Brighter outcomes.
Annual Report 2014
Contents
1 Highlights
2
Slater and Gordon Overview
5 Chair’s Report
6
Group Managing Director’s
Report
9 Business Review
12
Corporate Social Responsibility
13
21
Corporate Governance
Statement
Board of Directors and
Company Secretary
Financial Statements
24 Directors’‟ Report
40 Auditor‟‘s Independence
Declaration
Financial Report for the Year
Ended 30 June 2014
41
Consolidated Statement
of Comprehensive Income
42 Consolidated Statement
of Financial Position
43 Consolidated Statement
of Changes in Equity
45 Consolidated Statement
of Cash Flows
46 Notes to the Financial
Statements
85 Directors‟‘ Declaration
86 Independent Auditor’‟s Report
88 Additional ASX Information
89
Corporate Directory
Images in this Report feature
Slater and Gordon Sydney office staff.
Slater and Gordon Limited – Annual Report 2014 Brighter outcomes
represents our endeavour
to put our clients at the
centre of everything we do.
We believe that by understanding our clients’ needs
and providing high quality legal services affordably and
conveniently, we can guide our clients to brighter outcomes
and deliver sustainable returns for our shareholders.
Highlights
Revenue (up by 40.4%)
Normalised EBITDA (up by 38.3%)
FY14
FY13
FY12
FY11
$217.7m
$182.3m
$418.5m
$298.0m
FY14
FY13
FY12
FY11
$57.6m
$49.9m
$100.8m
$72.9m
FY10
$124.7m
FY10
$31.5m
Normalised NPAT (up by 51.0%)
Normalised Basic EPS (up by 29.9%)
$63.0m
FY14
FY13
FY12
FY11
$41.8m
$33.4m
$28.9m
FY10
$19.8m
FY14
FY13
FY12
FY11
FY10
31.3¢
24.1¢
21.7¢
19.1¢
17.9¢
Normalised data is adjusted for the write-down of the Vioxx class action in FY12, acquisition costs in FY13 and a
WIP adjustment relating to the Fenton’s acquisition, an onerous lease provision and acquisition costs in FY14.
1
Slater and Gordon Limited – Annual Report 2014 Slater and Gordon Overview
Employees
Brands
2,500
Shareholders
5,000+
Locations
80+
FY14 Revenue A$418.5 million
AUS PIL 46%
AUS GL 10%
UK PIL 34%
UK GL 10%
Who We Are
Slater and Gordon is a leading
consumer law firm in Australia and
the United Kingdom (UK). We employ
1,200 people in 70 locations across
Australia and 1,300 people in 13
locations in the UK.
Our Mission
To give people easier access to world
class legal services.
Our Values
• Do it right.
• Work well with others.
• Take the lead.
Our Clients
Our clients are people throughout
Australia and the UK who are in need
of a broad range of personal legal
services. They want lawyers who
are accessible and able to provide
expert advice on their legal matters
affordably.
Our Services
• Personal Injury Law (PIL) practice
PIL provides specialist legal services
in a range of personal injury areas
including motor vehicle accidents,
workers compensation and civil
liability.
• General Law (GL) practice
GL is made up of Personal Legal
Services (PLS) and Business and
Specialised Litigation Services
(B&SLS). PLS comprises family
law, conveyancing, wills, estate
planning and probate practices.
B&SLS includes commercial, estate,
employment and professional
negligence litigation, class or group
actions and criminal defence work.
2
Slater and Gordon Limited – Annual Report 2014 Our Strategy
Outcome
Growth Strategy
Satisfied clients, engaged staff, sustainable shareholder returns
Leading
consolidation
of the UK consumer
legal services market
Delivering strong growth from
the Australian Personal Injury Law practice
Building on the established platform in General Law
consumer legal services
Key Drivers
Client Experience
Striving to put
clients at the centre
of everything
we do
Brand and
Marketing
Leveraging the
power of the Slater
and Gordon brand
People and Culture
Operations
Building an aligned,
skilled and engaged
labour force
End-to-end mergers
and acquisitions
capability
Innovation in our
service offering,
delivery modes and
the management
of the organisation
3
Slater and Gordon Limited – Annual Report 2014 Growing our
UK presence.
We have now achieved the
scale required to compete
effectively in the UK
consumer law market.
Over the next few years
we will exploit this scale
and continue to grow market
share both organically and
through acquisitions.
4
Slater and Gordon Limited – Annual Report 2014 Chair’s Report
Dear Shareholder,
I am pleased to present the Slater
and Gordon Limited (Slater and
Gordon) Annual Report for the
2014 financial year.
The past year has been an extremely
busy time at Slater and Gordon, as
we continued with our acquisition
program to establish scale in the
United Kingdom (UK). We also
delivered strong revenue growth from
the Australian Personal Injury Law
(PIL) practices and continued to invest
in key areas of General Law (GL) such
as family law and conveyancing.
Importantly, while executing all
of these activities, we have been
able to continue our track record
of delivering strong financial results
for our shareholders.
Total Group revenue was up 40.4%
to A$418.5 million and net profit
after tax (NPAT) increased 47.2%
to A$61.1 million. Earnings per share
increased 26.8% to 30.3 cents per
share. The cash flow from operations
was A$54.4 million or 89.1% of NPAT.
The total dividend was 8.0 cents per
share fully franked, an increase
of 21.2% on the prior year. Whilst
dividend policy is reviewed regularly
by the Board, we expect the payout
ratio to be in the range of 25–30% of
NPAT during what we expect to be
a continued period of growth in FY15.
Slater and Gordon is now a leading
consumer law firm in the UK, with
the number one or two market share
position in most consumer law practice
areas. The acquisitions during the past
year have added an estimated annual
revenue base of £72.5 million bringing
UK revenues to just under half of the
expected total revenue for the Group in
FY15. Slater and Gordon now has 1,300
employees in the UK, up from 425
when we made our initial acquisition
of Russell Jones & Walker in 2012.
We have now successfully achieved
the scale we wanted to compete
effectively in the UK market and expect
to exploit this and continue to grow
market share both organically and
by acquisitions in the next few years.
A Board meeting was held in London
in May to provide Directors with
an opportunity to increase our
knowledge of the UK operations
and growth opportunities. The time
was extremely productive and a key
takeaway for me, from the meetings,
was the similarity between the UK
and Australia in terms of the operating
environment and challenges. There is
a huge opportunity to share knowledge
and resources and in particular the
systems that have been developed,
and successfully utilised for many
years in Australia.
In Australia, the PIL practices continue
to deliver results despite the disruption
caused by legislative change in
Queensland. Previous investment in
diversification and scale have created a
business that is able to adapt to change
and keep growing despite increasing
competitor activity. The Australian
GL practices are continuing to build
scale and provide exciting opportunities
for further growth in a market double
the size of the PIL market.
The solid results for 2014 are
testament to the high quality
management teams we have in place
both in Australia and the UK. I would
like to thank Andrew Grech and his
Executive team for their tremendous
effort this financial year and the 2,500
employees across Australia and the
UK whose commitment to providing
quality service to their clients is
unwavering.
To encourage staff retention
and further align employee and
shareholder interests, the Board
recently announced the proposed
introduction of a new Equity
Incentive Scheme, to be presented
to shareholders for approval at the
Annual General Meeting in October.
We consider equity participation
a fundamental component of an
effective Executive and Employee
Rewards Strategy and believe a
refreshed share scheme is warranted
to meet the needs of an international,
and now much larger, Slater and
Gordon Group. We look forward
to your supporting vote.
“Slater and Gordon
is now a leading
consumer law firm
in the UK, with the
number one or two
market share position
in most consumer
law practice areas.”
On behalf of the Board of Directors
I would like to thank you for your
ongoing support of Slater and Gordon.
Yours sincerely,
John Skippen
Chairman
5
Slater and Gordon Limited – Annual Report 2014 Group Managing Director’s Report
Dear Shareholder,
Welcome to Slater and Gordon’s
Annual Report for the 2014
financial year.
I am pleased to be able to deliver
another great set of financial results
for our shareholders by providing high
quality legal services to more clients
than ever before across Australia and
the United Kingdom (UK).
The past year has been satisfying on
many fronts. Our underlying practices
remained strong and delivered their
financial and operational targets
despite the impact of legislative
change in Australia and the significant
acquisition program undertaken in
the UK. Key initiatives implemented
to improve operational performance
have delivered immediate results
and we continued to see high quality
growth opportunities emerge in
both the Australian and UK consumer
law markets.
The Australian Personal Injury Law
(PIL) practice continues to grow in an
increasingly competitive market that
was negatively impacted by legislative
change in Queensland. Both of which
we will continue to contend with in
FY15. Our capacity to keep growing,
despite these circumstances, is a
testament to the quality and scale
of our PIL practice.
Operational efficiency is vital to our
ongoing success in Australian PIL and
we have undertaken several initiatives
during the year focused on improving
the client intake process and enhancing
client satisfaction. The results have
been very pleasing with improvements
in key operational metrics such as calls
answered, wait times and increased
client satisfaction. According to
independent research, total client
satisfaction for Slater and Gordon
increased from a score of 54 in 2012
to 67 in 2014. Our scores are now
higher than the benchmark for both
global consulting services and
healthcare services in Australia.
In the UK, the five firms acquired
during the year all met or exceeded
their performance targets and their
integration into the Slater and Gordon
UK business is well progressed and on
track for completion by March 2015.
We have now established a stable base
in the UK and have the people and
initiatives in place to make the best
of the opportunities that are available
in that market.
Investment in the Slater and Gordon
brand in both Australia and the UK is
delivering results with steady growth
in new file numbers during the year.
While we will continue to use the
Claims Direct brand to compete with
claims management companies in
the UK market, all other acquired
practices will operate under the Slater
and Gordon brand by March 2015.
We made great progress during the
year with firm wide initiatives aimed
at making Slater and Gordon a stronger
and more effective business.
A refreshed brand identity was created
and recently launched. The evolved
brand aims to better represent the
contemporary Slater and Gordon
as a trusted advisor which navigates
clients through the legal process, and
guides them to a brighter outcome.
The firm’s values were also refreshed
last year, in consultation with staff
across the UK and Australia. The
values aim to align us all in our
understanding of what Slater and
Gordon represents as an entity,
how we treat each other and how
we service our clients.
I am confident that all of the progress
made across the Group in the past
financial year means that we enter
FY15 better equipped than ever before
to exploit the substantial opportunities
available to us to continue to ensure
more people get easier access to
world class legal services.
6
“We made great
progress during the
year with firm wide
initiatives aimed at
making Slater and
Gordon a stronger
and more effective
business.”
I would like to thank our clients for
trusting us to guide them through to
brighter outcomes and our staff for
their exceptional effort during the
past year. I look forward to your
continued support as a Slater and
Gordon shareholder.
Yours sincerely,
Andrew Grech
Group Managing Director
Slater and Gordon Limited – Annual Report 2014 Personal
Injury Law.
Our Personal Injury Law
practice continues to
underpin the performance
of the Group and again
demonstrated its strength
and resilience.
7
Slater and Gordon Limited – Annual Report 2014 General
Law.
We have now established
a strong platform in
General Law with clarity
around service offering
to clients.
8
Slater and Gordon Limited – Annual Report 2014 Business Review
Australian Operations
Personal Injury Law
Overview
The Australian Personal Injury Law
(PIL) practice provides specialist legal
services to people in a range of areas
including motor vehicle accidents,
workers compensation and civil liability
law. Most of this work is performed
on a No Win – No Fee™ basis where
legal fees are paid on the successful
conclusion of a client’s matter. Slater
and Gordon is the market leader in
personal injury litigation in Australia
with an estimated 25% market share.
FY14 Highlights
• PIL practice continued to grow on
a strong and stable EBITDA margin;
• improvement in client intake process
and client satisfaction scores; and
• continued opportunities for
acquisitions.
FY15 Priorities
• Move to a single business in
Queensland, migrating the Trilby
Misso brand to the Slater and
Gordon platform;
• business improvement initiatives; and
• continue to build market share.
General Law
Overview
The General Law (GL) practice is
made up of Personal Legal Services
(PLS) and Business and Specialised
Litigation Services (B&SLS). PLS
comprises family and relationship
law, conveyancing, wills and estate
planning and probate practices.
Work is predominantly performed
on a fixed fee basis. Slater and Gordon
has now developed, what we
understand to be, the largest family
law and conveyancing practices
in Australia.
B&SLS includes commercial, estate,
employment and professional
negligence litigation, class or group
actions and criminal defence work.
Class actions are now largely funded
by third parties.
FY14 Highlights
• Good progress in family law and
conveyancing;
• class action pipeline replenished; and
• specialised litigation practices
(estate, professional negligence
and criminal defence) clearly defined
with good growth opportunities.
FY15 Priorities
• Further investment to build scale;
• broadening the brand to attract new
clients; and
• progressing the pipeline of funded
litigation matters.
9
Slater and Gordon Limited – Annual Report 2014 General Law
Overview
The UK GL practice comprises
Business and Specialised Litigation
Services, Real Estate, Crime and
Regulation, Personal Legal Services
and Employment, Reputation and
Professional Discipline. Slater
and Gordon has the largest family
law practice in the UK.
FY14 Highlights
• Integration and consolidation of
practices to achieve greater efficiency;
• developing targeted marketing and
business development activities to
drive enquiries; and
• launching new services and pricing
structures to increase client
conversion.
FY15 Priorities
• Development of workflow systems;
• scale up smaller practices and
optimise profitability levels; and
• broaden range and depth of
competence across major regional
centres.
Business Review
UK Operations
Personal Injury Law
Overview
The United Kingdom (UK) PIL practice
provides specialist legal services to
claimants in a range of areas including
motor vehicle accidents, employers
liability, industrial disease, clinical
negligence and serious injury claims.
Most of this work is performed on
a No Win – No Fee™ basis where
legal fees are paid on the successful
conclusion of a client’s matter.
We also now conduct a substantial
Court of Protection practice which
ensures that people without the
personal capacity to make decisions
for themselves are protected. This
trustee service is an important
adjunct to our PIL practice and is
complemented by a small financial
planning service known as Adroit
Financial Services.
Slater and Gordon entered the UK
market in 2012 and after a series of
acquisitions is now a leading personal
injury litigation firm with an estimated
5% market share including work
sourced from the Slater and Gordon
owned Claims Direct brand.
FY14 Highlights
• Core business underlying revenue
growth of 8% as targeted;
• investment in Slater and Gordon
brand delivering steady growth in
call volumes and case intake; and
• regulatory environment stabilising
and providing opportunity to
accelerate consolidation.
FY15 Priorities
• Successful integration of FY14
acquisitions;
• continue to build awareness of the
Slater and Gordon brand; and
• increase the proportion of high-
margin or multi-track PIL work and
improve the scale and efficiency
of low-margin or fast-track PIL
practices.
10
Slater and Gordon Limited – Annual Report 2014 Business Review
Group Activities
We continue to invest in the following
key drivers of our business. They are
critical to our long-term success.
Investment in our brand in both
Australia and the UK in FY14 has
delivered results.
Client Experience
It is important for the firm to focus on
continuously improving the experience
of its clients with the goal of improving
client satisfaction, lifting conversion
rates and promoting advocacy.
Several initiatives were undertaken
during FY14 focused on improving the
client intake process and enhancing
client satisfaction. The results have
been very pleasing with improvement
in key operational metrics such as calls
answered and wait times. Independent
research measured total client
satisfaction for Slater and Gordon
increasing from a score of 54 in 2012
to 67 in 2014. We will continue to
implement further client-focused
initiatives across the Group in FY15.
Brand and Marketing
Slater and Gordon is one of Australia’s
best known brands and is actively
building its brand awareness within
the UK. Protecting and nourishing
our brands is vital to delivering growth
across the firm.
The business currently consists of the
following brands: Slater and Gordon
(Australia and UK); Claims Direct
(UK); Trilby Misso Lawyers (QLD);
Conveyancing Works (QLD); Fentons
Solicitors (part of Slater and Gordon)
(UK); and Pannone (part of Slater
and Gordon) (UK). The UK brands,
with the exception of Claims Direct,
are being transitioned to Slater and
Gordon in FY15. The Australian brands
will be transitioned to Slater and
Gordon as part of the brand refresh.
In the UK, by drawing on our experience
of brand development in Australia we
have seen significant expansion of the
Slater and Gordon brand across the UK
market. Launch of the Slater and
Gordon brand through a multifaceted
approach which combined advertising,
digital marketing, media/PR,
sponsorship and business development
campaigns delivered 11% prompted
and unprompted brand awareness
nationally. This result sets us amongst
the three best-known law firms in
the UK and positions us well in our
goal to become the leading consumer
brand across the UK.
In Australia, Slater and Gordon
brand awareness remains strong with
prompted awareness nationally at 75%.
The focus of marketing activity now is
on positioning the Slater and Gordon
brand in a way that communicates the
breadth of our service offering, the
quality of our services and our focus
on getting the best possible outcomes
for our clients. These key messages
will be continually reinforced across
all of our advertising as well as in the
daily interactions with our clients and
prospective clients.
People and Culture
Our ultimate goal is to build an aligned,
skilled and engaged labour force.
The rapid growth in staff numbers,
with a larger proportion of staff now
located in the UK, made it a busy year
for the Human Resources team. Along
with integrating people from the newly
acquired practices, several initiatives
were implemented during the year.
The firm wide values were refreshed
and relaunched to better reflect the
larger and international Slater and
Gordon Group and how we work
today. A new integrated performance,
learning and talent management
system ‘S&G & Me’ was introduced
and an Equity Incentive Scheme was
announced to encourage staff
retention and drive achievement
of performance objectives.
Operations
Our highly developed work process
design and technology expertise
provides us with a unique competitive
advantage. Business improvement
initiatives are being implemented to
make sure we are working effectively
across the firm after a period of
rapid growth.
In the UK, a new practice management
and client management system was
selected and we commenced the
establishment of the standard core
applications platform to which
Slater and Gordon UK and all other
subsidiaries will migrate. In Australia
we invested in people with project
management, change management
and digital capabilities to enhance
our ability to deliver whole of firm
improvements.
11
Slater and Gordon Limited – Annual Report 2014 Addressing our
Environmental Impacts
We acknowledge that our business
activities have an environmental impact
and we are committed to reducing
that impact. Over the next three
years we are implementing initiatives
to significantly reduce our use of
resources in four key impact areas:
paper, energy, waste and travel.
FY14 Highlights
• Introduced default double-sided
printing across the Australian firm
to reduce paper use;
• in the UK, 89% of all stationery
product purchases are sustainable;
• the firm continues its contribution
through its membership of the
Legal Sector Alliance (UK) and the
Australian Legal Sector Alliance; and
• introducing state-of-the-art video
conferencing facilities to reduce
our travel.
Corporate Social Responsibility
Slater and Gordon strives for the
highest standards of social and
environmental performance. We
embrace programs which connect
our staff to clients and their
communities and continually look
to extend our contribution, beyond
the already enormous role we play
in providing access to the legal system,
through the provision of pro bono
legal services, philanthropic grants,
fundraising and staff volunteering
activities.
Pro Bono Legal Services
During FY14 Slater and Gordon
again worked towards contributing
to greater social equity by assisting
a number of individual and community
groups on a pro bono basis.
FY14 Highlights
• Introduced a new uniform Pro Bono
Policy to encourage and support
staff, across all of our practices who
perform pro bono work, delivering
on our commitment to increase the
level of pro bono work performed
each year; and
• increased our provision of pro bono
legal work by 7%, assisting a number
of individuals and community groups,
and through our lawyers volunteering
at community legal centres.
Connecting with the
Community
In FY14 we expanded our strong
foundation of supporting local
communities by significantly
increasing financial grants and
fundraising activities.
FY14 Highlights
• The Community Fund provided
nearly $100,000 worth of grants
to community groups for projects
and initiatives to support those with
disease or disability or experiencing
disadvantage. This was the first
time that funds of this scale have
been distributed since the fund was
established in 2001 and more than
doubled the total grants for last year.
• Membership of our Staff Giving
Program in Australia increased
34%, which greatly increased our
ability to assist community groups
with grants from the Slater and
Gordon Community Fund.
• The Health Projects and Research
Fund was launched in Australia
and the United Kingdom (UK). The
initiative aims to improve the lives
of people in the community with
serious illness or those who live
with significant disability. The fund
will provide $1 million by 2020 for
Australian eligible projects and
£500,000 in the UK. The new Fund
will continue and expand on the
work of the Asbestos Research Fund
which has provided over $1.4 million
since 2004 for education, medical
research and projects to improve
treatment of asbestos-related illness.
• We had over 420 registrations for
the Mother’s Day Classic, gaining
the largest corporate team award
at the Melbourne event. In addition,
staff raised about $21,000 for breast
cancer research.
• In the UK, we supported the National
Cycling Charity for their Road
Justice campaign.
12
Slater and Gordon Limited – Annual Report 2014 Corporate Governance Statement
Introduction
The Board of the Company recognises
that a genuine commitment to sound
principles of corporate governance is
fundamental to the sustainability of
the Company and its performance.
Accessing Slater and
Gordon’s Corporate
Governance Policies
The Board has adopted a number of
corporate governance policies that are
referred to throughout this Statement.
These corporate governance policies
are available at:
www.slatergordon.com.au/the-firm/
governance
Board Responsibility
The Board has the following
responsibilities for the Slater and
Gordon Group:
• reviewing and approving the
strategy of the Group and holding
management to account to deliver the
strategy and reviewing performance
against agreed corporate key
performance indicators;
• selection, monitoring, evaluation
and remuneration settings of the
Managing Director and other key
management personnel;
• selecting future Directors and
assessing the Board and individual
Director performance;
• monitoring Slater and Gordon
Group financial and business
performance and financial
reporting;
• approving and monitoring
the progress of major capital
expenditure, capital management
and acquisitions;
• overseeing risk management policies,
practice and performance;
• implementing high-level policy
framework and ratifying specific
policies within that framework;
• overseeing compliance and
governance policies and practices
and ensuring the Slater and Gordon
Group’s business is conducted legally,
ethically and responsibly; and
• reporting to shareholders.
The responsibilities of the Board are set
out in further detail in the Corporate
Governance Policy.
Board Composition and
Diversity
The Company’s Constitution specifies
a minimum of three Directors (and
must include at least one Legal
Practitioner Director). The Board
has supplemented this requirement
in the Corporate Governance Policy,
which specifies that the Board shall
comprise of at least five Directors.
As at 30 June 2014, the Board consists
of six Directors: four independent
Non-Executive Directors and two
Executive Directors who are also
legal practitioners. The Board has
an independent Chair and a majority
of independent Directors.
The Nomination and Remuneration
Committee of the Board ensures that
the Board consists of an appropriate
number of Directors and that the
Directors have an appropriate mix
of skills and experience to meet the
Board’s responsibilities and objectives.
The Board has adopted a skills
matrix to assist with determining the
required mix of skills and experience,
identifying any gaps in the collective
skills of the Board and to inform
Director professional development,
recruitment and succession planning.
