Notes to the financial statements

For the period ended 31 December 2024

 

Note 1 General Information

 

The financial statements cover Litigation Capital Management Limited (the 'Company') as a Group consisting of Litigation Capital Management Limited and the entities it controlled at the end of, or during, the period (referred to as the 'Group'). The financial statements are presented in Australian dollars, which is Litigation Capital Management Limited's functional and presentation currency.

 

Litigation Capital Management Limited was admitted onto the Alternative Investment Market ('AIM') on 19 December 2018.

 

Litigation Capital Management Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is:

 

Level 12, The Chifley Tower

2 Chifley Square

Sydney NSW 2000

 

A description of the nature of the Group's operations and its principal activities are included in the Directors' report, which is not part of the financial statements.

 

The financial statements were authorised for issue, in accordance with a resolution of Directors, on 18 March 2025. The Directors have the power to amend and reissue the financial statements.

 

Note 2 Significant accounting policies

These consolidated financial statements are general purpose financial statements for the interim reporting period ended 31 December 2023 and have been prepared in accordance with the Corporations Act 2001 and Australian Accounting Standard AASB 134 Interim Financial Reporting. Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS 34 'Interim Financial Reporting'.

 

These interim financial statements do not include all the notes of the type normally included in annual financial statements. Accordingly, these financial statements are to be read in conjunction with the annual report for the year ended 30 June 2024 and any public announcements made by the Company during the interim reporting period.

 

Basis of preparation

The principal accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period, unless otherwise stated.

 

New or amended Accounting Standards and Interpretations adopted

The consolidated entity has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current period.

 

Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.

 

Historical cost convention

The financial statements have been prepared under the historical cost convention.

 

Critical accounting estimates

The critical accounting judgements, estimates and assumptions that have been applied in the preparation of the interim consolidated financial statements are consistent with those followed in the preparation of the Group's annual report for the year ended 30 June 2024.

 

 

Note 3 Segment information

 

For management purposes, the Group is organised into two operating segments comprising the operations of Litigation Capital Management Limited and its wholly owned subsidiaries ("LCM") and the Group's fund structures ("Fund").

 

LCM

The LCM column includes the 25% co-investment in the Funds, Balance Sheet investments (ie, 100% investment by LCM) and corporate operations.

 

Fund 1 & 2

This comprises LCM Global Alternative Returns Fund and LCM Global Alternative Returns Fund II and their entities as disclosed in note 25. AASB 10 Consolidated Financial Statements requires the Group to consolidate fund investment vehicles over which it has exposure to variable returns from the fund investment vehicles. As a result, third party interests in relation to the Funds have been consolidated in the financial statements. The Fund column includes the 75% co-investment in the litigation funding assets and costs of administering the funds.

 

Intersegment revenue

The third-party interests in the Funds carry an entitlement to receive an 8% soft return hurdle. Upon satisfaction of the third-party interests soft return hurdle, LCM is entitled to performance fees as fund manager on the basis of a deal by deal waterfall. The net residual cash flows are to be distributed 25% to LCM and 75% to the third-party interests until a IRR of 20% is achieved by the third-party interests, thereafter the net residual cash flows are distributed 35% to LCM and 65% to the third-party interests.

 

The following tables reflect the impact of consolidating the results of the Funds with the results for LCM to arrive at the totals reported in the consolidated statement of profit or loss and other comprehensive income, consolidated statement of financial position and consolidated statement of cash flows.

 

 

 

 

 

 

	31 December 2024			31 December 2023
Consolidated Statement of Comprehensive Income	Consolidated	Fund	LCM	Consolidated	Fund	LCM
	$'000	$'000	$'000	$'000	$'000	$'000
Income
Gain on financial assets at fair value through profit or loss	25,790	21,111	4,679	52,429	30,843	21,586
Movement in financial liabilities related to third-party interests in consolidated entities	(18,382)	(18,382)	-	(30,546)	(30,546)	-
Total income	7,408	2,729	4,679	21,883	298	21,586
Expenses
Employee benefits expense	(6,688)	-	(6,688)	(5,938)	-	(5,938)
Depreciation expense	(47)	-	(47)	(80)	-	(80)
Corporate expenses	(2,577)	-	(2,577)	(1,960)	-	(1,960)
Fund administration expense	(1,313)	(478)	(835)	(1,474)	(483)	(991)
Foreign currency gains/(losses)	(4,735)	(2,251)	(2,484)	1,625	95	1,530
Total operating expenses	(15,360)	(2,729)	(12,632)	(7,826)	(388)	(7,439)
Operating (loss)/profit	(7,952)	-	(7,952)	14,057	(91)	14,147
Finance costs	(3,710)	-	(3,710)	(5,122)	91	(5,213)
(Loss)/profit before income tax expense	(11,662)	-	(11,662)	8,935	-	8,934
Income tax benefit/(expense)	3,309	-	3,309	(1,642)	-	(1,642)
(Loss)/profit after income tax expense	(8,353)	-	(8,353)	7,293	-	7,293
Other comprehensive income for the period, net of tax	8,620	-	8,620	(101)		(101)
Total comprehensive income for the period	267	-	267	7,192	-	7,192

