Litigation Capital Management Ltd · LSE:LIT

Litigation Capital Management — FY2024 Earnings Presentation

40 slides from Litigation Capital Management's earnings presentation, Sep 17, 2024

Slide 2: Presenters
PRESENTERS FY24 FULL YEAR RESULTS PRESENTATION PATRICK MOLONEY CHIEF EXECUTIVE OFFICER Patrick is a veteran of the disputes funding industry with over 20 years’ experience in the space. Patrick has been a Director of LCM since 2003 and the Chief Executive Officer of the group since December 2013 bas
Slide 4: FY24 Strong Momentum, Positioned for Success
FY24 // STRONG MOMENTUM, POSITIONED FOR SUCCESS 01 02 03 POWERING LONG- 04 STRONG MOMENTUM 05 REFINANCED DEBT FINANCIAL EXTENDED OUR HIGHLIGHTS INVESTMENT TRACK TERM GROWTH IN FUND FACILITY IN RECORD MANAGEMENT PROGRESS • 8 realisations in year • Performance fees of A$12m • Close to completing deal
Slide 5: Our Strategic Priorities
OUR STRATEGIC PRIORITIES WE ARE READY TO EXECUTE ON OUR STRATEGIC LONG -TERM PLANS TRANSITIONING TO ASSET MANAGEMENT DISCIPLINED AND STAGED ENTRY INTO THE USA ACQUIRED BIG DATA / ARTIFICIAL INTELLIGENCE PLATFORM © LCM 2024 // ALL RIGHTS RESERVED FY24 FULL YEAR RESULTS PRESENTATION 5
Slide 6: Transition to Asset Management
TRANSITION TO ASSET MANAGEMENT US$440m RAISED ACROSS TWO FUNDS TO DATE • Partnering with high quality LPs that are seeking long-term relationship, potentially across multiple funds EXCEPTIONAL INVESTMENT PERFORMANCE • 61% Net IRR for Fund I investors to date • Fund II performing in line with expecta
Slide 7: Securing Superior Economics from Asset Manager Model
SECURING SUPERIOR ECONOMICS FROM ASSET MANAGER MODEL REVENUE FROM LCM DIRECT REVENUE FROM TOTAL INVESTMENT PERFORMANCE FEES OLD MODEL – BALANCE SHEET FUNDER 4.3X MOIC A$2.8M LCM INVESTED 4.3X MOIC A$12M A$12M TOTAL REVENUE NEW MODEL – ASSET MANAGER A$2.2M 6.6X MOIC LCM INVESTED 3.8X MOIC A$8.4M 25/3
Slide 8: US Market Opportunity
US MARKET OPPORTUNITY The US accounts for around three CANADA quarters of annual global spend on ~$4BN UK litigation. ~$13BN CONTINENTAL EUROPE ASIA US market-wide new commitments of ~$21BN ~$19BN US $3bn per annum, excluding law firm ~$156BN HK AND financing. SINGAPORE ~$1.5BN Widespread use of con
Slide 9: Proprietary Technology
PROPRIETARY TECHNOLOGY ACQUIRED CUSTOM DESIGNED AND BUILT TECHNOLOGY SOLUTION INCORPORA TING BIG DATA AND ARTIFICIAL INTELLIGENCE DATA ENHANCE ORIGINATION IDENTIFY AND PRIORITISE ORIGINATION OPPORTUNITIES FACILITATES ENHANCED DECISION MAKING • Differentiate from traditional funding peers reliant on
Slide 11: We Are a Leading Legal Disputes Financier
WE ARE A LEADING LEGAL DISPUTES FINANCIER VAST 25-YEAR TRACK INDUSTRY LEADING UNDERPENETRATED RECORD RETURNS MARKET 87% WIN 286% MOIC >US$700BN RATIO FROM A$444M OF LAW FIRM REVENUES FROM C.275 CASH REALISATIONS GLOBALLY WITH <1% INVESTMENTS (BASED ON 13 YEAR LITIGATION FINANCE PENETRATION TRACK REC
Slide 12: We Are Specialists in a Highly Attractive Asset Class
WE ARE SPECIALISTS IN A HIGHLY ATTRACTIVE ASSET CLASS 01 // UNCORRELATED ASSET CLASS The success of an individual lawsuit or portfolio has no relation to the economy, financial markets or monetary policy 10.0 L C M R E A L I S E D R O I C ( X ) P E R I N V E S T M E N T 1,2 9.0 02 // UNDERPENETRATED
Slide 13: We Have an Industry-Leading Track Record
WE HAVE AN INDUSTRY-LEADING TRACK RECORD ADJUDICATED WINS A$149.0M TOTAL A$27.6M IS ATTRIBUTABLE TO 5.4X MOIC A$208M ADJUDICATION AND WIN IN AN REALISATIONS 143% IRR1 AVERAGE OF 35 MONTHS COMMITMENTS LOSSES A$443M A$20.5M NET IS ATTRIBUTABLE TO A$5.2M LOSSES AND TAKE AVERAGE OF 44 RECOVERED MONTHS R
Slide 15: FY24 Portfolio Progress
