Interim results for the HY ended 31 December 2024

About this update from Litigation Capital Management Ltd

18 March 2025   Litigation Capital Management Limited ("LCM" or the "Company")   Interim results for the half year ended 31 December 2024   Highlights • Seven realisations in period generating A$51m of revenue • Net realised gains of A$37.4m (HY24: A$19.6m), with concluded investments generating a 3.67x multiple of cash invested (MOIC) • Total income of A$4.7m (HY24: A$21.6m) due to A$32m negative fair value movement driven by fair value write-offs on concluded investments  • Loss after tax for the period of A$8.4m (HY24: profit A$7.3m) • Net assets of A$181.8m (HY24: A$188.9m) · Book value per share of 86.3 pence (FY24: 94.4 pence) · Total new commitments of A$34m added in the period (HY24: A$90m)       Outlook · Fund management momentum accelerating, with Fund III on track for launch before 30 June 2025 · New commitments expected to rebound in the second half of FY25.     Commenting on the results, Patrick Moloney, CEO of Litigation Capital Management, said: "The first half of the year reflected the inherent volatility of litigation finance. While we secured significant wins in two arbitration cases, we also faced setbacks with two class action losses at trial, which are now subject to appeal. Our transition to a fund management model continues to gain momentum, and as we scale, we expect to reduce financial unpredictability. We remain disciplined in capital allocation, focused on generating strong long-term returns for our investors and shareholders.   LCM will be hosting a webinar for investors today at 11.00 a.m. The presentation is open to all existing and potential shareholders. If you would like to attend this presentation, please register using the following link: https://www.investormeetcompany.com/litigation-capital-management-limited/register-investor   A webinar presentation for analysts will take place at 9.30am. Analysts wishing to attend should contact [email protected] to register.   The accompanying results presentation is available on LCM's website:  https://www.lcmfinance.com/investors/investor-presentations-results   The Interim Financial Report is available at: https://www.lcmfinance.com/investors/investor-presentations-results    Enquiries   Litigation Capital Management Patrick Moloney, Chief Executive Officer David Collins, Chief Financial Officer     Cavendish (Nomad and Joint Broker) Tel: 020 7523 8000 Jonny Franklin-Adams, Isaac Hooper and Rory Sale (Corporate Finance) Tim Redfern and Jamie Anderson (Corporate Broking) Canaccord Genuity (Joint Broker) Tel: 020 7597 5970 Bobbie Hilliam     NOTES TO EDITORS Litigation Capital Management (LCM) is an alternative asset manager specialising in disputes financing solutions internationally, which operates two business models. The first is direct investments made from LCM's permanent balance sheet capital and the second is third party fund management. Under those two business models, LCM currently pursues three investment strategies: Single-case funding, Portfolio funding and Acquisitions of claims. LCM generates its revenue from both its direct investments and also performance fees through asset management.   LCM has an unparalleled track record driven by disciplined project selection and robust risk management.   Currently headquartered in Sydney, with offices in London, Singapore, Brisbane and Melbourne, LCM listed on AIM in December 2018, trading under the ticker LIT.   www.lcmfinance.com     Chief Executive's Statement       The first half of our 2025 financial year has been particularly volatile, which is not uncommon in the litigation finance asset class. On the positive side, we secured significant wins in two investment treaty arbitration cases, where US$15 million of capital-deployed from both LCM's balance sheet and Fund I-generated awards exceeding US$400 million. LCM's share of these awards, across both capital sources, is approaching US$90 million, underscoring the exceptional returns we can deliver for our clients, fund investors, and shareholders. However, we also experienced setbacks, with two Australian class action investments losing at trial (both will be appealed).  LCM has invested A$38m of its own capital into these cases to date and we expect any further investment to take these cases to appeal will be relatively modest.   Our business is at an inflection point. Since embarking on our transition to a fund management model in 2020, we have made significant progress. Fund I (US$150 million) recently marked its fifth anniversary, delivering excellent performance. A comparison against the US private equity asset class, based on Cambridge Associates' extensive research, places Fund I in the top 5% of 2020 vintage funds across all key metrics. Fund II (US$291 million) has now closed to new commitments, with several cases in due diligence expected to bring it to 75-85% commitment.   Marketing for Fund III is progressing strongly. We have received excellent engagement from both existing and new investors and expect to complete the first close in Q2 2025.   As we scale and continue our transition towards a pure fund management model, we see a clear opportunity to enhance our economic profile. Over time, we expect to limit downside exposure to individual case outcomes while maintaining substantial upside through performance fees on co-funded investments. However, our financial results still exhibit volatility, largely due to legacy balance sheet investments. As these cases resolve, our risk profile will improve, reducing financial unpredictability.   New commitments in the first half were below historical levels, reflecting a temporary shortage of high-quality opportunities rather than any structural issue. While we saw strong deal flow, we remained disciplined-quality remains paramount. We expect commitments to rebound in the second half, particularly as market dynamics continue to shift in our favour. Many competitors in our core markets are facing challenges in raising capital, with some believed to be in de facto run-off, potentially increasing deal flow for LCM over time.   During the period, we successfully refinanced our debt facility, securing a larger facility at a lower interest rate and on improved terms. Our cost of debt is now below 10%, with the benefit of reduced interest costs already evident in our financials.   