101.asx iaw sept 27 2010 17.39 full year statutory accounts

8/9/2019 101.ASX IAW Sept 27 2010 17.39 Full Year Statutory Accounts

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INTEGRATEDLEGALHOLDINGSLIMITED

ACN120394194

(ASX:IAW)

FinancialReport

Fortheyearended30June2010


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ACN120394194

ContentstoFinancialReport

CorporateInformation

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

1

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

AuditorsIndependenceDeclaration.....................................................................................22

CorporateGovernanceStatement.........................................................................................23

ConsolidatedStatementofFinancialPosition.......................................................................32

ConsolidatedStatementofComprehensiveIncome.............................................................33

ConsolidatedStatementofCashFlows.................................................................................34

ConsolidatedStatement

of

Changes

in

Equity

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

35

NotestotheFinancialStatements.........................................................................................36

DirectorsDeclaration............................................................................................................93

IndependentAuditReport.....................................................................................................94

ASXAdditionalInformation...................................................................................................96


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CorporateInformation

1

ABN20120394194

Directors

TheHonJohnDawkins,Chairman

AnneTregonning,NonexecutiveDirector

GraemeFowler,ManagingDirector/ChiefExecutive

CompanySecretary

JeanMarieRudd

Registeredoffice

Level8,WesfarmersHouse

40The

Esplanade

Perth WA 6000

Principalplaceofbusiness

HeadOffice

Level22

1MarketStreet

Sydney NSW 2000

Tel: (02)82636600

ShareRegister

ComputershareInvestor

Services

Pty

Limited

Level2

45StGeorgesTerrace

Perth WA 6000

Tel: (08)93232000

IntegratedLegalHoldingsLimitedsharesarelistedontheAustralianStockExchange.

Solicitors

TalbotOlivier ArgyleLawyers

Level8,WesfarmersHouse Level22

40The

Esplanade

1

Market

Street

Perth WA 6000 Sydney NSW 2000

Bankers

NationalAustraliaBankLimited

50StGeorgesTerrace

Perth WA 6000

Auditor

Ernst&Young

11MountsBayRoad

Perth

WA

6000


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DirectorsReport

2

Yourdirectorssubmittheirreportfortheyearended30June2010.

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

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

stated.

Names,qualifications,experienceandspecialresponsibilities

TheHonJohnDawkins,AO,B.Ec(NonexecutiveChairman)

MrDawkinswasChairmanofLawCentralfromitsearlybeginningsinMarch2000untilMarch2006.

His other board appointments include Chair of the Archer Exploration Ltd, TVET Australia Ltd and

Sovereign Gold Ltd and Director of M&C Saatchi Direct Pty Ltd. For over 10 years, until 2005, he

served

on

the

board

of

Sealcorp

Holdings,

now

Asgard

Wealth

Solutions,

and

he

is

a

former

chairmanofEldersRuralBankanddirectorofRetailEnergyMarketCompanyLtd.

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.

Duringthe

past

three

years,

Mr

Dawkins

served

as

a

director

of

the

following

listed

companies:

MGMWirelessLtdappointed17August2009*

GeneticTechnologiesLtdappointed24November2004;resigned19November2009

*denotescurrentdirectorship

AnneTregonning,B.Com,FCA,GAICD(NonexecutiveDirector)

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),

and

Senior

Manager

Corporate

Banking,

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.

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

CharteredAccountantsandgraduateoftheAustralianInstituteofCompanyDirectors.

MsTregonning

did

not

have

any

directorships

in

other

listed

companies

during

the

past

three

years.


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DirectorsReport(continued)

3

GraemeFowler,B.Bus,CPA,GAICD(ManagingDirector/ChiefExecutive)

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) and has recently been

appointedaNonExecutiveDirectorofCountplusPtyLtd.

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

PracticingAccountantandagraduateoftheAustralianInstituteofCompanyDirectors.

MrFowlerdidnothaveanydirectorshipsinotherlistedcompaniesduringthepastthreeyears.

BeneficialinterestsinthesharesofthecompanyandrelatedbodiescorporateAsatthedateofthisreport,thebeneficialinterestsofthedirectorsinthesharesofIntegratedLegal

HoldingsLimitedwere:

Number

of

Ordinary

Shares

JDawkins 2,910,282

ATregonning 406,251

GFowler 4,810,559

COMPANYSECRETARY

JeanMarieRudd,B.Com,CA

Appointed:28August2009

MrsRuddisalsotheChiefFinancialOfficer(CFO)oftheIntegratedLegalHoldingsLimitedgroupof

companies.

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

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

Mrs

Rudd

has

over

19

years

experience

in

CFO/Company

Secretary

roles

including

senior

managementroleswiththeHeytesburyGroupandThinkSmartLimited.

MrsRuddisagraduateofCurtinUniversity,Perth,andaCharteredAccountant.

DIVIDENDS

On12August2010,the directorsdeclaredafullyfrankedfinaldividendof0.50centsper ordinary

sharewitharecorddateof15October2010.

PRINCIPALACTIVITIES

TheprincipalactivityoftheentitiesoftheconsolidatedGroupwastheprovisionoflegalservicesand

onlinelegal

document

services

in

Australia.


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4

OPERATINGANDFINANCIALREVIEW

GroupOverview

AdetailedreviewoftheoperationsoftheGroupduringthefinancialyear,itsfinancialpositionand

businessstrategiesandprospectsforfuturefinancialyearsissetoutbelow.

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

meetingallowing

all

directors

to

actively

monitor

the

Groups

performance.

OperatingResultsfortheYear

Consolidated operating revenues of $23,874,988 were 41% higher than the previous year which

reported $16,946,221 operating revenues. Revenue from ordinary activities increased due to a

combinationoforganicgrowthandthefullyeareffectofnewmemberfirmacquisitions.

Fortheyearended30June2010,theconsolidatedentitygeneratedanetprofitaftertaxof$853,494

comparedtotheyearended30June2009of$593,875,anincreaseof44%.

Earningspersharefortheyearwere1.18centspershare,comparedto0.89centspershareforthe

yearended

30

June

2009,

an

increase

of

33%.

TheDirectorsadvisethattheyarepleasedwiththefullyearresultsandwiththecontinuedstrategic

and operational progress that has been made during the period towards developing a robust

business model and in positioning the Group for future growth. Further, the results were an

improved position ontheyear ended 30June2009, theCompany having commenced its recovery

fromtheeffectsoftheGlobalFinancialCrisis(GFC).

AfullcommentaryontheresultsforthereportingperiodiscontainedintheASXreleasedated12

August2010.

ShareholderReturns

TheCompanysreturntoshareholdersisasfollows:

2010 2009

Basicanddilutedprofitpershare(cents) 1.18 0.89


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5

ReviewofFinancialCondition

Liquidityand

Capital

Resources

The statement of cash flows illustrates that there was an increase in cash flow from operating

activities.Operatingactivitiesresultedinanetcashinflowof$1,448,161(2009:$1,652,745outflow).

Cash flows used for investing activities amounted to $802,129 (2009: $3,909,689) which related

entirelytothenetacquisitionofplantandequipmentduringtheyear(2009:$178,286).

Totalcashinflowsweresupplementedby$766,027(2009:$476,372)receivedtofinanceequipment

acquisitions and annual professional indemnity insurance premiums and $227,000 (2009:

$1,723,000) additional draw down of bank floating bill facilities early in the financial year. These

floatingbillloanswerereducedby$1,000,000inthesecondhalfofthefinancialyear.

Finally, there was a cash outflow of $131,122 (2009: $1,411,065) for the payment of the 2010

interimdividendandnetreceiptsof$1,559,452fromthecapitalraisinginApril/May2010.

ThenettangibleassetbackingoftheGroupwas6.54centspershare(2009:4.89cents)anincrease

of34%.

AssetandcapitalstructureCONSOLIDATED

2010 2009

$ $

Net

assets

16,197,914

13,862,406

Less:Cashandcashequivalentsnetofoverdrafts (1,948,949) (465,875)

Totalcapitalemployed 14,248,965 13,396,531

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

implicationsofthebusinessacquisitionsandpaymentoftaxliabilitiesduringtheyear.

