Welcome to the Litigation Capital Management Interim Results webinar. All attendees are in listen-only mode. At the end of the presentation, there will be the opportunity to ask questions. There is a PDF of the slides on the right-hand side, and this webinar is being recorded. I now hand over to Patrick Moloney, CEO, Nick Rowles-Davies, Executive Vice Chairman, and Mary Gangemi, CFO. Patrick, over to you. Good morning. I feel privileged to be presenting on St. Patrick's Day, given my heritage. Kicking off, LCM came to the U.K. markets with a growth story, and the past six months' performance really gives some considerable validation to the growth that LCM has achieved and continues to achieve. I start by talking about some of the short or near-term priorities that we said in our annual report that we would be focusing on coming in to the new financial period. The first one of those was looking at LCM's balance sheet capital and looking for a way to supplement that capital. LCM looked at a range of opportunities or a range of options in respect of that, from equity through to other products such as capital facilities. We are pleased to announce that LCM, just outside the end of the financial period, secured a $50 million credit facility, which supplements and gives far greater flexibility to our capital structure. It's incredibly important for LCM at this juncture of its growth for three principal reasons. First, it provides a short bridge for LCM to significant organically generated capital. The second thing that it permits LCM to do is to grow our portfolio of direct investments. To continue with that growth of that portfolio. That, of course, in years to come, will generate considerable organic income of its own. The third thing that it permits LCM to do is to grow its asset management business. Of course, investors are familiar with the business models that LCM runs, which is an asset management and a direct investments from balance sheet. All of the opportunities that LCM funds through its asset management business get co-funded with balance sheet capital so as to give equity investors direct access to the economic upside of those investments. Turning second to our asset management business. As investors know, we closed a third-party pool of capital to commence our asset management business in March 2020. We've had tremendous success in terms of committing that capital and putting it to work. When that fund was concluded and closed in March 2020, it was structured so as to permit LCM a period of 24 months in which to commit that capital, and then a four-year period to manage those investments to a profitable conclusion. As at the end of the financial period, we had managed to commit that third-party pool of capital to 64%, and as we do this presentation, we've committed to 70%. In under 12 months, we have significantly committed that third party pool of capital. We've also started work in respect of either upsizing that fund from $150 million- $300 million. Alternatively, closing a second fund, probably in the order of about $300 million-$350 million. Those plans are well advanced, and we're in strategic discussions with stakeholders with respect to that. The next short-term strategic priority that we've been focusing on is increasing the number of applications that LCM receives. Of course, the applications are the start of the process in terms of us vetting and diligencing opportunities for investment. It's really important that LCM has a steady stream of applications such that it can put its capital and the capital that it manages to work. We managed, notwithstanding pretty challenging times across the world consequent on COVID, to increase our applications compared to the corresponding previous period by 5%. The final strategic priority that we've been focusing on is improving the quality of those applications themselves. We've implemented a number of strategies to achieve that, including an education process with our global strategic alliances with those firms that we have entered into a global strategic alliance with to educate them such that when applications come from those firms, they come in a far more advanced stage, reducing the burden on LCM to undertake such a rigorous due diligence process. We feel that we've made great steps to achieving some of those priorities, and obviously, we continue to strive for improving those priorities. Moving next to the highlights of the half year period. I touched upon the committing of the third party fund. We're currently at 70%, when that fund reaches a commitment point of 75%, LCM is free to close its next fund, as I mentioned, we're well advanced in respect of talking to stakeholders in that regard. What I mean by stakeholders is existing investors in our current third party pool of capital and those investors who had a desire to invest in our first fund, but we couldn't give them allocation given the size. In terms of revenue, our gross revenue in respect to the period was $8.1 million. We'll touch upon the financial performance in more detail with Mary, our chief financial officer, as we progress through this presentation. Applications I've touched upon before, up 5% from the same corresponding previous period, in a pretty challenging market. What I mean when I talk about a challenging market, we have had to innovate in terms of the way that we undertake due diligence and the way that we originate our opportunities for investment, consequent of not being able to travel and not being able to have face-to-face meetings. It's a tremendous achievement for us to increase the number of applications, notwithstanding that we've had to change the way that we think about business development and origination. We've made tremendous steps forward in terms of the amount of capital that we are investing. Either balance sheet capital or third party managed funds, we've managed to increase the amount we invested in the six-month period to $40 million, compared with the previous period of $18.4 million, representing an increase of 116%. That represents a very, very significant increase in the amount of capital that we have managed to actually invest over the period. Secondly, in respect of commitments, we've increased very significantly on the previous period. The commitments in respect of the six-month period to 31 December was $67 million, and that represented an increase of 134% on the corresponding previous period. Notwithstanding challenging conditions economically globally, we've entered into a really significant number of additional commitments, in respect of funding disputes than we did in the corresponding year. In respect of highlights, we've reached the point in measuring LCM's performance on concluded investments to nine and a half years. Over that nine and a half year period, if we take every single investment that LCM has made, including investments which were not profitable, we've generated an internal rate of return of 78% and a return on invested capital of 135%. While we have been able to increase the scale of this business, increase the origination capacity of this business, we've managed to expand this business into new territories in the last couple of years. While doing all of those things, we've still managed to maintain that standard of underwriting such that our investments perform within a very tight band and have done so for the last nine and a half years. If I can move on to LCM's strategy of building scale. When we think about building scale, what we're really talking about is increasing the pool of assets under management. Whether that's the pool of assets comprising direct investments from balance sheet, or the asset management business, we're managing capital on behalf of third party investors. What we're trying to do here is increase