Juridica Investments Regulatory News (JIL)

Juridica Investments Limited

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

Results for six months ended 30 June 2016

Juridica, a provider of strategic capital for corporate legal claims, declares a dividend of 32 pence per share and announces its results for the six months ended 30 June 2016.

Financial highlights

· Total comprehensive loss of US$27.2 million (2015: US$34.2 million) or 24.67 cents per ordinary share due principally to:

· net unrealised loss of US$23.8 million generated from the change in valuation of the Company's investments;

· operating expenses of US$2.1 million;

· realised loss of US$800,000 from the write-off of two investments; and

· other net negative adjustments of US$500,000

· Net asset value ("NAV") per share of US$0.7783 / 58 pence, (31 December 2015: US$1.1432 / 77 pence) largely due to:

· payment of the 8 pence per share dividend in June 2016 (US$0.1182 per share); and

· total comprehensive loss of 19 pence per share (US$0.2467 per share)

· Following a review of the cash needs of the business for the run-off period and the July 2016 receipt of US$46.5 million from case settlements, the Board has declared a dividend of 32 pence per share at a total of approximately US$47 million

Investment portfolio and results

There were 13 active investments at 30 June 2016: five involve pure litigation; four are in special purpose vehicles relating to patent monetisation; and four either include residual assets obtained as collateral, pre-litigation settlement opportunities, or investments in other entities tied to litigation, (including the Company's investment in its former Manager).

During the six-month period ended 30 June 2016 there were settlements in the final two cases in the Company's large antitrust and competition investment:

· Case 5308-U - Settlement was reached during trial, generating US$69.1m in gross proceeds and cost reimbursement. After reserving for taxes and other contingencies, net proceeds of US$46.0m were received in July 2016. Additional proceeds from the release of excess reserves may be remitted to the Company once final tax returns are filed by the counterparty to our investment (no later than third quarter 2017).

· Case 1008-A - A partial settlement was reached generating approximately US$600,000 in gross proceeds. After reserving for taxes and other contingencies, net proceeds of US$500,000 were received by the Company in July 2016. Additional proceeds of approximately US$1.0m are expected prior to 31 December 2017

Corporate run-off strategy

Further to the Company's announcement of 18 November 2015, the Board has instructed its investment manager, Juridica Asset Management Limited, to seek resolution and monetisation of all the remainder of the Company's assets, where reasonably possible, prior to 31 December 2017. In addition, subsequent to 30 June 2016, the Company has completed the wind-up of the debt facility with Fields Law Firm PLLC.

- Ends -

This report contains forward looking statements, which are based on the current expectations and assumptions of the Investment 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.

This announcement contains inside information

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Chairman's statement

On behalf of the Board, I present the results of Juridica Investments Limited ("JIL" or the "Company") for the six-month period ended 30 June 2016.

Financial Results

In the first half of 2016, the Company's loss was US$27.2 million compared with US$34.2 million for the comparable period in 2015. The net asset value ("NAV") per share has fallen by US$0.3649 per share from US$1.1432 per share at 31 December 2015 to US$0.7783 per share at 30 June 2016 largely due to the revaluation of case investments (US$0.2155 per share) and the payment of a dividend in June 2016 (US$0.1182 per share).

Corporate Run-Off Strategy

The Board announced on 18 November 2015 that the Company would not make any new investments (other than further funding of existing investments where such funding was reasonably required in the interests of shareholders) and it would seek to return capital to shareholders in the most appropriate manner, following the completion of investments. In early 2016 the Board entered into an agreement with the Company's investment manager, Juridica Asset Management Limited ("JAML" or "Manager'') for continued services for a further two years until 31 December 2017. On that date the Company is entitled to terminate these arrangements. This timing reflected our view of the circumstances of the remaining portfolio. Nevertheless we reiterate the approach set out in my statement in the 2015 Annual Report that should circumstances involve the continuation of any significant investments into 2018 then the Company will make appropriate arrangements as required. 

Further to this strategy, the Board has instructed JAML, to look into the resolution and monetisation of the remaining litigation assets as their circumstances reasonably permit, and for non-litigation assets where reasonable, by on or about 31 December 2017. This decision was made after considering the timing and expected value of the Company's remaining investments, the realisation of the largest remaining case in the portfolio, and the costs to continue operating the Company beyond 31 December 2017. As a consequence of this decision, the Board, with input from the Manager, has adjusted the values of certain remaining assets to reflect the potential likelihood of monetising them where reasonably possible by the end of 2017.

Lastly, and as previously announced in my 2015 year-end statement, the Board and the Manager have agreed a programme of cost reductions over and above the cuts to investment management fees with target savings of US$900,000 for 2016 compared with 2015 and I expect that we will meet that target by the year end. Further cost reductions will continue to be sought next year.

Investment Results

During the six-month period ended 30 June 2016 there were settlements in the final two cases in the Company's large antitrust and competition investment. Gross proceeds totalling US$69.7 million were generated from these combined settlements. Under the terms of the related investment agreement, gross proceeds generated from the investment are received and held by Fields Law Firm PLLC that is the counterparty to the Company's investment. Deducted from the gross proceeds are taxes and reserves required for certain contingencies. The Company receives net proceeds at the end of each calendar year, or earlier if approved by JIL and the counterparty. Once final tax obligations are determined and once all contingencies are cleared, any residual proceeds are transferred to the Company. A total of US$46.5 million in net proceeds, after the deductions for the above noted reserves (which were higher than we expected), was transferred to the Company in July 2016 (and has been included as a receivable in the Statement of Financial Position at 30 June 2016). We believe additional proceeds from these reserves may be released to the Company once actual tax returns are filed (expected no later than third quarter 2017) and again once all contingencies are cleared. An estimate for the amount of excess reserves to be released to the Company are included in the valuation for Investment 3608-A at 30 June 2016.

· Case 5308-U: Settlement was reached during trial that generated US$69.1 million in gross proceeds and cost reimbursement. After reserving for taxes and other contingencies, net proceeds of US$46.0 million were received by the Company in July 2016. Additional proceeds from this settlement may be remitted to the Company after filing of tax returns, which is expected no later than third quarter 2017.

· Case 1008-A: A partial settlement was reached generating approximately US$600,000 in gross proceeds. After reserving for taxes and other contingencies, net proceeds of US$500,000 were received by the Company in July 2016. Additional net proceeds of approximately US$1.0 million are expected prior to 31 December 2017. These returns represent the Company closing its investment in this case as any further future returns are speculative, and when off set against the cost of future commitments under the investment agreement, make closure at this stage prudent and, the Board believes, in the investors' interests.

