Annual Report 2023
Omni Bridgeway is a global leader
in financing and managing legal risk.
Industry acknowledgement
We are honoured to receive endorsement
and recognition for Omni Bridgeway’s industry
leadership and pioneering solutions.
Find out more at
omnibridgeway.com/acknowledgement
Omni Bridgeway acknowledges the traditional custodians of the lands
on which we live, work, and operate. We pay respect to their connections
to land, sea, and community and to Elders past, present, and emerging.
Omni Bridgeway
Contents
Highlights
Group at a glance
Estimated value from future completions
A balanced and diversified portfolio
FY23 highlights
Overview
Chairman's report
Managing Director's report
Geographic reach
Regional highlights
ESG and corporate social responsibility
Global risk, regulation and governance
Directors’ report
Letter from the Chair of the Nomination and Remuneration
Committee
Remuneration Report
Auditor's Independence Declaration
2
4
5
6
8
10
16
18
20
22
24
35
36
45
Financial report
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Cash Flows
Consolidated Statement of Changes In Equity
Notes to the Financial Statements
Directors' Declaration
Independent Auditor's Report
Shareholder and other information
Shareholder information
Corporate information
Glossary
Non-IFRS financial information and disclosure
IEV attribution assumptions
46
47
48
49
51
103
104
109
112
113
118
119
All figures are in Australian dollars (AUD, A$) unless otherwise stated.
Annual Report 2023
1
Group at a glance
Alternative
investment manager
with ~$2.5bn FUM
Proven 35+ year
track record of
high investment
returns
Uncorrelated to
macro economic
dynamics
Global focus with
extensive reach in
Americas, APAC
and EMEA
Diversified, scalable,
returns focused
platform
How we create value
Our strategic priorities leverage the strength of our platform and our expertise
in litigation finance and dispute management. Utilising specialist capabilities
in origination and risk management, we provide innovative solutions and
comprehensive support from case inception to completion.
Executing on these priorities enables us to extend access to justice for our
clients, improve risk adjusted returns across our portfolios, and create long
term growth for our fund investors and shareholders.
2
Omni Bridgeway
Strategic priorities
Enterprise-wide capability in developing unique products and fund structures
to expand market reach, scale and drive returns.
Upsize Funds 4 and 5
Finalise Fund 8
Launch unique new funds
Grow value of portfolio
Leverage sourcing and
origination expertise
Enhance financial flexibility
and capacity
Maximise capital reallocation
opportunities
Increase capital partnerships
Improve cost coverage and support
sustainable growth through
improved operational efficiencies
Expand into new markets
and areas of law
Drive competitive advantage
in pricing and structuring
Diversify income streams through
secondary transactions
Launch unique fund structures
and products
Continue to drive secondary market
evolution
Accelerate risk adjusted returns
Maintain top performance culture
and attract, retain and develop the
best industry talent
Return on
investor capital
Risk adjusted returns to
external fund investors and
shareholders through matter
completions and secondary
market transactions.
Cost and risk
mitigation
Support clients to enable
them to pursue legal
recoveries without cost
or risk.
Access
to justice
Provide the ability for the
small and impecunious
claimant, or those who face
powerful opponents, for
access to justice.
Community
support
Pro bono and
other support for the
communities in which
we live and work.
Annual Report 2023
3
Estimated value from future completions
$30.5bn EPV
Estimated Portfolio Value1
IEV is based on the
realisation of the current
unconditionally funded
portfolio, utilising a
normalised 15% EPV
conversion rate.
$3.9bn IEV
Implied Embedded Value2
($26.0bn unconditionally funded EPV)
$2.9bn
IEV provisionally
attributable
to NCI
$1.0bn
IEV provisionally
attributable
to OBL3,4
~$20m
per annum
Estimated
management fees4
from NCI to OBL
~$240m
Potential
performance fees4,5
from NCI to OBL
1. Includes all current investments (unconditional, conditionally funded, IC approved and investments disclosed as income yet to be recognised).
2. Includes current unconditional investments and those disclosed as income yet to be recognised.
3. Based upon OBL equity co-investment income rights.
4. Further information on the provisional attribution of IEV, estimated management fees and potential performance fees used in this report is available on page 119.
5. Based on the Group historic 1.1x ROIC and achieving 20% IRR hurdle of completed investments.
4
Omni Bridgeway
A balanced and diversified portfolio
The portfolio is strategically balanced offering growth potential in all regions.
We anticipate an ongoing trend of increasing investments in the Americas and EMEA.
Our diversified model will continue to be a critical comparative advantage providing
mitigation of competition, regulatory impact and portfolio concentration risks; we have
consistently grown, innovated and strengthened our platform and business offering
in contrast to our peers.
EPV1 by region
EPV1 by funding source
EPV1 by investment type
APAC
Americas
EMEA
31%
40%
29%
Balance sheet
Funds 2&3
Fund 4
Fund 5
Fund 6
Fund 8
<1%
11%
30%
45%
13%
<1%
Single party
Class actions
Arbitration
Law firm
Other²
35%
26%
25%
8%
6%
EPV profile
Future completions
Balance sheet
Funds 2&3
Fund 4
Fund 53
Fund 64
Fund 73
Fund 85,6
Funded EPV7
Conditionally funded
IC approved
Total EPV1
3
274
13
14
301
Possible completion of EPV $m
#
5
23
40
57
Fund size
Average
duration
FY24
FY25
FY26
FY27+
n/a
8.3 yrs
22
–
$189m
4.4 yrs
1,084
1,257
4
74
5
803
US$500m
1.4 yrs
1,240
2,356
2,679
2,876
US$500m
1.6 yrs
2,185
2,512
1,086
4,091
146
€188m
7.4 yrs
415
827
647
1,798
Total
31
3,218
9,151
9,874
3,687
– US$100m
–
€150m
0.4 yrs
–
8
–
7
–
11
–
27
–
53
IEV
5
483
1,373
1,481
553
–
8
5.0 yrs
4,954
6,959
4,501
9,600
26,014
3,903
2,127
2,334
30,475
1. Includes all current investments (unconditional, conditionally funded, IC approved and investments disclosed as income yet to be recognised).
2. Includes appeal, commercial and corporate funding.
3. Fund 5 and Fund 7 are not consolidated within the Group Consolidated Financial Statements, here they are presented at 100%.
4. Fund size is €150m plus an over commitment allowance of 25%.
5. Investments warehoused on OBL balance sheet, fund size subject to completion of the debt facility.
6. The principal protection insurance extends the indemnity to €270 million which facilitates a second series or an upsize of series I.
7. Includes current unconditional investments and those disclosed as income yet to be recognised.
Annual Report 2023
5
FY23 highlights
Financial performance
For the 12 months ended 30 June 2023
Total gross income and revenue
Net profit after tax
EPV conversion rate
$333.0m
+51% on FY22
$0.9m
+203% 2H23 v 1H23
14%
Life to date completed
investments1
Funds under management
Cash and receivables2
Implied embedded value2,4
~$2.5bn
Across a balanced portfolio
$360.4m
Plus access to up to
$60m debt
$3.9bn
+9% on FY22
Commitments2,3 ($m)
EPV2,3 ($bn)
$544.2m +17%
$30.5bn +12%
1Q FY23
2Q FY23
3Q FY23
4Q FY23
Balance sheet
Fund 1
Fund 2&3
Fund 4
Fund 5
Fund 6
Fund 8
1. Reflects completions in Funds 1 to 5 and OBL balance sheet since their inception, excluding partial secondary market sales. Reflects Fund 6 completions since OBE
acquisition in 2019, including investments acquired and funded subsequently. Fund 1 includes metrics up to 31 May 2023, the date of its deconsolidation.
2. Fund 5 is not consolidated within the Group Consolidated Financial Statements, here it is presented at 100%.
3. Includes all current investments (unconditional, conditionally funded, IC approved and investments disclosed as income yet to be recognised).
4. Includes current unconditional investments and those disclosed as income yet to be recognised.
5. IRR information prior to FY12 is not available due to the difficulty in extracting it from legacy systems.
6
Omni Bridgeway
313.2412.6463.3223.0544.268.7235.593.8146.2FY19FY20FY21FY22FY239.515.820.127.230.5FY19FY20FY21FY22FY23 Strategic initiatives
Finalise new fund
Finalise the first series of our €300m
fund focused on global judgement
enforcement investments by securing
a limited recourse debt facility of up to
€135m with standby equity of up to
€15m to be provided by OBL.
Secondary markets
The demand for mid-cycle, quality legal
risk assets in the secondary market is
a testament to our strong sourcing and
underwriting expertise.
Innovation
Greatly enhanced our foundational
capabilities by embracing cloud
technologies and fortifying data
governance practices to facilitate
our ability to scale.
Leadership
Omni continues to pave the way in the
regulatory arena with leadership roles
in ELFA (Chairman) and ILFA (Board
member) to ensure a stable operating
environment that fosters growth
and profitability.
Returns
Our diversified and resilient platform
and unrivalled expertise in sourcing and
underwriting quality investments has
potential to generate strong cash returns
for our investors as the market matures.
Growth
We continued to lay the groundwork
for growth by expanding our scope
and geographic reach into developing
markets including Paris, Milan
and Miami.
Since 2000, we have
realised $5.0bn for clients,
of which $1.7bn in
investment proceeds have
flowed to the Group.
ROIC
1.10x
IRR5
77%
Life to date
completed
investments1
Annual Report 2023
7
Chairman’s report
FY23 was a milestone year, marked by successful
execution of key strategies including substantially
completing the build-out of our global platform in
existing key markets, which we upgraded and
upscaled, to solidify Omni Bridgeway’s position
as the industry’s leading manager of legal assets.
Michael Kay
Non-Executive Director and Chairman
I am delighted to report we have
achieved each of the key goals
we set for FY23:
• Generating $283 million
investment income from
matter completions and
secondary market disposals.
•
Increasing our estimated
portfolio value by 12% to
$30.5 billion.
• Committing a record
$544 million to new
investments, up 17%.
• Expanding into new locations
and key jurisdictions within
United States and Europe.
• Advancing our modelling
capabilities and specialised
functions to support how
we price risk.
• Completing an integration
across all back-office
operations and regional hubs.
• Strengthening our Board,
Investment Committees,
and management teams.
8
Omni Bridgeway
Strategy
As we continue the implementation of
our strategic plan, the development and
evolution of our business is apparent.
We have significantly advanced our
pricing and modelling capabilities using
highly sophisticated probability analytics,
resulting in more precise evaluations to
help achieve greater risk adjusted returns
from positive case outcomes. Risk is
not only on the downside, but also in
undervaluing the upside, and in FY23 we
continued to enhance our assessment
capabilities globally across the full
investment lifecycle.
We note the evolving use of fair value
accounting and reporting by some of
our peers. We intend to explore the use
of fair value reporting to assist with
appropriate peer comparisons and
to enhance the assessment of the
embedded value in our assets.
The feasibility of launching two new
similarly structured funds, aiming for
higher management fees and lower
performance fees, one of which may be
focused on investments with a positive
ESG profile, is ongoing.
We continued to unlock opportunities
in the secondary market completing two
transactions which diversified income
sources and generated gross proceeds
of approximately $76 million. Secondary
market sales are likely to be a meaningful
contribution to our business, validating
our underlying business model, as we
recycle capital, de-risk the portfolio
and accelerate returns.
Our boots-on-the-ground approach
to business development, jurisdictional
eminence, and origination of investment
opportunities versus ‘fly in, fly out’ is what
distinguishes us from our competitors.
We have completed the expansion in the
United States, Italy, and France to ensure
sufficient presence in these attractive and
developing markets and continue to have
a geographic footprint that exceeds any
of our peers.
This was achieved through a combination
of fully remote and hybrid in-office roles,
allowing us to attract and retain top
global talent. We secured first-mover
advantage in several markets, evidenced
by early investment opportunities and the
notable market profile we’ve received.
With the strategic build-out substantially
complete in our existing key markets, our
focus for FY24 is on operational efficiency
and expense discipline. Our platform –
combined with targeting improved pricing
and duration risk protection – will result
in outperformance and value creation
to support our leading market position.
Capital management
The Board will continue to make risk
adjusted capital allocation decisions
that are appropriate for our operating
circumstances, including the availability of
franking credits, merger and acquisition
opportunities, capital deployment
requirements to increase the asset base,
and the share price relative to the implicit
value of Omni Bridgeway.
In August 2022, the Group initiated an
on-market share buy-back program for
an aggregate amount of up to $50 million.
Whilst we believe that investing in Omni
Bridgeway’s shares at opportune times
will be value accretive to our shareholders
and send a strong signal to the market
of our confidence in the outlook for the
business, we instead elected to invest in
our platform and deploy capital to new
and existing investments. This is expected
to deliver strong and accretive returns
over time.
Board and
management renewal
After more than eight years in the role,
Andrew Saker will retire as Managing
Director and Chief Executive Officer (CEO)
of the Group. On behalf of the Board,
I’d like to thank him for his extraordinary
commitment and leadership and for
his achievements during his tenure.
We now have a truly global platform with
operations in Australia, the United States,
Asia, Canada, the UK, continental Europe,
and the Middle East. The Group has
transformed from a balance sheet funder
to a co-investor and manager of non-
recourse financing investing in legal
assets across unique fund structures,
managing approximately $2.5 billion.
This has allowed Omni Bridgeway to scale
rapidly, at lower risk and, as the funds
mature, at higher risk adjusted returns.
Mr Saker laid the foundations for growth
and innovation that will continue to serve
our clients and shareholders well into the
future. I would also like to acknowledge
his absolute focus on driving our business
and on the continued execution of our
strategy during the CEO transition. On
behalf of everyone at Omni Bridgeway,
I wish Andrew the very best for the future
and record our thanks and appreciation
for the extraordinary job he has done
over the past eight years.
Executive Director, Managing Director
and Chief Investment Officer (CIO)
of EMEA, Raymond van Hulst, will be
appointed CEO upon Mr Saker’s
retirement. The succession will take effect
on 26 October 2023 at this year’s AGM.
Mr van Hulst previously held a wide
range of senior roles having been a key
member of the legacy Omni Bridgeway
team for over 20 years, as such, he brings
a breadth of experience of legal risk
asset management.
Since the merger with Omni Bridgeway
Holding B.V in 2019, Mr van Hulst has
focused on the globalisation of the
enforcement investment strategy
and the integration of the businesses.
His experience will provide business
continuity and a smooth transition.
We made other important leadership
appointments including Guillaume
Leger as Global Chief Financial Officer
in September 2022, Hannah van Roessel
as Co-Chief Investment Officer in EMEA in
February 2023 and Ian Munro as Global
Head of People and Culture in May 2023.
After 21 years of service, Michael Bowen
stepped down as Non-Executive Director
in November 2022. In line with our stated
objective of Board renewal, in April 2023,
we appointed Michael Green as Non-
Executive Director based in the United
Kingdom. Mr Green’s 30+ years in the
international financial services sector,
including asset management, insurance/
reinsurance, product and risk
management, and business development
and transformation, adds considerable
experience to the Board.
We also intend to explore the
appointment of another northern
hemisphere-based director to reflect
our significant and growing operations
in that region.
The Board currently comprises four
Non-Executive Directors and two
Executive Directors resulting in a majority
independent Board. In terms of Board
diversity, women currently represent
33% of the Board and 50% of the
Non-Executive Directors.
As one of our core values, we take a
broad view of diversity including seeking
a range of perspectives, skill sets and
backgrounds in our Board composition
in addition to gender and other
considerations.
Macro environment
With a challenging global economy facing
ongoing geopolitical disruption, stressed
financial markets, and high inflation –
coinciding with the removal of financial
and economic interventions in key
markets – the pace of economic growth
continues to slow, and market volatility is
anticipated in the short to medium term.
Omni Bridgeway, as an alternative asset
manager and investor in litigation and
enforcement assets, offers investors
a model that is typically uncorrelated
with economic cycles and macro events.
Demand for our capital increases as other
capital sources become more restricted.
The number of insolvencies and general
commercial disputes are likely to
increase; this creates opportunities,
improves our efficiencies and enhances
our scalability.
Omni Bridgeway has a pricing model that
provides a natural hedge against inflation.
Typically, investment costs are passed
on to the client and reimbursed on
successful completion of the investment.
Further, returns are structured as a
multiple of costs, that covers inflation, or
as a percentage of the damages including
interest that typically ameliorates the
impact of inflation. We are also
increasingly protected against duration
risk as our contracted returns reflect
the time value of money.
The emerging global market for legal
finance continues to mature, and
competition is contracting as capital
becomes constricted. We may see smaller
specialised operations enter the market
to facilitate discrete and limited books of
business, but we do not anticipate these
to directly compete with our model.
Our strong capital position, and
continued access to capital, amid
an uncertain economic environment,
positions us well within the competitive
and macro landscapes. Our diversified
model will continue to be a critical
comparative advantage; we have
consistently grown, innovated and
strengthened our platform and business
offering in contrast to others in the
asset class.
New Investment
Committee members
We welcomed four Investment
Committee members to our team.
Ms Leora Ben-Ami is a US based
intellectual property attorney, globally
recognised in the biotechnology, life
sciences and pharmaceuticals sectors,
and has held several leadership positions
in top-tier law firms.
Judge Winifred Y. Smith (Ret) ’s
distinguished career includes serving on
the bench of California’s Alameda County
Superior Court for over two decades,
covering a multitude of civil matters
and culminating in being selected as
Presiding Judge.
Mr Geoffrey Senogles is a damages
and valuation expert with extensive
experience in testifying in litigation and
international arbitration matters, based
in Switzerland.
Ms Ariana J Tadler is the founding
partner of Tadler Law LLP and has
30 years experience advocating for
consumers and investors while litigating
securities, consumer and data breach
class actions and complex matters.
Their appointments expand the depth
of expertise that can be drawn on for
particular investment decisions and add
outside perspective, helping us prevent
group think and further bolstering our
rigorous assessment process.
Summary
On behalf of the Board, I would like
to thank management and staff for this
milestone year of exceptional effort and
achievement.
We have strengthened core facets of our
business and continue to set the highest
industry standards as we transition to the
next phase of our strategy with Mr van
Hulst as CEO elect.
We are well positioned to realise the full
benefit of our strategy and will deliver
increasing and sustainable value to our
stakeholders in FY24 and beyond.
Michael Kay
Chairman
Annual Report 2023
9
Managing Director’s report
I am pleased to announce several notable
achievements during FY23 and report on
a strong finish to the year, underpinned
by gathering market momentum and the
effectiveness of our diversified funds
management strategy.
Andrew Saker
Managing Director & Chief Executive Officer
2H23 NPAT turnaround on 1H23
203%
Litigation investment proceeds
$283.4m
IYTBR at 30 June 2023
$55.2m
Annual commitments
17% growth
Estimated portfolio value
12% growth
Implied embedded value
provisionally attributable to OBL
(excl. management and performance fees)
$1.0bn
$3.9bn total IEV
Record gross income
and strong 2H23 profit
The Group realised a profit after tax
(before NCI) of $0.9 million, a notable
2H23 turnaround of $61.1 million and
a 203% improvement compared to 1H23.
This demonstrates the variability of
returns from investments with binary
outcomes, lower expenses and signals
momentum heading into FY24.
Material NCI distributions were made,
accelerating anticipated income for
shareholders in FY24.
In FY23, we achieved a significant
milestone generating $283.4 million from
33 investment completions and secondary
market transactions, plus $55.2 million
income yet to be recognised from
conditionally completed investments.
This excludes $86.6 million in third-party
income from the sale of an investment
vehicle in December 2022.
Additionally, we experienced growing
management fees, which increased by
31% compared to the previous year,
reaching $7.5 million.
Higher FY23 expenses predominately
relate to the expansion of the platform,
strategic investments in new operating
locations and marketing efforts including
increased headcount to 224, from 199,
and expenses which were previously
subdued due to reduced expenditure
during COVID-19.
10
Omni Bridgeway
Total expenses in the second half were
9% lower than the first half, reflecting non-
recurring items and initial savings from
a renewed focus on expense discipline.
We streamlined processes, optimised
workflows and enhanced productivity.
As a result of these initiatives,
we anticipate:
• Further expense discipline in FY24.
• Continued improvement in operational
efficiencies.
• Value created by investment managers
in excess of our cost base.
Impairment expense and adverse
cost charges of $13.1 million, up from
$8.1 million in FY22, reflects the Group’s
best estimate of the exposure across
several investments.
$m
Consolidated Group
Litigation investments proceeds1
2H23
1H23
Change
from
1H23
FY23
FY22
Change
from
FY22
139.6
96.1
45%
235.7
217.3
8%
Cash proceeds on sale of participation in Fund 1 assets
47.7
–
47.7
–
Litigation income proceeds
(grossed up to include all Funds at 100%)
Third party income from sale of investment vehicle
Less third party interest of Fund 5
Litigation investments proceeds
Management fees
Interest revenue and other
187.3
–
96.1
86.6
(33.6)
(18.2)
95 %
283.4
217.3
30 %
86.6
–
(51.8)
(12.6)
153.7
164.5
(7%)
318.2
204.7
4.0
5.1
3.5
2.2
14%
7.5
7.3
5.7
10.6
55%
31%
Total gross income and revenue
162.8
170.2
(4%)
333.0
221.0
51%
Litigation investments costs derecognised (non-cash)
(45.2)
(61.5)
(106.7)
(131.8)
19%
Derecognition of subsidiary and recognition of residual interest in F1
(20.5)
–
Reclassification to share of income from associates
Third party share of sale of investment vehicle
0.2
(2.5)
–
(86.6)
(20.5)
(2.3)
(86.6)
–
–
–
Total income (reflecting Consolidated Group)
97.2
19.6
396%
116.8
89.2
31%
Litigation investments – impairment and adverse costs
Amortisation of litigation investments – claims portfolio
(9.4)
(1.3)
(3.7)
(154%)
(13.1)
(2.7)
(4.0)
(8.1)
(5.7)
Employee expenses
Other expenses
(35.0)
(39.0)
(14.5)
(17.6)
(74.0)
(59.1)
(32.1)
(25.5)
52%
10%
18%
Fair value adjustments of financial assets and liabilities
2.6
–
100%
2.6
7.4
(61%)
28%
(25%)
(26%)
(65%)
Profit / (loss) before tax
39.6
(43.4)
191%
(3.8)
(1.8)
(111%)
Income tax benefit / (expense)
Profit / (loss) after tax
(8.6)
13.3
(165%)
31.0
(30.1)
203%
4.7
0.9
8.3
6.5
(44%)
(86%)
We continued to make strategic business investments to generate
higher levels of future income, particularly in developing markets
including Italy and France. We are now the largest manager of
legal risk in the world with a presence in five continents, across
14 countries.
This expansion in our productive capacity delivered significant
efficiency gains in key business metrics relating to our investment
managers. The EPV per investment manager increased 22% to
$341 million during the year, and, over the last four years, has
achieved a compound annual growth rate of 14%.
Another notable metric is new EPV created per investment
manager which grew 16% in the period to $138 million.
This important measure reflects that we are leveraging our talent
to produce more EPV per investment manager enhanced by our
ability to attract, retain and develop the best talent in the industry
globally. Furthermore, it also highlights we have generated
significant value over and above costs for the period.
$m
Efficiency ratios
EPV / investment manager
New investment EPV / investment manager
Management fees2 / cash operational expenses3
Total expenditure3/ IEV
Working capital ratio
Headcount
Number of locations
EPV
FY23
FY22
Change from
FY22
341
138
16%
3%
2.6:1
224
26
279
119
20%
2%
2.3:1
199
23
30,475
27,202
22%
16%
(20%)
50%
13%
13%
13%
12%
1. Data includes interest income on purchased claims. 1H23 and FY22 have been retrospectively adjusted to reflect this.
2. Includes management and servicing contribution from Fund 6, which is recognised as an equity contribution.
3. Excluding amortisation, impairments, adverse costs, interest and LTIP.
Annual Report 2023
11
Managing Director’s report continued
Balance sheet
The Group continues to maintain a strong
financial position based on $129.2 million
cash and receivables on OBL balance
sheet and access of up to $60 million
undrawn debt. We have sufficient capital
and dry powder to support growth,
deployment obligations, liquidity
requirements and corporate initiatives.
Across various businesses, there is no
universal standard for determining the
ideal level of liquidity. For Omni Bridgeway,
assessing the appropriate liquidity level
involves our evaluation of the Group’s
needs in light of potential completions
for the forthcoming period, funding
requirements for new investments and
essential working capital. We believe that
retaining a minimum of 12 months’ cash
to cover operational expenses is both
prudent and effective. This approach
ensures that we maintain financial stability
and balance sheet resilience.
In May 2022, we secured a five-year,
$250 million institutional debt facility
to enhance capital efficiency and provide
greater flexibility. This facility allowed us to
redeem $148 million of outstanding Fixed
Rate Notes and Bonds on 8 July 2022,
in advance of their maturity.
In March 2023, we accessed an additional
$40 million for general working capital
purposes. The carrying value was
$181.6 million, at 30 June 2023
($190 million proceeds, net of $8.4 million
capitalisation and amortisation costs
relating to the debt issuance, and is
classified as non-current debt).
Cashflow
The cash generated during the year was
driven by key completions and collection
of receivables. We anticipate significant
potential cash inflows from investment
completions as our funds mature, and as
secondary market transactions become
a larger portion of our income.
Consolidated Group (non-IFRS presentation) $m
Proceeds from litigation investments - claims portfolio
Proceeds from litigation investments - purchase claims
Proceeds from litigation investments - intangible assets
Proceeds from disposal of subsidiaries
Management and performance fees received
Interest received
Payments to suppliers and employees
Income tax paid
Other operating activity outflows
Total cashflows from business operation
Payments for litigation investments - claims portfolio
Payments for litigation investments - purchase claims
Payments for litigation investments - intangible assets
Payments for litigation investments - capitalised overhead and employee costs
Other investing activity outflows
Total cashflows used in litigation investments
Contributions from NCI
Distributions to NCI
Other financing activity outflows
Total cashflows from finance activities
Net increase/(decrease) in cash and cash equivalents
Net foreign exchange difference
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
FY23
4.8
0.7
121.8
75.8
203.1
8.8
1.8
213.7
(106.0)
(3.6)
(19.5)
84.6
(16.8)
–
(157.7)
(7.8)
(2.2)
FY22
13.4
6.4
273.3
–
293.1
12.6
0.3
306.0
(74.1)
(4.8)
(7.4)
219.7
(14.6)
–
(105.6)
(6.7)
(3.9)
(184.5)
(130.8)
135.9
(93.2)
42.7
15.1
57.8
(42.1)
0.1
159.0
117.0
43.6
(113.3)
(69.7)
(4.6)
(74.3)
14.6
1.8
142.6
159.0
Trade and other receivables
140.8
127.8
12
Omni Bridgeway
Portfolio overview1
At 30 June 2023, our portfolio consisted
of over 300 investments with a net
carrying value of $741.8 million, including
Fund 5 at 100%.
Our annual commitments, including
conditional and unconditional capital
commitments, amounted to
$544.2 million, marking a 17% increase
from the previous year and a compound
annual growth rate of 25% since FY19.
New commitments, across 98 investments
relating to matters that are newly funded,
conditionally approved or have had
updated budgets, are diverse in both
investment type and area of law.
These significant investment commitments
have allowed us to diversify our global
portfolio across various jurisdictions,
geographies, case types, clients, and
service providers, positioning us
strategically for potential growth and
opportunities in diverse markets.
The current pipeline of indicative
investment opportunities is approximately
$195 million across 22 term sheets
with clients.
FY23 commitments by
investment type
FY23 commitments by
area of law
Single party
Class actions
Law firm
Arbitration
Other
30%
30%
18%
11%
11%
Mixed Portfolio
Anti-trust
Patent
Bilateral investment
treaty
Securities class action
Insolvency
Breach of contract
Other
12%
10%
9%
8%
8%
7%
7%
39%
Unlocking secondary
market opportunities
Embracing a culture of continuous
innovation is instrumental in our
adaptation to evolving market conditions
and staying ahead of emerging industry
trends including utilising the secondary
market.
During the year, we completed two
strategic transactions which diversified our
income sources and yielded gross cash
proceeds of approximately $76 million.
In a significant milestone, the sale of
a participation in Fund 1 assets allowed
us to recycle capital, de-risk the portfolio,
and expedite returns.
Secondary market transactions will play
a pivotal role in and become a meaningful
contributor to our income generation,
whilst also controlling the liquidity of an
investment, ensuring a diversified income
stream, accelerating realisations in our
portfolio and mitigating risk.
Developments in
specific investments
The Group’s balance sheet investment
in the Brisbane Floods class action,
Wivenhoe Dam, completed in June 2023.
A final tranche of income of $16.0 million
was recognised in 4Q23 and reflects the
finalisation of the loss assessment by
external counsel. Receipt of the final cash
distribution of $13.7 million is anticipated
in late August 2023 and is reflected in
the balance sheet receivable balance
at 30 June 2023.
The Westgem investment on the Group’s
balance sheet is fully impaired. In June
2023, the High Court of Australia declined
to grant special leave to appeal the
Supreme Court of Western Australia
Court of Appeal's decision.
The appeal petition to the US Supreme
Court in relation to the fully impaired Fund
4 investment was denied in April 2023.
As there are no further avenues for
appeal, the investment was removed from
our portfolio during the Quarter. The EPV
of this investment was $1.6 billion with
an estimated completion date of FY24.
1. Includes all current investments (unconditional, conditionally funded, IC approved and investments disclosed as income yet to be recognised).
Annual Report 2023
13
Managing Director’s report continued
Completions
The data included in the table below reflects investment completions in Funds 1 to 6 and on balance sheet since their inception.
Fund 1 includes metrics up to 31 May 2023, the date of its deconsolidation. The Fund 4 performance metrics are impacted by a small
number of completions, several of which have been both large and negative. With partial completions prior to and one completion since
30 June 2023, the performance metrics have improved to 0.05x ROIC and 7% IRR. Whilst these metrics remain lower than our historical
performance, we are confident that with further successful outcomes the performance metrics will improve materially.
Portfolio
Fund 1
Fund 2&31
Fund 4
Fund 52
Fund 63
Fund 7
Fund 8
Balance sheet4
#
35
18
11
13
230
–
–
Average
duration
3.5 yrs
1.9 yrs
1.3 yrs
1.7 yrs
3.2 yrs
–
–
EPV conversion
rate
Financial outcome $
weighted average
EPV
$2,023m
$609m
$2,425m
$1,137m
–
–
–
11%
16%
4%
7%
19 %
–
–
69%
43%
51%
76%
80%
–
–
ROIC
0.38x
0.91x
(0.16x)
1.05x
3.07x
–
–
IRR
12%
89%
(18%)
54%
177%
–
–
196
3.0 yrs
$5,455m
20%
78%
1.64x
80%
Estimated value from
future completions
We continue to provide quantitative
information on the value of future
completions from our funded portfolio
by applying our long term past
performance metrics.
Based on a normalised EPV conversion
rate of 15%, the implied embedded value
(IEV) of our portfolio is $3.9 billion. This
calculation includes returns from
completions of our existing funded
investments.
The IEV attributed to Omni Bridgeway
is around $1.0 billion. This excludes
management and performance fees which
we anticipate will become an increasingly
important source of our future revenues.
Based upon the IEV analysis and related
assumptions, the funds’ terms entitle us
to potential performance fees, from the
existing portfolio, of approximately
$240 million based on the Group historic
1.1x ROIC and achieving 20% IRR hurdle
of completed investments.
Performance fees are subject to the
sequencing and timing of fund waterfall
proceeds and sufficient certainty of
earning positive income, above specific
hurdle rates, in each respective fund and
are subject to potential clawback.
In addition, for FY24 we estimate that
approximately $22 million of management
fees could be generated.
These figures, and together with EPV
and IEV, are based on several assumptions
noted on page 119 including key concepts
which are in the Glossary on page 113.
Despite completions momentum in 2H23,
we had deferred completions which will
result in potential income being
recognised in FY24, or later.
It's important to clarify that EPV deferral
does not imply a loss in value; we still
consider the matters to be of high quality
with positive prospects of success.
