ACN120394194

Level22
1MarketStreet
SydneyNSW2000
Phone(02)82636600
www.ilh.com.au

ASX Announcement

Managing Directors Address

2009 Annual General Meeting
Perth, Thursday 26 November 2009

Iwouldliketotakethisopportunitytowelcomeshareholderstothe2009AnnualGeneralMeeting,
mysecondasManagingDirector.

Iwilltodaydiscuss:
thecompanysprogressoverthelast12months,includingthe2009financialperformance;
provideanoverviewofthebusinessasitcurrentlystands;
thecompanysstrategyandpriorities;and
finally,abriefoutlookfortheperiodahead.

Additionally,InotethatIhavereceivedvariouscalls,emailsandevenvisitsfromshareholdersover
the last 23 months and I have ensured that questions and points raised by them are included in
todayspresentation.

Iwouldparticularlyliketothanktheseshareholdersfortheirfeedbackandinterest,andalsoallof
youforyourattendancetoday.

When I presented to you at last years Annual General Meeting I had only been in the role of
ManagingDirectorfor6monthsandthemessagesweregenerallyverypositive.

TheCompanysprofitsfor2008hadbeenstrong,asoliddividendhadbeendeclaredandwehadjust
announcedthestrategicallyimportantacquisitionsontheeastcoast.

WhilstIalludedatthattimetochangesthatwewouldneedtomaketothebusinessstrategy,the
business model and cost base of the company, the reality 12 months later is that those changes,
particularlytothecostbase,weremoresubstantialthanIhadunderstood.

Additionally, at last years meeting although we were in the worst of economic conditions, at the
timetheCompanyappearedtobesomewhatimmunetotheeffectsoftheeconomywithpartsof
our business out performing and seemingly offsetting other underperforming services. In fact the
Companysfirsthalfresultwasstrong.

However, as it turned out the Company was to be substantially effected by the economy in the
secondhalf,witharesultingimpactonprofitability.

So12monthslaterwehavelearntmuchaboutthebusiness,muchabouthowthebusinessresponds
todifferenteconomiccircumstances,muchmoreabouttheprospectsfortheCompany,andhaving
hadtomakemoresubstantialchangesthanweanticipated.

ButIdothinkwehavecomealongwaystrategicallyinthelast12monthswithsomekeymilestones
achieved,andthatwearenowinamuchstrongerpositionfortheopportunitiesahead.

TheLast12Months
It probably goes without saying that 2009 was a particularly difficult and challenging year for the
Company,butIthinkitisusefultostartbyreflectingontheenvironmenttheCompanyoperatedin,
andchallengesthatwerefaced.

GFC
The2009financialyearwasanunprecedentedperiodinAustralianandworldfinancialmarkets.
The global financial crisis, or GFC, impacted all aspects of business and society, with reduced
demand for products and services, significant job losses across Australia, and with a number of
previously high profile public listed companies either no longer in existence or who delivered a
significantlossofprofitabilityandshareholdervalue.

TheCompanywasnotimmunetotheeffectsoftheGFC,withtheeconomicenvironmentnegatively
impactingrevenues,andforcingsomeclientsintobankruptcy,leadingtobaddebtsforIntegrated.

SmallCompanywithNewbusiness/strategy
It was also a difficult operating environment for relatively new and small companies such as
Integrated.

Potentialnewinvestorsweredistractedbyeventsinthemarketandgenerallyhadlittleinterestin
newstoriesfromasmallcompanywhichcontinuedtobeintheprocessofdevelopingitsstrategy
andbusinessmodel.

Startingasmallpubliclylistedcompanyisdifficultatthebestoftimes,itisbeenevenmoresointhe
environmentoverthelast2years.

Additionally,Integratedistrailblazingwithanewbusinessmodelandconcept.

Integratedremains1ofonly2listedlegalfirmsintheworld.

Itisaverynewconceptandassuchwilltaketimetopositionthebusinessandtogaintractioninthe
market,andthisprocesshaswithoutdoubtbeenslowedbytheeffectsoftheGFC.

Largeacquisitionsrelativetosize
The Companys acquisitions during the year were very large relative to our size, which did put
pressureonthebusiness.

TheCompanylistedinPerthwithonlyPerthbasedbusinesses.

Ifweweretostarttogaincredibilityforthebusinessandtheconcept,itwasimportantthatwegain
apresenceinthelargereastcoastmarkets.

A priority therefore in 2009 was to establish a presence on the east coast, and to that end we
announced the acquisition of Argyle Lawyers last November and the subsequent tuckin of mda
lawyersinMarchthisyear.

IntegratednowhasasignificantpresenceinSydneyandtoalesserextentMelbourne,thisbeinga
veryimportantstrategicaccomplishmentforthefuturepositioningoftheCompany.

These acquisitions were very large relative to our existing size, and effectively doubled the size of
theCompanyinashorttime.

Asexpected,thisdidplacepressureonthebusiness,particularlyintheareasofoperatingcashflows
andprofitability.

Consolidation
Andfinally,thefocusformuchofthesecondhalfoftheyearinparticularwasconsolidation.

Thisconsolidationincludedthefollowing:
Bedding down the new acquisitions, which in the case of Argyle in Sydney included the
expected implementation of new technology to support the business and growth in the
business going forward. This is nearing successful completion and has involved material
investment;
Ensuring we had appropriate management and reporting processes in place across the
Group;
Starting to improve the quality of our cash flowmanagement processes in the businesses,
andIwilltalkfurtheraboutthislater;
Establishing some fundamental best practices that can be applied to the next round of
acquisitions;and
Resolving a number of outstanding legacy issues in the foundation businesses such as
PrincipalremunerationwhichIwilltalkaboutindetailshortly.Theselegacyissuesrelated
to various aspects of the initial business model and needed to be addressed before the
companycouldsuccessfullymoveforward.