Further details of the closing of the structures supporting the antitrust and competition portfolio are set out in the subsequent events note (Note 16) to these Financial Statements.

Investment Portfolio

The portfolio has been carefully reviewed in calculating the Company's NAV. As to the litigation cases now reviewed, earlier adverse decisions were reported in the last Annual Report; for example, the decision on case 5009-S in late 2015. The SPV group of investments are detailed in the Investment Manager's statement which follows. As commercial investments they can be named.

There were 15 active investments in the period to 30 June 2016 (two of which were written off in the period), of which seven involved litigation. Of the seven, four have had significant adverse judicial decisions substantially affecting their NAV - 5009-S, 2709-E, 12013 and 1608-T. The first two are being appealed and the third and fourth have been written off. One other, 1410, is awaiting a rehearing on damages following a successful appeal. The rehearing is before a judge alone and ought to occur this year or next. Investment 114107 is proceeding and the NAV reflects the prospective returns currently anticipated to be received by the Company in addition to some settlement returns already received. This investment is expected to complete this year or next. The seventh, 3608-A, is our antitrust and competition investment which had significant activity during the period as noted above.

Four investments are in special purpose vehicles ("SPV"). These investments began in 2014.

As to ACK, after extensive investigation it was determined that the inventions had no commercial value. The remaining investment is a note given in respect of an equity entitlement. These matters were resolved in the first half of this year.

As to Rich Media, 25 patent filings occurred in 2016. Further development is planned with the inventor.

As to GrandiOS, no inventor is directly involved. 37 U.S. domestic and 20 international patent filings have been made. Marketing is continuing.

As to ProSports, 55 domestic and 13 international patent filings have been made. A shareholder partner is the National Football League Players Association ("NFLPA"). Marketing is underway.

These SPVs are commercial ventures and their NAVs reflect market conditions and associated risks.

There are four remaining investments. Of them two, 7313 and 1610, are not in favourable circumstances as explained in the Investment Manager's Report. The NAV of these investments as at June 30, 2016, both as to litigation and other investments have been adjusted applying fair value principles to prevailing circumstances.

Dividend

During the six-month period ended 30 June 2016, an interim dividend of 8 pence per share (US$13.0 million) was paid on 24 June 2016.

Following a review of the cash needs of the business for the run-off period and the July 2016 receipt of US$46.5 million from case settlements, the Board has declared a further dividend of 32p per share (US$47.0 million) to shareholders on the Register at 16 September 2016.

Exchange Rate Movements

Since the vote by the UK on 23 June 2016 to leave the EU and concerns about the future economic effect on the UK there has been a fall in the value of the Sterling against the US Dollar. This has been beneficial to the Company as its assets are almost entirely denominated in US Dollars.

Conclusion

The two dividends this year of 8p and 32p total 40p.

The remaining investments have had a significant adjustment to NAV. For the litigation cases this follows judicial outcomes and for other investments this reflects commercial circumstances.

The Board appreciate that investors wish run-off to be effective and efficient and your Board will seek to achieve this.

Lord Daniel Brennan QC

Chairman

6 September 2016

Investment Manager's Report

The Company began operations in December 2007 and has, since inception, made 30 investments (some of which have multiple underlying cases or other assets and some which have had supplemental investments). A total of 17 of these investments have come to full conclusion. Of the remaining 13 investments, seven have had some return on the Company's investment (including the Company's investment in JCML 2007 Limited ("JCML 2007"), its former manager, either from settlements or other distributions, and still remain active.

During the six-month period ending 30 June 2016, the Company has moved forward with its strategy announced on 18 November 2015. The strategy involves engaging in no new investments, ensuring its existing investments are managed through to their conclusion, and returning capital to shareholders in the most appropriate manner ("Run-Off Strategy"). To date, since the adoption of the Run-Off Strategy, the Company has achieved the following:

· Settlement in two cases generating US$69.7 million in gross proceeds (US$46.5 million in net proceeds after reserving for taxes and contingencies). The US$23.2 million in reserves held by the counterparty to our investment were larger than expected and we believe additional net proceeds will be released prior to 31 December 2017.

· Dividend of 8 pence per share paid to shareholders on the Register at 27 May 2016.

· Declaration of a dividend of 32 pence per share payable to shareholders on the Register at 16 September 2016.

Further to the Company's Run-Off Strategy, the Board has instructed us to seek resolution and monetisation of all the remainder of the Company's assets, if possible by the end of 2017.

Financial Performance During 2016

The NAV per ordinary share decreased from US$1.1432 (77 pence per share) as at 31 December 2015 to US$0.7783 (58 pence per share) as at 30 June 2016. This decrease of 36.49 cents in NAV per ordinary share was primarily attributable to the following:

· Dividend declared on 19 May 2016 and paid on 24 June 2016 of US$13.0 million or 11.82 cents per ordinary share (8 pence per share).

· Total comprehensive loss of US$27.2 million or 24.67 cents per ordinary share.

The Company's US$27.2 million total comprehensive loss for the period ended 30 June 2016 was due to the net unrealised loss of US$23.8 million generated from the change in valuation of the Company's investments, a realised loss of US$800,000 associated with the write-off of two investments, operating expenses of US$2.1 million and other net negative adjustments of US$500,000.

The Company's net unrealised loss from net reduction in the valuation of the Company's investments of US$23.8 million was attributable to the following:

· US$18.7 million reduction in value associated with the Company's contractual interests. This change was due to changes in our expectations on probability of a successful resolution, changes in quantum and timing of a successful resolution, and application of additional risk factors on certain investments (principally the patent SPVs) accounted for as contractual interests to incorporate the potential of monetising these investments within a shortened development period following the Board's instructions in accordance with the Company's Run-Off Strategy. The risk factors associated with monetising the investment within a shorter development period may be adjusted in future reporting periods based on our ongoing monetisation efforts.

· US$3.4 million reduction in value associated with the Company's debt securities consisting exclusively of our antitrust and competition portfolio. This reduction is principally due to a reduction in the amount of expected net proceeds from our antitrust and competition portfolio.

