REG - Litigation Cap. Mgmt - Interim results for the HY ended 31 December 2024
18/03/2025 07:00
For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20250318:nRSR0233Ba&default-theme=true
RNS Number : 0233B Litigation Capital Management Ltd 18 March 2025
18 March 2025
Litigation Capital Management Limited
("LCM" or the "Company")
Interim results for the half year ended 31 December 2024
Highlights
• Seven realisations in period generating A$51m of revenue
• Net realised gains of A$37.4m (HY24: A$19.6m), with concluded investments
generating a 3.67x multiple of cash invested (MOIC)
• Total income of A$4.7m (HY24: A$21.6m) due to A$32m negative fair value
movement driven by fair value write-offs on concluded investments
• Loss after tax for the period of A$8.4m (HY24: profit A$7.3m)
• Net assets of A$181.8m (HY24: A$188.9m)
· Book value per share of 86.3 pence (FY24: 94.4 pence)
· Total new commitments of A$34m added in the period (HY24: A$90m)
Outlook
· Fund management momentum accelerating, with Fund III on track for launch
before 30 June 2025
· New commitments expected to rebound in the second half of FY25.
Commenting on the results, Patrick Moloney, CEO of Litigation Capital
Management, said: "The first half of the year reflected the inherent
volatility of litigation finance. While we secured significant wins in two
arbitration cases, we also faced setbacks with two class action losses at
trial, which are now subject to appeal. Our transition to a fund management
model continues to gain momentum, and as we scale, we expect to reduce
financial unpredictability. We remain disciplined in capital allocation,
focused on generating strong long-term returns for our investors and
shareholders.
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
(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 client-lcm@cavendish.com to register.
The accompanying results presentation is available on LCM's website:
https://www.lcmfinance.com/investors/investor-presentations-results
(https://www.lcmfinance.com/investors/investor-presentations-results)
The Interim Financial Report is available at:
https://www.lcmfinance.com/investors/investor-presentations-results
(https://www.lcmfinance.com/investors/investor-presentations-results%20)
Enquiries
Litigation Capital Management
Patrick Moloney, Chief Executive Officer
David Collins, Chief Financial Officer
Cavendish (Nomad and Joint Broker) Tel: 020 7523 8000
Jonny Franklin-Adams, Isaac Hooper and Rory Sale (Corporate Finance)
Tim Redfern and Jamie Anderson (Corporate Broking)
Canaccord Genuity (Joint Broker) Tel: 020 7597 5970
Bobbie Hilliam
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 (http://www.lcmfinance.com)
Chief Executive's Statement
The first half of our 2025 financial year has been particularly volatile,
which is not uncommon in the litigation finance asset class. On the positive
side, we secured significant wins in two investment treaty arbitration cases,
where US$15 million of capital-deployed from both LCM's balance sheet and Fund
I-generated awards exceeding US$400 million. LCM's share of these awards,
across both capital sources, is approaching US$90 million, underscoring the
exceptional returns we can deliver for our clients, fund investors, and
shareholders. However, we also experienced setbacks, with two Australian class
action investments losing at trial (both will be appealed). LCM has invested
A$38m of its own capital into these cases to date and we expect any further
investment to take these cases to appeal will be relatively modest.
Our business is at an inflection point. Since embarking on our transition to a
fund management model in 2020, we have made significant progress. Fund I
(US$150 million) recently marked its fifth anniversary, delivering excellent
performance. A comparison against the US private equity asset class, based on
Cambridge Associates' extensive research, places Fund I in the top 5% of 2020
vintage funds across all key metrics. Fund II (US$291 million) has now closed
to new commitments, with several cases in due diligence expected to bring it
to 75-85% commitment.
Marketing for Fund III is progressing strongly. We have received excellent
engagement from both existing and new investors and expect to complete the
first close in Q2 2025.
As we scale and continue our transition towards a pure fund management model,
we see a clear opportunity to enhance our economic profile. Over time, we
expect to limit downside exposure to individual case outcomes while
maintaining substantial upside through performance fees on co-funded
investments. However, our financial results still exhibit volatility, largely
due to legacy balance sheet investments. As these cases resolve, our risk
profile will improve, reducing financial unpredictability.
