TIDMJIL
RNS Number : 9481L
Juridica Investments Limited
19 August 2013
Juridica Investments Limited
('Juridica,' 'JIL,' or the 'Company')
Unaudited half-year results for the period ended 30 June
2013
Juridica, a leading provider of strategic capital for corporate
legal claims to both businesses and the legal markets, today
announces its financial results for the six months ended 30 June
2013.
Financial highlights and portfolio valuation
-- Realisation of approximately US$17.5 million in cash proceeds
from settlements with multiple defendants previously recognised as
unrealised gain. These cash proceeds will be delivered to the
Company on 31 December 2013.
-- Dividend of 10 pence per share, to be paid on 15 January 2014
to shareholders on the Register at 13 December 2013. This dividend
is to be funded from the cash proceeds noted above.
-- Total dividends announced or paid to shareholders in the
calendar year to date total 23 pence per share.
-- Net Asset Value ("NAV") per ordinary share decreased 1.4%
from US$2.20 at 31 December 2012 to US$2.17 at 30 June 2013. This
decrease was primarily due to a total comprehensive loss of US$3.0
million, comprising the net of: US$4.0 million fund operating
expenses, US$1.4 million of net unrealised gain generated from
change in valuation of the Company's investments; and US$0.4
million of intangible amortisation expenses.
-- Lifetime gross proceeds achieved by the Company total
US$117.3 million.
-- Gross internal rate of return from completed investments at
82%.
-- At 30 June 2013, the Company has invested or committed
approximately US$161.4 million in 21 cases across 16
investments.
Lord Dan Brennan, Juridica's Chairman, said: "The results
announced today demonstrate the Company's continued progress with
its portfolio. Taken together with the recently announced returns
on investments, we look to the future with optimism and expect the
portfolio to continue maturing as we remain focused on dividend
income and NAV growth."
Operational highlights
-- Subsequent gross cash proceeds from settlements following the
period totalled US$12.5 million which will be paid to the Company
on 31 December 2013.
-- During the period, the Company committed to make supplemental
investments in two existing cases, totalling up to US$656,000.
Outlook
Based on the outlook provided by the Manager, the Board expects
significant returns from the Company's investment portfolio during
the remainder of 2013, through 2014 and beyond. This is based on
the Manager's review of presently scheduled trial dates, expected
final decisions following trial, and possible settlements in
multiple cases that are in an advanced stage of development.
- Ends -
This document contains forward looking statements, which are
based on Juridica Capital Management Limited's (JCML) current
expectations and assumptions and involve known and unknown risks
and uncertainties that could cause actual results, performance or
events 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 which could cause actual results or trends to differ
materially. Each forward looking statement speaks only as of the
date of this announcement. Except as required by the AIM Rules, the
London Stock Exchange or otherwise by law, the Company 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 JCML's
expectations with regard thereto or any change in events,
conditions or circumstances on which any such statement is
based.
For further information contact:
Juridica Capital Management
Limited
Richard W. Fields +1 (866) 443 1080
Cenkos Securities PLC
(Nominated Adviser and Broker)
Nicholas Wells
Camilla Hume +44 (0) 20 7397 8900
Investec Bank PLC
(Joint Broker)
Tim Mitchell +44 (0)20 7597 4000
Peel Hunt LLP
(Joint Broker)
Guy Wiehahn +44 (0)20 7418 8900
Pelham Bell Pottinger
Olly Scott +44 (0) 20 7861 3232
About Juridica Investments Limited
Juridica Investments is a leading provider of strategic capital
to the business community and the legal markets for corporate
claims. It invests directly and indirectly in a diversified
portfolio of corporate claims in litigation and arbitration.
Juridica is one of the premier sources of value-added and direct
financing for large business claims in the United States and one of
the leading sources in the United Kingdom.
Our clients are Fortune 1000 companies, FT Global 500 companies,
inventors, major universities, and the leading law firms that
represent them. The Company only accepts cases that have already
been carefully vetted and undertaken by leading lawyers.
Juridica works to make the legal system work better for business
claims. It does not invest in speculative claims or claims that do
not demonstrate economic value and clear merits. Juridica invests
only in business claims, and does not invest in class actions,
personal injury, product liability, or mass tort claims.
Our goal is to provide business clients with financial choices
that reduce risk and assist in maximising claim value.
Juridica was established on 21 December 2007 as a limited
liability, closed-ended investment company registered in Guernsey.
It has over US$200 million of assets under management. It was the
pioneer in alternative litigation financing and the first
closed-end fund of its kind ever listed on AIM, a market operated
by the London Stock Exchange (AIM: JIL.L).
The Company has appointed Juridica Capital Management Limited as
its exclusive investment manager to locate, evaluate and manage
direct and indirect investments in cases, claims and disputes.
http://www.juridicainvestments.com
Chairman's statement
On behalf of the Board, I am pleased to present the results for
Juridica Investments Limited ("JIL" or the "Company") for the six
month period ended 30 June 2013.
JIL focuses exclusively on business-to-business related claim
investments that comprise the following sectors: antitrust and
competition; patents; and general commercial litigation. The
Company does not invest in shareholder class actions, personal
injury, product liability, or mass tort claims.
Over nearly six years in existence, JIL has created a strong
portfolio of investments in three categories: commercial claims;
patent infringement; and antitrust and competition. All three
categories have performed well, delivering internal rate of returns
on settled cases ranging from approximately 20% to over 250%.
During the six month period ended 30 June 2013, the Company
realised cash proceeds from settlements with multiple defendants
and the Board has reasonable grounds for anticipating further
substantial returns from several of JIL's cases over the next 12
months.
From inception to the date of this report, the Company's
portfolio has generated gross cash proceeds of approximately
US$117.3 million. This amount includes US$17.5 million in cash
proceeds generated during the six month period ending 30 June 2013
which are to be delivered to the Company on 31 December 2013. Also
included are cash proceeds of approximately US$12.5 million
generated after 30 June 2013 but prior to the date of this report
and also to be delivered to the Company on 31 December 2013.
After providing for recovery of investment book cost, required
reserves, and Company operating expenses, JIL will have returned
US$64 million (GBP41 million) to shareholders in the form of US$38
million in paid dividends; US$16 million in dividends declared on 4
July 2013 and payable on 15 January 2014; and US$10 million when it
acquired Company shares in its buyback programme in September
2010.
Operating results
During the six month period ended 30 June 2013, the Company's
investment portfolio generated gross proceeds totalling
approximately US$17.5 million related to partial settlements and
recovery of expenses. In addition, after the closing of the
reporting period, the Company reported additional cash settlements
of approximately US$12.5 million in partial settlements from one of
its cases. This brings the total gross proceeds generated thus far
in 2013 to US$30.0 million. These proceeds will be received by the
Company on 31 December 2013.
These cash results continue to reflect the maturation of JIL's
existing portfolio and highlights Juridica Capital Management
Limited's ("JCML" or "the Manager") precision in identifying and
investing in strong cases. JCML believes the Company will continue
to see strong cash returns during the coming 12 months.