In some cases a deferral may result
in higher compensation or a potentially
larger loss claim. Further to this, using the
secondary market as a lever to control
cash flow, address deteriorating IRR
and accelerate liquidity also reduces
the impact of EPV slippage on our
earnings profile.
At 30-Jun-2023
$m
Funded EPV
Balance sheet
Funds 2&3
Fund 45
Fund 52,5
Fund 65,6
Fund 8
Total IEV
Possible completion period (PCP)
Sensitivity analysis
FY24
4,954
FY25
6,959
FY26
4,501
FY27+
9,600
IEV at 15% EPV conversion rate
EPV conversion
rate to IEV
15% EPV
conversion rate
TOTAL
10%
20%
PCP delay of
12 months
26,014
26,014 26,014
26,014
3
163
186
328
62
1
–
189
353
377
124
1
1
11
403
162
97
2
1
5
3
6
120
483
322
644
431
1,373
915
1,830
614
1,481
987
1,975
270
553
4
8
369
5
737
11
5
483
1,373
1,481
553
8
743
1,044
676
1,440
3,903
2,601
5,203
3,903
IEV provisionally attributable to OBL
133
334
156
380
1,003
621
1,373
973
1. Excludes the partial investment completion of the secondary market sales.
2. Fund 5 is not consolidated within the Group Consolidated Financial Statements, here it is presented at 100%.
3. Data is current at 30 June 2023. As a large portion of the acquired assets did not have assigned EPV, total EPV is not available. The conversion rate relates to the portion
of the portfolio that had assigned EPV..
4. IRR information prior to FY12 is not available due to the difficulty in extracting it from legacy systems.
5. Excluding performance fee entitlement.
6. Utilises NCI's historic share of proceeds, being a blend of A, B, C, D investment specific waterfalls.
14
Omni Bridgeway
Transformation
For the past eight years, I have had the
privilege of leading Omni Bridgeway and
successfully establishing a global funds
management platform spanning the
Americas, APAC, and EMEA regions.
As co-investors and managers of non-
recourse funds, we specialise in legal
asset investments across diverse fund
structures, managing approximately
$3 billion in assets. This strategic
approach allowed us to scale rapidly in
an emerging asset class while mitigating
risks, leading to higher risk-adjusted
returns as the funds mature.
Our dispute finance team, consisting
of origination and risk management
specialists, are part of a world class
alternative investment management
firm, reflecting leadership, innovation,
and pioneering solutions in legal risk
management as evidenced by 60+
awards since 2015.
Our balanced and diversified portfolio
has grown 16 times its original size since
2015, providing effective mitigation against
competition, regulatory intervention, and
portfolio concentration risks.
We now have enterprise wide capability
in developing unique products and fund
structures to expand market reach, scale
and improve returns.
In line with our commitment to further
innovate and progress, we have enhanced
the way we price and structure investment
terms to address extended duration,
an inherent attribute of the asset class.
With a leading platform and sophisticated
risk management tools in place, the
business is in a prime position to capitalise
on sustainable growth, leveraging
operational efficiencies for greater
returns.
Global presence
~30 people, 4 countries, 9 cities
224 people, 14 countries, 26 cities
January 2015
June 2023
Number of investments
30
Estimated portfolio value
$1.8bn
301
$30.5bn
Funding
Expertise
Industry
recognition
OBL balance sheet funding
8 funds using 3rd party capital and OBL co-funding
Merits funding
In 2013, The American Lawyer awarded our
founders the ‘Top 50 Innovators for Big Law in the
Last 50 Years’.
Disputes, arbitration, settlement, post judgement
enforcement and distressed asset recoveries
In 2023 alone, 10+ key industry awards, notably:
Chambers Band 1 in Litigation Funding in all major
regions (excluding the UK), Global Asset Tracing,
International Arbitration. Lawdragon recognised
14 team members as top Global 100 in Litigation
Funding.
Capital raising
Outlook
In 1Q24, we expect to complete the
initial capital raising for Fund 8, a global
enforcement fund, totalling €300 million.
We are in the advanced stages to close
a limited recourse debt facility of up to
€135 million, along with standby equity
of up to €15 million provided by OBL.
This debt is backed by an existing principal
protection insurance policy and the
investments made by Fund 8.
The enforcement investments, previously
held on the Group's balance sheet, will
transfer to Fund 8 upon completion.
Additionally, the insurance policy offers
an option to extend the indemnity to
€270 million, creating a potential option
for a second series of Fund 8.
The insurance is a distinctive and
advantageous feature. It allows the fund,
which has an eight-year structure, to
pursue investment opportunities with
historically high internal rate of returns
and return on invested capital and
provides principal protection to the
underlying debt.
We are also progressing the upsizing of
Funds 4 and 5 and anticipate a first close
in 1H24. The investor appetite indicates
confidence in the embedded value of
our investments and the potential for
improved returns, which we believe will be
sufficient to generate performance fees.
Our success is a testament to the
dedication of the Omni Bridgeway team,
whose commitment to achieving business
goals, maximising investment outcomes
and providing access to justice for our
clients has been notable.
Our diversified and resilient platform,
coupled with unrivalled expertise in
sourcing and underwriting quality
investments, positions us well to create
value for shareholders through strong
cash returns.
With a stabilising operating environment
post-COVID-19 pandemic and a significant
investment pipeline, secondary market
opportunities, and completion
momentum, we are confident in our
underlying business model and foresee
continued future growth.
Our key goals for FY24 include:
• Achieving new commitments of
$625 million or equivalent value
through improved pricing and
attribution terms.
• Exploring transition to or adding fair
value reporting.
• Finalising the establishment of Fund 8,
our new global enforcement fund.
•
Increasing FUM via first closing of series
II of Fund 4 and Fund 5 and potential
launch of new funds.
• Continued focus on cost coverage
initiatives.
• Accelerating realisations and
mitigating risk through secondary
market transactions.
• Moderately expanding the UK team
to increase our presence in the second
largest litigation finance market.
• Aiming for approximately $95 million
of cash operational expenses.
Finally, this is my last full year result as
Managing Director and Chief Executive
Officer as we transition to Raymond
van Hulst.
I would like to thank investors, the Board
and management for the support they
have extended to me and wish the Group
well in the future.
Andrew Saker
Managing Director &
Chief Executive Officer
Annual Report 2023
15
Extensive reach in Americas, APAC and EMEA
~$220bn
estimated addressable market
in the rapidly growing $1tn
global legal market
Omni Bridgeway
is well positioned
to tap into these
addressable markets.
Estimated addressable market*
Omni Bridgeway locations
* Figures are approximate and may be
rounded. All data at 30 June 2023.
1-7. Data is based on several sources.
Reports noted on page 117.
35+ years’
experience
IMF Bentham
Omni Bridgeway
Canada
$4bn2
United States
$156bn1
Public listing (ASX)
Entered USA
Entered Canada
2001
2011
2016
1986
Founded as
Omni Finance
1990
2001
Distressed asset
recovery and
restructuring
Asset tracing
and enforcement
intelligence
2015
Entered Asia
16
Omni Bridgeway
United States
$62bn
United
Kingdom
$13bn3
Continental
Europe
$21bn4
Asia
$21bn5
Australia &
New Zealand
$4bn6,7
Diversified,
scalable, returns-
focused platform
offering full
capability across
the litigation
finance spectrum
Annual Report 2023
17
Launched
external
funding model
2017
2017
Acquired
ROLAND
ProzessFinanz,
Germany
Entered UK
2018
2018
Entered
Middle East
Merger of
IMF Bentham and
Omni Bridgeway
2019
Transacted first
secondary market
disposals
2022
2021
Entered
New Zealand and
Latin America
Regional highlights
Industry recognition
Our footprint, deep market
relationships, and proven track
record of successful outcomes
for claimants is undisputed, and
industry recognition continues
to reflect this.
Omni Bridgeway’s industry
accolades continued to
grow in FY23. We received
the most recognition of
any litigation funder by
Chambers and Partners,
a third-party market
research report based
solely on client, market,
and peer feedback.
Top-tier media coverage of
Omni Bridgeway grew significantly
in FY23, signalling the continued rise
of our brand and reputation amid
a greater market understanding
of legal finance and the critical role
funders play in the management
of legal risk.
220+
People
14
Countries
26
Locations
18
Omni Bridgeway
Americas
Canada, United States, Latin America
Jim Batson
Managing Director and
Co-Chief Investment Officer – US
Matthew Harrison
Managing Director and
Co-Chief Investment Officer – US
Paul Rand
Managing Director and
Chief Investment Officer – Canada
In FY23, Omni Bridgeway continued its strategic growth in
the Americas in response to market demand. New locations,
Investment team hires and promotions, and appointments
in Legal, Risk & Compliance and Marketing and Business
Development grew the company’s footprint, market share, and
recognition. Growth was further supported by our unique value
proposition in the Americas including dedicated intellectual
property and judgement enforcement capabilities.
FY23 achievements and highlights
Expanded operations into Chicago and Miami, and grew the
Investment Team in Dallas, Houston, Minneapolis, Montreal,
New York, Toronto and Washington, representing 24% growth
in the Americas.
The US based Judgement Enforcement team completed its
first full fiscal year, generating enforcement and merits-plus-
enforcement investment opportunities.
Growing market interest in funding of commercial disputes,
combined with strong appetite for class action funding drove
an increase in funding opportunities in Canada.
The US deepened its focus on class actions, mass torts,
and LatAm to provide more client solutions and broader
market coverage.
The Canada, US, and LatAm teams were each recognised as
Band 1 leaders in litigation support by Chambers and Partners.
Videos on company market insights
From our Americas team
omnibridgeway.com/insights/americas
APAC
EMEA
Asia-Pacific including Asia, Australia, New Zealand
Europe, Middle East, Africa
Tom Glasgow
Managing Director and Chief Investment
Officer – APAC | Portfolio Manager – Global
International Arbitration
Raymond van Hulst
Executive Director, Managing Director
and Co-Chief Investment Officer – EMEA
Hannah van Roessel
Managing Director and
Co-Chief Investment Officer – EMEA
In FY23 we continued to advance our strategic market priorities
and internal capabilities in the region, appointing investment team
members to new leadership positions and adding key hires in the
construction and insolvency sectors. While the region’s slower
post-COVID-19 reopening continued to affect activity early in the
year, by the second half we saw an uptick in new applications, new
investments, case completions and business development. Market
awareness and development continues to increase across the
wider APAC region, whilst demand remains very strong in more
established markets like Australia, Singapore and Hong Kong.
FY23 achievements and highlights
Exceeded new investment targets for the APAC region.
Expanded the Investment Team in Hong Kong and Singapore
with strategic hires who bring specialised expertise.
Appointed Tom Glasgow (Singapore) as sole APAC Managing
Director and CIO, Kristen Smith (Melbourne) as Portfolio
Manager for Australia, and Ruth Stackpool-Moore (Singapore)
as Senior Investment Manager.
Continued to diversify and cross-pollinate our offering in APAC
including leveraging our increased capability in insolvency,
construction, insurance, international arbitration and
enforcement disputes to the benefit of the wider APAC region.
The EMEA team continued its expansion in FY23, further
solidifying the company’s regional position as the largest and
most experienced funding team. New operations were established
in Italy and France while the investment team grew in Dubai and
Geneva. Key appointments were also made in Tax and a global
head of People & Culture based in EMEA.
FY23 achievements and highlights
In addition to establishing operations in Paris, France and Milan,
Italy we expanded resources in Dubai with investment managers
specialised in local enforcement and construction matters.
Expanded global capability in intellectual property with the first
EMEA-based appointment of an IP specialised investment
manager in Germany.
Expanding the collective redress portfolio across various
EMEA jurisdictions, including a sizeable investment in a cross-
collateralised portfolio of opt-out group claims in Portugal.
Appointed Hannah van Roessel as Managing Director and
Co-Chief Investment Officer for EMEA, and Kees de Visser
as Chair of the Investment Committee for the region.
Increased internal cross-border collaboration is resulting in the
development of new business opportunities for APAC clients with
disputes across the globe and vice-versa, underscoring the value
of our unique global portfolio and hub structure.
The Board of Directors announced Raymond van Hulst, Executive
Director, Managing Director and Co-CIO of EMEA as CEO
successor upon Andrew Saker’s retirement in October 2023.
From our APAC team
omnibridgeway.com/insights/apac
From our EMEA team
omnibridgeway.com/insights/emea
Annual Report 2023
19
ESG and corporate social responsibility
We are committed to good stewardship of investor funds and believe that
making a positive impact on the environment and the societies in which we
operate is an integral part of delivering long term value for our stakeholders.
Optimising environmental, social and governance outcomes
that support value creation requires ongoing focus and effort
commensurate with the scale of our business and its operations.
Last financial year, we adopted the globally recognised reporting
Standard provided by the Sustainability Accounting Standards
Board (SASB) and its guidance for companies in the Asset
Management & Custody Activities sector. The Standard has a
particular focus on the information needs of institutional investors
and was chosen by the International Sustainability Standards
Board (ISSB) and the IFRS Foundation in November 2021 as the
preferred reporting framework for harmonising sustainability
disclosures for financial markets globally.
In August 2022, the IFRS Foundation assumed responsibility
for SASB Standards when it merged with the Value Reporting
Foundation, which previously maintained these Standards. In line
with the ISSB’s guidance, our sustainability disclosures have been
prepared in accordance with the SASB Standards until they are
replaced by IFRS Sustainability Disclosure Standards.
In accordance with ASX Listing Rule 4.10.3, our ESG Report
is available on our corporate website at https://
omnibridgeway.com/investors/environmental-social-governance.
Responsible investment
Omni Bridgeway is committed to responsible investment. Our core
business delivers a clear social benefit; our heritage was built on
the desire to increase access to justice, particularly for the small
and impecunious claimant. In addition, financing claims against
wrongdoers for misconduct can have a deterrent effect, which
in turn, benefits society more broadly.
We are a leading global provider of funding and specialised skills
for litigation, arbitration and enforcement processes and our core
values reflect the principles of fairness, transparency and acting
ethically and responsibly that characterised our beginnings.
Some of our funds include a screening process to prohibit the
financing of investments that have negative ESG characteristics.
We continue to consider the feasibility of launching a new fund
focused on investments with a positive ESG profile.
Environmental footprint
Carbon Offset Program
implemented in FY23
Access to justice
Assist those who cannot
afford justice against
strong opponents, especially
through financing of
class actions
Positive impact
on the economy
Financing allows
companies to invest
in their businesses
ESG screening
ESG criteria for some
of our funds before
extending finance
Community support
Volunteer Days Program
and pro bono activities
where we live and work
Deter potential
malfeasance
Hold wrongdoers to
account with a potential
deterrent effect
ESG reporting
Transparent reporting in
our public disclosures
Diversity and inclusion
Systems to promote equal
access, opportunity and
advancement for employees
Robust risk management
Consistent investment in
cyber resilience and working
towards Tier 3 NIST Rating
20
Omni Bridgeway
Environmental
Social
Governance
As a provider of legal finance and
risk solutions, people are core to
our success.
We are committed to workplace
diversity and recognise the value
of attracting and retaining a diverse
workforce and creating a culture
that supports our people to deliver
their best.
Several initiatives have been
implemented to promote staff
engagement and retention including
employee surveys, provision of a
flexible work environment (where
possible), leave programs, including
parental leave for both primary and
secondary carers, access to
Employee Assistance Programs and
ongoing training and development.
We are also active participants in
our community, introducing a paid
volunteer leave scheme in FY23
allowing employees to take two days
of paid leave to engage in
volunteering activities.
Notwithstanding that our business
has a comparatively limited
environmental impact, we are
focused on reducing our
environmental footprint relating
to travel, building premises and
energy consumption.
Omni Bridgeway has adopted a local
‘boots-on-the-ground’ approach to
business development, jurisdictional
know-how, and origination of
investment opportunities with our
employees working from 26 global
locations as opposed to a ‘fly in,
fly out’ strategy. This is achieved
through a combination of fully
remote and hybrid in-office roles,
allowing us to attract and retain top
talent, be the largest global funder
by headcount and geographic
coverage but reduce our reliance
on global travel, resulting in a lower
carbon footprint.
In August 2022, we began using an
end-to-end carbon offsetting travel
solution for our Australia and North
America teams to assist us to reduce
our carbon footprint. This program
delivers a set of tools for making
sustainable travel decisions. During
FY23, we offset 180 tonnes of CO2
emissions for some of our travel.
We will look to extend this program
in FY24.
Across our business, we encourage
all employees to adopt work
practices that promote
environmental sustainability,
including providing recycling
programs, digital filing and electronic
invoicing systems and use of water
and energy savings devices.
In future years, we will look to
provide quantitative data, where
available, in line with evolving
regulatory requirements.
We are committed to workplace diversity and
recognise the value of attracting and retaining
a diverse workforce and creating a culture that
supports our people to deliver their best.
Omni Bridgeway is committed to the
highest standards of conduct and to
being a responsible corporate
citizen. It is critical that we lead by
example, with a strong corporate
governance framework; a central
component to effective compliance
and risk management. To achieve
this goal, we seek to have clear and
effective governance policies and
procedures which are regularly
updated and contained in our
Corporate Governance Manual.
The Board strives to ensure that
these policies and principles are
embedded into the culture of the
global organisation.
Our Code of Conduct is supported
by our policies including our
Whistleblower, Anti-Bribery and
Corruption, and Securities
Trading policies.
Our Compliance Program includes
regulatory identification and change
management, regulatory relationship
management, new risk assessments,
monitoring and testing, breach and
incident identification, analysis,
training, and reporting.
The objectives and expectations to
managing risk is set out in our Risk
Management Policy in a proactive
and effective manner and provides
supporting guidance including a Risk
Management Framework.
A key risk is the protection of
digital information. We have made
consistent investment in cyber
resilience and have adopted an IT
and Cybersecurity Risk Management
Policy which describes our overall
policies and procedures. Work
continues towards attaining a
maturity Tier 3 rating under the
National Institute of Standards and
Technology (NIST) Cybersecurity
Framework, which integrates
industry standards and best
practices to help manage
cybersecurity risks.
We are committed to ensuring
appropriate communication with key
stakeholders; shareholders, investor
partners and clients – as set out
in our ESG Report.
Annual Report 2023
21
Global risk, regulation and governance
As the industry continues to grow and evolve, there have been minor
regulatory developments in some of the markets in which we operate.
Developing regulatory landscape
APAC In Australia, following a change in the federal government
in May 2022, a more favourable regulatory landscape emerged for
third-party funders. The new government unwound some of the
regulatory changes implemented by the previous government.
As a result, funded class actions in Australia are now exempt from
the managed investment scheme (MIS) regime, and litigation
funders are exempt from holding an Australian Financial Services
Licence (AFSL) and other financial services regulatory
requirements.
In Asia, success-based fee arrangements for lawyers in arbitration
were legalised in both Singapore and Hong Kong in 2022. We
consider that these developments create opportunities to finance
law firms acting under these arrangements.
Europe In September 2022, the EU Parliament approved a report
into litigation funding and requested the European Commission to
propose a Directive. Proposed rules included a duty on claimants
to disclose third-party funding and a fee cap on funders. If
enacted, Member States would then have time to implement the
Directive in their domestic law. In June 2023, the International
Legal Finance Association (ILFA) published a report which
criticised the proposed reforms. In late June 2023, it was reported
that the Commission has planned to conduct a study of the
existing European litigation funding landscape before
implementing any new rules.
In July 2023, the German Federal Parliament (Bundestag) passed
a Bill to implement the EU Collective Redress Directive. This will be
considered by the Federal Council (Bundesrat) in September and
is expected to come into force in October. Aspects of the Bill have
been subject to criticism, including late changes which restrict the
amount that a litigation funder may agree to receive from the
proceeds of a successful claim to 10%. Although these limitations
will have little direct impact on our business, we will monitor any
future impact of the changes.
UK In late July 2023, in PACCAR Inc and Others v Competition
Appeal Tribunal and Others, the UK Supreme Court overturned
earlier decisions in the case and held that the litigation funding
agreements (LFAs) at issue were “damages-based agreements”
within the meaning of the relevant legislation in England.
Endorsements from our clients and peers
As a result, the LFAs were subject to the Damages-Based
Agreement Regulations 2013 (DBA Regulations) which set
out certain requirements for an agreement to be lawful
and enforceable.
It was accepted that the LFAs considered by the UK Supreme
Court were non-compliant with the DBA Regulations, and
therefore unenforceable. Omni Bridgeway, through its highly
diversified investment portfolio, has very limited exposure to this
development.The DBA Regulations are specific to English litigation
and arbitration with particular pricing structures and have little or
no impact on our other markets, including continental Europe, the
Americas or APAC. We do not anticipate any material impact on
existing investments and remain confident that the UK will be
a key market for litigation funding.
US In the US, the Government Accountability Office (GAO),
which provides research reports to Congress, conducted an
inquiry into the US litigation funding industry. Representatives
from ILFA (including Omni Bridgeway) participated in the inquiry.
In December 2022, the GAO published a report. The report
surveyed the third-party litigation finance market, discussed pros
and cons and distinguished between commercial and consumer
funding. The report made no specific recommendations.
Some US courts have set rules requiring disclosure of litigation
funding arrangements. Omni Bridgeway continues to review
and consider the implications of those rules. The US Chamber
of Commerce’s Institute for Legal Reform continues to lobby for
litigation finance legislation at the federal and state level. Dispute
funders, including Omni Bridgeway, monitor and respond via ILFA
to maintain a level playing field.
Global Omni Bridgeway continues to play an active role in key
industry associations around the world, including ILFA and the
new European Litigation Funders Association (ELFA). Omni
Bridgeway’s Managing Director Enforcement & EMEA, Wieger
Wielinga, is the inaugural chairman of ELFA.
Omni Bridgeway’s
team has impressive
depth and breadth,
and openness to any
subject matter.
Chambers and Partners
Litigation Support Guide 2023
Extremely effective
and efficient. They
are collaborative,
hands-on and
solution-oriented.
Chambers and Partners
Litigation Support Guide 2023
They have a very
strong commercial
awareness.
Chambers and Partners
Litigation Support Guide 2023
22
Omni Bridgeway
1,723 applications
1. Origination
Opportunities are primarily originated through
potential clients, advisors, other third parties or
internally by formulating a funding idea.
The investing process begins with the execution
of a confidentiality agreement.
A disciplined approach
to the assessment
of financial and legal
merits including a risk
analysis of potential
investments.
Our Investment
Committees are
comprised of highly
respected, experienced
legal and investment
professionals.
505 reviewed
2. Application review
Opportunities are evaluated
by numerous factors including the
type and strength of the case, pricing
and risk analysis, likely duration, and
an estimate of the capital required.
4. Monitoring and realisation
An investment may take between
1 and 5 years to complete.
The IM will monitor developments in the
investment as it progresses and receive
periodic updates from the lawyers.
In certain jurisdictions, we may provide
insight and strategic guidance
concerning the investment and
settlement opportunities.
39 funded
18 IC approved
& conditionally
funded
3. Funding decision
The Investment Committee (IC) receives
a due diligence report which is prepared
by the Investment Manager (IM).
The IC decides whether to recommend
to the applicable fund. This requires
unanimous approval.
5. Distribution of proceeds
If an investment is successful, the claimant's lawyers
will deduct the fees owing to the Group from the claim
proceeds, and pay the balance to the client.
If the claim fails, the Group does not recover its
investment and may also be responsible for paying the
defendant's costs on the terms agreed with client,
if not covered by ATE or adverse cost insurance.
Annual Report 2023
23
Directors’ report
Board of Directors
Michael Kay
Non-Executive Chairman
Andrew Saker
Managing Director & CEO
and Chief Strategy Officer – US
Raymond van Hulst
Executive Director, Managing Director
and Chief Investment Officer – EMEA
Appointed
July 2015
Appointed
January 2015
Appointed
April 2020
Committee
membership
Bachelor of Laws
(University of Sydney, Australia)
Michael Kay has been the Non- Executive
Chairman since July 2015. He brings
a wealth of commercial experience,
with a sound track-record of building
successful businesses.
In his last executive role, he was Chief
Executive Officer and Managing Director
of salary packaging company McMillan
Shakespeare Limited. He was previously
Chief Executive Officer of national
insurer AAMI and before that spent
12 years in private legal practice.
Directorships of other listed entities
within the past three years
• Chairman and Non-Executive Director
of City Chic Collective Limited (ASX:
CCX) (appointed October 2018)
Committee
membership
n/a
Committee
membership
n/a
Bachelor of Commerce (Accounting & Finance)
(University of Western Australia)
Associate Member, Chartered Accountants
Australia and New Zealand
Andrew Saker was appointed
Managing Director & Chief Executive
Officer in January 2015. Since then,
he has led a transformational strategy
of geographic expansion, product
diversification, and migrating the
company’s business model from capital
management to fund management.
In 2019 Mr Saker led the merger, and
subsequent integration, of the IMF
Bentham and Omni Bridgeway legacy
businesses to form the global Omni
Bridgeway Group. Omni Bridgeway
is now the largest funding team in the
world and the global leader in financing
and managing legal risks.
Mr Saker has lived and worked in
Australia, Asia and the United States.
Until his appointment as Managing
Director & Chief Executive Officer,
Mr Saker was a Registered Company
Liquidator of the Australian Securities
& Investments Commission and an
Official Liquidator of the Supreme
and Federal Courts.
Mr Saker has announced that he
will be retiring from the Group on
26 October 2023, after which he will
have a consulting role with the Group
for a period of 12 months.
Masters of Business Administration (INSEAD)
Masters in Management
(University of Groningen, The Netherlands)
Raymond van Hulst has been
appointed CEO elect for the company
and scheduled to take over as CEO
as per the AGM in October 2023.
Mr van Hulst has over 20 years’
experience in structuring and managing
innovative solutions for complex and
high value litigation funding and legal
enforcement matters. He has been
leading one of the largest teams of
litigators, recovery, business intelligence
and asset-tracing specialists in the
industry, while being responsible
for several special projects and
the company’s strategic initiatives,
operations and investment activities
across the EMEA region.
Mr van Hulst has established three
institutionally backed funds aimed at
funding legal disputes and enforcement
matters, including in joint venture with
the International Finance Corporation,
part of the World Bank for the
Distressed Asset Recovery Program.
He has headed Omni Bridgeway’s
Investment Committee for these funds.
Mr van Hulst also led Omni Bridgeway’s
acquisition of its German funding
business, Roland ProzessFinanz, in 2017.
Mr van Hulst was previously with
ABN AMRO Bank Structured Finance,
based out of India and Europe.
Directorships of other listed entities
within the past three years
Nil
Directorships of other listed entities
within the past three years
Nil
24
Omni Bridgeway
Karen Phin
Non-Executive Director
Christine Feldmanis
Non-Executive Director
Michael Green
Non-Executive Director
Appointed
August 2017
Appointed
November 2018
Appointed
April 2023
Committee
membership
Committee
membership
Committee
membership
Bachelor of Arts and Bachelor of Laws (Honours)
(University of Sydney, Australia)
Bachelor of Commerce
Bachelor of Arts (honours) Economics
(University of Wollongong, Australia)
(University of Exeter, UK)
Graduate Australian Institute
of Company Directors
Karen Phin has over 25 years’
experience advising Australian listed
companies on capital management,
capital raisings and mergers and
acquisitions. Until 2014, Ms Phin was
a Managing Director and Head of Capital
Advisory at Citigroup in Australia and
New Zealand. Prior to joining Citigroup,
she spent 12 months at ASIC as a Senior
Specialist in the Corporations group.
From 1996 to 2009, Ms Phin was
a Managing Director at UBS AG, where
she established and led the Capital
Management Group.
Directorships of other listed entities
within the past three years
• Non-Executive Director of ARB
Corporation Limited (ASX: ARB)
(appointed June 2019)
• Non-Executive Director of Magellan
Financial Group Limited (ASX: MFG)
(retired September 2022)
• Member of the Takeovers Panel
(since 2015)
Master of Applied Finance
(Macquarie University, Australia)
Fellow of the Australian Institute
of Company Directors
Trustee Fellow of the Association
of Superannuation Funds of Australia
Senior Fellow of the Financial Services
Institute of Australasia
Certified Practising Accountant
Christine Feldmanis is a qualified
accountant, investment, governance,
and risk management specialist with
over 30 years’ experience in the finance
and investment industry. Ms Feldmanis
was previously Managing Director of an
ASX-listed boutique funds management
incubator business and Chief Finance
Officer of the NSW Treasury Corporation.
Directorships of other listed entities
within the past three years
• Non-Executive Director of United
Malt Limited (ASX: UMG) (appointed
January 2023)
• Chair and Non-Executive Director
of Bell Financial Group Ltd (ASX: BFG)
(appointed February 2020)
• Non-Executive Director of Perpetual
Equity Investment Company Limited
(ASX: PIC) (retired November 2020)
Michael Green has over 20 years’
experience in the global investment
industry. Mr Green was International
CEO for both Morgan Stanley Investment
Management and for American Century
Investments where he was a member of
their respective Executive Management
Committees and was a board member
for a number of local entities and global
fund structures. In 2020, Mr Green
became a co-opted non-executive
member of the Investment Oversight
Committee for the London CIV, the
local government pension fund asset
pooling company.
Directorships of other listed entities
within the past three years
• Chairman, Non-Executive Director,
Independent Trustee and Head of the
Investment Committee of Lloyd’s of
London Pension Scheme (LON: LLOY)
(appointed May 2007)
Annual Report 2023
25
Directors’ report continued
Board of Directors continued
Officers
Michael Bowen
Non-Executive Chairman (retired)
Guillaume Leger
Global Chief Financial Officer
Jeremy Sambrook
Global General Counsel
and Company Secretary
Appointed
December 2001
Appointed
August 2022
Appointed
January 2016
Bachelor of Laws
(University of Bristol, United Kingdom)
Jeremy Sambrook is an experienced
corporate lawyer with a broad in-house
legal and private practice background,
having practised in the UK, Hong Kong,
the Channel Islands and Australia.
Mr Sambrook was appointed as
General Counsel and Company
Secretary in 2016 and has built out
the global legal, compliance and risk
function, in line with the international
growth of the business, to a team of
legal and compliance specialists across
APAC, North America and EMEA.
Retired
November 2022
Bachelor of Laws, Jurisprudence and
Commerce (University of Western Australia)
Graduate Diploma Public Accounting
(HEC Montréal)
Bachelor Accounting Sciences
(Université du Québec à Montréal)
Guillaume Leger joined the Company
in August 2022, and oversees the
company’s global financial operations
including investor relations, capital
raising, financial planning, treasury,
corporate development and
financial reporting.
Mr Leger was formerly the Group
Controller for Circle K – Alimentation
Couche-Tard, Inc., a publicly traded
Fortune 200 company. Mr Leger also
previously served as CFO at Citigroup
in Hong Kong after holding a range
of senior positions across Citigroup’s
business in North America, Asia, New
Zealand, Australia and Brazil.
His early career included progressive
roles within PwC and Deloitte, starting
in 1996. He is a CFA Charterholder
and a Canadian CPA.
Michael Bowen was a partner
of global law firm DLA Piper and
joined Thomson Geer in 2020.
He practises primarily corporate,
commercial and securities law
with an emphasis on mergers,
acquisitions, capital raisings
and resources.
He has been admitted as a barrister
and solicitor of the Supreme Court
of Western Australia since 1979 and
is also admitted as a solicitor of the
High Court of Australia.
He is a Certified Public Accountant
and a member of the Australian
Society of Accountants.
Directorships of other listed entities
within the past three years
• Non-Executive Director
of Emerald Resources NL
(ASX: EMR) (appointed
September 2022)
• Non-Executive Director of Lotus
Resources Limited (ASX: LOT)
(appointed February 2021)
• Non-Executive Director of
Genesis Minerals Limited (ASX:
GMD) (appointed October 2021)
• Non-Executive Director of Trek
Metals Limited (ASX: TKM)
(retired September 2020)
26
Omni Bridgeway
Operating and financial review
Principal activities
The Group’s principal activities were:
•
•
the investment into, and management of, Funds (or Fund-like structures) that are focused on investing into litigation, dispute resolution
and enforcement matters globally; and
the continued holding of direct investments into similar litigation, dispute resolution, and enforcement matters.
