REG - RBG Holdings PLC - Pre-Close Trading Update

RBG HoldingsAnnouncement

18/07/2022 07:00

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RNS Number : 7767S  RBG Holdings PLC  18 July 2022

18 July 2022

 

RBG Holdings plc

("RBG" or the "Group")

 

Pre-Close Trading Update

 

RBG Holdings plc (AIM: RBGP), the professional services group, today publishes
a pre-close trading update ahead of the publication of its financial results
for the six months ending 30 June 2022 on 13 September 2022.

 

The Board is pleased to announce that the Group continues to trade in line
with current market expectations*.

 

RBG Legal Services Limited ("RBGLS")

RBG's legal services division, RBGLS, holds the Company's two client-facing
brands of 'Rosenblatt', for contentious legal services, and 'Memery Crystal',
for non-contentious legal services. Overall, RBGLS has performed well with a
particularly strong performance in its Corporate and Banking practices.

 

The integration of RBGLS (and within that the Rosenblatt and Memery Crystal
brands) is complete with the businesses set to move to a new practice
management software system in the last quarter of 2022 to support the
integration and the potential for future cross-sell initiatives.

 

Pleasingly, because of management actions to date, the EBITDA margin of Memery
Crystal has improved by 10% to 27%. The EBITDA margin of RBGLS is 30% and is
expected to rise towards 35% over the medium-term as the benefits of the
integrated business are fully maximised. The advantages are two strong brands,
greater scale, and the creation of what the Group considers to be a leading
mid-tier law firm.

 

Convex Capital Limited ("Convex Capital")

The Group's specialist sell-side corporate finance boutique has continued its
strong performance into 2022. As at 30 June 2022, Convex Capital had completed
five deals generating revenue of £4.2 million (2021: 8 deals, revenue of
£5.0 million). Furthermore, as at 18 July 2022, Convex Capital has a strong
pipeline of 20 deals with a number currently at various stages of completion.
It is the Board's expectation that the current macro-economic environment will
support the ongoing fundamentals that drive M&A.

 

Litigation Finance

Since its launch in May 2020, LionFish Litigation Finance Limited ("LionFish")
has invested in 12 cases, with one case having settled successfully in 2021.
Current active cases have a total capital commitment of £11.3 million of
which £5.5 million has been deployed (as at 30 June 2022). Disposals since
inception total £5.9 million.

 

In February 2022, LionFish agreed a £20.0 million litigation investment
arrangement with a large alternative investment firm which will provide the
business with flexible capital. They will invest 75% on any new deals and have
retrospectively invested £2.0 million in existing cases in Rosenblatt and
LionFish.

 

This year, LionFish is expected to generate the majority of its gains from
potential settlements, the timings of which are not within RBG's control and
are thus difficult to predict.

 

Balance Sheet

The integration of Memery Crystal has progressed to plan with the expected
synergies having a positive impact on the wider Group. Consequently, the Group
has already paid back £2.0 million of the £10.0 million term loan used to
fund the acquisition (in addition to £5.6 million in deferred cash
consideration).  The term loan will be paid down over five years.
Furthermore, the Group has used £10.0 million of its £15.0 million revolving
credit facility as the Group's working capital requirements have doubled since
the acquisition of Memery Crystal. As a result, the Group's balance sheet
remains in line with expectations with net debt at £17.2 million (2021:
£10.0 million). Headroom remains sufficient to support the Group's growth
plans.

 

Dividend

The Company will announce the details of its interim dividend when it
publishes its financial results in September.

 

Commenting Group CEO Nicola Foulston, said: "Having delivered the upgraded
market expectations for the 2021 financial year, we are pleased with the
continued solid trading performance of the Group. Macro-economic conditions
are volatile, and we are conscious of the ever-changing economic environment.
However, our diversified strategy helps provide resilience and protection
through a broad revenue base that is not dependent on any one sector. The
integration of Memery Crystal and Rosenblatt has been a success with improved
operating efficiency driving higher margins.

 

"Our Litigation Finance business continues to develop and offers the potential
for substantial returns for shareholders. Finally, our M&A business,
Convex Capital, continues to perform well and is converting its pipeline. We
are confident about the long-term prospects of the Group."

 

*RBG understands that consensus market expectations for the year ended 31
December 2022 (excluding outliers) are for revenues of £56.2 million, Adj.
EBITDA of £17.3 million and Adj. PBT of £13.1 million (Source: FactSet).

 

Enquiries:

 RBG Holdings plc                                                 Via SEC Newgate
 Nicola Foulston, CEO

 Singer Capital Markets (Nomad and Broker)                       Tel: +44 (0)20 7496 3000
 Rick Thompson / Alex Bond / James Fischer (Corporate Finance)
 Tom Salvesen (Corporate Broking)
 SEC Newgate (for media enquiries)                               Tel: +44 (0)7540 106366
 Robin Tozer/Richard Bicknell

                                                                 rbg@secnewgate.co.uk

 

 

About RBG Holdings plc

RBG Holdings plc is a professional services group, which comprises the
following divisions:

 

RBG Legal Services Limited ("RBGLS")

RBGLS is the Group's legal services division which combines the businesses
previously operated by Rosenblatt Limited and Memery Crystal LLP.

 

Rosenblatt

Rosenblatt is one of the UK's pioneering legal practices and a leader in
dispute resolution. Rosenblatt provides a range of legal services to its
diversified client base, which includes companies, banks, entrepreneurs and
individuals. Complementing this is Rosenblatt's increasingly international
footprint, advising on complex cross-jurisdictional disputes.

 

Memery Crystal

Memery Crystal offers legal services in a range of areas such as corporate
(including a market-leading corporate finance offering), real estate,
commercial, IP & technology (CIPT), banking & finance, tax &
wealth structuring and employment. Memery Crystal is one of the leading legal
practices in the UK to advise the emerging cannabis sector on a wide range of
business issues. Memery Crystal offers a partner-led service to a broad range
of clients, from multinational companies, financial institutions and
owner-managed businesses to individual entrepreneurs.

 

LionFish Litigation Finance Limited ("LionFish")

The Group also provides litigation finance in selected cases through a
separate arm, LionFish Litigation Finance Limited. LionFish finances
litigation matters being run by other solicitors in return for a significant
return on the outcome of those cases. As such, the Group has two types of
litigation assets - Rosenblatt's own client matters, and litigation matters
run by third-party solicitors. LionFish is positioned to be a unique,
alternative provider to the traditional litigation funders.

 

Convex Capital Limited ("Convex Capital")

Convex Capital is a specialist sell-side corporate finance boutique based in
Manchester. Convex Capital is entirely focused on helping companies,
particularly owner-managed and entrepreneurial businesses, realise their value
through sales to large corporates. Convex Capital identifies and proactively
targets firms that it believes represent attractive acquisition opportunities.

 

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