TIDMRBGP
RNS Number : 7888A
RBG Holdings PLC
24 January 2020
24 January 2020
RBG Holdings plc
(the "Company" or the "Group")
Trading Update & Directorate Change
RBG Holdings plc (AIM: RBGP), the professional services group,
has today announced the following trading update ahead of the
publication of its full-year results for the twelve months ended 31
December 2019 on 21 April 2020.
Furthermore, the Board is pleased to announce that Keith Hamill
OBE will become the new Chairman of the Group as of today,
following the decision of the current Chairman, Stephen Davidson,
to step down to focus on his other Board appointments.
Trading Update
The Group expects to report financial results in line with
market expectations, and which are significantly ahead of the 2018
results. The Group continued to deliver healthy revenue growth
during 2019, aided by contribution from Dispute Resolution,
litigation finance and the Convex acquisition.
The Group's law firm, Rosenblatt Limited ("Rosenblatt" or the
"Firm"), had a steady performance from its primary practice areas,
which are focused on contentious law, including Dispute Resolution.
The continued success of this division, which accounts for the
majority of the Firm's revenue, has allowed Rosenblatt to increase
the amount of contingent work that it has taken on. When Rosenblatt
enters into conditional fee arrangements[1], which can generate
incremental margins on a successful case outcome, no revenue is
recognised until the outcome of the event has occurred. Such
revenue is considered contingent, and in 2019 the amount of
contingent work increased to GBP2 million.
The Firm's Corporate division, which is focused on commercial
transactions, saw reduced billings due to the impact of the
cautious business environment caused by Brexit uncertainty. The
trends highlighted at the Group's interims, therefore continued
through 2019, with revenue contribution from the division being
subdued. However, since the year-end, following the decisive
election result, the Group is beginning to see a significant
increase in the number of transactions the division is working on
as client confidence has improved.
The Group successfully closed the acquisition of Convex Capital
in September 2019, and the integration of this business is on
track. Despite only being part of the Group for a short period,
Convex has already contributed incremental revenues. The full
benefits of the acquisition are expected in the current financial
year. Convex has a significant pipeline of transactions, and the
Group expects to increasingly benefit from capturing Convex's legal
spend within Rosenblatt, as well as future cross-selling
opportunities.
The Group continues to successfully implement its strategy,
including growing its litigation finance arm. The Board has taken a
very prudent approach to litigation finance opportunities,
including adopting a conservative accounting methodology. As part
of its strategy to realise the intrinsic value of its litigation
finance investments, while de-risking its balance sheet and
recycling funds into new cases, the Group continues to sell
participation rights in its cases to third parties. Further revenue
has been generated in the second half of 2019 as a result of this
strategy.
The Group currently has GBP2.2 million invested in eleven cases
which are yet to conclude, of which, GBP1.9 million was invested in
2019 (2018: GBP0.3 million). In January 2020, the Group announced
the pre-trial settlement of Project Blue Sky, one of its internally
funded litigation cases. The return on the Company's investment in
the case, in terms of cash and time, was 184% with an Internal Rate
of Return of 317%. The settlement, while not material in terms of
the Group's forecast full-year financial results for 2020, is,
however, the first successful completion of a case that the Group
had invested in since its IPO. It demonstrates the significant
returns that can be achieved through the Group's litigation finance
strategy.
Dividend Update
The Company's balance sheet remains strong. In line with the
Group's dividend policy, the Company intends to pay an interim
dividend for the six months to 31 December 2019 of 3 pence per
share. The amount of the dividend will be formally announced on 21
April 2020 and will be paid to shareholders on the register as at 1
May 2019. The total dividend for 2019 is therefore expected to be 5
pence per share.
Agreement with Ian Rosenblatt
The Company has negotiated an extension and broadening of the
restrictive covenants put in place at the IPO (and described in the
Company's admission document) to an additional two year term
through to 2023. In consideration of this arrangement, the Company
will make a one off payment to Mr Rosenblatt of GBP1m.
The above arrangement is classified as a related party
transaction under the AIM Rules for Companies. The Directors
consider, having consulted with Stifel as nominated adviser, that
the terms of the agreement are fair and reasonable, insofar as
shareholders are concerned.
Directorate Change
The Board is pleased to announce the appointment of Keith Hamill
OBE as the new Chairman of the Group. He will join the Board today
and replace Stephen Davidson. Mr Davidson is stepping down to focus
on his other Board appointments.
Mr Hamill is a highly experienced corporate director. He is
currently a non-executive director of Samsonite, where he also
chairs the Remuneration Committee and is a member of the Audit
Committee of the Hong Kong-listed company. Mr Hamill is also the
Chair of Horsforth Holdings Group, a private company providing
outsourced leisure services.
Mr Hamill's experience as a listed company chairman includes
Collins Stewart, Tullett Prebon, Moss Bros, and Premier Foods. His
non-executive roles have included easyJet, Electrocomponents and
Max Property. He was also Chairman of Travelodge and Heath Lambert
and was appointed the chairman of a number of companies to lead
financial and operational restructurings. He was also the
Pro-Chancellor and President of the Council of The University of
Nottingham. Earlier in his career, he was Chief Financial Officer
of Forte and WH Smith as well as a Partner in
PricewaterhouseCoopers.
