ILH GROUP LIMITED

ACN: 120 394 194

ASX Appendix 4D
RESULTS FOR ANNOUNCEMENT TO THE MARKET
Current reporting period:
Previous corresponding period:

EARNINGS
Revenue from ordinary activities
Profit from ordinary activities after tax
(before fair value adjustment at 31 December 2011 refer
below)**
Profit from ordinary activities after tax attributable to members
Net profit for the period attributable to members
**Half Year Ended 31 December 2011
Reported profit from ordinary activities after tax reconciliation
Reported Profit from ordinary activities after tax

Half-year ended 31 December 2012

Half-year ended 31 December 2011
Percentage
change
UP(+)/DOWN(-)
flat

Amount
$A
16,265,542

down 1%

414,362

down 57%

414,362

down 57%

414,362
Amount
$A
970,123

Less: Other income from movement in fair value of financial liabilities

(550,437)
Profit from ordinary activities after tax
419,686
(before fair value adjustment at 31 December 2011)^
^The above measure is not a financial measure recognised by International Financial Reporting
Standards (IFRS). This measure has been inserted because it provides an understanding of the
Groups underlying financial performance. 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 was ultimately not payable.
It is recommended that the Appendix 4D be read in conjunction with the Companys ASX released
dated 27 February 2013 and all public announcements made by ILH Group Limited and its controlled
entities (the Group) during the half-year ended 31 December 2012 in accordance with the continuous
disclosure obligations under the ASX listing rules.
Franked
amount
per share
at 30%
0.20 cents
0.80 cents

Amount
DIVIDENDS
per share
2013 interim dividend
0.20 cents
Corresponding period
2012 final dividend
0.80 cents
Record date for determining entitlements to the
12 April 2013
2013 interim dividend
Payment date for the 2013 interim dividend
3 May 2013
The Company operates a dividend reinvestment plan (DRP). Further details are disclosed in the
interim dividend details section of this report.
DRP discount rate
5%
Last date for receipt of DRP election notices for the
26 April 2013
2013 interim dividend

ILH GROUP LIMITED

ACN: 120 394 194

ASX Appendix 4D
RESULTS FOR ANNOUNCEMENT TO THE MARKET

NET TANGIBLE ASSET BACKING

Net tangible assets
Total number of shares on issue
Net tangible asset backing per security

31 Dec 2012
Amount
$
4,399,620

31 Dec 2011
Amount
$
4,296,354

110,167,612

102,034,515

3.99

4.21

The group does not have any interests in joint ventures outside the group.
During the period, the Group made an investment in the following business:

ENTITY NAME
Rockwell Bates Pty Ltd
25% interest
A further 24% interest (bringing total interest to 49%)

Investment
Date
2 July 2012
1 November 2012

ILH GROUP LIMITED

Financial Report
for the half year ended 31 December 2012

ILH Group Limited

ACN 120 394 194
(ASX: IAW)

ILH Group Limited Financial Report

for the Half-Year Ended 31 December 2012

ACN: 120 394 194

Contents
Corporate information ....................................................................................................................... 1
Directors report ................................................................................................................................. 2
Consolidated statement of financial position .................................................................................... 4
Consolidated statement of comprehensive income .......................................................................... 5
Consolidated statement of cash flows ............................................................................................... 6
Consolidated statement of changes in equity .................................................................................... 7
Notes to the consolidated financial statements ................................................................................ 8
Directors declaration ....................................................................................................................... 21
Auditors independence declaration ................................................................................................ 22
Independent auditors review report............................................................................................... 23

ILH Group Limited Financial Report

for the Half-Year Ended 31 December 2012

ACN: 120 394 194

Corporate Information
ABN 20 120 394 194
Directors
The Hon John Dawkins AO, Non-executive Chairman
Anne Tregonning, Non-executive Director
Graeme Fowler, Managing Director/Chief Executive
Company Secretary
Jean-Marie Rudd
Registered office
Level 2
11 Mounts Bay Road
Perth WA 6000
Principal place of business
Head Office
Level 22
1 Market Street
Sydney NSW 2000
Tel: (02) 8263 6600
Share Register
Computershare Investor Services Pty Limited
Level 2
45 St Georges Terrace
Perth WA 6000
Tel: (08) 9323 2000
ILH Group Limited shares are listed on the Australian Stock Exchange.
Solicitors
Talbot Olivier
Level 8, Wesfarmers House
40 The Esplanade
Perth WA 6000
Bankers
St George Bank
Level 2, Westralia Plaza
167 St Georges Terrace
Perth WA 6000

