This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014 as retained as part of UK law by virtue of the European Union (Withdrawal) Act 2018 (as amended). Upon the publication of this announcement, this inside information is now considered to be in the public domain.

27 July 2023

RBG Holdings plc

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

Pre-close Trading and Business Update

RBG Holdings plc (AIM: RBGP), the legal and professional services group, today publishes a pre-close trading and business update ahead of the expected publication of its financial results for the six months ending 30 June 2023 in September 2023.

Trading Update

RBG Legal Services ("RBGLS") which trades under two brands - Rosenblatt and Memery Crystal - has performed broadly in line with the Board's expectations, despite the challenging economic conditions. The performance demonstrates the ability of these two leading law firms, both with over 30 years of trading experience, to perform through different economic cycles and reinforces the success of the integration during the past two years.

The Group's specialist sell-side corporate finance advisory business, Convex Capital, has a strong pipeline of 18 deals (as at 1 July 2023) and it is expected that deal flow will become more consistent in the second half of the year. While a number are in advanced stages of negotiations, transactions are taking longer to complete as a consequence of the current economic environment. It is currently expected that a number of these pipeline deals will complete in the second half. However, the Board believes that full-year Adjusted EBITDA is now more likely to be in the range of £10m to £12m.

Business Update

A detailed review of all the Group's activities has been undertaken since the new management team took over at the start of this calendar year, led by CEO Jon Divers. The following actions have been taken:

Litigation Finance

On 12 July 2023, the Group completed the disposal of the non-core business, LionFish Litigation Finance Limited ("LionFish") to Blackmead Infrastructure Limited ("Blackmead") which reduced the Group's exposure to litigation funding commitments.

LionFish was created by the previous management and financed litigation matters run by third-party solicitors. The consideration for the disposal is up to £3.07m, of which £1.07m was used for immediate repayment of an intercompany loan. The proceeds from the sale are being used for working capital purposes and to reduce the net debt of the Group. The announcement of 12 July 2023 referenced a net asset value of the four cases acquired by Blackmead of £4.05m, however this should have referenced an adjusted net book value of £3.7m, with a reduced loss on disposal of £0.64m.

Conditional Fee Arrangements ('CFAs')

Separately, the Board has reviewed the previous management's strategy to invest in a number of Conditional Fee Arrangements ("CFAs") and Damages Based Agreements ("DBAs") undertaken through RBGLS. Over the past six years, RBGLS invested in 13 cases with a total cash investment of £17.4m. The current carrying value of the remaining cases is £13.3m.  One of these cases, Project Shango, accounted for £9.3m of the total. Having taken advice, the Board has now concluded that Project Shango will not be successful.

In light of this outcome on Project Shango, the Board has taken the prudent decision to further write down the value of all remaining cases on the balance sheet to zero, including the four remaining fully funded retained LionFish investments. The total non-cash write off will be £13.3m. Any successful outcomes of the cases will be returned to the Group as revenue in line with RBGLS' percentage stake in the cases.

This decision simplifies and de-risks the Group's balance sheet, providing greater visibility to investors. RBGLS will continue to offer its clients alternative billing arrangements (both CFAs and DBAs) where appropriate but any investments in such cases will not be carried as assets on its balance sheet in contrast to the treatment by the previous management. Any fees from wins on such cases will simply be recorded as revenue when paid.

Dividend

The Board is currently focused on reducing the Group's net debt from its existing level. A number of major shareholders have provided clear feedback that their preference is for RBG to accelerate this process and as a result, the Board is suspending the Group's dividend policy. The Directors' intention is to reinstate a dividend when RBG has achieved a more sustainable level of net debt.

In the short term, repaying the outstanding term loan of £6.5m as at 30 June 2023 remains the priority. Additionally, the Group's revolving credit facility of £15.0m is set for renewal in April 2024 and the process of refinancing this is already underway. The Board is confident that this will be concluded well ahead of next April.

Jon Divers, CEO, RBG, said: "Since the appointment of the Group's new senior management team, we have been working with the Board to undertake a detailed review of the business to stabilise our earnings and to achieve greater visibility. We have now exited all litigation finance matters, to ensure that our time and resources are focused on our core strengths.

"We are committed to reducing the Group's debt as well as investing in growing our legal services businesses, Rosenblatt and Memery Crystal, which are both working on an increasing volume of client matters.  We have a reinvigorated and highly motivated team, all pulling in the same direction. We have had to take tough decisions but are optimistic about the business outlook for the second half of the year and beyond and are committed to returning the Group to prosperity."

Additional Information

The person responsible for arranging release of this announcement on behalf of the Company is Jon Divers, Chief Executive Officer.

Enquiries:

About RBG Holdings plc

RBG Holdings plc is a legal services and professional services group, which comprises three core brands:

Rosenblatt

Rosenblatt is one of the UK's pioneering legal practices and a leader in dispute resolution. Rosenblatt provides a range of legal services to its diversified client base, which includes companies, banks, entrepreneurs and individuals. Complementing this is Rosenblatt's increasingly international footprint, advising on complex cross-jurisdictional disputes.

Memery Crystal

Memery Crystal offers legal services in a range of areas such as corporate (including a market-leading corporate finance offering), real estate, commercial, IP & technology (CIPT), banking & finance, tax & wealth structuring and employment. Memery Crystal offers a partner-led service to a broad range of clients, from multinational companies, financial institutions and owner-managed businesses to individual entrepreneurs.

Convex Capital Limited

Convex Capital is a specialist sell-side M&A boutique based in Manchester. Convex Capital is entirely focused on helping companies, particularly owner-managed and entrepreneurial businesses, realise their value through sales to large corporates. Convex Capital identifies and proactively targets firms that it believes represent attractive acquisition opportunities.

Further information is available at: www.rbgholdings.com