 

	31 December 2024			30 June 2024
Consolidated statement of financial position	Consolidated	Fund	LCM	Consolidated	Fund	LCM
	$'000	$'000	$'000	$'000	$'000	$'000
Assets
Cash and cash equivalents	30,585	15,717	14,868	68,113	15,089	53,024
Trade & other receivables	1,786	-	1,786	10,986	-	10,986
Due from resolution of financial assets	105,198	69,776	35,422	3,980	-	3,980
Contract costs	47,396	-	47,396	42,072	-	42,072
Financial assets at fair value through profit or loss	420,264	235,448	184,816	465,213	262,300	202,913
Property, plant and equipment	144	-	144	157	-	157
Intangible assets	453	-	453	305	-	305
Other assets	839	(859)	1,698	977	(22)	999
Total assets	606,665	320,081	286,582	591,803	277,367	314,436
Liabilities
Trade and other payables	11,755	5,100	6,655	30,379	12,417	17,959
Tax payable	5,833	-	5,833	883	-	883
Employee Benefits	1,382	-	1,382	1,112	-	1,112
Borrowings	54,851	-	54,851	61,917	-	61,917
Third-party interests in consolidated entities	314,982	314,982	-	264,950	264,950	-
Deferred tax liability	36,062	-	36,062	43,624	-	43,624
Total liabilities	424,865	320,081	104,783	402,862	277,367	125,494
Net assets	181,800	-	181,800	188,941	-	188,941

 

 

	31 December 2024			31 December 2023
Consolidated Statement of Cash Flows	Consolidated	Fund	LCM	Consolidated	Fund	LCM
	$'000	$'000	$'000	$'000	$'000	$'000
Cash flows from operating activities
Proceeds from litigation contracts	56,402	27,176	29,227	71,272	38,950	32,322
Payments for litigation contracts	(78,310)	(42,938)	(35,372)	(33,083)	(16,345)	(16,739)
Payments to suppliers and employees	(10,152)	(573)	(9,579)	(8,099)	(1,427)	(6,672)
Income tax paid	(28)	-	(28)	(723)	-	(723)
Net cash (used in)/from operating activities	(32,088)	(16,335)	(15,752)	29,367	21,179	8,188
Cash flows from investing activities
Payments for property, plant and equipment	(3)	-	(3)	(13)	-	(13)
Payments for intangibles	(179)	-	(179)	(15)	-	(15)
Refund/(payment) of security deposits	(1)	-	(1)	13	-	13
Net cash (used in) investing activities	(182)	-	(182)	(15)	-	(15)
Cash flows from financing activities
Payments for treasury and loan shares	(5,318)	-	(5,318)	(796)	-	(796)
Dividends paid	(2,607)	-	(2,607)	(4,966)	-	(4,966)
Repayments of borrowings	(11,358)	-	(11,358)	(8,139)	-	(8,139)
Payments of finance costs	(3,186)	-	(3,186)	(5,426)	-	(5,426)
Payments of transaction costs related to third-party interests	(835)	-	(835)	(991)	-	(991)
Contributions from third-party interests in consolidated entities	40,626	40,626	-	11,010	11,010	-
Distributions to third-party interests in consolidated entities	(24,572)	(24,572)	-	(35,717)	(35,717)	-
Net cash (used in) financing activities	(7,250)	16,054	(23,304)	(45,026)	(24,707)	(20,318)
Net increase/(decrease) in cash and cash equivalents	(39,519)	(281)	(39,238)	(15,673)	(3,528)	(12,145)
Cash and cash equivalents at the beginning of the period	68,113	15,089	53,024	104,457	21,484	82,973
Effects of exchange rate changes on cash and cash equivalents	1,991	909	1,082	(1,084)	(506)	(578)
Cash and cash equivalents at the end of the period	30,585	15,717	14,868	87,701	17,450	70,250

