132.asx iaw sept 28 2011 12.09 full year statutory accounts

8/9/2019 132.ASX IAW Sept 28 2011 12.09 Full Year Statutory Accounts

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INTEGRATEDLEGALHOLDINGSLIMITED

ACN120394194

(ASX:IAW)

FinancialReport

Fortheyearended30June2011


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ACN120394194

ContentstoFinancialReport

CorporateInformation.............................................................................................................1

DirectorsReport......................................................................................................................2

AuditorsIndependenceDeclaration.....................................................................................29

CorporateGovernanceStatement.........................................................................................30

ConsolidatedStatementofFinancialPosition.......................................................................40

ConsolidatedStatementofComprehensiveIncome.............................................................41

ConsolidatedStatementofCashFlows.................................................................................42

ConsolidatedStatementofChangesinEquity.......................................................................43

Notesto

the

Consolidated

Financial

Statements

..................................................................

44

DirectorsDeclaration..........................................................................................................108

IndependentAuditReport...................................................................................................109

ASXAdditionalInformation.................................................................................................111


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ACN

120

394

194

CorporateInformation

1

ABN20120394194

DirectorsTheHonJohnDawkins,NonexecutiveChairman

AnneTregonning,NonexecutiveDirector

GraemeFowler,ManagingDirectorandChiefExecutive

CompanySecretary

JeanMarieRudd

Registeredoffice

Level8,WesfarmersHouse

40TheEsplanade

Perth

WA

6000

Principalplaceofbusiness

HeadOffice

Level22

1MarketStreet

Sydney NSW 2000

Tel: (02)82636600

ShareRegister

ComputershareInvestorServicesPtyLimited

Level2

45StGeorgesTerrace

Perth WA 6000

Tel: (08)93232000

IntegratedLegalHoldingsLimitedsharesarelistedontheAustralianStockExchange.

Solicitors

TalbotOlivier ArgyleLawyers

Level8,WesfarmersHouse Level22

40TheEsplanade 1MarketStreet

Perth

WA

6000

Sydney

NSW

2000

Bankers

NationalAustraliaBankLimited

100StGeorgesTerrace

Perth WA 6000

Auditor

Ernst&Young

11MountsBayRoad

Perth WA 6000


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ACN120394194

DirectorsReport

2

Yourdirectorssubmittheirreportfortheyearended30June2011.

DIRECTORS

The names and details of the Companys directors in office during the financial year and until the

date of this report are as follows. Directors were in office for this entire period unless otherwise

stated.

Names,qualifications,experienceandspecialresponsibilities

TheHonJohnDawkins,AO,B.Ec(NonexecutiveChairman)

MrDawkinswasChairmanofLawCentralfromitsearlybeginningsinMarch2000untilMarch2006.

Hisother

board

appointments

include

Chairman

of

the

Archer

Exploration

Ltd,

TVET

Australia

Ltd

andSovereignGoldLtdandDirectorofM&CSaatchiDirectPtyLtd. Forover10years,until2005,he

served on the board of Sealcorp Holdings, now Asgard Wealth Solutions, and he is a former

chairmanofEldersRuralBankandRetailEnergyMarketCompanyLtd.

MrDawkinshasconsultedtoseverallargeAustralianandoverseascompanies,theWorldBankand

the OECD. Until his retirement from politics in 1994 he served as a Minister in the Federal

Governmentfor10yearsandintheHouseofRepresentativesfor18years.

He isagraduate inEconomicsfromtheUniversityofWesternAustralia,andhehasbeenawarded

honorary doctorates from The University of South Australia and the Queensland University of

Technology.

Duringthepastthreeyears,MrDawkinsservedasadirectorofthefollowinglistedcompanies:

MGMWirelessLtdappointed17August2010*

ArcherExplorationLtdappointed30April2010*

SovereignGoldCompanyLimitedappointed16September2010*

GeneticTechnologiesLtdappointed24November2004;resigned19November2010

*denotescurrentdirectorship

AnneTregonning,B.Com,FCA,

GAICD

(Non

executive

Director)

MsTregonninghasextensiveexperienceinfinanceandriskmanagementinbothpublicpracticeand

commerce. Senior positions previously held include General Manager Finance and Risk, Wealth

Management Division,St George Bank, Director Group Finance, Sealcorp Holdings (now ASGARD

WealthSolutions),andSeniorManagerCorporateBanking,BankWest.

Ms Tregonning is a nonexecutive director of Retail Energy Market Company Ltd and the Breast

Cancer Research Centre Western Australia. She is a past executive director of ASGARD Capital

ManagementLimited,apastStateChairmanoftheInstituteofCharteredAccountantsandmember

of itsNationalCouncil,andapastdirectorofotherpubliccompanyandnotforprofit/professional

organisations.


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ACN120394194

DirectorsReport(continued)

3

Ms Tregonning is a graduate of The University of Western Australia, a Fellow of The Institute of

CharteredAccountantsandgraduateoftheAustralianInstituteofCompanyDirectors.

MsTregonningdidnothaveanydirectorshipsinotherlistedcompaniesduringthepastthreeyears.

GraemeFowler,B.Bus,CPA,MAICD(ManagingDirectorandChiefExecutive)

Mr Fowler was previously Chief Executive Officer of listed accounting and financial services

consolidator WHK Group Limited. He brings specific experience in the successful consolidation of

professionalservicesfirms.Hespentover15yearsinseniormanagementroleswiththeBTFinancial

GroupincludingGroupChiefFinancialOfficer,ChiefExecutiveOfficerofBTFundsManagementNZ,

and Chief Executive Officer of BT Portfolio Services (including BT Wrap). Mr Fowler is also non

executivedirectorofCountplusLimited.

Mr Fowler is a business studies graduate of The University of Technology, Sydney and a Certified

PracticingAccountant.

Duringthepastthreeyears,MrFowlerservedasadirectorofthefollowinglistedcompany:

CountplusLimitedappointed19August2010*

*denotescurrentdirectorship

Beneficialinterestsinthesharesofthecompanyandrelatedbodiescorporate

Asatthedateofthisreport,thebeneficialinterestsofthedirectorsinthesharesofIntegratedLegal

HoldingsLimitedwere:

Numberof

OrdinaryShares

JDawkins 2,950,129

ATregonning 416,001

GFowler 4,860,613

COMPANYSECRETARY

JeanMarieRudd,B.Com,CA,GAICD

MrsRuddisalsotheChiefFinancialOfficer(CFO)oftheIntegratedLegalHoldingsLimitedgroupof

companies.

Mrs Rudd was previously the Western Australian Finance Director of national law firm, Minter

Ellison, bringing industryspecific experience to her roles with Integrated Legal Holdings Limited.

Mrs Rudd has over 20 years experience in CFO/Company Secretary roles including senior

managementroleswiththeHeytesburyGroupandThinkSmartLimited.

MrsRuddisagraduateofCurtinUniversity,Perth,aCharteredAccountantandagraduateofthe

AustralianInstituteofCompanyDirectors.