Shareissuesduringtheyear

TheCompanyhasissued17,138,488shares(2009:5,807,858shares)duringtheyear:

40,000sharestoemployeesundertheDeferredEmployeesSharePlan(July2009);

353,488sharestoshareholdersunderthedividendreinvestmentplanforthe2010 interim

dividend(April2010);

11,100,000sharestoinvestorsunderTranche1and2oftheSharePlacement(AprilandMay

2010);and

5,645,000sharestoshareholdersundertheSharePlacementPlan(April2010).


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6

RiskManagement

The Group takes a proactive approach to risk management. The Board is responsible forensuring

thatrisks,

and

also

opportunities,

are

identified

on

a

timely

basis

and

that

the

Groups

objectives

and

activitiesarealignedwiththerisksandopportunitiesidentifiedbytheBoard.

TheGroupbelievesthatitiscrucialforallBoardmemberstobepartofthisprocess,andassuchthe

Board has not established a separate risk management committee. Instead subcommittees are

convenedasappropriate inresponsetoissuesandrisksidentifiedbytheBoardasawholeandthe

subcommitteefurtherexaminestheissueandreportsbacktotheBoard.

The Board has a number of mechanisms in place to ensure that managements objectives and

activitiesarealignedwiththerisksidentifiedbytheBoard. Theseincludethefollowing:

Implementation

of

Board

approved

budget

and

Board

monitoring

of

progress

against

budget,includingtheestablishmentandmonitoringoffinancialKPIs;and

Theestablishmentofcommitteestoreportonspecificbusinessrisks.

SIGNIFICANTCHANGESINTHESTATEOFAFFAIRS

Therewerenosignificantchangesinthestateofaffairsduringtheyearended30June2010.

SIGNIFICANTEVENTSAFTERTHEREPORTINGDATE

Afullyfrankedfinaldividendof0.50centspersharewasdeclaredon12August2010witharecord

dateof

15

October

2010

and

a

payment

date

of

5

November

2010.

LIKELYDEVELOPMENTSANDEXPECTEDRESULTS

IntegratedLegalHoldingsLimitedwillcontinuetoseekgrowthinrevenueandearningsthroughthe

acquisitionofadditionallawfirmsthroughoutAustralia.

ENVIRONMENTALREGULATION

The Groups operations are not subject to any significant environmental, Commonwealth or State,

regulationsorlaws.

INDEMNIFICATIONANDINSURANCEOFDIRECTORSANDOFFICERS

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

wherebytheCompanyhasprovidedcertaincontractualrightsofaccesstobooksandrecordsofthe

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

directorsandofficersliabilityandprovidecertainindemnitiestoeachofthedirectors,totheextent

permittedbysection199BoftheCorporationsAct2001.

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

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

premium.


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7

DIRECTORSMEETINGS

Thenumberofmeetingsofdirectors(includingmeetingsofcommitteesofdirectors)heldduringthe

yearand

the

number

of

meetings

attended

by

each

director

was

as

follows:

DirectorsMeetings AuditCommitteeMeetings

Eligibleto

attend Attended

Eligibleto

attend Attended

JDawkins 11 11 6 4

ATregonning 11 11 6 6

GFowler 11 11 6 6

Committeemembership

Asatthedateofthisreport,theCompanyhadanAuditCommitteeoftheBoardofDirectors.

The Audit Committee comprises all members of the Board of Directors and is chaired by Ms

Tregonning.

AUDITORINDEPENDENCEANDNONAUDITSERVICES

Acopyoftheauditors independencedeclarationreceivedbytheDirectors inrelationtotheaudit

fortheyearisprovidedwiththisreportonpage22.

NONAUDITSERVICES

Nonaudit

services

were

provided

by

the

entitys

auditor,

Ernst

&

Young.

The

directors

are

satisfied

thattheprovisionofnonauditservicesiscompatiblewiththegeneralstandardofindependencefor

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

serviceprovidedmeansthatauditorindependencewasnotcompromised.

Ernst&Youngreceivedorareduetoreceivethefollowingamountsfortheprovisionofnonaudit

services:

CONSOLIDATED

2010 2009

$ $

Taxcompliance 31,453 18,813

Taxationservices

5,500 7,737

36,953 26,550


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REMUNERATIONREPORT(audited)

8

Thisremuneration

report

for

the

year

ended

30

June

2010

outlines

the

remuneration

arrangements

oftheCompanyandtheGroup inaccordancewiththerequirementsoftheCorporationsAct2001

anditsRegulations. Theinformationhasbeenauditedasrequiredbysection308(3C)oftheAct.

The remuneration report details the remuneration arrangements for key management personnel

(KMP) of the Group who are defined as those persons having authority and responsibility for

planning, directing and controlling the major activities of the Company and the Group, directly or

indirectly, including any director (whether executive or otherwise) of the parent company, and

includesthefiveexecutivesintheParentandtheGroupreceivingthehighestremuneration.

For the purposes of this report, the term executive encompasses the Chief Executive, senior

executivesand

the

secretary

of

the

Parent

and

the

Group.

Theremunerationreportispresentedunderthefollowingsections:

1.

Individualkeymanagementpersonneldisclosures

2.

Boardoversightofremuneration

3.

Nonexecutivedirectorremunerationarrangements

4.

Executiveremunerationarrangements

5.

Companyperformanceandthelinktoremuneration

6.

Executivecontractualarrangements

7.

Equityinstrumentsdisclosures

1.

Individualkeymanagementpersonneldisclosures

DetailsofKMP including the topfive remuneratedexecutivesof theParent and the Groupare set

outbelow:

i) Directors

JDawkins Chairman(nonexecutive)

ATregonning NonExecutiveDirector

GFowler ManagingDirector/ChiefExecutive

ii) Executives

BTaylor

Managing

Principal,

Talbot

Olivier

PBobbin ManagingPrincipal,ArgyleLawyers

MDouglass Principal,ArgyleLawyers

AIreland Principal,ArgyleLawyers

BDavies ManagingPrincipal,BrettDaviesLawyers

JMRudd ChiefFinancialOfficer/CompanySecretary

TherewerenochangestoKMPafterthereportingdateandbeforethedatethefinancialreportwas

authorisedforissue.


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REMUNERATIONREPORT(audited)(continued)

9

2.

Boardoversightofremuneration

Remunerationassessmentandapprovalprocess

TheBoardofDirectorsoftheCompany isresponsiblefordeterminingandreviewingremuneration

arrangementsfortheBoardandexecutives.

TheBoardwillassesstheappropriatenessofthenatureandamountofremunerationofexecutives

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

objectiveofensuringmaximumstakeholderbenefitfromtheretentionofahighperformingdirector

andexecutiveteam.

Remunerationstrategy

The performance of the Company depends upon the quality of its directors and executives. To

prosper,theCompanymustattract,motivateandretainhighlyskilleddirectorsandexecutives(refer

GroupPerformanceonpage15).

Tothisend,theCompanyembodiesthefollowingprinciplesinitsremunerationframework:

Providecompetitiverewardstoattracthighcalibreexecutives;

Linkexecutiverewardtoshareholdervalue;

Haveaportionofexecutiveremunerationatrisk;and

Establishappropriate,demandingperformancehurdlesforvariableexecutiveremuneration.

Remunerationstructure

Inaccordancewithbestpracticecorporategovernance,thestructureofnonexecutivedirectorand

executiveremunerationisseparateanddistinct.

3. 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 fees paid to nonexecutive directors (NEDs) of comparable

companies. The Board may also consider advice from external consultants when undertaking the

annualreviewprocess.

TheGroupsConstitutionandtheASXListingRulesspecifythattheaggregateremunerationofNEDs

shallbedeterminedfromtimetotimebyageneralmeeting. Thecurrentaggregateremuneration

level for nonexecutive directors, as approved by shareholders, is $250,000 (2009: $250,000) per

annum.

TheBoard

will

not

seek

any

increase

for

the

NED

pool

at

the

2010

AGM.


