211.asx iaw feb 28 2014 half yearly report and accounts

8/9/2019 211.ASX IAW Feb 28 2014 Half Yearly Report and Accounts

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ILH GROUP LIMITEDACN: 120 394 194

ASX Appendix 4D

RESULTS FOR ANNOUNCEMENT TO THE MARKET

Current reporting period: Half-year ended 31 December 2013Previous corresponding period: Half-year ended 31 December 2012

It is recommended that the Appendix 4D be read in conjunction with all public announcements made

by ILH Group Limited and its controlled entities in accordance with the continuous disclosure

obligations under the ASX listing rules.

Report on half year ended 31 December 2013

EARNINGS

Percentage

change

UP(+)/DOWN(-)

Amount

$ARevenue from ordinary activities down 8% 14,965,638

Loss from ordinary activities after tax attributable to members down 436% (1,394,135)

Net loss for the period attributable to members down 436% (1,394,135)

At 31 December 2013 ILH Group Limited (ILH or the Group) had cash of $1,088,759 and net

operating cash inflows of $619,387 for the half year.

As previously announced to the market, ILH has been undergoing a significant repositioning and

transformation process as the Board looks to achieve size, scale, consistent earnings growth and

share price appreciation for the Group.

Specifically, ILH has made changes to its Australian legal business strategy including the

implementation of a national branding and marketing strategy which are expected to provide

revenue and cost reduction benefits over time. Further, the Board has introduced a complementary

business strategy, with the acquisition of two Wealth Management businesses and a professional

service focussed Corporate Advisory business (described as CIPL) effective 1 September 2013.

The Board is pleased with the progress of the transformation so far and considers that CIPL will

provide ILH with strong growth prospects, recurring revenue and diversification of earnings. CIPL is

also highly revenue synergistic with the Groups existing legal businesses and will provide cross

referral opportunities going forward.

With respect to CIPL, the Board is pleased to report that:

Wealth Management integration is proceeding smoothly and the expected synergies are being

realised;

Funds under management have grown 4% since completion to $464m;

There is a healthy pipeline of active success fee mandates in Corporate Advisory.

The acquired business contributed revenues of $1,615,193 and net profit after tax of $155,861 to the

Group for the four month period from acquisition to 31 December 2013.

The Pentad Group (Pentads) contribution to the net profit of the Group cannot be determined as this

business has been incorporated into CIPLs business and it is impracticable to disclose the total

revenue and profit for the combined entity as though the acquisition had taken place at the

beginning of the period.


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ILH GROUP LIMITEDACN: 120 394 194

ASX Appendix 4D

RESULTS FOR ANNOUNCEMENT TO THE MARKET

The acquisition of CIPL was a material transaction for the Group and involved extensive duediligence, an Independent Experts Report, external advice and significant internal resources. As a

result, ILH has incurred significant one-off costs in relation to the acquisition which have been

expensed in the first half.

ILH is also progressing a number of other strategic initiatives in the context of its transformation

program. These projects have resulted in additional material one-off project costs which have also

been expensed in the first half.

In total these one-off costs were in excess of $800,000.

Additionally, weakness in the West Australian economy has impacted first half revenue and earnings.The ILH business began its operations in Perth and the West Australian businesses have represented

about half of ILH revenue in recent years. The repositioning and diversification strategy being

undertaken by the Group has been driven by the Boards desire to reduce the business risk

associated with this particular market segment.

Due to the performance in the current period, ILH is in breach of the Groupsbank funding interest

cover ratio (ICR) at 31 December 2013. However, the bank is aware of ILHs ongoing repositioning

strategy and transformation process, and is considering a revision to the ICR for an interim period

given the significance of the changes being undertaken. In accordance with the accounting

standards, the Groups bank loans have been reclassified as current liabilities.

Outlook

For the second half, the Board expects an improved result with the benefits of the transformation

starting to emerge, including the Wealth Management and Corporate Advisory businesses being

included for the full six months. While the Company expects some further one-off project costs

associated with the transformation program in the second half, these costs are expected to be

significantly lower than in the first half.

Dividend

ILH has not declared an interim dividend with respect to the financial year ended 30 June 2014 (2013

interim dividend: 0.20 cents), given the acquisition activity during the first half and the potential forfurther acquisition announcements in the second half.

NET TANGIBLE ASSET BACKING

31 Dec 2013

Amount

$

31 Dec 2012

Amount

$

Net tangible asset backing per security (3.47) 3.99

During the period, the Group gained control over the following entities:

ENTITY NAME InvestmentDate

Capricorn Investment Partners Limited - 100% interest 1 September 2013

The Group does not have any interests in joint ventures outside the group.


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ILH GROUP LIMITED

Financial Report

for the half year ended 31 December 2013

ILH Group Limited

ACN 120 394 194

(ASX: IAW)


4/36

ILH Group LimitedFinancial Report

for the Half-Year Ended 31 December 2013 ACN: 120 394 194

Contents

Corporate information ....................................................................................................................... 1

Directors report................................................................................................................................. 2

Consolidated statement of financial position .................................................................................... 4

Consolidated statement of comprehensive income .......................................................................... 5

Consolidated statement of cash flows ............................................................................................... 6

Consolidated statement of changes in equity .................................................................................... 7

Notes to the consolidated financial statements ................................................................................ 8

Directors declaration....................................................................................................................... 29

Auditors independence declaration ................................................................................................ 30

Independent auditors review report ............................................................................................... 31


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1

Corporate Information

ABN 20 120 394 194

DirectorsThe Hon John DawkinsAO,Non-executiveChairman

Anne Tregonning, Non-executive Director

Graeme Fowler, Managing Director/Chief Executive

Dr Stephen Moss, Executive Director

Company Secretary

Jean-Marie Rudd

Registered Office

Level 2

11 Mounts Bay RoadPerth WA 6000

Principal place of business

Head Office

Level 22

1 Market Street

Sydney NSW 2000

Tel: (02) 8263 6600

Share Register

Computershare Investor Services Pty LimitedLevel 2

45 St Georges Terrace

Perth WA 6000

Tel: (08) 9323 2000

ILH Group Limited shares are listed on the Australian Stock Exchange.

Solicitors

Rockwell Olivier (Perth) Rockwell Olivier (Sydney)

Level 8, Wesfarmers House Level 22

40 The Esplanade 1 Market Street

Perth WA 6000 Sydney NSW 2000

Bankers

St George Bank National Australia Bank Limited

Level 2, Westralia Plaza 100 St Georges Terrace

167 St Georges Terrace PERTH WA 6000

Perth WA 6000

Auditor

Ernst & Young

11 Mounts Bay Road

Perth WA 6000


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2

Directors Report

The directors of ILH Group Limited (the Company) submit the financial report for the half-year ended31 December 2013.

