Trading Update & Directorate Change
24 January 2020
RBG Holdings plc
(the "Company" or the "Group")
Trading Update & Directorate Change
RBG Holdings plc (AIM: RBGP), the professional services group, has today announced the following trading update ahead of the publication of its full-year results for the twelve months ended 31 December 2019 on 21 April 2020.
Furthermore, the Board is pleased to announce that Keith Hamill OBE will become the new Chairman of the Group as of today, following the decision of the current Chairman, Stephen Davidson, to step down to focus on his other Board appointments.
The Group expects to report financial results in line with market expectations, and which are significantly ahead of the 2018 results. The Group continued to deliver healthy revenue growth during 2019, aided by contribution from Dispute Resolution, litigation finance and the Convex acquisition.
The Group's law firm, Rosenblatt Limited ("Rosenblatt" or the "Firm"), had a steady performance from its primary practice areas, which are focused on contentious law, including Dispute Resolution. The continued success of this division, which accounts for the majority of the Firm's revenue, has allowed Rosenblatt to increase the amount of contingent work that it has taken on. When Rosenblatt enters into conditional fee arrangements, which can generate incremental margins on a successful case outcome, no revenue is recognised until the outcome of the event has occurred. Such revenue is considered contingent, and in 2019 the amount of contingent work increased to £2 million.
The Firm's Corporate division, which is focused on commercial transactions, saw reduced billings due to the impact of the cautious business environment caused by Brexit uncertainty. The trends highlighted at the Group's interims, therefore continued through 2019, with revenue contribution from the division being subdued. However, since the year-end, following the decisive election result, the Group is beginning to see a significant increase in the number of transactions the division is working on as client confidence has improved.
The Group successfully closed the acquisition of Convex Capital in September 2019, and the integration of this business is on track. Despite only being part of the Group for a short period, Convex has already contributed incremental revenues. The full benefits of the acquisition are expected in the current financial year. Convex has a significant pipeline of transactions, and the Group expects to increasingly benefit from capturing Convex's legal spend within Rosenblatt, as well as future cross-selling opportunities.
The Group continues to successfully implement its strategy, including growing its litigation finance arm. The Board has taken a very prudent approach to litigation finance opportunities, including adopting a conservative accounting methodology. As part of its strategy to realise the intrinsic value of its litigation finance investments, while de-risking its balance sheet and recycling funds into new cases, the Group continues to sell participation rights in its cases to third parties. Further revenue has been generated in the second half of 2019 as a result of this strategy.
The Group currently has £2.2 million invested in eleven cases which are yet to conclude, of which, £1.9 million was invested in 2019 (2018: £0.3 million). In January 2020, the Group announced the pre-trial settlement of Project Blue Sky, one of its internally funded litigation cases. The return on the Company's investment in the case, in terms of cash and time, was 184% with an Internal Rate of Return of 317%. The settlement, while not material in terms of the Group's forecast full-year financial results for 2020, is, however, the first successful completion of a case that the Group had invested in since its IPO. It demonstrates the significant returns that can be achieved through the Group's litigation finance strategy.
The Company's balance sheet remains strong. In line with the Group's dividend policy, the Company intends to pay an interim dividend for the six months to 31 December 2019 of 3 pence per share. The amount of the dividend will be formally announced on 21 April 2020 and will be paid to shareholders on the register as at 1 May 2019. The total dividend for 2019 is therefore expected to be 5 pence per share.
Agreement with Ian Rosenblatt
The Company has negotiated an extension and broadening of the restrictive covenants put in place at the IPO (and described in the Company's admission document) to an additional two year term through to 2023. In consideration of this arrangement, the Company will make a one off payment to Mr Rosenblatt of £1m.
The above arrangement is classified as a related party transaction under the AIM Rules for Companies. The Directors consider, having consulted with Stifel as nominated adviser, that the terms of the agreement are fair and reasonable, insofar as shareholders are concerned.
The Board is pleased to announce the appointment of Keith Hamill OBE as the new Chairman of the Group. He will join the Board today and replace Stephen Davidson. Mr Davidson is stepping down to focus on his other Board appointments.
Mr Hamill is a highly experienced corporate director. He is currently a non-executive director of Samsonite, where he also chairs the Remuneration Committee and is a member of the Audit Committee of the Hong Kong-listed company. Mr Hamill is also the Chair of Horsforth Holdings Group, a private company providing outsourced leisure services.
Mr Hamill's experience as a listed company chairman includes Collins Stewart, Tullett Prebon, Moss Bros, and Premier Foods. His non-executive roles have included easyJet, Electrocomponents and Max Property. He was also Chairman of Travelodge and Heath Lambert and was appointed the chairman of a number of companies to lead financial and operational restructurings. He was also the Pro-Chancellor and President of the Council of The University of Nottingham. Earlier in his career, he was Chief Financial Officer of Forte and WH Smith as well as a Partner in PricewaterhouseCoopers.