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10

Structure

The remuneration of NEDs consists of directors fees and committee fees. NEDs do not receive

retirementbenefits,nordotheyparticipateinanyincentiveprograms.

EachNEDreceivesabasefeeof$45,000forbeingbothaDirectoroftheCompanyandmemberof

theAuditCommittee. Anadditionalfeeof$45,000isalsopaidiftheDirectoristheChairmanofthe

Boardand$18,000iftheDirectorisachairmanoftheAuditCommittee.

TheremunerationofNEDsforthefinancialyearisdetailedintable1onpage19ofthisreport.

4.

Executiveremunerationarrangements

Remunerationlevelsandmix

TheGroupaimstorewardexecutiveswithalevelandmixofremunerationcommensuratewiththeir

positionandresponsibilitieswithintheGroupsoasto:

Reward executives for Group, subsidiary and individual performance against targets set by

referencetoappropriatebenchmarks;

Aligntheinterestsofexecutiveswiththoseofshareholders;and

Ensuretotalremunerationiscompetitivebymarketstandards.

Structure

In determining the level and makeup of executive remuneration, the Board engages external

consultantsasneededtoprovideindependentadvice.

The Board has entered into a detailed contract of employment with the Managing Director/Chief

Executiveandotherexecutives. Detailsofthesecontractsareprovidedbelow.

Remunerationmayconsistofthefollowingkeyelements:

Fixedremuneration(basesalaryandsuperannuation)

Variableremuneration:

o

Shortterm

incentives

(STI)

o Long term incentives (LTI) in the form of cash payments or share based payments

(equitysettled)

Fixedremuneration

Objective

FixedremunerationisreviewedannuallybytheBoard.TheprocessconsistsofareviewofCompany,

subsidiaryandindividualperformance,relevantcomparativeremunerationexternallyandinternally

and, where appropriate, external advice on policies and practices. As noted above, the Board has

accesstoexternaladviceindependentofmanagement.


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11

Structure

Executives are given the opportunity to receive their fixed (primary) remuneration in a variety of

formsincludingcashandfringebenefitssuchasparking.Itisintendedthatthemannerofpayment

chosenwillbeoptimalfortherecipientwithoutcreatingunduecostfortheGroup.

Thefixedremunerationcomponentofexecutivesisdetailedintable1onpage19.

Variableremuneration shorttermincentives(STI)

Objective

TheobjectiveoftheSTIprogramistolinktheachievementoftheGroupsoperationaltargetswith

the

remuneration

received

by

the

executives

charged

with

meeting

those

targets.

The

total

potentialSTIavailableissetatalevelsoastoprovidesufficientincentivetotheexecutivetoachieve

theoperationaltargetsandsuchthatthecosttotheGroupisreasonableinthecircumstances.

Structure

ManagingDirector/ChiefExecutive

The Managing Director/Chief Executive is entitled to a maximum performance bonus of $160,000

(payableincash),subjecttotheachievementofspecificperformancetargetsfortheperiodfrom28

April2009to30June2010(26months). Ifachievementofperformancetargetsisnotsuccessfulby

that date, a lesser amount may be payable at the discretion of the Board, taking into account the

individualcircumstances

contributing

to

the

non

achievement

of

those

targets.

Performancetargetsareachievedwhen:

Accumulatedrevenueforthegroupis$40morgreater;and

Earningspersharegrowthof15%orgreaterabovetheforecastearningspershareforthe

2008financialyear.

ThesetargetsaremeasuredusingfinancialreportinginformationandreviewedbytheBoard.

Thetermsandconditionspertainingtothebonusareasfollows:

Both performance targets must be achieved at the same time for satisfaction of

performancecriteria,unlessdeterminedotherwisebytheBoard.

The bonus will vest upon achievement of targets on or before 30 June 2010 (providing

targetsachieved).

Anewbonusstructurewillbenegotiatedfromthetimeofpaymentofthisbonus.

Bonustobepaidincashand/orsharesatthediscretionoftheBoard.

Bonus payable within 30 days of satisfaction of performance criteria, as confirmed by the

Board.


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12

MemberFirmPrincipalsActual 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 pre determined profit hurdle for that

subsidiary.

ProfithurdlesareapprovedbytheBoardatthetimeofacquisitionofamemberfirm.

TheSTIpaymentforasubsidiaryisthenallocatedbetweenPrincipalsofthatsubsidiarybasedonpre

determinedkeyperformanceindicators,includingfeeincomeattributabletoeachPrincipal.

STIpayments

may

be

prepaid

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.

Accruedbonusesthatremainunpaidatyearendaredeliveredasacashbonuswithin10daysafter

thereleaseoftheauditedfinancialstatementseachfinancialyear.

ChiefFinancialOfficer

The Chief Financial Officer is entitled to a maximum performance bonus of $10,000 (assessed and

payableinsixmonthlyinstalments),subjecttotheachievementofspecificperformancetargetsfor

the 12 months ended 31 August 2010. If achievement of performance targets is not successful, a

lesser amount may be payable atthediscretionof the Managing Director, taking into account the

individualcircumstancescontributingtononachievementofthosetargets.

Performance targets are achieved upon satisfaction of key deliverables involving the realisation of

budgetednetprofitaftertaxandoperatingcashflowsforthe2010financialyear.

Thosekeydeliverablesrepresentkeydriversfortheshorttermsuccessofthebusinessandprovidea

framework for delivering long term value. Targets are measured using financial reporting

information and nonfinancial assessment by the Managing Director of implemented schemes and

processes.

STIawardsfor2010


AfterconsiderationofperformanceagainstKPIs,theBoarddeterminedthattheamounttobepaid

totheManagingDirector/ChiefExecutivewouldbe$64,000,with60%ofSTIawardsbeingforfeited

duetoperformanceconditionsnotfullymet. Paymentwasaccruedat30June2010andpaidincash

duringAugust2010.

TherewerenoalterationstotheManagingDirectorsSTIbonusplanduringtheyear.


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13

MemberFirmPrincipalsTheManagingDirectorassessestheSTIbonuspaymentsforasubsidiaryforsubsequentallocation

between Principals of that subsidiary based on pre determined key performance indicators,

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

information.

ThemaximumSTIcashbonusiscalculatedasapercentageofanamountbywhichprofitabilityofa

subsidiaryexceedsapredeterminedprofithurdleforthatsubsidiary. TheminimumSTIcashbonus

payableisnil.

Duringthe2010financialyear,thebonusachievedandvestedforMrTaylor,ManagingPrincipalof

TalbotOlivier

was

$44,103

(2009:

nil),

for

Mr

Davies,

Managing

Principal

of

Brett

Davies

Lawyers

was

nil(2009:nil),forMrBobbin,ManagingPrincipalofArgyleLawyerswas$300,000(2009:$17,006),

for Mr Douglass, Principal of Argyle Lawyers was $400,000 (2009: $17,006) and for Mr Ireland,

PrincipalofArgyleLawyerswas$50,000(2009:$17,006).

The bonuses achieved and vested during 2010 will be paid within 10 days after the release of the

2010AnnualReport.

TherehavebeennoalterationstotheSTIbonusplanduringtheyear.


TheManaging

Director

will

approve

the

STI

bonus

payments

for

the

12

months

ended

31

August

2010. ThemaximumSTIcashbonusis$10,000andtheminimumisnil. Asat30June2010,thishad

notyetbeenassessedandassuch,theawardhadnotyetvested.

$5,400(2009:$nil)ofSTIawards inrespectofthe six month periodended31 August2009 vested

duringthe2010financialyearwith10%forfeitedduetoperformanceconditionsnotbeingfullymet.

This was paid in October 2009. The maximum STI cash bonus achievable was $6,000 and the

minimumwasnil.

No STI awards (2009: $4,000) in respect of the six month period ended 28 February 2010 vested

during the 2010 financial year with 100% forfeited due to performance conditions not being fully

met.

Themaximum

STI

cash

bonus

achievable

was

$5,000

and

the

minimum

was

nil.


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14

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.

