Juridica Investments Regulatory News (JIL)

Juridica Investments Limited

('Juridica', 'JIL' or the 'Company')

Audited final results for the year ended 31 December 2012

Juridica Investments Limited, a market leader in corporate claims finance, released today its financial results for 2012.

In five yearsof operating, its team of experts has become one of the world's leading providers of key capital to the business community for the financing of corporate claims.

The strong results released today show a gross cash profit from case activity of $38.1 million during the 2012 financial year and JIL is positive about moving forward in 2013 with its mature portfolio of anti-trust, patent and commercial claims.

Lord Daniel Brennan, Juridica's Chairman, said: "JIL is showing how things should be done in a very competitive and sensitive field. Despite the economic downturn in both the US and the UK, we have proven that staying on course and being resolute is the prudent way forward."

Richard Fields, Chairman and Chief Executive of Juridica Capital Management Limited, the investment manager of JIL ('Manager'), said: "I am confident in the strength of our existing portfolio of claims and believe that we will see significant activity on these claims during 2013."

Financial highlights

• Total comprehensive income attributable to equity owners up 14% to US$37.6 million (2011: US$32.9 million)

• Gross cash proceeds up 125% to US$38.4 million (2011: US$17.1 million)

• Total cash profit from case activity up 195% to US$38.1 million (2011: US$12.9 million)

• After accounting for significant dividends declared during the year, the Net Asset Value per ordinary share still up slightly to US$2.2009 (2011: US$2.1820)

• Fully diluted earnings per share of 35.50c (2011: 31.08c)

• Dividend of 7p per share paid to shareholders on 10 February 2012

• Dividend of 13p per share paid to shareholders on 4 January 2013

 Operating highlights

• During the year ended 31 December 2012, JIL made supplemental investments in existing cases totaling US$5.6M in four investments.

- Two of these supplemental investments provide for a substantial increase in JIL's percentage interest in potential proceeds from the underlying cases.

- The third supplemental investment enables the underlying case to advance through additional legal effort that, if successful, would provide for a greater amount of potential return to the Company.

- The fourth supplemental investment enables the continuation of a multi-party pre-litigation settlement opportunity which has the potential to generate significant proceeds to the Company.

• The Company saw significant activity in several of its investments, including final settlement of two cases, partial settlement of several cases with multiple defendants, four successful verdicts, and two judgments that were favorably affirmed on appeals.

Proceeds received since the Fund's inception

• Gross cash proceeds since inception total US$87.0 million

• Eight investments have come to completion with settlements in the underlying cases delivering a total of US$40.1 million in gross proceeds on US$24.4 million of total investment

• IRR on completed investments of 81.97% (as calculated from date of investment to date of proceed return)

• Six cases, which are multi-defendant in nature, had partial settlements or expense recovery, providing for gross proceeds of approximately US$46.9 million

Outlook

The Manager believes the Company's portfolio will continue to see significant activity within the next 12 months. This expectation is based on confirmed trial dates, expected final decisions following trial or arbitration, and various other factors. Each of these milestones, if successful, creates real incentives for defendants to seek settlements. In addition, settlement discussions are ongoing for several investments.

About Juridica Investments Limited

Juridica Investments is a leading provider of strategic capital to the business community and the legal markets for corporate claims. It invests directly and indirectly in a diversified portfolio of corporate claims in litigation and arbitration. Juridica is one of the premier sources of value-added and direct financing for large business claims in the United States and one of the leading sources in the United Kingdom.

Our clients are Fortune 1000 companies, FT Global 500 companies, inventors, major universities, and the leading law firms that represent them. Juridica accepts only cases that have already been carefully vetted and undertaken by leading lawyers.

Juridica works to make the legal system work better for business claims. Juridica does not invest in speculative claims or claims that do not demonstrate economic value and clear merits. Juridica invests only in business claims, and does not invest in class actions, personal injury, product liability, or mass tort claims.

Our goal is to provide business clients with financial choices that reduce risk and assist in maximisingclaim value.

Juridica was established on 21 December 2007 as a limited liability, closed-ended investment company registered in Guernsey. It has over US$200 million of assets under management. Juridica was the pioneer in alternative litigation financing and the first closed-ended fund of its kind ever listed on AIM, a market operated by the London Stock Exchange (AIM: JIL.L).

The Company has appointed Juridica Capital Management Limited as its exclusive investment manager to locate, evaluate and manage direct and indirect investments in cases, claims and disputes.

For more information go to http://www.juridicainvestments.com

For further information, please contact:

Juridica Capital Management Limited +1 (866) 443 1080

Richard W. Fields

Cenkos Securities plc +44 (0) 20 7397 8900

(Nominated Adviser and Joint Broker)

Nicholas Wells

Camilla Hume

Peel Hunt LLP +44 (0)20 7418 8900

(Joint Broker)

Guy Wiehahn

Emma Riza

Chairman's Statement

On behalf of the Board, I am pleased to present the audited financial results for Juridica Investments Limited ("JIL" or the "Company") for the year ended 31 December 2012.

JIL focuses exclusively on business-to-business related claim investments that comprise the following sectors: antitrust and competition; intellectual property, particularly patents; and general commercial litigation. The Company does not invest in shareholder class actions, personal injury, product liability, or mass tort claims.

Antitrust and competition cases are the key sector of our investment portfolio because of our confidence in the potential for substantial returns. During the year ended 31 December 2012, the Company realised significant cash proceeds from the antitrust portfolio. We have reasonable grounds for anticipating further substantial returns from these cases over the next 12 months.

From inception to date the Company's portfolio has generated gross cash proceeds of approximately US$87.0 million. After providing for required reserves and Company operating expenses, JIL has returned a total of US$48 million to shareholders in the form of US$38 million in dividends and US$10 million when it acquired Company shares in its buyback programme in September 2010. We anticipate making additional dividends to shareholders over the next twelve months if the portfolio develops as expected.

Operating results

During the year ended 31 December 2012, the Company received gross proceeds totalling approximately US$38.4 million related to the final settlement of two cases, partial settlement in several cases with multiple defendants, and recovery of expenses related to an antitrust case. The time from initial commitment through collection on these proceeds ranged from 2.5 - 4.2 years. The vast majority of these proceeds were returned to the Company in the form of interest on the loan to Fields Law Firm PLLC (Formerly "Fields Sullivan PLLC"). Total cash profit based on these returns was approximately US$38.1 million, all of which has been recognised in past reporting periods as unrealised gain. This total cash profit represents an increase of 195% over the Company's 2011 total cash profit.

These cash results continue to support our view that the underlying cases for our investments are reaching maturity. Juridica Capital Management Limited ("JCML" or "the Manager") expects this trend to continue and believes the Company will see strong results during the coming 12 months, particularly in the antitrust portfolio.

Our overall results for the year ended 31 December 2012 are consistent against our strong results for the year ended 31 December 2011. For the year ended 31 December 2012, the Company reported a total comprehensive income attributable to equity owners of approximately US$37.6million as compared to total comprehensive income attributable to equity owners of approximately US$32.9 million for the year ended 31 December 2011.

The growth in total comprehensive income was primarily due to the increase in the carrying value of our investments in cases in accordance with IFRS. We continue to apply a consistent approach to the methodology used to value the Company's investments.

Net asset value

Although the Company committed to significant dividends during the period, JIL's Net Asset Value ("NAV") per ordinary share continued to increase from US$2.1820 at 31 December 2011 to approximately US$2.2009 per ordinary share at 31 December 2012.

Investment portfolio activity

As more fully described in the Investment Manager's report, the Company's investments have had significant activity in their underlying cases with two investments coming to final settlement along with partial settlement in several cases with multiple defendants.

The Company also has several investments in which the underlying case came to a major event for which the Company has not yet received any proceeds. Each of these investments either has upcoming legal proceedings that our Manager believes are likely to generate strong returns or has been awarded proceeds that have not yet been received or accounted for as receivables.

New investments

The Company made four supplemental investments in existing cases that were beyond initial funding commitments. These supplemental investments were made to increase the likelihood of greater potential return to the Company.

During the year the Company acquired 22.67% of the Manager at what it believes is an attractive price, bringing JIL's holding up to 36.17%. This allows the Company to participate in any performance fees due to the Manager on assets presently in the portfolio.

Cash balances are maintained for operating expenses and the existing commitments in the portfolio of cases.

Dividend

As a result of the Company's results for the year ended 31 December 2012, the Company paid a dividend on 4 January 2013 of 13 pence per share to shareholders on the register at 21 December 2012. The dividend was funded by approximately US$37.1 million in cash proceeds from partial settlements that were paid to the Company on 31 December 2012 as well as US$1.3 million of cash proceeds from two partial and two final settlements that occurred earlier in the year. During the first quarter of the year ended 31 December 2012, the Company paid a 7 pence special dividend, consistent with the Company's policy of returning actual net cash profits to shareholders. In total, the Company declared dividends of 20 pence per share during the year ended 31 December 2012.

Outlook

JCML believes several investments are likely to be completed in the coming calendar year with several additional investments generating partial settlements.

Based on the outlook provided by JCML, the Board expects significant returns from our investment portfolio through 2013 and beyond. This belief is based on JCML's review of presently scheduled trial dates, expected final decisions following trial, and possible settlements in multiple cases that are in an advanced stage of development.

The Board of JIL looks forward to this year's continuation vote on the fund in healthy and positive circumstances.

