REG - RBG Holdings PLC - Trading & Dividend Update

RBG HoldingsAnnouncement

05/12/2022 07:00

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RNS Number : 5217I  RBG Holdings PLC  05 December 2022

This announcement contains inside information for the purposes of Article 7 of
EU Regulation 596/2014 as retained as part of UK law by virtue of the European
Union (Withdrawal) Act 2018 (as amended). Upon the publication of this
announcement, this inside information is now considered to be in the public
domain.

 

5 December 2022

RBG Holdings plc

("RBG" or the "Group")

Trading & Dividend Update

 

RBG Holdings plc (AIM: RBGP), the professional services group, today publishes
an update on current trading and outlook.

 

RBG's strategy has been to deliver revenues and profit from a diversified
portfolio of professional services businesses, reducing overall volatility of
earnings and the impact of any losses from any one business. This strategy has
served the Group successfully since its admission to AIM in 2018 with the
Group achieving profitable top line growth each year.

 

Professional Services - RBG Legal Services Limited ("RBGLS") and Convex
Capital Limited ("Convex")

 

The Group's professional services businesses RBGLS which holds the Company's
two client-facing brands ('Rosenblatt', and 'Memery Crystal)', and Convex have
had a robust performance year-to-date, despite the market headwinds.

 

As a result, RBGLS is on track to exceed the Board's expectations for the full
year, whilst Convex has some transactions which are now expected to complete
in Q1 2023, with deferment of revenue into the new financial year. Together,
the professional services businesses will be marginally ahead of the Board's
expectations for the year.

 

LionFish Litigation Finance Limited ("LionFish")

The Group's litigation finance subsidiary, LionFish has recently lost two of
the cases that it has invested in and following a review, the Board has now
concluded that any further appeals on these cases are no longer viable.

 

As a result, LionFish will now have a non-cash write-off of £4.0m in 2022 and
will, therefore, miss the Board's previous expectations of £2.3m profit. The
actual cash loss associated with these cases amounts to £1.1m over the life
of the investment.

 

Committed funding on the on-going Lionfish cases is £3.3m over the next two
years.

 

The Board has been reviewing its strategy with respect to third party
litigation funding through LionFish with a view to reducing the Group's
ongoing exposure to the remaining committed funding. The Group expects to make
a further announcement after the year-end.

 

Dividend

As a result of the strong performance in the professional service businesses,
the Group intends to announce as planned a second interim dividend for the
twelve months to 31 December 2022 in its full year trading statement in
January 2023 in line with its policy of distributing up to 60% of retained
profits.

 

Balance Sheet

As highlighted above, losses arising from the unsuccessful Litigation Finance
cases have no further impact on the Group's cash position and the Group's
balance sheet remains in line with the Board's expectations.  Free cash flow
generation at Group level has remained positive and strong across 2022. The
Group continues to trade within its facility agreements and retains sufficient
headroom to execute on its strategy.

 

Outlook

RBGLS continues to trade robustly and Convex has a strong pipeline of deals
which remain in process. As a result of the case losses in LionFish, the Group
now expects adjusted EBITDA to be materially behind current market consensus
expectations for 2022 and in a range of between £11.0m-£12.0m. The Board is
confident in the medium and long-term outlook of the business.

 

Commenting Group CEO Nicola Foulston, said: "I am very disappointed with the
LionFish position. We are taking steps to address the ongoing exposure to this
subsidiary.   We will also look at the efficiency of the cost base so that
in 2023 we continue to deliver strong cash generation and good yield.

 

"I am pleased to see the robust trading of our professional services business,
which follows a strong 2021 financial year. We are seeing the benefits of the
integration of Memery Crystal and Rosenblatt with improved operating
efficiency driving higher margins. While there is some disruption from
difficult market conditions, Convex continues to benefit from its model of
deep deal origination around the demands of buyers for good businesses.

 

"As we refocus the Group on Professional Services business, we are excited at
the potential to grow the businesses organically and drive opportunities for
cross-selling.

 

"We are confident in the medium to long-term outlook of the business and are
looking forward to the next 12 months with optimism, despite the ongoing
economic uncertainty."

 

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

                                                                 rbg@secnewgate.co.uk (mailto: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.

 

 

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.

 

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.

 

 

 

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