Omni Bridgeway Ltd · ASX:OBL
Omni Bridgeway — FY2020 Earnings Presentation
24 slides from Omni Bridgeway's earnings presentation, September 2020
Slide 1: Investor Presentation September 2020
Investor Presentation September 2020 IMF Bentham, Bentham IMF, ROLAND ProzessFinanz have all now adopted the unified global name Omni Bridgeway.
Slide 2: Disclaimer
Disclaimer • The material in this presentation has been prepared by Omni Bridgeway and is general background information about Omni Bridgeway's activities. The information is given in summary form and does not purport to be complete. • A number of terms used in this presentation including: ROIC, EPV
Slide 3: Highlights
Highlights FINANCIALS: REFINANCED DEBT: • Material number of conditional and unconditional completions • Extended maturity profile generating $314m of revenue and income • Aligned covenants across debt facilities • $98m of NCI extinguished • Reduced borrowing rate • $628m of investments (made larges
Slide 4: Audit Delay and FV Adjustments
Audit Delay and FV Adjustments • The delay in the release of the financial results arose from a request from the auditor to • The purchase was intentionally structured so as to align vendors and purchasers to review the valuation of the liability associated with the deferred and the variable Omni Br
Slide 5: Financial Results Overview
Financial Results Overview FY 2020 FY 2019 % move from prior $m $m year Litigation contract income 257.5 35.0 ▲636% Revenue from cases 21.7 - Purchased claims income 9.7 - Management & performance fees 1.4 0.1 Other income (incl foreign exchange & interest) 24.0 9.9 ▲142% Total revenue and income 31
Slide 6: NCI Profit Attribution
NCI Profit Attribution Fund 1 Funds 2&3 Fund 4 Fund 5 Fund 6 OBL Consolidated $m $m $m $m $m $m $m As per Profit and Loss Statement / Segment note Profit / (loss) before tax and fair value adjustments 9.8 34.7 3.9 (1.1) 0.7 (0.9) 47.0 Fair value adjustments on financial liabilities - - - - - (13.6)
Slide 7: Operating Expenditure
Operating Expenditure FY 2020 FY 2019 • Actual cash costs have increased 20% from the prior year, however they have $m $m decreased as a percentage of net assets, investments and EPV, reflecting an As per Profit and Loss Statement improvement in operational efficiency. Finance costs (1.4) (0.1) Depr
Slide 8: Sources and Applications of Cash
Sources and Applications of Cash FY 2020 FY 2019 • IFRS reporting does not necessarily represent the cash generating capacity of $m $m the business given revenue recognition principles and capitalisation of certain Cash generation expenses into intangibles. Proceeds from litigation funding 171.0 43.
Slide 9: Balance Sheet Strength and Investment Portfolio
Balance Sheet Strength and Investment Portfolio Cash & Net Receivables Net Assets ($m) 312.2 ($m) 767.2 217.6 515.5 139.1 141.8 142.4 367.8 201.4 206.3 • Material growth in all key metrics including income, liquid assets, net assets, investments and portfolio. FY16 FY17 FY18 FY19 FY20 Balance Sheet
Slide 10: EPV Diversity
EPV Diversity EPV by Geography EPV by Investment Type 0% 10% 13% 13% 1% 18% 11% 43% 0% 27% 6% 21% 2% 10% 1% 23% Appeal Arbitration Commercial Corporate Funding Insolvency Law Firm Asia Australia Canada UK & EMEA United States Multi Party Other IP Patent Whistleblower Inclusion of OBE Group • Diversi
Slide 11: Funding Funnel
Funding Funnel Funding applications continue to grow year on year as our geographic expansion takes hold. Investments from year-to-year largely track funding commitments. Funding Applications Funding Commitments 1,400 400 700 1,296 1,200 350 600 300 Funds Committed ($million) 1,000 974 500 Investmen
Slide 12: Fund Summary
Fund Summary Investors Omni Bridgeway Commence Capital Returns 1 Capital Fees EPV date Fund size Committed A$m A$m A$m A$m A$m Fund 1 10 Feb 2017 USD 167m 100% 127.9 40.9 60.8 6.3 2,798.8 Funds 2 & 3 3 Oct 2017 AUD 180m 99% 50.1 20.0 16.2 1.4 2,939.9 Fund 4 1 Apr 2019 USD 500m 22% 103.2 24.2 25.8 -