Strategically, we have made meaningful progress on two key initiatives-expanding into the US legal finance market and integrating AI-driven technologies into our underwriting and origination processes. The AI technology we acquired six months ago is now fully embedded in our investment process for treaty arbitration cases-an area where we are establishing a strong track record in contrast to many peers who have struggled with these complex, high-value claims. In the second half of the year, we will pilot AI-driven origination strategies. While we do not expect immediate results from these pilot tests, we are confident that AI will play an increasingly important role in the long-term success of our business.   While the first half of the year presented challenges, particularly in individual case outcomes, our long-term investment model remains robust. Our disciplined capital allocation and growing fund management platform positions us to generate sustainable value for both shareholders and fund investors.     Patrick Moloney Chief Executive Officer 18 March 2025               Directors' Report   The Directors of Litigation Capital Management Limited (LCM) present their report together with the half-year financial report of the consolidated entity consisting of LCM and its subsidiaries (collectively LCM Group or the Group) for the six month period ended 31 December 2024 and the auditors' review report thereon. 1. Directors The Directors of LCM at any time during or since the end of the financial period are set out below: Jonathan Moulds Patrick Moloney Dr David King David Collins (appointed 6 December 2024) Gerhard Seebacher (resigned 15 January 2025) Mary Gangemi (resigned 5 September 2024)   2. Company Secretary Anna Sandham was appointed Company Secretary of LCM in September 2016. Anna is an experienced company secretary and governance professional with over 20 years' experience in various large and small, public and private, listed and unlisted companies. Anna has previously worked for companies including AMP Financial Services, Westpac Banking Corporation, BT Financial Group and NRMA Limited. Anna holds a Bachelor of Economics (University of Sydney), Graduate Diploma of Applied Corporate Governance (Governance Institute of Australia) and is a Chartered Secretary. 3. Principal activities LCM is a global provider of disputes finance and risk management services. LCM has an unparalleled track record, driven by effective project selection, active project management and robust risk management. Headquartered in Sydney, with offices in London, Singapore, Brisbane and Melbourne, LCM listed on AIM in December 2018, trading under the ticker LIT. 4. Operating and financial review Overview of the LCM Group LCM is a company limited by shares and was incorporated on 9 October 2015. LCM was admitted to trade on the Alternative Investment Market (AIM) of the London Stock Exchange on 19 December 2018 under the ticker LIT. LCM was formerly listed on the Australian Securities Exchange (ASX) between 13 December 2016 and 21 December 2018. Its registered office and principal place of business is Level 12, The Chifley Tower, 2 Chifley Square, Sydney NSW 2000, Australia. Operations LCM operates its business through a series of wholly owned subsidiaries. The principal activity of those subsidiaries is the provision of litigation finance and risk management associated with individual and portfolios of disputes. LCM currently operates two business models.  The first is direct investments made from LCM's balance sheet capital.  The second is funds and/or asset management. Under those two business models, LCM currently pursues three investment strategies.  Those strategies are as follows: Single ‐ case funding: The first and currently largest strategy, is single ‐ case funding.  That is, the investment in a single dispute.  This is a strategy that LCM has maintained since its inception (through its predecessor company) 25 years ago.  Currently, a large proportion of LCM's investments are in single ‐ case investments. Portfolio funding: The second strategy pursued by LCM is portfolio funding.  That is, the provision of a portfolio based funding solution to law firms, insolvency practitioners or corporates.  It involves the provision of a financing solution and risk management tools for a bundle of separate disputes.  LCM's particular focus with respect to that strategy is the provision of corporate portfolio financing. Acquisitions of Claims: The third strategy, in its early stages of evolution, is the investment in smaller disputes (typically insolvency ‐ based) through the acquisition or assignment of the underlying cause of action. LCM generates its revenue through acquiring a cause of action and pursuing a recovery or award as principal.   Review of financial performance The statutory loss for the Group after adjusting for income tax amounted to $8,353,000 (31 December 2023: profit $7,293,000). Operating loss before tax is $7,952,000 (31 December 2023: profit $14,057,000). Cash on balance sheet was $30,585,000 as at 31 December 2024 (30 June 2024: $68,113,000). Of this, $15,717,000 relates to third-party cash which is restricted cash as it relates to balances held within the fund investment vehicles which have been consolidated with the Group numbers (30 June 2024: $15,089,000). Cash generated during the period from the resolution of investments was $56,402,000 (31 December 2023: $71,272,000). The Directors do not recommend a dividend in respect of the period ended 31 December 2024. 5. Matters subsequent to the end of the financial period On 21 February 2025, the Group announced that the Federal Court of Australia had ruled against its funded party, Quintis Limited. While the claim was unsuccessful, the Group is reviewing the judgment and considering an appeal, which must be filed within 28 days of final orders being made. On 11 March 2025, the Group announced that an appeal has been filed in relation to the class action funded by the Group on behalf of Queensland electricity users against Stanwell Corporation Ltd and CS Energy Ltd. This follows the first instance judgment, which ruled against LCM's funded party, as announced on 4 December 2024. 