that portfolio and through the increasing of the portfolio and the natural maturity of those investments as they travel through the court system or the arbitral process to ultimately increase the revenue. The important thing for investors to focus on, when measuring LCM's performance during any particular period is to look at whether LCM is achieving growth and achieving what we set out to achieve, which is increasing the size of the portfolio. Of course, the first step in relation to increasing the portfolio is to increase the number of applications. The second thing is to increase the amount of committed capital during the period. That really comes down to new commitments and new investments we're making. Those commitments were increased by 134%. Following on from that, it's increased the amount of capital that we're actually putting in the ground or putting into investments physically. Because if one measures LCM's performance and the way that LCM has performed in respect of its investment over the last nine and a half years, that invested capital over the average life of investments, which is currently 27 months, should be multiplied by 135%. If we look at those measures of growth, LCM has made tremendous achievements, notwithstanding some pretty challenging economic circumstances and the effects of COVID. The second thing investors should look at is that we're maintaining a certain standard in terms of the performance of our investments. We've gone through this, the ROIC, the return on invested capital of 135%, and the cumulative internal rate of return. We don't expect as we gain scale in respect of this business to be always performing at that level. At this particular point in time, it should be really encouraging for investors to look at the performance and see that we are tracking in line with the same way we've tracked, because it gives you the reassurance that we're not relaxing any of the standards of due diligence and risk that we apply towards entering into these investments. Finally, in terms of measuring LCM's performance and its growth is what are our assets under management, across those two business lines, namely direct investments from balance sheet and secondly, asset management. We've currently got $322 million worth of assets under management currently being financial commitments in respect of funding disputes globally. I'm going to hand over to Mary to talk through the interim highlights from a financial perspective. Thank you, Patrick. The nature of our business is reliant on parties agreeing to settle a dispute or for an investment to reach a resolution through the courts. Consequently, and in line with our conservative revenue recognition, income will flow through at irregular intervals and in line with the timing of these resolutions. As touched upon by Patrick, our key performance metrics are the best indication of progress in building scale, and this doesn't immediately filter through in the same period. Instead, this will materialize over time as our portfolio matures. Additionally, as we continue to build on our portfolio, this will likely smooth earnings over time. That said, revenue for the period on a standalone basis was $7.7 million, gross profit was $ 5, and statutory loss before tax was $1.2 million. We have demonstrated that during this period, we continue to put our capital to work. More importantly, in reinforcing the momentum in our growth metrics, which are a strong indication of the progress we've made, our investments on balance sheet have grown by 108% to GBP 71 million. Invested capital during the period had also grown by 21% to GBP 22.3 million. On the balance sheet, we've touched upon invested capital. If we turn our attention to cash generation, this reinforces the fact that our realizations are far better aligned with the timing of our revenue recognition, with revenue being converted relatively quickly into cash. Cash at the end of February stood at GBP 26.9 million, placing us in a strong position to continue to deploy both in our existing portfolio as well as investing in new opportunities, which we've been observing an increase in applications. Additionally, we expect to see organic cash materialize as our portfolio is reaching maturity on the direct balance sheet side, which Patrick will talk to a little later on. The cash waterfall simply highlights that the two most significant movements during the period are those which are fundamental to our business, being capital deployment and cash receipts related to the resolution of matters. Expenses remain broadly in line with the prior period, and our cash position at February will further facilitate growth as we continue to invest in our growing portfolio of assets. Pass on to Patrick to talk through the portfolio. Thank you. I want to look now at LCM's portfolio. If we look at our current portfolio of direct investments, we currently have, in terms of 100% direct investments, meaning that LCM is funding 100% of the capital commitment in respect of those investments. There's $108 million worth of those capital commitments. If we look at then LCM's direct but co-funded investments, that being the 25% of the co-funded arrangements with the third-party pool of capital that we manage, that portfolio currently represents capital commitments of us of $63 million. $87 million combined of those two categories has been invested to date, with a balance of $84 million to be invested over the life of those investments. As investors know, those investments are progressively made by LCM on a monthly basis, right from the inception, from when we sign up those new commitments, right through until they're actually realized. Those investments are made progressively on a monthly basis over the life of the investments for us. If we again look at the structure of the portfolio of direct investments that LCM has built, we're looking for diversity across industry sector. The first pie chart there really demonstrates the way that we construct a portfolio such that it's not attended with concentration risk in respect of any one particular area. It's not only by capital commitment, but also by number, we're seeing the diversity there. The pie chart on the immediate right demonstrates really and proves the integration of the London team led by Nick, and the way that they are now generating at a similar level to what the traditional teams of LCM have in Australia and up into Asia. What we're seeing there is pretty much even contribution towards the origination of those investments, which comprise LCM's current portfolio of direct investments. If we turn over to LCM's asset management business and have a look at the portfolio that we have built and constructed in respect of that third-party pool of capital, for sure to which LCM acts as a fund manager. As we've talked about, that's currently 70% committed. We've got $151 million worth of commitments already entered into, leaving us with $56 million available to commit into the future. If we look again at the diversity of that portfolio, we're getting good diversity across industry sector. If you look at the second pie chart, we're looking there that the whole portfolio is not attended by concentration risk in terms of capital commitment in respect of any one particular investment. The same principles apply to the investments or the portfolio that we have built in respect of direct investments to our asset management business. We're looking for diversity. We're looking for a portfolio which is not attended with concentration risk. If we can turn over now to what the portfolio looks like in terms of maturity. Now, one of the things that investors continually request from LCM is a form of forecasting or a form of guidance in respect of what its forward earnings are going to look