The directors thank investors for their continued confidence and welcome those new shareholders who have joined us in the past year.

Lord Daniel Brennan QC

Chairman

14 March 2013

Investment Manager's Report

Operating Highlights

During the year ended 31 December 2012, the Company saw significant activity in several of its investments, including final settlement of two cases, partial settlement of several cases with multiple defendants, four successful verdicts, and two judgments that were favourably affirmed on appeals. This activity supports our current belief that the majority of the Company's investments are reaching their concluding phase. Pursuant to this, we expect the portfolio to generate significant cash returns over the next 12 months.

For the year ended 31 December 2012, JIL received gross cash receipts totalling approximately US$38.4 million. The time from initial commitment through collection on these proceeds ranged from 2.5 - 4.2 years. The vast majority of these proceeds were returned to the Company in the form of interest on the loan to Fields Law. Total cash gain from these settlements was approximately US$38.1 million.

Of the total cash receipts, US$1.3 million comes from three cases in the Company's patent investment portfolio. Two of these cases reached final settlement during the period. Proceeds on these two cases since inception total US$7.8 million from a total investment amount of US$2.3 million. The remaining balance of cash receipts of US$37.1 million are from the Company's antitrust and competition portfolio.

JIL's Net Asset Value ("NAV") increased from US$2.1820 per ordinary share at 31 December 2011 to US$2.2009 per ordinary share at 31 December 2012. This movement in NAV per ordinary share was primarily due to total comprehensive income attributable to equity owners of US$37.6 million offset by total dividends declared of $33.6 million during the year ended 31 December 2012. This income reflects the following:

·; Unrealised income of US$40.5 million from a net fair value increase in valuation of the Company's investment portfolio;

·; Gain of US$4.3 million relating to the acquisition of a controlling interest in a previously held investment for no additional cost;

·; Realised loss of US$1.2 million;

·; Other income of US$0.1 million;

·; Fund operating expenses of US$7.3 million; and

·; Comprehensive loss attributable to non-controlling interests of US$2.0 million.

From inception to date the Company's portfolio generated gross cash proceeds of approximately US$87.0 million. After providing for required reserves and Company operating expenses, JIL has returned a total of US$48 million to shareholders in the form of US$38 million in dividends and US$10 million when it acquired Company shares in its buyback program in September 2010.

In more detail, the portfolio since inception has performed as follows:

·; Eight investments reached completion with proceeds from the underlying cases delivering a total of US$40.1 million in gross proceeds representing a blended internal rate of return of approximately 81.97% (as calculated from date of investment to date of proceed return); and

·; Six cases, which are multi-defendant in nature, had partial settlements or expense recoveries amounting to approximately US$46.9 million. These six cases relate to four investments.

During the year ended 31 December 2012, JIL made supplemental investments in existing cases totalling US$5.6 million in four investments. Two of these supplemental investments provide for a substantial increase in JIL's percentage interest in potential proceeds from the underlying cases. The third supplemental investment enables the underlying case to advance through additional legal effort that, if successful, should provide for a greater amount of potential return to the Company. The fourth supplemental investment enables the continuation of a multi-party pre-litigation settlement opportunity which has the potential to generate significant proceeds to the Company.

Portfolio Update

The Company currently has a total of 16 investments representing 21 different cases or legal actions. Since inception, the Company has made 24 investments representing 30 different cases or legal actions. The Company's current portfolio is diversified amongst three primary groups: antitrust and competition, patent, and commercial as noted in the following table:

Antitrust and competition portfolio:

Five cases in the Company's antitrust and competition portfolio involve violation of US or European antitrust law and three of these cases also involve multi-defendant, price fixing cartels. In one of our largest investments, one of the cartel cases involves defendants that have already been found guilty of criminal violations. The sixth case in this portfolio is a special situation involving statutory claims and this case is also reaching maturity.

The Company has contributed US$95.0 million (with an additional commitment of US$3.0 million remaining) towards one investment representing these six cases. This investment is structured as a loan by the Company to Fields Law for the purpose of funding six cases under a co-counsel agreement. The loan is arranged such that any proceeds from these cases are used to make payments on the note on 31 December of each year. From inception to date, the cases within this antitrust portfolio have generated and paid to JIL total cash proceeds of US$43.9 million consisting of partial settlements totalling US$39.1 million and expense recovery totalling US$4.8 million. An additional US$2.9 million in proceeds was generated from these cases but these proceeds are being held in reserve by Fields Law to potentially fund additional expenses related to the Company's investment in antitrust and competition cases.

During the year ended 31 December 2012, one of the cases in this portfolio was dismissed in favour of the defendant and is now on appeal. The Manager expects that the appeal of the trial court's decision may well be successful but will result in a delay of at least 12 to 18 months in the resolution of this case. A separate case in this portfolio received a favourable appellate decision during the year ended 31 December 2012, upholding a judgment of liability against the defendant and the case is expected to move toward a damages trial.

Below is a snapshot of the case progression in the Company's antitrust and competition portfolio.

(*) Liability decided favourably. Awaiting trial on damages.

Patent portfolio:

The Company's patent portfolio includes eight cases involving infringement of one or more patents by one or more defendants. As of 31 December 2012, the Company has US$31.2 million invested in its patent portfolio with an additional US$4.0 million remaining in committed funds. Since the Company's inception, a total of US$13.2 million in gross proceeds has been generated from the Company's patent portfolio. During the year ended 31 December 2012, approximately US$1.3 million in gross proceeds was received from two partial and two final settlements in the Company's patent portfolio.

In June 2012, OTO Technologies LLC ("OTO") was acquired as part of the re-negotiation of an existing investment deal which resulted in the Company's interest in OTO increasing from 35% to 85% for no additional consideration. This resulted in a gain on bargain purchase - a business combination in which the net fair value of the identifiable assets acquired and liabilities assumed exceeds the aggregate of the consideration transferred, the non-controlling interests and the fair value of the previously held equity interest. Accordingly the Company has recognised a gain on bargain purchase of US$4,329,188 during the period.

The Company previously recognised its investment in OTO as an Available for Sale Financial Asset. As at the date of acquisition, this holding was treated as if it had been disposed and the assets and liabilities of OTO have been consolidated. Previously recognised unrealized losses amounting to US$1,484,513 have been reclassified from other comprehensive income to profit or loss as a result of the acquisition.

In Case 0108-S, the jury delivered a verdict in favour of the plaintiff in the amount of US$20 million (includes treble damages and interest). This was in line with the Manager's expectation for the low end of the recovery range of this case. Under the terms of the Company's investment agreement, the Company is entitled to receive the first US$8.0 million of recoveries pari passu with the attorney's contingency fee of 21%. Thus, if the verdict is entered by the court after further post-trial proceedings and upheld on appeal, the Company will recover approximately US$8.0 million from its investment of US$8.3 million. Again, significant uncertainty remains until judgment is entered and appeals are completed unless the case is resolved earlier by settlement.

In July 2012, verdicts for the plaintiff were rendered in two of the Company's patent investments. These cases are described in more detail below.

In Case 0409-C, the jury returned a verdict after trial in favour of the plaintiff in the amount of US$50 million. The Company invested US$4.8 million in this case and is entitled to receive the first US$3.0 million of cash proceeds from settlement or judgment plus 49% of remaining proceeds. Significant uncertainty remains until judgment is entered and appeals are completed unless the case is resolved earlier by settlement. Nonetheless, the Manager views this development as a positive milestone in the case.

In Case 7608-A, the jury returned a verdict in favour of the plaintiff in the amount of US$500,000 and the case was subsequently settled, resulting in no additional proceeds to the Company. The verdict and subsequent settlement were below the Manager's expectations. The Company invested US$2.0 million in this case and previously received US$1.2 million from settlements with other defendants in this case. Absent further positive developments in the case, the Manager does not expect that the Company will receive additional proceeds in this case but is undertaking due diligence to identify additional potential defendants. As of 31 December, 2012, this investment carried no value but remains open pending due diligence.

Below is a snapshot of the case progression in the Company's patent portfolio.

(*) Matter has been in litigation that has been settled, dismissed or otherwise resolved. Additional proceedings are currently being evaluated.

Commercial portfolio:

As of 31 December 2012, the Company's commercial portfolio consisted of investments in six cases that involve claims related to commercial disputes including: theft of trade secret, breach of contract and insurance subrogation. Included in the commercial portfolio is an investment that, as previously disclosed, the Company exercised its option to cease funding. The Company is pursuing recovery of its investment amount from the parties involved and has successfully defended a counter-claim by these parties.

As of 31 December 2012, the Company has US$24.1 million invested in its commercial portfolio, with an additional US$1.3 million remaining in committed funds. Since the Company's inception, a total of US$29.9 million in gross proceeds has been generated from the Company's commercial portfolio.

The portfolio also contains an investment involving a large, multi-party pre-litigation settlement opportunity that we believe has the potential to generate significant proceeds to the Company. This investment is being accounted for partially as an intangible asset and partially as a contractual interest.

In one of these cases, which involved a judgment on appeal, the appeals court earlier this year affirmed the trial court's determination of liability, the jury's damages verdict in excess of US$25 million, and the ruling that the defendants are jointly and severally liable for the damages. In October 2012, the defendants petitioned for Writ of Certiorari to the U.S. Supreme Court, and that petition was denied in early 2013. Claimants are now pursuing collection efforts in the US and elsewhere. The Company invested US$1.0 million in the case in late 2010 and if collection efforts are successful as anticipated, the Company expects to receive a return of at least US$3.0 million, including the return of its investment.