· US$1.7 million reduction in value associated with the Company's equity investments. This change was partially due to changes in our expectations on quantum and timing and application of additional risk factors on one equity investment to incorporate the potential of monetising this investment within a shortened growth period following the Board's instructions in accordance with the Company's Run-Off Strategy. The risk factors associated with monetising the investment within a shorter growth period may be adjusted in future reporting periods based on our ongoing monetisation efforts.

Investment Results During 2016

Case 5308-U:

During the six-month period ended 30 June 2016, Case 5308-U (which was one of the six underlying cases in our single antitrust and competition investment) reached a final settlement generating gross proceeds of US$69.1 million. As per the terms of the Company's investment arrangement, the law firm that is counterparty to this investment is required to set aside reserves for taxes and contingencies resulting from the settlement or other matters related to the investment. After netting out these reserves, which were larger than we expected, a total of US$46.0 million was delivered to the Company in July 2016 (and has been included as a receivable in the Statement of Financial Position at 30 June 2016). Additional proceeds may be delivered to the Company once actual tax returns are filed (which is expected no later than third quarter 2017) and again once all contingencies are cleared. The expected release of excess reserves is reflected in the remaining valuation of our antitrust and competition investment. The final amount of excess reserves that may be released could vary significantly from the estimate we have developed.

Case 1008-A:

During the six-month period ended 30 June 2016, Case 1008-A (which was one of the six underlying cases in our single antitrust and competition investment) reached partial settlement. This partial settlement generated gross proceeds in tranches, of which US$850,000 has been determined and approximately US$600,000 has been paid by the defendant. After providing for the appropriate reserves (similar to those described above for Case 5308-U), US$500,000 in net proceeds was delivered to JIL in July 2016 (and has been included as a receivable in the Statement of Financial Position at 30 June 2016). An additional payment from this case is expected prior to the end of 2017 and is expected to provide in excess of US$1.0 million in net proceeds (after deductions for reserves for taxes and other contingencies).

Investment 12013:

Investment 12013 is an investment made during 2015 that involves a legal claim of misappropriation of trade-secrets. The Company's investment was used for funding an appeal which, during the fourth quarter of 2015, was lost. A motion for reconsideration was denied and in February 2016, the Plaintiff's petition for Writ of Certiorari with the State Court of Appeals was denied. The Plaintiff determined that an appeal to the US Supreme Court was not viable and as a result, at 30 June 2016, the investment has been written off. The Company invested US$250,000 into this case and approximately US$95,000 of the Company's 2015 year-end NAV was applicable to this investment.

Investment 1608-T:

Investment 1608-T is one of the Company's earliest investments and involves a judgment on behalf of insurance companies against a foreign government. In 2014, we identified that although the collection efforts may ultimately be successful, timing and collection risk had increased and the fair value of the investment was written down. During the six-month period ended 30 June 2016, the Company believed that a pending summary judgment ruling from the United States Court of Federal Claims would grant the Defendant's motion for summary judgement denying the Plaintiff's claims. As such, at 30 June 2016, this investment was written off. The Company invested US$500,000 into this case and approximately US$450,000 of the Company's 2015 year-end NAV was applicable to this investment. Subsequent to 30 June 2016, the Defendant's motion for summary judgment was granted.

Other results:

In addition to the above activity, Case 2709-E generated a few small settlements related to one of the patents in litigation. The proceeds were reinvested into the case to further the legal proceedings on the remaining patent. Lastly, approximately US$40,000 in residual proceeds related to Case 8008-L and Case 5208-E were received by the Company during the six-month period ended 30 June 2016.

Fair Value of Investments

The fair value of the Company's investments at 30 June 2016 was US$25.2 million. From an accounting standpoint, these investments are categorised as contractual interests, debt securities, or equity investments.

These categories reflect the following changes from the carrying value as at 31 December 2015:

1 Additions within our antitrust and competition portfolio were provided from a US$5 million clawback of prior year swap payments as part of the facility between the Company and Fields Law PLLC (see Note 6). Net proceeds generated during the six-month period ended 30 June 2016 within our antitrust and competition portfolio is reflected as a receivable in the financial statements. Subsequent to 30 June 2016, US$46.5 million of the receivable was received by the Company. As per the terms of the Company's investment arrangement, the law firm that is counterparty to this investment is required to set aside reserves for taxes and contingencies resulting from the settlement or other matters related to the investment. The reserves set aside from 2016 settlement were larger than we expected and we believe additional proceeds may be delivered to the Company once actual tax returns are filed (which is expected to occur no later than third quarter 2017) and again once all contingencies are cleared. The expected release of excess reserves is reflected in the remaining valuation of our antitrust and competition investment. The final amount of excess reserves that may be released could vary significantly from the estimate we developed.

2 Equity investments exclude an intangible, with amortised value of approximately US$1.7 million.

As discussed in previous reports, we value JIL's investments using valuation and accounting methods that are applied in a manner that follows International Financial Reporting Standards' ("IFRS") accounting principles. In particular, we follow guidance provided by IFRS 13 in establishing the method of applying fair value accounting. Under this guidance, we develop a fair value of a case or investment by discounting its expected terminal value from its expected completion date.

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 and outside of the legal process. Our assumptions behind an investment's fair value are revisited on a semi-annual basis (to coincide with the Statement of Financial Position date). If needed, we will re-run the investment's valuation model and revise its expected future cash flow which we then discount to the reporting date. The discount rate used for valuation purposes is the Company's cost of equity. All due diligence and transaction costs related to an investment are expensed.

Unlike an investment that is backed by a physical asset, litigation assets are subject to certain legal hurdles each of which has the potential to cause the litigation portion of any investment to be worthless. A key element in selecting investment worthy cases is the likelihood of a particular case overcoming any remaining hurdles and generating either a settlement or trial victory.

For the majority of the Company's litigation investments, we consider the current legal merits of each underlying case, the legal history of the case, the current legal environment, and any other factors we feel are relevant as of the date of our valuation. Working with the lawyers assigned to each case, we develop scenarios of potential outcomes, including the various situations that can generate outsized returns, moderate returns, or a complete loss, and assign each scenario a probability. The Monte Carlo simulation runs the statistically relevant number of iterations to provide us with an expected value and timing. These results are then discounted to the reporting date at the Company's cost of equity. For certain of the Company's investments, we found it more appropriate to value them by using discounted cash flow models incorporating the various risks associated with the investment.