For the six month period ended 30 June 2013, the Company
reported a total comprehensive loss attributable to ordinary
shareholders of approximately US$3.0 million as compared to total
comprehensive loss attributable to ordinary shareholders of
approximately US$140,000 for the same period ended 30 June
2012.
The total comprehensive loss for the six month period ended 30
June 2013 was primarily due to the net of fund operating expenses
of approximately US$4.0 million, net unrealised gain generated from
the change in fair value of the Company's investments of
approximately US$1.4 million and intangible amortisation expense of
approximately US$0.4 million.
Net asset value
JIL's Net Asset Value ("NAV") per ordinary share decreased from
US$2.20 at 31 December 2012 to US$2.17 at 30 June 2013.
Investment portfolio activity
As more fully described in the Investment Manager's report, the
Company's investments have had significant activity in their
underlying cases. Beyond the recently announced settlements, the
Company also has several investments in which the underlying case
came to a major event for which the Company has not yet received
any proceeds. Each of these investments either has upcoming legal
proceedings that our Manager believes are likely to generate strong
returns or has been awarded proceeds that have not yet been
received.
New investments and pipeline
The Company made two supplemental investments in existing cases
that were beyond initial funding commitments. These supplemental
investments were made at opportunistic times and on highly
favourable terms that the Manager believes increases the likelihood
of greater potential return to the Company.
The Manager has progressed several potential investments to an
advanced stage in their due diligence. These investments may be
funded pending the decision of the shareholders to continue the
operations of the Company.
Dividend
As a result of the Company's results for the six month period
from 1 January 2013 through 30 June 2013, the Company has declared
a dividend of 10 pence per share payable on 15 January 2014 to
shareholders on the register at 13 December 2013. The dividend will
be funded by the US$30.0 million in cash proceeds from partial
settlements that will be paid to the Company on 31 December 2013.
This declared dividend is consistent with the Company's policy of
returning actual net cash profits to shareholders and follows the
20 pence per share in dividends paid since January 2012.
We anticipate declaring additional dividends to shareholders
over the next twelve months if the portfolio develops as
expected.
Outlook
The Manager believes several investments are likely to be
completed over the next twelve months with several additional
investments generating partial settlements.
Based on the outlook provided by the Manager, the Board expects
significant returns from the Company's investment portfolio during
the remainder of 2013, through 2014 and beyond. This belief is
based on the Manager's review of presently scheduled trial dates,
expected final decisions following trial, and possible settlements
in multiple cases that are in an advanced stage of development.
The Board of JIL looks forward to this year's continuation vote
on the fund in healthy and positive circumstances.
The directors thank investors for their continued confidence and
welcome those new shareholders who have joined us in the past
year.
Lord Daniel Brennan QC
Chairman
16 August 2013
Investment Manager's report
Operating highlights
During the six month period ended 30 June 2013, the Company saw
several settlements conclude in its portfolio and continued
progression in many of its other investments. Several investments
have progressed to the point where a near-term conclusion is
possible. Certain other cases are at an inflection point whereby
key decisions and strategies are being managed in order for the
investments to reach a successful and profitable conclusion. This
activity supports our current belief that the majority of the
Company's investments are reaching their concluding phase and we
expect the portfolio to continue to generate significant cash
returns over the next 12 months.
For the six month period ended 30 June 2013, gross cash proceeds
from settlements totalled approximately US$17.5 million. These
proceeds will be paid to the Company at 31 December 2013 in the
form of interest on the loan to Fields Law Firm PLLC ("Fields
Law").
Subsequent to the six month period ended 30 June 2013,
additional settlements were reached on a multi-defendant case in
the Company's portfolio. These settlements will generate
approximately US$12.5 million in cash proceeds which will be paid
to the Company at 31 December 2013 predominantly in the form of
interest on the loan to Fields Law.
Based on the above mentioned cash proceeds, as well as the
Manager's knowledge of current settlement discussions which are in
an advanced stage, the Company has declared a dividend of 10 pence
per share totalling US$16 million payable on 15 January 2014 to
shareholders on the share register at 13 December 2013.
JIL's Net Asset Value ("NAV") decreased from US$2.20 per
ordinary share at 31 December 2012 to US$2.17 per ordinary share at
30 June 2013. This 1.4% reduction in NAV per ordinary share was
primarily due to total comprehensive loss of US$3.0 million. This
comprehensive loss was primarily due to the net of fund operating
expenses of approximately US$4.0 million, net unrealised gain
generated from change in valuation of the Company's investments of
approximately US$1.4 million and intangible amortisation expense of
approximately US$0.4 million.
The net carrying value of JIL's investment portfolio decreased
by approximately US$12.8 million as compared to the value
established at 31 December 2012. This decrease was primarily due to
the establishment of a receivable for the US$17.5 million in
proceeds generated during the six month period ended 30 June 2013
partially offset by approximately US$3.0 million in additional
funding for certain investments and US$1.4 million in unrealised
gain generated from the change in valuation of the Company's
investments.
From inception to date the Company's portfolio has generated
gross cash proceeds of approximately US$117.3 million including
US$30.0 million to be delivered to the Company on 31 December 2013.
After providing for required reserves and Company operating
expenses, JIL will have returned a total of US$64 million (GBP41
million) to shareholders in the form of US$38 million in paid
dividends; US$16 million in dividends declared on 4 July 2013 and
payable on 15 January 2014; and US$10 million when it acquired
Company shares in its buyback program in September 2010.
In more detail, the portfolio since inception has performed as
follows:
-- Eight investments have reached completion with proceeds from
the underlying cases delivering a total of US$40.2 million in gross
proceeds representing a blended internal rate of return of
approximately 81.97% (as calculated from date of investment to date
of proceed return); and
-- Six cases, which are multi-defendant in nature, had partial
settlements or expense recoveries amounting to approximately
US$77.1 million. These six cases relate to four investments.
Investment number Amount invested Amount recovered IRR
(US$) (US$) (%)
------------------------------------- ---------------- ----------------- -------
Completed investments:
------------------------------------- ---------------- ----------------- -------
0208-G 12,050,211 13,750,000 29.99
0308-R 9,294 3,500,000
0908-U 3,119,371 4,337,693 60.81
6308-F 1,522,802 2,487,749 60.91
0408-W 2,872,424 3,793,389 19.53
6509-A 2,476,681 4,500,000 54.76
6409-V 785,819 5,302,905 260.52
0210-M 1,526,040 2,478,220 45.05
Total - Completed Investments 24,362,642 40,149,956 81.97
------------------------------------- ---------------- ----------------- -------
Investments with partial recoveries:
------------------------------------- ---------------- ----------------- -------
7508-O 5,154,486 105,371
0708-B 4,512,061 1,618,500
7608-A 2,128,686 1,239,032
3608-A 96,067,433 74,174,926
Total - Investments with partial
recoveries 107,862,666 77,137,829
------------------------------------- ---------------- ----------------- -------
Total cash recovered to date 117,287,785
------------------------------------- ---------------- ----------------- -------
During the period ended 30 June 2013, JIL committed to make
supplemental investments in two existing cases totalling up to
US$656,000. One of these supplemental investments provides for a
substantial increase in JIL's percentage interest in potential
proceeds from the underlying case. After a successful trial
verdict, the case is currently being appealed by both sides. The
other supplemental investment enables the continuation of a
multi-party pre-litigation settlement opportunity that the Manager
believes has the potential to generate significant proceeds to the
Company.