like. LCM, like other listed litigation financiers, is reluctant and not prepared to provide any sort of financial guidance moving forward, simply because our investments are obviously monitored and managed very carefully by LCM through to a profitable conclusion, but ultimately, those investments are not under LCM's control. We're investing in third-party disputes, where those disputes will be brought to an end or a conclusion, either by the parties to that dispute reaching a commercial resolution, or alternatively, if that's not possible, they'll be adjudicated by a court or tribunal. Just making an observation of that dynamic, an interesting aspect of this asset class is the fact that these investments have their own natural life. They are brought to an end irrespective of whether the parties to the underlying dispute have the wherewithal to negotiate a commercial outcome. An outcome will be imposed upon them by a court or a tribunal. In that sense, all of LCM's investments will have a natural life, and they will be brought to a conclusion naturally, either through the court or through the parties resolving their dispute. What I want to do is in respect of this slide is try and give investors some insight into what our portfolio looks like now, and hopefully give investors the tools that they might be able to get an insight into what our revenue stream might look like in the very near future. The first, I want to start on the right-hand side of this slide. We've talked about LCM's performance metrics over the last nine and a half years. Another metric which is important to bear in mind is, what is the average length of LCM's investments that it has brought to conclusion over the last nine and a half years? That has fluctuated in probably the last five years between 25 and 27 months. It's currently running at 27 months. If we take that 27 months as being a really good indication of what an investment, the typical life of an LCM investment, we then sort of move back across. If we look at then the maturity of LCM's portfolio of investments by number. What we can see there is the largest part of our portfolio has a maturity of between 13 and 24 months. That comprises 17 separate investments. If we move beyond that, seven investments fit into the category of 25-36 months, and then there's two outliers, which sit at the 37-48-month mark. What you can discern from that is a very large proportion of LCM's portfolio of direct investments is coming to the point of maturity now. Now, if we think about why perhaps some of these investments are taking longer to mature than they would have normally in normal market conditions, we look to COVID. COVID has caused delays in the court system, and there's two ways in which those delays have manifested themselves. First of all, at different times, different economies have gone into lockdown. In Australia, the predominance of the restricted lockdown happened at about this time or shortly after this time last year, when in the U.K. it was much later in the year when that occurred. The immediate effect of those was to shut down court systems such that everything froze. Nothing could progress through the court system. No hearings were taking place. The courts obviously adapted, as they must to ensure that commerce and economies can still function effectively to a digital format. They picked up within a matter of months and started operating again quickly. That has brought with it tremendous efficiencies in most of the court systems in which we operate. That's the first delay, was a physical delay, which put a certain number of months, maybe six months, onto our investments simply because the court system shut down and hearings couldn't take place. The second and less discernible delay that is occasioned by COVID is that the courts tend to allow indulgences in terms of timetables simply because there's restricted access and inability to travel and the like. When people and parties are required to put on their evidence, they're given an extra couple of weeks or month, and when their expert testimony is required, they get an extra couple of weeks. That has a tendency to elongate the time period. That explains why some of our investments are slightly stretched over the average time to completion. Finally, in respect of this slide, I want to make two points. The first one is, investors will say, "Well, how can we be sure which of your investments by size comprise these investments which on their face appear to be coming to maturity within the next sort of immediately through to the next 18 months?" If we look at the bar chart on the immediate left-hand side of that page, you'll see that our portfolio, in terms of the amount in dispute, is very evenly spread across. We're not managing a portfolio of small claims. We're not managing a portfolio of really large claims. It's a nice even spread across all of the sizes of those disputes. The final point I want to make is. The most mature portion of LCM's portfolio of investments are those investments where LCM is funding 100% of the capital commitment. What we can discern from this slide is that a very substantial part of LCM's portfolio investments are coming into their maturity stage, and that translates directly into an increase in LCM's revenue line. Secondly, we can observe that there's an even spread in terms of size across the portfolio, and we should expect that that will probably translate into and across the portfolio, which is coming into maturity. Finally, what we can say is, those matters and those investments which are in their most mature state, are those where LCM is funding 100% of the capital commitment. As a consequence of which, LCM and through LCM, its equity investors, get the full, 100% benefit of the economic upside in respect of those investments. I hope that provides some assistance to investors in terms of understanding where we are in terms of our investment cycle. The final observation I would make is, if you think about LCM coming to the U.K. market with a growth story, raising GBP 20 million at that time, that was December 2018. Once we had that capital available to us, we set about committing it. Assuming that that was committed over the next six to eight months, and then applying our average time to completion, you can see again that that GBP 20 million is coming into a period when those investments to which it was applied would be coming into their mature cycle. I want to hand over now to Nick Rowles-Davies, just to talk about the market conditions as they're currently presenting. Thanks, Patrick. Just to touch on market conditions and then shortly thereafter, the outlook for the next 12 months. The area in which we operate is entirely uncorrelated to the markets. Disputes in the form of litigation and arbitration are unaffected by political, economic or other market conditions, as we've mentioned before. Courts and tribunals don't change their decision-making in different economic conditions. They're consistent. Not only is the asset class uncorrelated, but each individual dispute within our portfolio is also entirely uncorrelated to the next. A loss in one particular investment is not reflective of the book, the portfolio or the merits of any of the other investments. Added to that, LCM's business benefits from being countercyclical and counter-recessionary. In times of economic uncertainty, instability, financial pressure, businesses tend to transact outside their normal business operating conditions, and that leads to an increase in disputes in times of economic instability. Recessions have increased or historically increased the number of disputes that we see. Economic uncertainty, instability, particularly brought about by COVID, is no doubt going to lead to an increased number of insolvencies, bankruptcies, and