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

Okay. Welcome, everyone. I'm going to start our presentation for the half 1 FY '25 results. I'll just click through -- actually, if you just look to the bottom left of your screen, we just had a bit of an update on -- we received the notice here today of all days. But anyway, bear with us. There might be a button on the bottom left-hand corner of your screen. But there's a live sync to presenter. If there is, you should press that because otherwise the slides may not sync for you. But just hopefully, you can do that. I'll just give you half a minute. And then I'll just click to the next slide. And I guess if it doesn't move for you, maybe I would refer you to refer you to the setup of the presentation that we issued last Thursday night. Just read along with that, if you can. So hopefully, it works. But anyway, let's see. I'll move on to the first slide. So hopefully, if that all worked, you're all seeing the slide that says H1 FY '25 highlights. If you've got any big concerns with it, just let me know quickly now. Otherwise, I will proceed. Okay. I'm just going to read through this one a little bit because I won't really get into too much detail on this slide because really the details follow on the subsequent slides. So the highlight for us, I guess, revenue growth, 16% on prior year. Our H1 average weekly revenue of $489,000, which is a new half year high. And equally quarter 2, which is the October, November, December, achieving an all-time high as well at $494,000, so $494,000 a week. Profitable growth continuing for our organization. So our pretty well [indiscernible] version of our profit in terms of normalized net profit before tax attributable to the owners of AF Legal Group normalized as we'll come to, $561,000 for the half, which is 72% of what we achieved last year. So last year, we achieved $781,000 for FY '24. So halfway through with 72% of that. So in that respect, some good progress. Operating cash is another strong result. So half yearly, the inflow of $3 million, which doubles what we did at the Q1 numbers that we talked about in the AGM. So strong revenue growth and even further improvements in collections, which we'll talk about when we get on to the cash flow. What else happened in the half? The acquisition of the second part of Armstrong Legal, if you like. So Armstrong Legal Criminal and also their Family Law practices, and along with that, the armstronglegal.com.au website. So we acquired that at the end of October, and we have completed migration, and it's part of our business now. We'll talk about that a little bit later on. Yes, so 8 weeks' worth of results in H2. And really, it says cost neutral there for the profit neutral really rather than cost neutral. It had a bit of a slow start for reasons that we'll talk about in a minute. And we probably always thought that there were some challenges to betting in the armstrong.com.au -- legal.com.au website, and we'll just talk about that briefly. But the Contested Wills & Estates business, which we acquired back in April, delivered another strong performance in Q2. So its results for the half are on track with where we originally thought they would be when we -- at the time of the acquisition. And equally, the other thing we did there is we moved the combined Armstrong Legal team. So both the Contested Wills & Estates and the Family Law teams, we moved them into a new building in Sydney CBD, on the corner of York and Market. So it's a lovely office for them and a lot of synergies in that team. They've worked together for a long, long time. So keeping them together makes a lot of sense. Also at the same time, we absorbed the smallish family law team of 4 individuals into our Watts McCray Sydney operations. Other things that happened in the half, and we probably talked about this at the AGM, but we'll just mention it again. It's our transition to a people-first and practice-led organization. Great progress there. So our second Great Place to Work [indiscernible] we did in October. That delivered 84%, which was a massive increase on the initial survey that we did back probably at the time of the management change really when it was around about 53%. So that 31% increase is our people saying that, hey, this is a great place to work. So that is a really important step for us. Project Titan. So Project Titan is a search for a replacement cloud-based platform to deliver real time and efficiency savings. So that's practice management systems. It's document management systems and a lot of other things as well. And we'll talk about that a little bit later or Stace will talk on to that one in due course. Moving on. And this is our little snapshot slide really that just sort of shows how we're tracking and does it look good. And when you look at the revenue graph on the side, the first graph, you can see that it's our highest-ever half year revenue. You can see that there's a nice progression here since a dip in H2 FY '22. And obviously, there's acquisitions all the way along here, I guess. We've got the Watts McCray and Kordos acquisitions back here in the start of H1 FY '22. And then 6 months later or thereabouts, we have the acquisition of Withnalls coming in early January in '22 and then obviously, the Armstrong one sort of coming in a little bit later on. We might talk about them on the average weekly revenue slide. So you see that we had a couple of -- the trend overall is very positive. But again, we did have a couple of slow quarters. So Q2 and Q3 in FY '24 were definitely soft for us. And then we see a bit of benefit there from the Armstrong Contested Wills & Estates, which lifted us up a little bit. And more recently, in the last quarter, we've got a little bit of criminal law but not a lot. Looking out at the profit. So again, our traditional normalized net profit before tax attributable. You see all those blue boxes since the pain of the H1 FY '23 results. You see that we've got positive profit half after half, so 4 successive halves. And even in the most recent half, you can see that it's back to more of the level that it was back here. We had that slowish quarter, if you like -- half rather, sorry, at the end of FY '24. And that was really -- that was on the back of a Family Law business. It was really quite flat at that