Presentation by Mr Graeme Fowler

Managing Director
April 2009
The information contained in this document is not intended to be exhaustive and must be considered in conjunction with all other
publicly available information, as disclosed by the Company to the Australian Securities Exchange from time to time.

Disclaimer

This presentation has been prepared by Integrated Legal Holdings Limited (IAW). The information in this presentation is
current as at 21 April 2009.

This presentation is not an offer or invitation for subscription or purchase of securities or a recommendation with respect to
any security. Information in this presentation should not be considered advice and does not take into account the investment
objectives, financial situation and particular needs of an investor. Before making an investment in IAW, any investor should
consider whether such an investment is appropriate to their needs, objectives and circumstances and consult with an
investment adviser if necessary.
necessary Past performance is not a reliable indication of future performance.
performance

IAW has prepared this presentation based on information available to it. No representation or warranty, express or implied, is
made as to the fairness, accuracy, completeness or correctness of the information, opinions and conclusions contained in this
presentation. To the maximum extent permitted by law, none of IAW, its directors, employees or agents, nor any person
accepts any liability, including, without limitation, any liability arising from
f
f
fault
or negligence on the part off any off them or any
other person, for any loss arising from the use of this presentation or its contents or otherwise arising in connection with it.

This presentation may contain forward looking statements that are subject to a range of risk factors and uncertainties. Whilst
the statements are considered to be based on reasonable assumptions, the statements themselves and the assumptions upon
which they are based may be affected by a range of circumstances which could cause actual results to differ significantly from
the results expressed or implied in these forward looking statements.

Agenda

The Australian Legal Industry

B i
Business
O
Overview
i

Business Strategy

Financial Information

Management and Capital Structure

Outlook

The Australian Legal Industry

The Australian Legal

g Industry
y

Big 6-10 firms dominate large company market

Some senior associates unhappy within

big firm culture

Medium sized law firms (partnerships) total

headcount 30-60

cu t to attract
att act a
and
d retain
eta good lawyers
a ye s
Difficult
(opportunities, career)

Hard to provide broad services to clients

Hard to achieve g
growth ((available capital)
p )

Young lawyers reluctant to buy into

partnership

Some owners seeking

g a value for their
business (accelerating)

Small sized firms total headcount < 20

IMPLICATIONS
Opportunity to develop
and grow a national
network of medium sized
fi
firms
Opportunity for leadership
of mid, SME & HNW
markets
Pipeline of tuck-in
acquisitions
Opportunity to improve
from cottage industry

Hard to be small staff, training, resources,

growth

Australian Legal Industry Landscape

Practices

Qualified Practitioners
Q

Other Staff

Total Income

No.

No.

No.

$m

NSW

2,912

41

10,332

41

17,729

42

2,821

46

VIC

1,944

27

6,536

26

10,682

25

1,565

25

QLD

1,097

15

3,713

15

7,656

18

869

14

SA

483

1,510

1,989

298

WA

438

1,839

2,470

415

TAS

121

435

717

74

52

182

282

42

111

497

710

108

7,115

100

25,044

100

42,234

100

6,192

100

NT
ACT
Total

Source: Australian Bureau of Statistics, 2002

Industry annual revenue in excess of $6 billion in 2002, likely approaching $8 billion in 2009

Average
g firm p
profit margin
g before tax 29.7% ((this measure excludes allowance for any
y base salary
y for
Principals)

Significant fragmentation with over 7,000 practices and an average total headcount per firm (staff and
legal practitioners) of less than 10

Approximately 150 medium sized firms

Broadly based firms (services) provide inherent resilience to present economic conditions

Top 30 Australian Law Firms by Revenue

Rank

Firm

Revenue
$m

Mallesons

544

Freehills

493

10

B k McKenzie
Baker
M K
i

170

17

Slater & Gordon

80

24

Hunt
u t & Hunt
u t

50

27

Thomson Playford

43

30

HopgoodGanim

24

IAW (present annual run rate)