6. Lead Auditor's independence declaration The Auditor's independence declaration as required under section 307C of the Corporations Act 2001 is included in LCM's financial statements. 7. Rounding of amounts LCM is of a kind referred to the Australian Securities and Investments Commission Corporations (Rounding in Financial/Directors' Reports) Instrument 2016/191, relating to 'rounding-off'. Amounts in this report have been rounded off in accordance with that Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.     Mr Jonathan Moulds Chairman 18 March 2025     Consolidated statement of profit or loss and other comprehensive income For the period ended 31 December 2024           31-Dec-24 31-Dec-23 Note $'000 $'000 Income Gain on financial assets at fair value through profit or loss 4 25,790 52,429 Movement in financial liabilities related to third-party interests in consolidated entities 4 (18,382) (30,546) Total income 7,408 21,883   Expenses Employee benefits expense 5 (6,688) (5,938) Depreciation expense 5 (47) (80) Corporate expenses (2,577) (1,960) Fund administration expense 5 (1,313) (1,474) Foreign currency gains/(losses) (4,735) 1,625 Total operating expenses (15,360) (7,826) Operating (loss)/profit (7,952) 14,057 Finance costs 5 (3,710) (5,122) (Loss)/profit before income tax expense (11,662) 8,935 Income tax benefit/(expense) 3,309 (1,642) (Loss)/profit after income tax expense (8,353) 7,293 Other comprehensive income Items that may be subsequently reclassified to profit and loss: Movement in foreign currency translation reserve 8,620 (101) Total comprehensive income for the period 267 7,192 (Loss)/profit for the period is attributable to: Owners of Litigation Capital Management Limited (8,353) 7,293 (8,353) 7,293 Total comprehensive income for the period is attributable to: Owners of Litigation Capital Management Limited 267 7,192 267 7,192     Cents Cents Basic earnings per share 7 (8.09) 6.84 Diluted earnings per share 7 (8.09) 6.37       The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with accompanying Notes to the Financial Statements.                         Consolidated statement of financial position As at 31 December 2024   31-Dec-24 30-Jun-24 Note $'000 $'000       Assets     Cash and cash equivalents 8 30,585 68,113 Trade receivables 1,786 10,986 Due from resolution of financial assets 10 105,198 3,980 Contract costs 11 47,396 42,072 Financial assets at fair value through profit or loss   12 420,264 465,213 Property, plant and equipment 144 157 Intangible assets 453 305 Other assets 839 977 Total assets 606,665 591,803     Liabilities Trade and other payables 13 11,755 30,376 Tax payable 5,833 883 Employee benefits 1,382 1,112 Borrowings 14 54,851 61,917 Financial liabilities related to third-party interests in consolidated entities 15 314,982   264,950 Deferred tax liability 36,062 43,624 Total liabilities 424,865 402,862 Net assets   181,800 188,941 Equity Issued Capital 16 58,960 69,674 Treasury shares 16 - (5,396) Reserves 13,381 4,171 Retained Earnings 109,459 120,492 Parent interest 181,800 188,941 Total equity 181,800 188,941       The above Consolidated Statement of Financial Position should be read in conjunction with accompanying Notes to the Financial Statements Consolidated statement of changes in equity For the period ended 31 December 2024   Share based Foreign   Issued Treasury Retained payments currency Total   capital shares earnings reserve translation equity Consolidated $'000 $'000 $'000 $'000 $'000 $'000 Balance at 1 July 2023 69,674 - 112,753 2,440 (1,398) 183,468 Profit after income tax expense for the period - - 7,293 - - 7,293 Other comprehensive income for the period - - - - (101) (101) Total comprehensive income for the period - - 7,293 - (101) 7,193 Equity Transactions: Share-based payments (note 22) - - - 463 - 463 Dividends paid (note 17) - - (4,966) - - (4,966) Treasury shares acquired (note 16) - (796) - - - (796) - (796) (4,966) 463 - (5,298) Balance at 31 December 2023 69,674 (796) 115,080 2,903 (1,498) 185,362 Share based Foreign   Issued Treasury Retained payments currency Total   capital shares earnings reserve translation equity Consolidated $'000 $'000 $'000 $'000 $'000 $'000 Balance at 1 July 2024 69,674 (5,396) 120,492 3,556 615 188,941 Loss after income tax expense for the period - - (8,353) - - (8,353) Other comprehensive income for the period - - - - 8,620 8,620 Total comprehensive income for the period - - (8,353) - 8,620 267 Equity Transactions:   Share-based payments (note 22) - - - 590 - 590 Dividends paid (note 17) - - (2,680) - - (2,680) Treasury shares acquired (note 16) - (4,458) - - - (4,458) Cancellation of treasury shares (note 16) (9,854) 9,854 - - - - LSPs exercised and purchased by EBT (note 16) (860) - - - - (860) (10,714) 5,396 (2,680) 590 - (7,407) Balance at 31 December 2024 58,960 - 109,459 4,146 9,235 181,800       The above Consolidated Statement of Changes in Equity should be read in conjunction with accompanying Notes to the Financial Statements.   Consolidated statement of cash flows For the period ended 31 December 2024           31-Dec-24 31-Dec-23 Note $'000 $'000 Cash flows from operating activities Proceeds from litigation contracts 56,402 71,272 Payments for litigation contracts (78,310) (33,083) Payments to suppliers and employees (10,152) (8,099) Income tax paid (28) (723) Net cash (used in)/from operating activities (32,088) 29,367 Cash flows from investing activities Payments for property, plant and equipment (3) (13) Payments for intangibles (179) (15) Refund/(payment) of security deposits (1) 13 Net cash (used in) investing activities (182) (15) Cash flows from financing activities Payments for treasury and loan shares 16 (5,318) (796) Dividends paid (2,607) (4,966) Repayments of borrowings 14 (11,358) (8,139) Payments of finance costs (3,186) (5,426) Payments of placement fees related to third-party interests (835) (991) Contributions from third-party interests in consolidated entities 15 40,626 11,010 Distributions to third-party interests in consolidated entities 15 24,572 (35,717) Net cash (used in) financing activities (7,250) (45,026) Net increase/(decrease) in cash and cash equivalents (39,519) (15,673) Cash and cash equivalents at the beginning of the period 68,113 104,457 Effects of exchange rate changes on cash and cash equivalents 1,991 (1,084) Cash and cash equivalents at the end of the period 8 30,585 87,701     The above Consolidated Statement of Financial Position should be read in conjunction with accompanying Notes to the Financial Statements Notes to the financial statements For the period ended 31 December 2024   Note 1 General Information   The financial statements cover Litigation Capital Management Limited (the 'Company') as a Group consisting of Litigation Capital Management Limited and the entities it controlled at the end of, or during, the period (referred to as the 'Group'). The financial statements are presented in Australian dollars, which is Litigation Capital Management Limited's functional and presentation currency.   