40,000sharesweregrantedtotheChiefFinancialOfficeron1July2009withafairvalueof$0.145

per share on grant date and a total fair value of $5,800. The shares will vest in stages during the

threeyearperiodfromissuedate,ended30June2012,followingthesuccessfulachievementofthe

performancecriteria

specified

below,

and

provided

that

the

Chief

Financial

Officer

remains

in

the

employment of the Company for each vesting period. Should the Chief Financial Officer cease

employmentpriortothisdate,unvestedshareswillbeforfeited.

Performancecriteriaattachedtothesharesareasfollows:

100%ofshareswillvestifcumulativegrowthintheCompanysearningspershareoverthe

threeyearsended30June2012is45%ormore;and

Shares will commence vesting after achieving 30% growth in the Companys earnings per

share. 50%ofshareswillvestat30%growthinearningspershare,withanadditional5%of

sharesvestingforevery1.5%ofearningspersharegrowthabove30%.

Performancecriteria

will

be

measured

using

financial

reporting

information.

At30June2010,nosharesundertheLTIplanhavevested(2009:nil)orwereforfeited(2009:nil).

Executivesharetradingpolicy

TheCompanyhas inplaceasharetradingpolicywhich imposestradingrestrictionsonofficersand

employeesoftheCompanyanditsrelatedentitiesthatareconsideredtobeinpossessionofinside

information.

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

enteringinto

transactions

(including

margin

loans)

that

operate

or

are

intended

to

operate

to

limit

theeconomicriskofsecurityholdingsovervestedorunvestedshares intheCompanywithoutthe

written permission of the Board. This is monitored by the CompanySecretary ona monthlybasis

through review of statements from ComputerShare Investor Services Pty Limited. Furthermore,

executivesandDirectors arerequiredtodeclaretheir intention totrade insharestotheCompany

Secretary,whichisthenpresentedtotheBoard.


17/98


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394

194



15

5.

CompanyperformanceandthelinktoremunerationIntegratedLegalHoldingsLimitedsremunerationpolicyaimstoconnecttheremunerationreceived

byexecutiveswithearningsandthecreationofshareholderwealth.

GroupperformanceisreflectedinthemovementoftheGroupsearningspershare(EPS)overtime.

ThegraphbelowshowsIntegratedLegalHoldingsLimitedsbasicEPShistorysince incorporation in

June2006:

(70.00)

(60.00)

(50.00)

(40.00)

(30.00)

(20.00)

(10.00)

0.00

10.00

EPS(cents)

EPS(cents) (65.50) 2.66 0.89 1.18

Jun2007 Jun2008 Jun2009 Jun2010

(1) Fortheperiodfromincorporationon26June2006to30June2007

The2007

EPS

result

of

65.50

was

affected

by

the

valuation

of

shares

issued

to

foundation

partners

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

acquisitionoflegalpractices.

The EPS improved in the 2008 financial year after listing in August 2007 and the subsequent

acquisitionoffourlegalpracticesandaninformationtechnologybusiness.

Inthe2009financialyearanumberoffactorsinfluencedthereductionofEPS. Corporateexpenses

increased with the full year effect of the costs of a Managing Director and Chief Financial

Officer/Company Secretary, the foundation member firms required additional investment to take

advantage of the growth opportunities available to them, the prevailing economic conditions

negativelyaffected

revenues

,and

the

decision

to

write

off

a

number

of

aged

debtor

balances

which

hadbecomeunrecoverableasaresultoftheeconomicenvironment.

The increase in EPS during the 2010 financial year represents the full year effect of prior year

businessacquisitionsandnormalisedtradingactivitiesacrosstheGroupandintheCorporateoffice.

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

achieveitsobjectives.


18/98


ACN

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16

6.

Executivecontractualarrangements


ThereisanemploymentcontractinplacebetweenMrFowlerandIntegratedLegalHoldingsLimited

forMr Fowlers appointment as Managing Director/Chief Executive of theCompany. Thecontract

commenced on 28 April 2008 and continues indefinitely unless terminated according to the

provisionsofthecontract.

Mr Fowler receives fixed remuneration of $272,500 (2009: $272,500) per annum (inclusive of

superannuation).

Underthe

terms

of

the

contract,

Mr

Fowlers

duties

include,

but

are

not

limited

to:

ImplementingthebusinessplanasdeterminedbytheCompany;

CarryingoutsuchlawfuldirectionsasgivenbytheCompany;and

Expandinganddevelopingthebusiness.

TheagreementmaybeterminatedwithoutnoticebyIntegratedLegalHoldingsLimitedif:

MrFowlercommitsaseriousbreachoftheagreement;

MrFowlercommitsanyactthatamountstoarepudiationoftheagreement;

MrFowlerengagesinseriousorwilfulmisconduct;or

Itispermittedforanyreasonunderrelevantlegislation.

The

agreement

may

also

be

terminated

by

either

party

with

30

days

notice

in

writing

of

termination.

MemberFirmPrincipals

BDaviesManagingPrincipal,BrettDaviesLawyers

MrDavieswasemployedunderatwoyearfixedtermcontract,whichexpiredon12August2009. At

expiry of the original contract, an extension was agreed to 30 June 2010 at which point a new

employmentcontractwasnegotiated.

Mr Davies is paid a salary of $200,000 per annum (inclusive of superannuation), from 1 January

2010,

and

potentially

a

bonuspaid

as

an

additional

salary

(the

bonus

payment

is

calculated

at

a

percentage of the amount by which the audited net profit before tax of the Principals law firm

exceedsapredeterminedprofithurdle).

The employment contract can 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

wilful misconduct. Either party may also terminate the employment contract by giving 28 days

notice.

Mr Davies is also subject to strict confidentiality obligations regarding clients of the legal practice,

andis

also

subject

to

solicitation

restraints

for

a

period

of

up

to

two

years

after

termination.


19/98


ACN

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394

194



17

BTaylorManagingPrincipal,TalbotOlivierMr Taylor is employed under a four year fixed term contract and continuing thereafter until

terminatedbyeitherpartywithsixmonthsnoticeinwritingoftermination(noticemaynotbegiven

before1January2013,beingsixmonthspriortothecompletionoftheinitialfouryearterm).

Mr Taylor is paid a salary of $400,000 per annum (inclusive of superannuation) and potentially a

bonuspaidasanadditionalsalary(thebonuspaymentiscalculatedasashareoftheTalbotOlivier

bonus pool, being 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


wilfulmisconduct. MrTaylor isalsosubjecttostrictconfidentialityobligationsandsolicitationand

competitionrestraintsforaperiodof12monthsfollowingtermination.

PBobbinManagingPrincipal,ArgyleLawyers

AIrelandandMDouglassPrincipals,ArgyleLawyers

Messrs Bobbin, Ireland and Douglass are employed under a four year fixed term contracts and

continuing thereafter until terminated by either party with six months notice in writing of

termination (notice may not be given before 4 August 2012 for Messrs Bobbin and Ireland and

before13

December

2012

for

Mr

Douglass,

being

three

months

prior

to

the

completion

of

the

initial

fouryearterm).

Messrs Bobbin, Ireland and Douglass are paid a salary of $410,000 per annum (inclusive of

superannuation) and potentially a bonus paid as an additional salary (the bonus payment is

calculatedatashareoftheArgyleLawyersbonuspool,beingapercentageoftheamountbywhich

theauditednetprofitbeforetaxofthePrincipalslawfirmexceedsapredeterminedprofithurdle).

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

breachofanyprovisionoftheircontract,areunabletoorareprohibitedfromholdinga licenseto


wilful

misconduct.

Messrs

Bobbin,

Ireland

and

Douglass

are

also

subject

to

strict

confidentialityobligations and solicitation and competition restraints for a period of 12 months following

termination.


20/98


ACN

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394

194



18

ChiefFinancial

Officer/Company

Secretary

The Chief Financial Officer/Company Secretary has a standard contract. Mrs Rudd receives fixed

remunerationof$160,000(2009:$160,000)perannum(inclusiveofsuperannuation).

TheCompanymayterminatetheemploymentagreementbyprovidingonemonthwrittennoticeor

providingpaymentinlieuofthenoticeperiod(basedonthefixedcomponentofremuneration).The

Companymayterminatethecontractatanytimewithoutnoticeifseriousmisconducthasoccurred.