Essentially this consolidation has been all about making changes to the business to ensure our
business model is right, our cost base reflects reality, our businesses are well positioned for the
future,andthattheCompanyiswellpositionedforthenextstageofacquisitions.

Financials
So with that difficult and challenging background in mind, lets turn to the Companys financial
performancefor2009.

TheCompanysoperatingrevenuefor2009wasapleasingresult.

ThistableshowsOperatingRevenuefor2009against2008,aswellashalfyearlyoperatingrevenue
forthelast3halfyears.

Revenue or fee income for 2009 was up 59% to $16.95m, through strong organic and acquisition
growth.

Additionally,theCompanycontinuestoachievestrongandconsistentgrowthinhalfyearlyrevenue,
with operating revenue for the 2nd half 2009 of $9.36m, representing 23% growth against the 1st
halfof$7.59m,anda51%increaseonthe2ndhalf2008of$6.18m.
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But the GFC did impact revenues for the year, with fee income for the Company less than the
Directorsexpected.

ThiswasparticularlythecaseintheJunequarter2009,andinparticularthemonthofJune,against
theseasonallyhighrevenueshistoricallyachievedduringthisperiod.

Additionally,ournewacquisitionsachievedfeeincomebelowexpectations,asadirectresultofthe
effectoftheGFConthefinancialservicesandcommercialareasofthosebusinesses.

Sooverall,astrongrevenuegrowthresult,althoughlowerthanexpectedasaresultoftheeconomic
conditions.

Importantlyhowever,wearecontinuingtobuildasolidtrackrecordofstrongandconsistentgrowth
bothannuallyandhalfyearly.

ContinuedProfitability
Turningto2009profitabilityoftheCompany,andthistableshowsNetProfitandEarningsperShare,
orEPS,for2009against2008.

Ataheadlinelevel,theCompanyachieveda2009netprofitof$594,000andEPSof0.89centsper
share,whichweredown62%and66%respectivelyfrom2008.

Whilst the Directors are disappointed with aspects of the 2009 net profit and EPS, overall we are
pleased with the continued profitability of the Company during difficult and challenging economic
conditions,andduringaperiodofconsiderablechangeanddevelopmentofthebusiness.

ThisslideprovidesfurtherdetailofhalfyearprofitabilityandEPS.

After achieving a solid performance for the 1st half of 2009 of $897,000 net profit and 1.38 cents
earningspershare,theCompanyrecordeda2ndhalflossof$303,000andanegativeEPSofminus45
centspershare.

Anumberofmattersshouldbeconsideredinrelationtothe2009results.

Firstly,inrespectofcomparatives,theDirectorshavepreviouslyreportedtoshareholdersthatthe
2008corresponding periodrelates totheinitial10.5months tradingoftheCompanyunderpublic
listing.

TheCompanyacquiredthefoundationbusinessesatthetimeofpubliclistinginAugust2007.

TheDirectorsconsiderthisinitialtradingperiodtobeanabnormalperiodoftradingreflectingthe
integration of acquired businesses and establishment as a listed company, and excluding the full
yeareffectofnormaloperatingcosts.

TheDirectorspreviouslyadvisedthatcorporateexpenseswouldincreasewiththefullyeareffectof
thecostsofaManagingDirectorandChiefFinancialOfficer/CompanySecretary.

Further, the Directors considered that the foundation member firms would require an addition to
their cost base during the period, in particular reflecting a required change to Principals
remuneration.

TalbotPrincipalRemunerationChanges
Inthisregard,letmetalkaboutthechangestomemberfirmTalbotOlivierPrincipalremunerationin
particular,andtheredoesseemtobesomemisunderstandingofthismatter.

Asbackground,underthetermsoftheInitialPublicOfferingoftheCompanyinAugust2007,andas
disclosedintheProspectusatthattime,thePrincipalsoftheFoundationfirmsofTalbotOlivierand
Brett Davies Lawyers signed an initial 2 year employment agreement ending August 2009, which
providedawellbelowmarketremunerationforthat2yearperiodforthesePrincipalsof$100,000
perannumsalary,andarequirementforarenegotiationoftheemploymentcontractsattheendof
thatfirsttwoyearssotheinitialcontractsexpiredinAugust2009justgone.

ThePrincipalswereabletoleavethefirmattheendofthat2yearperiodifsuitablearrangements
werenotagreedwithin28daysofAugust2009.

TalbotOlivierinparticularisthelargestmemberfirmoftheCompanyandhasgrownstronglyand
consistentlysincejoiningtheGroup.ItmaintainsastrongbrandandmarketpositioninginthePerth
market.

The Directors considered the appropriate renegotiation of arrangements for these Principals,
togetherwiththesecuringoflongtermemploymentcommitments,asacriticallyimportantpriority
fortheCompanyinprovidingsecurityoffutureearningsforshareholders.

TheDirectorsconsiderthatifthesePrincipalshadleftthefirm,shareholderswouldhavesuffereda
substantiallossofvalueandfutureearnings,thePrincipalsbeingthekeyfeeearnersofthebusiness.

TherealityisthatthisinitialremunerationofthesePrincipalswasverylowartificiallylowandas
such represented an unsustainable and non competitive position for Talbot Olivier and for the
Group.

