Rbg Holdings Regulatory News (RBGP)

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014 as retained as part of UK law by virtue of the European Union (Withdrawal) Act 2018 (as amended). Upon the publication of this announcement, this inside information is now considered to be in the public domain.

5 December 2022

RBG Holdings plc

("RBG" or the "Group")

Trading & Dividend Update

RBG Holdings plc (AIM: RBGP), the professional services group, today publishes an update on current trading and outlook.

RBG's strategy has been to deliver revenues and profit from a diversified portfolio of professional services businesses, reducing overall volatility of earnings and the impact of any losses from any one business. This strategy has served the Group successfully since its admission to AIM in 2018 with the Group achieving profitable top line growth each year. 

Professional Services - RBG Legal Services Limited ("RBGLS") and Convex Capital Limited ("Convex")

The Group's professional services businesses RBGLS which holds the Company's two client-facing brands ('Rosenblatt', and 'Memery Crystal)', and Convex have had a robust performance year-to-date, despite the market headwinds.

As a result, RBGLS is on track to exceed the Board's expectations for the full year, whilst Convex has some transactions which are now expected to complete in Q1 2023, with deferment of revenue into the new financial year. Together, the professional services businesses will be marginally ahead of the Board's expectations for the year.

LionFish Litigation Finance Limited ("LionFish")

The Group's litigation finance subsidiary, LionFish has recently lost two of the cases that it has invested in and following a review, the Board has now concluded that any further appeals on these cases are no longer viable.

As a result, LionFish will now have a non-cash write-off of £4.0m in 2022 and will, therefore, miss the Board's previous expectations of £2.3m profit. The actual cash loss associated with these cases amounts to £1.1m over the life of the investment.

Committed funding on the on-going Lionfish cases is £3.3m over the next two years.

The Board has been reviewing its strategy with respect to third party litigation funding through LionFish with a view to reducing the Group's ongoing exposure to the remaining committed funding. The Group expects to make a further announcement after the year-end.

Dividend

As a result of the strong performance in the professional service businesses, the Group intends to announce as planned a second interim dividend for the twelve months to 31 December 2022 in its full year trading statement in January 2023 in line with its policy of distributing up to 60% of retained profits.

Balance Sheet

As highlighted above, losses arising from the unsuccessful Litigation Finance cases have no further impact on the Group's cash position and the Group's balance sheet remains in line with the Board's expectations. Free cash flow generation at Group level has remained positive and strong across 2022. The Group continues to trade within its facility agreements and retains sufficient headroom to execute on its strategy.

Outlook

RBGLS continues to trade robustly and Convex has a strong pipeline of deals which remain in process. As a result of the case losses in LionFish, the Group now expects adjusted EBITDA to be materially behind current market consensus expectations for 2022 and in a range of between £11.0m-£12.0m. The Board is confident in the medium and long-term outlook of the business.

Commenting Group CEO Nicola Foulston, said: "I am very disappointed with the LionFish position. We are taking steps to address the ongoing exposure to this subsidiary. We will also look at the efficiency of the cost base so that in 2023 we continue to deliver strong cash generation and good yield.

"I am pleased to see the robust trading of our professional services business, which follows a strong 2021 financial year. We are seeing the benefits of the integration of Memery Crystal and Rosenblatt with improved operating efficiency driving higher margins. While there is some disruption from difficult market conditions, Convex continues to benefit from its model of deep deal origination around the demands of buyers for good businesses.

"As we refocus the Group on Professional Services business, we are excited at the potential to grow the businesses organically and drive opportunities for cross-selling.

"We are confident in the medium to long-term outlook of the business and are looking forward to the next 12 months with optimism, despite the ongoing economic uncertainty."

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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.

Convex Capital Limited ("Convex Capital")

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.

LionFish Litigation Finance Limited ("LionFish")

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 Group 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.