RBG Holdings plc (AIM: RBGP), the professional services group, is pleased to announce its unaudited results for the six months ended 30 June 2022.

Group Financial Highlights[1]:

• Revenue (including gains from litigation assets) up 44.8% to £26.6 million (2021: £18.3 million)
  • £1.7 million of gains from litigation assets (2021: £1.5 million)
• EBITDA up 31.8% to £6.8 million (2021: £5.2 million)
  • EBITDA margin is 25.6% (2021: 28.1%)
• Profit before tax up 10.8% to £4.4 million (2021: £3.9 million)
• Profit after tax up 13.3% to £3.5 million (2021: £3.1 million)
• Earnings per share up 4.4% to 3.62 pence (2021: 3.47 pence)
• Adjusted free cash flow generation in the period was £3.1 million (2021: £2.2 million)
• Net debt of £17.3 million (2021: net debt of £9.8 million)
• An interim dividend of 2 pence per share in respect of the six months to 30 June 2022 will be paid on the 30 November 2022

Business Highlights:

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

• Revenue (including gains from litigation assets) up 74.2% to £22.3 million (2021: £12.8 million)
• Legal services revenue up 74.9% to £20.7 million (2021: £11.8 million)
• EBITDA up 62.6% to £6.8 million (2021: £4.2 million)
• EBITDA margin is 30.7% (2021: 32.9%) with the decrease driven by the changing revenue mix, as anticipated, following the acquisition of Memery Crystal
• Successfully realised litigation asset sales with proceeds totalling £2.3 million (2021: £1.6 million)
• Average revenue per fee earner of £363,000 (2021: £375,000) reflects the diversification of the legal services business into more non-contentious areas of law, following the acquisition of Memery Crystal
• Total lockup was 120 days (2021: 102 days) of which debtor days were 51 (2021: 46) with the increase driven by the mix of the business following the acquisition of Memery Crystal
• As at 30 June 2022, RBGLS had invested in 13 litigation cases with an associated contingent WIP of £12.5 million (2021: £5.8 million) and a total cash investment of £9.3 million (£4.9 million)

Convex Capital Limited (“Convex Capital”)

• M&A activity has been strong in 2022: As at 30 June 2022, Convex had completed five deals resulting in revenue of £4.2 million (2021: £5.0 million)
• Strong pipeline as at 8 September 2022: 24 active deals, of which three are in late stages of the completion process

Litigation Finance

• Since its launch in May 2020, LionFish Litigation Finance Limited (“LionFish”) has invested in 12 cases, with one case having settled successfully in 2021
• Current active cases have a total capital commitment of £11.3 million of which £5.5 million has been deployed (as at 30 June 2022). Disposals since inception total £5.9 million
• In February 2022, LionFish agreed a £20.0 million litigation investment arrangement with a large alternative investment firm which will provide the business with flexible capital. They will invest 75% on any new deals and have retrospectively invested £2.0 million in existing cases in Rosenblatt and LionFish
• This year, LionFish is expected to generate the majority of its gains from potential settlements, the timings of which are not within RBG’s control and are thus difficult to predict

Operational and Strategic Highlights:

• New RBGLS COO Jon Divers, appointed in February 2022, has recently been confirmed in position and has full day-to-day operational responsibility for the legal services division
• Memery Crystal business transferred into one legal entity, RBGLS, which completed 1 September 2021
• The integration is almost complete with both businesses migrating onto a single practice management system which is expected to be complete in the fourth quarter of 2022
• With this integration, management has successfully delivered on a key part of the Group’s strategy which is to acquire high-value, strategically additive assets and improve their performance
• The combination of Memery Crystal with the Group’s pioneering law firm Rosenblatt means the Group now has one of London’s premier mid-tier law firms
• The Group continues to pursue acquisition opportunities to build and diversify the business to create long term shareholder value, where financing allows, in line with its M&A strategy
• A number of acquisition opportunities have been identified which adhere to the Group’s highly selective criteria and the Group continues to make progress on these

Outlook:

• The Group has had another solid six months which is reflected in improved revenue and profit growth
• The Group’s revenues and EBITDA have historically been second half weighted on an organic (and standalone) basis. With consistent demand for all the Group’s services we are currently on track to meet our expectations for the full year

Nicola Foulston, CEO, RBG Holdings plc, commented:

“Overall, the Group has had a solid first six months which is reflected in our continued revenue and profit growth. Our diversified revenue model has proved to be resilient in these uncertain times. We have built a strong platform from which to deliver growth over the coming years.

“Our legal services business integration is almost complete with two trading brands; Rosenblatt for contentious law and Memery Crystal for non-contentious law. We are building one of London’s premier mid-tier law firms providing quality advice to entrepreneurs and high-net-worth individuals. The business is receiving a high volume of new client instructions enabled by our expertise and increased scale. All our legal services businesses have seen consistent growth and steady flow of activity with our Corporate, Real Estate, and Dispute Resolution practices having all performed well.

“LionFish continues to grow and is funding eleven active cases. By selling a percentage of the invested assets, it has generated profit from day one of its inception as well as helping to de-risk the Group’s investment. The new litigation investment arrangement will provide the business with flexible capital to support its growth rather than the Group’s balance sheet.

“Our M&A advisory business, Convex Capital, has performed well in the first six months with five deals completing and remains well-positioned to benefit in the current macro-economic environment.

“With consistent demand for all Group services, we are on track to meet our expectations for the full year. While acknowledging the economic conditions continue to be volatile, we look forward to the next six months with optimism and are excited about the long-term prospects for the Group.”