069.ASX IAW Feb 26 2010 11.09 Half Yearly Report and Accounts

8/10/2019 069.ASX IAW Feb 26 2010 11.09 Half Yearly Report and Accounts

1/31

INTEGRATEDLEGALHOLDINGSLIMITED

ACN120394194

ASXAppendix4D

RESULTSFORANNOUNCEMENTTOTHEMARKET

Currentreportingperiod: Halfyearended31December2009

Previouscorrespondingperiod: Halfyearended31December2008

EARNINGS

Percentage

change

UP(+)/DOWN()

Amount

$A

Revenuefromordinaryactivities +53% 11,588,400

Profitfromordinaryactivitiesaftertaxattributable

tomembers

21% 711,069

Netprofitfortheperiodattributabletomembers 21% 711,069

DIVIDENDS

Amount

pershare

Frankedamount

pershareat30%

2010Interimdividend 0.25cents 0.25cents

Correspondingperiod

Recorddate

for

determining

entitlements

to

the

2010interimdividend 10March2010

Paymentdateforthe2010interimdividend 9April2010

TheCompanyoperatesadividendreinvestmentplan(DRP). Furtherdetailsaredisclosedin

theinterimdividenddetailssectionofthisreport.

DRPdiscountrate 5%

LastdateforreceiptofDRPelectionnoticesforthe

2010interimdividend 24March2010

NETTANGIBLEASSETBACKING

31Dec2009

31Dec2008

Nettangibleassetbackingpersecurity 5.87 7.36

Consolidated operating revenues of $11,588,400 were 53% higher than the previous

correspondinghalfyearperiodof$7,593,136operatingrevenues. Revenuefromordinary

activities increased due to a combination of organic growth and acquisitions of new

memberfirms.

Inrespectof the previous comparative period, the Directorshavepreviously advisedthat

expenses

have

necessarily

increased

for

the

Company

during

the

period

reflecting

a

required change to Foundation Principals remuneration from the artificially low and non

competitive levels established at the time of public listing in August 2007, and from

increasesinWAmemberfirmpremisescostsfollowingbelowmarketrentarrangementsin

2008.


2/31


ACN120394194

ASXAppendix4D

RESULTSFORANNOUNCEMENTTOTHEMARKET

The Directors consider the current period to better reflect a more normalised operating

profitabilityandmargin.

Thefollowingtablesummarisesresultsfortheperiod,theFullYear2008/09,andeachof

thehalfyearsof2008/09.

RESULTSSUMMARY

FirstHalf

2009/10

$000s

FullYear

2008/09

$000s

SecondHalf

2008/09

$000s

FirstHalf

2008/09

$000s

OperatingRevenue 11,588 16,946 9,353 7,593

NetProfit(Loss)afterTax 711 594 (302) 896

Earnings(Loss)perShare 1.03cents 0.89cents (0.49)cents 1.38cents

DividendperShare 0.25cents Nil Nil Nil

OperatingCashFlows(Outflows) 190 (1,652)* (2,016)* 365

Gearing(Netdebt/Equity) 13% 12% 12% 0%

*Relatestofundingofworkingcapitalfornewacquisitions.

Forthehalfyearended31December2009,theconsolidatedentitygeneratedanetprofit

aftertaxof$711,069comparedtoanetlossaftertaxof$302,828forthehalfyearended

30June

2009,

a

full

year

2008/09

net

profit

after

tax

of

$593,875,

and

a

half

year

ended

31

December2008netprofitaftertaxof$896,703.

Earningspersharefortheperiodwere1.03centspershare,comparedtotheyearended

30June2009of0.89cents(30June2009halfyear:negative0.49cents;31December2008

halfyear:1.38cents).

TheGroup hasdeclared afully franked interimdividend of 0.25 centswith respect tothe

financialyearended30June2010. Thedividendwillhavearecorddateof10March2010

and a payment date of 9 April 2010. The Group operates a dividend reinvestment plan.

The Directors of Integrated Legal Holdings Limited have advised of their intended full

participationin

the

interim

dividend

reinvestment

plan.

During the period, the Company requested an amendment to its 2008 income tax return

arising from the tax treatment of work in progress. The amendment resulted in a tax

refund of $325,306, constituting a reversal of income tax expense previously disclosed in

theIncomeStatement.Thereversalhasdirectlyincreasedprofitabilityfortheperiod.

Thegroupdoesnothaveanyinterestsinassociatesoutsidethegroup,nordoesithaveany

interestinjointventures.

Further information is included in the Directors Report within the HalfYear Financial

Report.


3/31


ACN120

394

194

(ASX:IAW)

HalfYearFinancialReport

forthehalfyearended31December2009


4/31


FINANCIALREPORTFORTHEHALF-YEARENDED

31DECEMBER2009

ACN120394194

Contents

Corporateinformation.............................................................................................................1

Directorsreport......................................................................................................................2

Consolidatedstatementoffinancialposition..........................................................................6

Consolidatedstatementofcomprehensiveincome................................................................7

Consolidatedstatementofchangesinequity.........................................................................8

Consolidatedstatementofcashflows.....................................................................................9

Notesto

and

forming

part

of

the

financial

report

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

10

Directorsdeclaration............................................................................................................24

Auditorsindependencedeclaration.....................................................................................25

Independentauditorsreviewreport....................................................................................26


5/31



31DECEMBER2009

ACN120394194

CorporateInformation

1

ABN20

120

394

194

Directors

TheHonJohnDawkins,Chairman

AnneTregonning,NonexecutiveDirector

GraemeFowler,ManagingDirector

CompanySecretary

JeanMarieRudd

Registeredoffice

Level8,

Wesfarmers

House

40TheEsplanade

PerthWA6000

Principalplaceofbusiness

HeadOffice

Level22

1MarketStreet

SydneyNSW2000

Tel:(02)82636601

Share

Register

ComputershareInvestorServicesPtyLimited

Level2,45StGeorgesTerrace

PerthWA6000

Tel: (08)93232000

IntegratedLegalHoldingsLimitedsharesarelistedontheAustralianStockExchange.