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ACN120394194


4

PRINCIPALACTIVITIES

Theprincipal

activity

of

the

entities

of

the

consolidated

Group

is

the

provision

of

legal

services

and

onlinelegaldocumentservicesinAustralia.

OPERATINGANDFINANCIALREVIEW

GroupOverview

AdetailedreviewoftheoperationsoftheGroupduringthefinancialyear,itsfinancialpositionand

businessstrategiesandprospectsforfuturefinancialyearsissetoutbelow.

OperatingResultsfortheYear

Consolidated operating revenues of $28,475,476 were 19% higher than the previous year which

reported $23,874,988 operating revenues. Revenue from ordinary activities increased due to a

combinationoforganicgrowthandtheacquisitionofWojtowiczKellyLegalinFebruary2011.

For the year ended 30 June 2011, the consolidated entity generated a net profit after tax of

$1,286,670comparedtotheyearended30June2010of$853,494,anincreaseof51%.

Earningspersharefortheyearwere1.41centspershare,comparedto1.18centspershareforthe

yearended30June2010,anincreaseof19%.

TheDirectorsconsiderthattheCompanyiswellplacedforthefuture,inparticularnoting:

TheCompanyhasgoodbusinesseswithstrongmarketpositionsandgrowthprospects.

The Company is successfully building a strong culture of likeminded people, with common

aspirationsforabovemarketgrowthandbusinessimprovement.

TheCompanyhasdemonstratedanabilitytoachievestrongandconsistentrevenuegrowth.

OrganicandacquisitiongrowthopportunitiesfortheGroupandformemberfirms.

TheCompanyhasastrongbalancesheetandavailablefundingforfurthergrowth.

Scopeforbusinessperformanceimprovementinallmemberfirms,providinganopportunityfor

increasedprofitabilityovertime.

In particular, an opportunity exists to increase profitability by achieving increased scale at both a

Groupandmemberfirmlevel.

AtaGrouplevelthismeanssecuringmorememberfirmstosharethefixedoverheadburdenofthe

Corporateoffice.

Andatamemberfirmlevel,thismeansachievingorganicandacquisitiongrowthtooptimisetheuse

ofexistingpremises,andtosharetheprofessionalmanagementandinfrastructurecoststhatthese

firmsnowhaveinplace.

The

Directors

believe

that

longterm

competitive

advantage

can

be

achieved

by

the

Company

supportingmemberfirmsindevelopingscaletounderpinfuturegrowthandprofitability.


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5

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.


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6

ReviewofFinancialCondition

Liquidityand

Capital

Resources

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)additional

draw

down

of

bank

floating

bill

facilities

early

in

the

financial

year.

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 18,012,663 16,197,914

Less:Cashandcashequivalentsnetof

overdrafts (2,435,615) (1,948,949)

Totalcapitalemployed 15,577,048 14,248,965

The level of gearing in the Company is within acceptable limits set by the directors given the

implicationsofthebusinessacquisitionsandpaymentoftaxliabilitiesduringtheyear.

Shareissues

during

the

year

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).


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ACN120394194


7

RiskManagement

TheGroup

takes

a

proactive

approach

to

risk

management.

The

Board

is

responsible

for

ensuring

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

activitiesare

aligned

with

the

risks

identified

by

the

Board.

These

include

the

following:

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.

Therehavebeennoothersignificantchanges inthestateofaffairsduringtheyearended30June

2011.


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8

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.

PLNprovides

a

range

of

legal

services

including

Corporate

and

Financial

Services,

Travel

and

Tourism,

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,with

renewal

dates

of

September

2012

and

September

2013.

Furtherdetailsareprovidedinnote33.

LIKELYDEVELOPMENTSANDEXPECTEDRESULTS

Integrated Legal Holdings Limited will continue to seek growth in earnings per share through the

developmentandgrowthofexistingmemberfirmsandtheacquisitionofadditionalmemberfirms

throughoutAustralia.


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9

ENVIRONMENTALREGULATION

TheGroups

operations

are

not

subject

to

any

significant

environmental,

Commonwealth

or

State,

regulationsorlaws.

INDEMNIFICATIONANDINSURANCEOFDIRECTORSANDOFFICERS

Each of the directors and secretary of the Company has entered into a deed with the Company

wherebytheCompanyhasprovidedcertaincontractualrightsofaccesstobooksandrecordsofthe

Company to those directors and secretary and to effect and maintain insurance in respect of the

directorsandofficersliabilityandprovidecertainindemnitiestoeachofthedirectors,totheextent

permittedbysection199BoftheCorporationsAct2001.

The Company has put in place Prospectus Insurance and Directors and Officers Liability Insurance.

The contract prohibits the disclosure of the nature of the liability and/or the amount of the

premium.

DIRECTORSMEETINGS

Thenumberofmeetingsofdirectors(includingmeetingsofcommitteesofdirectors)heldduringthe

yearandthenumberofmeetingsattendedbyeachdirectorwasasfollows:

DirectorsMeetings

Auditand

Risk

Management

CommitteeMeetings

Eligibleto

attend Attended

Eligibleto

attend Attended

JDawkins 11 10 8 7

ATregonning 11 11 8 8

GFowler 11 11 8 8

Committeemembership

As at the date of this report, the Company had an Audit and Risk Management Committee of the

BoardofDirectors.

TheAuditandRiskManagementCommitteecomprisesallmembersoftheBoardofdirectorsandis

chairedbyMsTregonning.


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10

AUDITORINDEPENDENCEANDNONAUDITSERVICES

Acopy

of

the

auditors

independence

declaration

received

by

the

directors

in

relation

to

the

audit

fortheyearisprovidedwiththisreportonpage29.

NONAUDITSERVICES

Nonauditserviceswereprovidedbytheentitysauditor,Ernst&Young. Thedirectorsaresatisfied

thattheprovisionofnonauditservicesiscompatiblewiththegeneralstandardofindependencefor

auditors imposed by theCorporationsAct2001. The nature and scope of each type of nonaudit

serviceprovidedmeansthatauditorindependencewasnotcompromised.

Ernst&

Young

received

or

are

due

to

receive

the

following

amounts

for

the

provision

of

non

audit

services:

CONSOLIDATED

2011 2010

$ $

Taxcompliance 17,500 31,453

Taxationservices 5,500

17,500 36,953


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REMUNERATIONREPORT(audited)(continued)

12

There

were

no

other

changes

to

KMP

after

the

reporting

date

and

before

the

date

the

financial

reportwasauthorisedforissue.

2.

Remunerationataglance

IntegratedLegalHoldingsLimitedsremunerationstrategyisdesignedtoattract,motivateandretain

employees and nonexecutive directors (NEDs) by identifying and rewarding high performers and

recognisingthecontributionofeachemployeetothecontinuedgrowthandsuccessoftheGroup.

The remuneration policy is to position total employment cost close to the median of its defined

talentmarket

to

ensure

a

competitive

offering.