Argyle Lawyers
Level 22
1 Market Street
Sydney NSW 2000

National Australia Bank Limited

100 St Georges Terrace
PERTH WA 6000

Auditor
Ernst & Young
11 Mounts Bay Road
Perth WA 6000

ILH Group Limited Financial Report

for the Half-Year Ended 31 December 2012

ACN: 120 394 194

Directors Report
The directors of ILH Group Limited (the Company) submit the half-year financial report for the halfyear ended 31 December 2012.
DIRECTORS
The names of the Companys directors in office during the half-year and until the date of this report
are set out below. Directors were in office for this entire period unless otherwise stated.
The Hon John Dawkins AO (Non-executive Chairman)
Anne Tregonning (Non-executive Director)
Graeme Fowler (Managing Director)
REVIEW AND RESULTS OF OPERATIONS
Consolidated revenues of $16,265,542 were on par with the previous corresponding half-year period
of $16,275,847.
A fuller commentary on the results for the reporting period is contained in the ASX release 2013
First Half Results Announcement, dated 27 February 2013.
The Group has declared a fully franked interim dividend of 0.20 cents with respect to the financial
year ended 30 June 2013 (2012 interim dividend: nil). The dividend will have a record date of 12
April 2013 and a payment date of 3 May 2013. The Company operates a dividend reinvestment plan
and further details are disclosed in note 14 of this report.
INVESTMENT IN ROCKWELL BATES PTY LTD
On 2 July 2012 the Company entered into a Share Purchase Agreement to acquire a 25% interest in
the Melbourne based legal practice of Rockwell Bates.
The consideration for the initial transaction is a combination of the issue of 3,152,958 shares at 9.5
cents per share and cash.
On 1 November 2012 the Company entered into a Share Purchase Agreement to acquire a further
24% interest in the legal practice of Rockwell Bates, which has increased the total investment in this
business to 49%.
The consideration for the subsequent transaction is a combination of the issue of 3,026,842 shares at
9.5 cents per share and cash.
Deferred consideration is payable at each of 1 July 2013 and 1 July 2014 subject to the Rockwell
Bates business achieving agreed performance hurdles linked to net profit before tax results achieved
by the associate in each financial year. The fair value of the deferred consideration payable is
$371,898 as at 31 December 2012 based on management expectations.
The acquisition is structured with the usual ILH employment restraints and conditions, consistent
with the Companys disciplined acquisition model and strict criteria.
2

ILH Group Limited Financial Report

for the Half-Year Ended 31 December 2012

ACN: 120 394 194

Directors Report (continued)

AUDITORS INDEPENDENCE DECLARATION
A copy of the auditors independence declaration in relation to the review for the half-year is
provided on page 22 and forms part of this report.

Signed in accordance with a resolution of the directors.

G Fowler
Managing Director
Perth, 27 February 2013

ILH Group Limited Financial Report

for the Half-Year Ended 31 December 2012

ACN: 120 394 194

Consolidated Statement of Financial Position

Note

ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Work in progress
Income tax receivable
Total current assets
Non-current assets
Investment in an associate
Plant and equipment
Goodwill
Intangible assets
Available-for-sale financial assets
Total non-current assets
TOTAL ASSETS
LIABILITIES
Current liabilities
Trade and other payables
Interest bearing loans and borrowings
Provisions
Other liabilities
Total current liabilities
Non-current liabilities
Interest bearing loans and borrowings
Provisions
Deferred tax liabilities
Other liabilities
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Accumulated losses
Reserves
TOTAL EQUITY

Consolidated
As at
31 Dec 2012
$

Consolidated
As at
30 June 2012
$

5
6

1,526,268
9,557,922
2,713,361
18,551
13,816,102

1,312,035
10,789,460
2,288,190
31,063
14,420,748

15

2,814,675
1,172,105
14,590,139
450,726
3,301
19,030,946
32,847,048

1,342,820
14,590,139
167,540
2,862
16,103,361
30,524,109

3,455,001
460,920
977,638
266,716
5,160,275

3,941,157
676,225
1,074,147
404,072
6,095,601

7,428,636
340,578
188,443
288,631
8,246,288
13,406,563
19,440,485

4,794,054
347,625
106,733
118,205
5,366,617
11,462,218
19,061,891

34,699,051
(17,368,147)
2,109,581
19,440,485

33,917,382
(17,368,147)
2,512,656
19,061,891

7
8

9
10

10

11
12

The above Consolidated Statement of Financial Position should be read in conjunction with the
accompanying notes
4

ILH Group Limited Financial Report

for the Half-Year Ended 31 December 2012

ACN: 120 394 194

Consolidated Statement of Comprehensive Income

Note

Professional fees revenue

Total revenue
Movement in fair value of financial liabilities
Share of profit of an associate
Interest income
Dividends received
Other revenue
Other income
Occupancy expenses
Salaries and employee benefits expenses
Depreciation and amortisation expenses
Office expenses
Advertising and marketing expenses
Other expenses
Interest expenses
Share based payments expense
Total expenses
Profit before income tax
Income tax expense
Profit after income tax
Net profit for the period
Other comprehensive income
Items that may be reclassified subsequently into profit
or loss:
Net gains/(losses) on available-for-sale financial assets
Other comprehensive income for the period, net of tax
Total comprehensive income for the period

