REG - Litigation Cap. Mgmt - Trading Update for 2024 Financial Year

Litigation Capital ManagementAnnouncement

17/07/2024 07:00

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RNS Number : 6672W  Litigation Capital Management Ltd  17 July 2024

17 July 2024

 

Litigation Capital Management Limited

("LCM" or the "Company")

 

Trading Update for 2024 Financial Year

 

Litigation Capital Management Limited (AIM:LIT), an alternative asset manager
specialising in dispute financing solutions internationally, is pleased to
provide an update on its business for the 2024 financial year ended 30 June
2024.

 

We are pleased to report another successful year with eight investments
concluding in the period generating realisations for LCM, inclusive of
performance fees, totalling AUD$56.0m.  This is compared to LCM's invested
capital of AUD$23.8m, representing a multiple on invested capital (MOIC) of
2.4x. This performance aligns with our long-term track record of an average
MOIC of 2.7x from investments concluded within the last 13 years, and
underscores the successful execution of our strategy.

 

Moreover, we have made a strong start to our 2025 financial year.  Shortly
after the 2024 financial year end, a single case investment concluded
generating realizations for LCM of at least AUD$12.5m, including performance
fees, compared to LCM's invested capital of AUD$1.5m, representing a MOIC of
8.3x.

 

 Period           Realisations (AUD$m)  Invested Capital (AUD$m)  MOIC multiple
 H1               28.4                  8.8                       3.2x
 H2               27.6                  15.0                      1.8x
 FY24             56.0                  23.8                      2.4x
 Post Period end  12.5                  1.5                       8.3x

 

The average duration of cases concluded in FY24 was 45 months - slightly
longer than our general expectation of 36-42 months, which remains
unchanged.  This largely reflects the COVID related delays that we have
previously communicated which impacted several of the investments that
concluded in the period.  Importantly, elongated time has not adversely
impacted on investment performance.

 

We continue to invest in what we believe are the highest quality legal claims,
collaborating with leading law firms and barristers in our respective
markets.  We have seen high demand for our capital in the second half of the
year and expect to report New Commitments for FY24 in excess of AUD$250m
(FY23: AUD$176m). It remains our key strategic priority to continue to grow
New Commitments, and thus ensure LCM achieves additional financial scale.

 

Our current portfolio of investments, both direct investments that are
entirely funded via our own balance sheet and those in which we are
co-invested alongside our managed external funds, continue to perform in line
with our expectations.

 

Patrick Moloney, CEO of LCM, commented: "The performance of our concluded
investments in our 2024 financial year highlights the strength and
effectiveness of our investment strategy. Through our rigorous investment
process, we have assembled a high-quality portfolio of uncorrelated legal
finance assets that are positioned to deliver attractive future aggregate
investment performance. Given our access to capital, further growing New
Commitments remains our key strategic priority and we are well on track. We
see significant upside potential here.

 

"We look forward to updating our investors on our strategic progress with our
full-year results presentation on 19 September and are excited about our
future opportunities."

 

Below is a brief summary of selected investments that concluded in the second
half of our 2024 financial year.

 

Binding Settlement reached  - Direct balance sheet Investment

 

A successful outcome in a dispute investment which forms part of LCMs
portfolio of 100% direct investments has been achieved. The proceedings were
heard in the Supreme Court of Western Australia and included two levels of
appeal at which LCM's funded party was successful at each level.  A binding
settlement deed has been executed by the parties resulting in the realisation
of LCM's investment. The investment is one of four legacy disputes held at
cost within our financial statements. Details of the returns are highlighted
below:

 

 AUD$m              Investment performance
 Invested capital   2.8
 Investment return  9.2
 Total revenue      12.0
 MOIC               4.3x

 

Binding Settlement reached - Direct balance sheet Investment

 

A further successful outcome was achieved with respect to a portfolio of
insolvency claims related to the failure of an Australian listed construction
company. A binding settlement deed was executed by the parties resulting in
the realisation of LCM's investment. The investment also forms part of LCMs
portfolio of 100% direct investments. Details of the returns are highlighted
below:

 

 AUD$m              Investment performance
 Invested capital   2.8
 Investment return  7.4
 Total revenue      10.3
 MOIC               3.7x

 

Furthermore, below is a summary of the investment that concluded shortly after
our financial year end.

 

Bilateral Investment Treaty - Fund I Investment

 

LCM funded a claim advanced in respect of a breach of a bilateral investment
treaty and brought under the International Centre For Settlement of Investment
Disputes (ICSID) Convention. The Tribunal issued an award in July 2023 in
favour of LCM's funded party for USD$76.7m plus interest and costs.  The
Respondent sought to challenge the award, but the parties have now reached a
settlement in advance of the annulment hearing. The terms of the settlement
are confidential.

 

The claim forms part of LCM's managed Global Alternative Returns Fund ("Fund
I") and was funded directly from LCM's balance sheet (25%) and Fund I
investors (75%). Details of the returns are highlighted below:

 

 AUD$m                               Investment performance  LCM performance metrics  Fund I performance metrics
 Invested capital                    5.9                     1.5                      4.4
 Investment return                   23.3                    5.8                      17.5
 Total revenue                       29.2                    7.3                      21.9
 MOIC on investment                  5.0                     5.0                      5.0
 Performance fee*                    -                       5.2                      (5.2)
 Gross profit                        23.3                    11.0                     12.3
 MOIC inclusive of performance fees  5.0x                    8.3x                     3.8x

*The investment returns are subject to change based on the prevailing FX rate
and timing of distribution

 

 

Notice of Results

 

We expect to report our 2024 financial year results on 19 September 2024.

 

 

Enquiries

 Litigation Capital Management             c/o Tavistock PR
 Patrick Moloney, Chief Executive Officer

 David Collins, 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                               LCM@Tavistock.co.uk
 Katie Hopkins

 

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/)

 

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