restructurings. Historically, this is an area of expertise for LCM and one of our core competencies, having been a pioneer in the industry, starting out in that space. We anticipate a significant increase in investment opportunities arising from insolvency and restructuring. In these times of economic uncertainty and instability, businesses tend to reserve balance sheet capital, keep hold of their cash flow for their core business, and that leads to an increase in interest in and the use of external capital for the funding of disputes. In particular, we're anticipating that this will be from both of the areas from where we receive corporate applications. As we've talked before, those funding out of necessity, the impecunious applicants, and those funding out of choice, those corporates who have the financial ability to pay their legal fees, but choose to use our funding instead of their own. The evidence of that is already there. We're seeing that and have done in the last period, and we've witnessed a 68% increase in those applications from corporates compared to the prior period. That covers pretty much market conditions for now. I want to move on to the outlook before that. I don't know whether, Patrick, you want to talk to the facility that we've recently entered into, or are we happy to go straight into outlook? We'll do that. Do that straight into the outlook. Yeah. Of course. Just the outlook currently and for the next 12 months. Given what we've seen in the first half of this year, the outlook is actually very positive, very healthy. We've had a marked increase in applications received from our strategic alliance with DLA and Aldersgate. A significant uptick in interest, discussion, and application from our other strategic alliances with global law firms. In those, we've introduced innovation and new thinking into those relationships, whether that be by way of education in the process to reach a positive investment decision or innovation in our origination collaborations. There's been an increase in demand for our capital from corporate clients as that instability and uncertainty remains in the global economies. The figure I mentioned previously is a year-on-year increase of 68% in applications from corporate clients. That shows the observations that we've made previously about the effect of the COVID-19 pandemic continue to be present from March onwards into the last 12 months. Those are the sort of the three effects that we've mentioned before. Those corporates who were in the midst of a dispute that have, at the very least, considered whether the allocation of the budget that they previously were going to use on legal spend is now appropriate and whether there's an alternative. Some of those corporates who are considering, but have not yet commenced their dispute, have also paused to think and have reconsidered whether the budget allocation is justified currently and whether the resources can be used better elsewhere. That's led to an increase in the discussions with lawyers over alternatives and alternative ways to address that legal spend. The result of that is the third effect that we've seen, which is an increase in demand from law firms for knowledge, and how things work, and a marked acceleration in the education and understanding by them of what we do. A number of large law firms are taking a keen interest in better understanding dispute financing, how it can assist them with their business development, their client acquisition, and of course, most importantly for them currently, client retention. That's reflected in the applications. Globally, as we've mentioned, and Patrick already said, these are up on last year by 5%, averaging around 46 good quality applications a month. This is not inquiries. These are paperwork supplied with a good quality review, so substantial applications. That includes 29 portfolio applications. To end of February, whilst globally everything's tracking well, and as Patrick alluded in previous comments, despite the difficult conditions for origination and business development, the needs to pivot and change as to how we've done that, no physical travel and everything being done virtually, all of the teams have managed to cope well and increase the number of applications. We're definitely seeing a large uptick in the European and EMEA region. To the end of February, the increase has been quite significant, and compared to the same period last year, we're up by 40% in terms of good quality applications. Things are positive in that regard. By the end of 2021 and into 2022, we were anticipating an increase in the number of applications from the insolvency and restructuring field as the various government moratorium regimes and stimulus programs come to an end. I think it's fair to say that our portfolio of investments is maturing, as Patrick's just shown you the range of those investments. The effect on slide 10 of the combined portfolio profile is that more than 65% of those investments are entering a duration where, given our experience and the historic average duration of 27 months, they're reaching a period of maturity. Lastly, in terms of outlook, our third party fund and our asset management model, we're tracking as expected as regards to commitments to the fund of high quality investments. As you've heard earlier, we're considering carefully the next step to increase in size or the size of our assets under management and the fund size. That's pretty much it for where the market sits and what we're seeing now and what we're expecting in the coming six to 12 months. With that, I'll pass back to Patrick just to talk about one slide that we've overlooked. I just want to go back to the credit facilities slide and provide a little more information around that facility. As I mentioned in my opening remarks, LCM's board looked very carefully at what the capital options were available and what options it could avail itself of in terms of introducing additional capital to LCM's balance sheet to continue to permit LCM to grow and to grow its portfolio of investments. We looked at the entire range, from raising capital through equity, through commercial bonds, and ultimately settled upon the credit facility that we entered into in the last month. That was principally for two reasons. One, it was the cost of capital. If we compared the cost of capital of this facility as against raising capital through equity, that equity capital was just incredibly expensive, given that the company is trading at a particular share price, which in view of the board, is not reflective in any way of the intrinsic value of this company. Raising capital, permanent capital through equity was an incredibly expensive option for us. In respect of flexibility, raising commercial bonds requires you to actually draw that capital down and start to pay the interest rate component of that in respect of the entire facility on day one. We really needed the flexibility to use that capital only when LCM's balance sheet needed it as a bridge to organic capital. When we weren't using it, we weren't paying the coupon. We settled on this facility as being the best option. If we talk about what we're paying in terms of an interest rate or coupon rate in respect of having those funds available to us, we have two components to that. We have a fixed interest component of 8%, what's currently 8%, and it's fixed off LIBOR with a base of 1%. It's currently fixed at 8%, and then there's a profit participation in LCM's direct investments, which is capped at 13%. The maximum cost to LCM in respect of these funds at any particular point in time when drawn is 13%. When one compares paying for their capital at that rate, compared to what LCM has performed at in terms of an internal rate of return on its