Basic earnings per share (cents)

Diluted earnings per share (cents)

15

16

Consolidated
Half-year
ended
31 Dec 2012
$

Consolidated
Half-year
ended
31 Dec 2011
$

16,265,542
16,265,542

16,275,847
16,275,847

94,452
16,671
78
55,514
166,715

550,437
69,577
76
28,604
648,694

(1,391,663)
(11,106,292)
(283,737)
(2,098,420)
(335,682)
(317,653)
(243,525)
(28,089)
(15,805,061)
627,196
(212,834)
414,362
414,362

(1,414,077)
(11,498,763)
(240,224)
(1,810,991)
(237,133)
(327,926)
(166,939)
(27,956)
(15,724,009)
1,200,532
(230,409)
970,123
970,123

439
439
414,801

(654)
(654)
969,469

0.38
0.38

0.96
0.96

The above Consolidated Statement of Comprehensive Income should be read in conjunction with
the accompanying notes.
5

ILH Group Limited Financial Report

for the Half-Year Ended 31 December 2012

ACN: 120 394 194

Consolidated Statement of Cash Flows

Note

Cash flows from operating activities

Receipts from customers
Payments to suppliers and employees
Interest received
Dividends received
Sundry income
Interest and other costs of finance paid
Income tax paid
Net cash flows from /(used in) operating activities
Cash flows from investing activities
Purchase of plant and equipment
Payment for intangible assets
Payment for the acquisition of businesses
Proceeds from the disposal of plant and equipment
Net cash flows used in investing activities

15

Cash flows from financing activities

Payment for share issue expenses
Proceeds from borrowings
Repayments of borrowings
Payment of dividends
Net cash flows from financing activities
Net increase/(decrease) in cash held
Cash and cash equivalents at the beginning of the
period
Cash and cash equivalents at the end of the period

Consolidated
Half-year
ended
31 Dec 2012
$

Consolidated
Half-year
ended
31 Dec 2011
$

18,538,271
(17,390,642)
16,671
78
55,514
(205,221)
(114,196)
900,475

15,753,614
(17,431,140)
69,577
76
28,604
(101,824)
(113,980)
(1,795,073)

(95,439)
(338,500)
(2,017,809)
37,614
(2,414,134)

(427,024)
(1,253,614)
(1,680,638)

(14,720)
2,849,495
(543,327)
(641,073)
1,650,375

(12,979)
2,940,337
(489,304)
(448,735)
1,989,319

136,716

(1,486,392)

1,279,636
1,416,352

2,435,615
949,223

The above Consolidated Statement of Cash Flows should be read in conjunction with the
accompanying notes.
6

ILH Group Limited Financial Report

for the Half-Year Ended 31 December 2012

ACN: 120 394 194

Consolidated Statement of Changes in Equity

CONSOLIDATED

Issued
Capital
$

At 1 July 2012

33,917,382

Profit for the period

Other comprehensive
income
Total comprehensive
income for the period
Transactions with owners in
their capacity as owners
Dividends paid
Shares issued
Transaction costs on share
issue
Share-based payments
Income tax on items taken
directly to or transferred
from equity
Balance as at
31 December 2012

(17,368,147)

(1,223)

General
Reserve
$

Total
Equity
$

2,513,879

19,061,891

414,362

414,362

439

439

414,362

414,801

763,884

(817,876)
-

(817,876)
763,884

(14,721)
28,090

(14,721)
28,090

4,416

4,416

34,699,051

CONSOLIDATED

Issued
Capital
$

At 1 July 2011

33,397,152

Profit for the period

Other comprehensive loss
Total comprehensive
income/(loss) for the period
Transactions with owners in
their capacity as owners
Dividends paid
Shares issued
Transaction costs on share
issue
Share-based payments
Balance as at
31 December 2011

Accumulated
Losses
$

Net
Unrealised
Gains/
(Losses)
Reserve
$

(17,368,147)

Accumulated
Losses
$
(16,926,589)

(784)
Net
Unrealised
Losses
Reserve
$

2,110,365

General
Reserve
$

439

19,440,485

Total
Equity
$

(649)

1,542,749

18,012,663

(654)

970,123
-

970,123
(654)

(654)

970,123

969,469

487,700

(586,435)
-

(586,435)
487,700

(12,980)
27,956

33,899,828

(16,926,589)

(1,303)

1,926,437

(12,980)
27,956
18,898,373

The above Consolidated Statement of Changes in Equity should be read in conjunction with the
accompanying notes.
7