Of significance is the risk of loss that is assigned to each case. This must be considered given the typical binary characteristics of a legal case (i.e. win or lose).

In response to the Company's Run-Off Strategy, as part of us reaching fair value assessment of the Company's investments, we have considered the potential likelihood of monetising certain investments within a shortened development period.

Our accounting fair value on the Company's investments is not intended to express our prediction about the ultimate outcome of any investment, but rather our fair value estimate based on the best information available to us at the Statement of Financial Position date using a range of possible outcomes.

Portfolio Update

As the Company's portfolio has progressed, it has evolved into three types of investments: litigation related investments; SPV related investments; and other investments. As such, our portfolio update will be grouped in the same manner.

The summary of our investment holding at 30 June 2016 for each of these groups is as noted on the following table, together with the current concentration risk:

1 Includes the Company's investment in JCML 2007. Also includes an investment in which US$1.7 million of its fair value at 30 June 2016 is categorised as an intangible.

A total of US$143.8 million has been invested in the current portfolio holdings (excluding any related transaction costs and excluding the Company's investment in JCML 2007). The current portfolio holdings (excluding the Company's investment in JCML 2007) have generated proceeds from partial settlement (net of reserves for taxes and contingencies) totalling US$201.7 million (including US$46.5 million that has been included as a receivable in the Statement of Financial Position at 30 June 2016) and was received in July 2016.

Litigation investments

A total of 5 investments in litigation remain active as of 30 June 2016.

Case summaries:

· Investment 3608-A: This investment originally included six cases of which five were related to antitrust and competition and one was related to statutory claims against an international bank. The investment was initiated in 2008 with terms that required funding obligations by the Company through 2016 followed by an annual option providing for the Company to extend the funding obligation beyond 2016.  At 30 June 2016, the Company declined to exercise its option to continue funding the investment.

Under the terms of the investment agreement, gross proceeds generated from the investment are received and held by the law firm that is the counterparty to the Company's investment. Deducted from the gross proceeds are taxes and reserves required for certain contingencies. The Company receives net proceeds at the end of each calendar year, or earlier if approved by JIL and the counterparty. Once final tax obligations are determined and once all contingencies are cleared, any residual proceeds are transferred to the Company. Prior to 2016, four of the individual cases in this investment had come to conclusion. During 2016, one of the remaining two cases reached its final conclusion and the second case reached partial settlement.

· Case 5308-U began its trial in March 2016 and came to a settlement in April 2016. Gross proceeds generated from the settlement were US$69.1 million. Net proceeds, after above noted reserves were made, of US$46.0 million were transferred to the Company in July 2016 (and has been included as a receivable on the Statement of Financial Position at 30 June 2016). The reserves held by the counterparty to our investment were greater than we expected and we believe additional proceeds may be delivered to the Company once actual tax returns are filed (which is expected to occur no later than third quarter 2017) and again after all contingencies are cleared. An estimate for the amount of excess reserves to be released to the Company are included in the valuation for Investment 3608-A at 30 June 2016. The final amount of excess reserves that may be released may vary from the estimate we have developed.

· Case 1008-A has reached partial settlement during 2016. Although the case continues, the Company's decision to not exercise its funding option eliminates the potential for the Company to receive any additional proceeds from settlements occurring after 31 December 2016 (which were not deemed sufficient to justify the additional funding requirements). A total of approximately US$500,000 in net proceeds was transferred to the Company in July 2016 (and has been included as a receivable on the Statement of Financial Position at 30 June 2016). We expect further net proceeds related to this settlement, estimated to be in excess of US$1.0 million to be received no later than 31 December 2017.

· Case 2709-E: This case originally consisted of three patents against three defendants. After a protracted patent re-examination, one patent was abandoned. During 2016, an unexpected event occurred which severely impacted one of the remaining patents. This resulted in settlement with the three defendants generating proceeds far below our expectations. A Markman hearing on the remaining patent completed just prior to 30 June 2016 with the plaintiff prevailing on validity. However, the ruling makes it difficult for the plaintiff to prove infringement. Full results of the Markman hearing are currently being reviewed by plaintiff's counsel. The parties have decided to submit remaining issues to the appeals court for final resolution. Trial is currently scheduled for May 2017 but is likely to be delayed as the district court case will be stayed pending appeal.

· Case 5009-S: This case completed its trial by jury during 2015. Although the plaintiff fully won on liability, the jury only awarded an amount which will result in proceeds to the Company of approximately US$2.0 million as compared to an investment of approximately US$3.5 million. Both sides filed post-trial motions with the plaintiff requesting a new trial on damages and the defendant for judgement to be entered in its favour as a matter of law. These motions were decided in favour of the defendant; however, the plaintiff has appealed this adverse decision of the trial court. We believe there remains a possibility that a new trial on damages will occur.

· Case 1410: This case completed its trial during 2014 with a positive ruling on liability but damages awarded were far less than expected. Cross-appeals on liability and plaintiff's appeal on damages were filed after the ruling. In early 2016, the plaintiff's appeal received a favourable appeals court ruling overturning the trial court's damages award. Although risk remains, we believe there is the possibility of a new award on damages without a further trial.

· Case 114107: This case consists of five separate patent portfolios comprising several hundred patents related to information technology. In 2015, and less than 60 days after making the investment, a settlement occurred in two lawsuits that provided excess collateral for the Company's investment. This settlement returned all of the Company's investment in the case. Additional proceeds are expected from activity with the new cases.

SPV investments

In early 2014, we identified a changing patent market whereby value was maximised by developing operating entities around a portfolio of patents. We identified several existing patent investments in which the underlying patents were at risk of not realising their full potential. Working with subject matter experts, new inventions were developed with the intention of obtaining patents, developing commercial applications, and monetising each SPV through litigation or other commercial strategies. These investments were funded through SPVs in order to facilitate monetisation of each developed entity.

A total of four SPVs were created, funded, and remain active. Three of these SPVs were developed around existing core patents. The fourth SPV was developed in partnership with the NFLPA.

SPV summaries:

· Rich Media: This investment originated with litigation involving an underlying patent for which the Company previously has received proceeds. In 2014, we began to develop a portfolio of related patents in the areas of rich media and multimedia. The inventor of the patent that was the subject of the original litigation, along with other subject matter experts, developed 25 additional inventions all of which were filed as patent applications in early 2016. At 30 June 2016, no patents had yet completed their review by the United States Patent and Trademark Office ("USPTO"). We are working with the original inventor, who is a well-known inventor in his field, to monetise the SPV.