point. So I think our Family Law business for the second half of FY '24 was growth of about 0.5%. And it also only had 3 months of Contested Wills & Estates. So we move into the new half, the most recent half. And Family Law still -- we still got work to do in Family Law, but it has lifted to growth of a little bit over 2%. And obviously, we've got a full 6 months' worth of Contested Wills & Estates but only a couple of slowish months from Criminal Law. Moving on, our revenue. I've probably spoken to a lot of this really just, yes, in a lot of ways. So I'm not going to read through it. But it's fair to say that Contested Wills & Estates has driven the fair chunk of the recent growth, and Criminal Law will do the same moving forward as well. And that's the reason that we went down this track. We recognize that growth in Family Law -- we will strive for growth in Family law, and we will always look to do big things there. But I think that bolting on these new divisions for us with our relatively fixed cost centralized cost base makes a lot of sense. And hopefully, you'll see the results coming through. Armstrong Criminal Law. I just would say that the numbers there in the first 2 months of their transition to us, if you like. Obviously, it's December as well, which is a little bit slow. A lot of stuff around the website transition. So the armstrong.com -- armstronglegal.com.au website, just our challenges in transitioning that onto our own systems, also coping with the volume of calls that had gone from a call center environment where it had peaked previously. So a lot of changes there. And I think that combine that with relocation of staff from one office to another, all -- that's the reasons that, at the time of the acquisition, we talked about it being it would really be profit neutral in H2 or Q2, whichever way you look at it. I would say that since then, the January numbers, with all of the changes that we've made -- so we made significant changes to the way that the pages load, the way that the landing pages hit, the way that the calls are responded to. And we are really seeing some good volume through that business now, and we'll talk about a little bit down the track as to what that means for the future for that business, which is all pretty bright, I must say. Moving on to the P&L. And I'll just talk to this one because really, when we look at our profit numbers on this page, they're not normalized. So it's not really that -- I'm not going to say it's not relevant because obviously, it's relevant. But we will talk a little bit more when we get on to the next slide, which talks about the normalization. But a couple of things that we will talk about is expenses. Just important to say that, that expenses number in this, what is a traditional statutory P&L, these expenses here include the normalized expenses, the stuff that gets normalized out later. So there's $447,000 worth of normalized expenses, which we'll talk about on the next slide. A couple of early questions or queries or whether they've come directly or sort of seen in other areas. Employee expenses, it's important to note. You look at the lift in employee expenses. The employee expenses includes about an additional $1 million for Contested Wills Armstrong & Estates and Criminal Law and bearing in mind that the Criminal Law division really was pretty much breakeven for those couple of months. So the other thing to note as well is that if you then look at Family Law and head office, which is the rest of it, it's actually up by 5% year-on-year at a time when revenue is up by a couple of percent in Family Law. But obviously, there's a bit of revenue growth in the other as well. So it's not a grim number for us. So I think it's definitely a number that we can make sense of. I think I've also had some questions about the fact that at $7,883,000 as a percentage of revenue, it's about 62%. But again, it's not an apples-apples thing in a way because the one thing in that employee numbers, again, there is a head office component, which accounts for about 12% of that. So the fee earning component of our employee expenses is about 50% of our revenue. And I think that I've also seen some discussion around 1/3, 1/3, 1/3 rule of thumb. So they talk about 1/3 for the staff, 1/3 for the overheads and 1/3 for the profit. We don't really -- it's not something we really see. I think that we tend to run more around that 50% mark. I think we do have businesses that do it better than others. And I think our shining light is Northern Territory. So the Withnalls business doesn't quite get to the 1/3, but it gets closer than the rest. So not to say that we don't aspire to 1/3, 1/3, 1/3. It would be nice, but it's not something that we see at this point. At a headline level, I think if you just go to the net -- it is like a net profit after tax effectively attributable. You can see that it's gone from $564,000 to $282,000. A lot of coincidences on these numbers down here, which -- they have been checked trust me. So they are all right. But it's effectively half. So it's gone from $564,000 to $282,000. It's important to note that most -- the biggest impact on that is that it's not a normalized number. So that's the biggest explanation there. There's also a little bit of explanation on the tax treatment. So we've got a tax expense in the current half. We had a tax benefit in the previous half. So that contributes a little bit to that as well. And also just the strength of our Northern Territory business. Our Northern Territory business has had a great first half. And obviously, we own half of that. So all of those things sort of caused that. But I think we'll just move on to the next slide now, which is the normalized view. And again, you look here and you see -- I'll throw to Stace in a minute on a couple of these normalization adjustments, and then I'll pick on -- I'll pick up again on the second Armstrong Legal acquisition. But just looking at those numbers there, you see that -- and we talked about the number, $561,000, 10% lift on the PCP of $510,000 and also that $561,000 relative to $781,000 is 72% of last year's number. So I'll just get Stace to talk to us a little bit about the normalization adjustments. And I know there has been a few queries from a number of people on those as well. So Stace, over to you.