The Committee reviews the Board’s
composition and succession planning
against the skills matrix annually and
otherwise as Board vacancies arise.
Recruitment and succession planning
is targeted to achieve a balance of the
required skills and experience on the
Board and to recruit Directors from
diverse backgrounds.
The existing Board members have
been drawn from Executive and Non-
Executive roles in a range of industries,
including government, health,
industrial relations, financial services,
legal, retail, education, mergers and
acquisitions, advertising and property.
The current Directors have also
been selected to achieve a balance
of collective complementary skill-
sets based on the core competencies
identified in the skills matrix, including:
Governance Skills
• Board experience – listed and
non-listed environments; and
• Executive experience reporting
to external/independent boards.
Business/Industry Skills
• Business management experience
and qualifications;
• Mergers and acquisitions experience,
including due diligence and
integration;
• legal experience and qualifications;
• financial experience and
qualifications;
• risk management;
• professional marketing;
• overseas experience;
• information technology and online/
digital platforms;
• people management strategy; and
• project management/change
management.
The Board has adopted a target that
50% of the Directors are women.
As at 30 June 2014, 30% of Directors
and 50% of independent Directors
are women. The Nomination and
Remuneration Committee reviews
performance against this target
annually.
A profile of each of the Directors and a
table reporting Directors’ attendance
at Board meetings is provided in the
Directors’ Report.
The Board’s policy and process in
relation to Board composition and
diversity are set out in more detail
in the Corporate Governance Policy.
13
Slater and Gordon Limited – Annual Report 2014
Corporate Governance Statement continued
Chair of the Board
Mr John Skippen is the Chair and is
an independent Director. The Chair
is selected by the Board from the
Non-Executive Directors.
Board Committees
The Board uses the following
Committees to support it in matters
which require more intensive review.
Each Committee has a written Charter,
approved by the Board, defining its
duties, reporting procedures and
authority. Committees report back
to the Board at each Board meeting.
Copies of the Committee Charters
are available at:
www.slatergordon.com.au/the-firm/
governance
6. do not have close family ties with
any person who falls within any of
the categories descried above; and
7. have not served on the Board
for such a period that his or her
independence may be compromised.
It is the Board’s view that its Non-
Executive Directors Ian Court, Erica
Lane, John Skippen and Rhonda
O’Donnell are independent and the
Board currently consists of a majority
of independent Directors.
The Board has also adopted a number
of additional measures to ensure that
independent judgment is achieved and
maintained in its decision-making
processes, including:
• the Chair is an independent Director;
• the Chair of each Board Committee
is an independent Director;
• the Audit, Compliance and Risk
Management Committee and the
Nomination and Remuneration
Committee are composed of
independent Directors only;
• Directors are entitled to seek
independent professional advice
at the Company’s expense with
prior notification to the Chair; and
• Directors having a conflict of
interest must absent themselves
from discussion on a matter unless
the Board decides otherwise.
The policies and procedures relating
to Board independence are set out in
the Corporate Governance Policy.
Board Tenure
Directors have served the following terms on the Board of Slater and Gordon Ltd:
Director
Andrew Grech
Ken Fowlie
Ian Court
Erica Lane
John Skippen
Rhonda O’Donnell
Independent
No
No
Yes
Yes
Yes
Yes
Date of appointment
June 2001
July 2003
March 2007
December 2008
May 2010
March 2013
Term
13 years
11 years
7 years
5 years
4 years
1 year
Board Independence
Directors are considered to be
independent if they are not a member
of management and are free from
any business or other relationship
that could materially interfere with,
or reasonably be seen to materially
interfere with, the independent
exercise of their judgment.
The Board considers the independence
of relationships on a case-by-case
basis and any payment to a Director
or corporate entity associated with
a Director for services outside their
engagement as a Director or key
management personnel requires
approval by the Audit, Compliance
and Risk Management Committee.
The independence of Directors is
assessed at each Board meeting.
Directors are required to disclose
the full extent and nature of their
interests as well as any potential or
actual conflicts of interest as and when
they change and to comply with the
constraints on their participation and
voting in relation to matters in which
they may have an interest in accordance
with the Corporations Law and the
Corporate Governance Policy.
Directors are considered independent
if they:
1. have not been employed in an
Executive capacity by the Slater
and Gordon Group for at least
three years;
2. have not been a partner, substantial
shareholder, Director or senior
employee of a professional adviser
or consultant to Slater and Gordon
or any of its related entities within
the last three years;
3. do not have material relationships
as a supplier or customer of the
Slater and Gordon Group (nor
had any for the last three years);
4. are not a substantial shareholder of
Slater and Gordon or an associate or
officer of a substantial shareholder
of Slater and Gordon;
5. have no material contract or
relationship with the Slater and
Gordon Group other than as a
Director;
14
Slater and Gordon Limited – Annual Report 2014 (i) Nomination and
Remuneration Committee
The Nomination and Remuneration
Committee reviews and makes
recommendations to the Board in
relation to the following functions
for the Group:
• performance review and
remuneration policies;
(ii) Audit, Compliance and
Risk Management Committee
The Audit, Compliance and Risk
Management Committee reviews and
makes recommendations to the Board
in relation to the following functions
for the Group:
• legal compliance;
• implementation of legal practice
• Director and Senior Executive
management systems;
remuneration;
• performance reviews of the Board,
Directors and Senior Executives;
• recruitment of Directors and Senior
Executives;
• Director induction and continuing
professional education;
• Board composition reviews and
succession planning for Directors
and Senior Executives;
• the Group’s recruitment,
development, retention and
remuneration policies;
• equity incentive schemes and other
forms of employee incentives;
• superannuation arrangements; and
• Diversity Policy settings and
monitoring performance against
diversity targets.
The Nomination and Remuneration
Committee is comprised of four
independent, Non-Executive Directors:
Erica Lane (Chair), Ian Court, Rhonda
O’Donnell and John Skippen. Ian
Court was recently appointed as
a member of this Committee, and
attended his first meeting during
the financial year on 1 May 2014.
Executive Director and Head of
Australia, Ken Fowlie and the
General Manager, Human Resources
for each of Australia and the United
Kingdom (UK) routinely attend
meetings of the Committee to report
directly. No Executive is involved in
decisions on their own remuneration.
A profile of the members of the
Nomination and Remuneration
Committee and a table reporting
attendance at Committee meetings
is provided in the Directors’ Report.
• financial reporting;
• internal control structure and
internal audit;
• external audit;
• trust account audit;
• risk management; and
• treasury management.
In discharging its role, the Committee
is empowered to investigate any matter
brought to its attention with full
access to all books, records, facilities
and personnel of the Company and
the authority to engage independent
counsel and other advisers as it
determines necessary to carry out
its duties.
The Audit, Compliance and Risk
Management Committee is comprised
of four independent, Non-Executive
Directors: Ian Court (Chair), Erica
Lane, John Skippen and Rhonda
O’Donnell. The Executive Directors,
Chief Financial Officer and Company
Secretary and external auditor also
routinely attend the Committee
meetings. A profile of the members
of the committee and a table reporting
attendance at the Committee meetings
is provided in the Directors’ Report.
Removal and Rotation
of Directors
The Company’s Constitution specifies
that one-third of the Board, excluding
the Managing Director, must retire
from office and stand for re-election
at each Annual General Meeting.
Further, each Director, excluding
the Managing Director, must stand
for re-election at least every three
years. Directors may be appointed by
the Board during the year. Directors
appointed by the Board are required
to submit themselves for re-election
at the next Annual General Meeting.
The processes and policies for the
removal, appointment and re-
appointment of Directors are set out
in the Corporate Governance Policy.
Review of Board
Performance
The Board reviews the performance
of the Board and the Board
Committees annually. The objective
of the evaluation is to contribute to
the ongoing development of the
Board, the Committees, individual
Directors and the overall corporate
governance framework.
Performance evaluation is conducted
using a combination of internally
and externally facilitated review as
deemed appropriate by the Chair to
meet the Board’s commitment to high
standards of corporate governance.
Review of Performance
and Remuneration for Key
Management Personnel
Key management personnel participate
in the annual performance review
process which applies to all Slater
and Gordon employees. This process
involves the establishment of annual
performance targets and review of
achievement of prior year targets.
The process also involves assessment
of remuneration. The Nomination and
Remuneration Committee reviews the
performance evaluation process and
remuneration of the key management
personnel of the Slater and Gordon
Group and reports to the Board.
The performance of the Managing
Director is reviewed annually by the
Board. The Managing Director is
assessed on achievement of the Slater
and Gordon Group’s Strategic Plan
applicable to the year in review.
The remuneration of the Managing
Director is reviewed annually and
is tied to the Company achieving its
stated financial goals and other goals.
During the reporting period, an
annual performance review of key
management personnel and the
Managing Director was conducted
in accordance with the performance
review process described above.
15
Slater and Gordon Limited – Annual Report 2014 Corporate Governance Statement continued
Executive remuneration is made
up of a balance between fixed and
performance-based pay. The Board
applies the following principles in
reviewing key management personnel
remuneration:
• fixed remuneration is based on
what is considered by the Board
to be reasonable and fair
compensation taking into account
the core performance requirements
of the role and business and market
conditions;
• performance-based remuneration
is linked to clear performance targets
that are a balance of individual and
Company performance targets
linked to achievement of the
Strategic Plan;
• in prior financial years, equity-
based remuneration has been
considered for key management
personnel under the Employee
Ownership Plan (EOP). No new
allocations were made under this
plan during the financial year and
no key management personnel
had rights under the EOP linked
to performance of FY14 targets.
A new Equity Incentive Scheme
will be put to shareholders for
approval at the 2014 Annual General
Meeting and it is anticipated that
performance rights will be offered
to key management personnel
dependent on performance against
FY15 performance targets based on
the Company achieving its stated
financial goals;
• Directors and employees are in
general not permitted to enter into
hedging arrangements in relation to
equity granted under equity incentive
schemes. The Board does retain
discretion to allow this to occur in
limited circumstances to protect
the financial position of an employee
who has a full recourse loan owing
to the Company for the issue price
of shares under the EOP. These loans
are all due and payable by 2018; and
• Executives are not provided with any
contractual termination payments
other than reasonable notice periods
for termination, recognising seniority
and length of tenure.
Non-Executive Director remuneration
is based on fixed Director fees and
superannuation contributions. Non-
Executive Directors are paid additional
fees for chairing committees and
membership of a second committee.
Non-Executive Directors do not receive
any equity-based remuneration,
nor any other performance-based
remuneration or retirement benefits
other than superannuation.
Further details about the policies
and procedures for the remuneration
of Directors and other key
management personnel are set out
in the Remuneration Report and the
Corporate Governance Policy.
Succession Planning
The Board plans succession of the
Board, the Managing Director and
other key management personnel in
conjunction with the Nomination and
Remuneration Committee. Succession
planning for key management
personnel was reviewed during
the reporting period as part of the
organisational planning for the
Strategic Plan reviewed at the Board
Retreat in May 2014.
Relationship with
Management
Ultimate responsibility for the
management and control of the
Company is vested in the Directors,
who may then delegate their powers
to management.
Broadly, the Board reserves to itself
the following decisions:
• appointment, performance
management, remuneration and
succession planning of Managing
Director and other key management
personnel;
• appointment and remuneration
of Non-Executive Directors and
Board composition and Board
succession planning;
• approval of strategy and budget
for the Slater and Gordon Group;
• approval of material capital
expenditure and acquisitions;
• approval of the publication of reports
and statements to shareholders;
• issuing securities; and
• approval of corporate policies,
management systems and material
settings within policy frameworks.
The Legal Practitioner Directors retain
responsibility under the Australian legal
professional regulatory framework for
maintaining appropriate management
systems for a legal practice.
Beyond the matters identified above,
the Board delegates to the Managing
Director all authority to achieve the
corporate objectives as set out in the
Strategic Plan. The Managing Director
then delegates the achievement of
specific corporate objectives and
strategies to members of the Senior
Executive Management team. In
exercising this delegated authority,
the Managing Director and other
Senior Executives are bound, like all
employees of Slater and Gordon, by
the Code of Conduct which demands
professionalism and integrity in conduct
and decision-making. The functions
and authority delegated by the Board
to the Managing Director are set out
in the Corporate Governance Policy.
Independent Advice
Directors have the right to seek
independent professional advice
in connection with their duties and
responsibilities, at the Company’s
expense. Directors also have access
to any employees, Company advisers,
records and information they may
require to carry out their duties.
Conflicts of Interest
Directors, key management personnel
and Senior Executives are required
to disclose to the Board any matters
in which they may have a personal
interest or a potential conflict of
interest with the Company.
16
Slater and Gordon Limited – Annual Report 2014 All Directors have entered into written
undertakings to supply the Company
with all information necessary for
the Company to disclose details of
Directors’ interests in the Company’s
securities in accordance with the
Listing Rules of the ASX. Directors
are required to review their interests
at each Board meeting.
Further details about the policies and
procedures attached to conflicts of
interest are set out in the Corporate
Governance Policy.
External Auditor
The Company’s auditor is appointed
by the Board, based upon a
recommendation from the Audit,
Compliance and Risk Management
Committee. The Committee
monitors and reviews the activities
of the Company’s auditor, including
scope and quality of the audit and
independence. The Company’s
auditor, Pitcher Partners (PP) has
committed to assist the Audit,
Compliance and Risk Management
Committee to review the quality of its
work and its independence. To this end:
• PP provides a half-yearly declaration
of independence for review by
the Audit, Compliance and Risk
Management Committee;
• The PP independence letter outlines
the services to be performed. This
enables the Audit, Compliance and
Risk Management Committee to
provide written approval for any
non-audit services to the Board; and
• The Audit, Compliance and Risk
Management Committee regularly
reports to the Board on these matters.
In accordance with the Corporations
Law the audit signing partner will
rotate after no more than five years.
Audit Partner Matthew Pringle
completed his fifth audit year at the
end of the 2014 financial year and
rotates off the audit from 1 July 2014.
The external auditor attends and will
be available at the Annual General
Meeting to answer questions relevant
to the conduct of the audit and
preparation of the Audit Report and
received in writing by the Company
five days prior to the meeting.
• prohibits Directors and other
designated persons at Slater
and Gordon from trading in the
Company’s securities within closed
and prohibited periods and only
permits trade within the following
windows:
Internal Audit
Internal audit activity is conducted
routinely in relation to compliance
with internal Slater and Gordon
practice standards and the effectiveness
of internal financial controls.
Routine internal audit of compliance
with Slater and Gordon practice
standards is coordinated by the
Professional Standards and Risk team
and conducted by senior lawyers
in each of the practice areas. This
involves an audit of a material file
sample across the business and
reporting to the Audit Compliance
and Risk Management Committee.
Practice improvement plans are
developed and implemented by the
management team based on these
audit results. Practice standards
internal audits have been conducted
annually from 2009–12. During
2013, the Professional Standards and
Risk team revised the program and
prepared the foundation for the future
Group internal audit function and the
next practice standards internal audit
will be conducted in October 2014.
Consultants, Protiviti were engaged
during FY14 to assist management
to conduct internal reviews of key
internal financial controls, information
technology controls and the
Corporate Governance structure
and policy framework.
Share Trading Policy
In addition to restrictions prescribed
in the Corporations Law, the Company
has a Share Trading Policy which:
• prohibits Directors from trading at
any time in the Company’s securities
without first notifying the Chair and
Company Secretary;
– within the six-week periods
commencing 24 hours after the
Company has released its half-
year and full-year results.
– within the period commencing
24 hours after the Company
lodges its Annual Report with
the ASX through to one month
after the Company’s AGM.
Directors and employees are in
general not permitted to enter into
hedging arrangements in relation to
equity granted under equity incentive
schemes. The Board does retain
discretion to allow this to occur in
limited circumstances to protect the
financial position of an employee who
has a full recourse loan owing to the
Company for the issue price of shares
under the Employee Ownership Plan.
These loans are all due and payable
by 2018.
The Share Trading Policy is available at:
www.slatergordon.com.au/the-firm/
governance
Continuous Disclosure and
Market Communications
The Company has established a
written policy designed to ensure
compliance with the ASX Listing Rule
disclosure requirements and to ensure
accountability at a Senior Executive
level for that compliance.
The Company is committed to
providing effective communication
to its shareholders. The Company
publishes presentations by the
Managing Director to institutional
investors and market analysts
through the ASX Announcements
Platform and on the Company
website, contemporaneously with
the scheduled presentation. These
presentations to institutional investors
and market analysts are routinely
17
Slater and Gordon Limited – Annual Report 2014 Corporate Governance Statement continued
held immediately after the release
of the Company’s half- and full-year
financial results and at various other
opportunities throughout the year.
From 1 July 2014, the percentage
of women on the Group Executive
is 44% due to an expansion in the
membership of that Group.
The Company’s Disclosure and
Market Communications Policy
is available at:
www.slatergordon.com.au/the-firm/
governance
Further details of diversity objectives
and initiatives are set out in the Slater
and Gordon Diversity Policy
available at:
www.slatergordon.com.au/the-firm/
governance
Ethical Standards
All Directors, Senior Executives and
employees are bound by the Slater
and Gordon Code of Conduct, which
is available at:
www.slatergordon.com.au/the-firm/
governance
This sets out the standards of ethical
behaviour required. The Code of
Conduct also contains the Company’s
Whistleblower Policy which actively
encourages employees to bring any
problems to the attention of designated
persons if that person suspects or
becomes aware of unethical, improper
or unlawful conduct.
The Company also has in place
policies covering equal employment
opportunity, discrimination,
harassment, confidentiality, privacy
and employee health and safety.
Diversity
The Board has adopted the following
measurable objectives for achieving
gender diversity and reports against
these targets for FY14 as follows:
Board Education and
Continuing Professional
Development
The Board is committed to ensuring
new Directors are adequately educated
on the Company’s operations.
New Directors are provided with an
induction program and briefing pack
upon commencement which provides
a comprehensive introduction
to Slater and Gordon’s business,
industry, regulatory context and
governance structures.
Slater and Gordon encourages Directors
to undertake Continuing Professional
Development (CPD) of 10 hours per
year and makes available an annual
financial contribution to external
CPD activities.
Risk Management
The Company has established a process
for the identification and management
of material business risks. Under the
Risk Management Policy responsibility
is allocated to the Board, the Audit,
Target
Category
% women on the Board
50%
% women Non-Executive Directors 50%
50%
% women on Group Executive
50%
% women on Australian Executive
50%
% women on UK Executive
Nil target set
% women employees
Performance 30 June 2014
33%
50%
20%
44%
37%
72%
Compliance and Risk Management
Committee, the Managing Director
and the broader management team
to monitor the key business risks and
implement agreed risk management
controls and strategies.
The reporting and review under this
framework is as follows:
• The Board requires the Head of
Professional Standards and Risk to
report annually to the Board on the
implementation of risk management
controls and strategies;
• The Audit, Compliance and Risk
Management Committee reviews
the Company’s risk profile quarterly,
checks that management is effectively
implementing the agreed controls
and strategies and recommends any
changes or issues warranting further
action to the Board; and
• The Board considers the material
business risks faced by the Company
and the Risk Management Framework
annually as part of the review of the
Strategic Plan.
By the processes outlined above, the
Board satisfies itself that management
has developed and implemented a
sound system of risk management
and internal control.
The Board has also received separate
assurance from the Managing
Director and the Chief Financial
Officer that the declaration provided
in accordance with Section 295A
of the Corporations Act (which
states that the financial records have
been appropriately maintained, the
financial statements comply with the
accounting standards and that the
financial statements provide a true and
fair view of the financial performance
of the Company) is founded on a
sound system of risk management and
internal control and that the system
is operating effectively in all material
respects in relation to financial
reporting risks.
The Risk Management Policy is
available at:
www.slatergordon.com.au/the-firm/
governance
18
Slater and Gordon Limited – Annual Report 2014 ASX Corporate Governance Council Recommendations
A table setting out the Company’s compliance with the ASX Corporate Governance Principles and Recommendations
(ASX CGPR) (2nd edition) is set out below.
From June 2014, the Board commenced a process of reviewing all corporate governance policies to prepare for reporting
in FY15 against the third edition of the ASX CGPR and all required policies are in place to enable the Company to comply
with ASX CGPR (3rd edition) for reporting in FY15.
ASX Principle
Compliance/comment
Principle 1
Lay solid foundations for management and oversight
1.1
1.2
1.3
Companies should establish the functions reserved to the Board and those
delegated to Senior Executives and disclose those functions.
Companies should disclose the process of evaluating the performance
of Senior Executives.
Companies should provide the information indicated in the Guide to reporting
on Principle 1.
Principle 2
Structure the Board to add value
2.1
2.2
2.3
2.4
2.5
2.6
A majority of the Board should be independent Directors.
The Chair should be an independent Director.
The roles of Chair and Executive Officer should not be exercised by the
same individual.
The Board should establish a Nomination Committee.
Companies should disclose the process for evaluating the performance
of the Board, its Committees and individual Directors.
Companies should provide the information indicated in the Guide to reporting
on Principle 2.
Principle 3
Promote ethical and responsible decision-making
Complies
Complies
Complies
Complies
Complies
Complies
Complies
Complies
Complies
3.1
3.2
3.3
3.4
3.5
Companies should establish a code of conduct and disclose the code or a
summary of the code as to:
Complies
• the practices necessary to maintain confidence in the Company’s integrity;
• the practices necessary to take into account their legal obligations and the
reasonable expectations of their stakeholders; and
• the responsibility and accountability of individuals for reporting and
investigating reports of unethical practices.
Companies should establish a policy concerning diversity and disclose the
policy or a summary of that policy. The policy should include requirements
for the board to establish measurable objectives for achieving gender
diversity and for the board to assess annually both the objectives and
progress in achieving them.
Companies should disclose in each annual report the measurable objectives
for achieving gender diversity set by the board in accordance with the
Diversity Policy and progress towards achieving them.
Companies should disclose in each annual report the proportion of women
employees in the whole organisation, women in Senior Executive positions
and women on the Board.
Complies
Complies
Complies
Companies should provide the information indicated in the Guide to reporting
on Principle 3.
Complies
19
Slater and Gordon Limited – Annual Report 2014 Corporate Governance Statement continued
ASX Principle
Compliance/comment
Principle 4
Safeguard integrity in financial reporting
4.1
4.2
4.3
4.4
The Board should establish an Audit Committee.
The Audit Committee should be structured so that it:
• consists only of Non-Executive Directors;
• consists of a majority of independent Directors;
• is chaired by an independent Chair who is not Chair of the Board; and
• has at least three members.
The Audit Committee should have a formal charter.
Companies should provide the information indicated in the Guide to reporting
on Principle 4.
Principle 5
Make timely and balanced disclosure
Companies should establish written policies designed to ensure compliance
with ASX Listing Rule disclosure requirements and to ensure accountability
at Senior Executive level for that compliance and disclose those policies or
a summary of those policies.
Complies
Complies
Complies
Complies
Complies
5.1
5.2
Companies should provide the information indicated in the Guide to reporting
on Principle 5.