An important point to note therefore is that these new remuneration arrangements were not an
increaseinsalary,butratheranadjustmentfromtheartificiallylowlevelsinitiallyestablished.

TheNewArrangementsareeffective1July2009,andthePrincipalshaveagreedtonewlongterm
employmentconditionsinreturnfortheseremunerationchanges.

These arrangements include an initial 4 year employment term from 1 July 2009 continuing
thereafter, a 6 month notice period, and on any termination, comprehensive restraints including
noncompetitionaswellasnonsolicitationofemployeesandclients.

InreturnthesePrincipalsreceivednewbasesalarieswhichareclosertomarketcompetitivelevels
(but not inflated), this being potentially supplemented by profit share arrangement to provide
incentiveforgrowthinearningsofthebusiness,andassuchappropriatelyalignedwithshareholder
interests.

The new arrangements are effective 1 July 2009, but the negotiations included an adjustment to
these base salaries from 1 January 2009 for six of the original Principals, payable in June 2009 of
$375,000inaggregate,thisamountbeingincludedin2ndhalfexpensesandcontributingsignificantly
tothelower2ndhalfprofitabilityoftheCompany.

The Directors consider the finalisation of this matter to be a critical strategic initiative and an
extremelypositivedevelopmentfortheCompany.
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The new remuneration framework will support the realisation of Talbot Oliviers growth potential
andprovideanimportantcompetitiveedgeinattractingandretainingqualityemployeesandtuckin
acquisitions.

ThesuccessfulrestructureofthesearrangementsrepresentsamajorendorsementbythePrincipals
oftheCompanysstrategyandbusinessmodelandunderpinsitsfutureprospects.

Again,thearrangementsputinplaceatthetimeoftheIPOwereartificiallylowandunsustainable.

The new arrangements are sustainable, competitive, incentivise for behaviours aligned to
shareholdersinterests,andprovideforlongtermcommitmentofthesesenioremployees.

Thefinalisationofthenewemploymentarrangementsprovidesanumberofimportantadvantages,
includingstabilityfortheongoingoperationofthebusinessandincreasedsecurityoffuturerevenue
andearningsforthebenefitofshareholders.

TalbotOlivierwouldbetheonlylegalfirminPerthtohavelongtermemploymentcontractsforits
senior team, this providing security for the business and shareholders and we believe deliver
competitiveadvantage.

Moregenerally,ourbusinessmodelprovidesalignmentbetweenshareholderinterestsandPrincipal
incentives.

Principals receive a base salary that is negotiated at the time of acquisition, and are then
incentivisedforgrowthinearningsthroughaprofitsharingarrangement.Thisbasesalaryisaligned
tofeesgeneratedforthatPrincipal.

Further,acquisitionarrangementsincludetheissuingofCompanysharessoourPrincipalsareall
shareholdersofbetween2and3percentoftheCompanyandassucharealsomotivatedtodrive
Companyearningsandcashflowsfordividends.

Insummarythen,undertheCompanysmodel,ourPrincipalsbeingthekeyrevenuegeneratorsof
thebusinessaredrivenbyrevenuegrowth,profitgrowth,sharepricegrowthanddividendsallof
whicharealignedtoshareholderbestinterests.

Again, the appointment of a corporate team and the renegotiated Principal remuneration were
significant changes in the cost base of the Company, but they reflect the reality of a normal cost
baseforthebusiness.

Further, several factors combined in the June quarter to decrease Net Profit to below the level
anticipatedbytheDirectors.

Firstly, as already mentioned, the prevailing economic conditions negatively affected revenues
againstexpectations.

Second,aspartoftheyearendreviewoftheCompanysfinancialposition,theDirectorsresolvedto
writeoff a number of aged debtor balances which in their view had become unrecoverable as a
resultoftheeconomicenvironment.TheseclientsbusinesshadbecomebankruptduringtheGFC.

Third, in line with the broader economic environment, revenue for the Companys IT Services
divisionLawCentralwaslowerthanexpectedandwellbelowhistoricallevels.
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ThisdeclineindemandnegativelyaffectedtheprofitabilityofLawCentralin2009,exacerbatedby
theCompanysplannedinvestmentduringtheperiodinrequiredtechnologyenhancements.

Impairment
AsaconsequenceoftheGFCandtheresultingreductioninrevenueandprofitsofLawCentral,the
Directorsrecognisedanimpairmentchargeof$450,000forthe2009financialyear.

Again,thisimpairmentchargecontributedsignificantlytothelowersecondhalfprofitabilityofthe
Company.

Underaccountingstandards,wearerequiredtoassessonasixmonthlybasis,thecurrentbalance
sheetvalueofallourbusinessassets.

TheimpairmentchargereflectsthesignificantchangeineconomicconditionssincetheCompanys
acquisitionofLawCentralinAugust2007,whichhasresultedinadeclineintherelativevalueofthe
business.

Thisimpairmentchargeisaoneoffaccountingitem,whichreducesNetReportedProfitbutisnota
normaloperatingcostoftheCompany.

WhilsttheDirectorsaredisappointedthatithasbeennecessarytowritedownthecarryingvalueof
theLawCentralbusiness,marketconditionsareinmanywaysunprecedented,withbusinessassets
generallyworthlesstodaythantheywere2yearsago,andrequiringmanycompaniestoimpairthe
valueofassetsduringthe2009reportingseason.

WeareconfidentthattheLawCentralbusinesswillreturntohistoricalrevenuelevelsandassuch
regainbusinessvalueastheeconomicconditionsimprove.

ButInotethatthebusinessatthistimecontinuestooperatebelowhistoricaldemandlevelswith
reducedactivityinareassuchasfamilytrusts,superfundsandcompanies.