Below is a snapshot of the case progression in the Company's commercial portfolio:

(*) Multi-party pre-litigation settlement opportunity.

Valuation

The Manager values JIL's investments using valuation and accounting methods that are applied in a manner that follows International Financial Reporting Standards' ("IFRS") accounting rules as set out in IFRS 4, IAS 39, and IAS 38.

The method of applying fair value accounting is designed to show the progression of a case towards its expected terminal value. We determine our initial expectations on quantum and timing of case results by assigning a probability of various scenarios coming to fruition and applying risk factors that: i) are intrinsic to the specific case; and ii) reflect general risks within the legal process. Our assumptions behind fair value accounting are revisited on a bi-annual basis. If needed, we will rerun the investment's valuation model and revise its expected future cash flow which we then discount to the reporting date.

As of 31 December 2012, the Manager examined the valuation for all of JIL's investments. In doing so, the following adjustments were made to their individual valuations:

·; Since 31 December 2011, valuation of the Company's contractual interests increased by US$7.5 million reflecting the net of US$0.7 million in additional investment funding, US$1.3 million reduction due to the return of proceeds to JIL as a result of settlement activity, additional US$10.5 million of contractual interests acquired upon acquisition of a controlling interest in a previously held investment, a US$1.3 million net decrease due to each investment's individual change in fair value, and realised losses of US$1.2 million due to previously reported unrealised gains which were not realised at the conclusion of the cases reaching final settlement.

·; Since 31 December 2011, valuation of the Company's available for sale debt securities increased by approximately US$8.2 million reflecting US$5.1 million in additional investment funding, US$37.2 million reduction due to the return of proceeds to JIL as a result of settlement activity, and a net US$40.3 million increase in the fair value.

·; Since 31 December 2011, valuation of the Company's available for sale financial assets increased by US$2.9 million reflecting the reclassification of an investment in which the Company had previously held a minority interest and subsequently acquired a controlling interest during the period amounting to US$3.7 million, additions of US$5.6 million, and an increase due to changes in fair value of US$1.0 million.

Notable Activity

The following activities reflect advancement in JIL's portfolio. One or more of these events may have a significant positive impact on the Company's net asset value. It is possible that one or more settlements may be concluded as a result of an award or judgment or prior to conclusion of a case that could result in net cash proceeds to the Company in excess of 10% of its current net asset value.

Two antitrust cases that comprise part of the security for the loan facility made to Fields Law may complete or reach an advanced stage during the next 6-12 months. Both cases have significant damages claimed by their plaintiffs which, if awarded by a jury, will be automatically trebled by the court. A judgment in any of these cases would, of course, be subject to appeal and possible reversal by one or more appellate courts and appeals could result in a delay of several years prior to collection or settlement. We expect that if any of these cases is resolved by settlement, the amount of settlement will be substantially less than the claimed damages and/or any judgment entered by the trial court for each case. We also expect that if any of these cases is settled prior to completion or a favourable jury verdict is rendered and the trial court enters judgment, such a result will have a significant positive impact on the Company's net asset value.

As previously announced, on 28 December 2012, the Company acquired 247,909 ordinary shares of £0.01 each in the capital of the Manager, from the trustees of the LTS Trust, for a total consideration of US$4.75 million. As a consequence of the acquisition, the Company has increased its holding to 36.17% of the issued share capital of JCML. In connection with the acquisition, JCML has agreed to reduce the investment management fee due to JCML in 2013 by US$425,000; thus reducing the net purchase price to US$4.33 million (see Note 16.(b)). The primary return on this investment will be the performance fees due to JCML. The Company believes that JCML will likely receive performance fees due to the expected returns from the underlying portfolio of the Company. As such, the Company believes this to be a sound investment given the diversity and maturity of the existing portfolio.

Outlook

Given the uncertain nature of litigation in general and the quantum of damages that trial juries may award, the Company's portfolio has the characteristics to produce a wide range of potential returns. This does not detract from our belief that JIL has invested in an excellent, high quality portfolio of cases that should, as a whole, produce healthy returns for our shareholders.

We believe the Company's portfolio will continue to see significant activity within the next 12 months. This expectation is based on confirmed trial dates, expected final decisions following trial or arbitration, and various other factors. Each of these milestones, if successful, creates real incentives for defendants to seek settlements. In addition, settlement discussions are on-going for several investments.

We are optimistic that the portfolio will produce a return of capital during the next 12 months. Furthermore, we believe the robust pipeline of investment opportunities is a positive indicator of profitable future reinvestment of capital.

The Manager would like to thank investors for their continued support. As always, we are committed to providing timely announcements and accurate reporting with as much transparency as possible.

Forward looking statements

This report contains forward looking statements, which are based on the current expectations and assumptions of the Manager and involve known and unknown risks and uncertainties that could cause actual results or performance to differ materially from those expressed or implied in such statements. It is believed that the expectations reflected in these statements are reasonable but they may be affected by a number of variables that could cause actual results or trends to differ materially. Each forward looking statement speaks only as of the date of this report. Except as required by the AIM Rules or otherwise by law, the Company and the Manager expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward looking statements contained herein to reflect any change in the Company's or Manager's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

Juridica Capital Management Limited

14 March 2013

Directors' Report

The Directors present their report together with the audited consolidated financial statements of Juridica Investments Limited (the "Company") and its subsidiaries (together the ''Group'') for the year ended 31 December 2012, with comparative figures for the year ended 31 December 2011.

Principal activities

The Company is an authorised closed-ended investment company incorporated under The Companies (Guernsey) Law, 2008 ("the Law"). The Law does not make a distinction between private and public companies. Shares in the Company were admitted to trading on AIM, a market operated by the London Stock Exchange, on 21 December 2007. The address of the Company's registered office is Bordeaux Court, Les Echelons, St Peter Port, Guernsey, GY1 6AW.

Investment objective and policy

The investment objective of the Company is to build a diversified portfolio of investments in claims and to provide Shareholders with an attractive level of dividends and capital growth through investing directly and indirectly in litigation and arbitration cases, claims and disputes. These contractual interests have been made predominantly in the United States although the Company may make investments outside of the United States in jurisdictions where such investments are lawful and permitted under local law and rules on professional ethics.

Results and dividend

The results for the year are shown in the consolidated statement of comprehensive income. On 4 January 2012, the Directors announced a special dividend of 7 pence per share which was paid on 10 February 2012 to shareholders on the register at 13 January 2012. On 17 September 2012, the Directors announced a special dividend of 13 pence per share which was paid on 4 January 2013 to shareholders on the register at 21 December 2012.

Statement of directors' responsibilities in respect of financial statements

The Directors are responsible for preparing financial statements for each financial year which give a true and fair view of the state of affairs of the Group and of the consolidated statement of comprehensive income for that period in accordance with The Companies (Guernsey) Law, 2008. In preparing these financial statements, the Directors are required to:

·; select suitable accounting policies and then apply them consistently;

·; make judgements and estimates that are reasonable and prudent;

·; state whether applicable accounting standards have been followed subject to any material departures disclosed and explained in the financial statements; and

·; prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The Directors confirm that they have complied with the above requirements in preparing the financial statements.

The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements have been properly prepared in accordance with The Companies (Guernsey) Law, 2008. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The maintenance and integrity of the Company's website is the responsibility of the Directors. The work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website. Legislation in the United Kingdom and Guernsey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

To the best of our knowledge, and in accordance with the applicable reporting principles, the consolidated financial statements give a true and fair view of the assets, liabilities, financial position and comprehensive income of the Group, although there is uncertainty around valuation of the Group's contractual interests in the absence of an established market. The Investment Manager's report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal opportunities and risks associated with the expected development of the Group.

Furthermore, to the best of our knowledge and belief, this annual report includes a fair review of the development and performance of the business and the position of the Group together with a description of the principal risks and uncertainties that the Group faces.

In accordance with The Companies (Guernsey) Law, 2008, each Director confirms that there is no relevant audit information of which the Group's auditor is unaware. Each Director also confirms that they have taken all steps they ought to have taken as a Director to make themselves aware of any relevant audit information and to establish that the Group's auditor is aware of that information.

Independent Auditors

The auditors, PricewaterhouseCoopers CI LLP, have expressed their willingness to continue in office and a resolution for their re-appointment will be proposed at the forthcoming Annual General Meeting.

Continuation and going concern

In accordance with the Company's Admission Document of December 2007, the Directors shall convene an extraordinary general meeting of the Company, on a date being not less than one month prior to 21 December 2013, at which a resolution will be proposed that the Company be wound up voluntarily. If such resolution is not passed by the Company's members then the Directors shall convene an extraordinary general meeting of the Company every three years from the date of the original meeting at which the winding-up proposal shall again be put to the Company's members.

Having given consideration to the maturity of the Company's existing portfolio, the performance of the portfolio to date, the prospects for future investments and expected future cash flows, the Directors consider that there is a good possibility that the winding-up proposal will not be passed in 2013. In addition, the Directors have reviewed the Company's budgets and cash flows for the year ahead and, accordingly, are satisfied on reasonable grounds that it is appropriate to prepare these financial statements on a going concern basis.

