AF Legal Group Limited (AFL) Earnings Call Transcript & Summary

All right. 10 a.m. Good morning, ladies and gentlemen. My name is Rick Dennis, and I'm the Chair of AF Legal Group Limited. I'll Chair the Annual General Meeting of this company this morning, and I'd like to welcome the Board and the executive team. I welcome you and thank you for attending and for your support. I'd firstly like to introduce our team. Sarah Kelly, unfortunately, who's coming, I don't know where she's got caught up, one of our board members. I'd like to welcome -- you know Peter Johns. Welcome, Peter. And I'd particularly like to convey my thanks to Peter for the support he's given from a Board point of view over the past 12 months. Frankly, he's gone over and above what I expect of a Board member. And Peter, I'm grateful for that. Thank you. I'd also like to introduce Chris McFadden, our Chief Executive Officer; and Stace Boardman, who's somewhere in Melbourne. Hi, Stace. Good morning. I'd also like to introduce Stephanie So, our Company Secretary; and Assistant Company Secretary, [ Mikhail Stanton ]. Thank you to both of them. I'd also welcome Tim Bow from PKF, our auditors. And Tim will be available during the meeting to answer any questions in relation to audit-related matters. And our share registry, Computershare, is also present. And I appoint David Maffescioni as our returning officer and will conduct the poll later in the meeting. A few procedural matters. As you know, it's a virtual meeting with questions. The virtual component of the meeting is being held via Computershare's online meeting platform. I now introduce Sarah Kelly, who will [ lead a part later ].

Thanks, Chair. Thank you.

The platform enable shareholders and proxy holders to participate in this live webcast of the meeting as well as to ask questions and to submit votes. Questions can be submitted at any time. [Operator Instructions] Please note that while you can submit questions from now on, I won't address them until the relevant time in the meeting. You can also note that if we do receive multiple questions on the same topic, I may amalgamate those questions. Due to time constraints, we may run out of time to answer all those questions. If that does happen, we will certainly get back to you via e-mail or posting responses on our website. In relation to how to vote, when we go into the formal part or formal business of the meeting, voting on all resolutions is to be conducted by poll. Shareholders wishing to vote on the resolutions being put to the meeting can do so through the virtual meeting platform. If you're eligible to vote, once voting opens, press the vote icon and all resolutions will be activated with voting options. To cast your vote, simply select one of the options, for, against or abstain, and you will receive a vote confirmation notification on your screen. Please note that if you've already lodged a proxy, you don't need to vote again through the online voting portal unless, of course, you wish to change your proxy instruction, as your votes will already be counted in a poll on each of the resolutions as per your proxy instructions. If you have any technical issues, please call the support number on the online meeting guide. So to allow shareholders time to vote -- to submit votes and ask questions, I'll now declare voting open on all items of business, and voting will remain open until I declare it closed at the end of formal business. I'd like to start by saying a few words about the progress of the company, and then I'll invite Chris to provide a presentation on our 2024 performance, our current trade, and the outlook for the year ahead. Those addresses and the AGM presentation have been or will be lodged with the ASX -- or they've been lodged. They will be lodged with the ASX. Following this, you'll be able to ask questions about financial results, operations and market outlook, which arise in my comments and in the address of Chris. This will be followed by the formal business of the meeting. At which time, I'll take questions specifically regarding each of the proposed resolutions. And I think Stace, who is our CFO and COO attending virtually, has audio access and can also answer questions in so far as they're needed. A few comments. 2024 was a significant year for our group. We continue to navigate what we call a stabilization phase, which commenced in the second half of financial year 2023 and continued across fiscal 2024, before we reenergized that growth in the latter part of fiscal '24. It was pleasing to deliver our third consecutive half of profitability, and we've established a solid base and we're now beginning to show the early signs of that growth. 2024 saw us deliver our highest ever revenue of $21.7 million and our best bottom line achievement, with normalized net profit before tax attributable to the owners of AF Legal Group of $0.8 million or $800,000. During the year, in recognition of the fact that we clearly identified the need to grow this organization to gain scale, we announced on the 1st of March 2024 our growth strategy, which was based not just on growth in the family law segment but by also expanding into complementary adjacent areas of law. We followed this in April 2024 with the announcement that we acquired Armstrong Legal Contested Wills & Estates, and that's a really significant move for us as it represented our first move beyond pure family law. As reported in our full year '24 results, the impact of the newly acquired contested wills and estates division in all our results have been immediate, with additional revenue delivering to our bottom line profitability at a greater rate, given the relatively fixed nature of our centralized cost base. This initial acquisition, which was our first since January 2022, included the extension of our $9 million finance facility with NAB out to 2027 and our first drawdown against that facility. The acquisition also saw us raise $1.9 million through an entitlement offer, with strong participation from the majority of our significant shareholders and notably a $250,000 participation from our CEO. We further outlined at the time of the release of our full year results that we were looking forward to further acquisitions to complement our organic growth. It's been pleasing to witness the transition of our organization into one that truly is people-first and practice-led, and Chris is going to talk more about that and particularly in relation to the most recent staff survey, Great Place to Work Survey, at the start of 2024 was the more recent one completed last month. In October 2024, we announced a further acquisition, which was the acquisition of the criminal law and family law practices of Armstrong Legal as well as the armstronglegal.com.au website. The significance here was threefold, adding a third area of law in criminal law, acquiring a family law team to bolster the Watts and McCray practice, and also obtaining a significant industry-leading website with considerable lead-generating capability and, we think, further potential. I wanted to comment briefly on the expansion in those new areas of law being family, contested wills and estates, and criminal law. They've been selected because they're large legal practice areas without significant better-resourced national competition. In each area, we're going to be better resourced in marketing, practice management systems and career progression for staff than nearly all of our competition. They tend to be small partnerships. The fact that we have a national presence in those areas has benefited us in family law due to the ability to share work among lawyers from different states in what is a national area of practice. The benefits in the other 2 areas from being a national firm are perhaps less obvious immediately. But we think there are exciting opportunities to have us become the go-to for -- a go-to option for referrals by large national organizations, including the large national law firms that don't practice in the areas that we now do. Many of those organizations are approached for referrals in crime and estate litigation law and presently deal with various local options. We offer the opportunity to be a single referral option with the ability to offer referrals in reverse. But of course, that depends on us to convince them of our high standards, which we are seeking to delivering. Personally, I'm particularly excited that AFL is moving into the area of criminal law, which brings with it many adjunct areas. They include defending clients being prosecuted by professional disciplinary bodies, coronial inquests, traffic, corruption, other commissions of inquiry, and ASIC investigations and prosecutions, so not true crime, as you might think about it. We also think there's significant scope to grow that practice geographically. It presently operates only in New South Wales. It previously operated in other jurisdictions. And we have a significant geographic expansion opportunity on criminal law. Chris will shortly touch on our first quarter performance in 2025. But I believe it's fair to say that our momentum -- our positive momentum continues. Thanks again to Peter and Sarah for their support and advice; and the management team, in particular, Chris and Stace, for their dedication and commitment; and to you, our shareholders, for your ongoing support and encouragement. Chris, on that note, I hand over to you.