Immaterial2ndhalfcontributionfromAcquisitions
The 2009 results also included an initial trading period for Argyle Lawyers and mda lawyers, the
CompanyhavingacquiredthesebusinessesinNovember2008andMarch2009,respectively.

Asexpected,thesenewlyacquiredbusinessesdidnotcontributemateriallytoprofitabilityin2009.
The Directors advise that generally the initial trading period of an acquisition will not provide a
material profit contribution. Specifically, this initial trading period will involve an element of
acquisitioncost,integrationexpenseandincludeaccountingadjustmentsonacquisition.

The Directors note that this will be particularly so going forward with additional changes to
accountingstandardsfrom1July2009requiringtheimmediateexpensingofcertaincostsassociated
with acquisitions, including applicable stamp duty and legal expenses, these being previously
capitalised.Sotherewillbeadditionalinitialperiodexpensesofanacquisition.

WApremisescostincreases
Andfinally,ourWAbusinesseshadenjoyedlowerthanmarket premisesrentalin2008,andagain
therealityisthatthesewerereturnedtomarketlevelsfromApril2009.

The Talbot Olivier business also required fitout work to these premises to provide appropriate
accommodation for the growth that had occurred in the business, again involving a material
investment.

Thefullyeareffectofthiswillbeincludedin2010profitability.

Operatingcashflows
Movingtooperatingcashflowsandthistableshowscashflowsfromoperationsfor2009asnegative
$1.65mfortheperiod.

Italsoshowskeyitemsincludedinthesecashflows.

During the 2009 year, the dollar value of working capital of the business, represented by Work in
progressanddebtors,increasedsignificantlyasaresultof:
Acquisitions;
Organicrevenuegrowthinthebusinesses;and
TheGFCwhichslowedclientpayments.

Operatingcashflowsareadverselyaffectedbynewfirmacquisitions,asfundsfromoperationsare
invested in the build up of debtors and work in progress post acquisition to normal levels. The
Companydoesnotacquiredebtorsandworkinprogressaspartoftheacquisition.

During the period, acquisitions were very material relative to the existing business, and operating
cashflowswereinvestedinthebuildupofworkinprogressanddebtorsforthesebusinessespost
tonormallevels.

Thecashflowimpactofworkingcapitalfornewacquisitionswas$1.53moutflowsfortheperiod.

As a general note, we believe that there is significant room for improvement in cash flow
management in our businesses, with the effect of lowering the value of work in progress and
debtors,andincreasingcashresources.

We are working hard in this regard and the businesses have made commitments to this
improvement.

Basically,ourfirmsarenotasgoodatcollectingmoniesfromclientsastheyneedtobeandithas
toimprove.

We have found some poor processes and bad habits in our businesses that are taking time to
change, but we will improve, and we will be much better prepared for the next round of
acquisitions.

Cashflowanddebtorsmanagementisanareathatmanyprofessionalservicesfirmsstrugglewith,
anditseemsthatlegalbusinessesarenodifferent,butweverymuchbelievewecanimproveour
effectivenessinthisareaandimprovetheGroupscashflowsgoingforwardforshareholdersinthe
process.

Further,theCompanymadeitsmaidentaxpaymentduringtheperiodof$0.96m.

ItisnotedthattheCompanysquarterlycashflowreportforSeptember2009,indicatedanetcash
outflowof$48,000fortheperiod,butimportantlyshowedapositivetrendincashflowoverthe3
months.

Dividend
InlightoftheCompanysstatedstrategyofacquiringlegalfirms,andasaresultofopportunitiesto
growtheCompanybyacquisition,theDirectorsmadethedifficultandveryunpopulardecisionnot
topayadividendfor2009.

Further, in the challenging market conditions, maintaining our balance sheet strength was and
continuestobeakeypriority.

Theretentionofavailablecashsupportsthispriority.

WhilsttheBoardviewsthepaymentofdividendsfromtheCompanyasdesirable,andunderstands
theimportanceofdividendstosomeshareholders,theyseetheimmediateprioritiesasinvestingin
thebusinessandmaintainingbalancesheetstrength,andassuchconsiderthisdividenddecisionto
beinthebestlongterminterestsofshareholders.

Ialsonotethatimproveddebtorscollectioninourfirmswillhaveadirectconnectiontothestrength
andregularityofdividends.Again,thisisanareawearefocused.

TheBoardsdividendpolicycontinuestobethatdividendswillbedeclaredafterconsiderationofthe
performanceofthecompany,includingcashflows,andfutureinvestmentopportunities.

We note that the Company continues to have a strong balance sheet, with conservative gearing
levels.

BusinessOverviewandStrategy
Thisnextsectionprovidesanoverviewofthebusinessandstrategy.

Asastartingpoint,itisworthwhiletoconsidersomebackgroundinformationonthelegalservices
industryandspecificallythekeytrendsthatwebelievecreateanopportunityfortheCompany.

Thedirectorsareoftheviewthatthelegalservicesindustryiscurrentlyinfluencedbyanumberof
issueswhichprovideanopportunitytodevelopandgrowanetworkofleadingmediumsizedfirms
inthemidmarket,SMEandhighnetworthclientsegments,andthatthecompanysbusinessmodel
andstrategyprovidesthebasisforassistingmemberfirmsinaddressingtheseindustryissues.

Thereissignificantfragmentationintheindustrywithcurrentlyover11,000legalfirmsinAustralia
accordingtothe2008IBISIndustryReport.