Whereterminationwithcauseoccurs,theexecutiveisonlyentitledtothatportionofremuneration

thatisfixed,andonlyuptothedateoftermination.

MrsRuddscontractcontainsstandardobligationstoperformthedutiesofanemployeewhichone

wouldexpect

to

find

in

a

standard

employment

contract.

7.

Equityinstrumentsdisclosures

Unissuedshares

TheCompanyhasnotissuedanyoptionsduringtheyear.


21/98


ACN120394194



Remunerationofkeymanagementpersonnel(KMP)andthefivehighestpaidexecutivesoftheCompanyandtheGroupTable1:Remunerationfortheyearended30June2010

Shortterm

Post

Employment Longterm

Salary&

Fees

Cash

Bonus

Nonmonetary

benefits Other

Super

annuation

LongService

benefits

O

Be

$ $ $ $ $ $

Nonexecutivedirectors

JDawkinsChairman 67,000 30,000

ATregonning 42,376 24,999

Subtotalnonexecutivedirectors 109,376 54,999

Executivedirectors

GFowlerManagingDirector/Chief

Executive

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

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

Otherkeymanagementpersonnel

BTaylorManagingPrincipal,Talbot

Olivier(1)

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

PBobbinManagingPrincipal,Argyle

Lawyers(1)

360,000 300,000 49,999 665

MDouglassPrincipal,ArgyleLawyers(1)(2)

370,000 400,000 49,999 640

AIrelandPrincipal,ArgyleLawyers(1)(2)

360,000 50,000 49,999 665

BDaviesManagingPrincipal,BrettDavies

Lawyers

129,969 11,697

JMRuddChiefFinancialOfficer/Company

Secretary

157,030 5,400 14,312 858

SubtotalotherKMP 1,767,026 799,503 190,467 8,181

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

(1)Cashbonusesof$841,440accruedasat30June2010werepaidinthe2011financialyear.

(2)MrDouglassandMrIrelandbecameGroupexecutivesfrom1July2009.

(3)RelatestotheinterestfreecomponentofloanstoKMP(note27(c)).


22/98


ACN120394194



Remunerationofkeymanagementpersonnel(KMP)andthethreehighestpaidexecutivesoftheCompanyandtheGroupTable2:Remunerationfortheperiodended30June2009

Shortterm

Post

Employment Longterm

Salary&Fees CashBonus

Non

monetary

benefits Other

Super

annuation

LongService

benefits

Oth

Bene

$ $ $ $ $ $ $

Nonexecutivedirectors

JDawkinsChairman 52,667 30,000

ATregonning 1,459 50,207

Subtotalnonexecutivedirectors 54,126 80,207

Executivedirectors

GFowlerManagingDirector/Chief

Executive

250,000 22,500 370 5

Subtotalexecutivedirectors 250,000 22,500 370 5

Otherkeymanagementpersonnel

BTaylorManagingPrincipal,Talbot

Olivier

149,083 14,776 290

PBobbinManagingPrincipal,Argyle

Lawyers(2)(3)

216,127 17,006 50,540 357

BDaviesManagingPrincipal,Brett

DaviesLawyers

91,743 8,257 308

JMRudd

Chief

Financial

Officer/CompanySecretary

143,359 7,833

13,370 190

SubtotalotherKMP 600,312 24,839 86,943 1,145

Total 904,438 24,839 189,650 1,515 5

(1)AllexecutivesoftheGroupandCompanyhavebeendisclosed.

(2)MrBobbinwasappointedasManagingPrincipalofArgyleLawyerson1November2008.

(3)Cashbonusesaccruedat30June2009werepaidtoMrBobbininthe2010financialyear.

(4)RelatestotheinterestfreecomponentofloanstoKMP(note27(c)).


23/98


ACN120394194


21

Signedinaccordancewitharesolutionofthedirectors.

GFowler

ManagingDirector

Sydney,27

September

2010


24/98

Liability limited by a scheme approved

under Professional Standards LegislationGHM:NR:ILH:050

Auditor's 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 2010, to the best of my knowledge and belief, there have been no contraventions of the

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

conduct.

Ernst & Young

G H Meyerowitz

Partner

Perth

27 September 2010


25/98


ACN120394194

CorporateGovernanceStatement

23

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

shareholdersbywhomtheyareelectedandtowhotheyareaccountable.

ThetablebelowsummarisestheCompanyscompliancewiththeCGCsrecommendations:

Recommendation

Comply

Yes/No

Reference/

explanation

ASXListing

Rule/CGC

recommendations

Principal1Laysolidfoundationsformanagementandoversight

1.1 Companiesshouldestablishthefunctionsreservedtothe

Boardand

those

delegated

to

senior

executives

and

disclose

thosefunctions.

Yes ASXCGC1.1

1.2 Companiesshoulddisclosetheprocessforevaluatingthe

performanceofseniorexecutives.

Yes ASXCGC1.2

1.3 Companiesshouldprovidetheinformationindicatedinthe

guidetoreportingonPrincipal1.

Yes ASXCGC1.3

Principal2StructuretheBoardtoaddvalue

2.1 AmajorityoftheBoardshouldbeindependentDirectors. Yes (a) ASXCGC2.1

2.2 ThechairshouldbeanindependentDirector. Yes (a) ASXCGC2.2

2.3 Therolesofchairandchiefexecutiveofficer(CEO)shouldnot

beexercisedbythesameindividual.

Yes ASXCGC2.3

2.4 TheBoardshouldestablishanominationcommittee. No (b) ASXCGC2.4

2.5 Companiesshoulddisclosetheprocessforevaluatingthe

performanceoftheBoard,itscommitteesandindividual

Directors.

Yes ASXCGC2.5



Yes ASXCGC2.6

Principal3Promoteethicalandresponsibledecisionmaking

3.1 Companiesshouldestablishacodeofconductanddisclose

thecodeorasummaryofthecodeasto:

Thepracticesnecessarytomaintainconfidencein

theCompanysintegrity.

Thepracticesnecessarytotakeintoaccounttheir

legalobligationsandthereasonableexpectationsof

theirstakeholders.

Theresponsibilityandaccountabilityofindividuals

forreportingandinvestigatingreportsofunethical

practices.

Yes ASXCGC3.1

3.2 Companiesshouldestablishapolicyconcerningtradingin

CompanysecuritiesbyDirectors,seniorexecutivesand

employees,anddisclosethepolicyorasummaryofthat

policy.

Yes ASXCGC3.2



Yes ASXCGC3.3


26/98


ACN120394194

CorporateGovernanceStatement(continued)

24

Recommendation

Comply

Yes/No

Reference/

explanation

ASXListing

Rule/CGC

recommendations

Principal4Safeguardintegrityinfinancialreporting

4.1 TheBoardshouldestablishanauditcommittee. Yes ASXCGC4.1

4.2 Theauditcommitteeshouldbestructuredsothatit:

ConsistsonlyofnonexecutiveDirectors

ConsistsofamajorityofindependentDirectors

Ischairedbyanindependentchair,whoisnotchair

oftheBoard

Hasatleastthreemembers

No (c) ASXCGC4.2

ASXLR12.7

4.3 Theauditcommitteeshouldhaveaformalcharter. Yes ASXCGC4.3


guideto

reporting

on

Principal

4.

Yes ASXCGC4.4

Principal5Maketimelyandbalanceddisclosure

5.1 Companiesshouldestablishwrittenpoliciesdesignedto

ensurecompliancewithASXListingRuledisclosure

requirementsandtoensureaccountabilityatasenior

executivelevelforthatcomplianceanddisclosethose

policiesorasummaryofthosepolicies.

Yes ASXCGC5.1



Yes ASXCGC5.2

Principal6Respecttherightsofshareholders

6.1 Companiesshoulddesignacommunicationspolicyfor

promotingeffective

communication

with

shareholders

and

encouragingtheirparticipationatgeneralmeetingsand

disclosetheirpolicyorasummaryofthatpolicy.