New commitments in the first half were below historical levels, reflecting a
temporary shortage of high-quality opportunities rather than any structural
issue. While we saw strong deal flow, we remained disciplined-quality remains
paramount. We expect commitments to rebound in the second half, particularly
as market dynamics continue to shift in our favour. Many competitors in our
core markets are facing challenges in raising capital, with some believed to
be in de facto run-off, potentially increasing deal flow for LCM over time.
During the period, we successfully refinanced our debt facility, securing a
larger facility at a lower interest rate and on improved terms. Our cost of
debt is now below 10%, with the benefit of reduced interest costs already
evident in our financials.
Strategically, we have made meaningful progress on two key
initiatives-expanding into the US legal finance market and integrating
AI-driven technologies into our underwriting and origination processes. The AI
technology we acquired six months ago is now fully embedded in our investment
process for treaty arbitration cases-an area where we are establishing a
strong track record in contrast to many peers who have struggled with these
complex, high-value claims. In the second half of the year, we will pilot
AI-driven origination strategies. While we do not expect immediate results
from these pilot tests, we are confident that AI will play an increasingly
important role in the long-term success of our business.
While the first half of the year presented challenges, particularly in
individual case outcomes, our long-term investment model remains robust. Our
disciplined capital allocation and growing fund management platform positions
us to generate sustainable value for both shareholders and fund investors.
Patrick Moloney
Chief Executive Officer
18 March 2025
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 2024 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
David Collins (appointed 6 December 2024)
Gerhard Seebacher (resigned 15 January 2025)
Mary Gangemi (resigned 5 September 2024)
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 loss for the Group after adjusting for income tax amounted to
$8,353,000 (31 December 2023: profit $7,293,000). Operating loss before tax is
$7,952,000 (31 December 2023: profit $14,057,000).
Cash on balance sheet was $30,585,000 as at 31 December 2024 (30 June 2024:
$68,113,000). Of this, $15,717,000 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 2024:
$15,089,000). Cash generated during the period from the resolution of
investments was $56,402,000 (31 December 2023: $71,272,000).
The Directors do not recommend a dividend in respect of the period ended 31
December 2024.
5. Matters subsequent to the end of the financial period
On 21 February 2025, the Group announced that the Federal Court of Australia
had ruled against its funded party, Quintis Limited. While the claim was
unsuccessful, the Group is reviewing the judgment and considering an appeal,
which must be filed within 28 days of final orders being made.
On 11 March 2025, the Group announced that an appeal has been filed in
relation to the class action funded by the Group on behalf of Queensland
electricity users against Stanwell Corporation Ltd and CS Energy Ltd. This
follows the first instance judgment, which ruled against LCM's funded party,
as announced on 4 December 2024.
