20 April 2021, 07:01

Source - LSE Regulatory

RNS Number : 9665V

RBG Holdings PLC

20 April 2021

RBG Holdings plc

("RBG", the "Group", or the "Company")

Audited Results for the year ended 31 December 2020

Solid performance as Group benefits from diversified revenue streams

RBG Holdings plc (AIM: RBGP), the professional services group, is pleased to announce its audited results for the year ended 31 December 2020.

Financial Highlights:

· Group revenue and gains on litigation assets up 8% to £25.6 million (2019: £23.7 million)

o Professional Services revenue up 12.6% to £22.4 million (2019: £19.9 million)

o Gains on litigation assets of £3.1 million (2019: £3.8 million)

· EBITDA of £10.2 million (2019: £9.4 million)

· Adjusted EBITDA[1] of £7.5 million

· Profit before tax of £7.7 million[2] (2019: £7.6 million)

· Profit after tax of £6.7 million (2019: £6.2 million)

· Paid dividend of 3p per share in respect of the 2020 financial year on 26 February 2021

· Balance sheet remains robust with net cash of £3.5 million as at 31 December 2020 (31 December 2019: £1.9 million)

Operational Highlights:

Rosenblatt Limited ("RBL") - Strong focus on maintaining margins and cash collection

· Revenue of £20.9 million, up 15% (2019 £18.1 million) - most successful year ever in terms of professional services revenue

· RBL took on more contingent work in 2020 with associated unrecognised time worked of £2.1 million (2019: £1.9 million)

· Average revenue per fee earner: £425,800 (2019: £393,000) placing RBL in the top 10 in the Legal 100; three partners added during 2020 taking total fee earners to 49 (2019: 46)

· Utilisation / Realisation: 89% / 106% (2019: 77% / 96%) - well ahead of 75% & 85% target respectively

· Dispute resolution division performed well with corporate division revenue double that of 2019

· Strong cash collection - Total Lockup[3] was 99 days (2019: 122 days) of which debtor days were 47 days (2019: 45)

· Five contingent cases via alternative billing arrangements are being progressed. Some larger investments provide a potential return that is not provided in market forecasts

LionFish Litigation Finance (UK) Limited ("LionFish") - Leverage assets to provide significant one-off returns

· In May 2020, LionFish launched as a provider of finance to the third-party litigation market (not RBL cases) with an experienced Managing Director, Tets Ishikawa

· LionFish has received 240 enquiries for finance, and seven cases have been invested in as at 31 December 2020

· Total cash deployed of £1.8 million across seven cases (as at 31 December 2020). Total capital commitment of £4.9 million

Convex Capital Limited ("Convex Capital") - Strong comeback after deal completion limited by Covid

· Convex Capital pipeline was significantly impacted by Covid with deals delayed or cancelled. Only completed two deals in 2020, generating revenues of £1.6 million (2019: £1.9 million)

· Management pivoted sector focus and rebuilt pipeline over the second half of 2020 to put Convex Capital back in a position to deliver in 2021

· Since 1 January 2021, Convex has completed seven deals generating revenue of £4.5 million. Pipeline of 33 deals with six currently at various stages of completion

Post-Period Highlight:

· Acquisition of Memery Crystal (conditional on completion) which is in line with the Group's M&A strategy, which aims to focus on high-margin professional services companies and to take advantage of consolidation opportunities in the UK legal sector

· Memery Crystal is a specialist international law firm, based in London, with 146 employees, including 29 partners, and an additional 66 fee earners as at date of exchange

· Memery Crystal's focus on transactions makes it a complementary fit with RBL, which derives most of its revenue from contentious law

· Both businesses will retain their own brand identities and separate offices, and together will form the Group's Legal Services Division

· The total consideration for the acquisition is £30 million (comprising £18.8 million in cash and £11.2 million in RBG shares). Further details of the transaction are contained within a separate stock exchange announcement released earlier this morning

· The Board expects the transaction to be immediately, and materially, earnings and value-enhancing for the Group

· In connection with the acquisition, the Group has extended its revolving credit facility to £15 million and taken out acquisition finance totalling £10 million (key terms of which can be found in this morning's announcement)

· For year ending 30 April 2020, Memery Crystal reported revenue of £23.2 million, profit[4] of £8.0 million, and had £7.3 million of net assets

Nicola Foulston, CEO, RBG Holdings plc, commented: "2020 was a year when the Group demonstrated the resilience of its evolving business model, and how our diversified revenue streams can deliver robust and sustainable financial results, despite the challenges of the pandemic. I am delighted with how the business has adapted, shown its entrepreneurial spirit, and progressed in difficult times.

"Every year since we came to the market, we have delivered a solid financial performance while laying the groundwork for future growth. Our law firm, RBL, had its most successful year ever in terms of revenue from its core legal services business and continues to strengthen its offering. The business performed across all practice areas, particularly those areas focused on contentious law such as dispute resolution, and our corporate division has also been busy. This year, RBL will continue to drive its litigation business, and we have identified new growth areas across the whole business.

"Our third-party litigation finance business, LionFish hit the ground running after its launch in May 2020. It already has a portfolio of seven deals with the first return expected in the first half of the current financial year. During a turbulent year, as a result of Covid, the team at Convex Capital led by Mike Driver worked hard to develop a new, stronger pipeline of M&A transactions. The fruits of all that effort has already shown in early 2021, with seven deals already completed, and more to come.

"The acquisition of Memery Crystal announced today is an excellent addition to the Group both culturally and strategically. Like RBL, Memery Crystal performed strongly in 2020. The Firm is a compelling operational fit with RBL, providing a greater corporate, commercial, and real estate offering than we have currently. Together, the businesses will form our Legal Services Division providing clients with a full-service offering across different sectors and legal disciplines. We see opportunities to grow both businesses.

"Across the Group, we have experience in supporting clients in times of upheaval which means we can react to the opportunities and challenges the current crisis will inevitably offer. Our services will be in demand. We have a solid balance sheet, and we are optimistic that the Group will continue its positive progress over the coming year."

Investor Presentation

RBG will provide a live investor presentation about the Group's results for the 12 months ended 31 December 2020 via the Investor Meet Company (IMC) platform today at 10.30am. Hosted by CEO Nicola Foulston, the online presentation is open to all existing and potential shareholders. Investors can sign up to IMC for free and add RBG Holdings plc via https://www.investormeetcompany.com/rbg-holdings-plc/register-investor

Investors who have already registered and added to meet the Company, will be automatically invited. Questions can be submitted at any time during the live presentation.

Enquiries:

RBG Holdings plc

Nicola Foulston, CEO

Via SEC Newgate

N+1 Singer (Nomad and Broker)

Shaun Dobson / Alex Bond (Corporate Finance)

Tom Salvesen (Corporate Broking)

Tel: +44 (0)20 7496 3000

SEC Newgate (for media enquiries)

Robin Tozer/Tom Carnegie

Tel: +44 (0)7540 106366; rbg@secnewgate.co.uk

About RBG Holdings plc

RBG Holdings plc is a professional services group, which includes one of the UK's pioneering law firms, Rosenblatt Limited ("RBL"), which is a leader in dispute resolution.

RBL provides a range of legal services to its diversified client base, which includes companies, banks, entrepreneurs and individuals. Complementing this is the RBL's increasingly international footprint, advising on complex cross-jurisdictional matters. RBL's practice areas include banking & finance, competition & regulatory, corporate, dispute resolution, employment, financial crime, financial services, insolvency & financial restructuring, IP/technology/media, real estate, serious & general crime, tax resolution and white-collar crime.

The Group also provides litigation finance in selected cases through a separate arm, LionFish Litigation Finance (UK) Limited ("LionFish"). LionFish finances litigation matters being run by other solicitors in return for a significant return on the outcome of those cases. As such, the Group has two types of litigation assets - RBL's own client matters, and litigation matters run by third-party solicitors. LionFish is positioned to be a unique, alternative provider to the traditional litigation funders.

The Group also owns Convex Capital Limited ("Convex Capital"), a specialist sell-side corporate finance boutique based in Manchester. Convex Capital is entirely focussed 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.

Chairman's Statement

Overview

On behalf of the Board, I am pleased to announce our 2020 annual results. That the Board can report such a strong financial performance is a tribute to everyone in the Group who has responded superbly to the challenge presented by COVID-19. The Group has been able to support all our clients remotely, maintaining the high client service standards for which we are known. Since our IPO, operational management has been strengthened in every subsidiary, and we are benefitting from our strategy to diversify the revenue streams of the business.

Companies and individuals need the specialist advice that both Rosenblatt Limited ("RBL") and Convex Capital Limited ("Convex Capital") provide. Difficult times like these mean that people need help to handle complex situations such as business restructurings as well as entrepreneurs who want to participate in M&A. We have won new client instructions across the Group which reflects our expertise and the high demand for our complementary services.

Our law firm, RBL, had its most successful year ever in terms of revenue, EBITDA, and gross margin, the latter exceeding management's target of 35 per cent. Its flexible business model meant we were in a strong position when the pandemic struck so RBL has continued to deliver high margins and revenue per lawyer, a core KPI, remaining significantly ahead of many of its peers.

After a tough 2020, where deal completions were impacted by the onset of COVID-19, the Convex Capital management team built a strong pipeline of deals across a variety of sectors which have shown resilience during the crisis. This is now being converted, and we have a solid platform from which to drive further growth.

Furthermore, the Group now has two types of litigation assets - RBL's own client matters, and litigation matters run by third-party solicitors. This is through our separately branded business for third-party solicitors, LionFish Litigation Finance (UK) Limited ("LionFish") launched in May 2020. Headed by an experienced MD, Tets Ishikawa, the business uses all of the expertise of RBL to assess appropriate opportunities and has hit the ground running with a growing portfolio of investments.

Looking ahead, the Board believes the Group is in a strong position with a solid balance sheet and a clear strategy to deliver continued growth.

Strategy

The strategy of the Group is delivering a diversified revenue and profit stream where no one part of the Group dominates, and we leverage the expertise across the Group to deliver incremental returns. We are using the expertise within the Group to maximise the potential returns by selectively investing in contingent asset classes such as litigation. We can do this by RBL working contingently on clients' cases, or by LionFish providing litigation funding to third party cases. Furthermore, we have begun to use acquisitions to diversify the business away from a reliance on legal revenues to create a broad, professional services group.

One of the key group principles is driving profit and our law firm RBL has achieved this by maintaining consistently high margins. The management has done well in delivering revenue of almost £426,000 per fee earner and a 52% gross margin. This puts RBL in the top 10 of the Legal 100 for revenue per fee earner. In addition, we have added new practice areas including competition & regulatory, financial crime, serious & general crime, and white-collar crime.

Our strong profit driven business model has enabled us to increase the amount of work we do for clients on a partly contingent basis in exchange for receiving a pre-agreed proportion of any damages awarded. This approach means we can increase the margin with a benefit to the client who would otherwise pay higher amounts to a third-party funder. The business has a strong litigation track record. RBL has a long-standing track record in picking the right cases, with an 86% success rate over the last 10 years.

In line with our stated strategy, we have created a new cash-generation opportunity, with litigation finance sales. By selectively selling a percentage of our participation rights in the contingent cases that we invest in through Damages Based Agreements, the Group raises working capital. The investment and divestment decisions are driven through a stringent set of criteria, marrying both our commercial expertise with our legal expertise to assess the risk profile of each case. We have adopted a conservative approach to estimates as part of our fair valuing of litigation assets: while accounting standards require the recognition of these investments at fair value, we have assessed the fair value to be close to cash disbursed less cash received on disposals.

Finally, the acquisition of Convex Capital, a specialist sell-side corporate finance boutique in September 2019 further diversified the business away from a reliance on legal revenues. Convex Capital is a high-margin, entrepreneurial, business that can also create cross-referral opportunities for other parts of the Group. We expect to see an increase in M&A activity in 2021 driven by the economic conditions, with Convex Capital well placed to benefit.

M&A

In line with our strategy, we will continue to assess selective M&A to build and diversify the business. We aim to grow our service offering to clients and diversify our revenue. Our ambition is to create a broad, high-quality, high margin professional services group. We focus on high-margin, specialist companies which can also create opportunities for cross-referrals. However, we will only do deals at the right price and with the right deal structure.

Each of the acquisitions we have made so far has met these criteria, First, Convex Capital in September 2019, and, in April 2021, Memery Crystal. Memery Crystal is a very exciting acquisition which will be immediately earnings enhancing, and we believe has the potential to generate significant value for shareholders over the long-term. I would like to welcome all the partners and employees of Memery Crystal to RBG, and we are excited about the opportunities the combined Group will create.

The Group will remain disciplined in its approach to M&A and continue to review potential opportunities according to its selective criteria.

Dividend

The Group's balance sheet is strong, and the Board is committed to its long-term progressive dividend policy set out in its Admission document. Under that policy, the Board normally expects to pay up to 60 per cent of distributable retained earnings from the core business in any financial year by way of dividend, subject to cash requirements.

Given the uncertainty in 2020, the Board made the prudent decision to make one payment for the 2020 financial year of 3 pence per share. Based on current outlook, we expect to pay up to 60 per cent of retained earnings in the 2021 financial year by way of dividend. Over time, we expect to have opportunities to pay special dividends because of returns from our litigation assets.

People

The strength of the Group is in our ability to retain and attract high-quality people. This is evidenced by our performance. In this most difficult of times, I want to thank everyone for their hard work, and their resilience.