Forthe2011performanceperiod,100%oftheshorttermincentivepaymentisbasedonattainment

of a financial measure (net profit before tax or earnings per share). In recognition of the

performanceoftheGroupandtheexecutivesduringtheyear,atotalof$704,234 incashbonuses

waspaidtoGroupKMPsduringthe2011financialyear.

Long term incentive awards consisting of shares that vest on attainment of a predetermined

performancegoalareawardedtoselectedexecutives. TheCompanyusesearningspershareasthe

performancemeasurefortheshareawards. Nosharesvestednorwereawardedor issuedduring

the2011financialyear.

The remuneration of NEDs of the Company consists only of directors fees and committee fees.

Directorandcommitteefeeswereindexedforinflationovertheprioryearfees.

3.

Boardoversightofremuneration

Remunerationassessmentandapprovalprocess

TheBoardofDirectorsoftheCompany isresponsiblefordeterminingandreviewingremuneration

arrangementsfortheBoardandexecutives.

TheBoardwillassesstheappropriatenessofthenatureandamountofremunerationofNEDsand

executives on a periodic basis by reference to relevant employment market conditions, with the

overallobjectiveofensuringmaximumstakeholderbenefitfromtheretentionofahighperforming

directorandexecutiveteam.


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13

Remunerationstrategy

IntegratedLegalHoldingsLimitedsremunerationstrategyisdesignedtoattract,motivateandretain

employeesandNEDsbyidentifyingandrewardinghighperformersandrecognisingthecontribution

ofeachemployeetothecontinuedgrowthandsuccessoftheGroup.

To this end, key objectives of the Companys reward framework are to ensure that remuneration

practices:

arealignedtothegroupsbusinessstrategy;

offercompetitiveremunerationbenchmarkedagainsttheexternalmarket;

providea

strong

linkage

between

individual

and

group

performance

and

rewards;

aligntheinterestsofexecutiveswithshareholdersthroughmeasurementofshareholderreturn;

haveaportionofexecutiveremunerationatrisk;and

establishappropriate,demandingperformancehurdlesforvariableexecutiveremuneration.

Remunerationstructure

In accordance with best practice corporate governance, the structure of NED and executive

remunerationisseparateanddistinct.

4.

Nonexecutivedirectorremunerationarrangements

Remunerationpolicy

TheBoardseekstosetaggregateremunerationatalevelthatprovidestheCompanywiththeability

to attract and retain directors of the highest calibre, whilst incurring a cost that is acceptable to

shareholders.

The amount of aggregate remuneration sought to be approved by shareholders and the fee

structure is reviewed annually against inflation and fees paid to NEDs of comparable companies.

TheBoardmayalsoconsideradvicefromexternalconsultantswhenundertakingtheannualreview

process.

The Companys Constitution and the ASX Listing Rules specify that the aggregate remuneration of

NEDs shall be determined from time to time by a general meeting. The current aggregate

remuneration level for nonexecutive directors, as approved by shareholders, is $250,000 (2010:

$250,000)perannum.

TheBoardwillnotseekanyincreasefortheNEDspoolatthe2011AGM.


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14

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;

Alignthe

interests

of

executives

with

those

of

shareholders;

and

Ensuretotalremunerationiscompetitivebymarketstandards.

Structure

In the 2011 financial year, the executive remuneration framework consisted of the following

components:

Fixedremuneration

Variableremuneration:

o

Shorttermincentive(STI)

o

Longterm

incentive

(LTI)


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ACN120394194



15

The

table

below

illustrates

the

structure

of

Integrated

Legal

Holdings

Limiteds

executive

remunerationarrangements:

Remuneration

ComponentVehicle Purpose

Linkto

Performance

Fixedremuneration Comprisesbasesalary,

superannuation

contributionsand

otherbenefits

Setwithreferencetorole,

marketandexperience.

Executivesaregiventhe

opportunitytoreceivetheir

fixedremunerationina

varietyofformsincluding

cashand

fringe

benefits

suchasparking.Itis

intendedthatthemanner

ofpaymentchosenwillbe

optimalfortherecipient

withoutcreatingunduecost

fortheGroup.

Remunerationlevelis

determinedannually

andisbasedona

financialscalelinked

toindividual

performanceinthe

previousfinancial

year.

STIcomponent Awardsaremadein

theformofcash

paymentsorshare

basedpayments

(equitysettled).

Rewardsexecutivesfor

theircontributionto

achievementofGroupand

businessunitoutcomes,as

wellas

individual

KPIs.

Linkedtofinancial

measuresincluding

earningspershareand

achievementof

profitabilitytargets.

LTIcomponent Awardsaremadein

theformofcash

paymentsorshare

basedpayments

(equitysettled).

Rewardsexecutivesfor

theircontributiontothe

creationofshareholder

valueoverthelongerterm.

Earningspershareis

thekeyfinancial

metric.

Fixedremuneration

FixedremunerationisreviewedannuallybytheBoard.TheprocessconsistsofareviewofCompany,

subsidiaryandindividualperformance,relevantcomparativeremunerationexternallyandinternally

and,where

appropriate,

external

advice

on

policies

and

practices.

The

Board

has

access

to

external

adviceindependentofmanagement,whereappropriate.

Thefixedremunerationcomponentofexecutivesisdetailedintable1onpage26.

Variableremuneration shorttermincentive(STI)

TheobjectiveoftheSTIprogramistolinktheachievementoftheGroupsoperationaltargetswith

the remuneration received by the executives charged with meeting those targets. The total

potentialSTIavailableissetatalevelsoastoprovidesufficientincentivetotheexecutivetoachieve

theoperationaltargetsandsuchthatthecosttotheGroupisreasonableinthecircumstances.


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16

STIawards

vest

at

the

end

of

the

period

over

which

the

performance

targets

are

measured,

and

are

forfeitedifemploymentisterminatedbeforethevestingdate. However,theBoardhasdiscretionto

approveproratapaymentsuptotheterminationdate,takingintoaccountthecircumstances.

ManagingDirectorandChiefExecutive

The Managing Director and Chief Executive is entitled to a maximum performance bonus of

$130,000 (2010:$160,000)payable in cashorshares at the discretionof theBoard, subject tothe

achievementofspecificearningspershare(EPS)performancetargets,calculatedbasedonearnings

beforeperformancebonusexpenserecognisedforthe2011financialyear. Thetargetsforthe2011

financialyearwere:

ThemaximumperformancebonusispayablewheretheGroupachieves25%EPSgrowth.

WheretheGroupachievesbetween15%and25%EPSgrowth,theamountpayableis40%ofthe

maximumbonus,plusanadditional6%(ofmaximumbonus)forevery1%inexcessof15%EPS

growth,toamaximumof100%bonusat25%EPSgrowth.

Wherethegroupachievesbetween10%and15%EPSgrowth,theamountpayableis20%ofthe

maximumbonus,plusanadditional4%(ofmaximumbonus)forevery1%inexcessof10%EPS

growth,toamaximumof40%bonusat15%EPSgrowth.

Where

the

Group

achieves

less

than

10%

EPS

growth

for

the

2011

financial

year,

any

bonus

payableisatthediscretionoftheBoard.