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
18 March 2025
Consolidated statement of profit or loss and other comprehensive income
For the period ended 31 December 2024
31-Dec-24 31-Dec-23
Note $'000 $'000
Income
Gain on financial assets at fair value through profit or loss 4 25,790 52,429
Movement in financial liabilities related to third-party interests in 4 (18,382) (30,546)
consolidated entities
Total income 7,408 21,883
Expenses
Employee benefits expense 5 (6,688) (5,938)
Depreciation expense 5 (47) (80)
Corporate expenses (2,577) (1,960)
Fund administration expense 5 (1,313) (1,474)
Foreign currency gains/(losses) (4,735) 1,625
Total operating expenses (15,360) (7,826)
Operating (loss)/profit (7,952) 14,057
Finance costs 5 (3,710) (5,122)
(Loss)/profit before income tax expense (11,662) 8,935
Income tax benefit/(expense) 3,309 (1,642)
(Loss)/profit after income tax expense (8,353) 7,293
Other comprehensive income
Items that may be subsequently reclassified to profit and loss:
Movement in foreign currency translation reserve 8,620 (101)
Total comprehensive income for the period 267 7,192
(Loss)/profit for the period is attributable to:
Owners of Litigation Capital Management Limited (8,353) 7,293
(8,353) 7,293
Total comprehensive income for the period is attributable to:
Owners of Litigation Capital Management Limited 267 7,192
267 7,192
Cents Cents
Basic earnings per share 7 (8.09) 6.84
Diluted earnings per share 7 (8.09) 6.37
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 2024
31-Dec-24 30-Jun-24
Note $'000 $'000
Assets
Cash and cash equivalents 8 30,585 68,113
Trade receivables 1,786 10,986
Due from resolution of financial assets 10 105,198 3,980
Contract costs 11 47,396 42,072
Financial assets at fair value through profit or loss 12 420,264 465,213
Property, plant and equipment 144 157
Intangible assets 453 305
Other assets 839 977
Total assets 606,665 591,803
Liabilities
Trade and other payables 13 11,755 30,376
Tax payable 5,833 883
Employee benefits 1,382 1,112
Borrowings 14 54,851 61,917
Financial liabilities related to third-party interests in consolidated 15 314,982
entities
264,950
Deferred tax liability 36,062 43,624
Total liabilities 424,865 402,862
Net assets 181,800 188,941
Equity
Issued Capital 16 58,960 69,674
Treasury shares 16 - (5,396)
Reserves 13,381 4,171
Retained Earnings 109,459 120,492
Parent interest 181,800 188,941
Total equity 181,800 188,941
The above Consolidated Statement of Financial Position should be read in
conjunction with accompanying Notes to the Financial Statements
Consolidated statement of changes in equity
For the period ended 31 December 2024
Share based Foreign
Issued Treasury Retained payments currency Total
capital shares earnings reserve translation equity
Consolidated $'000 $'000 $'000 $'000 $'000 $'000
Balance at 1 July 2023 69,674 - 112,753 2,440 (1,398) 183,468
Profit after income tax expense for the period - - 7,293 - - 7,293
Other comprehensive income for the period - - - - (101) (101)
Total comprehensive income for the period - - 7,293 - (101) 7,193
Equity Transactions:
Share-based payments (note 22) - - - 463 - 463
Dividends paid (note 17) - - (4,966) - - (4,966)
Treasury shares acquired (note 16) - (796) - - - (796)
- (796) (4,966) 463 - (5,298)
Balance at 31 December 2023 69,674 (796) 115,080 2,903 (1,498) 185,362
Share based Foreign
Issued Treasury Retained payments currency Total
capital shares earnings reserve translation equity
Consolidated $'000 $'000 $'000 $'000 $'000 $'000
Balance at 1 July 2024 69,674 (5,396) 120,492 3,556 615 188,941
Loss after income tax expense for the period - - (8,353) - - (8,353)
Other comprehensive income for the period - - - - 8,620 8,620
Total comprehensive income for the period - - (8,353) - 8,620 267
Equity Transactions:
Share-based payments (note 22) - - - 590 - 590
Dividends paid (note 17) - - (2,680) - - (2,680)
Treasury shares acquired (note 16) - (4,458) - - - (4,458)
Cancellation of treasury shares (note 16) (9,854) 9,854 - - - -
LSPs exercised and purchased by EBT (note 16) (860) - - - - (860)
(10,714) 5,396 (2,680) 590 - (7,407)
Balance at 31 December 2024 58,960 - 109,459 4,146 9,235 181,800
The above Consolidated Statement of Changes in Equity should be read in
conjunction with accompanying Notes to the Financial Statements.