 

Note 4 Income

 

	31-Dec-24	31-Dec-23
Fair value through profit and loss	$'000	$'000
Realised gains on litigation assets	18,500	10,866
Realised performance fees	18,929	8,776
Fair value adjustment during the period, net of previously recognised unrealised gains transferred to realised gains	(33,534)	2,381
Foreign exchange gains	783	(437)
Total income from litigation assets attributable to LCM	4,679	21,586
Gain on financial assets related to third-party interests in consolidated entities	21,111	30,843
	25,789	52,429
Loss on financial liabilities related to third-party interests in consolidated entities	(18,382)	(30,546)
Total income from litigation assets	7,408	21,883

 

Total income from litigation assets attributable to LCM represents realised and unrealised gains that relate to LCM's funded proportion of litigation contracts. The gain and loss related to third party interests in consolidated entities represents realised and unrealised gains and losses that relate to third party funded proportions  from LCM controlled entities. Realised gains relate to amounts where litigation risk has concluded and amounts are expected to be received by LCM. Unrealised gains or losses relate to the fair value movement of assets and liabilities associated with litigation contracts.

 

Note 5 Profit before tax

 

	31-Dec-24	31-Dec-23
	$'000	$'000
Profit before income tax expense includes the following specific expenses:
Employee benefits expense
Salaries & wages	5,074	4,530
Directors' fees	239	228
Superannuation and pension	156	147
Share based payments expense	495	463
Other employee benefits & costs	725	570
	6,688	5,938
Depreciation
Plant and equipment	16	42
Intangible assets	31	38
	47	80
Interest on borrowings (note 14)	3,257	4,919
Other finance costs	453	202
	3,710	5,122
Fund administration expense
General administration expenses	478	483
Placement fees	835	991
	1,313	1,474
Leases
Short-term lease payments	462	451

 

 

Note 6 Income tax expense

 

		31-Dec-24	31-Dec-23
		$'000	$'000
Numerical reconciliation of income tax expense and tax at the statutory rate
Profit before income tax expense		(11,662)	8,935
At the Group's statutory income tax rate of 30% (2023: 25%)		(3,499)	2,234
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
	Foreign tax rate adjustments	819	(24)
	Share-based payments	76	116
	Other non-deductible expenses	368	-
	Change in tax rate	-	(684)
	Utilisation of carried forward tax losses	(1,073)	-
Income tax expense / (benefit)		(3,309)	1,642

 

 

Note 7 Earnings per share

 

		31-Dec-24	31-Dec-23
		$'000	$'000
(Loss)/profit after income tax		(8,353)	7,293
(Loss)/profit after income tax attributable to the owners of Litigation Capital Management Limited		(8,353)	7,293
		Number	Number
Weighted average number of ordinary shares used in calculating basic earnings per share		103,190,317	106,606,481
Adjustments for calculation of diluted earnings per share:
Amounts uncalled on partly paid shares		-	1,309,066
Options over ordinary shares		-	6,597,884
Weighted average number of ordinary shares used in calculating diluted earnings per share		103,190,317	114,513,431
		Cents	Cents
Basic (loss)/earnings per share		(8.09)	6.84
Diluted (loss)/earnings per share		(8.09)	6.37

 

Dilutive potential shares which are contingently issuable are only included in the calculation of diluted earnings per share where the conditions are met.

 

Note 8 Cash and cash equivalents

 

	31-Dec-24	30-Jun-24
	$'000	$'000
Cash at Bank	14,868	22,963
Investment securities held for liquidity purposes	-	30,061
Cash of third-party interests in consolidated entities	15,717	15,089
	30,585	68,113

Cash of third-party interests in consolidated entities is restricted as it is held within the fund investment vehicles on behalf of the third-party investors in these vehicles. The cash is restricted to use cashflows in the litigation funding assets made on their behalf and costs of administering the fund.

