Litigation Capital Management Ltd · LSE:LIT
Litigation Capital Management — Q2 2023 Earnings Presentation
34 slides from Litigation Capital Management's earnings presentation, Mar 21, 2023
Slide 1: Half-year results Presentation
Half-year results Presentation six months ended 31 December 2022 Litigation Capital Management Limited ACN 608 667 509
Slide 2: Highlights
Highlights and Intro Operational review Financial review Outlook Highlights Funds under Fund II commitments A$79m at 31 December 22 and A$114m at 28 February 23. Fund I fully committed. Management Assets under Assets under management increased to A$506m by 31 December 2022 with further commitments i
Slide 3: Introduction
EXPERIENCE COUNTS DUCTION
Slide 4: Who we are
Highlights and Intro Operational review Financial review Outlook Who we are • Litigation Capital Management (LCM) is an alternative asset manager specialising in disputes financing Patrick Moloney solutions internationally Chief Executive Officer • Through our two business models, direct balance she
Slide 5: Why invest
Highlights Highlights and Intro Operational Financial review review Operational Financial review review Outlook Outlook Why invest Disputes as an investment Global financial markets are Despite demand for litigation opportunity, and the performance of experiencing high volatility. finance steadily i
Slide 6: Business model
Highlights and Intro Operational review Financial review Outlook Business model SHAREHOLDERS FUND INVESTORS Reinvestment Reinvestment Performance fees and profit share Business growth through profits DIRECT BALANCE THIRD PARTY earned on delivering value SHEET INVESTMENTS ASSET MANAGEMENT SINGLE CASE
Slide 7: Our investment proposition
Highlights and Intro Operational review Financial review Outlook Our investment proposition The Funds management model provides equity investors with the benefit of exposure to superior Fund returns in the INVESTMENT OPPORTUNITY form of performance and outperformance fees payable to LCM sourced LCM
Slide 8: Market dynamics
Highlights and Intro Operational review Financial review Outlook Market dynamics A combination of Covid disruption, high inflation, increasing interest rates, geo-political disruption, supply and logistics disruption and economic risks are both increasing the number of global disputes and placing pr
Slide 9: Operational review
V| ATIONA EXPERIENCE COUNTS
Slide 10: Building scale
Highlights and Intro Operational review Financial review Outlook Building scale Measures of growth(A$) Maintenance of Increase in AUM (A$) investment standards Number of applications 11.5 year cumulative Total assets under 162 ROIC management – 31 Dec Capital committed in H1 1 154% $0.5bn $107m 11.5
Slide 11: Transition to diversified risk and enhanced returns
Highlights and Intro Operational review Financial review Outlook Transition to diversified risk and enhanced returns • Scaling the business by • Maximising balance sheet capital • Diversification of balance sheet leveraging third party funds and diversifying risk by co-funding capital across our por
Slide 12: Disciplined growth
Highlights and Intro Operational review Financial review Outlook Disciplined growth 600 0.4 Demonstrates our ability to scale and service a larger portfolio of investments while maintaining a 0.35 disciplined approach to managing 34% 500 costs 0.3 400 0.25 Assets under management 300 0.2 A$m Opex 50
Slide 13: Current portfolio of direct investments
Highlights and Intro Operational review Financial review Outlook Current portfolio of direct investments Balances as at Portfolio by industry Portfolio by industry Portfolio by region Portfolio by individual 28 February 2023 sector sector (estimated A$ capital capital commitment¹ (A$ millions) (esti
Slide 14: LCM Global Alternative Returns Fund I
Highlights and Intro Operational review Financial review Outlook LCM Global Alternative Returns Fund I Balances as at Portfolio by industry Portfolio by industry Portfolio by geography Portfolio by individual 28 February 2023 sector sector (estimated A$ capital capital commitment¹ (A$ millions) (est
Slide 15: LCM Global Alternative Returns Fund II
Highlights and Intro Operational review Financial review Outlook LCM Global Alternative Returns Fund II Balances as at Portfolio by industry Portfolio by industry 28 February 2023 sector sector (A$ millions) (estimated A$ capital (number of investments) • In line with the structure of Fund I, commit
Slide 16: Investment case study (Carillion matter)
Highlights and Intro Operational review Financial review Outlook Investment case study (Carillion matter) Investment Fund I LCM performance A$m* performance performance metrics metrics metrics Invested capital (A) 9.1 2.3 6.8 Investment return (B) 12.6 3.1 9.5 Total Revenue (A+B) 21.7 5.4 16.3 ROIC
Slide 17: Portfolio maturity profile (A$m)
Highlights and Intro Operational review Financial review Outlook Portfolio maturity profile (A$m) Portfolio by Capital Committed & maturity1 Portfolio by Capital Deployed & maturity1 • Notwithstanding the running average, (A$m) (A$m) LCM expects the duration of investments to increase 201 • The expe
Slide 18: Progress of Investment portfolio
Highlights and Intro Highlights Operational review Financial review Financial review Operational review Outlook Outlook Progress of Investment portfolio Direct investments Fund I Fund II • One direct investment (an Australian class action) • Fund I fully committed across 26 investments (2 • As at Ma
Slide 19: Building our most experienced team
Highlights and Intro Operational review Financial review Outlook Building our most experienced team Timothy Mayer joined LCM’s London office in March 2023 as a Senior Fiona Heyes joined LCM’s London office in February 2023 as an Investment Manager for EMEA. Timothy joins from Therium where he Invest
Slide 20: Financial review
EXPERIENCE COUNTS
Slide 21: Interim results highlights
Highlights and Intro Operational review Financial review Outlook Interim results highlights – exclusive of third-party fund (A$) HY 2 0 2 3 HY 2 0 2 2 Ch a n g e % Gross Revenue $3.0m Investments at cost as at end of $119.5m $97.2m 23% financial period3 Total capital invested4 $21.3m $13.9m 53% Gros
Slide 22: HY23 Balance sheet overview
Highlights Highlights and and Intro Intro Operational Operational review review Financial Financial review review Outlook Outlook HY23 Balance sheet overview Post period end – exclusive of third-party fund (A$) cash receipts Capital invested ($m) Total equity ($m) 22.3 100 21.3 94.3 18.4 95 91.2 13.