Litigation Capital Management Limited was admitted onto the Alternative Investment Market ('AIM') on 19 December 2018.   Litigation Capital Management Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is:   Level 12, The Chifley Tower 2 Chifley Square Sydney NSW 2000   A description of the nature of the Group's operations and its principal activities are included in the Directors' report, which is not part of the financial statements.   The financial statements were authorised for issue, in accordance with a resolution of Directors, on 18 March 2025. The Directors have the power to amend and reissue the financial statements.   Note 2 Significant accounting policies These consolidated financial statements are general purpose financial statements for the interim reporting period ended 31 December 2023 and have been prepared in accordance with the Corporations Act 2001 and Australian Accounting Standard AASB 134 Interim Financial Reporting. Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS 34 'Interim Financial Reporting'.   These interim financial statements do not include all the notes of the type normally included in annual financial statements. Accordingly, these financial statements are to be read in conjunction with the annual report for the year ended 30 June 2024 and any public announcements made by the Company during the interim reporting period.   Basis of preparation The principal accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period, unless otherwise stated.   New or amended Accounting Standards and Interpretations adopted The consolidated entity has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current period.   Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.   Historical cost convention The financial statements have been prepared under the historical cost convention.   Critical accounting estimates The critical accounting judgements, estimates and assumptions that have been applied in the preparation of the interim consolidated financial statements are consistent with those followed in the preparation of the Group's annual report for the year ended 30 June 2024.     Note 3 Segment information   For management purposes, the Group is organised into two operating segments comprising the operations of Litigation Capital Management Limited and its wholly owned subsidiaries ("LCM") and the Group's fund structures ("Fund").   LCM The LCM column includes the 25% co-investment in the Funds, Balance Sheet investments (ie, 100% investment by LCM) and corporate operations.   Fund 1 & 2 This comprises LCM Global Alternative Returns Fund and LCM Global Alternative Returns Fund II and their entities as disclosed in note 25. AASB 10 Consolidated Financial Statements requires the Group to consolidate fund investment vehicles over which it has exposure to variable returns from the fund investment vehicles. As a result, third party interests in relation to the Funds have been consolidated in the financial statements. The Fund column includes the 75% co-investment in the litigation funding assets and costs of administering the funds.   Intersegment revenue The third-party interests in the Funds carry an entitlement to receive an 8% soft return hurdle. Upon satisfaction of the third-party interests soft return hurdle, LCM is entitled to performance fees as fund manager on the basis of a deal by deal waterfall. The net residual cash flows are to be distributed 25% to LCM and 75% to the third-party interests until a IRR of 20% is achieved by the third-party interests, thereafter the net residual cash flows are distributed 35% to LCM and 65% to the third-party interests.   The following tables reflect the impact of consolidating the results of the Funds with the results for LCM to arrive at the totals reported in the consolidated statement of profit or loss and other comprehensive income, consolidated statement of financial position and consolidated statement of cash flows.             31 December 2024 31 December 2023 Consolidated Statement of Comprehensive Income Consolidated Fund LCM Consolidated Fund LCM $'000 $'000 $'000 $'000 $'000 $'000 Income   Gain on financial assets at fair value through profit or loss 25,790 21,111 4,679 52,429 30,843 21,586 Movement in financial liabilities related to third-party interests in consolidated entities (18,382) (18,382) - (30,546) (30,546) - Total income 7,408 2,729 4,679 21,883 298 21,586 Expenses Employee benefits expense (6,688) - (6,688) (5,938) - (5,938) Depreciation expense (47) - (47) (80) - (80) Corporate expenses (2,577) - (2,577) (1,960) - (1,960) Fund administration expense (1,313) (478) (835) (1,474) (483) (991) Foreign currency gains/(losses) (4,735) (2,251) (2,484) 1,625 95 1,530 Total operating expenses (15,360) (2,729) (12,632) (7,826) (388) (7,439) Operating (loss)/profit (7,952) - (7,952) 14,057 (91) 14,147 Finance costs (3,710) - (3,710) (5,122) 91 (5,213) (Loss)/profit before income tax expense (11,662) - (11,662) 8,935 - 8,934 Income tax benefit/(expense) 3,309 - 3,309 (1,642) - (1,642) (Loss)/profit after income tax expense (8,353) - (8,353) 7,293 - 7,293     Other comprehensive income for the period, net of tax 8,620 - 8,620 (101)   (101) Total comprehensive income for the period 267 - 267 7,192 - 7,192   31 December 2024 30 June 2024 Consolidated statement of financial position Consolidated Fund LCM Consolidated Fund LCM   $'000 $'000 $'000 $'000 $'000 $'000 Assets   Cash and cash equivalents 30,585 15,717 14,868 68,113 15,089 53,024 Trade & other receivables 1,786 - 1,786 10,986 - 