Litigation Capital Management Limited (AIM:LIT), a leading international provider of litigation financing solutions, today announces its audited financial results for the year ended 30 June 2019.
Company highlights
▪ Strong performance and significant operational expansion to achieve global platform covering Australia, EMEA and Asia Pacific
– Establishment of London office and recruitment of highly experienced team led by Nick Rowles-Davies, Executive Vice Chairman, to service the EMEA region
– Establishment of Singapore office and recruitment of highly experienced team leader to service the growth markets of Singapore and Hong Kong
▪ Increased investment pool and achieved significant diversification in our portfolio and pipeline by geography and jurisdiction, as well as sector and capital commitment, whilst maintaining discipline
▪ Funded two corporate portfolio transactions; LCM is the clear global leader in this key growth area
▪ Initiated a pilot program providing a funding solution for small claims in the insolvency market in Australia and the United Kingdom
▪ Continued growth of pipeline with 64 investment opportunities (as at 3 September 2019)
▪ 235% increase in applications during FY19; maintaining disciplined focus on due diligence with only 3% of applications converted into an investment
▪ Delisted from Australian Securities Exchange and listed on AIM in December 2018; raising circa A$35 million (£20 million) of primary equity, following a raise of A$10 million on the ASX in the period
Financial highlights
▪ Revenue of A$34.71 million increased by 17% (FY18 A$29.68 million)
▪ Gross profit of A$20.34 million increased by 23% (FY18 A$16.51 million)
▪ Adjusted profit before tax of A$12.28 million broadly flat against FY18, despite unprecedented growth and expansion across all areas of the business
▪ Cash on balance sheet of A$49.12 million (A$52.60 million as at 31 December 2018) and total litigation investments of A$27.39 million (A$20.70 million as at 31 December 2018)
▪ Leading performance metrics with cumulative ROIC since FY12 of 135% (including losses) and portfolio IRR, since FY12, of 80% (including losses)
▪ Final fully franked dividend of 0.828 cents (Australian) per share; following the interim dividend of 0.506 cents (Australian) per share paid in May 2019
Notes:
¹ LCM reports on a cash accounting basis (historical cost), there are no fair value adjustments included in its financials
2 Revenue includes the impact of the adoption of AASB 15 Revenue from Contracts with Customers
3 Adjusted for foreign exchange loss, IPO and other transaction expenses, share based payments expense, non-recurring legal fees on litigation, provision for employee entitlements, non-recurring consultancy fees
4 Litigation investments equates to the total of current contracts costs and non-current contract costs on the Consolidated Statement of Financial Position
5 Cash receipts equates to Proceeds from Litigation Contracts as disclosed in the Consolidated Statement of Cashflows (Cash flows from operating activities). The cash receipts of $26.80m does not include revenue pf $7.627m due from the completion of litigation services, of which $7.18m is held in an Escrow Account awaiting orders of the Court for distribution.
Patrick Moloney, CEO of LCM, said:
“We are pleased to present a strong set of results for FY 2019, which we have delivered alongside unprecedented growth and expansion across all areas of our business. We have continued to invest in the right people who have the appropriate experience to support our growth trajectory.
The results we publish today represent realised revenue and demonstrate our true performance. We remain committed to providing our investors with the disclosure and transparency they need to assess the underlying performance of the business and the basis of our returns.
We are excited about a number of significant growth opportunities for LCM. Notably, corporate portfolio funding, where in the past year we have established ourselves as the global leader for this product. During the year, we originated over 15 applications and funded two corporate transactions. This number might seem small, but it represents more than any other funder globally and corporate portfolio funding remains a key part of our growth strategy going forward.”
WEBCAST AND CONFERENCE CALL
LCM will be hosting a live meeting and conference call today at 09:30 (BST). The webcast can be accessed via our website at www.lcmfinance.com/shareholders/. A conference call is also available for those unable to join the webcast, please register at https://secure.emincote.com/client/lcm/lcm001/vip_connect to get access. There will be a facility to ask questions. A replay of the webcast will be available later today.
CONTACTS
Litigation Capital Management
Patrick Moloney, Chief Executive Officer
Nick Rowles-Davies, Executive Vice Chairman Stephen Conrad, Chief Financial Officer
Canaccord (Nomad and Broker) Bobbie Hilliam
Hawthorn Advisors
Lorna Cobbett / Zinka MacHale
Tel: 020 7523 8000
Tel: 020 3745 4960
PROJECT AND PIPELINE UPDATE
As at 30 June 2019, LCM has a portfolio of 29 current projects under management. 23 projects are unconditionally funded and six projects conditionally funded. The portfolio shows significant growth of 45% in the number of projects under management,given LCM wasmanaging 20projectsasat 30June2018. In linewith LCM’sinvestment philosophy, the portfolio maintained diversity across industry sector, jurisdiction and capital commitment.
Both project and pipeline opportunities are well diversified by litigation type and geography, while maintaining a disciplined process of project selection. LCM has pre-qualified 64 pipeline projects with estimated investment of A$394 million.
During FY19 both the number and quality of applications received by LCM increased significantly. A total of 419 applications were received representing an increase of 235%, compared with 125 applications received in FY18. This application increase was largely due to our expansion into new jurisdictions, but also from LCM realising a higher profile