Thank you, Rick. It has been quite a year, as Richard has really touched on there, and we are now delivering consistent profitable growth with the benefits of our recent -- both of our recent acquisitions yet to fully impact our results, so definitely exciting times ahead for AF Legal. I'd like to start by providing a bit more detail on a topic that Rick just touched, that being our transformation to an organization which is truly people-first and practice-led. When the new management team came to being in July '23, one of the first things that we did was commission a survey through Great Place to Work, who really are one of the best in understanding the mood of an organization's team members. This first survey and its results, which were delivered back in August '23, gave us a lot of detail, gave us a lot of granular information to drill down what we work with. But at a headline number, the result was 53%. So effectively, 53% of our team members believe that AF Legal Group and our various branded divisions was a great place to work. So not a high bar there, but it wasn't surprising that it was. It was sobering for us and made it clear that a lot of work was needed to regain the trust and confidence of our team members. So now we roll forward to October '24, and we've now received the results of our second such survey through Great Place to Work again, where they compared one to the other. And this time around, the result was a very pleasing lift from 53% up to 84%, so an increase of 31%, so something that we can really be proud of. So I think for me, in many ways, that number of 84% is perhaps the most important number that we'll present here today. And it's from this base that we can be confident that we've got a great platform to deliver improving performance as we build an organization which does indeed put its people at the center of everything it does. We'll continue to work hard on this aspect of our organization, and we won't be resting on our laurels as we strive to make further gains in the years ahead. Financial year '24 was also busy in terms of new offices. And I know we've outlined this in our financial year '24 results previously, but we'll just touch on them on here again. We opened 5 new offices in Bayside in Gold Coast in Queensland, Joondalup in WA, Canberra in the ACT, and in Illawarra, Wollongong in New South Wales. Of those 5, other than the Canberra office, which was a relocation within the existing building just to better premises, the others represented us taking up a permanent presence where previously, we had set up in serviced office as market entry positions. As these business have established themselves and becomes sufficiently mature, we then determine if they're able to warrant a more permanent commitment. And at that stage, we undertake a -- we enter into leases for them. Also, in the year, we did open a couple of new serviced office locations, that being Frankston, Victoria, which taps into a growing market there in the outskirts of Melbourne, and also in Double Bay as well in New South Wales, which gives us access to some pretty -- a pretty high net worth area of clients. And both of those operations have started promisingly. Double Bay probably stronger than Frankston, but both are doing well. And really, that expansion and everything sort of comes back to our growth strategy as it should. And that expansion is in line with our organic family growth strategy of opening complementary family law practices, which feed off our existing network. Also in '24, again, something that we covered in the financial release, but again worth repeating again, is in the area of promotions. We continue to develop our team members. And we have promoted over 24 team members since the start of FY '24, which is effectively 30% of our lawyers and legal support staff. And it's all part of our people-first culture. It's a development focus. It is top of mind to us all the time, driven by our desire to prevent -- to present achievable and rewarding career paths to our team members, be that through the careful nurturing and development of our new lawyers but also by facilitating advancement at the higher levels also. Our 2 recent Armstrong Legal-based acquisitions have moved us, as Rick touched on, into 2 new complementary areas of law, bringing us new teams in the shape of the contested wills and estates team under the leadership of Alun Hill, and the criminal law team under the leadership of Angela Cooney. The quality gained in these acquisitions is without question and with the 2 divisions, including among them 6 accredited specialists in the areas of contested wills and estates and criminal law, to add to the 10 accredited specialists we currently have in our various family law practices. Additionally, the acquisition also brought us a further 4 family law team members from Armstrong Legal under the leadership of Laura Lincoln. And this team has already successfully been integrated into the Watts McCray Sydney-based practices. So that takes us to -- there's a couple of versions of this number, which was -- is my fault, at some point. It takes us to around 52 lawyers on an FTE basis. It may say 56 on some documents. I'm just not sure on the one that got lodged, but it should be 52 by the end of October. So that includes -- that sort of moves on from the Q1 numbers. So it's actually after the addition of our new teams coming through from a strong criminal law and also the additional family lawyers. But bear in mind that in terms of revenue and profitability for those new divisions, that doesn't really start until November. I think it actually starts a couple of days in October but by and large in November. So we've seen around 4 to 5 new lawyers join us since the end of Q1. We still do have a couple of vacancies in our organization, plus we also have a couple of significant maternity leave to plan for. Probably a couple of our higher performers are for maternity leave in the near future. So we remain on the lookout for top talent. And I will say that we have recently made some good additions there, and they -- the quality of the people that we brought in recently at a reasonably high and experienced level has been excellent, and they -- all of those have started exceptionally well, so we look forward to the future from them. We expect that the addition of the armstronglegal.com.au website will provide a significant opportunity to accelerate our digital growth. And our digital growth has been impressive, as we'll also touch on in a minute. But it's only early days in the ownership of this site, but initial indications are very positive. Inquiry volume coming from the armstrong.com.au -- armstronglegal.com.au website is above what we expected, which is a challenge to deal with. And I think the teams that actually look after that are having their challenges, but it is also a great problem for us to have. Our marketing and digital teams are working closely with the Armstrong Legal teams like with Alun and Angela, in particular, to look at ways to change the way things are done there to maximize conversion and adapting the processes required. And the processes vary a bit by the area of law as well, with a bit more urgency in relation to criminal than there is for some of the others. Based -- just touching on our digital growth. Based on our financial year '24 KPIs, digital KPIs, we were already trending very positively in this regard. Savings have been realized with the cost to -- the cost per new client file reducing by 40% through continued improvement of our digital acquisition model and our growing brand recognition. We continue to strengthen our SEO strategy, reaching a goal of 40% inquiry from organic search. And during FY '24, over 17,700 people reached out for help during the year. Also, another measure of our profile in this regard is also client reviews. So we have seen a 39% increase in positive client reviews, including over 220 5-star Google reviews. We've also firmly established our expert voice in national media, with a new chapter added to the AFL Relationships Report in Q1 and over 155 mentions by key media across financial year '24, including a 500% increase in commentary requests from the ABC. So you will see a number of our team members appearing on the radio from time to time, and it definitely has ramped up a lot in the last year. Our immediate and current task is the bedding in of our most recent acquisition, including the new armstronglegal.com.au website, with all the potential upside like I touched on earlier. We're at the early stage of exploring growth opportunities across our new -- our 2 newly acquired areas of law and anticipate movement here well before the end of financial year '25. Our overall growth plan remains very much as previously. We'll continue to deliver upon our growth