Fund management activity
As the Company's Manager, we have the responsibility to market
the Company's value proposition, research potential investments,
manage the due diligence on prospective investments, price and
structure all investment transactions and propose investment
opportunities to JIL's Underwriting Committee. We also have an
active role in monitoring and managing existing investments in
order to
i) protect the Company's investment;
ii) advise counsel and claim holder on business strategies; and
iii) seize upon opportunities to increase the potential return
to shareholders from individual investments.
Pipeline and case selection
As Manager, we spend significant time marketing JIL's value
proposition to claimholders and law firms. We ensure the legal
claims market understands our message; that partnering with JIL in
pursuing a claim through the legal process enhances the balance
between risk and reward. We have developed long-term relationships
with over 170 law firms including a representation of over 35% of
the 2013 American Lawyer Global 100 Ranking (which ranks the
largest law firms by global revenues). These relationships with
global, national, regional, and local law firms are critical as
they are the key source of the Company's future investment
opportunities.
We currently have a pipeline of attractive investment
opportunities consisting of: three anti-trust cases; several patent
portfolios with Fortune 100 and other companies; and numerous
commercial claims. Subject to continuation and expected investment
proceeds, these opportunities will provide future income and
capital growth for the Company.
Monitoring and managing existing investments
While operating within strict ethical and compliance guidelines
and well-developed processes and controls, we actively monitor,
liaise, and advise on all matters related to the Company's
investments. Our active monitoring is instrumental in ensuring that
lawyers attached to a particular case are diligently moving the
case forward in an appropriate manner, the proper legal strategy is
employed, the right experts are hired, and case expenses are
minimised. This activity not only helps protect our investments
from losses but also ensures maximum value is attained for each of
the Company's investments. We speak regularly with the clients and
law firms that are our investment partners in the portfolio to keep
abreast of developments, ensure compliance with the Company's
contract rights, and to assist where possible based on our
collective experience and judgment acquired from years of
investing.
Improve return on existing investments
In some instances, we have identified opportunities to improve
potential returns for existing investments or the need to
restructure an investment to minimise downside risk. These
opportunities may arise if an underlying case requires legal
services beyond those expected when the investment was initially
funded. Other opportunities to enhance existing investments occur
when the claimholder wishes to fund an appeal (to enhance damages
awarded or to reverse an adverse ruling). Enhancements to existing
investments usually occur with financing terms that are more
favourable to the Company than the terms associated with the
original investment. To date, we have negotiated and the Company
has funded several enhancements to existing investments including
two that occurred during the six month period ended 30 June
2013.
Portfolio update
The Company currently has a total of 16 investments representing
21 different cases or legal actions. Since inception, the Company
has made 24 investments representing 30 different cases or legal
actions. The Company's current portfolio is diversified amongst
three primary groups: antitrust and competition, patent, and
commercial as noted on the following table:
Type of claim or litigation Cases Total commitment Investments
----------------------------- ------ ----------------- ------------
Antitrust and competition 6 $107.5 million 1
Patents 8 $34.2 million 8
Commercial 7 $19.7 million 7
----------------------------- ------ ----------------- ------------
Total 21 $161.4 million 16
----------------------------- ------ ----------------- ------------
Antitrust and competition portfolio
Five cases in the Company's antitrust and competition portfolio
involve violation of US or European antitrust law and three of
these cases also involve multi-defendant, price fixing cartels. In
one of our largest investments, one of the cartel cases involves
defendants that have already been found guilty of criminal
violations. The sixth case in this portfolio is a special situation
involving statutory claims. All of the cases in this portfolio are
reaching maturity.
The Company has contributed US$96.0 million (with an additional
commitment of US$13.0 million remaining) towards one investment
representing these six cases. During the six month period ended 30
June 2013, the commitment level for this investment increased by
US$11.0 million, of which US$1.0 million was paid during the
reporting period. This increase in funding commitment was
contractually based and resulted from the level of proceeds
generated thus far by the investment exceeding certain thresholds.
This investment is structured as a loan by the Company to Fields
Law for the purpose of funding six cases under a co-counsel
agreement. The loan is arranged such that any proceeds from these
cases are used to make payments on the note on 31 December of each
year. From inception to date, the cases within this antitrust
portfolio have generated total cash proceeds and expense recovery
of US$74.2 million. Of this amount, US$44.2 million has previously
been paid to JIL and US$30.0 million is expected to be paid on 31
December 2013. An additional US$2.9 million in proceeds previously
generated from these cases are being held in reserve by Fields Law
to potentially fund additional expenses related to the Company's
investment in antitrust and competition cases. Additional reserves
may be required from future proceeds.
One of the cases in this portfolio was previously dismissed in
favour of the defendant and is now on appeal. The Manager expects
that the appeal of the trial court's decision may well be
successful but will result in a delay of at least six to 12 months
in the resolution of this case. A separate case in this portfolio
previously received a favourable appellate decision, upholding a
judgment of liability against the defendant and the case is
expected to move toward a damages trial.
Below is a snapshot of the case progression in the Company's
antitrust and competition portfolio:
Matter number Status
-------------- ------------------------------------------------------
1008-A Trial set in January 2014 for a portion of the claims
-------------- ------------------------------------------------------
1208-A Awaiting trial on damages only, liability favourably
concluded through all appeals
-------------- ------------------------------------------------------
5208-E Trial scheduled for Spring 2014
-------------- ------------------------------------------------------
5308-U Awaiting trial date, pre-trial proceedings complete
-------------- ------------------------------------------------------
5608-N Appeal pending with decision expected before 4(th)
quarter 2013
-------------- ------------------------------------------------------
8008-L Proceedings completed, awaiting trial
-------------- ------------------------------------------------------
Patent portfolio
The Company's patent portfolio includes eight cases involving
infringement of one or more patents by one or more defendants. As
of 30 June 2013, the Company has US$31.5 million invested in its
patent portfolio with an additional US$3.7 million remaining in
committed funds. Since the Company's inception, a total of US$13.2
million in gross proceeds has been generated from the Company's
patent portfolio.
In Case 0108-S, the jury delivered a verdict in favour of the
plaintiff in the amount of US$20 million (includes punitive damages
and interest). This was in line with the Manager's expectation for
the low end of the recovery range of this case and the Company will
recover approximately US$8 million from its investment of US$8.3
million. A supplemental investment is under negotiation to finance
an appeal on damages. Should the financing occur and if the appeal
is successful in increasing damages awarded, the Company will
receive a greater return on its investment. Significant uncertainty
remains until the appeal process is completed unless the case is
resolved earlier by settlement.