DIRECTORS

The names of the Companys directors in office during the half-year and until the date of this report

are set out below. Directors were in office for this entire period unless otherwise stated.

The Hon John DawkinsAO(Non-executive Chairman)

Anne Tregonning (Non-executive Director)

Graeme Fowler (Managing Director)

Dr Stephen Moss (Executive Director) appointed 26 September 2013

REVIEW AND RESULTS OF OPERATIONS

Consolidated revenues of $14,965,638 were down 8% compared with the previous corresponding

half-year period of $16,265,542.

The Group has not declared an interim dividend with respect to the financial year ended 30 June

2014 (2013 interim dividend: 0.20 cents), given the acquisition activity during the first half and the

potential for further acquisition announcements in the second half.

ACQUISITION OF CAPRICORN INVESTMENT PARTNERS LIMITED

On 1 September 2013 the Company acquired 100% of the shares of Capricorn Investment Partners

Limited (CIPL) and the business and assets of The Pentad Group(Pentad).

CIPL was an unlisted public company with operations in Queensland, New South Wales and Victoria.

The business consists of two divisions: Corporate Advisory in Professional Services; and Wealth

Management. In acquiring CIPL, the Company also acquired the business of a large Melbourne based

boutique Financial Planning firm, Pentad. Pentad has been integrated with CIPL to provide scale to

CIPLs Wealth Management operations.

The Directors believe that CIPL and Pentad are high quality businesses with strong growth prospects.CIPL has annual revenues of more than $5.8m and provides ILH with additional platforms growth and

profitability, and access to new industries and clients in the Australasian market.

The transaction supports the Companys strategy to grow a limited number of high quality member

firms, with strong, focused market positions and long term client relationships, into significant and

highly profitable businesses.


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3

Directors Report (continued)

AUDITORSINDEPENDENCE DECLARATION

A copy of the auditors independence declaration in relation to the review for the half-year is

provided on page 30 and forms part of this report.

Signed in accordance with a resolution of the directors.

G Fowler

Managing Director

Sydney, 28 February 2014


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The above Consolidated Statement of Financial Position should be read in conjunction with the

accompanying notes

4

Consolidated Statement of Financial Position

Consolidated Consolidated

Note

As at

31 Dec 2013

As at

30 June 2013

ASSETS $ $

Current assets

Cash and cash equivalents 5 1,140,044 1,164,462

Trade and other receivables 6 9,895,541 10,742,409

Inventories 271,162 6,750

Dividends receivable - 125,906

Work in progress 2,658,621 2,928,984

Income tax receivable 261,682 227,602

Total current assets 14,227,050 15,196,113

Non-current assets

Investment in an associate 15 2,888,913 2,861,383

Plant and equipment 831,161 983,161

Goodwill 7 26,727,347 14,590,139

Intangible assets 8 1,031,973 666,330

Available-for-sale financial assets 5,663 3,718

Deferred tax assets 529,048 -

Total non-current assets 32,014,105 19,104,731

TOTAL ASSETS 46,241,155 34,300,844

LIABILITIES

Current liabilities

Trade and other payables 4,400,213 3,378,660

Interest bearing loans and borrowings 9 13,079,019 623,115

Provisions 1,276,481 991,027

Other liabilities 10 1,811,783 114,494

Total current liabilities 20,567,496 5,107,296

Non-current liabilities

Interest bearing loans and borrowings 9 27,844 8,374,908

Provisions 528,588 387,748

Deferred tax liabilities - 310,340

Other liabilities 10 3,120,549 162,127

Total non-current liabilities 3,676,981 9,235,123

TOTAL LIABILITIES 24,244,477 14,342,419

NET ASSETS 21,996,678 19,958,425

EQUITY

Issued capital 11 38,710,589 34,831,886

Accumulated losses (17,368,147) (17,368,147)

Reserves 12 654,236 2,494,686

TOTAL EQUITY 21,996,678 19,958,425


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The above Consolidated Statement of Comprehensive Income should be read in conjunction with

the accompanying notes.

5

Consolidated Statement of Comprehensive Income


Note

Half-year

ended

31 Dec 2013

Half-year

ended

31 Dec 2012

$ $

Professional fees revenue 14,965,638 16,265,542

Total revenue 14,965,638 16,265,542

Movement in fair value of financial liabilities 10 166,163 -

Share of profit of an associate 15 116,408 94,452

Interest income 27,579 16,671

Dividends received 62 78

Other income 4 1,339 55,514

Total other income 311,551 166,715

Occupancy expenses (1,565,303) (1,391,663)

Salaries and employee benefits expenses (11,605,291) (11,106,292)

Depreciation and amortisation expenses (323,585) (283,737)

Office expenses (2,721,000) (2,098,420)

Advertising and marketing expenses (215,063) (335,682)

Other expenses (384,118) (317,653)

Interest expenses (547,796) (243,525)

Share based payments expense 16 (11,694) (28,089)

Total expenses (17,373,850) (15,805,061)

(Loss)/profit before income tax (2,096,661) 627,196

Income tax benefit/(expense) 702,526 (212,834)

(Loss)/profit after income tax (1,394,135) 414,362

Net (loss)/profit for the period (1,394,135) 414,362

Other comprehensive income

Items that may be reclassified subsequently into profit

or loss:

Net gains on available-for-sale financial assets 1,947 439

Other comprehensive income for the period, net of tax 1,947 439

Total comprehensive (loss)/income for the period (1,392,188) 414,801

Basic (losses)/earnings per share (cents) (0.95) 0.38

Diluted (losses)/earnings per share (cents) (0.95) 0.38


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The above Consolidated Statement of Cash Flows should be read in conjunction with the

accompanying notes.

6

Consolidated Statement of Cash Flows


Note

Half-year

ended31 Dec 2013

Half-year

ended31 Dec 2012

$ $

Cash flows from operating activities

Receipts from customers 18,173,868 18,538,271

Payments to suppliers and employees (17,453,068) (17,390,642)

Interest received 27,579 16,671

Dividends received 214,846 78

Sundry income 1,339 55,514

Interest and other costs of finance paid (345,177) (205,221)

Income tax paid - (114,196)

Net cash flows from operating activities 619,387 900,475

Cash flows from investing activities

Purchase of plant and equipment (31,927) (95,439)

Payment for intangible assets (151,001) (338,500)

Payment for the acquisition of businesses 10,14 (4,098,721) (2,017,809)

Proceeds from the disposal of plant and equipment 340 37,614

Net cash flows used in investing activities (4,281,309) (2,414,134)

Cash flows from financing activities

Payment for share issue expenses (96,912) (14,720)

Proceeds from borrowings 4,599,907 2,849,495Repayments of borrowings (493,832) (543,327)

Payment of dividends (346,561) (641,073)

Net cash flows from financing activities 3,662,602 1,650,375

Net increase in cash held 680 136,716

Cash and cash equivalents at the beginning of the

period 1,130,826 1,279,636

Cash and cash equivalents at the end of the period 5 1,131,506 1,416,352


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The above Consolidated Statement of Changes in Equity should be read in conjunction with the

accompanying notes.

