Litigation Capital Management Ltd · LSE:LIT
Litigation Capital Management — Q4 2020 Earnings Presentation
25 slides from Litigation Capital Management's earnings presentation, Sep 27, 2020
Slide 1: Results Presentation 2020
Results Presentation 2020 Litigation Capital Management Limited ACN 608 667 509
Slide 2: 2020 – a year of growth
2020 – a year of growth US$150m LCM Launches Asset Management Business. Committed 47% of first third party fund by 30 June Third-party and 61% by September fund launch Revenue growth Growth in revenue to $38m despite impact of COVID-19 Increase in Applications across all regions increased by 25% app
Slide 3: Measures of growth
Measures of growth Total assets under Capital committed in year ($m) Capital invested ($m) management $147m $52m FY20 147 FY20 52 $250m FY19 98 FY19 27.8 FY18 34 FY18 14.6 9-year cumulative portfolio ROIC of Revenue ($m) Number of applications 134% 1 $38m 522 9-year cumulative FY20 38 FY20 522 portf
Slide 4: Business model
Business model Shareholders Fund investors Direct Balance sheet Third Party Asset investments Management Business Performance growth fees earned through on delivering profits value Single case Portfolio Acquisition of investment investment claims Client Successful completion of litigation project 4
Slide 5: Asset management business
Asset management business Investment opportunity LCM sourced Third Party Fund LCM co-investment 75% investment contribution 25% investment contribution Multiple on Invested Capital (MOIC) = 100% return of capital + Return on Invested Capital (ROIC) Return to fund: Return to LCM: 75% investment contr
Slide 6: Cashflows: investment cycle
Investment cycle Theoretical single-case LCM profit Return of capital It is important to understand the investment cycle in order to investment cycle understand and measure LCM’s growth properly. The starting point Project for consideration is the investment period. r e s o l u ti o n • Historically
Slide 7: Full year results highlights
Full year results highlights – exclusive of third-party fund ($A) FY 2020 FY 2019 Change % Gross Revenue Gross revenue $38.4m $34.7m 11% $38.4m Gross profit $21.7m $20.3m 7% Adjusted profit before tax1 $11.1m $12.3m (9%) Statutory Profit before tax1 Statutory profit before tax1 $9.2m $10.2m (9%) Cas
Slide 8: FY20 Balance sheet overview
FY20 Balance sheet overview – exclusive of third-party fund ($A) Capital invested Total equity 76.2 82.2 41.3 ($m) ($m) 27.8 14.6 25.4 16.7 7.2 3.5 4.7 7.4 5.6 FY15 FY16 FY17 FY18 FY19 FY20 FY15 FY16 FY17 FY18 FY19 FY20 Cash generation2 Net cash as at period 49.1 35.3 ($m) end $4.6m 27.1 26.8 ($m) 2
Slide 9: Organic cash generation (A$)
Organic cash generation (A$) FY 2020 Cash Flow Waterfall1 (A$ in millions) 30.7 (39.7) Litigation Investments Operating activities Investing activities Financing activities 49.1 (11.8) 4.6 29.5 (2.1) (0.9) (0.4) 24.9 Cash balance Cash Capital Expenses Cost for fund Dividends Property, Cash I
Slide 10: Current portfolio of direct investments
Current portfolio of direct investments Balances as at 18 Portfolio by industry Portfolio by industry Portfolio by region sector (estimated A$ capital September 2020 sector commitment)¹ (estimated A$ capital (number of projects) (A$ millions) commitment)¹ $107 million $25 Direct investment2 18% 18%
Slide 11: LCM Global Alternative Returns Fund
LCM Global Alternative Returns Fund Portfolio by industry Portfolio by industry Third party fund Balances as at 18 sector sector commitments September 2020 (estimated A$ capital (number of projects) (estimated A$ capital commitment)¹ (A$ millions) commitment)¹ 61% 20% 18% 4 4 Committed 39% 7% 2 2 61
Slide 12: Favourable market conditions
Favourable market conditions Investing in disputes in an LCM’s business benefits from counter- uncorrelated investment class cyclical features • In times of economic uncertainty, or instability, businesses tend to • Disputes in the form of litigation or arbitration are transact outside their normal
Slide 13: Strategic priorities