FY24 // PORTFOLIO PROGRESS CONCLUDED INVESTMENTS 01 02 NEW INVESTMENTS 03 ONGOING INVESTMENTS 8 investments concluded in 506 applications for funding in 58 ongoing investments as at 30 the year generating A$56.0m the period (up over 17% June 2024 of proceeds for LCM, inclusive versus FY23) of $12.7m
Slide 16: FY24 Summary Profit & Loss (A$)
FY24 // SUMMARY PROFIT & LOSS (A$) FY 2024 FY 2023 CONCLUDED INVESTMENTS – PROCEEDS ON LCM CAPITAL $43.3M $59.6M CONCLUDED INVESTMENTS - PERFORMANCE FEES ON 3P CAPITAL $12.7M $24.6M CONCLUDED INVESTMENTS - LCM CAPITAL INVESTED (“COST”) ($23.8M) ($32.7M) NET REALISED GAINS FROM CONCLUDED INVESTMENTS
Slide 17: FY24 Summary Balance Sheet (A$)
FY24 // SUMMARY BALANCE SHEET (A$) FY 2024 FY 2023 CASH $53.0M $83.0M DEBTORS $15.0M $13.9M INVESTMENTS AT FAIR VALUE $202.9M $165.8M INVESTMENTS HELD AT COST $42.1M $37.3M OTHER ASSETS $1.5M $1.7M TOTAL ASSETS $314.4M $301.7M BORROWINGS ($61.9M) ($67.0M) DEFERRED TAX LIABILITY AND TAX PAYABLE ($44.
Slide 18: FY24 Summary Cash Flow (A$M)
FY24 // SUMMARY CASH FLOW ( A$M) FY 2024 FY 2023 OPENING CASH 83.0 29.3 CASH GENERATED FROM CONCLUDED INVESTMENTS 56.7 96.8 CASH INVESTED INTO ONGOING CASES (CASE FUNDING) (39.7) (36.3) OPERATING EXPENSES (17.0) (12.1) INTEREST (9.0) (6.0) DIVIDEND AND SHARE BUY BACK (10.4) 0.0 DEBT REPAYMENT (8.1)
Slide 19: Third Party Capital Outpacing B/S Capital
THIRD PARTY CAPITAL OUTPACING B/S CAPITAL 725 300 279 COMMITTED CAPITAL INVESTED CAPITAL NEW COMMITMENTS 700 300 281 250 600 270 240 228 128 500 484 413 200 210 153 176 414 181 400 180 147 337 124 150 301 150 134 83 110 300 250 227 120 98 104 116 156 46 100 104 200 90 71 60 106 151 130 312 60 11 128
Slide 20: Scaling to a Sustainable Asset Manager Model
SCALING TO A SUSTAINABLE ASSET MANAGER MODEL 9.0% 7.8% 8.0% 7.0% 6.0% 4.9% 5.0% 4.6% 4.0% 3.5% 3.5% 3.0% 2.6% 2.0% 1.0% 0.0% FY19 FY20 FY21 FY22 FY23 FY24 Opex as % of Committed capital 2% Operating expenses as a % of Committed Capital to continue trending lower over time © LCM 2024 // ALL RIGHTS RE
Slide 22: FY24 Outlook
FY24 // OUTLOOK 01 Transitioning to Asset Management 02 Entering the US Market 03 Acquired Big Data / AI Platform to Enhance Origination and Underwriting Significant long-term growth opportunity in the vast and nascent legal finance market © LCM 2024 // ALL RIGHTS RESERVED FY24 FULL YEAR RESULTS PRE
Slide 25: The Opportunity: Vast Legal Market
THE OPPORTUNITY THE LEGAL MARKET IS VAST AND OFFERS AN EXCEPTIONAL LONG-TERM GROWTH OPPORTUNITY FOR LITIGATION FINANCE… US$700BILLION OF LEGAL REVENUES GLOBALLY 200,000+ LAWYERS WITHIN OUR EXISTING MARKET 1 MILLION+ LAWYERS IN THE UNITED STATES LESS THAN 1% PENETRATION OF LITIGATION FINANCE © LCM 20
Slide 26: We Can Unlock This Opportunity for Investors
THE OPPORTUNITY WE CAN UNLOCK THIS OPPORTUNITY FOR INVESTORS… 25 YEARS OF EXPERIENCE A WIN RATIO OF 87% FROM CIRCA 275 INVESTMENTS FUNDED 286% MOIC INDUSTRY LEADING RETURNS ON INVESTED CAPITAL ASSET MANAGER MODEL TO SIGNIFICANTLY ENHANCE RETURNS © LCM 2024 // ALL RIGHTS RESERVED FY24 FULL YEAR RESUL
Slide 27: We Operate in Vast and Growing Markets
WE OPERATE IN VAST AND GROWING MARKETS UK LEGAL SERVICES SECTOR AUSTRALIAN LEGAL SERVICES SECTOR 40. 32 30. 24 REVENUE // A$BILLION REVENUE // £BILLION 20. 16 10. 8 0. 0 2017 2018 2019 2020 2021 2022 2023 2024 2017 2018 2019 2020 2021 2022 2023 2024 SOURCES // STATISTICA 2024, IBISWORLD, PROSPERANT
Slide 28: Why Invest in Disputes?
WHY INVEST IN DISPUTES? COUNTERCYCLICAL UNCORRELATED ASYMMETRICAL H ISTOR IC ALLY DISPUTE SUSTAINE D INVE STME NT TH E POTE NTIA L F OR LE VE LS R ISE DUR ING PE R FOR MANC E AC R OS S H IGH R E TUR NS F A R PE R IODS OF INSTABILITY E C ONOMIC C YC LE S A ND OUTWE IGH S TH E AND TH E LE VE L OF C ON
Slide 29: What Types of Claims Do We Invest In?
