ACN 120 394 194

Level 22, 1 Market Street

Sydney NSW 2000
Phone (02) 8263 6601
www.ilh.com.au

Wednesday 27 February 2013

ASX RELEASE IAW

ILH Group Limited

2012/13 Half Year Report and Dividend Announcement
Net contribution from member firms - up 11% to $1.93m
Revenue from ordinary activities - flat at $16.2m
Profit from ordinary activities after tax - down 1%
(before fair value adjustment at 31 December 2011)*

Interim dividend - 0.2 cents fully franked

*Refer ASX Appendix 4D for the half-year ended 31 December 2012

KEY DEVELOPMENTS

Adoption of a national legal services brand

Continued expansion and enhancement of legal services expertise

- Melbourne Mergers and Acquisitions; Gaming and Wagering
- Perth Workplace Relations; Taxation
- Sydney Litigation and Dispute Resolution; French Desk; Indian Desk

Continued network expansion

- New affiliate relationships in India, the Solomon Islands and East Timor

Law Central
- New branding and website
- Product and functionality enhancements
- Significant new client engagements (cornerstone national groups)

The Directors of ILH Group Limited (ILH) report that the net contribution from member firms increased by
11% to $1,930,987 for the half year ending 31 December 2012.
Operating revenues of $16,265,542 were on par with the prior corresponding period.
Profit from ordinary activities after tax (before fair value adjustment at 31 December 2011)* was down 1%
to $414,362 over the corresponding prior period. The fair value adjustment represented a non-cash and
one-off accounting adjustment arising from an acquisition transaction in 2011, being a deferred
consideration liability which ultimately was not payable. Including this fair value adjustment, net profit
after tax was down 57% over the corresponding prior period.
Operating cash flows of $900,475 were generated for the period.

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1.

ABOUT ILH GROUP LIMITED

The ILH strategy is aggregation in the legal services industry, identifying businesses to join the Group
through acquisition, and then supporting these businesses towards growth, improved business
performance, and group synergies through collaboration.
The Group comprises the Legal Services and Law Central divisions.
Legal Services
The Legal Services division encompasses a growing network of member firms, affiliates and strategic
relationships, targeting growth markets and segments in Australia and the Pacific/South East Asia
region.
The national legal business in Australia (Melbourne, Perth, Sydney) derives competitive advantage
from and is enhanced by a unique market position in the Pacific and increasingly in South East Asia.
Predominantly through subsidiary Pacific Legal Network (PLN), Legal Services has developed distinctive
skills and relationships in the Pacific region which is complemented by an extensive network including
visiting offices in Fiji and Vanuatu, a representative office in Singapore, and affiliate relationships in
more than 15 countries.
The divisions market position is further enhanced by international capabilities through a strategic
collaboration in the region with large US law firm Davis Wright Tremaine, and by strategic relationships
with international legal associations.
The division is focused on client relationships with multi-nationals, public companies, large private
companies, businesses with assets in the Pacific region, international businesses seeking to acquire
assets in Australia and the Pacific, organisations in government and insurance, and growth businesses
in small and medium enterprise sector, as well as higher net worth individuals and business owners.
The Legal Services division is a top 40 Australian law firm by fee income.
Law Central
Law Central is an internet based customised legal document and information service business.
The business targets accountants and financial planners who can create legal documents on-line, using
document templates that can be customised for their clients.
The business provides approximately 100 legal documents including Superannuation Fund Deeds,
Trust Deeds, Employment Contracts and Shelf Companies.
Law Central earns revenue based on the selling of these legal documents and from subscriptions to the
information service. The business operates with minimal variable costs per document sale.
Additionally, ILH legal firms receive document income from the development, maintenance and sale of
Law Central documents, as well as fee income from referral work where Law Central clients require
additional customisation and advice.
The Law Central strategy is to grow and develop organically through the expansion of on-line services
in Australia (and internationally), and by acquisition.
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2.