Solicitors

TalbotOlivier

Level8,WesfarmersHouse

40

The

Esplanade

PerthWA6000

Bankers

NationalAustraliaBankLimited

100StGeorgesTerrace

PerthWA6000

Auditors

Ernst&Young

11MountsBayRoad

Perth

WA

6000


6/31



31DECEMBER2009

ACN120394194

DirectorsReport

2

The

directors

of

Integrated

Legal

Holdings

Limited

(the

Company)

submit

the

halfyear

financial

reportforthehalfyearended31December2009.

DIRECTORS

ThenamesoftheCompanysdirectorsinofficeduringthehalfyearanduntilthedateofthisreport

aresetoutbelow. Directorswereinofficeforthisentireperiodunlessotherwisestated.

TheHonJohnDawkinsAO(NonexecutiveChairman)

AnneTregonning(NonexecutiveDirector)

GraemeFowler(ManagingDirector)

REVIEWAND

RESULTS

OF

OPERATIONS

Consolidatedoperatingrevenuesof$11,588,400were53%higherthanthepreviouscorresponding

halfyearperiodof$7,593,136operatingrevenues. Revenuefromordinaryactivities increaseddue

toacombinationoforganicgrowthandacquisitionsofnewmemberfirms.

Forthehalfyearended31December2009,theconsolidatedentitygeneratedanetprofitaftertax

of$711,069comparedtoanetlossaftertaxof$302,828forthehalfyearended30June2009,a

fullyear2008/09netprofitaftertaxof$593,875,andahalfyearended31December2008netprofit

aftertaxof$896,703.

Earnings per share for the period were1.03 centspershare, compared to the year ended 30 June

2009

of

0.89

cents

(30

June

2009

half

year:

negative

0.49

cents;

31

December

2008

half

year:

1.38

cents).

Operating cash flows for the period were positive at $190,142, compared with operating cash

outflows (negative) for the full year 2008/09 (as the working capital requirements of new

acquisitionswereabsorbed).

RESULTSSUMMARY

FirstHalf

2009/10

$000s

FullYear

2008/09

$000s

SecondHalf

2008/09

$000s

FirstHalf

2008/09

$000s

OperatingRevenue

11,588

16,946

9,353

7,593

NetProfit(Loss)afterTax 711 594 (302) 896

Earnings(Loss)perShare 1.03cents 0.89cents (0.49)cents 1.38cents

DividendperShare 0.25cents Nil Nil Nil

OperatingCashFlows(Outflows) 190 (1,652)* (2,016)* 365

Gearing(Netdebt/Equity) 13% 12% 12% 0%

*Relatestofundingofworkingcapitalfornewacquisitions.

Inrespectofthepreviouscomparativeperiods,theDirectorshavepreviouslyadvisedthatexpenses

have necessarily increased for the Company during the period, reflecting a required change to

FoundationPrincipalsremunerationfromtheartificiallylowandnoncompetitivelevelsestablished

atthe

time

of

public

listing

in

August

2007,

and

an

increase

in

WA

premises

rental

following

below

marketrentin2008.


7/31



31DECEMBER2009

ACN120394194

DirectorsReport

3

TheDirectors

consider

the

current

period

to

better

reflect

a

more

normalised

operating

profitability

andmargin.

The Company has maintained a strong balance sheet with bank loans of $1.85m at 31 December

2009. Thisrepresentsagearing levelof12%. TheCompanysexistingworkingcapitalbankfacility

hasalimitofupto$3.35m.

Duringtheperiod,theCompanyrequestedanamendmenttoits2008incometaxreturnarisingfrom

the tax treatment of work in progress. The amendment resulted in a tax refund of $325,306,

constituting a reversal of income tax expense previously disclosed in the Income Statement. The

reversalhasdirectlyincreasedprofitabilityfortheperiod.

The Group hasdeclared a fullyfranked interimdividendof0.25cents with respect tothe financial

year ended30 June 2010. The dividendwill have a record date of 10 March 2010 and a payment

dateof9April2010. TheGroupoperatesadividendreinvestmentplan. TheDirectorsofIntegrated

Legal Holdings Limited have advised of their intended full participation in the interim dividend

reinvestmentplan.

TheDirectorsarepleasedwiththefirsthalfresultsandwiththecontinuedoperationalprogressthat

hasbeenmade.

Theperiodwashighlightedbyoperationalconsolidation,followingthestrongorganicandacquisition

growth

experienced

by

the

Company

over

the

previous

18

months.

The

Companys

acquisitions

in

2009wereverylargerelativetotheexistingbusiness.

TheDirectorsarepleasedtoreportthatthese2009acquisitionsareperformingwell.

TheArgyleLawyersbusinessinSydneyandMelbourne,andthemdalawyerstuckinacquisition,are

proving to be good businesses. Growth in Argyle Lawyers has been solid including several high

quality new staff appointments in the first half. This includes the return of former Argyle Lawyers

PartnerandInsolvencyandCorporateRecoverylawyer,MarkPetrucco.

TheDirectorsalsoreportthattheCompanyhasexperiencedsomeimprovedperformanceinitsLaw

Central

business,

following

the

significant

drop

in

demand

for

services

in

the

2008/09

financial

year

asaresultoftheGlobalFinancialCrisis(GFC).

LawCentralisaninternetbasedcustomisedlegaldocumentpublishingandinformationservice.

The effects of the GFC did however continue for the Company during the period. Conditions

remained challenging in parts ofthe business and some services werebehindexpectations for the

firsthalf,andthishascontinuedintotheearlymonthsofthesecondhalf.

Our Perth businesses in particular underperformed against expectations in some service lines and

thiswilltempertheCompanysperformanceinthe2009/10year.

Wearealsocontinuingtoexperiencesomebaddebtsfromclientbankruptcies,andsuspectthismay

continueforawhilelonger.


8/31



31DECEMBER2009

ACN120394194

DirectorsReport

4

OUTLOOKTheDirectors notetheirexpectation of continuedoperational improvementfrommember firms in

theperiodsahead.