21

Source BRW 2007/08

O aspiration
Our
i ti iis tto b
be something
thi very different
diff
t to
t these
th
firms
fi
culture,
lt
opportunity,
t it client
li t
service but we will compete with them for staff & clients
7

Business Overview

Business Overview

IAW listed on ASX in August 2007 with the goal of developing a national network of leading
law firms in the capital cities and other key centres across Australia

Through its network, IAW plans to offer commercial law services as well as capabilities in
specialist areas including superannuation, tax and estate planning, and employment law

Presently:
4 legal services businesses
55 lawyers
4 offices

Share price (24 April 2009)

16

Shares on issue

69.4m

Market capitalisation

$11.1m

EPS 1H09

1
1.38
38
9

Corporate & Commercial

Wealth Management/Protection

Commercial Litigation

Superannuation

Insurance Services

Taxation Litigation

Media & Defamation

Taxation Advice

Banking & Finance

Franchising
Government Services
Insolvency
Workplace Relations

Private
P
e Clientts

Bu
usiness
s Advis
sory

Range of services

Taxation Audits
Estate Planning & Wills
Succession Planning
Family
Property

Business Succession

Employment/Workplace

Taxation Litigation

Criminal

Taxation Advice

On line document publishing

On-line

10

Developing a National Network

Law Central
(Internet Based)

Talbot Olivier
(Perth WA)

Brett Davies Lawyers

(Perth WA)

The Argyle
Th
A
l Partnership
P t
hi
(Sydney NSW &
Melbourne - VIC)

11

Acquisition
q
Register
g
Acquisition

Business

Effective Date

Foundation Businesses
Talbot Olivier Perth, WA

Commercial Law

August 2007

Brett Davies Lawyers Perth, WA

Tax Law

August 2007

Law Central Perth, WA

On-line Documents

August 2007

New Member Firms

Argyle Lawyers Sydney, NSW

Commercial Law

November 2008

Peter Marks Perth, WA (Talbot Olivier)

Estate Planning

September 2007

Shayne Leslie - Perth, WA (Talbot Olivier)

Commercial Litigation

September 2007

mda lawyers
y
Sydney,
y
y, NSW (Argyle)
( gy )

Tax Advice,, Tax Litigation

g

Tuck-ins

March 2009

12

12

Talbot Olivier Lawyers

Largest member firm Perth CBD based

80 year history well established brand and reputation

Commercial law firm specialising in:

Corporate & business
Litigation
Insurance
Government
Insolvency
Workplace relations
Criminal Law

37 fee earners

Approved quality practice Law Society WA

Strong growth since joining IAW:

Principals
p
increased from 7 to 9
Tuck-in acquisitions
13

Brett Davies Lawyers

Perth CBD based

15 year
ear histor
history

Specialist in tax, succession planning, estate planning and superannuation

4 lawyers

Focussed on relationships with accountants & financial planners

National client base

Approved quality practice Law Society WA

14

Argyle
gy Lawyers*
y

Strategically important east coast acquisition

25 year history

Fee income approx. $6.5m

Head office Sydney, office in Melbourne

R
Range
off llegall services
i
corporate,
t business,
b i
ffamily
il and
d property
t llaw

Specialist in financial services, wealth management, super & tax

Strong brand, reputation and growth prospects

ISO: 9000 quality assurance certified

Tuck-in acquisition of Sydney-based mda lawyers (effective 13 March 2009):

*effective 1 November 2008

Tax litigation
litigation, tax advice and tax audits
$2.5m annual revenue

Full revenue and profit impact will be realised from 2009/10 year

15

Law Central

Commenced in March 2000

Internet based business www.LawCentral.com.au

www LawCentral com au

Provides on-line purchase of legal documents

Preparation & publishing as well as a legal information service

Standard, base level documents for DIY users

60% of revenue from accountants & financial planners

16

Information Technology
gy Services

Online legal documents

A
Approx.
$1m
$1 revenues; 10% recurring
i

Good margins & cash flows

Key competitors:
Reckon (recent purchase of Corporate Services division of Espreon)
Cleardocs
Lots of smaller ones