Approved by the Board of Directors on 14 March 2013 and signed on their behalf:

RJ Battey

Director

Independent Auditors' Report to the Members of Juridica Investments Limited

We have audited the accompanying consolidated financial statements (the "financial statements") of Juridica Investments Limited which comprise the consolidated statement of financial position as of 31 December 2012, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated cash flow statement for the year then ended and a summary of significant accounting policies and other explanatory information.

Directors' responsibilities

The Directors are responsible for the preparation of financial statements that give a true and fair view in accordance with International Financial Reporting Standards and with the requirements of Guernsey law. The Directors are also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors' responsibilities

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance as to whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements give a true and fair view of the financial position of the Group as of 31 December 2012, and of the financial performance and cash flows of the Group for the year then ended in accordance with International Financial Reporting Standards and have been properly prepared in accordance with the requirements of The Companies (Guernsey) Law, 2008.

Emphasis of Matter

Without qualifying our opinion, we draw attention to Notes 2(d), 2(e), 2(f), 3 and 19(a) to the consolidated financial statements. As indicated in Notes 2(d), 2(e), 2(f), 3 and 19(a), the consolidated financial statements include non-current assets stated at their fair value of US$209,420,042. Because of the inherent uncertainty associated with the valuation of such non-current assets and the absence of a liquid market, these fair values may differ from their realisable values, and the differences could be material.

Report on other Legal and Regulatory Requirements

We read the other information contained in the Annual Report and consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements. The other information comprises only the Corporate Information, the Chairman's Statement, the Investment Manager's Report, the Directors' Report, the Notice of Annual General Meeting and the Form of Proxy.

In our opinion the information given in the Directors' Report is consistent with the financial statements.

This report, including the opinion, has been prepared for and only for the Company's members as a body in accordance with Section 262 of The Companies (Guernsey) Law, 2008 and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

PricewaterhouseCoopers CI LLP

Chartered Accountants

Guernsey, Channel Islands

14 March 2013

Consolidated Statement of Comprehensive Income

Consolidated Statement of Financial Position

These consolidated financial statements were approved and authorised for issue by the Board of Directors on 14 March 2013 and signed on its behalf by:

RJ Battey

Director

Consolidated Statement of Changes in Equity

Consolidated Cash Flow Statement

Notes to the Consolidated Financial Statements

1. LEGAL FORM AND PRINCIPAL ACTIVITY

The Group consists of the Company, which is an authorised closed-ended investment company incorporated under The Companies (Guernsey) Law, 2008 ("the Law"), and its subsidiaries as detailed in Note 4. The Law does not make a distinction between private and public companies. Shares in the Company were admitted to trading on AIM, a market operated by the London Stock Exchange, on 21 December 2007. The address of the Company's registered office is Bordeaux Court, Les Echelons, St Peter Port, Guernsey, GY1 6AW.

The investment objective of the Company is to build a diversified portfolio of investments in claims and to provide Shareholders with an attractive level of dividends and capital growth through investing directly and indirectly in litigation and arbitration cases, claims and disputes.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

(a) Basis of Preparation

The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards ("IFRS") and all applicable requirements of The Companies (Guernsey) Law, 2008. They have been prepared on a going concern basis, under the historical cost convention as modified by the revaluation of contractual interests. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires the Board of Directors to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 3.

In accordance with the Company's Admission Document of December 2007, the Directors shall convene an extraordinary general meeting of the Company, on a date being not less than one month prior to 21 December 2013, at which a resolution will be proposed that the Company be wound up voluntarily. If such resolution is not passed by the Company's members then the Directors shall convene an extraordinary general meeting of the Company every three years from the date of the original meeting at which the winding-up proposal shall again be put to the Company's members.

Having given consideration to the maturity of the Company's existing portfolio, the performance of the portfolio to date, the prospects for future investments and expected future cash flows, the Directors consider that there is a good possibility that the winding-up proposal will not be passed in 2013. In addition, the Directors have reviewed the Company's budgets and cash flows for the year ahead and, accordingly, are satisfied on reasonable grounds that it is appropriate to prepare these financial statements on a going concern basis.

(i) Standards, amendments and interpretations effective on or after 1 January 2012 and adopted by the Group

The Group has adopted the following new and amended IFRSs as of 1 January 2012:

·; IFRS 7 (revised), 'Financial Instruments: Disclosures' - effective for financial years beginning on or after 1 July 2011.

·; IAS 12 (revised), 'Income Taxes' - effective for financial years beginning on or after 1 January 2012.

Adoption of the above standards and amendments has had no material impact on the Group's consolidated financial statements.

(ii) Standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the Group

·; IFRS 9, 'Financial instruments'. Effective 1 January 2015.

·; IFRS 10, 'Consolidated financial statements'. Effective 1 January 2013.

·; IFRS 11, 'Joint Arrangements'. Effective 1 January 2013

·; IFRS 12, 'Disclosures of interests in other entities'. Effective 1 January 2013.

·; IFRS 13, 'Fair value measurement'. Effective 1 January 2013.

·; IAS 1 (revised), 'Presentation of Financial Statements'. Effective 1 July 2012.

·; IAS 27 (revised), 'Separate Financial Statements'. Effective 1 January 2013.

·; IAS 28 (revised), 'Investments in Associates and Joint Ventures'. Effective 1 January 2013.

·; IAS 32 (revised), 'Financial Instruments: Presentation'. Effective 1 January 2014.

The Directors of the company are in the process of assessing the impact of these amendments and believe that these new accounting standards and interpretations will not significantly affect the Group's results of operations or financial position. The Directors of the Company do, however, believe that these standards may require amendments to financial reporting procedures applied in the preparation of the consolidated financial statements and are likely to have a notable impact on the level of disclosures in the consolidated financial statements.

Other standards in issue but not yet effective which are not relevant to the Group have not been listed above.

(b) Consolidation

The consolidated financial statements comprise the financial statements of Juridica Investments Limited and its subsidiary undertakings as stated in Note 4.

Subsidiaries

Subsidiaries are all entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are no longer consolidated from the date that control ceases. The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group.

Inter-company transactions, balances and unrealised gains/losses on transactions between group companies are eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

Non-controlling interests

Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the Group's equity therein. The Group applies a policy of treating transactions with non-controlling interests as transactions with parties external to the Group.

Business combinations

Business combinations are accounted for using the purchase method. The purchase method involves the recognition of the acquiree's identifiable assets and liabilities, including contingent liabilities, regardless of whether or not they were recorded in the financial statements prior to acquisition. On initial recognition, the assets and liabilities of the acquired subsidiary are included in the consolidated statement of financial position at their fair values, which are also used as the bases for subsequent measurement in accordance with the Group's accounting policies. Any excess of identifiable net assets over acquisition cost is recognised in the statement of comprehensive income immediately after acquisition as a gain on bargain purchase. Any excess of acquisition cost over identifiable net assets is recognised as an expense in the statement of comprehensive income immediately after acquisition as goodwill.

(c) Geographical and segmental reporting

Since the Group is engaged in the provision of similar products and services within a particular economic environment, being subject to similar risks and returns, the management considers that the Group has only one business segment and geographical focus, being investments in legal claims primarily in the United States (US), and accordingly does not present additional business and geographical segment information. The Investment Manager is responsible for the investment decisions for the Group's entire portfolio and considers the business to have a single operating segment. The Investment Manager's asset allocation decisions are based on a single, integrated investment strategy, and the Group's performance is evaluated on an overall basis.

(d) Contractual interests

Classification

Unless otherwise determined by the Group, investments in claims will be categorised as contractual interests. Contractual interests will initially be measured as the cash sum provided to acquire an interest in a plaintiff's claim or as the cash advanced to law firms under loan agreements ("Qualifying Agreements"). Attributable due diligence costs are capitalised into the cost of the contractual interest.

Recognition, derecognition and measurement

The contractual interests will initially be measured as the sum provided to acquire an interest in a plaintiff's claim or as the cash advanced to law firms under Qualifying Agreements plus due diligence and transaction costs.

Interest on performing contractual interests will be recognised using the effective interest rate method as shown in Note 6. No interest will be recognised on non-performing contractual interests.

Subsequent measurement of contractual interests will be at fair value utilising a fair value model developed by the Investment Manager.

The principal assumptions to be used in the fair value model are as follows:

·; Estimated duration of each contractual interest;

·; Best estimate of anticipated outcome; and

·; Effective interest rate on nominal value of each contractual interest.

Interest income arising on all performing contractual interests is recognised in the consolidated statement of comprehensive income within other income, using the effective interest rate method.

The effective interest rate method is a way of calculating the amortised cost of a financial asset or liability and of allocating the interest income or interest expense over the relevant period. In the case of assets this rate is the internal rate of return of the expected cash inflows and outflows over the expected duration of the claim which takes the contract's initial value to the expected pay out over the expected duration of the claim. The application of the method has the effect of recognising estimated income on the instrument over the period to maturity or repayment.

In calculating effective interest, the Group estimates cash flows (using projections based on litigation experience) considering all contractual terms of the contractual interest and the likely outcome of the case. The Group adjusts the carrying amount of the contractual interest to reflect actual and revised estimated future cash flows at each reporting date whenever it revises its cash flow estimates. The entity recalculates the carrying amount by computing the present value of estimated future cash flows at the contractual interest's original effective interest rate. The adjustment is recognised in the consolidated statement of comprehensive income within other income arising on contractual interests. This impact on contractual interests is reflected in Note 6.