These targets are measured using financial reporting information and reviewed by the Board. If

performancetargetsarenotachieved,theperformancebonusmaystillbepaidatthediscretionof

theBoard,takingintoaccountthecircumstances.

MemberFirmPrincipals

Actual STI payments are granted to subsidiary member firms dependent on the extent to which

specific performance hurdles are met. The STI payments are calculated as a percentage of an

amount

by

which

profitability

of

a

subsidiary

exceeds

a

predetermined

profit

hurdle

for

that

subsidiary.

ProfithurdlesareapprovedbytheBoardatthetimeofacquisitionofamemberfirm.

The STI payment for a subsidiary is then allocated between Principals of that subsidiary based on

predeterminedKPIs,includingfeeincomeattributabletoeachPrincipal.

STI payments may be paid as a cash bonus, up to a maximum of 40% of the accrued bonus, at

quarterly intervals during the financial year subject to satisfaction of member firm KPI targets.

Accruedbonusesthatremainunpaidatyearendaredeliveredasacashbonusorshareswithin10

daysafter

the

release

of

the

audited

financial

statements

each

financial

year.


19/113


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ACN120394194



18

MemberFirm

Principals

The Managing Director reviews the STI bonus payments for a subsidiary for subsequent allocation

between Principals of that subsidiary based on predetermined key performance indicators, which

may include fee income attributable to each Principal,which is measured using financial reporting

information.

ThemaximumSTIcashbonusiscalculatedasapercentageofanamountbywhichprofitabilityofa

subsidiaryexceedsapredeterminedprofithurdleforthatsubsidiary. TheminimumSTIcashbonus

payableisnil.

Duringthe

2011

financial

year,

the

bonus

achieved

and

vested

for

Mr

Taylor,

Managing

Principal

of

Talbot Olivier, was $74,846 (2010: $44,103), forMr Bobbin, Managing Principal of Argyle Lawyers,

was$238,394(2010:$300,000),forMrDouglass,PrincipalofArgyleLawyers,was$238,394(2010:

$400,000), for Mr Ireland, Principal of Argyle Lawyers, was nil (2010: $50,000), for Mr Davies,

Managing Principal of Brett Davies Lawyers (to 31 January 2011), was nil (2010: nil) and for Mr

Quahe,ManagingPrincipalofCivicLegal(from1February2011),wasnil(2010:n/a).

The bonuses achieved and vested during 2011 will be paid within 10 days after the release of the

2011AnnualReport,subjecttoachievementofKPItargetsinrelationtofirmdebtormanagement.

TherehavebeennoalterationstotheSTIbonusplanduringtheyear.

ChiefFinancialOfficerandCompanySecretary

TheManagingDirectorapprovedtheSTIbonuspaymentforthesixmonthsended31August2010.

Themaximumcashbonusis$7,000andtheminimumisnil.

$5,000(2010:$5,400)ofSTIawardsinrespectofthesixmonthperiodended31August2010vested

during the 2011 financial year with 29% (2010: 10%) forfeited. Board discretion was given to the

payment of a cash bonus given that performance conditions were not fully met. This was paid in

cashinOctober2010.

Under

the

new

STI

bonus

arrangements,

commencing

from

1

September

2010

and

afterconsiderationofperformanceagainstKPIs,theBoarddeterminedthattheamounttobepaidtothe

Chief Financial Officer and Company Secretary would be $17,600 (2010: $10,400). Payment was

accruedat30June2011andpaid incash inSeptember2011. ThemaximumSTIbonusachievable

was$17,600andtheminimumwasnil.

Other than the new arrangements from 1 September 2010 noted above, there were no other

alterationstotheChiefFinancialOfficerandCompanySecretarysSTIbonusplanduringtheyear.


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19

Variableremuneration

long

term

incentives

(LTI)


TheLTIbenefitsaredeliveredonadiscretionarybasisbytheBoardintheformofordinarysharesin

theCompanyundertheDeferred EmployeesSharePlan. Suchgrantsareonlymadeto executives

who are able to influence the generation of shareholder wealth and thus have an impact on the

Groupsperformanceagainsttherelevantlongtermperformancehurdle.

NosharesweregrantedtotheChiefFinancialOfficerandCompanySecretaryduringtheyear(2010:

40,000shares).

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).

Executiveshare

trading

policy

TheCompanyhas inplaceasharetradingpolicywhich imposestradingrestrictionsonofficersand

employeesoftheCompanyanditsrelatedentitiesthatareconsideredtobeinpossessionofinside

information.

Executives and directors are prohibited from using derivatives or hedge instruments or otherwise

entering intotransactions(includingmargin loans)thatoperateorare intendedtooperateto limit

theeconomicriskofsecurityholdingsovervestedorunvestedshares intheCompanywithoutthe

writtenpermissionoftheBoard.

Thisis

monitored

by

the

Company

Secretary

on

a

monthly

basis

through

review

of

statements

from

theshareregistryserviceprovider,ComputershareInvestorServicesPtyLimited.


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ACN120394194



20

Furthermore,executives

and

directors

are

required

to

declare

their

intention

to

trade

in

shares

to

theCompanySecretary,whichisthenpresentedtotheBoard.


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ACN120394194



21

6.

Companyperformanceandthelinktoremuneration

IntegratedLegalHoldingsLimitedsremunerationpolicyaimstoconnecttheremunerationreceived

byexecutiveswithearningsandthecreationofshareholderwealth.

Group performance is reflected in the movement of the Groups EPS over time. The graph below

showsIntegratedLegalHoldingsLimitedsEPShistorysinceincorporationinJune2006:

*Fortheperiodfromincorporationon26June2006to30June2007

The2007EPSresultof65.50wasaffectedbythevaluationofsharesissuedtofoundationpartners

and supporters at a deemed value of 50 cents per share prior to listing of the Company and

acquisitionoflegalpractices.

In the 2008 financial year, the EPS was positively impacted through the acquisition of four legal

practicesandaninformationtechnologybusiness.

Inthe2009financialyearanumberoffactorsinfluencedthereductionofEPS. Corporateexpenses

increasedwith

the

full

year

effect

of

the

costs

of

a

Managing

Director

and

Chief

Executive

and

Chief

Financial Officer and Company Secretary, the foundation member firms required additional

investment to take advantage of the growth opportunities available to them, the prevailing

economicconditions negativelyaffectedrevenues, andthedecisiontowriteoff anumberofaged

debtorbalanceswhichhadbecomeunrecoverableasaresultoftheeconomicenvironment.

The increase in EPS during the 2010 financial year represented the full year effect of business

acquisitionsintheprioryearandnormalisedtradingactivitiesacrosstheGroupandintheCorporate

office.

Inthe2011financialyear,EPScontinuedtobestrongwitha19%increaseovertheprioryear. The

increasewas

driven

by

growth

in

business

performance

(51%

increase

in

net

profit

after

tax)

and

improvementinbestpracticestosupportimprovedmarginsandcostefficiencies.