Nicola Foulston, CEO, RBG Holdings, said: "2019 has been a year
of substantial progress, with the Group continuing to perform well
in a challenging business environment. We are beginning to see the
benefits from our focus on litigation finance opportunities, and we
completed our first piece of M&A since the float with the
acquisition of Convex Capital in September. Convex will contribute
fully to the Group this year.
"2020 already looks promising, especially in our Corporate
division, where there has been a pickup in activity post the
election. I am very positive about the future of the Group. As well
as continuing to take advantage of all the market opportunities we
see, I am also delighted to welcome Keith Hamill to the Board, with
his considerable City experience, and also thank Stephen for his
help and support. We wish him well for the future."
Stephen Davidson, outgoing Chairman, said: "I am delighted that
someone of the calibre of Keith is replacing me as Chair. Since the
flotation, the business has done a huge amount in terms of
delivering its strategy, as today's trading update shows. I have
greatly enjoyed working with Nicky and the rest of the Board and am
looking forward to witnessing the continued growth of the
Company."
Incoming Chairman, Keith Hamill, commented: "I am very pleased
to be joining the Board of such an exciting company. Nicky and the
team are developing a new type of professional services group,
building on Rosenblatt's heritage. Having worked with Rosenblatt in
previous roles, it is a business with a strong reputation for
client service and innovation. I look forward to working with the
rest of the Board and management to create value for our
shareholders."
Enquiries:
RBG Holdings plc Via Newgate Communications
Nicola Foulston, CEO
Stifel (Nominated Adviser and Broker) Tel: +44 (0)20 7710
7600
Gareth Hunt
Stewart Wallace (QE)
Tom Marsh
Newgate Communications (for media enquiries) Tel: +44 (0)20 3757
Robin Tozer/Tom Carnegie 6880; rosenblatt@newgatecomms.com
Notes to Editors:
Disclosures required by Schedule 2(g) of the AIM Rules for
Companies
In the past five years, Keith Hamill, aged 67, has held the
following positions where he was acting in the capacity of a
Director:
Current Directorships:
----------------------------------------------------------
Samsonite International SA
Horsforth Holdings Limited
On Board Leisure Holdings Limited
TSA Service Limited
1LMS Holdings Limited
1Life Management Solutions Limited
Smart Fit Fitness Limited
Smart Fit 35 Limited
Trustee, St George's British International School in Rome
Aldrington Investments Limited
Florida Squalo LLC
Community Sports Arts & Leisure Trust
Previous Directorships:
----------------------------------------------------------
Bagir Group Limited
Easy Jet Limited
Premier Foods Plc
Keith Hamill also makes the following disclosures in accordance
with Schedule Two paragraph (g) of the AIM Rules for Companies.
Travelodge Hotels Limited (Keith Hamill served as Chair from 5
March 2003 to 13 June 2012)
On 17 August 2012, Travelodge Hotels Limited ("Travelodge" or
"the Company") implemented an operational restructuring via a
Company Voluntary Arrangement ("CVA"). Keith Hamill resigned from
the Board in June 2012.
Danoptra Limited (Keith Hamill served as Chair from 1 September
2008 to 17 January 2013)
Danoptra Limited ("Danoptra") was a former investment made by
Cognetas (now "Motion Equity Partners") in a gaming machine group.
The business was taken over by its secured lenders in 2010, and, at
the time, Keith Hamill was appointed Chair in order to assist with
the workout of this business. In July 2012, Astra Games purchased
its assets and subsequently on 3 April 2013, Danoptra implemented a
creditors voluntary liquidation.
Community Sports Arts and Leisure Trust (Keith Hamill has served
as a Director from 10 September 2018).
Community Sports Arts and Leisure Trust ("CSALT") was a trading
partner of a subsidiary of Horsforth Holdings operating in the
Leisure sector. Advice is currently being taken on liquidating
CSALT possibly on an insolvent basis. Keith Hamill joined the Board
following CSALT entering into financial difficulties to assist in
the orderly wind up of its affairs. CSALT has no known liabilities
except to the Horsforth Holdings Group.
Keith Hamill does not have any interest in the ordinary shares
of the Group.
There are no further disclosures to be made pursuant to Schedule
Two, paragraph (g) of the AIM Rules for Companies.
About RBG Holdings plc
RBG Holdings plc is a professional services group, which
includes one of the UK's pioneering law firms, Rosenblatt Limited,
which is a leader in dispute resolution.
Rosenblatt Limited provides a range of legal services to its
diversified client base, which includes companies, banks,
entrepreneurs and individuals. Complementing this is the Company's
increasingly international footprint, advising on complex
cross-jurisdictional matters. Rosenblatt Limited's practice areas
include dispute resolution, financial crime, corporate, banking and
finance, insolvency and financial restructuring, construction and
projects, employment, financial services, IP/technology/media, real
estate, regulatory and tax resolution. The Group also provides
litigation finance in selected cases through a separate arm.
The Group also owns Convex Capital Limited, a specialist
sell-side corporate finance boutique, based in Manchester, UK.
Convex is entirely focussed on helping companies, particularly
owner-managed and entrepreneurial businesses, realise their value
through sales to large corporates. Convex identifies and
proactively targets firms that it believes represent attractive
acquisition opportunities.
[1] including where services are provided under Alternative
Billing Arrangements such as Damages-Based Agreements or
Conditional Fee Agreements
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END
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