Consolidated statement of cash flows
For the period ended 31 December 2024
31-Dec-24 31-Dec-23
Note $'000 $'000
Cash flows from operating activities
Proceeds from litigation contracts 56,402 71,272
Payments for litigation contracts (78,310) (33,083)
Payments to suppliers and employees (10,152) (8,099)
Income tax paid (28) (723)
Net cash (used in)/from operating activities (32,088) 29,367
Cash flows from investing activities
Payments for property, plant and equipment (3) (13)
Payments for intangibles (179) (15)
Refund/(payment) of security deposits (1) 13
Net cash (used in) investing activities (182) (15)
Cash flows from financing activities
Payments for treasury and loan shares 16 (5,318) (796)
Dividends paid (2,607) (4,966)
Repayments of borrowings 14 (11,358) (8,139)
Payments of finance costs (3,186) (5,426)
Payments of placement fees related to third-party interests (835) (991)
Contributions from third-party interests in consolidated entities 15 40,626 11,010
Distributions to third-party interests in consolidated entities 15 24,572 (35,717)
Net cash (used in) financing activities (7,250) (45,026)
Net increase/(decrease) in cash and cash equivalents (39,519) (15,673)
Cash and cash equivalents at the beginning of the period 68,113 104,457
Effects of exchange rate changes on cash and cash equivalents 1,991 (1,084)
Cash and cash equivalents at the end of the period 8 30,585 87,701
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 2024
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 18 March 2025. 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 2024 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 2024.
Note 3 Segment information
For management purposes, the Group is organised into two operating segments
comprising the operations of Litigation Capital Management Limited and its
wholly owned subsidiaries ("LCM") and the Group's fund structures ("Fund").
LCM
The LCM column includes the 25% co-investment in the Funds, Balance Sheet
investments (ie, 100% investment by LCM) and corporate operations.
Fund 1 & 2
This comprises LCM Global Alternative Returns Fund and LCM Global Alternative
Returns Fund II and their entities as disclosed in note 25. 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. The Fund column
includes the 75% co-investment in the litigation funding assets and costs of
administering the funds.
Intersegment revenue
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 net residual 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.
31 December 2024 31 December 2023
Consolidated Statement of Comprehensive Income Consolidated Fund LCM Consolidated Fund LCM
$'000 $'000 $'000 $'000 $'000 $'000
Income
Gain on financial assets at fair value through profit or loss 25,790 21,111 4,679 52,429 30,843 21,586
Movement in financial liabilities related to third-party interests in (18,382) (18,382) - (30,546) (30,546) -
consolidated entities
Total income 7,408 2,729 4,679 21,883 298 21,586
Expenses
Employee benefits expense (6,688) - (6,688) (5,938) - (5,938)
Depreciation expense (47) - (47) (80) - (80)
Corporate expenses (2,577) - (2,577) (1,960) - (1,960)
Fund administration expense (1,313) (478) (835) (1,474) (483) (991)
Foreign currency gains/(losses) (4,735) (2,251) (2,484) 1,625 95 1,530
Total operating expenses (15,360) (2,729) (12,632) (7,826) (388) (7,439)
Operating (loss)/profit (7,952) - (7,952) 14,057 (91) 14,147
Finance costs (3,710) - (3,710) (5,122) 91 (5,213)
(Loss)/profit before income tax expense (11,662) - (11,662) 8,935 - 8,934
Income tax benefit/(expense) 3,309 - 3,309 (1,642) - (1,642)
(Loss)/profit after income tax expense (8,353) - (8,353) 7,293 - 7,293
Other comprehensive income for the period, net of tax 8,620 - 8,620 (101) (101)
Total comprehensive income for the period 267 - 267 7,192 - 7,192
31 December 2024 30 June 2024
Consolidated statement of financial position Consolidated Fund LCM Consolidated Fund LCM
$'000 $'000 $'000 $'000 $'000 $'000
Assets
Cash and cash equivalents 30,585 15,717 14,868 68,113 15,089 53,024
Trade & other receivables 1,786 - 1,786 10,986 - 10,986
Due from resolution of financial assets 105,198 69,776 35,422 3,980 - 3,980
Contract costs 47,396 - 47,396 42,072 - 42,072
Financial assets at fair value through profit or loss 420,264 235,448 184,816 465,213 262,300 202,913
Property, plant and equipment 144 - 144 157 - 157
Intangible assets 453 - 453 305 - 305
Other assets 839 (859) 1,698 977 (22) 999
Total assets 606,665 320,081 286,582 591,803 277,367 314,436
Liabilities
Trade and other payables 11,755 5,100 6,655 30,379 12,417 17,959
Tax payable 5,833 - 5,833 883 - 883
Employee Benefits 1,382 - 1,382 1,112 - 1,112
Borrowings 54,851 - 54,851 61,917 - 61,917