(65.50)

2.66 0.89 1.18 1.41

70.00

60.00

50.00

40.00

30.00

20.00

10.00

0.00

10.00

2007* 2008 2009 2010 2011

EPS

(cents/share)

Year


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ACN120394194



22

TheCompany

has

good

businesses

with

strong

market

positions

and

growth

prospects.

The directors believe that the business model remains strong and the company is on target to

achieveitsobjectives.

ThetablebelowsummarisestheconsequenceoftheGroupsperformanceonshareholdervaluefor

the financial year and the previous four financial years in the form of changes in share price and

returnonequity(inaccordancewiththerequirementsoftheCorporationsAct2001):

Financialyearended30June 2007 2008 2009 2010 2011

Closingshareprice

centspershareasat30June

50.0* 11.0 14.5 10.0 12.0

Dividendspershare(cents) 0.0 2.2 0.00 0.75 0.90

Returnonequity 0% 20% 0% 8% 8%

*The2007sharepricehadadeemedvalueof50centspersharepriortolistingoftheCompanyandacquisitionoflegal

practices.

7. Executivecontractualarrangements

ManagingDirectorandChiefExecutive

ThereisanemploymentcontractinplacebetweenMrFowlerandIntegratedLegalHoldingsLimited

for Mr Fowlers appointment as Managing Director and Chief Executive of the Company. The

contractcommencedon28April2008andcontinuesindefinitelyunlessterminatedaccordingtothe

provisionsofthecontract.

Mr Fowler receives fixed remuneration of $325,000 (2010: $272,500) per annum (inclusive of

superannuation).

Underthetermsofthecontract,MrFowlersdutiesinclude,butarenotlimitedto:

ImplementingthebusinessplanasdeterminedbytheCompany;

Carrying

out

such

lawful

directions

as

given

by

the

Company;

and

Expandinganddevelopingthebusiness.

TheagreementmaybeterminatedwithoutnoticebyIntegratedLegalHoldingsLimitedif:

MrFowlercommitsaseriousbreachoftheagreement;

MrFowlercommitsanyactthatamountstoarepudiationoftheagreement;

MrFowlerengagesinseriousorwilfulmisconduct;or

Itispermittedforanyreasonunderrelevantlegislation.

The agreement may also be terminated by either party with six months notice in writing of

termination. Inlieuofnotice,MrFowlerwouldbeentitledtopaymentequivalenttosixmonthsof

hissalary

at

the

time

notice

is

given.


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ACN120394194



23

MemberFirm

Principals

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,andpotentiallyabonus paidasanadditionalsalary(the bonus payment is

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.

In lieuofnotice,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.

MrTaylor

is

paid

a

salary

of

$412,000

per

annum

(inclusive

of

superannuation)

(2010:

$400,000)

and

potentiallyabonuspaidasanadditionalsalary(thebonuspayment iscalculatedasashareofthe

TalbotOlivierbonuspool,beingapercentageoftheamountbywhichtheauditednetprofitbefore

taxofthePrincipalslawfirmexceedsapredeterminedprofithurdle).




wilfulmisconduct.


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ACN120394194



24

MrTaylor

is

also

subject

to

strict

solicitation

and

competition

restraints

for

a

period

of

12

months


Inlieuofnotice,MrTaylorwouldbeentitledtopaymentequivalenttosixmonthsofhissalaryatthe

timenoticeisgiven.

PBobbinManagingPrincipal,ArgyleLawyers

AIrelandandMDouglassPrincipals,ArgyleLawyers

Messrs Bobbin, Ireland and Douglass are employed under an initial four year term contract and

continue indefinitely unless terminated by either party with six months notice in writing of

termination.

Messrs Bobbin, Ireland and Douglass are paid a salary of $422,300 per annum (inclusive of

superannuation) (2010: $410,000) and potentially a bonus paid as an additional salary (the bonus

payment is calculated at a share of the Argyle Lawyers bonus pool, being a percentage of the

amount by which the audited net profit before tax of the Principals law firm exceeds a pre

determinedprofithurdle).

The employment contracts may be terminated without notice if the employees commit a serious

breachofanyprovisionoftheircontract,areunabletoorareprohibitedfromholdinga licenseto


wilfulmisconduct.

MessrsBobbin,IrelandandDouglassarealsosubjecttostrictsolicitationandcompetitionrestraints

foraperiodof12monthsfollowingtermination.

Inlieuofnotice,MessrsBobbin,IrelandandDouglasswouldbeentitledtopaymentequivalenttosix

monthsoftheirsalaryatthetimenoticeisgiven.

AQuaheManagingPrincipal,CivicLegal

Mr Quahe is employed under an initial four year term contract and continues indefinitely unless

terminatedby

either

party

with

six

months

notice

in

writing

of

termination.

Mr Quahe is paid a salary of $225,000 per annum (inclusive of superannuation) (2010: nil) and

potentiallyabonuspaidasanadditionalsalary(thebonuspayment iscalculatedasashareofthe

CivicLegalbonuspool,beingapercentageoftheamountbywhichtheauditednetprofitbeforetax

ofthePrincipalslawfirmexceedsapredeterminedprofithurdle).




wilfulmisconduct.


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ACN120394194



25

MrQuahe

is

also

subject

to

strict

solicitation

and

competition

restraints

for

a

period

of

12

months


In lieuofnotice,MrQuahewouldbeentitledtopaymentequivalenttosixmonthsofhissalaryat



TheChiefFinancialOfficerandCompanySecretaryhasastandardcontract.MrsRuddreceivesfixed

remunerationof$176,000perannum(inclusiveofsuperannuation)(2010:$160,000).

TheCompany

may

terminate

the

employment

agreement

by

providing

one

month

written

notice

or

providingpaymentinlieuofthenoticeperiod(basedonthefixedcomponentofremuneration).The

Companymayterminatethecontractatanytimewithoutnoticeifseriousmisconducthasoccurred.

Whereterminationwithcauseoccurs,theexecutiveisonlyentitledtothatportionofremuneration

thatisfixed,andonlyuptothedateoftermination.

MrsRuddscontractcontainsstandardobligationstoperformthedutiesofanemployee.

In lieuofnotice,MrsRuddwouldbeentitledtopaymentequivalenttoonemonthofhersalaryat


8.

Equityinstrumentsdisclosures

Unissuedshares

TheCompanyhasnotissuedanyoptionsduringtheyear.


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ACN120394194



Remunerationofkeymanagementpersonnel(KMP)andthefivehighestpaidexecutivesoftheCompanyandtheGroupTable1:Remunerationfortheyearended30June2011

Shortterm PostEmployment Longterm

Salary&

Fees

Cash

Bonus

Non

monetary

benefits Superannuation

LongService

benefits

Other

Benefits1

$ $ $ $ $ $

Nonexecutivedirectors

JDawkins 62,662 30,000

ATregonning 42,168 22,696

Subtotalnonexecutivedirectors 104,830 52,696

Executivedirectors

GFowler1 305,850 130,000 19,150 3,218 31,5

Subtotalexecutivedirectors 305,850 130,000 19,150 3,218 31,5

Otherkeymanagementpersonnel

BTaylor2 424,447 74,846 15,199 5,849

PBobbin2 372,299 238,394 50,000 2,493

MDouglass2 373,118 238,394 50,000 2,244

AIreland 372,299 50,000 2,493

AQuahe2 49,326 45,000

BDavies3 122,324 11,009 2,146

JMRudd2 159,021 22,600 14,312 1,990

SubtotalotherKMP 1,872,834 574,234 235,520 17,215

Total 2,283,514 704,234 307,366 20,433 31,5

1RelatestotheinterestfreecomponentofloanstoKMP(note27(c)).