Keith Hamill

Chairman

20 April 2021

Chief Executive's Statement

Overview

Despite a challenging backdrop, we are pleased to have delivered a strong financial performance, with the Group developing in-line with our stated strategy. The business is evolving into a broader high-quality professional services group, with our pioneering law firm, RBL at its heart, a growing litigation finance division, and a successful M&A business.

Group revenue and gains on litigation assets was up 8% to £25.6 million (2019: £23.7 million), primarily driven by a record year at our law firm, RBL. Gains on litigation assets were £3.1 million (2019: £3.8 million), which were primarily generated by LionFish, our new third-party litigation finance business, launched in May 2020.

EBITDA grew to £10.2 million (2019: £9.4 million), with EBITDA margins of 40% (2019: 39%). This includes £2.6m of the write back of the deferred Convex Capital earn out. After adjusting for this, the Group made EBITDA of £7.5 million, representing an EBITDA margin of 29%.

The Group has a strong balance sheet, with net cash of £3.5 million as at 31 December 2020. Cash collections remain as forecast. The Company also has a £10 million revolving credit facility with HSBC. Our balance sheet will support our growth plans, including acquisitions, continued investment in litigation finance opportunities, and the dividend. We expect to be able to pay out up to 60 per cent of retained earnings in the financial year by way of dividend.

RBL

COVID-19 created a challenging trading environment. In 2020, however, RBL achieved the best performance in its 32-year history on its core business of selling legal services. This performance was due to strong revenues from contentious law, and high-value corporate transactions. RBL took on more contingent work in 2020, with associated unrecognised time worked on a contingent basis of £2.1 million (2019: £1.9 million).

Our focus, as always, is on profit and cash, not only billing revenue, and we seek to control back-end cost to support profit generation. The business has a monthly "heartbeat" looking at revenue, margin, WIP and debtors. Gross margins of 52% drive strong profits and there is a back-end focus on collection and realisation. Total lockup[5] was 99 days (2019: 122 days) of which debtor days were 47 days (2019:45). The industry average for lockup is 136 days.

Our investment in IT and a flexible business model meant the business was well placed to handle the challenge of remote working. We continued to win new instructions, benefitting from our diversified client base, reputation for handling complex cases, and our strong relationships with entrepreneurs and business founders.

In times of difficulty, it is often the case that these entrepreneurs become more proactive requiring more innovative support. We have adapted our strategy to make sure RBL is well placed to meet the needs of customers considering the demands created by the pandemic. We have added competition & regulatory, financial crime, serious & general crime, and white-collar crime practice areas.

In January 2021, we appointed a new Managing Director, Barry Roche, to focus on maintaining commercial excellence, and growth through business development. Barry will enhance RBL's performance review culture. Departments and individuals are coached and provided with detailed analysis of key KPI's including debtors, WIP, utilisation and recovery.

Success is reflected in the KPIs. Average revenue per fee earner was up to £425,800 (2019: £393,000). At IPO we targeted utilisation of 75% of 1,500 billable hours, with recovery of 85% on fees billed. Actual resource allocation was 89% utilisation on 1,500 hours, with 106% recovery. Industry average is 70% on 1,200 hours.

In 2021, we will continue to drive the litigation business, and have identified additional areas of growth and specific strategies to support these. These areas include employment, competition law and insolvency & restructuring. Our business development strategy will focus on our digital profile and networking. We have created a business development training program, improved our client engagement process so we can better understand and exceeding our clients' expectations, and ensured all Partners are developing their capabilities.

We are building a strong dynamic team working on cross-selling and referrals. RBL has developed a close working alliance with LionFish where the RBL dispute resolution team assess all potential investments. The RBL corporate team works closely with Convex Capital on its transactions.

We expect RBL to benefit from life post-Brexit and post-COVID as business returns to normality.

Litigation Finance

The Group now has two types of litigation assets - RBL's own client matters, and litigation matters run by third-party solicitors funded by LionFish.

Our approach to litigation assets will always be conservative in nature to limit exposure and risk. No more than 25% of our revenues can be committed to contingent work in progress within RBL. A maximum of 25% of the net assets of the Group can be invested in external funding. A maximum of 50% of the external funding can be invested in any one case over £0.5 million within RBL.

Our accounting approach will follow our same conservative commercial approach. Some larger investments provide a potential return that is not provided in our market forecasts and where possible, within the requirements of IFRS 9 Accounting for Financial Instruments to fair value these investments, we hold these investments at a fair value based on recent transaction prices. These fair values at the year end were close to being equivalent to the cost of funds disbursed less disposal proceeds.

RBL litigation assets

RBL invests time at cost and advances cash for disbursements and court fees on its own client Damages Based Agreements when commercially advantageous to do so. RBL's litigation assets offer high potential returns. The current RBL litigation assets include the three largest cases project named Neptune, Shango and Mercury.

LionFish

In May 2020, we launched a separately branded business - LionFish Litigation Finance (UK) Limited. LionFish invests cash in third party litigation matters run by law firms other than RBL. An experienced managing director, Tets Ishikawa was appointed, and the business is now established.

Since launch to 31 December 2020, LionFish has received 240 enquiries for finance, and seven have been invested in. There has been cash investment of £1.8 million across the seven cases (total capital commitment of £4.9 million if all cases go to trial). The first realisation is anticipated in HY 2021. Expected average investment duration is around two years.

Part of our approach is to sell a percentage of our participation rights in the cases that we invest in. This year, we realised gains from litigation finance sales of £3.1 million, the majority coming from LionFish's investment in 7 cases.

Convex Capital

Acquired by the Group in September 2019, Convex Capital is a specialist provider of sell-side only M&A advice to UK, US and European entrepreneurs. It is focused on helping businesses to maximise their value through sales to large corporates, private equity, or family offices. Deal sizes range from £10 million to £500 million with an average of £40m. On average, Convex Capital's fees are over £750,000 which is significantly above the industry norms. Fees are 100% contingent on success, so Convex Capital is completely aligned with the client.

2020 was challenging, as deals proved hard to complete with the lack of face-to-face meetings as well as COVID obscuring financial performance. Many deals were postponed or delayed. Only two deals were completed in 2020, with total fees of £1.6 million. The Convex Capital team, led by CEO Mike Driver, has worked to pivot its sector focus to successfully rebuild its transaction pipeline over the last six months. The pipeline is more focused on areas which are COVID-19 resilient. This strong pipeline is now being converted. Since 1 January 2021, Convex Capital has already completed seven deals generating revenue of £4.5 million. Convex Capital has a pipeline of 33 deals with six currently at various stages of completion.

Furthermore, the Convex Capital senior management team agreed for 2021 to exchange their fixed base salary arrangements for a flexible commission structure directly linked to income from completed deals. Under the terms of this scheme, Convex Capital management will instruct N+1 Singer to use a minimum of 50% of commission earned to acquire shares in RBG in the open market[6]. This new commission scheme replaces the deferred consideration arrangements under the sale and purchase agreement with the Convex Capital sellers, announced at the time of the acquisition in September 2019. This deferred consideration was due to be payable one year after completion of the purchase, based on certain performance criteria, which were not met due to the pandemic.

Outlook

The new financial year will again be dominated by the wider economic conditions brought about by the legacy of the COVID-19 pandemic. Across the Group, we have demonstrated our experience in supporting clients in times of upheaval which means we can react to the opportunities and challenges the current crisis will inevitably offer. The business is trading as expected in the first quarter with delivery from Convex Capital accelerated.

In RBL, we are focused on capturing growth opportunities; contentious law thrives in difficult times. The business will benefit from life post-Brexit and post-COVID as businesses return to normality. Our litigation finance business, LionFish is now established, and we expect the number of cases it invests in to grow, with the first return expected in the first half. With a strong pipeline of deals, and increased interest in M&A in 2021, Convex Capital is expected to perform well.

We also expect Memery Crystal to make a significant contribution to the Group. Our immediate focus is to successfully integrate Memery Crystal, and we will provide updates on our progress. I am very confident that RBL and Memery Crystal will enable us to capture growth opportunities across the legal services industry.

In 2021, our services will be in demand. We have a solid balance sheet, and we are optimistic that the Group will continue its positive progress over the coming year. I would like to thank all our shareholders for their continued support.

Nicola Foulston

Chief Executive

20 April 2021

Chief Financial Officer's review

Financial review

During 2020, we have continued to build on our strong track-record of profitable growth by increasing revenue and driving our EBITDA margins, which are leading among those of the listed legal sector. The Group is well positioned to deliver its growth strategy through product diversification, high-quality recruitment, and carefully selected acquisitions.

Key Performance Indicators (KPIs)

· Revenue and gains on litigation assets: £25.6 million (2019: £23.7 million)

· Revenue in legal and professional services up 12.6% to £22.4 million (2019: £19.9 million)

· Gains on litigation assets: £3.1 million (2019: £3.8 million)

· EBITDA: £10.2 million, 40% of revenue and gains on litigation assets (2019: £9.4 million, 40%)

· Adjusted EBITDA: £7.5 million,29% of revenue and gains on litigation assets (2019: £9.4 million, 40%)

· Profit Before Tax: £7.7 million, 30% of revenue and gain on litigation assets, includes £2.6 million write back of the deferred earn out (2019: £7.6 million, 32%)

· Total lock up: 99 days (2019: 122 days)

· Revenue Per Fee Earner: £425,800 (2019: £393,000)

· Utilisation / Realisation: 89% / 106% (2019: 77% / 96%)

· Net Cash: £3.5million (2019: £1.9 million)

· EPS: 7.54p (2019: 7.56p)

Revenue and gains on litigation assets

Reported Group revenue and gains on litigation assets for the period is £25.6 million compared to £23.7 million, representing an 8% increase.

Of this increase, £2.7 million came from legal services revenue, whilst revenue from other professional services and gains on litigation assets were marginally behind year on year. The number of partners in our legal services business has remained broadly constant at 20 with 49 fee earners and an annualised revenue per fee earner of £426,000. Of the Litigation gains of £3.1 million, £3.08 million came from LionFish.

Divisional highlights

RBL

·	Total revenue and gains on litigation assets of £20.9 million, (2019 £21.9 million of which £3.8 million was gains on litigation assets)
·	Legal services revenues £20.8 million, up 15.3% on last year (2019: £18.1 million)
·	Dispute resolution continued to perform well, in addition to taking on more contingent work with associated unrecognised time worked of £2.1 million
·	Corporate performed exceptionally well with revenue of £5.1 million, 155% up on 2019
·	EBITDA 35% of revenue (2019: 31% of revenue)
·	Average revenue per fee earner £425,800 (2019: £393,000)
·	Total Lockup was 99 days (2019: 122) of which Debtor Days were 47 days (2019: 45)
·	Recruited 3 new partners through the year

Litigation finance

LionFish

·	Successfully realised litigation asset sales in seven cases with proceeds totalling £3.1 million
·	These gains are from where LionFish owns a percentage of the participation rights in a settlement on a contingent case, financed through a Damages Based Agreement (DBA), and then sells on a proportion of its participation rights
·	Cash investment of £1.8 million in seven cases, with a full commitment of £4.9 million if funded through to court

RBL

·	Successfully realised litigation asset sales with proceeds totalling £0.4 million (2019: £3.8 million)

Convex Capital

·	Completed two transactions in the year, generating revenue of £1.6 million (2019 from acquisition: £1.9 million), EBITDA loss £0.9 million (2019 from acquisition: £0.8 million profit)
·	Earn-out was not achieved which released £2.6 million back to the income statement at Group level

Staff costs
Total staff costs in 2020 were £14.8 million (2019: £11.5 million), including £2.0 million for Convex Capital (2019 from acquisition: £0.9 million) and £0.3 million for LionFish (2019: £nil). In total, this represents 58% of revenue and gains on litigation assets compared to 48% in 2019.

The year-end headcount totalled 92 (2019: 95), with average headcount for the year of 90 (2019: 81).

Overhead costs

During 2020, the Group incurred overheads of £15.4 million (before depreciation and amortisation) (2019: £14.3 million, including only three months of Convex). Personnel costs were £14.8 million (2019: £11.5 million), which included contractors' costs of £3.2 million (2019: £2.1 million).

Other operating costs were £0.6 million (2019: £2.8 million), which includes operating costs at Convex of £0.4 million (2019 from acquisition: £0.2 million) and the deduction of £2.6 million of the deferred consideration release. Other costs including insurances of £0.7 million (2019: £0.5 million), rates £0.3 million (2019: £0.3 million), training and recruitment £0.3 million (2019: £0.2 million) and books & subscriptions of £0.2 million (2019: £0.2 million).

Operationally, there remains a significant focus on IT, and our current and future infrastructure. We have invested sensibly over recent years and further enhanced both our internal and client facing experiences of IT usage. We have taken steps both before and during the pandemic to continue to refine existing processes, including moving to Microsoft Teams, investing in a new client opening technology and streamlining service delivery.

Our response to COVID-19

As COVID-19 swept across the UK in mid-March 2020, we prioritised the wellbeing of all staff across the Group. This involved the immediate closure of all our offices and resultant changes in working practices, to ensure continuity of service to our clients as staff continued to support them and the business remotely. I am extremely pleased with the calm response of our staff and the team spirit shown across the Group in the face of such difficult circumstances.

EBITDA

In assessing performance, the Group uses EBITDA as a KPI. EBITDA for 2020 was £10.2 million (40% of revenue and gains on litigation assets) (2019: £ 9.4 million, 40%). This includes the Convex deferred consideration write back of £2.6 million and excluding this non-underlying item gives an Adjusted EBITDA of £7.5 million (29% of revenue and gains on litigation assets) (2019: £9.4 million, 40%). In 2020, the EBITDA performance has been held back by the losses in Convex of £0.9 million.