Yes ASXCGC6.1



Yes ASXCGC6.2

Principal7Recogniseandmanagerisk

7.1 Companiesshouldestablishpoliciesfortheoversightand

managementofmaterialbusinessrisksanddisclosea

summaryofthosepolicies.

Yes ASXCGC7.1

7.2 TheBoardshouldrequiremanagementtodesignand

implementtheriskmanagementandinternalcontrolsystem

tomanagetheCompanysmaterialbusinessrisksandreport

toit

on

whether

those

risks

are

being

managed

effectively.

TheBoardshoulddisclosethatmanagementhasreportedto

itastotheeffectivenessoftheCompanysmanagementof

thismaterialbusinessrisks.

Yes ASXCGC7.2

7.3 TheBoardshoulddisclosewhetherithasreceivedassurance

fromtheCEO(orequivalent)andthechieffinancialofficer

(CFO)[orequivalent]thatthedeclarationprovidedin

accordancewithsection295AoftheCorporationsActis

foundedonasoundsystemofriskmanagementandinternal

controlandthatthesystemisoperatingeffectivelyinall

materialrespectsinrelationtofinancialreportingrisks.

Yes ASXCGC7.3


guideto

reporting

on

Principal

7.

Yes ASXCGC7.4


27/98


ACN120394194


25

RecommendationComplyYes/No

Reference/explanation

ASXListing

Rule/CGCrecommendations

Principal8Remuneratefairlyandresponsibly

8.1 TheBoardshouldestablisharemunerationcommittee. No (d) ASXCGC8.1

8.2 Companiesshouldclearlydistinguishthestructureofnon

executiveDirectorsremunerationfromthatofexecutive

Directorsandseniorexecutives.

Yes ASXCGC8.2



Yes ASXCGC8.3

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

yearended

30

June

2010.

The

following

are

reference

notes

to

the

Principal

Recommendation

table:

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.

b)

No formal nomination committee or procedures have been adopted for the identification,

appointmentandreviewoftheBoardmembership,buttheBoard iscommittedtoan informal

assessment process, facilitated by the Chair in consultation with the Companys professional

advisors.

c)

The audit committee membership includes an executive Director, being the Managing

Director/Chief Executive. Inclusion of the Managing Director/Chief Executive is required to

satisfytherecommendationthatthecommitteemustconsistofatleastthreemembers.

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

that decisionmaking process. The determination of an executive Directors remuneration will

bemadebytheBoardhavingregardtotheinputsandvaluetotheGroupofthecontributionsby

theexecutiveDirectorinconsultantwiththeCompanysprofessionaladvisors.

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. Forfurtherinformation

on corporate governance policies adopted by Integrated Legal Holdings Limited, refer to The

Companyswebsite:

www.ilh.com.au


28/98


ACN120394194


26

Boardfunctions

The Board seeks to identify the expectations of the shareholders, as well as other regulatory and

ethicalexpectations

and

obligations.

In

addition,

the

Board

is

responsible

for

identifying

areas

of

significantbusinessriskandensuringarrangementsareinplacetoadequatelymanagethoserisks.

To ensure that the Board is well equipped to discharge its responsibilities it has established

guidelinesforthenominationandselectionofdirectorsandfortheoperationoftheBoard.

TheresponsibilityfortheoperationandadministrationoftheGroupisdelegatedbytheBoardtothe

Managing Director/Chief Executive and the executive management team. The Board ensures that

this team is appropriately qualified and experienced to discharge their responsibilities and has in

place procedures to assess the performance of the Managing Director/Chief Executive and the

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 committee. The roles and responsibilities of this

committeearediscussedthroughoutthisCorporateGovernanceStatement.

TheBoard isresponsibleforensuringthatmanagementsobjectivesandactivitiesarealignedwith

theexpectationsandriskidentifiedbytheBoard. TheBoardhasanumberofmechanismsinplace

toensurethisisachievedincluding:

Board

approval

of

a

strategic

plan

designed

to

meet

stakeholders

needs

and

manage

businessrisk;

Ongoingdevelopmentofthestrategicplanandapprovinginitiativesandstrategiesdesigned

toensurethecontinuedgrowthandsuccessoftheentity;and

Implementation of budgets by management and monitoring progress against budget via

the establishment and reporting of both financial and nonfinancial key performance

indicators.

OtherfunctionsreservedtotheBoardinclude:

Approvaloftheannualandhalfyearlyfinancialreports;

Approving andmonitoring theprogress of major capital expenditure, capital management,

andacquisitions

and

divestitures;

Ensuringthatanysignificantrisksthatariseareidentified,assessed,appropriatelymanaged

andmonitored;and

Reportingtoshareholders.

StructureoftheBoard

Theskills,experienceandexpertiserelevanttothepositionofdirectorheldbyeachdirectorinoffice

at the date of the annual report is included in the Directors Report. Directors of Integrated Legal

HoldingsLimitedareconsideredtobeindependentwhentheyareindependentofmanagementand

free from any business or other relationship that could materially interfere with or could

reasonably be perceived to materially interfere with the exercise of their unfettered and

independentjudgement.


29/98


ACN120394194


27

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

quantitativeand

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.

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

followingdirectors

of

Integrated

Legal

Holdings

Limited

are

considered

to

be

independent:

Name Position

JDawkins Chairman,NonexecutiveDirector

ATregonning NonexecutiveDirector

TheBoard recognises the CorporateGovernanceCouncilsrecommendations thattheChair should

beanindependentDirector.

There are procedures in place, agreed by the Board, to enable Directors in furtherance of their

dutiestoseekindependentprofessionaladviceattheCompanysexpense.

TheterminofficeheldbyeachDirectorinofficeatthedateofthisreportisasfollows:

Name TerminOffice

JDawkins 3years,11months

ATregonning 3years,11months

GFowler 2years,4months

ForadditionaldetailsregardingBoardappointments,pleaserefertoourwebsite:

www.ilh.com.au

Performance

TheperformanceoftheBoardandkeyexecutivesisreviewedregularlyagainstbothmeasurableand

qualitativeindicators.

The performance criteria againstwhich Directors andexecutives are assessed are aligned with the

financialandnonfinancialobjectivesofIntegratedLegalHoldingsLimited.

Directorswhoseperformanceisconsistentlyunsatisfactorymaybeaskedtoretire.


30/98


ACN120394194


28

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).

RestrictedPersons

are

prohibited

from

trading

in

the

Companys

securities

within

two

months

of

a

halfyear or full year result announcement, being the end of February and the end of August,

respectively.

RestrictedPersonsarepermittedtobuyorsellCompanyshares:

betweentwoand30daysfollowingthereleaseoftheCompanyshalfyearfinancialresults;

and

fromtwodaysafterthereleaseoftheCompanyspreliminaryfullyearfinancialresultsuntil

30daysaftertheCompanysAnnualGeneralMeeting.

In exceptional circumstances clearance may be given for a Restricted Person to sell (but not to

purchase)securities

when

they

would

otherwise

be

prohibited

from

doing

so

but

not

while

there

exists any matter which constitutes unpublished pricesensitive information in relation to the

Companyssecurities.

AsrequiredbytheASXlistingrules,theCompanynotifiestheASXofanytransactionconductedby

DirectorsinthesecuritiesoftheCompany.

Auditcommittee

The Board has established an audit committee, which operates under a charter approved by the

Board. It is the Boards responsibility to ensure that an effective internal control framework exists

withintheentity.Thisincludesinternalcontrolstodealwithboththeeffectivenessandefficiencyof

significant

business

processes,

the

safeguarding

of

assets,

the

maintenance

of

proper

accounting

records,andthereliabilityoffinancialinformationaswellasnonfinancialconsiderationssuchasthe

benchmarkingofoperationalkeyperformanceindicators.TheBoardhasdelegatedresponsibilityfor

establishing and maintaining a framework of internal control and ethical standards to the audit

committee.

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

financialinformationforinclusioninthefinancialreports.

Themembersoftheauditcommitteeduringtheyearwere:

ATregonning

Chairman

JDawkins

GFowler


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29

Qualificationsofauditcommitteemembers

The qualifications and experience of the audit committee members are noted in pages 23 of the

AnnualReport.