In particular, the Directors believe that there is significant room for improvement in cash flow

managementinmemberfirmswhichwouldhavetheeffectofloweringthecarryingvalueofworkin

progressanddebtors,andincreasingcashresources.

TheDirectorsconsidertheCompanytobewellplacedforthefuture,inparticularnoting:

TheCompanyhasgoodbusinesseswithstrongmarketpositionsandgrowthprospects.

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

aspirationsforabovemarketgrowth,businessimprovementandworkingtogether.

The Company has demonstrated an ability to achieve strong and consistent revenue growth.

IntegratedLegalHoldingsLimitedwasnominatedthefastestgrowinglegalfirmbyfeeincomein

Australiain2009byAustralasianLegalBusiness(December2009).

Scopeforbusinessperformanceimprovementinallmemberfirms,providinganopportunityfor

theCompanytoincreaseprofitabilityovertime.

Organicand

acquisition

growth

opportunities

for

the

Group

and

for

member

firms.

Opportunitytoincreaseprofitabilitybyachievingincreasedscale:

- Atagrouplevelthismeanssecuringadditionalmemberfirmstosharethefixedoverheadof

Corporate;and

- At amember firm level, thismeansachieving organicand acquisition growth to more fully

utiliseexistingpremises,andtoshareinfrastructurecostsofthefirms.

Law firm revenue isgenerally not recurring in nature and demand in certain services, business

and

locations

will

fluctuate

over

time.

The

Group

is

currently

reliant

on

a

small

number

of

businesses and as such can be exposed to the underperformance of any one of them. The

creationofamorediversifiedportfolioofbusinessesbytheCompanyovertimewillultimately

havetheeffectofprovidingimprovedearningsconsistency.

The Directors advise that the delivery of the Companys stated strategy of developing a national

network of leading medium sized law firms will take time. The Company remains focused on

incrementallyandselectivelybuyinggoodbusinesses,andworkingwiththemtowardsabovemarket

growth,businessimprovementandGroupsynergies.

Progress for the Company has been slowed by the economic events of the last two years, but the

Directorsbelieve

the

Company

has

made

progress

and

has

good

medium

to

longer

term

prospects.

The Directors have previously advised that they expect Company revenue for 2009/10 of at least

$21m,andgrowthinNetProfitafterTaxandearningspershare.


9/31



31DECEMBER2009

ACN120394194

DirectorsReport

5

TheDirectors

are

of

the

view

that

the

Company

is

well

placed

to

continue

growth

both

organically

and by acquisition by capitalising on the significant opportunity afforded by prevailing industry

issues. Longterm competitiveadvantage canbeachieved bytheCompany insupportingmember

firmsindevelopingscaletounderpinfuturegrowthandprofitability.

The Directors are confident in the longer term outlook of the Company given the strength and

underlyingqualityoftheexistingmemberfirms,thesignificantpotentialtogroworganically,andthe

opportunities for selective acquisition growth as part of the strategy of developing a national

networkoflegalservicesbusinesses.

AUDITORSINDEPENDENCE

DECLARATION

A copy of the auditors independence declaration in relation to the review for the halfyear is

providedwiththisreportonpage25.

Signedinaccordancewitharesolutionofthedirectors.

GFowler

ManagingDirector

Perth,25February2010


10/31



31DECEMBER2009

ACN120394194

StatementofFinancialPosition

TheaboveconsolidatedStatementofFinancialPositionshouldbereadinconjunctionwiththe

accompanyingnotes.

6

Consolidated Consolidated

Note

Asat

31Dec2009

Asat

30June2009

ASSETS $ $

Currentassets

Cashandcashequivalents 5 249,796 600,694

Tradeandotherreceivables 5,446,927 4,964,957

Prepayments 6 473,099 651,276

Workinprogress 2,195,555 1,370,212

Totalcurrentassets 8,365,377 7,587,139

Noncurrentassets

Availableforsalefinancialassets 2,794 2,677

Plantandequipment 1,297,182 691,360

Goodwill 7 10,421,239 10,372,263

Intangibleassets 8 83,160 100,980

Deferredtaxassets 315,575 464,147

Prepayments 6 56,456 63,016

Totalnoncurrentassets 12,176,406 11,694,443

TOTALASSETS 20,541,783 19,281,582

LIABILITIES

Currentliabilities

Tradeandotherpayables 2,010,310 1,738,222

Interestbearingloansandborrowings 9 1,329,168 1,244,330

Incometaxpayable 58,720 157,011

Provisions 491,886 459,466

Otherliabilities 10 426,811 200,000

Totalcurrentliabilities 4,316,895 3,799,029

Noncurrentliabilities

Tradeandotherpayables 75,107

Interestbearing

loans

and

borrowings

9

1,208,443

1,064,105

Provisions 190,901 177,620

Otherliabilities 10 168,852 378,422

Totalnoncurrentliabilities 1,643,303 1,620,147

TOTALLIABILITIES 5,960,198 5,419,176

NETASSETS 14,581,585 13,862,406

EQUITY

Contributedequity 11 30,512,821 30,504,813

Accumulatedlosses (16,657,078) (16,641,034)

Reserves 12 725,842 (1,373)

TOTALEQUITY

14,581,585

13,862,406


11/31



31DECEMBER2009

ACN120394194

StatementofComprehensiveIncome

TheaboveconsolidatedStatementofComprehensiveIncomeshouldbereadinconjunctionwiththe

accompanyingnotes.

7


Note

Halfyear

ended

31Dec2009

Halfyear

ended

31Dec2008

$ $

Professionalfeesrevenue 11,566,053 7,203,303

Interestrevenue 11,996 139,068

Otherrevenue 4 10,351 250,765

Totalrevenue 11,588,400 7,593,136

Occupancyexpenses

1,054,668

644,543

Salariesandemployeebenefitsexpenses 7,798,695 4,186,881

Depreciationandamortisationexpenses 151,887 74,235

Officeexpenses 1,769,227 1,146,455

Advertisingandmarketingexpenses 118,382 149,086

Otherexpenses 36,192 84,487

Interestexpenses 87,360 12,477

Totalexpenses 11,016,411 6,298,164

Profitbeforeincometax 571,989 1,294,972

Incometaxexpense/(benefit) (139,080) 398,269

Profitafterincometax 711,069 896,703

Netprofit

for

the

period

711,069

896,703

Othercomprehensiveincome

Netgains/(losses)onavailableforsalefinancialassets 102 (177)

Othercomprehensiveincomefortheperiod,netoftax 711,171 896,526

Totalcomprehensiveincomefortheperiod 711,171 896,526

Basicanddilutedearningspershareforprofit

attributabletotheordinaryequityholderoftheparent 1.03 1.38


12/31



31DECEMBER2009

ACN120394194

StatementofChangesinEquity

TheaboveconsolidatedStatementofChangesinEquityshouldbereadinconjunctionwiththe

accompanyingnotes.

