Slater & Gordon Limited Annual Report 2007-2008 Reputation & Results
Over its 73 year history Slater & Gordon has developed a reputation for fighting for the rights of its clients and delivering results, often breaking new legal ground to do so. Today Slater & Gordon is one of the best known names in the Australian legal market with a rapidly growing presence in most states and territories.
Contents PAGE The Year in Brief 1 Chair’s Report 3 Managing Director’s Report 4 Overview of Slater & Gordon 9 Business Overview 10 Business by State 12 Our History 14 Slater & Gordon and the Community 16 Corporate Governance 18 Board of Directors 29 Financial Statements for the Year Ended 30 June 2008 31 07 08
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The Year in Brief Financial highlights • NPAT of $15.1 million, up 34.0% on prospectus forecast • NPAT up 41.8% year on year • Year on year revenue up 26.7% to $79.7 million Business highlights • Completed the acquisition of nine practices during the year • Increased revenue from outside Victoria to 42.6% of total in line with jurisdiction diversifjcation strategy • Increased range and volume of non-personal injury legal services • Considerably strengthened position in class actions • Continued to build national brand recognition Results summary 08 2008 2007 Change $000’s $000’s Total Revenue 79,715 62,933 +26.7% Earnings Before Interest and Tax 21,741 16,434 +33.0% Net Profit Before Tax 21,741 15,386 +41.3% Net Profit After Tax 15,104 10,655 +41.8% Earnings per share Basic EPS (cents) 15.3 16.2 Diluted EPS (cents) 13.8 12.9 *Alternative Basic EPS (cents) 14.8 11.2 *Alternative Diluted EPS (cents) 13.5 9.9 * Due to the signifjcant share restructuring before and at the listing of the Company in 2007, an alternative basic and diluted EPS has been calculated to give a like for like comparison of the two years PAGE 1
Slater & Gordon Anna Booth Chair Andrew Grech Managing Director PAGE 2 Slater & Gordon Annual Report 2007-2008
Chair’s Report Dear Shareholder On behalf of the board of Slater & Gordon Limited, it is my pleasure to present the Annual Report of our company for its fjrst full year as a publicly listed entity. It is pleasing to report that we have comfortably exceeded the forecast in the prospectus for our May 2007 listing. To a degree it is even more pleasing that we have exceeded the growth projections we set in our internal strategy documents several years before listing. This reinforces our confjdence in our market assessment and strategic planning processes and in our ability to deliver against our plans. We have now completed our strategic planning for the period up to 2012 and the general thrust of our strategy remains unchanged. We intend to continue to lead the consolidation of the personal injury litigation market, to extend the geographical reach of the business, to expand the range of services we offer our clients and to continue to build the Slater & Gordon brand as a driver of business to all our practices. We will follow that course while maintaining our commitment to providing access to justice for those who may not otherwise be able to obtain such access. The 2008 fjnancial year has been an exceptionally busy and productive one. While continuing to deliver excellent legal services to our thousands of clients across the country, we have completed nine acquisitions of smaller practices. The process of integrating them into Slater & Gordon has gone well to date, which is a tribute to the thought and planning that went into each transaction from all parties and to the determination of the people involved on both sides to make it work. We will continue to seek out other fjrms which have the potential to add similar value to Slater & Gordon and our shareholders, but our immediate focus is on making sure those that we have recently acquired are well settled into the organisation. Our board, led by my fellow independent director Ian Court and myself, continues to place appropriate emphasis on effectively discharging our corporate governance responsibilities and we are confjdent that we have the policies and compliance mechanisms in place to do so. I also said in the 2007 annual report that it was the board’s intention over time to evolve further into a board with a majority of independent directors. I am pleased to report that we expect to be taking another step in that direction by appointing a third independent director during the course of the next several months. In conclusion I would like to express the thanks of the board to all Slater & Gordon staff members for their dedication to our clients and for their continued contribution to the success of our business. Yours sincerely, Anna Booth Chair PAGE 3
Managing Director’s Report Dear Shareholder I am pleased to report on another strong year for Slater & Gordon Limited. When we fjrst set out on our current strategic path back in 2002, part of our motivation for broadening the geographic reach of the business and the scope of services we offer was as a risk management measure. We wanted to reduce our susceptibility to adverse market changes in individual jurisdictions or in particular areas of law. Where we have got to is much more than that. We have certainly diversifjed our practice and therefore mitigated any adverse market change risks considerably, but we have also built a much stronger business. We have grown substantially. We have gone from being a predominantly Victorian practice to a truly national one. We have gone from a mostly personal injuries practice to one that can offer an extensive range of legal services to our thousands of clients. Most importantly, I believe that we have been able to do all this without diminishing any of the principles that the Slater & Gordon reputation has been built on – fjghting for the rights of our clients and delivering results. FY 2008 HIGHLIGHTS • Revenue growth of 26.7% year on year; • After tax profjt of $15.1 million, 34.0% higher than our prospectus forecast and 41.8% higher than the previous year; • Continued double digit growth in our traditional markets; • Further geographic spread of the business – revenue generated from outside Victoria increased to 42.6% (up from 37.4% in 2007); • Increased capacity in non-personal injury practices including commercial litigation, business law, commercial transactions and advice, family law and estate planning through acquisition and recruitment; • Strong position established in commercial class actions; • Successful acquisition of nine smaller practices in New South Wales, Queensland, Western Australia and Victoria; • New offjces opened in Gosford (NSW), Southport (Queensland) and Reservoir (Victoria); and • Continued growth in national brand recognition. THE YEAR IN REVIEW When detailing our growth strategy in the April 2007 Prospectus we highlighted the following key elements: 1. Acquisition of personal injuries litigation practices to position Slater & Gordon as the leading legal services provider in that market in Australia; 2. Acceleration of the growth of non-personal injury practices through marketing, recruitment and the acquisition of other practices; 3. Increased investment in marketing and advertising in most states and territories; 4. Investments in selected large scale litigation projects; and 5. Development of the commercial advisory and transactions practice area. I am pleased to report that we made good progress in each of these areas in the 2008 fjnancial year. PAGE 4 Slater & Gordon Annual Report 2007-2008
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