19 March 2024
Litigation Capital Management
Limited
("LCM" or the
"Company")
Interim results for the half
year ended 31 December 2023
Highlights
•
|
Total realisations of A$28.4m, with concluded
case investments generating a 3.3x multiple of cash
invested
|
•
|
Realisations include performance fees of
A$10.2m on concluded cases as the benefits of our fund management
model are realised
|
•
|
Total income from litigation assets of A$21.9m,
an increase from A$10.1m in HY23
|
•
|
Net Profit after tax for the period of A$7.3m,
compared to a loss of A$2.3m in HY23
|
•
|
Net assets of A$185.4m as at 31 Dec 23 with
cases conservatively valued at 2.0x cash invested
|
·
|
50% increase in applications for funding reflecting
countercyclical nature of the business
|
•
|
Total new commitments of A$90m added in the
period
|
•
|
Fund I which comprises US$150m of external capital is
fully committed and Fund II which comprises US$291m of external
capital is 35% committed at 29 Feb 24
|
·
|
A$3.36m1 share buy backs to 15 March
2024, 1.7m shares
|
Outlook
·
|
The Company is well positioned to take advantage of a
sector that is rapidly gaining traction amidst consolidation
amongst competitors
|
·
|
Expectation Fund II will be fully committed and Fund
III launched within the next 12 months
|
(1 converted at 1.94 GBP to
AUD)
Commenting on
the results, Patrick Moloney, CEO of Litigation Capital Management,
said: "These
results demonstrate the opportunity that now presents itself for
LCM. Having built a strong foundation for its fund management
business, we are now seeing the benefits of it come to fruition.
Fund I is already delivering strong returns, and we expect to fully
commit Fund II as well as launch a new fund this
year."
"At a time
when demand for dispute finance is increasing, LCM is extremely
well placed to take advantage of this opportunity. This set of
results demonstrates that LCM has the knowledge and expertise to
make sound investment decisions and deliver for shareholders and
fund investors alike."
LCM will be hosting a webinar for investors
today at 11.00 a.m. The presentation is open to all
existing and potential shareholders. If you would like
to attend this presentation, please register using the following
link:
https://www.investormeetcompany.com/litigation-capital-management-limited/register-investor
A webinar presentation for analysts
will take place at 9.30am. Analysts wishing to attend should
contact lcm@tavistock.co.uk
to register.
The accompanying results
presentation is available on LCM's website:
https://www.lcmfinance.com/investors/investor-presentations-results
The Interim Financial Report is
available at:
https://www.lcmfinance.com/investors/investor-presentations-results
Enquiries
Litigation Capital Management
|
c/o Tavistock PR
|
Patrick Moloney, Chief Executive
Officer
Mary Gangemi, Chief Financial
Officer
|
|
|
|
Canaccord (Nomad and Joint Broker)
|
Tel: 020 7523 8000
|
Bobbie Hilliam
|
|
|
|
Investec Bank plc (Joint Broker)
|
Tel: 020 7597 5970
|
David Anderson
|
|
|
|
Tavistock PR
|
Tel: 020 7920 3150
|
Tim Pearson
Katie Hopkins
Simon Hudson
|
lcm@tavistock.co.uk
|
NOTES TO EDITORS
Litigation Capital Management (LCM)
is an alternative asset manager specialising in disputes financing
solutions internationally, which operates two business models. The
first is direct investments made from LCM's permanent balance sheet
capital and the second is third party fund management. Under those
two business models, LCM currently pursues three investment
strategies: Single-case funding, Portfolio funding and Acquisitions
of claims. LCM generates its revenue from both its direct
investments and also performance fees through asset
management.
LCM has an unparalleled track record
driven by disciplined project selection and robust risk
management.
Currently headquartered in Sydney,
with offices in London, Singapore, Brisbane and Melbourne, LCM
listed on AIM in December 2018, trading under the ticker
LIT.
www.lcmfinance.com
Chief Executive's Statement
Progress on Fund management
business
2023 was the
year in which our funds management business bedded down and for the
first time showed the benefits, with Fund I investments generating
cash and outsized returns. This has continued into the first half
of the 2024 financial year, with the settlement of an Australian
class action, part of Fund I, generating a ROIC after performance
fees of 4.0 times. Following the period end, as previously
announced, LCM's investment related to a portfolio of two separate
construction related disputes in Fund I has had a successful award,
with the financial performance expected to
be in line with our historic performance metrics.
The success of this model is clear
to see, underpinned by the same rigorous underwriting process which
LCM is known for and has developed, and we expect to see further
case settlements from Fund I in the second half of the
year.
Following on from Fund I, we expect
Fund II to be fully committed within the next 12 months
(commitments as at 31 December 2023 within Fund II: A$162m) and
have plans to launch a further fund as well.
The Funds Management Model enables
LCM to leverage third party capital and co-invest in a larger pool
of diversified investments. Our co-investment in cases aligns LCM's
interests with third party investors and enhances returns to LCM,
through performance fees.
Building out this model has been one
of our key goals, AUM has increased to A$561m at
the end of the period (FY23: A$484m), putting us on solid
foundations from which to expand and continue to deliver on this
model to provide sustainable growth.
Investment
performance
The performance of the business,
following LCM's best ever year on record in FY 2023 remains strong.
As we have reiterated previously, our investments do not generate
linear returns, so the performance of the business in any given six
or twelve month period may not accurately reflect the underlying
performance of the business. On a three-year basis (FY22-24), our
returns remain strong, with a rolling IRR of 67.4% and ROIC of 2.0
x. Recovery times have lengthened from a historic average of 30
months over a 12.5 year period to 40 over the most recent
three-year period, however we are hopeful that court delays as a
result of the Covid pandemic, will continue to reduce.
Having moved to Fair Value
accounting for FY23, investors can now get a clearer idea of the
value of the portfolio, having previously valued all investments at
cost. The value of all ongoing cases on our balance sheet was
A$213m as at 31 Dec 23, valuing the cases at 2.0x cash invested
compared to our long-term track record of achieving 2.8x cash
invested. This demonstrates that despite the change in accounting
methodology, we will continue to be prudent in our approach to
valuation.
In the period, three cases
concluded, generating A$28.4m of cash receipts for LCM, inclusive
of $10.2m of performance fees with further recoveries due in H2. On
these cases, a 3.3x multiple was achieved on A$8.7m cash
invested.
Our underwriting team continue to
see a strong pipeline of potential investments, with 242
applications for funding in the period, an increase of 50% on H1
2023. From these cases, we have so far committed A$90m to five
cases, which again demonstrates our thorough due diligence and
robust underwriting practices.
Outlook
LCM is well positioned to take
advantage of the growing demands for disputes capital. Across our
Asia, European and Australian operations, we have built out highly
qualified teams of litigation finance professionals who have
developed strong relationships in these markets. Across the globe,
economic uncertainty and rising insolvencies means there is the
expectation of an increase in disputes, which we believe will drive
demand for LCM's capital. Alongside this, LCM finds itself in an
improved competitive position, due to industry consolidation and in
some cases contraction amongst existing litigation
financiers.
Post year end, the UK Government has
tabled legislation to end the uncertainty in litigation finance
caused by the Supreme Court's ruling last
July in PACCAR, which is a positive development for the
industry.
We announced in the FY23 results
that the business was exploring a sterling retail eligible bond
listed on the ORB at the London Stock Exchange to optimise cost of
capital and allow us to take advantage of opportunities we see in
the market, as well as other alternative debt financing. These
discussions are at an advanced stage and an update will be provided
in due course.