7

Consolidated Statement of Changes in Equity

CONSOLIDATED

Issued

Capital

Accumulated

Losses

Net

UnrealisedGains/(Losses)

Reserve

General

Reserve

Total

Equity

$ $ $ $ $

At 1 July 2013 34,831,886 (17,368,147) (367) 2,495,053 19,958,425

Loss for the period -

-

-

(1,394,135) (1,394,135)

Other comprehensive income -

-

1,947 -

1,947

Total comprehensive

income/(loss) for the period - - 1,947 (1,394,135) (1,392,188)

Transactions with owners in

their capacity as owners

Dividends paid - - - (448,262) (448,262)

Shares issued 3,935,082 - - - 3,935,082

Share-based payments 11,694 - - - 11,694

Transaction costs on share

issue (96,912) -

-

-

(96,912)

Income tax on items taken

directly to or transferred from

equity 28,839 -

-

-

28,839

Balance as at

31 December 2013 38,710,589 (17,368,147) 1,580 652,656 21,996,678

CONSOLIDATED

Issued

Capital

Accumulated

Losses

Net

Unrealised

Gains/(Losses)

Reserve

General

Reserve

Total

Equity

$ $ $ $ $

At 1 July 2012 33,917,382 (17,368,147) (1,223) 2,513,879 19,061,891

Profit for the period -

-

-

414,362 414,362

Other comprehensive income -

-

439 -

439

Total comprehensive income

for the period - - 439 414,362 414,801

Transactions with owners intheir capacity as owners

Dividends paid - - - (817,876) (817,876)

Shares issued 763,884 -

-

-

763,884

Transaction costs on share

issue (14,721) - - - (14,721)

Share-based payments 28,090 - - - 28,090

Income tax on items taken

directly to or transferred from

equity 4,416 -

-

-

4,416

Balance as at

31 December 2012 34,699,051 (17,368,147) (784) 2,110,365 19,440,485


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Notes to the Consolidated Financial Statements

8

1) CORPORATE INFORMATION

The general purpose condensed financial report of ILH Group Limited for the half-year ended 31

December 2013 was authorised for issue in accordance with a resolution of the Directors on 28

February 2014. ILH Group Limited is a for-profit company incorporated in Australia and limited

by shares, which are publicly traded on the Australian Stock Exchange (ASX). The principal

activities of the entities of the consolidated Group are the provision of legal services, online legal

document services, corporate advisory and wealth management in Australia.

2) BASIS OF PREPARATION AND ACCOUNTING POLICIES

a) Basis of preparation

This general purpose condensed financial report for the half-year ended 31 December 2013 has

been prepared in accordance with AASB 134 Interim Financial Reporting and the Corporations

Act 2001.

The half-year financial report does not include all notes of the type normally included within the

annual financial report and therefore cannot be expected to provide as full an understanding of

the financial performance, financial position and financing and investing activities of the

consolidated entity as the full financial report.

It is recommended that the half-year financial report be read in conjunction with the annual

report for the year ended 30 June 2013 and considered together with any publicannouncements made by ILH Group Limited and its controlled entities (the Group) during the

half-year ended 31 December 2013 in accordance with the continuous disclosure obligations

under theASX Listing Rules.

The half-year financial report is prepared in Australian dollars and on a historical cost basis,

except for available-for-sale investments, which have been measured at fair value.

For the purposes of preparing the half-year financial report, the half-year has been treated as a

discrete reporting period.

Going Concern

At 31 December 2013 the Group had cash of $1,088,759 and net operating cash inflows of

$619,387 for the half year.

Due to the performance in the current period, ILH is in breach of the Groups bank funding

interest cover ratio (ICR) at 31 December 2013. However, the bank is aware of ILHs ongoing

repositioning strategy and transformation process, and is considering a revision to the ICR for an

interim period given the significance of the changes being undertaken. In accordance with the

accounting standards, the Groups bank loans have been reclassified as current liabilities.


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9

2) BASIS OF PREPARATION AND ACCOUNTING POLICIES (continued)

Going Concern (continued)

The consolidated financial statements have been prepared on a going concern basis which

contemplates that the Group will continue to meet its commitments and therefore continue to

realise its assets and settle its liabilities in the ordinary course of business.

For the second half, the Board expects an improved result with the benefits of the

transformation starting to emerge, including the Wealth Management and Corporate Advisory

businesses being included for the full six months.

Should the Company continue to breach the ICR, there would be uncertainty as to whether theGroup could continue as a going concern and therefore whether it would realise its assets and

extinguish its liabilities in the normal course of business and at the amounts stated in the

financial report. The financial report does not include any adjustments relating to the

recoverability or classification of recorded assets amounts nor to the amounts or classification

of liabilities that might be necessary should the Group not be able to continue as a going

concern.

Significant accounting policies

Apart from the changes in accounting policy noted below, the accounting policies and methods

of computation are the same as those adopted in the most recent annual financial statements.

Changes in accounting policy

From 1 July 2013, the Group has adopted all Australian Accounting Standards and

Interpretations, mandatory for annual periods beginning on or after 1 July 2013. Adoption of

these standards and interpretations did not have a material effect on the financial position or

performance of the Group.


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10

2) BASIS OF PREPARATION AND ACCOUNTING POLICIES (continued)

b) Basis of consolidation

The half-year consolidated financial statements comprise the financial statements of ILH Group

Limited and its subsidiaries as at 31 December 2013.

Subsidiaries are all those entities (including special purpose entities) over which the Group has

the power to govern the financial and operating policies so as to obtain benefits from their

activities. The existence and effect of potential voting rights that are currently exercisable or

convertible are considered when assessing whether a group controls another entity.

The financial statements of the subsidiaries are prepared for the same reporting period as theparent company, using consistent accounting policies.

In preparing the consolidated financial statements, all intercompany balances and transactions,

income and expenses and profit and losses resulting from intra-group transactions have been

eliminated in full.

Subsidiaries are fully consolidated from the date on which control is obtained by the Group and

cease to be consolidated from the date on which control is transferred out of the Group.

c) Inventories

Inventories are valued at the lower of cost or net realisable value.