strategy through '25 and beyond, focused on profitable revenue growth, through our continued commitment to our highly valued team members and through the provision of an exceptional client experience. As I've said many times before, both internally to our fantastic and committed team and also externally to our supportive shareholders and stakeholders, the best is yet to come from AF Legal Group. So let's turn our attention to a presentation on the Q1 FY '25 results, leading to the highlights. So I think obviously, this presentation is lodged and the full detail is there. I'm not going to read through every word of it, but I'll just touch on certain aspects. We'll start with the highlights. The details follow. In those again, I won't go through all the details on it, but we'll probably read through most of the highlights. So revenue growth, 13% up on the prior year, so the corresponding prior period. And Q1 FY '25 saw our average weekly revenue at $483,000 per week, which represents a new high for us. And it's a new high, obviously. I'll talk more about it as we get to the revenue slide too coming through. Our significant turnaround continues to gain momentum and at a net profit before tax attributable to the owners of AF Legal Group, which is our preferred measure. In quarter 1 of FY '25, we delivered $362,000. And when you compare that to FY '24 at $781,000, with the splits that you see there on the 2 halves, yes, definitely gaining momentum is a fair comment. Operating cash flow was very strong in the period, so a strong inflow of $1.7 million, as we saw some unwinding of working capital and also some timing benefits and also significant improvements in collections. And when we get to those slides on that later, Stace will sort of add a bit more color to that, but definitely some strong cash collection activity. Again, the highlights. Going back into things that we've already sort of spoken about in relation to the acquisition of criminal law and family law from Armstrong Legal and the armstrong.com.au (sic) [ armstronglegal.com.au ] website acquired in October. And important to note that the results from these newly acquired divisions will flow into our quarter 2 results, partially from November, I guess, and then obviously, December is a slowish month as well. But from half 2, they should be fully in there and delivering for us. And in relation to the earlier acquisition of Armstrong Contested Wills & Estates that was acquired back in April '24, happy to report that in quarter 1, again, another strong performance from them in terms of revenue, profitability and cash flow. And I think the comment at the full year results was that they really haven't missed a beat since they joined us, and that continues to be the case. Again, the highlights there on the Great Place to Work. I won't go back through that because we've spoken in the address, I guess. But just to say that 53% to 84% is a great result for us, and the positivity in the practices, when you go out there, is just obvious for all to see. And yes, from time to time, you get some very nice stories from people as well how life has changed for them in our organization. And that's particularly pleasing to hear. On to the next slide, if we can. And again, we'll just flip through these ones relatively quickly, but -- because the detail follows. You can see there that the highest-ever quarterly revenue at $6.281 million. And when you look at it to the half next to it, you can see that it's tracking pretty well against that half, and better things are ahead. The average weekly revenue result again at -- I think it's $483,000. It's the highest result ever. And you can see that, that positive upward trend has reestablished itself in the last couple of quarters, albeit assisted by the introduction of contested wills and estates, which is part of the reason that we did it. And again, looking at profitability and our net profit before tax attributable to the shareholders level there, obviously, that's a quarter at the end compared to halves previously. So you can see that, that quarter compares quite very favorably with the 2 preceding halves, so showing a lift in the trend there. So we'll move on to the revenue slide, if we can. [ Are you there ]? Sorry. Don't mind me. So yes, looking there, you see that $6.281 million, and it's not as simple as let's double it. But if you double that, it's $12.5 million for the half. And so yes, I think that we probably are looking at something between $12 million and $12.5 million for the half, which compares very favorably to the $10.95 million that we've got there. I won't go through all of the percentage increases because we have touched on the 13% total in -- on PCP. And also, although I guess it's worth mentioning, we're up 4% on the previous quarter, the previous quarter is pretty much like-for-like because we did have contested wills and estates in it as well. Yes, I think the rest of everything up there is just -- you can look at these. So I think the last point is of importance. I would say that quarter 2 may see some potential contraction in the average weekly revenue due to a number of things. I think calendar year closure seasonality definitely has an impact. We got a few staffing gaps that we mentioned in relation to the family law team, which is spread pretty nationally. A couple of absences. We've got one of our best dealers broke his arm quite badly as well. So yes, he seems to be back online. But I think in general, some of this downward potential will be offset by the fact that we've got 2 months of revenue from the newly acquired businesses. But I think at this early stage, it's a little bit hard to say what it will be like. Although I will say that October, as a non-second acquisitions revenue month, was similar to quarter 1 and November, which is the first month of criminal law, family law and the website as well. We're definitely seeing an uptick, but it's a reasonable uptick in the rates there, although November hasn't quite closed, so the numbers are moving around a bit. But -- so I think the potential contraction may not be what we potentially thought. I do think that it will be buffered by those additions. Moving on to profitability. And again, I get caught up too much on the detail. I'm not going to get into comparisons on expenses quarter-to-quarter or the quarter relative to last year. It's a little bit challenging, especially acquisitions in one and not in the other. But I think the important thing to note there is that, that first quarter net profit before tax attributable of $362,000, that represents 46% of our full year profit last year, so like to do 46% of last year's profit in the first quarter is a very pleasing start to the year. And I think that's probably the thing that I want to get out of that slide because I think we talked about the net profit before tax, before minority interest It's there for your information. But by and large, that's not the level that we tend to focus on from our organization. So moving on, and I'm going to be relatively quick because it's really similar information that you've already seen, just expressed in a different format. It's the traditional format that we do with our other quarterly and half year and full year releases, so it's just that table that you sort of get used to, I guess. And the takeaways from that is, as I said, that 46% of the profit of last year in the first quarter, I think that profit is in line with the profit of first quarter last year. But relative to the halves, H2 at $271,000 and H1 at $510,000, $362,000 is a very favorable and growing trend there. I think the rest of that is all stuff that we've already talked about, so we'll move on to the next slide. And this slide is really just revisiting a slide, which we introduced with our FY '24 results. And really, it's to illustrate the turnaround in our organization. So you can see that it's all presented at a standardized net profit before tax attributable to the shareholders by AF Legal, with consistent normalization. I think normalizations in the past varied a little bit, so we standardized all of that. And what it shows you is that the first 2.5 years of the listed organization's existence, it really produced a loss at -- a combined loss of around about $400,000. And in not the same period, but we're in now 1.75 years into this turnaround, and our profit is $1.8 million across that period. And as we say, if you look at that $362,000 column relative to the $781,000, given that the $781,000 is for a full year and the $362,000 is for a quarter, you can likely -- you can see that the fact that -- the statement that we are gaining momentum is very true. So we'll move on from that one as well, and I will pass on now. On the next couple of slides on the balance sheet and cash flow, Stace will talk.