The Group invests by entering into funding agreements with claimants, liquidators, banks, creditors, or law firms to provide funding,
recovery, enforcement and associated services; or purchasing awards, claims or rights to action, non-performing loans and distressed
debt.
Overlaying the principal activities is the Funds management aspect of the Group that:
• provides services to external third party capital;
• generates recurring management and service fees; and
• provides the opportunity for further return through performance fees depending on a Fund’s performance.
There were no significant changes to the principal activities of the Group during the year.
Nature of operations
The Group is an alternative asset manager investing in legal risk management which is typically non-cyclical and uncorrelated to underlying
economic conditions.
Since 2017, investment activities are undertaken through its Funds management platform extending to the Americas, APAC and EMEA
regions:
• Funds 1, 2&3 – First Generation Funds – were established by the Group in 2017 with a European distribution waterfall and a preferred
return to external Fund investors. Fund 1 was deconsolidated on 31 May 2023 following the sale of a participation in Fund 1 assets and
is now recognised as an investment in associates. Funds 2&3 are consolidated within the Group Consolidated Financial Statements with
distributions to OBL including a management fee and a residual profit share that eliminate upon consolidation, whilst the NCI
component will vary depending upon the status of the NCI distribution waterfall.
• Fund 4 and Fund 5 – Second Generation Funds – were established by the Group in 2019 with an American distribution waterfall,
periodic management fees and transactional performance fees. Fund 4 investments are consolidated into the Group, with external
investor’s share shown as NCI. Fund 4 management and performance fees are charged to the investors of Fund 4 and therefore appear
in the Consolidated Statement of Comprehensive Income. Fund 5 is brought in at the Group’s attributable 20% share of income, assets
and liabilities with no associated NCI. Fund 5 management and performance fees are included in the Consolidated Statement of
Comprehensive Income.
• Fund 6 and Fund 7 – purchased by the Group in 2019 through the acquisition of OBE - have a hybrid deal-by-deal and Fund level
waterfall together with management fees.
• Fund 8 is an insured leveraged structure focused on global enforcement.
The waterfalls and fee structures in the various Funds in part determine the attribution of profits, net assets and distributions between
the Group’s equity holders and non-controlling interests.
Whilst the Group manages the Funds’ investment activity, diversification and opportunities using third party capital, it is a committed
litigation investment funder in its own right, holding a meaningful capital interest (5%-25%) in each Fund, with the exception of Fund 1
where the Group holds an entitlement to distributions on completed investments as per its waterfall.
Whether by direct investment or via a Fund structure, the objective is to successfully complete (e.g. by settlement, court judgement,
arbitral award or enforcement recovery) litigation investments. The successful completion of an investment and the timing of that
completion is, in many respects, beyond the Group’s control and it may take several years between making an initial investment and
finalising a completion.
The Group is also able to sell a partial or full interest in litigation investments into the secondary market rather than continuing to hold the
entirety of the investment through to completion. Secondary sales improve the liquidity, mitigate completion and duration risk of these
investments while also accelerating realisations and retaining most of the upside potential.
If the underlying litigation, arbitration, recovery or enforcement action is successful, the Group earns a return from the resolution sum
obtained.
Where the Group has purchased the award, claim or right to action, non-performing loan or distressed debt the return will be the
resolution sum less any legal or professional fees and any residual success fee component to the vendor. Otherwise, the resolution sum
is shared with the funded client(s) in accordance with the contracted funding terms. The share to the Group will generally be the amount
invested plus a return defined as either:
• a multiple of the amount invested; or
• a percentage of the realised amount; or
• a combination of the above.
In some instances (e.g. Australian class action litigation) the presiding court or tribunal of the underlying litigation may be involved to
approve a settlement and that involvement can extend to consideration of the litigation funding terms.
Generally, the multiple or percentage return to the Group increases as the duration of an investment extends. If the underlying litigation,
arbitration, recovery or enforcement is unsuccessful the Group generally does not generate any financial return.
Annual Report 2023
27
Directors’ report continued
Operating and financial review (continued)
In certain jurisdictions, the investment terms may require the Group to pay an amount of adverse costs to the litigation counterparty.
In certain circumstances, the Group can obtain insurance to protect any of deployed capital, commission and adverse costs exposure.
Employees
At 30 June 2023, the Group employed 224 permanent staff (2022: 199).
Operating results for the financial year
The Group made a profit after tax (before NCI) for the year of $0.9 million (2022: $6.5 million). This is reflective of the variability of returns
from investments with binary outcomes and non-linear periods for completions.
The total gross proceeds and investment revenue in FY23 was $231.6 million. This reflects the Group’s consolidated share of Fund 5 at
20%, at 100% the value was $283.4 million1.
In FY23, the loss attributable to the equity holders of the Parent reduced from $42.8m for the first half year to $31.7m for the year, this
reflects the Group made a profit of $11.1m attributable to shareholders in the last half year.
The value created through scaling our team of legal asset specialists improved operational efficiencies during the year. On average, the
Group has increased its EPV per investment manager ratio by 14% and new investment EPV per investment manager ratio by 9%.
Costs in the year were consistent with growth targets. Employee expenses increased 25% on the prior year. The change predominately
relates to headcount growth to 224 people from 199 at 30 June 2022, which is reflected in the improvement in commitment levels, whist
still achieving significant efficiency gains. Corporate overheads reflect resumed levels of pre-COVID-19 expenditure for certain categories,
new operating locations and investment in marketing efforts.
Excerpts from Consolidated Statement of Comprehensive Income for the year ended 30 June 2023
Gross proceeds and investment revenue¹
Costs of derecognition or disposal of litigation investments
Other revenue and income
Total income
Other expenses, fair value adjustments and tax benefits
Profit after tax
2023
$'000
231,552
(129,541)
14,799
116,810
(115,948)
862
2022
$'000
204,713
(131,778)
16,246
89,181
(82,699)
6,482
Change
%
13%
(2%)
(9%)
31%
40%
(87%)
1. Gross proceeds and investment revenue is calculated as the sum of proceeds on derecognition of litigation investments – intangible assets, proceeds on derecognition
of litigation investments – purchased claims, revenue from litigation investments – claims portfolio and gross proceeds from litigation investment in associates for the
consolidated group. It is categorised as non-IFRS information prepared in accordance with ASIC Regulatory Guidance 230 – Disclosing non-IFRS financial information,
issued in December 2011. The $231.6 million reflects the Group's 20% interest in Fund 5. If the 80% attributable to external investors of $51.8 million had been
included, the total would be $283.4 million as per the Investment Portfolio Report at 30 June 2023, lodged with ASX on 31 July 2023.
Refer to Appendix for more detail on non-IFRS disclosures.
Non-controlling interest (NCI)
The loss attributable to the Group’s equity holders in FY23 was $31.7 million with a profit of $32.5 million attributable to NCI. This
disproportionate attribution is primarily due to the status of the First Generation Funds’ distribution waterfalls which prioritised the return
to NCI during the period. For Funds 2&3, the NCI portion is dependent on the status of the waterfall which progresses from initially 100%
going to NCI, and then 100% to OBL and finally a back end profit share.
Consolidated Statement of Financial Position
The Group continues to maintain a solid financial position based on:
• Strong liquidity and working capital levels
• Debt refinancing which was settled on 8 July 2022
• Limited net debt and total equity
• Continued growth of litigation investments
Litigation investments
At 30 June 2023, the carrying value of litigation investments was $596.7 million (2022: $550.9 million) with more than 300 active litigation
investments. This reflects the Group’s consolidated share of Fund 5 at 20%. At 100%, the value was $741.8 million (2022:$635.1 million).
All investments are generally carried at cost, except for litigation investments - investment in associates, which was recognised at fair value
at date of deconsolidation of Fund 1. There is typically a lag between investment commitment and capital deployment.
28
Omni Bridgeway
Operating and financial review (continued)
Liquidity and capital resources
The Group continues to maintain an adequate financial position with appropriate liquidity and working capital levels sufficient for
continued portfolio growth and commitments to litigation investments.
At 30 June 2023, the Group had limited net debt and an appropriate level of equity.
Working capital
Current assets
Current liabilities (excluding debt)1
Net working capital
Working capital ratio
2023
$’000
266,725
103,727
162,998
2.6:1
2022
$’000
293,083
128,329
164,754
2.3:1
Change
%
(9%)
(19%)
(1%)
13%
1. Current liabilities exclude debt for the purposes of calculating the working capital. There was no debt due within 12 months as at 30 June 2023 and the debt as at
30 June 2022 was fully repaid in July 2022.
Capital structure
A strong capital position was maintained at 30 June 2023, built on the Group’s cash holdings, limited net debt and total equity. This capital
structure enables the the business to grow its operations, meet deployment obligations and support corporate initiatives.
Profile of interest-bearing debt
The profile of the Group’s interest-bearing debt at 30 June 2023 is summarised in the table below.
Omni Bridgeway Bonds
Fixed Rate Notes
Leases
Current
Borrowings
Leases
Non-current
Total interest-bearing debt
Debt refinance
2023
$’000
–
–
2,933
2,933
181,639
15,008
196,647
199,580
2022
$’000
76,000
72,000
2,755
150,755
–
11,173
11,173
161,928
Change
%
(100%)
(100%)
6%
(98%)
100%
34%
1660%
23%
On 8 July 2022, the Group made an initial draw down of $150 million on the new 5-year, $250 million institutional debt facility to redeem
the Bonds and Fixed Rate Notes in advance of their maturities on 22 December 2022 and 8 January 2026 respectively. The facility is
provided by Northleaf Capital Partners and Pacific Equity Partners and included $100 million of undrawn debt capital. In March 2023,
the Group drew $40 million of the undrawn capital to optimise its medium term capital management.
The facility terms include a variable rate of interest based on the BBSW Bid rate plus a fixed margin of 7.00% per annum, a maturity date
of 1 July 2027, a security interest over all present and after-acquired property of OBL and guarantees and security provided by certain
wholly owned subsidiaries.
The facility provides a comparative improvement with the removal of the restrictive requirement to hold cash and receivables equivalent
to 75% of the debt (being $142.5 million at 30 June 2023) which related to the Bonds and Fixed Rate Notes.
As at 30 June 2023, the drawn components of the combined facility are classified as non-current borrowings.
Annual Report 2023
29
Directors’ report continued
Operating and financial review (continued)
Consolidated Statement of Cash Flows
The consolidated Statement of Cash Flows illustrates that there was a decrease in cash and cash equivalents for the year ended
30 June 2023 of $42.0 million (2022: increase of $16.3 million).
In relation to the movement in cash:
• Operating activities: $130.4 million net cash outflows (2022: $74.5 million)
•
Investing activities: $30.6 million net cash inflows (2022: $163.5 million)
Across both operating and investing activities per IFRS classifications, the aggregate cash flows include:
• Proceeds from litigation investments: $127.3 million
• Management and performance fee proceeds: $8.8 million
• Payments for litigation investments: $182.3 million
Financing activities $57.8 million net cash inflows (2022: net cash outflows $74.3 million) include:
• Contributions from NCI: $135.9 million
• Distributions to NCI: ($93.2) million
Investment activity
FY23 overview
Commitments and completions are the key drivers of our business and they continued to grow in FY23, demonstrated by a particularly
strong last half year. Key metrics and highlights included:
• Generated investment income in FY23 of $338.6 million, reflecting Fund 5 at 100%, (from income recognised, income yet to be
recognised (IYTBR) and secondary market transactions), with $119.8 million provisionally attributable to OBL. The gross proceeds
and investment revenue of $231.6 million in the Consolidated Financial Statements reflects the Group’s consolidated share of Fund 5
at 20%.
• Recognised $182.4 million income, reflecting Fund 5 at 100%, from diversified sources in a strong 4Q23, representing approximately
65% of annual income recognised.
• Achieved FY23 commitments target with a commitment to fund $544.2 million to investments, representing $11.0 billion of new EPV
(from matters that were newly funded, conditionally approved or had increased investment opportunities). These commitments
continued to expand the portfolio’s diversification and reduce concentration.
• Estimated portfolio value (EPV) of $30.5 billion, up 12% in FY23 after completions, reductions from impaired investments and the
Fund 1 deconsolidation. This comprised $26.0 billion from unconditional investments and $4.5 billion from conditionally-funded
and Investment Committee-approved investments. At 30 June 2023 there are 301 active litigation investments in the portfolio.
•
Implied embedded value (IEV) is $3.9 billion at 30 June 2023 for funded investments.
• EPV conversion rate for FY23 was 14% reflecting adjusted litigation proceeds.
Secondary market sales
During the year, we continued to unlock opportunities in the secondary market while diversifying income streams, recycling capital,
and accelerating returns to our investors.
Secondary market transactions relating to Fund 1 during FY23 generated gross cash proceeds of $75.7 million, excluding $86.6 million
from the third-party’s share of sale of an investment vehicle in December 2022, comprising:
• $28.0 million from an investment disposal in December 2022.
• $47.7 million from the sale of a participation in Fund 1 assets which completed on 31 May 2023.
This risk management strategy allows us to reduce duration and completion risks, while enhancing liquidity and preserving internal rates
of return.
We expect this market will continue to evolve and we anticipate that it will provide a meaningful contribution to future sources of income.
Subject to achieving appropriate return metrics, we have identified investments (spread across all our funds) as potential candidates,
either in whole or in part, for secondary market transactions.
30
Omni Bridgeway
Investment activity (continued)
Fund summary and distribution profiles
The majority of our 301 investments reside within a Fund, with less than 2% of total investments remaining on the Group’s Consolidated
Statement of Financial Position with a minimal carrying value of $9.5 million.
The Funds 2&3 structure provide OBL shareholders with a back-end return of our capital and a substantial profit share, which we will
attribute to OBL in future periods.
Our Second Generation Funds, Fund 4 and Fund 5, are demonstrating good progress and will generate returns and fees when the funds
are more mature, further completions occur and performance crystallises the outcome from the waterfall.
Fund 1
Secondary market transactions in FY23 relating to Fund 1 resulted in the deconsolidation of the subsidiary on 31 May 2023. The residual
interest in Fund 1 is recognised as an investment in associate within the Group Consolidated Financial Statements. Fund 1 operational
metrics, effective from 1 June 2023 are not disclosed.
Funds 2&3
The investment period of Funds 2&3 have expired and they are in their “harvest” phase.
For Funds 2&3 there is $120 million capital and returns outstanding to the Fund NCI at 30 June 2023 and $30.1 million of cash proceeds
from litigation and current receivables. The receipt and distribution will further pay down the Funds 2&3 NCI.
Fund 4 and Fund 5
Fund 4 and Fund 5 continue to deploy capital and have approximately US$245 million in available capacity including recycling of capital.
We plan on executing a first close of a series II upsizing in 1H24 of around US$400 million to US$600 million with existing investors.
A second close is planned with other new investors to follow.
Fund 6
Fund 6 is in harvest mode. Merits investment opportunities are being funded by Fund 5 and enforcement investment opportunities will
flow to Fund 8 once closed.
Fund 7
Fund 7 is being restructured and discontinued.
Fund 8
The enforcement investments that are warehoused on the OBL balance sheet will transfer to Fund 8 upon completion, which is
anticipated in 1Q24.
As part of establishing the first series of the €300 million Fund 8, we are in advanced stages to close a limited recourse debt facility of up to
€135 million with standby equity to be provided by OBL of up to €15 million.
The debt will be secured against an already acquired principal protection insurance policy as well as the Fund 8 investments.
New funds
We are exploring the creation of new Funds, both structured in a similar manner and potentially dedicated to ESG and low-risk investment
strategies, which, together with the upsizing of Funds 4 and 5, will increase our funds under management.
Fund distribution profiles
The following is a Fund summary and distribution profile at 30 June 2023:
Fund size
Phase
Committed Capital called
Fund breakdown
Capital
deployed
Capital
committed -
undeployed
Capital
uncommitted
Other
(costs and
recycled
profits)
Outstanding amounts
yet to be attributable
to
Total
distributions
(capital and
returns) NCI (A$)
OBL (A$)
$189m
Harvest
100%
$163m
$134m
$44m
($4m)
$15m
($67m)
$120m
US$500m Investing
US$500m Investing
86%
85%
US$236m US$225m US$190m
US$72m
US$13m
(US$74m)
$196m
US$168m US$134m US$262m
US$74m
US$30m
(US$19m)
$179m
€188m
Harvest
100%
€91m
€94m
€112m
(€18m)
€50m
US$100m
n/a
€150m Launched
4%
4%
US$4m
US$4m
–
US$96m
–
<€1m
€6m
€144m
–
–
–
–
–
$142m
$5m
–
$41m
$49m
$45m
$7m
<$1m
–
Portfolio
Funds 2&31
Fund 4
Fund 52
Fund 63,4
Fund 72
Fund 85,6
1. Fund 2&3 capital uncommitted represents the over commitment allowance.
2. Fund 5 and Fund 7 are not consolidated within the Group Consolidated Financial Statements, here they are presented at 100%.
3. Data for Fund 6 is current at 31 March 2023.
4. Fund size is €150m plus an over commitment allowance of 25%.
5. Investments warehoused on OBL balance sheet, fund size subject to completion of the debt facility.
6. The principal protection insurance extends the indemnity to €270 million which facilitates a second series or an upsize of series I.
Annual Report 2023
31
Directors’ report continued
Investment activity (continued)
Fund performance
The following table demonstrates ROIC and IRR for completed investments.
Balance sheet
Fund 1
Funds 2&3
Fund 4
Fund 5
Fund 6
Total
1 Year
3 Year
5 Year
Completed investment performance1
ROIC
1.01x
(0.20x)
1.16x
(0.96x)
2.87x
2.65x
0.02x
IRR
17%
–
36%
(43%)
127%
50%
–
ROIC
2.12x
0.51x
0.08x
(0.25x)
1.05x
2.08x
0.74x
IRR
31%
10%
3%
75%
54%
60%
22%
ROIC
1.70x
0.40x
0.84x
n/a
n/a
n/a
0.99x
IRR
35%
12%
64%
n/a
n/a
n/a
29%
1. Fund 1 to Fund 5 since their respective dates of inception and for Fund 6 since 2019 merger.
Specific investments
The Group’s balance sheet investment in the Brisbane Floods class action, Wivenhoe Dam, completed in June 2023. A final tranche of
income of $16.0 million was recognised and reflects the finalisation of the loss assessment by external counsel. The final cash distribution
of $13.7 million is anticipated to be received in late August 2023 and is reflected in the balance sheet receivable balance at 30 June 2023.
The Westgem investment on the Group’s balance sheet remains fully impaired. In June 2023, the High Court of Australia declined to grant
special leave to appeal the Supreme Court of Western Australia Court of Appeal's decision.
The appeal petition to the US Supreme Court in relation to the fully impaired Fund 4 investment was denied in April 2023. As there are no
further avenues for appeal, the investment was removed from our portfolio. The EPV of this investment was $1.6 billion with an estimated
completion date of FY24.
Shareholders
Dividends
The Company considers its capital management options in light of the cash position and performance of the Group at the time as well as
the likely demand for cash over the ensuing 12-month period. In determining the appropriate mechanism to deliver returns to
shareholders, the Board will consider both semi-annual dividends and share buy-backs. Relevant considerations include the source and
nature of income and the prevailing share price relative to the intrinsic value and the franking credit balance.
Based on the FY23 profit result and expected capital requirements, the Directors have not declared an interim or final dividend for the
year (2022:Nil).
Shareholder returns
The following summary of operating results reflects the Group’s performance for the year ended 30 June 2023:
Basic loss per share (cents per share)
Diluted loss per share (cents per share)
Return on assets (NPAT/average assets)
Return on equity (NPAT/average equity)
Net debt/equity ratio %1
2023
(11.50)
(11.50)
0.1 %
0.1 %
8.2 %
2022
(17.17)
(17.17)
0.6 %
0.9 %
n/a
1. As cash and short term deposits are greater than total debt, net debt (cash and short term deposits less total debt) is positive as at 30 June 2022.
Shares issued during the year
On 7 December 2022, the Company issued 7,755,446 shares to the vendors of OBE relating to the 2019 acquisition in satisfaction of the
third tranche of variable deferred consideration and second and final tranche of deferred consideration.
On 30 August 2022, the Company issued 2,768,359 shares relating to the FY20 LTIP vesting.
Share options – unissued shares
As at 30 June 2023 there were 15,421,416 share performance rights on issue (2022: 15,929,183).
32
Omni Bridgeway
Risk management
Risk management framework
Omni Bridgeway’s risk management framework is overseen by the Board and includes our Risk Policy, Risk Strategy and Risk Appetite
Statement setting out the arrangements for identification, assessment, monitoring, management and reporting of risks. Our Risk Policy
describes our approach to risk management and as a key corporate governance policy is available on the OBL website. The Policy is
supported by our Risk Appetite Statement which is set by the Board to be aligned with our business strategy.
Our Audit and Risk Committee receives at least quarterly reporting on risks measured against our risk appetite and ensures that we
maintain our robust processes and systems for management of our identified current and anticipated risks. The Board requests and
receives additional reporting on risk culture across the Group, including the results of risk culture surveys.
In FY23, we continue to evolve our risk management focus to respond to new and emerging risks whilst remaining focused on the quality
of our investment management processes. The below ‘Key risks and responses’ table sets out some of our material risks and risk
treatment responses.
Key risks and responses
Risk
Description
Risk response
Investment
governance
and sourcing
Our biggest risk is our ability to maintain a high
standard of investment decision making which has
underpinned our historical success.
Risk management policies and procedures are designed to ensure
the continued high quality of investment decisions as well as
diversity and reduced concentration risk. The role of the
investment committees is a key pillar of our investment risk
management process.
Pricing structure which increases with duration, portfolio
diversification and active use of the secondary market are the
primary ways in which we have sought to navigate duration risk.
The timing of the completion of our investments is
uncertain and generally entirely outside of our
control. If a material number of investments are
delayed this can produce a high level of earnings
volatility.
Increased competition in any market may result in a
potential reduction in market share or, at the least,
an on-going challenge to convert a larger portion of
the addressable market in order to maintain growth.
We manage competition through diversity of products and
operating markets and ownership of investments while relying on
our sourcing and underwriting expertise. As an established market
leader we will continue to maintain pricing integrity and a floor in
our pricing.
Investment
duration
Competition
Capital raising
Cybersecurity
The rate of growth of the business in terms of
investment commitments requires us to have the
ability to raise capital, enabling us to be competitive
in the markets in which we operate. The global
increase in interest rates has increased the
competition for third party capital.
A major systems and/or data breach may have
material adverse consequences for the business and
its reputation. The business holds a high level of
sensitive case material surrounding its investments, a
data breach could result in the loss of privilege in
such material and a breach of confidentiality
obligations.
We seek to maintain our excellent track record through continued
focus on risk management across all facets of the business and
have a continuous engagement program with private capital
markets.
The Board has oversight of our Cybersecurity Risk Management
Framework and receives regular reporting on cybersecurity
matters. Our cybersecurity risk management framework is
supported by our cybersecurity, electronic communications,
privacy, data breach management and other cyber related policies
that set out requirements for ensuring the security of the
confidential and personal information maintained in our systems
and mechanisms for escalating and resolving breaches. Our
employees are a critical line of defence in cybersecurity risk
detection and we employ regular cybersecurity training, friendly
phishing exercises as well as simulated cyber threat scenario
workshops to reinforce cyber awareness.
We invest in security hardware, software and systems and regularly
submit to external IT audits to prevent attacks and detect (and
learn from) new attack tools, methodologies and targets.
As part of our continuous focus on cybersecurity and in response
to an increased focus globally on cybersecurity risks, we have
undertaken an assessment and review of our cybersecurity risk
management practices to benchmark against the NIST framework
and ensure that we are meeting global best practices and
standards in cybersecurity.
The group has developed an effective compliance risk
management framework to ensure that we meet our global
regulatory requirements.
The Global Head of Risk and Compliance leads the risk and
compliance function and ensures that the compliance framework
is supported by global policies as well as a robust compliance
monitoring, Board reporting and training program to instill best
practice across our international network. Our global policies
include internal breach reporting procedures as well as a
Whistleblower Policy to enable policy violations and misconduct to
be reported, escalated and managed using a transparent process.
Annual Report 2023
33
Regulatory,
compliance
and conduct
We are subject to global regulatory requirements. A
material failure in compliance may result in a liability
for damages, regulatory fines and reputational
damage.
Directors’ report continued
Significant events after reporting date
Apart from that disclosed in this report, no other circumstances have arisen since 30 June 2023 that have significantly affected, or may
significantly affect the consolidated entities’ operations, the results of those operations, or the consolidated entities state of affairs in the
future financial years.
Likely developments and expected results
The Group does not provide forecasts considering the difficulty in estimating the timing of the finalisation of its investments but provides
an indication of its view of the possible completion dates and EPV in the quarterly portfolio reports.
The Group expects demand for its funding to continue in each of its markets. Competition is expected to increase in coming years with
new entrants in each market. Litigation funding is considered non-cyclical or uncorrelated to underlying economic conditions.
Environmental regulation and performance
The Consolidated Entity’s operations are not presently subject to significant environmental regulation under the laws of the
Commonwealth and the States of Australia.
Indemnification and insurance of directors and officers
During the financial year, the Company has paid premiums in respect of an insurance contract insuring all the directors and officers
of the Group against any legal costs incurred in defending proceedings for conduct other than, amongst others:
(a) wilful breach of duty; or
(b) contravention of sections 182 or 183 of the Corporations Act 2001, as may be permitted by section 199B of the Corporations Act
2001.
The total amount of premiums paid under the insurance contract referred to above was $2.3 million during the current financial year
(2022: $2.2 million).
Indemnification of auditors
To the extent permitted by law, the Company has agreed to indemnify its auditors, as part of the terms of its audit engagement against
claims by third parties arising from the audit (for an unspecified amount). No payment has been made to indemnify BDO during or since
the financial year.
Directors’ meetings
The number of meetings of directors held during the period under review, and the number of meetings attended by each director, were
as follows:
Board
Meetings
Project
Sub Committee
Meetings
Audit and Risk
Committee
Remuneration
Committee
Nomination
Committee
Corporate
Governance
Committee
9
9
9
8
3
9
9
2*,3
2
2
1,1*
1,1*
1*
2
1,1*
1*
4
4
3*
1*
2
4
4
1
3
3
1*
0
2
3
3
0
1
1
1*
1*
0
1
1
1
2
2
2*
0
0
2
2
1*
Total number of meetings held:
Meetings attended:
M Kay
A Saker
R van Hulst
M Bowen1
K Phin
C Feldmanis
M Green2
* Attended by invitation
1.
2.
Retired November 2022.
Appointed April 2023.
34
Omni Bridgeway
Letter from the Chair of the Nomination and Remuneration Committee
Dear Shareholder
I present the FY23 Remuneration Report on behalf of the Board of Directors (Board). As part of our ongoing commitment to
transparency and responsible corporate governance, this report outlines our remuneration framework and practices during
the fiscal year.
As our qualitative investment business is characterised by an average three-year investment cycle, we believe it is important
that our remuneration framework aligns with the overarching goals of our long-term business strategy while providing an
effective mechanism to attract, motivate and retain high calibre employees with a long-term outlook.
The remuneration structure for KMP, senior executives and investment managers is comprised of both fixed and “at risk”
components. The fixed remuneration component is benchmarked against market standards in our various operating regions.
The “at risk” element is structured as:
• a Short-Term Incentive Plan (STIP) that provides for an annual cash payment, subject to the achievement of key financial
and non-financial performance objectives; and
• an equity based Long-Term Incentive Plan (LTIP) that provides for an annual grant of performance rights with a three-year
vesting cycle tested against the Company’s Total Shareholder Return (TSR) and Compound Annual Growth Rate (CAGR) of
the investment asset balance.
The Board conducted a review of the remuneration framework in 2021 and, as part of this process, Mercer confirmed that
the principles and structure of our STIP and LTIP are well-aligned with industry peers and the broader market. Following this
review, the Board determined to increase the TSR weighting in the LTIP vesting conditions to 80% and reduce the weighting of
the investment asset CAGR to 20%. In addition, forfeiture and clawback provisions were incorporated into the LTIP rules
which maintain alignment of shareholder and employee’s interests beyond vesting.
The foundations of the STIP and LTIP have remained constant, whilst the performance hurdles and other elements have
evolved with the business to ensure executive reward and shareholder value remain closely aligned. This is reflected in the
vesting determination at the conclusion of FY23:
• 50% of LTIP performance rights are due to vest based upon the relevant metrics for their three-year performance between
1 July 2020 and 30 June 2023.
•
in light of the statutory loss in FY23, there have been no STIP payments awarded to senior employees.
The Board values the insights and perspectives of shareholders and will continue to assess the appropriateness of the
performance hurdles for the at-risk remuneration component to ensure they are aligned with the creation of long-term
shareholder value. Given the importance of our people to the success of OBL, our goal is to incentivise and reward our
exceptional team in the optimal manner for all stakeholders.
Yours faithfully
Karen Phin
Chair of the Nomination and Remuneration Committee
Annual Report 2023
35
Directors’ report continued
Remuneration Report (Audited)
This Remuneration Report outlines the director and Key Management Personnel (KMP) remuneration arrangements of the Group in
accordance with the requirements of the Corporations Act 2001 (Cth) and its Regulations. For the purposes of this report, KMP of the
Group are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the
Group, directly or indirectly, including any director (whether executive or otherwise) of Omni Bridgeway Limited (OBL).
Key management personnel
Details of OBL’s KMP for the 2023 financial year are:
(i) Directors
Michael Kay
Andrew Saker
Non-Executive Director and Chairman
Managing Director & CEO and Chief Strategy Officer - US
Raymond van Hulst
Executive Director, Managing Director and Co-Chief Investment Officer – EMEA
Michael Bowen
Non-Executive Director (retired on 30 November 2022)
Karen Phin
Non-Executive Director
Christine Feldmanis
Non-Executive Director
Michael Green
Non-Executive Director (formally appointed on 28 April 2023)
(ii) Executives
Stuart Mitchell
Group Chief Financial Officer (resigned effective 30 September 2022)
Jeremy Sambrook
Group General Counsel and Company Secretary
Guillaume Leger
Global Chief Financial Officer (appointed 1 September 2022)
There were no other changes to OBL’s KMP after the reporting date and before the financial report was authorised for issue.
Remuneration Committee
The Remuneration Committee determines and reviews the remuneration arrangements for the Board and KMP. This involves an
assessment of the appropriateness of the nature and amount of the emoluments on a periodic basis by reference to relevant
employment market conditions.
Mercer Consulting (Australia) Pty Ltd was engaged in 2021 to review our remuneration structure. The review led to some adjustment in
the STIP and LTIP. The Board is satisfied that the review was free from undue influence by eligible participants, KMP or other LTIP
participants.
Remuneration philosophy
The performance of the Group is heavily dependent upon the quality of its directors, KMP and staff generally. Accordingly, the Company
must attract, motivate, and retain high calibre directors and personnel.
The Group embodies the following principles in its remuneration framework:
• determination of appropriate market rates for the fixed remuneration component recognising that the majority of investment
professionals are most comparable to partners in private practice professional services businesses; and
• establishment of appropriate performance hurdles for the variable at-risk remuneration component.
Remuneration structure
The structure of non-executive director and executive or KMP remuneration structures are separate and distinct.
Non-executive director remuneration structure
All non-executive directors enter into service agreements with the Company in the form of a letter of appointment. The letter summarises
the Board policies and terms, including remuneration, relevant to the office of Director.
Fees and payments to non-executive directors reflect the demands which are made on, and the responsibilities of, the non-executive
directors.
Non-executive directors’ fees and payments totalled $601,101 (including superannuation), as disclosed in the following tables in this
report.
At the 2015 Annual General Meeting, shareholders approved payments up to $700,000 to non-executive directors.
There are no retirement allowances for non-executive directors, nor do they have a variable at-risk remuneration component.