Patrick Moloney
Chief Executive Officer
19 March 2024
Directors' Report
The Directors of Litigation Capital
Management Limited (LCM) present their report together with the
half-year financial report of the consolidated entity consisting of
LCM and its subsidiaries (collectively LCM Group or the Group) for
the six month period ended 31 December 2023 and the auditors'
review report thereon.
1.
Directors
The Directors of LCM at any time
during or since the end of the financial period are set out
below:
Jonathan Moulds
Patrick Moloney
Dr David King
Gerhard Seebacher
Mary Gangemi
2.
Company Secretary
Anna Sandham was appointed Company
Secretary of LCM in September 2016. Anna is an experienced company
secretary and governance professional with over 20 years'
experience in various large and small, public and private, listed
and unlisted companies. Anna has previously worked for companies
including AMP Financial Services, Westpac Banking Corporation, BT
Financial Group and NRMA Limited. Anna holds a Bachelor of
Economics (University of Sydney), Graduate Diploma of Applied
Corporate Governance (Governance Institute of Australia) and is a
Chartered Secretary.
3.
Principal activities
LCM is a global provider of disputes
finance and risk management services.
LCM has an unparalleled track
record, driven by effective project selection, active project
management and robust risk management. Headquartered in Sydney,
with offices in London, Singapore, Brisbane and Melbourne, LCM
listed on AIM in December 2018, trading under the ticker
LIT.
4.
Operating and financial review
Overview of the LCM Group
LCM is a company limited by shares
and was incorporated on 9 October 2015. LCM was admitted to trade
on the Alternative Investment Market (AIM) of the London Stock
Exchange on 19 December 2018 under the ticker LIT. LCM was formerly
listed on the Australian Securities Exchange (ASX) between 13
December 2016 and 21 December 2018.
Its registered office and principal
place of business is Level 12, The Chifley Tower, 2 Chifley Square,
Sydney NSW 2000, Australia.
Operations
LCM operates its business through a
series of wholly owned subsidiaries. The principal activity of
those subsidiaries is the provision of litigation finance and risk
management associated with individual and portfolios of disputes.
LCM currently operates two business models. The first is
direct investments made from LCM's balance sheet capital. The
second is funds and/or asset management. Under those two business
models, LCM currently pursues three investment strategies.
Those strategies are as follows:
Single‐case funding: The first and
currently largest strategy, is single‐case funding. That is,
the investment in a single dispute. This is a strategy that
LCM has maintained since its inception (through its predecessor
company) 25 years ago. Currently, a large proportion of LCM's
investments are in single‐case investments.
Portfolio funding: The second
strategy pursued by LCM is portfolio funding. That is, the
provision of a portfolio based funding solution to law firms,
insolvency practitioners or corporates. It involves the
provision of a financing solution and risk management tools for a
bundle of separate disputes. LCM's particular focus with
respect to that strategy is the provision of corporate portfolio
financing.
Acquisitions of Claims: The third
strategy, in its early stages of evolution, is the investment in
smaller disputes (typically insolvency‐based) through the
acquisition or assignment of the underlying cause of action. LCM
generates its revenue through acquiring a cause of action and
pursuing a recovery or award as principal.
Review of financial
performance
The statutory profit for the Group
after adjusting for income tax amounted to $7,293,000 (31 December
2022: loss $2,266,000). Adjusted profit before tax is $15,998,000
(31 December 2022: $1,324,000).
Cash on balance sheet was
$87,701,000 as at 31 December 2023 (30 June 2023: $104,457,000). Of
this, $17,450,000 relates to third-party cash which is restricted
cash as it relates to balances held within the fund investment
vehicles which have been consolidated with the Group numbers (30
June 2023: $21,484,000). Cash generated during the period from the
resolution of investments was $72,772,000 (31 December 2022:
$19,615,000).
The Directors do not recommend a
dividend in respect of the period ended 31 December
2023.
5.
Matters subsequent to the end of the financial
period
In the Directors' opinion, no matter
or circumstance has arisen since the end of the financial year,
that has significantly affected, or may significantly affect, the
operations of the Group, the results of those operations, or the
state of affairs of the Group in future years.
6.
Lead Auditor's independence declaration
The Auditor's independence
declaration as required under section 307C of the Corporations Act
2001 is included in LCM's financial statements.
7.
Rounding of amounts
LCM is of a kind referred to the
Australian Securities and Investments Commission Corporations
(Rounding in Financial/Directors' Reports) Instrument 2016/191,
relating to 'rounding-off'. Amounts in this report have been
rounded off in accordance with that Instrument to the nearest
thousand dollars, or in certain cases, the nearest
dollar.
Mr Jonathan Moulds
Chairman
19 March 2024
Consolidated statement of profit or
loss and other comprehensive income
For the period ended 31 December
2023
|
|
|
Restated
|
|
|
31-Dec-23
|
31-Dec-22
|
|
Note
|
$'000
|
$'000
|
Income
|
|
|
|
Gain on financial assets at fair
value through profit or loss
|
4
|
52,429
|
18,479
|
Movement in financial liabilities
related to third-party interests in consolidated
entities
|
4
|
(30,546)
|
(8,409)
|
Total income from litigation assets
|
|
21,883
|
10,070
|
Other income
|
|
-
|
-
|
Interest income
|
|
421
|
5
|
Expenses
|
|
|
|
Employee benefits expense
|
6
|
(5,938)
|
(4,759)
|
Depreciation expense
|
6
|
(80)
|
(80)
|
Corporate expenses
|
|
(1,960)
|
(2,708)
|
Finance costs
|
6
|
(5,543)
|
(3,876)
|
Fund administration
expense
|
6
|
(1,474)
|
(1,139)
|
Foreign currency
gains/(losses)
|
|
1,625
|
(1,316)
|
Total expenses
|
|
(13,369)
|
(13,878)
|
Profit/(loss) before income tax expense
|
|
8,935
|
(3,803)
|
Analysed as:
|
|
|
|
Adjusted operating profit
|
|
15,998
|
1,324
|
Non-operating expenses
|
6
|
(1,520)
|
(1,391)
|
Finance costs
|
6
|
(5,543)
|
(3,736)
|
Profit/(loss) before income tax expense
|
|
8,935
|
(3,803)
|
Income tax expense
|
7
|
(1,642)
|
1,537
|
Profit/(loss) after income tax expense
|
|
7,293
|
(2,266)
|
Other comprehensive income
|
|
|
|
Items that may be subsequently
reclassified to profit and loss:
|
|
|
|
Movement in foreign currency
translation reserve
|
|
(101)
|
310
|
Total comprehensive income for the period
|
|
7,192
|
(1,956)
|
Profit for the period is
attributable to:
|
|
|
|
Owners of Litigation Capital
Management Limited
|
|
7,293
|
(2,266)
|
|
|
7,293
|
(2,266)
|
Total comprehensive income for the
period is attributable to:
|
|
|
|
Owners of Litigation Capital
Management Limited
|
|
7,192
|
(1,956)
|
|
|
7,192
|
(1,956)
|
|
|
Cents
|
Cents
|
Basic earnings per share
|
21
|
6.84
|
(2.13)
|
Diluted earnings per
share
|
21
|
6.37
|
(2.13)
|
Where applicable, comparative
information has been restated to reflect a change in accounting for
litigation funding agreements. Refer to Note 3.
The above Consolidated Statement of
Profit or Loss and Other Comprehensive Income should be read in
conjunction with accompanying Notes to the Financial
Statements.