Thank you, Chris. So we did -- looking at the numbers and the comparative numbers, we do have normalizations, not only in H1 for this financial year, but we had $174,000 in H2 for the second half of last year. Last year was all acquisition costs, $174,000, and that was for the first Armstrong Legal deal. H1 this year included also acquisition costs for our second acquisition for the Criminal Law team and the Family Law team and the website, and that was $137,000. So there was obviously some benefits and savings in the acquisition costs themselves coming over just because we were able to -- we were dealing with the same people. We were able to utilize some of the existing business agreement. So we made some savings there. The second component of our normalization for H1 was around legal defense fees, about $310,000 there. These are isolated issues within our business and relate to a few years ago. And there was 2 components. One is a litigation piece, and the other was an industry investigation. And they're all big scary words when you see them on the paper. We take them very seriously. And at the end of the day, what we're trying to do is be as transparent in the books and with you about those. But it is impossible at this point in time to determine with any certainty any potential financial impact. If we were to try and even guess and put an estimate out there at this stage, it could actually impact our discussions and/or negotiations. So we are at that stage where we don't have clarity. But of course, as always, we'll continue to be as transparent with the shareholders and the business as to any updates. It's worth noting on the industry investigation -- the regulator investigation. We work in that environment. This is our reality. We take our responsibility to act with the highest professional standards that are set by state law societies very seriously. Each individual lawyer's right to trade depends on their ability to perform at those professional standards. So it's something that we deal with and manage on a day-to-day basis. We also work very closely with the law societies in trying to maintain up-to-date information about what those standards look like and how we can better improve our adherence to them. And we have a good working relationship with each of those state law societies. And it's a way that we can also show to them that we take our responsibility seriously and our commitment to compliance. Those professional standard obligations not only cover obvious obligations like do not do fraudulent activity or have strict management regarding around the handling of trust monies, which are very serious obligations, and we do have strict controls in place around those. But they also extend to things like actual behaviors of our lawyers. So the standards actually expect lawyers, for example, to speak respectfully to other lawyers, especially during intense negotiations. So the spectrum of our obligations are quite extensive, and we take each and every one of them seriously. But that's what the law societies in each state will actually monitor and will inquire of businesses if they receive any direct complaints. The second acquisition costs we spoke about, just to Chris' point, the issue around the second acquisition having a fairly cost neutral or profit neutral position for the quarter 2. It was a complex migration. What we have to recognize is we're actually introducing a brand-new practice area into our practice. And I'm just thrilled with the speed at which we were able to get on -- get the systems, the processes, the teams, the website, all on the ground and up and running within about an 8-week period just before Christmas. We're really excited with some of the positive early signs around new client leads. And at the moment, in January, they were showing double the monthly average for Q2. So that's great early signs. The other thing which is exciting about both the Armstrong Legal acquisitions are the actual leaders in the team. They are very proactive and very invested in ensuring that everything is running smoothly and profitably going forward. So they're great partners in all of this. And we know that H2 will benefit from having the full year contributions of both of those teams. Chris, did you want to add anything or happy to go to the next slide?

