP,sharesacquiredundertheplanmustnotbewithdrawnor
otherwise dealt with, commencing from the date the employee acquires a beneficial interest in
thosesharesuntiltheearliestofthedatethat:
Isthreeyearsaftertheacquisitiondate;or
TheemployeeceasestobeanemployeeoftheGroup.
The rules of the TEESP do not contain any provisions that could result in an employee forfeiting
ownershipofsharesundertheplan.
Deferredemployeeshareplan(DESP)
Shares are granted to key employees and directors of the Group. The DESP is designed to align
participantsinterestswiththoseofshareholdersbyincreasingthevalueoftheCompanysshares.
EmployeesareeligibletoparticipateintheDESPiftheymeetthefollowingcriteria:
TheyareapermanentfulltimeorpermanentparttimeemployeeoftheGroup;
Theyhavemettheprobationperiodunderthetermsoftheiremploymentcontract;
Theyareatleast18yearsofage;and
TheyareanAustralianresidentfortaxpurposes.
UndertheDESP,thefairvalueofthesharesissetatthemarketpriceofthesharesonthedateof
grant.
Whenaparticipantceasesemploymentpriortothevestingoftheirshares,thesharesareforfeited
infullorinpart,dependedonthetermsofawardofthoseshares.
Intheeventofachangeofcontrol,theperformanceperiodenddatewillbebroughtforwardtothe
date of the change of control and awards will vest subject to performance over this shortened
period.
Thevestingperiodofeachshareisthreeyears.Therearenocashsettlementalternatives.
100
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
28)SHAREBASEDPAYMENTPLANS(continued)
c) SummaryofsharesgrantedunderTEESPandDESParrangements
The following table illustrates the number of and movements in shares granted during the period
undertheTEESPandtheDESP:
TEESP:
Openingbalanceasat1July2010
Transferredtodepartedemployeesduringtheyear(1)
Closingbalanceasat30June2011
DESP:
Openingbalanceasat1July2010
Grantedduringtheyear
Closingbalanceasat30June2011
CONSOLIDATED
2011
2010
No
No
252,672
252,672
255,842
(3,170)
252,672
371,667
884,550
1,256,217
331,667
40,000
371,667
(1)Sharesaretransferredoutofanemployeetrustintotheemployeesnameonterminationofemployment.
d) Weightedaverageremainingcontractuallife
Theweightedaverageremainingcontractuallifeasat30June2011forthesharesissuedunderthe
DESPis1.66years(2010:1.23years).
e) Weightedaveragefairvalue
Asat30June2011,theweightedaveragefairvalueofsharesgrantedundertheDESPwas11.7cents
(2010:15.5cents).
101
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
29) BUSINESSCOMBINATIONS
AcquiredlegalpracticeWojtowiczKellyLegal
On1February2011theCompanyacquiredthelegalpracticeofWojtowiczKellyLegal(incorporating
CivicLegal,theSimpsonKellyGroup,GibsonTovey&Associates,AllPropertyConveyancingandJan
SimpsonSettlements)undermergerarrangementswiththeexistingmemberfirmCivicLegalPtyLtd
(formerlyTaxLawyersAustraliaPtyLtd)tradingasBrettDaviesLawyers.
ThemergedbusinesswilltradeasCivicLegal.
Theconsiderationforthetransactionisacombinationoftheissueof5.727msharesandanupfront
cash payment of $924,000 (funded from surplus cash reserves). A deferred cash consideration of
$125,000waspaidinJuly2011.
Additionally, under the merger agreement, a maximum of $600,000 and minimum of nil in
contingent cash consideration may be payable in September 2013 subject to the merged business
achievingagreedprofitability(netprofitbeforetax)targetsinthefinancialyearsended30June2012
and30June2013.Thecontingentconsiderationwillbesettledincashorsharesatthediscretionof
theBoard.TheGrouphasforecastseveralscenarios,andprobabilityweightedeachtodeterminea
fairvalueforthiscontingentpaymentarrangement,whichhasbeenincludedinthedetermination
of the consideration transferred. Future changes in estimates of this amount will be recorded
directlyinthestatementofcomprehensiveincomeintheperiodinwhichtheyoccur.