· ACK / Smooth3D: This investment consists of three components:

· The investment originated with litigation that resulted in a judgment of liability but low damages and which provided no proceeds to the Company. During 2015, the case had progressed to the point where we determined that there was no prospect of generating any proceeds from the original litigation and no value had been assigned to the litigation component.

· As collateral for the Company's original investment in the litigation, JIL received an equity interest in a company that has developed energy-saving software for electrical motors. The energy-saving software continues to be tested by a major industrial conglomerate.

· During the six-month period ended 30 June 2016, JIL exchanged its equity interest in the company for a note subject to agreed discounts if redeemed early. The redemption discounts have been factored into the Company's reported NAV at 30 June 2016.

· During 2014, we worked with the inventor of the patents that were subject to the original litigation and other subject matter experts to develop a portfolio of related inventions with the intention of procuring patents. At 30 June 2016, it was determined that the underlying inventions had no commercial value and all work on these inventions has ceased.

· GrandiOS: This investment consists of two components:

· The investment originated with litigation surrounding core computer technology. Although prior settlements have provided the Company with some small return, during the six-month period ended 30 June 2016 we learned of new hurdles related to the original litigation which we believe creates severe doubt on the ability of the Company to generate any further proceeds. As such, the Company has no longer assigned any value to the litigation component.

· The original investment included an interest in certain mobile phone related patents. In 2014, we worked with subject matter experts to develop a portfolio of patents related to mobile phone technology. As of 30 June 2016, a total of 37 patent applications have been filed with the USPTO and 20 international patent applications have been filed under the Patent Cooperation Treaty ("PCT") which provides international protection. At 30 June 2016, a total of 10 patents have either been granted or been allowed by the USPTO. We continue to market this developing portfolio of patents and inventions to prospective buyers.

· ProSports: This SPV was established to develop and monetise a large portfolio of patents in the technology and sports market. The Company has partnered with the NFLPA in this endeavour. As of 30 June 2016, a total of 55 patent applications have been filed with the USPTO and 13 international patent applications have been filed under the PCT. At 30 June 2016, a total of five patents have either been granted or been allowed by the USPTO. We continue to market this developing portfolio of patents and inventions to prospective buyers.

Other investments:

The Company holds four active investments that are not directly related to litigation and are not specific to a particular SPV. These are detailed below:

· Investment 7313: As part of the Company's 2014 revised patent strategy, the Company acquired a 7.8% preferred ownership in ipCreate, Inc. ("ipCreate") with an expectation to monetise this investment as part of future capital raising by ipCreate. During the six-month period ended 30 June 2016, events have indicated enhanced risk to ipCreate successfully raising new funds. The valuation of this investment at 30 June 2016 reflects this increased risk. Events subsequent to 30 June 2016 indicate further risk to ipCreate raising new funds. We will continue to monitor these events closely. At 30 June 2016, this investment represented US$700,000 of the Company's NAV.

· Investment in JCML 2007: At Admission, the Company acquired 15 per cent (subsequently diluted to 13.6 per cent) of JCML 2007 for US$2.9 million. In 2012, the Company acquired a further holding in JCML 2007 for US$4.3 million, bringing its overall holding in JCML 2007 to 36.17%. As a result of its interest in JCML 2007, the Company is entitled to its percentage share of any performance fees paid to JCML 2007 as well as its percentage share of any assets distributed. In 2015, the Company received dividend income of approximately US$5.4 million from a combination of performance fees and a distribution of the Company's shares held by JCML 2007. No further performance fees are expected to be earned by JCML 2007 and at 30 June 2016, the value attributable to JIL's investment in JCML 2007 is based on the Company's share of Company stock still held by JCML 2007 (US$32,000 at 30 June 2016).

· Investment 1610: This investment began as an investment in litigation which resulted in a favourable arbitration award in the amount of US$4.0 million. While JIL has recouped its US$4.0 million investment from the settlement, the Company is seeking to recover further proceeds from its security interest in a revenue stream to be generated from a US based coal mine. This security interest served as a cross collateral hedge against unfavourable litigation results. Market conditions for the coal industry remain highly unfavourable. As such, and at year-end 2015, the Company retained an industry expert to provide input into a current valuation. This valuation, which considered factors related to the asset being a functioning mine, has been adjusted by additional risk factors (including the potential to sell the asset before market conditions recover). At 30 June 2016, this investment represented US$180,000 of the Company's NAV. The Company will continue to seek opportunities to monetise its interest, although near-term market conditions are expected to make this effort difficult.

· Investment 6609-S: This investment involves a large, multi-party pre-litigation settlement opportunity. The investment is now in the very late stages of development and the risk is still binary. If a settlement is concluded, JIL is likely to receive significant proceeds. If a settlement is not achieved the entire value of the asset, carried in the NAV at US$3.7 million will be written off. The ongoing costs associated with attempting to complete this complex deal are modest. Settlement negotiations for a portion of the opportunity continue. Given the complexity of the matter, it is not possible to predict the likelihood of success although outside counsel believes that a successful result is possible. This investment is being accounted for partially as an intangible asset and partially as an equity investment.

Outlook

We will continue to work with the Company's Board of Directors to return capital to shareholders, following the completion of investments.

Disclaimer on 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 disclaim 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 Asset Management Limited

6 September 2016

Independent Review Report

Introduction

We have been engaged by Juridica Investments Limited (the "Company") to review the unaudited condensed set of financial statements in the half yearly report for the six months ended 30 June 2016, which comprises the unaudited condensed statement of comprehensive income, the unaudited condensed statement of financial position as at 30 June 2016, the unaudited condensed statement of changes in equity, the unaudited condensed cash flow statement and related notes. We have read the other information contained in the half-yearly report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the unaudited condensed set of financial statements.

Directors' responsibilities

The half-yearly report and unaudited condensed financial statement is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half yearly report in accordance with the AIM Rules for Companies which require that the financial information must be presented and prepared in a form consistent with that which will be adopted in the Company's annual financial statements.

As disclosed in note 2, the annual financial statements of the Company are prepared in accordance with International Financial Reporting Standards. The unaudited condensed set of financial statements included in this half yearly report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting".