8

CONSOLIDATED

Issued

Capital

Accumulated

Losses

Net

Unrealised

GainsReserve

General

Reserve

Total

Equity

$ $ $ $ $

At1July2008 29,729,975 (15,823,844) (1,485) 13,904,646

Profitfortheperiod 896,703 896,703

Othercomprehensive

income (177) (177)

Totalcomprehensive

incomefortheperiod 896,703 (177) 896,526

Transactionswithowners

intheircapacityasowners

Sharesissued (1,411,065) (1,411,065)

Transactioncostsonshare

issue 580,000 580,000

Sharebasedpayments 7,518 7,518

Balanceasat31December

2008 30,317,493 (16,338,206) (1,662) 13,977,625

CONSOLIDATED

Issued

Capital

Accumulated

Losses

Net

Unrealised

GainsReserve

General

Reserve

Total

Equity

$ $ $ $ $

At1July2009 30,504,813 (16,641,034) (1,373) 13,862,406

Profitfortheperiod 711,069 711,069

Othercomprehensive

income 102 102

Totalcomprehensive

incomefortheperiod 711,069 102 711,171

Transactionswithowners

intheircapacityasowners

Transfertogeneralreserve (727,113) 727,113

Transactioncostsonshare

issue (1,694) (1,694)

Sharebasedpayments 9,702 9,702

Balanceasat31December

2009 30,512,821 (16,657,078) (1,271) 727,113 14,581,585


13/31



31DECEMBER2009

ACN120394194

CashFlowStatement

TheaboveconsolidatedCashFlowStatementshouldbereadinconjunctionwiththeaccompanying

notes.

9


Note

Halfyear

ended

31Dec2009

Halfyear

ended

31Dec2008

$ $

Cashflowsfromoperatingactivities

Receiptsfromcustomers 11,408,374 6,411,856

Paymentstosuppliersandemployees (11,371,200) (6,397,647)

Interestreceived 11,996 140,016

Rentreceived 108,597

Sundryincome

10,337

103,141

Interestandothercostsoffinancepaid (58,718) (1,277)

Incometaxrefund 189,361

Netcashflowsfromoperatingactivities 190,150 364,686

Cashflowsfrominvestingactivities

Purchaseofplantandequipment (743,040) (117,749)

Proceedsfromthedisposalofplantandequipment 3,150 1,353

Paymentforacquisitionofbusinessesnetofcash

acquired 15 (2,137,552)

Netcashflowsusedininvestingactivities (739,890) (2,253,948)

Cashflowsfromfinancingactivities

Paymentforshareissueexpenses (1,694)

Proceedsfromborrowings 674,664 81,484

Repaymentsofborrowings (410,767) (159,889)

Paymentofdividends (1,411,065)

Netcashflows(usedin)/fromfinancingactivities 262,203 (1,489,470)

Netdecreaseincashheld (287,537) (3,378,732)

Cashandcashequivalentsatthebeginningofthe

period 465,875 5,626,766

Cashand

cash

equivalents

at

the

end

of

the

period

5

178,338

2,248,034


14/31



31DECEMBER2009

ACN120394194

NotestoandformingpartoftheFinancialReport

10

1)

CORPORATEINFORMATION

ThegeneralpurposecondensedfinancialreportofIntegratedLegalHoldingsLimited(theCompany)

forthehalfyearended31December2009wasauthorisedforissueinaccordancewitharesolution

oftheDirectorson25February2009. IntegratedLegalHoldingsLimitedisacompanyincorporated

inAustraliaandlimitedbyshares,whicharepubliclytradedontheAustralianStockExchange(ASX).

2)

SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES

The halfyear financial report does not include all notes of the type normally included within the

annualfinancialreportandthereforecannotbeexpectedtoprovideasfullanunderstandingofthe

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

entityas

the

full

financial

report.

Itisrecommendedthatthehalfyearfinancialreportbereadinconjunctionwiththeannualreport

fortheyearended30June2009andconsideredtogetherwithanypublicannouncementsmadeby

IntegratedLegalHoldingsLimitedanditscontrolledentities(theGroup)duringthehalfyearended

31 December 2009 inaccordance with the continuousdisclosure obligations undertheASXListing

Rules.

a)

Basisofpreparation

This general purpose condensed financial report for the halfyear ended 31 December 2009 has

been prepared in accordance with AASB 134 InterimFinancialReporting and the CorporationsAct

2001.

Thehalfyearfinancialreport isprepared inAustraliandollarsandonahistoricalcostbasis,except

foravailableforsaleinvestments,whichhavebeenmeasuredatfairvalue.

For the purposes of preparing the halfyear financial report, the halfyear has been treated as a

discretereportingperiod.

b) Significantaccountingpolicies

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

computationarethesameasthoseadoptedinthemostrecentannualfinancialstatements.

c) Changesinaccountingpolicy

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

mandatoryforannualperiodsbeginningonorafter1July2009. Adoptionofthesestandardsand

interpretationsdidnothaveaneffectonthefinancialpositionorperformanceoftheGroup,except

forthefollowing:

AASB8OperatingSegments

ThestandardreplacesAASB114SegmentReportingandrequiresamanagementapproach

tobe used for segmentreporting andalsoreplacestherequirement todetermineprimary

(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. TheGroupconcludedthattheoperatingsegmentsdeterminedinaccordance

withAASB8arethesameasthebusinesssegmentsreportedunderAASB114.