In Case 0409-C, the jury returned a verdict after trial in
favour of the plaintiff in the amount of US$50.0 million. The
Company invested US$4.8 million in this case and is entitled to
receive the first US$3.0 million of cash proceeds from settlement
or judgment plus 49% of remaining proceeds. Uncertainty remains
until post-trial proceedings are completed and judgment is entered
and appeals are completed unless the case is resolved earlier by
settlement.
Below is a snapshot of the case progression in the Company's
patent portfolio:
Matter number Status
-------------- ---------------------------------------------------------
0108-S Positive trial verdict - appeals pending
-------------- ---------------------------------------------------------
0209-S Proceedings Not Yet Initiated (*)
-------------- ---------------------------------------------------------
0409-C Jury verdict awarded, further proceedings on equitable
issues underway, awaiting entry of final judgement
-------------- ---------------------------------------------------------
0808-C Appellate proceedings pending
-------------- ---------------------------------------------------------
2709-E Positive ruling on one patent, awaiting ruling on
second patent in re-exam
-------------- ---------------------------------------------------------
7608-A Further proceedings not yet initiated (**)
-------------- ---------------------------------------------------------
0708-B Further proceedings not yet initiated (**)
-------------- ---------------------------------------------------------
7508-O Litigation on-going, sale of one patent being finalised,
strategy being developed for multiple other patents
-------------- ---------------------------------------------------------
(*) Liability decided favourably. Awaiting trial on damages.
(**) Matter has been in litigation that has been settled,
dismissed or otherwise resolved. Additional proceedings are
currently being evaluated.
Commercial portfolio
As of 30 June 2013, the Company's commercial portfolio consisted
of investments in six cases that involve claims related to
commercial disputes including: theft of trade secret, breach of
contract and insurance subrogation.
Included in the commercial portfolio is an additional
investment, 0608-S, that, as previously disclosed, the Company
exercised its option to cease funding. The Company pursued recovery
of its investment amount from the parties involved after having
successfully defended an attempt to avoid arbitration by these
parties. After the close of the reporting period, the arbitration
panel decided against the Company on its claim against the client
and the client's claims against the Company were withdrawn.
However, the Company remains entitled under its investment
agreement to recover from the client any sums received by the
client in connection with ancillary claims made by the client
against other parties, including claims that may exceed the value
of the Company's investment. Since 2009, the Company has reduced
the carrying value of this investment by 75% of the investment book
cost.
As of 30 June 2013, the Company has US$26.2 million invested in
its commercial portfolio, with an additional US$550,000 remaining
in committed funds. Since the Company's inception, a total of
US$29.9 million in gross proceeds has been generated from the
Company's commercial portfolio.
For two investments in this portfolio, the underlying cases are
at the point where collection is being pursued. One of these cases
has survived several attempts to vacate the trial court's
determination of liability including a Writ of Certiorari to the
U.S. Supreme Court that was denied in favour of our client.
Claimants are pursuing collection within the U.S. and elsewhere.
The other case involves a judgment on behalf of insurance clients
against a foreign government. Unrest within the foreign government
has delayed settlement. Although we believe the collection efforts
will be successful, timing and collection risk has increased. As a
result, the carrying value of this investment has been reduced to a
level that equals 75% of the Company's investment of US$500,000 in
this case.
This portfolio also contains an investment involving a large,
multi-party pre-litigation settlement opportunity that we believe
has the potential to generate significant proceeds to the Company.
Settlement negotiations for a portion of the opportunity are
underway. This investment is being accounted for partially as an
intangible asset and partially as a contractual interest.
Below is a snapshot of the case progression in the Company's
commercial portfolio:
Matter number Status
-------------- -----------------------------------------------------
1410 Positive trial court ruling on liability, damages
on appeal
-------------- -----------------------------------------------------
1608-T Collection and settlement efforts underway
-------------- -----------------------------------------------------
1610 Awaiting ruling on appeal and further collection
efforts
-------------- -----------------------------------------------------
2510 Collection underway after successful appeal of trial
verdict, all appeals completed
-------------- -----------------------------------------------------
5009-S Final pre-trial conference set for 4(th) quarter
2013, awaiting trial date
-------------- -----------------------------------------------------
0608-S Collection efforts underway and awaiting ancillary
rulings
-------------- -----------------------------------------------------
6609-S Settlement negotiations underway (*)
-------------- -----------------------------------------------------
(*) Multi-party pre-litigation settlement opportunity.
Valuation
The Manager values JIL's investments using valuation and
accounting methods that are applied in a manner that follows
International Financial Reporting Standards' ("IFRS") accounting
rules as set out in IFRS 4, IAS 39, and IAS 38.
The method of applying fair value accounting is designed to show
the progression of a case towards its expected terminal value. 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 fair value accounting are
revisited on a bi-annual basis. If needed, we will rerun the
investment's valuation model and revise its expected future cash
flow which we then discount to the reporting date.
As of 30 June 2013, the Manager examined the valuation for all
of JIL's investments. In doing so, the following adjustments were
made to their individual valuations:
-- Since year ended 31 December 2012, valuation of the Company's
contractual interests decreased by approximately US$400,000
reflecting the net of US$1.9 million in additional investment
funding and US$2.3 million net decrease due to each investment's
individual change in fair value.
-- Since year ended 31 December 2012, valuation of the Company's
available for sale debt securities decreased by approximately
US$14.6 million reflecting the reclassification of US$17.5 million
to a receivable, additional investment funding of US$1.1 million,
and a net US$1.8 million increase in the fair value.
-- Since year ended 31 December 2012, valuation of the Company's
available for sale financial assets increased by approximately
US$1.9 million reflecting the net increase due to each investment's
individual changes in fair value.
-- Since year ended 31 December 2012, valuation of the Company's
intangible assets increased by approximately US$300,000 reflecting
the net impact of additional investment funding and amortisation
charge.
Notable activities
The following activities reflect advancement in JIL's portfolio.
One or more of these events may, in the Manager's view, have a
significant positive impact on the Company's net asset value. It is
possible that one or more settlements may be concluded as a result
of an award or judgment or prior to conclusion of a case that could
result in net cash proceeds to the Company in excess of 10% of its
current net asset value.
Two antitrust cases that comprise part of the security for the
loan facility made to Fields Law may complete or reach an advanced
stage during the next six to 18 months. Both cases have significant
damages claimed by their plaintiffs that, if awarded by a jury,
will be automatically trebled by the court. A judgment in any of
these cases would, of course, be subject to appeal and possible
reversal by one or more appellate courts and appeals could result
in a delay of several years prior to collection or settlement. We
expect that if any of these cases is resolved by settlement, the
amount of settlement will be substantially less than the claimed
damages and/or any judgment entered by the trial court for each
case. We also expect that if any of these cases is settled prior to
completion or a favourable jury verdict is rendered and the trial
court enters judgment, such a result will have a significant
positive impact on the Company's net asset value.