WHAT TYPES OF CLAIMS DO WE INVEST IN? 01 02 03 04 05 06 INSOLVENCY COMMERCIAL CLASS ACTIONS INTERNATIONAL ENFORCEMENT PORTFOLIOS ARBITRATION Insolvency claims include Commercial claims include Class actions include Spans multiple types of The funding of legal A growing trend for unfair preference cl
Slide 30: Return Profile
RETURN PROFILE PROFIT PER INVESTMENT1 R O I C ( X ) P E R I N V E S T M E N T 1,2 10.0 25.0 9.0 20.0 8.0 7.0 15.0 6.0 5.0 10.0 4.0 3.0 5.0 2.0 1.0 0.0 0.0 -1.0 -5.0 -10.0 1. PRESENTED IN ASCENDING VALUE ORDER, NOT CHRONOLOGICAL ORDER BASE D ON 13.0 YEAR TRACK RECORD, INVESTMENTS WHERE PROFIT IS GREA
Slide 31: Three-Year Running Performance
THREE-YEAR RUNNING PERFORMANCE 1 400% 45.00 3.31 41 3.09 40.00 300% 2.86 2.66 37 2.49 2.44 2.39 35.00 200% 33 32 31 31 30.00 28 100% 82.6% 71.1% 76.2% 65.6% 65.1% 63.8% 25.00 59.1% 0% 20.00 FY16-18 FY17-19 FY18-20 FY19-21 FY20-22 FY21-23 FY 22-24 Rolling IRR Rolling MoIC Time to recovery (months) 1.
Slide 32: Dual Sources of Capital, Dual Sources of Revenue
DUAL SOURCES OF CAPITAL, DUAL SOURCES OF REVENUE 2X FUNDS // A$650M BALANCE SHEET CAPITAL DIRECT INVESTMENTS A$128M INVESTED BALANCE SHEET CAPITAL THIRD PARTY CAPITAL A$311M COMMITTED BALANCE SHEET CAPITAL FUNDS MANAGEMENT A$153M INVESTED THIRD PARTY CAPITAL A$413M COMMITTED THIRD PARTY CAPITAL REVE
Slide 33: LCM Only - Portfolio
LCM ONLY - PORTFOLIO BALANCES AS AT 30 JUNE 2024(A$ MILLIONS) PORTFOLIO BY PORTFOLIO BY PORTFOLIO BY CASE TYPE CASE TYPE REGION A$67M A$244 M (estimated A$ committed (number of projects) (estimated A$ capital capital) 1 commitment) 1 3 1% 1% 2% 9% DIRECT 100% CO-INVESTMENT 9 INVESTMENT2 COMMITTED CA
Slide 34: LCM Global Alternatives Return Fund I
LCM GLOBAL ALTERNATIVES RETURN FUND I PORTFOLIO BY PORTFOLIO BY PORTFOLIO BY GEOGRAPHY CASE TYPE CASE TYPE (estimated US$ capital BALANCES AS AT 30 JUNE 2024 US$150M (estimated US$ capital commitment) 2 (number of investments) commitment) 2 (US$ MILLIONS) EXTERNAL AUM 21% 23% 21% COMMITTED1 31% 2% 3
Slide 35: LCM Global Alternatives Return Fund II
LCM GLOBAL ALTERNATIVES RETURN FUND II PORTFOLIO BY PORTFOLIO BY PORTFOLIO BY GEOGRAPHY CASE TYPE CASE TYPE (estimated US$ capital BALANCES AS AT 30 JUNE 2024 US$291M (estimated US$ capital commitment) 2 2% (number of investments) commitment) 2 (A$ MILLIONS) EXTERNAL AUM 6% 4% 11% 18% 4% COMMITTED 1
Slide 36: Portfolio Age A$M as at 30 June 2024
PORTFOLIO AGE A$M AS AT 30 JUNE 2024 COMMITTED CAPITAL & AGE (A$M) INVESTED CAPITAL & AGE (A$M) COMMITTED CAPITAL A$723M INVESTED CAPITAL A$290M 161M 48M 56M 49M 113M 78M 34M 63M 22M 62M 49M 20M 23M 57M 10M 44M 38M 12M 35M 9M 20 8 25M 9 8 8 5 6M 0 - 12 months 13 - 24 months 25 - 36 months 37 - 48 mo
Slide 37: How We Generate Returns
HOW WE GENERATE RETURNS LCM REVENUE FROM FUND REVENUE A$* DIRECT FROM PERFORMANCE INVESTMENTS FEES INVESTED CAPITAL 25 75 APPLY HISTORICAL PERFORMANCE 2.86 X MOIC 72 215 GROSS PROFIT 47 140 PERFORMANCE FEE @ 25% ON PROFIT 35 (35) GROSS PROFIT 82 105 IMPLIED MOIC 4.3X 2.4X © LCM 2024 // ALL RIGHTS RE
Slide 38: Glossary
GLOSSARY Invested Capital means funds invested into a the current portfolio of investments during the relevant period Co-investment means LCM's direct investment into the matters funded together with the Funds, generally equal to 25% of the total capital commitment means, in respect of a Case or Lit
Slide 39: 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 40: Contact Information
CONTACT INFORMATION SYDNEY BRISBANE LONDON SINGAPORE Level 12, The Chifley Tower, Level 38, Bridge House, 1 Marina Boulevard, 2 Chifley Square, 71 Eagle Street, 181 Queen Victoria Street, Level 20-43, Sydney NSW 2000 Brisbane QLD 4000 London EC4V 4EG Singapore 018989 T // +61 2 8098 1390 T // +61 7