Complies
Principle 6
Respect the rights of shareholders
6.1
6.2
Companies should design a Communications Policy for promoting effective
communication with shareholders and encouraging their participation at
general meetings and disclose their policy or a summary of that policy.
Complies
Companies should provide the information indicated in the Guide to reporting
on Principle 6.
Complies
Principle 7
Recognise and manage risk
7.1
7.2
7.3
7.4
Companies should establish policies for the oversight and management
of material business risks and disclose a summary of those policies.
The Board should require management to design and implement the risk
management and internal control system to manage the company’s material
business risks and report to it on whether those risks are being managed
effectively. The Board should disclose that management has reported to it as
to the effectiveness of the company’s management of its material business risks.
The Board should disclose whether it has received assurance from the
Chief Executive Officer (or equivalent) and the Chief Financial Officer (or
equivalent) that the declaration provided in accordance with Section 295A of the
Corporations Act is founded on a sound system of risk management and internal
control and that the system is operating effectively in all material respects in
relation to financial reporting risks.
Complies
Complies
Complies
Companies should provide the information indicated in the Guide to reporting
on Principle 7.
Complies
Principle 8
Remunerate fairly and responsibly
The Board should establish a Remuneration Committee.
The Remuneration Committee should be structured so that it:
Complies
Complies
• consists of a majority of independent Directors;
• is chaired by an independent Chair; and
• has at least three members.
Companies should clearly distinguish the structure of Non-Executive Directors’
remuneration from that of Executive Directors and Senior Executives.
Complies
Companies should provide the information indicated in the Guide to reporting
on Principle 8.
Complies
8.1
8.2
8.3
8.4
20
Slater and Gordon Limited – Annual Report 2014 Board of Directors and Company Secretary
John Skippen
Chair, Non-Executive Director
ACA
Andrew Grech
Group Managing Director
LLB MAICD
Erica Lane
Non-Executive Director
B App Sc, Grad Dip Comp, MBA
(Melbourne), MBA (Chicago), MAICD
Experience
John has been on the Board since 2010
and has been Chair of the Board since 2012.
Experience
Andrew was appointed Director of the
Company in June 2001.
Experience
Erica joined the Board of the Company
in 2008.
John has over 30 years’ experience as a
chartered accountant and was the former
Executive Finance Director of Harvey
Norman Holdings Ltd. John brings to the
Board extensive financial, public company
and retail experience and skills in financial
management, general management,
mergers and acquisitions, taxation,
advertising, property and strategy.
Other Current Directorships
Non-Executive Director of Flexigroup
Limited (appointed November 2006).
Non-Executive Director of Super Retail
Group Ltd (appointed September 2008).
Non-Executive Director of Emerging
Leaders Investment Ltd (appointed
October 2010).
Former Directorships
Non-Executive Director of Briscoe Group
Limited (NZ) (2004-2011).
Non-Executive Director of Mint Wireless
Limited (2007-2008).
Andrew joined Slater and Gordon in 1994
and has worked as a lawyer in most areas
of its litigation practice. As Managing
Director Andrew has been at the forefront
of the successful acquisition and integration
of more than 30 law firms in Australia.
Since the acquisition of Russell Jones &
Walker in the United Kingdom (UK) in April
2012, Andrew has been integral to Slater
and Gordon’s UK expansion.
Other Current Directorships
Member of the Board of the Youth
Junction Inc.
Other Positions
Previous founding chair of the Youth
Junction Inc, a not for profit youth charity
operating in Sunshine, Victoria.
Member of the Advisory Council of the
Melbourne Law School.
Erica has extensive experience as a senior
executive and non-executive director in
international and local industries. She has
deep and varied commercial expertise with
a strong bias towards strategy, financial
performance and change management
in complex environments. In addition to
Board appointments, Erica consults in the
public and private sectors at CEO and Board
level on a range of strategic and business
performance issues. Specific industry
experience includes banking, insurance,
capital markets, funds management,
professional services and healthcare in
public and private sectors. Prior to her
business career, Erica practised as a medical
microbiologist and immunologist.
Other Current Directorships
Wilsons Investment Management HTM
(ASX: WIG).
Former Directorships
Non-executive director and Chair
of Nomination and Remuneration.
Committee of Victorian Funds
Management Corporation.
Non-executive director and Chair
of IT Committee of Eastern Health.
Non-executive director of Ilhan Food
Allergy Foundation.
Other Positions
Previously held several senior executive
roles with ANZ Bank in Group finance
and as GM Insurance and Trustees.
Other previous executive roles include
Booz Allen & Hamilton, Arthur Andersen,
Unisys and Royal Children’s Hospital.
Special Responsibilities
Chair – Nomination and Remuneration
Committee.
21
Slater and Gordon Limited – Annual Report 2014 Board of Directors and Company Secretary continued
Ian Court
Non-Executive Director
FAICD
Ken Fowlie
Executive Director
and Head of Australia
LLB BCom (NSW) MSc (with
distinction) (LBS) MAICD
Rhonda O’Donnell
Non-Executive Director
M App Sc, MBA (Melbourne)
Experience
Ken was appointed a Director of the
Company in 2003.
Experience
Rhonda joined the Board of the Company
in 2013.
Ken has extensive litigation experience
particularly in claims for sufferers of
asbestos related illness (including acting
for the ACTU and asbestos support
groups in negotiations with James
Hardie) and large, multi-party group and
representative actions. Ken brings to the
Board a unique operational perspective
in several of the Group’s key strategic
areas. As a legal practitioner with close
to 20 years’ experience and qualifications
and a strong interest in economics and
business management, Ken contributes
skills in legal practice, legal practice
management, risk management, financial
analysis, financial reporting and mergers
and acquisitions. Ken was appointed Head
of Australia in July 2013, and is responsible
for the overall management of the Slater
and Gordon Australian operations.
Rhonda has extensive experience in
international and local industries including
telecommunications, information
technology, education, government and
utilities. Rhonda has been a successful
executive and board member in both the
private and public sectors. Rhonda has
received several industry achievements
including the award for the Victorian Telstra
Business Woman of the Year in 1999.
Other Current Directorships
Non-executive director, RMIT Vietnam.
Non-executive director, RMIT Training.
Former Directorships
Managing Director, Cambridge
Technology Partners.
Managing Director, Global Customer
Solutions (GCS) (a subsidiary of TXU
(now TRU)).
Other Positions
Current Member, RMIT Council.
Current Member, Advisory Board DB
Results.
Current Chairman, Insync Surveys.
Previous Chairman and President, Novell
Asia Pacific.
Previous Chairman, Victorian Government
Purchasing Board.
Experience
Ian has extensive experience as a senior
executive and non-executive director in
a diverse range of companies and industry
sectors, including financial services,
unlisted infrastructure, private equity
and the property sector. Ian brings to
the Board expertise and skills in finance,
financial markets, business strategy, human
resources, risk management and corporate
governance. Ian was also inaugural president
of the Australian Institute of Superannuation
Trustees (AIST). Prior executive positions
include CEO of Development Australia
Funds Management Ltd (1998-2004) and
Executive Chair of Cbus (1992-1998). Earlier
in his career Ian was a senior industrial officer
with the ACTU (1982-1992).
Other Current Directorships
Non-Executive Director of AssetCo
Management Pty Ltd as PPP management
company for SSSR Holdings Pty Ltd
(Southern Cross Station), Praeco Pty
Ltd (HQ Joint Operations Command),
Western Liberty Group Holdings Pty Ltd
(Perth District Court Complex). He also
holds pro-bono positions as Chair of ACTU
Member Connect Pty Ltd and Chair of
Renewable Energy Development Trust.
Former Directorships
Non-Executive Director of Victorian Funds
Management Corporation, Epic Energy
Holdings Pty Ltd, Pacific Hydro Pty Ltd,
Federal Airports Corporation, Utilities
of Australia Pty Ltd, Bennelong Funds
Management Pty Ltd, Ecogen Holdings
Pty Ltd, Australian Venture Capital
Association Ltd and ISPT Pty Ltd.
Other Positions
Chair of the IFM Investors Investor
Advisory Board.
Special Responsibilities
Chair – Audit, Compliance and Risk
Management.
22
Slater and Gordon Limited – Annual Report 2014 Wayne Brown
Chief Financial Officer and Joint
Company Secretary
BCom (Hons), M Int Bus (Melbourne),
CA MAICD
Kirsten Morrison
General Counsel and Joint Company
Secretary
BA/LLB (Hons)
Experience
Wayne commenced as Chief Financial
Officer and Company Secretary of Slater
and Gordon in 2004. Prior to joining Slater
and Gordon, Wayne was the financial
controller of Grand Hotel Group (an ASX
listed property trust) and prior to that,
Wayne worked at Arthur Andersen for
ten years where he specialised in corporate
recovery, insolvency and restructuring.
Wayne contributes skills in corporate
governance, financial management,
analysis and reporting.
Experience
Kirsten commenced as a commercial
litigator with Slater and Gordon in 2006
and then as General Counsel and Company
Secretary in 2008. Prior to joining Slater
and Gordon, Kirsten was a lawyer at
Allens Arthur Robinson and completed an
Associateship to the Hon. Justice Hargrave
in the Victorian Supreme Court. Kirsten
contributes skills in corporate governance
and risk management.
23
Slater and Gordon Limited – Annual Report 2014 SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
DIRECTORS’ REPORT
The directors present their report, together with the financial report of the consolidated entity consisting of Slater &
Gordon Limited (“the Company”) and its controlled entities (jointly referred to as “the Group”), for the financial year
ended 30 June 2014 and auditor’s report thereon. This financial report has been prepared in accordance with Australian
Accounting Standards. Compliance with Australian Accounting Standards ensures compliance with International
Financial Reporting Standards (“IFRS”).
Directors
The directors in office at any time during the financial year and up to the date of this report are:
John Skippen –Chair
Andrew Grech – Managing Director
Ian Court
Ken Fowlie
Erica Lane
Rhonda O’Donnell
Details of the skills, experience, expertise and special responsibilities of each director are set out in a subsequent section
of this report.
Principal activities
The principal activity of the Group during the financial year was the operation of legal practices in Australia and the
United Kingdom (“UK”).
Results
The profit after income tax of the Group was $61.1 million (2013: $41.5 million).
Review of operations
The Group continued to deliver strong financial results in the year ending 30 June 2014, at the same time making solid
progress against key strategic priorities in particular the expansion of its UK operations.
The Group ended the year with total revenue of $418.5 million (2013: $298.0 million) and net profit after tax of
$61.1 million (2013: $41.5 million). The full year dividend was up 21.2% over the prior year to 8.0 cents per share fully
franked (2013: 6.6 cents). The cash profile of the Group improved during the current year with cash flow from
operations of $54.4 million, representing 89.1% of net profit after tax.
A new multi-currency funding agreement has been entered into with the Group’s financiers to provide future funding
flexibility for continued growth of the Group. The expansion into the UK continued to progress well during the year
with the acquisition of Goodmans Law, the personal injury (“PI”) practice of Taylor Vinters LLP, Fentons Solicitors
LLP, John Pickering & Partners LLP, the PI practice of Chadwick Lawrence LLP and the consumer law business of
Pannone Solicitors LLP. The UK ended the financial period with total revenue of $182.5 million (2013: $70.5 million)
and net profit after tax of $27.5 million (2013: $7.2 million).
Significant changes in the state of affairs
Other than the UK acquisitions during the course of the year (refer to Note 31), there have been no significant changes
in the state of affairs of the Group that require disclosure in this report.
Events subsequent to reporting date
Subsequent to the reporting date, the Group announced its intention to purchase the following businesses:
Schultz Toomey O’Brien, a consumer law firm based in Queensland, with an indicative completion date in
November 2014.
Nowicki Carbone, a specialist personal injuries practice in Victoria, with an indicative completion date in
November 2014.
24
3
Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
Dividends paid, recommended and declared
The dividends paid and declared since the start of the financial year are as follows:
Dividends on ordinary shares
Interim franked dividend at the tax rate of 30% for 2014: 3.00 cents per share
(2013: 2.75 cents per share)
Final franked dividend at the tax rate of 30% for 2013: 3.85 cents per share
(2012: 3.50 cents per share)
2014
$’000
2013
$’000
6,115
4,681
7,655
13,770
5,966
10,647
In addition to the above dividends, since the end of the financial year the directors have recommended the payment of a
final ordinary dividend of $10,217,000 (5.0 cents per share) to be paid on 24 October 2014 out of retained earnings at
30 June 2014.
Dividend reinvestment plan
On 27 February 2013, the Company announced the introduction of a Dividend Reinvestment Plan (“DRP”) to allow
eligible shareholders to reinvest their dividends in further Company shares. The DRP was active for the final dividend
declared for the financial year ending on 30 June 2013 and the interim dividend declared for the financial year ending on
30 June 2014. Under the DRP 428,725 shares were issued for the 2013 final dividend at $3.70 per share and 517,083
shares were issued for the 2014 interim dividend at $4.40 per share.
Share options
No options over unissued shares or interests in the Company were granted during or since the end of the financial year
and there were no options outstanding at the end of the financial year.
Indemnification and insurance of directors and officers
During or since the end of the financial year, the Group has given indemnity or entered an agreement to indemnify, or
paid or agreed to pay insurance premiums as follows:
A premium of $55,000 (2013: $42,500) for a twelve month period was incurred in respect of directors, officers and the
Company Secretary of the Company against a liability brought upon such an officer.
Further disclosure required under section 300(9) of the Corporations Act 2001 is prohibited under the terms of the
contract.
4
25
Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
Information on directors and company secretaries
The skills, experience, expertise and special responsibilities of each person who has been a director of the Company at
any time during or since the end of the financial year is provided below, together with details of the company secretaries
as at the year end.
John Skippen
ACA
Chair, Non-executive Director
Experience
John has been on the Board since 2010 and has been Chair of the Board since
2012.
Andrew Grech
LLB MAICD
Managing Director
John has over 30 years’ experience as a chartered accountant and was the former
Executive Finance Director of Harvey Norman Holdings Ltd. John brings to the
Board extensive financial, public company and retail experience and skills in
financial management, general management, mergers and acquisitions, taxation,
advertising, property and strategy.
Other current directorships
Non-Executive Director of Flexigroup Limited (appointed November 2006)
Non-Executive Director of Super Retail Group Ltd (appointed September 2008)
Non-Executive Director of Emerging Leaders Investment Ltd (appointed October
2010)
Former directorships
Non-Executive Director of Briscoe Group Limited (NZ) (2004-2011)
Non-Executive Director of Mint Wireless Limited (2007-2008)
Experience
Andrew was appointed Director of the Company in June 2001.
Andrew joined Slater & Gordon in 1994 and has worked as a lawyer in most areas
of its litigation practice. As Managing Director Andrew has been at the forefront
of the successful acquisition and integration of more than 30 law firms in
Australia. Since the acquisition of Russell Jones & Walker in the United Kingdom
in April 2012, Andrew has been integral to Slater & Gordon’s UK expansion.
Other current directorships
Member of the Board of the Youth Junction Inc
Former directorships
None
Other positions
Previous founding chair of the Youth Junction Inc, a not for profit youth charity
operating in Sunshine, Victoria
Member of the Advisory Council of the Melbourne Law School
26
5
Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
Ken Fowlie
LLB BCom (NSW) MSc (with
distinction) (LBS)
MAICD
Executive Director
Ian Court
FAICD
Non-executive Director
Experience
Ken was appointed a Director of the Company in 2003.
Ken has extensive litigation experience particularly in claims for sufferers of
asbestos related illness (including acting for the ACTU and asbestos support
groups in negotiations with James Hardie) and large, multi-party group and
representative actions. Ken brings to the Board a unique operational perspective in
several of the Group’s key strategic areas. As a legal practitioner with close to 20
years’ experience and qualifications and a strong interest in economics and
business management, Ken contributes skills in legal practice, legal practice
management, risk management, financial analysis, financial reporting and mergers
and acquisitions. Ken was appointed Head of Australia in July 2013, and is
responsible for the overall management of the Slater & Gordon Australian
operation.
Other current directorships
None
Former directorships
None
Experience
Ian has extensive experience as a senior executive and non-executive director in a
diverse range of companies and industry sectors, including financial services,
unlisted infrastructure, private equity and the property sector. Ian brings to the
Board expertise and skills in finance, financial markets, business strategy, human
resources, risk management and corporate governance. Ian was also inaugural
president of the Australian Institute of Superannuation Trustees (AIST). Prior
executive positions include CEO of Development Australia Funds Management
Ltd (1998-2004) and Executive Chair of Cbus (1992-1998). Earlier in his career
Ian was a senior industrial officer with the ACTU (1982-1992).
Other current directorships
Non-Executive Director of AssetCo Management Pty Ltd as PPP management
company for SSSR Holdings Pty Ltd (Southern Cross Station), Praeco Pty Ltd
(HQ Joint Operations Command), Western Liberty Group Holdings Pty Ltd (Perth
District Court Complex). He also holds pro-bono positions as Chair of ACTU
Member Connect Pty Ltd and Chair of Renewable Energy Development Trust
Former directorships
Non-Executive Director of Victorian Funds Management Corporation, Epic
Energy Holdings Pty Ltd, Pacific Hydro Pty Ltd, Federal Airports Corporation,
Utilities of Australia Pty Ltd, Bennelong Funds Management Pty Ltd, Ecogen
Holdings Pty Ltd, Australian Venture Capital Association Ltd and ISPT Pty Ltd
Other positions
Chair of the IFM Investors Investor Advisory Board
Special responsibilities
Chair – Audit, Compliance and Risk Management
6
27
Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
Erica Lane
B App Sc, Grad Dip Comp, MBA
(Melbourne), MBA (Chicago),
MAICD
Non-executive Director
Experience
Erica joined the Board of the Company in 2008.
Erica has extensive experience as a senior executive and non-executive director in
international and local industries. She has deep and varied commercial expertise
with a strong bias
towards strategy, financial performance and change
management in complex environments. In addition to Board appointments, Erica
consults in the public and private sectors at CEO and Board level on a range of
strategic and business performance issues. Specific industry experience includes
banking, insurance, capital markets, funds management, professional services and
healthcare in public and private sectors. Prior to her business career, Erica
practised as a medical microbiologist and immunologist.
Other current directorships
Wilsons Investment Management HTM (ASX: WIG)
Former directorships
Non-executive director and Chair of Nomination and Remuneration
Committee of Victorian Funds Management Corporation
Non-executive director and Chair of IT Committee of Eastern Health
Non-executive director of Ilhan Food Allergy Foundation
Other positions
Previously held several senior executive roles with ANZ Bank in Group finance
and as GM Insurance and Trustees.
Other previous executive roles include Booz Allen & Hamilton, Arthur Andersen,
Unisys and Royal Children’s Hospital
Rhonda O’Donnell
M App Sc, MBA (Melbourne)
Non-executive Director
Special responsibilities
Chair – Nomination and Remuneration Committee
Experience
Rhonda joined the Board of the Company in 2013.
Rhonda has extensive experience in international and local industries including
telecommunications, information technology, education, government and utilities.
Rhonda has been a successful executive and board member in both the private and
public sectors. Rhonda has received several industry achievements including the
award for the Victorian Telstra Business Woman of the Year in 1999.
Other current directorships
Non- executive director, RMIT Vietnam
Non-executive director, RMIT Training
Former directorships
Managing Director, Cambridge Technology Partners
Managing Director, Global Customer Solutions (GCS) (a subsidiary of TXU (now
TRU))
Other positions
Current Member, RMIT Council
Current Member, Advisory Board DB Results
Current Chairman, Insync Surveys
Previous Chairman and President, Novell Asia Pacific
Previous Chairman, Victorian Government Purchasing Board
28
7
Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
Wayne Brown
BCom (Hons), M Int Bus
(Melbourne), CA MAICD
Chief Financial Officer and Joint
Company Secretary
Experience
Wayne commenced as Chief Financial Officer and Company Secretary of Slater
& Gordon in 2004. Prior to joining Slater & Gordon, Wayne was the financial
controller of Grand Hotel Group (an ASX listed property trust) and prior to that,
Wayne worked at Arthur Andersen for ten years where he specialised in corporate
recovery, insolvency and restructuring. Wayne contributes skills in corporate
governance, financial management, analysis and reporting.
Kirsten Morrison
BA/LLB (Hons)
General Counsel and Joint
Company Secretary
Experience
Kirsten commenced as a commercial litigator with Slater & Gordon in 2006 and
then as General Counsel and Company Secretary in 2008. Prior to joining Slater
& Gordon, Kirsten was a lawyer at Allens Arthur Robinson and completed an
the Victorian Supreme
Associateship
Court. Kirsten contributes skills in corporate governance and risk management.
the Hon. Justice Hargrave
to
in
8
29
Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
Directors’ meetings
The number of meetings of the Board of Directors and of each Board committee held during the financial year and the
numbers of meetings attended by each director were:
Board of Directors
Audit, Compliance and Risk
Management Committee
Nomination and
Remuneration Committee
Eligible to
attend
9
9
9
9
9
9
Attended
9
9
9
8
9
8
Eligible to
attend
-
5
-
5
5
5
Attended
-
5
-
4
5
5
Eligible to
attend
-
1
-
5
5
5
Attended
-
1
-
5
5
5
A Grech
I Court
K Fowlie
E Lane
J Skippen
R O’Donnell
Directors’ interests in shares
Directors’ relevant interests in shares of the Company as at the date of this report are detailed below.
A Grech
I Court
K Fowlie
E Lane
J Skippen
R O’Donnell
Ordinary shares
of the Company
5,395,495
29,882
5,096,221
150,000
-
-
Directors’ interests in contracts
Directors’ interests in contracts are disclosed in Note 29 to the financial statements.
Auditor’s independence declaration
A copy of the auditor’s independence declaration in relation to the audit for the financial year is provided with this
report.
Non-audit services
Written approval for non-audit services is provided by resolution of the Audit, Compliance and Risk Management
Committee and approval is notified to the Board of Directors. Non-audit services provided by Pitcher Partners, the
auditors of the Group, during the year are detailed below. The directors are satisfied that the provision of the non-audit
services during the year by the auditor is compatible with the general standard of independence for auditors imposed by
the Corporations Act 2001.
During the year, the following fees were paid or payable for non-audit services provided by the auditor of the parent
entity, its related practices and non-related audit firms:
Due diligence investigations
- Pitcher Partners
Total remuneration for due diligence investigations
IT review
- Pitcher Partners
Total remuneration for IT review
Total remuneration for non-audit services
30
9
2014
$’000
2013
$’000
16
16
5
5
21
28
28
29
29
57
Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
AUDITED REMUNERATION REPORT
The Remuneration Report outlines the director and executive remuneration arrangements of the Group in accordance
with the requirements of the Corporations Act 2001 and its regulations. For the purposes of this report, Key
Management Personnel (“KMP”) of the Group are defined as those persons having authority and responsibility for
planning, directing and controlling the major activities of the Group, directly or indirectly, including any director
(whether executive or otherwise) of the Group, and includes the key executives of the Group.