Focus is organic growth

17

Business Strategy
gy

18

Strategy
gy
Network of leading
l
legal
l services
i
businesses

1. ACQUIRE

2. GROW

C
Consolidate
a national ffootprint through key geographic centres

Target the mid market, SME and high net worth client markets

3. DEVELOP

IAW Value Proposition

p

Enables lawyers to achieve the equivalent of Equity Partnership without capital investment & financial
commitment

Provides a corporate structure to improve access to capital for business growth

Provides opportunity to generate fee income from network cross referrals and expanded client
relationships

Provides economies of scale and broader product capabilities

Provides incentives for growth and development of the business

Facilitates client & business development training

Provides career & personal growth opportunities for staff

building a better law firm

20

Acquisition
q
Template
p
Selective
and
incremental
approach to
acquisitions

Cultural fit

Attitude & objectives of Principals (Partners)

Commitment to growth, improvement & working
g
together

Quality & growth potential of firm

Multiple of maintainable earnings

Net of ongoing Principal (Partner) base salary

Acquisition
q
transaction
structure

Cash (mostly) and shares

Employment conditions/restraints

Strict investment criteria

21

Business Model

Freedom within boundaries

Firms retain brand
Firms continue to develop strategy & manage the business
Focus on revenue growth and margin improvement; not cost cutting or centralisation

Performance based remuneration

Profit share to incentivise growth in revenue & earnings
Aligned with shareholder interests
Corporate structure provides strategic direction, boundaries, risk management & support

22

First Steps
p

The first 18 months....excellent progress in a difficult market

August

Public listing Talbot Oliver, Bret Davies Lawyers, Law Central

September
2007

Talbot Oliver tuck-in acquisition Peter Marks

September

Talbot Oliver tuck-in acquisition - Shayne Leslie

October

Appointment of Managing Director (Sydney)

Appointment of CFO (Perth)

April

Year-end results release strong performance

August

Acquisition of Argyle Lawyers (Sydney/ Melbourne)

2008

November

Maiden dividend payment 2.2 per share November

February

Half year results release strong performance

March

2009

Argyle tuck-in acquisition

mda lawyers

23

First Steps,
p , cont.

Investment in businesses & corporate structure ensures IAW is well placed to take advantage
of organic and acquisition growth opportunities

Strengthened executive management team

MD Graeme Fowler commenced role on 28 April 2008
CFO Jean-Marie Rudd commenced role in October 2007

Establishing a track record of success

Financial results for FY2008 (10.5 months) & 1H2009
Growth and improvement in existing businesses
East coast firm acquisition

good strategy, execute well ... share price appreciation will follow

24

Immediate Priorities

The next 12 months

Financial performance 30 June 2009
Review & refine strategy & business model - position for consistent growth
Continued success & improvement in existing member firms
Continued selective acquisition growth
New member firm (target 1 in next 12 months)
Quality tuck-ins for existing firms

25

Financial Information

26

Financial Highlights
g g

Excellent progress since listing

Strong profitability in line with expectation
I
Improved
db
business
i
performance
f
b
by member
b fifirms
New acquisitions will accelerate growth

Current annualised
run rate - $21m
$

1st Half
2008/09
$m

10.5 months
2007/08
$m

Operating
p
g revenue

$7.59m
$

$10.69m
$

Net profit after tax

$0.90m

$1.54m

12%

14%

1 38 cents
1.38
t

2 66 cents
2.66
t

NPAT margin
E i
Earnings
per share
h

27

Detailed Operating
p
g Performance
1st Half

1st Half

2nd Half

Full Year

2009

(4.5 months)
2008

2008

(10.5 months)
2007/08

Operating Revenue

$m

7.59

4.51

6.18

10.69

Revenue from Firms

$m

7.45

4.27

6.02

10.29

Total Net Contribution from Firms

$m

1 91
1.91

1 77
1.77

1 99
1.99

3 76
3.76

25.6%

41.4%

33.0%

36.5%

Contribution Margin from Firms

Less: Profit Share for firms

$m

(0.07)

(0.00)

(0.10)

(0.10)

Less: Corporate Expenses

$m

(0 46)
(0.46)