Inventories relate to the costs that are directly attributable to specific mandates undertaken by

the Corporate Advisory business and which are billable under success fee arrangements. These

costs consist primarily of the labour and other costs of personnel directly engaged in providing

the service, including supervisory personnel, and attributable overheads. Labour and other costs

relating to sales and general administrative personnel are not included but are recognised as

expenses in the period in which they are incurred. The cost of inventories of a service provider

does not include profit margins or non-attributable overheads that are often factored into prices

charged by service providers.

Net realisable value is the estimated selling price in the ordinary course of business, less

estimated costs of completion and the estimated costs necessary to make the sale.


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11

3) SEGMENT INFORMATION

Operating segments

ILH Group Limited has identified its operating segments based on the internal management

reporting that is used by the executive management team (the chief operating decision maker)

in assessing performance and allocating resources.

ILH Group Limitedsoperating segments have been identified based on how the financial and

operating results of the Group are monitored and presented internally to the executive

management team. The reportable segments are based on aggregated operating segments

determined by the similarity of the products sold and the services provided, as these are thesources of the Groups major risks and have the most effect on the rates of return.

Rockwell Olivier (Perth), Rockwell Olivier (Sydney), Rockwell Olivier (Melbourne), Civic Legal and

Signet Lawyers are operating within the legal services sector in the Australian market and have

been aggregated to one reportable segment given the similarity of the services provided,

method in which services are delivered, types of customers and regulatory environment.

Capricorn Investment Partners Limited is operating within the corporate advisory and wealth

management services sector in the Australian market and has been aggregated to one

reportable segment.

ILH Group Head Office Division has not been allocated to an operating segment, as the costs

relate to managing group affairs, including group financing. These have been reflected as

adjustments and eliminations on page 12.


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12

3) SEGMENT INFORMATION (continued)

Operating segments (continued)

Half-year ended

31 December 2013 Legal

Corporate

Advisory and

Wealth

Management

Total

segments

Adjustments

and

eliminations Consolidated

$ $ $ $ $

Revenue and other income

External customers 13,492,099 1,615,193 15,107,640 169,549 15,277,188

Inter-segment 648,738 - 648,738 (648,738) -

Total revenue and other income 14,140,837 1,615,193 15,756,378 (479,189) 15,277,188

Results

Total profit/(loss) before tax (110,881) 155,861 44,980 (2,141,641) (2,096,661)

Operating assets

Total assets 31,476,348 10,380,221 41,856,569 4,384,586 46,241,155

Less income tax receivable - - - (261,682) (261,682)

Less deferred tax assets (64,017) (53,742) (117,759) (411,289) (529,048)

Total operating assets 31,412,331 10,326,479 41,738,810 3,711,615 45,450,425

Operating liabilities

Total liabilities 25,502,059 1,603,340 27,105,399 (2,860,922) 24,244,477

Less deferred tax liabilities (203,250) - (203,250) 203,250 -

Total operating liabilities 25,298,809 1,603,340 26,902,149 (2,657,672) 24,244,477

As the Group was aggregated into only one reportable segment prior to the acquisition of

Capricorn Investment Partners Limited on 1 September 2013, there is no segment reporting for

the half-year ended 31 December 2012.


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13

4) OTHER INCOME

Consolidated

Half-year

ended

31 Dec 2013

Consolidated

Half-year

ended

31 Dec 2012

$ $

Sundry income 1,339 55,514

5) CASH AND CASH EQUIVALENTS

Consolidated

At31 Dec 2013

Consolidated

At30 Jun 2013

$ $

Cash at bank and in hand 1,140,044 1,164,462

Consolidated

Half-year

ended

31 Dec 2013

Consolidated

Half-year

ended

31 Dec 2012

$ $

Reconciliation to statement of cash flows

For the purposes of the statement of cash flows, cash and cash

equivalents comprise the following at 31 December:

Cash at bank and in hand 1,088,759 1,522,518

Short-term deposits 51,285 3,750

Bank overdrafts (8,538) (109,916)

1,131,506 1,416,352

6) TRADE AND OTHER RECEIVABLES

ConsolidatedAt

31 Dec 2013

ConsolidatedAt

30 Jun 2013

CURRENT $ $

Trade receivables 9,191,483 10,049,886

Allowance for doubtful debts(a)

(642,195) (564,678)

8,549,288 9,485,208

Unbilled client disbursements 149,364 109,184

Prepayments 933,090 964,589

Other receivables 263,799 183,428

9,895,541 10,742,409


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14

6) TRADE AND OTHER RECEIVABLES (continued)

a) Allowance for doubtful debts

Trade receivables are non-interest bearing and are generally on 30-60 day terms. An allowance

for doubtful debts is recognised when there is objective evidence that an individual trade

receivable is impaired. Cumulative bad and doubtful debts of $274,439 (30 June 2013: $435,386

and 31 December 2012: $182,514) have been recognised by the Group as at 31 December 2013

which includes bad debts expense recognised of $196,922 (30 June 2013: $352,787 and 31

December 2012: $172,572). These amounts have been included in other expenses.

Movements in the allowance for doubtful debts were as follows:

Consolidated

At

31 Dec 2013

Consolidated

At

30 Jun 2013

$ $

Opening balance at the beginning of the period 564,678 482,079

Charge for the period 77,517 82,599

Closing balance at the end of the period 642,195 564,678

7)

GOODWILL

Consolidated

At

31 Dec 2013

Consolidated

At

30 Jun 2013

Consolidated

At

31 Dec 2012

$ $ $

Opening balance 14,590,139 14,590,139 14,590,139

Acquisition of subsidiary 12,137,208 - -

Closing balance 26,727,347 14,590,139 14,590,139

a)

Description of the Groups goodwill

After initial recognition, goodwill acquired in a business combination is measured at cost less any

accumulated impairment losses. Goodwill is not amortised but is subject to impairment testing

on an annual basis or whenever there is an indication of impairment.


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15

8) INTANGIBLE ASSETS

a) Reconciliation of carrying amounts at the beginning and end of the period

Consolidated

At

31 Dec 2013

Consolidated

At

30 Jun 2013

Consolidated

At

31 Dec 2012

$ $ $

Opening balance

(net of accumulated amortisation) 666,330 167,540 167,540

Capitalisation of IT development costs 151,001 620,319 338,500

Acquisition of a subsidiary 309,230 - -

Amortisation (94,588) (84,748) (55,314)

Internal transfer - (36,781) -

Closing balance

(net of accumulated amortisation) 1,031,973 666,330 450,726

Consolidated

At

31 Dec 2013

Consolidated

At

30 Jun 2013

Consolidated

At

31 Dec 2012

$ $ $

Cost (gross carrying amount) 1,319,039 787,859 506,040Accumulated amortisation (287,066) (121,529) (55,314)

Net carrying amount at the end of the period 1,031,973 666,330 450,726

b) Description of the Groups identified intangible assets

Intangible assets represent the costs associated with the development and design of the Law

Central website from 2012 to 2014 financial years.