Third-party interests in consolidated entities 314,982 314,982 - 264,950 264,950 -
Deferred tax liability 36,062 - 36,062 43,624 - 43,624
Total liabilities 424,865 320,081 104,783 402,862 277,367 125,494
Net assets 181,800 - 181,800 188,941 - 188,941
31 December 2024 31 December 2023
Consolidated Statement of Cash Flows Consolidated Fund LCM Consolidated Fund LCM
$'000 $'000 $'000 $'000 $'000 $'000
Cash flows from operating activities
Proceeds from litigation contracts 56,402 27,176 29,227 71,272 38,950 32,322
Payments for litigation contracts (78,310) (42,938) (35,372) (33,083) (16,345) (16,739)
Payments to suppliers and employees (10,152) (573) (9,579) (8,099) (1,427) (6,672)
Income tax paid (28) - (28) (723) - (723)
Net cash (used in)/from operating activities (32,088) (16,335) (15,752) 29,367 21,179 8,188
Cash flows from investing activities
Payments for property, plant and equipment (3) - (3) (13) - (13)
Payments for intangibles (179) - (179) (15) - (15)
Refund/(payment) of security deposits (1) - (1) 13 - 13
Net cash (used in) investing activities (182) - (182) (15) - (15)
Cash flows from financing activities
Payments for treasury and loan shares (5,318) - (5,318) (796) - (796)
Dividends paid (2,607) - (2,607) (4,966) - (4,966)
Repayments of borrowings (11,358) - (11,358) (8,139) - (8,139)
Payments of finance costs (3,186) - (3,186) (5,426) - (5,426)
Payments of transaction costs related to third-party interests (835) - (835) (991) - (991)
Contributions from third-party interests in consolidated entities 40,626 40,626 - 11,010 11,010 -
Distributions to third-party interests in consolidated entities (24,572) (24,572) - (35,717) (35,717) -
Net cash (used in) financing activities (7,250) 16,054 (23,304) (45,026) (24,707) (20,318)
Net increase/(decrease) in cash and cash equivalents (39,519) (281) (39,238) (15,673) (3,528) (12,145)
Cash and cash equivalents at the beginning of the period 68,113 15,089 53,024 104,457 21,484 82,973
Effects of exchange rate changes on cash and cash equivalents 1,991 909 1,082 (1,084) (506) (578)
Cash and cash equivalents at the end of the period 30,585 15,717 14,868 87,701 17,450 70,250
Note 4 Income
31-Dec-24 31-Dec-23
Fair value through profit and loss $'000 $'000
Realised gains on litigation assets 18,500 10,866
Realised performance fees 18,929 8,776
Fair value adjustment during the period, net of previously recognised (33,534) 2,381
unrealised gains transferred to realised gains
Foreign exchange gains 783 (437)
Total income from litigation assets attributable to LCM 4,679 21,586
Gain on financial assets related to third-party interests in consolidated 21,111 30,843
entities
25,789 52,429
Loss on financial liabilities related to third-party interests in consolidated (18,382) (30,546)
entities
Total income from litigation assets 7,408 21,883
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 Profit before tax
31-Dec-24 31-Dec-23
$'000 $'000
Profit before income tax expense includes the following specific expenses:
Employee benefits expense
Salaries & wages 5,074 4,530
Directors' fees 239 228
Superannuation and pension 156 147
Share based payments expense 495 463
Other employee benefits & costs 725 570
6,688 5,938
Depreciation
Plant and equipment 16 42
Intangible assets 31 38
47 80
Interest on borrowings (note 14) 3,257 4,919
Other finance costs 453 202
3,710 5,122
Fund administration expense
General administration expenses 478 483
Placement fees 835 991
1,313 1,474
Leases
Short-term lease payments 462 451
Note 6 Income tax expense
31-Dec-24 31-Dec-23
$'000 $'000
Numerical reconciliation of income tax expense and tax at the statutory rate
Profit before income tax expense (11,662) 8,935
At the Group's statutory income tax rate of 30% (2023: 25%) (3,499) 2,234
Tax effect amounts which are not deductible/(taxable) in calculating taxable
income:
Foreign tax rate adjustments 819 (24)
Share-based payments 76 116
Other non-deductible expenses 368 -
Change in tax rate - (684)
Utilisation of carried forward tax losses (1,073) -
Income tax expense / (benefit) (3,309) 1,642
Note 7 Earnings per share
31-Dec-24 31-Dec-23
$'000 $'000
(Loss)/profit after income tax (8,353) 7,293
(Loss)/profit after income tax attributable to the owners of Litigation (8,353) 7,293
Capital Management Limited
Number Number
Weighted average number of ordinary shares used in calculating basic earnings 103,190,317 106,606,481
per share
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 103,190,317 114,513,431
earnings per share
Cents Cents
Basic (loss)/earnings per share (8.09) 6.84
Diluted (loss)/earnings per share (8.09) 6.37
Dilutive potential shares which are contingently issuable are only included in
the calculation of diluted earnings per share where the conditions are met.