TheDirectorsconsiderthatthecontingentconsiderationwillsupportandfosteraunitedprincipal
group environment for the merged firm, by incentivising teamwork in the realisation of merger
revenueandcostsynergies.
The contingent consideration has been formulated using Integrated Legal Holdings Limiteds
minimum expectations as a base (i.e. the contingent consideration is only payable on
outperformanceabovetheseminimumexpectations).
Furthermore, any contingent consideration will only be payable following the achievement of
minimumexpectedlockup(Workinprogressanddebtors)performancebythefirm.
Theacquisitionisstructuredwithsignificantemploymentconstraintsandconditions,consistentwith
theCompanysdisciplinedacquisitionmodelandstrictcriteria.
102
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
29)BUSINESSCOMBINATIONS(continued)
Thefollowingconstitutestheprovisionalcalculationoftheconsiderationgivenandthefairvalueof
netassetsacquired:
Consideration
Cash
Deferredcashconsideration
Totalcashconsideration
Contingentconsideration
Sharesissuedasconsideration
Totalacquisitioncost
Netassetsacquired
Assets
Plantandequipment
Prepayments
Deferredtaxasset
Totalassetsacquired
924,000
125,000
1,049,000
601,564
744,600
2,395,164
ProvisionalFair
Value
$
156,585
33,720
48,316
238,621
Carrying
Amount
$
156,585
33,720
190,305
26,899
73,261
161,054
261,214
(22,593)
2,417,757
73,261
161,054
234,315
(44,010)
Liabilities
Deferredtaxliability
Interestbearingloansandborrowings
Provisions
Totalliabilitiesacquired
Netliabilitiesacquired
Goodwillonacquisition
As the integration of the business is still occurring the fair value of net assets acquired remains
provisionallydetermined.
TheacquireescontributiontothenetprofitoftheGroupcannotbedeterminedasthisbusinesshas
beenincorporatedintoBrettDaviesLawyersbusiness,anditisimpracticabletodisclosethetotal
revenue and profit for the combined entity as though the acquisition had taken place at the
beginningoftheperiod.
Keyfactorscontributingtothe$2,417,757ofgoodwillarethesynergiesexistingwithintheacquired
business,andsynergiesexpectedtobeachievedasaresultofcombiningWojtowiczKellyLegalwith
therestoftheGroup.
Cashoutflowsacquiredlegalpractices
Cashoutflowsduringtheyearended30June2011relatedtoacquisitionswereasfollows:
WojtowiczKellyLegal(1February2011)
Cashconsideration
Contingentconsideration
TheArgylePartnership(1November2008)
Stampdutypaid
mdalawyers(13March2009)
Stampdutypaid
TOTAL
924,000
42,948
11,000
1,200
979,148
103
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
30) EXPENDITURECOMMITMENTS
i) Leasingcommitments
OperatingleasecommitmentsGroupaslessee
TheGrouphasenteredintooperatingleasesfortherentalofofficespaceatitsvariouscommercial
premises.Thesenoncancellableleaseshaveremainingtermsofbetween2to8years.Theleases
haverenewaloptions.Renewalsareattheoptionofthespecificentitythatholdsthelease.
Futureminimumrentalspayableundernoncancellableoperatingleasesasat30June2011areas
follows:
Withinoneyear
Afteroneyearbutnotmorethanfiveyears
Aftermorethanfiveyears
Totalminimumleasepayments
CONSOLIDATED
2011
2010
$
$
2,381,760
1,973,067
6,924,450
5,791,879
2,726,571
3,133,815
12,032,780
10,898,761
FinanceleaseandhirepurchasecommitmentsGroupaslessee
TheGrouphasfinanceleasesandhirepurchasecontractsforvariousitemsofplantandequipment
withacarryingamountof$345,511(2010:$458,625).Thesecontractsexpirewithin1to4years.