Our responsibility

Our responsibility is to express to the Company a conclusion on the unaudited condensed set of financial statements in the half yearly report based on our review. This report, including the conclusion, has been prepared for and only for the Company for the purpose of the AIM Rules for Companies and for no other purpose. We do not, in producing this report, 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.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the International Auditing and Assurance Standards Board. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the unaudited condensed set of financial statements in the half yearly report for the six months ended 30 June 2016 is not prepared, in all material respects, in accordance with International Accounting Standard 34 and the AIM Rules for Companies.

Emphasis of Matter

Without qualifying our conclusion, we draw attention to Notes 6 and 7 to the unaudited condensed financial statements surrounding the fair value of non-current assets. The unaudited condensed set of financial statements includes non-current assets stated at their fair value of US$26,838,452. Due to 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.

PricewaterhouseCoopers CI LLP

Chartered Accountants

Guernsey, Channel Islands

6 September 2016

The maintenance and integrity of the Juridica Investments Limited website is the responsibility of the Directors; the work carried out by us does not involve consideration of these matters and, accordingly, we accept no responsibility for any changes that may have occurred to the unaudited condensed financial statements since they were initially presented on the website.

Legislation in Guernsey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

UNAUDITED CONDENSED STATEMENT OF COMPREHENSIVE INCOME

FOR THE PERIOD FROM 1 JANUARY 2016 TO 30 JUNE 2016

The notes on pages 22 to 32 form an integral part of these unaudited condensed financial statements.

UNAUDITED CONDENSED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2016

These half yearly unaudited condensed financial statements were approved by the Board of Directors on 6 September 2016 and signed on its behalf by:

RJ Battey

Director

The notes on pages 22 to 32 form an integral part of these unaudited condensed financial statements.

UNAUDITED CONDENSED STATEMENT OF CHANGES IN EQUITY

FOR THE PERIOD FROM 1 JANUARY 2016 TO 30 JUNE 2016

The notes on pages 22 to 32 form an integral part of these unaudited condensed financial statements.

UNAUDITED CONDENSED CASH FLOW STATEMENT

FOR THE PERIOD FROM 1 JANUARY 2016 TO 30 JUNE 2016

The notes on pages 22 to 32 form an integral part of these unaudited condensed financial statements.

NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS

FOR THE PERIOD FROM 1 JANUARY 2016 TO 30 JUNE 2016 

1. LEGAL FORM AND PRINCIPAL ACTIVITY

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 11 New Street, St. Peter Port, Guernsey, Channel Islands, GY1 2PF. The condensed interim financial statements have been reviewed, not audited.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of the financial statements are set out below: 

Basis of Preparation

These half yearly unaudited condensed financial statements ("the condensed financial statements") for the six months ended 30 June 2016 have been prepared in accordance with International Accounting Standard 34: Interim Financial Reporting ("IAS 34"), and on a going concern basis. The condensed financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2015 which have been prepared in accordance with International Financial Reporting Standards ("IFRS"), issued by the International Accounting Standards Board ("IASB"), interpretations issued by the International Financial Reporting Interpretations Committee ("IFRIC") and applicable legal and regulatory requirements of Guernsey Law.

The following IFRS standards became effective for periods commencing on or after 1 January 2016:

· IAS 1 'Presentation of Financial Statements' - Disclosure Initiative (Amendments to IAS 1)

· Clarification of Acceptable methods of Depreciation and Amortisation (Amendments to IAS 16 and IAS 38)

· IFRS Annual Improvements Cycle 2012- 2014

However, these have had no material impact on the presentation of the financial statements.

Accounting policies

The preparation of financial statements in conformity with IAS 34 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 Company's accounting policies. The accounting policies applied are consistent with those of the annual financial statements for the year ended 31 December 2015.

Financial risk management

The Company's activities expose it to a variety of financial risks. The main risks arising from the Company's financial instruments are market risk, insurance risk, credit risk and liquidity risk. These condensed financial statements do not include all financial risk management information and disclosures required in the annual financial statements and, accordingly, should be read in conjunction with the Company's annual financial statements for the year ended 31 December 2015.

Fair value estimation

The Company's investments are categorised as level 3 within the fair value hierarchy under IFRS 13 (as was the case at 31 December 2015). There have been no transfers between levels during the six months to 30 June 2016. Further details are presented in Note 7.

Geographical and segmental reporting

Since the Company 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 Company 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 Manager is responsible for the investment decisions for the Company's entire portfolio and considers the business to have a single operating segment. The Manager's asset allocation decisions are based on a single, integrated investment strategy, and the Company's performance is evaluated on an overall basis.

Earnings/deficit per share

The basic earnings/ deficit 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 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.

3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

The 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 Company's accounting policies

The Company makes investments in claims that may involve litigation. The nature of the investments made by the Company reduces by some predetermined amount the cost of litigating a matter to a plaintiff and/or a law firm. A typical investment by the Company will include cash and may also include cash commitments subject to certain restrictions. In most arrangements, the Company 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 Company will often not be entitled to reimbursement of the facility they advanced to the counterparty for the specific claim. In these cases the Company will write off their investment in the claim as a loss. The Company is compensated for this risk through the return structure built into the investment. The Company mitigates this risk through the use of their Manager who is experienced in evaluating the investment worthiness of a particular opportunity.

In the process of applying the Company's accounting policies, which are described in Note 2, the Directors have reviewed the Manager's assessment of the fair value 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 fair value applied to contracts entered into by the Company, as disclosed in Note 7.

To determine the appropriate fair value to apply to each contract, the Manager follows a formal process of developing a set of scenarios for each case and assigns probabilities to each potential outcome. The probabilities are 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.

For certain of the Company's investments, the Manager determines fair value by developing a discounted cash flow model incorporating various risk factors such as: quantum risk; timing risk; execution risk; and for certain investments, consideration of monetising an investment within a shortened development period (following the Company's intention to seek resolution and monetisation of the remaining investments if possible by the end of 2017).

4. UNCONSOLIDATED SUBSIDIARY INVESTMENTS

The following subsidiary investments are held by the Company but have not been consolidated, following the adoption of the investment entities exemption per IFRS 10.

There are no outstanding commitments with these unconsolidated subsidiaries at the period end, other than those disclosed in Note 10.

# JCML 2007 Limited and Escon Capital, Inc. are not subsidiaries however, Juridica Investments Limited has a significant interest in them.

* The Smooth 3D IP, LLC was 100% owned by Juridica Kinetics, LLC as from 30 June 2016.