ILH Group Limited Financial Report

for the Half-Year Ended 31 December 2012

ACN: 120 394 194

Notes to the Consolidated Financial Statements

1) CORPORATE INFORMATION
The general purpose condensed financial report of ILH Group Limited (the Company) for the
half-year ended 31 December 2012 was authorised for issue in accordance with a resolution of
the Directors on 27 February 2013. ILH Group Limited is a company incorporated in Australia
and limited by shares, which are publicly traded on the Australian Stock Exchange (ASX). The
principal activity of the entities of the consolidated Group is the provision of legal services and
online legal document services in Australia.
2) BASIS OF PREPARATION AND ACCOUNTING POLICIES
a) Basis of preparation
This general purpose condensed financial report for the half-year ended 31 December 2012 has
been prepared in accordance with AASB 134 Interim Financial Reporting and the Corporations
Act 2001.
The half-year financial report does not include all notes of the type normally included within the
annual financial report and therefore cannot be expected to provide as full an understanding of
the financial performance, financial position and financing and investing activities of the
consolidated entity as the full financial report.
It is recommended that the half-year financial report be read in conjunction with the annual
report for the year ended 30 June 2012 and considered together with any public
announcements made by ILH Group Limited and its controlled entities (the Group) during the
half-year ended 31 December 2012 in accordance with the continuous disclosure obligations
under the ASX Listing Rules.
The half-year financial report is prepared in Australian dollars and on a historical cost basis,
except for available-for-sale investments, which have been measured at fair value.
For the purposes of preparing the half-year financial report, the half-year has been treated as a
discrete reporting period.
Significant accounting policies
Apart from the changes in accounting policy noted below, the accounting policies and methods
of computation are the same as those adopted in the most recent annual financial statements.
Changes in accounting policy
From 1 July 2012, the Group has adopted all Australian Accounting Standards and
Interpretations, mandatory for annual periods beginning on or after 1 July 2012. Adoption of
these standards and interpretations did not have an effect on the financial position or
performance of the Group.

ILH Group Limited Financial Report

for the Half-Year Ended 31 December 2012

ACN: 120 394 194

Notes to the Consolidated Financial Statements

2) BASIS OF PREPARATION AND ACCOUNTING POLICIES (continued)
b) Basis of consolidation
The half-year consolidated financial statements comprise the financial statements of ILH Group
Limited and its subsidiaries as at 31 December 2012.
Subsidiaries are all those entities (including special purpose entities) over which the Group has
the power to govern the financial and operating policies so as to obtain benefits from their
activities. The existence and effect of potential voting rights that are currently exercisable or
convertible are considered when assessing whether a group controls another entity.
The financial statements of the subsidiaries are prepared for the same reporting period as the
parent company, using consistent accounting policies.
In preparing the consolidated financial statements, all intercompany balances and transactions,
income and expenses and profit and losses resulting from intra-group transactions have been
eliminated in full.
Subsidiaries are fully consolidated from the date on which control is obtained by the Group and
cease to be consolidated from the date on which control is transferred out of the Group.
c) Investment in an associate
The Groups investment in its associate, an entity in which the Group has significant influence, is
accounted for using the equity method.
Under the equity method, the investment in the associate is initially recognised at cost. The
carrying amount of the investment is adjusted to recognise changes in the Groups share of net
assets of the associate since the acquisition date. Goodwill relating to the associate is included in
the carrying amount of the investment and is neither amortised nor individually tested for
impairment.
The statement of comprehensive income reflects the Groups share of the results of operations
of the associate. When there has been a change recognised directly in the equity of the
associate, the Group recognises its share of any changes, when applicable, in the statement of
changes in equity. Unrealised gains and losses resulting from transactions between the Group
and the associate are eliminated to the extent of the interest in the associate.
The Groups share of profit or loss of an associate is shown on the face of the statement of
comprehensive income and represents profit or loss after tax and non-controlling interests in
the subsidiaries of the associate.
The financial statements of the associate are prepared for the same reporting period as the
Group. When necessary, adjustments are made to bring the accounting policies in line with
those of the Group.
After application of the equity method, the Group determines whether it is necessary to
recognise an impairment loss on its investment in its associate. At each reporting date, the
Group determines whether there is objective evidence that the investment in the associate is
impaired. If there is such evidence, the Group calculates the amount of impairment as the
9

ILH Group Limited Financial Report

for the Half-Year Ended 31 December 2012

ACN: 120 394 194

Notes to the Consolidated Financial Statements

difference between the recoverable amount of the associate and its carrying value, then
recognises the loss as Share of losses of an associate in the statement of comprehensive
income.
Upon loss of significant influence over the associate, the Group measures and recognises any
retained investment at its fair value. Any difference between the carrying amount of the
associate upon loss of significant influence and the fair value of the retained investment and
proceeds from disposal is recognised in profit or loss.
3) SEGMENT INFORMATION
Operating segments
The accounting policies used by the Group in reporting segments internally are the same as
those contained in note 2 to the accounts. The ILH Group has identified its operating segments
based on the internal management reporting that is used by the executive management team
(the chief operating decision maker) in assessing performance and allocating resources.
ILH Group Limiteds operating segments have been identified based on how the financial and
operating results of the Group are monitored and presented internally to the executive
management team. The reportable segments are based on aggregated operating segments
determined by the similarity of the products sold and the services provided, as these are the
sources of the Groups major risks and have the most effect on the rates of return.
Argyle Lawyers, Civic Legal, Signet Lawyers, Talbot Olivier and ILH Group Head Office Division are
operating segments within the legal services sector in the Australian market and have been
aggregated to one reportable segment given the similarity of the services provided, method in
which services are delivered, types of customers and regulatory environment.
As the Group is aggregated into one reportable segment, there are no inter-segment
transactions.