Fair value estimation

Fair value will be reviewed semi-annually on an individual case basis. Events that will trigger changes to the fair value of each contractual interest include the following:

·; Changes in general US dollar interest rate assumptions (market assumption);

·; Changes in any variable relating to a claim including: assessment of probability of successful judgement; range of settlement or award; expected timing until claim resolution; and extrinsic risks related to a claim;

·; Successful judgement of a claim in which the Group has a contractual interest;

·; Unsuccessful judgement of a claim in which the Group has a contractual interest;

·; Outstanding appeals against both successful and unsuccessful judgements;

·; A contractual interest is to be sold at a discount or to be settled out of Court by a binding agreement;

·; Legal impediments to collectability of claims (in the US Chapter 7 Bankruptcy or Chapter 11 Court Protection from Creditors); and

·; A case is dismissed with prejudice (meaning, it can never be re-filed anywhere).

Partial settlement

Partial settlement of contractual interests occur when one or more parties, but not all parties, involved in the matter agree to terms on a settlement amount. Proceeds received by the Group are allocated between return of original principal and any gain based on the following process:

·; Proceeds are discounted back to the original investment date at a discount rate equal to the internal rate of return of the most recent valuation;

·; This discounted value represents the portion of proceeds attributable to a return of investment with the remainder representing a gain associated with the partial settlement; and

·; The amount representing the gain is then compared against any prior gain recognised on the portion of the proceeds attributed to a return of investment (calculated by using the effective interest rate method up to the date at which settlement is obtained plus any fair value movement due to changes in estimated cash flows previously recognised) with the difference reflected as current year realised gain or loss.

Full settlement

Full settlement of contractual interests occur when all parties involved in the matter agree to terms on a settlement amount or the full legal process has concluded with either proceeds being awarded or dismissal (no proceeds awarded). Proceeds received by the Group are first allocated to the return of any remaining principal with the remainder allocated to gain. The amount representing the gain is then compared against any prior gain recognised on the portion of the proceeds attributed to a return of investment (calculated by using the effective interest rate method up to the date at which settlement is obtained plus or minus any fair value movement due to changes in estimated cash flows previously recognised) with the difference reflected as current year realised gain or loss.

(e) Available for sale financial assets

Classification

Available for sale financial assets are those intended to be held for an indefinite period of time, and that may be sold in response to needs for liquidity or changes in interest rates, exchange rates or equity prices. The Group could be seen to have significant influence over certain of its available for sale financial assets as a result of its stake in each of those assets. If significant influence exists, that investment, under IFRS, should be accounted for as an 'Associate' and hence the equity accounting method should be applied. However, the Board have taken the view that (a) there is no material difference in accounting for these investments as associates and accounting for them as financial assets at fair value; (b) there is no material difference in the disclosure; and (c) the strategy of the Group is to hold investments as part of an investment portfolio with a view to the ultimate realisation of capital gains rather than as a medium to carry out its own business, hence accounting for these investments as available for sale is the most appropriate method.

Recognition, derecognition and measurement

Regular purchases and sales of available for sale financial assets are recognised on the trade date, being the date on which the Group commits to purchase or sell the asset.

Available for sale investments will initially be measured at cost and are subsequently carried at fair value. Gains and losses arising from changes in the fair value are recognised in equity and other comprehensive income. When available for sale investments are sold or impaired, the accumulated fair value adjustments recognised in equity will be recycled through the consolidated statement of comprehensive income. The estimates and assumptions made by the investment manager in determining this fair value have been outlined in Note 3.

(f) Available for sale debt securities

Available for sale debt securities entered into by the Group will initially be measured as the cash sum advanced to a law firm plus due diligence and transaction costs. Attributable due diligence and transaction costs are capitalised into the amount advanced. Subsequent measurement is at fair value with the movement due to effective interest recognised in the consolidated statement of comprehensive income and the fair value movement recognised in equity and other comprehensive income. The estimates and assumptions made by the investment manager in determining this fair value have been outlined in Note 3.

(g) Due diligence and transaction costs

The due diligence and transaction costs attributable to investments in contractual interests, available for sale financial assets or available for sale debt securities, or amendments thereto, have been capitalised into the cost of that investment. Any other due diligence and transaction costs not directly relating to an investment have been expensed immediately in the consolidated statement of comprehensive income.

Due diligence and transaction costs relating to a potential investment in a contractual interest that has not been consummated by the end of the reporting year is expensed in the consolidated statement of comprehensive income. If the potential investment is completed in a subsequent year, the due diligence and transaction costs previously expensed are reversed and capitalised into the cost of the contractual interest.

Due diligence and transaction costs associated with investments characterised as intellectual property are expensed until such time as the following has been affirmed: i) the technical feasibility of completing the intangible so that it will be available for use or sale; ii) the intention to complete the intangible asset and use or sell it; iii) the ability to use or sell the intangible asset; iv) how the intangible asset will generate probable future economic benefits; v) the availability of adequate technical, financial and other resources to complete the development and to use or sell the asset; and vi) the ability to measure reliably the expenditure attributable to the intangible asset during its development, at which time they are capitalised as an intangible asset and held at cost less accumulated amortisation and any impairment loss.

(h) Foreign currency

Functional and presentation currency

Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates (''the functional currency''). The functional currency of the Group as determined in accordance with IFRS is the United States Dollar ("US Dollar") because this is the currency that best reflects the economic substance of the underlying events and circumstances of the Group. The consolidated financial statements are presented in US Dollars, the presentation currency.

Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rate prevailing at the date of the transaction. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the consolidated statement of comprehensive income.

(i) Finance income

Finance income arising on cash and cash equivalents is recognised in the consolidated statement of comprehensive income on the effective interest basis.

(j) Cash and cash equivalents

Cash and cash equivalents comprise of cash balances and deposits held at banks with a maturity profile of 3 months or less.

(k) Taxation

The Company has obtained exempt company status in Guernsey. The Company is, therefore, only liable to an annual exemption fee of £600. The Company's subsidiaries are subject to income tax in their respective jurisdictions.

To the extent that any foreign withholding taxes or any form of profits taxes become payable, these will be accrued on the basis of the event that created the liability to taxation.

(l) Expenses

Expenses are accounted for on an accruals basis. Expenses for monitoring claims will generally be paid by the Investment Manager except in extraordinary circumstances approved by the Board of Directors of the Company.

(m) Dividends

Dividends paid during the period will be disclosed directly in equity via the consolidated statement of changes in equity. A final dividend proposed by the Board and approved by the shareholders prior to the period end will be disclosed as a liability. Dividends proposed and not approved will be disclosed in the notes as commitments.

(n) Other receivables and prepayments

Other receivables and prepayments are recognised initially at fair value and subsequently measured at cost, less provision for impairment.

(o) Other payables

Other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest rate method.

(p) Capital and reserves

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity via the special reserve as a deduction from the issue proceeds.

Where any group company purchases the Company's equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the Company's equity holders until the shares are cancelled or reissued. Where such ordinary shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the Company's equity holders.

(q) Share-based payments transactions

The Company engages in equity settled share-based payment transactions in respect of the services received from one of its Directors and from Cenkos Securities PLC ("Nominated Adviser and Broker") as set out in the Company's Admission Document. The fair value of the services received is measured by reference to the fair value of the shares or share options granted on the date of the grant. The fair value of the share options is recognised in the consolidated statement of comprehensive income over the period that the services are received, which is the vesting period. The fair value of the options granted is determined using the Black-Scholes option pricing model, which takes into account the exercise price of the option, the current share price, the risk free interest rate, the expected volatility of the share price over the life of the option and other relevant factors. Except for those which include terms to market conditions, vesting conditions included in the terms of the grant are not taken into account in estimating the fair value.

Non-market vesting conditions are taken into account by adjusting the number of shares or share options included in the measurement of the cost of the services so that, ultimately, the amount recognised in the consolidated statement of comprehensive income reflects the number of vested shares or share options. Where vesting conditions are related to market conditions, the charges for the services received are recognised regardless of whether or not the market conditions-related vesting condition is met, provided that the non-market vesting conditions are met.

(r) Impairment of assets

The carrying amounts of assets are assessed on a semi-annual basis to determine whether there is any indication of impairment. If such indication exists, the Group estimates the recoverable amount of the asset, being the higher of the asset's net selling price and its value in use. Any impairment loss is recognised for the amount which the asset's recoverable amount is lower than its carrying value and the difference being taken to the consolidated statement of comprehensive income.

The group first assesses whether objective evidence of impairment exists. The criteria that the Group may use to determine that there is objective evidence of an impairment loss include:

·; significant financial difficulty of the obligor;

·; a breach of contract, such as a default or delinquency in interest or principal payments;

·; the group, for economic or legal reasons relating to the borrower's financial difficulty, granting to the borrower a concession that the lender would not otherwise consider;

·; it becomes probable that the borrower will enter bankruptcy or other financial reorganisation; or

·; Observable data indicating that there is a measurable decrease in the estimated future cash flows from a portfolio of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the portfolio, including: (i) adverse changes in the payment status of borrowers in the portfolio; and (ii) national or local economic conditions that correlate with defaults on the assets in the portfolio.

The amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the contractual interest/available for sale debt securities' original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the consolidated statement of comprehensive income.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor's credit rating), the reversal of the previously recognised impairment loss is recognised in the consolidated statement of comprehensive income.

