Ann: Proposed Merger with GTC Legal Group, page-16

Umm - not sure this is a great transaction for AFL shareholders.

50m new shares issues at 20c each. If the transaction had been done at 40c per share then only 25m would be issued thereby improving the existing shareholders position as the dilution would have been less. And the EBITDA accretive % would have been much more significant.

The issue of shares at 20c is a contradiction to the rational for the buy back. If the buy back is announced at 25c for the reason the shares are cheap how do you justify issuing 50 m shares at 20c?

Another purported reason for the transaction is that it will provide "Greater liquidity for shareholders through increased market capitalisation and capital market significance". The 50m shares that are being issued are being held in escrow for 12 months. How does this achieve greater liquidity?

Confirmation that the original thesis of being a family law specialist was flawed. Operate for 3 years and the share price is pretty much back at issue price. So the point about the "Strengthened board and leadership team with proven track records in legal market disruption and consolidation" must refer to the GTC team?

AFL is on its first strike for the remuneration report. I wonder if they get a second at the upcoming AGM?

I note incentives at ALF are driven off EBITDA hurdles. This acquisition should result in the hurdle being met. But there is no proviso "providing no more shares are issued"..... I wonder if the independent expert will address this or this potential conflict was considered (with ALF director's recusing themselves") when the AFL board considered this. Perhaps not due to the statement "The Proposed Merger is unanimously endorsed and supported by the Board of AFL."

Separately, how are the lawyers at AFL going to react. As with any change some will take it positively but I am concerned about those lawyers who joined a family law firm because they wanted to practice family law (and nothing else) and are now in a very general personal services firm. It is so true for professional services firms - the entire firm leaves everyday and the firm only has value if they turn up the following day. How many will jump ship and start their own family law firm?

The flip side is that it is perhaps an opportunity to buy a good business (and its management) that is truly disruptive and in a growth phase. But if it was so good why would the existing owners sell?

Thoughts on the above?

Best BSP

GLTAH, DYOR, NFA