~ Juridica Holdings LLC, a Delaware limited liability company formed and registered on 15 June 2016, is 100% owned by JIL. Its only asset is a $7.25M Note received in exchange for the shares of AC Kinetics.

5. INTANGIBLE ASSET

The Company's intangible asset comprises an investment structured as an agency agreement. Additions to the intangible asset during the period are deemed to have occurred at 30 June 2016. The Company amortises the intangible asset on a diminishing balance basis at 25 per cent every 6 months as from 1 January 2016 so that the balance is US$Nil by 31 December 2017 (at 16.7 per cent every 6 month until 31 December 2015).

The Directors consider that the diminishing balance basis of amortisation most accurately reflects the pattern in which the asset's future economic benefits are expected to be consumed by the Company.

In addition, the Company purchased common and preferred stock related to the intangible asset in 2012, which has been classified as a financial asset at fair value through profit or loss (Note 6), and purchased additional common and preferred stock of US$468,328 during the year ended 31 December 2015. As at 30 June 2016, US$2,070,838 is deemed an appropriate approximation of fair value (31 December 2015: US$2,070,838) for the financial asset.

6. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT AND LOSS

a) Contractual interests

Contractual interests have been accounted for using the fair value model. At 30 June 2016, the Company had investments in 7 contractual interests (31 December 2015: 10 contractual interests).

Fair value movements of contractual interests are due to amendments in estimated cash flows arising from changes in expectations surrounding each case. Realised gains or (losses) due to the full completion of cases with proceeds, if any, are first being allocated to the return of any remaining principal. Any remaining proceeds are then compared against any prior gain or loss recognised with the difference reflected as current period/year realised gain or loss.

b) Equity investments

The Company's equity investments include a holding in JCML 2007. The fair value of the Company's investment in JCML 2007 was assessed as at 30 June 2016 to be US$32,000 (31 December 2015: US$27,257). This assessment of fair value is deemed appropriate given the investment in the company in prior years, remaining level of assets, and the expected value of future income and earnings and the projection of future cash flows.

c) Debt securities

The Loan and the Swap have been aggregated and treated as a single claim asset. Returns on the Loan and the Swap are dependent on returns in claims financed by Fields Law PLLC ("Fields Law"). In accordance with provisions under the Swap, proceeds previously paid by Fields Law to Riverbend Investments Limited ("Riverbend") can be clawed back by Fields Law if needed to meet funding obligations within the antitrust and competition portfolio. During the period, a clawback of US$5.0 million was paid to Fields Law and the disposal proceeds amounted to US$46.5 million. Fair value movements of debt securities are due to amendments in estimated cash flows arising from changes in expectations surrounding each investment. The fair value at 30 June 2016 includes an estimate of reserves that may be released by Fields Law after filing of tax returns (expected to be no later than third quarter 2017) and again after all contingencies are cleared. To the extent a settlement in an underlying case generates proceeds in excess of the total prior unrealised gain, a realised gain equal to the excess will be reflected in the financial statements. At completion of the investment, any residual unrealised gain or loss will be reclassified to a realised gain or loss.

d) Forward foreign currency contracts

The Company held no forward foreign currency contracts at 30 June 2016 (31 December 2015: None).

7. FAIR VALUE ESTIMATION

For instruments for which there is no active market and for which reliable pricing sources cannot be obtained, the Company may use internally developed models, which are usually based on valuation methods and techniques generally recognised 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.

IFRS 13 requires the Company 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 Company. The Company 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.

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

There were no transfers between levels for the period ended 30 June 2016 (31 December 2015: None).

The Company has identified three key unobservable inputs to the valuation model used in the valuation of investments held at fair value through profit or loss: expected quantum, expected duration, and cost of equity.

Expected quantum

The greater the quantum expected at conclusion, the greater the valuation at any point in time, other than at conclusion. The lower the quantum expected at conclusion, the lower the valuation at any point in time, other than at conclusion.

Expected duration

The greater the expected duration of an investment, the lower the valuation at any point in time, other than at conclusion. The reduction of the expected duration of an investment will increase the valuation at any point in time, other than at conclusion. In response to the Company's intention to monetise all remaining investments if possible by the end of 2017, the risk of resolving an investment within a shortened development period has been incorporated into the expected duration input for certain investments.

Cost of equity

The Company's cost of equity is 11%. As the Company's cost of equity decreases, the valuations at any point in time will increase, other than at conclusion. As the Company's cost of equity increases, the valuation at any point in time will decrease, other than at conclusion.

The following table summarised the sensitivities:

8. OTHER RECEIVABLES AND PREPAYMENTS

9. OTHER PAYABLES

10. COMMITMENTS & GUARANTEES

Under the terms of some of its contracts, JIL provides a line of credit to counterparties. As at 30 June 2016, the maximum commitment under these lines of credit was US$28,000 (31 December 2015: US$7.3 million).

11. FUNCTIONAL AND PRESENTATION CURRENCY / EXCHANGE RATES

The financial statements are presented in United States Dollar ("US$") which is also the Company's functional currency. The following exchange rate was applicable as at 30 June 2016:

12. RELATED PARTY TRANSACTIONS

a) Management fee

Previously, JAML was entitled to a management fee of 2 per cent of the adjusted net asset value of the Company.

The adjusted net asset value is the net asset value of the Company at the relevant time and will be calculated, 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; and

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

On 8 February 2016, the Company entered into an amended management agreement with JAML. Under the terms of the amendments the existing arrangements for management fees to JAML as stated above have been altered to state that from 1 January 2016, the Company will pay US$3,000,000 in management fees for the year ending 31 December 2016, and US$1,750,000 in management fees for the year ending 31 December 2017. Management fees for the period ended 30 June 2016 are US$1,500,360 (30 June 2015: US$2,860,627). In compliance with the management agreement, management fees paid during 2015 (which was based on adjusted net asset value at 31 December 2014) was trued up against actual adjusted net asset value at 31 December 2015 and resulted in a receivable from JAML of which US$479,339 remains at 30 June 2016 (31 December 2015: US$719,549). This receivable is being offset against the agreed 2016 management fee of US$3,000,000. The total resulting net management fee that will be paid to JAML during 2016 will be US$2,280,451.

Mr Fields is the sole beneficial owner of JAML.

b) Performance fee

No performance fee was payable to JCML 2007 for the period ended 30 June 2016 (31 December 2015: Nil).