Consolidated statement of financial
position
As at 31 December 2023
|
|
31-Dec-23
|
30-Jun-23
|
|
Note
|
$'000
|
$'000
|
|
|
|
|
Assets
|
|
|
|
Cash and cash equivalents
|
8
|
87,701
|
104,457
|
Trade & other
receivables
|
|
1,838
|
2,209
|
Due from resolution of financial
assets
|
9
|
19,430
|
11,873
|
Financial assets at fair value
through profit or loss
|
10
|
391,011
|
391,410
|
Contract costs
|
11
|
39,377
|
37,277
|
Property, plant and
equipment
|
|
182
|
211
|
Intangible assets
|
|
333
|
356
|
Other assets
|
|
1,180
|
1,110
|
Total assets
|
|
541,051
|
548,903
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
Trade and other payables
|
12
|
5,390
|
7,535
|
Tax payable
|
|
7,770
|
7,769
|
Employee benefits
|
13
|
988
|
906
|
Borrowings
|
14
|
59,783
|
68,976
|
Financial liabilities related to
third-party interests in consolidated entities
|
15
|
244,726
|
243,990
|
Deferred tax liability
|
7
|
37,032
|
36,259
|
Total liabilities
|
|
355,689
|
365,435
|
Net
assets
|
|
185,362
|
183,468
|
|
|
|
|
Equity
|
|
|
|
Issued Capital
|
16
|
69,674
|
69,674
|
Treasury shares
|
16
|
(796)
|
-
|
Reserves
|
|
1,404
|
1,042
|
Retained Earnings
|
|
115,080
|
112,753
|
Parent interest
|
|
185,362
|
183,468
|
Total equity
|
|
185,362
|
183,468
|
Where applicable, comparative
information has been restated to reflect a change in accounting for
litigation funding agreements. Refer to Note 3.
The above Consolidated Statement of
Financial Position should be read in conjunction with accompanying
Notes to the Financial Statements
Notes to the financial statements
For the period ended 31 December
2023
Note 1 General Information
The financial statements cover
Litigation Capital Management Limited (the 'Company') as a Group
consisting of Litigation Capital Management Limited and the
entities it controlled at the end of, or during, the period
(referred to as the 'Group'). The financial statements are
presented in Australian dollars, which is Litigation Capital
Management Limited's functional and presentation
currency.
Litigation Capital Management
Limited was admitted onto the Alternative Investment Market ('AIM')
on 19 December 2018.
Litigation Capital Management
Limited is a listed public company limited by shares, incorporated
and domiciled in Australia. Its registered office and principal
place of business is:
Level 12, The Chifley
Tower
2 Chifley Square
Sydney NSW 2000
A description of the nature of the
Group's operations and its principal activities are included in the
Directors' report, which is not part of the financial
statements.
The financial statements were
authorised for issue, in accordance with a resolution of Directors,
on 19 March 2024. The Directors have the power to amend and reissue
the financial statements.
Note 2 Significant accounting policies
These consolidated financial
statements are general purpose financial statements for the interim
reporting period ended 31 December 2023 and have been prepared in
accordance with the Corporations Act 2001 and Australian Accounting
Standard AASB 134 Interim Financial Reporting. Compliance with AASB
134 ensures compliance with International Financial Reporting
Standard IAS 34 'Interim Financial Reporting'.
These interim financial statements
do not include all the notes of the type normally included in
annual financial statements. Accordingly, these financial
statements are to be read in conjunction with the annual report for
the year ended 30 June 2023 and any public announcements made by
the Company during the interim reporting period.
Basis of preparation
The principal accounting policies
adopted are consistent with those of the previous financial year
and corresponding interim reporting period, unless otherwise
stated.
New
or amended Accounting Standards and Interpretations
adopted
The consolidated entity has adopted
all of the new or amended Accounting Standards and Interpretations
issued by the Australian Accounting Standards Board ('AASB') that
are mandatory for the current period.
Any new or amended Accounting
Standards or Interpretations that are not yet mandatory have not
been early adopted.
Historical cost
convention
The financial statements have been
prepared under the historical cost convention.
Critical accounting
estimates
The critical accounting judgements,
estimates and assumptions that have been applied in the preparation
of the interim consolidated financial statements are consistent
with those followed in the preparation of the Group's annual report
for the year ended 30 June 2023.
Operating segments
Operating segments are presented
using the 'management approach', where the information presented is
on the same basis as the internal reports provided to the Chief
Operating Decision Makers ('CODM'). The CODM is responsible for the
allocation of resources to operating segments and assessing their
performance.
Note 3 Restatement of comparative
As disclosed in the 30 June 2023
Annual Report, the Group reassessed its classification of the
funding of its litigation funding agreements, which resulted in the
majority of the Group's litigation funding assets now being
recognised under AASB 9. Under this change, litigation funding
agreements and third-party interest in consolidated entities are
accounted for as financial instruments under AASB 9 Financial
Instruments.
As a result of implementing this
accounting for litigation funding agreements for relevant
contracts, the Group has restated the Consolidated statement of
profit or loss and other comprehensive income for the period ended
31 December 2022 for comparative purposes.
The restatement of each of the
affected financial statement line items for the prior periods, as
follows:
Impact on consolidated statement of profit and loss and other
comprehensive income (increase/(decrease) in
profit)
|
31-Dec-23
|
|
$'000
|
Income
|
|
Litigation service
revenue
|
(4,699)
|
Litigation service
expense
|
3,558
|
Net gains/(losses) on financial
assets at fair value through profit or loss
|
18,479
|
Movement in financial liabilities
related to third-party interests in consolidated
entities
|
(8,409)
|
Total expenses
|
(1,801)
|
Income tax expense
|
(1,897)
|
Net
impact on profit for the period
|
7,128
|
Attributable to:
|
|
Equity holders of the
parent
|
7,128
|
Other comprehensive
income
|
1,583
|
Net
impact on total comprehensive income for the
period
|
8,711
|
Impact on basic and diluted earnings per share (EPS)
(increase/(decrease) in EPS)
Earnings per share
|
Cents
|
Basic, profit for the period
attributable to ordinary equity holders of the parent
|
4.90
|
Diluted, profit for the period
attributable to ordinary equity holders of the parent
|
4.90
|
Consolidated statement of cashflows
The change did not have a net impact
on the Group's operating, investing and financing cash flows but
did require some change to components within each cash flow
class.
Note 4 Income
|
|
Restated
|
|
31-Dec-23
|
31-Dec-22
|
|
$'000
|
$'000
|
Realised gains on litigation
assets
|
10,866
|
(34)
|
Realised performance fees
|
8,776
|
-
|
Fair value adjustment during the
period, net of previously recognised unrealised gains transferred
to realised gains
|
2,381
|
6,168
|
Foreign exchange gains
|
(437)
|
1,006
|
Total income from litigation assets
attributable to LCM
|
21,586
|
7,140
|
Gain on financial assets related to
third-party interests in consolidated entities
|
30,843
|
11,339
|
|
52,429
|
18,479
|
Loss on financial liabilities
related to third-party interests in consolidated
entities
|
(30,546)
|
(8,409)
|
Total income from litigation
assets
|
21,883
|
10,070
|
Total income from litigation assets
attributable to LCM represents realised and unrealised gains that
relate to LCM's funded proportion of litigation contracts. The gain
and loss related to third party interests in consolidated entities
represents realised and unrealised gains and losses that relate to
third party funded proportions from LCM controlled entities.
Realised gains relate to amounts where litigation risk has
concluded and amounts are expected to be received by LCM.