The intangible asset relating to the capitalisation of website development costs commenced

amortisation over its useful life in the 2013 year. It has been assessed as having a useful life ofthree years and is amortised using the straight line method over the remaining term and carried

at cost less accumulated amortisation.

Acquisition during the period

During the process of acquisition of CIPL an intangible asset was identified, relating to the

development of the CIPL Portfolio Administration System (PAS). It has been assessed as having a

useful life of five years and is being amortised using the straight line method over the remaining

term and carried at cost less accumulated amortisation.

The amortisation has been recognised in the statement of comprehensive income in the line

item depreciation and amortisation expense.


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16

9) INTEREST BEARING LOANS AND BORROWINGS

Consolidated

At

31 Dec 2013

Consolidated

At

30 Jun 2013

$ $

CURRENT

Bank overdraft 8,538 33,636

Obligations under finance leases and hire purchase contracts 162,247 179,277

Insurance premium funding (unsecured) 138,136 410,202

Bank loan (secured) 12,770,098 -

13,079,019 623,115

NON-CURRENT

Obligations under hire purchase contracts 27,844 104,810

Bank loan (secured) - 8,270,098

27,844 8,374,908

Refer to note 2(a) for details regarding the reclassification of the Groups bank loan to current

liabilities.

The bank loan is secured over the assets of ILH Group Limited and its controlled entities. The facilityis a Commercial Bill Acceptance with a limit of $14,000,000 expiring in December 2015. This facility

has been drawn down by $12,770,098 at 31 December 2013.


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17

10)OTHER LIABILITIES

Consolidated

At

31 Dec 2013

Consolidated

At

30 Jun 2013

$ $

CURRENT

Contingent consideration payable(1) 1,751,606 -

Lease incentive obligation(2) 60,177 114,494

1,811,783 114,494

NON-CURRENT

Contingent consideration payable(3) 3,120,549 158,416

Lease incentive obligation(2) - 3,711

3,120,549 162,127

(1) Contingent consideration payable on the acquisition of CIPL and Pentad.

(2) Operating lease incentives are recognised as a liability when received and subsequently reduced by allocating lease

payments between rental expense and reduction of the liability to ensure rental expense is recognised on a straight

line basis over the lease term.

(3) Contingent consideration payable on the acquisition of CIPL and Pentad (31 December 2013: $3,120,549 and 30 June

2013: Nil), on the acquisition of Rockwell Olivier (Melbourne) (31 December 2013: Nil and 30 June 2013: $151,322) and

on the acquisition of Wojtowicz Kelly Legal (31 December 2013: Nil and 30 June 2013: $7,094).

$

Financial liability for contingent consideration as at 30 June 2013 158,416

Addition due to CIPL and Pentad acquisition 3,053,738

Interest accretion 75,942

Fair value adjustment (166,163)

Payment of contingent consideration (1,384)

Closing balance at 31 December 2013 3,120,549


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18

11)ISSUED CAPITAL

a) Ordinary shares

Consolidated

31 Dec 2013Consolidated

30 Jun 2013Consolidated

31 Dec 2013Consolidated

30 Jun 2013

Shares Shares $ $

Fully paid shares 164,347,860 109,857,645 38,544,529 34,677,520

Partly paid shares(1) 1,659,056 1,763,500 166,060 154,366

Forfeited shares held in trust(2) (54,444) (100,000) - -

165,952,472 111,521,145 38,710,589 34,831,886

(1) Shares issued under the Deferred Employee Share Plan that vest over three years (note 16).

(2) Shares issued but forfeited under the Deferred Employee Share Plan, held in trust (note 16).

b) Movements in ordinary share capital

CONSOLIDATED Shares $

Opening balance as at 1 July 2013 111,521,145 34,831,886

Issue of shares at 7.2 cents per share being part consideration for

the acquisition of Capricorn Investment Partners Limited on 2

September 2013 40,377,523 2,907,182


the acquisition of the business and assets of The Pentad Group

on 2 September 2013 12,308,333 886,200


services performed by Corporate Advisor, Taylor Collision on 5

September 2013 444,444 40,000

Issue of shares under the Deferred Employee Share Plan

(refer note 16) 245,556 18,920

Forfeited shares under the Deferred Employee Share Plan (200,000) (7,226)

Issue of shares under the Dividend Reinvestment Plan 1,255,471 101,700Costs associated with issuing shares - (96,912)

Income tax on items taken directly to or transferred from equity - 28,839

Balance as at 31 December 2013 165,952,472 38,710,589


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19

11)ISSUED CAPITAL (continued)

b) Movements in ordinary share capital (continued)

CONSOLIDATED Shares $

Opening balance as at 1 July 2012 101,734,515 33,917,382

Issue of shares at 9.5 cents per share to vendors of Rockwell

Bates for a 25% interest in the business on 2 July 2012 3,152,958 299,531

Issue of shares at 9.5 cents per share to vendors of Rockwell

Bates for a further 24% interest in the business on 1 November

2012 3,026,842 287,550

Issue of shares under the Deferred Employee Share Plan(refer note 16) 372,500 28,089

Issue of shares under the Dividend Reinvestment Plan 1,880,797 176,803

Costs associated with issuing shares - (14,720)

Income tax on items taken directly to or transferred from equity - 4,416

Balance as at 31 December 2012 110,167,612 34,699,051

12)RESERVES

At

31 Dec 2013

At

30 Jun 2013

$ $

Retained earnings/(accumulated losses) on available-for-sale

financial assets(a) 1,580 (367)

General reserve(b) 652,656 2,495,053

654,236 2,494,686

a) Net unrealised gains/(losses) reserve

This reserve records movements in the fair value of available-for-sale financial assets.

b) General reserve

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

establishment of a General Reserve.

During the period, no transfers were made to the General Reserve from Accumulated Losses (31

December 2012: nil). Trading losses of $1,394,135 (Trading profit in 31 December 2012:

$414,362) were recognised in the General Reserve and $448,262 (31 December 2012: $817,876)

as dividends paid.


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20

13)CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Other than the contingent consideration arrangement in relation to the acquisition of Capricorn

Investment Partners Limited, The Pentad Group (refer note 14) and Rockwell Olivier (Melbourne) Pty

Ltd (refer note 15), there are no contingent liabilities or assets as at 31 December 2013.