10

ILH Group Limited Financial Report

for the Half-Year Ended 31 December 2012

ACN: 120 394 194

Notes to the Consolidated Financial Statements

4) OTHER REVENUE
Consolidated
Half-year
ended
31 Dec 2012

Consolidated
Half-year
ended
31 Dec 2011

Sundry income

55,514

28,604

5) CASH AND CASH EQUIVALENTS

Cash at bank and in hand

Consolidated
At
31 Dec 2012

Consolidated
At
30 Jun 2012

1,526,268

1,312,035

Consolidated
Half-year
ended
31 Dec 2012

Consolidated
Half-year
ended
31 Dec 2011

Reconciliation to statement of cash flows

For the purposes of the statement of cash flows, cash and cash
equivalents comprise the following at 31 December:
Cash at bank and in hand

1,522,518

1,087,538

3,750

4,195

(109,916)

(142,510)

1,416,352

949,223

Short-term deposits
Bank overdrafts

6) TRADE AND OTHER RECEIVABLES

CURRENT
Trade receivables

Consolidated
At
31 Dec 2012

Consolidated
At
30 Jun 2012

9,304,178

10,293,039

(492,021)

(482,079)

8,812,157

9,810,960

Unbilled client disbursements

(64,901)

16,357

Prepayments

729,919

882,464

80,747

79,679

9,557,922

10,789,460

Allowance for doubtful debts

Other receivables

(a)

11

ILH Group Limited Financial Report

for the Half-Year Ended 31 December 2012

ACN: 120 394 194

Notes to the Consolidated Financial Statements

a) Allowance for doubtful debts
Trade receivables are non-interest bearing and are generally on 30-60 day terms. An allowance
for doubtful debts is recognised when there is objective evidence that an individual trade
receivable is impaired. Cumulative bad and doubtful debts of $182,514 (30 June 2012: $431,034
and 31 December 2011: $49,032) have been recognised by the Group as at 31 December 2012
which includes bad debts expense recognised of $172,572 (30 June 2012: $368,651 and 31
December 2011: $149,786). These amounts have been included in other expenses.
Movements in the allowance for doubtful debts were as follows:
Consolidated
At
31 Dec 2012

Consolidated
At
30 Jun 2012

482,079

419,696

9,942

62,383

492,021

482,079

Opening balance at the beginning of the period

Charge for the period
Closing balance at the end of the period
7) GOODWILL

Opening balance
Acquisition of subsidiary
Closing balance

Consolidated
At
31 Dec 2012

Consolidated
At
30 Jun 2012

Consolidated
At
31 Dec 2011

14,590,139
14,590,139

12,900,557

12,900,557

1,689,582

1,689,582

14,590,139

14,590,139

a) Description of the Groups goodwill

After initial recognition, goodwill acquired in a business combination is measured at cost less any
accumulated impairment losses. Goodwill is not amortised but is subject to impairment testing
on an annual basis or whenever there is an indication of impairment.

12

ILH Group Limited Financial Report

for the Half-Year Ended 31 December 2012

ACN: 120 394 194

Notes to the Consolidated Financial Statements

8) INTANGIBLE ASSETS
a) Reconciliation of carrying amounts at the beginning and end of the period
Consolidated
At
31 Dec 2012

Consolidated
At
30 Jun 2012

Consolidated
At
31 Dec 2011

Opening balance
(net of accumulated amortisation)

167,540

29,700

Capitalisation of IT development costs

338,500

167,540

Amortisation

(55,314)

(29,700)

(17,820)

Closing balance
(net of accumulated amortisation)

450,726

167,540

11,880

29,700

Consolidated
At
31 Dec 2012

Consolidated
At
30 Jun 2012

Consolidated
At
31 Dec 2011

Cost (gross carrying amount)

506,040

330,794

163,254

Accumulated amortisation

(55,314)

(163,254)

(151,374)

Net carrying amount at the end of the period

450,726

167,540

11,880

b) Description of the Groups identified intangible assets

Intangible assets represent the costs associated with IT development for Law Central in the 2012
financial year.
The asset relating to the capitalisation of IT development costs (including website, IT platform
and document development) will commence amortisation over its useful life as it becomes
available for use. This intangible asset was first amortised during the period ended 31 December
2012. The intangible asset has been assessed as having a finite life and is amortised using the
straight line method over three years. The amortisation has been recognised in the statement of
comprehensive income in the line item depreciation and amortisation expense.