Note 8 Cash and cash equivalents
31-Dec-24 30-Jun-24
$'000 $'000
Cash at Bank 14,868 22,963
Investment securities held for liquidity purposes - 30,061
Cash of third-party interests in consolidated entities 15,717 15,089
30,585 68,113
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 10 Due from resolution of financial assets
31-Dec-24 30-Jun-24
$'000 $'000
At start of period (1 July) 3,980 11,873
Transfer from realisation of litigation funding assets 149,243 101,943
Proceeds from litigation funding assets (46,882) (112,990)
Other income - 697
Foreign Exchange (loss)/gain (1,143) 2,457
Balance as at end of period 105,198 3,980
As at 31 December 2024, amounts due from resolution of financial assets are
expected to be settled within 12 months after the Balance Sheet date.
Note 11 Contract costs - litigation contracts
31-Dec-24 30-Jun-24
$'000 $'000
Contract costs - litigation contracts 47,396 42,072
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-24 30-Jun-24
$'000 $'000
Balance at 1 July 42,072 37,277
Additions during the period 5,324 8,030
Realisations of contract assets - (3,236)
Balance as at end of period 47,396 42,072
The Group has recognised impairment losses of $nil (2024: $nil) in profit or
loss on contract costs for the period ended 31 December 2024.
Note 12 Litigation Funding assets at fair value through profit or loss
31-Dec-24 30-Jun-24
$'000 $'000
At start of period (as at 1 July) 465,213 391,410
Deployments 19,920 45,301
Deployments - third-party interests 35,537 47,818
Realisations of litigation funding assets (149,243) (101,943)
Income for the period 25,790 86,926
Foreign exchange gains/(losses) 23,046 (4,300)
Balance as at end of period 420,264 465,213
Litigation funding assets at fair value through income statement 184,819 202,913
Litigation funding assets at fair value through income statement - third-party 235,448 262,300
interests
Total litigation funding assets 420,264 465,213
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 13 Trade and other payables
31-Dec-24 30-Jun-24
$'000 $'000
Trade payables 11,546 29,789
Other payables 209 587
11,755 30,376
Note 14 Borrowings
31-Dec-24 30-Jun-24
$'000 $'000
Borrowings 54,851 61,917
54,851 61,917
Reconciliation of borrowings of LCM: 31-Dec-24 30-Jun-24
$'000 $'000
Balance 1 July 61,917 68,976
Repayment of borrowings (12,864) (8,139)
Payments for borrowing costs (683) (819)
Net accrued interest 743 648
Amortisation 453 1,221
Other non-cash items 5,285 29
Balance as at end of period 54,851 61,917
On 2 December 2024, LCM refinanced its credit facility with Northleaf Capital
Partners for an initial amount of US$75,000,000, AUD equivalent of
$120,157,069(1) (the "Facility"), with a potential to upsize by a further
US$75,000,000 (total US$150,000,000, AUD equivalent $240,314,000(1)). The
Facility carries interest set at the relevant bank rate plus 5.25%. The
Facility has an overall term of four years and is secured against LCM's
assets. As at 31 December 2024, LCM's outstanding utilisation amounted to
US$30,000,000 on the initial credit facility, an AUD equivalent of
$48,063,000(1).