Non-executive directors may elect to have a portion of their remuneration paid into their personal superannuation plans.
36
Omni Bridgeway
Remuneration Report (Audited) (continued)
Executive & KMP remuneration structures
Objective
The Group aims to reward executives, KMP and other staff with a level and mix of compensation elements commensurate with their
position and responsibilities, within the following framework:
• reward for Group and individual performance against targets set to appropriate benchmarks;
• align the interests with shareholders;
•
link rewards with the internal strategic goals of the Group; and
• ensure total compensation is competitive by market standards.
Structure
All executives and KMP have employment contracts. Details of these contracts are provided below in the following Executive & KMP
Employment Contracts table.
Remuneration consists of two key elements: (i) fixed component, consisting of base salary, retirement contributions, and benefits;
and (ii) variable at-risk component, consisting of (i) short-term incentive plan (STIP) and (ii) long-term incentive plan (LTIP).
Fixed remuneration component
The levels of fixed remuneration are reflective of employment conditions in respective locations and consider skills, experience, and
responsibility. Reference is generally to the private practice professional services market within which the Company competes for talent.
Investment managers are invariably at or around the partner level of legal practices prior to joining the Group.
Fixed compensation is reviewed annually by the Nomination and Remuneration Committee. The process consists of a review of Group and
individual performance, relevant comparative compensation in the market and internally and, where appropriate, external advice on
policies and practices.
Variable at-risk remuneration component
(short & long-term)
Objective
The objective of the variable compensation component is to reward executives in a manner aligned with the objectives and internal key
performance indicators of the Group. The total potential incentive available is set at a level to provide sufficient incentivization to achieve
the operational and strategic targets at a reasonable cost.
Structure
There is a STIP based on one-year performance and a LTIP tied to three-year performance. The STIP & LTIP are products of and subject
to external remuneration review and are reflective of industry standards.
Short-Term Incentive Plan
The purpose of STIP is to provide an annual ‘at-risk’ incentive to participants linked to the achievement of specific financial and
non-financial performance goals. The STIP performance measures reflect the core drivers of short-term performance and also provide
a framework for delivering sustainable value to the Group, its shareholders and other stakeholders.
Long-Term Incentive Plan
The LTIP is tied to the Group’s long-term performance. It encourages equity ownership and directly aligns shareholders’ and participants’
interests, whilst also not being a cash drain.
There are 2 tranches of LTIP. The relative proportion between each can be changed by the Remuneration Committee each year.
Key Features of Variable Remuneration Component
STIP
LTIP
Participants
Participation % of TFR
Executive directors & KMP
(participant may substitute their
allocation with rights equivalent to
LTIP rights)
Senior employees
All executive directors & KMP.
Senior employees
–
max 40%
Pre-1 July 2021 employees:
– LTIP Executive
– Other
Post-1 July 2021 employees:
– Level 1 participant max 40%
– Level 2 participant max 35%
– Level 3 participant max 30%
– Level 4 participant max 20%
Pre-1 July 2021 employees:
– Executive
– Other
Post-1 July 2021 employees:
– Executive
– Senior participant
– Junior participant
max 100%
max 60%
max 100%
max 60%
max 30%
Annual Report 2023
37
Directors’ report continued
Remuneration Report (Audited) (continued)
Key Features of Variable Remuneration Component
Payment frequency
and type
STIP
Annual in cash
Performance criteria
(i) Group’s financial
Positive consolidated net profit
before tax for the year, as a gating
requirement.
(ii) Individual
Key performance indicators (KPIs) are
targeted to the individual’s role and
their ability to influence the strategic
and commercial objectives of the
Group incorporated in the approved
business plan and budget, risk and
compliance policies and procedures,
and cultural, leadership and
behavioural expectations
Other
LTIP
Annual grant of performance rights with 3-year vesting
Each right over OBL ordinary shares is issued for
no consideration or exercise price
The number of rights issued at the beginning of each service
period is determined by reference to individual’s TFR and the
Company’s VWAP at either (i) 30 June of the preceding Financial
Year; or 31 December of the preceding Half Financial Year,
depending on when a participant became eligible to participate in
the LTIP
Tranche 1 – Total Shareholder
Return (TSR) = 80%
OBL’s TSR compared to a peer
group comprising entities from
the ASX diversified financials
industry group with a market
capitalisation of < $1bn
Tranche 2 – Capital deployed =
20%
The amount of capital deployed
to litigation investments
Tranche 1 – (TSR) = 80%
Vesting depends on Company’s
Percentile ranking over the
vesting period compared to the
peer group:
Tranche 2 – Capital deployed =
20%
Vesting depends on the CAGR
of Capital deployed over the
vesting period
Percentile rank
less than 50th
equal to 50th
between 50-75%
% tranche 1
– TSR vesting
nil
50%
50-100%
determined on a
straight line basis
CAGR
less than 5%
equal to 5%
between 5 -7%
% tranche 2 –
Funds deployed
nil
50%
50-100%
determined on a
straight line basis
75th or above
100%
7% or above
100%
– Good leaver/bad leaver provisions in respect to unvested
rights
– Malus event provisions in respect to fraud, dishonest
behaviour, or gross misconduct
– 12-month clawback provisions.
38
Omni Bridgeway
Remuneration Report (Audited) (continued)
Executive & KMP Employment Contracts
Andrew Saker Managing Director & CEO and Chief Strategy Officer – US
Contract commenced
5 January 2015
Gross annual salary package
$1,250,000 (excluding super) + a USA cost-of-living allowance
Salary review
Notice period
Termination payment arrangements
By the Board from time to time
6 months by the Group or 12 months by the employee
As approved at the 21 November 2018 AGM (i) notice period (ii) 12
months’ salary, (iii) statutory entitlements, and (iv) If termination
occurs due to the provision of notice by OBL, or due to the
provision of notice by Mr Saker following a material breach by the
Company of the executive services agreement or a material
diminution of Mr Saker’s role or due to redundancy or Mr Saker’s
ill health, then, in addition to the above, Mr Saker shall be entitled
to receive a potential further amount calculated by reference to the
number of shares Mr Saker would have received had he retained
the good leaver proportion of his unvested performance rights. Any
such payment is contingent on the level of satisfaction of the
performance conditions associated with the referenced
performance rights and shall be calculated by reference to the 5-
day-VWAP calculated at the time such performance rights would
have vested if they had been held for the full performance period.
STIP / LTIP Participation level
Pre-1 July 2021 employee – “Executive”
Raymond van Hulst Executive Director, Managing Director and Chief Investment Officer – EMEA
Contract commenced
Gross annual salary package
Salary review
Notice period
Termination payment arrangements
21 April 2020
CHF620,000
Annually
3 months by either the Group or employee
Statutory entitlements, notice period, and subject to good or bad
leaver status unvested LTIP
STIP / LTIP Participation level
Pre-1 July 2021 employee – “Other”
New Contract
Based on Raymond van Hulst’s appointment as CEO, a new
contract will be entered into, effective on 26 October 2023.
Annual Report 2023
39
Directors’ report continued
Remuneration Report (Audited) (continued)
Executive & KMP Employment Contracts
Jeremy Sambrook Group General Counsel and Company Secretary
Contract commenced
18 January 2016
Gross annual salary package
$500,000 (including super)
Salary review
Notice period
Annually
6 months by either the Group or employee
Termination payment arrangements
Statutory entitlements, notice period, and subject to good or bad
leaver status unvested LTIP
STIP / LTIP Participation level
Pre-1 July 2021 employee – “Executive”
Stuart Mitchell Group Chief Financial Officer (handover to G. Leger effective 1 September 2022)
Contract commenced/concluded
12 November 2018 /30 September 2022
Gross annual salary package
$450,000 (including super)
Salary review
Notice period
Annually
6 months by either the Group or employee
Termination payment arrangements
Statutory entitlements, notice period, and subject to good or bad
leaver status unvested LTIP
STIP / LTIP Participation level
Pre-1 July 2021 employee – “Other”
Guillaume Leger Global Chief Financial Officer (handover from S. Mitchell effective 1 September 2022)
Contract commencement
12 August 2022
Gross annual salary package
USD500,000 plus safe harbour
Salary review
Notice period
Annually
3 months by either the Group or employee
Termination payment arrangements
Statutory entitlements, notice period, and subject to good or bad
leaver status unvested LTIP
STIP / LTIP Participation level
Post-1 July 2021 employee – Level 1 participant/Senior Participant
Appointment performance rights
Rights with personal KPI & continuity of service hurdles:
– 140,752 rights; for period 1 September 2022 – 30 June 2023
– 60,307 rights; for period 1 September 2022 – 30 June 2024
40
Omni Bridgeway
Remuneration Report (Audited) (continued)
Remuneration of Key Management Personnel
Fixed Remuneration
Variable
Remuneration
Short-term benefits
Post-
employment
Long-term
benefits
Share based
payments
Salary & fees
$
Cash bonus
accrued
$
Super-
annuation /
pension
$
Employee
entitlements
$
Share
performance
rights
$
Termination
payments
$
Total
remuneration
$
Performance
related
%
203,526
1,974,251
1,044,057
37,707
135,747
150,000
34,539
108,037
480,231
686,111
4,854,206
–
–
–
–
–
–
–
–
–
–
–
21,370
25,292
49,759
3,959
14,253
–
–
–
–
(1,566)
622,391
8,830
183,260
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
224,896
2,620,368
1,285,906
41,666
150,000
150,000
34,539
6,323
(100,704)
167,618
87,749
269,023
25,292
27,603
248,321
7,478
51,602
802,616
–
–
781,447
1,547,807
153,726
(14,235)
2,024,206
87,749
7,105,652
–
24%
14%
–
–
–
–
62%
32%
52%
2023
Directors
M. Kay
A. Saker
R. van Hulst
M. Bowen1
K. Phin
C. Feldmanis
M. Green
Executives
S. Mitchell2
J. Sambrook
G. Leger
Total
1. Michael Bowen retired on 30 November 2022.
2. Stuart Mitchell left the Group on 31 August 2022. The negative employee entitlements reflects the payments of his accrued entitlements.
Fixed Remuneration
Variable
Remuneration
Short-term benefits
Post-
employment
Long-term
benefits
Share based
payments
Salary & fees
$
Cash bonus
accrued
$
Super-
annuation /
pension1
$
Employee
entitlements
$
Share
performance
rights
$
Termination
payments
$
Total
remuneration
$
Performance
related
%
204,451
1,951,827
488,216
792,252
90,909
135,273
150,000
430,707
446,377
4,690,012
–
–
–
–
–
–
–
–
–
–
20,445
–
–
23,568
134,937
1,105,319
–
–
224,896
3,215,651
11,784
(873,526)
600,816
882,489
1,109,779
36,429
18,275
141,033
9,091
14,727
–
–
–
–
–
–
–
–
–
–
–
987,989
100,000
150,000
150,000
23,568
33,712
245,762
23,568
27,531
264,042
–
–
733,749
761,518
163,180
(659,071)
2,356,972
882,489
7,433,582
–
34%
54%
14%
–
–
–
33%
35%
2022
Directors
M. Kay
A. Saker
H. McLernon
R. van Hulst
M. Bowen1
K. Phin
C. Feldmanis
Executives
S. Mitchell
J. Sambrook
Total
The following table outlines the proportion of maximum STIP earned by KMP in the 2023 financial year.
2023
Andrew Saker1
Raymond van Hulst
Stuart Mitchell
Guillaume Leger
Jeremy Sambrook 1
Maximum STIP
opportunity
(% of TFR)
Maximum STIP
opportunity
($)
% of
maximum
earned
–
25%
40%
–
–
–
193,945
180,000
–
–
–
–
–
–
–
% of STIP
forfeited
–
100%
100%
–
–
1. Elected to receive 100% of variable remuneration as LTIP.
Non-executives (M. Kay, M. Bowen, K. Phin, C. Feldmanis, M. Green) did not participate in STIP. They have not been included in the table.
Any awards of STIP for FY23 will, in accordance with the Company’s remuneration cycle, be determined in the coming months.
Annual Report 2023
41
Directors’ report continued
Remuneration Report (Audited) (continued)
Share performance rights – Granted and vested during the year – Key Management Personnel
Granted during the year
Tranche 1
Tranche 2
Total
Grant
date
Vesting
date
Expiry
Date
Awarded
during the
year
Fair value per
rights at
grant date 1
Awarded
during the
year
Fair value per
rights at
grant date 1
awarded
during the
year
value granted
during the
year
Vested during
the years
Number
$
Number
$
Number
$
Number
Value
remaining to
be expensed
to profit &
loss
$
01-Jul-22
30-Jun-25
01-Jul-37
129,431
01-Jul-22
30-Jun-25
01-Jul-37
90,080
1.85
1.85
32,358
22,520
3.32
3.32
161,789
346,876
131,949
146,582
112,600
241,414
30,353
204,027
01-Jul-22
30-Jun-25
01-Jul-37
–
01-Jul-22
30-Jun-25
01-Jul-37
117,479
01-Jul-22
30-Jun-25
01-Jul-37
170,531
14-Jul-22
30-Jun-23
14-Jul-37
140,752
1.85
1.85
1.85
3.85
–
29,370
42,633
3.32
3.32
3.32
–
–
21,031
–
146,849
314,844
26,147
292,295
213,164
457,024
–
304,682
–
–
140,752
541,895
140,752
–
14-Jul-22
30-Jun-24
14-Jul-37
–
–
60,307
3.78
60,307
227,659
–
108,379
648,273
187,188
835,461 2,129,712
350,232 1,055,965
2023
Executive Directors
A. Saker
R. van Hulst
Executives
S. Mitchell
J. Sambrook
G. Leger
G. Leger Bonus T12
G. Leger Bonus T22
Total
1. The performance rights vested in current year is subject to fx adjustment, which has been estimated for the year end reporting purpose.
2. Guillaume Leger's T1 and T2 Bonus is included in addition to performance rights.
Granted during the year
Tranche 1
Tranche 2
Total
Grant
date
Vesting
date
Expiry
Date
Awarded
during the
year
Fair value per
rights at
grant date¹
Awarded
during the
year
Fair value per
rights at
grant date¹
awarded
during the
year
value granted
during the
year
Vested during
the years
Number
$
Number
$
Number
$
Number
Value
remaining to
be expensed
to profit &
loss
$
30-Nov-21
30-Jun-24
01-Jul-36
273,622
1.41
68,406
3.09
342,028
597,181
374,057
705,826
–
–
–
–
–
–
–
–
–
289,634
137,355
30-Nov-21
30-Jun-24
01-Jul-36
59,222
1.41
14,806
3.09
74,028
129,253
27,880
145,873
01-Jul-21
30-Jun-24
01-Jul-36
58,008
01-Jul-21
30-Jun-24
01-Jul-36
93,458
484,310
1.79
1.79
14,502
23,364
121,078
3.42
3.42
72,510
153,431
80,796
167,618
116,822
247,195
75,410
225,772
605,388 1,127,060
847,777 1,382,444
2022
Executive Directors
A. Saker
H. McLernon
R. van Hulst
Executives
S. Mitchell
J. Sambrook
Total
Non-executives (M. Kay, M. Bowen, K. Phin, C. Feldmanis, M. Green) did not participate in LTIP. They have not been included in the table.
The fair value of performance rights is determined at the time of grant as prescribed in AASB 2. For details on the valuation of
performance rights, including models and assumptions used, refer to Note 32.
Share performance right holdings of Key Management Personnel
Balance
1 July 2022
Number
Movement for the year
Balance
30 June 2023
Number
Total
Number
Granted as
remuneration
Number
Exercised
Number
Lapsed
Number
Total
Number
Vested
Number
Unvested
Number
2,808,524
162,068
367,122
112,600
–
(414,676)
2,760,970
2,334,547
(16,725)
(40,962)
216,981
30,353
262,152
311,674
–
–
146,849
414,223
–
–
–
(77,274)
(26,147)
–
184,878
432,376
414,223
154,643
168,705
140,752
426,423
186,628
30,235
263,671
273,471
3,544,418
1,040,794
(16,725)
(559,059)
4,009,428
2,829,000
1,180,428
2023
Executive Directors
A. Saker
R. van Hulst
Executives
S. Mitchell
J. Sambrook
G. Leger
Total
42
Omni Bridgeway
Remuneration Report (Audited) (continued)
Balance
1 July 2021
Movement for the year
Balance
30 June 2022
Total
Number
Granted as
remuneration
Number
Exercised
Number
Lapsed
Number
Total
Number
Vested
Number
Unvested
Number
342,028
–
(60,675)
2,808,524
2,202,598
–
(1,723,993)
(258,927)
(4,612)
407,435
162,068
289,634
27,880
605,926
117,801
134,188
2,527,171
2,390,355
92,652
202,748
207,084
5,420,010
74,028
72,510
116,822
605,388
(13,106)
(12,232)
262,152
311,674
133,612
142,558
128,540
169,116
(1,723,993)
(349,552)
3,951,853
2,796,282
1,155,571
Non-executives (M. Kay, M. Bowen, K. Phin, C. Feldmanis, M. Green) did not participate in LTIP. They have not been included in the table.
Interests of Key Management Personnel
–
–
–
–
–
–
–
–
–
Balance
1 July 2022
Received as
remuneration
Shares
Share
performance
rights exercised
Number
Number
Number
Net change
other1
Number
Bonds
Notes
Balance
30 June 2023
Number
Number
Number
570,000
182,068
3,045,379
1,114,620
27,266
60,656
134,941
8,446
–
5,143,376
–
–
–
–
–
–
–
–
–
–
–
–
–
–
570,000
182,068
16,725
1,669,179
4,731,283
–
–
–
–
–
–
–
–
–
–
–
–
1,114,620
27,266
60,656
134,941
8,446
–
16,725
1,669,179
6,829,280
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Balance
1 July 2021
Received as
remuneration
Shares
Share
performance
rights exercised
Number
Number
Number
Net change
other1
Number
Bonds
Notes
Balance
30 June 2022
Number
Number
Number
470,000
182,068
4,185,982
2,153,551
1,114,620
27,266
45,656
134,941
8,446
8,322,530
–
–
–
–
–
–
–
–
–
–
–
–
100,000
–
1,723,993
(5,909,975)
570,000
182,068
–
891,828
3,045,379
1,114,620
1,500
–
–
15,000
27,266
60,656
–
–
134,941
8,446
1,723,993
(4,903,147)
5,143,376
1,500
–
–
–
–
–
–
–
–
–
–
–
–
–
–
80
–
–
80
2022
Directors
A. Saker
H. McLernon
R. van Hulst
Executives
S. Mitchell
J. Sambrook
Total
2023
Directors
M. Kay
A. Saker
R. van Hulst
M. Bowen
K. Phin
C. Feldmanis
Executives
S. Mitchell
J. Sambrook
G. Leger
Total
2022
Directors
M. Kay
A. Saker
H. McLernon
R. van Hulst
M. Bowen
K. Phin
C. Feldmanis
Executives
S. Mitchell
J. Sambrook
Total
1. Net change other relates to shares bought or sold on market.
Shares above are held nominally by the Directors or the other key management personnel.
Annual Report 2023
43
Directors’ report continued
Remuneration Report (Audited) (continued)
Loans to Key Management Personnel
There have been no loans provided to KMP in 2023 (2022: nil).
Transactions with Key Management Personnel
During the period, the Group obtained legal advice from a legal firm associated with Michael Bowen, Thomson Geer Lawyers of $55,012
(2022: $37,886). The legal advice was obtained at arm’s length. The Group engages a number of different law firms for its external legal
advice and its relationship with Thomson Geer is not exclusive. Michael Bowen did not participate in any board decisions to appoint
external counsel when Thomson Geer was being considered for engagement. Refer to Note 36 for details.
– End of Remuneration Report –
44
Omni Bridgeway
Auditor’s Independence Declaration
Annual Report 2023
45
Consolidated Statement of Comprehensive Income
for the year ended 30 June 2023
Continuing operations
Revenue from contracts with customers
Interest revenue
Net gain on derecognition of litigation investments - intangible assets
Net gain on disposal of litigation investments - purchased claims
Net gain on disposal of subsidiaries
Other income
Total income
Finance costs
Amortisation of litigation investments - claims portfolio
Depreciation expense
Employee benefits expenses
Corporate and office expenses
Other expenses
Impairment expense and adverse costs - litigation investments
Share of loss/(profit) in associates
Loss before tax and fair value adjustments
Fair value adjustment of financial assets and liabilities
Loss before tax
Income tax benefit
Profit for the year
Attributable to:
Equity holders of the Parent
Non-controlling interests
Note
2
3
4
12
34
5
6(a)
6(b)
6(c)
6(d)
6(e)
6(f)
6(g)
35
7
8
34
Other comprehensive income
Items that may be subsequently reclassified to profit or loss:
Movement in foreign currency translation reserve
Items that will not be subsequently reclassified to profit or loss:
Movement in foreign currency translation reserve attributed to non-controlling interests
34
Other comprehensive income net of tax
Total comprehensive income for the year
Attributable to:
Equity holders of the Parent
Non-controlling interests
Consolidated
2023
$'000
11,469
9,009
44,666
1,019
46,078
4,569
116,810
2,688
4,042
3,917
73,992
18,146
6,790
13,102
555
(6,422)
2,610
(3,812)
(4,674)
862
2022
$'000
21,867
8,368
49,029
790
–
9,127
89,181
1,397
5,650
3,455
59,149
17,411
3,602
8,120
(387)
(9,216)
7,424
(1,792)
(8,274)
6,482
(31,659)
32,521
(45,645)
52,127
6,340
8,599
6,291
12,631
13,493
10,465
19,064
25,546
(25,319)
38,812
(37,046)
62,592
Loss per share attributable to the equity holders of the Company (cents per share)
Basic loss per share (cents per share)
Diluted loss per share (cents per share)
8
8
(11.50)
(11.50)
(17.17)
(17.17)
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
46
Omni Bridgeway
Consolidated Statement of Financial Position
as at 30 June 2023
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Contract costs
Other assets
Total current assets
Non-current assets
Trade and other receivables
Litigation investments - claims portfolio
Litigation investments - purchased claims
Litigation investments - intangible assets
Litigation investments - financial assets
Litigation investments - investment in associates
Goodwill
Right of use assets and other plant and equipment
Investment in associates
Contract costs
Other assets
Deferred tax assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Income tax payable
Provisions
Lease liabilities
Debt securities
Litigation investments - deferred consideration
Other financial liabilities
Total current liabilities
Non-current liabilities
Provisions
Lease liabilities
Borrowings
Litigation investments - deferred consideration
Other financial liabilities
Deferred tax liabilities
Other liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Accumulated losses
Equity attributable to equity holders of the parent
Non-controlling interests
Total equity
Note
Consolidated
2023
$'000
2022
$'000
18
22
23
24
22
11
12
13
14
35
16
25
35
23
24
7
26
27
28
19
15
29
27
28
19
15
29
7
20
21(a)
21
34
117,016
140,770
939
8,000
158,966
127,754
939
5,424
266,725
293,083
45,661
125,775
37,423
370,085
7,078
56,336
103,304
18,446
6,981
1,644
17,788
77,589
36,638
106,123
47,040
394,684
3,071
–
95,567
14,869
5,031
2,583
12,751
63,809
868,110
782,166
1,134,835
1,075,249
50,110
8,007
31,238
2,933
–
3,342
8,097
103,727
1,291
15,008
181,639
4,325
10,750
30,879
2,930
246,822
350,549
784,286
449,854
18,488
(119,491)
348,851
435,435
784,286
41,953
7,464
25,124
2,755
148,000
21,872
29,161
276,329
1,243
11,173
–
–
16,568
30,282
155
59,421
335,750
739,499
406,963
9,759
(87,832)
328,890
410,609
739,499
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
Annual Report 2023
47
Consolidated Statement of Cash Flows
for the year ended 30 June 2023
Cash flows from operating activities
Proceeds from litigation investments - claims portfolio
Payments for litigation investments - claims portfolio
Proceeds from management and performance fees
Payments to suppliers and employees
Interest received
Interest paid
Income tax paid
Note
Consolidated
2023
$'000
4,822
(16,792)
8,773
(106,014)
1,775
(19,428)
(3,564)
2022
$'000
13,434
(14,554)
12,586
(74,079)
318
(7,475)
(4,777)
Net cash flows used in operating activities
10
(130,428)
(74,547)
Cash flows from investing activities
Proceeds from litigation investments - purchased claims
Proceeds from litigation investments - intangible assets
Payments for litigation investments - intangible assets
Payments for litigation investments - capitalised overheads and employee costs
Payments for plant and equipment
Loans to related parties
Proceeds from disposal of subsidiaries
Net cash flows from investing activities
Cash flows from financing activities
Payments of borrowing costs
Repayment of debt
Proceeds from issue of borrowings
Payments of lease liabilities
Contributions from non-controlling interests
Distributions to non-controlling interests
Payments for debt insurance
Payments of share buy-back scheme
Net cash flows from/(used in) financing activities
Net (decrease)/increase in cash and cash equivalents held
Net foreign exchange difference
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
662
6,427
121,824
273,294
(157,725)
(105,559)
(7,786)
(730)
(1,443)
75,757
30,559
(9,436)
(149,440)
190,000
(4,335)
135,854
(6,734)
(1,850)
(2,107)
–
163,471
–
–
–
(4,576)
43,617
(93,166)
(113,335)
(9,998)
(1,660)
57,819
(42,050)
100
158,966
117,016
–
–
(74,294)
14,630
1,688
142,648
158,966
34
19
34
34
18
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
48
Omni Bridgeway
Consolidated Statement of Changes in Equity
for the year ended 30 June 2023
Share
based
payment
reserve
Foreign
currency
translation
reserve
Issued
capital
Option
premium
reserve
Convertible
note
reserve
Fund
equity
reserve
Accumulated
losses
Notes
$'000
$'000
$'000
$'000
$'000
$'000
$'000
Non-
controlling
interests
$'000
Total
$'000
Total
equity
$'000
406,963
32,273
(19,806)
3,404
3,832
(9,944)
(87,832) 328,890
410,609
739,499
–
–
–
–
–
–
6,340
–
6,340
13,839
(19,399)
–
9,868
30,712
–
–
(1,660)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
7,553
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(31,659)
(31,659)
32,521
862
–
6,340
6,291
12,631
–
(31,659) (25,319)
38,812
13,493
–
–
–
–
–
–
(2,789)
–
–
(5,560)
9,868
–
–
(5,560)
9,868
–
30,712
–
30,712
–
–
–
–
–
135,854
135,854
–
(93,166)
(93,166)
(1,660)
–
(1,660)
4,764
(49,518)
(44,754)
–
7,156
–
7,156
(7,156)
–
At 1 July 2022
Profit/(loss) for the year
Other
comprehensive income
Total
comprehensive
income/(loss) for the
year
Equity
Transactions:
Shares issued
Share based payments,
net of tax
Shares issued to settle
deferred and variable
deferred consideration
Contributions from
non-controlling
interests
Distributions to non-
controlling interests
Share Buy-back
Scheme
Deconsolidation of
Subsidiary
Changes in the
proportion of equity
held by non-controlling
interests
At 30 June 2023
20, 21, 34 449,854
22,742
(5,913)
3,404
3,832
(5,577)
(119,491) 348,851
435,435
784,286
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
Annual Report 2023
49
Consolidated Statement of Changes in Equity
continued
Share
based
payment
reserve
Foreign
currency
translation
reserve
Issued
capital
Option
premium
reserve
Convertible
note
reserve
Fund
equity
reserve
Accumulated
losses
Notes
$'000
$'000
$'000
$'000
$'000
$'000
$'000
Non-
controlling
interests
Total
equity
$'000
$'000
Total
$'000
389,501
28,327
(28,405)
3,404
3,832
(22,599)
(42,187) 331,873
430,474
762,347
–
–
–
–
–
–
8,599
–
8,599
6,522
(6,522)
–
10,468
10,940
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(45,645)
(45,645)
52,127
6,482
–
8,599
10,465
19,064
–
(45,645) (37,046)
62,592
25,546
–
–
–
–
–
–
–
–
–
–
10,468
–
10,468
–
10,940
–
10,940
–
–
–
43,617
43,617
–
(113,335) (113,335)
–
12,655
–
12,655
(12,739)
(84)
At 1 July 2021
Profit/(loss) for the year
Other comprehensive
income
Total comprehensive
income/(loss) for the
year
Equity
Transactions:
Shares issued
Share based
payments, net
of tax
Shares issued to
settle deferred and
variable deferred
consideration
Contributions from
non-controlling
interests
Distributions to
non-controlling
interests
Changes in the
proportion of
equity held by non-
controlling interests
At 30 June 2022
20, 21, 34 406,963
32,273
(19,806)
3,404
3,832
(9,944)
(87,832) 328,890
410,609
739,499
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
50
Omni Bridgeway
Notes to the Financial Statements
for the year ended 30 June 2023
About this Report
The financial report of Omni Bridgeway Limited (OBL, Company, Parent) and its subsidiaries (Group, Consolidated Entity) for the year
ended 30 June 2023 was authorised for issue in accordance with a resolution of the directors on 22 August 2023. The principal activities of
the entities within the consolidated group are:
i.
the investment into and management of Funds (or Fund-like structures) that are focused on investing into litigation and dispute
resolution matters globally; and
ii.
the continued holding of direct investments into similar litigation and dispute resolution matters.
Omni Bridgeway Limited (ABN 45 067 298 088) is a for profit company incorporated and domiciled in Australia and limited by shares that
are publicly traded on the Australian Securities Exchange (ASX code: OBL).
This section sets out the basis upon which the Group’s Financial Statements are prepared. Specific accounting policies are described in
the respective notes to the Financial Statements. This section also shows information on new or amended accounting standards and
interpretations and their impact on the financial position and performance of the Group.
a. Basis of preparation
The financial report is a general purpose financial report, which has been prepared in accordance with the requirements of the
Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards
Board. The financial report has been prepared on a historical cost basis, except for the financial assets and liabilities that have been
measured at fair value.
The amounts contained within this report have been rounded to the nearest $1,000 or $100,000 (where rounding is applicable) under the
option available to the Company under ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191.
b. Compliance with IFRS
The financial report also complies with International Financial Reporting Standards (IFRS), as issued by the International Accounting
Standards Board.
c. Basis of consolidation
The consolidated financial statements comprise the financial statements of Omni Bridgeway Limited and its subsidiaries at 30 June 2023.
Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability
to affect those returns through its power over the investee.
The Group includes Fund collective investment vehicles over which Omni Bridgeway Limited has the right to direct the relevant activities
of the Fund under contractual arrangements and has exposure to variable returns from the Fund collective investment vehicles. See Note
34.
The financial results of the subsidiaries are prepared for the same reporting period as the Company, using consistent accounting policies.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.
In preparing the consolidated financial statements, all intercompany balances and transactions, income and expenses and profits and
losses resulting from intra-group transactions have been eliminated in full.
Foreign currency
The Group’s consolidated financial statements are presented in Australian dollars, which is also the Parent’s functional currency. The
Group determines the functional currency of each entity in the Group. The Group uses the direct method of consolidation and on disposal
of a foreign operation, the gain or loss that is reclassified to profit or loss reflects the amount that arises from using this method.
Transactions and balances
Transactions in foreign currencies are initially recorded by each entity in the Group at their respective functional currency spot rates at the
date the transaction first qualifies for recognition. Monetary assets and liabilities denominated in foreign currencies are converted at the
functional currency spot rates of exchange at the reporting date.
Exchange differences arising on settlement or conversion of monetary items are recognised in profit or loss.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the
dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates
at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items measured at fair value is
treated in line with the recognition of gain or loss on change in fair value of the item (i.e. translation differences on items whose fair value
gain or loss is recognised in other comprehensive income or profit or loss are also recognised in other comprehensive income or profit
or loss, respectively).
Group companies
On consolidation, the assets and liabilities of foreign operations are translated into Australian dollars at the rate of exchange prevailing
at the reporting date and their statements of profit or loss are translated at exchange rates prevailing at the dates of the transactions.
The exchange differences arising on translation for consolidation purposes are recognised in other comprehensive income. On disposal
of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is recognised in profit
or loss.