The principal of JCML 2007 is Richard Fields, who owns 103,000 Ordinary Shares in the Company (0.09 per cent equity interest) (31 December 2015: 103,000). JCML 2007 owns 118,254 Ordinary Shares in the Company (0.107 per cent equity interest) (31 December 2015: 118,254 shares).

Richard Battey, as investor representative and non-executive director of the Company, is also an unpaid non-executive director of JCML 2007.

c) Facility agreement and collateral account

The Company entered into a facility agreement (the "Facility") with which it agrees to loan to Fields Law, 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. Prior to adopting its Run-Off Strategy, the Company expected to enter into loan arrangements with other law firms (which may include other law firms established by the Principal of the Company) on terms and conditions similar to those contained in the Facility. The Facility available to Fields Law was for up to approximately 50 per cent of the net proceeds of the capital raised by the Company less any loans made to other law firms.

In August 2016, the Facility was terminated by agreement between the Company and Fields Law. See Note 16 for more details.

d) Directors' fees and expenses

Fees and expenses are attributable to the Directors of the Company as follows:

No pension contributions were paid or were payable on behalf of the Directors. Effective from 1 January 2016, the Chairman's fee was reduced to GBP90,000 per annum (up to 31 December 2015: GBP 187,500 per annum) and the Directors fees were reduced to GBP50,000 each per annum. Richard Battey's fee prior to the change was GBP75,000 per annum and Kermit Birchfield's fee amounted to USD 125,000 per annum until 31 December 2015.

Lord Daniel Brennan has an interest in 447,817 shares (31 December 2015: 447,817 shares) under a Share Option Agreement, details of which were disclosed in the Admission Document. Lord Brennan can exercise these share options at any time up until 17 December 2017. The other Directors have no beneficial interest in the share capital of the Company.

e) Escon Capital Inc.

The Company has an interest in 38% (31 December 2015: 38%) of the voting common stock and 100% of the issued preference shares of Escon Capital Inc. ("Escon"), a Delaware corporation of which Kermit Birchfield and Richard Fields are directors.

During the period ended 30 June 2016, Kermit Birchfield received a director's fee of US$25,000 from Escon Capital Inc. (31 December 2015: US$50,000).

f) Eleven Engineering Game Control LLC

The Company has provided a loan of US$575,000 to Eleven Engineering Game Control LLC, a company ultimately owned and controlled by JCML 2007 (31 December 2015: US$575,000). As at 30 June 2016 no further facility remains available to be drawn (31 December 2015: US$Nil). Interest will be accrued at a rate of 10% per annum, and the loan and interest are repayable on Eleven Engineering Game Control LLC's receipt of net recoveries.

g) g) Special purpose vehicles

As compensation for providing management services, Kermit Birchfield receives a fee from each of Smooth 3D IP, LLC, Rich Media Ventures, LLC, and GrandiOS Technologies, LLC. For the period ending 30 June 2016, Mr Birchfield received fees totalling US$45,000 for provision of these services (2015: US$67,500). Lord Daniel Brennan is an unpaid director of ProSports Technologies, LLC.

13. CAPITAL AND RESERVES

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

Issued share capital: 110,701,754 shares as at 30 June 2016 (31 December 2015: 110,701,754 shares), of which 80,000,000 shares were issued at a premium of £1 per share on admission, and a further 30,701,754

shares issued at a premium of £1.14 on 6 April 2009. On 4 June 2015, the Company received 361,735 of its own shares as a result of an in-specie dividend received from JCML 2007 at £1.16.

On 15 March 2016, the Board of Directors approved the cancellation of the 361,735 treasury shares. As at 30 June 2016 the formal documentation to complete this process remained outstanding.

The Company's capital is represented by ordinary shares of no par value and share premium which are included in the reserves figure on the statement of changes in equity. Each share carries one vote and is entitled to dividends when declared. The Treasury shares have no right.

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 10 May 2016.

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.

14. SEASONALITY

The Company's operations are not affected by seasonality or cyclicality and as such they have no impact on the unaudited condensed financial statements.

15. DIVIDENDS

The following dividends were paid during the period:

16. SUBSEQUENT EVENTS

The following events occurred subsequent to 30 June 2016:

· The Company received US$46.5 million in cash from settlements that occurred in Case 5308-U and Case 1008-A. At 30 June 2016, this value was reflected as a receivable.

· Following the period end, management understand that Investment 7313, which reflects the Company's ownership in ipCreate, may be at further risk due to ipCreate's failure to raise incremental capital and changes in management. The Company will continue to closely monitor the status. At 30 June 2016, this investment represented approximately US$700,000 of the Company's NAV.

· On 25 August 2016, the consolidated loan agreement ("CLA") between the Company and Fields Law and the swap agreement (the "Swap") between Riverbend and Fields Law were terminated by agreement and by completion of the following transactions:

· Riverbend returned US$11,124,194.89 to Fields Law under the Swap, which is the amount remaining available from prior Swap payments made by Fields Law to Riverbend, and paid Fields Law US$14,306,940.85 pursuant to its obligations under the Swap. Following these payments, the Swap was terminated by agreement between Riverbend and Fields Law, except that Riverbend remains entitled to amounts that Fields Law may receive that constitute "Relevant Revenues" as defined in the Swap and the CLA (subject to any reduction on account of any tax liability of Fields Law) and to previously made reserves from Relevant Revenues that become available for release. Fields Law is permitted to retain cash reserves from settlement proceeds for the purpose of paying US Federal and state taxes on proceeds generated from the anti-trust and competition portfolio. Fields Law is currently expected to release excess tax reserves no later than third quarter 2017, when it expects to file its US Federal and state tax returns for its tax year 2016.

· Fields Law paid the amounts received from Riverbend to the Company in satisfaction of the remaining unpaid interest and outstanding principal in respect of the CLA. Following the payments, the CLA was terminated by agreement between the Company and Fields Law, except that an escrow account with an initial balance of US$3.0 million, owned by the Company, will be maintained in order to provide a reserve for certain contingency expenses which may become payable by Fields Law in addition to those described above. Any balance in the escrow account will be released from the escrow arrangements no later than 30 September 2021, and possibly 30 September 2020 if Fields Law receives all remaining settlement proceeds attributable to Case 1008-A in 2016.

· The Board declared a dividend payment of 32 pence per share (amounting to US$47.0 million) payable to shareholders on the Register on 16 September 2016.