Yes. I'll just recap a couple of things that I missed on the previous slide just really quickly as well, just in relation to the depreciation and amortization numbers. Again, I've seen some speculation around what goes into depreciation. The number there is $709,000. Just worth noting that 80% of that is the depreciation on the ROU asset, which is effectively rent really. It's rent under AASB 16, which is an accounting stream, that standard, but it shifts rent down to there. So that's -- 80% of it is rent. And also just on the amortization, the drop back there from $215,000 to $90,000. That's reflective of the fact that a previous IPO-related asset was fully amortized as at the end of May. So we don't have that falling through our numbers any further. Moving on. I'll click forward to Slide 7. And we won't talk -- we won't dwell on this one too long. It's really just illustrating our performance since the changes started to be made after H1 FY '23. And obviously, the management change then came in towards the end of H2 FY '23. And you see that prior to that, the 2.5 years leading up to that from float, I guess, from IPO. It was a loss of $400,000. And in the last 2 years, we have delivered just over $2 million in profit. And that's again, and I won't labor the point, but normalized net profit before tax attributable to the owners of AFL Group -- AF Legal Group. You can read the rest of that at your leisure. And I will now pass you back to Stace for the balance sheet movements.

Great. Thanks again, Chris. So we've got some positive news on the balance sheet, which we're always pleased about after the work that we did in the financial year '24. We saw a $0.3 million increase in total net assets. Some of the key headline components of that are cash increased by $1 million. So we did have some recovery through GST, VAT returns, strong revenue growth. Receivables, it was pleasing to see that drop. And that is a dedicated area that we're working on and some great advancements in debtors' collections, making -- if we're doing installments, we've got direct debit arrangements in place. So we're just constantly reinforcing and improving that area. Intangibles obviously increased as a result of the acquisition, where we saw goodwill and an indefinite intangible for the brand as part of that second acquisition, total value $2.6 million. And that indefinite intangible for the brand, which includes the website, we sought professional advice about those valuations. And there's actually no amortization on that $0.9 million. And it's -- but we would be considering that, obviously, in our half yearly impairment reviews. Borrowings also featured. We borrowed $2,275 -- sorry, $2.275 million as due to the acquisitions, which saw borrowings -- just total borrowings for us just over $6 million, and I'll just touch on that a little bit. We didn't borrow -- just in a little bit. We didn't borrow another over $1 million, which we could have, but instead we paid with cash. So there was a few things in that $1 million. We had a cash deposit for the second acquisition. So we paid that with cash. That was about $200,000. We had 2 earn-out payments, total cash value of about $625,000. And then we had the second deal completion payment part of the arrangement of about $230,000. So they were all paid with cash and not borrowed. We'll start to make principal repayments on the $6 million loan in May this year. So we've had 1 year where we haven't been paying principal, but we're well prepared for those quarterly payments coming through. And just based on some initial calculations, we should see the interest and facility -- monthly interest and facility fees drop within the next 12 months by about 23% due to those principal repayments and assuming there's no interest and no further borrowings. So we're feeling optimistic about our management in that area. Chris, are you happy for me to go on?

Yes, just carry on, Stace.

Lovely. Thank you. So on the cash flow, we're also obviously featured strongly in our results for this year -- this half year, which saw cash from operating activities inflow of $3 million. Outflows obviously represented the acquisition deal where we saw the $2.5 million for the acquisition payment, the 2 earn-out payments, the first being the first Armstrong Legal deal. So the first deal, their first out payment. We've got another one to come next -- this coming August and then the final installment earn-out payment for the Kordos deal of $250,000. Outflows of financial activities, about $1.4 million, again, reflecting the second acquisition for Armstrong Legal of $2.3 million additional borrowings. We have our normal lease liability repayments and $250,000 -- just over $250,000 of the dividend payment to noncontrolling interest. So a net cash inflow of $1 million.