Litigation Capital Management — FY2024 Earnings Presentation on 6ix

Litigation Capital Management — FY2024 Earnings Presentation

Slide 1: Full Year Results Presentation 2024

Slide 2: Presenters

Slide 3: Key Messages

Slide 4: FY24 Strong Momentum, Positioned for Success

Slide 5: Our Strategic Priorities

Slide 6: Transition to Asset Management

Slide 7: Securing Superior Economics from Asset Manager Model

Slide 8: US Market Opportunity

Slide 9: Proprietary Technology

Slide 10: LCM Overview

Slide 11: We Are a Leading Legal Disputes Financier

Slide 12: We Are Specialists in a Highly Attractive Asset Class

Slide 13: We Have an Industry-Leading Track Record

Slide 14: Financials

Slide 15: FY24 Portfolio Progress

Slide 16: FY24 Summary Profit & Loss (A$)

Slide 17: FY24 Summary Balance Sheet (A$)

Slide 18: FY24 Summary Cash Flow (A$M)

Slide 19: Third Party Capital Outpacing B/S Capital

Slide 20: Scaling to a Sustainable Asset Manager Model

Slide 21: Outlook

Slide 22: FY24 Outlook

Slide 23: Q&A

Slide 24: Appendices

Slide 25: The Opportunity: Vast Legal Market

Slide 26: We Can Unlock This Opportunity for Investors

Slide 27: We Operate in Vast and Growing Markets

Slide 28: Why Invest in Disputes?

Slide 29: What Types of Claims Do We Invest In?

Slide 30: Return Profile

Slide 31: Three-Year Running Performance

Slide 32: Dual Sources of Capital, Dual Sources of Revenue

Slide 33: LCM Only - Portfolio

Slide 34: LCM Global Alternatives Return Fund I

Slide 35: LCM Global Alternatives Return Fund II

Slide 36: Portfolio Age A$M as at 30 June 2024

Slide 37: How We Generate Returns

Slide 38: Glossary

Slide 39: Important Notices and Disclaimer

Slide 40: Contact Information