Directors and key management personnel disclosed in this report
Non-executive Directors
John Skippen
Ian Court
Erica Lane
Rhonda O’Donnell
Executive Directors
Andrew Grech
Ken Fowlie
Other Key Management Personnel
Wayne Brown
Neil Kinsella
Hayden Stephens
Cath Evans
Chair, Non-Executive Director
Chair, Audit, Compliance
Committee, Non-Executive Director
Chair, Nomination and Remuneration Committee, Non-
Executive Director
Non-Executive Director
and Risk Management
Managing Director
Head of Australia and Executive Director
Group Chief Financial Officer
Head of United Kingdom
Chief Executive Officer of Personal Injury, Australia
Chief Executive Officer, United Kingdom
For the purposes of this Report the term “executive” means the Executive Directors, the Group Chief Financial Officer,
the Head of United Kingdom, the Chief Executive Officer of Personal Injury Australia and the Chief Executive Officer
of United Kingdom.
Role of the Nomination and Remuneration Committee
The Nomination and Remuneration Committee is a committee of the Board. It is primarily responsible for making
recommendations to the board on:
Non-executive director fees;
Remuneration levels of executive directors and other key management personnel;
The executive remuneration policy including short-term and long-term incentive programs;
Setting performance conditions for key management personnel; and
Evaluating performance and assessing grants and entitlements under incentive programs for key management
personnel.
The Committee performs this role consistent with the overall objective of ensuring maximum shareholder benefit from
the retention of a high quality, high performing Board and executive team.
The Committee consults with external remuneration consultants as required to ensure that executive remuneration and
rewards are market competitive and that the executive reward strategy and structure reflects contemporary practice.
Overview of remuneration strategy and policy
The Board is committed to achieving sustainable long-term growth and returns for investors. Achieving this objective
depends on attracting, motivating, developing and retaining highly skilled directors and executives and aligning their
interests with those of the shareholders.
The Board ensures that key management personnel remuneration is:
Competitive and reasonable;
Aligned to shareholder interests;
A strong driver of executive performance;
Transparent; and
Sustainable.
10
31
Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
Non-executive directors
The Board seeks to set aggregate remuneration at a level that provides the Group with the ability to attract and retain
directors of the highest calibre, whilst incurring a cost that is acceptable to shareholders and other stakeholders. In
accordance with good corporate governance, the structure of non-executive director and executive remuneration is
separate and distinct.
The constitution and the ASX Listing Rules specify that the aggregate remuneration of non-executive directors shall be
determined from time to time by a general meeting. The latest determination was an aggregate remuneration of
$650,000. The amount of aggregate remuneration sought to be approved by shareholders and the fee structure is
reviewed annually. In determining the remuneration of non-executive directors, the Board considers the time
commitment and nature of the contribution required by directors. Advice is obtained from external consultants
independent of management and remuneration paid to non-executive directors of comparable companies is also taken
into account when undertaking the annual review process.
During the year ended 30 June 2014, the remuneration of non-executive directors was set for the position of Chair of the
Board at $150,000 and for a director at $85,000. An additional fee of $10,000 was paid for any director who acts as
Chair of a Board sub-committee. An additional fee of $5,000 per sub-committee was paid for any director who acts as a
member of a second Board sub-committee. These additional fees do not apply to the Chair. The payment of the
additional fees for being the Chair or a member of a second Board sub-committee is to reflect the additional time
commitment required by the director. Non-executive directors receive no other form of remuneration, however
reasonable expenses incurred in the course of their role are reimbursed.
Non-executive director remuneration
2014
Salary/Fees
Superannuation
Total
Non-monetary
benefit
Total
remuneration
John Skippen
Ian Court
Erica Lane
Rhonda O’Donnell
2013
$137,324
$72,442
$91,549
$82,465
$383,780
$12,702
$23,976
$8,468
$7,628
$52,774
$150,026
$96,418
$100,017
$90,093
$436,554
-
-
-
-
-
$150,026
$96,418
$100,017
$90,093
$436,554
Salary/Fees
Superannuation
Total
Non-monetary
benefit
Total
remuneration
-
-
-
-
-
$151,641
$95,438
$100,535
$28,442
$376,056
John Skippen
Ian Court
Erica Lane
Rhonda O’Donnell(1)
$139,120
$85,066
$92,234
$26,094
$342,514
$12,521
$10,372
$8,301
$2,348
$33,542
$151,641
$95,438
$100,535
$28,442
$376,056
(1) Rhonda O’Donnell was appointed as a director on 7 March 2013
Executive remuneration
The executive remuneration framework:
Provides fair and competitive rewards to attract high calibre executives;
Rewards capability and experience;
Provides recognition for contribution;
Links executive rewards to the creation of sustainable shareholder value;
Makes a material portion of executive remuneration ‘at risk’;
Establishes appropriate, demanding performance hurdles for variable executive remuneration that drive
performance and are aligned to shareholder interests;
Provides long term incentives and rewards for performance through the Employee Ownership Plan (“EOP”); and
Provides a clear structure for earning rewards.
32
11
Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
Executive remuneration (continued)
Structure
Executive remuneration is structured in the following three categories:
ELEMENT
POLICY
Fixed
remuneration
Fixed remuneration and superannuation contributions as specified in an
executive’s contract of employment.
Fixed remuneration is reviewed annually by the Nomination and
Remuneration Committee, taking into account the performance of the
Group, its divisions and practice groups, and individuals. This is then
compared to relevant comparative remuneration in the market and
internally and, where appropriate, external advice on policies and
practices. As noted above, the committee has access to external advice
independent of management.
Executives are given the opportunity to receive their fixed base
remuneration in a variety of forms including cash and fringe benefits
such as motor vehicles. It is intended that the manner of payment
chosen will be optimal for the recipient without creating an additional
cost for the Group.
SHAREHOLDER
INTERESTS
Market positioned.
Variable- Short-
term Incentive
(“STI”)
Included in contracts for executives.
A Balanced Scorecard approach to ‘at risk’ remuneration is adopted.
The Scorecard of objectives for each KMP is developed from the
Company’s strategic and operational objectives. The Scorecard is
divided into three performance based elements:
Incentive to achieve high
Group and
individual
performance.
Objectives align with
shareholder interests.
1. Financial
performance.
and Operational
Financial
performance for KMP is based on Group/Australia/United
Kingdom financial performance (including Earnings before
interest, tax, depreciation and amortisation (“EBITDA”),
EBITDA margin, Cashflow from operations, fee and cost
budgets). Operational performance is based on the delivery of
key elements of the strategy of the Group/Australia/United
Kingdom;
2. People and Culture. These objectives typically relate to
organisational planning and people development for the
Group/Australia/United Kingdom;
3. Clients and Development. These objectives typically relate to
new business generation and business improvement initiatives
within the Group/Australia/United Kingdom.
The achievement of objectives and the weightings across the categories
results in a performance rating. The performance rating and the extent
of the achievement of Group/Australia/United Kingdom financial
performance determines the payment of STI at target levels which range
from 20% to 100%. Maximum STI is paid in circumstances where
objectives are significantly exceeded.
For senior executives the target for at risk remuneration is 35% of total
remuneration. The objective of the STI program is to link the
achievement of the Group’s operational targets with the remuneration
received by the executives charged with meeting those targets. The
total potential STI available is set at a level to provide sufficient
incentive to the executive to achieve the operational targets and such
that the cost to the Group is reasonable in the circumstances.
Policies defining setting and payment of variable STI for KMP are
reviewed and approved by
the Nomination and Remuneration
Committee.
12
33
Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
Executive remuneration (continued)
ELEMENT
POLICY
SHAREHOLDER
INTERESTS
In addition, the Committee reviews the setting and payment of STI at an
individual level for selected senior executives. The KMP who may be
eligible to a cash performance bonus with a combined total of up to
$842,855 (2013: $464,608) in respect of the year ended 30 June 2014
are Andrew Grech, Ken Fowlie, Wayne Brown, Cath Evans, Neil
Kinsella and Hayden Stephens.
The estimated bonuses due to KMP for the year ended 30 June 2014 is
$598,570 (2013: $357,304). The entitlement to these bonuses has been
based on the performance assessment of the KMP in accordance with
the balanced scorecard for the financial year.
Variable Long-
term incentive
(“LTI”)
The existing Employee Ownership Plan (“EOP”) provided an
opportunity for senior employees to build a shareholding in the
Company over time. The EOP served as an incentive and reward for
longer term performance and a retention strategy for key employees.
The EOP provided for the issue of Vesting Convertible Redeemable
Ordinary Shares (“VCR shares”) to participants in a number of tranches
and for the Company to make a loan to participants equal to the total
amount subscribed.
The EOP provided for KMP to be offered from one to several
allocations of VCR shares over their career with the Group. Further
details of the EOP are set out in Note 27 to the financial statements.
During the reporting period the decision was taken to make no further
issues under the EOP, pending the consideration by shareholders at the
2014 Annual General Meeting of the introduction of a new Equity
Incentive Scheme. No KMP had shares under the EOP subject to
performance criteria in respect of the year ending 30 June 2014.
If the new Equity Incentive Scheme is approved by shareholders,
performance rights will be allocated to KMP during the financial year
ending 30 June 2015.
that
Measure
aligns
executive interests with
returns to shareholders.
Linked
strategy.
to
long-term
Promotes retention.
34
13
Slater and Gordon Limited – Annual Report 2014
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E
Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
Executive employment contracts
Executive Directors
Mr Andrew Grech, the Managing Director, is employed under a rolling contract. The current employment contract
commenced on 1 July 2006. Under the terms of the present contract:
Mr Grech receives fixed remuneration of $550,254 per annum (inclusive of superannuation);
Mr Grech is also eligible to receive a bonus of up to $150,000 (2013: $125,000) for the year ended 30 June 2014,
inclusive of superannuation, at the discretion of the board, based on the achievement of certain key performance
indicators. The key performance indicators are consistent with the Company’s approved business plan and are
aligned to delivering sustainable value to shareholders. The indicators are based on the Balanced Scorecard
methodology and cover Group operational and financial results and the successful implementation of Group
strategic and people development initiatives. A cash bonus of $112,500 was paid during the year ending 30 June
2014 in respect to the year ended 30 June 2013. For the year ended 30 June 2014 a cash bonus of $125,000 has
been provisionally determined.
Mr Ken Fowlie, an executive director and Head of Australia, is employed under a rolling contract. The current
employment contract commenced on 1 July 2006. Under the terms of the present contract:
Mr Fowlie receives fixed remuneration of $435,030 per annum (inclusive of superannuation);
Mr Fowlie is also eligible to receive a bonus of up to $125,000 (2013: nil) for the year ended 30 June 2014,
inclusive of superannuation, based on the achievement of certain key performance indicators. The key performance
indicators are consistent with the Company’s approved business plan and are aligned to delivering sustainable value
to shareholders. The indicators are based on the Balanced Scorecard methodology and cover the operational and
financial results of Australia and the successful implementation of Australian strategic and people development
initiatives. For the year ended 30 June 2014 a cash bonus of $50,000 has been provisionally determined.
In addition, both executive directors are bound by the following terms and conditions in their employment contracts:
The director may resign from their position and thus terminate their employment contract by giving three months
written notice;
The Company may terminate their employment agreement by providing three months written notice or providing
payment in lieu of the notice period (based on the fixed component of the director’s remuneration);
The Company may terminate their employment contract at any time without notice if serious misconduct has
occurred. Where termination with cause occurs the director is only entitled to that portion of remuneration that is
fixed, and only up to the date of termination;
Their employment agreement contains a restraint of trade provision which applies for a period of 12 months (or, in
the case of a direct competitor of the Company, 24 months);
The performance of the director is reviewed annually by the Nomination and Remuneration Committee and/or the
Board. The director is assessed on achievement of the Group’s goals and budgets applicable to the year in review.
The Committee also reviews the remuneration of the director on an annual basis. The findings are reported to, and
approved by, the Board.
Other executives (standard contracts)
All executives have rolling contracts.
The Group may terminate the executive’s employment agreement by providing one to three months written notice
or providing payment in lieu of the notice period (based on the fixed component of the executive’s remuneration).
Any executive who is an EOP Participant is subject to consequences which flow from the cessation of their
employment as discussed above.
Any executive who is a Vendor Shareholder is subject to the consequences which flow from the cessation of their
employment as a term of the shareholders agreement which has been entered into by the seven Vendor
Shareholders.
The Group may terminate the contract at any time without notice if serious misconduct has occurred. Where
termination with cause occurs the executive is only entitled to that portion of remuneration that is fixed, and only up
to the date of termination.
The employment agreement contains a restraint of trade provision which applies for a period of 12 months (or, in
the case of a direct competitor of the Company, 24 months).
36
15
Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
Relationship of remuneration to company performance
Review of the Group’s operations during the financial year, its financial position and business strategies and prospects
for the future financial years are set out in the directors’ report.
The performance of the group and remuneration paid to KMP over the last five years is summarised in the following
table.
Company performance
Revenue
Profit before tax
Profit after tax
Basic earnings per share (cents)
Diluted earnings per share
(cents)
Dividends per share - paid during
financial year (cents)
Total dividends paid during
financial year
Share price at 30 June (cents)
Remuneration paid to Key
Management Personnel
Base salary package
Short term incentive
Long term incentive
Total
Total as a % Profit after tax
2010
$,000
2011
$’000
2012
$’000
2013
$’000
2014
$’000
124,730
28,854
19,800
17.9
182,309
41,543
27,908
19.1
217,704
36,494
24,992
16.2
297,963
61,341
41,521
23.9
418,466
84,449
61,105
30.3
5yr
Growth
%
235.5%
192.7%
208.6%
69.3%
16.7
5.3
5,778
1.53
1,475
68
46
1,589
8.0%
18.3
5.2
7,697
2.30
1,404
249
86
1,739
6.2%
15.7
23.3
29.8
78.4%
5.8
6.3
6.9
30.5%
8,786
1.85
10,647
2.78
13,770
5.16
138.3%
237.3%
1,180
95
71
1,346
5.4%
1,493
150
62
1,705
4.1%
1,874
235
52
2,161
3.5%
27.1%
245.6%
13.0%
36.0%
(55.9%)
Given that there has been significant change in the definition and composition of “Key Management Personnel” over the
five years presented above, the KMP have been defined as the Board (including the Managing Director) plus the Chief
Financial Officer in order to have a comparable base line.
Since 2010, earnings per share have increased by 69.3% and the share price has increased by 237.3%.
During the same period, total remuneration paid to specific KMP has grown by 36.0%, whilst base salary has increased
by 27.1%.
Remuneration as a percentage of Profit after tax has reduced by 55.9%.
Shareholdings of Key Management Personnel
Shares held in Slater & Gordon Limited (number)
Net movement in share capital 2014
Key Management
Personnel (a)
Andrew Grech
Ian Court
Ken Fowlie
Erica Lane
Wayne Brown
Neil Kinsella
Cath Evans
Hayden Stephens
Total
Ordinary shares
balance at
beginning of year
5,122,495
29,882
5,096,221
150,000
333,674
1,006,339
4,410,476
4,705,115
20,854,202
Ordinary shares
acquired
Ordinary shares
disposed
Ordinary shares
balance at end of
year
173,000
-
-
-
-
42,578
-
-
215,578
-
-
-
-
(28,571)
(408,249)
(300,000)
(450,000)
(1,186,820)
5,295,495
29,882
5,096,221
150,000
305,103
640,668
4,110,476
4,255,115
19,882,960
There are no key management personnel with unvested VCR shares as at 30 June 2014.
16
37
Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
Shareholdings of Key Management Personnel (continued)
Net movement in share capital 2013
Key Management
Personnel (a)
Andrew Grech
Ian Court
Ken Fowlie
Erica Lane
Wayne Brown
Neil Kinsella
Cath Evans
Hayden Stephens
Total
Ordinary shares
balance at
beginning of year
8,116,613
44,000
6,086,221
150,000
496,000
1,011,639
6,050,476
5,205,115
27,160,064
Ordinary shares
acquired
Ordinary shares
disposed
Ordinary shares
balance at end of
year
5,882
5,882
-
-
51,960
-
-
-
63,724
(3,000,000)
(20,000)
(990,000)
-
(214,286)
(5,300)
(1,640,000)
(500,000)
(6,369,586)
5,122,495
29,882
5,096,221
150,000
333,674
1,006,339
4,410,476
4,705,115
20,854,202
Key Management
Personnel(a)
VCR shares
balance at
beginning of year
VCR shares issued
Wayne Brown
Total
50,000
50,000
-
-
(a) Includes Key Management Personnel and their related entities/parties
VCR shares vested
as Ordinary
shares
30 December 2012
(50,000)
(50,000)
VCR shares
balance at end of
year
-
-
Balances to Key Management Personnel
Details of aggregate loan balances with KMP are as follows:
Negative amounts represent a payable of the Group to KMP. Positive amounts represent a receivable due to the
Company by KMP.
Balance at beginning of
year
$
2014
2013
478,428
478,428
Balance at end of year
Number in Group
$
244,500
478,428
1
1
Details of KMP with balances above $100,000 in the reporting period are as follows:
30 June 2014
Balance at beginning of
year
$
Balance at end of year Highest balance during
the year
$
$
Wayne Brown
478,428
244,500
478,428
30 June 2013
Balance at beginning of
year
$
Balance at end of year Highest balance during
the year
$
$
Wayne Brown
478,428
478,428
478,428
Terms and Conditions of balances to Key Management Personnel:
The balance at the end of the year due to the Company by Wayne Brown is pursuant to the EOP, the terms and
conditions of which are disclosed in Note 27. Notional interest of $40,666 (2013: $40,666) for Wayne Brown was not
charged on this loan balance.
End of Remuneration Report.
38
17
Slater and Gordon Limited – Annual Report 2014
39
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES ABN 93 097 297 400 18 Rounding of amounts The amounts contained in the directors’ report and in the financial report have been rounded to the nearest $1,000 (where rounding is applicable) under the option available to the Company under ASIC Class Order 98/0100. The Company is an entity to which the Class Order applies. Signed in accordance with a resolution of the directors. John Skippen Andrew Grech Chair Managing Director Melbourne 27 August 2014Slater and Gordon Limited – Annual Report 2014 SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
AUDITOR’S INDEPENDENCE DECLARATION
TO THE DIRECTORS OF SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
AUDITOR’S INDEPENDENCE DECLARATION
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
TO THE DIRECTORS OF SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
AUDITOR’S INDEPENDENCE DECLARATION
TO THE DIRECTORS OF SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
In relation to the independent audit for the year ended 30 June 2014, to the best of my knowledge and
belief there have been:
In relation to the independent audit for the year ended 30 June 2014, to the best of my knowledge and
belief there have been:
In relation to the independent audit for the year ended 30 June 2014, to the best of my knowledge and
belief there have been:
No contraventions of the auditor independence requirements of the Corporations Act 2001; and
No contraventions of the auditor independence requirements of the Corporations Act 2001; and
(i)
(i)
(i)
(ii)
No contraventions of the auditor independence requirements of the Corporations Act 2001; and
No contraventions of any applicable code of professional conduct.
No contraventions of any applicable code of professional conduct.
(ii)
(ii)
No contraventions of any applicable code of professional conduct.
M W PRINGLE
Partner
M W PRINGLE
Partner
M W PRINGLE
Partner
27 August 2014
27 August 2014
27 August 2014
PITCHER PARTNERS
PITCHER PARTNERS
Melbourne
Melbourne
PITCHER PARTNERS
Melbourne
- 19 -
- 19 -
An independent Victorian Partnership ABN 27 975 255 196
An independent Victorian Partnership ABN 27 975 255 196
Liability limited by a scheme approved under Professional Standards Legislation
Liability limited by a scheme approved under Professional Standards Legislation
- 19 -
An independent Victorian Partnership ABN 27 975 255 196
Liability limited by a scheme approved under Professional Standards Legislation
40
Pitcher Partners is an association of independent firms
Melbourne | Sydney | Perth | Adelaide | Brisbane| Newcastle
An independent member of Baker Tilly International
Pitcher Partners is an association of independent firms
Melbourne | Sydney | Perth | Adelaide | Brisbane| Newcastle
An independent member of Baker Tilly International
Pitcher Partners is an association of independent firms
Melbourne | Sydney | Perth | Adelaide | Brisbane| Newcastle
An independent member of Baker Tilly International
Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2014
Revenue
Fee revenue
Other income
Total revenue and other income
Less Expenses
Salaries and employee benefit expense
Rental expense
Advertising and marketing expense
Administration and office expense
Consultant fees
Finance costs
Bad and doubtful debts
Depreciation and amortisation expense
Costs associated with acquisitions
Other expenses
Profit before income tax expense
Income tax expense
Profit for the year
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Foreign currency translation differences - foreign operations
Changes in fair value of cash flow hedges, net of tax
Total items that may be reclassified subsequently to profit or loss
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Profit for the year attributed to:
Owners of the Company
Non-controlling interests
Total comprehensive income for the year attributed to:
Owners of the Company
Non-controlling interests
Note
2014
$’000
2013
$’000
4
4
5
5
5
6
20(b)
20(a)
21(a)
22(a)
411,813
6,653
418,466
294,210
3,753
297,963
(200,270)
(22,005)
(32,786)
(36,391)
(4,928)
(8,412)
(6,904)
(6,955)
(4,054)
(11,312)
84,449
(23,344)
61,105
(145,517)
(14,095)
(23,775)
(25,018)
(2,580)
(7,653)
(4,531)
(4,973)
(282)
(8,198)
61,341
(19,820)
41,521
5,695
(308)
5,387
5,387
66,492
60,946
159
61,105
66,326
166
66,492
4,519
191
4,710
4,710
46,231
41,486
35
41,521
46,192
39
46,231
Basic earnings per share (cents)
Diluted earnings per share (cents)
25
25
30.3 cents
29.8 cents
23.9 cents
23.3 cents
The accompanying notes form an integral part of these financial statements.
20
41
Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2014
Note
2014
$’000
2013
$’000
Current assets
Cash and cash equivalents
Receivables
Work in progress
Other current assets
Total current assets
Non-current assets
Plant and equipment
Work in progress
Intangible assets
Other non-current assets
Total non-current assets
Total assets
Current liabilities
Payables
Short term borrowings
Current tax liabilities
Other current liabilities
Provisions
Total current liabilities
Non-current liabilities
Payables
Long term borrowings
Deferred tax liabilities
Derivative financial instruments
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained profits
Total equity attributable to equity holders in the Company
Non-controlling interest
Total equity
8
9
10
11
12
10
13
14
15
16
6
17
18
15
16
6
18
19
20
21
22
25,270
229,368
470,609
12,403
737,650
12,964
2,730
130,190
11,844
157,728
895,378
194,850
9,467
1,960
10,103
16,468
232,848
19,187
116,864
97,619
1,020
4,760
239,450
472,298
423,080
233,638
9,090
180,139
422,867
213
423,080
20,056
130,499
299,859
9,554
459,968
12,219
2,337
108,296
16,108
138,960
598,928
92,003
20,103
3,941
-
13,883
129,930
6,238
32,032
78,015
656
2,850
119,791
249,721
349,207
212,373
3,710
132,963
349,046
161
349,207
The accompanying notes form an integral part of these financial statements.