10,986 Due from resolution of financial assets 105,198 69,776 35,422 3,980 - 3,980 Contract costs 47,396 - 47,396 42,072 - 42,072 Financial assets at fair value through profit or loss   420,264 235,448 184,816 465,213 262,300 202,913 Property, plant and equipment 144 - 144 157 - 157 Intangible assets 453 - 453 305 - 305 Other assets 839 (859) 1,698 977 (22) 999 Total assets 606,665 320,081 286,582 591,803 277,367 314,436 Liabilities   Trade and other payables 11,755 5,100 6,655 30,379 12,417 17,959 Tax payable 5,833 - 5,833 883 - 883 Employee Benefits 1,382 - 1,382 1,112 - 1,112 Borrowings 54,851 - 54,851 61,917 - 61,917 Third-party interests in consolidated entities 314,982 314,982 - 264,950 264,950 - Deferred tax liability 36,062 - 36,062 43,624 - 43,624 Total liabilities 424,865 320,081 104,783 402,862 277,367 125,494 Net assets 181,800 - 181,800 188,941 - 188,941     31 December 2024 31 December 2023 Consolidated Statement of Cash Flows Consolidated Fund LCM Consolidated Fund LCM $'000 $'000 $'000 $'000 $'000 $'000 Cash flows from operating activities Proceeds from litigation contracts 56,402 27,176 29,227 71,272 38,950 32,322 Payments for litigation contracts (78,310) (42,938) (35,372) (33,083) (16,345) (16,739) Payments to suppliers and employees (10,152) (573) (9,579) (8,099) (1,427) (6,672) Income tax paid (28) - (28) (723) - (723) Net cash (used in)/from operating activities (32,088) (16,335) (15,752) 29,367 21,179 8,188 Cash flows from investing activities Payments for property, plant and equipment (3) - (3) (13) - (13) Payments for intangibles (179) - (179) (15) - (15) Refund/(payment) of security deposits (1) - (1) 13 - 13 Net cash (used in) investing activities (182) - (182) (15) - (15) Cash flows from financing activities Payments for treasury and loan shares (5,318) - (5,318) (796) - (796) Dividends paid (2,607) - (2,607) (4,966) - (4,966) Repayments of borrowings (11,358) - (11,358) (8,139) - (8,139) Payments of finance costs (3,186) - (3,186) (5,426) - (5,426) Payments of transaction costs related to third-party interests (835) - (835) (991) - (991) Contributions from third-party interests in consolidated entities 40,626 40,626 - 11,010 11,010 - Distributions to third-party interests in consolidated entities (24,572) (24,572) - (35,717) (35,717) - Net cash (used in) financing activities (7,250) 16,054 (23,304) (45,026) (24,707) (20,318) Net increase/(decrease) in cash and cash equivalents (39,519) (281) (39,238) (15,673) (3,528) (12,145) Cash and cash equivalents at the beginning of the period 68,113 15,089 53,024 104,457 21,484 82,973 Effects of exchange rate changes on cash and cash equivalents 1,991 909 1,082 (1,084) (506) (578) Cash and cash equivalents at the end of the period 30,585 15,717 14,868 87,701 17,450 70,250   Note 4 Income   31-Dec-24 31-Dec-23 Fair value through profit and loss $'000 $'000 Realised gains on litigation assets 18,500 10,866 Realised performance fees 18,929 8,776 Fair value adjustment during the period, net of previously recognised unrealised gains transferred to realised gains (33,534) 2,381 Foreign exchange gains 783 (437) Total income from litigation assets attributable to LCM 4,679 21,586 Gain on financial assets related to third-party interests in consolidated entities 21,111 30,843 25,789 52,429 Loss on financial liabilities related to third-party interests in consolidated entities (18,382) (30,546) Total income from litigation assets 7,408 21,883   Total income from litigation assets attributable to LCM represents realised and unrealised gains that relate to LCM's funded proportion of litigation contracts. The gain and loss related to third party interests in consolidated entities represents realised and unrealised gains and losses that relate to third party funded proportions  from LCM controlled entities. Realised gains relate to amounts where litigation risk has concluded and amounts are expected to be received by LCM. Unrealised gains or losses relate to the fair value movement of assets and liabilities associated with litigation contracts.   Note 5 Profit before tax     31-Dec-24 31-Dec-23   $'000 $'000 Profit before income tax expense includes the following specific expenses: Employee benefits expense   Salaries & wages 5,074 4,530 Directors' fees 239 228 Superannuation and pension 156 147 Share based payments expense 495 463 Other employee benefits & costs 725 570 6,688 5,938 Depreciation   Plant and equipment 16 42 Intangible assets 31 38 47 80 Interest on borrowings (note 14) 3,257 4,919 Other finance costs 453 202 3,710 5,122 Fund administration expense   General administration expenses 478 483 Placement fees 835 991 1,313 1,474 Leases   Short-term lease payments 462 451     Note 6 Income tax expense     31-Dec-24 31-Dec-23   $'000 $'000 Numerical reconciliation of income tax expense and tax at the statutory rate   Profit before income tax expense (11,662) 8,935 At the Group's statutory income tax rate of 30% (2023: 25%) (3,499) 2,234 Tax effect amounts which are not deductible/(taxable) in calculating taxable income: Foreign tax rate adjustments 819 (24) Share-based payments 76 116 Other non-deductible expenses 368 - Change in tax rate - (684) Utilisation of carried forward tax losses (1,073) - Income tax expense / (benefit) (3,309) 1,642     Note 7 Earnings per share   31-Dec-24 31-Dec-23 $'000 $'000 (Loss)/profit after income tax (8,353)  7,293 (Loss)/profit after income tax attributable to the owners of Litigation Capital Management Limited (8,353)  7,293     Number Number Weighted average number of ordinary shares used in calculating basic earnings per share 103,190,317                                106,606,481 Adjustments for calculation of diluted earnings per share:           Amounts uncalled on partly paid shares - 1,309,066         Options over ordinary shares - 6,597,884 Weighted average number of ordinary shares used in calculating diluted earnings per share 103,190,317 114,513,431     Cents Cents Basic (loss)/earnings per share (8.09) 6.84 Diluted (loss)/earnings per share (8.09) 6.37   Dilutive potential shares which are contingently issuable are only included in the calculation of diluted earnings per share where the conditions are met.   