Profit Before Tax

The profit before tax for 2020 was £7.7 million, representing 30% of revenue and gains on litigation assets (2019: £7.6 million, 32%). This includes the £2.6 million Convex deferred consideration write back and excluding this gives profit before tax for 2020 of £5.1 million, representing 20% of revenue and gains on litigation assets.

Earnings Per Share (EPS)

The weighted average number of shares in 2020 was 85.6 million, which gives a basic earnings per share (Basic EPS) for the year of 7.54p (2019: 7.56p).

Corporation tax

The Group's tax charge for the year is £1.02 million with an effective tax rate of 13.3% (2019: £1.47 million, 19.1%) which has been impacted by Convex deferred consideration write back which is non-taxable income.

Balance sheet

	2020 £m	2019 £m
Goodwill, intangible and tangible assets	48.0	44.7
Current assets	7.7	11.1
Current liabilities	(4.4)	(5.0)
	51.3	50.8
Net cash and cash equivalents	3.5	1.9
Non-current liabilities	(6.4)	(6.3)

Deferred consideration	(1.1)	(4.0)
Net assets	47.3	42.4

The Group's net assets as at 31 December 2020 increased by £4.9 million, due to profitable trading in the year.

Goodwill, tangible and intangible assets

Included within tangible assets, £5.8 million relates to IFRS 16 right of use for the Group's leases. Within intangible assets and goodwill is £33 million of intangible assets identified, on prior year acquisitions, such as goodwill, customer relationships and brand. The Board carries out an impairment review of goodwill each year to ensure the carrying value is supportable. Also included within intangible assets is £1 million one-off payment made to Ian Rosenblatt during 2020 in respect of an extension and broadening of the restrictive covenants put in place at the IPO to an additional term through to 2023 As at 31 December 2020 the Board concluded that the goodwill and intangible assets are not impaired.

Non-current assets also includes £6.3 million in litigation assets (2019: £2.2 million).

Working capital

Management of lock up has continued to be a key focus of the Group over the period, as it measures the length of time it takes to convert work done into cash. It is calculated as the combined debtor and contract asset (WIP) days for the Group. This is a key focus for Management and the Board, as it drives the cash generation necessary to support the growth strategy of the Group. Lock up days at 31 December 2020 were 99 compared to 122 the previous year. Management are satisfied with the level of lock up at the year-end, which remains significantly ahead of the industry average for quoted legal firms.

Trade debtors at the end of the year were £3.4 million (2019: £3.4 million). Contract assets at the year-end were £3.0 million, down from £3.8 million at the end of 2019.

Net cash

Net cash at the year-end was £3.5 million (2019: £1.9 million), with cash at bank of £13.5 million and a fully drawn Revolving Credit Facility of £10 million. The cash movement during the year included an additional £6.7 million generated from operations, less £1.9 million paid in corporation tax, £1.1 million outflow on investing activities, £0.8 million in dividends and £1 million in operating lease payments.

Under Governmental COVID-19 measures, the Group deferred the payment of £0.5 million of VAT until 2021. The net cash position at year-end, together with the £10m Revolving Credit Facility, positions the Group well to deliver its strategy into 2021 and also support the business through the continuing uncertainty caused by COVID-19.

Cash conversion

	2020 £'M	2019 £'M
Cash generated from operating activities	6.7	1.5
Interest	(0.4)	(0.2)
Capital expenditure	(1.2)	(0.5)
Free cash flow	5.1	0.8
Profit after tax	6.7	6.2
Cash conversion	76%	13%

The cash conversion percentage measures the Group's conversion of its underlying profit after tax into free cash flows. Cash conversion of 76% for the year shows an increase from previous periods and is a further focus of the business.

Capital expenditure

During the year, the Group continued to invest in its systems and premises to ensure our professionals have a high-quality working environment and consistent systems across the Group, to aid integration and support our one-firm culture. The investment during the year also enabled the ability to work remotely when required, as a result of COVID-19. This investment enabled a smooth transition of the business to remote working, enabling staff to provide services in a seamless fashion. To this end, during 2020, we invested £0.2 million in our existing IT systems and offices (2019: £0.5 million).

Corporation tax- cash flow impact

Going forward, the Group will fall under the very large quarterly payments regime for its Corporation Tax. This will have the effect of advancing the Corporation Tax payments, such that the full estimated amount is paid during the year rather than only 50%. Management expects post tax cash conversion to average out at circa75% going forward.

Summary

We are pleased with the continued profitability during the year. The investment in the Group puts us in a strong position to grow the business both organically through recruitment, and through selective acquisition opportunities. However, it is important to acknowledge the continued impact of COVID-19 on business life. COVID-19 has and will be a significant challenge moving forward that will continue to create great uncertainty.

Robert Parker

Chief Financial Officer

20 April 2021

Consolidated statement of comprehensive income

For the year ended 31 December 2020


	Note	1 January to	1 January to
		31 December 2020	31 December 2019
		£	£

Revenue	5	22,449,332	19,941,240

Gains on litigation assets	5	3,122,727	3,800,000

Personnel costs	7	(14,780,204)	(11,496,875)
Depreciation and amortisation expense		(2,081,501)	(1,576,180)
Other expenses		(633,999)	(2,808,567)
		_______	_______

Profit from operations	6	8,076,355	7,859,618

EBITDA		10,157,856	9,435,798
Non-underlying items
Deferred consideration release		(2,640,000)	-
Adjusted EBITDA		7,517,856	9,435,798

Finance expense	8	(394,534)	(253,210)
Finance income	8	24,460	41,027
		_______	_______

Profit before tax		7,706,281	7,647,435

Tax expense	9	(1,024,936)	(1,470,837)
		_______	_______

Profit and total comprehensive income		6,681,345	6,176,598
		_______	_______

Total profit and comprehensive income attributable to:
Owners of the parent		6,454,738	6,176,598
Non-controlling interest		226,607	-
		_______	_______

		6,681,345	6,176,598
		_______	_______

Earnings per share attributable to the ordinary equity holders of the parent	10

Profit
Basic (pence)		7.54	7.56
Diluted (pence)		7.54	7.50
		_______	_______

The results for the year presented above are derived from continuing operations.

There were no elements of other comprehensive income for the financial year other than those included in the income statement.

The attached notes form part of these financial statements.

Consolidated statement of financial position

As at 31 December 2020

Company registered number: 11189598	Note	31 December	31 December
		2020	2019
Assets		£	£
Current assets
Trade and other receivables	19	7,696,925	11,088,812
Cash and cash equivalents		13,522,184	1,910,156
		_______	_______

		21,219,109	12,998,968
Non-current assets
Property, plant and equipment	12	475,229	638,382
Right-of-use assets	13	5,825,712	6,760,198
Intangible assets	14	35,378,065	35,137,871
Litigation assets	18	6,294,754	2,209,886
		_______	_______

		47,973,760	44,746,337
		_______	_______

Total assets		69,192,869	57,745,305
		_______	_______
Liabilities
Current liabilities
Trade and other payables	20	3,894,546	6,710,936
Leases	13	870,019	811,105
Current tax liabilities	20	657,437	1,395,489
Provisions	22	116,875	75,000
		_______	_______

		5,538,877	8,992,530
Non-current liabilities
Loans and borrowings	21	10,000,000	-
Deferred tax liability	23	304,853	422,144
Trade and other payables	20	1,015,000	-
Leases	13	5,081,043	5,920,697
		_______	_______

		16,400,896	6,342,841
		_______	_______

Total liabilities		21,939,773	15,335,371
		_______	_______

NET ASSETS		47,253,096	42,409,934
		_______	_______
Issued capital and reserves attributable to owners of the parent
Share capital	24	171,184	171,184
Share premium reserve	25	37,565,129	37,565,129
Retained earnings	25	9,290,076	4,673,621
		_______	_______

		47,026,389	42,409,934

Non-controlling interest		226,707	-
		_______	_______

TOTAL EQUITY		47,253,096	42,409,934
		_______	_______

Consolidated statement of cash flows

For the year ended 31 December 2020

	Note	2020	2019
		£	£
Cash flows from operating activities
Profit for the year before tax		7,706,281	7,647,435
Adjustments for:
Depreciation of property, plant and equipment	12	335,634	232,728
Amortisation of right-of-use assets	13	986,061	891,794
Amortisation of intangible fixed assets	14	759,806	451,658
Finance income	8	(24,460)	(41,027)
Finance expense	8	394,534	253,210
		_______	_______

		10,157,856	9,435,798

Decrease/(increase) in trade and other receivables		3,391,887	(5,091,691)
(Decrease) in trade and other payables		(2,816,390)	(710,714)
(Increase) in litigation assets	18	(4,084,868)	(2,209,886)
Increase in provisions		41,875	39,736
		_______	_______

Cash generated from operations		6,690,360	1,463,243

Tax paid		(1,880,277)	(1,637,610)
		_______	_______

Net cash flows from operating activities		4,810,083	(174,367)
Investing activities		_______	_______
Purchases of property, plant and equipment	12	(172,482)	(534,155)
Purchase of other intangibles		(1,000,000)	-
Acquisition of subsidiary, net of cash		-	(6,008,389)
Interest received		24,460	41,027
		_______	_______

Net cash used in investing activities		(1,148,022)	(6,501,517)
		_______	_______
Financing activities
Issue of ordinary shares in subsidiaries		100	-
Dividends paid to holders of the parent	11	(823,283)	(3,811,342)
Proceeds from loans and borrowings	21	21,000,000	1,637,608
Repayment of loans and borrowings	21	(11,000,000)	(1,637,608)
Repayments of lease liabilities	13	(832,316)	(699,875)
Interest paid on loans and borrowings		(185,497)	(27,564)
Interest paid on lease liabilities	13	(209,037)	(225,646)
		_______	_______

Net cash from financing activities		7,949,967	(4,764,427)
		_______	_______

Net (decrease)/increase in cash and cash equivalents		11,612,028	(11,440,311)
Cash and cash equivalents at beginning of year		1,910,156	13,350,467
		_______	_______

Cash and cash equivalents at end of year		13,522,184	1,910,156
		_______	_______

The attached notes form part of these financial statements.

Consolidated statement of changes in equity

For the year ended 31 December 2020

				Total
				attributable
				to equity	Non-
	Share	Share	Retained	holders of	controlling	Total
	Capital	Premium	Earnings	parent	Interest	Equity
	£	£	£	£	£	£

Balance at 1 January 2020	171,184	37,565,129	4,673,621	42,409,934	-	42,409,934

Comprehensive income for the year
Profit for the year	-	-	6,454,738	6,454,738	226,607	6,681,345
	______	______	______	_____	______	______

Total comprehensive Income for the year	-	-	6,454,738	6,454,738	226,607	6,681,345
	______	______	______	_____	_____	______
Contributions by and distributions to owners
Dividends	-	-	(823,283)	(823,283)	-	(823,283)
Issue of share capital	-	-	-	-	100	100
Grant of put option over shares in subsidiary	-	-	(1,015,000)	(1,015,000)	-	(1,015,000)
	______	______	______	_____	______	______

Total contributions by and distributions to owners	-	-	(1,838,283)	(1,838,283)	100	(1,838,183)
	______	______	______	_____	______	______

Balance at 31 December 2020	171,184	37,565,129	9,290,076	47,026,389	226,707	47,253,096
	______	______	______	______	______	______

The attached notes form part of these financial statements.

Consolidated statement of changes in equity

For the year ended 31 December 2020 (continued)

				Total
				Attributable
				to equity	Non-
	Share	Share	Retained	holders of	controlling	Total
	Capital	Premium	Earnings	parent	Interest	Equity
	£	£	£	£	£	£

Balance at 1 January 2019	160,184	32,516,129	2,308,365	34,984,678	-	34,984,678

Comprehensive profit for the year
Profit for the year	-	-	6,176,598	6,176,598	-	6,176,598
	______	______	______	______	______	______
Total comprehensive profit for the year
	-	-	6,176,598	6,176,598	-	6,176,598
	______	______	______	______		______
Contributions by and distributions to owners
Dividends	-	-	(3,811,342)	(3,811,342)	-	(3,811,342)
Issue of share capital	11,000	5,049,000	-	5,060,000	-	5,060,000
	______	______	______	______	______	______

Total contributions by and distributions to owners	11,000	5,049,000	(3,811,342)	1,248,658	-	1,248,658
	______	______	______	______	______	______

Balance at 31 December 2019	171,184	37,565,129	4,673,621	42,409,934	-	42,409,934
	______	______	______	______	______	______

The attached notes form part of these financial statements.

Company statement of financial position

As at 31 December 2020

Company registered number: 11189598	Note	2020	2019
		£	£
Assets
Current assets
Trade and other receivables	19	24,900,931	26,492,958
Cash and cash equivalents		12,313,385	359,684
		_______	_______

		37,214,316	26,852,642
Non-current assets
Property, plant and equipment	12	5,847	10,427
Investments	16	15,814,321	15,813,422
		_______	_______

		15,820,168	15,823,849
		_______	_______

Total assets		53,034,484	42,676,491
		_______	_______
Liabilities
Current liabilities
Trade and other payables	20	2,035,431	4,326,969
		_______	______

		2,035,431	4,326,969
Non-current liabilities
Loans and borrowings	21	10,000,000	-
Deferred tax liability	23	502,711	1,773
		_______	_______

		10,502,711	1,773
		_______	_______

Total liabilities		12,538,142	4,328,742
		_______	_______

NET ASSETS		40,496,342	38,347,749
		_______	_______
Issued capital and reserves attributable to owners of the parent
Share capital	24	171,184	171,184
Share premium reserve	25	37,565,129	37,565,129
Retained earnings	25	2,760,029	611,436
		_______	_______

TOTAL EQUITY		40,496,342	38,347,749
		_______	_______

Company statement of financial position

As at 31 December 2020 (continued)

The Company has taken advantage of the exemption contained in S408 Companies Act 2006 and has not presented a separate income statement for the Company. The Company recorded a profit after tax of £2,971,876 for the year ended 31 December 2020 (2019: £5,718,891).