(0 14)
(0.14)

(0 73)
(0.73)

(0 87)
(0.87)

Less: Finance Costs

$m

(0.07)

(0.03)

(0.03)

(0.06)

Less: Impairments/Amortisations

$m

(0.02)

(0.23)

(0.02)

(0.25)

Net Profit Before Tax

$m

1.30

1.38

1.10

2.48

Less: Taxation

$m

(0.40)

(0.48)

(0.46)

(0.94)

Net Profit After Tax

$m

0.90

0.90

0.64

1.54

EPS

p
cps

1.4

1.6

1.1

2.7

DPS (fully franked)

cps

0.0*

0.0

2.2

2.2

*Cash retained for investment opportunities and in view of the current environment. Future dividend policy will be determined in the context of the
28
Companys financial performance, future investment opportunities and cash flow requirements.

Financial Performance Analysis

Revenue from firms

$7.59m in 1HY2009, compared with $6.18m in 2HY2008

Strong growth,
growth driven by both underlying organic growth and acquisitions (Argyle)

Present annualised revenues from firms of around $21m p.a.

Net contribution from firms

Performance in 1HY2008 (4.5

(4 5 months) of limited use for comparative purposes

1HY2009 net contribution margin reflects 2008 impact of WA wages and salary pressure more favourable conditions
expected for FY2010

Full year FY2009 & FY2010 margins will reflect restructuring of foundation partner employment contracts

Current salaries of $100k pa will be realigned so that remuneration structure is consistent with recent acquisitions
(higher base salary; profit share incentive; and more appropriate employment terms and conditions inc. restraints)

Increased rental expense of around $0.2m expected in FY2010 (Perth property market)

Corporate expenses

Movement attributed solely to recruitment of new CFO (October 2007) and MD (April 2008)

2HY2008 includes $0.4m for share issue to new MD

1HY2009 includes salaries for new CFO and MD for full six months

29

Acquisitions
Acquisition

Fee Income
$m

Effective Date

Talbot Olivier Perth, WA

6.80

17 August 2007

B tt Davies
Brett
D i L
Lawyers Perth,
P th WA

1 17
1.17

17 A
Augustt 2007

Law Central Perth, WA

0.95

17 August 2007

Foundation Businesses

Acquisitions YTD
2008/09 $9
$9.0m
0

New Member Firms

Argyle Lawyers Sydney, NSW

6.50

1 November 2008

Peter Marks Perth, WA (Talbot Olivier)

0.30

19 September 2007

Shayne Leslie - Perth, WA (Talbot Olivier)

0.75

28 September 2007

mda
d llawyers Sydney,
S d
NSW (A
(Argyle)
l )

2 50
2.50

13 M
March
h 2009

Tuck-ins
Tuck
ins

30

Balance Sheet Analysis

$
$m
Cash and cash equivalents
Trade and other receivables
Prepayments
Work in progress
Total current assets
Plant and equipment
Goodwill
Intangible assets
Deferred tax assets
Prepayments
Total non-current assets
Total assets

A att
As
A att
As
31-Dec-08 30-Jun-08
2.2
5.6
3.5
2.4
0.3
0.3
15
1.5
11
1.1
7.6
9.4
0.7
8.8
01
0.1
0.4
0.1
10.2
17.7

0.2
6.3
01
0.1
0.4
0.0
7.1
16.4

Trade and other payables

Interest bearing loans and borrowings
Income tax payable
Provisions
Total current liabilities

1.4
0.1
1.3
0.5
3.3

1.1
0.2
1.0
0.2
2.4

Interest bearing loans and borrowings

Provisions
Other liabilities
Total non-current liabilities
Total liabilities
Net assets

0.1
0.2
0.2
0.5
3.8
14.0

0.1
0.0
0.1
2.5
13.9

IAW had a net cash balance of $2.2m

as at 31 December 2008

The reduction in cash and increase

in working capital in 1H09 primarily
reflects
fl t the
th acquisition
i iti
off Argyle
A
l