42
21
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Slater and Gordon Limited – Annual Report 2014
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3
2
Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2014
Note
2014
$’000
2013
$’000
4(a)
6
23(b)
19
22(a)
Cash flow from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Borrowing costs
Income tax paid
Net cash provided by operating activities
Cash flow from investing activities
Payment for software development
Payment for plant and equipment
Costs associated with acquisition of businesses
Payment for acquisition of businesses, net of cash in subsidiaries
Payment for acquisition of businesses - deferred consideration
Net cash used in investing activities
Cash flow from financing activities
Proceeds from share issue
Proceeds from non-controlling interests
Costs of raising equity
Proceeds from related parties and employees
Proceeds from borrowings
Repayment of borrowings
Dividends paid
Net cash provided by financing activities
Net increase in cash held
Effect of exchange rate fluctuations on cash held
Cash at beginning of financial year
Cash at end of financial year
23(a)
442,609
(375,225)
401
(5,344)
(8,006)
54,435
(1,485)
(3,284)
(4,054)
(98,464)
(18,309)
(125,596)
-
-
(120)
5,247
154,770
(73,695)
(9,907)
76,295
5,134
80
20,056
25,270
324,279
(285,148)
281
(6,158)
(537)
32,717
(1,253)
(1,058)
(282)
(4,876)
(11,309)
(18,778)
66,680
51
(2,066)
4,336
34,439
(91,835)
(9,580)
2,025
15,964
132
3,960
20,056
1.
The accompanying notes form an integral part of these financial statements.
24
45
Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 1: BASIS OF PREPARATION
This financial report is a general purpose financial report that has been prepared in accordance with Australian
Accounting Standards, Interpretations and other authoritative pronouncements of the Australian Accounting
Standards Board and the Corporations Act 2001.
The financial report covers Slater & Gordon Limited (“the Company”) which is a company limited by shares,
incorporated and domiciled in Australia. The Company is a for-profit entity for the purpose of preparing the
financial statements.
The consolidated financial statements of the Company as at and for the year ended 30 June 2014 comprise the
Company and its controlled entities referred to in Note 30, together referred to as (“the Group”) and individually
as (“Group Entities”). The financial report was authorised for issue by the directors as at the date of the
Directors’ Report.
The following is a summary of material accounting policies adopted by the Group in the preparation and
presentation of the financial report. The accounting policies have been consistently applied, unless otherwise
stated.
(a)
Basis of preparation of the financial report
Compliance with IFRS
The consolidated financial report of Slater & Gordon Limited also complies with International Financial
Reporting Standards (“IFRS”).
Historical cost convention
The financial report has been prepared under the historical cost convention, as modified by revaluations to fair
value for certain classes of assets as described in the accounting policies.
(b)
Adoption of new and amended accounting standards
Restatement of comparative amounts
Comparatives have been restated for the adoption of AASB 10 Consolidated Financial Statements (effective for
financial years commencing on or after 1 January 2013).
The consolidated financial statements are those of the consolidated entity (“the Group”), comprising the financial
statements of the parent entity and of all entities the parent controls.
Under AASB 10, the Group controls an entity where it has the power, for which the parent has exposure or rights
to variable returns from its involvement with the entity, and for which the parent has the ability to use its power
over the entity to affect the amount of its returns.
The Group has applied AASB 10 retrospectively in accordance with the transition provisions. This has resulted
in the inclusion of ‘Andrew Grech trading as Slater & Gordon Lawyers’ into the consolidated Group for the year
ending 30 June 2014. Andrew Grech trading as Slater & Gordon Lawyers is not material to the Group and
bringing this entity into the consolidated Group has had the following effect on the comparative results:
Net profit after tax – year ending 30 June 2013
Net assets – as at 30 June 2013
Earnings per share (cents) – year ending 30 June 2013
Amendments with no financial impact
$’000
(389)
(314)
(0.3)
Initial application of AASB 11 Joint Arrangements and AASB 13 Fair Value Measurements have had no
financial impact on the Group.
46
25
Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 1: BASIS OF PREPARATION (Continued)
(c)
Principles of consolidation
The consolidated financial statements are those of the consolidated entity, comprising the financial statements of
the parent entity and of all entities which the parent has the power to control the financial and operating policies
so as to obtain benefits from its activities.
The financial statements of subsidiaries are prepared for the same reporting period as the parent entity, using
consistent accounting policies. Adjustments are made to bring into line any dissimilar accounting policies which
may exist.
All inter-company balances and transactions, including any unrealised profits or losses have been eliminated on
consolidation. Subsidiaries are fully consolidated from the date on which control is established. They are
de-consolidated from the date that control ceases.
The Group treats transactions with non-controlling interests that do not result in a loss of control as transactions
with equity owners of the Group. A change in ownership interest results in an adjustment between the carrying
amounts of the controlling and non-controlling interest to reflect their relative interests in the subsidiary. Any
difference between the amount of the adjustment to non-controlling interests and any consideration paid or
received is recognised in a separate reserve with equity attributable to owners of the Company.
(d)
Segment reporting
Determination and presentation of operating segments
The Group determines and presents operating segments based on the information that is internally provided to
the Managing Director, who is the Group’s chief operating decision maker.
An operating segment is a component of the Group that engages in business activities from which it may earn
revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s
other components. All operating segment results are regularly reviewed by the Group’s Managing Director to
make decisions about resources to be allocated to the segment and to assess its performance.
Segment results that are reported to the Managing Director include items directly attributable to a segment, as
well as those that can be allocated on a reasonable basis.
(e)
Foreign currency translation
Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the
primary economic environment in which the entity operates (the “functional currency”). The consolidated
financial statements are presented in Australian dollars, which is the Company’s functional and presentational
currency.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at
the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in
foreign currencies are recognised in profit or loss, except when they are deferred in equity as qualifying cash
flow hedges and qualifying net investment hedges or are attributable to part of the net investment in a foreign
operation.
Foreign exchange gains and losses that relate to borrowings are presented in the income statement within finance
costs except when they are deferred in equity as qualifying net investment hedges. All other foreign exchange
gains and losses are presented in the income statement on a net basis within other income or other expenses.
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates
at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair
value are reported as part of the fair value gain or loss. Non-monetary items in a foreign currency that are
measured in terms of historical cost are translated using the exchange rate at the date of the transaction.
26
47
Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 1: BASIS OF PREPARATION (Continued)
(e)
Foreign currency translation (continued)
Group companies
The results and financial position of foreign subsidiaries that have a functional currency different from the
presentation currency are translated into the presentation currency as follows:
assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that
balance sheet,
income and expenses for each income statement and statement of comprehensive income item are
translated at average exchange rates (unless this is not a reasonable approximation of the cumulative
effect of the rates prevailing on the transactions dates, in which case income and expenses are translated
at the dates of the transactions), and;
all resulting exchange differences are recognised in a separate component of equity.
Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and
liabilities of the foreign operation and translated at the closing rate.
(f)
Revenue recognition
Revenue from the rendering of a service is recognised upon the delivery of the service to the customers. Revenue
is recognised to the extent that it is probable that the economic benefits will flow to the entity and the revenue
can be reliably measured. The following specific recognition criteria must also be met before revenue is
recognised:
Rendering of services for project litigation
Where there is an enforceable contractual agreement and the outcome can be reliably measured:
control of a right to be compensated for the services has been attained and the stage of completion can
be reliably measured. Stage of completion is measured by reference to the time incurred to date as a
percentage of the expected time for an outcome to be rendered in the case.
Where there is not an enforceable contractual agreement or the outcome cannot be reliably measured:
revenue is recognised to the extent of costs incurred and only if the client is under obligation to pay the
costs as part of the enforceable contractual agreement.
Interest revenue
Interest revenue is recognised when it becomes receivable on a proportional basis taking into account the interest
rates applicable to the financial assets.
Other revenue
Other revenue is recognised when the right to receive the revenue has been established.
All revenue is stated net of the amount of goods and services tax (“GST”) or UK equivalent value added tax
(“VAT”).
(g)
Taxation
Current income tax expense is the tax payable on the current period’s taxable income based on the applicable
income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences
between the tax base of assets and liabilities and their carrying amounts in the consolidated financial statements,
and for unused tax losses.
Deferred tax assets and liabilities are recognised for temporary differences between the tax bases of assets and
liabilities and their carrying amounts in the consolidated financial statements. No deferred tax asset or liability is
recognised in relation to temporary differences arising from the initial recognition of an asset or a liability if they
arose in a transaction, other than a business combination, that at the time of the transaction did not affect either
accounting profit or taxable profit/loss.
Deferred tax liabilities and assets are calculated at the tax rates that are expected to apply to the period when the
asset is realised or liability settled. Current and deferred tax balances attributable to amounts recognised directly
in equity, are also recognised directly in equity.
48
27
Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 1: BASIS OF PREPARATION (Continued)
(g)
Taxation (continued)
Deferred tax assets are recognised to the extent that it is probable that future tax profits will be available against
which deductible temporary differences can be utilised.
Goods and services tax (“GST”) and Value Added Tax (“VAT”)
Revenues, expenses and assets are recognised net of the amount of GST/VAT, except where the GST/VAT
incurred is not recoverable from the Australian Taxation Office (“ATO”) or UK HMRC, and is therefore
recognised as part of the asset’s cost or as part of the expense item. Receivables and payables are stated
inclusive of GST/VAT.
The net amount of GST/VAT recoverable from, or payable to, the ATO/HMRC is included as part of receivables
or payables in the Consolidated Statement of Financial Position.
Tax consolidation
The Company and its Australian domiciled subsidiaries have formed a tax consolidated group under the tax
consolidation legislation. Trilby Misso Lawyers Limited (“TML”), Conveyancing Works (Qld) Pty Limited
(“CWQ”) and Slater & Gordon Lawyers NSW Pty Limited (“S&G NSW”) formed part of the consolidated tax
group throughout the financial year. As a consequence, the Company and its controlled entities which comprise
the tax consolidated group are taxed as a single entity. The head entity within the tax consolidated group is
Slater & Gordon Limited.
The tax-consolidated group also has a tax sharing agreement in place to limit the liability of subsidiaries in the
tax-consolidated group arising under the joint and several liability requirements of the tax consolidation system,
in the event of default by the parent entity to meet its payment obligations.
(h)
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, deposits held at call with banks and short-term deposits with
an original maturity of three months or less. Bank overdrafts are shown within short-term borrowings in current
liabilities on the Consolidated Statement of Financial Position. For the purposes of the Consolidated Statement
of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of
outstanding banking overdrafts.
(i)
Disbursements
Disbursements represent costs incurred during the course of a matter that are recovered from clients. A provision
for non-recoverable disbursements is recognised to the extent that recovery of the outstanding receivable balance
is considered less than likely. The provision is established based on the Group's history of amounts not recovered
over the previous four years.
(j)
Work in progress
Work in progress is carried at either cost or it may include profit recognised to date based on the value of work
completed. The following are the methodologies adopted for each practice area in determining the value of work
in progress:
Time recording valuation
For estate, probate, industrial law, commercial law and funded project litigation matters, time records and
historical levels of fees billed are used in determining the value of work completed.
Value pricing and fixed fee valuation
Work in progress for practice areas, other than project litigation matters, that do not calculate the fees due by a
client solely by reference to time records is recognised using the percentage of completion method when the
stage of completion can be reasonably determined, and the fee per file and probability of success can be reliably
estimated, making allowance for the “No Win, No Fee” conditional fee arrangements, under which the Personal
Injury practice operates.
28
49
Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 1: BASIS OF PREPARATION (Continued)
(j)
Work in progress (continued)
Project litigation
Work in progress on project litigation is recognised on self funded project litigation matters for which a
favourable outcome is considered probable. For such projects, work in progress is initially valued at costs
incurred less a discount for the likely recovery of those costs. Cost includes both variable and fixed costs directly
related to cases and those that can be attributed to case activity and that can be allocated to specific projects on a
reasonable basis. Where a project litigation matter has reached partial or full settlement and an enforceable
agreement to recover the professional fees exists, work in progress is valued at the settled fee amount and
discounted for percentage file completion, and the probability of the full fee being collected. Project litigation
matters that are not expected to be realised within twelve months are classified as non current.
(k)
Plant and equipment
Plant and equipment is measured at cost less accumulated depreciation and impairment losses.
The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the
recoverable amount from those assets. The recoverable amount is assessed on the basis of the expected net cash
flows which will be received from the assets’ employment and subsequent disposal. The expected net cash flows
have been discounted to present values in determining recoverable amounts.
Depreciation
The depreciable amounts of all fixed assets are depreciated over their estimated useful lives, commencing from
the time the asset is held ready for use.
The depreciation rates used for each class of assets are:
Class of fixed asset
Depreciation rates
Depreciation method
Plant and equipment
Low value asset pool
5.00 – 66.67%
18.75 – 37.50%
Straight Line and Diminishing Value
Diminishing Value
An asset’s residual value and useful life is reviewed, and adjusted if appropriate, at each balance sheet date. An
asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is
greater than its estimated recoverable amount. Gains and losses are determined by comparing proceeds with the
carrying amount. These gains and losses are included in the Consolidated Statement of Comprehensive Income.
(l)
Leases
Operating leases
Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as
operating leases. Operating lease payments are recognised as an expense in the Consolidated Statement of
Comprehensive Income on a straight-line basis over the lease term. Lease incentives under operating leases are
recognised as a liability and amortised on a straight-line basis over the life of the lease.
(m)
Intangibles
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of net
identifiable assets of the acquired entity at the date of acquisition.
Goodwill is not amortised, but is tested annually for impairment or more frequently if events or changes in
circumstances indicate that it might be impaired. Goodwill is carried at cost less accumulated impairment losses.
Software development costs
Software development costs are carried at cost less accumulated amortisation and accumulated impairment
losses. These assets have been assessed as having a finite useful life and once operating in the Group are
amortised over the useful life of 5-8 years.
50
29
Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 1: BASIS OF PREPARATION (Continued)
(m)
Intangibles (continued)
Trademarks
The fair value of trademarks acquired in a business combination is based on the discounted estimated royalty
payments that have been avoided as a result of the trademark being owned.
The trademarks are not amortised, but tested annually for impairment or more frequently if events or changes in
circumstances indicate that it might be impaired. Trademarks are carried at fair value at the date they are
acquired less accumulated impairment losses.
Customer relationships
The fair value of customer relationships acquired in a business combination is determined using the multi-period
excess earnings method, whereby the subject asset is valued after deducting a fair return on all other assets that
are part of creating the related cash flows. They are assessed as having a finite useful life and are amortised over
their useful life of three years.
(n)
Impairment of assets
Assets with an indefinite useful life are not amortised but are tested at least annually for impairment in
accordance with AASB 136. Assets subject to annual depreciation or amortisation are reviewed for impairment
whenever events or circumstances arise that indicates that the carrying amount of the asset may be impaired.
An impairment loss is recognised where the carrying amount of the asset exceeds its recoverable amount. The
recoverable amount of an asset is defined as the higher of its fair value less costs to sell and value in use.
For the purposes of impairment, assets are grouped at the lowest levels for which there are separately identifiable
cash flows (cash-generating units).
(o)
Acquisition of assets
All assets acquired, including plant and equipment and intangibles, other than goodwill, are initially recorded at
their cost of acquisition at the date of acquisition, being the fair value of the consideration provided.
(p)
Borrowing costs
All borrowing costs are recognised in the Consolidated Statement of Comprehensive Income in the period in
which they are incurred.
Borrowing costs can include interest, amortisation of discounts or premiums relating to borrowings, and
ancillary costs incurred in connection with the arrangement of borrowings.
(q)
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of past
events, for which it is probable that an outflow of economic benefits will result that can be reliably measured.
Where the Group expects some or all of a provision to be reimbursed, for example under an insurance contract,
the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The
expense relating to any provision is presented in the Consolidated Statement of Comprehensive Income net of
any reimbursement.
(r)
Employee benefits
Service benefits
Provision is made for the Group’s liability for employee benefits arising from services rendered by employees to
balance sheet date. Employee benefits that are expected to be settled within one year have been measured at the
amounts expected to be paid when the liability is settled, plus related on-costs.
Employee benefits payable later than one year have been measured at the present value of the estimated future
cash outflows to be made for those benefits. These estimated future cash flows have been discounted using
market yields, at the reporting date, on government bonds with matching terms to maturity.
30
51
Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 1: BASIS OF PREPARATION (Continued)
(r)
Employee benefits (continued)
Share-based payment transactions
The Group operates an Employee Ownership Plan (“EOP”). The EOP allows employees to purchase Vesting
Convertible Redeemable (“VCR”) shares in the Company by way of an interest-free loan. Per the policy, the
loan has been recorded as a financial instrument as described below:
The VCR shares vest over a specified period of time. At the time of vesting, VCR shares convert into
ordinary shares with disposal restrictions. The terms and conditions of these shares are further
described at Note 27.
The value of the benefit received by an employee from issue of the VCR shares is assessed as the
difference between the value of the VCR shares at the date of issue and the present value of the amount
payable by the employee for purchase of the VCR shares. In accordance with AASB 2 Share Based
Payment, the benefit is expensed on a proportional basis over the period from issue date to the date on
which the employee becomes unconditionally entitled to the full benefit of ownership of the shares.
(s)
Solicitor liability claims
Provision is made for the potential future cost of claims brought against the Group by former clients. The
provision is determined by including the estimated maximum amount payable by the Group under its
Professional Indemnity Insurance Policy on all claims notified by its insurer.
(t)
Financial instruments
Loans and receivables
VCR share loan receivables are non-interest bearing, non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market. The loans are initially recognised based on fair value and are
subsequently stated at amortised cost using the effective interest rate method. Refer to Note 27 for further details.
Financial liabilities
Financial liabilities include trade payables, other creditors and loans from third parties including loans from or
other amounts due to director-related entities.
Non-derivative financial liabilities are recognised at amortised cost, comprising original debt less principal
payments and amortisation.
Non-interest bearing financial liabilities for deferred cash consideration on the acquisition of acquired firms is
measured at amortised cost using the effective interest rate method. The implied interest expense is recognised
in profit and loss.
Derivative financial instruments
The Group designates certain derivatives as either:
hedges of fair value of recognised assets or liabilities or a firm commitment (fair value hedge); or
hedges of highly probable forecast transactions (cash flow hedges).
The Group currently has cash flow hedges only, relating to interest rate risk management. At the inception of the
transaction the relationship between hedging instruments and hedged items, as well as the Group’s risk
management objective and strategy for undertaking various hedge transactions are documented. It is the Group’s
policy to hedge a portion of its exposure in order to minimise the impact of an adverse change in interest rates
that the Group is subject to.
Assessments, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in
hedging transactions have been and will continue to be highly effective in offsetting changes in fair values or
cash flow hedged items, are also documented.
Fair value hedge
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the
Consolidated Statement of Comprehensive Income, together with any changes in the fair value of hedged assets
or liabilities that are attributable to the hedged risk.
52
31
Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 1: BASIS OF PREPARATION (Continued)
(t)
Financial instruments (continued)
Cash flow hedge
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow
hedges is recognised in a hedge reserve in equity. The gain or loss relating to the ineffective portion is
recognised immediately in the Consolidated Statement of Comprehensive Income.
Amounts accumulated in the hedge reserve in equity are transferred to the Consolidated Statement of
Comprehensive Income in the periods when the hedged item will affect profit and loss.
(u)
Earnings per share
Basic earnings per share (“EPS”) is calculated as net profit attributable to ordinary equity holders of the
Company divided by the weighted average number of ordinary shares outstanding during the year.
Diluted EPS is calculated as net profit attributable to ordinary equity holders of the Company divided by the
weighted average number of ordinary shares and dilutive potential ordinary shares outstanding during the year.
(v)
Rounding amounts
The Company is of a kind referred to in ASIC Class Order 98/0100 and in accordance with that Class Order,
amounts in the financial statements have been rounded to the nearest thousand dollars, or in certain cases, to the
nearest dollar.
(w)
Comparatives
Where necessary, comparative information has been reclassified and repositioned for consistency with current
year disclosures.
(x)
New accounting standards and interpretations
A number of accounting standards and interpretations have been issued at the reporting date but are not yet
effective and are detailed below. New accounting standards which may have an impact on the financial
statements of the Group are detailed below:
AASB 9 Financial Instruments
The directors’ assessment of the impact of this standard is set out below:
(i) AASB 9 Financial Instruments, AASB 2009‑11 Amendments to Australian Accounting Standards arising
from AASB 9, AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 (December
2010) and AASB 2012-6 Amendments to Australian Accounting Standards – Mandatory Effective Date of AASB
9 and Transition Disclosure and AASB 2013-9 Amendments to Australian Accounting Standards – Conceptual
Framework, Materiality and Financial Instruments (effective for financial years commencing on or after
1 January 2017)
AASB 9 Financial Instruments improves and simplifies the approach for classification and measurement of
financial assets compared with the requirements of AASB 139. The standard is not applicable until
1 January 2017 but is available for early adoption.
When adopted, the standard may change the classification and measurement of financial assets however the
directors have determined it will not have a material impact on the consolidated entity.
The consolidated entity does not have any financial liabilities that are designated at fair value through profit or
loss. The new requirements only affect the accounting for financial liabilities that are designated at fair value
through profit or loss. Therefore, there will be no impact on the consolidated entity’s accounting for financial
liabilities.
In December 2013, new general hedge accounting requirements were incorporated into AASB 9. The new model
aligns hedge accounting more closely with risk management, and will be easier to apply and reduce the costs of
implementation. However, the new model requires extended disclosure. The standard is not applicable until
1 January 2017 but is available for early adoption. The Group has yet to assess the impact of the new general
hedge accounting model on its hedge arrangements.
The directors have decided not to early adopt AASB 9 at 30 June 2014.
32
53
Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 2: CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The Group makes certain estimates and assumptions concerning the future, which by definition, will seldom
represent actual results. The estimates and assumptions that have a significant inherent risk in respect of
estimates based on future events, which could have a material impact on the assets and liabilities in the next
financial year, are discussed below:
(a)
Estimated impairment of goodwill and indefinite life intangibles
Goodwill and indefinite life intangibles are allocated to cash generating units (“CGU’s”) according to applicable
business operations. The recoverable amount of a CGU is based on value-in-use calculations. These calculations
are based on projected cash flows approved by management covering a period not exceeding five years.
Management’s determination of cash flow projections and gross margins are based on past performance and its
expectation for the future. Refer to Note 13 for further detail.
(b)
Income taxes
Income tax benefits are based on the assumption that no adverse change will occur in the income tax legislation
and the anticipation that the Group will derive sufficient future assessable income to enable the benefit to be
realised and comply with the conditions of deductibility imposed by the law.
(c)
Work in progress
The following estimates and judgements are applied in valuing work in progress:
Time recording valuation
An estimate is made of the recoverability of time recorded on a file.
Value pricing and fixed fee valuation
An estimate is made of fees to be earned on a file with reference to internal and external (where available)
historical and forecast fee levels. An estimate of the percentage of completion and probability of success is
made with reference to internal and external (where available) information and experience, and having regard to
where a file is in its life cycle.