14)BUSINESS COMBINATIONS

Acquisition of Capricorn Investment Partners Limited

On 1 September 2013 the Company acquired 100% of the shares of Capricorn Investment Partners

Limited (CIPL) and the business and assets of The Pentad Group (Pentad).

CIPL was an unlisted public company with operations in Queensland, New South Wales and Victoria.

The business consists of two divisions: Corporate Advisory in Professional Services; and Wealth

Management. In acquiring CIPL, the Company also acquired the business of a large Melbourne based

boutique Financial Planning firm, Pentad. Pentad has been integrated with CIPL to provide scale to

CIPLs Wealth Management operations.

The Directors believe that CIPL and Pentad are high quality businesses with strong growth prospects.

CIPL has annual revenues of more than $5.8m and provides ILH with additional platforms growth and

profitability, and access to new industries and clients in the Australasian market.

The transaction supports the Companys strategy to grow a limited number of high quality member

firms, with strong, focused market positions and long term client relationships, into significant and

highly profitable businesses.

In addition to the continued expansion of the legal business, ILH will develop a complementary

business strategy through the acquisition of complementary non-legal businesses with the following

characteristics:

Strong businesses with significant growth potential

Recurring revenues

Non-personal exertion revenues Scalable

Synergistic with the legal businessesopportunities to cross pollinate.

ILH considers the CIPL transaction will significantly progress its enhanced strategic objectives.


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21

14)BUSINESS COMBINATIONS (continued)

Transaction Details

In the Companysacquisition announcement to the market on 31 July 2013, ILH outlined its intention

to acquire 100% of the shares in CIPL, and the business and assets of Pentad on 1 September 2013,

for consideration of $9,247,846. The consideration was to be satisfied by the issue of 52,685,856 ILH

shares at 9.0 cents per share and the payment of $4,506,119 cash. In addition, contingent

consideration of up to $5,002,211 would be payable over a two year period in scrip and cash if

certain performance conditions were satisfied.

Due to a movement in the share price between the contract date and the date of issue of the shares,

the shares issued on completion were valued at 7.2 cents per share.

A net tangible assets adjustment of $12,406 and $200,000 in cash were also withheld from payment

at acquisition date pending completion of the acquisition balance sheet.

The cash component was sourced from ILHs existing cash reserves and borrowing capacity. ILH

received funding approval from its lenders to increase the companys commercial bill facility by

$4,000,000 to $14,000,000 with the term extended for a further year to 15 December 2015.

The shares component comprises fully paid ordinary shares in the Company which rank equally with

the Company's issued shares, except for any final dividend payable in respect of the 2012/13

financial year, where the shares did not participate.

Due to the proximity of the transaction to the reporting date, the initial accounting for the business

combination was incomplete at 31 December 2013. Accordingly, the Group has recognised the fair

values of the assets acquired and liabilities assumed on a provisional basis.


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22


The following constitutes the total consideration paid or payable calculated at present value and the

provisional fair value of net assets acquired:

Initial

Contract

$

At

Completion

$

Consideration

Cash 4,518,525 4,318,525

Contingent cash consideration (discounted) 2,825,942 3,025,942

Total cash consideration 7,344,467 7,344,467

3,793,382Shares issued at fair value 4,741,727

Contingent share consideration (discounted) 1,680,589 1,680,589

Total share consideration 6,422,316 5,473,971

Total acquisition cost 13,766,783 12,818,438

Provisional

Fair value

$

Assets

Cash and cash equivalents 221,188

Trade and other receivables 719,574

Work in progress 13,885

Inventories 103,082

Income tax receivables 50,616

Property and equipment 45,413

Intangible assets 309,230

Net deferred tax assets 91,487

Total assets acquired 1,554,475

Liabilities

Trade and other payables 506,733

Provisions 348,247

Other liabilities 18,265

Total liabilities acquired 873,245

Total identifiable net assets at fair value (provisional) 681,230

Goodwill arising on acquisition 12,137,208

The cash outflow from the acquisition transaction was $4,097,337 net of cash and cash equivalentsacquired.


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23


Contingent ConsiderationCIPL Shareholders

The maximum acquisition consideration for the CIPL business is $5,294,262 based on a three times

multiple of recurring revenue from acquired clients of the Wealth Management business, and a one

times multiple of revenue for the Corporate Advisory business.

Of $5,294,262, consideration of $3,890,051 was paid at completion ($982,869 paid in cash and

$2,907,182 paid in ILH shares), with $1,404,211 withheld as contingent consideration over the next

two years subject to achieving agreed financial targets for the combined CIPL and Pentad businesses.

Contingent Consideration A - $602,106 is payable in cash in October 2014, subject to CIPL (includingPentad) achieving earnings before interest, tax and amortisation (EBITA) of at least $1,728,000 for

the 12 months ending 31 August 2014. If this target is achieved, the contingent consideration will be

paid in full. Should this minimum target not be achieved, no Contingent Consideration A will be

payable.

Contingent Consideration B - $602,105 is payable in cash in October 2015, subject to CIPL (including

Pentad) achieving an EBITA of at least $1,909,000 for the 12 months ending 31 August 2015. If this

target is achieved, the contingent consideration will be paid in full. Should this minimum target not

be achieved, no Contingent Consideration B will be payable.

$200,000 was withheld from payment at acquisition date pending completion of the acquisitionbalance sheet. This amount was paid in February 2014.

Contingent ConsiderationPentad Shareholders

The maximum acquisition consideration for the Pentad business is $8,019,856, comprising

$6,120,856 which is based on a three times multiple of recurring revenue from acquired clients of

$2,110,000, and up to $1,899,000 in respect of growth in recurring revenue from acquired clients.

Of the $6,120,856, consideration of $4,221,856 (70%) was paid at completion ($3,335,656 paid in

cash and $886,200 paid in ILH shares), with 30% withheld as contingent consideration over the next

two years subject to both achieving agreed financial synergies with CIPL and the retention of

recurring revenue from acquired clients.

Contingent Consideration C payable in cash in October 2014 is subject to Pentad first achieving

agreed target synergies (with CIPL) of at least $181,036 for the twelve months ending 31 August

2014. If this minimum target is not achieved, then no Contingent Consideration C will be payable.

If the agreed target synergies (above) are achieved, the October 2014 contingent consideration will

be determined on the basis of recurring revenue from acquired Pentad clients, subject to a

maximum consideration of $949,500 and a minimum of zero (pro rata basis).


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24


Contingent ConsiderationPentad Shareholders (continued)

The full amount would be payable where there was no change in recurring revenue from acquired

clients in the twelve months ending 31 August 2014 ($2,110,000). The amount payable would

reduce pro rata for any reduction in recurring revenue from acquired clients.