Annual Report 2023
51
Notes to the Financial Statements continued
About this Report (continued)
d. New and amended accounting standards and interpretations adopted during the year
The accounting policies adopted are consistent with those followed in the preparation of the Group’s annual consolidated financial
statements for the year ended 30 June 2022. All new and amended accounting standards and interpretations effective from 1 July 2022
were adopted by the Group with no material impact.
e. New and amended accounting standards and interpretations issued but not yet effective
The new and amended standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Group’s
financial statements that the Group reasonably expects will have an impact on its disclosures, financial position or performance when
applied at a future date, are disclosed below. The Group intends to adopt these new and amended standards and interpretations, if
applicable, when they become effective. Of the other standards and interpretations that are issued, but not yet effective, as these are not
expected to impact the Group, they have not been listed.
Amendments to IAS 1: Classification of Liabilities as Current or Non-current
In January 2020, the IASB issued amendments to paragraphs 69 to 76 of IAS 1 to specify the requirements for classifying liabilities as
current or non-current. The amendments clarify:
• What is meant by a right to defer settlement
• That a right to defer must exist at the end of the reporting period
• That classification is unaffected by the likelihood that an entity will exercise its deferral right.
That only if an embedded derivative in a convertible liability is itself an equity instrument would the terms of a liability not impact its
classification.
The amendments are effective for annual reporting periods beginning on or after 1 January 2023 and must be applied retrospectively. The
Group has assessed the impact of the amendments on current practice and it is not expected to have a material impact on the Group.
Amendments to IAS 12 – Deferred Tax related to Assets and Liabilities arising from a Single Transaction
On 7 May 2021, the IASB issued amendments to IAS 12, requires companies to recognise deferred tax on transactions that, on initial
recognition, give rise to equal amounts of taxable and deductible temporary differences. The amendments are effective for annual
reporting periods beginning on or after 1 January 2023. The amendments should be applied on a modified retrospective basis. The
amendments are not expected to have a material impact on the Group.
f. Significant accounting judgements, estimates and assumptions
The preparation of the Group’s consolidated financial statements requires management to make judgements, estimates and assumptions
that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of
contingent liabilities at the date of the consolidated financial statements.
Key judgements
In the process of applying the Group’s accounting policies, management has made the following judgements, which have the most
significant effect on the amounts recognised in the consolidated financial statements:
Consolidation of entities in which the Group holds less than a majority voting right (de facto control)
The Group has assessed the entities in which it has an interest to determine whether or not control exists and the entity is, therefore,
consolidated into the Group. These entities are listed in Notes 33 and 34. For those entities consolidated with an interest less than 51%,
the Group uses judgement to determine that it has power to direct the relevant activities of the investee under contractual arrangements
and sufficient exposure to variable returns. In reviewing whether the Group has power and sufficient exposure to variable returns the
Group considers whether it is acting as a principal or as an agent of the entity.
Taxation
The Group’s accounting policy for taxation requires management’s judgement in assessing whether deferred tax assets and certain
deferred tax liabilities are recognised on the Statement of Financial Position. Deferred tax assets, including those arising from tax losses,
capital losses and temporary differences, are recognised only where it is considered more likely than not that they will be recovered, which
is dependent on the generation of sufficient future taxable profits.
Assumptions about the generation of future taxable profits depend on management’s estimates of future cash flows as contained in the
Group’s yearly budget. These depend on estimates of future income, operating costs, capital expenditure, dividends and other capital
management transactions.
Judgements and assumptions are also required about the application of income tax legislation. These judgements and assumptions are
subject to risk and uncertainty, hence there is a possibility that changes in circumstances will alter expectations, which may impact the
amount of deferred tax assets and deferred tax liabilities recognised in the Statement of Financial Position and the amount of other tax
losses and temporary differences not yet recognised. In such circumstances, some or all of the carrying amounts of recognised deferred
tax assets and liabilities may require adjustment, resulting in a corresponding credit or charge to the Statement of Comprehensive
Income.
Litigation investments
Classification of litigation investments as either Claims Portfolio, Purchased Claims, Intangible Assets or Financial Assets requires
judgement on the circumstances and contracts attached to the investment. Refer to Notes 11 - 14 on the accounting policies for litigation
investments.
Significant estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant
risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below.
The Group based its assumptions and estimates on parameters available when the consolidated financial statements were prepared.
52
Omni Bridgeway
About this Report (continued)
Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances
arising that are beyond the control of the Group. Such changes are reflected in the assumptions when they occur.
Impairment of financial and non-financial assets
The Group assesses impairment of all required financial and non-financial assets at each reporting date by evaluating conditions specific
to the Group and to the particular asset that may lead to impairment. Impairment exists when the carrying value of an asset or cash
generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The Group
primarily relies on value in use calculations based on Discounted Cash Flows (DCF) models. The cash flows are derived from either the
Group’s budget or from estimates made by investment managers. The recoverable amount is sensitive to the discount rate used for the
DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes. These estimates are most
relevant to goodwill and other intangibles recognised by the Group. Refer to individual notes for further information around impairment
of financial and non- financial assets.
Fair value measurement of financial liabilities through profit or loss
When deferred and variable deferred consideration meets the definition of a financial liability at fair value through profit or loss, it is
subsequently remeasured to fair value at each reporting date. The determination of the fair value is based on option pricing methodology.
The key inputs are detailed in the Notes 17 and 29.
Provision for adverse costs
The Group raises a provision for adverse costs upon an underlying litigation receiving a losing judgement in certain jurisdictions that
require adverse costs to be paid to the litigations’ counter party. If an appeal is lodged, the Group still raises a provision. The provision
raised is the Group’s best estimate of the amount of adverse costs it will have to remit. Typically, this estimate is between nil to 80% of the
amount spent by the plaintiff, on the basis that there is only one defendant per the litigation. Refer to Notes 27 and 30 for further details
on adverse costs.
Share-based payments
Estimating fair value for share-based payment transactions requires determination of the most appropriate valuation model, which
depends on the terms and conditions of the grant. This estimate also requires determination of the most appropriate inputs to the
valuation model including the expected life of the performance rights, volatility dividend yield and risk-free rate and making assumptions
about them. For the measurement of the fair value of performance rights at the grant date, the Group uses a Monte-Carlo simulation
model and Black-Scholes model. The assumptions and models used for estimating fair value for share-based payment transactions are
disclosed in Note 32.
Measurement of non-controlling interests (NCI)
Profits and losses are attributed to non-controlling interests in line with the allocation of profit distributions under the terms of the
respective agreements with non-controlling investors. Therefore, at the end of each reporting period, the non- controlling interests
represents the non-controlling shareholders’ share of net assets, as would be distributed under the relevant shareholders or investors
agreements at the balance date.
Revenue recognition – estimating variable consideration on management and performance fees
The Group estimates variable considerations to be included in the transaction price for management and performance fees. Management
fees are based on the level of external investors net deployed capital per quarter and any uncertainty is resolved at the end of the same
quarter. Therefore, management fee revenues are recognised quarterly in arrears, corresponding with the delivery of performance
obligations. The calculation of performance fees is subject to individual investment and overall portfolio returns with some uncertainties.
Accordingly, performance fee revenue is not recognised until it is highly probable that a significant reversal in the amount of cumulative
revenue recognised will not occur.
Net gain/loss on derecognition of Litigation investments – intangible assets
The Group recognises proceeds and derecognises carrying costs on disposal in accordance with the investments’ funding terms. In some
instances, the calculation requires certain estimates and assumptions to be made. Refer to Note 13 for further information.
Fair value of residual interest held in a former subsidiary
For all subsidiaries where there is more than 50% ownership interest and voting rights, the Group’s power to direct the relevant activities
of the investee is subject to a without-cause kick-out right exercisable by a third party, the Group is considered to be acting as an agent
and thus has no control. The Group’s retained power is able to significantly influence the financial and operating activities of the investee.
The retained residual interest is equity accounted for as an investment in associates and initially recognised at the fair value. The Group
uses Investment Managers’ best estimate to calculate the present value of probability-weighted cashflows from matters held in the
associate which represents the fair value of the retained residual interest held by the Group. Refer to Note 35 for further information.
Litigation investments – purchased claims
The Group initially recognises litigation investments – purchased claims at fair value. These are subsequently measured at amortised cost
by applying the credit-adjusted effective interest rate based on estimated cash flows. Refer to Note 12 for further information.
Litigation investments – financial assets
The Group initially recognises litigation investments – financial assets at fair value. These are subsequently measured at fair value through
the profit & loss. Refer to Note 14 for further information.
Expected credit losses (ECLs) of receivables
The Group uses Investment Managers’ best estimate to calculate ECLs for receivables. The provision is based on assessment of customer
segments that have similar loss patterns. Refer to Note 22 for further information.
Annual Report 2023
53
Notes to the Financial Statements continued
A. RESULTS FOR THE YEAR
Note 1: Segment information
The Group operates in one industry, being funding and provision of services in relation to legal dispute resolution. For management
purposes, the Group is organised into operating segments comprising the OBL Group’s corporate operations and the Group’s fund
structures.
The OBL Group’s wholly owned subsidiaries own historical litigation investments and provide investment management advisory and
administration services to the Group’s fund structures in the following locations:
• Australia
• United States
• Canada
• Asia
• Europe, Middle East and Africa (EMEA)
The Group’s Fund structures include:
• Fund 1 – Fund 1 was deconsolidated on 31 May 2023 following a sale of a participation in its underlying investments.
• Funds 2 & 3 – This comprises Omni Bridgeway (Fund 2) Pty Ltd, Omni Bridgeway (Fund 3) Pty Ltd, IMF Bentham ROW SPV 1 Limited
and IMF Bentham ROW SPV 2 Limited. These entities jointly invest in litigation investments outside the United States. Funds 2&3 are
consolidated into the Group.
• Fund 4 – This Fund invests in litigation investments in the United States. It consists of a series of parallel investing entities comprising
Omni Bridgeway (Fund 4) Invt 1 LP; Omni Bridgeway (Fund 4) Invt 2 LP; Omni Bridgeway (Fund 4) Invt 3 LP; Omni Bridgeway (Fund 4) Invt
4 LP; Omni Bridgeway (Fund 4) Invt 5 LP; Omni Bridgeway (Fund 4) Invt 6 LP; Omni Bridgeway (Fund 4) Invt 7 LP; Omni Bridgeway (Fund
4) Invt 8 LP; Omni Bridgeway (Fund 4) Invt 9 LP; Security Finance (Fund 4) LLC; JPV I LP and Bentham HPCR LP. Fund 4 entities except for
Bentham HPCR LP are consolidated into the Group.
• Fund 5 – Consists of a collective investment group comprising Omni Bridgeway (Fund 5) LP, Omni Bridgeway (Fund 5) Cayman Invt.
Limited, Omni Bridgeway (Fund 5) Australian Invt Pty Ltd, Omni Bridgeway (Fund 5) Canada Investments Ltd, Omni Bridgeway (Fund 5)
NZ Invt Limited, Omni Bridgeway (Fund 5) Cayman DDI Limited, Gold Road Limited, Oak Henge Limited, as well as parallel joint investor,
Omni Bridgeway (Fund 5) GPA Pty Ltd. 2238319 Alberta Ltd was deregistered on 20 April 2022. This Fund invests in litigation
investments outside the United States. Only the parallel joint investor is consolidated within the Group and is included in the segment
note.
• Fund 6 – Is an investment structure focused in Europe, Middle East and Africa that was acquired in a business combination on 8
November 2019 and includes the entity responsible for providing the management of Fund 7. It was established to invest in litigation,
arbitration and enforcement proceedings, and for the work-out and monetisation of claims. Revenue is derived from enforcement and
recovery services and other income is derived from litigation investments. OBL retains control and ownership of Fund 6 via its equity
interests. Legal ownership of the litigation investments are spread across the entire OBE Group. Fund 6 is consolidated into the Group.
• Fund 8 – Is an investment structure focused on global enforcement investments and comprises Omni Bridgeway (Fund 8) Guernsey
Investments Limited. Fund 8 is consolidated into the Group.
For Funds 2 & 3, the non-controlling interest is comprised of an equity interest, which carry an entitlement to receive a capped priority
return on drawn capital and a further preferred return on committed but undrawn capital. OBL retains control and ownership of the
Funds via its equity interests. Upon satisfaction of the non-controlling interests’ priority returns, OBL is entitled to a manager return.
After satisfaction of the priority return and the manager returns, the residual net cash flows are to be distributed 80% to OBL and 20%
to non-controlling interests. The Funds have an infinite life and all distributions are discretionary.
For Fund 4 the non-controlling interest is comprised of an equity interest which, together with OBL’s interest, carries an entitlement to
receive return of capital plus a hurdle return on invested capital; and a pro-rata share of any residual after OBL’s periodic management fee
and transactional based performance fee. OBL retains control and ownership of the Funds via its equity interest. The Fund has an infinite
life and all distributions are discretionary.
For Fund 5, there is no non-controlling interest as only OBL’s 100% owned investment vehicle is consolidated. OBL is entitled to periodic
management fees and transactional based performance fees.
For Fund 6, the non-controlling interest is comprised of an equity interest which, together with OBL’s interest, carries a case by case
entitlement to receive return of capital plus a return on invested capital after OBL’s transactional based performance fee. OBL retains
control and ownership of the Funds via its equity interest. The Fund has an infinite life and all distributions are discretionary during the
investment period.
For Fund 8, there is no non-controlling interests as the fund is structured as an insured, leveraged special purpose vehicle (SPV). The
capital for the fund is to be sourced from limited recourse debt and equity provided by OBL.
54
Omni Bridgeway
Note 1: Segment information (continued)
Intersegment revenue comprises interest revenue on intercompany loans and advisory fees.
Intercompany interest revenue is recognised in accordance with AASB 9 using the effective interest rate method.
The intercompany advisory fee revenue earned during the year was derived from management and advisory agreements between the
group entities. The consideration received is determined by reference to costs plus a percentage mark-up. The revenue is recognised over
the period in which costs are incurred as it is deemed that the Group transfers control of the management services over this period and,
therefore, satisfies its performance obligations and recognises revenue over time.
Adjustments and eliminations relate to certain finance and overheads costs that are not allocated to individual segments as the underlying
expenses are incurred within wholly owned operations. These costs are capitalised into litigation funding contracts on consolidation of the
Group. The associated tax effect accounting for these items are also managed on a Group basis and not allocated to the individual
segments.
Inter-segment revenue and expenses are eliminated on consolidation and reflected in the “adjustments and eliminations” column.
Adjustments made in the balance sheet include adjustments to non-current assets to eliminate intercompany loans and investments in
subsidiaries on consolidation.
Group
Funds
Consolidation
4
5
6
Adjustments and
eliminations
8
Consolidated
$'000
$'000
$'000
$'000
$'000
$'000
Segment result for the year ended 30 June 2023
Revenue from contracts with customers
Interest revenue on cash and deposits
Interest revenue on receivables
Interest revenue on litigation investments - purchased
claims
Inter-segment
Segment revenue
Net gain/(loss) on derecognition of litigation investments -
intangible assets
Derecognition of capitalised overheads on litigation
investments - intangible assets
Net gain/(loss) on disposal of litigation investments -
purchased claims
Corporate
1
$'000
$'000
6,599
1,475
–
–
30,819
38,893
–
5
–
–
–
5
2&3
$'000
–
304
–
–
1,781
128
2,104
2,385
–
–
4,189
2,513
–
–
–
–
–
–
5,443
–
194
633
(330)
5,940
25,113
(6,801)
14,804
19,187
8,153
14,647
(2,241)
(22,883)
(1,398)
(2,408)
(1,507)
–
Net gain on disposal of subsidiaries
39,702
6,376
–
–
–
–
–
–
–
–
1,019
–
Other income
Total Income
3,338
(1)
1,440
(10)
1,397
(433)
104,805
(23,304)
19,035
19,282
8,043
21,173
Amortisation of litigation investments - claims portfolio
–
–
–
–
–
4,000
Impairment expense and adverse costs - litigation
investments
6,548
(6,794)
331
5,340
Other expenses
146,571
86
2,249
Share of (profit)/loss in associates
2,161
(1,606)
–
286
–
668
183
–
7,009
14,739
–
–
–
–
–
–
–
–
–
–
–
–
–
42
–
496
–
(573)
11,469
–
–
–
1,784
2,103
5,122
(30,489)
–
(31,062)
20,478
–
–
–
–
75,103
(30,437)
1,019
46,078
(1,162)
4,569
(32,224)
116,810
–
–
4,042
13,102
(59,077)
105,533
–
555
Profit/(Loss) before tax and fair value adjustments
(50,475)
(14,990)
16,455
13,656
7,192
(4,575)
(538)
26,853
(6,422)
Profit/(Loss) on fair value adjustment of financial assets
and liabilities
2,441
–
(1,577)
–
–
–
–
1,746
2,610
Profit/(Loss) before tax
(48,034)
(14,990)
14,878
13,656
7,192
(4,575)
(538)
28,599
(3,812)
Income tax (benefit)/expense
(13,753)
4
4,625
434
2,693
1,462
–
(139)
(4,674)
Segment result
Attributable to:
Equity holders of the Parent
Non-controlling interests
(34,281)
(14,994)
10,253
13,222
4,499
(6,037)
(538)
28,738
862
(34,281)
(19,065)
(1,163)
1,352
4,499
(11,201)
(538)
28,738
(31,659)
–
4,071
11,416
11,870
–
5,164
–
–
32,521
Annual Report 2023
55
Notes to the Financial Statements continued
Note 1: Segment information (continued)
Group
Funds
Consolidation
Corporate
1
$'000
$'000
2&3
$'000
4
5
6
Adjustments and
eliminations
8
Consolidated
$'000
$'000
$'000
$'000
$'000
$'000
Segment assets and liabilities at 30 June 2023
Cash and cash equivalents¹
Receivables due from the completion of litigation
investments
Other current assets
Litigation investments - claims portfolio
Litigation investments - purchased claims
Litigation investments - intangible assets
Litigation investments - financial assets
Litigation investments - investment in associates
Litigation investments - provision for impairment
Goodwill
Investments in funds
Other non-current assets
Total segment assets
Current liabilities
Non-current liabilities
Total segment liabilities
Net assets
Equity attributable to:
Equity holders of the Parent
Contributed equity - NCI
Earnings - NCI
Total equity
92,602
36,571
13,934
–
–
9,460
–
52,559
–
103,304
257,160
415,427
981,017
58,026
212,645
270,671
710,346
710,346
–
–
–
–
–
–
–
–
–
–
–
–
–
–
14,655
8,175
47,131
17,094
–
–
1,566
44,902
18
–
–
–
117,016
145,698
7,149
1,609
15,381
22,482
1,051
(12,781)
48,825
–
–
–
122,118
11,751
16,318
–
9,354
81,096
172,763
29,073
64,341
–
–
3,777
7,199
–
(556)
(11,589)
–
–
–
–
–
–
(3,354)
–
30
–
–
–
–
–
–
–
–
–
–
–
–
3,657
125,775
–
37,423
29,577
386,310
(3,898)
7,078
3,777
56,336
(726)
(16,225)
–
103,304
(250,178)
7,012
2,551
949
1,670
4,211
12,836
(321,361)
116,283
–
163,777
209,096
53,323
265,650
13,905
(551,933) 1,134,835
–
–
–
15,645
14,695
46,485
15,964
11,468
(58,556)
103,727
5,065
–
522
19,948
2,975
5,667
246,822
20,710
14,695
47,007
35,912
14,443
(52,889)
350,549
–
143,067
194,401
6,316
229,738
(538)
(499,044)
784,286
–
–
–
24,750
38,880
6,316
66,946
(538)
(497,849)
348,851
83,968
192,519
–
142,237
34,349
(36,998)
–
20,555
–
–
–
418,724
(1,195)
16,711
710,346
–
143,067
194,401
6,316
229,738
(538)
(499,044)
784,286
1. Cash in Funds can only be used for litigation investments and expenses within the respective Funds in accordance with their mandates and constituent documents
56
Omni Bridgeway
Note 1: Segment information (continued)
Segment result for year ended 30 June 2022
Revenue from contracts with customers
Interest revenue on cash and deposits
Interest revenue on receivables
Interest revenue on litigation investments - purchased claims
Inter-segment
Segment revenue
Net gain/(loss) on derecognition of litigation investments -
intangible assets
Derecognition of capitalised overheads on litigation
investments - intangible assets
Net gain/(loss) on disposal of litigation investments - purchased
claims
Other income
Total Income
Profit/(Loss) before tax
Income tax (benefit)/expense
Segment result
Attributable to:
Equity holders of the Parent
Non-controlling interests
Group
Corporate
$'000
4,613
297
–
–
18,410
23,320
1
$'000
–
14
–
–
–
2&3
$'000
–
8
1,419
1,655
–
14
3,082
Funds
4
$'000
–
–
–
423
–
423
5
$'000
6
$'000
Consolidation
Adjustments
and
eliminations
Consolidated
$'000
$'000
–
–
–
–
–
–
17,254
–
355
4,197
–
–
–
–
(549)
(17,861)
21,867
319
1,774
6,275
–
21,257
(17,861)
30,235
(21,649)
16,502
21,670
29,911
626
10,230
(1,461)
(2,047)
(2,638)
(762)
(1,353)
–
–
7,668
7,878
–
(1)
–
1,063
–
(8)
14,468
23,177
29,564
–
–
–
57,290
(8,261)
790
(3,319)
9,127
790
1,507
33,784
(21,180)
89,181
5,650
769
–
–
5,650
5,511
14,027
(38,500)
87,623
–
–
(387)
–
2,217
1,490
–
–
274
–
(88,304)
3,988
21,631
27,744
1,216
13,338
18,595
(24,182)
163
8,808
517
(64,122)
3,825
12,823
27,227
(64,122)
(2,971)
(1,687)
4,793
–
6,796
14,510
22,434
718
498
498
–
4,185
9,153
766
8,387
7,424
(1,792)
(8,274)
6,482
1,517
17,078
Amortisation of litigation investments - claims portfolio
–
–
–
Impairment expense - litigation investments
(5,762)
10,405
(553)
Other expenses
Share of (profit) in associates and joint ventures
109,755
(387)
75
–
824
–
–
652
1,168
–
Profit/(Loss) before tax and fair value adjustments
(95,728)
3,988
22,906
27,744
1,216
13,338
17,320
(9,216)
Profit/(Loss) on fair value adjustment of financial liabilities
7,424
–
(1,275)
–
–
–
1,275
17,078
(45,645)
–
52,127
Annual Report 2023
57
Notes to the Financial Statements continued
Note 1: Segment information (continued)
Group
Corporate
$'000
Funds
1
$'000
2&3
$'000
4
$'000
Segment assets and liabilities at 30 June 2022
Cash and cash equivalents¹
107,645
8,820
Receivables due from the completion of litigation investments
Other current assets
Litigation investments - claims portfolio
Litigation investments - purchased claims
61,057
32,158
–
–
–
–
–
–
24,283
47,316
7,854
–
17,926
4,780
582
–
17,727
9,198
5
$'000
1
–
4,064
–
–
Litigation investments - intangible assets
79,066
147,793
70,225
143,334
17,936
Consolidation
Adjustments
and
eliminations
Consolidated
$'000
$'000
–
–
158,966
138,074
(34,263)
32,681
6
$'000
291
24,921
22,286
102,901
3,222
106,123
20,115
54,784
–
47,040
34,573
547,711
Litigation investments - financial assets
–
–
–
–
3,117
–
(46)
3,071
Litigation investments - provision for impairment
(60,491)
(20,206)
(4,786)
(59,812)
Goodwill
Investments in funds
Other non-current assets
Total segment assets
Current liabilities
Non-current liabilities
Total segment liabilities
Net assets
Equity attributable to:
Equity holders of the parent
Contributed equity - NCI
Earnings - NCI
Total equity
95,567
280,196
369,818
–
–
–
–
–
5,067
–
–
–
–
–
–
(2,067)
(5,665)
(153,027)
–
–
–
95,567
(275,165)
5,031
2,953
1,827
(285,653)
94,012
965,016
136,407
167,686
116,008
28,071
225,058
(562,997) 1,075,249
239,828
1,471
27,623
5,311
27,266
32,589
–
1,902
–
460
24,392
15,029
(49,562)
276,329
9,441
59,421
272,417
1,471
29,525
5,311
27,726
39,421
(40,121)
335,750
692,599
134,936
138,161
110,697
345
185,637
(522,876)
739,499
692,599
–
–
61,717
33,447
39,772
25,377
22,139
345
52,044
(525,331)
328,890
93,038
127,686
19,746
(39,128)
–
–
118,201
–
372,372
15,392
2,455
38,237
692,599
134,936
138,161
110,697
345
185,637
(522,876)
739,499
1. Cash in Funds can only be used for litigation investments and expenses within the respective Funds in accordance with their mandates and constituent documents
58
Omni Bridgeway
Note 1: Segment information (continued)
Non-current assets, excluding financial assets and deferred tax assets, can be represented geographically as follows:
Australia
United States
Canada
Europe, Middle East and Africa
Asia
Consolidated
2023
$'000
184,618
183,587
23,652
2022
$'000
168,236
243,600
20,089
220,429
169,243
23,958
20,044
636,244
621,212
Note 2: Revenue from contracts with customers
Revenue from contracts with customers is recognised when control of the service is transferred to the customer at an amount that
reflects the consideration to which the Group expects to be entitled in exchange for those services.
(i) Litigation investments – claims portfolio
The nature of services
Revenue is generated from providing enforcement, collection, monetisation and recovery services to customers with judgements, awards
or contractual debts and receivables.
Performance obligations
At investment inception, the Group assesses the services promised in its contracts with customers and identifies the performance
obligation involved in each promise to transfer funds received to the customer. Performance obligations are satisfied at a point in time,
upon the recovery of each dollar.
Transaction price
Almost all revenues from litigation investments – claims portfolio are based on a no success, no fee basis. The transaction price contains
various components, with each component being either fixed or variable. The Group includes variable consideration (a portion or all) in
the transaction price only when it is highly probable that the recognised revenue will not incur a significant revenue reversal. The revenue
is based on a percentage that is recovered so the uncertainty is typically removed when the money is received or settlement agreement
has been signed and where applicable, court approval obtained as, at that point, the revenue formula can be applied to the amount
collected.
(ii) Management fees
The management fee revenue earned during the year was derived from Investment Management Agreements with the investors in Fund
4, Fund 5 and Fund 7. The services provided are for the administration of the investor accounts and fund structures. For Fund 4 and Fund
5 the consideration is considered to be variable consideration and is determined with reference to the net invested capital attributable to
the Investor’s accounts. The revenue is recognised over the period in which there is net invested capital in the Fund as the Group transfers
control of the services over this period and, therefore, satisfies its performance obligations over time. Variable consideration is recognised
to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur. As the net
invested capital is known at the end of each quarter the management fees are able to be calculated and recognised as it is then highly
probable that a significant reversal in the amount of cumulative revenue recognised will not occur.
Annual Report 2023
59
Notes to the Financial Statements continued
Note 2: Revenue from contracts with customers (continued)
Corporate
$'000
Fund 6
$'000
Total
$'000
2023
Type of service
Litigation investments – claims portfolio
Management and service fees
2022
Type of service
Litigation investments – claims portfolio
Management and service fees
2023
Geographical markets
Europe
Australia
United States
Cayman Islands
2022
Geographical markets
Europe
Australia
United States
Cayman Islands
2023
Timing of revenue recognition
Services transferred at a point in time
Services transferred over time
2022
Timing of revenue recognition
Services transferred at a point in time
Services transferred over time
–
6,025
6,025
–
4,613
4,613
4,002
1,442
5,444
16,173
1,081
17,254
–
5,444
1,564
2,812
1,649
6,025
–
–
–
4,002
7,467
11,469
16,173
5,694
21,867
5,444
1,564
2,812
1,649
5,444
11,469
–
17,254
17,254
1,675
2,223
715
4,613
–
6,025
6,025
–
4,613
4,613
–
–
–
1,675
2,223
715
17,254
21,867
4,002
1,442
5,444
16,173
1,081
17,254
4,002
7,467
11,469
16,173
5,694
21,867
During the year, the Group received performance fees of $4.236 million (2022: $3.643 million) relating to Fund 4 and Fund 5 that have not
yet satisfied IFRS income recognition requirements and are thus not disclosed as revenue. The cumulative amount of unrecognised
performance fee is held as unearned revenue in trade and other payables on the Consolidated Statement of Financial Position. Refer to
Note 26.
60
Omni Bridgeway
Note 3: Interest revenue
Interest revenue is recognised using the effective interest rate method. The effective interest rate is the rate that exactly discounts
estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.
The Group earned 97% (2022: 96%) of its interest revenue on cash and deposits in Australia. Interest revenue on receivables relates to
the Europe, Middle East and Africa region. The purchased claims revenue relates to the Europe, Canada and United States geographical
market.
Interest revenue
Interest revenue on cash and deposits
Interest revenue on receivables
Interest revenue on litigation investments - purchased claims
Consolidated
2023
$'000
1,784
2,103
5,122
9,009
2022
$'000
319
1,774
6,275
8,368
Note 4: Net gain on derecognition of litigation investments - intangibles assets
Net gain on derecognition of litigation investments – intangibles assets is derived from the disposal through sale or completion (partial or
full) of the underlying litigation that the Group invested in. The accounting policy for litigation investments - intangibles assets is outlined in
Note 13.
Net gain on derecognition of litigation investments - intangible assets
Proceeds
Derecognition of carrying cost
Consolidated
2023
$'000
2022
$'000
141,640
175,170
(96,974)
(126,141)
44,666
49,029
Net gain on derecognition of litigation investments – intangible assets can be represented geographically as follows:
Australia
United States
Canada
Europe, Middle East and Africa
Asia
Latin America
Consolidated
2023
$'000
18,589
(9,503)
4,971
15,715
14,861
33
2022
$'000
1,668
45,964
(5,687)
7,136
(9)
(43)
44,666
49,029
Annual Report 2023
61
Notes to the Financial Statements continued
Note 5: Other income
Other income
Net foreign exchange gain
Other income
Note 6: Expenses
Finance costs
Consolidated
2023
$'000
3,748
821
4,569
2022
$'000
7,594
1,533
9,127
Borrowing costs directly attributable to the acquisition and development of a qualifying asset (i.e. an asset that necessarily takes a
substantial period of time to get ready for its intended use or sale) are capitalised as part of the cost of that asset. All other borrowing
costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that the Group incurs in connection
with the borrowing of funds. Detailed information is provided in Note 19.
Amortisation of litigation investments – claims portfolio
Amortisation of litigation investments – claims portfolio represents the amortisation of the capitalised contract costs due to completion
of the underlying enforcement or recovery action. Detailed information is provided in Note 11.
Depreciation
The depreciation policy is disclosed in Note 25.
Employee benefits
Provision is made for employee benefits accumulated as a result of employees rendering services up to the end of the reporting period.
These benefits include salaries and wages, annual leave, long service leave and bonuses. Liabilities in respect of employees’ services
rendered that are not expected to be wholly settled within one year after the end of the periods in which the employees render the
related services are recognised as long-term employee benefits. These liabilities are measured at the present value of the estimated
future cash outflow to be made to the employees using the projected unit credit method. Liabilities expected to be wholly settled within
one year after the end of the period in which the employees render the related services are classified as short-term benefits and are
measured at the amount due to be paid. The corresponding movements are expensed together with those incurred during the year.
Share based payments
The policy for share based payments is disclosed in Note 32.
Impairment expense – litigation investments
The policy for impairment expense – litigation investments is disclosed in Notes 11-14 according to asset classes litigation investments –
claims portfolio, litigation investments – purchased claims, litigation investments – intangible assets and litigation investments – financial
assets.
Adverse costs – litigation investments
The expense raised is the Group’s best estimate of the amount of adverse costs it will have to remit where the underlying litigation has
received an unfavourable judgement. Refer to Notes 27 and 30 for further details on adverse costs.