15/31



31DECEMBER2009

ACN120394194


11

AASB101

Presentation

of

Financial

Statements

(revised)

The revised standard 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

comprehensiveincomeusingthesinglestatementapproach.

AASB3BusinessCombinations(revised)

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

Under thismethodallpaymentstopurchaseabusinessaretoberecordedatfairvalueat

theacquisitiondate,withcontingentpaymentsclassifiedasdebtsubsequentlyremeasured

throughthe income statement. There is a choice on an acquisitionby acquisition basisto

measurethe

non

controlling

interest

in

the

acquiree

either

at

the

fair

value

or

at

the

non

controlling interests proportionate share of the acquirees net assets. The Groups policy

hasbeenamendedtofacilitatetheadoptionofthisstandardprospectively. Thetransitional

provisions of the revised AASB 3 allows for contingent payments in respect of previous

acquisitionstoberemeasuredthroughgoodwill.

TheGrouphaselectednottoearlyadoptanynewstandardsoramendmentsthatareissuedbynot

yeteffective.

d)

Basisofconsolidation

The halfyear consolidated financial statements comprise the financial statements of Integrated

LegalHoldings

Limited

and

its

subsidiaries

as

at

31

December

2009.

Subsidiariesareallthoseentities(includingspecialpurposeentities)overwhichtheGrouphasthe

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

Theexistence and effect of potential voting rights thatarecurrently exercisable orconvertible are

consideredwhenassessingwhetheragroupcontrolsanotherentity.


16/31



31DECEMBER2009

ACN120394194


12

3)

SEGMENTINFORMATION

TheGrouphasidentifieditsoperatingsegmentsbasedontheinternalmanagementreportingthatis

used by the executive management team (the chief operating decision maker) in assessing

performanceandallocatingresources. IntegratedLegalHoldingsLimitedsoperatingsegmentshave

been identified based on how the financial and operating results of the Group are monitored and

presentedinternallytotheexecutivemanagementteam.

TheGroupsreportablesegmentsareidentifiedbymanagementbasedonthenatureofthebusiness

andthesimilaritiesofservicesprovided,methodofdeliveryandtypeofclientsastheGroupsrisks

andreturnsareaffectedpredominantlybydifferencesinlegalproductsandservicesperformed.

Theoperating

businesses

are

organised

and

managed

separately

according

to

the

nature

of

the

legal

productsandservicesprovided,witheachsegmentrepresentingastrategicbusinessunitthatoffers

differentlegalproductsandservesdifferentmarkets.

Thefollowingreportablesegmentshavebeenidentifiedbymanagement:

LegalServicesDivision

OperatoroflegalpracticesthroughoutAustralia

InformationTechnologyDivision

Provides an internet portal designed to provide easy access to a range of legal and other

documentsto

the

legal

profession

and

public

alike

and

information

about

various

areas

of

law.

The accounting policiesused bythe Group in reporting segments internally are the same as those

containedinnote1totheaccounts,exceptforthefollowing:

Intersegmentsales

Intersegmentsalesarerecognisedatcostwithnomarginbuiltintotheintersegmenttransactions,

andaimstoencourageintersegmentworkreferrals.

Unallocatedrevenueandassets

Corporate

items

are

not

allocated

to

operating

segments

as

they

are

not

considered

part

of

the

core

operationsofanysegments.


17/31



31DECEMBER2009

ACN120394194


13

Businesssegments

Thefollowingtablepresentsrevenueandprofitinformationforbusinesssegmentsforthehalfyears

ended31December2009and31December2008.

Halfyearended31December2009

Legal

Services

$

Information

Technology

$

Total

$

Revenue

Professionalfees 11,176,517 389,536 11,566,053

Otherrevenue 1,480 9,347 10,827

Intersegmentrevenue 5,765 5,765

Totalsegment

revenue

11,183,762 398,883

11,582,645

Unallocatedrevenue:

Interestreceived 11,470

Dividendsreceived 50

Totalunallocatedrevenue 11,520

Intersegmentelimination (5,765)

Totalrevenueperstatementof

comprehensiveincome 11,588,400

Result

Segmentresult 1,191,118 110,045 1,301,163

Unallocateditems:

Salariesandemployeebenefits

expenses (406,361)

Officeexpenses (238,379)

Otherunallocateditems 2,926

Totalunallocateditems (641,814)

Profitbeforetaxandfinancecosts 659,349

Financecosts (87,360)

Profitbeforeincometax 571,989

Incometaxbenefit 139,080

Netprofitafterincometax 711,069


18/31



31DECEMBER2009

ACN120394194


14

Halfyearended31December2008

Legal

Services

$

Information

Technology

$

Total

$

Revenue

Professionalfees 6,827,259 376,044 7,203,303

Otherrevenue:

Rentalrevenue 108,597 108,597

Compensationreceivable 139,000 139,000

Advertisingrevenue 3,108 3,108

Intersegmentrevenue 18,994 18,994

Totalsegment

revenue

7,093,850 379,152

7,473,002

Unallocatedrevenue:

Interestrevenue 139,068

Dividendsreceived 60

Totalunallocatedrevenue 139,128

Intersegmentelimination (18,994)

Totalrevenueperstatementof

comprehensiveincome 7,593,136

Result

Segmentresult 1,715,780 104,177 1,819,957

Unallocateditems:

Interestrevenue 139,068

Salariesandemployeebenefits

expenses (332,921)

Officeexpenses (254,969)

Otherunallocateditems (8,184)

Totalunallocateditems (457,006)

Profitbeforetaxandfinancecosts 1,362,951

Financecosts (67,979)

Profitbeforeincometax 1,294,972

Incometaxexpense (398,269)

Netprofit

after

income

tax

896,703


19/31



31DECEMBER2009

ACN120394194


15

Totalassets

have

increased

by

5.2%

since

the

last

annual

report.