TheDirectorsconsiderthatthereareintherangeof150200mediumsizedfirmsinAustralia,being
ourtargetmarketmemberfirms.

Formediumsizedlegalfirms,itisdifficulttoattractandretaingoodseniorlawyersanditishardto
providebroadservicestomeetclientneeds.

Thetraditionalpartnershipmodellimitsbusinessgrowth,preventsownersfromrealisingvaluefor
theirbusiness,andobstructsyounglawyersfromachievinganappropriatebusinessownership.

Itisproblematictoachievegrowthinthepartnershipmodelduetolimitationsonavailablecapital.

Further, succession planning is difficult with young lawyers increasingly reluctant to buy into
partnershipsgiventhecostoflivinginAustraliancities.

For small law firms, it is just difficult to survive with challenges in getting and retaining staff,
providingtraining,providinganappropriateservicetoclientsandfindingcapitalandresourcesfor
growth.

We believe these industry issues provide the Company with a unique opportunity to acquire and
growanationalnetworkofqualitymemberfirmsandaspiretoamarketleadershippositioninthe
midmarket,SMEandhighnetworthclientsegments.

Webelievetherewillbeastrongpipelineofsmallertuckinacquisitionsthatcansupportmember
firms in developing scale to underpin future growth and profitability and achieve longterm
competitiveadvantage.

ThischartshowstheCompanysprogresswithinthelegalindustrysofar.

ThefiguresarefromBRWMagazineOctober2009edition,andshowIntegratedjustoutsidethetop
30lawfirmsinAustralia.

Strategy
Broadly,theCompanysstrategyisbasedonthefollowingprinciples:
Owning a limited number of member firms in capital cities and key regional areas across
Australia;
Target firms are both medium sized commercial law firms and specialist law firms in key
growthsegments;
TheCompanyistargeting1520memberfirmsoverthenext510years;
Supporting the strong growth and development of member firms both organically and by
tuckinacquisition,toachievescalebusinesseswithcompetitiveadvantageintheirmarkets.
Wewilllooktogrowthesememberfirmsorganicallywithaseriesofstrategiesincludingthe
implementation of best practices for revenue growth, enhancing the environment for
attracting and retaining great lawyers, introducing new products and services, and
developinginternalcrossreferralprocessesandexternalstrategicrelationshipstoleverage
clientopportunitiesaspartofanetworkofmemberfirms;and
Improvement of the overall management of these businesses. We will look to improve
margins of member firms with enhanced management practices and develop cost
advantagesformemberfirmsthroughnationalprocurementarrangements.

Philosophies
ThekeybusinessphilosophiesoftheCompanyincludeaselectiveapproachtoacquisitions.

Thismeansacquiringselectivelyandincrementallyonlyqualityfirms,withstronggrowthprospects,
andwhoarecompatiblewithexistingmemberfirmaspirationsandvalues,includingacommitment
togrowth,improvementandworkingtogether.

Againthisisreallyimportant.Wearenotanddontintendtomakealargenumberofacquisitions
quickly.

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We are selective and we have already rejected a number of acquisition opportunities. We want
goodbusinessesthatfitourcultureandaspirationsandthatmaytaketime.

Wewillalsobeincrementalwearestillasmallbusinessandwehavetomanagehowfastwegrow.
Thereareanumberofpotentialacquisitionswearecurrentlyspeakingwithwhichmayormaynot
turnouttobetherightfitfortheGroup.

The model is one of freedom within boundaries, where member firms retain their branding and
continuetodevelopthestrategyandmanagethebusinessastheyhavepreviouslydone,butwith
strategic,financialandriskmanagementboundaries.

Themodelisnotaboutcostcuttingandnotaboutcentralisationitisaboutrevenueandearnings
growth.

Although, scale advantage overtime is expected to help improve margins and we expect best
practicestohelpdrivecostefficienciesagainovertime.

Remuneration is performance based and as such aligned with shareholder interests, with profit
shareandshareschemestoincentivisegrowthandimprovementinrevenueandbusinessearnings.

TheCorporateteamwillbekepttoaminimumandprovideGroupmanagement,strategicdirection,
boundariesandsupport,aswellasprovidingaccountabilityformemberfirms.

TheBusiness
Wenowhave4legalservicesbusinesseswithmorethan60legalprofessionals,across4offices.
TalbotOlivierisbasedinPerthCBDandisourlargestmemberfirm.

Talbot Olivier has an 80 year history so it is a well established business with a strong brand and
reputationinthePerthandWAmarkets.

ArgyleLawyershasa25yearhistoryandhasbecomeacategoryleadingmediumsizedcommercial
lawfirm.ArgylehasaheadofficeisinSydneywithanofficeinMelbourne.

BrettDaviesLawyersisbasedinPerthCBD,hasbeenoperatingforover15years,andisaspecialist
in tax, succession planning, estate planning and superannuation. And I note that Brett Davies
Lawyerswasrecentlyawardedthe2009NationalWinnerforexcellenceincustomerservicebythe
CustomerServiceInstituteofAustralia.

LawCentralcommencedasabusinessin2000,andisaninternetbasedbusinessprovidingonline
purchaseoflegaldocuments.LawCentralprovidespreparationandpublishingofdocumentsaswell
as an information service. They are standard, base level documents for do it yourself users. The
service is predominantly used by accountants and financial planners who provide over 60% of
revenueandthebusinessproducesrecurringrevenueintheformofsubscriptions.

Alreadywearedevelopingarangeoflegalservices,inthebroadcategoriesofbusinessadvisoryand
privateclientservices.

This range of services will become increasingly important as we look to develop broader
relationshipswithourclientsovertime.