13

ILH Group Limited Financial Report

for the Half-Year Ended 31 December 2012

ACN: 120 394 194

Notes to the Consolidated Financial Statements

9) INTEREST BEARING LOANS AND BORROWINGS
Consolidated
At
31 Dec 2012

Consolidated
At
30 Jun 2012

CURRENT
Bank overdraft

109,916

32,399

Obligations under finance leases and hire purchase contracts

193,717

223,569

Insurance premium funding (unsecured)

157,287

420,257

460,920

676,225

158,538

245,317

7,270,098

4,548,737

7,428,636

4,794,054

NON-CURRENT
Obligations under finance leases and hire purchase contracts
Bank loan (secured)

The bank loan is secured over the assets of ILH Group Limited and its controlled entities. The new
facility is a Commercial Bill Acceptance with a facility limit of $10,000,000 expiring in December
2014. This has been drawn down by $7,270,098 at 31 December 2012.
10) OTHER LIABILITIES
Consolidated
At
31 Dec 2012

Consolidated
At
30 Jun 2012

CURRENT
Contingent consideration payable(1)
Contingent consideration obligation
Lease incentive obligation

(2)

(3)

143,444

247,290

7,094

10,277

116,178

146,505

266,716

404,072

228,454

NON-CURRENT
Contingent consideration payable(1)
Lease incentive obligation

(3)

60,177

118,205

288,631

118,205

(1) Contingent consideration payable on the acquisition of Rockwell Bates (see note 15) (2011: Contingent consideration
payable on the acquisition of PLN Lawyers).
(2) Contingent consideration payable on the acquisition of Wojtowicz Kelly Legal.
(3) Operating lease incentives are recognised as a liability when received and subsequently reduced by allocating lease
payments between rental expense and reduction of the liability to ensure rental expense is recognised on a straight
line basis over the lease term.

14

ILH Group Limited Financial Report

for the Half-Year Ended 31 December 2012

ACN: 120 394 194

Notes to the Consolidated Financial Statements

11) ISSUED CAPITAL
a) Ordinary shares
Consolidated
31 Dec 2012
Shares

Fully paid shares

Consolidated
31 Dec 2012
$

Consolidated
30 Jun 2012
$

108,304,112

100,543,515

34,553,822

33,800,242

1,863,500

1,491,000

145,229

129,589

(300,000)

(12,449)

(1)

Partly paid shares

Forfeited shares held in trust

Consolidated
30 Jun 2012
Shares

(2)

110,167,612

101,734,515

34,699,051

33,917,382

(1) Shares issued under the Deferred Employee Share Plan that vest over three years (note 16).
(2) Shares issued but forfeited under the Deferred Employee Share Plan, held in trust (note 16).

b) Movements in ordinary share capital

CONSOLIDATED
Opening balance as at 1 July 2012

Shares

101,734,515

33,917,382

Issue of shares at 9.5 cents per share to vendors of Rockwell

Bates for a 25% interest in the business on 2 July 2012

3,152,958

299,531

Issue of shares at 9.5 cents per share to vendors of Rockwell

Bates for a further 24% interest in the business on 1 November
2012

3,026,842

287,550

372,500

28,089

1,880,797

176,803

Issue of shares under the Deferred Employee Share Plan

(refer note 16)
Issue of shares under the Dividend Reinvestment Plan
Costs associated with issuing shares

(14,720)

Income tax on items taken directly to or transferred from equity

4,416

Balance as at 31 December 2012

110,167,612

34,699,051

CONSOLIDATED

Shares

Opening balance as at 1 July 2011

97,164,328

33,397,152

Issue of shares under the Deferred Employee Share Plan (refer

note 15)

574,783

27,956

Issue of shares at 11.5 cents per share to vendors of PLN Lawyers

in part satisfaction of consideration payable on 1 August 2011

3,043,478

350,000

Issue of shares under the Dividend Reinvestment Plan

1,251,926

137,700

Costs associated with issuing shares

Balance as at 31 December 2011

102,034,515

(12,980)
33,899,828

15

ILH Group Limited Financial Report

for the Half-Year Ended 31 December 2012

ACN: 120 394 194

Notes to the Consolidated Financial Statements

12) RESERVES

Accumulated losses on available-for-sale financial assets

General reserve

(b)

(a)

At
31 Dec 2012

At
30 Jun 2012

(784)

(1,223)