Contingent Consideration D - payable in cash in October 2015 is subject to Pentad first achieving

agreed target synergies (with CIPL) of at least $362,072 for the twelve months ending 31 August

2015. If this minimum target is not achieved, then no Contingent Consideration D will be payable.

If the agreed target synergies (above) are achieved, the October 2015 contingent consideration willbe determined on the basis of recurring revenue from acquired Pentad clients, subject to a

maximum contingent consideration of $1,899,000 less the amount of any Pentad payment in

October 2014 (above).

The full amount would be payable where there was no change in recurring revenue from acquired

clients ($2,110,000). The amount payable would reduce pro rata for any reduction in recurring

revenue from acquired clients.

Clawback of Contingent Consideration C - should an amount be paid under Contingent Consideration

C in October 2014, and subsequently in the twelve months ending 31 August 2015 the recurring

revenue from acquired clients falls below that level, then the corresponding amount of ContingentConsideration C would be repaid by former Pentad shareholders to ILH to a maximum of the amount

previously paid.

Contingent Consideration E payable in ILH shares in October 2015 is subject to Pentad first

achieving agreed target synergies (with CIPL) of at least $362,072 for the twelve months ending 31

August 2015. If this minimum target is not achieved, then no Contingent Consideration E is payable.

If the agreed target synergies (above) are achieved, then up to $1,899,000 is payable on a pro rata

basis in October 2015 where Pentad achieves growth in recurring revenue from acquired clients for

the 12 months ending 31 August 2015. This would be payable based on a three times multiple of the

growth in recurring revenue from acquired clients.

The full amount would be payable where acquired recurring revenue is $633,000 higher than at

acquisition. No Contingent Consideration E will be payable if there is no change in the recurring

revenue from specific clients acquired at acquisition.

ILH believes that any increase in recurring revenue from acquired clients would be with minimal

additional costs for the Company.

The value ascribed to the issue of any ILH shares under Contingent Consideration E will be the

volume weighted average ILH share price calculated over the 10 trading days immediately preceding

the issue of these shares.


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25


Contingent ConsiderationPentad Shareholders (continued)

These shares would rank equally with the ILH ordinary shares already on issue, save for the final

dividend payable in respect of the 2014/2015 financial year, where the new shares would not

participate. These shares would be subject to a two year voluntary escrow period.

The following table summarises the Contingent Consideration of CIPL and Pentad:

Payment Payment Amount

type date $

CIPL

Contingent consideration A Cash October 2014 602,106

Contingent consideration B Cash October 2015 602,105

Payment withheld at acquisition date Cash February 2014 200,000

Total CIPL contingent consideration 1,404,211

Pentad

Contingent consideration C Cash October 2014 949,500

Contingent consideration D Cash October 2015 949,500

Contingent consideration E Shares October 2015 1,899,000

Total Pentad contingent consideration 3,798,000

Total contingent consideration (gross) 5,202,211

15)INVESTMENT IN AN ASSOCIATE

The Group has a 49% interest in Rockwell Olivier (Melbourne) (ROM), a Melbourne based legal

practice.

Should the business achieve the budgeted net profit before tax in the 2014 financial year, contingent

consideration of $160,453 would be payable to ROM in July 2014. Based on the financial result for

the half-year ended 31 December 2013 however, this amount is considered to be no longer payable

and has been added back to other income as a movement in the fair value of financial liabilities.

The carrying value of the investment as at 31 December 2013 is $2,888,913 (30 June 2013:

$2,861,383) and includes the Groups share of the associates after tax profit for the period, of

$116,408 (31 December 2012: $94,452). The carrying value of the investment in ROM approximates

its fair value.

ROM is a private entity that is not listed on any public exchange.


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26

16)SHARE-BASED PAYMENTS

a) Recognised share based payments expense

The expense recognised for employee services received during the half-year is shown in the

table below:

Consolidated

31 Dec 2013

Consolidated

31 Dec 2012

$ $

Expense arising from equity-settled share based

transactions 11,694 28,089

b) Types of share based payment plans

Tax exempt employee share plan (TEESP)

All employees are eligible to participate in the TEESP if they meet the following criteria:

i. They have an adjusted taxable income of less than $180,000 per annum;

ii. They are a permanent full-time or permanent part-time employee of the Group;

iii. They have met the probation period under the terms of their employment contract;

iv. They are at least 18 years of age; and

v.

They are an Australian resident for tax purposes.

Employees who participate in the TEESP can nominate to contribute up to $1,000 per annum

from their pre-tax wages or salary by way of an effective salary sacrifice towards acquiring fully

paid ordinary shares in the Company.

In accordance with the rules of the TEESP, shares acquired under the plan must not be

withdrawn or otherwise dealt with, commencing from the date the employee acquires a

beneficial interest in those shares until the earliest of the date that:

i. Is three years after the acquisition date; or

ii.

The employee ceases to be an employee of the Group.

The rules of the TEESP do not contain any provisions that could result in an employee forfeiting

ownership of their shares under the plan.


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27

16)SHARE-BASED PAYMENTS (continued)

b) Types of share based payment plans (continued)

Deferred employee share plan (DESP)

Shares are granted to key employees and directors of the Group. The DESP is designed to align

participants interests with those of shareholders by increasing the value of the Companys

shares.

Employees are eligible to participate in the DESP if they meet the following criteria:

i.

They are a permanent full-time or permanent part-time employee of the Group;ii. They have met the probation period under the terms of their employment contract;

iii. They are at least 18 years of age; and

iv. They are an Australian resident for tax purposes.

Under the DESP, senior employees are invited to receive fully paid ordinary shares in the

Company subject to the achievement of a number of key performance indicators such as

contribution to earnings per share for the Group.

Shares may either be acquired on-market by the Group or issued by the Parent. During the half-

year ended 31 December 2013, 245,556 shares (31 December 2012: 372,500 shares) were

granted by the Parent with the cost being expensed over a vesting period of three years. Thefair value of the shares is set at the market price of the shares on the date of grant. The impact

on the profit and loss for the half-year ended 31 December 2013 is $18,920 (31 December 2012:

$28,089).

When a participant ceases employment prior to the vesting of their shares, the shares are

forfeited in full unless otherwise determined by the Board. In the event of a change of control,

the performance period end date will be brought forward to the date of the change of control

and awards will vest subject to performance over this shortened period.

There are no cash settlement alternatives.


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28

16)SHARE-BASED PAYMENTS (continued)

c) Summary of shares granted under TEESP and DESP arrangements

No shares were granted under the TEESP during the half-year ended 31 December 2013.