Theleaseshavetermsofrenewalandpurchaseoptions.Renewalsareattheoptionofthespecific
entitythatholdsthelease.
Withinoneyear
Afteroneyearbutnotmorethanfiveyears
Totalminimumleasepayments
Lessamountsrepresentingfinancecharges
Presentvalueofminimumleasepayments
CONSOLIDATED
2011
2010
$
$
198,624
215,919
146,887
268,187
345,511
484,106
(27,317)
(46,382)
318,194
437,724
Includedinthefinancialstatementsas:
Currentinterestbearingloansandborrowings(note19)
Noncurrentinterestbearingloansandborrowings(note1919))
Totalinterestbearingloansandborrowings
CONSOLIDATED
2011
2010
$
$
174,869
176,811
143,325
260,913
318,194
437,724
104
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
30)EXPENDITURECOMMITMENTS(continued)
ii) Plantandequipmentrentalcommitments
TheGrouphascontractualobligationsfortherentalofplantandequipment.Therentalagreements
expirewithin1and3yearsandhavepurchaseoptionsonexpiry.Rentalcommitmentscontracted
foratreportingdatebutnotrecognisedasliabilitiesareasfollows:
Withinoneyear
Afteroneyearbutnotmorethanfiveyears
Aftermorethanfiveyears
Totalminimumrentalpayments
CONSOLIDATED
2011
2010
$
$
11,138
63,142
11,138
11,138
74,280
CONSOLIDATED
2011
2010
$
$
4,534,380
5,109,956
9,644,336
iii) Remunerationcommitments
Commitmentsforthepaymentofsalariesandotherremunerationunderlong
termemploymentcontractsinexistenceatthereportingdatebutnot
recognisedasliabilities,payable:
Withinoneyear
Afteroneyearbutnotmorethanfiveyears
Aftermorethanfiveyears
4,315,079
6,694,457
11,009,536
Amounts disclosed as remuneration commitments include commitments arising from the service
contractsofdirectorsandexecutivesreferredtointheRemunerationReportoftheDirectorsReport
that are not recognised as liabilities and are not included in the compensation of KMP for the
currentperiod.
105
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
31) CONTINGENCIES
Crossguarantees
PursuanttoClassOrder98/1418,reliefhasbeengrantedtoTalbotOlivierPtyLtd,CivicLegalPtyLtd,
ArgyleLawyersPtyLtdandLawCentralCoPtyLtdfromtheCorporationsAct2001requirementsfor
preparation,auditandlodgementoftheirfinancialreports.
AsaconditionoftheClassOrder,IntegratedLegalHoldingsLimited,TalbotOlivierPtyLtd,CivicLegal
PtyLtd,ArgyleLawyersPtyLtdandLawCentralCoPtyLtdenteredintoaDeedofCrossGuarantee.
TheeffectofthedeedisthatIntegratedLegalHoldingsLimitedhasguaranteedtopayanydeficiency
intheeventofwindingupofeithercontrolledentityoriftheydonotmeettheirobligationsunder
the terms of overdrafts, loans, leases or other liabilities subject to the guarantee. The controlled
entities have also given a similar guarantee in the event that Integrated Legal Holdings Limited is
wounduporifitdoesnotmeetitsobligationsunderthetermsofoverdrafts,loans,leasesorother
liabilitiessubjecttotheguarantee.
32) AUDITORSREMUNERATION
TheauditorofIntegratedLegalHoldingsLimitedisErnst&Young.