Outlook
Given the uncertain nature of litigation in general and the
quantum of damages that trial juries may award, the Company's
portfolio has the characteristics to produce a wide range of
potential returns. This does not detract from our belief that JIL
has invested in an excellent, high quality portfolio of cases that
should, as a whole, produce healthy returns for JIL's
shareholders.
We believe the Company's portfolio will continue to see
significant activity within the next 12 months. This expectation is
based on the Manager's knowledge from managing the Company's
investments. Knowledge the Manager possesses includes, confirmed
trial dates, expected final decisions following trial or
arbitration, and various other factors. Each of these milestones,
if successful, creates real incentives for defendants to seek
settlements. In addition, settlement discussions are on-going for
several investments.
We are optimistic that the portfolio will produce further return
of capital during the next 12 months. Our robust pipeline of
investments would be excellent opportunities for growing the
capital base and income of the Company should shareholders decide
to continue the fund at the Company's continuation vote scheduled
for later this year.
The Manager would like to thank investors for their continued
support. As always, we are committed to providing timely
announcements and accurate reporting with as much transparency as
possible.
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 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.
Juridica Capital Management Limited
16 August 2013
Independent review report
Introduction
We have been engaged by the Company to review the unaudited
condensed set of financial statements in the half-yearly financial
report for the six months ended 30 June 2013, which comprises the
unaudited condensed consolidated income statement, the unaudited
condensed consolidated statement of financial position as at 30
June 2013, the unaudited condensed consolidated statement of
changes in equity, the unaudited condensed consolidated cash flow
statement, the comparative figures and associated notes. We have
read the other information contained in the half-yearly financial
report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial 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 condensed consolidated set of financial
statements included in this half-yearly financial 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 consolidated financial statements in
the half-yearly financial 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
consolidated financial statements in the half-yearly financial
report for the six months ended 30 June 2013 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 2,
5, 6, 7 and 8 to the unaudited condensed consolidated financial
statements. As indicated in Notes 2, 5, 6, 7 and 8, the unaudited
condensed set of consolidated financial statements include
non-current assets stated at their fair value of US$199,357,631.
Due to the inherent uncertainty associated with the valuation of
such non-current assets and the absence of a liquid market, these
fair values may differ from their realisable values, and the
differences could be material.
PricewaterhouseCoopers CI LLP
Chartered Accountants
Guernsey, Channel Islands
16 August 2013
The maintenance and integrity of the Juridica Investments
Limited website is the responsibility of the Directors; the work
carried out by us does not involve consideration of these matters
and, accordingly, we accept no responsibility for any changes that
may have occurred to the unaudited condensed consolidated financial
statements since they were initially presented on the website.
Legislation in Guernsey governing the preparation and
dissemination of financial statements may differ from legislation
in other jurisdictions.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
1 January 1 January
2013 to 2012 to
30 June 30 June
2013 2012
------------ -------------
Notes US$ US$
INCOME
Finance income 3,373 20,955
3,373 20,955
------------ -------------
EXPENSES
Management fees 13(a) 2,532,425 2,218,736
Due diligence and transaction costs 58,316 191,878
Directors' remuneration 13(g) 267,200 215,438
Audit fees 122,662 147,099
Legal expenses 389,960 124,508
Administration fees 170,809 213,978
Options and warrants costs - 15,805
Foreign exchange loss 199,735 4,822
Other expenses 228,661 287,579
3,969,768 3,419,843
------------ -------------
INVESTMENT MOVEMENTS
Amortisation of intangible assets 5 (450,520) (291,903)
Other (expense)/income arising on contractual
interests 6 (2,288,374) 1,550,948
Other income arising on available for
sale debt securities 8 9,874,732 9,322,657
Loss on revaluation of case proceeds (33,145) -
payment obligation
Gain on bargain purchase - 4,329,188
Previously recognised fair value change
in available for sale assets reclassified
as profit or loss - (1,484,513)
7,102,693 13,426,377
------------ -------------
Profit for the period 3,136,298 10,027,489
============ =============
Other comprehensive income:
Previously recognised fair value change
in available for sale assets reclassified
as profit or loss - 1,484,513
Fair value change in available for
sale financial assets 7 1,880,541 506,669
Fair value change in available for
sale debt securities 8 (8,044,456) (13,607,409)
Total other comprehensive income (6,163,915) (11,616,227)
------------ -------------
Total comprehensive loss for the period (3,027,617) (1,588,738)
============ =============
Comprehensive loss attributable to:
Equity shareholders (2,992,449) (139,827)
Non-controlling interests (35,168) (1,448,911)
(3,027,617) (1,588,738)
============ =============
Earnings per Ordinary Share
Basic Cents (2.86) (0.13)
Fully diluted Cents (2.85) (0.13)
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
30 June 31 December
2013 2012
------------ ------------
Notes US$ US$
ASSETS
Non-current assets
Intangible assets 5 3,012,153 2,703,118
Contractual interests 6 45,048,665 45,446,175
Available for sale financial assets 7 12,262,935 10,380,608
Available for sale debt securities 8 139,033,878 153,593,259
199,357,631 212,123,160
------------ ------------
Current assets
Other receivables and prepayments 9 17,801,154 694,235
Cash and cash equivalents 13,493,669 42,951,916
31,294,823 43,646,151
------------ ------------
TOTAL ASSETS 230,652,454 255,769,311
============ ============
EQUITY AND LIABILITIES
Equity
Special reserve 199,013,730 199,013,730
Other reserve 36,992,638 43,156,553
Revenue reserve 1,368,113 (1,803,353)
Treasury shares (9,925,024) (9,925,024)
Net assets attributable to ordinary
shareholders 227,449,457 230,441,906
Non-controlling interests 2,053,759 2,088,927
Total equity 229,503,216 232,530,833
------------ ------------
Current liabilities
Dividend payable - 22,105,995
Other payables 10 1,149,238 1,132,483
Total liabilities 1,149,238 23,238,478
------------ ------------
TOTAL EQUITY AND LIABILITIES 230,652,454 255,769,311
============ ============
Number of ordinary shares 104,701,754 104,701,754
Net Asset value attributable to each
ordinary share $2.17 $2.20
These half yearly unaudited condensed consolidated financial
statements were approved by the Board of Directors on 16 August
2013 and signed on its behalf by:
R J Battey
Director
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY
30 June 2013
------------------------------------------------------------------------------------------
Special Other reserve Revenue Treasury Non-controlling
reserve reserve Shares interests Total
------------ -------------- ------------- ------------ ---------------- -------------
US$ US$ US$ US$ US$ US$
Balance at 1 January
2013 199,013,730 43,156,553 (1,803,353) (9,925,024) 2,088,927 232,530,833