WeconsiderthedevelopmentoftheGroupscultureasbeingofcriticalimportance.
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Inthisregardourmemberfirmssharecompatibleaspirationsof:
Abovemarketgrowth;
Marketleadingqualityfrombusinessimprovement;
Winningthewarfortalentthroughattractingandretaininggreatpeople;and
Winning the war for the client which will require a broadening of service offering and a
new approach for deeper client relationships rather than transactional, which has
historicallybeentheapproachofmanylawyers.

Wewillcontinuetobeveryselectiveinacquiringbusinesseswhosharetheseaspirations.

PrioritiesandOutlook
AndfinallyafewwordsonourprioritiesandtheoutlookfortheCompany.

I think its a useful exercise to consider and reflect on what we have learnt over the first 2 years
operationoftheCompany:

Firstly, we have good businesses with strong positions in their markets and strong growth
prospects.
We are successfully building a strong culture of likeminded people, with common
aspirationsforabovemarketgrowth,businessimprovementandworkingtogether.
And the model is starting to work we have already shown that we can achieve strong
revenuegrowthinmemberfirms.
Wecanseesignificantscopeforbusinessperformanceimprovementinallof ourmember
firms,whichprovidesanopportunityforincreasedprofitabilityovertime.
WecanalsoseestrongorganicandacquisitiongrowthopportunitiesfortheGroupandfor
thememberfirms,althoughwemayneedtokissalotoffrogsbeforewefindourprincesses.
Wehaveasignificantopportunitytoincreaseprofitabilitybyachievingincreasedscale:
o Atagrouplevelthismeanssecuringmorememberfirmstosharethefixedoverhead
burdenofCorporate.
o Andatamemberfirmlevel,thismeansachievingorganicandacquisitiongrowthto
utilise available excess premises, and to share the infrastructure costs that these
firmsnowhaveinplace.
o Wehavethebasicsinplacethestrategy,businessmodel,goodbusinesses,butwe
needscalenowtoreallydriveprofitability.
o Additionally, law firm revenue is generally not recurring in nature and demand in
certainservicesandcertainbusinessandcertainstateswillfluctuateovertime.We
needtodevelopamorediversifiedportfolioofbusinesseswhichwillultimatelyhave
theeffectofsmoothingearnings.TheGroupiscurrentlyreliantonasmallnumber
of businesses and as such a bit exposed to the underperformance of any one of
them.
Therealityisthatthedeliveryofourstrategywilltaketime,thereisnoeasywins,weneed
to incrementally buy good businesses with likeminded people, and work with them for
growthandimprovement.Andourprogresshasbeenslowedbytheeconomiceventsofthe
last2years.
ButwefirmlybelievetheCompanyhasgoodmediumtolongertermprospects.

Priorities
Our focus during the last 18 months has been on reviewing and refining the strategy of the
Company,growthandimprovementintheexistingbusinesses,andtheacquisitionofaneastcoast
memberfirm.

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Ourprioritiesforthenext12monthswillbe:
Workingwithourexistingmemberfirmsforcontinuedgrowthandimprovement;
Thereisplentymoretodotohelpthesefirmsachievescaleandimproveprofitability;
Aspreviouslymentionedwearealsoworkingtoimprovingtheircashflowmanagement;
Aspartofouroverallstrategy,expandingtheservicesprovidedtoclients;and
ExtendingourgeographiccoveragetobuildscalefortheGroup

Outlook
Lookingforward,myviewisthateffectsoftheGFCarefarfromover:
Conditions remain challenging in parts of our business and some services are behind
expectationsforthefirsthalfof2010;
Wearestillseeingsomebaddebts,andsuspectthiswillcontinueforawhilelonger;
OurPerthbusinessesinparticularhavestruggledinsomeservicelinesinfirst45monthsof
theyear;and
ThiswilllikelytempertheCompanysperformanceinthefirsthalf.

2010 will also see the full year effect of the necessary cost base changes as I have talked about
today.

Somegreatnewsisthatlastyearsacquisitionsareperformingwell:
ThatsArgyleinSydneyandMelbourne.
Theyarenowsettledinandprovingtobethegoodbusinesseswethoughttheywere.
Growthinthefirmisalsogoodwithsomeexcellentnewstaffappointmentsinthelastfew
months.

Aspreviouslyadvised,weexpectrevenuestobeatleast$21mfor2010,representing24%growth,
andassumingnofurtheracquisitions.

AndtherearestrongprospectsforbothorganicandacquisitiongrowthfortheGroup,butwewill
continuetomanageacquisitionincrementallybutonlyifwecanfindtherightfirms.

Ibelievewearemakingprogress.

SinceIjoinedtheCompanyinMay2008wehavehadtomakeanumberofchangesfromtheinitial
businessmodeltoensurethattheCompanyisinapositiontogeneratestrongandconsistentlonger
termreturns.

This,combinedwiththeworstofeconomicconditions,hasmeantareductioninearningsin2009.

Italsomeanttheveryunpopulardecisionnottopayadividendfor2009,butwebelievethistobe
the best decision for shareholders given growth opportunities, as well as the need to maintain
balancesheetstrength.

IdoseeIntegratedasanattractivemediumtolongerterminvestmentopportunityorelseIwould
notbehereandIstronglybelievetheCompanyhasstrongfutureprospects.

Ialsobelievewehavethereallygoodpeoplenecessarytoachievethestrategyandtobesuccessful.

Icannotsayitwillbeallsmoothsailingfromhere,butweareprogressivelygettingthecompanyinto
goodshape.