The financial statements were approved and authorised for issue by the Board of Directors on 19 April 2021 and were signed on its behalf by:

Nicola Foulston

Director

The attached notes form part of these financial statements.

Company statement of cash flows

For the year ended 31 December 2020

	Note	2020	2019
		£	£
Cash flows from operating activities
Profit for the year before tax		3,110,117	5,720,664
Adjustments for:
Depreciation of property, plant and equipment	12	6,205	5,212
Finance income		(4,754)	(11,269)
Finance expense		174,079	25,945
		_______	_______

		3,285,647	5,740,552

(Increase) in trade and other receivables		1,954,724	(4,029,201)
(Decrease)/increase in trade and other payables		(2,291,537)	(289,197)
		_______	_______

Cash generated from operations		2,948,834	1,422,154

Tax paid		-	-
		_______	_______

Net cash flows from operating activities		2,948,834	1,422,154
Investing activities		_______	_______
Purchases of property, plant and equipment	12	(1,625)	(1,625)
Investment in subsidiary		(900)	-
Acquisition of subsidiary, net of cash		-	(6,313,322)
Interest received		4,754	11,269
		_______	_______

Net cash used in investing activities		2,229	(6,303,678)
		_______	_______
Financing activities
Issue of ordinary shares		-	-
Dividends paid to holders of the parent	11	(823,283)	(3,811,342)
Proceeds from loans and borrowings		21,000,000	1,637,608
Repayment of loans and borrowings		(11,000,000)	(1,637,608)
Interest paid on loans and borrowings		(174,079)	(25,945)
		_______	_______

Net cash from financing activities		9,002,638	(3,837,287)
		_______	_______

Net increase/(decrease) in cash and cash equivalents		11,953,701	(8,718,811)
Cash and cash equivalents at beginning of year		359,684	9,078,495
		_______	_______

Cash and cash equivalents at end of year		12,313,385	359,684
		_______	_______

Company statement of changes in equity

For the year ended 31 December 2020

	Share Capital	Share premium	Retained Earnings	Total
	£	£	£	£

Balance at 1 January 2020	171,184	37,565,129	611,436	38,347,749

Comprehensive profit for the year
Profit for the year	-	-	2,971,876	2,971,876
	______	______	______	______
Total comprehensive profit for the year	-	-	2,971,876	2,971,876
	______	______	______	______

Contributions by and distributions to owners
Dividends	-	-	(823,283)	(823,283)
Issue of share capital	-	-	-	-
	______	______	______	______

Total contributions by and distributions to owners	-	-	(823,283)	(823,283)
	______	______	______	______

Balance at 31 December 2020	171,184	37,565,129	2,760,029	40,496,342
	______	______	______	______

Company statement of changes in equity

For the year ended 31 December 2020 (continued)

	Share Capital	Share premium	Retained Earnings	Total
	£	£	£	£

Balance at 1 January 2019	160,184	32,516,129	(1,296,113)	31,380,200

Comprehensive profit for the year
Profit for the year	-	-	5,718,891	5,718,891
	______	______	______	______
Total comprehensive profit for the year	-	-	5,718,891	5,718,891
	______	______	______	______

Contributions by and distributions to owners
Dividends	-	-	(3,811,342)	(3,811,342)
Issue of share capital	11,000	5,049,000	-	5,060,000
	______	______	______	______

Total contributions by and distributions to owners	11,000	5,049,000	(3,811,342)	1,248,658
	______	______	______	______

Balance at 31 December 2019	171,184	37,565,129	611,436	38,347,749
	______	______	______	______

The attached notes form part of these financial statements.

Notes (forming part of the consolidated financial statements)

1	Basis of preparation

RBG Holdings plc is a public limited company, incorporated on 6 February 2018 and domiciled in the United Kingdom.

The financial information set out in this release does not constitute the Company's full statutory accounts for the year ended 31 December 2020 for the purposes of section 434(3) of the Companies Act 2006, but it is derived from those accounts that have been audited. Statutory accounts for 2019 have been delivered to the registrar of companies, and those for 2020 will be delivered after the forthcoming AGM. The auditors have reported on the accounts for the period ended 31 December 2019 and the year end 31 December 2020: their reports were unqualified, and did not contain statements under section 498(2) or (3) of the Companies Act 2006.

While the information included in this preliminary announcement has been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards (IFRS) as adopted by the UK, this announcement does not itself contain sufficient information to comply with IFRS. The Company expects to publish full financial statements for the year ended 31 December 2020 that comply with IFRS on 21 April 2021.

The accounting policies set out below are in accordance with IFRS, as adopted by the UK, and International Financial Reporting Interpretations Committee ('IFRIC') interpretations that were applicable for the year ended 31 December 2020.

The financial statements have been prepared for year ended 31 December 2020, with a comparative year to 31 December 2019, and are presented in Sterling, which is also the Group's functional currency.

The principal accounting policies adopted in the preparation of the consolidated financial statements are set out in Note 2. The policies have been consistently applied to the period presented, unless otherwise stated.

The preparation of financial statements in compliance with IFRS requires the use of certain critical accounting estimates. It also requires Group management to exercise judgment in applying the Group's accounting policies. The areas where significant judgements and estimates have been made in preparing the financial statements and their effect are disclosed in Note 3.

Basis of measurement

The consolidated financial statements have been prepared on a historical cost basis, except for the following items (refer to individual accounting policies for details):

- Litigation assets - fair value through profit or loss

- Contingent consideration - fair value through profit or loss

Going concern

As described in the Strategic Report the Group expects to be able to operate within the Group's financing facilities and in accordance with the covenants set out in all available facility agreements. Accordingly, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future and they have adopted the going concern basis of accounting in preparing the annual Group financial statements.

Notes (continued)

1	Basis of preparation (continued)

Changes in accounting policies

a) New standards, interpretations and amendments effective from 1 January 2020

New standards that have been adopted in the annual financial statements for the year ended 31 December 2020 but have not had a significant effect on the Group are:

· IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors (Amendment - Definition of Material)

· IFRS 3 Business Combinations (Amendment - Definition of Business)

· Conceptual Framework for Financial Reporting (Revised)

· COVID-19 Related Rent Concessions (Amendment to IFRS16)

b) New standards, interpretations and amendments not yet effective

There are a number of standards, amendments to standards, and interpretations which have been issued by the IASB that are effective in future accounting periods that the Group has decided not to adopt early. The following amendments are effective for the period beginning 1 January 2021:

· Interest Rate Benchmark Reform (Amendments to IFRS9, IAS 39, IFRS 7 and IFRS16)

The following amendments are effective for the period beginning 1 January 2022:

· Onerous Contract - Cost of fulfilling a Contract (Amendments to IAS 37)

· Property, plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16)

· Annual Improvements to IFRS Standards 2018-2020 (Amendments to IFRS1, IFRS 9, IFRS 16 and IAS 41)

· References to Conceptual Framework (Amendments to IFRS 3)

The Group is currently assessing the impact of these new accounting standards and amendments and does not expect that they will have a material impact on the Group.

Notes (continued)

2	Accounting policies

Revenue

Revenue comprises the fair value of consideration receivable in respect of services provided during the period, inclusive of recoverable expenses incurred but excluding value added tax.

Legal and Other Professional services revenues

Where fees are contractually able to be rendered by reference to time charged at agreed rates, the revenue is recognised over time, based on time worked charged at agreed rates, to the extent that it is considered recoverable.

Where revenue is subject to contingent fee arrangements, including where services are provided under Damages Based Agreements (DBAs), the Group estimates the amount of variable consideration to which it will be entitled and constrains the revenue recognised to the amount for which it is considered highly probable that there will be no significant reversal. Due to the nature of the work being performed, this typically means that contingent revenues are not recognised until such time as the outcome of the matter being worked on is certain.

Bills raised are payable on delivery and until paid form part of Trade receivables. The Group has taken advantage of the practical exemption in IFRS 15 not to account for significant financing components where the Group expects the time difference between receiving consideration and the provision of the service to a client will be one year or less. Where revenue has not been billed at the balance sheet date, it is included as contract assets and forms part of Trade and other receivables.

Basis of consolidation

Where the company has control over an investee, it is classified as a subsidiary. The company controls an investee if all three of the following elements are present: power over the investee, exposure to variable returns from the investee, and the ability of the investor to use its power to affect those variable returns. Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control.

The consolidated financial statements present the results of the company and its subsidiaries ("the Group") as if they formed a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.

The consolidated financial statements incorporate the results of business combinations using the acquisition method. In the statement of financial position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date on which control ceases.

Non-Controlling interests

The total comprehensive income of non-wholly owned subsidiaries is attributed to owners of the parent and to the non-controlling interests in proportion to their relative ownership interests.

Where the Company has agreed a put option over the shares of a subsidiary held by a non-controlling interest, the liability for the estimated exercise value of the put option is recognised at fair value in the financial statements of the Company and is recognised at present value in the financial statements of the Group. Movements in the estimated liability after initial recognition are recognised in the income statement.

Goodwill

Goodwill represents the excess of the cost of a business combination over the Group's interest in the fair value of identifiable assets, liabilities and contingent liabilities acquired.

Notes (continued)

2	Accounting policies (continued)

Goodwill (continued)

Cost comprises the fair value of assets given, liabilities assumed and equity instruments issued, plus the amount of any non-controlling interests in the acquiree plus, if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree. Contingent consideration is included in cost at its acquisition date fair value and, in the case of contingent consideration classified as a financial liability, remeasured subsequently through profit or loss. Direct costs of acquisition are recognised immediately as an expense.

Goodwill is capitalised as an intangible asset with any impairment in carrying value being charged to the consolidated statement of comprehensive income. Where the fair value of identifiable assets, liabilities and

contingent liabilities exceed the fair value of consideration paid, the excess is credited in full to the consolidated statement of comprehensive income on the acquisition date.

Impairment of non-financial assets (excluding inventories, investment properties and deferred tax assets)

Impairment tests on goodwill and other intangible assets with indefinite useful economic lives are undertaken annually at the financial period end. Other non-financial assets are subject to impairment tests whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Where the carrying value of an asset exceeds its recoverable amount (i.e. the higher of value in use and fair value less costs to sell), the asset is written down accordingly.

Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried out on the smallest group of assets to which it belongs for which there are separately identifiable cash flows; its cash generating units ('CGUs'). Goodwill is allocated on initial recognition to each of the Group's CGUs that are expected to benefit from a business combination that gives rise to the goodwill.

Impairment charges are included in profit or loss, except to the extent they reverse gains previously recognised in other comprehensive income. An impairment loss recognised for goodwill is not reversed.

Foreign currency

Transactions entered into by Group entities in a currency other than the currency of the primary economic environment in which they operate (their "functional currency") are recorded at the rates ruling when the transactions occur. Foreign currency monetary assets and liabilities are translated at the rates ruling at the reporting date. Exchange differences arising on the retranslation of unsettled monetary assets and liabilities are recognised immediately in profit or loss.

Financial assets

The Group classifies its financial assets into one of the categories discussed below, depending on the purpose for which the asset was acquired. The Group's accounting policy for each category is as follows:

Fair value through profit or loss

Litigation assets relate to the provision of funding to litigation matters in return for a participation share in the settlement of that case (Damages Based Award). Investments are initially measured at the sum invested and are subsequently held at fair value through the profit and loss.

Where the Group sells an interest in its entitlement to any award under a Damages Based Award to a third party, the difference between the disposal proceeds and the cost of the investment disposed gives rise to a profit on disposal which is recognised through the profit and loss when the sale is agreed. These sales are non-recourse and, if the case is successful, the relevant % of the settlement received is paid to the third party.

Notes (continued)

2	Accounting policies (continued)

Amortised cost

These assets arise principally from the provision of goods and services to customers (eg trade receivables), but also incorporate other types of financial assets where the objective is to hold these assets in order to collect contractual cash flows and the contractual cash flows are solely payments of principal and interest. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment.

Impairment provisions for current and non-current trade receivables are recognised based on the simplified approach within IFRS 9 using a provision matrix in the determination of the lifetime expected credit losses. During this process the probability of the non-payment of the trade receivables is assessed. This probability is then multiplied by the amount of the expected loss arising from default to determine the lifetime expected credit loss for the trade receivables. For trade receivables, which are reported net, such provisions are recorded in a separate provision account with the loss being recognised in profit or loss. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.

From time to time, the Group elects to renegotiate the terms of trade receivables due from customers with which it has previously had a good trading history. Such renegotiations will lead to changes in the timing of payments rather than changes to the amounts owed and, in consequence, the new expected cash flows are discounted at the original effective interest rate and any resulting difference to the carrying value is recognised in the consolidated statement of comprehensive income (operating profit).