Great. Thank you, Chris. Hope you can hear me. We've been very excited equally not only with the stabilizing of our profitability but the quality of our balance sheet. All the work that we've done over the last sort of 18 months is really enabling us to really get a clear picture of how we're tracking when looking at the balance sheet. And certainly, we saw a modest $0.4 million increase in our net total assets position. But I think the reason that we had that was through the profitability, but it was also very much supported by strong activity around ensuring that we're collecting our receivables. So we saw receivables quite favorably drop by $0.5 million despite the increase in fees. And that's due mostly to a real robust finance team out there working very closely with the business, some strong leadership on the ground, again supported by our new people-first pro policy where we're actually seeing our leaders on the ground driving some of these good protocols, and we're reaping the benefits of that. So we saw the highest -- I think one of the ones that I like the most is the highest collection of over 90-day debtors in any quarter. And so that was $0.7 million. We did have a little kickup because you do have these timing issues for our billing processes, so we did have a $400 million -- sorry, $400,000 bill raise in June that was collected in Q1. That will continue because we are seeing some strong activity around larger matters coming through, which we're managing very closely to ensure that they are fully recoverable. And we just generally saw the highest quarter for cash collections on debtors regardless. So fantastic. You'll see the benefits come through in the cash flow, no doubt. But we've also had cleared out our deferred consideration, $625,000, one that was due to the first Armstrong Legal deal where we had 1 of 2 payments, earn-out payments, that's for $375,000. That was -- the conditions of that were equally achieved. We didn't have to pay these conditions were achieved, but they're all positive to us. So we were almost happy to pay that amount of money because the business was performing. The second payment was the final payment for Kordos so there's no further earn-out payments in that area, and we're seeing some good numbers coming out of Kordos as well. In addition, we just had our other significant movements were around that lease space. We didn't actually take out any new leases in Q1. We will in Q2 to house our new Armstrong Legal team. But otherwise, that's just taking over. That new lease is nothing new. It's in the same format and modeling that we've done with all our other offices. So we'll be -- you'll see that come through in the H1 numbers. Just the next slide, please. And I suppose a positive number here for everybody to see is that increase in operating cash flow of the $1.5 million. There was a little uplift there for us through the GST input tax credit of $275,000. We had to pay GST, and that was on the first deal, and we actually recouped that as part of our Q1 results. We also had obviously all the strong collections from just normal cash collections through our billing, but we also had $1.5 million in cash come through from the ACE team. So the Contested Wills & Estates team, they collect $1.5 million in Q1. So we're expecting that to, not the $1.5 million, to continue every quarter, but certainly, as we move through some of these larger bills, that they do come in and they do help and to our total overall cash flow. Then outflows, investing activities, $0.87 million, and that was due to a $200,000 deposit we had to make in relation to the second deal. And that -- we've made that out but that was offset against the total payment that we've made for deal 2 in Q2. First of 2 payments, obviously, with the $375,000, the final payment to Kordos was all in there. And then the overall outflow for financing activities of $0.5 million was just down normal, as expected, lease liabilities. And we paid a dividend to Withnalls $253,000. This resulted in a net cash inflow of $131,000. So all in all, a very positive story, and we're very excited about the cash flow management going forward.