AmountsreceivedordueandreceivablebyErnst&Young(Australia)for:
anauditorreviewofthefinancialreportofthecompany
otherservicesinrelationtothecompany
o Taxcompliance
o Taxationservices
AmountsreceivedordueandreceivablebynonErnst&Young(Australia)firmsfor:
otherservicesinrelationtothecompany
o Specialauditsrequiredbyregulators
o Taxationservices
CONSOLIDATED
2011
2010
$
$
187,624
136,397
17,500
31,453
5,500
205,124
173,350
19,597
22,727
19,597
22,727
224,721
196,077
106
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
NotestotheConsolidatedFinancialStatements(continued)
FORTHEYEARENDED30JUNE2011
33) EVENTSAFTERREPORTINGDATE
AcquisitionoflegalpracticeofPLNLawyers
On 1 August 2011 the Company acquired the legal practice of PLN Lawyers (PLN) under tuckin
arrangementswiththeexistingmemberfirmArgyleLawyers.
The consideration for the transaction is a combination of the issue of 3.04m shares and $1.1m in
cash(fundedthroughsurpluscashreserves),anda$0.25mcontingentcash componentpayablein
September 2012 subject to the PLN business achieving revenue and profitability targets for the
periodto30June2012.
Theacquisitionisstructuredwithsignificantemploymentconstraintsandconditions,consistentwith
theCompanysdisciplinedacquisitionmodelandstrictcriteria.
Atthedateofthisreport,initialaccountingforthebusinessacquisitionhasnotyetbeendetermined
withthefairvalueassessmentoftheidentifiedassetsandliabilitiesacquiredatacquisitionandthe
estimate of the fair value of the contingent consideration to be finalised. As a result, it is not
possibletodisclosethefairvalueoftheidentifiedassetsandliabilitiesthatwillberecognisedat1
August2011,theacquisitiondate,fairvalueofconsiderationtransferredortocalculatethevalueof
goodwill.
DeclarationofFinalDividend
The Directors have declared a fully franked final dividend of 0.6 cents. The dividend will have a
recorddateof14October2011andapaymentdateof4November2011.Therewillbeadividend
reinvestmentplanavailable.
RenewalofBankFundingFacilities
On 31 July 2011, the bank funding facilities were renegotiated. As at 30 June 2011, the following
bankfundingfacilitieswereinplace:
Facility
1
2
TOTAL
FacilityLimit
$m
2.50
0.55
3.05
Drawndownasat
30/06/2011
$m
1.95
1.95
UndrawnFacility
Available
$m
0.55
0.55
1.10
Expiry
September2011
September2011
Afterthe31July2011renegotiation,thefacilitieswererenewedasfollows:
Facility
1
2
TOTAL
FacilityLimit
$m
2.50
1.00
3.50
Drawndown
$m
1.95
1.95
UndrawnFacility
Available
$m
0.55
1.00
1.55
Expiry
September2013
September2012
107
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
DirectorsDeclaration
InaccordancewitharesolutionofthedirectorsofIntegratedLegalHoldingsLimited,Istatethat:
1. Intheopinionofthedirectors:
a. The financial statements, notes and the additional disclosures included in the directors
report designated as audited, of the consolidated entity are in accordance with the
CorporationsAct2001,including:
givingatrueandfairviewoftheconsolidatedentitysfinancialpositionasat30June
2011andofitsperformancefortheyearendedonthatdate;and
b. the financial statements and notes also comply with International Financial Reporting
Standardsasdisclosedinnote2(a).
c. there are reasonable grounds to believe that the company will be able to pay its debts as
andwhentheybecomedueandpayable.
2. This declaration has been made after receiving the declarations required to be made to the
directors in accordance with section 295A of the Corporations Act 2001 for the financial year
ended30June2011.
3. Intheopinionofthedirectors,asatthedateofthisdeclaration,therearereasonablegrounds
tobelievethatthemembersoftheClosedGroupidentifiedinnote31willbeabletomeetany
obligationsorliabilitiestowhichtheyareormaybecomesubject,byvirtueoftheDeedofCross
Guarantee.
OnbehalfoftheBoard.