Nicola Foulston, CEO, RBG Holdings, said: "2019 has been a year of substantial progress, with the Group continuing to perform well in a challenging business environment. We are beginning to see the benefits from our focus on litigation finance opportunities, and we completed our first piece of M&A since the float with the acquisition of Convex Capital in September. Convex will contribute fully to the Group this year.
"2020 already looks promising, especially in our Corporate division, where there has been a pickup in activity post the election. I am very positive about the future of the Group. As well as continuing to take advantage of all the market opportunities we see, I am also delighted to welcome Keith Hamill to the Board, with his considerable City experience, and also thank Stephen for his help and support. We wish him well for the future."
Stephen Davidson, outgoing Chairman, said: "I am delighted that someone of the calibre of Keith is replacing me as Chair. Since the flotation, the business has done a huge amount in terms of delivering its strategy, as today's trading update shows. I have greatly enjoyed working with Nicky and the rest of the Board and am looking forward to witnessing the continued growth of the Company."
Incoming Chairman, Keith Hamill, commented: "I am very pleased to be joining the Board of such an exciting company. Nicky and the team are developing a new type of professional services group, building on Rosenblatt's heritage. Having worked with Rosenblatt in previous roles, it is a business with a strong reputation for client service and innovation. I look forward to working with the rest of the Board and management to create value for our shareholders."
RBG Holdings plc
Nicola Foulston, CEO
Via Newgate Communications
Stifel (Nominated Adviser and Broker)
Tel: +44 (0)20 7710 7600
Stewart Wallace (QE)
Newgate Communications (for media enquiries)
Robin Tozer/Tom Carnegie
Tel: +44 (0)20 3757 6880; [email protected]
Notes to Editors:
Disclosures required by Schedule 2(g) of the AIM Rules for Companies
In the past five years, Keith Hamill, aged 67, has held the following positions where he was acting in the capacity of a Director:
Samsonite International SA
Horsforth Holdings Limited
On Board Leisure Holdings Limited
TSA Service Limited
1LMS Holdings Limited
1Life Management Solutions Limited
Smart Fit Fitness Limited
Smart Fit 35 Limited
Trustee, St George's British International School in Rome
Aldrington Investments Limited
Florida Squalo LLC
Community Sports Arts & Leisure Trust
Bagir Group Limited
Easy Jet Limited
Premier Foods Plc
Keith Hamill also makes the following disclosures in accordance with Schedule Two paragraph (g) of the AIM Rules for Companies.
Travelodge Hotels Limited (Keith Hamill served as Chair from 5 March 2003 to 13 June 2012)
On 17 August 2012, Travelodge Hotels Limited ("Travelodge" or "the Company") implemented an operational restructuring via a Company Voluntary Arrangement ("CVA"). Keith Hamill resigned from the Board in June 2012.
Danoptra Limited (Keith Hamill served as Chair from 1 September 2008 to 17 January 2013)
Danoptra Limited ("Danoptra") was a former investment made by Cognetas (now "Motion Equity Partners") in a gaming machine group. The business was taken over by its secured lenders in 2010, and, at the time, Keith Hamill was appointed Chair in order to assist with the workout of this business. In July 2012, Astra Games purchased its assets and subsequently on 3 April 2013, Danoptra implemented a creditors voluntary liquidation.
Community Sports Arts and Leisure Trust (Keith Hamill has served as a Director from 10 September 2018).
Community Sports Arts and Leisure Trust ("CSALT") was a trading partner of a subsidiary of Horsforth Holdings operating in the Leisure sector. Advice is currently being taken on liquidating CSALT possibly on an insolvent basis. Keith Hamill joined the Board following CSALT entering into financial difficulties to assist in the orderly wind up of its affairs. CSALT has no known liabilities except to the Horsforth Holdings Group.
Keith Hamill does not have any interest in the ordinary shares of the Group.
There are no further disclosures to be made pursuant to Schedule Two, paragraph (g) of the AIM Rules for Companies.
About RBG Holdings plc
RBG Holdings plc is a professional services group, which includes one of the UK's pioneering law firms, Rosenblatt Limited, which is a leader in dispute resolution.
Rosenblatt Limited provides a range of legal services to its diversified client base, which includes companies, banks, entrepreneurs and individuals. Complementing this is the Company's increasingly international footprint, advising on complex cross-jurisdictional matters. Rosenblatt Limited's practice areas include dispute resolution, financial crime, corporate, banking and finance, insolvency and financial restructuring, construction and projects, employment, financial services, IP/technology/media, real estate, regulatory and tax resolution. The Group also provides litigation finance in selected cases through a separate arm.
The Group also owns Convex Capital Limited, a specialist sell-side corporate finance boutique, based in Manchester, UK. Convex is entirely focussed on helping companies, particularly owner-managed and entrepreneurial businesses, realise their value through sales to large corporates. Convex identifies and proactively targets firms that it believes represent attractive acquisition opportunities.
 including where services are provided under Alternative Billing Arrangements such as Damages-Based Agreements or Conditional Fee Agreements
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