Changes in equity
for 2013
Profit for the
period - - 3,171,466 - (35,168) 3,136,298
Fair value change
in available for
sale assets - 1,880,541 - - - 1,880,541
Fair value change
in available for
sale debt securities - (8,044,456) - - - (8,044,456)
Total comprehensive
(loss)/income - (6,163,915) 3,171,466 - (35,168) (3,027,617)
Balance at 30
June 2013 199,013,730 36,992,638 1,368,113 (9,925,024) 2,053,759 229,503,216
============ ============== ============= ============ ================ =============
30 June 2012
------------------------------------------------------------------------------------------
Special Other reserve Revenue Treasury Non-controlling
reserve reserve Shares interests Total
------------ -------------- ------------- ------------ ---------------- -------------
US$ US$ US$ US$ US$ US$
Balance at 1 January
2012 199,013,730 20,698,109 18,667,926 (9,925,024) 6,861,482 235,316,223
Changes in equity
for 2012
Profit for the
period - - 10,083,909 - (56,420) 10,027,489
Reclassification
of fair value
change in available
for sale assets - 1,484,513 - - - 1,484,513
Fair value change
in available for
sale assets - 506,669 - - - 506,669
Fair value change
in available for
sale debt securities - (12,214,918) - - (1,392,491) (13,607,409)
Total comprehensive
income/(loss) - (10,223,736) 10,083,909 - (1,448,911) (1,588,738)
Acquisition of
subsidiary - - - - 1,737,589 1,737,589
Put option provision - (1,980,540) - - - (1,980,540)
Share option payment
reserve - 15,805 - - - 15,805
Dividend paid - - (11,455,419) - - (11,455,419)
Balance at 30
June 2012 199,013,730 8,509,638 17,296,416 (9,925,024) 7,150,160 222,044,920
============ ============== ============= ============ ================ =============
UNAUDITED CONDENSED CONSOLIDATED CASH FLOW STATEMENT
1 January 1 January
2013 to 2012 to
30 June 30 June
2013 2012
------------- -------------
US$ US$
Cash flows from operating activities
Profit for the period 3,136,298 10,027,489
Adjusted for:
Gain on bargain purchase - (4,329,188)
Other income arising on contractual interests
and available for sale debt securities (7,586,358) (10,873,605)
Reclassification of previously recognised
fair value change on available for sale financial
assets - 1,484,513
Amortisation of intangible assets 450,520 291,903
Loss on revaluation of case proceeds payment 33,145 -
obligation
Increase in share option and warrant reserve - 15,805
Interest income (3,373) (20,955)
Foreign exchange losses 199,735 4,822
Changes in working capital
Purchases of intangible assets, contractual
interests, available for sale financial assets
and available for sale debt securities (3,312,066) (4,359,393)
Settlement of contractual interests 231,496 -
Decrease in trade and other receivables 120,711 49,372
Decrease in trade and other payables (425,999) (70,860)
Cash balance acquired with subsidiary undertaking - 114,351
Cash used in operations (7,155,891) (7,665,746)
Interest received 3,272 21,011
Net cash outflow from operating activities (7,152,619) (7,644,735)
------------- -------------
Financing activities
Dividend paid (22,107,357) (11,627,550)
Net cash flow from financing activities (22,107,357) (11,627,550)
------------- -------------
Net decrease in cash and cash equivalents (29,259,976) (19,272,285)
Cash and cash equivalents at the beginning
of the period 42,951,916 43,014,566
Effect of foreign exchange rate changes (198,271) 167,315
Cash and cash equivalents at the end of the
period 13,493,669 23,909,596
============= =============
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
1. LEGAL FORM AND PRINCIPAL ACTIVITY
The Group consists of the Company, which is a closed-ended
investment company incorporated under The Companies (Guernsey) Law,
2008 ("the Law"), and its subsidiaries as detailed in note 4. 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 Bordeaux Court,
Les Echelons, St Peter Port, Guernsey, GY1 6AW. The condensed
consolidated 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 condensed consolidated financial statements
for the six months ended 30 June 2013 have been prepared in
accordance with International Accounting Standard 34: Interim
Financial Reporting ("IAS 34"). The condensed consolidated
financial statements should be read in conjunction with the annual
Financial Statements for the year ended 31 December 2012 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.
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 Group's accounting policies. The
accounting policies applied are consistent with those of the annual
financial statements for the year ended 31 December 2012, except
for those noted below.
Amendments to existing standards
The following new standards and amendments to standards are
mandatory for the first time for the financial year beginning 1
January 2013:
-- IFRS 7 (revised), 'Financial Instruments: Disclosures' -
effective for financial years beginning on or after 1 January
2013.
-- IFRS 10, 'Consolidated Financial Statements' - effective for
financial years beginning on or after 1 January 2013.
-- IFRS 11, 'Joint Arrangements' - effective for financial years
beginning on or after 1 January 2013.
-- IFRS 12, 'Disclosure of Interests in Other Entities' -
effective for financial years beginning on or after 1 January
2013.
-- IFRS 13, 'Fair Value Measurement' - effective for financial
years beginning on or after 1 January 2013.
-- IAS 1 (revised), 'Presentation of Financial Statements' -
effective for financial years beginning on or after 1 January
2013.
-- IAS 27 (revised), 'Separate Financial Statements' - effective
for financial years beginning on or after 1 January 2013.
-- IAS 28 (revised), 'Investments in Associates and Joint
Ventures' - effective for financial years beginning on or after 1
January 2013.
Adoption of the above standards and amendments has had no
material impact on the Group's consolidated results or
position.
Financial risk management
The Group's activities expose it to a variety of financial
risks. The main risks arising from the Group's financial
instruments are market risk, insurance risk, credit risk and
liquidity risk. These condensed consolidated interim financial
statements do not include all financial risk management information
and disclosures required in the annual financial statements and,
accordingly, they should be read in conjunction with the Company's
annual financial statements as at 31 December 2012.
Fair value estimation
The Group's investments are categorised as level 3 within the
fair value hierarchy under IFRS 7 (as was the case at 31 December
2012). There have been no transfers between levels during the six
months to 30 June 2013.
3. CONTINUATION AND GOING CONCERN
In accordance with the Company's Admission Document of December
2007, the Directors shall convene an extraordinary general meeting
of the Company, on a date being not less than one month prior to 21
December 2013, at which a resolution will be proposed that the
Company be wound up voluntarily. If such resolution is not passed
by the Company's members then the Directors shall convene an
extraordinary general meeting of the Company every three years from
the date of the original meeting at which the winding-up proposal
shall again be put to the Company's members.
Having given consideration to the maturity of the Company's
existing portfolio, the performance of the portfolio to date, the
prospects for future investments and expected future cash flows,
the Directors consider that there is a good possibility that the
winding-up proposal will not be passed in 2013. In addition, the
Directors have reviewed the Company's budgets and cash flows for
the year ahead and, accordingly, are satisfied on reasonable
grounds that it is appropriate to prepare these financial
statements on a going concern basis.