NAB facilities:
Floating rate bills - $2m (drawn to
$1m as at March 2009)
Overdraft - $0.5m
$0 5m (undrawn)

31

Balance Sheet Ratios

Current ratio (x)

D b d
Debtor
days ((no.))
Net cash balance ($m)
Shares outstanding (m)
Net assets per share (cps)
NTA per share (cps)

As att
A
A att
As
31-Dec-08 30-Jun-08
2.3
3.9
98 0
98.0
132 0
132.0
2.0
5.5
68.1
63.5
20.5
21.9
7.4
11.7

Franking credit balance (est. as at 30 June 2009) = $0.9m

32

Cash Flow Analysis

Underlying cash flows from operations continue to improve

FY2009 acquisitions have been very material (Argyle and mda)

New business acquisitions adversely impact short term operating cash flows because debtors & WIP are not
acq ired with
acquired
ith a b
business
siness

Cash flows are invested to rebuild working capital post acquisition

6 months ended
31/12/08
$m

10.5 months ended

30/06/08
$m

Cash Flow from Operations (reported)

0.36

1.21

Add Working Capital impact of Acquisitions

0 50
0.50

0 00
0.00

Underlying Cash Flow from Operations

0.86

1.21

FY2009 Operating Cash Flows will include the following:

Working capital build up of material acquisitions (Argyle and mda)
FY2008 tax payment (maiden) due May 2009 ($0.94m) which will be an operating cash
outflow
Change to quarterly pre-payments of tax from April 2009 (approx. $0.3m) which will
result in an operating cash outflow

33

Management and Capital Structure

34

IAW Board and Management

g

John Dawkins Independent Non-Executive Chairman

Former Federal Treasurer

Company Chairman & Director (formerly Asgard, Elders)

Graeme Fowler Managing Director

Experience in publicly listed accounting and financial services

Previously over 20 years Financial Services Industry

WHK Group March 2003 (CFO/CEO Financial Services) July 2007 (Group CEO)

BT Financial Group
G

Anne Tregonning Independent Non-Executive Director

Experience in accounting, risk management and as a company Director

Held senior management roles at St George Bank and BankWest

Jean-Marie Rudd Chief Financial Officer and Company Secretary

Experienced CFO (joined IAW October 2007)

Previously 6 years with Minter Ellison Perth as Finance Director

35

IAW Shareholders
Group

Holding

Board

7%

Davies Superannuation
S
Fund

12%
%

Other employees (approx. 60)

41%

Retail shareholders (Perth centric)

40%

Institutions

0%

Shareholder distribution by size of holding as

at 31.03.09
Size off
S
Shareholding

Shareholder distribution by location of holder as

at 31.0309

No. off
holders

% off Issued
Capital

No. off
holders

% off Issued
Capital

WA

360

38.0%

1 001 - 5,000
1,001
5 000

158

1 0%
1.0%

NSW/ACT

284

30 0%
30.0%

5,001 - 10,000

249

3.0%

VIC

139

15.0%

10,001 - 100,000

471

24.0%

Other Australia

154

16.0%

100 001 and over

100,001

65

72 0%
72.0%

Overseas

10

1 0%
1.0%

947

100.0%

947

100.0%

1 - 1,000

Location

36

OUTLOOK

37

Outlook Positioned for Growth

Organic Growth

IAW has a highly competitive position in its local markets

Generally good market conditions for growth

Broad service offering - cross selling (firms & group)

Network skills and knowledge

Acquisition Growth

Significant opportunities available

Prevailing industry issues create opportunities for IAW

Strong IAW value proposition

Target $10m acquired fee income p.a.

YTD2009 acquisitions (Argyle and mda) = operating revenue of $9m p.a.

FY2010 result should better reflect the underlying earnings performance of the expanded group, taking
into account the expected strong revenue growth and the factors referred to in the Financial
Performance Analysis slide

IAWs annualised operating revenues are presently around $21m vs $10.7m in FY2008 (10.5
months)

38

Contact Details

Graeme Fowler
Managing Director
Level 22
1 Market Street
Sydney NSW 2000
Phone (02) 8263 6601

39