Okay. Thanks, Stace. Thank you very much. Sorry, some technical difficulties here. Okay. The focus and outlook slide, I won't dwell on this one, to be honest. It's something that appears in all of our releases. A lot of it doesn't change. Some of it does. What changes really is usually in blue. I think the things that we'll just touch on really quickly is obviously the Great Place to Work results, very positive there, and our people-first culture section. New client activity. Well, the sponsorship and executive producer role in Millie, the film. So Millie is a film put together by a barrister and filmmaker, family law barrister, Darren Mort, who has also produced similar movies previously. This one really is a short film about family turmoil and parental conflict as seen through the eyes of 10-year-old Millie. And that gives us a great opportunity to get out there and meet with people, and it's a great business development opportunity for us. And it also just gives us an opportunity to increase our voice out there in the market, which I think is positive on so many notes in terms of referrals, staff attraction, all sorts of things, I would say. One other one there. RUR, I think someone asked me the question on what is RUR. Literally, it was a launch to 2025 that we did with the team a little while back. It was called are you ready. And it was really just outlining our behaviors, values and mindsets that we want to encourage in our organization for all of our people, for all of our team members. And a little corny part, I guess, is they all started with R. So that's -- hence, the are you ready. So that was what that was about. So I'll just get Stace to talk quickly about the practice management system, and then I'll wrap up with a bit of forward-looking stuff on the next slide.

Thanks, Chris. Yes. So on the 31st of December, we had completed all our due diligence and review of our options, and we're happy to have signed up with best-in-class new practice management system and document management system. This is going to be a game changer for us. The -- what's recorded in our interim accounts is in relation to our commitments included a figure of $1.5 million, and that includes a component of capitalized costs. So it's going to take a 12- to 14-month period to actually get this new system set up. During that time, there will be some capital costs obviously incurred of the $1.5 million commitments. Included there were about $300,000 of costs that will be ultimately capitalized and amortized over the 5-year period. The remainder is really the remaining 4 years' worth of actual operating license costs. So when the lawyers and the team are actually using the system, and comparatively, they are slightly less than what we're actually paying on a monthly basis at the moment. And what was the exciting element of the new pricing model was the fact of how we charge a license for our fee earners. So those people in our business that are actually recording time, we're paying -- they are paying a license, whereas the other non-fee earning people in our business like my operating team, the central operating team do not. So it just supported our scaling up growth model where we're wanting to really stabilize our cost base upon which revenue is generated. So it does actually work out slightly cheaper. And that's -- those sort of preferential rates that we secured in those 3- and 5-year agreements really are quite good compared to the rest of the market. So we've locked in late in those periods, increases of a maximum of 5% where other industry increases can range from 7% to 13%. So we're very happy with the deal that we have done. And the real benefits are obviously going to be in the user experience. We're in this modern IT world where there's all sorts of time and process savings that can be made for our staff there. It's an ability for us to offer the top end industry's top standard practice management system, document management systems. It's a way -- it's something that I know talented lawyers look for when they're jumping from one business to the other. And we're very proud to be able to say that we've got these new systems on offer. Some of the -- just a couple of quick examples of the real benefits that our people will actually experience. It's like there's going to be 3 clicks of time entry instead of 5. There's actually going to be -- when they're actually processing their precedents, so we have an extensive list of precedents that are used in -- for every matter. Sometimes it takes up to 15 seconds to process one of those precedents in our current system. In the new system, we're looking at 1.6 seconds. So I mean there's just lengths and lengths of benefits in this new combination of systems that we've actually engaged and committed to. And -- but that's just to give you a flavor of some of them. And of course, it's cloud based and really enables us to utilize some of the other modern technologies like AI to be fully integrated with those. So we'll look forward to telling you a bit more about some of those savings, time, and ultimately, cost savings that we expect to come through.