 

Note 10 Due from resolution of financial assets

 

	31-Dec-24	30-Jun-24
	$'000	$'000
At start of period (1 July)	3,980	11,873
Transfer from realisation of litigation funding assets	149,243	101,943
Proceeds from litigation funding assets	(46,882)	(112,990)
Other income	-	697
Foreign Exchange (loss)/gain	(1,143)	2,457
Balance as at end of period	105,198	3,980

 

As at 31 December 2024, amounts due from resolution of financial assets are expected to be settled within 12 months after the Balance Sheet date.

 

Note 11 Contract costs - litigation contracts

 

		31-Dec-24	30-Jun-24
		$'000	$'000
Contract costs - litigation contracts		47,396	42,072

 

There are a small number of legacy investments which are still being recorded under AASB 15 Revenue from Contract with Customers due to the timing the contracts were entered into. These are expected to resolve in the short to medium term.

 

Reconciliation of litigation contract costs

Reconciliation of the contract costs at the beginning and end of the current period and previous financial year are set out below:

 

 

		31-Dec-24	30-Jun-24
		$'000	$'000
Balance at 1 July		42,072	37,277
Additions during the period		5,324	8,030
Realisations of contract assets		-	(3,236)
Balance as at end of period		47,396	42,072

 

 

The Group has recognised impairment losses of $nil (2024: $nil) in profit or loss on contract costs for the period ended 31 December 2024.

 

Note 12  Litigation Funding assets at fair value through profit or loss

 

	31-Dec-24	30-Jun-24
	$'000	$'000
At start of period (as at 1 July)	465,213	391,410
Deployments	19,920	45,301
Deployments - third-party interests	35,537	47,818
Realisations of litigation funding assets	(149,243)	(101,943)
Income for the period	25,790	86,926
Foreign exchange gains/(losses)	23,046	(4,300)
Balance as at end of period	420,264	465,213
Litigation funding assets at fair value through income statement	184,819	202,913
Litigation funding assets at fair value through income statement - third-party interests	235,448	262,300
Total litigation funding assets	420,264	465,213

 

Litigation Funding assets are financial instruments that relate to the provision of capital in connection with legal finance. The Group fund through both direct investments as well as using third party funders via a Fund model. The table above sets forth the changes in LFA assets at the beginning and end of the relevant reporting periods.

 

 

Note 13 Trade and other payables

 

		31-Dec-24	30-Jun-24
		$'000	$'000
Trade payables		11,546	29,789
Other payables		209	587
		11,755	30,376

 

 

 

 

 

 

Note 14 Borrowings

 

		31-Dec-24	30-Jun-24
		$'000	$'000
Borrowings		54,851	61,917
		54,851	61,917

 

 

 

Reconciliation of borrowings of LCM:	31-Dec-24	30-Jun-24
	$'000	$'000
Balance 1 July	61,917	68,976
Repayment of borrowings	(12,864)	(8,139)
Payments for borrowing costs	(683)	(819)
Net accrued interest	743	648
Amortisation	453	1,221
Other non-cash items	5,285	29
Balance as at end of period	54,851	61,917

 

On 2 December 2024, LCM refinanced its credit facility with Northleaf Capital Partners for an initial amount of US$75,000,000, AUD equivalent of $120,157,069¹ (the "Facility"), with a potential to upsize by a further US$75,000,000 (total US$150,000,000, AUD equivalent $240,314,000¹). The Facility carries interest set at the relevant bank rate plus 5.25%. The Facility has an overall term of four years and is secured against LCM's assets. As at 31 December 2024, LCM's outstanding utilisation amounted to US$30,000,000 on the initial credit facility, an AUD equivalent of $48,063,000¹.

 

LCM agreed to various debt covenants including a minimum effective net tangible worth, borrowings as a percentage of effective net tangible worth, minimum liquidity, a minimum consolidated EBIT and a minimum multiple of invested capital on concluded contract assets over a specified period. There have been no defaults or breaches related to the Facility during the period ended 31 December 2024. Should LCM not satisfy any of these covenants, the outstanding balance of the Facility may become due and payable.

 

LCM incurred costs in relation to arranging the Facility of $667,000 which were reflected transactions costs and will be amortised over the 4 year term of the borrowings. As at 31 December 2024, $652,000 of these loan arrangement fees remained outstanding.

