Litigation Capital Management Limited (AIM:LIT), a leading international provider of disputes
financing solutions, announces its interim results for the six months ended 31 December 2019
(“HY20”).
Highlights
- Delivering sustained growth across a diversified portfolio by investment activity and geography
- First close of a new third-party fund of US$150 million (post-period)
- Cumulative 139% ROIC and 79% IRR over the last 8.5 years*
- Total cash generated of A$18.9 million (post-period cash receipt totalling A$9.7 million)
- Four single-case investments in APAC generated a combined revenue of approximately A$14.9 million and contribution to gross profit of approximately A$7.8 million
- Significant traction in key growth area of corporate portfolio funding:
- Construction portfolio: resolved two disputes out of seven matters; generated revenue of A$8.6 million and provided a contribution to gross profit of A$4.3 million
- First matter resolution in the aviation portfolio; generated revenue of A$0.6 million and provided a contribution to gross profit of A$0.2 million
- Strategic Alliance with international law firm delivered material opportunities and over 30 applications, including both single case and corporate portfolio. Second Alliance initiated with an international law firm which has already generated corporate portfolio applications
*FY12 to HY20, including losses. The Company reports performance over the last 8.5 years since FY12 as the Board deems it the period most representative of the current business
Summary of financials
| Figures in A$ million unless otherwise stated | Six months ended 31 December 2019 | Six months ended 31 December 2018 |
| Gross revenue | 24.1 | 11.7 |
| Gross profit | 12.2 | 5.7 |
| Adjusted profit before tax | 6.9 | 2.7 |
| Adjusted basic EPS (cents per share) | 6.61 | 4.31 |
| Statutory profit before tax | 6.7 | 1.0 |
| Net cash | 34.7 | 52.6 |
| Capital deployed on litigation investments | 18.4 | 12.8 |
| Litigation investments | 34.0 | 20.7 |
| Total equity | 80.4 | 70.3 |
| Cash receipts from the completion of litigation investments | 9.2 | 11.0 |
Post-period events
- First close of US$150 million LCM Global Alternative Returns Fund (the Fund) – US$140 million committed investments from global blue-chip investors with balance of US$10 million which LCM expects to be subscribed in the near term
- Fund will supplement the deployment of capital from LCM’s balance sheet, significantly increasing the Group’s ability to invest in new opportunities.
- Transitions LCM into an alternate asset manager specialising in investments relating to the global disputes market
- Post period cash received on projects resolved – A$9.7 million, as a result of resolutions occurring close to the end of the financial period
Current trading and outlook
LCM moves forward as an alternate asset manager specialising in investments relating to the global disputes market with two complementary business models: direct investment from the Company’s balance sheet and asset management following the first close of the US$150m fund. In the second half, we will continue to execute our strategy of growing and diversifying our portfolio by investment activity and geography, taking advantage of the numerous and exciting growthopportunities available to us in a measured and disciplined way.
With a burgeoning global infrastructure in place, an increasingly diversified portfolio and a strong pipeline supported by a robust balance sheet, third-party funds and growing pool of the best talent in the industry, while the nature of LCM’s business model means that returns will not always result in a linear growth pattern, the Board is confident the Company will continue to grow and deliver strong returns.
Patrick Moloney, CEO of LCM, commented: “In the first half, LCM has continued to strengthen its market position in all of the geographies we operate. The development of our corporate portfolio strategy is gaining significant traction and already paying dividends in an area where we are a global leader in the provision of portfolio financing to corporate clients. With the first close of LCM’s US$150 million fund we are well placed to significantly increase the portfolio of investments under management, enabling LCM to expand its business in all of the geographies in which we operate. The launch of the fund in parallel with direct balance sheet investments signals the transition of the business into a global alternate asset manager.”
Nick Rowles-Davies, Executive Vice Chairman of LCM, added: “Momentum in corporate portfolio opportunities has increased in the first half with the Fund now enabling LCM to invest in larger corporate portfolio transactions which have previously been beyond the capacity of our balance sheet. This provides an important catalyst for the ongoing development of LCM’s corporate portfolio strategy.”
LCM Contact Angela Bilbow
Global Head of Communications abilbow@lcmfinance.com
+44 (0)20 3955 5271