In the year ended 31 December 2012 there were no impairments (2011: US$ Nil).

(s) Earningsper share

The basic earnings per share value is calculated by taking the total comprehensive income/loss for the period and dividing it by the weighted average number of ordinary shares in issue over the period. The fully diluted earnings per share figure is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares.

(t) Net asset value per share

Net asset value per share is calculated by taking the net assets attributable to ordinary shareholders and dividing it by the number of shares in issue at the period end.

(u) Put option

The put option was previously carried at fair value, which was assessed by considering the present value of the redemption amount (see Note 12).

(v) Intangible asset

Where the Group has entered into an agency agreement involving licensing of intellectual property, the resulting transaction will be categorised as an intangible asset (see Note 5). The cost of the intangible asset will be capitalised once it is possible to demonstrate that the intangible asset will generate probable future economic benefit. Intangible assets will be held at cost less any accumulated amortisation and any accumulated impairment losses. Amortisation will be on a systematic basis over the asset's useful life.

3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

The Investment Manager makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities are outlined below.

Critical accounting judgements in applying the Group's accounting policies

The Group makes investments in claims that may involve litigation. The nature of the investments made by the Group reduces by some predetermined amount the cost of litigating a matter to a plaintiff and/or a law firm. A typical investment by the Group will include cash and may also include cash commitments subject to certain restrictions. In most arrangements, the Group is paid only from proceeds generated from the litigation and any related settlement or award. If a lawsuit fails to generate any proceeds and all legal remedies are exhausted, the Group will often not be entitled to reimbursement of the facility they advanced to the counterparty for the specific claim. In these cases the Group will write off their investment in the claim as a loss. The Group is compensated for this risk through the return structure built into the investment. The Group mitigates this risk through the use of their Investment Manager which is experienced in evaluating the investment worthiness of a particular opportunity.

In the process of applying the Group's accounting policies, which are described in Note 2, the Directors have relied upon the Investment Manager's assessment of contractual interests including the probability of success on the merits of each claim, likelihood of settlement and claim duration. This is most evident in the assessment of the effective interest rate applied to contracts entered into by the Group, as disclosed in Note 6.

To determine the appropriate effective interest rate to apply to each contract, the Investment Manager follows a formal process of developing a set of scenarios for each case and assigns probabilities to each potential outcome. The probabilities are phased based on the expected progression path of each particular case. In addition, each potential successful scenario has a range of likely settlement proceeds assigned to it as well as a most likely resolution or settlement date. The scenarios not only incorporate the merits of each particular case but also consider known risks intrinsic to the particular matter, as well as general risks found in any litigation matter.

The Investment Manager then runs a Monte-Carlo method analysis which dictates that the Investment Manager runs algorithms that rely on random sampling based on the variables within each scenario and their related probabilities. The results of the analysis provide expected outcomes and other statistical data which is used to calculate the future valuation of each particular contractual interest. An effective interest rate is then derived based on the level of investment and the determined future value.

Determination of functional currency

The determination of the functional currency of the Group is critical since recording of transactions and exchange differences arising therefrom are dependent on the functional currency selected. As described in Note 2, the Directors have considered those factors described therein and have determined that the functional currency of the Group is the United States Dollar (US$).

4. SUBSIDIARIES

5. INTANGIBLE ASSET

The Group's intangible asset comprises an investment structured as an agency agreement. In addition, the Company has purchased common and preferred stock related to the intangible asset as at 31 December 2012 of US$1,602,510 (31 December 2011: US$315,010) which has been classified as an available for sale financial asset (note 7).

Additions to the intangible asset during the first half of the year are deemed to have occurred at 30 June 2012 and additions during the second half of the year are deemed to have occurred at 31 December 2012.

The Group amortises the intangible asset on a diminishing balance basis at a rate of 16.7 per cent every 6 months. Previously, the Group amortised the intangible asset on a straight line basis over the expected useful life of the asset. The useful life of the Group's intangible asset had previously been assessed to be 3 years from 31 December 2011. The Directors consider that the diminishing balance basis of amortisation more accurately reflects the pattern in which the asset's future economic benefits are expected to be consumed by the Group. As a result of this change in accounting estimate, the Group has recognised US$98,413 less amortisation in the year ended 31 December 2012 than would have been recognised on a straight line basis. This amortisation will instead be recognised in future periods. The impact to the amortisation of the intangible asset in future periods is to extend the timescale over which the cost of the intangible asset is amortised, in line with the Directors' expectation of the useful life of the intangible asset.

6. CONTRACTUAL INTERESTS

Contractual interests have been accounted for using the effective interest rate method of calculation. Effective interest rates on these contractual interests range between 3.62 and 129.39 per cent at 31 December 2012 (31 December 2011: between 3.62 and 131.35 per cent). At 31 December 2012, the Group had investments in 11 contractual interests (31 December 2011: 13 contractual interests).

The Group had two contractual interests that came to full settlement during the year. In addition, the Group acquired a controlling interest in an existing investment (see note 20) which itself has an interest in a contractual interest. Upon consolidation, this contractual interest was deemed to have been acquired for consideration equal to its fair value at the acquisition date, being US$10,504,424, which is included in additions in the above table.

Fair value movements of contractual interests are due to amendments in estimated cash flows arising from changes in expectations surrounding each case. Further explanation on fair value movements is found within the "Valuation" section of the Investment Manager's Report.

7. AVAILABLE FOR SALE FINANCIAL ASSETS

The Group's Available for Sale Financial Assets include a holding in Juridica Capital Management Limited ("JCML"). During the year, the Group acquired an additional holding in JCML for consideration of US$4,325,000. The fair value of the Group's investment in JCML was assessed as at 31 December 2012 to be US$6,151,811 (31 December 2011: US$2,281,209). This assessment of JCML is deemed appropriate given its investment in the Group, its level of assets (including intellectual property), and the quality of its income and earnings and the projection of future cash flows.

In the event that the proposal for the winding-up of the Company (see the Director's Report for further information) is successful, JCML's future earnings would be reduced and the value of the Group's holding in JCML would be lower.

During the year, the Group acquired a controlling interest in an entity that had previously been recorded as an Available for Sale Financial Asset. At the date of acquisition, this investment was treated as being disposed of at its carrying value of US$3,659,473 and the acquired entity's assets and liabilities have been fully consolidated. Any previously recognised fair value gains/losses have been reclassified from other comprehensive income to profit or loss. See note 20 for further information.

8. AVAILABLE FOR SALE DEBT SECURITIES

Note 16(g) details arrangements between the Group and Fields Law PLLC ("FL"). The Loan and the Swap have been aggregated on consolidation and treated as a single claim asset. Returns on the Loan and the Swap are dependent on returns in claims financed by FL.

During the year, the Group received settlement and other revenue related activity totalling US$37.2 million (31 December 2011: US$6.6 million) from its available for sale debt securities. All of this revenue was previously recognised as unrealised income in current and prior years through fair value movements due to effective interest rate change and changes in estimated cash flows.

Fair value movements of available for sale debt securities are due to amendments in estimated cash flows arising from changes in expectations surrounding each investment. Further explanation on fair value movements is found within the "Valuation" section of the Investment Manager's Report.

9. FAIR VALUE ESTIMATION

For instruments for which there is no active market and for which reliable pricing sources cannot be obtained, the Group may use internally developed models, which are usually based on valuation methods and techniques generally recognised as standard within the industry. Valuation models are used primarily to value unlisted equity, debt securities and other debt instruments for which markets are or have been inactive during the financial year. Some of the inputs to these models may not be market observable and are therefore estimated based on assumptions.

The carrying value less impairment provision of other receivables and payables are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments.

IFRS 7 requires the Group to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:

·; Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).

·; Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2).

·; Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).

The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a level 3 measurement. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgement, considering factors specific to the asset or liability.

The determination of what constitutes 'observable' requires significant judgement by the Group. The Group considers observable data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.

All of the Group's financial assets and liabilities are classified as Level 3.

Investments classified within level 3 have significant unobservable inputs, as they trade infrequently. Level 3 instruments include equity securities. As observable prices are not available for these securities, the Group has used valuation techniques to derive their fair value.

There were no transfers between levels for the year ended 31 December 2012 (31 December 2011: Nil).

The following table presents the movement in level 3 instruments by class of financial instrument:

10. OTHER RECEIVABLES AND PREPAYMENTS

11. DIVIDENDS

The following dividends were declared during the year:

No dividends were declared during the year ended 31 December 2011. At 31 December 2012, dividends totalling US$22,105,995 were payable (31 December 2011: Nil).

12. PUT OPTION

In October 2009, the Group sold 8% of the interest in its subsidiary, Riverbend Investments Limited, to an unaffiliated party. As part of this transaction, the Group issued a put option to the buyer providing him with the ability to sell back the shares to the Group at a value based on a predetermined formula.

The put option had an increasing strike price based on the number of days from the date of sale of the interest until the third anniversary of the date of sale. On the third anniversary of the date of sale, the put option would have had a strike price of US$7,000,000 and would have expired on the following day.

In August 2012, the Put Option was exercised for a total sale price of US$6,743,157.