Unrealised gains or losses relate to the fair value movement of
assets and liabilities associated with litigation
contracts.
Note 5 Segment Information
The Group's operating segments are
based on the internal reports that are reviewed and used by the
Board of Directors (who are identified as the Chief Operating
Decision Makers ('CODM')) in assessing performance and in
determining the allocation of resources.
The Directors have determined that
there is one operating segment. The information reported to the
CODM is the consolidated results of the Group. The segment result
is as shown in the statement of profit or loss and other
comprehensive income. Refer to statement of financial position for
assets and liabilities.
Note 6 Profit before tax
|
|
Restated
|
|
31-Dec-23
|
31-Dec-22
|
|
$'000
|
$'000
|
Profit before income tax expense
includes the following specific expenses:
|
|
|
Employee benefits expense
|
|
|
Salaries & wages
|
4,530
|
3,841
|
Directors' fees
|
228
|
196
|
Superannuation and
pension
|
147
|
138
|
Share based payments
expense
|
463
|
308
|
Other employee benefits &
costs
|
570
|
276
|
|
5,938
|
4,759
|
Depreciation
|
|
|
Plant and equipment
|
42
|
20
|
Intangible assets
|
38
|
60
|
|
80
|
80
|
Interest on borrowings (note
14)
|
5,340
|
3,536
|
Finance costs of third-party
interests
|
-
|
140
|
Other finance costs
|
202
|
200
|
|
5,543
|
3,876
|
Fund administration expense
|
|
|
General administration
expenses
|
483
|
289
|
Set-up expenses
|
-
|
73
|
Placement fees
|
991
|
777
|
|
1,474
|
1,139
|
Fund administration expenses relates
to costs associated with the setup and administration of the LCM
Global Alternative Returns Funds which are wholly attributable to
the third party interest in consolidated entities.
|
Leases
|
|
|
Short-term lease payments
|
451
|
379
|
Adjusted operating profit
Adjusted operating profit excludes
non-operating expenses which includes items which are considered
unusual, non-cash or one-off in nature.
Non-operating expenses
Management have opted to separately
present these items as it better reflects the Groups underlying
performance. Non-operating expenses includes the following
items:
Share based payments
expense
|
463
|
308
|
Other transaction costs
|
15
|
38
|
Litigation fees
|
-
|
225
|
Other expenses
|
51
|
42
|
Fund administration
expenses
|
991
|
777
|
Total non-operating
expenses
|
1,520
|
1,391
|
Note 7 Income tax expense
|
|
|
Restated
|
|
|
31-Dec-23
|
31-Dec-22
|
|
|
$'000
|
$'000
|
Numerical reconciliation of
income tax expense and tax at the statutory rate
|
|
|
|
Profit before income tax
expense
|
|
8,935
|
(3,803)
|
|
|
|
|
At the Group's statutory income tax
rate of 25% (2022: 25%)
|
|
2,234
|
(951)
|
|
|
|
|
Tax effect amounts which are not
deductible/(taxable) in calculating taxable income:
|
|
|
|
|
Foreign tax rate
adjustments
|
(24)
|
(33)
|
|
Share-based payments
|
116
|
77
|
|
Change in tax rate
|
(684)
|
(630)
|
Income tax expense /
(benefit)
|
|
1,642
|
(1,537)
|
Statutory tax rate of 25% is
applicable to Australian entities with aggregated turnover below
$50 million for the period ended 31 December 2023. The Group's
turnover is expected to be above the threshold of $50 million in
the future reporting periods which will attract a statutory tax
rate of 30%. As a result, recognition of deferred tax asset is made
by applying a 30% statutory rate instead of the lower 25% tax
rate.
Note 8 Cash and cash equivalents
|
31-Dec-23
|
30-Jun-23
|
|
$'000
|
$'000
|
Cash at Bank
|
30,121
|
82,973
|
Investment securities held for
liquidity purposes
|
40,130
|
-
|
Cash of third-party interests in
consolidated entities
|
17,450
|
21,484
|
|
87,701
|
104,457
|
Cash of third-party interests in
consolidated entities is restricted as it is held within the fund
investment vehicles on behalf of the third-party investors in these
vehicles. The cash is restricted to use cashflows in the litigation
funding assets made on their behalf and costs of administering the
fund.
Note 9 Due from resolution of financial
assets
|
31-Dec-23
|
30-Jun-23
|
|
$'000
|
$'000
|
At
start of period (as restated as at 1 July 2022)
|
11,873
|
24,340
|
Transfer from realisation of
litigation funding assets
|
77,891
|
150,447
|
Proceeds from litigation funding
assets
|
(72,164)
|
(192,623)
|
Foreign Exchange
gain/(losses)
|
1,830
|
29,708
|
Balance as at end of period
|
19,430
|
11,873
|
Note 10 Litigation Funding assets at fair value through
profit or loss
|
31-Dec-23
|
30-Jun-23
|
|
$'000
|
$'000
|
At
start of period (as restated as at 1 July 2022)
|
391,410
|
296,980
|
Deployments
|
15,187
|
30,756
|
Deployments - third-party
interests
|
16,345
|
58,293
|
Realisations of litigation funding
assets
|
(77,891)
|
(150,447)
|
Income for the period
|
52,429
|
136,638
|
Foreign exchange
gains/(losses)
|
(6,469)
|
19,191
|
Balance as at end of period
|
391,011
|
391,410
|
Litigation funding assets at fair
value through income statement
|
173,766
|
165,768
|
Litigation funding assets at fair
value through income statement - third-party interests
|
217,245
|
225,642
|
Total litigation funding assets
|
391,011
|
391,410
|
Litigation Funding assets are
financial instruments that relate to the provision of capital in
connection with legal finance. The Group fund through both direct
investments as well as using third party funders via a Fund model.
The table above sets forth the changes in LFA assets at the
beginning and end of the relevant reporting periods.
Note 11 Contract costs - litigation
contracts
|
|
31-Dec-23
|
30-Jun-23
|
|
|
$'000
|
$'000
|
Contract costs - litigation
contracts
|
|
39,377
|
37,277
|
There are a small number of legacy
investments which are still being recorded under AASB 15 Revenue
from Contract with Customers due to the timing the contracts were
entered into. These are expected to resolve in the short to medium
term.
Reconciliation of litigation contract costs
Reconciliation of the contract costs
at the beginning and end of the current period and previous
financial year are set out below:
|
|
31-Dec-23
|
30-Jun-23
|
|
|
$'000
|
$'000
|
Balance at 1 July
|
|
37,277
|
31,783
|
Additions during the
period
|
|
2,305
|
5,495
|
Realisations of contract
assets
|
|
(206)
|
-
|
Balance as at end of
period
|
|
39,377
|
37,277
|
|
|
|
|
The Group has recognised impairment
losses of $nil (2022: $nil) in profit or loss on contract costs for
the period ended 31 December 2023.