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 period
ended 31 December 2024. 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 $667,000 which
were reflected transactions costs and will be amortised over the 4 year term
of the borrowings. As at 31 December 2024, $652,000 of these 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-24 30-Jun-24
$'000 $'000
Balance 1 July 264,950 243,990
Proceeds - capital contributions from Limited Partners 40,626 30,505
Payments - distributions to Limited Partners (24,572) (56,407)
Loss on financial liabilities related to third-party interests in consolidated 18,382 48,382
entities
Other non-cash items, including foreign exchange gain/loss 15,596 (1,521)
Balance as at end of period 314,982 264,950
Note 16 Equity - issued capital
31-Dec-24 30-Jun-24 31-Dec-24 30-Jun-24
Shares Shares $'000 $'000
Ordinary shares - fully paid 102,690,913 104,118,534 59,820 69,674
Ordinary shares - under loan share plan 11,590,384 12,331,148 (860) -
114,281,297 116,449,682 58,960 69,674
31-Dec-24 30-Jun-24
Movements in ordinary share capital Shares $'000 Shares $'000
Balance at 1 July 104,118,534 69,674 106,613,927 69,674
Options exercised 740,764 - 255,257 -
Share Buy-Back Programme (treasury shares) (2,168,385) - (2,750,650) -
Treasury shares cancelled - (9,854) - -
Balance at period end 102,690,913 59,820 104,118,534 69,674
The Group's share buyback programme which commenced on 5 October 2023,
completed on 8 November 2024.
Movements in ordinary shares issued under loan share plan ('LSP') and held by
Employee Benefit Trust:
31-Dec-24 30-Jun-24
Shares $'000 Shares $'000
Balance at 1 July 12,331,148 - 12,586,405 -
Options exercised (740,764) - (255,257) -
LSPs exercised (784,519) - - -
LSPs purchased by EBT 784,519 (860) - -
Balance at period end 11,590,384 (860) 12,331,148 -
Reconciliation of ordinary shares issued under LSP: 31-Dec-24 30-Jun-24
Total shares allocated under existing LSP arrangements with underlying LSP 6,642,872 7,501,608
shares (note 20)
Less shares allocated under existing LSP arrangements without underlying LSP (221,467) (221,467)
shares (note 20)
Shares held by LCM Employee Benefit Trust for future allocation under employee 5,168,979 5,051,007
share and option plans
11,590,384 12,331,148
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 - held by Employee Benefit Trust
The Employee Benefit Trust ('EBT') holds performance related shareholdings
awarded to former executive which did not vest. The Trust holds 5,168,979
shares which remain unallocated as at 31 December 2024 (June 2024: 5,051,007).
Ordinary shares - partly paid
As at 31 December 2024, 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 2024, there were nil treasury shares (June 2024: 2,750,650)
which has resulted in nil being deducted from equity (June 2024: $5,396,000).
Treasury shares comprised shares bought back from shareholders which were held
by Canaccord on behalf of LCM and classified as treasury shares. All treasury
shares were cancelled in November 2024.
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 2024
Annual Report.
Note 17 Equity - dividends
31-Dec-24 30-Jun-24
$'000 $'000
Ordinary dividend paid (December 2024: 1.25 cents, June 2024: 2.25 cents) 2,680 4,976
Franking credits
The franking credits available to the Group as at 31 December 2024 are $5,000
(June 2024: $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-24 30-Jun-24
Litigation funding assets $'000 $'000
APAC 106,289 111,662
EMEA 313,974 353,551
Total Level 3 assets 420,264 465,213
Liabilities
Financial liabilities related to third-party interests in consolidated 314,982 264,950
entities
Total Level 3 liabilities 314,982 264,950
Refer note 12 for movements in level 3 assets and note 15 for movements in
level 3 liabilities. There were no transfers into or out of level 3 during the
period ended 31 December 2024.