investments of 78% currently, there's adequate margin in there for us to adequately utilize this capital facility really to drive LCM's growth. If I want to, just in my closing remarks, about where LCM sits in the market, you've heard from Nick about the opportunities that we're seeing out there in terms of growth and the quality applications which are being originated by our investment managers. We've talked about introducing capital so that we can actually fund these opportunities which we're generating and originating inside LCM, that capital is either coming from the facility or coming from organically generated capital through our mature book of investments, we're also continuing to grow our asset management business. If we look at LCM's profile, we've got a ready source of capital, from both asset management and balance sheet capital. We've got economic conditions which are really conducive to driving people, and corporations most particularly, towards wanting to use an external source of capital to fund their disputes. LCM is in an incredibly good place, given our history and our experience, to take advantage of these market conditions and the capital available and the demand for our capital. We look at this outlook as being really, really positive going into the next few years. Happy now to field or answer any questions that investors might have. Many thanks, Patrick. To ask your questions, kindly raise your hand using the hand icon at the side of the control panel or at the top on a mobile or device, or type your question into the box on the right-hand side at the bottom of the control panel or at the top on a mobile or device. We have a question here which asks, "Why did the firm's commitment rate slow down between September 20 (60%) and March 21 (70%), compared to the first 60% committed in six months between March 20 and September 20? Is it because of a lack of own capital pre-RCF due to project delays? Look, there's a number of reasons why the perception might be present that the commitment rate has slowed down. The first observation to make in respect to that is, the receipt of applications and our ability to convert those applications into funded projects is not entirely dependent upon LCM. It's also dependent upon the funded party in reaching commercial terms. The way that progresses is not always linear. You have fits and starts in that process. In some months you originate more applications. In some months you diligence more applications and they travel through the process and the IC process. The second observation I'd make is that the perception is that there was very quick commitment rates in the beginning. What investors need to remember is that in the months preceding closure of that fund, we had prepared a portfolio of, I think, nine separate investments which we seeded into the fund pretty much immediately upon its closure. That gives you the perception that the commitment rate early in the cycle was much better than the latter part of the cycle. I think that's the effect that you're seeing. Then the final observation I'd make is, our investments, as you've seen from slide 10, range in capital commitment size very markedly. At one end of the scale, you have a dispute, which might be about between GBP 10 million and GBP 20 million, and the budget in respect to that or the capital commitment is relatively modest compared to at the other end of the spectrum, you have claims, I think we had two in number, which were in excess of half a billion GBP in dispute size. As you can appreciate, the capital commitment in respect to those is very much more. If you're originating, diligencing, and passing through the investment committee process a very large claim, it eats up capacity much quicker than a bundle of smaller claims. Thank you. Regarding third party managed funds, can you elaborate further on the type of structures these investments are in? Are they multi-year commitments? What's the management fee, et cetera? Are LCM aligned with the underlying investors? For example, do you also invest capital in these third-party funds? Yeah. The structure of our third-party funds management business is utterly aligned with the interests of both the investors in that third-party fund and equity investors. The way we get that absolute alignment is in two forms. The first is that every single investment that LCM originates, which meets the fund mandate, is co-funded as to 25% from LCM's balance sheet and 75% from the pool of third-party capital that LCM manages as fund manager. You get this absolute alignment between that. LCM equity investors enjoy the full economic upside in respect of that 25%, and the fund enjoys the economic upside in respect of the 75% commitment, with the exception that LCM as fund manager gets a proportion of that profit, depending upon the way that each individual investment performs. Now, LCM does not receive a management fee. Made a choice to have an increased performance fee in respect of those investments. We get 25% of the fund's profits in respect of each investment, up to an IRR of 20%, and then above that, it's a 35% profit split in LCM's favor. There's two ways that we're utterly aligned in terms of balance sheet and fund. First of all, is participating through our performance fees, and the second is through co-funding. Thank you. Can you please clarify what the $21.1 million net cash movement post-period on slide seven was derived from? Mary, do you want to talk to that? Sorry, I was just on mute. Yes. The $21.1 post-period cash movement was the initial drawdown on the facility that we closed at the end of February, offset by further deployments in investments from that period through to end of Feb. Thank you. Have you resolved as to the requirement or otherwise to move to fair value accounting? LCM's position is not moving to fair value accounting. We are very comfortable with the very conservative approach that we take with respect to accounting principles. Unlike other of our listed peers who have moved to fair value accounting, we're very comfortable recognizing revenue only when it's earned and LCM has fulfilled all of its obligations such that we become entitled to both the return of our capital and our profits. That inevitably leads to a more lumpy revenue line, and it means that LCM may not necessarily generate or receive its revenue in one or other of the halves of the financial period. That should not be a concern to investors. It's simply the way that LCM's revenue line works, and we don't recognize any intrinsic value in our revenue line of investments prior to them reaching full maturity and receiving the proceeds. Thank you. I understand the comparison of relative cost of the debt facility to alternatives and the return on invested capital, but the coupon and participation looks very expensive. Why did the bank insist on such a high rate of return for secured debt? Look, we tested the market really vigorously. We got in excess of four offers of capital from global sources, and that was the best LCM was able to achieve in terms of available capital at our particular stage of growth and evolution. We were pretty comfortable. We got advice from a number of investment banks as to what we should be expecting to be able raise a capital facility at. We managed to secure capital at a rate which was below that which we were advised we should expect to receive. We have really just met the commercial market in respect of that facility. Thank you. It's fluctuated presently between 25 and 27 months. We have recognized, and investors would recall this from reading our annual report, that as we have a larger capital base to operate with, and as we build our portfolio such that we can invest in larger disputes with larger capital commitments without affecting that