Impairment provisions for receivables from related parties and loans to related parties, including those from subsidiary companies, are recognised based on a forward looking expected credit loss model. The methodology used to determine the amount of the provision is based on whether there has been a significant increase in credit risk since initial recognition of the financial asset. This annual assessment considers forward-looking information on the general economic and specific market conditions together with a review of the operating performance and cash flow generation of the entity relative to that at initial recognition. For those where the credit risk has not increased significantly since initial recognition of the financial asset, twelve month expected credit losses along with gross interest income are recognised. For those for which credit risk has increased significantly, lifetime expected credit losses along with the gross interest income are recognised. For those that are determined to be credit impaired, lifetime expected credit losses along with interest income on a net basis are recognised.

The Group's financial assets measured at amortised cost comprise trade and other receivables and cash and cash equivalents in the consolidated statement of financial position. Cash and cash equivalents includes cash in hand, deposits held at call with banks, and other short term highly liquid investments with original maturities of three months or less.

Financial liabilities

The Group classifies its financial liabilities depending on the purpose for which the liability was acquired.

Other financial liabilities

All the Group's financial liabilities are classified as other financial liabilities, which include the following items:

Bank borrowings are initially recognised at fair value net of any transactions costs directly attributable to the issue of the instrument. Such interest bearing liabilities are subsequently measured at amortised cost using the effective interest rate method, which ensures that any interest expense over the period to repayment is at a constant rate on the balance of the liability carried in the consolidated statement of financial position. For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding.

Notes (continued)

2	Accounting policies (continued)

Trade payables and other short-term monetary liabilities, which are initially recognised at fair value and subsequently carried at amortised cost using the effective interest method.

Defined contribution schemes

Contributions to defined contribution pension schemes are charged to the consolidated statement of comprehensive income in the year to which they relate.

Leased assets

Identifying leases

The Group accounts for a contract, or a portion of a contract, as a lease when it conveys the right to use an asset for a period of time in exchange for consideration. Leases are those contracts that satisfy the following criteria:

(a) There is an identified asset:

(b) The Group obtains substantially all the economic benefits from use of the asset; and

The Group considers whether the supplier has substantive substitution rights. If the supplier does have those rights, the contract is not identified as giving rise to a lease.

In determining whether the Group obtains substantially all the economic benefits from use of the asset, the Group considers only the economic benefits that arise from use of the asset, not those incidental to legal ownership or other potential benefits.

In determining whether the Group has the right to direct use of the asset, the Group considers whether it directs how and for what purpose the asset is used throughout the period of use. If there are no significant decisions to be made because they are pre-determined due to the nature of the asset, the Group considers whether it was involved in the design of the asset in a way that predetermines how and for what purpose the asset will be used throughout the period of use. If the contract or portion of the contract does not satisfy these criteria, the Group applies other applicable IFRSs rather than IFRS 16.

All leases are accounted for by recognising a right-of-use asset and a lease liability except for:

· Leases of low value assets: and

· Leases with a term of 12 months or less.

Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount rate determined by reference to the rate inherent in the lease unless this is not readily determinable, in which case the Group's incremental borrowing rate on commencement of the lease is used. Variable lease payments are only included in the measurement of the lease liability if they depend on an index or rate. In such cases, the initial measurement of the lease assumes the variable element will remain unchanged throughout the lease term. Other variable lease payments are expensed in the period to which they relate.

Notes (continued)

2	Accounting policies (continued)

Leased assets (continued)

On initial recognition, the carrying value of the lease liability also includes:

· amounts expected to be payable under any residual value guarantee:

· the exercise price of any purchase option granted in favour of the Group if it is reasonable certain to assess that option:

· any penalties payable for terminating the lease, if the term of the lease has been estimated on the basis of the termination option being exercised.

Right-of-use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received, and increased for:

· lease payments made at or before the commencement of the lease:

· initial direct costs incurred; and

· the amount of any provision recognised where the Group is contractually required to dismantle, remove or restore the leased asset.

Subsequent to initial measurement lease liabilities increase as a result of interest charged at a constant rate on the balance outstanding and are reduced for lease payments made. Right-of-use assets are amortised on a straight-line basis over the remaining term of the lease or over the remaining economic life of the asset if this is judged to be shorter than the lease term.

When the Group revises its estimate of the term of any lease, it adjusts the carrying amount of the lease liability to reflect the payments to make over the revised term, which are discounted using a revised discount rate. The carrying value of lease liabilities is similarly revised when the variable element of future lease payments dependent on a rate or index is revised, except the discount rate remains unchanged. In both cases an equivalent adjustment is made to the carrying value of the right-of-use asset, with the revised carrying amount being amortised over the remaining lease term.

For contracts that both convey a right to the Group to use an identified asset and require services to be provided to the Group by the lessor for a variable amount, the Group has elected to account for the right-of-use payments as a lease and expense the service charge payments in the period to which they relate.

Externally acquired intangible assets

Externally acquired intangible assets are initially recognised at cost and subsequently amortised over their useful economic lives.

Intangible assets are recognised on business combinations if they are separable from the acquired entity or give rise to other contractual/legal rights. The amounts ascribed to such intangibles are arrived at by using appropriate valuation techniques.

Notes (continued)

Externally acquired intangible assets (continued)

The significant intangibles recognised by the Group, their useful economic lives and the methods used for amortisation and to determine the cost of intangibles acquired in a business combination are as follows:

Intangible asset	Useful economic life	Remaining useful economic life	Amortisation method	Valuation method

Brand	20 years	17-19 years	Straight line	Estimated discounted cash flow
Customer contracts	1-2 years	1 year	In line with contract revenues	Estimated discounted cash flow
Restrictive covenant extension	2 years	2 years	Straight line	Cost

Non current investments

Investments in subsidiary undertakings are stated at cost less amounts written off for impairment. Investments are reviewed for impairment where events or circumstances indicate that their carrying amount may not be recoverable.

Dividends

Dividends are recognised when they become legally payable. In the case of interim dividends to equity shareholders, this is when declared by the directors. In the case of final dividends, this is when approved by the shareholders at the AGM.

Deferred taxation

Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the consolidated statement of financial position differs from its tax base, except for differences arising on:

- the initial recognition of goodwill

- the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting or taxable profit, and

- investments in subsidiaries and joint arrangements where the Group is able to control the timing of the reversal of the difference and it is probable that the difference will not reverse in the foreseeable future.

Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against which the difference can be utilised.

The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the reporting date and are expected to apply when the deferred tax liabilities/assets are settled /recovered.

Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority on either:

- The same taxable group company, or

- Different group entities which intend either to settle current tax assets and liabilities on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are expected to be settled or recovered.

Notes (continued)

2	Accounting policies (continued)

Property, plant and equipment

Items of property, plant and equipment are initially recognised at cost. As well as the purchase price, cost includes directly attributable costs and the estimated present value of any future unavoidable costs of dismantling and removing items. The corresponding liability is recognised within provisions.

Depreciation is provided on all items of property, plant and equipment so as to write off their carrying value over their expected useful economic lives. It is provided at the following rates:

Plant and machinery	-	25-33% per annum straight line
Fixtures and fittings	-	25% per annum straight line
Computer equipment	-	33% per annum straight line

Provisions

The group has recognised provisions for liabilities of uncertain timing or amount including those for legal claims. The provision is measured at the best estimate of the expenditure required to settle the obligation at the reporting date, discounted at a pre-tax rate reflecting current market assessments of the time value of money and risks specific to the liability. Where a legal claim is within the scope of an insurance policy held by the Group, provision will be made up to the level of the excess payable on the insurance claim.

Notes (continued)

3	Critical accounting estimates and judgements

The Group makes certain estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on actual experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial period are discussed below.

Judgements, estimates and assumptions

- Accounting for business combinations and fair value

Business combinations are accounted for at fair value. Valuation of acquired intangibles requires estimates of future growth rates, profitability, remaining useful lives and discount rates for input to the business combination valuation methodology. A difference in the estimated future growth rates, profitability, the use of a different discount rate, or the selection of a different valuation method may result in a different assessment of fair value of the asset or liability acquired as part of the business combination.

- Estimated impairment of intangible assets including goodwill

Determining whether an intangible asset is impaired requires an estimation of the value in use of the cash generating units to which the intangible has been allocated. The value in use calculation requires the entity to estimate the future cash flows expected to arise from each cash generating unit and determine a suitable discount rate. A difference in the estimated future cash flows or the use of a different discount rate may result in a different estimated impairment of intangible assets.

- Revenue recognition

Where the group performs work that is chargeable based on hours worked at agreed rates, assessment must be made of the recoverability of the unbilled time at the period end. This is on a matter by matter basis, with reference to historic and post year-end recoveries. Different views on recoverability would give rise to a different value being determined for revenue and a different carrying value for unbilled revenue.

Where revenue is subject to contingent fee arrangements, the Group estimates the amount of variable consideration to which it will be entitled and constrains the revenue recognised to the amount for which it is considered highly probable that there will be no significant reversal. Due to the nature of the work being performed, this typically means that contingent revenues are not recognised until such time as the outcome of the matter being worked on is certain. Factors the Group considers when determining whether revenue should be constrained are whether:-

i) The amount of consideration receivable is highly susceptible to factors outside the Group's influence.

ii) The uncertainty is not expected to be resolved for a long time.

iii) The Group has limited previous experience (or limited other evidence) with similar contracts.

iv) The range of possible consideration amounts is broad with a large number of possible outcomes.

Different views being determined for the amount of revenue to be constrained in relation to each contingent fee arrangement may result in a different value being determined for revenue and also a different carrying value being determined for unbilled amounts for client work.

Notes (continued)

3	Critical accounting estimates and judgements (continued)

Where the group enters into Damages Based Agreements ("DBAs") that include both the provision of services and the provision of litigation finance, the Group must apportion the total expected settlement between that arising as conditional revenue for services and that arising as a return on participation. This requires estimation of the total amount of time cost and disbursements that will be incurred on a matter and the expected settlement value; the allocation of the DBA to revenue is made with reference to standard returns on contingent fee work. Different views will impact the level of unrecognised contingent revenue and also the recognised financial asset relating to the DBA participation.

Where non-contingent fees as well as contingent revenue are earned on DBAs, the group must make a judgement as to whether non-contingent amounts represent revenue or a reduction in funding, with reference to the terms of the agreement and timing and substance of time worked and payments made. Where non-contingent revenue arises, the Group must match it against the services to which it relates. This requires Management to estimate work done as a proportion of total expected work to which the fee relates. Different views could impact the level of non-contingent revenue recognised.

- Impairment of trade receivables

Receivables are held at cost less provisions for impairment. Impairment provisions are recognised based on the simplified approach within IFRS 9 using a provision matrix in the determination of the lifetime expected credit losses. A different assessment of the impairment provision with reference to the probability of the non-payment of trade debtors or the expected loss arising from default, may result in different values being determined.

- Litigation assets and fair value

LionFish

For each of LionFish's investments, a part disposal has been made in the period, and the sales prices of these disposals have been used to value the gross value of the interest in damages retained by the Group. In order to calculate the proportion of each investment retained, the Group has estimated the expected total return on the investment and the expected return payable to the onward investor. As returns are dependent on the timing of the settlement, these estimates are driven by assumptions over the most likely timing of settlement, which is based on semi-annual individual case by case reviews by management.

In order to calculate the profit on disposal, the Group allocates the corresponding proportion of the total expected cost of the investment against the proportion of the investment sold. The total expected cost of each investment involves an assumption regarding the total expected drawdown on that investment, which may be less than the total value of funds committed. Management make this assumption based on their semi-annual case by case reviews of each individual investment. The recorded profits on disposal and carrying values are relatively insensitive to assumptions made, with the exception that matters for which capital invested is insured are sensitive to the estimated settlement date. In general, the later the anticipated settlement date, the greater the carrying value of the investment. Management has exercised caution in its assessment of settlement dates.

RBL

Unlike LionFish's investments, the total return on RBL's litigation assets is a proportion of damages awarded, rather than being dependent on timing of settlement. As this figure is potentially large and uncertain, and has a strong impact on fair value calculations, where possible the Group avoids using it as an input to its fair value calculations.

Notes (continued)

3	Critical accounting estimates and judgements (continued)

Where a recent disposal of an interest in a damage based agreement has been made, the sales price of the disposal has been used to value the gross value of the interest in damages retained by the Group. The sales price is adjusted downwards for the cost of the Group's ongoing funding of the matter, which is not borne by the onward investor. This involves an estimate of the likely amount and timing of disbursements over the course of the matter, the minimum being funds already disbursed at the balance sheet date. As management believes the sales price of disposals to represent the floor level, having been used to create a market and de-risk the original investment, the minimum level of disbursements has also been used in valuing the investment. If the present value of the maximum level of disbursements were applied against the value of damages based on disposal price, this would reduce the fair value of the investment to zero. Conversely, if a discounted cash flow method of valuation were used, including an estimate of the likely amount of damages on settlement, the value of the investment would be significantly increased.

It is presumed that fair value and cost approximate to each other on initial recognition and where a damages based agreement is at an early stage, such that the level of time worked is de minimis, the financial asset has been valued at cost, subject to assessment for overstatement.

Where there has been minimal activity on a damages based agreement from period to period, the prior year valuation is taken as the initial indication of fair value, subject to assessment for overstatement.

- Put options over shares held by non-controlling interest

The following key estimates and judgements have been used in determining the present value of put options over the shares held by the non-controlling interest in LionFish:-

i) It has been assumed that the option holder will exercise at the earliest possible opportunity, being 12 August 2022

ii) The value at the date of exercise, which is calculated as a multiple of average profit over the preceding two years, has been based on the actual profit after tax for the period ended 31 December 2020 and the budgeted profit after tax for the year ended 31 December 2021.