Note 8 Cash and cash equivalents   31-Dec-24 30-Jun-24 $'000 $'000 Cash at Bank 14,868 22,963 Investment securities held for liquidity purposes - 30,061 Cash of third-party interests in consolidated entities 15,717 15,089 30,585 68,113 Cash of third-party interests in consolidated entities is restricted as it is held within the fund investment vehicles on behalf of the third-party investors in these vehicles. The cash is restricted to use cashflows in the litigation funding assets made on their behalf and costs of administering the fund.   Note 10 Due from resolution of financial assets   31-Dec-24 30-Jun-24 $'000 $'000 At start of period (1 July) 3,980 11,873 Transfer from realisation of litigation funding assets 149,243 101,943 Proceeds from litigation funding assets (46,882) (112,990) Other income - 697 Foreign Exchange (loss)/gain (1,143) 2,457 Balance as at end of period 105,198 3,980   As at 31 December 2024, amounts due from resolution of financial assets are expected to be settled within 12 months after the Balance Sheet date.   Note 11 Contract costs - litigation contracts       31-Dec-24 30-Jun-24   $'000 $'000 Contract costs - litigation contracts 47,396 42,072   There are a small number of legacy investments which are still being recorded under AASB 15 Revenue from Contract with Customers due to the timing the contracts were entered into. These are expected to resolve in the short to medium term.   Reconciliation of litigation contract costs Reconciliation of the contract costs at the beginning and end of the current period and previous financial year are set out below:         31-Dec-24 30-Jun-24   $'000 $'000 Balance at 1 July   42,072 37,277 Additions during the period   5,324 8,030 Realisations of contract assets   - (3,236) Balance as at end of period   47,396 42,072           The Group has recognised impairment losses of $nil (2024: $nil) in profit or loss on contract costs for the period ended 31 December 2024.   Note 12  Litigation Funding assets at fair value through profit or loss   31-Dec-24 30-Jun-24 $'000 $'000 At start of period (as at 1 July) 465,213 391,410 Deployments 19,920 45,301 Deployments - third-party interests 35,537 47,818 Realisations of litigation funding assets (149,243) (101,943) Income for the period 25,790 86,926 Foreign exchange gains/(losses) 23,046 (4,300) Balance as at end of period 420,264 465,213 Litigation funding assets at fair value through income statement 184,819 202,913 Litigation funding assets at fair value through income statement - third-party interests 235,448 262,300 Total litigation funding assets 420,264 465,213   Litigation Funding assets are financial instruments that relate to the provision of capital in connection with legal finance. The Group fund through both direct investments as well as using third party funders via a Fund model. The table above sets forth the changes in LFA assets at the beginning and end of the relevant reporting periods.     Note 13 Trade and other payables       31-Dec-24 30-Jun-24   $'000 $'000 Trade payables   11,546 29,789 Other payables   209 587   11,755 30,376             Note 14 Borrowings       31-Dec-24 30-Jun-24   $'000 $'000 Borrowings   54,851 61,917   54,851 61,917       Reconciliation of borrowings of LCM: 31-Dec-24 30-Jun-24 $'000 $'000 Balance 1 July 61,917 68,976 Repayment of borrowings (12,864) (8,139) Payments for borrowing costs (683) (819) Net accrued interest 743 648 Amortisation 453 1,221 Other non-cash items 5,285 29 Balance as at end of period 54,851 61,917   On 2 December 2024, LCM refinanced its credit facility with Northleaf Capital Partners for an initial amount of US$75,000,000, AUD equivalent of $120,157,069 1 (the "Facility"), with a potential to upsize by a further US$75,000,000 (total US$150,000,000, AUD equivalent $240,314,000 1 ). The Facility carries interest set at the relevant bank rate plus 5.25%. The Facility has an overall term of four years and is secured against LCM's assets. As at 31 December 2024, LCM's outstanding utilisation amounted to US$30,000,000 on the initial credit facility, an AUD equivalent of $48,063,000 1 .   LCM agreed to various debt covenants including a minimum effective net tangible worth, borrowings as a percentage of effective net tangible worth, minimum liquidity, a minimum consolidated EBIT and a minimum multiple of invested capital on concluded contract assets over a specified period. There have been no defaults or breaches related to the Facility during the period ended 31 December 2024. Should LCM not satisfy any of these covenants, the outstanding balance of the Facility may become due and payable.   LCM incurred costs in relation to arranging the Facility of $667,000 which were reflected transactions costs and will be amortised over the 4 year term of the borrowings. As at 31 December 2024, $652,000 of these loan arrangement fees remained outstanding.   1 Converted at the functional currency spot rates of exchange at the reporting date   Note 15 Financial liabilities related to third-party interests in consolidated entities   31-Dec-24 30-Jun-24 $'000 $'000 Balance 1 July 264,950 243,990 Proceeds - capital contributions from Limited Partners 40,626 30,505 Payments - distributions to Limited Partners (24,572) (56,407) Loss on financial liabilities related to third-party interests in consolidated entities 18,382 48,382 Other non-cash items, including foreign exchange gain/loss 15,596 (1,521) Balance as at end of period 314,982 264,950   Note 16 Equity - issued capital   31-Dec-24 30-Jun-24 31-Dec-24 30-Jun-24 Shares Shares $'000 $'000 Ordinary shares - fully paid 102,690,913 104,118,534 59,820 69,674 Ordinary shares - under loan share plan 11,590,384 12,331,148 (860) - 114,281,297 116,449,682 58,960 69,674 31-Dec-24 30-Jun-24 Movements in ordinary share capital Shares $'000 Shares $'000 Balance at 1 July 104,118,534 69,674 106,613,927 69,674 Options exercised 740,764 - 255,257 - Share Buy-Back Programme (treasury shares) (2,168,385) - (2,750,650) - Treasury shares cancelled - (9,854) - - Balance at period end 102,690,913 59,820 104,118,534 69,674 The Group's share buyback programme which commenced on 5 October 2023, completed on 8 November 2024.   