62
Omni Bridgeway
Note 6: Expenses (continued)
(a) Finance costs
Interest on lease liabilities (Note 28)
Other finance charges
Consolidated
2023
$'000
1,091
1,597
2,688
2022
$'000
808
589
1,397
(b) Amortisation of litigation investments - claims portfolio
Amortisation of litigation investments - claims portfolio (Note 11)
4,042
5,650
(c) Depreciation expense
Depreciation (Note 25)
(d) Employee benefits expenses
Wages and salaries
Superannuation expense
Directors' fees
Payroll tax
Share based payments (Note 32)
Long service leave (Note 27)
(e) Corporate and office expenses
Insurance expense
Network expense
Marketing expense
Occupancy expense
Professional fees expense
Recruitment expense
Travel expense
(f) Other expenses
ASX fees
General expenses
Amortisation of contract costs
Postage, printing and stationery
Repairs and maintenance
Share registry costs
Staff training, development and conferences
Expected credit loss allowance (Note 22)
(g) Impairment expense and adverse costs - litigation investments
Adverse costs - litigation investments (Note 27)
Net impairment loss - litigation investments (Notes 11 - 14)
3,917
3,455
59,212
43,064
2,383
527
2,986
8,871
13
1,865
572
2,211
11,724
(287)
73,992
59,149
3,868
2,539
1,736
656
5,241
1,593
2,513
3,513
1,697
1,581
719
7,675
1,237
989
18,146
17,411
182
1,387
939
1,503
6
39
1,007
1,727
6,790
7,699
5,403
13,102
174
644
939
1,435
28
30
352
–
3,602
2,609
5,511
8,120
Annual Report 2023
63
Notes to the Financial Statements continued
Note 7: Income tax
Income tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities
based on the current period’s taxable income. The tax rates and tax laws used to compute the amount are those that are enacted or
substantively enacted by the reporting date.
Deferred income tax is provided for using the full liability balance sheet method.
Deferred income tax liabilities are recognised for all taxable temporary differences except:
• When the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not
a business combination and that, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or
• When the taxable temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, and the
timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in
the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax
losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the
carry-forward of unused tax credits and unused tax losses can be utilised, except:
• When the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or
liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor
taxable profit or loss; or
• When the deductible temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, in
which case a deferred tax asset is only recognised to the extent that it is probable that the temporary difference will reverse in the
foreseeable future and taxable profit will be available against which the temporary difference can be utilised.
The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer
probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed at each reporting date and are recognised to the extent that it has become
probable that future taxable profit will allow the deferred tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised
or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Income taxes relating to items recognised directly in other comprehensive income are recognised in equity and not in profit or loss.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against
current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority.
Australian tax consolidated group
The Parent and its Australian resident wholly owned subsidiaries have formed an income tax consolidated group. The Parent has entered
into tax funding arrangements with its Australian resident wholly owned subsidiaries, pursuant to which each subsidiary has agreed to pay
or receive a tax equivalent amount based on the net taxable amount or loss of the subsidiary at the current tax rate. The tax consolidated
group has applied the separate taxpayer approach in determining the appropriate amount of current taxes to allocate to each entity.
64
Omni Bridgeway
Note 7: Income tax (continued)
Other taxes
Revenues, expenses and assets are recognised net of the amount of GST, except (i) when the GST incurred on a purchase of goods and
services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset
or as part of the expense item, as applicable; and (ii) receivables and payables, which are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the
Consolidated Statement of Financial Position.
Cash flows are included in the Consolidated Statement of Cash Flows on a gross basis and the GST component of cash flows arising from
investing and financing activities, which is recoverable from, or payable to, the taxation authority is classified as part of cash flows from
operating activities.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.
Consolidated Statement of Comprehensive Income
The major components of income tax benefit are:
Current income tax
Current income tax charge
Adjustment in respect of current income tax expense of previous year
Refund of foreign state-based taxes
Current year losses moved to deferred tax asset
Other
Deferred income tax:
Relating to origination and reversal of temporary differences
Current year losses moved to deferred tax asset
Adjustment in respect of deferred income tax of previous year
Other
Income tax benefit reported in the Consolidated Statement
of Comprehensive Income
Other comprehensive income
Deferred income tax related to items charged or credited directly to equity
Deferred tax associated with share-based payments
Income tax expense reported in equity
Consolidated
2023
$'000
2022
$'000
(13,973)
(7,854)
(249)
(58)
17,991
1,309
4,906
(17,991)
1,516
1,875
203
452
18,133
587
(5,167)
(18,133)
3,528
(23)
(4,674)
(8,274)
96
96
377
377
Annual Report 2023
65
Notes to the Financial Statements continued
Note 7: Income tax (continued)
A reconciliation between income tax benefit and the product of accounting loss before income multiplied by the Group’s applicable
income tax rate is as follows:
Accounting loss before income tax
At the Group's statutory income tax rate of 30% (2022: 30%)
Foreign tax rate adjustments
Adjustment in respect of income and deferred tax of previous years
Expenditure not allowable for income tax purposes
Non-assessable income
State income tax
Relating to deductible temporary differences not previously recognised
Other
Income tax benefit reported in the Consolidated Statement of Comprehensive Income
Consolidated
2023
$'000
(3,812)
(1,143)
(611)
1,210
749
(683)
49
(2,710)
(1,535)
(4,674)
2022
$'000
(1,792)
(538)
(1,463)
3,731
2,645
(12,467)
100
–
(282)
(8,274)
Consolidated
Statement of
Financial Position
Statement of
Comprehensive Income
2023
$'000
2022
$'000
2023
$'000
2022
$'000
Deferred income tax at 30 June relates to the following:
Deferred income tax liabilities
Litigation investments – intangible assets
29,085
29,688
Accrued interest & unrealised foreign exchange differences
Right of use assets and other plant and equipment
Other
Gross deferred tax liabilities
Offsetting deferred tax assets
Net operating losses
Accruals and provisions
Share based payments
Leases
Expenditure deductible for income tax over time
Gross deferred tax assets
Net deferred tax liabilities
–
876
5,101
–
1,171
(39)
35,062
30,820
2,473
–
217
767
726
4,183
355
–
299
222
(338)
538
30,879
30,282
602
–
295
(5,139)
(4,242)
8,081
12
78
39
8,210
2,118
(12,474)
–
14
545
1,057
3,734
(6,251)
(2,666)
8
(1,596)
(22,979)
66
Omni Bridgeway
Note 7: Income tax (continued)
Deferred tax assets
Accruals and provisions
Intercompany
Expenditure deductible for income tax over time
Leases
Share based payments
Deferred tax assets - Foreign net operating losses
Deferred tax assets
Net deferred income tax
Movements in foreign exchange
Deferred tax expense
Consolidated
Statement of
Financial Income
Statement of
Comprehensive Income
2023
$'000
2022
$'000
2023
$'000
9,189
3,492
1,626
3,656
274
59,352
77,589
8,686
780
4,301
6,867
1,118
42,057
63,809
503
2,712
(2,668)
(3,210)
(844)
17,294
13,787
13,279
(3,584)
9,695
2022
$'000
7,316
725
2,801
2,330
(97)
24,729
37,804
23,035
(3,240)
19,795
Unrecognised temporary differences and tax losses
At 30 June 2023, the Group had $2.466 million (2022: $2.287 million) of unrecognised deferred tax assets relating to temporary
differences and tax losses in its Canadian subsidiaries.
Deferred tax assets relating to Australian operations
The deferred tax assets balance includes $34.336 million (2022: $17.765 million) of assets relating to carried forward tax losses of the
Omni Bridgeway Limited (OBL) tax consolidated group at 30 June 2023.
It is probable that the OBL tax consolidated group will earn sufficient taxable incomes to utilise the losses as the Australian business has
significant investments on balance sheet and through Fund 5 participation, which have a combined EPV of $12.788 billion. In addition,
OBL is expected to receive distributions from Fund 2&3 and intra-group income from the wider group.
Deferred tax assets relating to USA operations
The deferred tax assets balance includes $24.731 million (2022: $22.750 million) of assets relating to carried forward tax losses of Omni
Bridgeway Holdings (USA) Inc. Under existing tax regulations, the losses incurred prior to financial year ended 30 June 2019 can be carried
forward for 20 years and losses incurred thereafter can be carried forward indefinitely. The US business had a history of incurring tax
losses before the year ended 30 June 2023. The losses have arisen primarily from the implementation of the expansion of the operating
base in the United States to support strategic growth initiatives that are, according to plan, yet to realise their full value. OBL has
considered the utilisation of these tax losses within the expanded US business and has determined that, based on approved budgets and
existing investments, it is probable that the US tax group will earn sufficient taxable income to utilise the losses. Further, in assessing the
utilisation of the tax losses, OBL considers there to be convincing other evidence to support the recoverability of these tax losses
including:
(i) The US business has been in an expansion and infrastructure growth phase. Additional costs have been incurred in the business
related to the expansion of activity, changes in operations to a Fund management structure and establishment of a scalable platform.
Investments in people, systems and infrastructure have been made ahead of the expected investment activity of the Funds. Fund 4
started in 2019 for an approved portfolio of commitment up to US$500 million (of which the US business has a 20% interest) is
currently in its investment commitment activity phase. With an average investment life of circa 3-4 years, a significant portion of the
expected income is in the future. This income generation will be by way of both investment returns and fee revenues.
(ii) The US business has raised substantial external capital over the past 4 years via its Fund structures. Fund 4 investors committed
US$500 million (80% external commitments). The external capital raised is the foundation of the investing activity that enables the
US business to grow and generate returns to realise future taxable income. Fund 4 Series II which is currently being considered by
the institutional investors and may be launched in the near future.
(iii) US business achieved a record level of commitment of A$278 million last year. The commitment growth supports the increased
business activity, growth phase, profit generation and recovery of deferred tax assets in the future.
(iv) There are 55 US investments with total EPV of $9.1 billion as at 30 June 2023. Using the Group’s normalised long term conversion rate
of 15%, this indicates an implied embedded value of $1.3 billion. OBL’s share of this potential embedded value could be received by
way of investment returns and performance fees or accelerated from the sale of these investments in the secondary market. The
realisation of this potential embedded value will assist in the recovery of deferred tax assets.
Deferred tax assets relating to Funds 2 & 3
Omni Bridgeway (Fund 2) Pty Limited and Omni Bridgeway (Fund 3) Pty Limited carried combined total deferred tax assets balances of
$0.070 million at 30 June 2023 (2022: $1.573 million), the deferred tax assets balances were predominantly related to the loss of Asian and
Europe, Middle East & Africa investments during this reporting period. The Funds are 100% committed with litigation investment that are
expected to generate significant taxable income in their respective tax jurisdictions in the future.
Annual Report 2023
67
Notes to the Financial Statements continued
Note 8: Loss per share
Basic loss per share is calculated as net loss attributable to members of the Parent, adjusted to exclude any costs of servicing equity
(other than dividends), divided by the weighted average number of ordinary shares outstanding during the financial year, adjusted for
any bonus element.
Diluted loss per share is calculated as net loss attributable to members of the Parent, adjusted for:
• Costs of servicing equity (other than dividends);
• The after-tax effect of interest dividends associated with dilutive potential ordinary shares that have been recognised; and
• Other non-discretionary changes in revenue or expenses during the period that would result from dilution of potential ordinary shares;
• Divided by the weighted average number of shares and dilutive shares, adjusted for any bonus element.
At 30 June 2023, 15,421,416 performance rights (2022: 15,929,183) were on issue as detailed in Note 32. Upon meeting certain
performance and service conditions, the vesting of each right will result in the issue of 1 ordinary share. The performance shares are
contingently issuable and are not considered dilutive.
The following reflects the income and share data used in the basic loss per share computation:
a. Loss used in calculating loss per share
For basic and diluted loss per share
Total net loss attributable to equity holders of the Parent
(31,659)
(45,645)
Consolidated
2023
$'000
2022
$'000
b. Weighted average number of shares
Weighted average number of ordinary shares outstanding
Effect of dilution:
Performance rights
Variable deferred consideration - business combination shares
Weighted average number of ordinary shares
2023
000
2022
000
275,182
265,850
–
–
–
–
275,182
265,850
Variable deferred consideration – business combination may be settled by the issue of fully paid ordinary shares in Omni Bridgeway
Limited. Refer to Note 29 for details.
These shares have not been included for the following reasons:
• Variable deferred consideration – business combination shares have not been included as their performance milestones for future
tranches have yet to be met.
•
In addition to the above, the inclusion of any of these shares would be considered anti-dilutive.
The weighted average number of ordinary shares outstanding includes performance rights granted under the Long-Term Incentive Plan
which are only included in dilutive earnings per ordinary share where the performance hurdles are met as at period end and they do not
have an anti-dilutive effect.
There have been no transactions involving ordinary shares or potential ordinary shares that would significantly change the number of
ordinary shares outstanding between the reporting date and the date of completion of these financial statements.
Note 9: Dividends paid and proposed by Omni Bridgeway Limited (the parent entity)
(a) Cash dividends on ordinary shares declared and paid
There were no dividends declared or paid for the year ended 30 June 2023 (2022: nil cents per share). Omni Bridgeway Limited’s retained
earnings are disclosed in Note 21.
The Company considers all its capital management options in light the cash position and performance of the Group at the time of as well
as the likely demand for cash over the ensuing 12-month period. In determining the appropriate mechanism to deliver returns to
shareholders, the board will consider both semi-annual dividends and share buy-backs. Relevant considerations include the source and
nature of income and the prevailing share price relative to the intrinsic value and the franking credit balance.
The Company put in place a buy-back facility on 29 August 2022 and has a dividend reinvestment plan (DRP) that shareholders may elect
to participate in. On appropriate occasions, the Company may arrange DRP underwriting to reduce the impact a particular dividend might
otherwise have on the Group’s cash resources.
68
Omni Bridgeway
Note 9: Dividends paid and proposed by Omni Bridgeway Limited (the parent entity) (continued)
(b) Franking credit balance
The amount of franking credits for the subsequent financial year are:
Franking account balance at the end of previous financial year at 30%
Franking debits
Balance at 30 June
(c) Tax rates
The tax rate at which paid dividends have been franked is 30% (2022: 30%).
Note 10: Statement of cash flows reconciliation
Reconciliation of net profit for the year to net cash flows used in operations:
Net profit for the year
Adjustments for:
2023
$'000
5,905
–
5,905
2022
$'000
5,905
–
5,905
Consolidated
2023
$'000
862
2022
$'000
6,482
Net impact of the reclassification of litigation investments - intangible assets related to cash flows
from investing activities
(110,976)
(115,628)
Fair value adjustments to litigation investments - deferred consideration
Fair value adjustments to financial liabilities
Amortisation of litigation investments - claims portfolio
Amortisation of contract costs
Depreciation
Share based payments
Unrealised foreign exchange gain
Changes in assets and liabilities
(Increase)/Decrease in receivables
Increase in other current assets
Decrease/(Increase) in litigation investments - intangible assets
Increase in litigation investments - claims portfolio
Decrease/(Increase) in litigation investments - purchased claims
Increase in deferred tax assets and liabilities
Decrease in other liabilities
Increase in lease liabilities
Increase in trade and other payables
Increase in provisions
Increase in current income tax payable
Net cash used in operating activities
Disclosure of financing facilities
Refer to Notes 18, 19 and 28.
Changes in liabilities arising from financing activities
Refer to Notes 19 and 28.
(906)
(2,610)
4,042
939
3,917
10,616
(3,748)
(22,039)
(6,674)
24,599
(19,652)
9,617
(13,183)
(24,107)
4,013
8,157
6,162
543
(667)
(7,424)
5,650
939
3,455
13,966
(7,594)
66,913
(5,911)
(3,650)
(11,064)
(8,286)
(22,657)
(20,579)
8,085
20,944
1,098
1,381
(130,428)
(74,547)
Annual Report 2023
69
Notes to the Financial Statements continued
B. LITIGATION INVESTMENTS AND GOODWILL
Note 11: Litigation investments - claims portfolio
(a) Recognition and measurement
Litigation investments - claims portfolio assets consist of the capitalised costs incurred to purchase, obtain or fulfil a contract with a
customer. These contracts with customers involve a vendor-customer relationship established in the contract. They comprise the litigation
enforcement and recovery investment contracts and certain merits-based funding contracts.
Costs incurred to obtain a contract are only capitalised to the investment when it is expected that a contract will be executed, and where
those costs will be recoverable. The Group recognises an asset for costs incurred to fulfil a contract if those costs relate directly to the
contract, the costs generate or enhance resources of the Group to satisfy performance obligations in the future and the costs are
expected to be recovered. All capitalised contract costs are amortised to the profit or loss on a systematic basis that follows delivery of
performance obligations to the customer. The delivery of performance obligations to the customer on the contracts are aligned with each
individual dollar of recovery to the customer.
The carrying value of the litigation investments - claims portfolio is measured at cost less amortisation and any impairment. At each
reporting date an assessment is made on an individual investment by investment basis to determine if the carrying amount of a contract
exceeds its recoverable amount. In order to determine the recoverable amount a cashflow model is used which includes forecast
revenues and expenses, together with an estimate of directly attributable overheads to complete the contract. If the carrying value
exceeds the recoverable amount the difference is recognised as an impairment expense in the profit or loss.
Reconciliation of carrying amounts
Balance at 1 July1
Additions
Amortisation of carrying costs2
Impairment expense
Foreign currency adjustment
Balance at 30 June³
Consolidated
2023
$’000
106,123
20,969
(4,042)
(719)
3,444
2022
$’000
95,059
20,749
(5,650)
(197)
(3,838)
125,775
106,123
1. Includes $59.558 million (2022: $64.541 million) of fair value adjustments from business combination in FY20.
2. Includes $1.180 million (2022: $2.414 million) of fair value adjustments from business combination in FY20.
3. Includes $63.151 million (2022: $59.558 million) of fair value adjustments from business combination in FY20.
Note 12: Litigation investments - purchased claims
(a) Recognition and measurement
Litigation investments – purchased claims are litigation actions which have been acquired by the Group (except by business combination).
They are classified as purchased credit-impaired financial assets which are initially recognised at fair value.
The credit-adjusted effective interest rate on these financial assets is calculated taking into account the initial lifetime expected credit loss
in the estimated cash flows. In determining the lifetime expected credit losses for these financial assets, the Group has taken into account
the financial position of the counterparties, the legal environment in which the enforcement occurs, historical default experience and
considering various external sources of actual and forecast information, as appropriate.
Purchased claims are subsequently measured at amortised cost by applying the credit-adjusted effective interest rate. The Group
recognises:
i.
ii.
Interest income through the application of the credit-adjusted effective interest rate to the amortised cost of the purchased claims;
and
Impairment losses and gains, when material, due to the changes in estimated lifetime expected credit losses. At each reporting period,
the Group reviews the estimated cash flows from purchased claims on an investment by investment basis, estimating the expected
recovery, its timing and any other cashflows that may be attributable to the counterparties. The net present value of the cashflows are
then determined using the credit-adjusted effective interest rate and the value compared to the carrying value. Where there is a
material gain, this gain is recognised by adjusting the gross carrying amount of the receivable. Where there is a material loss, it is
recognised as an impairment provision.
70
Omni Bridgeway
Note 12: Litigation investments - purchased claims (continued)
Reconciliation of carrying amounts
Balance at 1 July1
Interest revenue
(Decrease)/Increase in carrying value reflected in deferred consideration (Note 15)
Carrying value disposed2
Impairment (loss)/gain
Foreign currency adjustment
Balance at 30 June³
Consolidated
2023
$’000
47,040
5,122
(16,387)
(651)
(1,546)
3,845
37,423
2022
$’000
38,754
6,275
8,447
(5,637)
260
(1,059)
47,040
At 30 June 2023, the fair value of the litigation investments - purchased claims amounted to $37.423 million (2022: $47.040 million) and
the gross contractual amount was $169.008 million (2022: $177.500 million).
Net gain on disposal of litigation investments - purchased claims
Proceeds
Carrying value disposed2
1. Includes $0.586 million (2022: $2.936 million) of fair value adjustments from the business combination in FY20.
2. Includes ($0.228) million (2022: $2.331 million) of fair value adjustments from the business combination in FY20.
3. Includes $0.861 million (2022: $0.586 million) of fair value adjustments from the business combination in FY20.
Note 13: Litigation investments - intangible assets
(a) Recognition and measurement
Consolidated
2023
$’000
1,670
(651)
1,019
2022
$’000
6,427
(5,637)
790
Litigation investments involve funding provided to pursue an underlying litigation dispute that are not classified as purchased investments,
claims portfolio or financial assets. They are recognised as intangible assets in the financial statements of the Group when they represent
future economic benefits controlled by the Group. The Group is able to control the expected future economic benefit as the investment
may be exchanged or sold. The litigation funding contract does not give rise to an unconditional right to receive cash. Rather, it provides
the Group with a right to a share of litigation proceeds which may be in the form of cash or other non-financial assets.
These litigation contracts are not considered contracts with customers as they are collaborative arrangements and there is no vendor-
customer relationship established in the contract.
Litigation investments – intangible assets are measured at cost on initial recognition. They are not amortised as the assets are not
available for use until the determination of a judgement or settlement, withdrawal or sale, at which point the assets are realised through
disposal.
Gains or losses arising from derecognition are measured as the difference between the net disposal proceeds and the carrying amount
of the asset at the time and are recognised in the profit or loss when the asset is derecognised.
The following specific asset recognition and derecognition rules have been applied to litigation investments – intangible assets:
(i) Ongoing litigation
When the underlying litigation action is ongoing and pending a determination, the investments are carried at cost (subject to any provision
for impairment). Initial and subsequent ongoing expenditure is capitalised when it meets all the following criteria:
(a)
the Group is able to demonstrate its ability to complete the litigation so that the asset will be available for use and the benefits
embodied in the asset will be realised;
(b) the Group retains control of the asset;
(c)
the Group can demonstrate that it intends to complete the litigation;
(d) the Group is able demonstrate the availability of adequate technical, financial and other resources to complete the litigation;
and
(e)
the Group can measure reliably the expenditure attributable to the intangible asset during the life of the litigation investments –
intangible assets.
Impairment is considered in line with the policy described in (b) below.
Annual Report 2023
71
Notes to the Financial Statements continued
Note 13: Litigation investments - intangible assets (continued)
(ii) Completion
Where the underlying litigation has been finally determined or a settlement has been agreed, such that there is not considered to be a
significant risk of reversal, this constitutes a disposal transaction, the carrying cost is derecognised and a gain or loss on disposal of the
intangible asset is recognised in the Consolidated Statement of Comprehensive Income. Control of the intangible asset is considered to
be transferred as follows:
• For judgements, typically after a judgement has been determined and the relevant appeal periods have expired;
• For settlements, typically when settlement agreement is reached and if relevant, court approval is obtained; and
• For sales, typically when a binding agreement is executed.
(iii) Partial completion
Where litigation investments have been subject to a partial sale transaction, consideration has been agreed, such that there is not
considered to be a significant risk of reversal and it is evident the litigation investment can be assessed at the respective percentage
of interest level, this constitutes a disposal transaction and a gain or loss on disposal is recognised in the statement of comprehensive
income.
Control of the partial intangible asset is considered to be transferred as follows:
• When the partial sale agreement is executed. Upon this date, the purchaser is considered to be able to direct the use of the interest
and assume substantially all the remaining benefits of the interest.
(iv) Appeal/enforcement
If a funded client obtains an unsuccessful decision from the court, arbitration or tribunal and appeals against the judgement, where the
investment and funding was undertaken by the Group with that as a central thesis, the investment may be considered to be ongoing with
deployment capitalised to the investment. Where there was not such thesis, the investment is dercognised and future costs incurred in
relation to the appeal are expensed as incurred.
If a funded client obtains a successful decision from the court, arbitration or tribunal and has to subsequently undertake enforcement
activities, where the investment and funding was undertaken with that as a central thesis, the investment may be considered to be
ongoing with a delivery of a partial service obligation requiring partial derecognition of the investment and income recognition. Where
there was not such a thesis, the investment is derecognised, with a receivable recognised and any future costs incurred in relation to the
enforcement appeal are expensed as incurred.
(v) Portfolio investments
Upon completion of an underlying litigation within a portfolio, a corresponding portion of the intangibles carrying value is derecognised.
The difference between the disposal proceeds received and the derecognised carrying value is recognised as a net gain or loss in the
profit or loss. The remainder of the portfolio continues to be carried at cost (subject to usual impairment considerations) until the earlier
of either the full return to the Group is obtained or each case within the portfolio has completed.
Reconciliation of carrying amounts
Balance at 1 July
Additions - external funding costs
Additions - capitalised overheads
Derecognitions - external expenditure
Derecognitions - capitalised overheads
Net derecognition of purchase price adjustment arising from business combination
Impairment expense
Deconsolidation of Fund 1 and HC 1 LLC
Effect of movement in foreign currency
Balance at 30 June
Consolidated
2023
$’000
2022
$’000
394,684
391,034
157,201
28,772
91,829
18,085
(61,352)
(101,622)
(35,284)
(19,988)
(339)
(3,138)
(123,420)
(4,534)
(5,574)
–
12,961
25,454
370,085
394,684
The carrying value includes external costs such as solicitors’ fees, counsels’ fees and experts’ fees funded by the Group, the capitalisation
of certain directly attributable internal costs of managing the litigation funding investment, such as certain direct salaries and wages,
occupancy costs, other out of pocket expenses and the capitalisation of borrowing costs as described below. The capitalised salaries and
wages in 2023 equated to approximately 13.0% of the Group’s total salary and wages expense (2022: 14.6%). The other internal
capitalised expenses equated to approximately 49.9% of related overhead costs (2022: 52.2%).
The Group has determined that litigation investments – intangible assets meet the definition of qualifying assets and that all borrowing
costs are eligible for capitalisation. The weighted average cost of borrowing was 6.9% (2022: 6.9%).
72
Omni Bridgeway
Note 13: Litigation investments - intangible assets (continued)
The carrying value of litigation investments – intangible assets can be summarised as follows:
External funding costs
Capitalised overheads
Gross carrying amount at cost
Accumulated impairment - Investments in progress
Balance at 30 June
Consolidated
2023
$’000
2022
$’000
337,167
472,310
49,143
75,399
386,310
547,709
(16,225)
(153,025)
370,085
394,684
(b) Impairment testing of litigation investments – intangible assets
Except for specific litigation investments – intangible assets that are subject to an unfavourable judgement or award, the recoverable
amount of each of the litigation investments – intangible assets is determined based on a value in use calculation using cash flow
projections based on financial budgets approved by management for the expected length of each investment.
The following describes each key assumption on which management has based its cash flow projections when determining the value
in use of litigation investments – intangible assets:
• The estimated cost to complete is budgeted based on estimates provided by the external legal advisors handling the litigation.
• The value of the litigation is estimated based on a successful completion and the fees due to the Group under the litigation funding
contract.
• The discount rate applied to the cash flow projections is based on the Group’s weighted average cost of capital and other factors
relevant to the particular investment including country risk. The discount rate applied ranged between 12.8% and 13.7% for this
reporting period (2022: between 10.9% and 12.0%).
At 30 June 2023, a provision for impairment has been recognised for $16.225 million (2022: $153.025 million). The impairment comprised:
•
($12.006) million relating to a Fund 4 investment. An initial court decision ruled in favour of the defendants. The plaintiffs are currently
reviewing avenues/feasibility for appeal.
• The remainder of the impairment, ($4.219) million at 30 June 2023 (2022: $25.068 million) relates to 18 investments (2022: 27) across
the remainder of the portfolio, the majority of which are not individually material.
For new or increased impairments, during the impairment review, management have determined that either a successful outcome for the
investment was no longer likely to occur or that the likely outcome would not recover the current carrying value of the investment. The
discount rate used in the impairment assessment of these assets was 13.2%. After taking into account the impairment, at 30 June 2023,
the 18 investments have a combined carrying value of $7.153 million. This amount reflects the net recoverable amount expected to be
received from the investments.
Note 14: Litigation investments - financial assets
(a) Recognition and measurement
Litigation investments - financial assets previously represented the Group's investments made into Managed Investment Schemes (MISs)
relating to Australian class actions, where Omni Bridgeway Managed Investments Limited (OBIML), which is part of the consolidated
Group, was the responsible entity of each MIS.
On 17 June 2022, the Full Federal Court determined that funded litigation schemes are generally not within the definition of a Managed
Investment Scheme but more a financial product under the Australian Corporation Law. As a result, all nine MISs were deregistered on
25 December 2022 and there was no longer a requirement for OBIML to hold an Australian Financial Services Licence (AFSL). This does
not affect the carrying value, viability, prospect or accounting treatment for the Group.
These investments continue to be held within Fund 5 where the Group participates in these investments via its 20% participation and are
not consolidated with the Group.
The investments are classified as financial assets at fair value through the profit or loss. The investments are initially recognised at fair
value plus any attributable transaction costs and are subsequently measured at fair value at each reporting date. The determination of the
fair value is designated as level 3 in the fair value hierarchy. Management judgement is required when calculating the fair value of the
investments. Level 3 inputs are used in the fair value calculation and estimation of fair value is inherently uncertain.
Typically the fair value of investments are equivalent to the Group’s deployed capital on the investment, being the Group’s share of funded
costs of the litigation plus any associated costs until there is some material objective positive or negative event in the underlying litigation
that would cause a change in value.
Annual Report 2023
73
Notes to the Financial Statements continued
Note 14: Litigation investments - financial assets (continued)
(b) Reconciliation of carrying amounts
The following table reconciles the movements in recurring fair value measurements categorised within level 3 of the fair value
hierarchy:
Balance at 1 July
Additions
Disposals
Balance at 30 June
Consolidated
2023
$’000
3,071
4,007
–
7,078
2022
$’000
389
2,791
(109)
3,071
Note 15: Litigation investments – deferred consideration
(a) Recognition and measurement
Variable consideration relating to litigation investments - purchased claims is initially measured at fair value and subsequently measured
at amortised cost using the effective interest rate method. The determination of the fair value is designated as level 3 in the fair value
hierarchy.
(b) Reconciliation of carrying amounts
The following table reconciles the movements in recurring fair value measurements categorised within level 3 of the fair value
hierarchy:
Balance at 1 July
(Decrease)/Increase in carrying value (Note 12)
Interest expense
Valuation remeasurement recognised through profit or loss
Effect of movement in foreign currency
Balance at 30 June
Current
Non-current
Consolidated
2023
$’000
21,872
(16,387)
490
(906)
2,598
7,667
3,342
4,325
7,667
2022
$’000
14,376
8,447
800
(667)
(1,084)
21,872
21,872
–
21,872
74
Omni Bridgeway
Note 16: Goodwill
(a) Recognition and measurement
Goodwill is initially measured at cost (being the excess of the aggregate of the consideration transferred and the amount recognised for
non-controlling interests and any previous interest held over the fair value of the net identifiable assets acquired and liabilities assumed).
Goodwill is subsequently measured at cost less any impairment.
Goodwill arose on the acquisition of Omni Bridgeway Holding B.V. and its subsidiaries (collectively known as the OBE Group) accounted
for as a business combination. For impairment purposes, goodwill has been solely allocated to the OBE Group, its related enforcement
business and income generated by the OBE Group. The Group performs its annual impairment test on the goodwill associated with the
OBE Group at 30 June each year.
The impairment test performed on the OBE Group goodwill is done via a value-in-use calculation using the following inputs:
i.
Cashflows generated over a 5-year period from the OBE Group’s annual budget. The annual budget includes an estimation for all
cashflows from operations of the OBE Group, including returns from investments and payments of overheads. The budget cashflows
are sensitive to the timing and amount of investment completions. The investment completions refer to income earned from claims
portfolio, purchased claims and intangible assets – litigation contracts in progress. The timing of completion and amount of
investment income are based on the relevant investment manager’s best estimates during the Group’s annual budget process and
are reviewed internally by management. The cashflows from investment completions have a compound annual growth rate of 25.4%
(2022: 38.3%) over the cash flow period. This is reflective of the management’s estimate of the OBE Group’s expected future growth
in business activity.
ii. Discount rate of 14.9% (2022: 18.4%). The discount rate represents the current assessment of the risks specific to OBE Group cash-
generating unit (CGU), taking into consideration the time value of money and individual risks of the underlying OBE Group investmen
t that have not been incorporated in the cash flow estimates. The discount rate was arrived using the OBL’s weighted average cost of
capital (WACC) as a starting base.