The following table illustrates the number of and movements in shares granted during the

period under the TEESP and the DESP:

Consolidated

31 Dec 2013

Consolidated

31 Dec 2012

No. No.

TEESP:Opening balance at 1 July 252,672 252,672

Transferred to departed employees during the period(1) - -

Closing balance as at 31 December 252,672 252,672

DESP:

Opening balance at 1 July 1,763,500 1,491,000

Granted during the period 245,556 372,500

Shares transferred upon vesting and then sold (150,000) -

Shares forfeited and held in trust (200,000) -

Closing balance as at 31 December 1,659,056 1,863,500

(1) Shares are transferred out of an employee trust into the employees name on termination of employment.

d) Weighted average remaining vesting period

The weighted average remaining vesting period as at 31 December 2013 for the shares issued

under the DESP is 0.86 years (30 June 2013: 0.91 years).

e)

Weighted average fair value

As at 31 December 2013, the weighted average fair value of shares granted under the DESP was

17.9 cents (30 June 2013: 12.0 cents).

17)SUBSEQUENT EVENTS

There were no events occurring subsequent to balance date that have, or will have, a significant

effect on the Group.


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29

Directors Declaration

In accordance with a resolution of the Directors of ILH Group Limited, I state that:

In the opinion of the directors:

a. The financial statements and notes of the consolidated entity are in accordance with the

Corporations Act 2001, including:

i. Giving a true and fair view of the consolidated entitys financial position as at 31

December 2013 and the performance for the half-year ended on that date of the

consolidated entity

ii.

Complying with Accounting Standard AASB 134 Interim Financial Reportingandthe Corporations Regulations 2001

b. There are reasonable grounds to believe that the company will be able to pay its debts

as and when they become due and payable.

On behalf of the Board

G Fowler

Director

Sydney, 28 February 2014


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A m em ber firm of Ernst & Young Global Lim ited

Liability lim ited by a sch em e app rove d u nder P rofessional Standards Legislation TD:AF:ILH:025

Ernst & Young

11 M ounts Bay Road

Perth W A 600 0 A ustralia

GPO Box M 939 Perth W A 6843

Tel: +6 1 8 94 29 22 22

Fax: +61 8 9 429 243 6

ey.com /au

Auditors Independence Declaration to the Directors of ILH Group Limited

In relation to our review of the financial report of ILH Group Lim ited for the half-year ended 31 D ecem ber

2013, to the best of m y know ledge and belief, there have been no contraventions of the auditor

independence requirem ents of the Corporations Act 2001or any applicable code of professional conduct.

Ernst & Young

T G Dachs

Partner

28 February 201 4


35/36

A m em ber firm of Ernst & Young Global Lim ited

Liability lim ited by a schem e app rove d u nder P rofessional Standards Legislation TD:AF:ILH:024

Ernst & Young

11 M ounts Bay Road

Perth W A 600 0 A ustralia

GPO Box M 939 Perth W A 6843

Tel: +6 1 8 94 29 22 22

Fax: +61 8 9 429 243 6

ey.com /au

Independent review report to members of ILH Group Limited

Report on the Half-Year Financial Report

W e have review ed the accom panying half-year financial report of ILH G roup Lim ited, w hich com prises the

consolidated statem ent of financial position as at 31 Decem ber 20 13, the consolidated statem ent of

com prehensive incom e, consolidated statem ent of changes in equity and consolidated statem ent of cash

flow s for the half-year ended on that date, notes com prising a sum m ary of significant accounting policies

and other explanatory inform ation, and the directorsdeclaration of the consolidated entity com prising

the com pany and the entities it controlled at the half-year end or from tim e to tim e during the half-year.

Directors Responsibility for the year Financial Report

The directors of the com pany are responsible for the preparation of the half-year financial report thatgives a true and fair view in accordance w ith A ustralian A ccounting Standards and the Corporations Act

2001and for such internal controls as the directors determ ine are necessary to enable the preparation of

the half-year financial report that is free from m aterial m isstatem ent, w hether due to fraud or error.

Auditors Responsibility

O ur responsibility is to express a conclusion on the half-year financial report based on our review . W e

conducted our review in accordance w ith A uditing Standard on Review Engagem ents A SR E 2410 Review

of a Financial Report Performed by the Independent Auditor of t he Entit y, in order to state w hether, on the

basis of the procedures described, w e have becom e aw are of any m atter that m akes us believe that the

financial report is not in accordance w ith the Corporations Act 2 00 1including: giving a true and fair view

of the consolidated entitys financial position as at 31 D ecem ber 2013 and its perform ance for the half-year ended on that date; and com plying w ith A ccounting Standard A A SB 134 Interim Financial Report ing

and the Corpo rations Regulations 2001. As the auditor of ILH G roup Lim ited and the entities it controlled

during the half-year, A SRE 2410 requires that we com ply w ith the ethical requirem ents relevant to the

audit of the annual financial report.

A review of a half-year financial report consists of m aking enquiries, prim arily of persons responsible for

financial and accounting m atters, and applying analytical and other review procedures. A review is

substantially less in scope than an audit conducted in accordance w ith A ustralian A uditing Standards and

consequently does not enable us to obtain assurance that w e w ould becom e aw are of all significant

m atters that m ight be identified in an audit. A ccordingly, w e do not express an audit opinion.

Independence

In conducting our review , w e have com plied w ith the independence requirem ents of the Corporations Act

2001. W e have given to the directors of the com pany a w ritten A uditors Independence D eclaration, a

copy of w hich is included in the D irectorsReport.


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Conclusion

Based on our review , w hich is not an audit, w e have not becom e aw are of any m atter that m akes us believe

that the half-year financial report of ILH G roup Lim ited is not in accordance w ith the Corporat ions Act

2001, including:

a) giving a true and fair view of the consolidated entitys financial position as at 31 D ecem ber 2013 and

of its perform ance for the half-year ended on that date; and

b) com plying w ith A ccounting Standard A A SB 13 4 Interim Financial Report ingand the Corporations

Regulations 20 01.

Emphasis of Matter

W ithout qualifying our conclusion, w e draw attention to N ote 2 in the financial report w hich indicates that

the entity w as in breach of a financial covenant in relation to a debt facility at 31 D ecem ber 2013

resulting in the reclassification of the debt facility to current liabilities. These conditions, along w ith other

m atters as set forth in N ote 2, indicate the existence of a m aterial uncertainty that m ay cast significant

do ubt about the consolidated entitys ability to continue as a going concern and therefore, the

consolidated entity m ay be unable to realise its assets and discharge its liabilities in the norm al course of

business.

Ernst & Young

T G Dachs

Partner

Perth

28 February 201 4

211.asx iaw feb 28 2014 half yearly report and accounts

Documents