Thanks, Stace. We'll just move on to the last couple of slides, beyond that one, if we can to the next slide. Okay. So this is our regular focus, outlook slide and I won't get through all of it. The way we try and work this logic behind it, if there is some, is really that the blue highlights changes that are relevant to the current quarter, I guess. So from a people-first culture box here, you can see the Great Place to Work lift, as we've mentioned already downstair really, 84%. So very pleasing. New client activity, there are a few here and even one that's not in blue that probably should be. The sponsorship and executive producer role that we have in the Millie - The Film. We touched on it previously, but that -- the film has not been released yet. It will be released in early calendar '25. But we did have a function with Darren in Melbourne, where they basically showed us, I don't know what they called them, the [ rushes ] or something like that, I think, but they showed us a short version of the one already short film. Really good like the quality of it is fantastic. It's really -- its production values are very high, and I think that it's something that if it can gather -- if it can build on the success of the previous movie, which was Tommy which is into family law training resource in the U.S. So it's really gaining traction over there. So if Millie can do that -- and I think Millie is a softer version than Tommy. Tommy was probably a darker movie in some ways, and this is a lighter one. And yes, but to meet the lady that produced it, and I should know her name, but I don't. But she is very highly qualified and the resultant product is unbelievably great quality. So I think for us to be associated with that and to be able to promote discussions with partners and business development activity and all sorts just the industry discussions, I think will be a real opportunity for us in calendar '25 and beyond. The other one that's up there as well as just our focus on digital and SEO. Obviously, they were because the armstrong.com.au -- armstronglegal.com.au website and all the activity around that is really turbocharging what we were already doing. And I think that, that's a great opportunity for us. One that's not highlighted up there is business development. So you see the corporate service and service offerings [ a lot ]. The important things to mention there is that the Australian Association of Social Workers has selected us as their official partners. So basically, all of their members can access contact with Armstrong -- AF Legal Group to service their members, which is really a positive experience for us. And also from a referral point of view, we have established now with Maurice Blackburn as well to build on one that we already have in slate or onboard. So I think going back to some of the comments that Rick made in relation to his Chairman's address whereby we can be a national partner to these organizations and one of few in these areas. I think this is beginning to exhibit that. So I think that's one well worth highlighting. I think the other thing, profitability. Obviously, the profitability trend continue in Q1 '25. And the last one that's up there as well, and again, I might just throw this one [indiscernible] because she is the expert on all things practice management systems. So she can just give us a little bit of an update on what we're working on there as well.