Project Litigation
An estimate is made as to the likely recovery of costs incurred as at the reporting date in respect of each project.
(d)
Financial instruments at fair value
The Group measures its interest rate swaps at fair value. These fair values are based on level 2 fair value
measurements, as defined in the fair value hierarchy in AASB 7, with reference to market data which can be
used to estimate future cash flows and discount them to present value. Management’s aim is to use and source
this data consistently from period to period. Whilst management believes the assumptions used are appropriate,
a change of assumptions would impact the fair value calculations.
(e)
Determination and fair value of intangibles in a business combination
The fair value of customer relationships acquired in a business combination is determined using the multi-period
excess earnings method (‘MEEM’) whilst the fair value of trademarks acquired in a business combination is
based on a relief from royalties approach. These methods require estimates by management of future income
streams, applicable royalty rates and discount rates.
54
33
Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 3: SEGMENT REPORTING
The group has two operating segments, as described below, which are the Group’s strategic business units. The
strategic business units are managed separately. For each of the strategic business units, the Managing Director
reviews internal management reports on a monthly basis. The following summary describes each of the Group’s
reportable segments:
Slater & Gordon Australia (“AUS”) - includes the parent company Slater & Gordon Limited and its
subsidiaries in Australia. This segment conducts a range of legal services within the geographical area
of Australia. This segment also includes investments in the Group’s other segment, and borrowings and
capital raising activities to finance investment and operations of the combined Group. There is a
recharge of ongoing management support to the other segment in the Group.
Slater & Gordon UK (“UK”) – includes the Group’s operations, conducting a range of legal services
in the United Kingdom.
Segment assets are allocated to countries based on where the assets are located.
2014
Total segment revenue
Inter-segment revenue
Revenue from external customers
AUS
$’000
241,487
(5,467)
236,020
UK
$’000
182,446
-
182,446
Total
$’000
423,933
(5,467)
418,466
Earnings before interest tax depreciation and
amortisation
Interest revenue
Interest expense
Depreciation and amortisation
Income tax expense
Net profit after income tax
97,987
1,829
(8,412)
(6,955)
(23,344)
61,105
56,914
1,584
(5,142)
(3,450)
(16,253)
33,653
41,073
245
(3,270)
(3,505)
(7,091)
27,452
Segment assets
Total segment assets*
Inter-segment assets
Total assets per the balance sheet
Segment liabilities
Total segment liabilities
Inter-segment liabilities
Total liabilities per the balance sheet
*Additions to non-current assets
Plant and equipment
Intangibles, including goodwill
Total additions to non-current assets
604,377
(126,013)
478,364
417,014
-
417,014
1,021,391
(126,013)
895,378
221,224
-
221,224
763
2,558
3,321
377,087
(126,013)
251,074
598,311
(126,013)
472,298
4,238
18,626
22,864
5,001
21,184
26,185
34
55
Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 3: SEGMENT REPORTING (Continued)
2013
Total segment revenue
Inter-segment revenue
Revenue from external customers
Earnings before interest tax depreciation and
amortisation
Interest revenue
Interest expense
Depreciation and amortisation
Income tax expense
Net profit after income tax
Segment assets
Total segment assets*
Inter-segment assets
Total assets per the balance sheet
Segment liabilities
Total segment liabilities
Inter-segment liabilities
Total liabilities per the balance sheet
*Additions to non-current assets
Plant and equipment
Intangibles, including goodwill
Total additions to non-current assets
AUS
$’000
228,503
(1,068)
227,435
58,127
1,356
(5,595)
(3,344)
(16,249)
34,295
528,924
(61,981)
466,943
191,672
-
191,672
433
2,352
2,785
UK
$’000
70,528
-
70,528
14,454
30
(2,058)
(1,629)
(3,571)
7,226
Total
$’000
299,031
(1,068)
297,963
72,581
1,386
(7,653)
(4,973)
(19,820)
41,521
131,985
-
131,985
660,909
(61,981)
598,928
120,030
(61,981)
58,049
311,702
(61,981)
249,721
625
7,220
7,845
1,058
9,572
10,630
56
35
Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 4: REVENUE
Fee revenue
Rendering of services
Other income
Interest
Other
(a) Interest from
Other persons
VCR share loans to employees
NOTE 5: PROFIT FROM CONTINUING ACTIVITIES
Finance costs expense
Interest on bank overdraft and loans
Interest on deferred consideration payable to vendors on acquisitions
Interest on obligations under hire purchases
Depreciation and amortisation of non-current assets
Plant and equipment
Software development
Trademarks
Client lists
Bad and doubtful debts
Share based payments expense
Note
2014
$’000
2013
$’000
411,813
294,210
4(a)
1,829
4,824
6,653
401
1,428
1,829
4,807
3,068
537
8,412
4,352
1,141
1,404
58
6,955
6,904
1,180
1,386
2,367
3,753
281
1,105
1,386
5,573
1,495
585
7,653
3,623
919
-
431
4,973
4,531
1,377
36
57
Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 6: INCOME TAX
Note
Income tax expense
Current tax
Deferred tax
Adjustment for current tax of prior periods
Income tax recognised in other comprehensive income
Deferred tax charge/(credit) arising on cash flow hedges
Current tax (credit)/charge arising on foreign exchange gain
Income tax recognised directly in equity
Deferred tax charge recognised directly in equity
Deferred income tax expense included in income tax expense
comprises:
(Increase)/decrease in deferred tax assets
Deferred income tax relating to items charged to other
comprehensive income
Deferred income tax relating to items charged directly to equity
Increase in deferred tax liabilities
Recoup prior year tax losses and over/under on prior year losses
Exchange differences
Net deferred taxes arising from business combinations
The prima facie tax payable on profit differs from the
income tax provided in the financial statements as follows:
Total profit before income tax expense
At the Australian statutory income tax rate of 30% (2013: 30%)
Tax effect of amounts which are not deductible/(taxable) in
calculating taxable income:
- other non-allowable items
Other assessable items
Adjustments in respect to prior periods
Difference in overseas tax rate
Deferred tax assets not recognised
Deferred tax assets now recognised
Income tax expense
Net current tax (liability)/asset:
Balance at the beginning of the year
Current income tax expense
Foreign withholding tax credit
Tax paid
Adjustments in respect to prior periods
Exchange differences
Balance at the end of the year
2014
$’000
6,314
17,361
(331)
23,344
48
(2,085)
(2,037)
-
-
(2,277)
(2,037)
-
21,881
-
(315)
109
17,361
84,449
25,559252
25,335
1,220
(996)
25,559
(48)
(2,176)
120
(111)
23,344
(3,941)
(6,314)
282
8,006
127
(120)
(1,960)
2013
$’000
3,352
16,557
(89)
19,820
(105)
964
859
620
620
828
(105)
620
16,370
89
(294)
(951)
16,557
61,341
18,402
620
964
19,986
382
(648)
217
(117)
19,820
(101)
(3,352)
-
537
(916)
(109)
(3,941)
58
37
Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 6: INCOME TAX (Continued)
Note
Deferred tax assets
Provision for impairment
Employee benefits
Provision for legal costs
Accruals
Non-deducted business related costs
Fair value of cash flow hedges
Unbilled acquired WIP and disbursements
Unrendered WIP and disbursements not yet deducted
Plant and equipment
Other
Revenue losses carried forward
Goodwill
Deferred tax liabilities
The balance comprises temporary differences attributable to:
Prepayments
Work in progress
Unrendered disbursements
Intangibles
Foreign Currency Reserve
Other
Balance after set off of deferred tax assets and (liabilities)
NOTE 7: DIVIDENDS
Dividends paid during the year
Dividends on ordinary shares
Interim franked dividend at the tax rate of 30% for 2014: 3.00 cents
per share (2013: 2.75 cents per share)
Final franked dividend at the tax rate of 30% for 2013: 3.85 cents per
share (2012: 3.50 cents per share)
Total dividends paid during the year
Dividends proposed and not recognised as a liability
Dividends on ordinary shares
Final franked dividend at the tax rate of 30% for the year ended 30 June 2014:
5.0 cents per share (2013: 3.85 cents per share)
Franking credit balance
Balance of franking account at year-end adjusted for franking credits
arising from payment of provision for income tax and after deducting
franking credits to be used in payment of proposed dividends:
Impact on franking account of dividend recommended by the directors
since the year end but not recognised as a liability at year end:
2014
$’000
1,276
5,755
275
2,609
451
228
985
-
171
172
3,329
11,734
26,985
2013
$’000
1,311
5,011
169
2,332
708
179
795
1,681
509
286
6,026
5,701
24,708
(808)
(106,791)
(14,184)
(697)
(2,085)
(39)
(124,604)
(97,619)
(709)
(83,972)
(14,670)
(1,066)
-
(2,306)
(102,723)
(78,015)
6,115
4,681
7,655
13,770
5,966
10,647
10,217
7,655
(3,082)
(623)
4,379
3,252
38
59
Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 8: CASH AND CASH EQUIVALENTS
Cash at bank
NOTE 9: RECEIVABLES
Current
Trade debtors
Impairment of trade debtors
Disbursements
Impairment of disbursements
Other receivables
Impairment of receivables
Balance at beginning of the year
Receivables written off as uncollectible
Provision for impairment recognised
Balance at end of the year
NOTE 10: WORK IN PROGRESS
Current
Non-personal injury
Personal injury
Project litigation
Non-current
Project litigation
NOTE 11: OTHER ASSETS
Current
Prepayments
Other current assets
Note
23(a)
2014
$’000
25,270
2013
$’000
20,056
111,549
(8,690)
102,859
133,927
(7,717)
126,210
299
229,368
(11,286)
1,680
(6,801)
(16,407)
75,808
(5,951)
69,857
65,903
(5,335)
60,568
74
130,499
(14,422)
4,557
(1,421)
(11,286)
16,412
453,091
1,106
470,609
7,300
289,769
2,790
299,859
2,730
2,337
10,337
2,066
12,403
6,878
2,676
9,554
60
39
Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 12: PLANT AND EQUIPMENT
Plant and equipment at cost
Less accumulated depreciation
Low value asset pool at cost
Less accumulated depreciation
Total plant and equipment
Note
12(a)
12(b)
2014
$’000
35,328
(22,878)
12,450
1,825
(1,311)
514
12,964
2013
$’000
29,877
(18,198)
11,679
1,618
(1,078)
540
12,219
Movements in carrying amounts
Movement in the carrying amounts for each class of plant and equipment between the beginning and the end of
the current financial year
(a) Plant and equipment
Balance at the beginning of the year
Additions
Additions through acquisition of entities
Exchange differences
Depreciation expense
Disposals
Carrying amount at end of year
(b) Low value asset pool
Balance at the beginning of the year
Additions
Additions through acquisition of entities
Depreciation expense
Disposals
Carrying amount at end of year
NOTE 13: INTANGIBLE ASSETS
Goodwill – at cost
Accumulated impairment loss
Net carrying amount
Software development – at cost
Accumulated amortisation
Net carrying amount
Trademarks – at cost
Accumulated impairment loss
Net carrying amount
Customer relationships – at cost
Accumulated amortisation
Net carrying amount
Total intangible assets
11,679
3,131
1,839
221
(4,111)
(309)
12,450
540
199
18
(241)
(2)
514
116,108
-
116,108
9,661
(4,556)
5,105
10,407
(1,430)
8,977
1,397
(1,397)
-
14,044
825
-
188
(3,378)
-
11,679
552
233
-
(245)
-
540
93,504
-
93,504
8,144
(3,430)
4,714
10,020
-
10,020
1,397
(1,339)
58
13(a)
13(b)
13(c)
13(d)
130,190
108,296
40
61
Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 13: INTANGIBLE ASSETS (Continued)
Note
2014
$’000
2013
$’000
Movements in carrying amount
Movement in the carrying amounts for each class of intangible assets between the beginning and the end of the
current financial year
(a) Goodwill
Opening net book amount
Additions in respect to current period acquisitions
Exchange differences
Closing net book value
(b) Software development
Opening net book amount
Additions
Addition in respect to current period acquisitions
Exchange differences
Amortisation expense
Closing net book value
(c) Trademarks
Opening net book amount
Additions in respect to current period acquisitions
Exchange differences
Amortisation expense
Closing net book value
(d) Customer relationships
Opening net book amount
Amortisation expense
Closing net book value
31
93,504
19,670
2,934
116,108
4,714
1,495
25
12
(1,141)
5,105
10,020
-
361
(1,404)
8,977
58
(58)
-
88,123
2,403
2,978
93,504
4,376
1,253
-
4
(919)
4,714
9,703
-
317
-
10,020
489
(431)
58
Goodwill and indefinite life intangibles acquired through business combinations have been allocated to
individual cash generating units (“CGUs”) in the Australian business for the purposes of impairment testing
being the Personal Injuries (“PI”) division and the General Law (“GL”) division. In addition, the operating
segment of the UK is considered to be an individual CGU.
The recoverable amount of goodwill and indefinite life intangibles allocated to each of the CGUs has been
determined based on a value in use calculation as required by AASB 136 Impairment of Assets. This uses
financial budgets and cash flow projections approved by senior management covering a five year period.
The value in use is compared to the net carrying amount of the CGU. If the calculated value in use exceeds the
net carrying amount, no impairment loss is recorded.
62
41
Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 13: INTANGIBLE ASSETS (Continued)
2014
Goodwill recognised ($’000)
Indefinite life intangibles ($’000)
CGU
GL
PI
44,766
5,659
11,575
-
UK
59,767
1,719
The assumptions used by management in determining the value in use for all CGU’s include:
Growth in fees (real)
Discount rate (Australia)
Discount rate (UK)
Terminal value growth rate (nominal)
5.0% – 8.0%
9.1%
8.8%
3.0%
2013
Goodwill recognised ($’000)
Indefinite life intangibles ($’000)
CGU
GL
PI
43,130
5,659
11,575
-
The assumptions used by management in determining the value in use for all CGU’s include:
Growth in fees (real)
Discount rate (Australia)
Discount rate (UK)
Terminal value growth rate (nominal)
UK
38,799
4,361
5.0%
10.2%
9.4%
3.0%
A reasonable change in the assumptions would not result in an impairment of the goodwill or indefinite life
intangibles.
NOTE 14: OTHER NON-CURRENT ASSETS
VCR share loans to employees
NOTE 15: PAYABLES
Current
Unsecured liabilities
Trade creditors
Legal creditors and accruals
Vendor liabilities – acquisitions
Non-current
Unsecured liabilities
Vendor liabilities – acquisitions
Note
27
2014
$’000
11,844
11,844
2013
$’000
16,108
16,108
11,914
164,432
18,503
194,850
4,072
76,800
11,131
92,003
19,187
6,238
42
63
Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 16: BORROWINGS
Current
Secured
Cash advances
Hire purchase liability
Non-current
Secured
Cash advances
Hire purchase liability
Note
32
32
2014
$’000
7,215
2,252
9,467
112,698
4,166
116,864
2013
$’000
17,379
2,724
20,103
26,885
5,147
32,032
(a) Terms and conditions relating to the above financial instruments:
The bank overdraft and cash advance facility are part of a syndicated facility provided by Westpac Banking
Corporation (“Westpac”) and National Australia Bank (“NAB”). They are secured by a fixed and floating
charge over the assets of the Company.
Interest on the bank overdraft is charged at BBSY plus an agreed margin.
(b) A portion of the bills of exchange are the subject of an interest rate swap to hedge the risk of an adverse
interest rate movement. Refer to Note 32 (iv).
NOTE 17: OTHER CURRENT LIABILITIES
Current
Unsecured
LLP member capital contributions
NOTE 18: PROVISIONS
Current
Employee benefits
Solicitor liability claims
Non-current
Employee benefits
Other non-current provisions
2014
$’000
10,103
10,103
15,550
918
16,468
3,164
1,596
4,760
2013
$’000
-
-
13,398
485
13,883
2,850
-
2,850
18(a)
18(a)
(a) Aggregate employee benefits liability
18,714
16,248
64
43
Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
Note
NOTE 19: CONTRIBUTED EQUITY
Ordinary shares fully paid 19(a)
VCR shares 19(b)
Balance at end of the year
(a) Movement in ordinary share capital
Balance at the beginning of the year
Shares issued as consideration for acquisitions:
- 29 November 2012
- 31 October 2013
- 2 December 2013
- 17 February 2014
Conversion of vested VCR shares to ordinary share capital:
- 24 September 2012
- 26 September 2013
- 2 December 2013
Share capital issued by share placement and SSP:
- 13 May 2013
- 18 June 2013
Share capital issued under dividend reinvestment plan:
- 29 April 2013
- 14 November 2013
- 24 April 2014
Employee share scheme buy-back:
- 27 June 2013
Less capital raising costs, net of tax
Balance at end of the year
2014
Shares
204,338,625
2,629,333
206,967,958
2014
$’000
231,103
2,535
233,638
2013
Shares
196,809,265
5,111,334
201,920,599
2013
$’000
206,506
5,867
212,373
196,809,265
206,506
168,536,445
137,099
-
2,911,498
211,835
1,339,886
4,463,219
-
2,037,333
83,000
2,120,333
-
10,058
870
5,918
16,846
92,106
-
-
-
92,106
-
3,851
157
4,008
1,908,664
-
-
1,908,664
-
-
-
-
-
-
23,113,186
3,035,357
26,148,543
-
428,725
517,083
945,808
-
1,586
2,277
3,863
423,507
-
-
423,507
-
-
-
204,338,625
-
-
(120)
231,103
(300,000)
(300,000)
-
196,809,265
175
-
-
-
175
3,431
-
-
3,431
58,939
7,741
66,680
1,067
-
-
1,067
(507)
(507)
(1,439)
206,506
44
65
Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 19: CONTRIBUTED EQUITY (Continued)
(b) Movement in VCR share capital
Balance at the beginning of the year
Conversion of vested VCR shares to ordinary shares:
- 24 September 2012
- 26 September 2013
- 2 December 2013
VCR shares issued under Employee Ownership Plan:
- 20 December 2012
- 25 February 2013
Employee share scheme buy-back:
- 27 June 2013
- 24 April 2014
Share based payments expense
Equity adjustment for leavers and extension of repayment
terms
Less capital raising costs, net of tax
Balance at end of the year
Ordinary shares
2014
Shares
5,111,334
-
(2,037,333)
(83,000)
(2,120,333)
-
-
-
-
(361,668)
(361,668)
-
-
-
2,629,333
2014
$’000
5,867
-
(3,851)
(157)
(4,008)
-
-
-
-
(438)
(438)
1,180
(66)
-
2,535
2013
Shares
4,819,998
(1,908,664)
-
-
(1,908,664)
2,294,998
130,002
2,425,000
(225,000)
-
(225,000)
-
-
-
5,111,334
2013
$’000
5,082
(3,431)
-
-
(3,431)
2,797
161
2,958
(108)
-
(108)
1,377
(4)
(7)
5,867
Ordinary shares participate in dividends and the proceeds on winding up of the Company in proportion to the
number of shares held. At shareholders meetings each ordinary share is entitled to one vote when a poll is
called, otherwise each shareholder has one vote on a show of hands.
VCR shares
Please refer to Note 27 for detailed discussion on the rights attached to VCR shares.
Capital Management
When managing capital, management’s objective is to ensure the Group continues to maintain optimal returns
to shareholders and benefits for other stakeholders. This is achieved through the monitoring of historical and
forecast performance and cashflows.
During 2014, management paid dividends of $13.8 million (2013: $10.6 million)
Management manages capital through the gearing ratio a:b (net debt / total equity). Net debt is calculated as
total borrowings (including trade and other payables) as shown in the balance sheet less cash and cash
equivalents. The target for the Group’s gearing ratio is between 30% to 40%.
66
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Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 20: RESERVES
Cash flow hedging
Foreign currency translation
Note
20(a)
20(b)
2014
$’000
(781)
9,871
9,090
2013
$’000
(473)
4,183
3,710
Movements in carrying amount
Movement in the carrying amounts for each class of reserve between the beginning and the end of the current
financial year.
(a) Cash flow hedging
Balance at the beginning of the year
(Loss)/gain recognised on interest rate hedge, net of tax
Balance at the end of the year
(b) Foreign currency translation
Balance at the beginning of the year
Currency translation differences arising during the year
Non-controlling interest share in translation reserve
Balance at the end of the year
Nature and purpose of other reserves
Cash flow hedging
(473)
(308)
(781)
4,183
5,695
(7)
9,871
(664)
191
(473)
(332)
4,519
(4)
4,183
The cash flow hedging reserve represents the cumulative net change in the fair value of cash flow hedging
instruments related to hedge transactions that have not yet occurred, net of tax.
Foreign currency translation
Exchange differences arising on translation of the foreign controlled entity are recognised in other
comprehensive income and accumulated in a separate reserve within equity. The cumulative amount is
reclassified to profit or loss when the net investment is disposed of.
NOTE 21: RETAINED PROFITS
Retained earnings
(a) Retained earnings
Balance at the beginning of year
Net profit attributable to ordinary equity holders
Total available for appropriation
Dividends paid
Balance at end of year
NOTE 22: NON-CONTROLLING INTERESTS
Interest in:
Share capital
Reserves
Retained earnings
Balance at end of year
21(a)
180,139
132,963
132,963
60,946
193,909
(13,770)
180,139
2014
$’000
-
7
206
213
102,124
41,486
143,610
(10,647)
132,963
2013
$’000
113
4
44
161
7
22(a)
46
67
Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 22: NON-CONTROLLING INTERESTS (Continued)
(a) Non-controlling interests
Note
Balance at the beginning of the year
Capital contributions from non-controlling interests
Non-controlling interest share in net profit after tax
Non-controlling interest share in translation reserve
Balance at the end of the year
NOTE 23: CASH FLOW INFORMATION
(a) Reconciliation of cash
2014
$’000
161
(114)
159
7
213
2013
$’000
71
51
35
4
161
For the purposes of the Consolidated Statement of Cash Flows, cash includes cash on hand and at call deposits
with banks or financial institutions, investments in money market instruments maturing within less than two
months and net of bank overdrafts.