 

1 Converted at the functional currency spot rates of exchange at the reporting date

 

Note 15 Financial liabilities related to third-party interests in consolidated entities

 

	31-Dec-24	30-Jun-24
	$'000	$'000
Balance 1 July	264,950	243,990
Proceeds - capital contributions from Limited Partners	40,626	30,505
Payments - distributions to Limited Partners	(24,572)	(56,407)
Loss on financial liabilities related to third-party interests in consolidated entities	18,382	48,382
Other non-cash items, including foreign exchange gain/loss	15,596	(1,521)
Balance as at end of period	314,982	264,950

 

Note 16 Equity - issued capital

 

	31-Dec-24	30-Jun-24	31-Dec-24	30-Jun-24
	Shares	Shares	$'000	$'000
Ordinary shares - fully paid	102,690,913	104,118,534	59,820	69,674
Ordinary shares - under loan share plan	11,590,384	12,331,148	(860)	-
	114,281,297	116,449,682	58,960	69,674
	31-Dec-24		30-Jun-24
Movements in ordinary share capital	Shares	$'000	Shares	$'000
Balance at 1 July	104,118,534	69,674	106,613,927	69,674
Options exercised	740,764	-	255,257	-
Share Buy-Back Programme (treasury shares)	(2,168,385)	-	(2,750,650)	-
Treasury shares cancelled	-	(9,854)	-	-
Balance at period end	102,690,913	59,820	104,118,534	69,674

The Group's share buyback programme which commenced on 5 October 2023, completed on 8 November 2024.

 

Movements in ordinary shares issued under loan share plan ('LSP') and held by Employee Benefit Trust:

 

	31-Dec-24		30-Jun-24
	Shares	$'000	Shares	$'000
Balance at 1 July	12,331,148	-	12,586,405	-
Options exercised	(740,764)	-	(255,257)	-
LSPs exercised	(784,519)	-	-	-
LSPs purchased by EBT	784,519	(860)	-	-
Balance at period end	11,590,384	(860)	12,331,148	-

 

 

 

 

Reconciliation of ordinary shares issued under LSP:			31-Dec-24	30-Jun-24
Total shares allocated under existing LSP arrangements with underlying LSP shares (note 20)			6,642,872	7,501,608
Less shares allocated under existing LSP arrangements without underlying LSP shares (note 20)			(221,467)	(221,467)
Shares held by LCM Employee Benefit Trust for future allocation under employee share and option plans			5,168,979	5,051,007
			11,590,384	12,331,148

 

Ordinary shares

Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the Company does not have a limited amount of authorised capital.

 

On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote.

 

Ordinary shares - under loan share plan ('LSP')

The Company has an equity scheme pursuant to which certain employees may access a LSP. The acquisition of shares under this LSP is fully funded by the Company through the granting of a limited recourse loan. The shares under LSP are restricted until the loan is repaid. The underlying options within the LSP have been accounted for as a share-based payment. Refer to note 22 for further details. When the loans are settled the shares are reclassified as fully paid ordinary shares and the equity will increase by the amount of the loan repaid.

 

Ordinary shares - held by Employee Benefit Trust

The Employee Benefit Trust ('EBT')  holds performance related shareholdings awarded to former executive which did not vest. The Trust holds 5,168,979 shares which remain unallocated as at 31 December 2024 (June 2024: 5,051,007).

 

Ordinary shares - partly paid

As at 31 December 2024, there are currently 1,433,022 partly paid shares issued at an issue price of $0.17 per share. No amount has been paid up and the shares will become fully paid upon payment to the Company of $0.17 per share. As per the terms of issue, the partly paid shares have no maturity date and the amount is payable at the option of the holder.

 

Partly paid shares entitle the holder to participate in dividends and the proceeds of the Company in proportion to the number of and amounts paid on the shares held. The partly paid shares do not carry the right to participate in new issues of securities. Partly paid shareholders are entitled to receive notice of any meetings of shareholders. The partly paid shareholders are entitled to vote in the same proportion as the amounts paid on the partly paid shares bears to the total amount paid and payable.

 

Treasury shares

As at 31 December 2024, there were nil treasury shares (June 2024: 2,750,650) which has resulted in nil being deducted from equity (June 2024: $5,396,000). Treasury shares comprised shares bought back from shareholders which were held by Canaccord on behalf of LCM and classified as treasury shares. All treasury shares were cancelled in November 2024.

 

Capital risk management

The Group's objectives when managing capital is to safeguard its ability to continue as a going concern, so that it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to reduce the cost of capital.

 

Capital is regarded as total equity as recognised in the statement of financial position.

 

In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

 

The capital risk management policy remains unchanged from the 30 June 2024 Annual Report.

