Rbg Holdings Regulatory News (RBGP)

27 January 2022

RBG Holdings plc

("RBG" or the "Group")

Pre-Close Trading & Dividend Update

RBG Holdings plc (AIM: RBGP), the professional services group, today publishes a pre-close trading update ahead of the publication of its financial results for the twelve months ending 31 December 2021 on 29 March 2022.

The Board is pleased to announce that having completed a strong final quarter, it now expects adjusted EBITDA for 2021 to be approximately 10% ahead of current market expectations. As a result of this, and the Board's continued confidence in the Group's growth prospects, the Board intends to pay a second interim dividend of 3 pence per share in respect of the six months to 31 December 2021 on 25 February 2022 to shareholders on the register as of 4 February 2022. This brings the total dividend paid to shareholders in respect of the 2021 financial year to 5 pence per share (2020: 3 pence per share).

The Group's balance sheet remains satisfactory with net debt at £14.2 million (2020:net cash of £3.5 million). This change reflects the acquisition of Memery Crystal in May 2021. The Group has paid back £1 million of the £10 million term loan used to fund the acquisition. The term loan will be paid down over five years. Furthermore, the Group has used £5.2 million of the £15 million revolving credit facility announced in April 2021, so significant headroom remains to support the Group's growth.

RBG Legal Services Limited

Following the completion of the acquisition of Memery Crystal in May 2021, the Group combined its two law firms, Rosenblatt and Memery Crystal, into a new legal services corporate entity called RBG Legal Services Limited ("RBGLS").

RBGLS has two client-facing brands of 'Rosenblatt', for contentious legal services, and 'Memery Crystal', for non-contentious legal services. Overall, RBGLS has performed well, benefitting from the increase in corporate and commercial transactions and greater breadth and depth of expertise to service the Group's growing client base.

The integration of the two firms' support functions is largely complete, with the businesses set to move to a new practice management software system in 2022. As set out at the time of the acquisition, the two firms are proving to be highly complementary and are sharing skills and resources, enhancing the Group's offering to its combined client base. Furthermore, the successful process of integrating Rosenblatt and Memery Crystal has led to a sustained improvement in net margins of 29%, expected to rise towards 35% over the medium-term as the benefits of the integration come through.

Litigation Finance

The Group has two types of litigation assets - RBGLS's own client matters, and litigation matters run by third-party solicitors funded by LionFish Litigation Finance Limited ("LionFish").

Both types of litigation investments not only have significant return potential but represent an opportunity to extract additional value from the Group's legal and commercial expertise and diversify its sources of income. In 2022, the Group expects to report returns on LionFish's litigation investments in place of the de-risking of investments that has taken place to date.

In 2021 LionFish completed a further four investments bringing the total investments made by LionFish since its inception in May 2020 to 10, with a total capital commitment of £10.5 million of which £3.6 million has been deployed (as at 31 December 2021). Disposals since inception total £6.4 million.

Convex Capital Limited ("Convex Capital")

The Group's specialist sell-side corporate finance boutique, Convex Capital, successfully rebuilt its transaction pipeline in 2021. As a result, in the 2021 financial year, Convex Capital completed 14 deals generating revenue of £9.4 million (2020: 2 deals, revenue of £1.6 million). Furthermore, as at 21 January 2022, Convex Capital has a strong pipeline of 22 deals with several currently at various stages of completion.

Commenting Group CEO Nicola Foulston, said: "The Group has continued its strong performance from the first six months, and has followed an excellent 2020, with an even better 2021 result. Demand for legal services remains strong, led by corporate and commercial transactions, such as IPOs and real estate deals. The integration of Memery Crystal has been successful with only the roll-out of new practice management software to be completed. Both Rosenblatt and Memery Crystal are working well together. Our client offering and margin profile are moving in the right direction.

"We continue to build a portfolio of litigation investments comprising both RBG's own client litigation investments and third-party client litigation managed by other law firms through LionFish which offer the potential for high returns for our shareholders.

"Finally, our M&A business, Convex Capital, has sustained its strong start to the year converting its pipeline. Given the progress of the Group, and the structural growth drivers we are exposed to, we enter 2022 with confidence."

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About RBG Holdings plc

RBG Holdings plc is a professional services group, which comprises the following divisions:

RBG Legal Services Limited ("RBGLS")

RBGLS is the Group's legal services division which combines the businesses previously operated by Rosenblatt Limited and Memery Crystal LLP

Rosenblatt

Rosenblatt is one of the UK's pioneering legal practices and a leader in dispute resolution. Rosenblatt provides a range of legal services to its diversified client base, which includes companies, banks, entrepreneurs and individuals. Complementing this is Rosenblatt's increasingly international footprint, advising on complex cross-jurisdictional disputes.

Memery Crystal

Memery Crystal offers legal services in a range of areas such as corporate (including a market-leading corporate finance offering), real estate, commercial, IP & technology (CIPT), banking & finance, tax & wealth structuring and employment. Memery Crystal is one of the leading legal practices in the UK to advise the emerging cannabis sector on a wide range of business issues. Memery Crystal offers a partner-led service to a broad range of clients, from multinational companies, financial institutions and owner-managed businesses to individual entrepreneurs.

LionFish Litigation Finance Limited

The Group also provides litigation finance in selected cases through a separate arm, LionFish Litigation Finance Limited. LionFish finances litigation matters being run by other solicitors in return for a significant return on the outcome of those cases. As such, the Company has two types of litigation assets - Rosenblatt's own client matters, and litigation matters run by third-party solicitors. LionFish is positioned to be a unique, alternative provider to the traditional litigation funders.

Convex Capital Limited

Convex Capital is a specialist sell-side corporate finance boutique based in Manchester. Convex Capital is entirely focused on helping companies, particularly owner-managed and entrepreneurial businesses, realise their value through sales to large corporates. Convex Capital identifies and proactively targets firms that it believes represent attractive acquisition opportunities.