Note 12 Trade and other payables
|
|
31-Dec-23
|
30-Jun-23
|
|
|
$'000
|
$'000
|
Trade payables
|
|
4,976
|
7,001
|
Other payables
|
|
414
|
534
|
|
|
5,390
|
7,535
|
Note 13 Employee benefits
|
|
31-Dec-23
|
30-Jun-23
|
|
|
$'000
|
$'000
|
Annual Leave
|
|
654
|
623
|
Long Service Leave
|
|
334
|
283
|
|
|
988
|
906
|
Note 14 Borrowings
|
|
31-Dec-23
|
30-Jun-23
|
|
|
$'000
|
$'000
|
Borrowings
|
|
59,783
|
68,976
|
|
|
59,783
|
68,976
|
Reconciliation of borrowings of
third-party interests in consolidated entities:
|
31-Dec-23
|
30-Jun-23
|
|
$'000
|
$'000
|
Balance 1 July
|
-
|
14,494
|
Repayment of borrowings
|
-
|
(14,848)
|
Net accrued interest
|
-
|
(17)
|
Amortisation of borrowing
costs
|
-
|
34
|
Other non-cash items
|
-
|
336
|
Balance as at end of
period
|
-
|
-
|
|
|
|
Reconciliation of borrowings of
LCM:
|
31-Dec-23
|
30-Jun-23
|
|
$'000
|
$'000
|
Balance 1 July
|
68,976
|
54,915
|
Proceeds from borrowings
|
-
|
9,636
|
Repayment of borrowings
|
(8,139)
|
-
|
Payments for borrowing
costs
|
(58)
|
(256)
|
Net accrued interest
|
(713)
|
-
|
Amortisation
|
764
|
2,441
|
Other non-cash items
|
(1,047)
|
2,241
|
Balance as at end of
period
|
59,783
|
68,976
|
On 22 February 2021, LCM entered
into a credit facility with Northleaf Capital Partners for an
aggregate amount of US$50,000,000, AUD equivalent of
$75,017,5171 (the "Facility"). The Facility carries
interest together with a profit participation, capped at 13% per
annum. The Facility has an overall term of four years and is
secured against LCM's assets. As at 31 December 2023, LCM has nil
outstanding utilisation. Borrowings have a maturity date of
February 2025.
LCM agreed to various debt covenants
including a minimum effective net tangible worth, borrowings as a
percentage of effective net tangible worth, minimum liquidity, a
minimum consolidated EBIT and a minimum multiple of invested
capital on concluded contract assets over a specified period. There
have been no defaults or breaches related to the Facility during
the year ended 31 December 2023. Should LCM not satisfy any of
these covenants, the outstanding balance of the Facility may become
due and payable.
LCM incurred costs in relation to
arranging the Facility of $1,649,000 which were reflected
transactions costs and will be amortised over the 4 year term of
the borrowings. As at 31 December 2023, $622,000 of the loan
arrangement fees remained outstanding.
1 Converted at the functional
currency spot rates of exchange at the reporting date
Note 15 Financial liabilities related to third-party interests
in consolidated entities
|
31-Dec-23
|
30-Jun-23
|
|
$'000
|
$'000
|
Balance 1 July
|
(243,990)
|
(142,180)
|
Proceeds - capital contributions
from Limited Partners
|
(11,010)
|
(74,980)
|
Payments - distributions to Limited
Partners
|
35,717
|
94,373
|
Loss on financial liabilities
related to third-party interests in consolidated entities
(note 4)
|
(30,546)
|
(111,953)
|
Other non-cash items, including
foreign exchange gain/loss
|
5,104
|
(9,250)
|
Balance as at end of
period
|
(244,726)
|
(243,990)
|
Note 16 Equity - issued capital
|
31-Dec-23
|
30-Jun-23
|
31-Dec-23
|
30-Jun-23
|
|
Shares
|
Shares
|
$'000
|
$'000
|
Ordinary shares - fully
paid
|
106,445,388
|
106,613,927
|
69,674
|
69,674
|
Ordinary shares - under loan share
plan
|
12,331,148
|
12,586,405
|
-
|
-
|
|
118,776,536
|
119,200,332
|
69,674
|
69,674
|
|
|
|
|
|
Movements in ordinary share capital
|
|
Date
|
Shares
|
$'000
|
Balance
|
|
30 June
2022
|
106,613,927
|
69,674
|
Balance
|
|
30 June
2023
|
106,613,927
|
69,674
|
Options exercised
|
|
31 October
2023
|
87,993
|
-
|
Options exercised
|
|
23
November 2023
|
167,264
|
-
|
Shares bought back during the
period
|
|
Various
|
(423,796)
|
-
|
|
|
31
December 2023
|
106,445,388
|
69,674
|
As announced on 5 October 2023, the
Group commenced a share buyback programme in respect of its
ordinary shares up to a maximum consideration of A$10.0 million
from the date of this announcement.
Movements in ordinary shares issued under loan share plan
('LSP'):
|
|
Date
|
Shares
|
$'000
|
Balance
|
|
30 June
2022
|
12,586,405
|
-
|
Balance
|
|
30 June
2023
|
12,586,405
|
-
|
Options exercised
|
|
31 October
2023
|
(87,993)
|
-
|
Options exercised
|
|
23
November 2023
|
(167,264)
|
-
|
|
|
31
December 2023
|
12,331,148
|
-
|
Reconciliation of ordinary shares issued under
LSP:
|
|
|
31-Dec-23
|
30-Jun-23
|
Total shares allocated under
existing LSP arrangements with underlying LSP shares (note
22)
|
|
|
7,890,408
|
7,890,408
|
Less shares allocated under existing
LSP arrangements without underlying LSP shares (note 22)
|
|
|
(221,467)
|
(221,467)
|
Shares held by LCM Employee Benefit
Trust for future allocation under employee share and option
plans
|
|
|
4,917,464
|
4,917,464
|
Exercise of options during the
period held by the LCM Employee Benefit Trust
|
|
|
(255,257)
|
-
|
|
|
|
12,331,148
|
12,586,405
|
Ordinary shares
Ordinary shares entitle the holder
to participate in dividends and the proceeds on the winding up of
the Company in proportion to the number of and amounts paid on the
shares held. The fully paid ordinary shares have no par value and
the Company does not have a limited amount of authorised
capital.
On a show of hands every member
present at a meeting in person or by proxy shall have one vote and
upon a poll each share shall have one vote.
Ordinary shares - under loan share plan
('LSP')
The Company has an equity scheme
pursuant to which certain employees may access a LSP. The
acquisition of shares under this LSP is fully funded by the Company
through the granting of a limited recourse loan. The shares under
LSP are restricted until the loan is repaid. The underlying options
within the LSP have been accounted for as a share-based payment.
Refer to note 22 for further details. When the loans are settled
the shares are reclassified as fully paid ordinary shares and the
equity will increase by the amount of the loan repaid.
Ordinary shares - partly paid
As at 31 December 2023, there are
currently 1,433,022 partly paid shares issued at an issue price of
$0.17 per share. No amount has been paid up and the shares will
become fully paid upon payment to the Company of $0.17 per share.
As per the terms of issue, the partly paid shares have no maturity
date and the amount is payable at the option of the
holder.
Partly paid shares entitle the
holder to participate in dividends and the proceeds of the Company
in proportion to the number of and amounts paid on the shares held.
The partly paid shares do not carry the right to participate in new
issues of securities. Partly paid shareholders are entitled to
receive notice of any meetings of shareholders. The partly paid
shareholders are entitled to vote in the same proportion as the
amounts paid on the partly paid shares bears to the total amount
paid and payable.
Treasury shares
As at 31 December 2023, there were
423,796 treasury shares (December 2022: nil). Treasury shares
comprises shares bought back from shareholders which are held by
Canaccord on behalf of the Company and classified as treasury
shares.
Capital risk management
The Group's objectives when managing
capital is to safeguard its ability to continue as a going concern,
so that it can provide returns for shareholders and benefits for
other stakeholders and to maintain an optimum capital structure to
reduce the cost of capital.
Capital is regarded as total equity
as recognised in the statement of financial position.
In order to maintain or adjust the
capital structure, the Group may adjust the amount of dividends
paid to shareholders, return capital to shareholders, issue new
shares or sell assets to reduce debt.