Management system, finance system. Payroll, we'll be doing as well. So it is that integrated package and platform that's going to enable us to really find those time efficiencies, provide a better user experience for our talented professionals. But there's 2 things that we've been specifically working on in Q1 is getting the contract right, making sure affordability ongoing, we're getting the best price, cash flow management in that regard because it's a very difficult space when you go into the cloud. Everybody wants the money upfront so we're sort of ensuring that the contract going forward is going to be cash positive or manageable. And the second thing we've been working on this last quarter is very much around understanding on the impacts of AI and modern technology and how our 2 shortlisted platforms that we're looking at actually deal with this. And it's quite mind-blowing some of the functionality that's going to be included in this package. So it's -- we're ensuring that it is going to be able to utilize all that modern technology in the future. You don't have everything right now, but we'll have so many more benefits by the time we would plan to go live in about 9 to 12 months. And the pathway and the expectations of what they're building into that platform over the next 3 to 5 years is quite exciting. So we are hoping to secure a contract sooner rather than later. I'd love to do it before Christmas. If not, it will be soon after so that we can get the migration underway. But we'll have more to talk about.

Thanks, Stace. And last but not least, we'll just flip on to the final slide, which is our growth strategy. And again, this doesn't change much, obviously, from time to time, and the blue is really just the updated things that have happened. Again, I'm not going to go through a lot of detail because I've mentioned it a million times in terms of the most recent acquisition, and that's reflected up there. The one point that I will just focus on is that the last blue point. So really looking at geographic expansion in both criminal law and Contested Wills & Estates, and that will come through leveraging the existing AF Legal office network. And I think there's already activity in relation to that. I think from a point of view of the teams themselves in Sydney in terms of Contested Wills & Estates and criminal law, we're about to move them into new premises as well, which they're very excited about because they see that as a real fresh change for them. And it's interesting, they actually -- the leaders haven't told their stuff where it is, yes, they -- they're going to have -- they're going to treasure hunt where they basically find the locations. So they're all very excited about that. So it's going to see new teams come on board with that sort of energy and excitement. So I think that, yes, the prospects for those divisions going forward is fantastic. So I think that's quarter 1. Thank you.

Thank you. Thanks, Chris and thanks, Stace. So let's go to questions. We'll start with questions from the floor here on anything we've covered today for you to write anything you want and then we'll go to questions online. Any questions from the floor? No. Stephanie, any question online?

No questions online.

That's not the usual. We usually have questions. All right. We'll kick out. There will be a chance for questions again later. Let me now move to the formal business and the resolutions to be put to shareholders set out in the Notice of Meeting, which was set out on the 21st of October this year. I would like to remind shareholders that during the formal procedures, questions should be made relevant to them to particular resolution that we're dealing with. All resolutions today will be put to a poll and at the right time, we'll ask Computershare to put voting cards. As Chair of the meeting and as confirmed in the Notice of Meeting, I intend to vote where authorized all undirected proxies in favor of the particular resolution. Following the conclusion of the meeting, of course, you're welcome to remain until you ask any questions of the Board or executives. The notice convening this meeting was dated 25 October 2024 and was made available to shareholders in accordance with the ASX Listing Rules and the Corporations Act. And if there are no objections, I propose to take that notice as being read. Proxies -- valid proxies have been received and recorded and are open for inspection. Proxies have been received with shareholders for a total of 19,402,339 shares, and that represents 21.25% of the issued capital of the company. Details of the proxy numbers for each resolution will be displayed on the screen as each item of business is put to the meeting. Attendees at the meeting will have received an admission card on [indiscernible] new systems, I would like to take each resolution in sequence as set out in the Notice of Meeting, resolution together with the proxy votes will be displayed on the screen. I don't intend to read out the resolutions or the proxy results unless the shareholders specifically request me to do so. Reasonable opportunity will be given to shareholders to make comments and ask questions before the resolution is put to a vote. Shareholders in the room, please raise if you want ask a question a blue or a yellow card. Shareholders attending virtually can vote and ask questions via the online portal. So if we go to financial statements, first item of business is to receive and consider the financial report, the directors' report and the auditor's report for 2024, all of which were included in the 2024 annual report. There's no requirement that shareholders vote on, approve or adopt the financial reports. But we take the [ view ] that shareholders should be afforded an opportunity to ask questions about those reports or any other matter relevant to the performance of the company. Shareholders are entitled to direct questions to Tim Ford, the auditor relating to his audit, the auditor's report, our accounting policies and issues relating to auditor independence. I note for the record that there were no written questions to the auditor submitted prior to the meeting. So I'll now invite questions from shareholders firstly in the room in relation to the financial reports and open the meeting for discussion of those reports. Do we have any questions from the room? No. Stephanie, do we have any questions online? We do?

There's one question. Could you please comment on the materiality of the service provision for this -- for the Association of Social Workers?

The materiality of...

The service provision for the Association of Social Workers.

So I read that question. I would view that question as what is the potential revenue from that association.

Yes, it's not a really material amount, but they actually do pay us a retainer for that. And I should know the number, but I don't know what it is, to be honest. It's a modest retainer which allows a certain number of queries, above those queries, we [ didn't miss ] a payment in relation to that.

And I guess my response would be for any referral source in a professional services environment, we don't know the answer to that. So whether it's material or not, we don't know. Other questions?

No other questions received.

