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RNS Number : 3292H
RBG Holdings PLC
27 July 2023
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.
27 July 2023
RBG Holdings plc
("RBG", the "Group", or the "Company")
Pre-close Trading and Business Update
RBG Holdings plc (AIM: RBGP), the legal and professional
services group, today publishes a pre-close trading and business
update ahead of the expected publication of its financial results
for the six months ending 30 June 2023 in September 2023.
Trading Update
RBG Legal Services ("RBGLS") which trades under two brands -
Rosenblatt and Memery Crystal - has performed broadly in line with
the Board's expectations, despite the challenging economic
conditions. The performance demonstrates the ability of these two
leading law firms, both with over 30 years of trading experience,
to perform through different economic cycles and reinforces the
success of the integration during the past two years.
The Group's specialist sell-side corporate finance advisory
business, Convex Capital, has a strong pipeline of 18 deals (as at
1 July 2023) and it is expected that deal flow will become more
consistent in the second half of the year. While a number are in
advanced stages of negotiations, transactions are taking longer to
complete as a consequence of the current economic environment. It
is currently expected that a number of these pipeline deals will
complete in the second half. However, the Board believes that
full-year Adjusted EBITDA is now more likely to be in the range of
GBP10m to GBP12m.
Business Update
A detailed review of all the Group's activities has been
undertaken since the new management team took over at the start of
this calendar year, led by CEO Jon Divers. The following actions
have been taken:
Litigation Finance
On 12 July 2023, the Group completed the disposal of the
non-core business, LionFish Litigation Finance Limited ("LionFish")
to Blackmead Infrastructure Limited ("Blackmead") which reduced the
Group's exposure to litigation funding commitments.
LionFish was created by the previous management and financed
litigation matters run by third-party solicitors. The consideration
for the disposal is up to GBP3.07m, of which GBP1.07m was used for
immediate repayment of an intercompany loan . The proceeds from the
sale are being used for working capital purposes and to reduce the
net debt of the Group. The announcement of 12 July 2023 referenced
a net asset value of the four cases acquired by Blackmead of
GBP4.05m, however this should have referenced an adjusted net book
value of GBP3.7m, with a reduced loss on disposal of GBP0.64m.
Conditional Fee Arrangements ('CFAs')
Separately, the Board has reviewed the previous management's
strategy to invest in a number of Conditional Fee Arrangements
("CFAs") and Damages Based Agreements ("DBAs") undertaken through
RBGLS. Over the past six years, RBGLS invested in 13 cases with a
total cash investment of GBP17.4m. T he current carrying value of
the remaining cases is GBP13.3m. One of these cases, Project
Shango, accounted for GBP9.3m of the total. Having taken advice,
the Board has now concluded that Project Shango will not be
successful.
In light of this outcome on Project Shango, the Board has taken
the prudent decision to further write down the value of all
remaining cases on the balance sheet to zero, including the four
remaining fully funded retained LionFish investments. The total
non-cash write off will be GBP13.3m. Any successful outcomes of the
cases will be returned to the Group as revenue in line with RBGLS'
percentage stake in the cases.
This decision simplifies and de-risks the Group's balance sheet,
providing greater visibility to investors. RBGLS will continue to
offer its clients alternative billing arrangements (both CFAs and
DBAs) where appropriate but any investments in such cases will not
be carried as assets on its balance sheet in contrast to the
treatment by the previous management. Any fees from wins on such
cases will simply be recorded as revenue when paid.
Dividend
The Board is currently focused on reducing the Group's net debt
from its existing level . A number of major shareholders have
provided clear feedback that the ir preference is for RBG to
accelerat e this process and as a result, the Board is suspending
the Group's dividend policy. The Directors' intention is to
reinstate a dividend when RBG has achieved a more sustainable level
of net debt.
In the short term, repaying the outstanding term loan of GBP6.5m
as at 30 June 2023 remains the priority. Additionally, the Group's
revolving credit facility of GBP15.0m is set for renewal in April
2024 and the process of refinancing this is already underway. The
Board is confident that this will be concluded well ahead of next
April.
Jon Divers, CEO, RBG, said: "Since the appointment of the
Group's new senior management team, we have been working with the
Board to undertake a detailed review of the business to stabilise
our earnings and to achieve greater visibility. We have now exited
all litigation finance matters, to ensure that our time and
resources are focused on our core strengths.
"We are committed to reducing the Group's debt as well as
investing in growing our legal services businesses, Rosenblatt and
Memery Crystal, which are both working on an increasing volume of
client matters. We have a reinvigorated and highly motivated team,
all pulling in the same direction. We have had to take tough
decisions but are optimistic about the business outlook for the
second half of the year and beyond and are committed to returning
the Group to prosperity."
Additional Information
The person responsible for arranging release of this
announcement on behalf of the Company is Jon Divers, Chief
Executive Officer.
Enquiries:
RBG Holdings plc Via SEC Newgate
Jon Divers, Chief Executive Officer
Singer Capital Markets (Nomad and Broker) Tel: +44 (0)20 7496 3000
Rick Thompson / Alex Bond / James Fischer
(Corporate Finance)
Tom Salvesen (Corporate Broking)
SEC Newgate (for media/analyst enquiries) Tel: +44 (0)7540 106366
Tali Robinson / Robin Tozer rbg@secnewgate.co.uk
About RBG Holdings plc
RBG Holdings plc is a legal services and professional services
group, which comprises three core brands:
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 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 is a specialist sell-side M&A 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.
Further information is available at: www.rbgholdings.com
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