In determining the fair value of the put options, it has been assumed that fair value of the put shares in LionFish is equal to the fair value of the shares in the Company for which they would be exchanged, and that the fair value of the option is zero.

- Claims and regulatory matters

The Group from time to time receives claims in respect of professional service matters. The Group defends such claims where appropriate, but makes provision for the possible amounts considered likely to be payable, having regard to any relevant insurance cover held by the Group. A different assessment of the likely outcome of each case or of the possible cost involved may result in a different provision or cost.

Notes (continued)

4	Financial instruments - Risk Management

The Group is exposed through its operations to the following financial risks:

· Credit risk

· Interest rate risk and

· Liquidity risk.

In common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments. This note describes the Group's objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these financial statements.

There have been no substantive changes in the Group's exposure to financial instrument risks, its objectives, policies and processes for managing those risks or the methods used to measure them from the previous period unless otherwise stated in this note.

(i) Principal financial instruments

The principal financial instruments used by the Group, from which financial instrument risk arises, are as follows:

- Trade receivables

- Cash and cash equivalents

- Litigation assets

- Trade and other payables

- Floating-rate bank loans

(ii) Financial instruments by category

Financial assets

	Fair value through profit or loss		Amortised cost
	31 December 2020	31 December 2019	31 December 2020	31 December 2019
	£	£	£	£

Cash and cash equivalents	-	-	13,522,184	1,910,156
Trade and other receivables	-	-	7,074,425	10,393,807
Litigation assets	6,294,754	2,209,886	-	-
	_______	_______	_______	_______

Total financial assets	6,294,754	2,209,886	20,596,609	12,303,963
	_______	_______	_______	_______

Financial liabilities

	Fair value through profit or loss		Amortised cost
	31 December 2020	31 December 2019	31 December 2020	31 December 2019
	£	£	£	£

Trade payables and accruals	-	-	1,618,264	1,555,988
Loans and borrowings	-	-	10,000,000	-
Other payables	-	2,640,000	2,133,595	1,430,000
	_______	_______	_______	_______

Total financial liabilities	-	2,640,000	13,751,859	2,985,988
	_______	_______	_______	_______

Trade and other payables are due within twelve months.

Notes (continued)

4	Financial instruments - Risk Management (continued)

Principal financial instruments (continued)

(iii) Financial instruments not measured at fair value

Financial instruments not measured at fair value includes cash and cash equivalents, trade and other receivables, trade and other payables and loans and borrowings.

Due to their short-term nature, the carrying value of cash and cash equivalents, trade and other receivables, and trade and other payables approximates their fair value.

(iv) Financial instruments measured at fair value

Litigation assets are classified as level 3 in the fair value hierarchy of financial instruments.

The methods and procedures to fair value litigation assets may include, but are not limited to: (i) obtaining information provided by third parties when available; (ii) performing comparisons of comparable or similar investment matters; (iii) calculating the present value of future cash flows; (iv) assessing other analytical data and information relating to the investment that is an indication of value; (v) reviewing the amounts invested in these investments; (vii) entering into a market transaction with an arm's length party.

The material estimates and assumptions used in the analysis of fair value include the status and risk profile of the risks underlying the investment, the timing and expected amount of cash flows based on the investment structure and agreement, the appropriateness of discount rates used, if any, and in some cases, the timing of, and estimated minimum proceeds from, a favourable outcome. Significant judgement and estimation goes into the assumptions which underlie the analyses, and the actual values realised with respect to investments could be materially different from values obtained based on the use of the estimates.

The reconciliation of the opening and closing fair value balance of the level 3 financial instruments is provided in Note 18 together with a sensitivity analysis.

General objectives, policies and processes

The Board has overall responsibility for the determination of the Group's risk management objectives and policies and, whilst retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective implementation of the objectives and policies to the Group's finance function. The Board receives monthly reports from the Chief Financial Officer through which it reviews the effectiveness of the processes put in place and the appropriateness of the objectives and policies it sets.

The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group's competitiveness and flexibility. Further details regarding these policies are set out below:

Credit risk

Credit risk is the risk of financial loss to the Group if a client or counterparty to a financial instrument fails to meet its contractual obligations. The Group is mainly exposed to credit risk from credit sales, It is Group policy to assess the credit risk of new and irregular clients before entering contracts and to require money on account of work for these clients. The Group reviews, on a regular basis, whether to perform further work where clients have unpaid bills. The Group works with a broad spread of long standing reputable clients to ensure there are no significant concentrations of credit risk.

Credit risk also arises from cash and cash equivalents and deposits with banks and financial institutions. Cash and cash equivalents are invested with banks with an A+ credit rating.

Notes (continued)

4	Financial instruments - Risk Management (continued)

General objectives, policies and processes (continued)

Interest rate risk

The Group is exposed to cash flow interest rate risk from borrowings under the Revolving Credit Facility at variable rate. The Board reviews the interest rate exposure on a regular basis.

During 2020 and 2019, the Group's borrowings at variable rate were denominated in sterling. At 31 December 2020, if interest rates on sterling denominated borrowings had been 100 basis points higher/lower with all other variables held constant, profit after tax for the year would have been £78,000 lower/higher, mainly as a result of higher/lower interest expense on floating-rate borrowings. The directors consider that 100 basis points is the maximum likely change in sterling interest rates over the next year, being the period up to the next point at which the Group expects to make these disclosures.

Liquidity risk

Liquidity risk arises from the Group's management of working capital and the finance charges and principal repayments on its debt instruments. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due. The Group's policy is to ensure that it will always have sufficient cash (or agreed facilities) to allow it to meet its liabilities when they become due and to take advantage of business opportunities.

The Board reviews the projected financing requirements annually when agreeing the Group's budget and receives rolling 12-month cash flow projections for the Group on a regular basis as well as information regarding cash balances.

On 25^th October 2019, the Group signed a £10,000,000 three-year Revolving Credit Facility with HSBC UK Bank plc. The Group may utilise any proportion of the facility, paying an interest margin of 1.75-2.25% over LIBOR on utilisations and a commitment fee on the unutilised facility. The facility is secured by the debenture which grants first ranking fixed and floating security of the property and assets of the Group as referenced in Notes 12 and 14. During 2020, the Group drew down the full £10m facility. At the year end the Group had £13.5m in cash, and so a net cash position of £3.5m (2019: £1.9m).

At the end of the financial year, cash flow projections indicated that the Group expected to have sufficient liquid resources to meet its obligations, including scheduled lease payments (Note 13), under all reasonably expected circumstances.

Capital Management

The Group monitors "adjusted capital" which comprises all components of equity (i.e. share capital, share premium, non-controlling interest and retained earnings).

The Group's objectives when maintaining capital are:

- to safeguard the entity's ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders, and

- to provide an adequate return to shareholders by pricing products and services commensurately with the level of risk.

The Group expects to pursue a progressive dividend policy over time, driven primarily by the level of cash retained within the business as well as investment opportunities available to the Group and from time to time review the continued appropriateness of such policy.

Notes (continued)

5 Segment information

The Group's reportable segments are strategic business groups that offer different products and services. Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker, which has been identified as the Board of Directors of RBG Holdings plc.

The following summary describes the operations of each reportable segment:

· Legal services - Provision of legal advice, by Rosenblatt

· Litigation finance - Sale of litigation assets, by Rosenblatt and LionFish

· Other Professional services -Provision of sell-side M&A corporate finance services, by Convex

2020		Legal services	Litigation finance	Other Professional services	Total
		£	£	£	£

Segment revenue		20,864,341	-	1,584,991	22,449,332
		_______	_______	_______	_______

Segment gains on litigation assets comprising:
Proceeds on disposal of litigation assets		-	3,561,000	-	3,561,000
Realisation of litigation assets		-	(2,353,164)	-	(2,353,164)
		_______	_______	_______	_______

Profit on disposal of litigation assets		-	1,207,836	-	1,207,836
Fair value movement on litigation assets		-	1,914,891	-	1,914,891
		_______	_______	_______	_______

		-	3,122,727	-	3,122,727
		_______	_______	_______	_______

Segment contribution		10,868,778	-	(605,593)	10,263,185
		_______	_______	_______

Segment gains on litigation assets		--	3,122,727	--	3,122,727
		_______	_______	_______

	Costs not allocated to segments
	Personnel costs				(2,634,661)
	Depreciation and amortisation				(2,081,501)
	Other operating expense				(593,395)
	Net financial expenses				(370,074)
					_______

Group profit for the year before tax					7,706,281
					_______

Notes (continued)

5 Segment information (continued)

2019		Legal services	Litigation finance	Other Professional services	Total
		£	£	£	£

Segment revenue		18,089,740	-	1,851,500	19,941,240
		_______	_______	_______	_______

Segment gains on litigation assets		--	3,800,000	--	3,800,000
		_______	_______	_______	_______

Segment contribution		10,231,521	-	1,037,839	11,269,360
		_______	_______	_______

Segment gains on litigation assets		--	3,800,000	--	3,800,000
		_______	_______	_______

	Costs not allocated to segments
	Personnel costs				(2,861,240)
	Depreciation and amortisation				(1,576,180)
	Other operating expense				(2,772,322)
	Net financial expenses				(212,183)
					_______

Group profit for the year before tax					7,647,435
					_______

Total assets and liabilities by operating segment are not reviewed by the chief operating decision makers and are therefore not disclosed.

A geographical analysis of revenue is given below:

	Revenue by location of clients
	2020	2019
	£	£

United Kingdom	20,680,948	17,420,189
Europe	387,829	301,799
North America	7,833	71,591
Other	1,372,722	2,147,661
	_______	_______

	22,449,332	19,941,240
	_______	_______

Revenues from Legal services clients that account for more than 10% of Group revenue total £12,829,816 (2019: £7,905,967).

Notes (continued)

Contract assets
	2020	2019
Group	£	£

At 1 January 2020	3,797,152	3,040,152
Acquired through business combinations	-	-
Transfers in the period from contract assets to trade receivables	(3,429,927)	(2,692,814)
Excess of revenue recognised over cash (or rights to cash) being recognised during the year	2,629,700	3,449,814
	_______	_______

At 31 December 2020	2,996,925	3,797,152
	_______	_______

Contract assets are included within "trade and other receivables" on the face of the statement of financial position. They arise when the Group has performed services in accordance with the agreement with the relevant client and has obtained right to consideration for those services but such income has not been billed at the balance sheet date.

6	Profit from operations and auditor's remuneration
		2020	2019
		£	£
	Profit from operations is stated after charging:

	Fees payable to the company's auditors
	- Audit fees	177,500	147,750
	- Other services	12,500	12,500
	Depreciation of property, plant and equipment	335,634	232,729
	Amortisation of right-of-use assets	986,061	891,794
	Amortisation/impairment of intangible assets	759,806	451,658
	Lease expense:
	- Short term	-	-
	- Low value	3,335	1,872

The Alternative Performance Measures used by Management are shown below:

	2020	2019
	£	£

Operating profit	8,076,355	7,859,618
Depreciation and amortisation expense	2,081,501	1,576,180
Non-underlying items	(2,640,000)	-
	_______	_______

Adjusted EBITDA	7,517,856	9,435,798
	_______	_______

	2020	2019
	£	£

Profit before tax	7,706,281	7,647,435
Non-underlying items	(2,640,000)	-
	_______	_______

Adjusted PBT	5,066,281	7,647,435
	_______	_______

Notes (continued)

7	Employees
		2020	2019
	Group	£	£

	Staff costs (including directors) consist of:

	Wages and salaries	9,902,596	8,071,730
	Short-term non-monetary benefits	122,854	114,448
	Cost of defined contribution scheme	262,518	262,998
	Share-based payment expense	39,403	-
	Social security costs	1,225,260	981,110
		_______	_______

		11,552,631	9,430,286
		_______	_______

Personnel Costs stated in the Consolidated statement of comprehensive income includes the costs of contractors of £3,227,573 (2019: £2,066,589).

The average number of employees (including directors) during the period was as follows:

	2020	2019
	Number	Number

Legal and professional staff	55	50
Administrative staff	35	31
	_______	_______

	90	81
	_______	_______

Defined contribution pension schemes are operated on behalf of the employees of the Group. The assets of the schemes are held separately from those of the Group in independently administered funds. The pension charge represents contributions payable by the Group to the funds and amounted to £262,518 (2019: £262,998). Contributions amounting to £40,574 (2019: £42,308) were payable to the funds at period end and are included in Trade and other payables.

Company

The average number of employees (excluding directors) during the period was one (2019: nil); all other personnel are employed by subsidiary undertakings.

Details of the Directors' remuneration, share interests and transactions with directors are included in the Directors' Report and in Note 26. The directors are considered to be the key management personnel.