All right. Thank you. If we move then to the remuneration report resolution #1. First formal resolution is the adoption of the remuneration report for the 2024 financial year. As I mentioned, it's part of the director's report, which in turn is part of the 2024 annual report. Our remuneration policy and practices aim to attract, motivate and retain employees and the Board unanimously supports the adoption of the report. I do remind shareholders that under the Corporations Act, voting on this resolution is advisory and it's not binding. However, the Board will take into account any discussion on the resolution and the outcome of the vote when considering our future remuneration policies and practices. Proxy votes received in respect to this resolution is displayed on the screen, and I now open this resolution to questions firstly from the floor. No questions? Stephanie, are there any online questions in relation to the rem report?

No online questions received.

All right. Thank you. The next resolution concerns me so I'm going to pass the Chair to Peter Johns to deal with this resolution.

Thanks, Rick. The second item of business is the reelection of Rick Dennis to the Board of Directors. Rick was appointed as a director by the Board on 1 July 2022, and he was last elected by shareholders in 2022 AGM. Details of Rick's qualifications and experience are outlined in the Notice of Meeting. The directors, excluding Rick, unanimously recommend that shareholders vote in favor of this resolution. Proxy votes received in respect to this resolution are displayed on the screen. Are there any questions or comments from the floor on the reelection of Rick as a director? Stephanie, are there any questions submitted online in relation to this resolution?

No questions received online.

Thank you. I'll pass the Chair now back to Rick.

All right. Thank you and for your support. The third resolution is for the approval of the 10% placement capacity. The details of that are set out in the Notice of Meeting and the explanatory statement. We unanimously, as a Board, recommend that shareholders vote in favor of this resolution. Proxy votes received in respect of the resolution are as displayed. Are there any questions from the floor in relation to this resolution? Stephanie, any questions online?

Yes. There's one question. The question is what will the placement be used for?

My response to that and I invite Chris and/or Peter and/or [ Sarah ] and/or Stace to comment is that we have no current plans for the use of that capacity, but we believe it's logical and sensible to [ seek it ] should an opportunity arise, which would be predominantly around an acquisition, but we have nothing that we're currently focused on. And as Chris mentioned in his report, we have an organic growth strategy and focuses on the build-out of the 2 acquisitions we've made in the past 12 months. But as I say, it's logical to have that capacity available to us should an opportunity arise. Chris, Peter?

Yes, I'd just perhaps speak from the perspective of normally an investor who would probably, before this AGM, attended hundreds of AGMs that as an investor rather than a Board member and saw this resolution regularly has a tendency to sometimes read something into this that's not there. And I suppose now means [indiscernible] consider there will be is nothing there and it's something that's advised by our advisers, both company secretarial and financial advisers to have in there as a mechanism that if something was to happen, it certainly makes the administration of future [ raise ] easier and less costly. But there's absolutely nothing to be read into.

Okay. Other questions, Stephanie?

No questions on this.

All right. Thank you. So that concludes the resolutions to be voted on. To those voting in person, [indiscernible]... [Voting]

[indiscernible] online. I declare the poll closed. The results of the poll will be released and made available on the ASX platform. Do we have any questions from members or online in relation to general business we want to put forward the discussion? Any questions from the floor? Any questions online?

Yes, there's 2 questions. First one, good to see cash collection improving. Could you comment on how Contested Wills & Estates where your balance is tracking?

Stace, I might direct this question to you. Question was Contested Wills & Estates WIP value, how is that looking?

Yes, it's fairly steady. So we had an expected level of WIP generated during the first quarter, which is our quarter 4 last financial year. And we're seeing a relatively steady, albeit slightly down, but nothing to be worried about because somebody had leave like with any of these situations, but it's absolutely nothing to worry about. And we're seeing a good, strong start to Q2 this year as well. So yes, very excited.

Second question, how is the hiring environment now for family law talent? Is that a key area the company is working to drive scalability?

Chris?

Yes. I think it's as competitive as it's always been. I think that as word of the change in our organization gets out there, I think it makes a little bit easier. I think people are -- I personally have a lot of these meetings myself so especially at the senior levels. And whilst they don't all come on board initially, the conversations are ongoing. And the common thing that I hear is really that, let's see -- we're hearing really good things from your people out of different events, and we see that things have changed in the organization. So that's very positive. We have an internal resource that we use for most of their improvement. We try and avoid using recruitment firms where at all possible and also are constantly speaking to our team members in relation to reminding of the recruitment bonuses that we have internally for where they identify potential future team members. And when that actually happens, it's always very pleasing to meet those payments to your own team members rather than an external recruiter. I think that we've had some real quality ones coming onboard lately. I think we've had a senior associate coming into Perth. We've had a special council join us in -- not that one, Gold Coast and also special council in Canberra as well. And equally, we've had a new associate that joined us in Sydney as well, who is also taps into the Chinese community as well as management, which is a significant advantage for us too. So I think we've definitely lifted our quality through the last little while, but I think there's still more to go. And I have a number of discussions with a number of people ongoing at the moment that I'm hopeful will join us. If not, we'll move on to the next one.

My comment would be with my experience across the professional in particular in law or accounting, the question or the issue we're dealing with here is not unique to this company. The challenge in recruiting and retaining talent is by far a significant issue for professional service firms across the country, and I'll say across the world. And that's why what you said earlier, most important number today is the 84% Great Place to Work. We need to keep that up. We need to get the culture right. We need to be a place that people want to come and work at and stay. And I think that is what we're focused on. Other questions, Steph?