Thanks, Stace. Appreciate that. Okay. And again, last but not least, before we get on to questions, just in terms of our growth strategy, again, a similar slide that doesn't change a lot. And any things that change are shown in blue, where we've done something different in the intervening period. So a lot of it's all around that second Armstrong acquisition. But I will just talk a little bit about just looking forward. So if I look at the positives for the second half, particularly in Armstrong Contested Wills & Estates, we -- well, one thing, we will have 6 months' worth of it in the second half, whereas we had 3 months in the second half of last year. We will grow that team by a little over 30% in the near future. We've already appointed 2 people in the last couple of days and a few more to come, which will see them being able to capitalize on the opportunities that they have. I think that they definitely have more work than they can handle at the moment. So we're getting the people to them so they can handle that. So that will -- that should see a very strong second half for them. Armstrong Contested law as well. So the Armstrong -- not contested law, sorry, Criminal Law. Armstrong Criminal Law, the team that came across to us was effectively 4 criminal lawyers and their support team of paralegals and the like, all based in New South Wales. So the good news is that we have already appointed our first criminal lawyer outside of New South Wales. So we have someone starting with us in Victoria very shortly, and they actually are a returning Armstrong Legal employee who has been elsewhere and developing nicely for the last 3 years. So happy to see that person rejoin us. And I think that they obviously have a familiarity with some of the existing criminal law team, so that will be a person really to lead that business for us. We're then looking to follow up, whether it's all before the end of the first half, but at least in calendar '25. I think that we will see similar moves made in Queensland, ACT and WA. We have -- out of the armstronglegal.com.au website, we have good visibility on the leads coming out in all of those locations. And whilst we moved first on Victoria, we can see that there is definitely similar lead volume in Queensland and WA. So they will be all things that we will look to do sooner rather than later. And it's -- obviously, we're not expanding into those markets. We just have one criminal lawyer. So we will look to grow those as soon as it makes sense from that point as well. So a lot of -- there's a lot of growth opportunities in Criminal Law. And I think that was one of the real attractions to us of that business. It's -- it had contracted back due to the former owners' sort of references, I guess, rather than the actual management of the team itself. They have contracted back to being just New South Wales. It had probably gone from a revenue line of north of $10 million down to something close to $2 million. And we look to -- yes. We want to take it back towards -- I'm not saying it's going to get to $10 million, but we want to take it up that way as quickly as we can. And I think that it's rebuilding what was again, and I think we can definitely do that. Family Law. As always, comings and goings, maternity leave returners, maternity leave leavers, all sorts of unfortunate reasons that people leave. We've had some couple of personal tragedies for a couple of our team members as well, which has affected them. But all in all, we are getting to the stage now of a net lift in team members, I would say. We're making a lot of appointments in the last month or so, I would say. And the quality of these people is excellent. And I think that, again, the benefits of things like the Great Place to Work can't be underestimated. I think the word is getting out there that this is a great place to work, and people are -- we have another returning person coming into the business at an associate level in Canberra. So again, that's pleasing to see, and obviously, the criminal lawyer that I mentioned as well. If I look at the Family Law business just in general, like we have 14 offices effectively. You can -- other numbers may have been quoted years ago, but it's down to 14 true offices at the moment. And I would say that of those, 10 are in the satisfactory to outstanding range. I mean there's one that's clearly outstanding and some that aren't far off, but 10 of them are fine really. I'd say that 4 of them need a little bit -- they need a little bit of help, and they're the ones that we're working on the most. Some of that is workflow. Some of that is workload coming through to them. And some of it is just the number of people in the actual practice itself. So we're working on all of that. But what we have done to make use of these people is we've diverted any extra resource that we have, something that we have been doing to some extent for a while, but I'd say it's really ramped up in the last year to such a significant state that Northern Territory is a location where we do struggle a little bit to get lawyers, although we have had a bit of luck lately, and we had one start in December and another one starting with us pretty shortly. But what we have managed to do is we have been able to effectively allocate work to team members in other locations who could then work on the Darwin files. And equally, sometimes that involves some travel for them as well, which is, again, part of their development because that Darwin business is a barnstormer for us. So I think that it's an added benefit that we can help them get revenue that maybe they wouldn't have otherwise got. But equally, our team members are benefiting from the experience of being on the ground in Darwin and helping their own utilization levels. That's about all we have, I think, in terms of the presentation itself. But I'll throw it back to questions. Are you going to look after the questions, Steph? Do you read those out?

Yes. Can hear me, Chris?

I can hear you.

Yes, we've got one question. So regarding the $310,000 of legal defense fees industry and litigation. I understand there are restrictions on what you can disclose. However, the lack of information provides shareholders with no way to gauge how material this could be.