Notes (continued)

8	Finance income and expense

Recognised in profit or loss

	2020	2019
Finance income	£	£

Interest received on bank deposits	24,460	41,027
	_______	_______

Net finance income recognised in profit or loss	24,460	41,027
	_______	_______

Finance expense	£	£

Interest expense on financial liabilities measured at amortised cost	(185,497)	(27,565)
Interest expense on lease liabilities	(209,037)	(225,645)
	_______	_______

	(394,534)	(253,210)
	_______	_______

Net finance (expense) recognised in profit or loss	(370,074)	(212,183)
	_______	_______

The above financial income and expense include the following in respect of assets/(liabilities) not at fair value through profit or loss:

Total interest income on financial assets	24,460	41,027
Total interest expense on financial liabilities	(185,497)	(27,565)
	_______	_______

	161,037	13,462
	_______	_______

9	Tax expense

	2020	2019
	£	£
Current tax expense

Current tax on profits for the year	1,141,107	1,487,925
Adjustment for under provision in prior periods	1,120	61,538
	_______	_______

Total current tax	1,142,227	1,549,463

Deferred tax expense

Origination and reversal of temporary differences (Note 23)	(117,291)	(78,626)
	_______	_______

Total tax expense	1,024,936	1,470,837
	_______	_______

Notes (continued)

9	Tax expense (continued)

The reasons for the difference between the actual tax charge for the period and the standard rate of corporation tax in the United Kingdom applied to profits for the period are as follows:

	2020	2019
	£	£

Profit on ordinary activities before taxation	7,706,281	7,647,435
	_______	_______

Tax using the Company's domestic tax rate of 19%	1,464,193	1,453,013
Expenses not deductible for tax purposes	5,293	31,715
Income not taxable for tax purposes	(501,600)	-
Adjustments in respect of prior periods	1,120	61,539
Adjustments in respect of prior periods (deferred tax)	5,606	(11,816)
Remeasurement of deferred tax for changes in tax rates	50,324	(63,614)
	_______	_______

Total tax expense	1,024,936	1,470,837
	_______	_______

Changes in tax rates and factors affecting the future tax charge

Following an announcement in the Budget on 11 March 2020, which was substantively enacted on 17 March 2020, the UK corporation tax rate applicable for the years beginning 1 April 2020 and 1 April 2021 now remains at 19%, rather than the previously enacted reduction to 17%. This rate of 19% has been applied to deferred tax balances which are expected to reverse after 1 April 2020, the date on which that rate became effective.

10	Earnings per share

	Total	Total
	2020	2019
Numerator	£	£

Profit for the period and earnings used in basic and diluted EPS	6,454,738	6,176,598

Non-Underlying items
Deferred consideration release	(2,640,000)	-
Less: tax effect of above items	-	-
	_______	_______

Profit for the year adjusted for Non Underlying items	3,814,738	6,176,598
	_______	_______

Denominator	Number	Number

Weighted average number of shares used in basic EPS	85,592,106	81,704,435
Effect of:
Contingent share consideration on business combination	-	603,422
	_______	_______

Weighted average number of shares used in diluted EPS	85,592,106	82,307,857
	_______	_______

Notes (continued)

10	Earnings per share (continued)

Earnings per share is calculated as follows:

	2020	2019
	Pence	Pence

Basic earnings per ordinary share	7.54	7.56

Diluted earnings per ordinary share	7.54	7.50

Basic earnings per ordinary share adjusted for Non Underlying items	4.46	7.56

Diluted earnings per ordinary share adjusted for Non Underlying items	4.46	7.50

Clawback arrangements over certain shares of Cascades Ltd would have an anti-dilutive effect on earnings per share and therefore no impact on diluted earnings per share.

11 Dividends

	2020	2019
	£	£

Interim dividend of 0p (2019: 2.8p) per Ordinary share proposed and paid during the year relating to the previous year's results	-	2,228,300

Interim dividend of 1.0p (2019: 2.0p) per Ordinary share paid during the year	823,283	1,583,042
	_______	_______

	823,283	3,811,342
	_______	_______

On 26 February 2021, an interim dividend was paid of 3 pence per share in respect of the 2020 financial year.

Notes (continued)

12	Property, plant and equipment

Group	Plant and	Fixtures	Computer	Total
	Machinery	and fittings	Equipment
	£	£	£	£
Cost

At 1 January 2020	324,512	116,258	501,408	942,178
Additions	10,989	32,878	128,615	172,482
Disposals	-	-	(1,339)	(1,339)
	_______	_______	_______	_______

At 31 December 2020	335,501	149,136	628,684	1,113,321
	_______	_______	_______	_______

Accumulated Depreciation and Impairment

At 1 January 2020	172,297	9,097	122,402	303,796
Charge for the year	109,274	35,958	190,403	335,635
Disposals	-	-	(1,339)	(1,339)
	_______	_______	_______	_______

At 31 December 2020	281,571	45,055	311,466	638,092
	_______	_______	_______	_______

Net book value

At 1 January 2020	152,215	107,161	379,006	638,382

At 31 December 2020	53,930	104,081	317,218	475,229
	_______	_______	_______	_______

Notes (continued)

12	Property, plant and equipment (continued)

Company	Computer	Total
	Equipment
	£	£
Cost

At 1 January 2020	17,125	17,125
Additions	1,625	1,625
Acquired through business combinations	-	-
	_______	_______

At 31 December 2020	18,750	18,750
	_______	_______

Accumulated Depreciation and Impairment

At 1 January 2020	6,698	6,698
Charge for the year	6,205	6,205
	_______	_______

At 31 December 2020	12,903	12,903
	_______	_______

Net book value

At 1 January 2020	10,427	10,427

At 31 December 2020	5,847	5,847
	_______	_______

Under a debenture signed and registered on 25 October 2019, HSBC UK Bank plc have a fixed charge over the property, plant and equipment of the Group.

13 Leases

The Group leases its business premises in the United Kingdom. The lease contracts either provide for annual increases in the periodic rent payments linked to inflation or for payments to be reset periodically to market rental rates. The Group also leases an item of office equipment, with fixed payments over the lease term.

The percentages in the table below reflect the current proportions of lease payments that are either fixed or variable. The sensitivity reflects the impact on the carrying amount of lease liabilities and right-of-use assets if there was an uplift of 5% on the balance sheet date to lease payments that are variable.

Notes (continued)

13	Leases (continued)

At 31 December 2020	Lease Contracts	Fixed Payments	Variable Payments	Sensitivity
	Number	%	%	£000

Property leases with payments linked to inflation	1	-	88.0%	+/- 290
Property leases with periodic uplifts to market rentals	1	-	11.3%	+/- 10
Leases of plant and equipment	1	0.7%	-	-
	_______	_______	_______	_______

	3	0.7%	99.3%	+/-300
	_______	_______	_______	_______

The percentages in the table below reflect the proportions of lease payments that are either fixed or variable for the comparative period.

At 31 December 2019	Lease Contracts	Fixed Payments	Variable Payments	Sensitivity
	Number	%	%	£000

Property leases with payments linked to inflation	1	-	89.7%	+/- 323
Property leases with periodic uplifts to market rentals	1	-	9.7%	+/- 13
Leases of plant and equipment	1	0.6%	-	-
	_______	_______	_______	_______

	3	0.6%	99.4%	+/-336
	_______	_______	_______	_______

Right-of-Use Assets

	Land and buildings	Computer equipment	Total
	£	£	£

At 1 January 2019	7,294,194	16,518	7,310,712
Acquired through business combinations	274,380	-	274,380
Amortisation	(885,187)	(6,607)	(891,794)
Variable lease payment adjustment	66,900	-	66,900
	_______	_______	_______

At 31 December 2019	6,750,287	9,911	6,760,198
	_______	_______	_______

	Land and buildings	Computer equipment	Total
	£	£	£

At 1 January 2020	6,750,287	9,911	6,760,198
Amortisation	(979,454)	(6,607)	(986,061)
Variable lease payment adjustment	51,575	-	51,575
	_______	_______	_______

At 31 December 2020	5,822,408	3,304	5,825,712
	_______	_______	_______

Notes (continued)

13	Leases (continued)

Lease liabilities

	Land and buildings	Computer equipment	Total
	£	£	£

At 1 January 2019	7,073,880	16,518	7,090,398
Acquired through business combinations	274,380	-	274,380
Interest expense	225,187	459	225,646
Variable lease payment adjustment	66,900	-	66,900
Lease payments	(918,615)	(6,906)	(925,521)
	_______	_______	_______

At 31 December 2020	6,721,732	10,071	6,731,803
	_______	_______	_______

	Land and buildings	Computer equipment	Total
	£	£	£

At 1 January 2020	6,721,732	10,071	6,731,803
Interest expense	208,790	247	209,037
Variable lease payment adjustment	51,575	-	51,575
Lease payments	(1,034,442)	(6,911)	(1,041,353)
	_______	_______	_______

At 31 December 2020	5,947,655	3,407	5,951,062
	_______	_______	_______

At 31 December 2020, lease liabilities were falling due as follows:

Group	Up to 3 months	Between 3 and 12 months	Between 1 and 2 years	Between 2 and 5 years	Over 5 years	Total
	£	£	£	£	£	£
Lease liabilities	213,432	656,587	885,479	2,685,051	1,510,513	5,951,062

The aggregate undiscounted commitments for low-value leases as at 31 December 2020 was £5,460.

Notes (continued)

14	Intangible assets
	Group	Goodwill	Customer	Brand	Other	Total
			Contracts
		£	£	£	£	£
	Cost

	At 1 January 2019	17,260,221	200,111	750,000	-	18,210,332
	Acquired through business combinations	15,775,039	1,167,673	661,596	-	17,604,308
		_______	_______	_______	_______	_______

	At 31 December 2019	33,035,260	1,367,784	1,411,596	-	35,814,640
		_______	_______	_______	_______	_______

	At 1 January 2020	33,035,260	1,367,784	1,411,596	-	35,814,640
	Additions	-	-	-	1,000,000	1,000,000
		_______	_______	_______	_______	_______

	At 31 December 2020	33,035,260	1,367,784	1,411,596	1,000,000	36,814,640
		_______	_______	_______	_______	_______

	Accumulated amortisation and impairment

	At 1 January 2019	-	200,111	25,000	-	225,111
	Amortisation charge	-	404,602	47,056	-	451,658
		_______	_______	_______	_______	_______

	At 31 December 2019	-	604,713	72,056	-	676,769
		_______	_______	_______	_______	_______


	At 1 January 2020	-	604,713	72,056	-	676,769
	Amortisation charge	-	689,226	70,580	-	759,806
		_______	_______	_______	_______	_______

	At 31 December 2020	-	1,293,939	142,636	-	1,436,575
		_______	_______	_______	_______	_______

	Net book value

	At 1 January 2019	17,260,221	-	725,000	-	17,985,221

	At 31 December 2019	33,035,260	763,071	1,339,540	-	35,137,871

	At 31 December 2020	33,035,260	73,845	1,268,960	1,000,000	35,378,065
		_______	_______	_______	_______	_______

Under a debenture signed and registered on 25 October 2019, HSBC UK Bank plc have a fixed charge over the intangible assets of the Group.

As announced on 24 January 2020 and disclosed in the Report and Financial Statements for the year ended 31 December 2019, RBL negotiated with Ian Rosenblatt 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, RBL made a one-off payment to Mr Rosenblatt of £1 million, reflected in Other Intangible assets above.

Notes (continued)

15	Impairment of goodwill and other intangible assets

The Group is required to test, on an annual basis, whether goodwill and other intangible assets have suffered any impairment. The recoverable amounts are determined based on value in use calculations. The use of this method requires the estimation of future cash flows and the determination of a discount rate in order to calculate the present value of the cash flows. The recoverable amounts were determined to be higher than the carrying amounts and so no impairment losses were recognised.

The recoverable amounts have been determined from value in use calculations based on an extrapolation of the cash flow projections from the formally approved budget. Values assigned to the key assumptions represent management's estimate of expected future trends and are as follows:

· A pre-tax discount rate of 18%was applied in determining the recoverable amount. The discount rate is based on the average weighted cost of capital.

· Growth rates over the long term of between 2-4% are based on management's understanding of the market opportunities for services provided, whilst in the case of Convex Capital, a return to pre COVID-19 business levels was not assumed until 2023.

· Increases in costs are based on current inflation rates and expected levels of recruitment needed to generate predicted revenue growth.

· Cash flows have been assessed over ten years with the assumption that the business will be ongoing at the end of that period.

The review demonstrated sufficient headroom such that the estimated carrying values are not sensitive to changes in assumptions. Having reviewed the key assumptions used, the Directors do not believe that there is a reasonably possible change in any of the key assumptions that require further disclosure.

16	Subsidiaries

The principal subsidiaries of RBG Holdings plc, which are incorporated in England and Wales and have been included in these consolidated financial statements, are as follows:

Name	Principal Activity	Registered Number	Proportion of ownership interest at 31 December		Non-Controlling interests ownership at 31 December
			2020	2019	2020	2019

Rosenblatt Limited	Legal Services	09986118	100%	100%	-	-
Convex Group (Holdings) Limited	Holding Company	11490871	100%	100%	-	-
Convex Capital Limited	Professional Services	11491052	100%	100%	-	-
LionFish Litigation Finance (UK) Limited	Litigation Finance	12165991	90%	-	10%	-
Islero Assignments Limited	Dormant	12754244	100%	-	-	-

The principal place of business of Convex Group (Holdings) Limited and Convex Capital Limited is Bass Warehouse, 4 Castle Street, Manchester, M3 4LZ. The principal place of business of the other subsidiaries and the registered address of each subsidiary is 9-13 St. Andrew Street, London, England EC4A 3AF.

For the year ending 31 December 2020, the principal subsidiary companies, set out above, were exempt from the requirements of the Companies Act relating to the audit of individual accounts by virtue of section 479A of the Companies Act 2006. RBG Holdings plc, has given a statement of guarantee under the Companies Act 2006 section 479C, whereby RBG Holdings plc will guarantee all outstanding liabilities to which the respective subsidiary companies are subject as at 31 December 2020.

Notes (continued)

17	Non-controlling interests

The NCI of LionFish Litigation Finance (UK) Finance, which is 90% owned by the Group, is considered to be immaterial.

18 Litigation assets

The table below provides analysis of the movements in the Level 3 financial assets.