ANALYSIS OF FINANCIAL RESULTS

Net Contribution from Member Firms

Operating revenue from member firms
Share of profit of an associate
Net Contribution from Member Firms
Corporate/head office
Interest expenses
Income tax expense
Profit from ordinary activities after tax
(before fair value adjustment at
31 December 2011)
*Refer ASX Appendix 4D for the half-year

2012/13
$000s

2011/12
$000s

%
Change

16,266
94
1,931
(1,060)
(244)
(213)

16,276
0
1,734
(916)
(167)
(231)

11%
16%
46%
(8%)

414

420

(1%)

0
414

550
970

(57%)

1,392
11,106
284
336
2,444
243
15,805

1,414
11,499
240
237
2,167
167
15,724

(2%)
(3%)
18%
42%
13%
46%
1%

0%

ended 31 December 2012

Movement in fair value of financial liabilities

Net Profit after Tax
Expenses
Occupancy
Salaries and employee benefits
Depreciation and amortisation
Advertising and marketing
Other expenses
Interest expenses
Total Expenses
Share of Profit from an Associate

The ILH investment in Rockwell Bates has been equity accounted and included as share of profit from
an associate.
As the Melbourne member firm of Legal Services, the earnings from Rockwell Bates have been
included in contribution from member firms.
The investment in Rockwell Bates increased from 25% to 49% on 1 November 2012.
Movement in fair value of liabilities (included in corresponding prior period)
The movement in fair value of financial liabilities represents a non-cash and one-off accounting
adjustment arising from an acquisition transaction in 2011, being a deferred consideration liability
which ultimately was not payable.
Interest Expenses
Interest expense increased for the period as a result of increased bank debt used in funding the cash
component of acquisitions.

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2.

ANALYSIS OF FINANCIAL RESULTS (continued)

Expenses
Increases in corporate/head office, depreciation and amortisation, advertising and marketing, and
other expenses relate to continued investment in the ILH growth strategy.
a)

Law Central

IT Development
The Company has continued to invest in Law Central IT during the period.
The IT development includes the website, new product functionality, document
development, and a new IT platform.
The new IT platform is now in testing and on track for completion in May 2013, and will
significantly improve time to market for new documents, document changes and product
features generally, as well as enable enhanced online marketing.

Business Development
Law Central has appointed a business development professional, specifically experienced in
the accountant and financial planner segment.
A program has been developed to target and develop relationships with key current and
potential clients.
We see this appointment as a critical investment in realising the significant opportunity for
Law Central in the Australian market.

Law Central expansion

Law Central will launch in New Zealand in 2013, and the Company is reviewing the
opportunity for new revenues streams, including new target markets in Australia, third party
product promotion and advertising on the Law Central website, and further international
expansion.

Product endorsement
Law Central has engaged former Australia cricket captain Steve Waugh in a promotional
capacity in Australia, and potentially as part of further international expansion.

b)

Branding and Marketing

In November 2012, ILH announced that the legal services businesses of Argyle Lawyers (Sydney),
Rockwell Bates (Melbourne) and Talbot Olivier (Perth) would combine under the national trading
name Rockwell Olivier.

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2.

ANALYSIS OF FINANCIAL RESULTS (continued)

b) Branding and Marketing (continued)
The transition to Rockwell Olivier is expected to be completed in March/April 2013, and initially
involves brand concept advice, new brand collateral (stationery and marketing materials), and new
website design and functionality.
The costs of re-branding include material one-off costs and will continue into the second half.
ILH anticipates significant synergies being available under this brand strategy, including revenue
growth opportunities resulting from a national approach and a consistent client and marketing
strategy, as well as cost synergies from the streamlining of brands, websites, and marketing.
c) Training
An inaugural ILH Leadership Academy was held in November 2012, aimed at the development of
the leadership and management skills of senior lawyers and senior administrators.
This program is seen as a critical element to achieving the ILH strategic growth priorities.
Further, we see cross Group training programs such as these as key enablers in building strong
relationships across member firms, and underpinning collaboration and cross selling.

3.

DECLARATION OF INTERIM DIVIDEND

The Directors have declared a fully franked interim dividend of 0.2 cents per share.
The dividend will have a record date of 12 April 2013 and a payment date of 3 May 2013.

4.

OUTLOOK
The Company remains focused on acquiring good businesses with like-minded people, and working
with them to achieve growth, business improvement and revenue synergies through collaboration
across the Group.
In this regard, IHL continues to have a strong pipeline of potential acquisition opportunities.
The Directors anticipate strong earnings momentum into 2013/14 from:

Revenue synergies arising from the national Rockwell Olivier branding for Legal Services

Continued expansion and development of the Pacific/South East Asia legal services business

Growth initiatives in Law Central

The Directors remain confident in the outlook for the Company given the strength and underlying
quality of its member firms and network, the opportunity for organic growth and improved
performance, particularly from cross Group collaboration, and the significant potential to grow by
selective acquisition, affiliation and strategic relationship.
For further information contact:
Graeme Fowler Managing Director
Mobile: 0419 746 618
Office:
(02) 8263 6601
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