13

Butagaintherealityisitwilltaketimetherearenosilverbulletsitwilltaketimeandmorehard
work.

IshouldnotethatIalsogetalotofquestionsaboutthesharepricewhyisitnothigherwhenwill
itgoupandevenwhenwillthesharepricegetbacktotheissuepriceof50cents.

WelltherealityonthesharepriceisthatitisatabouttherightlevelfortheCompanysprofitability.

SharepricesaremostlyaboutmultiplesofearningspershareandbasedontheCompanysearnings
persharethesharepriceisaboutright.

Ourtaskistofocusonthebusiness,growprofitabilitypershareatanattractiverate,andachieve
consistencyinthatprofitabilitythatiswhatwilldriveoursharepricegrowth,andourfocusover
thelast18monthshasbeentowardsgettingtheCompanyinapositiontostarttoachievethis.

Finally,IwouldliketothankthePrincipalsandstaffoftheCompanyfortheircontinuedeffortsand
support.

Weareveryfortunatetohaveahighlyskilledandverycommittedteamandweareappreciativeof
theirefforts.

Withthat,Iwouldliketothankshareholdersfortheirattendancetodayandwillnowhandbackto
theChairmanofthisAnnualGeneralMeeting,TheHonJohnDawkins,toconductthebusinessofthe
meeting.

Thankyouforyourattention.

GraemeFowler
ManagingDirector

26November2009

14

Annual General Meeting

November 2009
Chairman Hon. John Dawkins
The information contained in this document is not intended to be exhaustive and must be considered in conjunction with all other public available
information, as disclosed by the Company to the Australian Stock Exchange from time to time.

Annual General Meeting

November 2009
Managing Director Graeme Fowler
The information contained in this document is not intended to be exhaustive and must be considered in conjunction with all other public available
information, as disclosed by the Company to the Australian Stock Exchange from time to time.

Agenda

The Last 12 Months

2009 Financial Performance

Business Overview & Strategy

2010 Priorities & Outlook

The Last 12 Months

The Last 12 Months

Difficult & Challenging Year

Global Financial Crisis (GFC)
Small Company with New Business Model/Strategy
Large Acquisitions Relative to Size
Consolidation

2009 Financial Performance

Revenue Strongly
g y Higher
g

Operating Revenue

2009
$m

2008
$m

16.95

10.69

%
Growth

59%

Revenue increased by 59% to $16.95m

2nd Half

1st Half

2nd Half

2009
$m

2009
$m

2008
$m

9.36

7.59

6.18

51%
Growth

Organic & Acquisition Growth

Developing a track record of strong & consistent revenue growth

Continued Profitability

Reported Net Profit

Reported EPS

2009
$000s

10.5 months
2008
$000s

%
Growth

594

1,544

(62%)

0.89 cents

2.66 cents

(66%)

Continued Profitability

Reported Net Profit

Reported EPS

2009
$000s
$

10.5 months
2008
$000s
$

%
Growth

2nd Half
2009
$000s
$

1st Half
2009
$000s
$

2nd Half
2008
$000s
$

594

1,544

(62%)

(303)

897

649

0.89 cents

2.66 cents

(66%)

(0.45) cents

1.38 cents

1.12 cents

2008 comparatives reflect abnormal trading

Corporate Management
Part year effect of renegotiated Principal Remuneration

Principal Remuneration

Talbot Olivier Principal remuneration changes

Background
Existing remuneration was low, non-commercial & unsustainable
Not an increase an adjustment from artificially low levels
New Arrangements
Sustainable
Competitive
Aligned to shareholder interests
Longer term commitment
Critical
C iti l strategic
t t i iinitiative
iti ti

Continued Profitability

Reported Net Profit

Reported EPS

2009
$000s
$

10.5 months
2008
$000s
$

%
Growth

2nd Half
2009
$000s
$

1st Half
2009
$000s
$

2nd Half
2008
$000s
$

594

1,544

(62%)

(303)

897

649

0.89 cents

2.66 cents

(66%)

(0.45) cents

1.38 cents

1.12 cents

2008 comparatives reflect abnormal trading

Corporate Management
Part year effect of renegotiated Principal Remuneration

Continued Profitability (cont.)

2009
$000s
$

10.5 months
2008
$000s
$

%
Growth

2nd Half
2009
$000s
$

1st Half
2009
$000s
$

2nd Half
2008
$000s
$

594

1,544

(62%)

(303)

897

649

0.89 cents

2.66 cents

(66%)

(0.45) cents

1.38 cents

1.12 cents

Reported Net Profit

Reported EPS

2008 comparatives reflect abnormal trading

Part yyear effect of renegotiated

g
Principal
p Remuneration

Impact of GFC
June Quarter Revenues below expectations
Client
Cli t Bankruptcies
B k
t i
Lower Law Central Profit Contribution
Law Central Accounting Impairment Charge 2nd Half $450,000

Accounting Impairment Law Central

Accounting write down

GFC

Reduced activity in online documents

business worth less than 2 years ago

Family Trusts
Super Funds
Companies

Business continues to perform below historical levels

Continued Profitability (cont.)

