Annual Report 2016 IMF BENTHAM LIMITED Contents IMF Bentham - PDF document

Annual Report 2016

IMF BENTHAM LIMITED Contents IMF Bentham Limited is a leading global litigation funder and the fjrst to list on the Australian Securities Exchange. We have now successfully expanded into the USA and Canada. We have an experienced team to ensure the strongest cases receive funding and are managed to facilitate their successful resolution. 1 Highlights 2 Our Services 3 Board of Directors 4 Chairman and Managing Director’s Report 7 Directors’ Report 30 Auditor’s Independence Declaration 31 Statement of Comprehensive Income 32 Statement of Financial Position 33 Statement of Cash Flows 34 Statement of Changes in Equity 35 Notes to the Financial Statements 74 Directors’ Declaration 75 Independent Auditor’s Report 77 Corporate Governance Statement 85 Shareholder Information 88 Corporate Information ABN 45 067 298 088

1 ANNUAL REPORT 2016 Highlights IMF’S TRACK RECORD $1.8 billion $1 billion 123 Settlements Total recoveries Returns for Clients 90% 2.4 years 187 Cases Completed Success Rate Average case length Excluding withdrawals 13 Won 1.55 15 36 Withdrawals Multiple on Invested Capital Lost $21 Cash Total Dividend ($ Million) (cents/share) Million 10 10 10 Net profjt 142.5 130.1 Growth in net profjt after tax including profjt/loss from discontinued operations of 7.5 232% refmects a signifjcant 105.6 improvement year-on-year. $66 5 68.0 62.4 Million Net income from litigation funding (before lost cases) 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 Investments Net Assets Portfolio 3,438 145.6 ($ Million) ($ Million) ($ Million) 201.4 191.1 185.9 99.5 98.6 2,067 86.1 2,002 125.5 1,635 111.7 66.0 1,233 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016

2 IMF BENTHAM LIMITED Our Services Our principal activities are the investigation, management and funding of litigation claims. N.B. IMF does not provide legal advice Factual investigations Funding for litigation preliminary to litigation Payment of adverse Appeal funding costs orders Assistance in facilitating Strategic planning, settlements and monitoring and maximising the value managing of litigation of each claim

3 ANNUAL REPORT 2016 Board of Directors Michael Kay Andrew Saker Non-Executive Director and Chairman Managing Director and CEO Alden Halse Hugh McLernon Non-Executive Director Executive Director Michael Bowen Wendy McCarthy Non-Executive Director Non-Executive Director

4 IMF BENTHAM LIMITED Chairman and Managing Director’s Report After a diffjcult 2015 We commenced business in Canada in These changes have started to produce results, refmected in the early calendar year 2016. While not of fjnancial year which the same size as USA, it is nevertheless increase in our portfolio size, carrying included signifjcant value of investments and case a large market for legal services and litigation funding is a relatively new numbers. We intend to continue with changes to both board this approach during the course of concept there. We believe there is and management a signifjcant opportunity for us in the forthcoming year as we seek to achieve the benefjts of a portfolio Canada and are setting ourselves to together with patchy be at the vanguard of the development approach to fund management. results, 2016 has of that market. At the end of the fjnancial year, IMF seen signifjcant sold its European joint venture interest We are continuing to consider other to its former joint venture partner. In markets and are currently funding developments in the participating in the joint venture, IMF in Hong Kong, though have not yet company’s strategy was seeking to mitigate the risk and opened an offjce there. costs of operating in Europe. After and operational We have implemented two signifjcant two years of operation it became initiatives to further enhance our apparent that an actively participating execution which have position as a global industry leader joint venture partner did not fjt well with our funding for the IMF Bentham contributed to much with the IMF business model. The sale Class Action Research Initiative in resulted from a joint venture deadlock improved fjnancial conjunction with the University of sale mechanism and in no way refmects NSW and the Civil Justice Research results. IMF’s view on the European market. Institute at the University of California, Achieving a sensible termination of Irvine School of Law. These initiatives the joint venture was an important are directed at areas of academic and positive development for IMF. IMF research that relate to our core Strategy is restricted from competing in parts business ofgerings and principles. of Europe for a period of 12 months IMF commenced its transition process ending in July 2017, after which IMF will in January 2015 that manifested in Financials consider re-entering the market. a number of key areas during this The fjnancial results for the year ended fjnancial year. The transition process The USA business continues to 30 June 2016 are pleasing for both is expected to be completed in the fmourish, driven by an energetic the management and shareholders next 12 to 24 months. management team and a very of IMF. Income of $103.245m, and net sizeable market which is relatively One of the key objectives for profjt after tax of $20.920m refmect under-penetrated. The US (and a signifjcant turnaround from the this transition is the shift from Canadian) investment portfolio grew idiosyncratic risk associated with previous year. ROA increased from from $0.619b in 2015 to $1.642b in 2.2% in 2015 to 6.2% in 2016, and a small number of large cases, to a 2016 and now comprises 48% of systemic risk approach associated ROE increased from 3.4% in 2015 our total portfolio. There remains to 10.4% in 2016. with a larger number of cases, enormous opportunity for profjtable diversifjed by size, type and geography However, the results for the current growth in this market and it is and with a view to creating a more fjnancial year continue to refmect will remain a key focus for us for reliable and consistent cash fmow and the former strategy, and have been the foreseeable future. smoothing, what historically have derived from two signifjcant outcomes been, fairly lumpy results. in the second half of the fjnancial year including S&P Lehman and US Case 008.