2Cashbonusesof$699,234accruedasat30June2011werepaidinthe2012financialyear. Afurther$5,000incashbonusesrelatingtotheyearended30June2011waspaidinthe2011financ

2MrQuahebecameaGroupexecutivefrom1February2011.

3MrDaviesceasedtobeaGroupexecutiveon31January2011.


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ACN120394194



Remunerationofkeymanagementpersonnel(KMP)andthefivehighestpaidexecutivesoftheCompanyandtheGroupTable2:Remunerationfortheperiodended30June2010

Shortterm

Post

Employment Longterm

Salary&

Fees

Cash

Bonus

Nonmonetary

benefits Superannuation

LongService

benefits

O

Be

$ $ $ $ $

Nonexecutivedirectors

JDawkins 67,000 30,000

ATregonning 42,376 24,999

Subtotalnonexecutivedirectors 109,376 54,999

Executivedirectors

GFowler1 270,833 64,000 24,375 1,372 1

Subtotalexecutivedirectors 270,833 64,000 24,375 1,372 1

Otherkeymanagementpersonnel

BTaylor2 385,539 44,103 14,461 5,353

PBobbin2 360,000 300,000 49,999 665

MDouglass2,3

370,000 400,000 49,999 640

AIreland2,3

360,000 50,000 49,999 665

BDavies 129,969 11,697

JMRudd2 157,030 5,400 14,312 858

SubtotalotherKMP 1,767,026 799,503

190,467 8,181

Total 2,147,235 863,503 269,841 9,553 1

1RelatestotheinterestfreecomponentofloanstoKMP(note27(c)).

2Cashbonusesof$841,440accruedasat30June2010werepaidinthe2011financialyear. Afurther$12,063incashbonusesrelatingtotheyearended30June2010waspaidinthe2010finan

3MrDouglassandMrIrelandbecameGroupexecutivesfrom1July2009.


30/113


ACN120394194


28

Signedinaccordancewitharesolutionofthedirectors.

GFowler

ManagingDirector

Sydney,28September2011


31/113

Liability limited by a scheme approved

under Professional Standards LegislationGHM:MJ:ILH:063

Auditors Independence Declaration to the Directors of Integrated Legal

Holdings Limited

In relation to our audit of the financial report of Integrated Legal Holdings Limited for the financial year

ended 30 June 2011, to the best of my knowledge and belief, there have been no contraventions of the

auditor independence requirements of the Corporations Act 2001or any applicable code of professional

conduct.

Ernst & Young

G H Meyerowitz

Partner

28 September 2011


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ACN120394194

CorporateGovernanceStatement

30

The Board of directors of Integrated Legal Holdings Limited is responsible for the corporate

governance oftheGrouphaving regardtotheASX CorporateGovernance Council(CGC) published

guidelinesas

well

as

its

corporate

governance

principals

and

recommendations.

The

Board

guides

and monitors the business and affairs of Integrated Legal Holdings Limited on behalf of the

shareholdersbywhomtheyareelectedandtowhomtheyareaccountable.

TheCorporateGovernancepoliciesdisclosed inthisreportrepresentsthe latestguidancereleased

bytheAustralianStockExchange(ASX)forwhich,applicationisnotmandatoryforthe2011financial

yearbutisrequiredforthe2012financialyear.

ThetablebelowsummarisestheCompanyscompliancewiththeCGCsrecommendations:

RecommendationComplyYes/No

Reference/explanation

ASXListing

Rule/CGCrecommendations

Principal1Laysolidfoundationsformanagementandoversight

1.1 Companiesshouldestablishthefunctionsreservedtothe

Boardandthosedelegatedtoseniorexecutivesanddisclose

thosefunctions.

Yes ASXCGC1.1

1.2 Companiesshoulddisclosetheprocessforevaluatingthe

performanceofseniorexecutives.

Yes ASXCGC1.2

1.3 Companiesshouldprovidetheinformationindicatedinthe

guidetoreportingonPrincipal1.

Yes ASXCGC1.3

Principal2StructuretheBoardtoaddvalue

2.1

Amajority

of

the

Board

should

be

independent

directors.

Yes

(a)

ASX

CGC

2.1

2.2 Thechairshouldbeanindependentdirector. Yes (a) ASXCGC2.2

2.3 Therolesofchairandchiefexecutiveofficer(CEO)shouldnot

beexercisedbythesameindividual.

Yes ASXCGC2.3

2.4 TheBoardshouldestablishanominationcommittee. No (b) ASXCGC2.4

2.5 Companiesshoulddisclosetheprocessforevaluatingthe

performanceoftheBoard,itscommitteesandindividual

directors.

Yes ASXCGC2.5



Yes ASXCGC2.6

Principal3Promoteethicalandresponsibledecisionmaking

3.1 Companiesshouldestablishacodeofconductanddisclose

thecodeorasummaryofthecodeasto:

thepracticesnecessarytomaintainconfidenceinthe

Companysintegrity

thepracticesnecessarytotakeintoaccounttheirlegal

obligationsandthereasonableexpectationsoftheir

stakeholders

theresponsibilityandaccountabilityofindividualsfor

reportingandinvestigatingreportsofunethicalpractices.

Yes ASXCGC3.1

3.2 Companiesshouldestablishapolicyconcerningdiversityand

disclosethepolicyorasummaryofthatpolicy. Thepolicy

shouldincluderequirementsfortheBoardtoestablish

measurableobjectivesforachievinggenderdiversityfortheBoardtoassessannuallyboththeobjectivesandprogressin

achievingthem.

Yes ASXCGC3.2


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ACN120394194

CorporateGovernanceStatement(continued)

31

Recommendation

Comply

Yes/No

Reference/

explanation

ASXListing

Rule/CGC

recommendations

Principal3Promoteethicalandresponsibledecisionmaking

(continued)

3.3 Companiesshoulddiscloseineachannualreportthe

measurableobjectivesforachievinggenderdiversitysetby

theBoardinaccordancewiththediversitypolicyand

progresstowardsachievingthem.

Yes ASXCGC3.3

3.4 Companiesshoulddiscloseineachannualreportthe

proportionofwomenemployeesinthewholeorganisation,

womeninseniorexecutivepositionsandwomenonthe

Board.

Yes ASXCGC3.4


guideto

reporting

on

Principal

3.