The capital risk management policy
remains unchanged from the 30 June 2023 Annual Report.
Note 17 Equity - dividends
|
31-Dec-23
|
31-Dec-22
|
|
$'000
|
$'000
|
Final unfranked ordinary dividend
(December 2023: 2.25 cents, December 2022: nil)
|
4,966
|
-
|
Franking credits
The franking credits available to
the Group as at 31 December 2023 are estimated to be $338,000
(December 2022: $338,000).
Note 18 Fair value assessment
The fair value measurements used for
all assets and liabilities held by the Group listed below are level
3:
Assets
|
31-Dec-23
|
30-Jun-23
|
Litigation funding assets
|
$'000
|
$'000
|
APAC
|
111,090
|
158,836
|
EMEA
|
279,923
|
232,574
|
Total Level 3 assets
|
391,014
|
391,410
|
Liabilities
|
|
|
Financial liabilities related to
third-party interests in consolidated entities
|
244,726
|
243,990
|
Total Level 3 liabilities
|
244,726
|
243,990
|
Refer note 10 for movements in level
3 assets. There were no transfers into or out of level 3 during the
period ended 31 December 2023.
Sensitivity of Level 3 Valuations
The Group's fair value policy
provides for ranges of percentages to be applied against the risk
adjustment factor to more than 159 discrete objective litigation
events. The tables below set forth each of the key unobservable
inputs used to value the Group's LFA assets and the applicable
ranges and weighted average by relative fair value for such
inputs.
31 December 2023
Item
|
Valuation technique
|
Unobservable Input
|
Min
|
Max
|
|
|
Litigation funding asset
|
Discounted cash flow
|
Discount rate
|
12.80%
|
12.80%
|
|
|
|
|
Duration (years)
|
0.08
|
5.01
|
|
|
|
|
Adjusted risk premium
|
0%
|
85%
|
|
|
|
|
|
|
|
|
|
|
|
|
Min
|
Max
|
|
|
|
|
Significant ruling or other
objective event prior to trial court judgment
|
40%
|
80%
|
|
|
|
|
Trial court judgment or tribunal
award
|
0%
|
85%
|
|
|
|
|
Appeal judgment
|
0%
|
85%
|
|
|
|
|
Settlement
|
70%
|
85%
|
|
|
|
|
Enforcement
|
75%
|
85%
|
|
|
|
|
Other
|
0%
|
45%
|
|
|
At each reporting period, the Group
reviews the fair value of each litigation funding asset in
connection with the preparation of the consolidated financial
statements. A fair value of 10% higher or lower, while all other
variables remain constant, in financial assets at fair value
through profit or loss would have increased or decreased the
Group's income and net assets by $39,101,000 as at 31 December 2023
(30 June 2023: $39,141,000). Similarly, a fair value of 10% higher
or lower, while all other variables remain constant, in financial
liabilities at fair value through profit or loss would have
increased or decreased the Group's income and net assets by
$24,473,000 as at 31 December 2023 (30 June 2023:
$24,399,000).
Note 19 Contingent liabilities
The majority of the Group's funding
agreements contain a contractual indemnity from the Group to the
funded party that the Group will pay adverse costs awarded to the
successful party in respect of costs incurred during the period of
funding, should the client's litigation be unsuccessful. The
Group's position is that for the majority of litigation projects
which are subject to funding, the Group enters insurance
arrangements which lessen or eliminate the impact of such awards
and therefore any adverse costs order exposure.
Note 20 Third-party interests in consolidated
entities
AASB 10 Consolidated Financial
Statements requires the Group to consolidate fund investment
vehicles over which it has exposure to variable returns from the
fund investment vehicles. As a result, third party interests in
relation to the Funds have been consolidated in the financial
statements.
As at 31 December 2023, the
financial liability due to third-party interests is $244,726,000
(June 2023: $243,990,000), recorded at fair value as represented
per Note 3. Amounts included in the consolidated statement of
financial position represent the fair value of the third-party
interests in the related financial assets and the amounts included
in the consolidated statement of profit or loss and other
comprehensive income represent the third-party share of any gain or
loss during the period. Third-party interests exclude the 25%
co-investment made by Litigation Capital Management Limited and its
wholly owned subsidiaries ("LCM"). The third-party interests in the
Funds carry an entitlement to receive an 8% soft return hurdle.
Upon satisfaction of the third-party interests soft return hurdle,
LCM is entitled to performance fees as fund manager on the basis of
a deal by deal waterfall. The residual net cash flows are to be
distributed 25% to LCM and 75% to the third-party interests until a
IRR of 20% is achieved by the third-party interests, thereafter the
net residual cash flows are distributed 35% to LCM and 65% to the
third-party interests.
The following tables reflect the
impact of consolidating the results of the Funds with the results
for LCM to arrive at the totals reported in the consolidated
statement of profit or loss and other comprehensive income,
consolidated statement of financial position and consolidated
statement of cash flows. The Fund column in the table below
presents the interests of third-party investors comprising both the
investment in the litigation funding assets made on their behalf
and costs of administering the funds. The LCM column includes
the 25% co-investment in these litigation contracts.
|
|
|
|
Restated
|
|
31 December
2023
|
31 December
2022
|
Consolidated Statement of Comprehensive
Income
|
LCM
|
Fund
|
Consolidated
|
LCM
|
Fund
|
Consolidated
|
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
Income
|
|
|
|
|
|
|
Gain on financial assets at fair
value through profit or loss
|
21,586
|
30,843
|
52,429
|
7,140
|
11,339
|
18,479
|
Movement in financial liabilities
related to third-party interests in consolidated
entities
|
-
|
(30,546)
|
(30,546)
|
-
|
(8,409)
|
(8,409)
|
Total income from litigation assets
|
21,586
|
297
|
21,883
|
7,140
|
2,930
|
10,070
|
|
|
|
|
|
|
|
Interest income
|
331
|
91
|
421
|
5
|
-
|
5
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
Employee benefits expense
|
(5,938)
|
-
|
(5,938)
|
(4,759)
|
-
|
(4,759)
|
Depreciation expense
|
(80)
|
-
|
(80)
|
(80)
|
-
|
(80)
|
Corporate expenses
|
(1,960)
|
-
|
(1,960)
|
(1,863)
|
(845)
|
(2,708)
|
Finance costs
|
(5,543)
|
-
|
(5,543)
|
(3,736)
|
(140)
|
(3,876)
|
Fund administration
expense
|
(991)
|
(483)
|
(1,474)
|
(777)
|
(362)
|
(1,139)
|
Foreign currency
gains/(losses)
|
1,530
|
95
|
1,625
|
267
|
(1,583)
|
(1,316)
|
Total expenses
|
(12,982)
|
(388)
|
(13,369)
|
(10,948)
|
(2,930)
|
(13,878)
|
Profit/(loss) before income tax expense
|
8,935
|
-
|
8,935
|
(3,803)
|
-
|
(3,803)
|
|
|
|
|
|
|
|
Analysed as:
|
|
|
|
|
|
|
Adjusted operating profit
|
15,998
|
-
|
15,998
|
1,324
|
-
|
1,324
|
Non-operating expenses
|
(1,520)
|
-
|