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, internal complianceand internal

control. IndoingsotheBoardhastakentheviewthatitiscrucialforallBoardmemberstobeapart

ofthisprocessandassuch,hasnotestablishedaseparateriskmanagementcommittee.

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

controleffectivenessaredelegatedtomanagementthroughtheManagingDirector/ChiefExecutive,

including responsibility for the day to day design and implementation of the Companys risk

managementandinternalcontrolsystem. ManagementreportstotheBoardontheCompanyskey

risksandtheextenttowhichitbelievestheserisksarebeingadequatelymanaged.

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

non

financial

nature.

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 completeness and

accuracyofriskreportingbymanagement.


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30

Tothisend,comprehensivepracticesareinplacethataredirectedtowardsachievingthefollowing

objectivesinrelationtotherequirementsofPrincipal7:

EffectiveandefficientuseoftheCompanysresources

Compliancewithapplicablelawsandregulations

Preparationofreliablepublishedfinancialinformation

ChiefExecutiveandCFOcertification

Inaccordancewithsection295AoftheCorporationsAct,theChiefExecutiveandCFOhaveprovided

awrittenstatementtotheBoardthat:

TheirviewprovidedontheCompanysfinancialreportisfoundedonasoundsystemofrisk

management and internal compliance and control which implements the financial policies

adoptedby

the

Board;

and

The Companys risk management and internal compliance and control system is operating

effectivelyinallmaterialrespects.

TheBoardagreeswiththeviewsoftheASXonthismatterandnotesthatduetoitsnature,internal

control assurance from the Chief Executive and CFO can only be reasonable rather than absolute.

This is due to such factors as the need 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.

RemunerationItistheCompanysobjectivetoprovidemaximumstakeholderbenefitfromtheretentionofahigh

quality Board and executive team by remunerating directors and key executives fairly and

appropriatelywithreferencetorelevantemploymentmarketconditions.Toassist inachievingthis

objective,theBoardlinksthenatureandamountofexecutivedirectorsandofficersremuneration

totheCompanysfinancialandoperationalperformance.

Theexpectedoutcomesoftheremunerationstructureare:

Retentionandmotivationofkeyexecutives.

AttractionofhighqualitymanagementtotheCompany.

Performance

incentives

that

allow

executives

to

share

in

the

success

of

Integrated

Legal

HoldingsLimited.

For a full discussion of the Companys remuneration philosophy and framework and the

remuneration received by Directors and executives in the current period please refer to the

RemunerationReport,whichiscontainedwithintheDirectorsReport.

Thereisnoschemetoprovideretirementbenefitstononexecutivedirectors.

The Board is responsible for determining and reviewing compensation arrangements for the

Directorsthemselvesandtheexecutiveteam.


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31

Shareholdercommunicationpolicy

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

communicationwith

its

shareholders

at

all

times.

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.

Complying with continuous disclosure obligations contained in applicable ASX listing rules

andtheCorporationsAct2001inAustralia.

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

ThroughthedistributionoftheannualreportandNoticesofAnnualGeneralMeeting

Throughshareholdermeetingsandinvestorrelationspresentations

Throughlettersandotherformsofcommunicationsdirectlytoshareholders

By posting relevant information on Integrated Legal Holdings Limiteds website

www.ilh.com.au

TheCompanys

website

www.ilh.com.au

has

a

dedicated

section

for

the

purposes

of

publishing

all

importantCompanyinformationandrelevantannouncementsmadetothemarket.

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

ConsolidatedStatementofFinancialPosition

ASAT30JUNE2010

TheaboveConsolidatedStatementofFinancialPositionshouldbereadinconjunctionwiththe

accompanyingnotes.

32

Note CONSOLIDATED

2010 2009

$ $

ASSETS

CurrentAssets

Cashandcashequivalents 11 2,151,449 600,694

Tradeandotherreceivables 12 7,538,870 5,616,233

Workinprogress 13 1,353,354 1,370,212

TotalCurrentAssets 11,043,673 7,587,139

NonCurrentAssets

Plantand

equipment

14

1,181,314 691,360

Prepayments 29,230 63,016

Goodwill 15 10,470,600 10,372,263

Intangibleassets 16 65,340 100,980

Deferredtaxassets 8 101,089 464,147

Otherassets 17 2,642 2,677

TotalNonCurrentAssets 11,850,215 11,694,443

TOTALASSETS 22,893,888 19,281,582

LIABILITIES

CurrentLiabilities

Tradeandotherpayables 18 3,317,157 1,738,222

Interestbearingloansandborrowings 19 1,573,325 1,244,330

Incometaxpayable 8 177,524 157,011

Provisions 20 687,057 459,466

Otherliabilities 21 279,933 200,000

TotalCurrentLiabilities 6,034,996 3,799,029

NonCurrentLiabilities

Tradeandotherpayables 18 75,107

Interestbearingloansandborrowings 19 260,913 1,064,105

Provisions 20 197,350 177,620

Otherliabilities 21 127,608 378,422

TotalNonCurrentLiabilities 660,978 1,620,147

TOTALLIABILITIES 6,695,974 5,419,176

NETASSETS 16,197,914 13,862,406

EQUITY

IssuedCapital 22 32,160,426 30,504,813

AccumulatedLosses 23 (16,688,184) (16,641,034)

Reserves 24 725,672 (1,373)

TOTALEQUITY 16,197,914 13,862,406


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ACN120394194

ConsolidatedStatementofComprehensiveIncome

FORTHEYEARENDED30JUNE2010

TheaboveConsolidatedStatementofComprehensiveIncomeshouldbereadinconjunctionwith

theaccompanyingnotes.

33

Note CONSOLIDATED

2010 2009

$ $

Professionalfees 23,822,676 16,388,522

Interestrevenue 39,175 158,585

Dividendsreceived 91 85

Otherrevenue 7(a) 13,046 399,029

Totalrevenue 23,874,988 16,946,221

Occupancyexpenses (2,114,280) (1,619,855)

Salariesandemployeebenefitsexpenses 7(b) (16,149,830) (10,167,466)

Depreciationand

amortisation

expenses

7(c)

(343,759) (189,496)

Advertisingandmarketingexpenses (222,928) (209,481)

Administrativeexpenses (2,889,908) (2,602,316)

Otherexpenses 7(d) (742,175) (534,936)

Financecosts 7(e) (160,597) (57,148)

Sharebasedpaymentsexpense (19,243) (14,838)

Impairmentloss (450,000)

Totalexpenses (22,642,720) (15,845,536)

Profitbeforeincometax 1,232,268 1,100,685

Incometaxexpense 8 (378,774) (506,810)

Profitafterincometax 853,494 593,875

Netprofitfortheyear 853,494 593,875

Othercomprehensiveincome

Netgains/(losses)onavailableforsalefinancialassets (68) 112

Othercomprehensiveincome/(losses)fortheyear,netoftax (68) 112

Totalcomprehensiveincomefortheyear 853,426 593,987

Basicprofitpershare(cents) 10 1.18 0.89

Dilutedprofitpershare(cents) 10 1.18 0.89


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ACN120394194

ConsolidatedStatementofCashFlows


TheaboveConsolidatedStatementofCashFlowsshouldbereadinconjunctionwiththe

accompanyingnotes.