Segment

assets

for

the

half

year

ended31December2009areasfollows:

Asat31December2009

Legal

Services

$

Information

Technology

$

Total

$

Segmentassets

Segmentoperatingassets 17,843,553 2,155,205 19,998,758

Unallocatedassets:

Cashandcashequivalents 176,256

Deferredtaxassets 245,740

Prepayments 118,723

Investmentin

associates

712,888

Availableforsalefinancialassets 2,794

Plantandequipment 4,161

Totalunallocatedassets 1,260,562

Intersegmenteliminations (717,537)

Totalassetsfromcontinuingoperations

perbalancesheet 20,541,783

Asat30June2009

Legal

Services

$

Information

Technology

$

Total

$

Segmentassets

Segmentoperatingassets 16,108,199 2,166,143 18,274,342

Unallocatedassets:

Cashandcashequivalents 547,437

Deferredtaxassets 297,357

Prepayments 170,386

Investmentinassociates 712,888

Availableforsalefinancialassets 2,677

Plantandequipment 5,023

Totalunallocatedassets 1,735,768

Intersegmenteliminations (728,528)

Totalassets

from

continuing

operations

perbalancesheet 19,281,582

4)

OTHERREVENUE


Halfyear

ended

31Dec2009

Halfyear

ended

31Dec2008

$ $

Compensationreceivable 139,000

Rentalrevenue 108,597

Sundryincome 10,301 3,108

Dividendsreceived 50 60

10,351 250,765


20/31



31DECEMBER2009

ACN120394194


16

5)

CASHAND

CASH

EQUIVALENTS


At

31Dec2009

At

30Jun2009

$ $

Cashatbankandinhand 249,796 600,694


At

31Dec2009

At

30Jun2009

$ $

ReconciliationtocashflowstatementForthepurposesofthecashflowstatement,cashandcash

equivalentscomprisethefollowingat31December:

Cashatbankandinhand 249,796 600,694

Bankoverdrafts (71,458) (134,819)

178,338 465,875

6)

PREPAYMENTS


At31Dec2009

At

30Jun2009

CURRENT $ $

UnsecuredLoanGFowler(1) 75,612 75,612

Otherprepayments 397,487 575,664

473,099 651,276

NONCURRENT

UnsecuredLoanGFowler(1) 56,456 63,016

(1) Underthetermsofhisemploymentcontract,MrFowler(ManagingDirector)wasprovided

with an interestfree loan of $189,036 in October 2008 pertaining to the tax liability of

sharesintheCompanyissuedonhisappointment.Thetermsoftheloanareasfollows:

the loanwillbeforgiven ifMrFowlerremainsemployedbytheCompanyforat least3

yearsfromthedateofcommencementofemployment;

50%oftheloanwillbewaivedifMrFowlerterminateshisemploymentwithin23years;

and

0%oftheloanwillbewaivedifMrFowlerterminateshisemploymentwithin2years.

TheCompanywillmeetanyFBTobligationsarisingfromthistransaction.

This loan has been assessed as prepaid employee benefits in accordance with AASB 119

EmployeeBenefits. TheamortisationofthebalancehasbeenrecognisedintheStatementof

comprehensiveincomeinthelineitemsalariesandemployeebenefitsexpenses.


21/31



31DECEMBER2009

ACN120394194


17

7)

GOODWILL

Consolidated Consolidated Consolidated

At

31Dec2009

At

30Jun2009

At

31Dec2008

$ $ $

Openingbalance 10,372,263 6,330,233 6,330,233

Additions(note16) 48,976 4,492,030 2,516,110

Impairment (450,000)

Closingbalance 10,421,239 10,372,263 8,846,343

a)

Descriptionof

the

Groups

goodwill

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

accumulated impairment losses. Goodwill isnotamortisedbut issubjectto impairmenttestingon

anannualbasisorwheneverthereisanindicationofimpairment.

8)

INTANGIBLEASSETS

Consolidated Consolidated Consolidated

At

31Dec2009

At

30Jun2009

At

31Dec2008

$ $ $

Openingbalance

136,620 136,620

136,620

Additions

AmortisationExpense (53,460) (35,640) (17,820)

Closingbalance 83,160 100,980 118,800

a)

DescriptionoftheGroupsotherintangibleassets

Otherintangiblesrepresentthevalueofleasedpremisesacquiredupontheacquisitionofthe legal

practiceofPeterMarkson19September2007andiscarriedatcostlessaccumulatedamortisation.

Thisintangibleassethasbeenassessedashavingafinitelifeandisamortisedusingthestraightline

method over the remaining term of the lease. The amortisation has been recognised in the

statement

of

comprehensive

income

in

the

line

item

depreciation

and

amortisation

expenses.


22/31



31DECEMBER2009

ACN120394194


18

9)

INTERESTBEARING

LOANS

AND

BORROWINGS


At

31Dec2009

At

30Jun2009

$ $

CURRENT

Bankoverdraft 71,458 134,819

Obligationsunderfinanceleasesandhirepurchasecontracts 174,845 72,734

Insurancepremiumfunding(unsecured) 82,865 313,777

Bankloan(secured) 1,000,000 723,000

1,329,168

1,244,330

NONCURRENT

Obligationsunderfinanceleasesandhirepurchasecontracts 358,443 63,555

Loanrelatedparty(unsecured) 550

Bankloan(secured) 850,000 1,000,000

1,208,443 1,064,105

10)

OTHERNONCURRENTLIABILITIES

Consolidated

Consolidated

At

31Dec2009

At

30Jun2009

$ $

CURRENT

Deferredconsiderationpayable(1)

344,322 200,000

Leaseincentiveobligation(2) 82,489

426,811 200,000

NONCURRENT

Deferredconsiderationpayable(1) 85,837

Leaseincentiveobligation(2) 168,852 292,585

168,852 378,422

(1) Deferredconsideration payableonthe acquisition ofThe ArgylePartnership Lawyersand

mdalawyers(refernote16)

(2)

Operating lease incentives are recognised as a liability when received and subsequently

reducedbyallocating leasepaymentsbetweenrentalexpenseandreductionoftheliability

toensurerentalexpenseisrecognisedonastraightlinebasisovertheleaseterm.


