Litigation Capital Management Ltd · LSE:LIT
Litigation Capital Management — H1 FY2020 Earnings Presentation
20 slides from Litigation Capital Management's earnings presentation, Mar 17, 2020
Slide 1: HY20 Results Presentation
HY20 RESULTS PRESENTATION 17 MARCH 2020
Slide 2: 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 3: Expansion of LCM's business into asset management
E x p a n s i o n of LCM’s business into asset management Two d i st i n c t b u s i n e s s m o d e l s : 1 Direct balance sheet investments 2 Asset management Continuation of existing portfolio LCM to act as a fund manager investing third-party capital, receiving both performance and outperformanc
Slide 4: Key messages HY20
Key messages HY20 Clear demonstration of an increase in earnings over the last two half year periods Backed by continued investment discipline Larger capital base coming into play Corporate portfolio market opportunity now demonstrable First contribution to revenue line Early financial performance i
Slide 5: Delivering clear growth in HY20
Delivering clear growth in HY20 Strategic goals: Financial: Corporate portfolios - two resolutions achieved in the building and construction A$24.1m 8.5-year portfolio portfolio. First case resolution in aviation Gross revenue ROIC portfolio Third-Party fund - immediate scale A$6.9m 139% with first
Slide 6: HY20 Financial results overview
HY20 Financial results over view HY20 HY19 % move from A$m A$m H1 2019 Revenue from litigation projects 24.1 11.7 ▲105% Derecognition of contract asset upon recovery (11.8) (6.0) ▲98% Gross Profit 12.2 5.7 ▲113% Due diligence costs (write off) - (0.1) Other income (Unrealised FX gains) 0.6 0.3 Opera
Slide 7: HY20 Balance sheet overview
HY20 Balance sheet over view Total Capital Deployed on Litigation Investments Total Equity Cash received ($ in millions) ($ in millions) post period1 27.8 80.4 76.2 18.4 14.6 7.2 25.4 4.7 16.7 3.5 7.4 5.6 2015 2016 2017 2018 2019 HY20 2015 2016 2017 2018 2019 HY20 Cash generation Net cash3 as at per
Slide 8: Current portfolio of direct investments
Current portfolio of direct investments Portfolio by industry Portfolio by industry Portfolio by region sector sector (estimated A$ capital commitment)¹ (estimated A$ capital commitment) ¹ (number of projects) 2 Current Portfolio as at 16 March 2020 $25 (A$ millions) 5 24% 22% $96 million 8 34% Dire
Slide 9: LCM Global Alternative Returns Fund
LCM Global Alternative Returns Fund Portfolio by industry Portfolio by capital Third party fund sector commitment commitments Balances as at first (estimated A$ capital (estimated A$ capital (estimated A$ capital commitment) ¹ commitment) ¹ commitment)¹ close on 10 March 2020 (A$ millions) $51 milli
Slide 10: Favourable market dynamics
Favourable market dynamics Uncorrelated Countercyclical Low market returns business penetration Each and every investment Global financial markets are Despite demand for litigation whether the subject of a experiencing high volatility. finance steadily increasing, the direct investment or as p
Slide 11: Delivering across LCM's stated principles of growth & focus
Delivering across LCM’s stated principles of growth & focus 01 Balanced portfolio 02 Consistent and 03 Unique origination unparalleled underwriting Ensured the natural diversity of our Maintained the discipline of Cemented our position in leading the pipeline of opportunities to build on underwritin
Slide 12: Positive outlook for H2 and beyond
Positive outlook for H2 and beyond First close of third-party fund gives LCM access to materially increased capital Difficult global markets: historically, instability drives an increase in disputes Corporates are reluctant to allocate financial resources towards those disputes Given LCM’s h
Slide 13: Appendix
APPENDIX EXPERIENCE COUNTS
Slide 14: Consolidated statement of profit or loss and other comprehensive income
Consolidated statement of profit or loss and other comprehensive income For the period ended 31 December 2019 14
Slide 15: Consolidated statement of financial position
Consolidated statement of financial position As at 31 December 2019 15
Slide 16: Consolidated statement of cash flows
Consolidated statement of cash flows For the period ended 31 December 2019 16
Slide 17: Adjusted profit & EBITDA reconciliation
Adjusted profit & EBITDA reconciliation HY20 HY19 % move from A$m A$m H1 2019 Statutory profit after tax 4.8 0.8 ▲490% Add: Depreciation & interest 0.02 0.01 Non-cash tax expense 1.9 0.2 EBITDA 6.7 1.0 ▲553% Add: Share based payments 0.2 0.1 Litigation costs 0.4 0.5 IPO costs - 0.2 Non-recurring con
Slide 18: International disputes financing solutions
International disputes financing solutions Well-resourced Balance sheet Third-party fund of permanent capital Supplementing balance sheet – Delivering outstanding Experienced team - investment LCM as Fund Manager results for 21 years - one managers are former litigators of the first proponents of Pr
Slide 19: Returns on concluded litigation investments by individual case FY12 to HY20
Returns on concluded litigation investments by individual case FY12 to HY20 1 Time to resolve 1 Time to resolve No. Type FY Completion RoIC (x) No. Type FY Completion RoIC (x) (months) (months) 1 Commercial 12 1.4x 18.0 40 Insolvency 20 2.0x 53.1 2 Commercial 12 9.8x 4.0 41 Commercial 20 TBA3 TBA3 3
Slide 20: Portfolio under management
Portfolio growth with proportionally reduced Opex A$ Millions 250 0.4 Portfolio under management 34% 0.35 Total expenses (Opex) 200 0.3 Opex as a % of portfolio Portfolio under management 2 under management Opex as % of Current Portfolio 0.25 Estimated A$ capital 150 commitment1 of portfolio under 0
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