Movements in ordinary shares issued under loan share plan ('LSP') and held by Employee Benefit Trust:   31-Dec-24 30-Jun-24 Shares $'000 Shares $'000 Balance at 1 July 12,331,148 - 12,586,405 - Options exercised (740,764) - (255,257) - LSPs exercised (784,519) - - - LSPs purchased by EBT 784,519 (860) - - Balance at period end 11,590,384 (860) 12,331,148 -         Reconciliation of ordinary shares issued under LSP:   31-Dec-24 30-Jun-24 Total shares allocated under existing LSP arrangements with underlying LSP shares (note 20)                   6,642,872 7,501,608 Less shares allocated under existing LSP arrangements without underlying LSP shares (note 20)                   (221,467) (221,467) Shares held by LCM Employee Benefit Trust for future allocation under employee share and option plans   5,168,979 5,051,007 11,590,384 12,331,148   Ordinary shares Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the Company does not have a limited amount of authorised capital.   On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote.   Ordinary shares - under loan share plan ('LSP') The Company has an equity scheme pursuant to which certain employees may access a LSP. The acquisition of shares under this LSP is fully funded by the Company through the granting of a limited recourse loan. The shares under LSP are restricted until the loan is repaid. The underlying options within the LSP have been accounted for as a share-based payment. Refer to note 22 for further details. When the loans are settled the shares are reclassified as fully paid ordinary shares and the equity will increase by the amount of the loan repaid.   Ordinary shares - held by Employee Benefit Trust The Employee Benefit Trust ('EBT')  holds performance related shareholdings awarded to former executive which did not vest. The Trust holds 5,168,979 shares which remain unallocated as at 31 December 2024 (June 2024: 5,051,007).   Ordinary shares - partly paid As at 31 December 2024, there are currently 1,433,022 partly paid shares issued at an issue price of $0.17 per share. No amount has been paid up and the shares will become fully paid upon payment to the Company of $0.17 per share. As per the terms of issue, the partly paid shares have no maturity date and the amount is payable at the option of the holder.   Partly paid shares entitle the holder to participate in dividends and the proceeds of the Company in proportion to the number of and amounts paid on the shares held. The partly paid shares do not carry the right to participate in new issues of securities. Partly paid shareholders are entitled to receive notice of any meetings of shareholders. The partly paid shareholders are entitled to vote in the same proportion as the amounts paid on the partly paid shares bears to the total amount paid and payable.   Treasury shares As at 31 December 2024, there were nil treasury shares (June 2024: 2,750,650) which has resulted in nil being deducted from equity (June 2024: $5,396,000). Treasury shares comprised shares bought back from shareholders which were held by Canaccord on behalf of LCM and classified as treasury shares. All treasury shares were cancelled in November 2024.   Capital risk management The Group's objectives when managing capital is to safeguard its ability to continue as a going concern, so that it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to reduce the cost of capital.   Capital is regarded as total equity as recognised in the statement of financial position.   In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.   The capital risk management policy remains unchanged from the 30 June 2024 Annual Report.   Note 17 Equity - dividends   31-Dec-24 30-Jun-24 $'000 $'000 Ordinary dividend paid (December 2024: 1.25 cents, June 2024: 2.25 cents) 2,680 4,976 Franking credits The franking credits available to the Group as at 31 December 2024 are $5,000 (June 2024: $338,000).   Note 18 Fair value assessment   The fair value measurements used for all assets and liabilities held by the Group listed below are level 3:   Assets 31-Dec-24 30-Jun-24 Litigation funding assets $'000 $'000 APAC 106,289 111,662 EMEA 313,974 353,551 Total Level 3 assets 420,264 465,213 Liabilities Financial liabilities related to third-party interests in consolidated entities 314,982 264,950 Total Level 3 liabilities 314,982 264,950   Refer note 12 for movements in level 3 assets and note 15 for movements in level 3 liabilities. There were no transfers into or out of level 3 during the period ended 31 December 2024.   As at 31 December 2024, the financial liability due to third-party interests is $314,982,000 (June 2024: $264,950,000), recorded at fair value as represented in note 15. Amounts included in the consolidated statement of financial position represent the fair value of the third-party interests in the related financial assets and the amounts included in the consolidated statement of profit or loss and other comprehensive income represent the third-party share of any gain or loss during the period.   Sensitivity of Level 3 Valuations   The Group's fair value policy provides for ranges of percentages to be applied against the risk adjustment factor to more than 159 discrete objective litigation events. The tables below set forth each of the key unobservable inputs used to value the Group's LFA assets and the applicable ranges and weighted average by relative fair value for such inputs.   31 December 2024   Item Valuation technique Unobservable Input Min Max   Weighted average   Litigation funding asset Discounted cash flow Discount rate 9.80% 10.80% 10.40% Duration (years) 1.75 7.58 4.78 Adjusted risk premium 0% 85% 17% Adjusted risk premium - case milestone Min Max   Weighted average % of portfolio 1 Pre-commencement & commenced 0% 20% 5% 56% Pleadings 5% 35% 11% 4% Discovery & evidence 20% 40% 36% 8% Significant ruling or other objective event prior to trial court judgment 25% 80% 46% 18% Settlement 70% 85% 0% 0% Trial court judgment or tribunal award 0% 85% 21% 9% Appeal judgment 0% 85% 0% 4% Enforcement 75% 85% 84% 2%   1 Percentage of portfolio represents the percentage of the book within the cohort   Note 19 Contingent liabilities   The majority of the Group's funding agreements contain a contractual indemnity from the Group to the funded party that the Group will pay adverse costs awarded to the successful party in respect of costs incurred during the period of funding, should the client's litigation be unsuccessful. The Group's position is that for the majority of litigation projects which are subject to funding, the Group enters into insurance arrangements which lessen or eliminate the impact of such awards and therefore any adverse costs order exposure.   