Yes, it's true. It is challenging. As Stace pointed out, it is challenging because the stage of negotiations on some of these things, whether it's getting to a mediation stage or disclosure stage, if we say too much, it's probably not helpful to our case or may not be. You don't know. And then equally, on the regulatory stuff, I think on both of them, to be honest, do they keep me awake at night? No, they don't really. They don't. But they are part of what we deal with. And these are old matters and maybe sometimes related to way things were done in the past, which is not the way they're done now, especially in relation to the legal defense matter. The industry regulation stuff comes from time to time. It is exceedingly rare that this happens. But yes, does it keep me awake at night? No, it doesn't. So that's about the best I can give you because I can't give you any gauge on the dollars because, again, I don't know the dollars. And when you're in that situation, I guess anything is possible, but I feel that everything is -- we have the best of professional advisers helping us through this process. And the comfort that they provide us leads us to think that we're hopefully not too far down the track to resolving all of these.

Yes. Thanks, Chris. There's another 2 questions. So this one is about director transactions. There has been no director on market transactions since June 2023. With a significant drop in share price over this period, this is concerning as a shareholder. Based on results and acquisitions now integrated, the low market cap of $10 billion seems low. Why are directors and management not investing at these levels?

I'm happy to answer that, and Chris can add to it. It's worth noting that directors and management are often confronted with blackout periods based on the information that may not be disclosable but is such that it means that it's not appropriate for us to transact. When there's a current or a sort of likely future event, we obviously can't speak about those things. But if we just look back at last year, for example, I can speak personally that there were times that I would have liked to transact when I couldn't. The 2 transactions we did in relation to Armstrong, the discussions for the first of those commenced way back in late 2023. And so we're effectively in a blackout from that period right through until the first of those occurred. And I can say that the vendor of that literally a day or 2 after that settled approached us in relation to starting discussions around the second of those transactions. So that basically put all of 2024 in a blackout period for directors even beyond the normal blackout periods which occur between the end of a financial period and matters being released. So I just ask investors to consider that, that happens from time to time. Where they're ongoing, we can't obviously talk about them.

And I think in general, if I think back to the equity raise that we did back in March a little over a year ago, that was at $0.15, and I invested around $0.25 million at that point in time. Share price has -- sure, it fluctuates a little bit, but it hasn't been materially different from $0.15 until the last couple of days, to be honest, where it sort of dropped back a little bit. But hopefully, that's a temporary thing. So I don't really feel that there has been a significant drop to sort of give a market entry point for me. And really, like $250,000, it's a significant amount of money for me. So I probably -- the likelihood that I'm going back in to buy it more in the future -- in the near future is probably not high, I would say. And equally, obviously, I have, as the space as well, we have incentives that can bring us shares as well. So we like to have a positive outlook on those as well to think that that's something that's coming to us as well. So let's wait and see in that regard.

So the next question is in relation to trade receivables. Trade receivables past 90 days are now over $3 million. Could you please provide more context on this...

Do you want me to take this one, Chris?

Yes. Sounds like one of yours. Thanks, Stace.

Yes, no problem. Yes, it's -- I know that increase is mostly contributed to a few things. One is the recent acquisition. There was a deferred settlement matter that came over for Family Law that was quite significant. So -- and we're very positive about that. That will be finished soon. So we've got that in the mix there. That contributed to that. Also, we have Contested Wills & Estates. They do have some over 90-day debtors that we are working with them on. Again, they're going through a process. We're fully -- we've got full visibility of what's going on, and we're driving those. Some of those are actually connected to, again, getting the particular case completed, settled, properties sold, et cetera, and then distributed. Some of those matters can be quite complex in getting to that final cash distribution stage. And then we also have approved deferred settlement matters for Family Law generally. And with the improved approval process, we do reject some of those deferred settlements. And that's when you're actually delaying payment of the work that's actually done and billed until there's a settlement between the parties. And they might have to distribute cash or sell a property, et cetera. So we've got some of those, and we monitor those on a monthly basis through our credit controller. So we know exactly at what state that they're in. So those over 90-day debtors are more managed debtors rather than concerning debtors. And as I mentioned previously, we've introduced direct debit installment arrangement plans. So people are actually -- we're actually doing direct debits, and we're doing them over a shorter period. It's not like 2 years we're doing direct debits. It's more likely to sort of be a 3- to 6-month program where we have that direct plan in place with the banks.

