Financial Report Template Page 13
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80DIRECTORS’ REPORT
FUTURE DEVELOPMENTS, PROSPECTS AND
Your Directors present their report, together with the financial
statements of the Group, being the Company and its controlled
BUSINESS STRATEGIES
entities for the financial year ended 30 June 2015.
The Group will seek to continue to grow its business profitably
by concentrating on:
PRINCIPAL ACTIVITIES AND SIGNIFICANT
CHANGES IN NATURE OF ACTIVITIES
Inch Wide Mile Deep Strategy:
The Group expects to continue
to deepen its ‘inch wide mile deep’ strategy by growing all areas
The principal activities of the Group during the financial year
of its damages based plaintiff litigation business, but with a focus
were the operations of legal services throughout Queensland,
on growing the emerging practice areas at a faster rate than the
Victoria, Western Australia, and New South Wales. The Group
personal injury practice areas. The Group intends to continue to
also has a one third interest in an insurance recovery consulting
grow in the future with a balance of organic growth and
business located in New Zealand.
acquisitions.
No significant changes in the nature of the principal activities
In line with this strategy, in August 2015, the Group announced
occurred during the financial year.
the acquisition of Bradley Bayly, a personal injury litigation firm
operating in Western Australia. This acquisition is now complete.
OPERATING AND FINANCIAL REVIEW
FOR THE YEAR
Tort Reform Opportunities:
Although tort reform initiatives pose
risks for the Group’s business, it has considerable experience
The consolidated profit of the Group amounted to 29,628,361
adapting its business model to regulatory change. Tort reform
(2014: $22,175,139) after providing for income tax. Further
presents opportunities, particularly in the acquisition of smaller
discussion of the Group’s operations is provided below.
practices which do not have the systems in place to deal with
complex regulatory changes.
REVIEW OF OPERATIONS
International Opportunities:
Whilst the Directors believe there
The Group specialises in damages based plaintiff litigation legal
are ample opportunities for the Group to continue to grow
services, primarily relating to personal injury where 78% of the
domestically, the Directors will continue to monitor
Group’s revenue for the financial year ended 30 June 2015 was
opportunities internationally. With its experience in the Australian
derived (2014: 85%). The balance of the financial year’s revenue
legal market and its established systems and processes, the
was from the expanding emerging practice areas such as
Group considers itself well placed to capitalise on opportunities
professional negligence, class actions, landowner rights and
in the United Kingdom legal market which is currently
environmental cases.
undergoing reform. Given the Group’s relationship with Erin
The Group contains one of the three largest plaintiff litigation
Brockovich, her strong referral base and other opportunities, the
firms in Australia, being Shine Lawyers. Whilst the Group and its
Directors have kept a watching brief on the US legal market and
largest competitors have grown significantly in recent years, the
will continue to do so in the future. The Group expects Risk
Directors estimate that the market share of the Group and those
Worldwide New Zealand Limited to produce an improved result
competitors in the personal legal services industry is still less
in the forthcoming year.
than 20%. The Group estimates that it holds less than 4% of the
Continuous Improvement and the T2 Project:
The Group is
personal legal services industry, which equates to no more than
committed to continuous improvement in its case management
10% of the personal injuries market. With over 12,000 open client
systems and processes. The T2 Project is tasked with a number
matters, the Group does not have any dependencies on key
of important business improvement goals, including to increase
customers.
the level of damages recovered for the Group’s clients, reduce
Revenue has increased by 30% this year (2014: 10%), primarily
the cycle time (the speed with which a matter is brought to a
as a result of acquisitions.
conclusion for clients), improve recoverability of the Group’s
fees, increase the ratio of fee-earning to non-fee-earning staff in
FINANCIAL POSITION
the business, and make the Group’s systems and processes
increasingly scalable and agile across different geographies.
The net assets of the consolidated group have increased by
$56,291,636 from 30 June 2014 ($119,898,045) to $176,189,681
MATERIAL BUSINESS RISKS
in 2015 as a result of the strong operating performance and
acquisitions within the Group.
The Group’s business is subject to risk factors, both specific to its
business activities, and risks of a general nature. The risks the
With a cash position at 30 June 2015 of $9,393,350
Directors highlight below do not represent all risks associated
(2014: $11,004,417) and access to a further $9,732,047
with the Group, but represent, in the Directors’ opinion, the
(2014: $13,369,160) from existing unused debt facilities,
material business risks. These are:
the Directors believe the Group is in a strong and stable
financial position to expand and grow its current operations.
Conflict of Duties:
The Group, through its Incorporated Legal
In addition, on 16 July 2014 the Group successfully concluded a
Practice Shine Lawyers Pty Ltd (“Shine”), has a paramount duty to
1 for 10 rights issue at $1.90 per share, raising a total of $29.45M,
the court, first, and then to its clients. Those duties prevail over
primarily to fund the acquisitions of Stephen Browne Personal
the Group’s duty to shareholders. There may be instances where
Injury Lawyers and Emanate Legal.
the Group and its lawyers, in exercising their duties to the court
or to the client (or both), act other than in the best interests of
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