	2020	2019
	Level 3	Level 3
	£	£

At 1 January	2,209,886	-
Additions	4,523,141	2,209,886
Realisations	(2,353,164)	(3,800,000)
Fair value movement	1,914,891	3,800,000
	_______	_______

At 31 December	6,294,754	2,209,886
	_______	_______

Sensitivity of Level 3 valuations

Following investment, the Group engages in a semi-annual review of each investment's fair value. At 31 December 2020, should the value of investments have been 10% higher or lower than provided for in the Group's fair value estimation, while all other variables remained constant, the Group's income and net assets would have increased and decreased respectively by £629,475 (2019: £220,988).

19	Trade and other receivables
		Group	Company	Group	Company
		2020	2020	2019	2019
		£	£	£	£

	Trade receivables	3,592,075	-	3,469,642	-
	Less: provision for impairment of trade receivables	(219,643)	-	(64,923)	-
		_______	_______	_______	_______

	Trade receivables - net	3,372,432	-	3,404,719	-
	Contract assets	2,996,925	-	3,797,152	-
	Amounts due from subsidiaries	-	24,143,299	-	25,995,864
	Other receivables	705,068	673,073	3,191,936	489,677
		_______	_______	_______	_______

	Total financial assets other than cash and cash equivalents classified as amortised cost	7,074,425	24,816,372	10,393,807	26,485,541
	Prepayments	622,500	84,559	695,005	7,417
		_______	_______	_______	_______

	Total trade and other receivables	7,696,925	24,900,931	11,088,812	26,492,958
		_______	_______	_______	_______

Notes (continued)

19	Trade and other receivables (continued)

The carrying value of trade and other receivables classified at amortised cost approximates fair value.

The Group does not hold any collateral as security.

The Group applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss provision for trade receivables and contract assets. To measure expected credit losses on a collective basis, trade receivables and contract assets are grouped based on similar credit risk and aging. The contract assets have similar risk characteristics to the trade receivables for similar types of contracts.

The expected loss rates are based on the Group's credit losses experienced over the period since incorporation, adjusted for current and forward-looking information on macroeconomic factors affecting the Group's customers. The Group has identified the gross domestic product (GDP), unemployment rate and inflation rate as the key macroeconomic factors in the countries where the Group operates.

The lifetime expected loss provision for trade receivables and contract assets is as follows:

31 December 2020		More than	More than	More than
		30 days	60 days	120 days	Total
	Current	past due	past due	past due	£

Expected loss rate	0%	2%	2%	23%
Gross carrying amount	5,073,270	381,262	352,867	781,601	6,589,000
Loss provision	23,566	7,028	6,505	182,544	219,643

31 December 2019		More than	More than	More than
		30 days	60 days	120 days	Total
	Current	past due	past due	past due	£

Expected loss rate	0%	2%	2%	5%
Gross carrying amount	5,894,884	365,492	402,330	604,088	7,266,795
Loss provision	14,684	8,406	9,254	32,579	64,923

None of the trade receivables and contract assets have been subject to a significant increase in credit risk since initial recognition.

Notes (continued)

19	Trade and other receivables (continued)

Movements in the impairment allowance for trade receivables are as follows:

	2020	2019
	£	£

At 1 January 2020	64,923	27,790
Increase during the year	154,720	37,133
	_______	_______

At 31 December 2020	219,643	64,923
	_______	_______

Company

The loan due from RBL is on demand and interest free.

Management considers that there is no increase in credit risk on the related party loan. Given that the loan is on demand, lifetime credit losses and 12 month credit losses will be the same. Having considered different recoverability scenarios which incorporated macroeconomic information (such as market interest rates and growth rates), current and forward looking information, management consider the expected credit loss to be close to nil.

20	Trade and other payables

	Group	Company	Group	Company
	2020	2020	2019	2019
	£	£	£	£

Trade payables	465,300	-	789,857	-
Corporation tax payable	657,437	-	1,395,489	-
Other taxes and social security	1,157,687	-	1,084,948	-
Amounts due to group companies	-	662,213	-	44,321
Other payables	2,133,595	1,118,595	4,070,000	4,070,000
Accruals	1,152,964	254,623	766,131	212,648
	_______	_______	_______	_______

At 31 December	5,566,983	2,035,431	8,106,425	4,326,969
	_______	_______	_______	_______

Due within one year or less	4,551,983	2,035,431	8,106,425	4,326,969
Due after more than one year	1,015,000	-	-	-
	_______	_______	_______	_______

	5,566,983	2,035,431	8,106,425	4,326,969
	_______	_______	_______	_______

The carrying value of trade and other payables classified as financial liabilities measured at amortised cost approximates fair value.

On 12 August 2020, the Company agreed put and call options over the shares of LionFish held by the non-controlling interest. Under this agreement, the holder of the shares can require the Company to buy the shares in LionFish, with consideration based on a multiple of LionFish profits, settled by the issue of ordinary shares in the Company, at any point in the period from 12 August 2022 to 12 August 2030. Similarly under the agreement, the Company can require the holder of the shares to sell the shares of LionFish for a consideration calculated and settled in the same way at any point in the period from 12 August 2025 to 12 August 2030.

Notes (continued)

21	Loans and borrowings

The book value and fair value of loans and borrowings which all denominated in sterling are as follows:

		Book value	Fair value	Book value	Fair value
		31 Dec 20	31 Dec 20	31 Dec 19	31 Dec 19
		£	£	£	£
	Non-Current
	Bank loans
-	- Secured	10,000,000	10,000,000	-	-

		_______	_______	_______	_______

	At 31 December	10,000,000	10,000,000	-	-

		_______	_______	_______	_______

The rate at which Sterling denominated loans and borrowings are payable is 1.75% above LIBOR.

The bank loans are secured by fixed and floating charges over the assets of the Group. The Group has no undrawn committed borrowing facilities available at 31 December 2020 (2019: £10,000,000).

22	Provisions
	Group	Other provisions	Other provisions
		2020	2019
		£	£

	At 1 January	75,000	35,264
	Charged to profit or loss	41,875	39,736
		_______	_______

	At 31 December	116,875	75,000
		_______	_______

	Due within one year or less	116,875	75,000
	Due after more than one year	_______-	_______-

		116,875	75,000
		_______	_______

Other provisions represent the amount equal to the insurance excess payable on outstanding claims against the Group which are covered by the Group's professional indemnity insurance policy. The amount or timing of amounts payable in these cases is uncertain as the resolution of the cases is unknown at the period end.

Notes (continued)

23	Deferred tax

Deferred tax is calculated in full on temporary differences under the liability method using a tax rate of 19%.

The movement on the deferred tax account is as shown below:

	Group	Company	Group	Company
	2020	2020	2019	2019
	£	£	£	£

At 1 January	422,144	1,773	144,062	-

Recognised in profit and loss
Tax expense	(117,291)	500,938	(78,626)	1,773
	_______	_______	_______	_______

	304,853	502,711	65,436	1,773

Arising on business combination	-	-	356,708	-
	_______	_______	_______	_______

At 31 December	304,853	502,711	422,144	1,773
	_______	_______	_______	_______

24	Share capital

	Authorised
	2020	2020	2019	2019
	Number	£	Number	£


Ordinary shares of 0.2p each	85,592,106	171,184	85,592,106	171,184
	_______	_______	_______	_______

	Allotted, issued and fully paid
Allotted, issued and fully paid	2020	2020	2019	2019
	Number	£	Number	£
Ordinary shares of 0.2p each
At 1 January	85,592,106	171,184	80,092,106	160,184
Other issues for cash during the year	-	-	-	-
Other issues during the year	-	-	5,500,000	11,000
	_______	_______	_______	_______

At 31 December	85,592,106	171,184	85,592,106	171,184
	_______	_______	_______	_______

Ordinary shares rank equally as regards to dividends, other distributions and return on capital. Each ordinary share carries the right to one vote.

Notes (continued)

25 Reserves

Financial instruments issued by the Group are classified as equity only to the extent that they do not meet the definition of a financial liability or financial asset.

The following describes the nature and purpose of each reserve within equity:

	Reserve	Description and purpose

	Share capital	Amount subscribed for share capital at nominal value.

	Share premium	Amount subscribed for share capital in excess of nominal value less transaction costs.
	Retained earnings	All other net gains and losses and transactions with owners (e.g. dividends) not recognised elsewhere.

26	Related party transactions

Group

During the year, Group companies entered into the following transactions with related parties who are not members of the Group:

Related party	Supply of	Purchase of	Supply of	Purchase of
	Services	Services	Services	Services

	2020	2020	2019	2019
	£	£	£	£

Velocity Venture Capital Ltd*	14,250	209,786	18,886	194,836
N Foulston	6,500	-	-	-
Motorsport Circuit Management Limited*	-	-	1,000	-
WDK Motorsport Limited*	-	-	(2,550)	-
Cascades Ltd **	-	-	2,500	-
Winros***	-	1,128,051	-	655,587

Note: *A company controlled by Nicola Foulston, ** A company wholly owned by the Foulston Family Trust of which Nicola Foulston is a beneficiary, *** A partnership in which Ian Rosenblatt is a partner.

In addition, during the year, £80,180 of contingent work was performed by the Group in relation to a Conditional Fee Agreement with Winros. At 31 December 2020, there were no amounts due to any related party (2019: £nil) and no amounts due by any related party (2019: £nil).

Sales and purchase of services to related parties were conducted on an arm's length basis on normal trading terms. The Group has not made any allowance for bad or doubtful debts in respect of related party debtors nor has any guarantee been given or received during 2020 for related party transactions.

There are various other companies controlled by Nicola Foulston, which use the Group's office as their registered address, with which there have been no transactions during the year.

Ian Rosenblatt is not a director of any company in the Group, nor a member of key management personnel, nor does he have a significant influence over the Group. He is a substantial shareholder, as disclosed in the Directors' Report and under the AIM Rules for Companies is classified as a related party. During the year a one-off payment of £1 million was made to Mr Rosenblatt for the extension and broadening of the restrictive covenants put in place at the IPO, more detail of which is given in Note 14.

Total remuneration of Key Management Personnel during the year was £835,565 (2019: £846,283). Further details of directors' remuneration are given in the Directors' Report.

Notes (continued)

26	Related party transactions (continued)

Company

In addition to the amounts disclosed in the Directors' Report, the Company has entered into the following transactions with related parties.

During 2020, the company reimbursed fees and expenses paid on its behalf by Rosenblatt Limited totalling £1,026,323 (2019: £151,653). At 31 December 2020, the company was owed £22,340,825 by Rosenblatt Limited (2019: £25,995,864).

At 31 December 2020, the company was owed £1,802,474 by Convex Capital Limited (2019: £44,321 owed to Convex Capital Limited).

During 2020, LionFish Litigation Finance (UK) Limited reimburse fees and expenses paid on its behalf by the Company totalling £143,602 (2019: £nil). At 31 December 2020, the company owed £662,213 to LionFish Litigation Finance (UK) Limited (2019: £nil).

27	Notes supporting statement of cash flows

Significant non-cash transactions from investing activities are as follows:

	2020	2019
	£	£

Equity consideration for business combination	(2,640,000)	7,700,000

Non-cash transactions from financing activities are shown in the reconciliation of liabilities from financing transactions below:

	Non-current loans and borrowings	Current loans and borrowings	Total
	£	£	£

At 1 January 2020	-	-	-
Cash flows	(122,836)	-	-
Non-cash flows
- Interest accruing in year	174,048	-
	_______	_______	_______

At 31 December 2020	51,212	-	-
	_______	_______	_______

At 1 January 2019	-	-	-
Cash flows	-	(27,565)	(27,565)
Non-cash flows
- Interest accruing in year	-	27,565	27,565
	_______	_______	_______

At 31 December 2019	-	-	-
	_______	_______	_______

Notes (continued)

28	Events after the reporting date

On 19 April 2021, the Group announced the acquisition of Memery Crystal (conditional on completion), a specialist international law firm based in London, for £30 million (£18.8 million in cash and £11.2 million in shares). Memery Crystal, with 146 employees (including 29 partners and an additional 66 fee earners), has a strong focus on transactions, which makes it a complementary fit with RBL, which derives most of its revenue from contentious law.

[1] Excluding £2.6 million write back of the deferred Convex Capital earnout

[2] Includes £2.6 million write back of the deferred Convex Capital earnout

[3] Total Lockup is average debtor days plus average accrued income days

[4] Profit for the year before members remuneration and profit share

[5] Total Lockup is average debtor days plus average accrued income days.

[6] The authority granted by management under the scheme is irrevocable and non-discretionary, and during a Close Period the Board has no power to invoke any changes to the authority. Any purchases will be undertaken at the sole discretion of N+1 Singer Limited. The Group confirms that it currently has no unpublished price sensitive information.

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END

FR IMMBTMTMTMFB

Results for the year ended 31 December 2020

1

Basis of preparation

1

Basis of preparation (continued)

2

Accounting policies

3

Critical accounting estimates and judgements

5

Segment information

5

Segment information (continued)

6

Profit from operations and auditor's remuneration

8

Finance income and expense

10

Earnings per share

10

Earnings per share (continued)

11

Dividends

12

Property, plant and equipment

12

Property, plant and equipment (continued)

13

Leases

13

Leases (continued)

13

Leases (continued)

15

Impairment of goodwill and other intangible assets

16

Subsidiaries

17

Non-controlling interests

18

Litigation assets

23

Deferred tax

25

Reserves

26

Related party transactions

26

Related party transactions (continued)

27

Notes supporting statement of cash flows

28

Events after the reporting date

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