Previously, the Group fair valued the strike price of the put option by calculating the present value of its maximum stated value from the third anniversary of the date of sale to 31 December 2011. The resulting amount is reflected on the books as a non-current liability with an offset to equity. The below table details the fair value of the Put Option as at 31 December 2011:

13. OTHER PAYABLES

As a result of the acquisition of a subsidiary (see note 20), the Group is party to an agreement whereby it has agreed to pay a proportion of case proceeds arising from a particular case investment to a third party in return for that third party managing that particular case investment on behalf of the Group. The amount due to the third party will depend on the value of the proceeds that the Group will receive and, accordingly, the liability has been measured at fair value in line with the Group's fair value assessment of the particular case investment. This liability is shown as case proceeds payment obligation in the above table. On acquisition of the subsidiary, the fair value of the case proceeds payment obligation was assessed to be US$887,629. Movements in the fair value of the liability are recognised in the statement of comprehensive income.

14. DUE DILIGENCE AND TRANSACTION COSTS

The Group, through its Investment Manager, will often incur costs related to potential investments that remain pending as of the end of the reporting year. In accordance with the Group's accounting policies (Note 2), if a potential investment is not recognised by the end of the reporting year, all due diligence and transaction costs incurred are to be expensed in the consolidated statement of comprehensive income. If the potential investment is completed in a subsequent year, the due diligence and transaction costs previously expensed are reversed and capitalised into the cost of the contractual interest. In some instances, spending on potential investments may continue for more than a year. As at 31 December 2012, the cumulative amount of due diligence and transaction costs that relate to pending deals was US$0.4 million (2011: US$0.4 million).

One investment by the Group has been characterised as intellectual property for which only certain due diligence and transaction costs can be capitalised.

The reduction in due diligence and transaction costs incurred during the year ended 31 December 2012 compared with the year ended 2011 is due do a reduction in the number of new investment assessments undertaken whilst the Group's capital is fully deployed. In addition, new costs relating to a particular investment which would previously have been expensed can now be capitalised.

15. COMMITMENTS & GUARANTEES

Under the terms of some of its contracts, JIL provides a line of credit to counterparties. As at 31 December 2012, the maximum commitment under these lines of credit was US$8.3 million (31 December 2011: US$12.3 million).

16. RELATED PARTY TRANSACTIONS

Richard Battey, as investor representative, is a director of Juridica Capital Management Limited (''JCML''). The principal of JCML is Richard Fields, who acquired 50,000 Ordinary Shares in the Company (0.0625 per cent equity interest) as reimbursement of £100,000 of pre-IPO costs.

(a) Management fee

The Group is managed by JCML, an investment management company incorporated in Guernsey in which the Group holds a 36.2 per cent equity interest (31 December 2011: 14.1 per cent). Under the terms of the Management Agreement, the Company appointed Juridica Capital Management Limited as an Investment Manager to provide management services to the Company. The Investment Manager receives a fee based on the adjusted net asset value of the Company, payable quarterly in advance using the annual rate of 2.5 per cent.

The adjusted net asset value is the net asset value of the Company at the relevant time, after accruing for the annual management fee but not taking into account any liability of the Company for accrued performance fees and after:

(i) deducting any unrealised gains on non-current assets;

(ii) adding the amount of any write downs with respect to contractual interests which have not been written off; and

(iii) deducting the value of the Company's investment in JCML.

In the year ended 31 December 2012, JCML was entitled to investment management fees totalling US$5,070,212 (31 December 2011: US$4,536,313) of which US$501,215 was outstanding as a creditor at 31 December 2012 (31 December 2011: debtor of US$122,982).

(b) Investment in Juridica Capital Management Limited

The Company acquired 15 per cent of JCML on Admission (see Note 7), which was subsequently diluted to 13.6 per cent by the exercise of share options by certain of JCML's employees. The Company acquired a further holding in JCML during the year for consideration of US$4.7 million, taking the Company's overall holding in JCML to 36.2 per cent. Of the total consideration of US$4.7 million, it has been agreed that US$0.4 million relates to the termination of certain contractual arrangements between JCML and the previous shareholder. JCML has agreed to reimburse the Company for that amount (see note 16 (c)). Accordingly, the cost to the Company of the additional shares in JCML is US$4.3 million. An impairment review of JCML has been performed as part of the fair value assessment and will be carried out on a semi-annual basis.

(c) Short term funding to Juridica Capital Management Limited

In connection with the further acquisition of shares in JCML by the Group (see note 16 (b)), the former shareholder agreed to waive his rights to future contractual payments from JCML. As recompense to the Company, JCML has agreed to repay US$0.4 million in consideration for the termination of the contractual arrangements. This will be repaid in four equal, quarterly instalments over the next year by way of a reduction in the quarterly Investment Management fee payment. In this regard, US$0.4 million remains outstanding as at 31 December 2012 (see note 10).

(d) Performancefee

The Investment Manager is entitled to a performance fee based on the adjusted net asset value (being the NAV of the Company before taking into account any performance fee payable less any unrealised gains on investments plus the value of any write-downs in any investments that have been written down but not written off) of the Company. The performance fee will equal 20 per cent of the annualised increase in the adjusted net asset value between a hurdle rate of 8 per cent and 20 per cent, furthermore a fee of 35 per cent of the increase over a hurdle of 20 per cent and 40 per cent and 50 per cent of the same increase over a hurdle of 40 per cent. The fees are subject to a high water mark such that no performance fee will be paid if the performance of the Company does not exceed the net asset value at the end of the previous year in which the performance fee was paid. Payment of the performance fee is subject to the condition set out in (e) below.

As at 31 December 2012, the minimum hurdle rate (which is based on the adjusted net asset value) was not achieved. Therefore, no performance fee was paid or payable for the year ended 31 December 2012 (31 December 2011: US$ Nil). However, the current net asset value (unadjusted) is greater than the minimum hurdle rate as at 31 December 2012. To the extent that this net asset value is realised, a performance fee will become payable.

(e) Trust account

Of the performance fee, 50 per cent of any payment will be retained by the Company in a trust account. If, at any given year end, the annualised increase in net asset value of the Company is less than 8 per cent, the Company may claw back 20 per cent of the difference between the actual net asset value and the net asset value assuming an 8 per cent increase from the net asset value for the previous period (to the extent that there is sufficient cash in the clawback trust account). To the extent the performance fee held in the trust account is not clawed back by the Company, it will, upon the release of the monies from the trust account, be used to subscribe for new Ordinary Shares at a price equal to the Net Asset Value per Ordinary Share as at the end of the accounting period to which the relevant performance fee relates. As at 31 December 2012, the balance in the trust account was US$Nil (31 December 2011: US$Nil).

(f) Eleven Engineering Game Control LLC

During the year, the Group agreed to provide US$575,000 to Eleven Engineering Game Control LLC, a company ultimately owned and controlled by JCML, of which US$257,000 has been drawn during the year. As at 31 December 2012 US$318,000 remains available to Eleven Engineering Game Control LLC.

(g) Facility agreement and collateral account

The Company has entered into a facility agreement (the "Facility") with which it agrees to loan to Fields Law PLLC ("Fields Law") (formerly Fields Sullivan PLLC), a law firm in which Richard Fields is a partner, money for funding cases in which Fields Law is to act under a Co-counsel Agreement. The Group expects to enter into loan arrangements with other law firms (which may include other law firms established by the Principals) on terms and conditions similar to those contained in the Facility. The Facility available to Fields Law will be for up to approximately 50 per cent of the net proceeds of the capital raised by the Group less any loans made to other law firms.

The Facility will remain outstanding and available until the earlier of (i) the termination of the Management Agreement, (ii) the date on which Richard Fields ceases to own a controlling interest in Fields Law, (iii) the winding up of the Company, (iv) an event of default of the Facility documents, or (v) ten years from Admission. Under the Facility, drawdowns may be requested by Fields Law from time to time up to the maximum principal amount but subject always to approval by the Company in its sole discretion.

No more than US$10 million may be drawn down in respect of the same case investment, unless otherwise approved by the Company.

(h) Directors' remuneration

No pension contributions were paid or were payable on behalf of the Directors.

Lord Daniel Brennan has an interest in 447,817 shares (31 December 2011: 416,140 shares) under a Share Option Agreement, details of which were disclosed in the Admission Document. As at 31 December 2012, a provision of US$164,470 (31 December 2011: US$115,138) has been made for these options, which includes provision for additional dividend shares to which Lord Brennan becomes entitled when the Company pays dividends. Lord Brennan can exercise these share options at any time on or after the publication of these consolidated financial statements for the year ended 31 December 2012 up until 17 December 2017.

The other Directors have no beneficial interest in the share capital of the Company.

(i) Cenkos warrant

Cenkos Securities plc. had an interest in 800,000 shares under a Deed of Warrant Grant at a price of 130p which expired, unexercised, on 21 December 2012. These were fair valued as of the grant date at US$246,906 (31 December 2011: US$246,906) and a full provision was made for this in the financial statements.

(j) Escon Capital Inc.

The Group has an interest in 38% (31 December 2011: 24%) of the voting common stock and 100% of the issued preference shares of Escon Capital, Inc., a Delaware corporation of which Kermit Birchfield and Richard Fields are directors.

Kermit Birchfield and Richard Fields receive directors' fees from Escon Capital Inc. of US$75,000 and US$60,000 per annum respectively. Juridica Capital Management US Inc., a subsidiary of JCML, receives an annual fee from Escon Capital Inc. of US$600,000 for overhead support.