(1,520)
|
(1,391)
|
-
|
(1,391)
|
Finance costs
|
(5,543)
|
-
|
(5,543)
|
(3,736)
|
-
|
(3,736)
|
Profit/(loss) before income tax expense
|
8,935
|
-
|
8,935
|
(3,803)
|
-
|
(3,803)
|
Income tax expense
|
(1,642)
|
-
|
(1,642)
|
1,537
|
-
|
1,537
|
Profit/(loss) after income tax expense
|
7,293
|
-
|
7,293
|
(2,266)
|
-
|
(2,266)
|
|
|
|
|
|
|
|
Other comprehensive income for the
period, net of tax
|
(101)
|
-
|
(101)
|
310
|
|
310
|
Total comprehensive income for the period
|
7,192
|
-
|
7,192
|
(1,956)
|
-
|
(1,956)
|
|
31 December
2023
|
30 June
2023
|
Consolidated statement of financial position
|
LCM
|
Fund
|
Consolidated
|
LCM
|
Fund
|
Consolidated
|
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
Assets
|
|
|
|
|
|
|
Cash and cash equivalents
|
70,251
|
17,450
|
87,701
|
82,973
|
21,484
|
104,457
|
Trade & other
receivables
|
1,838
|
-
|
1,838
|
2,209
|
-
|
2,209
|
Due from resolution of financial
assets
|
7,520
|
11,909
|
19,430
|
11,873
|
-
|
11,873
|
Financial assets at fair value
through profit or loss
|
173,766
|
217,245
|
391,011
|
165,768
|
225,642
|
391,410
|
Contract costs
|
39,377
|
-
|
39,377
|
37,277
|
-
|
37,277
|
Property, plant and
equipment
|
182
|
-
|
182
|
211
|
-
|
211
|
Intangible assets
|
333
|
-
|
333
|
356
|
-
|
356
|
Other assets
|
1,180
|
-
|
1,180
|
1,032
|
78
|
1,110
|
Total assets
|
294,447
|
246,604
|
541,051
|
301,699
|
247,204
|
548,903
|
Liabilities
|
|
|
|
|
|
|
Trade and other payables
|
3,511
|
1,879
|
5,390
|
4,321
|
3,214
|
7,535
|
Tax payable
|
7,770
|
-
|
7,770
|
7,769
|
-
|
7,769
|
Employee Benefits
|
988
|
-
|
988
|
906
|
-
|
906
|
Borrowings
|
59,783
|
-
|
59,783
|
68,976
|
-
|
68,976
|
Third-party interests in
consolidated entities
|
-
|
244,726
|
244,726
|
-
|
243,990
|
243,990
|
Deferred tax liability
|
37,032
|
-
|
37,032
|
36,259
|
-
|
36,259
|
Total liabilities
|
109,085
|
246,604
|
355,689
|
118,231
|
247,204
|
365,435
|
Net
assets
|
185,362
|
-
|
185,362
|
183,468
|
-
|
183,468
|
A financial liability at fair value
through the income statement is recognised in the parent entity in
relation to the transactions entered into with certain Fund
structures to support the financing of LFAs. These arrangements
fail the derecognition principles in IFRS 9 and represents the net
share of the overall LFA at fair value apportioned to the
Funds.
|
|
|
|
|
Restated
|
|
|
31 December
2023
|
31 December
2022
|
Consolidated Statement of Cash Flows
|
LCM
|
Fund
|
Consolidated
|
LCM
|
Fund
|
Consolidated
|
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
$'000
|
|
|
|
|
|
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss) after income tax
expense for the period
|
7,293
|
-
|
7,293
|
(2,266)
|
-
|
(2,266)
|
|
|
|
|
|
|
|
Adjustments for:
|
|
|
|
|
|
|
Gain on financial assets at fair
value through profit or loss
|
(21,586)
|
-
|
(21,586)
|
(7,140)
|
-
|
(7,140)
|
Depreciation and amortisation of
intangibles
|
80
|
-
|
80
|
80
|
-
|
80
|
Share-based payments
|
463
|
-
|
463
|
308
|
-
|
308
|
Finance costs reclassified to
financing activities
|
5,543
|
-
|
5,543
|
3,736
|
167
|
3,904
|
Income tax expense
|
1,642
|
-
|
1,642
|
(1,537)
|
-
|
(1,537)
|
Exceptional items
|
(144)
|
-
|
(144)
|
(39)
|
-
|
(39)
|
Fund costs reclassified to financing
activities
|
991
|
-
|
991
|
777
|
-
|
777
|
Other, including foreign exchange
rate movements
|
(1,122)
|
-
|
(1,122)
|
(842)
|
(5,045)
|
(5,887)
|
|
|
|
|
|
|
|
Change in operating assets and
liabilities:
|
|
|
|
|
|
|
Proceeds from resolution of
financial assets
|
33,214
|
38,950
|
72,164
|
20,082
|
1,722
|
21,804
|
Decrease/(increase) in trade and
other receivables
|
608
|
-
|
608
|
(2,189)
|
-
|
(2,189)
|
(Funding) of financial
assets
|
(15,187)
|
(16,345)
|
(31,531)
|
(18,520)
|
(31,579)
|
(50,099)
|
(Increase) in contract costs -
litigation contracts
|
(2,305)
|
-
|
(2,305)
|
(2,938)
|
-
|
(2,938)
|
Decrease/(increase) in financial
assets
|
780
|
-
|
780
|
432
|
-
|
432
|
(Decrease)/Increase in trade and
other payables
|
(809)
|
(1,336)
|
(2,145)
|
109
|
(50)
|
59
|
(Decrease)/Increase in employee
benefits
|
81
|
-
|
81
|
(22)
|
-
|
(22)
|
Income Tax paid
|
(868)
|
-
|
(868)
|
-
|
-
|
-
|
(Increase) in other
assets
|
(161)
|
-
|
(161)
|
604
|
-
|
604
|
Net
cash from/(used in) operating activities
|
8,515
|
21,270
|
29,785
|
(9,364)
|
(34,785)
|
(44,149)
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
Payments for property, plant and
equipment
|
(13)
|
-
|
(13)
|
(22)
|
-
|
(22)
|
Payments for intangibles
|
(15)
|
-
|
(15)
|
(34)
|
-
|
(34)
|
Refund/(payment) of security
deposits
|
13
|
-
|
13
|
(12)
|
-
|
(12)
|
Net
cash used in investing activities
|
(15)
|
-
|
(15)
|
(69)
|
-
|
(69)
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
Payments for treasury
shares
|
(796)
|
-
|
(796)
|
-
|
-
|
-
|
Dividends paid
|
(4,966)
|
-
|
(4,966)
|
-
|
-
|
-
|
Repayments of borrowings
|
(8,139)
|
-
|
(8,139)
|
-
|
(14,494)
|
(14,494)
|
Payments of finance costs
|
(5,752)
|
-
|
(5,752)
|
(3,350)
|
(132)
|
(3,482)
|
Payments of transaction costs
related to third-party interests
|
(991)
|
-
|
(991)
|
(777)
|
-
|
(777)
|
Contributions from third-party
interests in consolidated entities
|
-
|
11,010
|
11,010
|
-
|
45,298
|
45,298
|
Distributions to third-party
interests in consolidated entities
|
-
|
(35,717)
|
(35,717)
|
-
|
-
|
-
|
Net
cash (used in)/from financing activities
|
(20,644)
|
(24,707)
|
(45,351)
|
(4,127)
|
30,672
|
26,545
|
Net
increase/(decrease) in cash and cash equivalents
|
(12,144)
|
(3,437)
|
(15,581)
|
(13,560)
|
(4,113)
|
(17,673)
|
Cash and cash equivalents at the
beginning of the period
|
82,973
|
21,484
|
104,457
|
29,253
|
20,711
|
49,964
|
Effects of exchange rate changes on
cash and cash equivalents
|
(578)
|
(597)
|
(1,175)
|
880
|
228
|
1,108
|
Cash and cash equivalents at the end of the
period
|
70,251
|
17,450
|
87,701
|
16,573
|
16,826
|
33,399
|
Note 21 Earnings per share
|
|
31-Dec-23
|
31-Dec-22
|
|
|
$'000
|
$'000
|
Profit after income tax
|
|
7,293
|
(2,266)
|
Profit after income tax attributable
to the owners of Litigation Capital Management Limited
|
7,293
|
(2,266)
|
|
|
|
|
|
|
Number
|
Number
|
Weighted average number of ordinary
shares used in calculating basic earnings per share
|
|
106,606,481
|
106,613,927
|
Adjustments for calculation of
diluted earnings per share:
|
|
|
|
|
Amounts uncalled on partly paid
shares
|
1,309,066
|
-
|
|
Options over ordinary
shares
|
6,597,884
|
-
|
Weighted average number of ordinary
shares used in calculating diluted earnings per share
|
114,513,431
|
106,613,927
|
|
|
|
|
|
|
Cents
|
Cents
|
Basic earnings per share
|
|
6.84
|
(2.13)
|
Diluted earnings per
share
|
|
6.37
|
(2.13)
|
Dilutive potential shares which are
contingently issuable are only included in the calculation of
diluted earnings per share where the conditions are met.