As at 31 December 2024, the financial liability due to third-party interests
is $314,982,000 (June 2024: $264,950,000), recorded at fair value as
represented in note 15. 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.
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 2024
Item Valuation technique Unobservable Input Min Max Weighted average
Litigation funding asset Discounted cash flow Discount rate 9.80% 10.80% 10.40%
Duration (years) 1.75 7.58 4.78
Adjusted risk premium 0% 85% 17%
Adjusted risk premium - case milestone Min Max ( ) Weighted average % of portfolio(1)
Pre-commencement & commenced 0% 20% 5% 56%
Pleadings 5% 35% 11% 4%
Discovery & evidence 20% 40% 36% 8%
Significant ruling or other objective event prior to trial court judgment 25% 80% 46% 18%
Settlement 70% 85% 0% 0%
Trial court judgment or tribunal award 0% 85% 21% 9%
Appeal judgment 0% 85% 0% 4%
Enforcement 75% 85% 84% 2%
1 Percentage of portfolio represents the percentage of the book within the
cohort
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 into insurance arrangements which lessen or
eliminate the impact of such awards and therefore any adverse costs order
exposure.
Note 20 Share-based payments
The share-based payment expense for the period was $590,000 (December 2023:
$463,000).
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 (June 2024: nil) shares under the LSP.
Set out below are summaries of shares/options granted under the LSP:
31 December 2024
Grant date Expiry date Exercise Balance at the start of the period Granted Exercised Expired/ Balance at the end of the period
Price forfeited/
other
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 1,043,953 (125,259) 918,694
13/10/2020 13/10/2030 £0.6655 616,520 (158,296) 458,224
27/10/2021 27/10/2031 £1.06 1,512,638 (163,209) 1,349,429
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)
7,501,608 - (858,736) - 6,642,872
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 532,235 (June 2024: 771,911) options under
the DBSP.
Set out below are summaries of options granted under the DBSP:
31 December 2024
Grant date Expiry date Exercise Balance at the start of the period Granted Exercised Expired/ Balance at the end of the period
Price forfeited/
other
07/10/2022 07/10/2032 $0.00 877,435 - (442,468) - 434,967
04/10/2023 04/10/2033 $0.00 771,911 - (224,079) - 547,832
04/10/2024 04/10/2034 $0.00 - 532,235 - - 532,235
1,649,346 532,235 (666,547) - 1,515,034
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 (June 2024: nil) options under the
LTIP.
Set out below are summaries of shares/options granted under the LTIP:
31 December 2024
Grant date Expiry date Exercise Balance at the start of the period Granted Exercised Expired/ Balance at the end of the period
Price forfeited/
other
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 ( )
04/10/2024 04/10/2034 £0.98 £0.00 35.00% 1.10% 4.30% £0.9478
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 21 Events after the reporting period
On 21 February 2025, the Group announced that the Federal Court of Australia
had ruled against its funded party, Quintis Limited. While the claim was
unsuccessful, the Group is reviewing the judgment and considering an appeal,
which must be filed within 28 days of final orders being made.
On 11 March 2025, the Group announced that an appeal has been filed in
relation to the class action funded by the Group on behalf of Queensland
electricity users against Stanwell Corporation Ltd and CS Energy Ltd. This
follows the first instance judgment, which ruled against LCM's funded party,
as announced on 4 December 2024.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR EAFDXFDXSEAARecent news on Litigation Capital Management
See all newsREG - Litigation Cap. Mgmt - Outcome of Commercial Arbitration Investment
AnnouncementREG - Litigation Cap. Mgmt - Interim results for the HY ended 31 December 2024
AnnouncementRCS - Litigation Cap. Mgmt - Investor Presentation via Investor Meet Company
AnnouncementREG - Litigation Cap. Mgmt - Appeal Filed in Class Action Investment
AnnouncementREG - Litigation Cap. Mgmt - Judgment Delivered in Class Action Investment
Announcement