GFowler
ManagingDirector
Sydney,28September2011
108
Auditor's responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
audit in accordance with Australian Auditing Standards. Those standards require that we comply with
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
reasonable assurance about whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial report. The procedures selected depend on the auditor's judgment, including the assessment
of the risks of material misstatement of the financial report, whether due to fraud or error. In making
those risk assessments, the auditor considers internal controls relevant to the entity's preparation and
fair presentation of the financial report in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's
internal controls. An audit also includes evaluating the appropriateness of accounting policies used and
the reasonableness of accounting estimates made by the directors, as well as evaluating the overall
presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Independence
In conducting our audit 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 directors report.
Opinion
In our opinion:
a.
b.
the financial report of Integrated Legal Holdings Limited is in accordance with the Corporations
Act 2001, including:
i
giving a true and fair view of the consolidated entity's financial position as at 30 June 2011
and of its performance for the year ended on that date; and
ii
complying with Australian Accounting Standards and the Corporations Regulations 2001;
and
the financial report also complies with International Financial Reporting Standards as disclosed in
Note 2.
Opinion
In our opinion, the Remuneration Report of Integrated Legal Holdings Limited for the year ended 30 June
2011, complies with section 300A of the Corporations Act 2001.
G H Meyerowitz
Partner
Perth
28 September 2011
GHM:MJ:ILH:062
INTEGRATEDLEGALHOLDINGSLIMITED
ACN120394194
ASXAdditionalInformation
AdditionalinformationrequiredbytheAustralianStockExchangeLimitedandnotshownelsewhere
inthisreportisasfollows.Theinformationiscurrentasat25August2011.
a) Distributionofequitysecurities
Ordinarysharecapital
100,642,589fullypaidordinarysharesareheldby851individualshareholders.
Allissuedordinarysharescarryonevotepershareandcarrytherightstodividends.
Thenumbersofshareholdersbysizeofholdingare:
11,000
14
1,0015000
117
5,00110,000
197
10,001100,000
428
100,001andover
95
851
Holdinglessthanamarketableparcel
99
b) Substantialshareholders
Ordinaryshareholders
FullyPaid
Number
Percentage
BKDavies
7,420,478
7.37%
BJMaguire
6,360,247
6.32%
13,780,725
13.69%
c) 20largestholdersofquotedequitysecurities
Ordinaryshareholders
LegalAustraliaPtyLtd<DaviesSuperFundA/c>
AustralianShareFinancePtyLtd<BradleyMaguireSuperFundA/c>
RBCDexiaInvestorServicesAustraliaNomineesPtyLimited<BKCUSTA/c>
BobbinEdPtyLtd
JPOlivier
PangoRoadPtyLimited<RidgwaySuperannuationA/c>
GHGFowler
YearsPtyLtd<KordicFamilyNo1A/c>
AloaPtyLimited
DR&GSands<SandsFamilyA/cNo2>
ACatelli&GPorter<Catelli/PorterSuperfundA/c>
GH&LPFowler<FowlerSuperFundA/c>
SP&EMSkinner<SkinnerSuperFundA/c>
AnglerfishPtyLtd<TheHemeryFamilyA/c>
BrendalisPtyLtd<TaylorFamilyA/c>
UOBKayHianPrivateLimited<ClientsA/c>
ChichesterNomineesPtyLtd<WojtowiczFamilyNo.2A/c>
ACQuahe
SilverfoxInvestmentsPtyLtd<LouKellyTestamentaryFundA/c>
JSDawkins
FullyPaid
Number
7,412,821
6,360,245
4,432,893
3,974,935
3,068,340
3,043,478
2,724,996
2,610,617
2,536,428
2,268,340
2,191,672
2,119,936
2,055,000
2,000,349
2,000,349
1,947,302
1,909,000
1,909,000
1,909,000
1,700,129
58,174,830
Percentage
7.37%
6.32%
4.40%
3.95%
3.05%
3.02%
2.71%
2.59%
2.52%
2.25%
2.18%
2.11%
2.04%
1.99%
1.99%
1.93%
1.90%
1.90%
1.90%
1.69%
57.81%
111