portfolio with concentration risk. Those disputes, those larger disputes, where the dispute is about a larger sum of money, will probably elongate compared to the smaller disputes. Over a period of time, we probably expect that 27 months to elongate slightly. The simple dynamic that is at play there is that the larger the amount of money that people are fighting over, the harder they'll fight and the longer they'll fight and the more obstacles they'll put in the plaintiff or the claimant's way to reaching a conclusion. We're realistic about that. In respect of the portfolio which is coming into maturity, we would not expect it, other than the dynamics that I've described in respect of COVID, to display any different characteristics to those that we've completed within the last nine and a half years. Thank you. Should shareholders be concerned that COVID or due diligence changes could result in lower returns when these cases complete in 2022 and 2023? Investors should not be concerned about that at all. LCM has not relaxed any of its really rigorous due diligence or risk underwriting processes. They're not really affected by COVID. The way we go about origination and business development in terms of sourcing our opportunities, we've had to change and adapt simply because we haven't been able to travel and we haven't been able to have face-to-face meetings with our referrers. In terms of the underlying processes and methodologies that LCM has developed over its 22-year history, in terms of underwriting and assessing the risks associated with these investments, that has not changed at all during the period of COVID and will not change moving forward. Thank you. Sorry. Can I add to that? The way we price our investments means that to the extent that anything's been pushed out, the vast majority of these investments are priced on a multiple of invested capital increasing over the duration. We've built in a safeguard to ensure that our returns actually probably increase the longer they take, because we see that as a higher risk in terms of general investments. Investors shouldn't be concerned about that. Thank you. When you receive a proposal, how do you assess the chances of winning? Well, LCM has a criteria which is applied to that. A quick gallop through that criteria is, first we're looking for disputes where the legal principles are well settled and predictable. Secondly, we're looking for disputes where the underlying evidence is in documentary form, as opposed to relying upon oral testimony. We obviously recognize there's risk in a case being reliant upon someone's performance in the witness box, and that's the type of investment we would avoid. Thirdly, we're looking for a clear line of sight in respect of recovery. We look very hard and very closely at whether we will be able to recover against a target or a defendant, and that typically drives us towards defendants who either have deep pockets and adequate financial resources. Alternatively, defendants which are backed by some form of insurance, whether it be directors and officers policy or professional indemnity. The next criteria is we look really closely at the proportionality of that claim to ensure that at all times during the progress of that investment, there's an alignment between the funded party's interests and desires and that of the funder. These principles do most of their work in the smaller claims, such as to ensure that the funder and the lawyer are not taking all the proceeds of a particular dispute, because otherwise you have an un-alignment between the funded party who may be getting a disproportionately small amount. They're the types of investments which we would avoid, simply because we want to have absolute alignment between the funded party and the funder. The final criteria is that we're looking for a legal team who can prosecute that claim adequately and appropriately and diligently through the court system. That may sound really simple and straightforward, but it's really a criteria which is grounded in discipline because often you not infrequently, you'll get an application which will meet our other criteria, and we can see that that is an investment that LCM could generate significant profits for shareholders. We know that the legal team will not prosecute that with due diligence and dispatch, and we need to have the discipline to say, "That's not an investment, because that legal team represents too much risk for us," even though we can see inherent value in that underlying dispute. An investment manager will apply those principles, and ultimately, there's a process which leads to a decision being made by our investment committee. That's a very quick run through the process, and it obviously has a lot more detail to it. In the context of this forum, that's probably as quick as I can go through it. Thank you. A question about upsizing of the first fund or launch of the second fund. Is the 25% co-investment rate sustainable over time? Is the launch of a second fund of $ 300 million-$ 350 million, as you mentioned six months ago, still the base case? Yeah. We as a company are very conscious not to simply go into the market and raise capital just to bolster our asset management business. We're conscious that we need to be able to put that capital to work, in other words, commit it and then invest it within a sensible period of time. We think we could comfortably cope with a fund of $300 million-$350 million and we could commit and deploy that within a reasonable period of time. We're still very confident that's the correct number. We are still contemplating with stakeholders whether it's best to upsize the existing fund. Part of the drivers in respect of making that decision was really our ability to actually get out there and conduct a proper roadshow, given the restrictions on travel across the globe currently. We're in the final stages of that process and we are very confident that we will be in a position where we will make a decision and then bring to a closure either an upsize or a new second fund within a short period of time. Thank you. Operating in multiple territories supports further growth, but does it also provide other benefits in relation to choice of territory for litigation or specific potential investments? Look, I think when LCM thinks about its longer-term strategies, one of those is certainly looking at new territories in which for us to operate. I think equity investors should expect that LCM will approach that in the same way that we've approached expansion in the past when we expanded up into Asia and when we expanded, ultimately establishing our U.K. office, headed up by Nick. We did that in an incredibly disciplined fashion, and we would not move into a new territory unless we had an experienced team that we could put on the ground from day one. Not only that was sort of really familiar with the legal principles associated with that particular jurisdiction, but more than that, would understand the actual culture of the dispute scene and the legal profession within that particular territory. Those issues for us are paramount, and we would not move into a new area unless we were satisfied that we had the right team in the same way we did when we brought Nick and his team on to form our U.K. office. Thank you. Can you give us an update on the corporate portfolio? Have you acquired new portfolios, and how are the current portfolios doing? I'm grateful to hand over to Nick to answer this one and give myself a quick break. Just touching on the existing corporate portfolios. We've had the benefit of some resolutions within both the aviation portfolio, and in one of our first construction portfolios that have produced revenues that have been reported already. They continue to make progress. In relation to