 

Note 17 Equity - dividends

 

	31-Dec-24	30-Jun-24
	$'000	$'000
Ordinary dividend paid (December 2024: 1.25 cents, June 2024: 2.25 cents)	2,680	4,976

Franking credits

The franking credits available to the Group as at 31 December 2024 are $5,000 (June 2024: $338,000).

 

Note 18 Fair value assessment

 

The fair value measurements used for all assets and liabilities held by the Group listed below are level 3:

 

Assets	31-Dec-24	30-Jun-24
Litigation funding assets	$'000	$'000
APAC	106,289	111,662
EMEA	313,974	353,551
Total Level 3 assets	420,264	465,213
Liabilities
Financial liabilities related to third-party interests in consolidated entities	314,982	264,950
Total Level 3 liabilities	314,982	264,950

 

Refer note 12 for movements in level 3 assets and note 15 for movements in level 3 liabilities. There were no transfers into or out of level 3 during the period ended 31 December 2024.

 

As at 31 December 2024, the financial liability due to third-party interests is $314,982,000 (June 2024: $264,950,000), recorded at fair value as represented in note 15. Amounts included in the consolidated statement of financial position represent the fair value of the third-party interests in the related financial assets and the amounts included in the consolidated statement of profit or loss and other comprehensive income represent the third-party share of any gain or loss during the period.

 

Sensitivity of Level 3 Valuations

 

The Group's fair value policy provides for ranges of percentages to be applied against the risk adjustment factor to more than 159 discrete objective litigation events. The tables below set forth each of the key unobservable inputs used to value the Group's LFA assets and the applicable ranges and weighted average by relative fair value for such inputs.

 

31 December 2024

 

Item	Valuation technique	Unobservable Input	Min	Max		Weighted average
Litigation funding asset	Discounted cash flow	Discount rate	9.80%	10.80%		10.40%
		Duration (years)	1.75	7.58		4.78
		Adjusted risk premium	0%	85%		17%
		Adjusted risk premium - case milestone	Min	Max		Weighted average	% of portfolio1
		Pre-commencement & commenced	0%	20%		5%	56%
		Pleadings	5%	35%		11%	4%
		Discovery & evidence	20%	40%		36%	8%
		Significant ruling or other objective event prior to trial court judgment	25%	80%		46%	18%
		Settlement	70%	85%		0%	0%
		Trial court judgment or tribunal award	0%	85%		21%	9%
		Appeal judgment	0%	85%		0%	4%
		Enforcement	75%	85%		84%	2%

 

1 Percentage of portfolio represents the percentage of the book within the cohort

 

Note 19 Contingent liabilities

 

The majority of the Group's funding agreements contain a contractual indemnity from the Group to the funded party that the Group will pay adverse costs awarded to the successful party in respect of costs incurred during the period of funding, should the client's litigation be unsuccessful. The Group's position is that for the majority of litigation projects which are subject to funding, the Group enters into insurance arrangements which lessen or eliminate the impact of such awards and therefore any adverse costs order exposure.

 

Note 20 Share-based payments

 

The share-based payment expense for the period was $590,000 (December 2023: $463,000).

 

Loan Funded Share Plans ('LSP')

 

As detailed in note 16, the Group has an equity scheme pursuant to which certain employees may access a LSP. The shares under LSP are issued at the exercise price by granting a limited recourse loan. The LSP shares are restricted until the loan is repaid. Options under this scheme can be granted without an underlying LSP share until they have been exercised and on this basis, do not form part of the Group's issued share capital. The underlying options have been accounted for as a share-based payments. The options are issued over a 1-3 year vesting period. Vesting conditions include satisfaction of customary continuous employment with the Group and may include a share price hurdle.

 

During the period the Group granted nil (June 2024: nil) shares under the LSP.