Reported Net Profit

Reported EPS

2009
$000 s
$000s

10.5 months
2008
$000s
$000
s

%
Growth

2nd Half
2009
$000s
$000
s

1st Half
2009
$000s
$000
s

2nd Half
2008
$000s
$000
s

594

1,544

(62%)

(303)

897

649

0.89 cents

2.66 cents

(66%)

(0.45) cents

1.38 cents

1.12 cents

2008 comparatives reflect abnormal trading

Part year effect of renegotiated Principal Remuneration

Impact of GFC

Immaterial 2nd half contribution from new acquisitions

Premises rental increases

Operating Cash Outflows

2008/09
$m

R
Reported
t d Operating
O
ti Cash
C h Outflows
O tfl
Includes:
Working capital impact of new Acquisitions
2008 maiden tax payment

(1 65)
(1.65)
1.53
0 96
0.96

Dollar value of work in progress and debtors grew during the period
Acquisitions
Organic growth
GFC

FY2009 acquisitions very material

New business acquisitions adversely impact short term operating cash flows

Room for significant improvement with cash flow management

Maiden tax payment

Dividends

Retention of cash
Acquisition
A
i iti strategy
t t
Opportunities
Priority of Balance Sheet strength

Dividend
Di
id d P
Policy
li - declared
d l d after
ft consideration
id ti off C
Company performance
f
&
investment opportunities

g balance sheet with conservative g

gearing
g levels
Strong

Business Overview & Strategy

The Australian Legal

g Industry
y

IMPLICATIONS

Medium sized law firms

Difficult to attract and retain good
lawyers

Opportunity to develop
and grow a national
network of medium sized
fi
firms

Hard to provide broad services to

clients
Hard to achieve growth
Young lawyers reluctant to buy into
partnership
Some owners seeking a value for
their business

Small sized firms

Hard to be small staff, training,
resources, growth
There is no market leader in mid market,
SME & HNW client segments

Over 11,000 law firms

In Australia.
Approx. 150 medium
Approx
sized firms

Opportunity for leadership

of mid, SME & HNW
markets
Pipeline of tuck-in
acquisitions
Opportunity to improve
from cottage industry

Top 30 Australian Law Firms by Revenue 2009

Rank

Firm

Revenue
$m

Mallesons

553

Freehills

493

10

B k McKenzie
Baker
M K
i

155

15

Slater & Gordon

103

20
0

Moray
o ay & Agnew
g e

64
6

25

Thomson Playford

48

30

HopgoodGanim

29

Integrated (annual run rate)

21

Source BRW October 2009

O aspiration
Our
i ti iis tto b
be something
thi very different
diff
t to
t these
th
firms
fi
culture,
lt
opportunity,
t it client
li t
service but we will compete with them for staff & clients

Business Strategy
gy
Network of leading
legal services
businesses

1 ACQUIRE
1.

15-20 member firms

2 GROW
2.

Above market rates

3 DEVELOP
3.

Improvement

Philosophies
p

Selective & Incremental approach to acquisitions

C
Cultural
lt l fit
Attitude & objectives of Partners
Commitment to growth, improvement & working together
Quality & growth potential of firm

Freedom within boundaries

Firms retain brand
Firms
Fi
continue
ti
tto develop
d
l strategy
t t
& manage th
the b
business
i
Focus on revenue growth and margin improvement

Performance based remuneration

P
Profit
fi share
h
& share
h
schemes
h
to iincentivise
i i growth
h iin revenue & earnings
i
Aligned with shareholder interests

Corporate provide boundaries strategic, financial, risk

Developing a National Network

Law Central
(Internet Based)

Talbot Olivier
(Perth WA)

Brett Davies Lawyers

(Perth WA)

The Argyle
Th
A
l Partnership
P t
hi
(Sydney NSW &
Melbourne - VIC)

Corporate & Commercial

Wealth Management/Protection

Commercial Litigation

Superannuation

Insurance Services

Taxation Litigation

Media & Defamation

Taxation Advice

Banking & Finance

Franchising
Government Services
Insolvency
Workplace Relations

Private
P
e Clientts

Bu
usiness
s Advis
sory

Range of services

Taxation Audits
Estate Planning & Wills
Succession Planning
Family
Property

Business Succession

Employment/Workplace

Taxation Litigation

Criminal

Taxation Advice

On line document publishing

On-line

Member Firm Aspirations

p
Market
Leading
Quality

Above
M k t
Market
Growth

ILH
Member
Firms
Fi

War for
Talent

War for
the
Client

2010 PRIORITIES & OUTLOOK

2 Years on What have we learnt?

Good businesses with strong positions in local markets

Building a strong culture like-minded people; common aspirations

Model is starting to work

Fee income growth in member firms

Scope for business improvement

Growth opportunities

Achieving scale to drive profit growth

This will take time slowed by GFC

g term p
prospects
p
Good medium to long

2010 Priorities

Continued growth & improvement of existing member firms

Build scale in member firms
Improve cash flow management
Expansion of services

Extend geographic coverage

p
Build scale for the Group

Outlook

Continuing
g effects of GFC will temper
p 1st half p
profit

Full year effect of cost base changes

Last years acquisitions performing well

2010 revenues at least $21m

24% growth
Assumes no acquisitions

O
Opportunities
t iti ffor organic
i & acquisition
i iti
growth
th

Annual General Meeting

November 2009
Managing Director Graeme Fowler
The information contained in this document is not intended to be exhaustive and must be considered in conjunction with all other public available
information, as disclosed by the Company to the Australian Stock Exchange from time to time.

Item 2 Adopt the Remuneration Report

The Report is incorporated in the Directors Report.

The vote on this resolution is advisory only and does not bind the
Di t off th
Directors
the C
Company.
In favour

2,971,882

Against

486,000

Proxys Discretion

295,439

Abstain

18 000
18,000

Item 3 Re-election of Director Anne Tregonning

In favour

3,333,882

Against

138,000

Proxys
Proxy
s Discretion

295 439
295,439

Abstain

4,000