Note 20 Share-based payments   The share-based payment expense for the period was $590,000 (December 2023: $463,000).   Loan Funded Share Plans ('LSP')   As detailed in note 16, the Group has an equity scheme pursuant to which certain employees may access a LSP. The shares under LSP are issued at the exercise price by granting a limited recourse loan. The LSP shares are restricted until the loan is repaid. Options under this scheme can be granted without an underlying LSP share until they have been exercised and on this basis, do not form part of the Group's issued share capital. The underlying options have been accounted for as a share-based payments. The options are issued over a 1-3 year vesting period. Vesting conditions include satisfaction of customary continuous employment with the Group and may include a share price hurdle.   During the period the Group granted nil (June 2024: nil) shares under the LSP.   Set out below are summaries of shares/options granted under the LSP:   31 December 2024   Grant date Expiry date Exercise Price Balance at the start of the period  Granted  Exercised  Expired/ forfeited/ other Balance at the end of the period 04/12/2017 04/12/2027 $0.60 2,000,000 2,000,000 31/08/2018 31/08/2028 $0.77 411,972 (411,972) - 19/11/2018 25/11/2028 $0.47 1,595,058 1,595,058 03/12/2018 03/12/2028 $0.89 100,000 100,000 01/11/2019 01/11/2029 £0.7394 1,043,953 (125,259) 918,694 13/10/2020 13/10/2030 £0.6655 616,520 (158,296) 458,224 27/10/2021 27/10/2031 £1.06 1,512,638 (163,209) 1,349,429 27/10/2021 27/10/2031 £1.06 99,037 99,037 1 27/10/2021 27/10/2031 £1.14 122,430 122,430 1 7,501,608               -   (858,736)                               -   6,642,872   1 Options granted without an underlying LSP share until exercised ie, do not form part of the Group's issued share capital     Deferred Bonus Share Plan ('DBSP')   The Company has in place a DBSP. Options granted under the DBSP reflect past performance and are in the form of nil cost options and will vest in three equal tranches from the date of issue and are subject to continued employment over the three year period.   In addition, the Options granted under the DBSP are subject to malus and clawback provisions. In the event of a change of control of the Company, unvested awards will vest to the extent determined by the Board, taking into account the proportion of the period of time between grant and the normal vesting date that has elapsed at the date of the relevant event.   During the period the Group granted 532,235 (June 2024: 771,911) options under the DBSP.   Set out below are summaries of options granted under the DBSP:   31 December 2024   Grant date  Expiry date  Exercise Price Balance at the start of the period Granted Exercised Expired/ forfeited/ other Balance at the end of the period 07/10/2022 07/10/2032 $0.00 877,435 - (442,468) - 434,967 04/10/2023 04/10/2033 $0.00 771,911 - (224,079) - 547,832 04/10/2024 04/10/2034 $0.00 - 532,235 - - 532,235 1,649,346 532,235 (666,547) - 1,515,034   Executive Long Term Incentive Plan ('LTIP')   The Company has in place an Executive LTIP. Options over ordinary shares in the capital of the Company ("Ordinary Shares") are issued to recipients under the LTIP plan. The options set out above have been granted under the LTIP in the form of nil cost options and are subject to performance conditions which require the growth of Funds under Management ('FuM') over a five year performance period. The performance conditions associated with the options are set out below:   (1)  50% vesting on reaching a minimum of FuM of US$750m; and (2)  100% vesting on reaching FuM of US$1bn.    The vesting date of options granted is the later of: (1)   the third anniversary of the Grant Date; (2)   the satisfaction of the Performance Condition; or (3)   the date of any adjustment under the Plan rules of the Plan at the Boards discretion.   Any awards made to the participants are subject to a five year holding period from the grant date. In the event of a change of control of the Company, unvested awards will vest to the extent determined by the Board, taking into account the proportion of the period of time between grant and the normal vesting date that has elapsed at the date of the relevant event and the extent to which any performance condition has been satisfied at the date of the relevant event.   During the period the Group granted nil (June 2024: nil) options under the LTIP.   Set out below are summaries of shares/options granted under the LTIP:   31 December 2024   Grant date Expiry date Exercise Price Balance at the start of the period Granted Exercised Expired/ forfeited/ other Balance at the end of the period 07/10/2022 07/10/2032 $0.0000 5,671,516 - - - 5,671,516 5,671,516 - - - 5,671,516   For the options under LSP granted during the current period, the valuation model inputs used in the Black-Scholes pricing model to determine the fair value at the grant date, are as follows:   Grant date  Expiry date   Share price at grant date Exercise price Expected volatility Dividend yield Risk-free interest rate Fair value at grant date   04/10/2024 04/10/2034 £0.98 £0.00 35.00% 1.10% 4.30% £0.9478   The expected volatility reflects the assumption that the historical volatility over a period similar to the life of the options is indicative of future trends, which may not necessarily be the actual outcome.   Note 21 Events after the reporting period   On 21 February 2025, the Group announced that the Federal Court of Australia had ruled against its funded party, Quintis Limited. While the claim was unsuccessful, the Group is reviewing the judgment and considering an appeal, which must be filed within 28 days of final orders being made.   On 11 March 2025, the Group announced that an appeal has been filed in relation to the class action funded by the Group on behalf of Queensland electricity users against Stanwell Corporation Ltd and CS Energy Ltd. This follows the first instance judgment, which ruled against LCM's funded party, as announced on 4 December 2024.

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