Yes ASXCGC3.5

Principal4Safeguardintegrityinfinancialreporting

4.1 TheBoardshouldestablishanauditcommittee. Yes ASXCGC4.1

4.2 Theauditcommitteeshouldbestructuredsothatit:

consistsonlyofnonexecutivedirectors

consistsofamajorityofindependentdirectors

ischairedbyanindependentchair,whoisnotchairofthe

Board

hasatleastthreemembers.

No (c) ASXCGC4.2

ASXLR12.7

4.3 Theauditcommitteeshouldhaveaformalcharter. Yes ASXCGC4.3

4.4

Companiesshould

provide

the

information

indicated

in

the


Yes

ASXCGC

4.4

Principal5Maketimelyandbalanceddisclosure

5.1 Companiesshouldestablishwrittenpoliciesdesignedto

ensurecompliancewithASXListingRuledisclosure

requirementsandtoensureaccountabilityatasenior

executivelevelforthatcomplianceanddisclosethose

policiesorasummaryofthosepolicies.

Yes ASXCGC5.1



Yes ASXCGC5.2

Principal6Respecttherightsofshareholders

6.1

Companiesshould

design

a

communications

policy

for

promotingeffectivecommunicationwithshareholdersand

encouragingtheirparticipationatgeneralmeetingsand

disclosetheirpolicyorasummaryofthatpolicy.

Yes

ASXCGC

6.1



Yes ASXCGC6.2


34/113


ACN120394194


32

Recommendation

Comply

Yes/No

Reference/

explanation

ASXListing

Rule/CGC

recommendations

Principal7Recogniseandmanagerisk

7.1 Companiesshouldestablishpoliciesfortheoversightand

managementofmaterialbusinessrisksanddisclosea

summaryofthosepolicies.

Yes ASXCGC7.1

7.2 TheBoardshouldrequiremanagementtodesignand

implementtheriskmanagementandinternalcontrolsystem

tomanagetheCompanysmaterialbusinessrisksandreport

toitonwhetherthoserisksarebeingmanagedeffectively.

TheBoardshoulddisclosethatmanagementhasreportedto

itastotheeffectivenessoftheCompanysmanagementof

thismaterialbusinessrisks.

Yes ASXCGC7.2

7.3 TheBoard

should

disclose

whether

it

has

received

assurance

fromtheCEO(orequivalent)andthechieffinancialofficer

(CFO)[orequivalent]thatthedeclarationprovidedin

accordancewithsection295AoftheCorporationsActis

foundedonasoundsystemofriskmanagementandinternal

controlandthatthesystemisoperatingeffectivelyinall

materialrespectsinrelationtofinancialreportingrisks.

Yes

ASXCGC

7.3



Yes ASXCGC7.4

Principal8Remuneratefairlyandresponsibly

8.1 TheBoardshouldestablisharemunerationcommittee. No (d) ASXCGC8.1

8.2

Theremuneration

committee

should

be

structure

so

that

it:

consistsofamajorityofindependentdirectors

ischairedbyanindependentchair

hasatleastthreemembers.

No

(d)

ASXCGC

8.2

8.3 Companiesshouldclearlydistinguishthestructureofnon

executivedirectorsremunerationfromthatofexecutive

directorsandseniorexecutives.

Yes ASXCGC8.3



Yes ASXCGC8.4

Integrated Legal Holdings Limiteds corporate governance practices were in place throughout the

yearended

30

June

2011.

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

independentjudgement. 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.


35/113


ACN120394194


33

b)

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.

c) TheAuditandRiskManagementCommitteemembershipincludesanexecutivedirector,being

the Managing Director and Chief Executive. Inclusion of the Managing Director and Chief

Executiveisrequiredtosatisfytherecommendationthatthecommitteemustconsistofatleast

threemembers.

d) 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

bemade

by

the

Board

having

regard

to

the

inputs

and

value

to

the

Group

of

the

contributions

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

ManagingDirector

and

Chief

Executive

and

the

executive

management

team.

The

Board

ensures

thatthisteam isappropriatelyqualifiedandexperiencedtodischargetheirresponsibilitiesandhas

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.


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TheBoard isresponsibleforensuringthatmanagementsobjectivesandactivitiesarealignedwith

theexpectationsandriskidentifiedbytheBoard. TheBoardhasanumberofmechanismsinplace

toensure

this

is

achieved

including:

Boardapprovalofastrategicplandesignedtomeetstakeholdersneedsandmanagebusiness

risk;

Ongoingdevelopmentofthestrategicplanandapprovinginitiativesandstrategiesdesignedto

ensurethecontinuedgrowthandsuccessoftheentity;and

Implementationofbudgetsbymanagementandmonitoringprogressagainstbudgetviathe

establishmentandreportingofbothfinancialandnonfinancialkeyperformanceindicators.

OtherfunctionsreservedtotheBoardinclude:

Approvalof

the

annual

and

half

yearly

financial

reports;

Approvingandmonitoringtheprogressofmajorcapitalexpenditure,capitalmanagement,and

acquisitionsanddivestitures;

Ensuringthatanysignificantrisksthatariseareidentified,assessed,appropriatelymanagedand

monitored;and

Reportingtoshareholders.

StructureoftheBoard

Theskills,experienceandexpertiserelevanttothepositionofdirectorheldbyeachdirectorinoffice

atthe

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)ifit isequaltoorgreaterthan10%oftheappropriatebase

amount.

Qualitative factors considered include whether a relationship is strategically important, the

competitive landscape, the nature of the relationship and the contractual or other arrangements

governingitandotherfactorsthatpointtotheactualabilityofthedirectorinquestiontoshapethe

directionoftheGroupsloyalty.


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In accordance with the definition of independence above, and the materiality thresholds set, the

followingdirectorsofIntegratedLegalHoldingsLimitedareconsideredtobeindependent:

Name Position

JDawkins Chairman,NonexecutiveDirector

ATregonning NonexecutiveDirector

TheBoardrecognises the CorporateGovernanceCouncilsrecommendations thattheChair should

beanindependentdirector.

Thereareproceduresinplace,agreedbytheBoard,toenabledirectorsinfurtheranceoftheirduties

toseekindependentprofessionaladviceattheCompanysexpense.

Theterm

in

office

held

by

each

director

in

office

at

the

date

of

this

report

is

as

follows:

Name TerminOffice

JDawkins 4years,11months

ATregonning 4years,11months

GFowler 3years,4months

ForadditionaldetailsregardingBoardappointments,pleaserefertoourwebsite.

Performance

Theperformance

of

the

Board

and

key

executives

is

reviewed

regularly

against

both

measurable

and

qualitativeindicators.

The performance criteria against which directors and executives are assessed are aligned with the

financialandnonfinancialobjectivesofIntegratedLegalHoldingsLimited.

Directorswhoseperformanceisconsistentlyunsatisfactorymaybeaskedtoretire.

Tradingpolicy

UndertheCompanysShareTradingPolicyanexecutiveordirectormustnottradeinanysecurities

ofthe

Company

at

any

time

when

they

are

in

possession

of

unpublished,

price

sensitive

information

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).