4. SUBSIDIARIES
Date incorporated Country % Share holdings
of incorporation
------------------- ------------------------ -----------------
8 October
Riverbend Investments Limited 08 Guernsey 100%
Juridica Ventures KFT 2 March 09 Hungary 100%
Juridica Ventures (US) Inc. 31 May 09 United States 100%
28 February
Spinal Spot LLC 11 United States 52%
Spinal Ventures LLC 25 March 11 United States 100%
25 February
OTO Technologies LLC 09 United States 85%
5. INTANGIBLE ASSET
30 June 31 December
2013 2012
---------- ------------
US$ US$
Balance at start of the year 2,703,118 1,757,832
Additions 759,555 1,715,784
Amortisation (450,520) (770,498)
Balance at end of the year 3,012,153 2,703,118
========== ============
The Group's intangible asset comprises an investment structured
as an agency agreement. In addition, the Company has purchased
common and preferred stock related to the intangible asset which
has been classified as an available for sale asset (note 7).
The Group amortises the intangible asset on a diminishing
balance basis at a rate of 16.7 per cent every 6 months.
6. CONTRACTUAL INTERESTS
Balance Additions Disposal Fair value Fair value Realised Balance
at proceeds movement movement gains at
1 January due to due to 30 June
2013 effective changes 2013
interest in
estimated
cash flows
----------- ----------- ----------- ------------ ------------ ------------- --------------
US$ US$ US$ US$ US$ US$ US$
Totals 45,446,175 1,890,866 - 4,761,356 (7,049,732) - 45,048,665
=========== =========== =========== ============ ============ ============= ==============
Balance Additions Disposal Fair value Fair value Realised Balance
at proceeds movement movement losses at
1 January due to due to 31 December
2012 effective changes 2012
interest in estimated
cash flows
----------- ----------- ------------ ------------ ------------- ------------ ------------
US$ US$ US$ US$ US$ US$ US$
Totals 37,964,964 11,242,654 (1,261,026) 9,666,056 (10,978,268) (1,188,205) 45,446,175
=========== =========== ============ ============ ============= ============ ============
Contractual interests have been accounted for using the
effective interest rate method of calculation. Effective interest
rates on these contractual interests range between 3.62 and 129.39
per cent at 30 June 2013 (31 December 2012: between 3.62 and 129.39
per cent). At 30 June 2013, the Company had investments in 11
contractual interests (31 December 2012: 11 contractual
interests).
Fair value movements of contractual interests are due to
amendments in estimated cash flows arising from changes in
expectations surrounding each case. Further explanation on fair
value movements is found within the "Valuation" section of the
Investment Manager's Report and is detailed in the accounting
policies of the Group's financial statements for the year ended 31
December 2012.
7. AVAILABLE FOR SALE FINANCIAL ASSETS
30 June 31 December
2013 2012
----------- ------------
US$ US$
Balance at start of the year 10,380,608 7,440,753
Additions 1,786 5,618,141
Disposal proceeds - (3,659,473)
Fair value movement 1,880,541 981,187
Balance at end of the year 12,262,935 10,380,608
=========== ============
The Group's Available for Sale Financial Assets include a
holding in Juridica Capital Management Limited ("JCML"). The fair
value of the Company's investment in JCML was assessed as at 30
June 2013 to be US$6,807,805 (31 December 2012: US$6,151,811). This
assessment of JCML is deemed appropriate given its investment in
the Group, its level of assets (including intellectual property),
and the quality of its income and earnings and the projection of
future cash flows.
In the event that the proposal for the winding-up of the Company
(see note 3 for further information) is successful, JCML's future
earnings would be reduced and the value of the Group's holding in
JCML would be lower.
8. AVAILABLE FOR SALE DEBT SECURITIES
Balance Drawdown Repayment Movement Fair value Realised Balance
at due to movement gains at
1 January effective due 30 June
2013 interest to changes 2013
in
estimated
cash
flows
------------ ---------- ------------- ----------- ------------ --------- -------------
US$ US$ US$ US$ US$ US$ US$
Totals 153,593,259 1,069,469 (17,459,126) 9,874,732 (8,044,456) - 139,033,878
============ ========== ============= =========== ============ ========= =============
Balance Drawdown Repayment Movement Fair value Realised Balance
at due to movement gains at
1 January effective due 31 December
2012 interest to changes 2012
in
estimated
cash
flows
------------ ---------- ------------- ----------- ------------ --------- -------------
US$ US$ US$ US$ US$ US$ US$
Totals 145,370,653 5,111,401 (37,188,909) 19,635,791 20,664,323 - 153,593,259
============ ========== ============= =========== ============ ========= =============
Note 13(f) details arrangements between the Company and Fields
Law PLLC ("Fields Law"). The Loan and the Swap have been aggregated
on consolidation and treated as a single claim asset. Return on the
Loan and the Swap are dependent on returns in claims financed by
Fields Law.
Fair value movements of available for sale debt securities are
due to amendments in estimated cash flows arising from changes in
expectations surrounding each investment. Further explanation on
fair value movements is found within the "Valuation" section of the
Investment Manager's Report.
9. OTHER RECEIVABLES AND PREPAYMENTS
30 June 31 December
2013 2012
----------- ------------
US$ US$
Juridica Capital Management Limited (see note
13(c)) 212,500 425,000
Settlement proceeds 17,459,126 231,496
Debtors 51,390 23,282
Prepayments and accrued bank interest 78,138 14,457
17,801,154 694,235
=========== ============
10. OTHER PAYABLES
30 June 31 December
2013 2012
---------- ------------
US$ US$
Management fees - 501,215
Audit fees 107,397 162,735
Case additions 409,610 -
Case proceeds payment obligation 439,528 406,384
Other creditors 192,703 62,149
1,149,238 1,132,483
========== ============
The Group has entered into an agreement whereby it has agreed to
pay a proportion of case proceeds arising from a particular case
investment to a third party in return for that third party managing
that particular case investment on behalf of the Group. The amount
due to the third party will depend on the value of the proceeds
that the Group will receive and, accordingly, the liability has
been measured at fair value in line with the Group's fair value
assessment of the particular case investment. This liability is
shown as case proceeds payment obligation in the above table.
11. COMMITMENTS & GUARANTEES
Under the terms of some of its contracts, JIL provides a line of
credit to counterparties. As at 30 June 2013, the maximum
commitment under these lines of credit was US$7.5 million (31
December 2012: US$8.3 million).
12. FUNCTIONAL AND PRESENTATION CURRENCY / EXCHANGE RATES
The financial statements are presented in United States Dollar
("US$") which is also the Company's functional currency. The
following exchange rate was applicable as at 30 June 2013:
Closing rate
----------------------
30 June 31 December
2013 2012
-------- ------------
US$ US$
British pounds (GBP) 1.521 1.624
======== ============
13. RELATED PARTY TRANSACTIONS
Richard Battey, as investor representative of JIL, is a director
of Juridica Capital Management Limited ("JCML"). The principal of
JCML is Richard Fields, who acquired 50,000 Ordinary Shares in the
Company (0.0625 per cent equity interest) as reimbursement of
100,000 pounds sterling of pre IPO costs.