Yes. What is the working capital profile of criminal law in terms of days to start, finish and collect a matter?

Yes, it's an interesting question. I'm not sure I know the answer to that. So the cash flow profile of crime, Peter, your previous criminal law -- what's yours?

Yes. I rely on states for days. That was certainly something that would have been dug down on the acquisition process. [indiscernible] so fingertips. Yes, certainly someone who practice in that area, it is a very favorable profile in that. We are not taking on any legal aid work. It's all paid work, and unlike some aspects of even family law and contested estates, there is very much a demand that money is placed in trust before work is done. There's no -- it does come up and this perhaps goes to 90-plus day numbers too, which we've discussed previously contested estates and some large family law matters, we are content to bill at the end of the manner in circumstances where we're very comfortable that there's an asset pool there that will secure our fees in crime. There's obviously no asset pool to be dealt with. Money is required upfront and billed shortly or perhaps on a [ full basis ], but that's certainly immediately at the end of the month.

All right. Thank you. Other question?

Is there scope for efficiency gains in the various legal businesses through greater -- is there scope for efficiency gains in the various legal businesses through greater automation of processes?

[indiscernible]

[indiscernible] as is looking at this in the context of the practice management is probably a good [indiscernible].

Yes. I think the answer is yes. But be able to quantify it at this stage, it's a bit early. I think there is a lot of hype out there about what can be achieved. But certainly, there are opportunities, absolutely to make things more efficient for our lawyers and do a little bit of the legwork, but it is working out which of those systems is actually going to help us. And there's a new AI generated type app coming out every sort of second month at the moment. And it's really working through all the elements around its adoption, its use and how it integrates with your own system. We've got to really ensure security and of the data that we actually maintain. So we've just got to be very careful about jumping on board with any of these new apps that suggests they're solving all the problems of the world. So yes, but it's a bit early at this stage to provide any quantity on that.

Thank you. Did you have a question?

Yes, so quick question. With the 3 businesses, is there -- was the sort of historic seasonality with those if there's some sort of color on that.

The seasonality of our 3 businesses?

Yes, if there is any seasonality, so just maybe...

Not really other than the courts -- when the courts are closed, it's a little bit quiet. Beyond that seasonality, it doesn't really vary too much, to be honest.

I mean the last week in December and the first couple of weeks in January are noticeably in general. Otherwise, I don't think there's any...

And the only other thing from a seasonality point of view is that you do get a few lawyers that go to Europe in the middle of the year. I mean so you do take a slight dip sometimes through that if you lose a couple of good billers for a month because people when they get in Europe didn't care for a while. So that's the only other thing you don't really, and that would be the same across any of them.

The challenge for us is to build the scale so that we avoid that stuff to be thinking that we can be effective in a particular month of the year because people are on [ leave ]. That's the challenge to build scale in this business. That's my view.

Yes, 100%. And like, for example, the example there's 2 lawyers in Darwin. When one of them goes on holidays, you noticed that we do have another one joining us very shortly, and we do have another one potentially heading over there as well who is a qualified lawyer in the U.K. and will quickly qualify here as well. So we -- that's an area that if we can find lawyers in Darwin, we've got plenty of work. So I think that's an opportunity for us. But with 2 lawyers, when one is on holidays, you do notice it.

Stephanie, more questions?

This one is regarding performance incentives. So performance incentives have been reviewed and deemed difficult to achieve. Has this been addressed and are employees able to reach these performance rewards?

Yes, I think on this one, with the management change last year, July '23, we did revise the bonus scheme. So we basically lowered the hurdles and we increased the payout rates above the hurdles as well. I don't have the exact numbers and really at my fingertips the number of team members attaining bonuses has lifted appreciably, I think from memory, around 40% and equally in terms of the dollars paid out also has lifted similarly. I think that we are still -- we are currently reviewing it again. And I think that we will look to make some more changes. We're trying to build in some longer-term incentives for our more senior people and also trying to incentivize our leaders on the results of their practices rather than just their own personal results as well. So that's probably the next cab off the rank. And I think that when you're adjusting bonus rewards kind of, it's a gradual process. You may not get it perfectly right. And it doesn't -- I would be honest and say, look, it doesn't pay out as much as I'd like it to. So I think we actually generate opportunities to make it work but to make it work in a way that is very sensible for us. And I think it's really -- it is important as well because you do see, when you're talking about potential recruits as well at very high levels, sometimes they can have access to pretty good percentage of what they build. So it needed to be competitive in that regard. So I think part of this current review is designed to look at that option for us as well so we can get the best price in our organization.

One more question. On the U.K., would the group consider opening an office? Do you still work with family law over there?

There is still a slight link [indiscernible]. There's not a lot of activity in that regard. I would say I think some of our more senior lawyers who are a bit more connected internationally do -- in terms of opening an office, I think that's pretty unlikely. I don't think that would be something that would be [ on there ].

Other questions?

No further questions.

Okay. No further questions. Thank you, shareholders, for your questions. We take [indiscernible]. That concludes the formal business of the meeting. I can now declare the meeting closed. Thank you for attending in person or online, and I thank you for your continued support of our company. Many thanks.

Thank you.