Slide 23: HY23 cash movements
Highlights and Intro Operational review Financial review Outlook HY23 cash movements 1 – exclusive of third-party fund (A$) Litigation Investments Operating activities Investing activities Financing activities 17.7 29.3 (20.2) (7.1) (0.3) 16.6 (0.8) (0.1) 1.3 (3.3) Cash balance Cash Capital
Slide 24: Outlook
LOM EXPERIENCE COUNTS
Slide 25: Outlook
Highlights and Intro Operational review Financial review Outlook Outlook LCM is building the scale of its business through expansion of global origination platform Growing asset management model producing enhanced returns Expected increase in demand for LCM’s capital from corporate clients as instab
Slide 26: Q&A
Q&A EXPERIENCE COUNTS
Slide 27: Appendices
endices EXPERIENCE COUNTS
Slide 28: Consolidated income statement
Consolidated income statement For the period ended 31 December 2022 Consolidated Consolidated LCM only Fund LCM only Fund HY23 HY22 A$m A$m A$m A$m A$m A$m Revenue from contracts with customers Litigation service revenue 3.0 1.7 4.7 19.1 0.2 19.3 Portfolio revenue - - - - - - Performance fees - - -
Slide 29: Adjusted profit & EBITDA reconciliation
Adjusted profit & EBITDA reconciliation For the period ended 31 December 2022 Consolidated Consolidated LCM only Fund LCM only Fund HY23 HY22 A$m A$m A$m A$m A$m A$m Statutory (loss)/profit after tax (7.3) (0.2) (7.5) 2.9 (0.3) 2.6 Add: Depreciation & interest 3.7 - 3.7 2.2 - 2.2 Tax expense (3.4) -
Slide 30: Consolidated statement of financial position
Consolidated statement of financial position As at 31 December 2022 Consolidated Consolidated LCM only Fund LCM only Fund HY23 HY22 A$m A$m A$m A$m A$m A$m Current assets Cash and cash equivalents 16.6 16.8 33.4 30.3 13.2 43.4 Trade and other receivables 20.4 - 20.4 12.5 - 12.5 Contract costs 31.5 -
Slide 31: Consolidated statement of cash flows
Consolidated statement of cash flows For the period ended 31 December 2022 LCM only Consolidated LCM only Consolidated A$m Fund A$m HY23 A$m A$m Fund A$m HY22 A$m (Loss)/profit after income tax expense for the period (7.3) (0.2) (7.5) 3.3 (0.3) 3.0 Adjustments for: Depreciation and amortisation of i
Slide 32: Glossary
Glossary Return on Invested Capital means the Net Capital Returned from a settlement or judgment that LCM receives in respect of a LCM managed (ROIC) Litigation Project less Peak Invested Capital, divided by the Peak Invested Capital Invested on a LCM managed Litigation Project. Internal Rate of Ret
Slide 33: Important notices and disclaimer
Important notices and disclaimer NOT FOR PUBLICATION, DISTRIBUTION OR RELEASE, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES OF AMERICA (INCLUDING ITS TERRITORIES AND DEPENDENCIES, ANY STATE OF THE UNITED STATES AND THE DISTRICT OF COLUMBIA), CANADA, AUSTRALIA, NEW ZEALAND, JAPAN, THE REPUBLI
Slide 34: Contact Information
Contact Information Offices Sydney Brisbane Level 12, The Chifley Tower Level 54, 2 Chifley Square, 111 Eagle Street, Sydney NSW 2000 Brisbane QLD 4000 T +61 2 8098 1390 T +61 7 3012 6478 London Bridge House Melbourne 181 Queen Victoria Street Level 50, London EC4V 4EG 120 Collins Street T +44 203 9
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