(a) Management fee
The Company is managed by JCML, an investment management company
incorporated in Guernsey in which the Company holds a 36.5 per cent
equity interest (31 December 2012: 36.2 per cent). Under the terms
of the Management Agreement, the Company appointed JCML as an
Investment Manager to provide management services to the Company.
The Investment Manager receives a fee based on the adjusted net
asset value of the Company, payable quarterly in advance using the
annual rate of 2.5 per cent.
The adjusted net asset value is the net asset value of the
Company at the relevant time, 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;
(ii) adding the amount of any write downs with respect to
contractual interests which have not been written off; and
(iii) deducting the value of the Company's investment in
JCML.
In the period to 30 June 2013, investment management fees
totalling US$2,532,425 (30 June 2012: US$2,218,736) were paid to
JCML. As at 30 June 2013, investment management fees payable
amounted to US$Nil (31 December 2012: US$501,215).
(b) Investment in Juridica Capital Management Limited
The Company acquired 15 per cent of JCML on Admission (see note
7), which was subsequently diluted to 13.6 per cent by the exercise
of share options by certain of JCML's employees. The Company
acquired a further holding in JCML during 2012, taking the
Company's overall holding in JCML to 36.2 per cent. JCML bought
back and cancelled shares from a former employee during the period,
which resulted in the Company's holding in JCML increasing to 36.5
per cent. An impairment review has been performed as part of the
fair value assessment and an impairment review will be carried out
on a semi-annual basis.
(c) Short term funding to Juridica Capital Management
Limited
During 2012, the Group acquired additional shares in JCML for
which it was agreed that part of the consideration related to the
termination of certain contractual arrangements between JCML and
the former shareholder. JCML agreed to repay that relevant portion
of the consideration in four equal, quarterly instalments by way of
a reduction in the quarterly investment management fee payment.
During the period, US$0.2 million has been repaid and US$0.2
million remains outstanding as at 30 June 2013 (31 December 2012:
US$0.4 million).
(d) Performancefee
The Investment Manager is entitled to a performance fee based on
the adjusted net asset value (being the NAV of the Company before
taking into account any performance fee payable less any unrealised
gains on investments plus the value of any write-downs in any
investments that have been written down but not written off) of the
Company. The performance fee will equal 20 per cent of the
annualised increase in the net asset value between a hurdle rate of
8 per cent and 20 per cent, furthermore a fee of 35 per cent of the
increase over a hurdle of 20 per cent and 40 per cent and 50 per
cent of the same increase over a hurdle of below 40 per cent. The
fees are subject to a high water mark such that no performance fee
will be paid if the performance of the Company does not exceed the
net asset value at the end of the previous year in which the
performance fee was paid. Payment of the performance fee is subject
to the condition set out in (e), below.
As at 30 June 2013, the hurdle rate was not achieved and,
therefore, no performance fee was paid or payable for the period
(30 June 2012: US$Nil, 31 December 2012: US$Nil). However, the
current net asset value (unadjusted) is greater than the minimum
hurdle rate as at 30 June 2013. To the extent that this net asset
value is realised, a performance fee may become payable.
(e) Trust account
Of the performance fee, 50 per cent of any payment will be
retained by the Company in a trust account. If, at any given year
end, the annualised increase in net asset value of the Company is
less than 8 per cent, the Company may claw back 20 per cent of the
difference between the actual net asset value and the net asset
value assuming an 8 per cent increase from the net asset value for
the previous period. As at 30 June 2013, the balance in the trust
account was US$Nil (31 December 2012: US$Nil).
(f) Facility agreement and collateral account
The Group has entered into a facility agreement (the "Facility")
with which it agrees to loan to Fields Law PLLC ("Fields
Law")(previously Fields Sullivan PLLC), 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. The Group expects to enter
into loan arrangements with other law firms (which may include
other law firms established by the Principal) on terms and
conditions similar to those contained in the Facility. The Facility
available to Fields Law will be for up to approximately 50 per cent
of the net proceeds of the capital raised by the Group less any
loans made to other law firms.
The Facility will remain outstanding and available until the
earlier of (i) the termination of the Management Agreement, (ii)
the date on which Richard Fields ceases to own a controlling
interest in Fields Law, (iii) the winding up of the Company, (iv)
an event of default of the Facility documents, or (v) ten years
from Admission. Under the Facility, drawdowns may be requested by
Fields Law from time to time up to the maximum principal amount but
subject always to approval by the Company in its sole
discretion.
No more than US$10 million may be drawn down in respect of the
same case investment, unless otherwise approved by the Company.
(g) Directors' remuneration
30 June 30 June
2013 2012
-------- --------
US$ US$
Lord Daniel Brennan 146,214 118,170
Richard Battey 58,486 47,268
Kermit Birchfield 62,500 50,000
267,200 215,438
======== ========
No pension contributions were paid or were payable on behalf of
the Directors.
Lord Daniel Brennan has an interest in 447,817 (31 December
2012: 447,817) shares under a Share Option Agreement, details of
which were disclosed in the Admission Document. Following the
publication of the Group's consolidated financial statements for
the year ended 31 December 2012, 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.
(h) Escon Capital Inc.
The Group has an interest in 38% (31 December 2012: 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.
Kermit Birchfield and Richard Fields receive directors' fees
from Escon Capital Inc. of US$75,000 and US$60,000 per annum
respectively. During the period to 30 June 2013 Juridica Capital
Management US Inc., a subsidiary of JCML, received a fee from Escon
for overhead support of US$260,000 (year to 31 December 2012:
US$600,000).The overhead support agreement was terminated with
effect from 30 June 2013 and no further payments will be made.
(i) Eleven Engineering Game Control LLC
During the period, the Group provided US$318,000 to Eleven
Engineering Game Control LLC, a company ultimately owned and
controlled by JCML.
14. SEASONALITY
The Company's operations are not affected by seasonality or
cyclicality and as such they have no impact on the unaudited
condensed consolidated financial statements.
15. SUBSEQUENT EVENTS
On 4 July 2013, the Board announced that it would be paying a
dividend of 10 pence per share on 15 January 2014 to shareholders
on the register at 13 December 2013.
In July 2013, an arbitration panel ruled against the Group's
claim for damages in a recovery effort by the Group in respect of a
case which, as previously disclosed, the Company has previously
exercised its option to cease funding. Further information can be
found in the Investment Manager's Report.
In August 2013, the Company announced additional case proceeds
of approximately US$12.5 million receivable on 31 December
2013.
With effect from 1 October 2013, the Company intends to appoint
Legis Fund Services Limited as Administrator of the Company in
place of the existing Administrator, Bordeaux Services (Guernsey)
Limited.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR SFMEFAFDSEFA
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