 

Set out below are summaries of shares/options granted under the LSP:

 

31 December 2024

 

Grant date	Expiry date	Exercise Price	Balance at the start of the period	Granted	Exercised	Expired/ forfeited/ other	Balance at the end of the period
04/12/2017	04/12/2027	$0.60	2,000,000				2,000,000
31/08/2018	31/08/2028	$0.77	411,972		(411,972)		-
19/11/2018	25/11/2028	$0.47	1,595,058				1,595,058
03/12/2018	03/12/2028	$0.89	100,000				100,000
01/11/2019	01/11/2029	£0.7394	1,043,953		(125,259)		918,694
13/10/2020	13/10/2030	£0.6655	616,520		(158,296)		458,224
27/10/2021	27/10/2031	£1.06	1,512,638		(163,209)		1,349,429
27/10/2021	27/10/2031	£1.06	99,037				99,037	1
27/10/2021	27/10/2031	£1.14	122,430				122,430	1
			7,501,608	-	(858,736)	-	6,642,872

 

1 Options granted without an underlying LSP share until exercised ie, do not form part of the Group's issued share capital

 

 

Deferred Bonus Share Plan ('DBSP')

 

The Company has in place a DBSP. Options granted under the DBSP reflect past performance and are in the form of nil cost options and will vest in three equal tranches from the date of issue and are subject to continued employment over the three year period.

 

In addition, the Options granted under the DBSP are subject to malus and clawback provisions. In the event of a change of control of the Company, unvested awards will vest to the extent determined by the Board, taking into account the proportion of the period of time between grant and the normal vesting date that has elapsed at the date of the relevant event.

 

During the period the Group granted 532,235 (June 2024: 771,911) options under the DBSP.

 

Set out below are summaries of options granted under the DBSP:

 

31 December 2024

 

Grant date	Expiry date	Exercise Price	Balance at the start of the period	Granted	Exercised	Expired/ forfeited/ other	Balance at the end of the period
07/10/2022	07/10/2032	$0.00	877,435	-	(442,468)	-	434,967
04/10/2023	04/10/2033	$0.00	771,911	-	(224,079)	-	547,832
04/10/2024	04/10/2034	$0.00	-	532,235	-	-	532,235
			1,649,346	532,235	(666,547)	-	1,515,034

 

Executive Long Term Incentive Plan ('LTIP')

 

The Company has in place an Executive LTIP. Options over ordinary shares in the capital of the Company ("Ordinary Shares") are issued to recipients under the LTIP plan. The options set out above have been granted under the LTIP in the form of nil cost options and are subject to performance conditions which require the growth of Funds under Management ('FuM') over a five year performance period. The performance conditions associated with the options are set out below:

 

(1)  50% vesting on reaching a minimum of FuM of US$750m; and

(2)  100% vesting on reaching FuM of US$1bn.

 

 The vesting date of options granted is the later of:

(1)   the third anniversary of the Grant Date;

(2)   the satisfaction of the Performance Condition; or

(3)   the date of any adjustment under the Plan rules of the Plan at the Boards discretion.

 

Any awards made to the participants are subject to a five year holding period from the grant date. In the event of a change of control of the Company, unvested awards will vest to the extent determined by the Board, taking into account the proportion of the period of time between grant and the normal vesting date that has elapsed at the date of the relevant event and the extent to which any performance condition has been satisfied at the date of the relevant event.

 

During the period the Group granted nil (June 2024: nil) options under the LTIP.

 

Set out below are summaries of shares/options granted under the LTIP:

 

31 December 2024

 

Grant date	Expiry date	Exercise Price	Balance at the start of the period	Granted	Exercised	Expired/ forfeited/ other	Balance at the end of the period
07/10/2022	07/10/2032	$0.0000	5,671,516	-	-	-	5,671,516
			5,671,516	-	-	-	5,671,516

 

For the options under LSP granted during the current period, the valuation model inputs used in the Black-Scholes pricing model to determine the fair value at the grant date, are as follows:

 

Grant date	Expiry date	Share price at grant date	Exercise price	Expected volatility	Dividend yield	Risk-free interest rate	Fair value at grant date
04/10/2024	04/10/2034	£0.98	£0.00	35.00%	1.10%	4.30%	£0.9478

 

The expected volatility reflects the assumption that the historical volatility over a period similar to the life of the options is indicative of future trends, which may not necessarily be the actual outcome.

 

Note 21 Events after the reporting period

 

On 21 February 2025, the Group announced that the Federal Court of Australia had ruled against its funded party, Quintis Limited. While the claim was unsuccessful, the Group is reviewing the judgment and considering an appeal, which must be filed within 28 days of final orders being made.

 

On 11 March 2025, the Group announced that an appeal has been filed in relation to the class action funded by the Group on behalf of Queensland electricity users against Stanwell Corporation Ltd and CS Energy Ltd. This follows the first instance judgment, which ruled against LCM's funded party, as announced on 4 December 2024.