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Dividend
- Increased final dividend of 0.8 cps fully franked payable November 2012
Strong pipeline of potential acquisition opportunities
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1.
Overview
Overall, the Directors of Integrated Legal Holdings Limited (the Company or ILH) are pleased with
the development and growth of the Company during 2011/12, in what has continued to be very
challenging and difficult business conditions.
The Company achieved further progress with the delivery of its strategic growth plan during the year,
most notably:
The addition of a Melbourne based member firm (ILH now has member firms in the key Australian
locations of Sydney, Melbourne and Perth).
The addition of new legal services to the Group, including Mergers and Acquisitions, Private
Equity Transactions, Structured Debt and Equity Finance, Distressed Assets and Insolvency.
Enhancement of the Groups commercial and corporate legal services (Sydney, Perth and
Melbourne).
Continued expansion of the Groups network of member firms and affiliates. The Company has
now developed a substantial legal services distribution network across Australia and the
Asia/Pacific region.
The introduction of an improved acquisition model, which the Directors consider provides further
opportunity to invest in high quality and fast growing legal services businesses (Rockwell Bates).
The Company has continued to achieve strong and consistent revenue growth, and has become a top
40 Australian law firm by fee income.
The Law Central business is being re-launched in September 2012 with a new website, enhanced legal
documents, new features and a fresh approach to marketing activities, including the engagement of
former Australian cricket captain Steve Waugh in a promotional capacity for the business.
The Directors consider that the Company is building an exciting and vibrant legal business with strong
growth potential through positioning in niche service offerings in growth markets and segments in
Australia and the Asia/Pacific region.
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About ILH
ILH is a legal services aggregation business with a growing network across Australia and the Asia/Pacific region.
The Legal Services division is a top 40 Australian law firm by fee income with over 160 employees including 26
Principals and 80 other fee earners.
ILH has member firms based in Sydney, Perth and Melbourne, offices in Brisbane, Fiji and Vanuatu, a representative
office in Singapore, and affiliate relationships in more than 15 countries across the Pacific, Asia and India.
The Groups international capabilities are enhanced through strategic relationships with international legal
associations, as well as a strategic collaboration in the Pacific region between PLN and large US law firm Davis
Wright Tremaine LLP.
ILH is focused on client relationships with multi-nationals, publicly listed companies, businesses with assets in the
Asia/Pacific region, mid-market businesses, organisations in the government and insurance sectors, growth
businesses in the small and medium enterprises sector, as well as high net worth private clients.
The Law Central division (www.lawcentral.com.au) is an internet based legal document and information service
business targeting accountants, financial planners and DIYs.
The ILH strategy is to identify quality legal services businesses to join the group through acquisition and support
these businesses towards growth, improved business performance and group synergies through collaboration.
ILH was ranked by Australasian Legal Business as a Top 10 Fastest Growing Law Firm in Australia in 2009, 2010 and
2011, and by BRW as a Top 8 Fast Starters Australian businesses in 2010, 2011 and 2012.
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3.
4.
5.
2010/11
$m
% Change
Revenue
32.41
28.48
14%
1.12
1.29
(13%)
1.10 cents
1.41 cents
(22%)
2011/12
Dividends
6.
7.
Financial Services;
Automotive and Aviation;
Health and Life Sciences;
Mining , Minerals and Energy;
Technology Media and Advertising;
Electrical Manufacturing and Services; and
Entrepreneurial Ventures and Investments.
Rockwell Bates clients are typically middle market financial sponsors, private equity investors, growth
companies and mid-cap listed companies based in Australia, India, Taiwan, Hong Kong and Malaysia.
The firm consists of founder and Managing Principal Adam Levine, Principals Brett Burns, George
Spiliotis and Julie Armstrong, with 7 other lawyers and a total staff of 16. Its annual fee income is
approximately $4m.
Rockwell Bates has become the Melbourne member firm of ILH and will continue to develop the
existing business strategy of:
A focus on domestic and Asian based inward bound Mid Market Mergers and Acquisitions, Private
Equity, Structured Debt and Equity Transactions, Distressed Assets and Insolvency and Complex
Litigation;
The development of relationships and offices in key Asian centres; and
Broadening the Rockwell Bates service offering over time and continuing to build trusted adviser
relationships with clients.
As a clear sign of its involvement in Asia, Rockwell Bates has an affiliate relationship with leading Indian
Mergers and Acquisitions law firm Rajani Associates based in Mumbai.
Rockwell Bates is an award winning law firm having been noted by the leading industry journal Asian
Legal Business as one of the Hot 100 Asian Region Law Firm (2011) and Managing Principal Adam
Levine has been recognised as one of the Top 20 Asia Region Deal Makers (2011).
ILH will support the business as appropriate with its growth and development endeavours, identifying
value adding opportunities for collaboration and revenue and cost synergies with ILH and ILH member
firms and associated parties.
ILH has initially acquired a 25% investment in Rockwell Bates, increasing to 49% over the next two years
through the acquisitions of additional 12% interests at fair value on each of 1 July 2013 and 1 July 2014.
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The Directors believe that Rockwell Bates is a high quality business with very strong growth prospects
that will strengthen the Groups corporate and commercial law services offering and provide new
access to industries and clients in the Australian and Asian markets.
The PLN and Rockwell Bates transactions are consistent with ILHs strategy of supporting the growth
and expansion of a limited number of high quality member firms, with strong and focused market
positions and long term client relationships, into significant and highly profitable businesses with
competitive advantages. This will be achieved by combining the scope and scale of complementary
practices as part of a network within a publicly listed group.
Both acquisitions are structured with significant employment restraints and conditions, consistent with
the Companys disciplined acquisition model and strict criteria.
8.
Business Strategy
Legal Services Division
The priorities for the legal services division have been broadened.
Continuing to work with existing member firms towards growth and development.
This includes organic and acquisition revenue growth and business operational improvement.
Continuing to develop the Groups legal services network and range of services.
The Company is focused on developing its distribution network across Australia and the
Asia/Pacific region, as well as developing and enhancing capabilities in key legal services.
Additionally, over the period ahead, the Directors anticipate a move towards more consistent
branding across the member firms, and an increased focus on collaboration across the Group to
achieve revenue synergies.
Outlook
Whilst the Directors remain cautious in the present business environment, the Board is confident that
the continued execution of the Companys growth plans and initiatives will add long term shareholder
value.
Overall, the Directors remain confident in the outlook for the Company given the strength and
underlying quality of its member firms and distribution network, the opportunity for organic growth
and improved performance, and the significant potential to grow by selective acquisition.
The Company remains focused on incrementally and selectively acquiring good businesses with likeminded people and working with them to achieve growth, business improvement and revenue
synergies through collaboration across the Group. In this regard, IHL presently has a strong pipeline of
potential acquisition opportunities.
The full year profit effect of the PLN and Rockwell Bates acquisitions is expected to be reflected from
the 2012/13 financial year. The Directors believe that both transactions will enhance the Companys
growth prospects and be materially earnings per share positive in the 2012/13 financial year.
The Directors also expect growth in Law Central business revenues over the longer term as a result of
the business initiatives outlined previously.
The Company will provide updated commentary in respect of the 2012/13 financial year at its Annual
General Meeting in November 2012.
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