No reasonably possible change in key assumption would result in the carrying amount of the CGU exceeding its recoverable amount.
Reconciliation of carrying amounts
Balance at 1 July
Effect of movement in foreign currency
Balance at 30 June
Consolidated
2023
$’000
95,567
7,737
103,304
2022
$’000
99,645
(4,078)
95,567
Annual Report 2023
75
Notes to the Financial Statements continued
C. CAPITAL STRUCTURE
Note 17: Financial risk management
The Group’s principal financial instruments comprise cash and short-term deposits, purchased claims, receivables, payables, debt
securities (bonds and fixed rate notes), borrowings, lease liabilities, deferred consideration and variable deferred consideration.
The Group manages its exposure to key financial risks, including interest rate risk and currency risk in accordance with the Group’s
financial risk management policy. The objective of the policy is to support the delivery of the Group’s financial targets whilst protecting its
future financial security. On 18 July 2022, Group fully repaid and redeemed all of its debt securities (bonds and fixed rate notes) from the
proceeds of debt drawn down from a debt facility in the form of a Senior Facility Agreement, entered into on 5 May 2022. Refer to Note 19.
The main risks arising from the Group’s financial instruments are interest rate risk, foreign currency risk, credit risk and liquidity risk. The
Group uses different methods to measure and manage different types of risks to which it is exposed. These include monitoring levels of
exposure to interest rates and currencies and assessments of market forecasts for interest rates and foreign currencies. Ageing analyses
and monitoring of specific credit allowances are undertaken to manage credit risk. Liquidity risk is monitored through the development of
future rolling cash flow forecasts.
Risk exposures and responses
Interest rate risk
The Group’s exposure to the risk of changes in market interest rates relates primarily to:
• The Group’s cash holdings with a floating interest rate; and
• The Group has a $190 million variable rate debt facility outstanding including fixed capitalised costs of issuing debt as at 30 June 2023.
The debt facility requires that the Group make a quarterly interest payment based on the Bank Bill Swap Bid Rate plus a fixed margin of
7% per annum.
At reporting date the Group had the following financial instruments exposed mainly to Australian variable interest rate risk:
Financial instruments
Cash and cash equivalents
Borrowings
Omni Bridgeway Bonds
Net exposure
Consolidated
2023
$’000
2022
$’000
117,016
158,966
(190,000)
–
(72,984)
–
(76,000)
82,966
The Group regularly analyses its interest rate exposure. Within this analysis, consideration is given to expected interest rate movements
and the Group’s future cash requirements, potential renewals of existing positions, alternative financing available, and the mix of fixed and
variable interest rates.
The following sensitivity analysis is based on the interest rate risk exposures in existence at the reporting date.
At 30 June 2023, if interest rates had moved with all other variables held constant, post-tax profit and equity would have been affected as
follows:
+1.00% (100 basis points) (2022: +1.00%)
-1.00% (100 basis points) (2022: -1.00%)
Credit risk
Post Tax Profit
Higher/ (Lower)
Equity
Higher/(Lower)
2023
$’000
(511)
511
2022
$’000
581
(581)
2023
$’000
(511)
511
2022
$’000
581
(581)
Credit risk arises from the financial assets of the Group, which comprises cash and cash equivalents, purchased claims and receivables
from litigation contracts and other. The Group’s exposure to credit risk arises from potential default of the counterparty, with a maximum
exposure equal to the carrying amount of these instruments. Exposure at reporting date is addressed in each applicable note. Apart from
ratings on cash held and litigation contract receivables, as detailed below, the remainder of the Group’s receivables typically do not carry a
credit risk rating from a ratings agency.
To mitigate credit risk on litigation contract receivables the Group assesses the defendants in the investments funded by the Group prior
to entering into any agreement to provide funding and continues this assessment during the course of funding. Wherever possible, the
Group ensures that security for settlement sums is provided, usually with the settlement funds placed into solicitors’ trust accounts. As at
30 June 2023, there are $13.7 million worth of funds within solicitor’s trust accounts. The Group’s continual monitoring of the defendants’
financial capacity mitigates this risk. At 30 June 2023, there were no litigation contract receivables that were due to be paid by the AAA
rated government (2022: $nil).
To mitigate credit risk on purchased claims, the Group assesses the defendants in the investments funded by the Group prior to
purchasing the claim. The Group’s continual monitoring of the defendants’ financial capacity mitigates this risk.
76
Omni Bridgeway
Note 17: Financial risk management (continued)
To mitigate credit risk on cash and cash equivalents, the Group holds over 99.6% (2022: 92.4%) of its cash with Australian, American,
Canadian and Singaporean AA rated banks.
Refer to each financial asset’s respective note for information on how impairment and credit loss is determined.
Liquidity risk
The liquidity position of the Group is managed to ensure sufficient liquid funds are available to meet the Group’s expected financial
commitments in a timely and cost-effective manner.
Management continually reviews the Group’s liquidity position, including the preparation of cash flow forecasts, to determine the forecast
liquidity position and to maintain appropriate liquidity levels. All financial liabilities of the Group, except the debt facility, consideration
liabilities and non-current lease liabilities, are current and payable within 30 days.
The maturity profile of the Group’s financial liabilities based on contractual maturity on an undiscounted basis are set out below. On
18 July 2022, Group fully repaid and redeemed all of its debt securities (bonds and fixed rate notes) from the proceeds of debt drawn
down from a debt facility in the form of a Senior Facility Agreement, entered into on 5 May 2022. This repayment included an early
redemption fee.
2023
Financial Liabilities
Trade and other payables
Borrowings - principal
Borrowings - interest
Lease liabilities
Litigation investments - deferred consideration
Deferred consideration - Insurance
Variable deferred consideration - business combinations
2022
Financial Liabilities
Trade and other payables
Bonds and Notes - principal
Bonds and Notes - interest
Lease liabilities
Litigation investments - deferred consideration
Deferred and variable deferred consideration - business
combinations
< 6 months
6-12 months
1-5 years
>5 years
$'000
$'000
$'000
$'000
Total
$'000
50,110
–
10,227
1,466
3,342
1,099
6,998
–
–
10,227
1,467
–
–
–
–
190,000
61,697
10,885
4,325
2,975
7,775
–
–
–
4,123
–
–
–
50,110
190,000
82,151
17,941
7,667
4,074
14,773
73,242
11,694
277,657
4,123
366,716
41,953
148,000
1,519
1,377
12,406
29,161
–
–
–
1,378
9,466
–
234,416
10,844
–
–
–
6,932
–
16,568
23,500
–
–
–
4,241
–
–
41,953
148,000
1,519
13,928
21,872
45,729
4,241
273,001
Equity price risk
The fair value of the deferred and variable deferred consideration – business combination for the acquisition of the OBE Group (refer to
Note 20 and 29) is exposed to changes in the Company’s share price. There is no hedging or policy in place to mitigate the changes in
share price. Refer to Fair Value section below for sensitivity analysis of this risk.
Annual Report 2023
77
Notes to the Financial Statements continued
Note 17: Financial risk management (continued)
Fair value
The methods for estimating fair value are outlined in the relevant notes to the financial statements. The carrying amounts of financial
assets and liabilities of the Group carried at amortised cost approximate their fair values.
For the purposes of disclosure, the fair value measurements used for all assets and liabilities below are level 3, except for the bonds which
are level 1 on the fair value hierarchy.
Financial assets
Trade and other receivables
Carrying Value
2023
$’000
2022
$’000
Fair Value
2023
$’000
2022
$’000
186,431
164,392
186,431
164,392
Litigation investments - purchased claims
37,423
47,040
37,423
47,040
Litigation investments - financial assets
Security deposits
Financial liabilities
Trade and other payables
Omni Bridgeway bonds
Fixed rate notes
Borrowings
Deferred consideration - business combination
Variable deferred consideration - business combination
Variable consideration - litigation investments - purchased
claims
7,078
2,925
3,071
2,848
7,078
2,925
3,071
2,848
233,857
217,351
233,857
217,351
50,110
–
–
181,639
4,074
14,773
41,953
76,000
72,000
50,110
–
–
–
181,639
15,491
30,238
4,074
14,773
41,953
76,494
73,146
–
15,491
30,238
7,667
21,872
7,667
21,872
258,263
257,554
258,263
259,194
78
Omni Bridgeway
Note 17: Financial risk management (continued)
Description of significant inputs to valuation of deferred and variable deferred consideration – business combination
The significant inputs and assumptions used in the fair value measurements of deferred and variable deferred consideration – business
combination, categorised within Level 3 of the fair value hierarchy, together with a quantitative sensitivity analysis at 30 June 2023 are
shown below:
Item
Variable deferred
consideration -
business
combination
Valuation
technique
Black Scholes
Option Pricing
Model
Significant
unobservable
inputs
Exercise price
Volatility
Range
(weighted average)
Theoretical exercise
price based on the
floor price of $3.407
40% at 30 June 2023
and 40% at 30 June
2022
Underlying share
price
$2.62 at 30 June
2023 and $3.55 at
30 June 2022
Dividend yield
Risk free rate
FX forward rate
(AUD/EUR)
At 30 June 2023:
0% for 8-Nov-23
payment 0% for 8-
Nov-24 payment
At 30 June 2022:
0% for 8-Nov-22
payment 2% for 8-
Nov-23 payment 2%
for 8-Nov-24 payment
At 30 June 2023:
4.36% for 8-Nov-23
payment 4.36% for
8-Nov-24 payment
At 30 June 2022:
1.94% for 8-Nov-22
payment 2.95% for 8-
Nov-23 payment
3.02% for 8-Nov-24
payment
At 30 June 2023:
8-Nov-23: 1.64
8-Nov-24: 1.66
At 30 June 2022:
8-Nov-22: 1.53
8-Nov-23: 1.58
8-Nov-24: 1.62
Sensitivity of the input to fair value
At 30 June 2023:
An absolute 5% increase in the volatility
would result in a $170,000 increase in the
value of the liability. An absolute 5%
decrease in the volatility would result in a
$164,000 decrease in the value of the
liability.
At 30 June 2022:
An absolute 5% increase/(decrease) in the
volatility would result in a $487,000 increase/
(decrease) in the value of the liability
respectively.
At 30 June 2023:
A relative 5% increase in the share price
would result in a $176,000 increase in the
value of the liability. A relative 5% decrease
in the share price would result in a
$153,000 decrease in the value of the
liability.
At 30 June 2022:
A relative 5% increase in the share price would
result in a $875,000 increase in the value of
the liability. A relative 5% decrease in the share
price would result in a $803,000 decrease in
the value of the liability.
At 30 June 2023:
An absolute 1% increase in dividend yield
would result in a $33,000 decrease in the
value of the liability. An absolute 1%
decrease in dividend yield would not result
in a change in the value of the liability.
At 30 June 2022:
An absolute 1% increase in dividend yield
would result in a $160,000 decrease in the
value of the liability. An absolute 1% decrease
in dividend yield would result in a $164,000
increase in the value of the liability.
At 30 June 2023:
An absolute 0.5% increase in risk free rate
would result in a $43,000 decrease in the
value of the liability. An absolute 0.5%
decrease in risk free rate would result in a
$41,000 increase in the value of the liability.
At 30 June 2022:
An absolute 0.5% increase in risk free rate
would result in a $77,000 decrease in the value
of the liability. An absolute 0.5% decrease in
risk free rate would result in a $79,000
increase in the value of the liability.
At 30 June 2023:
A relative 5% increase/(decrease) in the
forward exchange rates would result in a
$714,000 increase/(decrease) in the value of
the liability respectively.
At 30 June 2022:
A relative 5% increase in the forward exchange
rates would result in a $1,489,000 increase the
value of the liability. A relative 5% decrease in
the forward exchange rate would result in a
$1,489,000 decrease in the value of the
liability.
Annual Report 2023
79
Notes to the Financial Statements continued
Note 17: Financial risk management (continued)
Foreign currency risk
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with
respect to the US dollar. Foreign exchange risk arises from commercial transactions and recognised assets and liabilities denominated
in a currency that is not the functional currency in which they are measured. The risk is monitored using sensitivity analysis and cash flow
forecasting. The Group is also exposed to foreign exchange translation risk arising from its foreign operations. The Group’s investments in
its subsidiaries are not hedged as those currency positions are considered to be long term in nature. In addition, the parent entity has
intercompany receivables from its subsidiaries denominated in Australian Dollars which are eliminated on consolidation. The gains or
losses on re-measurement of these intercompany receivables from foreign currencies to Australian Dollars are not eliminated on
consolidation as the loans are not considered to be part of the net investment in the subsidiary.
The Group’s exposure to foreign currency risk at 30 June were as follows:
AUD
USD
GBP
EUR
SGD
CAD
HKD
CHF
AED
JPY
NZD
NOK
ZAR
MAD
SEK
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
– 665 132 372
1 101 1,029
1
79
35
–
–
–
–
– 6,434 6,000 1,103
– 19,808
–
–
–
–
–
–
–
–
– 59,427 (831)
– (2,095)
–
–
– 66,526 5,301 1,475 (2,094) 19,909 1,029
–
1
–
– 351
79
35 351
–
–
–
–
–
–
–
–
–
–
460 1,836 512 282
1 375
–
– 115
–
– 202
–
60 183
2023
Financial
Assets
Cash and cash
equivalents
Trade
receivables¹
Intercompany
loan receivable
Total assets
Financial
Liabilities
Trade payables
Deferred and
variable
deferred
consideration -
business
combination
45,729
–
–
–
–
–
Total liabilities
46,189 1,836 512 282
1 375
–
–
–
–
– 115
–
–
–
–
– 202
–
–
–
–
60 183
2022
Financial
Assets
Cash and cash
equivalents
Trade
receivables¹
Intercompany
loan receivable
Total assets
Financial
Liabilities
Trade payables
Deferred and
variable
deferred
consideration -
business
combination
Total liabilities
AUD
USD
GBP
EUR
SGD
CAD
HKD
CHF
AED
JPY
NZD
NOK
ZAR
MAD
SEK
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
– 9,963 306 996 303
– 9,820
27 102
41
–
–
–
–
– 6,516 6,000 5,052
– 14,725
–
–
–
–
–
–
–
–
– 43,141
(705)
– (2,956)
–
–
–
–
–
– 59,620 5,601 6,048 (2,653) 14,725 9,820
27 102
41
4
4
–
–
–
–
–
–
–
–
–
–
2,897 279
15 301
2 207
88
–
34
(34)
35
31 557
–
–
45,729
–
–
–
–
–
–
48,626 279
15 301
2 207
88
–
–
–
–
–
–
–
34
(34)
35
31 557
–
–
–
–
1. Receivables includes intercompany loan trade receivable and payable.
The Group’s exposure to foreign currency risk on cash and cash equivalents primarily relates to foreign cash holdings within the parent
entity. The USD foreign currency risk for receivables is predominately due to the Group’s AUD and Euro denominated subsidiaries which
have USD receivables. The AUD foreign currency risk for variable deferred consideration is due to Omni Bridgeway (Storm) Holdings BV’s
acquisition of the OBE Group and its requirement to deliver AUD denominated shares in the Company.
80
Omni Bridgeway
Note 17: Financial risk management (continued)
Sensitivity
The following table summarises the sensitivity of financial instruments held at balance date to movement in the exchange rate of the
subsidiary’s functional currency to the listed currencies, with all other variables held constant. The sensitivity is based on management’s
estimate of reasonably possible changes over the financial year.
30 June
2023
30 June
2022
AUD
USD
GBP
EUR
SGD
CAD
HKD
CHF
AED
JPY
NZD
NOK
ZAR
MAD
SEK
Impact on profit or loss before tax ($’000)
+10% 1,428 (9,773) (913) (196) 233 (2,228)
(20)
(10%) (1,428) 9,773 913 196 (233) 2,228
20
–
–
1
(1)
–
(32)
3
–
32
(3)
–
–
1
3
(1)
(3)
+10% 4,528 (8,632) (985) (873) 277 (1,638) (180)
(4)
(3)
(10%) (4,528) 8,632 985 873 (277) 1,638 180
4
3
–
–
3
(3)
–
–
5
(5)
–
–
–
–
Note 18: Cash and cash equivalents
Cash and cash equivalents in the Consolidated Statement of Financial Position and Consolidated Statement of Cash Flows comprise cash
at bank and on hand, and short-term deposits with an original maturity of three months or less that are readily convertible to known
amounts of cash on hand and which are subject to an insignificant risk of changes in value.
Cash at bank
Short-term deposits
Consolidated
2023
$’000
2022
$’000
115,430
124,755
1,586
34,211
117,016
158,966
Cash at bank earns interest at floating rates based on daily bank deposit rates. The carrying amounts of cash and cash equivalents
represent fair value. Of the cash at bank, $2,226,000 (2022: $1,686,000) is restricted as it is cash received for unearned revenue or is held
within Stichting vehicles on behalf of customers. The Stichting vehicles were founded as a separate, independent foundation to ensure the
cash flows related to the claims were secured.
Short-term deposits are made for varying periods depending on the immediate cash requirements of the Group. At 30 June 2023, all
short-term deposits are due to mature in less than 90 days from inception and earn interest at the respective short-term deposit rates.
Bank Guarantees
Bank guarantees have been issued by the Group’s bankers as security for leases over premises. At 30 June 2023, guarantees of
$1,735,000 were outstanding (2022: $2,355,000). The Group has a total guarantee facility limit of $1,735,000 (2022: $2,472,000) that is
secured by an offset arrangement with deposits of $1,490,000 (2022: $1,672,000).
Note 19: Borrowings and debt securities
All loans and borrowings are initially recognised at fair value less directly attributable transaction costs.
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest
rate method.
On 8 July 2022, the Group fully repaid and redeemed all of its Bonds and Fixed Rate Notes from the proceeds of debt drawn down from a
debt facility with a limit of $250 million in the form of a Senior Facility Agreement, entered into on 5 May 2022. The total amount of drawn
down from the debt facilities at 30 June 2023 was $190 million.
The interest rate of the borrowings is 7% + BBSY and matures on 5 July 2027.
There were no breaches of financial covenants during the year ended 30 June 2023.
Current
Omni Bridgeway Bonds
Fixed Rate Notes
Non-Current
Borrowings
Consolidated
2023
$’000
–
–
–
2022
$’000
76,000
72,000
148,000
181,639
181,639
–
–
Annual Report 2023
81
Notes to the Financial Statements continued
Note 19: Borrowings and debt securities (continued)
Cash and non-cash movements in borrowings are shown below:
Balance at 1 July
Repayment of Bonds and Fixed Rate Notes
Proceeds from issue of borrowings
Capitalised costs of borrowings
Amortisation of costs of borrowings
Balance at 30 June
Consolidated
2023
$’000
2022
$’000
148,000
145,522
(148,000)
190,000
(10,378)
–
–
–
2,017
2,478
181,639
148,000
The application of AASB 123 Borrowing Costs (revised 2007) has resulted in the capitalisation of interest and borrowing cost amounting to
$19.601 million (2022: $10.182 million) during the current financial year as part of the litigation investments which are deemed to be
qualifying assets post the application date of AASB 123 (revised) on 1 July 2009 (refer to Note 13).
Note 20: Contributed equity
(a) Ordinary shares
Ordinary shares are classified as equity. Issued and paid up capital is recognised at the fair value of the consideration received by the
Company. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from
the proceeds.
Fully paid ordinary shares carry one vote per share and the right to dividends.
Contributed equity
Issued and fully paid ordinary shares
Movement in ordinary shares
At 1 July 2021
Shares issued during the year (deferred and variable deferred consideration - business combination)
(Note 29)
Shares issued upon exercise of performance rights (Note 32)
At 30 June 2022
Shares issued during the year (deferred and variable deferred consideration - business combination)
(Note 29)
Shares issued upon exercise of performance rights (Note 32)
Share Buy-Back Scheme
At 30 June 2023
(b) Performance rights
Consolidated
2023
$’000
2022
$’000
449,854
406,963
Number
’000
$’000
262,180
389,501
3,659
2,800
10,940
6,522
268,639
406,963
7,756
2,768
(544)
30,712
13,839
(1,660)
278,619
449,854
At 30 June 2023, there were 15,421,416 unissued ordinary shares in respect of which share performance rights have been issued but not
vested were outstanding (2022: 15,929,183). Refer to Note 32.
(c) Variable deferred consideration shares
ASX has granted the Company a waiver from Listing Rule 7.3.4 on 31 December 2019, to permit the Company to seek Shareholder
approval for the issue of the Variable Deferred Consideration Shares in respect of the Variable Deferred Consideration later than
3 months from the date of the Meeting but no later than 60 months after the date of Completion (ASX Waiver). The ASX Waiver was
granted subject to the following conditions:
(i)
the Annual Targets not being varied;
(ii)
the maximum number of Variable Deferred Consideration Shares to be issued is calculated based upon the Minimum Deemed Issue
Price and is stated in the Notice, along with adequate details regarding potential dilution;
(iii) for any annual reporting during which any of the Variable Deferred Consideration Shares have been issued or any of them remain to
be issued, the Company’s annual report sets out in detail the number of Variable Deferred Consideration Shares issued in that annual
reporting period, the number of Variable Deferred Consideration Shares that remain to be issued and the basis on which the Variable
Deferred Consideration Shares may be issued;
82
Omni Bridgeway
Note 20: Contributed equity (continued)
(iv)
in any half year or quarterly report for a period during which any of the Variable Deferred Consideration Shares have been issued or
remain to be issued, the Company must include a summary statement of the number of Variable Deferred Consideration Shares
issued during the reporting period, the number of Variable Deferred Consideration Shares that remain to be issued and the basis on
which the Variable Deferred Consideration Shares may be issued; and
(v)
the notice of shareholder meeting contains the full terms and conditions of the Variable Deferred Consideration Shares and the
conditions of the Waiver.
During the year, the following number of shares were issued in settlement of this obligation:
Maximum approved as permissible to issue
Previously issued
Issued during the year
Total issued
Remaining shares to be issued
(d) Capital management
2023
$’000
17,329
(7,468)
(3,640)
(11,108)
6,221
2022
$’000
17,329
(3,809)
(3,659)
(7,468)
9,861
Capital includes debt, lease liabilities and equity attributable to the equity holders of the Parent. When managing capital, management’s
objective is to ensure the Group continues as a going concern while maintaining optimal returns to shareholders and benefits for other
stakeholders. Management also aims to maintain a capital structure that ensures the lowest cost of capital available to the Group.
The Group’s earnings often vary dramatically, and this is expected to continue in future. Management’s policy is to pay dividends to
shareholders from earnings where there is capital surplus to the needs of the business.
The Group is not subject to any externally imposed capital requirements. The Parent’s accumulated losses/retained earnings are disclosed
in Note 33.
Note 21: Accumulated losses and reserves
Movements in retained earnings/(accumulated losses) were as follows:
Balance at 1 July
Net loss for the year
Balance at 30 June
(a) Movements in reserves were as follows:
Share based
payment
reserve
Foreign
currency
translation
reserve
$’000
$’000
28,327
(28,405)
3,946
32,273
(9,531)
22,742
8,599
(19,806)
13,893
(5,913)
Balance at 1 July 2021
Movements in reserves during the year
Balance at 30 June 2022
Movements in reserves during the year
Balance at 30 June 2023
(b) Nature and purpose of reserves
i.
Share-based payment reserve
Consolidated
2023
$’000
(87,832)
(31,659)
(119,491)
2022
$’000
(42,187)
(45,645)
(87,832)
Convertible
note reserve
Fund equity
reserve
Option
premium
reserve
$’000
3,404
–
$’000
3,832
–
3,404
3,832
–
–
3,404
3,832
$’000
(22,599)
12,655
(9,944)
4,367
(5,577)
Total
reserves
$’000
(15,441)
25,200
9,759
8,729
18,488
The share-based payment reserve is used to recognise the value of equity-settled share-based payments provided to employees,
including key management personnel as part of their remuneration. Refer to Note 32 for further details of this plan.
ii. Foreign currency translation reserve
This reserve is used to record differences on the translation of the assets and liabilities of foreign operations.
iii. Option premium reserve
This reserve is used to record the value of equity benefits provided to employees and directors, including Key Management Personnel,
as part of their remuneration. This reserve relates to the previous plan for options already vested.
iv. Convertible note reserve
This reserve was used to record the equity portion on the convertible notes (issued on 13 December 2010), which were fully redeemed
by the Company during December 2013.
v. Fund equity reserve
This reserve is used to record changes in the proportion of equity held by non-controlling interests within the Group.
Annual Report 2023
83
Notes to the Financial Statements continued
D. WORKING CAPITAL, OTHER ASSETS AND OTHER LIABILITIES
Note 22: Trade and other receivables
Receivables are recognised initially at fair value and subsequently remeasured at amortised cost using the effective interest rate method,
less an allowance for any uncollectible amounts.
Receivables due from the completion of litigation investments are recognised upon various stages of completion of the underlying
litigation in conjunction with the income recognition criteria of each investment. Collectability is reviewed on an ongoing basis and at
each reporting period.
The Group recognises an allowance for expected credit losses (ECLs) for all receivables based on the difference between the contractual
cash flows due and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest
rate. ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial
recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month
ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is
required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL). At
30 June 2023, the value of the ECL allowance is $1.727 million (2022: $nil).
Other receivables comprise interest receivable upon the maturity of the Group’s short-term deposits (between 30 and 90 days),
receivables from co-funders of litigation contracts in progress, short term loans and deposits receivable.
Current
Receivables due from the completion of litigation investments
Other receivables
Non-current
Receivables due from the completion of litigation investments
Other receivables
Consolidated
2023
$’000
2022
$’000
101,929
101,448
38,841
26,306
140,770
127,754
43,769
1,892
45,661
36,638
–
36,638
(a) Fair value and credit risk
Due to the nature of these receivables, the carrying value of the current receivables approximates its fair value. The maximum exposure to
credit risk is the carrying value of receivables. It is not the Group’s policy to transfer (on-sell) receivables.
Note 23: Contract costs
The Group holds management and advisory contracts in respect of Fund 4 and Fund 5. Incremental costs incurred in obtaining a contract
are capitalised when the Group expects to recover the costs and are amortised on a systemic basis that is consistent with the Group’s
transfer of related services to the customer.
The amounts have been capitalised as shown below. The amounts are being amortised on a straight line basis over a period of seven
years, being in reference to the initial four-year commitment period of the fund plus the estimated litigation funding contract life of three
years.
Consolidated
2023
$’000
3,522
(939)
2,583
939
1,644
2,583
2022
$’000
4,461
(939)
3,522
939
2,583
3,522
Balance at 1 July
Amortisation of contract costs
Balance at 30 June
Current
Non-current
84
Omni Bridgeway
Note 24: Other assets
Current
Prepayments
Security deposits
Non-current
Prepayments
Other
Consolidated
2023
$’000
5,075
2,925
8,000
16,988
800
17,788
2022
$’000
2,576
2,848
5,424
12,037
714
12,751
Note 25: Right of use assets and other plant and equipment
Plant and Equipment
Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Such cost includes the cost of replacing
parts that are eligible for capitalisation when the cost of replacing parts is incurred. All other repairs and maintenance are recognised in
the profit or loss as incurred.
Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets. The major categories of property, plant
and equipment are depreciated as follows:
• Equipment
• Furniture
• Leasehold
• Right-of-use
2 to 11 years; and
3 to 10 years.
2 to 6 years;
2 to 5 years;
The assets’ residual values, useful lives and amortisation methods are reviewed, and adjusted if appropriate, at each financial year end.
An item of plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use
or disposal.
Right-of-use assets
The Group recognises right-of-use assets at the commencement date of the lease (ie. the date the underlying asset is available for use).
Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement
of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised (Refer to Note 28), initial direct costs
incurred, and lease payments made at or before the commencement date less any lease incentives received. Unless the Group is
reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognised right-of-use assets are depreciated
on a straight-line basis over the shorter of its estimated useful life and the lease term. Right-of-use assets are subject to impairment
indicator assessments.
Gross carrying amount - at cost
Accumulated depreciation
Net carrying amount
Consolidated
2023
$’000
29,066
(10,620)
18,446
2022
$’000
26,942
(12,073)
14,869
Annual Report 2023
85
Notes to the Financial Statements continued
Note 25: Right of use assets and other plant and equipment (continued)
Reconciliation of carrying amounts at the beginning and end of the year
Gross carrying amount
Balance at 1 July 2021
Additions
Disposals
Effect of movement in foreign currency
Balance at 30 June 2022
Additions
Disposals/terminations
Effect of movement in foreign currency
Equipment
$'000
Furniture,
fixtures and
fittings
Leasehold
improvements
Right-of-use
assets
$'000
$'000
$'000
2,080
357
(2)
(2)
968
242
–
10
2,433
1,220
334
(948)
(33)
156
(302)
59
1,931
1,065
–
12
3,008
57
(1,772)
14
9,202
15,084
(4,446)
441
20,281
6,399
(2,562)
722
Total
$'000
14,181
16,748
(4,448)
461
26,942
6,946
(5,584)
762
Balance at 30 June 2023
1,786
1,133
1,307
24,840
29,066
Accumulated depreciation
Balance at 1 July 2021
Depreciation charge for the year
Disposals
Adjustments
Effect of movement in foreign currency
Balance at 30 June 2022
Depreciation charge for the year
Disposals
Adjustments
Effect of movement in foreign currency
Balance at 30 June 2023
1,594
339
(2)
–
(2)
1,929
458
(1,292)
–
53
1,148
776
106
–
–
10
892
99
(302)
–
42
731
1,814
255
–
–
8
2,077
238
(1,772)
–
12
555
4,092
2,757
–
197
129
7,175
3,122
(2,562)
183
268
8,276
3,457
(2)
197
145
12,073
3,917
(5,928)
183
375
8,186
10,620
Property, plant and equipment of the Company is subject to a fixed charge to secure the Company’s debt. See Note 19 for further details.
Refer to Note 28 for further information on right-of-use assets and their associated leases.
Note 26: Trade and other payables
Trade payables, other payables and accruals are carried at amortised cost. Due to their short-term nature they are not discounted. They
represent liabilities for goods and services provided to the Group or liabilities to provide funding in relation to a litigation investment to the
end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase
of these goods and services or deployment against investment commitments. The amounts are unsecured, non-interest bearing and are
usually paid within 30 days of recognition.
Trade payables
Unearned revenue (Refer to Note 2)
Wage accruals
Interest accruals
Fair Value
Due to the nature of trade and other payables, their carrying value approximates their fair value.
Consolidated
2023
$'000
36,226
11,862
2,022
–
2022
$'000
30,842
8,594
468
2,049
50,110
41,953
86
Omni Bridgeway
Note 27: Provisions
General provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that
an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the
amount of the obligation.
Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation
at the balance date. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects
the time value of money and the risks specific to the liability.
The increase in the provision resulting from the passage of time is recognised in finance costs.
Refer to Notes 11 - 14 in respect to litigation investment impairment provisions.
Employee benefits
Provision is made for employee benefits accumulated as a result of employees rendering services up to the end of the reporting period.
These benefits include wages, salaries, annual leave, long service leave and bonuses.
Liabilities in respect of employees’ services rendered that are not expected to be wholly settled within one year after the end of the
periods in which the employees render the related services are recognised as long-term employee benefits. These liabilities are measured
at the present value of the estimated future cash outflow to be made to the employees using the projected unit credit method.
Liabilities expected to be wholly settled within one year after the end of the period in which the employees render the related services are
classified as short-term benefits and are measured at the amount due to be paid.