the aviation, I think we started at 38 cases in that book, and it's now up to nearly 50. That's despite the resolution. The client has continued to believe in the process and put new cases in. We had 29 applications for portfolios within the last period, and that includes both corporate and law firm and insolvency portfolios. That means that we're tracking quite well in relation to those matters. I think it's fair to say that we continue to operate on the basis that Excuse me. We continue to operate on the basis that that's an area for us which we see significant growth. It's an area where we're distinguishing ourself from the market. Clearly in the last nine months, we've had to look at the way in which we originate those, and we very much work with our law firm and strategic partners to generate those leads. That said, what we've been pleased with is the reaction from other areas of the market where, again, probably because of the effects of COVID, other people have come to us with an interest in how they might operate in the same way. I think it's fair to say that the ones that we have ongoing are producing returns and kind of proving the model that we expected, which is that the revenues come a little bit more quickly than the 27-month period. They're slightly, what we've referred to as evergreen, in that they continue to produce new investments from the same portfolio. Also, we have some still in due diligence. One of the largest, probably the largest construction portfolio, or the largest corporate portfolio that's been done certainly by LCM, remains in due diligence and is an indication of onward strength and how we've been originating good transactions and continuing to make significant progress. Very much positive. Not just in corporate portfolios, which obviously was very much our thrust. We've been pleased with the way that the law firm portfolio transactions are beginning to get some traction. All in all, really positive. Thank you. How do you see competition in the corporate portfolios? Are you seeing more competition from your peers? Look, I think the answer to that is, we're not seeing any competition in the marketplace at the moment. To be perfectly frank, I think Nick and I would like to see more competition in that space simply because it'll help getting the message out to corporates. We seem to be the only funder globally who's actively focused on that part of the market, and I think it's such a large and vast market out there. There is room for perhaps a dozen funders to be focusing on that market globally. To date, we're really not seeing a great deal of competition, if at all. Do you expect insolvency cases to be the biggest driver of growth in committed capital over the coming 12-18 months? How does LCM compare with our peers that focus specifically on insolvency, such as Manolete? I think the answer to that is we would not expect there to be any significant increase in the number of applications in respect of insolvency or restructuring-related disputes within the near term. Even though governments globally may stop stimulus packages and then relax the moratorium against winding up corporations or placing them into bankruptcy, the reality is that once an external administrator or controller is appointed to an insolvent corporate shell, there's a time lag between that insolvency practitioner really investigating the affairs of that company and identifying the courses of action which require funding, and then submitting an application through to a funder to bring that into one of the portfolios of investments that LCM manages. The reality is that, I think it's inescapable that we are going to see an increase in the number of externally administered insolvent companies. We're going to see an increase in bankruptcies. We're going to see an increase in restructuring across all of the markets in which LCM operates, undoubtedly. There will be a lag in respect of that. Once those applications start flowing through, we would expect, and it's been our experience in the past, having funded through the global financial crisis and the back end of the Asian credit crisis. That those applications will continue for very many years thereafter until the limitation period sort of expires. You've got a good six-year flow once that starts of insolvency and restructuring-related disputes, which will require funding. We certainly see it as an area of growth, but not as soon as perhaps some other of the funders have been talking about. Whether we regard ourselves as being in competition to other funders who focus solely on insolvency market. Look, we don't operate in direct competition on a day-to-day basis with Manolete. We operate a far more diverse business and focus on far more diverse sectors in the marketplace than simply smaller scale insolvency. Thank you. In LCM's fund, is there a catch-up on the 35% profit share after a 20% IRR or is it just a 35% share on all profits above a 20% IRR? There's no catch up. We get a 25% profit share up to the 20% IRR, and then we get our performance calculated at 35% thereafter. If one considers that the IRR that LCM has achieved over the last nine and a half years has been 78%, inclusive of losses, we would have a fairly high conviction and expectation that we will be operating largely in the area of outperformance. Thank you. How much of the $50 million facility has been drawn down? If a significant proportion, is there any further need for more debt capital? Well, currently, LCM has drawn down $25 million of that $50 million. That puts us in a strong financial position for the foreseeable future. Whether there's any need in the immediate time for any additional capital facility, the answer is no. Thank you. Is there a trend in average claim size? Are you now handling more larger and presumably slower claims than, say, five years ago? Yeah. It comes down to the discipline associated with building a portfolio of dispute investments. As we talked about before, we ensure that any portfolio that we build or create is not affected with concentration risk in respect of any particular investment dominating the capital commitment. As LCM's capital resources increase and as the size of the portfolio we're managing increases, it enables us, without attending that portfolio with undue risk, to enter into capital commitments of a larger size. As I said previously in answer to one of the other questions, when you're funding a dispute which is larger, they normally take longer because people fight longer and harder about larger sums of money, and they fight longer and harder by adding complexity to those disputes and putting impediments in the way of the claimant or the plaintiff to a judgment or an award. That will have a tendency to elongate the time. That needs to be measured against the benefit to LCM of being able to increase the size of the profit split or the fee that we earn in respect of these investments. Thank you. Are you seeing increasing competition and thereby pricing pressure? No, we're not seeing pricing pressure anywhere. I might get Nick to talk to what he's seeing more directly in the northern hemisphere. In the southern hemisphere, I think with the onset of regulation in respect of class actions, which was brought in to the Australian market in August of last year, I think the observation we have made in the marketplace is that has dampened competition from offshore litigation financiers coming into our market. It has increased the regulatory burden that is required in respect of funding class actions moving forward, and that's proved to be a disincentive in terms of litigation financiers operating from offshore and putting their capital to work inside the Australian market. I think that has had a tendency to drive litigation financiers out of the market