Slide 13: Non-Controlling Interests
Non-Controlling Interests NCI Fund 1 Funds 2&3 Fund 4 Fund 6 Total • First Generation Funds remain within the 100% A$m A$m A$m A$m A$m proceeds (& profit) distribution to NCI stage of the Opening (202.5) (68.6) (25.5) - (296.6) distribution waterfall. Acquired during the period - - - (104.8) (104.8)
Slide 14: First Generation Funds
First Generation Funds We have been asked how we analyse the ability of the first generation funds to return value to OBL shareholders based on their current portfolios and returns to date. Whilst Omni Bridgeway does not provide earnings guidance or forecasts and notes that past performance is not n
Slide 15: Fund 6 Performance
Fund 6 Performance FY 2020 • Purchase was considered to be a strategic expansion purchase but also believed to be and $m proving to be value accretive. There are now 6 co-investments between the legacy IMF and As per Segment Note legacy Omni Bridgeway businesses with aggregate capital commitments of
Slide 16: ROIC Track Record
ROIC Track Record ROIC • ROIC as a measure for our investments is becoming less relevant given our transition to 165% 163% 165% 156% funds management. 154% 160% 159% • ROIC in the US has declined over the last 147% financial year as a consequence of investments 121% 118% 134% 132% that completed in
Slide 17: Wivenhoe
Wivenhoe • The decision was handed down in November 2019 in favour of our funded clients, and which found the defendants Seqwater, Sunwater and the State of Queensland (State) liable in negligence to group members. Subsequently the State has advised that it will not appeal the decision, whereas the
Slide 18: Westgem
Westgem • The Supreme Court of Western Australia has delivered judgment in the Westgem litigation in favour of the defendant and has dismissed the claims of Omni Bridgeway’s funded clients. • The Westgem investment has a carrying value of $55m and was commenced in 2011. This represents 8.7% of Omni
Slide 19: Regulation / Common Fund Orders / Contingency Fees
Regulation / Common Fund Orders / Contingency Fees • The High Court’s decision on Common Fund Orders (CFOs) in December 2019 caused some consternation amongst industry participants but has not resulted in a wholesale change in the funding of class actions. The implications are yet to be felt on comp
Slide 20: Culmination of Initial Five Year Plan
Culmination of Initial Five Year Plan 1 July 2015 30 June 2020 • This financial year has been Australia, USA, Canada, the strongest in our company’s Increased jurisdictional coverage Australia, USA, UK Asia, UK, EMEA history, with record income of $314.3m and net profit before tax and fair value adj
Slide 21: Next Five Year Plan
Next Five Year Plan • The previous business plan was focussed on diversification. The current business plan is focussed on differentiation. Omni Bridgeway now finds itself as the largest litigation funder in the world and our vision is to be recognised as the global leader in managing and financing
Slide 22: Risk Mitigation
Risk Mitigation Risk Potential impact Strategic response PORTFOLIO Potential for a funded case to be lost = Omni Bridgeway • Deliberate transition from idiosyncratic risk to systemic risk of a portfolio CONCENTRATION investment lost and exposure to adverse costs • Portfolio represents increased numb
Slide 23: Glossary of Terms and Notes
Glossary of Terms and Notes ESTIMATED PORTFOLIO VALUE (EPV) EPV for an investment where the funding entity earns: (i) a percentage of the resolution proceeds as a funding commission, is the current estimate of the investment’s recoverable amount after considering the perceived capacity of the defend
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