2,110,365

2,513,879

2,109,581

2,512,656

a) Net unrealised losses reserve

This reserve records movements in the fair value of available-for-sale financial assets.
b) General reserve
Due to accumulated losses incurred prior to the listing of the company on 17 August 2007, the
Directors resolved to isolate profits derived from trading activities since listing through the
establishment of a General Reserve.
During the period, no transfers were made to the General Reserve from Accumulated Losses (31
December 2011: nil). Trading profits of $414,362 (31 December 2011: $970,123) were
recognised in the General Reserve and $817,876 (31 December 2011: $586,435) dividends paid.
13) CONTINGENT LIABILITIES AND CONTINGENT ASSETS
Other than the deferred consideration arrangement in relation to the investment in Rockwell Bates
Pty Ltd (refer note 15), there are no contingent liabilities or assets as at 31 December 2012.
14) INTERIM DIVIDEND
Amount per Share
Amount franked
Record date to determine entitlements to the dividend
Date the interim dividend is payable

0.20 cents
Fully franked at 30% tax rate
12 April 2013
3 May 2013

a) Dividend Reinvestment Plan

The Company operates a dividend reinvestment plan (DRP) which offers eligible shareholders the
opportunity to reinvest all or part of their dividends in additional shares in the Group.
The shares are issued at a price derived by applying a 5% discount to the volume weighted average
market price of shares (on an ex-dividend basis) during the five trading days immediately preceding
and inclusive of the record date.
The last date for receipt of an election notice for participation in the DRP with respect to the above
interim dividend is 26 April 2013.
16

ILH Group Limited Financial Report

for the Half-Year Ended 31 December 2012

ACN: 120 394 194

Notes to the Consolidated Financial Statements

15) INVESTMENT IN AN ASSOCIATE
Investment in Rockwell Bates Pty Ltd
On 2 July 2012 the Company entered into a Share Purchase Agreement to acquire a 25% interest in
the Melbourne based legal practice of Rockwell Bates.
Under that agreement, the investment would be increased to 49% over the next two years.
On 1 November 2012, the planned increased investment was accelerated with the acquisition of an
additional 24% interest in the business.
The consideration for the initial transaction was a combination of the issue of 3.15m shares at 9.5
cents per share and cash. The consideration for the subsequent transaction was a combination of
the issue of 3.03m shares at 9.5 cents per share and cash.
Deferred consideration is payable at each of 1 July 2013 and 1 July 2014 subject to the Rockwell
Bates business achieving agreed performance hurdles linked to net profit before tax results achieved
by the associate in each financial year. The fair value of the deferred consideration payable is
$371,898 as at 31 December 2012 based on management expectations.
The acquisition is structured with the usual ILH employment restraints and conditions, consistent
with the Companys disciplined acquisition model and strict criteria.
The Directors of ILH Group Limited consider Rockwell Bates to be a quality business with strong
growth prospects and will provide ILH Group Limited with a platform for further growth, in particular
strengthening the organisations corporate and commercial law services offering, and providing new
access to industries and clients in the Australian and Asian markets.
The carrying value of the investment as at 31 December 2012 is $2,814,675 and includes the Groups
share of the associates after tax profit for the period of $94,452 (25% investment 2 July 2012 to 31
October 2012, then 49% investment 1 November 2012 to 31 December 2012).

17

ILH Group Limited Financial Report

for the Half-Year Ended 31 December 2012

ACN: 120 394 194

Notes to the Consolidated Financial Statements

16) SHARE-BASED PAYMENTS
a) Recognised share based payments expense
The expense recognised for employee services received during the half-year is shown in the
table below:

Expense arising from equity-settled share based

transactions

Consolidated
31 Dec 2012

Consolidated
31 Dec 2011

28,089

27,956

b) Types of share based payment plans

Tax exempt employee share plan (TEESP)
All employees are eligible to participate in the TEESP if they meet the following criteria:
i.
ii.
iii.
iv.
v.

They have an adjusted taxable income of less than $180,000 per annum;
They are a permanent full-time or permanent part-time employee of the Group;
They have met the probation period under the terms of their employment contract;
They are at least 18 years of age; and
They are an Australian resident for tax purposes.

Employees who participate in the TEESP can nominate to contribute up to $1,000 per annum
from their pre-tax wages or salary by way of an effective salary sacrifice towards acquiring fully
paid ordinary shares in the Company.
In accordance with the rules of the TEESP, shares acquired under the plan must not be
withdrawn or otherwise dealt with, commencing from the date the employee acquires a
beneficial interest in those shares until the earliest of the date that:
i.
ii.

Is three years after the acquisition date; or

The employee ceases to be an employee of the Group.

The rules of the TEESP do not contain any provisions that could result in an employee forfeiting
ownership of shares under the plan.

18

ILH Group Limited Financial Report

for the Half-Year Ended 31 December 2012

ACN: 120 394 194

Notes to the Consolidated Financial Statements

16) SHARE-BASED PAYMENTS (continued)
b) Types of share based payment plans (continued)
Deferred employee share plan (DESP)
Shares are granted to key employees and directors of the Group. The DESP is designed to align
participants interests with those of shareholders by increasing the value of the Companys
shares.
Employees are eligible to participate in the DESP if they meet the following criteria:
i.
ii.
iii.
iv.