17. FUNCTIONAL AND PRESENTATION CURRENCY / EXCHANGE RATES

The financial statements are presented in United States Dollar ("US$") which is also the Group's functional currency. The following rate was applicable as at 31 December 2012:

18. CAPITAL AND RESERVES

Authorised share capital: Unlimited number of ordinary shares of no par value ("Shares").

Issued share capital: 104,701,754 Shares as of 31 December 2012 (31 December 2011: 104,701,754 Shares), of which 80,000,000 Shares were issued at a premium of £1 per Share on admission with a further 30,701,754 Shares issued at a premium of £1.14 on 6 April 2009. Under a Share Buyback Programme, the Company acquired 6,000,000 Shares at a price of £1.02 per share on 3 November 2010. These Shares are held in treasury. As at 31 December 2012, the number of Shares held in treasury amounted to 6,000,000 (2011: 6,000,000).

The Company's capital is represented by ordinary shares of no par value and share premium. Each share carries one vote and is entitled to dividends when declared. The relevant movements in capital are shown on the consolidated statement of changes in equity through the special reserve.

The Company has authority to make market purchases of up to 14.99 per cent of its own issued ordinary shares. This authority was renewed at the annual general meeting of the Company held on 11 May 2012. A renewal of the authority to make purchases of ordinary shares will be sought from Shareholders at each annual general meeting of the Company. The timing of any purchases will be decided by the Board.

19. FINANCIAL RISK AND INSURANCE RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group's activities expose it to a variety of financial risks and insurance risk.

The Group's overall risk management programme seeks to maximise the return derived for the level of risk to which the Group is exposed and seeks to minimise potential adverse effects on the loss of capital is limited to the fair value.

The management of these risks is carried out by the Investment Manager under policies approved by the Board of Directors. The Board provides written principles for overall risk management, as well as written policies covering specific areas such as foreign exchange risk, interest rate risk, credit risk and investment of excess liquidity.

The Group uses different methods to measure and manage the various types of risk to which it is exposed. These methods are explained below.

(a) Investment risk

There is no established market for the Group's assets. The Investment Manager's assessment of the quantum and timing of returns is subjective and based on the Investment Manager's experience and due diligence. The estimates of the outcome and financial effect on the Group of the assets from which respective effective interest rates are derived are determined by the judgement of the Investment Manager. In coming to its best estimate of the effective interest rates on the assets, the Investment Manager has estimated the probability, timing and quantum of particular outcomes. The respective effective interest rates on contractual interests are then derived as the mean internal rate of return from a Monte-Carlo simulation of expected outcomes.

(b) Foreign Currency Risk

Foreign currency risk is the risk that the value of a financial instrument will fluctuate because of changes in foreign exchange rates.

The Group's policy, generally, is not to manage the Group's exposure to foreign exchange movements (both monetary and non-monetary) by entering into any foreign exchange hedging transactions. However, the Group did enter into a forward currency contract, maturing 31 December 2012, to lock in the US dollar equivalent of the special dividend declared in September 2012 which was paid to shareholders on 4 January 2013. The Directors considered that this was a prudent step in order to mitigate the cash flow impact of adverse exchange rate fluctuations on the amount of the dividend, which was declared in GBP.

The Group holds assets denominated in currencies other than the US dollar, the functional currency. It is therefore exposed to currency risk, as values of the assets denominated in other currencies will fluctuate due to changes in exchange rates. The Group may hedge future investment opportunities in the functional currency.

As at 31 December 2012, a proportion of the net financial assets of the Group are denominated in currencies as follows:

At 31 December 2012, if exchanges rates had moved by 5% with all other variables remaining constant, the change in net assets attributable to holders of ordinary shares for the year would amount to approximately +/- US$438,423 (31 December 2011: +/- US$269,541). Management assesses the risk of exposure to the general banking system, and specific banks, and invests cash in US government securities when there is perceived risk to principal.

(c) Cash flow and fair value interest rate risk

Interest rate risk arises from the effects of fluctuations in the prevailing levels of market interest rate on the fair value of financial assets and liabilities and future cash flows. The Group holds fixed and variable rate interest securities that expose the Group to fair value interest rate risk.

The Group is exposed to interest rate risk related to its cash balances. The Group does not actively manage this risk.

At 31 December 2012, if interest rates had moved by 75 basis points with all other variables remaining constant, the change in net assets attributable to holders of ordinary shares for the year would amount to approximately +/- US$303,200 (31 December 2011: +/- US$110,235), arising substantially from the cash and cash equivalents.

(d) Credit risk

The Group is exposed to credit risk, which is the risk that a counterparty will be unable to pay amounts in full when they fall due.

The Group has in place various policies and procedures to guide the Investment Manager's evaluation and management of investment opportunities and, particularly, the credit risk associated with investment counterparties (law firms and claim interest holders) and investments. The policies include Investment Restrictions (which contain prohibitions on pursuing investments with certain kinds of claims and claim holders, those being prosecuted by certain law firms, and those where collection, counterparty or compliance risk is significant), Investment Policies (which contain guidelines for diversification of the Group's portfolio based on certain claimholder characteristics, jurisdiction(s) involved, prosecuting law firm, claim size and investment structure), and Investment Process Guidelines (which define the due diligence, investment and investment monitoring processes to be followed by the Investment Manager in claim evaluation, valuation and investment completion). Collectively, these Investment Parameters are designed to guide the investment opportunity analysis so to limit credit, collection and portfolio concentration risks associated with Group investments. In addition, the Investment Manager has, pursuant to its own Underwriting Guidelines, developed and implemented systems and procedures to analyse and (pursuant to investment contracts) manage credit risk associated with Group investments.

The main concentration to which the Group is exposed arises from the Group's loan to FL. The Group is also exposed to counterparty credit risk on trading contractual interests, cash and cash equivalents and other receivables.

In accordance with the Group's policy, the Investment Manager monitors the Group's credit position on a daily basis, and the Board of Directors reviews it on a quarterly basis.

The Group is also exposed to material credit risk in respect of the contractual interests and cash and cash equivalents. The credit risk of the cash and cash equivalents is mitigated as all cash is placed with reputable banking institutions with a sound credit rating. The maximum credit risk exposure represented by total assets is as stated in the consolidated statement of financial position which amounted to US$255,769,311 (31 December 2011: US$235,728,256).

(e) Liquidity risk

The Group is exposed to liquidity risk. The contractual interests are acquisition of claims, as well as loans to lawyers to fund participation in claims on a contingency fee basis, and therefore require significant capital contribution with little or no immediate return and no guarantee of return or repayment. The market for such contractual interests is not active. In the opinion of the Directors the current liquidity risk at 31 December 2012 is low as cash and cash equivalents exceed unmatched liabilities or other contractual commitments.

(f) Concentration risk

The Group seeks to minimise concentration risk by investing in a diverse portfolio of contractual interests through a number of different law firms, including interests in antitrust, patent, property damage, insurance subrogation, shareholder dispute, contract claim and arbitration cases. Further information regarding portfolio diversification can be found in the Investment Manager's Report.

The Group further seeks to minimise concentration risk by utilising a variety of Investment Parameters which are designed to guide the investment opportunity analysis so as to minimise, amongst other things, concentration risk. These Investment Parameters are further detailed in Note 19(d).

(g) Capital risk management

The capital of the Company is represented by the net assets attributable to holders of ordinary shares. The Company's objectives when managing this risk are to safeguard the Company's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain a strong capital base to support the development of the investment activities of the Group.

The Company is closed-ended and therefore the capital risk is reduced as shareholder funds are locked in until the closure of the Company.

(h) Fair value estimation

The fair value of financial assets and liabilities that are not traded in an active market is determined by using valuation techniques.

The carrying value less impairment provision of other receivables and payables is assumed to approximate their fair value. The fair value of financial liabilities for disclosure purposes is not discounted as the Group does not expect there to be any material differences.

20. BUSINESS COMBINATIONS

OTO Technologies LLC ("OTO") was acquired as part of the re-negotiation of an existing investment deal which resulted in the Group's interest in OTO increasing from 35% to 85% for no additional consideration. This resulted in a bargain purchase - a business combination in which the net fair value of the identifiable assets acquired and liabilities assumed exceeds the aggregate of the consideration transferred, the non-controlling interests and the fair value of the previously held equity interest. Accordingly the Group has recognised a gain on bargain purchase of US$4,329,188 during the year.

The Group previously recognised its investment in OTO as an Available for Sale Financial Asset. As at the date of acquisition, this holding was treated as if it had been disposed of and the assets and liabilities of OTO have been consolidated. Previously recognised unrealised losses amounting to US$1,484,513 have been reclassified from other comprehensive income to profit or loss as a result of the acquisition.

Identifiable net assets at the date of acquisition of OTO were as follows:

The fair value of non-controlling interests in OTO at the date of acquisition was assessed to be US$1,737,589, based on the non-controlling interests' proportional share of the fair value of OTO's identifiable net assets.

21. NET ASSET VALUE ATTRIBUTABLE TO EACH ORDINARY SHARE

The net asset value attributable to each ordinary share is calculated by dividing the net asset value attributable to ordinary shareholders of US$230,441,906 (31 December 2011: US$228,454,741) by the 104,701,754 ordinary shares in issue at 31 December 2012 (31 December 2011: 104,701,754).

22. SUBSEQUENT EVENTS

There have been no significant events to report since 31 December 2012.