Are you ready for the next question? So the next question is based on the share price and the STI, LTI, can you confirm no bonuses were paid to executives?

In terms of the current financial year, there's been nothing paid. These are paid after the end of the financial year. So in relation to the FY '24 financial year, where we returned to a profit, there were STIs paid to a couple of executives. But it's not related -- it's related to performance, and it's related to a number of KPIs and measurements that the Board manage. It's actually not -- it's not related to share price. And the share price at that point hadn't really changed dramatically from where it was at the issue back in March as well. So anything you want to add on that one, Pete?

No, other than to say that those bonuses for last financial year were well below the maximum that the Board was able to grant, which recognized the stagnating share price. As Chris said, it hadn't fallen significantly at that stage. And it also reflected the fact that over that financial year, the business had returned to a consistent, albeit lower than we want normalized profit, which is something that had not been achieved previously. So it was a fair balance in the Board's view between the fact that the shareholders, including me, I'm taking a directors' fee that is not only below the industry norm but below the other directors on the Board. And the only real benefit I get on this thing is as a shareholder. So I'm intently watching and protecting shareholders, and I want to see an improved return for them. But I and the Board felt this was a fair division of the benefits that have been created through that profit. And there's all other considerations, of course, in relation to staff retention and whatnot. And so yes, we're talking a figure that is magnitudes below, for instance, what was happening 3 or 4 years ago in this business where bonuses in the order of high hundreds of thousands of dollars were being issued for a business that was making a statutory and even normalized loss. So yes, that's on the Board that we will consider year-on-year, but it will be a reflection of the performance -- share price comes into it, but predominantly, it's related to the profit performance of the business.

There are 2 other questions that relate to the litigation cases. I might just combine them and just read that out now. So it says I understand that you can't give a value on proceedings, but is there any information you can give relating to what they are in relation to? And I guess connected question is, when did the company start defending the actions against the 2 legal proceedings? Based on what the company knows now, is the best case scenario spending another $310,000 on defending before resolving them, both without negative impact?

I think in terms of like the best case scenario, another $310,000, that wouldn't be a best case scenario. I think that the best case scenario would be a long way south of that number. But again, it's an unknown number. Could it be $310,000? It's possible. But I would like to think that where we sit at the moment that it would be less than that. In terms of what they are about, the litigation matter rather than the statutory matter is related to a recruitment of a lawyer that we did about 3 years ago and some of their previous related employment terms and how they -- I can't -- whether there was any apparent breach of those terms. And I guess that's what the question is to be determined. And I think we have one view, and obviously, the other party has another view. But that's what that one is about. But yes, it is related to a recruitment of a senior lawyer back around 3 years ago. And the other matter is it is, as it says, it's a regulatory investigation. It's not something that relates to, as Stace said, anything fraudulent. It's not something that costs people money. It's not like -- it's maybe some slight procedural issues that potentially may have not been quite perfect. But whether that is of significant concern, I guess we'll wait and see. I think that, again, the view that we are getting from our professional advisers is that we are in a good position on this one. So we can only go on that. But yes, in terms of the likelihood that they both wrap up very quickly, it's possible. Do I expect them to drag out for a long, long time? I don't really -- I think they will be resolved sooner rather than later, but you never can tell on these things.

I think there's time for one last question. So Stace, I think this one is for you. In some cases, Contested Wills & Estates will take security against estate property. This is included within receivables. Is it possible to split this out on the balance sheet to get a clearer view of non-securitized debtors?

Good question. I don't have the definitive answer on that one, but that's something I can certainly look into. But I mean I think it's fair to say that with all our deferred matters, the lawyers are asked to have security in place that can range from caveats to replicable authorities. And certainly, we don't go into these arrangements lightly anyway. So to actually separate them on the balance sheet, I might have to sort of take that question on notice and come back.

Thank you. I think that was all the questions.

Okay. Well, thank you all for joining us. If you have anything further, just feel free to come through to any of the 3 of us, and we will help you out where we can. But thank you again for your interest in our company. And I look forward to talk to you again in the near future. Thank you. Bye-bye.