Cash at the end of the financial year as shown in the Statement of Consolidated Cash Flows is reconciled to the
related items in the Statement of Financial Position as follows:
Cash on hand
8
25,270
25,270
20,056
20,056
(b) Reconciliation of cash flow from operations with profit after income
tax
Profit after income tax
Non-cash flows in profit from ordinary activities
Notional interest on VCR share loans
Depreciation and amortisation
Share based payments expenses
Costs associated with acquisition
Notional interest on deferred consideration
Foreign exchange revaluation reserve
Changes in assets and liabilities
Increase in receivables
Increase in other assets
Increase in work in progress
Increase in payables
Decrease in income tax payable
Increase in deferred taxes
Increase in provisions
Cash flows from operations
4
5
5
5
61,105
41,521
(1,428)
6,955
1,180
4,054
3,068
-
(5,945)
(169)
(45,382)
13,808
(8,167)
21,013
4,343
54,435
(1,105)
4,973
1,377
282
1,495
3,870
(7,892)
(1,811)
(41,954)
11,864
(1,771)
20,436
1,432
32,717
68
47
Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 24: COMMITMENTS AND CONTINGENCIES
Operating lease commitments
Non-cancellable operating leases (including rental of office space) contracted but not capitalised in the
consolidated financial statements:
Within one year
One year or later and not later than five years
Greater than five years
Note
$000
2014
20,815
43,920
6,911
71,646
2013
$000
16,965
37,981
10,959
65,905
Bank guarantees in respect of rental properties and acquisitions
9,255
8,271
Other commitments and contingencies
The Group has entered into agreements with third party disbursement funders, ASK Funding Limited and
Equal Access Funding Proprietary Limited (“the Funders”) to provide financial guarantees to the Funders with
respect to disbursement funding borrowings to the Group’s clients. The nature of these agreements is that the
Funders will fund disbursements in respect of individual matters and will be reimbursed out of any settlement
proceeds on the matter. The Group has provided a financial guarantee for the repayment of the clients’
obligations to the Funders. The total gross amount (before repayments) currently funded by the Funders to the
Group’s clients at 30 June 2014 is $19,048,164 (2013: $8,579,653). The maximum exposure of the Group at
30 June 2014 is $12,881,278 (2013: $8,051,803) if the individual client matters are not recovered from any
other party.
NOTE 25: EARNINGS PER SHARE
The following reflects the income and share data used in the calculations of
basic and diluted earnings per share
Net profit after tax attributable to ordinary equity holders
Adjustments
Earnings used in calculating basic and diluted earnings per share
60,946
-
60,946
41,486
-
41,486
Weighted average number of ordinary shares used in calculating
basic earnings per share (‘000’s)
201,306
173,258
Effect of dilutive securities:
VCR shares (‘000’s)
Adjusted weighted average number of ordinary shares used in
calculating diluted earnings per share (‘000’s)
VCR shares
3,437
4,598
204,743
177,856
VCR shares are considered to be potential ordinary shares and have been included in the determination of
diluted earnings per share. Refer to Note 27 for a detailed explanation of VCR shares.
NOTE 26: DIRECTORS AND EXECUTIVES’ COMPENSATIONS
Compensation by Category
Short-term employment benefits
Post employment benefits
Other long term employment benefits
Share based payments
Other benefits
2014
$’000
3,490
161
86
12
241
3,990
2013
$’000
2,797
135
54
21
236
3,243
48
69
Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 27: EMPLOYEE OWNERSHIP PLAN (“EOP”)
The EOP provides employees of the Group with an opportunity to participate in the ownership of the
Company.
Invitation and Eligibility
The Board has the authority to invite employees to participate in the EOP and subscribe for VCR shares. VCR
shares are vesting, converting, and redeemable shares in the capital of the Company.
Plan
The EOP provides for the issue of VCR shares to participants in a number of tranches and for the Company to
make a loan to participants equal to the total amount that is to be subscribed.
When making an offer to an employee to subscribe for VCR shares, the Board has the power to specify:
The number of VCR shares which may be subscribed for by a particular employee;
The issue price. The Board sets the issue price at the fair value of a share as at the date of the issue;
The number of tranches into which the VCR shares will be divided and the vesting date for each
tranche;
The period for which an absolute restriction on disposal will apply (this period may not exceed 3 years
from vesting);
Any conditions to be placed on vesting;
Any events which would result in the forfeiture of the VCR shares; and
The period for which the Company will be able to buy back or require the forfeiture of the converted
shares.
The EOP provides for a full recourse loan from the Company to the employee to facilitate the employee’s
subscription for VCR shares. The loan is secured by the VCR shares or the converted VCR shares. The offer
made by the Board must specify the date by which the loan must be repaid.
Vesting, redemptions and conversion
VCR shares do not carry rights to participate in issues by the Company or to receive any dividends paid by the
Company and cannot be transferred or otherwise disposed of without the prior written consent of the Board.
VCR shares will not confer a right to notices of general meetings, a right to attend or speak at general
meetings, nor a right to vote at general meetings except as may be required by law.
Vesting conditions are set by the Board and relate to the performance of the participant and the performance of
the Company. Cessation of employment with the Group results in the forfeiture of that participant’s VCR
shares. The Board has the power to specify other forfeiture events.
Where vesting conditions are not met or a forfeiture event occurs, the Company has the power to redeem the
relevant tranche (or tranches) of VCR shares for an amount equal to the relevant proportion of the subscribed
amount (this amount may be offset against any loan made to the participant).
If all vesting conditions are satisfied, and no forfeiture event has occurred, each tranche of VCR shares vests,
and then automatically converts to ordinary shares on a one for one basis, on the relevant vesting date.
After conversion
After conversion the shares rank in all respects pari passu with all other shares on issue. However those shares
will be subject to disposal restrictions.
If the participant ceases employment with the Group, their converted VCR shares can be forfeited or bought
back by the Company and set off against any outstanding loan. The participant may be deemed liable for any
shortfall between the value of the shares forfeited or brought back by the Company and the loan amount.
At the cessation of the Buyback Period, each participant is required to enter into a Binding Commitment with
the Company in respect of their converted VCR shares. Under the Binding Commitment the participants in the
EOP will be under the following restrictions:
70
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Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 27: EMPLOYEE OWNERSHIP PLAN (“EOP”) (Continued)
They will be required to maintain a minimum level of shareholding for as long as they remain an employee of
the Group. The minimum holding is calculated based on the:
lower of 15% of the aggregate number of VCR shares, or 20% of the aggregate value (based on the
issue price) of VCR shares, issued to that employee which have vested and converted to shares.
if they cease to be employed by the Group, they may forfeit or be required to dispose of some or all of
their shares upon such termination. The ramifications of a departure from employment are linked to the
circumstances surrounding that departure.
Transfer
VCR shares may not be transferred. During the Buyback Period, converted VCR shares may not be transferred;
however, an exception applies for a takeover or scheme of arrangement relating to the Company that meets
certain conditions set out in the EOP.
Profile of vesting, conversion and redemption of VCR shares to ordinary shares
The profile of the vesting of VCR shares into ordinary shares, conversion into ordinary shares (subject to
disposal restrictions) or scheduled for redemption as VCR shares based on the shares issued under the EOP as
at 30 June 2014:
VCR shares which have (or may) vest as
ordinary shares
VCR shares which may convert to ordinary
shares but are subject to disposal restrictions
VCR shares to be redeemed
Recognition in the Accounts
Vested
’000
1 year
or less
’000
1 to 5
years
’000
14,025
2,529
-
10,464
1,994
4,096
-
140
-
More
than 5
years
’000
-
-
-
Total
’000
16,554
16,554
140
The VCR Share loan receivable is initially recognised at its fair value and is ascertained with reference to the
effective interest method under AASB 139 Financial Instruments: Recognition and Measurement. The profit
and loss impact is taken as the difference between the expected repayment period and the expected present
value of the loan amount at the reporting date and is recognised as interest income.
The key assumptions used in the present value calculation are:
Date VCR shares issued
Shares issued
Issue price
Effective interest rate
Final repayment date
21 December
2009
2,880,000
$1.63
8.5%
1 July 2013 to
1 July 2015
22 February
2011
1,830,000
$2.05
8.5%
1 July 2014 to
1 July 2016
31 December
2011
2,390,000
$1.79
8.5%
1 July 2015 to 1
July 2017
20 December 2012 and
25 February 2013
2,425,000
$1.95
8.5%
1 July 2016 to
1 July 2018
The interest income recognised on VCR Share loans to employees has been disclosed in Note 4.
The benefit provided to the employee is required to be recognised in the accounts under AASB2 Share-based
Payments. The benefit is assessed as the difference between the fair value of the VCR shares at the issue date
and the present value discounted over the vesting period. The benefit is expensed with reference to the
effective interest rate method over the vesting period.
The share based payments expense has been disclosed in Note 5.
50
71
Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 28: AUDITOR’S REMUNERATION
Note
2014
$’000
2013
$’000
Amounts received or due and receivable by Pitcher Partners:
An audit of the financial report of the Group and review of statutory
accounts
The half year review of the financial report of the Group
Other assurance services
Due diligence investigations
IT review
Amounts received or due and receivable by network firms of
Pitcher Partners:
An audit of the financial report of the Group and review of statutory
accounts
Total auditor’s remuneration
NOTE 29: RELATED PARTY DISCLOSURES
247
98
12
16
5
378
228
228
606
229
94
17
28
29
397
69
69
466
The following provides the total amount of transactions that were entered into with related parties for the
relevant financial year:
As outlined in the replacement Prospectus (“the Prospectus”) dated 13 April 2007 the South Australian
practice is operated by Andrew Grech as a sole practitioner trading as Slater & Gordon Lawyers under a
Service and Licence Agreement between Andrew Grech and the Company. In 2014 the Service and
Licence Fee totalled $1,186,000 (2013: $1,128,000);
As disclosed in Note 2, this entity is included in the consolidated group in accordance with AASB 10.
The shareholdings of related parties and remuneration of KMP are disclosed in the Directors’ Report.
Outstanding receivables, if any, between related parties are disclosed in Note 9. Outstanding payables, if any,
are disclosed in Note 15.
NOTE 30: GROUP ENTITIES
Controlled entities
Trilby Misso Lawyers Limited
Slater & Gordon Lawyers NSW Pty Limited
Conveyancing Works (Qld) Pty Limited
Slater & Gordon (UK) 1 Limited
New Claims Direct Limited
4 Legal Limited
4 Legal Solutions Limited
Slater & Gordon (UK) LLP
Adroit Financial Planning Limited
Pannone Trust Corporation Limited
2014
2013
Country of
incorporation
Ownership
Interest (%)
Ownership
Interest (%)
Australia
Australia
Australia
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
-
72
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Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 31: BUSINESS COMBINATIONS
2014:
Acquisition of business – Gibson & Gibson
On 1 August 2013, the Group acquired the business of Gibson & Gibson, a personal injuries law firm based in
Perth, Western Australia, for a total consideration of $3,289,100. Included in this amount is final goodwill of
$1,636,314.
Acquisition of business – Fentons Solicitors LLP (“Fentons”)
On 27 September 2013, the Group acquired the business of Fentons, a personal injuries law firm based in
London, UK.
The strategic rationale for this business acquisition is:
to further expand and diversify our personal injuries practice in a market 4 to 5 times that of Australia’s
with a similar legal jurisdiction;
synergies expected to be achieved as a result of combining the acquired businesses with the rest of the
Group;
access to referral networks not previously available to the Group; and
to become a dominant law firm brand in the consumer legal services market in the UK.
The initial accounting for the acquisition had previously been provisionally determined. The necessary fair
valuation of consideration and net assets acquired have now been finalised and are reflected in the amounts
detailed below. This revaluation has resulted in a $7,372,000 decrease in the goodwill recognised on this
transaction.
The value of the assets and liabilities at the date of acquisition and converted using the acquisition date rate of
exchange are as follows:
Consideration
Cash
Equity issued (1,903,911 shares at $3.63 per share)
Fair value of deferred consideration (cash)
Net present value of total consideration
Net assets acquired
Assets
- Cash and cash equivalents
- Trade and other receivables
- Work in progress
- Plant and equipment
- Other assets
Total assets acquired
Liabilities
- Payables
- Provisions
Total liabilities acquired
Net assets acquired
Goodwill on acquisition
$’000
43,266
6,854
5,904
56,024
Fair Value
7
43,768
54,686
1,518
120
100,099
40,176
3,899
44,075
56,024
-
There were 1,903,911 shares issued as part of the consideration. The issue price of $3.63 is based on the average
of the volume weighted average price of ordinary shares on each of the 20 business days immediately preceding
the completion date.
52
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Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 31: BUSINESS COMBINATIONS (Continued)
Since the acquisition date, Fentons has contributed revenue of $54,806,898 and profit after tax of $9,208,591 in
the year ended 30 June 2014, which is included within the consolidated profit. It is not practicable to disclose
the revenue and profit after tax of the combined entity as if the acquisition took place on 1 July 2013, as the
Group does not have access to audited financial information to reliably determine the revenue and profit after tax
of the acquired business from 1 July 2013 to the date of acquisition.
Acquisition-related costs for this acquisition amounting to $720,000 have been recognised as an expense in the
year ended 30 June 2014, within the ‘costs associated with acquisitions’ line item in the Statement of
Comprehensive Income.
Acquisition of other businesses in the UK
During the period under review, the Group acquired the following businesses in the UK:
Acquisition Date
16 August 2013
Company
Taylor Vinters LLP
Location
Business Type
Cambridge, UK Personal Injury
Acquired
Personal Injuries business
operations and assets
30 August 2013
Goodmans Law Limited
Liverpool, UK
29 November 2013
John Pickering & Partners LLP Halifax, UK
4 December 2013
Chadwick Lawrence LLP
Yorkshire, UK
Personal Injury Business operations and
assets
Personal Injury Business operations and
assets
Personal Injury Personal Injuries business
operations and assets
The strategic rationale for these business acquisitions is:
diversification of earnings through expansion of geographic coverage;
to become a dominant law firm brand in the consumer legal services market in the UK; and
access to referral networks not previously available to the group.
The initial accounting for these acquisitions had previously been provisionally determined. The necessary fair
valuation of consideration and net assets acquired have now been finalised and are reflected in the amounts
detailed below. This revaluation has resulted in an immaterial movement in the goodwill recognised on this
transaction.
The value of the assets and liabilities at the date of acquisition and converted using the acquisition date rate of
exchange are as follows:
Consideration
Cash
Equity issued (960,882 shares at $3.35 per share)
Fair value of deferred consideration (cash)
Net present value of total consideration
Net assets acquired
Assets
- Trade and other receivables
- Work in progress
- Plant and equipment
- Other assets
Total assets acquired
Liabilities
- Payables
- Provisions
Total liabilities acquired
Net assets acquired
Goodwill on acquisition
74
53
$’000
16,950
3,217
10,675
30,842
Fair Value
9,665
15,370
9
65
25,109
5,488
849
6,337
18,772
12,070
Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 31: BUSINESS COMBINATIONS (Continued)
There were 960,882 shares issued as part of the combined consideration. The issue price of $3.35 is based on the
average of the volume weighted average price of ordinary shares on each of the 20 business days immediately
preceding the completion dates. The key item that gave rise to the goodwill above is the existing business to
underpin strategic growth of the personal injuries practice within the UK market.
Since the acquisition date, these UK entities have contributed combined revenue of $14,206,979 and profit after
tax of $1,202,256 in the year ended 30 June 2014, which is included within the consolidated profit. It is not
practicable to disclose the revenue and profit after tax of the combined entity as if the acquisitions took place on
1 July 2013, as the Group does not have access to audited financial information to reliably determine the revenue
and profit after tax of the acquired businesses from 1 July 2013 to the date of acquisition.
Contingent Consideration
For the Goodmans Law acquisition, the Group has agreed to pay cash consideration of up to GBP 600,000
subject to an agreed net fees target being met from completion up to and including 31 December 2014. This
payment represents a net present fair value of GBP 527,924 ($915,579) at the date of acquisition. Notional
interest of GBP 42,056 ($74,498) has been recognised on this contingent consideration in the current year.
Acquisition-related costs for these acquisitions amounting to $740,000 have been recognised as an expense in
the year ended 30 June 2014, within the ‘costs associated with acquisitions’ line item in the Statement of
Comprehensive Income.
Acquisition of business – Pannone Solicitors LLP (“Pannones”) and related entities
On 14 February 2014, the Group acquired the Consumer Law business of Pannones, a consumer law firm based
in London, UK. On the same day the Group also acquired two related entities, Adroit Financial Planning
Limited (“Adroit”) and Pannone Trust Corporation Limited (“Pannone Trust”). Adroit Financial Planning
Limited is a financial planning business. Pannone Trust Corporation Limited is a dormant company, initially
incorporated to act as administrator of estates and other appointments having fiduciary responsibility associated
with Adroit.
The strategic rationale for these business acquisitions is:
diversification of earnings through expansion of geographic coverage; and
to become a dominant law firm brand in the consumer legal services market in the UK.
The provisional value of the assets and liabilities assumed at the date of acquisition and converted using the
acquisition date rate of exchange are as follows:
Consideration
Cash
Equity issued (1,339,886 shares at $4.42 per share)
Equity to be issued
Fair value of deferred consideration (cash)
Net present value of total consideration
Net assets acquired
Assets
- Cash and cash equivalents
- Trade and other receivables
- Work in progress
- Plant and equipment
- Other assets
Total assets acquired
Liabilities
- Payables
- Provisions
Total liabilities acquired
Net assets acquired
Goodwill on acquisition
$’000
37,589
6,003
7,870
8,183
59,675
Fair Value
518
31,793
47,944
83
1,992
82,330
23,681
4,498
28,179
54,151
5,524
54
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Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 31: BUSINESS COMBINATIONS (Continued)
There were 1,339,886 shares issued as part of the consideration. The issue price of $4.42 is based on the average
of the volume weighted average price of ordinary shares on each of the 20 business days immediately preceding
the completion date.
The key item that gave rise to the goodwill above is the existing business to underpin strategic growth within the
UK market.
Since the acquisition date, Pannones has contributed revenue of $26,295,754 and profit after tax of $3,171,402 in
the year ended 30 June 2014, which is included within the consolidated profit. It is not practicable to disclose
the revenue and profit after tax of the combined entity as if the acquisition took place on 1 July 2013, as the
Group does not have access to audited financial information to reliably determine the revenue and profit after tax
of the acquired business from 1 July 2013 to the date of acquisition.
Acquisition-related costs for this acquisition amounting to $1,543,000 have been recognised as an expense in the
year ended 30 June 2014, within the ‘costs associated with acquisitions’ line item in the Statement of
Comprehensive Income.
2013:
Acquisition of businesses – JSP Solicitors and Marrons Solicitors (“JSP” and “Marrons”)
On 25 January 2013 and 24 May 2013, the Group acquired the businesses of JSP and Marrons respectively, two
personal injury law firms based in the UK, for a total consideration of GBP 2,320,000. Included in this amount
was goodwill of GBP 726,000.
Acquisition of business – Clark Toop & Taylor (“CTT”)
On 26 March 2013, the Group acquired CTT, a personal injuries law firm based in Melbourne, Victoria, for a
total consideration of $8,500,000. Included in this amount was goodwill of $823,895.
2012:
Acquisition of business – Hilliard & Associates (“Hilliards”)
On 9 August 2012, the Group acquired the business of Hilliards, a personal injuries law firm based in Hobart,
Tasmania, for a total consideration of $1,286,000. Included in this amount was goodwill of $376,000
NOTE 32: FINANCIAL RISK MANAGEMENT
The Group is exposed to a variety of financial risks comprising:
Credit risk
Liquidity risk
(i)
(ii)
(iii) Fair values
(iv)
(v)
Interest rate risk
Foreign exchange risk
(i) Credit risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by
failing to discharge an obligation. The main exposure to credit risk in the Group is represented by the
receivables (debtors and disbursements) owing to the Group.
The maximum exposure to credit risk, excluding the value of any collateral or other security, at the balance
sheet date of recognised financial assets is the carrying amount of those assets, net of any provisions against
those assets, as disclosed in the Statement of Financial Position and Notes to the Financial Statements.
Concentrations of credit risk
The Group’s credit risk is associated with the management of work in progress, particularly when client
matters are undertaken on a “no win no fee” basis. To mitigate this risk, the Group has strong screening
processes for new client enquiries and then further review by experienced lawyers who are assigned to new
client matters. The Group minimises the concentration of this credit risk by undertaking transactions with a
large number of clients.
76
55
Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 32: FINANCIAL RISK MANAGEMENT (Continued)
There is also credit risk associated with unrendered disbursements and trade receivables. Once client matters
are billed, a significant portion of receivables related to the personal injuries business are considered low risk.
This is because these receivables are collected directly from settlements paid by insurers into trust funds held
on behalf of the Group’s clients. As at 30 June 2014, approximately 67% of trade receivables relate to the
personal injuries business.
For the non-personal injuries business, the Group is exposed to the credit risk associated with the client’s
ability to meet their obligations under the fee and retainer agreement. The Group minimises the concentration
of this credit risk by undertaking transactions with a large number of clients.
Management of credit risk
The Group actively manages its credit risk by:
Assessing the capability of a client to meet its obligations under the fee and retainer agreement;
Periodically reviewing the reasons for bad debt write offs in order to improve the future decision
making process;
Maintaining an adequate provision against the future recovery of debtors and disbursements;
Including in each practitioner’s Key Performance Indicators (“KPI’s”) measurements in respect of
debtor levels, recovery and investment in disbursements;
Providing ongoing training to staff in the management of their personal and practice group debtor
portfolios; and
Where necessary, pursuing the recovery of debts owed to the Group through external mercantile agents
and the courts.
(ii) Liquidity risk
Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial
liabilities.
Management of liquidity risk
The Group manages liquidity risk by monitoring forecast cash flows and ensuring that adequate borrowing
facilities are maintained. Refer to the Statement of Cash Flows and Note 23: Cash Flow Information, for
further information on the historical cash flows and the current borrowing facilities below.
The Group actively reviews its funding position to ensure the available facilities are adequate to meet its
current and anticipated needs.
Total banking facility
Banking overdrafts
Cash advance facility
Other sundry facilities
Total credit facility
Amount utilised
Unused bank facility
Banking Overdrafts
2014
$’000
5,000
200,000
15,640
220,640
2013
$’000
5,000
134,316
10,210
149,526
(125,657)
94,983
(58,754)
90,772
Bank overdraft facilities are arranged with Westpac with the general terms and conditions being set and agreed
to annually. The current facility is $5,000,000 (2013: $5,000,000). Interest rates are variable and subject to
adjustment.
56
77
Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 32: FINANCIAL RISK MANAGEMENT (Continued)
Cash Advance and Equipment Finance Facility
The Group renewed its multicurrency (AUD/GBP) syndicated bank facility on 30 December 2013 with a
structure and maturity profile as follows:
an AUD $25,000,000 revolving annual interest only working capital facility. The facility is to be
renewed on 30 December 2014 and interest is charged on the loans at BBSY/LIBOR plus an agreed
margin;
an AUD $80,000,000 revolving interest only loan facility. This loan matures on 30 December 2016 and
interest is charged on the loan at BBSY/LIBOR plus an agreed margin;
an AUD $95,000,000 revolving interest only loan facility. This loan matures on 30 December 2018 and
interest is charged on the loan at BBSY/LIBOR plus an agreed margin; and
bilateral facilities totalling AUD $41,000,000.
The proceeds of the facilities will be used to fund core debt, acquisition activities, working capital
requirements, short term funding requirements, the leasing of equipment and any performance guarantees, as
required.
Maturity analysis
The table below represents the undiscounted contractual settlement terms for financial instruments and
management’s expectation for settlement of undiscounted maturities.
