017.asx iaw nov 30 2007 agm presentation

8/9/2019 017.ASX IAW Nov 30 2007 AGM Presentation

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A Platform of Growth for Law Firms

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Activities since listing on ASX 17 August 2007

$12m capital raising oversubscribed

Acquired businesses continue to operate profitably

Talbot Olivier tuck-ins:

legal practice of Shayne Leslie(expected revenues of $3m over 3 years)

Peter Marks, Succession Lawyers(1,100 Will bank, staff, and below market lease)

Dividend Policy announced - 2.5 cents per share

But, failed to convince the market of our worth

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Snapshot of the Legal Industry in Australia

Average profitmargin of

29.7%

Annualrevenue $6b

Fragmented 7,000practices

Cottageindustry-10employees

Australian Bureau of Statistics, 2002

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Issues Facing the Legal Profession

Partnerships hard to sell Junior lawyers unwilling to buy into partnerships with no liquidity Limited ability for Partners to sell their practice as remaining Partners

must approve of new Partner

Traditional partnership structure Partners jointly and severally liable for the debts of other partners

Poor staff retention Junior solicitors often resent a third of their billings going to Partners

Over-specialisation boutiques are not a one-stop shop Clients want an array of services but desire for expertise causessmaller firms to be more specialised

must refer other issues to outside solicitors

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What we are doing right now?

1. Acquiring stand alone firms that want to grow Highly selective approach. Targeting law firms with best cultural, strategic and

financial fit.

6 25 partners in size in capital cities and large regional areas

City acquisition primarily commercial and corporate or boutiques in thoseareas

Regional practices must have substantial presence in their geographic area

Firms are priced conservatively, thus allowing higher profit share back to the

Principals going forward

Member firms given level of independence and responsibility for theirbusiness, consistent with their size, dynamism and ability to meet budgets

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2. Supporting Member Firms sourcing their own tuck-ins

3. Facilitate move to Corporate structure, best practice and crossreferral of clients Firms share knowledge and contribute to overall group strategy and direction

4. Employee Share Scheme To motivate lawyers and staff to stay longer

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Why do firms want to join us?

Bigger Ability to grow via acquisition tuck-in

Better staff retention through employee share schemes

Member Firms are Employers of Choice Greater attraction for new lawyers and staff Secondment opportunities - lawyers and staff can move within the group

(rather than being lost to the group) Lawyers have a clear and transparent path to Principal

Key employees are rewarded with equity in the Company and they becomeactively involved in the success of the group

Employees stay longer because of Integrated training modules

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Better

Provide training and documentation support for implementing Best

Practice initiatives (client satisfaction surveys, suggested businessprocesses, empowering employees to service clients to allow Principalsto manage and increase their leverage)

Quarterly meetings of all Chief Executives to develop Best Practice andbenchmark to each others practice. Tools for continual improvementand support.

Best Practice encourages the institutionalising of the clients, allowingnon partners to service clients and increasing the principals leveraging(number of fee-earners per principal). The Principal is encouraged tomanage effectively and is rewarded for increasing profits rather thanhoarding clients and work greater corporate approach.

Motivation for the Associate Principals to stay longer with a clear road tothe level of Principal (and then Principal with profit share).

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Broader

Broader network of client referral through other Member Firms

Develop areas of specialisation within individual Member Firms toattract and retain employees and increase sources of referral work asreputation expands

Acquire complementary practices through tuck-ins to bring in newareas of practice and leverage of existing client base

Member Firms recruitment opportunities through staff looking to work

in other Integrated firms in different states and different areas ofpractice

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Incentives for Older Partners Reduce fluctuations and risk of income

Reduces the reliance on one form of income, being 100% share of profits ofthe practice

Replacing 100% of the profit of the law firm that can fluctuate up and downwith a more reliable and less risky income stream made up of threecomponents:

Base salary (including the protection of sick leave, annual leave, longservice leave)

Profit share of that Member Firm Dividends from Integrated shares

With these three forms of income we expect the Principals to, within 3 5

years, to move back to the incomes that they were receiving before theyjoined the Integrated group with a lot less risk

The dividends provide a passive income from dividends and an opportunityfor capital growth of the shares (which extend into retirement)

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Working capital extraction - releases the capital value of

their practice now, rather than later Reduce risk by removing personal guarantees for law

firms loans, overdrafts and leases

Building a model that drives succession

Succession planning - younger equity partners andsenior associates, through a corporate approach, are

able to move up to join and, where required, replaceretiring partners. Partners can leave with dignity and withproper succession

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Incentives for Younger Partners

Increased personal growth and professional development andopportunities

Achieve higher growth in your business and therefore, through profitshare, higher income

No cost of moving into a Principal profit sharing position equity

position without capital

Transparent succession planning and path to Principal allowsorderly transition. This encourages lawyers and senior associates towork through the system to get to Principal level at a Member Firm,while receiving proper and fair valuation through salary and the

application of the Employee Share Schemes Orderly and documented succession planning allows older partners

to retire to make way for younger partners, without short termupheaval or adverse affect on profits

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Value for Integrated Shareholders

Allows lawyers and non-lawyers alike to share in the high profits ofthe legal profession

Small head office staff and low head office overheads gets as muchprofit into the hands of the shareholders as possible

Relatively high dividend policy gives both equity partners andshareholders alike a solid and recurring income stream, while stillallowing retention of profit to fund future acquisitions

Quarterly meetings of all Member Firms Chief Executives leads to

sharing of best practice and increased profit performance. The sumis greater than the parts.

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Questions & further information

Brett Davies08 9463 4341 or 041 998 0972

[email protected]

Disclaimer and Confidentiality This presentation is prepared by Integrated LegalHoldings Limited for investors as background information. It is not an offer, invitation, solicitation or

recommendation for the purchase or sale of securities.This is a summary only. You should undertake your own research. Neither Integrated Legal HoldingsLimited or its affiliates make any representation of warranty.

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017.asx iaw nov 30 2007 agm presentation

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