23/31



31DECEMBER2009

ACN120394194


19

11)

ISSUEDCAPITAL

a)

Ordinaryshares

Consolidated Consolidated Consolidated Consolidated

31Dec2009 30Jun2009 31Dec2009 30Jun2009

Shares Shares $ $

Fullypaidshares 69,014,511 69,014,511 30,488,281 30,489,975

Partlypaidshares(1) 371,667 331,667 24,540 14,838

Forfeitedsharesheldintrust(1) 26,667

69,412,845 69,346,178 30,512,821 30,504,813

(1)

DeferredEmployeeSharePlan Informationrelatingtotheemployeeshareplan, including

detailsof

shares

issued

under

the

scheme

is

set

out

in

note

17.

b)

Movementsinordinarysharecapital

Consolidated Shares $

Openingbalanceasat1July2008 63,538,320 29,729,975

Issueofsharesat14centspershareon4November2008

tothevendorsofTheArgylePartnership Lawyers 4,142,857 580,000

Issueof

shares

under

the

Deferred

Employee

Share

Plan

(refernote17) 398,334 7,518

Balanceasat31December2008 68,079,511 30,317,493

Consolidated Shares $

Openingbalanceasat1July2009 69,346,178 30,504,813

Costsassociatedwithissuingshares (1,694)

IssueofsharesundertheDeferredEmployeeSharePlan

(refernote

17)

66,667

9,702

Balanceasat31December2009 69,412,845 30,512,821


24/31



31DECEMBER2009

ACN120394194


20

12)

RESERVES


At

31Dec2009

At

30Jun2009

$ $

Netgains/(losses)onavailableforsalefinancialassets (1,271) (1,373)

Generalreserve(1) 727,113

725,842 (1,373)

(1)

Duetoaccumulated losses incurredpriortothe listingofthecompanyon17August2007,

theDirectorsresolvedto isolateprofitsderivedfromtradingactivitiessince listingthrough

theestablishmentofaGeneralReserve.

During the period, $727,113, representing trading profits to 30 June 2009 less dividends

paid,wastransferredtotheGeneralReservefromAccumulatedLosses.

AccumulatedlossesincurredpriortolistingoftheCompanyandcommencementoftrading

activitiesarosefromthefollowingtransactions:

(a)

impairment losses incurred on shares issued to vendors of Talbot Olivier

Business Assets, Brett Davies Lawyers Business Assets and Law Central Co Pty

Ltdshareholderson29August2006;and

(b)

Sharebasedpaymentsexpensesforsharesissuedatadeemedvalueof50cents

persharetodirectorsandsupporterson29August2006and28February2007.

13)

CONTINGENTLIABILITIESANDCONTINGENTASSETS

Therearenocontingentliabilitiesorassetsasat31December2009.

14)

SUBSEQUENTEVENTS

Other than the declaration of an interim dividend, as discussed in note 15, there were no events

occurringsubsequent

to

balance

date

that

have

had,

or

will

have,

a

significant

effect

on

the

Group.


25/31



31DECEMBER2009

ACN120394194


21

15)

INTERIMDIVIDEND

DETAILS

[to

be

confirmed]

Amountpershare 0.25cents

Amountfranked Fullyfrankedata30%taxrate

Recorddatetodetermineentitlementstothedividend 10March2010

Datetheinterimdividendispayable 9April 2010

DividendReinvestmentPlan

The Company operates a dividend reinvestment plan (DRP) which offers eligible shareholders the

opportunitytoreinvestallorpartoftheirdividends inadditionalshares intheGroup. TheShares

areissuedata5%discounttotheweightedaveragemarketpriceofsharessoldontheASXduringa

periodof

10

trading

days

(rounded

to

the

nearest

half

cent),

with

the

period

commencing

on

the

secondtradingdayafterthedividendrecorddate.

ThelastdateforreceiptofanelectionnoticeforparticipationintheDRPwithrespecttotheabove

interimdividendis24March2010.

16)

BUSINESSCOMBINATIONS

Acquisition

of

Argyle

Lawyers

On4November2008,IntegratedLegalHoldingsLimited,throughitswhollyownedsubsidiary,Argyle

LawyersPtyLtd,acquiredthelegalpracticeofTheArgylePartnership. Thetransactionwaseffective

from

1

November

2008.

Sincetheendofthepreviousfinancialyear,thefinancialperformanceoftheacquiredbusinesshas

exceededexpectationsandtheamountpayableasdeferredconsiderationinrelationtothebusiness

combinationhas increasedby$48,976. Thischange inestimatehas increasedthetotalacquisition

cost,resultinginacorrespondingincreaseingoodwill(refernote7).

Forfulldetailsofthebusinesscombinationaffected,pleaserefertotheannualreportfortheyear

ended30June2009.

17)

SHARE

BASED

PAYMENTS

Recognisedsharebasedpaymentexpenses

Theexpenserecognisedforemployeeservicesreceivedduringtheyearisshowninthetablebelow:


31Dec2009 31Dec2008

$ $

Expensearisingfromequitysettledsharebasedtransactions 9,702 7,518


26/31



31DECEMBER2009

ACN120394194


22

Typesof

share

based

payment

plans

Taxexemptemployeeshareplan(TEESP)

AllemployeesareeligibletoparticipateintheTEESPiftheymeetthefollowingcriteria:

i.

TheyareapermanentfulltimeorpermanentparttimeemployeeoftheGroup;

ii.

Theyhavemettheprobationperiodunderthetermsoftheiremploymentcontract;

iii.

Theyareatleast18yearsofage;and

iv. TheyareanAustralianresidentfortaxpurposes.

Employeeswhoparticipate intheTEESPcannominatetocontributeupto$1,000perannumfrom

their

pretax

wages

or

salary

by

way

of

an

effective

salary

sacrifice

towards

acquiring

fully

paid

ordinarysharesintheCompany.

InaccordancewiththerulesoftheTEESP,sharesacquiredundertheplanmustnotbewithdrawnor

otherwise dealt with, commencing from the date the employee acquires a beneficial interest in

thosesharesuntiltheearliestofthedatethat:

i. Isthreeyearsaftertheacquisitiondate;or

ii.