2014
Payables
Borrowings
Other current liabilities
Financial liability maturities
2013
Payables
Borrowings
Financial liability maturities
(iii)
Fair values
< 12
Months
$’000
192,729
9,485
10,103
212,317
1-5 years
$’000
16,681
118,035
-
134,716
Total
contractual
cash flows
$’000
209,410
127,520
10,103
347,033
Carrying
amount
$’000
214,037
126,331
10,103
350,471
92,667
20,145
112,812
6,878
33,471
40,349
99,545
53,616
153,161
98,148
52,135
150,283
The fair value of financial assets and financial liabilities approximates their carrying amounts as disclosed in
the Statement of Financial Position and Notes to the Financial Statements. The main exposure to fair value
risk is contained in the balance of interest rate swaps.
Management of fair value risk in interest rate swaps
The Group measures its interest rate swaps at fair value. These fair values are based on level 2 fair value
measurements, as defined in the fair value hierarchy in AASB 7 Financial Instruments: Disclosures; with
reference to market data which can be used to estimate future cash flows and discount them to present value.
Management’s aim is to use and source this data consistently from period to period.
78
57
Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 32: FINANCIAL RISK MANAGEMENT (Continued)
(iv)
Interest rate risk
The Group's exposure to interest rate risks and the effective interest rates of non-derivative financial assets and
financial liabilities both recognised and unrecognised at the balance sheet date are as follows:
Financial Instruments
(i) Financial assets
Cash
Trade debtors
Disbursements
Other receivables
VCR share loans receivable
Total financial assets
(ii) Financial liabilities
Bank overdraft
Trade creditors
Legal creditors and accruals
Interest bearing vendor
liabilities – acquisitions
Non-interest bearing vendor
liabilities - acquisitions
Provisions
Hire purchase liability
Bills of exchange – fixed
rate
Bills of exchange – variable
rate
Total financial liabilities
Interest rate swaps
Weighted
average
interest rate
2014 2013
Non interest
bearing
Variable interest
rate
Fixed interest
rate
Total
2014
$’000
2013
$’000
2014
$’000
2013
$’000
2014
$’000
2013
$’000
2014
$’000
2013
$’000
0.88% 0.67%
-
-
25,270
20,056
102,859
69,857
126,210
60,568
299
74
11,844
16,108
-
-
-
-
-
-
-
-
241,212
146,607
25,270
20,056
-
-
5,129
4,072
171,218
76,800
-
4.00%
-
-
37,690
15,741
21,228
16,733
-
-
-
-
-
-
-
-
7.42% 7.34%
2.49% 3.02%
3.02% 4.01%
-
-
-
-
-
-
10,103
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
25,270
20,056
102,859
69,857
126,210
60,568
299
74
11,844
16,108
266,482
166,663
-
5,129
-
4,072
171,218
76,800
1,628
-
1,628
-
-
-
37,690
15,741
21,228
16,733
10,103
-
6,418
7,871
6,418
7,871
80,094
36,572
80,094
36,572
235,265
113,346
49,922
7,692
86,512
46,071
371,699
167,109
39,819
7,692
-
-
39,819
7,692
Other current liabilities
4.45%
-
Interest rate swap transactions are entered into by the Group to exchange variable and fixed interest payment
obligations to protect long-term borrowings from the risk of increasing interest rates. The Group uses swap
contracts to maintain a designated proportion of fixed to floating debt.
The notional principal amounts of the swap contracts approximate 67% (2013: 83%) of the Group’s
outstanding borrowings on the cash advance facility (excluding the working capital facility) at 30 June 2014.
The net interest payments or receipt settlements of the swap contracts are matched to the maturity of the cash
advance they are hedging. The net settlement amounts are brought into account as an adjustment to interest
expense. At the balance sheet date, the details of outstanding contracts, all of which are to receive floating/pay-
fixed interest rate swaps, are as follows:
58
79
Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 32: FINANCIAL RISK MANAGEMENT (Continued)
Maturity of notional amounts
0 to 2 years
2 to 5 years
Effective average
fixed interest rate
payable
2014
2013
4.18%
2.02%
-
3.02%
Notional principal
value
2014
$’000
17,500
62,594
80,094
2013
$’000
-
36,572
36,572
The net effective variable interest rate borrowings (i.e. unhedged debt) expose the Group to interest rate risk
which will impact future cash flows and interest charges and are indicated by the following interest rate financial
liabilities:
Floating rate instruments
Unhedged cash advances/bills of exchange
Note
2014
$’000
39,819
39,819
2013
$’000
7,692
7,692
Interest rate swaps are measured at fair value with gains and losses taken to the cash flow hedge reserve until
such time as the profit or loss associated with the hedged risk is recognised in the Consolidated Statement of
Comprehensive Income. Given the matching of the hedge settlements with the payment of interest expense on
the hedged borrowings, the balance in the reserve attributable to interest rate swaps is generally minimal.
Interest rate sensitivity
If interest rates were to increase/decrease by 100 basis points from rates used to determine fair values as at the
reporting date, assuming all other variables that might impact on fair value remain constant, then the impact on
profit for the year and equity is as follows:
+/- 100 basis points
Impact on profit after tax
Impact on equity
(v)
Foreign exchange risk
2014
$’000
-
2,371
2013
$’000
-
979
The Group has no significant exposures to currency risk other than the translation of its foreign subsidiary S&G
UK. Any impacts on the balances relating to S&G UK as a result of movements in the foreign exchange rate are
recorded in other comprehensive income as a foreign currency translation reserve. Refer to Note 1(e).
The Group has no other significant exposures to currency risk.
NOTE 33: FAIR VALUE MEASUREMENTS
(a) Fair value hierarchy
Assets and liabilities measured and recognised at fair value have been determined by the following fair value
measurement hierarchy:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Input other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly or indirectly.
Level 3: Inputs for the asset or liability that are not based on observable market data.
80
59
Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 33: FAIR VALUE MEASUREMENTS (Continued)
30 June 2014
Recurring Fair Value Measurements
Financial liabilities
Derivative financial instruments – interest rate swaps
Contingent consideration
Total financial liabilities
Level 1
$’000
Level 2
$’000
Level 3
$’000
-
-
-
1,020
-
1,020
-
13,208
13,208
30 June 2013
Recurring Fair Value Measurements
Financial liabilities
Derivative financial instruments – interest rate swaps
Contingent consideration
Total financial liabilities
Level 1
$’000
Level 2
$’000
Level 3
$’000
-
-
-
656
-
656
-
7,976
7,976
(b) Valuation techniques and inputs used in level 2 and 3 fair value measurements
Total
$’000
1,020
13,208
14,228
Total
$’000
656
7,976
8,632
The fair value of the interest rate swaps is measured with reference to market data which can be used to estimate
future cash flows. The key input into this valuation is the interest rate swap revaluation statement as provided by
Westpac Banking Corporation and National Australia Bank.
The fair value of contingent consideration payable in a business combination is measured with reference to
current fee and performance forecasts which can be used to estimate future cash flows. The key inputs into this
valuation are the estimated future cash flows and the average discount rate of 9.2% used to present value the
future cash flows.
(c) Reconciliation of recurring level 3 fair value movements
Contingent Consideration
Opening balance
Acquisitions
Payments
Adjustment to contingent consideration
Interest
Exchange differences
Closing balance
2014
$’000
7,976
11,687
(4,947)
(2,668)
1,119
41
13,208
2013
$’000
6,949
-
-
-
710
317
7,976
There has been no change in the range of undiscounted contingent consideration outcomes during the year.
(d) Sensitivity analysis for recurring level 3 fair value measurements
A reasonable movement in the unobservable inputs would not significantly impact the fair value of contingent
consideration as at the reporting date.
NOTE 34: SUBSEQUENT EVENTS
Subsequent to the reporting date, the Group announced its intention to purchase the following businesses:
Schultz Toomey O’Brien, a consumer law firm based in Queensland, with an indicative completion date
in November 2014.
Nowicki Carbone, a specialist personal injuries practice in Victoria, with an indicative completion date
in November 2014.
60
81
Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 35: DEED OF CROSS GUARANTEE
Slater & Gordon Limited, Trilby Misso Lawyers Limited and Slater & Gordon Lawyers NSW Pty Ltd are parties
to a deed of cross guarantee under which each company guarantees the debts of the others. By entering into the
deed, the wholly-owned entities have been relieved from the requirement to prepare a financial report and
directors’ report under Class Order 98/1418 (as amended) issued by the Australian Securities and Investments
Commission.
A consolidated Statement of Comprehensive Income and Statement of Financial Position, comprising the
Company and controlled entities subject to the deed, after eliminating all transactions between parties to the
Deed of Cross Guarantee is set out as follows:
82
61
Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 35: DEED OF CROSS GUARANTEE (Continued)
Note
Statement of Comprehensive Income
Revenue
Finance costs
Other expenses
Profit before income tax expense
Income tax expense
Profit for the year
Changes in fair value of cash flow hedges and foreign currency
translation, net of tax
Total comprehensive income for the year
2014
$’000
2013
$’000
227,009
(5,138)
(171,817)
50,054
(16,408)
33,646
219,235
(5,592)
(162,973)
50,670
(15,913)
34,757
4,753
38,399
245
35,002
Statement of Financial Position
Current assets
Cash and cash equivalents
Receivables
Work in progress
Other current assets
Total current assets
Non-current assets
Plant and equipment
Work in progress
Intangible assets
Investment in subsidiary
Other non-current assets
Total non-current assets
Total assets
Current liabilities
Payables
Short term borrowings
Current tax liabilities
Provisions
Total current liabilities
Non-current liabilities
Payables
Long term borrowings
Deferred tax liabilities
Derivative financial instruments
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained profits
Total equity
11,620
217,680
280,105
5,323
514,728
7,611
2,730
58,807
7,678
11,844
88,670
603,398
62,777
1,741
841
16,199
81,558
2,765
43,908
87,369
759
3,034
137,835
219,393
384,005
233,638
4,334
146,033
384,005
18,018
158,999
253,484
5,076
435,577
9,180
2,337
57,323
7,678
16,109
92,627
528,204
59,651
12,298
2,507
13,647
88,103
6,238
18,574
73,795
598
2,784
101,989
190,092
338,112
212,373
(419)
126,158
338,112
62
83
Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
NOTE 36: PARENT ENTITY DISCLOSURES
As at, and throughout, the financial year ended 30 June 2014 the parent entity of the Group was Slater & Gordon
Limited.
Results of parent entity
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Note
2014
$’000
36,054
(113)
35,941
2013
$’000
29,701
245
29,946
There has been a recharge by the parent entity of management and associated services and interest expense to
the subsidiary entities.
Financial position for the parent entity at year end
Current assets
Total assets
Current liabilities
Total liabilities
Total equity of the parent company comprising of
Contributed equity
Reserves
Retained profits
Total Equity
Other commitments and contingencies
447,604
565,695
75,941
201,412
233,638
4,334
126,311
364,283
366,814
488,118
82,963
172,137
212,373
(419)
104,027
315,981
The Company has entered into agreements with third party disbursement funders, ASK Funding Limited and
Equal Access Funding Pty Limited (“the Funders”) to provide financial guarantees to the Funders with respect to
disbursement funding borrowings to the Company’s clients. The nature of these agreements is that the Funders
will fund disbursements in respect of individual matters and will be reimbursed out of any settlement proceeds
on the matter. The Company has provided a financial guarantee for the repayment of the clients’ obligations to
the Funders. The total gross amount (before repayments) currently funded by the Funders to the Company’s
clients at 30 June 2014 is $14,579,907 (2013: $6,855,036). The maximum exposure of the Company at
30 June 2014 is $10,591,462 (2013: $6,405,246) if the individual client matters are not recovered from any other
party.
Operating lease commitments
2014
$’000
2013
$’000
Non-cancellable operating leases (including rental of office space) contracted but not capitalised in the
consolidated financial statements:
Within one year
One year or later and not later than five years
Greater than five years
11,986
31,775
6,342
50,103
10,462
28,167
10,656
49,285
84
63
Slater and Gordon Limited – Annual Report 2014
85
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES ABN 93 097 297 400 64 SLATER & GORDON LIMITED DIRECTORS DECLARATION The directors declare that the financial statements and notes set out on pages 41 to 84 and the directors’ report are in accordance with the Corporations Act 2001and: (a) Comply with Accounting Standards and the Corporations Regulations 2001, and other mandatory professional reporting requirements; (b) As stated in Note 1, the financial statements also comply with International Financial Reporting Standards; (c) Give a true and fair view of the financial position of the consolidated entity as at 30 June 2014 and of its performance as represented by the results of its operations, changes in equity and its cash flows, for the year ended on that date. In the directors’ opinion there are reasonable grounds to believe that Slater & Gordon Limited will be able to pay its debts as and when they become due and payable. the Company and the group entities identified in Note 30 will be able to meet any obligations or liabilities to which they are or may become subject to by virtue of the Deed of Cross Guarantee between the Company and those group entities pursuant to ASIC Class Order 98/1418. This declaration has been made after receiving the declarations required to be made by the chief executive officer and chief financial officer to the directors in accordance with sections 295A of the Corporations Act 2001 for the financial year ended 30 June 2014. This declaration is made in accordance with a resolution of the directors. John Skippen Andrew Grech Chair Managing Director Melbourne 27 August 2014Slater and Gordon Limited – Annual Report 2014 SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
AUDITOR’S INDEPENDENCE DECLARATION
TO THE DIRECTORS OF SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
AUDITOR’S INDEPENDENCE DECLARATION
TO THE DIRECTORS OF SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
SLATER & GORDON LIMITED
ABN 93 097 297 400
AND CONTROLLED ENTITIES
In relation to the independent audit for the year ended 30 June 2014, to the best of my knowledge and
INDEPENDENT AUDITOR'S REPORT
belief there have been:
TO THE MEMBERS OF
SLATER & GORDON LIMITED
In relation to the independent audit for the year ended 30 June 2014, to the best of my knowledge and
belief there have been:
No contraventions of the auditor independence requirements of the Corporations Act 2001; and
No contraventions of the auditor independence requirements of the Corporations Act 2001; and
(i)
(i)
(ii)
No contraventions of any applicable code of professional conduct.
No contraventions of any applicable code of professional conduct.
(ii)
Report on the Financial Report
We have audited the accompanying financial report of Slater & Gordon Limited and controlled entities,
which comprises the consolidated statement of financial position as at 30 June 2014, the consolidated
statement of comprehensive income, the consolidated statement of changes in equity and the consolidated
statement of cash flows for the year then ended, 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 year's end or from time to time during the
M W PRINGLE
financial year.
Partner
PITCHER PARTNERS
PITCHER PARTNERS
Melbourne
Melbourne
M W PRINGLE
Partner
Directors' Responsibility for the Financial Report
27 August 2014
27 August 2014
The directors of the company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
such internal control as the directors determine is necessary to enable the preparation of the financial
report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.
In Note 1, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of
Financial Statements, that the financial statements comply with International Financial Reporting Standards.
Auditor's Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
audit in accordance with Australian Auditing Standards. Those standards require that we comply with
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
reasonable assurance about whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial report. The procedures selected depend on the auditor's judgement, including the assessment of
the risks of material misstatement of the financial report, whether due to fraud or error. In making those
risk assessments, the auditor considers internal control relevant to the company's preparation of the
financial report that gives a true and fair view in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's
internal control. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by the directors, as well as evaluating the overall
presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
- 19 -
- 19 -
An independent Victorian Partnership ABN 27 975 255 196
An independent Victorian Partnership ABN 27 975 255 196
Liability limited by a scheme approved under Professional Standards Legislation
Liability limited by a scheme approved under Professional Standards Legislation
- 65 -
Pitcher Partners is an association of independent firms
Melbourne | Sydney | Perth | Adelaide | Brisbane| Newcastle
An independent member of Baker Tilly International
Pitcher Partners is an association of independent firms
Melbourne | Sydney | Perth | Adelaide | Brisbane| Newcastle
An independent member of Baker Tilly International
An independent Victorian Partnership ABN 27 975 255 196
Liability limited by a scheme approved under Professional Standards Legislation
86
Pitcher Partners is an association of independent firms
Melbourne | Sydney | Perth | Adelaide | Brisbane| Newcastle
An independent member of Baker Tilly International
Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
AUDITOR’S INDEPENDENCE DECLARATION
TO THE DIRECTORS OF SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
AUDITOR’S INDEPENDENCE DECLARATION
TO THE DIRECTORS OF SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
SLATER & GORDON LIMITED
ABN 93 097 297 400
AND CONTROLLED ENTITIES
In relation to the independent audit for the year ended 30 June 2014, to the best of my knowledge and
INDEPENDENT AUDITOR'S REPORT
belief there have been:
TO THE MEMBERS OF
SLATER & GORDON LIMITED
In relation to the independent audit for the year ended 30 June 2014, to the best of my knowledge and
belief there have been:
No contraventions of the auditor independence requirements of the Corporations Act 2001; and
No contraventions of the auditor independence requirements of the Corporations Act 2001; and
(i)
(i)
(ii)
Independence
(ii)
No contraventions of any applicable code of professional conduct.
No contraventions of any applicable code of professional conduct.
In conducting our audit, we have complied with the independence requirements of the Corporations Act
2001.
Opinion
In our opinion:
(a)
the financial report of Slater & Gordon Limited is in accordance with the Corporations Act 2001,
including:
M W PRINGLE
(i)
Partner
giving a true and fair view of the consolidated entity's financial position as at 30 June 2014
and of its performance for the year ended on that date; and
PITCHER PARTNERS
PITCHER PARTNERS
Melbourne
Melbourne
M W PRINGLE
Partner
27 August 2014
27 August 2014
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b)
the consolidated financial report also complies with International Financial Reporting Standards as
disclosed in Note 1.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 31 to 38 of the directors' report for the year
ended 30 June 2014. The directors of the company are responsible for the preparation and presentation of
the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
Opinion
In our opinion, the Remuneration Report of Slater & Gordon Limited and controlled entities for the year
ended 30 June 2014 complies with section 300A of the Corporations Act 2001.
M W PRINGLE
Partner
27 August 2014
PITCHER PARTNERS
Melbourne
- 19 -
- 19 -
An independent Victorian Partnership ABN 27 975 255 196
An independent Victorian Partnership ABN 27 975 255 196
Liability limited by a scheme approved under Professional Standards Legislation
Liability limited by a scheme approved under Professional Standards Legislation
- 66 -
Pitcher Partners is an association of independent firms
Melbourne | Sydney | Perth | Adelaide | Brisbane| Newcastle
An independent member of Baker Tilly International
Pitcher Partners is an association of independent firms
Melbourne | Sydney | Perth | Adelaide | Brisbane| Newcastle
An independent member of Baker Tilly International
An independent Victorian Partnership ABN 27 975 255 196
Liability limited by a scheme approved under Professional Standards Legislation
Pitcher Partners is an association of independent firms
Melbourne | Sydney | Perth | Adelaide | Brisbane| Newcastle
An independent member of Baker Tilly International
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Slater and Gordon Limited – Annual Report 2014
SLATER & GORDON LIMITED AND CONTROLLED ENTITIES
ABN 93 097 297 400
In accordance with the Australian Stock Exchange Limited Listing Rules, the Directors provide the following
information as at 18 August 2014.
(a) Distribution of shareholders and option holders.
Holding
1
1,001
5,001
10,001
100,001
- 1,000
- 5,000
- 10,000
- 100,000
- Over
Number of
Ordinary
Shareholders
1,645
2,107
617
574
92
5,035
There are 275 shareholders holding less than a marketable parcel (i.e. less than $500 per parcel of shares).
(b) Twenty largest shareholders
Shareholder
1
2
3
4
5
6
7
8
9
10
HSBC Custody Nominees (Australia) Limited
JP Morgan Nominees Australia
National Nominees Limited
Citicorp Nominees Pty Limited
BNP Paribas Noms Pty Ltd (DRP)
Ken Fowlie
Andrew Grech
RBC Investor Services Australia Nominees Pty Limited
Hayden Stephens
Cath Evans
HSBC Custody Nominees (Australia) Limited (Nt-Comnwlth
Super Corp A/C)
Citicorp Nominees Pty Limited (Colonial First State Inv A/C)
11
12
13 Warbont Nominees Pty Ltd (Accumulation Entrepot A/C)
14
15
16
17
18
19
20 Mark Walter
Deansgate 123 LLP
Edward Cooper
BNP Paribas Noms (NZ) Ltd (DRP)
Alexander Whitehead
Frog Hollow Super Pty Ltd (Frog Hollow Remit Fund A/C)
AMP Life Limited
Number of Shares
Held
44,166,879
35,400,585
24,474,144
14,850,666
7,839,551
5,096,221
5,028,238
4,425,327
4,255,115
4,110,476
1,981,998
1,926,800
1,550,674
1,261,673
1,039,394
920,729
826,021
759,884
710,020
648,740
161,273,135
%
Held
21.61
17.32
11.98
7.27
3.84
2.49
2.46
2.17
2.08
2.01
0.97
0.94
0.76
0.62
0.51
0.45
0.40
0.37
0.35
0.32
78.92
(c) Substantial shareholders
A substantial shareholder is one who has a relevant interest in 5 per cent or more of the total issued shares in
the Company. Following are the substantial shareholders in the Company based on notifications provided to
the Company under the Corporations Act 2001:
Shareholder
National Australia Bank Limited and its Associated Companies
Number
15,656,052
Ordinary Shares
% *
7.66
* Percentage of shares held based on total issued capital of the Company at the time a substantial shareholder notice was provided to the
Company.
(d) VCR shares
Total number of VCR shares on issue is 2,629,333 held by 83 employee shareholders.
88
67
Slater and Gordon Limited – Annual Report 2014
Corporate Directory
Directors
John Skippen, Chair
Andrew Grech, Group
Managing Director
Ian Court
Ken Fowlie
Erica Lane
Securities Exchange Listing
Slater and Gordon Limited shares
are listed on the Australian Securities
Exchange. The Home Exchange
is Melbourne.
ASX Code: SGH
Rhonda O’Donnell
Share/Security Registers
The Registrar
Computershare Investor Services Pty Ltd
Yarra Falls
425 Johnston Street
Abbotsford Victoria 3067
GPO Box 2975
Melbourne Victoria 3001
Telephone
Toll Free 1300 850 505 (Australia)
+61 3 9415 4000 (Overseas)
Investor Centre Website
www.computershare.com.au
Email
web.queries@computershare.com.au
Company Secretaries
Wayne Brown
Kirsten Morrison
Registered Office and
Corporate Office
Level 12
485 La Trobe Street
Melbourne Victoria 3000
T 03 9602 6888
F 03 9600 0290
Company Website
www.slatergordon.com.au
Company Numbers
ACN 097 297 400
ABN 93 097 297 400
Auditors
Pitcher Partners
Level 19
15 William Street
Melbourne Victoria 3000
Bankers
Westpac Banking Corporation
Level 7
360 Collins Street
Melbourne Victoria 3000
National Australia Bank
Level 30
500 Bourke Street
Melbourne Victoria 3000
Solicitors
Arnold Bloch Leibler
Level 21
333 Collins Street
Melbourne Victoria 3000
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Slater and Gordon Limited – Annual Report 2014 slatergordon.com.au