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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;

Sharesare

offered

pursuant

to

a

dividend

reinvestment

plan;

Shares are transferred between related entities pursuant to an internal reorganisation of a

director,officerordesignatedemployee;or

WiththepriorwrittenclearanceoftheChairman.

AsrequiredbytheASXlistingrules,theCompanynotifiestheASXofanytransactionconductedby

directorsinthesecuritiesoftheCompany.

Diversitypolicy

TheCompanyvaluesdiversityandrecognisesthebenefitsitcanbringtotheorganisationsabilityto

achieveits

goals.

Accordingly

the

Company

has

developed

a

diversity

policy.

This

policy

outlines

the

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 Objective

Number % %

Numberofwomenemployeesinthewholeorganisation 127 71% 40%60%

NumberofwomenPrincipalsandinseniorexecutivepositions 7 28% 40%60%

NumberofwomenonmemberfirmsBoards 1 7% 40%60%

NumberofwomenonILHBoard 1 33% 40%60%


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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

Boardhasdelegatedresponsibilityforestablishingandmaintainingaframeworkof internalcontrol

andethicalstandardstotheAuditandRiskManagementCommittee.

The committee also provides the Board with additional assurance regarding the reliability of

financialinformationforinclusioninthefinancialreports.

ThemembersoftheAuditandRiskManagementCommitteeduringtheyearwere:

ATregonning Chairman

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

overseeingandapprovingriskmanagement strategy andpolicies, internalcomplianceand internal

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, including responsibilityforthedaytodaydesignand implementationoftheCompanys

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.


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As part of its duties, the Companys management conducts routine reviews with the objective of

providingassurance on the adequacy of the Companysrisk framework and the completenessand

accuracyof

risk

reporting

by

management.

Tothisend,comprehensivepracticesareinplacethataredirectedtowardsachievingthefollowing

objectivesinrelationtotherequirementsofPrincipal7:

EffectiveandefficientuseoftheCompanysresources

Compliancewithapplicablelawsandregulations

Preparationofreliablepublishedfinancialinformation

ChiefExecutiveandCFOcertification

Inaccordance

with

section

295A

of

the

Corporations

Act,

the

Chief

Executive

and

CFO

have

provided

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

controlassurance

from

the

Chief

Executive

and

CFO

can

only

be

reasonable

rather

than

absolute.

This is due to such factors as the need forjudgement, 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.Toassist inachievingthis

objective,the

Board

links

the

nature

and

amount

of

executive

directors

and

officers

remuneration

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.


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Thereisnoschemetoprovideretirementbenefitstononexecutivedirectors.

The

Board

is

responsible

for

determining

and

reviewing

compensation

arrangements

for

the

directorsthemselvesandtheexecutiveteam.

Shareholdercommunicationpolicy

Pursuant to Principal 6, Integrated Legal Holdings Limiteds objective is to promote effective

communicationwithitsshareholdersatalltimes.

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.

Complyingwithcontinuousdisclosureobligationscontained inapplicableASX listingrulesand

theCorporationsAct2001inAustralia.

Communicating effectively with its shareholders and making it easier for shareholders to

communicatewithIntegratedLegalHoldingsLimited.

To promote effective communication with shareholders and encourage effective participation at

generalmeetings,informationiscommunicatedtoshareholders:

ThroughthereleaseofinformationtothemarketviatheASX.

Throughthe

distribution

of

the

annual

report

and

Notices

of

Annual

General

Meeting.

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.


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ACN120394194

ConsolidatedStatementofFinancialPositionASAT30JUNE2011

TheaboveConsolidatedStatementofFinancialPositionshouldbereadinconjunctionwiththe

accompanyingnotes.

40

CONSOLIDATED

Note 2011 2010

$ $

ASSETS

CurrentAssets

Cashandcashequivalents 11 2,460,760 2,151,449

Tradeandotherreceivables 12 7,826,873 7,538,870

Workinprogress 13 2,499,220 1,353,354

Incometaxreceivable 8(d) 12,782

TotalCurrentAssets 12,799,635 11,043,673

NonCurrentAssets

Plantandequipment 14 1,170,294 1,181,314

Prepayments 14,614 29,230

Goodwill 15 12,900,557 10,470,600

Intangibleassets 16 29,700 65,340

Deferredtaxassets 8(d) 101,089

Financialassets 17 3,435 2,642

TotalNonCurrentAssets 14,118,600 11,850,215

TOTALASSETS 26,918,235 22,893,888

LIABILITIES

CurrentLiabilities

Tradeandotherpayables 18 3,813,598 3,317,157

Interestbearing

loans

and

borrowings

19

&

33

2,536,259 1,573,325

Incometaxpayable 8(d) 177,524

Provisions 20 986,593 687,057

Otherliabilities 21 255,769 279,933

TotalCurrentLiabilities 7,592,219 6,034,996

NonCurrentLiabilities

Tradeandotherpayables 18 37,554 75,107

Interestbearingloansandborrowings 19&33 143,325 260,913

Provisions 20 306,092 197,350

Deferredtaxliabilities 8(d) 137,038

Otherliabilities 21 689,344 127,608

TotalNonCurrentLiabilities 1,313,353 660,978

TOTALLIABILITIES 8,905,572 6,695,974

NETASSETS 18,012,663 16,197,914

EQUITY

Issuedcapital 22 33,397,152 32,160,426

Accumulatedlosses 23 (16,926,589) (16,688,184)

Reserves 24 1,542,100 725,672

TOTALEQUITY 18,012,663 16,197,914


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ConsolidatedStatementofComprehensiveIncomeFORTHEYEARENDED30JUNE2011

TheaboveConsolidatedStatementofComprehensiveIncomeshouldbereadinconjunctionwith

theaccompanyingnotes.

41

CONSOLIDATED

Note 2011 2010

$ $

Professionalfees 28,313,125 23,822,676

Interestrevenue 153,015 39,175

Dividendsreceived 126 91

Otherrevenue 7(a) 9,210 13,046

Totalrevenue 28,475,476 23,874,988

Occupancyexpenses (2,338,627) (2,114,280)

Salariesandemployeebenefitsexpenses 7(b) (18,579,646) (16,149,830)

Depreciationandamortisationexpenses 7(c) (412,841) (343,759)

Advertisingandmarketingexpenses (359,123) (222,928)

Administrativeexpenses (3,335,793) (2,889,908)

Otherexpenses 7(d) (1,351,267) (742,175)

Financecosts 7(e) (143,193) (160,597)

Sharebasedpaymentsexpense (41,415) (19,243)

Totalexpenses (26,561,905) (22,642,720)

Profitbeforeincometax 1,913,571 1,232,268

Incometaxexpense 8(a) (626,901) (378,774)

Profitafterincometax 1,286,670 853,494

Netprofitfortheyear 1,286,670 853,494

Othercomprehensiveincome

Netgains/(losses)onavailableforsalefinancialassets 792 (68)

Othercomprehensi

132.asx iaw sept 28 2011 12.09 full year statutory accounts

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