34

Note CONSOLIDATED

2010 2009

$ $

Cashflowsfromoperatingactivities

Receiptsfromcustomers 24,249,661 14,744,556

Interestreceived 39,175 159,533

Dividendsreceived 57 44

Otherrevenue 13,046 399,029

Paymentstosuppliersandemployees (22,800,109) (15,623,518)

Interestandothercostsoffinancepaid (92,984) (23,832)

Incometaxreceived/(paid) 39,315 (1,308,557)

Netcashflowsfrom/(usedin)operatingactivities 25(a)

1,448,161 (1,652,745)

Cashflowsfrominvestingactivities

Purchaseofplantandequipment (807,265) (180,612)

Proceedsfromthedisposalofplantandequipment 5,136 2,326

Paymentfortheacquisitionofbusinessesnetofcashacquired (3,731,403)

Netcashflowsusedininvestingactivities (802,129) (3,909,689)

Cashflowsfromfinancingactivities

Proceedsfromloansreceived 993,027 2,199,372

Repaymentofborrowings (1,584,315) (386,764)

Dividendspaid (131,122) (1,411,065)

Proceedsfrom

issue

of

shares

1,674,510

Paymentsforshareissueexpenses (115,058)

Netcashflowsfromfinancingactivities 837,042 401,543

Netincrease/(decrease)incashheld 1,483,074 (5,160,891)

Cashandcashequivalentsatthebeginningofthefinancialyear 465,875 5,626,766

Cashandcashequivalentsattheendofthefinancialyear 11 1,948,949 465,875


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ACN120394194

ConsolidatedStatementofChangesinEquity


TheaboveConsolidatedStatementofChangesinEquityshouldbereadinconjunctionwiththe

accompanyingnotes.

35

CONSOLIDATED

Issued

Capital

Accumulated

Losses

Net

Unrealised

Gains/(Losses)

Reserve

General

Reserve

Total

Equity

$ $ $ $ $

Balanceasat1July2008 29,729,975 (15,823,844) (1,485) 13,904,646

Profitfortheyear 593,875 593,875

Othercomprehensiveincome 112 112

Totalcomprehensiveincomeforthe

year 593,875 112 593,987

Transactionswithownersintheircapacityasowners

Dividendspaid (1,411,065) (1,411,065)

Issueofshares 774,838 774,838

Balanceasat30June2009 30,504,813 (16,641,034) (1,373) 13,862,406

CONSOLIDATED

Issued

Capital

Accumulated

Losses

Net

Unrealised

Gains/(Losses)

Reserve

General

Reserve

Total

Equity

$ $ $ $ $

Balanceasat1July2009 30,504,813

(16,641,034)

(1,373)

13,862,406

Profitfortheyear 853,494 853,494

Othercomprehensiveloss (68) (68)

Totalcomprehensiveincomeforthe

year 853,494 (68) 853,426

Transactionswithownersintheir

capacityasowners

Transfertogeneralreserve (727,113) 727,113

Dividendspaid (173,531) (173,531)

Sharebasedpayments 19,243 19,243

Issueofshares 1,716,910 1,716,910

Transactioncostsonissueofshares (115,058) (115,058)

Incometaxonitemstakendirectlytoor

transferredfromequity 34,518 34,518

Balanceasat30June2010 32,160,426 (16,688,184) (1,441) 727,113 16,197,914


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ACN120394194

NotestotheFinancialStatementsFORTHEYEARENDED30JUNE2010

36

1)

CORPORATEINFORMATION

Thefinancial

report

of

Integrated

Legal

Holdings

Limited

(the

Company)

for

the

year

ended

30

June

2010wasauthorisedforissueinaccordancewitharesolutionofdirectorson27September2010.

Integrated Legal Holdings Limited (the parent) is a company limited by shares incorporated in

Australia whose shares are publicly traded on the Australian Stock Exchange. The company was

domiciledinAustralia.

The nature of the operations and principal activities of the Group are described in the Directors'

Report.

2)

SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIESBasisofpreparation

The financial report is a general purpose financial report, which has been prepared in accordance

with the requirements of the CorporationsAct 2001, Australian Accounting Standards and other

authoritative pronouncements of the Australian Accounting Standards Board. The financial report

has also been prepared on a historical cost basis, except for availableforsale investments, which

havebeenmeasuredatfairvalue.

ThefinancialreportispresentedinAustraliandollars.

a) CompliancewithIFRS

The

financial

report

complies

with

Australian

Accounting

Standards

and

International

Financial

ReportingStandards(IFRS)asissuedbytheInternationalAccountingStandardsBoard.

b) Newaccountingstandardsandinterpretations

From 1 July 2009, the Group has adopted all Australian Accounting Standards and Interpretations,

mandatory for annual reporting periods beginning on or after 1 July 2009. Adoption of these

standardsandinterpretationsdidnothaveaneffectonthefinancialpositionorperformanceofthe

Group,exceptforthefollowing:

AASB8OperatingSegments

ThestandardreplacesAASB114SegmentReportingandrequiresamanagementapproach

tobe

used

for

segment

reporting

and

also

replaces

the

requirement

to

determine

primary

(business) and secondary (geographical) reporting segments of the Group. This approach

identifies operating segments by reference to internal reports that are evaluated regularly

bythechiefoperatingdecisionmakerindecidinghowtoallocateresourcesandinassessing

performance. The Group concluded that operating segments determined in accordance

withAASB8arethesameasthebusinesssegmentsreportedunderAASB114.

AASB101PresentationofFinancialStatements(Revised)

The revised statement separates owner and nonowner changes in equity and requires a

statement of comprehensive income to be prepared which discloses all changes in equity

during a period resulting from nonowner transactions. The Group has elected to present

comprehensiveincome

using

the

single

statement

approach.


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ACN120394194

NotestotheFinancialStatementsFORTHEYEARENDED30JUNE2010

2)SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(continued)

37

AASB3BusinessCombinations(Revised)

The revised AASB 3 applies the acquisition method to account for business combinations.

Underthismethodallpaymentstopurchaseabusinessaretoberecordedatfairvalueat

theacquisitiondate,withcontingentpaymentsclassifiedasdebtsubsequentlyremeasured

through the statement of comprehensive income. There is a choice on an acquisition by

acquisition basis to measure the noncontrolling interest in the acquiree either at the fair

value or at the noncontrolling interests proportionate share of the acquirees net assets.

Acquisitionrelatedcostsareexpensedas incurred. However,thetransitionalprovisionsof

therevised AASB 3allow forcontingent payments inrespectof acquisitionsprior to1 July

2009toberemeasuredthroughgoodwill. TheGroupspolicyhasbeenamendedtoreflect

therevised

standard.

AASB123(Revised)andAASB20076

TherevisedAASB123requirescapitalisationofborrowingcoststhataredirectlyattributable

to the acquisition, construction or production of a qualifying asset. The Groups previous

policy was to expense borrowing costs as they were incurred. In accordance with the

transitionalprovisionsoftheamendedAASB123,theGrouphasadoptedthestandardona

prospective basis. Therefore borrowing costs are capitalised on qualifying assets with a

commencement date on or after 1 July 2009. The Groups accounting policy has been

amendedtoreflecttherevisedstandard.

IAS

27Consolidated

and

Separate

Financial

Statements

Cost

of

an

Investment

in

a

Subsidiary,JointlyControlledEntityorAssociate(Amendments)

ThereareanumberofchangesarisingfromtherevisionofAASB127relatingtochangesin

ownershipinterestinasubsidiarywithoutlossofcontrol,allocationoflossesofasubsidiary

andaccountingforthelossofcontrolofasubsidiary. Specificallyinrelationtoachangein

ownership interest of a subsidiary (that does not result in a loss of control) such a

transaction will be accounted for as an equity transaction. The Group has adopted this

accountingpolicyprospectivelyfrom1July2009.

AASB7FinancialInstruments:Disclosures(revised)

The amended standard requires additional disclosure about fair value measurement and

liquidityrisk.

Fair

value

measurements

related

to

all

financial

instruments

recognised

and

measuredatfairvaluearetobedisclosedbysourceofinputsusingathreelevelhierarchy,

by class. The amendments also clarify the requirements for liquidity risk disclosures with

respecttoderivativetransactionsandassetsusedforliquiditymanagement. Thefairvalue

measurement disclosures are presented in note 4. The liquidity risk disclosures are not

significantlyimpactedbytheamendmentsandarealsopresentedinnote3.

AustralianAccountingStandardsandInterpretationsthathaverecentlybeenissuedoramendedbut

arenotyeteffectivehavenotbeenadoptedbytheGroupfortheannualreportingperiodended30

June2010. Theseareoutlinedinthefollowingtable.


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ACN120394194

NotestotheFinancialStatements(continued)FORTHEYEARENDED30JUNE2010

2)

SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(continued)

b)

101.asx iaw sept 27 2010 17.39 full year statutory accounts

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