They are a permanent full-time or permanent part-time employee of the Group;

They have met the probation period under the terms of their employment contract;
They are at least 18 years of age; and
They are an Australian resident for tax purposes.

Under the DESP, senior employees are invited to receive fully paid ordinary shares in the
Company subject to the achievement of a number of key performance indicators such as
contribution to earnings per share for the Group.
Shares may either be acquired on-market by the Group or issued by the Parent. During the halfyear ended 31 December 2012, 372,500 shares (30 June 2012: 574,783 shares) were granted by
the Parent with the cost being expensed over a vesting period of three years. The fair value of
the shares is set at the market price of the shares on the date of grant. The impact on the profit
and loss for the half-year ended 31 December 2012 is $28,089 (31 December 2011: $27,956).
When a 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 awards will vest subject to performance over this shortened period.
There are no cash settlement alternatives.

19

ILH Group Limited Financial Report

for the Half-Year Ended 31 December 2012

ACN: 120 394 194

Notes to the Consolidated Financial Statements

16) SHARE-BASED PAYMENTS (continued)
c) Summary of shares granted under TEESP and DESP arrangements
No shares were granted under the TEESP during the half-year ended 31 December 2012.
The following table illustrates the number of and movements in shares granted during the
period under the TEESP and the DESP:
Consolidated
31 Dec 2012

Consolidated
31 Dec 2011

No.

No.

TEESP:
Opening balance at 1 July
Transferred to departed employees during the period
Closing balance as at 31 December

(1)

252,672

252,672

252,672

252,672

1,491,000

1,256,217

372,500

574,783

1,863,500

1,831,000

DESP:
Opening balance at 1 July
Granted during the period
Closing balance as at 31 December
(1)

Shares are transferred out of an employee trust into the employees name on termination of employment.

d) Weighted average remaining vesting period

The weighted average remaining vesting period as at 31 December 2012 for the shares issued
under the DESP is 1.15 years (30 June 2012: 1.20 years).
e) Weighted average fair value
As at 31 December 2012, the weighted average fair value of shares granted under the DESP was
12.0 cents (30 June 2012: 11.8 cents).
17) SUBSEQUENT EVENTS
Other than the declaration of an interim dividend, as discussed in note 14, there were no events
occurring subsequent to balance date that have, or will have, a significant effect on the Group.

20

ILH Group Limited Financial Report

for the Half-Year Ended 31 December 2012

ACN: 120 394 194

Directors Declaration
In accordance with a resolution of the Directors of ILH Group Limited, I state that:
In the opinion of the directors:
a. The financial statements and notes of the consolidated entity are in accordance with the
Corporations Act 2001, including:
i. Giving a true and fair view of the consolidated entitys financial position as at 31
December 2012 and the performance for the half-year ended on that date of the
consolidated entity
ii. Complying with Accounting Standard AASB 134 Interim Financial Reporting and
the Corporations Regulations 2001
b. There are reasonable grounds to believe that the company will be able to pay its debts
as and when they become due and payable.

On behalf of the Board

G Fowler
Director
Perth, 27 February 2013

21

Auditor's Independence Declaration to the Directors of ILH Group Limited

In relation to our review of the financial report of ILH Group Limited for the half-year ended 31 December
2012, to the best of my knowledge and belief, there have been no contraventions of the auditor
independence requirements of the Corporations Act 2001 or any applicable code of professional conduct.

Ernst & Young

T G Dachs
Partner
Perth
27 February 2013

Liability limited by a scheme approved

under Professional Standards Legislation
TD-PB-ILH-016

To the members of ILH Group Limited

Report on the Half-Year Financial Report

We have reviewed the accompanying half-year financial report of ILH Group Limited, which comprises the
statement of financial position as at 31 December 2012, the statement of comprehensive income,
statement of changes in equity and statement of cash flows for the half-year ended on that date, notes
comprising a summary of significant accounting policies and other explanatory information, 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 of the half-year financial report that
gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act
2001 and for such internal controls as the directors determine are necessary to enable the preparation of
the half-year financial report that is free from material misstatement, whether due to fraud or error.

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 Review
of a Financial Report 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 2001 including: giving a true and fair view
of the consolidated entitys financial position as at 31 December 2012 and its performance for the halfyear ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting
and the Corporations Regulations 2001 . As the auditor of ILH Group 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.

Liability limited by a scheme approved

under Professional Standards Legislation
TD-PB-ILH-015

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 ILH Group Limited is not in accordance with the Corporations Act
2001, including:
a) giving a true and fair view of the consolidated entitys financial position as at 31 December 2012 and
of its performance for the half-year ended on that date; and
b) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations
Regulations 2001.

Ernst & Young

T G Dachs
Partner
Perth
27 February 2013

TD-PB-ILH-015