Note 22 Share-based payments
The share-based payment expense for
the period was $463,000 (December 2022: $308,000).
Loan Funded Share Plans ('LSP')
As detailed in note 16, the Group
has an equity scheme pursuant to which certain employees may access
a LSP. The shares under LSP are issued at the exercise price by
granting a limited recourse loan. The LSP shares are restricted
until the loan is repaid. Options under this scheme can be granted
without an underlying LSP share until they have been exercised and
on this basis, do not form part of the Group's issued share
capital. The underlying options have been accounted for as a
share-based payments. The options are issued over a 1-3 year
vesting period. Vesting conditions include satisfaction of
customary continuous employment with the Group and may include a
share price hurdle.
During the period the Group granted
nil (December 2022: nil) shares under the LSP.
Set out below are summaries of
shares/options granted under the LSP:
December 2023
Grant date
|
Expiry date
|
Exercise
Price
|
Balance at the start of the
period
|
Granted
|
Exercised
|
Expired/
forfeited/
other
|
Balance at the end of the
period
|
|
04/12/2017
|
04/12/2027
|
$0.60
|
2,000,000
|
|
|
|
2,000,000
|
|
31/08/2018
|
31/08/2028
|
$0.77
|
411,972
|
|
|
|
411,972
|
|
19/11/2018
|
25/11/2028
|
$0.47
|
1,595,058
|
|
|
|
1,595,058
|
|
03/12/2018
|
03/12/2028
|
$0.89
|
100,000
|
|
|
|
100,000
|
|
01/11/2019
|
01/11/2029
|
£0.7394
|
1,432,753
|
|
|
|
1,432,753
|
|
13/10/2020
|
13/10/2030
|
£0.6655
|
616,520
|
|
|
|
616,520
|
|
27/10/2021
|
27/10/2031
|
£1.06
|
1,512,638
|
|
|
|
1,512,638
|
|
27/10/2021
|
27/10/2031
|
£1.06
|
99,037
|
|
|
|
99,037
|
1
|
27/10/2021
|
27/10/2031
|
£1.14
|
122,430
|
|
|
|
122,430
|
1
|
|
|
|
7,890,408
|
-
|
-
|
-
|
7,890,408
|
|
1 Options granted without an
underlying LSP share until exercised ie, do not form part of the
Group's issued share capital
Deferred Bonus Share Plan ('DBSP')
The Company has in place a DBSP.
Options granted under the DBSP reflect past performance and are in
the form of nil cost options and will vest in three equal tranches
from the date of issue and are subject to continued employment over
the three year period.
In addition, the Options granted
under the DBSP are subject to malus and clawback provisions. In the
event of a change of control of the Company, unvested awards will
vest to the extent determined by the Board, taking into account the
proportion of the period of time between grant and the normal
vesting date that has elapsed at the date of the relevant
event.
During the period the Group granted
771,911 (December 2022: 1,132,692) options under the
DBSP.
Set out below are summaries of
options granted under the DBSP:
December 23
Grant date
|
Expiry date
|
Exercise
Price
|
Balance at the start of the
period
|
Granted
|
Exercised
|
Expired/
forfeited/
other
|
Balance at the end of the
period
|
07/10/2022
|
07/10/2032
|
$0.00
|
1,132,692
|
-
|
(255,257)
|
-
|
877,435
|
04/10/2023
|
04/10/2033
|
$0.00
|
-
|
771,911
|
-
|
-
|
771,911
|
|
|
|
1,132,692
|
771,911
|
(255,257)
|
-
|
1,649,346
|
Executive Long Term Incentive Plan ('LTIP')
The Company has in place an
Executive LTIP. Options over ordinary shares in the capital of the
Company ("Ordinary Shares") are issued to recipients under the LTIP
plan. The options set out above have been granted under the LTIP in
the form of nil cost options and are subject to performance
conditions which require the growth of Funds under Management
('FuM') over a five year performance period. The performance
conditions associated with the options are set out
below:
(1) 50% vesting on reaching a
minimum of FuM of US$750m; and
(2) 100% vesting on reaching
FuM of US$1bn.
The vesting date of options
granted is the later of:
(1) the third
anniversary of the Grant Date;
(2) the satisfaction of
the Performance Condition; or
(3) the date of any
adjustment under the Plan rules of the Plan at the Boards
discretion.
Any awards made to the participants
are subject to a five year holding period from the grant date. In
the event of a change of control of the Company, unvested awards
will vest to the extent determined by the Board, taking into
account the proportion of the period of time between grant and the
normal vesting date that has elapsed at the date of the relevant
event and the extent to which any performance condition has been
satisfied at the date of the relevant event.
During the period the Group granted
nil (December 2022: 5,671,516) options under the LTIP.
Set out below are summaries of
shares/options granted under the LTIP:
December 2023
Grant date
|
Expiry date
|
Exercise
Price
|
Balance at the start of the
period
|
Granted
|
Exercised
|
Expired/
forfeited/
other
|
Balance at the end of the
period
|
07/10/2022
|
07/10/2032
|
$0.0000
|
5,671,516
|
-
|
-
|
-
|
5,671,516
|
|
|
|
5,671,516
|
-
|
-
|
-
|
5,671,516
|
For the options under LSP granted
during the current period, the valuation model inputs used in the
Black-Scholes pricing model to determine the fair value at the
grant date, are as follows:
Grant date
|
Expiry
date
|
Share price at grant
date
|
Exercise
price
|
Expected
volatility
|
Dividend
yield
|
Risk-free interest
rate
|
Fair value at grant
date
|
1
|
04/10/2023
|
04/10/2033
|
£0.98
|
£0.00
|
35.00%
|
1.10%
|
3.79%
|
$1.820
|
|
1 AUD amount. GBP equivalent
£0.952
The expected volatility reflects the
assumption that the historical volatility over a period similar to
the life of the options is indicative of future trends, which may
not necessarily be the actual outcome.
Note 23 Events after the reporting period
In the Directors' opinion, no matter
or circumstance has arisen since the end of the financial year,
that has significantly affected, or may significantly affect, the
operations of the Group, the results of those operations, or the
state of affairs of the Group in future years.