Strategic priorities Launch Increase Law firm Increase Expansion further number and alliances number of into third-party quality of portfolio new regions funds application investments Raise a larger third- Aim to increase the Introduce innovative Growing Entering new party fund, percentage of strate
Slide 14: Significant growth since initial listing
Significant growth since initial listing Applications received Total portfolio under Operating capital in the 12-month management ($m)1 period2 ($m)1 522 250 • Exponential growth in total 92 portfolio 658% 74 91 125 33 98 • Significant growth in 16 applications feeding portfolio - ASX IPO AIM IPO FY
Slide 15: LCM's growth compared to market capitalisation
LCM’s growth compared to market capitalisation1 A$ Millions $250m Total portfolio under management Market capitalisation Operating capital1 • LCM’s core business is its portfolio under management • LCM’s share price and market $116m cap has tracked operating capital without recognition of $99m asset
Slide 16: Capital growth potential of AUM
Capital growth potential of AUM 353 268 after 100% commitment of existing fund Total potential $1B LCM value 2 $687m LCM balance sheet 230 25% LCM co-investment 2.5x 35% LCM outperformance fee 190 Fund investors MOIC 2.35x 250 330 $250m $304m $416m MOIC Total potential AUM AUM AUM $973m LCM
Slide 17: Appendices
(— Appendices LeM
Slide 18: Consolidated income statement
Consolidated income statement For the period ended 30 June 2020 Consolidated • Revenue up 11% despite COVID-19 causing three LCM only Fund FY20 FY19 A$m A$m A$m A$m matters to be pushed into the next financial year Revenue from contracts with customers Litigation service revenue 35.8 35.8 34.7 • 8 p
Slide 19: Adjusted profit & EBITDA reconciliation
Adjusted profit & EBITDA reconciliation For the period ended 30 June 2020 Consolidated • Non operating costs include expenses which are LCM only Fund FY20 FY19 considered unusual, non-cash or one-off in nature A$m A$m A$m A$m Statutory profit after tax 6.4 (1.2) 5.2 7.1 Add: Depreciation & interest
Slide 20: Consolidated statement of financial position
Consolidated statement of financial position As at 30 June 2020 Consolidated LCM only Fund FY20 FY19 • The Group continues to deploy capital into its A$m A$m A$m A$m direct investments as part of its growing portfolio. Current assets Consequently, cash down on prior year Cash and cash equivalents 24
Slide 21: Consolidated statement of cash flows
Consolidated statement of cash flows As at 30 June 2020 Consolidated FY20 FY19 • Funds raised from AIM IPO is being put to work A$m A$m with investments made in year increasing 49% Cash flows from operating activities exclusive of third-party commitments Proceeds from litigation contracts - settleme
Slide 22: Portfolio under management
Portfolio growth with proportionally reduced Opex A$ Millions 250 0.4 Total committed1 portfolio Total opex 34% Opex as a % of portfolio/AUM 0.35 Total AUM as at 30 June 2020 FY20 opex 200 Portfolio under management 2 0.3 Opex as % of Current Portfolio 0.25 150 0.2 100 13% 0.15 13% 13% 9% 9% 0.1 8%
Slide 23: Glossary
Glossary Acquisition of claims means the investment in smaller disputes (typically insolvency based) through the acquisition or assignment of the underlying cause of action and pursuing that claim through the court system as the principal Capital commitment means the total estimated budget of an inv
Slide 24: Important notices and disclaimer
Important notices and disclaimer Disclaimer The information in this presentation or on which this presentation is based has been obtained from sources that LIT believes to be reliable and accurate. However, none of LIT, LIT’s directors, officers, employees, its shareholders or any of their respectiv
Slide 25: Contact Information
Contact Information Offices Sydney London Singapore Melbourne Brisbane Level 12, The Chifley Tower Bridge House Marina Bay Financial Centre Level 30, Collins Place Level 54, 2 Chifley Square, 181 Queen Victoria Street Tower 1, Level 11 35 Collins Street, 111 Eagle Street, Sydney NSW 2000 London EC4V
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