who don't have a permanent presence in Australia, which has lessened the competition. I think that there's not a great deal of competition in the Asian markets currently. It's dominated principally by two funders, one of which is ourselves. We're not seeing a great deal of competition in that market, which is still emerging and providing a really steady flow of quality applications in arbitration and trade. Nick, I might just get you to comment upon what you're seeing in the markets in which you operate. Clearly, there are more funders in the market than there were, but the quality of their ability to execute and the amount of funds under management or access to capital that they have varies significantly. What you're seeing in the EMEA market is a slightly more sophisticated approach from lawyers. They've grown in education over the last 10 or 15 years, and they understand that price is not everything. Now, what that means is that some lawyers will run a process but appreciate that maybe access to large capital, being regulated, namely on the stock exchange and by the Jersey FSC in a largely unregulated market, and having transparency by being listed is a big plus for an awful lot of law firms when they're dealing with funders. That automatically cuts out a lot of the competition which tend not to operate. Of course, there are only a small number of listed funders globally that are on the public markets. There are still the broker-led introductions, and some firms will use them, and some clients will use them. I think the U.K. is unique in that respect because of the historic insurance markets. The brokers tend to try and compare everybody, apples with apples. We have a strategy to deal with that. I mean, firstly, we don't do an awful lot of broker-led introductions. We refuse to get involved in a race to the bottom over price because the price that we charge reflects the risk, and the risk doesn't change regardless of the other circumstances around the case, such as the fact that there's competition. Most funders in the London market now that we operate against, if we do come up against them, are sophisticated and have been there for a long time, and they understand the same things, so they price appropriately. We're very much distinguishing ourselves from the rest of the market or trying to, by gaining specialisms in certain niches, whether it be construction or insolvency or aviation or oil and gas or whatever it is. That because of the nature of the highly qualified and top professionals we have within LCM, we're able to do that. When you look at other funders, if you take off the branding, a lot of them are exactly the same. You wouldn't know one from the other, if you read their verbiage or their websites. Hopefully with LCM, that's a difference because we're adding some value over and above just being a source of capital. The short answer is there is more competition in single cases. There's none in portfolios, and as Patrick's alluded to, it would be helpful to have slightly more innovative opposition in that respect because that would educate the market and mean that every time that we pitch, we don't have to educate as to what we can do and what solutions we can provide. There is something changing on that front but going slowly. Of course, a lot of our work in terms of origination is the innovation with the likes of the DLA Aldersgate arrangement, which because of its structure allows very competitive pricing at the same time as being a very warm professional introduction from a top global law firm. Clyde & Co, the same effect because they know our processes. It's not simply that we get to look at a large number of their cases, but one of the huge benefits of working with these firms, and the same with Norton Rose Fulbright, is that they understand how they can quickly get to a positive outcome. They can triage their own cases, and that means they'd rather work with us than go to the market. There's very little competition in that respect. In short, yes, the market is a fuller market than it was. In some areas, there's an increase in competition, namely funding out of necessity in the broker-led region. Where we do our best work and where, of course, the vast majority of untapped cases are, which is funding out of choice, the corporate world, we don't face an awful lot of competition. When we do, we're careful not to get involved in a race to the bottom. Hopefully, that encapsulates the market really. Thank you. In the $21 million net cash movement post period, are there any proceeds or receivable movements? Mary, I might get you to talk to that one. Yeah, sorry. There are some smaller receivables that have come through. There's also deployment included in that figure. It's a combination of cash drawn down, receivables coming through, as well as deployments being made. Thank you. As you scale up on own and managed funds, do your costs increase proportionately? Can you give an idea of the opportunities for efficiencies of scale? Look, I think we haven't included the slide which we typically include in our full-year results, which tracks our operational expenses as a percentage of our overall portfolio of assets under management. What I can say is that that's been tracking down from the time that we did our first IPO on the Australian Securities Exchange. It was tracking from memory at about 13% of our portfolio. When we did our full-year results, it was tracking down at around 4% or below. There's certainly efficiencies which can be drawn from operating a larger portfolio. We will inevitably have to increase, in some respects, our team as we have larger pools of capital under our management. We're very conscious when we are increasing our operating expenses that we do so in line with an increase in the size of the portfolio of assets under management. We're very conscious of that, and we are very disciplined about the way that we grow the business in line with the growth that we're achieving in terms of the size of the portfolio under management. Thank you. How do you think your business model will perform if inflation picks up over the next three to five years? If so, is it a good hedge against inflation for investors? Look, I think that I wouldn't necessarily always lean towards inflation as being something that one would hedge against in respect of the litigation finance industry. I think I would rather sort of lean towards the fact that it's a good hedge against the countercyclical nature. It's a very good hedge against a downturn in an economy because we tend to get more applications coming and a more demand for our capital, both from corporates and from insolvency practitioners. I think it's probably a better hedge against a downturn in an economy than it is necessarily in relation to inflation. I think we all need to accept that there is gonna be turbulence in economies as global governments or governments across the globe withdraw stimulus, which they have to do at some point. Many thanks. We do have more questions, but we've run out of time. Patrick, do you have any closing remarks? I just reiterate that with the additional capital that LCM's got available to us, with the market conditions which are generally prevailing, and with LCM's experience in the marketplace, we are very much moving into a period which will be incredibly conducive to both LCM's growth and an increase in each revenue line. Thank you, Patrick and Nick and Mary, and to you all for joining. You will now be taken to a webpage to give some anonymous feedback on Litigation Capital Management and today's presentation. If you're unable to complete this now, you'll receive a follow-up email about an hour later. We'd be really grateful if you could take a few minutes to complete. This is the end of the webinar. Thank you.