Audited results for the twelve months ended 31 December 2021

Strong performance as Group increasingly benefits from diversified revenue streams

RBG Holdings plc (AIM: RBGP), the professional services group, is pleased to announce its audited results for the twelve months ended 31 December 2021.

Group Financial Highlights[1]:

• Group revenue (including gains from litigation assets) up 86.7% to £47.2 million (2020 restated: £25.3 million)
• Group organic revenue, excluding Memery Crystal, up 19.6% to £26.8 million (2020: £22.4 million)
• Gains on litigation assets up 84.5% to £5.2 million (2020 restated: £2.8 million)
• Adjusted EBITDA[2] up 91.0% to £13.8 million, (2020 restated: £7.2 million)
• Adjusted profit before tax up 111.7% to £10.1 million (2020 restated: £4.8 million)
• EBITDA is up 31.1% to £12.9 million (2020 restated: £9.9 million) and profit before tax is up 24.6% to £9.2 million (2020 restated: £7.4 million)
• Adjusted free cash flow generation was £6.4 million (2020 restated: £8.1 million)
• Net debt of £14.2 million (2020: net cash of £3.5 million) reflecting new £10 million term facility to fund the acquisition of Memery Crystal (of which £1 million has already been repaid
• Total dividend paid to shareholders in respect of the 2021 financial year was 5 pence per share (2020: 3 pence per share), reflecting the Board’s confidence in the Group’s continued prospects

Operational Highlights:

RBG Legal Services Limited (“RBGLS”) – Combination of the Rosenblatt and Memery Crystal businesses

• Revenue (including gains on litigation assets) up 61.2% to £33.7 million (2020: £20.9 million)
• Legal services revenue up 56.3% to £32.6 million (2020: £20.9 million) with revenue now more evenly split across Dispute Resolution (35.8%), Corporate (35.3%) and Real Estate (28.9%)
• Dispute Resolution continued to perform well, in addition to taking on more contingent work with associated unrecognised time worked of £3.4 million (2020: £2.0 million)
• Successfully realised litigation asset sales with proceeds totalling £1.8 million (2020: £0.4 million)
• The integration of Rosenblatt and Memery Crystal support functions now largely complete and has led to a sustained improvement in EBITDA margin to 27%. The Board expects this to rise towards 35% over the medium-term
• Average revenue per fee earner of £347,000 (2020: £425,800) reflecting new larger workforce. Total staff is 193 (2020:73, Rosenblatt only) of which 137 are fee earners (2020: 43, Rosenblatt only)
• Total Lockup was 109 days (2020: 99) of which Debtor Days were 59 days (2020: 47, Rosenblatt only)

LionFish Litigation Finance Limited (“LionFish”)

• Successfully realised litigation asset sales[3] in five cases with proceeds totalling £3.1 million (2020 restated: £2.6 million)
• Cash investment of £1.8 million in 10 cases (2020: £1.8 million in 7 cases), with a full commitment of £10.5 million (if funded through to trial over the next 2-3 years)
• First case successfully completed, delivering a return of two times money invested as per strategy

Convex Capital Limited (“Convex Capital”)

• Completed 14 deals, generating revenue of £9.4 million (2020: 2 deals, £1.6 million)
• EBITDA of £4.2 million (2020: loss of £0.9 million)

Post-period highlights:

• Since the year end, Convex Capital has completed two further deals, delivering revenue of £1.7 million
• As at 28 March 2022, Convex Capital had a strong pipeline of 20 deals, with six going through due diligence
• In February 2022, LionFish agreed a £20 million litigation investment arrangement with a large alternative investment firm
• In the first quarter of 2022, trading has been as expected. Historically, in legal services, Corporate is quieter at this time of year, however, the Group is creating opportunities in other areas of the business

Nicola Foulston, CEO, RBG Holdings plc, commented: “RBG continues to evolve into a well-diversified, high-quality professional services group, with a litigation finance business that leverages the Group’s legal expertise. We are building a Group with a broad revenue base that reduces any dependence on any one business, sector, or fee generator. With the pandemic still presenting a significant challenge, our financial performance in 2021 demonstrated once again the resilience of our business model. Every year since our IPO, I am pleased to say that we have delivered a solid financial performance, while laying the groundwork for future profitable growth.

“From November 2021, our legal services business RBGLS started trading under its two distinct brands, Rosenblatt for contentious law, such as Dispute Resolution, and Memery Crystal for non-Contentious law, such as Corporate and Real Estate. The business is almost fully integrated and is now based at one office on Fleet Street. The final part of the integration, which is putting both businesses on the same practise management software, is expected to be completed by the end of 2022. The acquisition of Memery Crystal was part of the Group’s strategy to acquire high-value assets that amplify and broaden our client offering. The benefits are already being felt with improved organic revenue growth, enhanced operating efficiency, and margins growing, with scope for further improvement over the medium term.

“Our sell-side M&A advisory boutique, Convex Capital, had an exceptional year with 14 completed deals, after a difficult 2020 when the M&A market ground to a halt. Importantly, deal flow momentum remains strong in 2022, and the pipeline of opportunities is growing.

“We continue to invest in litigation assets, with 23 live deals, either in our own matters through RBGLS or in third party matters via LionFish. LionFish’s recently signed litigation investment arrangement will provide the business with flexible capital to allow the management team to focus on the quality of profits, not the quantity of monies deployed into litigation risks.

“The strategy of the Group is clear. In our core professional services businesses, we want to capitalise on the areas that offer the highest returns for shareholders, such as our high margin legal services businesses. Furthermore, we will use the Group’s expertise to maximise the potential returns by selectively investing in contingent asset classes such as litigation.

“Overall, the Group has had an excellent twelve months which is reflected in our improved revenue and profit growth. With strong demand for all Group services, we delivered the upgraded market expectations for the 2021 financial year from January’s trading update. While acknowledging that macro-economic conditions continue to be volatile, the new financial year has started as expected giving us cause to look forward to the coming year with optimism. We are excited about the long-term prospects for the Group.”

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