TheemployeeceasestobeanemployeeoftheGroup.

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

ownership

of

shares

under

the

plan.

Deferredemployeeshareplan(DESP)

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

participantsinterestswiththoseofshareholdersbyincreasingthevalueoftheCompanysshares.

EmployeesareeligibletoparticipateintheDESPiftheymeetthefollowingcriteria:

i. TheyareapermanentfulltimeorpermanentparttimeemployeeoftheGroup;

ii. Theyhavemettheprobationperiodunderthetermsoftheiremploymentcontract;

iii.

Theyareatleast18yearsofage;and

iv.

They

are

an

Australian

resident

for

tax

purposes.

UndertheDESP,senioremployeesareinvitedtoreceivefullypaidordinaryshares intheCompany

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

earningspersharefortheGroup.

SharesmayeitherbeacquiredonmarketbytheGrouporissuedbytheParent. Duringthehalfyear

ended31December2009,noshares(30June2009:398,334shares)wereissuedbytheParentwith

thecostbeingexpensedoveravestingperiodofthreeyears. Thefairvalueoftheshares issetat

themarketpriceofthesharesonthedateofgrant. Theimpactontheprofitandlossforthehalf

yearended31December2009is$9,702(31December2008:$7,518).


27/31



31DECEMBER2009

ACN120394194


23

Whena

participant

ceases

employment

prior

to

the

vesting

of

their

shares,

the

shares

are

forfeited

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

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

awardswillvestsubjecttoperformanceoverthisshortenedperiod.

Therearenocashsettlementalternatives.

SummaryofsharesgrantedunderTEESPandDESParrangements

NosharesweregrantedundertheTEESPduringthehalfyearended31December2009.

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

underthe

DESP:


31Dec2009 30Jun2009

No. No.

Openingbalanceat1July2009 398,334

Grantedduringtheperiod 40,000 398,334

Forfeitedduringtheperiod (66,667)

Forfeitedsharesheldintrust 26,667

Closingbalanceasat31December2009 398,334 398,334

Weightedaverage

remaining

vesting

period

Theweightedaverageremainingvestingperiodasat31December2009forthesharesissuedis1.72

years(30June2009:2.13years).

Weightedaveragefairvalue

Theweightedaveragefairvalueofsharesgrantedduringtheperiodwas14.5cents(30June2009:

15.8cents).


28/31



31DECEMBER2009

ACN120394194

DirectorsDeclaration

24

InaccordancewitharesolutionoftheDirectorsofIntegratedLegalHoldingsLimited,Istatethat:

Intheopinionofthedirectors:

a.

Thefinancialstatementsandnotestothefinancialstatementsoftheconsolidatedentity

areinaccordancewiththeCorporationsAct2001,including:

i. givingatrueandfairviewoftheconsolidatedentitysfinancialpositionasat31

December2009andtheperformanceforthehalfyearendedonthatdate;

ii.

complying

with

Australian

Accounting

Standard

AASB

134

Interim

FinancialReportingandtheCorporationsRegulations2001;and

b. Therearereasonablegroundstobelievethatthecompanywillbeabletopayitsdebts

asandwhentheybecomedueandpayable.

ThisdeclarationismadeinaccordancewitharesolutionoftheDirectors.

OnbehalfoftheBoard,

GFowler

Director

Perth,25February2010


29/31

Liability limited by a scheme approved

under Professional Standards LegislationGHM:NR:ILH:043

Auditor's Independence Declaration to the Directors of Integrated Legal

Holdings Limited

In relation to our review of the financial report of Integrated Legal Holdings Limited for the half-year ended

31 December 2009, 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

25 February 2010


30/31

Liability limited by a scheme approved

under Professional Standards LegislationGHM:NR:ILH:042

To the members of Integrated Legal Holdings Limited

Report on the Half-Year Financial Report

We have reviewed the accompanying half-year financial report of Integrated Legal Holdings Limited, which

comprises the statement of financial position as at 31 December 2009, and the statement of

comprehensive income, statement of changes in equity and statement of cash flows for the half-year ended

on that date, other selected explanatory notes and the directors declaration of the consolidated entity

comprising the company and the entities it controlled at the half-year end or from time to time during the

half-year.

Directors Responsibility for the Half-Year Financial Report

The directors of the company are responsible for the preparation and fair presentation of the half-yearfinancial report in accordance with Australian Accounting Standards (including the Australian Accounting

Interpretations), the Corporations Act 2001. This responsibility includes establishing and maintaining

internal controls relevant to the preparation and fair presentation of the half-year financial report that is

free from material misstatement, whether due to fraud or error; selecting and applying appropriate

accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditors Responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We

conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 R eview of

Interim and other Financial Reports Performed by the Independent Auditor of the Entity, in order to state

whether, on the basis of the procedures described, we have become aware of any matter that makes us

believe that the financial report is not in accordance with the Corporations Act 2001including: giving atrue and fair view of the consolidated entitys financial position as at 31 December 2009 and its

performance for the half-year ended on that date; and complying with Accounting Standard AASB 134

Interim Financial Reporting, the Corporations Regulations 2001. As the auditor of Integrated Legal

Holdings Limited and the entities it controlled during the half-year, ASRE 2410 requires that we comply

with the ethical requirements relevant to the audit of the annual financial report.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for

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

substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and

consequently does not enable us to obtain assurance that we would become aware of all significant matters

that might be identified in an audit. Accordingly, we do not express an audit opinion.

Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act

2001. We have given to the directors of the company a written Auditors Independence Declaration a copy

of which is included in the Directors Report.


31/31

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe

that the half-year financial report of Integrated Legal Holdings Limited is not in accordance with:

a. the Corporations Act 2001, including:

i) giving a true and fair view of the consolidated entitys financial position as at 31 December

2009 and of its performance for the half-year ended on that date; and

ii) complying with Accounting Standard AASB 134 Interim Financial Reportingand the

Corporations Regulations 2001.

Ernst & Young

G H Meyerowitz

Partner

Perth

25 February 2010

Documents

069.ASX IAW Feb 26 2010 11.09 Half Yearly Report and Accounts