Current
Annual leave and vested long service leave
Litigation investments - adverse costs
Bonus
Non-Current
Premises lease make good
Long service leave
(a) Movement in provisions
Balance at 1 July 2021
Arising during the year
Utilised
Effect of movement in foreign currency
Consolidated
2023
$’000
4,483
26,753
2
31,238
626
665
1,291
2022
$’000
3,941
20,877
306
25,124
601
642
1,243
Litigation
investments -
adverse costs
Annual leave
Long service
leave
Premises
lease make
good
$'000
$'000
$'000
$'000
19,100
3,733
1,481
1,777
3,060
–
–
(3,469)
65
160
(447)
–
278
323
–
–
Bonus
$'000
677
725
Total
$'000
25,269
6,045
(1,085)
(5,001)
(11)
54
Balance at 30 June 2022
20,877
3,389
1,194
601
306
26,367
Arising during the year
Utilised
Effect of movement in foreign currency
Balance at 30 June 2023
Current 2023
Non-current 2023
Current 2022
Non-current 2022
7,583
4,160
(1,707)
(3,684)
–
76
146
(133)
–
26,753
3,941
1,207
26,753
3,941
–
–
542
665
26,753
3,941
1,207
20,877
3,389
–
–
552
642
20,877
3,389
1,194
120
(95)
–
626
–
626
626
–
601
601
–
12,009
(304)
(5,923)
–
2
2
–
2
76
32,529
31,238
1,291
32,529
306
25,124
–
1,243
306
26,367
Annual Report 2023
87
Notes to the Financial Statements continued
Note 27: Provisions (continued)
(b) Nature and timing of provisions
Litigation investments – adverse costs
The Group raises a provision for adverse costs upon receipt of a losing judgement in jurisdictions that require adverse costs to be paid
to the litigations’s counter party. Refer to Notes 1, 6 and 30 for further details on adverse costs.
At 30 June 2023, an adverse costs provision of $26.8 million (2022: $20.9 million) exists in relation to two non-fund investments.
Of that amount, $9.5 million will be recovered from (i) ATE insurance proceeds ($8.7 million); and (ii) as part of a co-funding agreement
($0.8 million) recognised as a receivable. As a result, $7.7 million has been expensed and is included in other expenses. $1.8 million
had been recognised for fund investments with $1.2 million recoverable from insurance proceeds.
Premises lease make good
The make good provision relates to amounts recognised for make good requirements on leases of office space.
Bonus
The bonus provision relates to amounts accrued based on management’s best estimate to be paid to employees.
Note 28: Lease liabilities
The Group has lease contracts for rental property and motor vehicles. These leases generally have lease terms between 3 and 10 years.
The Group’s obligations under its leases are secured by the lessor’s title to the leased assets. Generally, the Group is restricted from
assigning and subleasing the leased assets. There are several lease contracts that include extension and termination options and variable
lease payments, which are further discussed below.
The Group assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the
use of an identified asset for a period of time in exchange for consideration.
Group as lessee
Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be
made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives
receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees.
The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments
of penalties for terminating a lease, if the lease term reflects the Group exercising the option to terminate.
In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement date if the
interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to
reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is
remeasured if there is a modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the
assessment to purchase the underlying asset.
Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to its short-term leases of machinery and equipment (ie those leases that
have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of
low-value assets recognition exemption to leases of office equipment that are considered of low value. Lease payments on short-term
leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.
Set out below are the carrying amounts of lease liabilities and the movements during the year:
Balance at 1 July
Additions
Terminations
Accretion of interest
Payments
Effects of movement in foreign currency
Balance at 30 June
Current
Non-current
88
Omni Bridgeway
Consolidated
2023
$’000
13,929
6,333
–
1,091
(3,877)
465
17,941
2,933
15,008
17,941
2022
$’000
5,843
13,602
(2,738)
808
(3,955)
368
13,928
2,755
11,173
13,928
Note 28: Lease liabilities (continued)
The following are the amounts recognised in profit or loss:
Depreciation expense on right-of-use assets
Interest expense on lease liabilities (included in finance costs)
Expense relating to short-term leases
Expenses relating to leases of low-value assets (included in corporate and office expense)
Consolidated
2023
$’000
3,122
1,091
227
413
2022
$’000
2,757
808
99
522
Total amount recognised in profit or loss
4,853
4,186
The Group had total cash outflows for leases of $4,517,636 in 2023 (2022: $4,576,000). The future cash outflows relating to leases that
have not yet commenced are disclosed in Note 30.
The Group has several lease contracts that include extension and termination options. These options are negotiated by management to
provide flexibility in managing the leased-asset portfolio and align with the Group’s business needs. Management exercises significant
judgement in determining whether these extension and termination options are reasonably certain to be exercised.
Note 29: Other financial liabilities
Deferred and variable deferred consideration is valued at fair value at the acquisition date as part of a fair value through profit or loss
business combination. It is subsequently remeasured at fair value at each reporting date.
Current
Deferred consideration - Insurance
Deferred consideration - business combination
Variable deferred consideration - business combination
Non-Current
Deferred consideration - Insurance
Variable deferred consideration - business combination
Consolidated
2023
$’000
1,099
–
6,998
8,097
2,975
7,775
10,750
2022
$’000
–
15,491
13,670
29,161
–
16,568
16,568
Annual Report 2023
89
Notes to the Financial Statements continued
Note 29: Other financial liabilities (continued)
Deferred and variable deferred consideration – business combination
Relates to the acquisition of OBE Group. Deferred consideration in relation to the business combination was fully paid via shares issue in
December 2022. The determination of the fair value is designated as level 3 in the fair value hierarchy. Refer to Note 17 for further
information.
The following table reconciles the movements in recurring fair value measurements categorised within level 3 of the fair value hierarchy:
Current
Balance at 1 July 2021
Fair value remeasurement recognised through profit or loss
Issue of shares to satisfy the liability
Reclassification from Non-Current
Effect of movement in foreign currency
Balance at 30 June 2022
Fair value remeasurement recognised through profit or loss
Issue of shares to satisfy the liability
Reclassification from Non-Current
Effect of movement in foreign currency
Balance at 30 June 2023
Non-Current
Balance at 1 July 2021
Deferred
consideration -
business
combination
Variable deferred
consideration -
business
combination
$'000
$'000
–
(1,564)
–
17,055
–
15,491
337
14,647
(4,971)
(10,940)
15,050
(116)
13,670
(1,161)
Total
$'000
14,647
(6,535)
(10,940)
32,105
(116)
29,161
(824)
(16,297)
(14,415)
(30,712)
–
469
–
8,503
401
6,998
8,503
870
6,998
17,783
33,886
51,669
Fair value remeasurement recognised through profit or loss
–
(880)
(880)
Reclassification to Current
Effect of movement in foreign currency
Balance at 30 June 2022
Fair value remeasurement recognised through profit or loss
Reclassification to Current
Effect of movement in foreign currency
Balance at 30 June 2023
(17,055)
(15,050)
(32,105)
(728)
–
–
–
–
–
(1,388)
16,568
(1,617)
(8,503)
1,327
7,775
(2,116)
16,568
(1,617)
(8,503)
1,327
7,775
90
Omni Bridgeway
Note 30: Commitments and contingencies
Capital commitments
Omni Bridgeway Limited has $420.220 million (2022: $402.532 million) in aggregate Investor Capital commitments to its Funds 1, 2&3, 4, 5,
6, 7 and 8 collectively, of which $195.290 million is undrawn at 30 June 2023 (2022: $227.703 million).
The Funds have made aggregate funding commitments to Investments totalling $2,115.500 million (2022: $1,574.017 million), of which
$931.550 million is yet to be deployed at 30 June 2023 (2022: $799.979 million).
Remuneration commitments
Commitments for the payment of salaries and other remuneration under long-term employment
contracts in existence at the reporting date but not recognised as liabilities payable:
Within one year
After one year but no more than five years
Consolidated
2023
$'000
5,008
–
5,008
2022
$'000
4,295
–
4,295
Amounts disclosed as remuneration commitments also include commitments arising from the service contracts of, and bonuses payable
to, directors and executives referred to in the Remuneration Report of the Directors’ Report that are not recognised as liabilities and are
not included in the compensation of Key Management Personnel.
Contingencies
In certain jurisdictions litigation funding agreements contain an undertaking from the Group to the client 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. It is not possible to predict in which cases such an award might be made.
The Group has insurance arrangements which, in some circumstances, will lessen the impact of such awards. The entire Funds 2 & 3
portfolio has an after the event (ATE) insurance policy that will respond to claims for adverse costs in aggregate in excess of $7.5 million.
The entire Fund 5 portfolio has an ATE insurance policy that will respond to claims for adverse costs in aggregate in excess of
US$20 million. Additionally, the Group may obtain insurance cover over a specific investment. Based on past experience, an award of
adverse costs to a defendant will approximate nil to 80% (depending on jurisdiction) of the amount paid by the plaintiff to pursue the
litigation (although in some cases there may be more than one defendant).
An indicative pre-insurance cover estimate of the total gross potential adverse costs exposure of the Group may be made by assuming
all cases are lost, that adverse costs equal 40% to 80% of the amount spent by the plaintiff and that there is only one defendant per case.
At 30 June 2023, the total amount of capital deployed on currently funded investments by the Group where undertakings to pay adverse
costs have been provided was $177.351 million (2022: $141.127 million). This excludes specifically identified investments where adverse
costs provisions have already been recognised in liabilities (refer to Note 27) .The potential adverse costs exposure using the above
methodology would amount to $50.302 million (2022: $53.363 million), including the portion attributable to the Group of $19.880 million.
Notwithstanding the historic performance, subject to specific investment impairment considerations, the Group does not currently expect
that any of the investments will be unsuccessful. The Group maintains a large cash holding in the event that one or more investments are
unsuccessful and an adverse costs order is made which is not covered by its insurance arrangements.
Further to the contingent comment above, in respect to a number of investments where the Group has a potential exposure to adverse
cost OBL has provided a security deed poll. The Group has invested $34.084 million to these investments collectively. Where such
investment is within a Fund, OBL is indemnified by the respective Fund.
A portion of the consideration relating to the acquisition of OBE Group is contingent upon the OBE Group meeting performance targets.
This is outlined in Notes 20 and 29.
Annual Report 2023
91
Notes to the Financial Statements continued
E. THE GROUP, MANAGEMENT AND RELATED PARTIES
Note 31: Key management personnel
Details of Key Management Personnel
During the year, Stuart Mitchell was replaced by Guillaume Leger as Global Chief Financial Officer, effective 1 September 2022.
As announced to the ASX on 23 February 2023, Raymond van Hulst will be appointed CEO upon Andrew Saker’s retirement, effective
26 October 2023.
There were no further changes to Key Management Personnel after the reporting date and before the date the financial report was
authorised for issue.
Compensation of Key Management Personnel
Short-term employee benefits
Post-employment benefits
Long term employee benefits
Termination payments
Share based payments
Note 32: Share-based payment plan
Share-based payment transactions
(i) Equity-settled transactions
Consolidated
2023
$’000
2022
$’000
4,854
4,690
154
(14)
88
2,024
7,106
163
(659)
882
2,357
7,433
The Company’s LTIP awards share performance rights to key senior employees. The cost of equity-settled transactions with employees is
measured by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined using
a Monte Carlo or Black Scholes Model depending on the type of LTIP.
In valuing equity-settled transactions, no account is taken of any vesting conditions, other than conditions linked to the price of the shares
of OBL (i.e. market conditions) if applicable.
The cost of equity-settled transactions is recognised, together with a corresponding increase in the share-based payment reserve, over
the period in which the performance and/or service conditions are fulfilled (the vesting period), ending on the date on which the relevant
employees become fully entitled to the award (the vesting date).
The charge to the profit or loss for the period is the cumulative amount as calculated above less the amounts already charged in previous
periods. There is a corresponding credit to equity.
Equity-settled awards granted by OBL to employees of subsidiaries are recognised in the Parent’s separate financial statements as an
additional investment in the subsidiary with a corresponding credit to equity. These amounts are eliminated through consolidation. As a
result, the expenses recognised by the Company in relation to equity-settled awards only represents the expense associated with grants
to employees of the Parent. The expense recognised by the Group is the total expense associated with all such awards.
Until an award has vested, any amounts recorded are contingent and will be adjusted if more or fewer awards vest than were originally
anticipated to do so. Any award subject to a market condition is considered to vest irrespective of whether or not that market condition
is fulfilled, provided that all other conditions are satisfied.
If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified.
An additional expense is recognised for any modification that increases the total fair value of the share-based payment arrangement,
or is otherwise beneficial to the employee, as measured at the date of modification.
If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and an expense not yet recognised for the
award is recognised immediately. However, if a new award is substituted for the cancelled award and designated as a replacement award
on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award, as described in
the previous paragraph.
Where outstanding rights do not have an anti-dilutive effect and are currently meeting the performance criteria, the dilutive effect, if any,
is added to share dilution in the computation of diluted earnings per share.
(ii) Cash-settled transactions
The Group does not provide cash-settled share-based benefits to employees or senior executives.
Long Term Incentive Plan
LTIP awards are delivered in the form of performance rights over shares which vest after a period of three years subject to meeting
performance measures. The Group uses relative TSR and CAGR of Funds Deployed as the performance measures.
For the portion of the LTIP subject to the relative TSR performance measure, the fair value of share performance rights granted is
estimated at the date of grant using a Monte-Carlo simulation model, taking into account the terms and conditions upon which the share
performance rights were granted. For the portion of the LTIP based on the achievement of CAGR of Funds Deployed, the Black-Scholes
model is used.
92
Omni Bridgeway
Note 32: Share-based payment plan (continued)
Performance Rights
On 14 July 2022, 201,059 performance rights were issued to Guillaume Leger in relation to his appointment as the new Global Chief
Financial Officer. The performance rights are subject to Mr. Leger meeting both service and performance conditions. On 28 June 2023,
the Board has approved vesting of 140,752 performance rights, the remaining 60,307 will be tested and approved at the remuneration
committee meeting to be held on 28 June 2024.
6,228,684 share performance rights were issued during 2023 (2022: 5,032,932). Specific assessment for performance rights issued in
the period is below:
Grant Date
Share price at grant date
Exercise price
Expected Volatility (%)
Dividend yield (%)
Risk-free rate (%)
Performance period
Models used
Tranche 1 - relative TSR (value per right $)
Tranche 2 - CAGR (value per right $)
T1 performance rights
T2 performance rights
The expense recognised for share based payments during the year is shown below:
Share based payments expense
1 July
2022
$3.450
Nil
40%
0% for FY23 and 2% for FY24 and FY25
2.92%
3 years ending
30 June 2025
Monte Carlo & Black Scholes
$1.850
$3.320
n/a
n/a
Consolidated
2023
$’000
2022
$’000
8,871
11,724
The following table illustrates the number and weighted average exercise prices (WAEP) of, and movements in, share performance rights
during the year:
Movements during the year
Outstanding at 1 July
Granted
Exercised
Forfeited
Outstanding at 30 June
Exercisable at 30 June
2023
Number
2023
WAEP
2022
Number
2022
WAEP
15,929,183
6,228,684
(4,212,468)
(2,523,983)
15,421,416
1,964,822
–
–
–
–
–
–
18,528,532
5,032,932
(4,599,380)
(3,032,901)
15,929,183
4,274,861
–
–
–
–
–
–
Annual Report 2023
93
Notes to the Financial Statements continued
Note 33: Parent entity information
Information relating to Omni Bridgeway Limited:
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
Issued capital
Accumulated losses
Reserves
Total shareholders’ equity
Loss of the Parent
Total comprehensive loss of the Parent
Details of the contractual commitments and contingent liabilities of the Parent are contained in Note 30.
2023
$’000
2022
$’000
79,347
589,682
154,401
547,672
(33,892)
(201,847)
(230,422)
(172,845)
359,260
374,827
445,702
402,686
(116,261)
29,819
(67,037)
39,178
359,260
374,827
(49,224)
(49,224)
(61,435)
(61,435)
The consolidated financial statements include the financial statements of OBL and the subsidiaries listed in the following table:
Percentage owned
Name
Fund 1
Omni Bridgeway (Fund 1) LLC¹
HC 1 LLC²
Security Finance (Fund 1) LLC¹
Funds 2 & 3
Omni Bridgeway (Fund 2) Pty Ltd
Omni Bridgeway (Fund 3) Pty Ltd
IMF Bentham ROW SPV 1 Limited
IMF Bentham ROW SPV 2 Limited
Fund 4
Omni Bridgeway (Fund 4) Invt 1 LP
Omni Bridgeway (Fund 4) Invt 2 LP
Omni Bridgeway (Fund 4) Invt 3 LP
Omni Bridgeway (Fund 4) Invt 4 LP
Omni Bridgeway (Fund 4) Invt 5 LP
Omni Bridgeway (Fund 4) Invt 6 LP
Omni Bridgeway (Fund 4) Invt 7 LP
Omni Bridgeway (Fund 4) Invt 8 LP
Omni Bridgeway (Fund 4) Invt 9 LP
JPV I LP
Fund 5
Country of
Incorporation
USA
USA
USA
Australia
Australia
United Kingdom
Australia
USA
USA
USA
USA
USA
USA
USA
USA
USA
USA
2023
%
100
–
100
27
27
27
27
20
20
20
20
20
20
20
20
20
20
2022
%
100
25
100
23
23
23
23
20
20
20
20
20
20
20
20
20
20
Omni Bridgeway (Fund 5) GPA Pty Ltd
Australia
100
100
94
Omni Bridgeway
Note 33: Parent entity information (continued)
Name
Fund 6
Omni Bridgeway BV
Omni Bridgeway Legal Tech BV
Omni Bridgeway Emerging Markets BV
Omni Bridgeway Collective Redress BV
Omni Bridgeway Asia Pte Ltd
Omni Bridgeway Holding (Switzerland) SA
Omni Bridgeway SA
Omni Bridgeway GmbH (formerly Omni Bridgeway AG)
Omni Bridgeway Finance BV
Stichting Client Accounts Omni Bridgeway3
Stichting Cartel Compensation3
Stichting Trucks Cartel Compensation3
Omni Bridgeway France SAS4
Omni Bridgeway Italy S.r.L5
Fund 7
Omni Bridgeway Advisory Ltd
Fund 8
Country of
Incorporation
Netherlands
Netherlands
Netherlands
Netherlands
Singapore
Switzerland
Switzerland
Germany
Netherlands
Netherlands
Netherlands
Netherlands
France
Italy
United Arab Emirates
Omni Bridgeway (Fund 8) Guernsey Investments Limited⁶
Guernsey
Group Subsidiaries
Omni Bridgeway Holdings (Fund 1) LLC
Omni Bridgeway Capital GP (Fund 4) LLC
Omni Bridgeway (USA) LLC
Omni Bridgeway Management (USA) LLC
Omni Bridgeway Holdings (USA) Inc
Security Finance LLC
Omni Bridgeway Capital (Canada) Limited
Lien Finance Canada Limited
Omni Bridgeway (Singapore) Pte Limited
Omni Bridgeway (UK) Limited
Omni Bridgeway (Cayman) Limited
Omni Bridgeway (Storm) Holdings Pty Ltd
Omni Bridgeway (Storm) Holdings BV
Omni Bridgeway Investment Management Ltd
Omni Bridgeway Holding BV
Omni Bridgeway Investment BV7
Omni Bridgeway (NZ) Limited
Crestwood I LLC
USA
USA
USA
USA
USA
USA
Canada
Canada
Singapore
United Kingdom
Cayman Islands
Australia
Netherlands
Australia
Netherlands
Netherlands
New Zealand
USA
Percentage owned
2023
%
2022
%
81
41
81
81
81
81
81
81
81
n/a
n/a
n/a
81
81
65
81
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
81
41
81
81
81
81
81
81
81
n/a
n/a
n/a
–
–
65
–
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
1.
2.
3.
4.
5.
6.
7.
This holding represents 100% of share capital and the voting rights. On 31 May 2023, Fund 1 was ceased to be consolidated into the Group due to loss of control as a
result of the disposal of participation interests in Fund. Upon the disposal transaction, Fund 1 was determined as an agent because of the provision of without cause
kick out right to the new owner of the participation interests (Class A interests).
The entity was derecognised 30 December 2022.
The Stichting vehicles were founded as separate, independent foundations to ensure the cash flows related to the claims were secured.
The entity was incorporated 8 March 2023.
The entity was incorporated 31 May 2023.
The entity was incorporated 19 July 2022.
This holding this represents 100% of type A shares and voting rights. Type B shares, with no voting rights, represent 90% of share capital and receive 10% of yearly
profits. Type A shares receive the remaining yearly profits.
Annual Report 2023
95
Notes to the Financial Statements continued
Note 34: Material partly-owned subsidiaries
For all subsidiaries where there is less than 51% ownership interest, the Group has power to direct the relevant activities of the investee
under contractual arrangements and exposure to variable returns the Group is considered to be acting as principal and thus has control.
Financial information of subsidiaries that have material non-controlling interests is provided below:
Proportion of equity interest held by non-controlling interests:
Country of
Incorporation
Percentage owned
2023
%
2022
%
Fund 1
Omni Bridgeway (Fund 1) LLC1
HC 1 LLC1
Security Finance (Fund 1) LLC 1
Funds 2 & 3
Omni Bridgeway (Fund 2) Pty Ltd2
Omni Bridgeway (Fund 3) Pty Ltd2
IMF Bentham ROW SPV 1 Limited2
IMF Bentham ROW SPV 2 Limited2
Fund 4
Omni Bridgeway (Fund 4) Invt 1 LP3
Omni Bridgeway (Fund 4) Invt 2 LP3
Omni Bridgeway (Fund 4) Invt 3 LP3
Omni Bridgeway (Fund 4) Invt 4 LP3
Omni Bridgeway (Fund 4) Invt 5 LP3
Omni Bridgeway (Fund 4) Invt 6 LP3
Omni Bridgeway (Fund 4) Invt 7 LP3
Omni Bridgeway (Fund 4) Invt 8 LP3
Omni Bridgeway (Fund 4) Invt 9 LP3
JPV I LP3
Security Finance (Fund 4) LLC3
Fund 6
Omni Bridgeway BV4
Omni Bridgeway Legal Tech BV4
Omni Bridgeway Emerging Markets BV4
Omni Bridgeway Collective Redress BV4
Omni Bridgeway Asia Pte Ltd4
Omni Bridgeway Holding (Switzerland) SA4
Omni Bridgeway SA4
Omni Bridgeway GmbH (formerly Omni Bridgeway AG)4
Omni Bridgeway Finance BV4
Omni Bridgeway France SAS4
Omni Bridgeway Italy S.r.L4
96
Omni Bridgeway
USA
USA
USA
Australia
Australia
United Kingdom
Australia
USA
USA
USA
USA
USA
USA
USA
USA
USA
USA
USA
Netherlands
Netherlands
Netherlands
Netherlands
Singapore
Switzerland
Switzerland
Germany
Netherlands
France
Italy
–
–
–
73
73
73
73
80
80
80
80
80
80
80
80
80
80
–
75
–
77
77
77
77
80
80
80
80
80
80
80
80
80
80
100
100
19
59
19
19
19
19
19
19
19
19
19
19
59
19
19
19
19
19
19
19
–
–
Note 34: Material partly-owned subsidiaries (continued)
Accumulated balances of material non-controlling interest:
Accumulated balances of material non-controlling interest:
Omni Bridgeway (Fund 1) LLC1
HC 1 LLC1
Omni Bridgeway (Fund 2) Pty Ltd2
Omni Bridgeway (Fund 3) Pty Ltd2
Fund 43
Fund 64
Transaction costs, net of tax - disposal of non-controlling interest (Fund 1)
Transaction costs, net of tax - disposal of non-controlling interest (Funds 2 & 3)
Profit allocated to material non-controlling interest:
Omni Bridgeway (Fund 1) LLC1
Omni Bridgeway (Fund 2) Pty Ltd2
Omni Bridgeway (Fund 3) Pty Ltd2
Fund 4³
Fund 6⁴
2023
$'000
–
–
90,888
30,296
154,326
2022
$'000
32,005
47,148
86,738
28,912
91,013
162,791
133,593
–
(2,866)
(5,934)
(2,866)
435,435
410,609
4,071
8,562
2,854
11,870
5,164
32,521
6,796
10,883
3,628
22,434
8,386
52,127
1. On 31 May 2023, Fund 1 was deconsolidated due to a loss of control by the Group upon sale of a participation interest into the Fund. Comparatives of the results and
non-controlling interests of these entities were included in Note 1 Segment Information.
2. The results and non-controlling interests of these entities comprise the results of Funds 2 & 3, included in Note 1 Segment Information.
3. The results and non-controlling interests of these entities comprise the results of Fund 4, included in Note 1 Segment Information.
4. The results and non-controlling interests of these entities comprise the results of Fund 6, included in Note 1 Segment Information.
Movements in NCI’s of material partly owned subsidiaries during the year were as follows:
Balance at 1 July 2021
Contributions
Distributions
Change in share of net assets attributable to NCI
Profit
Other comprehensive income/(loss)
Balance at 30 June 2022
Contributions
Distributions
Deconsolidation of Subsidiary
Change in share of net assets attributable to NCI
Profit
Other comprehensive income
Balance at 30 June 2023
Consolidated
Fund 1
$'000
147,470
20
(80,593)
(4,778)
6,796
4,304
Funds 2 & 3
$'000
80,399
19,600
–
(1,635)
14,511
(91)
Fund 4
$'000
Fund 6
$'000
Total
$'000
85,120
117,485
430,474
16,211
(32,742)
(7,265)
7,786
43,617
–
(113,335)
939
(12,739)
22,434
8,386
7,255
(1,003)
52,127
10,465
73,219
112,784
91,013
133,593
410,609
10,548
(34,244)
(49,518)
(4,076)
4,071
–
–
15,880
(24,950)
–
2,938
11,416
250
85,390
24,036
135,854
(33,972)
–
–
–
(93,166)
(49,518)
(3,662)
(2,356)
(7,156)
11,870
3,687
5,164
2,354
32,521
6,291
118,318
154,326
162,791
435,435
Annual Report 2023
97
Notes to the Financial Statements continued
Note 34: Material partly-owned subsidiaries (continued)
Fund 1
On 31 December 2022, the Group disposed all the equity shareholding in HC1 LLC to Gerchen Capital Partners (GCP) for an initial
payment of $27.993 million and a deferred contingent consideration depends on the quantum and timing of the completion of the
litigation underpinning the investment. The deferred contingent consideration is not recognised in the consolidated financial statements
as the cash outflow is not probable.
The Group sold a participation in Fund 1 assets for a consideration of $47.662 million which completed on 31 May 2023, the residual
interest in Fund 1 of $55.950 million is recognised as an investment in associate within the Group Consolidated Financial Statements.
Refer to Note 35.
The disposals resulted in the deconsolidation of the Fund 1 entities by the Group because of the loss of control on the transaction date.
An aggregate net gain to the Group of $28.465 million was recognised into the profit or loss, including the effect of the derecognition of
related capitalised overhead costs amounted $17.613 million.
The details of net gain on disposals for the year are set out below.
Carrying value of assets and liabilities
Cash and cash equivalent
Receivables
Intangible assets
Prepayment
Payables and accruals
Non-controlling interests
Total carrying value of net assets
Consideration received by the Group
Fair value of residual interest
Foreign exchange
Direct costs and expenses
HC 1 LLC
$’000
Omni
Bridgeway
(Fund 1) LLC
$’000
–
–
142
2,611
Total
$’000
142
2,611
68,483
54,937
123,420
14,167
(10)
–
(48)
14,167
(58)
(61,863)
(6,393)
(68,256)
20,777
51,249
72,026
28,095
47,662
–
55,950
75,757
55,950
(102)
(840)
–
(102)
(12,661)
(13,501)
Net gain on disposal of subsidiaries
6,376
39,702
46,078
Derecognition - capitalised overheads¹
(5,091)
(12,522)
(17,613)
Net gain on disposal of subsidiaries after derecognition of capitalised overheads
1,285
27,180
28,465
1. The capitalised overhead costs in relation to the disposed entities were fully written off upon the deconsolidation, as part of the calculation of net gain on derecognition
of litigation investments - intangible assets in the profit or loss.
Funds 2 & 3
On 13 September 2017, the Group established Omni Bridgeway (Fund 2) Pty Ltd and Omni Bridgeway (Fund 3) Pty Ltd. On 26 July 2019,
the Group established IMF Bentham ROW SPV 1 Limited. On 15 March 2021, the Group established IMF Bentham ROW SPV 2 Pty Ltd.
These entities are collectively “Funds 2 & 3”.
Fund 4
On 26 October 2018, the Group established Omni Bridgeway Capital GP (Fund 4) LLC. On 29 November 2018, the Group established
Security Finance (Fund 4) LLC. On 4 December 2018, the Group established Omni Bridgeway (Fund 4) Invt 1 – 9 LP. On 7 July 2020, the
Group established JPV I LP. These entities are collectively “Fund 4”.
Fund 6
Fund 6 was created in 2016 and was acquired by the Group as part of the November 2019 acquisition of OBE. During the year, the Group
established Omni Bridgeway France SAS and Omni Bridgeway Italy S.r.L. Refer to Note 33. This is an Europe, Middle East and Africa
focused investment structure.
98
Omni Bridgeway
Note 34: Material partly-owned subsidiaries (continued)
The summarised financial information of controlled entities with material non-controlling interests is provided below is based on amounts
prior to intercompany eliminations:
Consolidated
Fund 1
Fund 2 & 3
Fund 4
Fund 5
Fund 6
2023
$'000
2022
$'000
2023
$'000
2022
$'000
2023
$'000
2022
$'000
2023
$'000
2022
$'000
2023
$'000
2022
$'000
Summarised statement of cash
flows
Operating
Investing
Financing
(225)
(265) (5,926) 2,941
(733)
(2,231)
15,259 77,816 1,400
(6,176) (75,565) 17,960
(24,194) (80,573) (5,100) 24,500 65,855 (20,155)
Net increase/(decrease) in cash and
cash equivalents
(9,160)
(3,022) (9,626) 21,265 (10,443)
(4,426)
Cash and cash equivalents at the
beginning of the period
Deconsolidation of Subsidiary
Foreign exchange
Cash and cash equivalents at the
end of the period
8,820 10,836 24,283 3,018 17,926 20,402
(140)
–
480 1,006
–
(2)
–
–
–
–
692 1,950
– 8,820 14,655 24,283 8,175 17,926
–
–
–
–
–
–
–
–
– (30,900) (18,458)
– (17,620) 9,970
– 49,789
(17)
– 1,269
(8,505)
–
–
–
291 9,478
–
6
–
(682)
– 1,566
291
Note 35: Interest in associates
Set out below are the associates and joint ventures of the Group as at 30 June 2023 which, in the opinion of the directors, are material to
the Group. The entities listed below have share capital consisting solely of ordinary shares, which are held directly by the Group. The
country of incorporation or registration is also their principal place of business.
Name of entity
OB Capital Coop U.A1
Place of business/
country of
incorporation
Netherlands
Omni Bridgeway (Fund 1)
LLC2
USA
% of ownership
interest
% of voting rights
Carrying amount
2023
2022
2023
2022
%
5
%
5
%
n/a
%
Classification
n/a Investment in
associates
2023
$’000
2022
$’000
6,981
5,031
100
100
100
100 Litigation
56,336
–
investment -
investment in
associates
Total equity-accounted investments
63,317
5,031
1. OB Capital Coop U.A is an associate of the Group and it is acquired through the acquisition of Omni Bridgeway Holding B.V. in November 2019. The entity invests in
litigation investments in the Netherlands. The Coop agreement outlines the various powers and rights of responsibilities of the members, includes provisions that
provide the Group with significant influence over the entity
2. Omni Bridgeway (Fund 1) LLC is an litigation investment associate of the Group and it is an entity within Fund 1 which invests in litigation investments in the United
States. The Group has 100% voting rights subject to a without-cause kick-out right exercisable by GCP effective 31 May 2023, which changed the Group’s status from
principal to agent.
(a) Recognition and measurement
An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial
and operating policy decisions of the investee, but is not control or joint control over those policies.
Litigation investment associates are investment in associates where the underlying investments in the entity assets either wholly or
significantly litigation investments.
The considerations made in determining significant influence are similar to those necessary to determine control over subsidiaries.
The Group’s investment in its associate are accounted for using the equity method.
Under the equity method, the investment in an associate is initially recognised at cost. The carrying amount of the investment is adjusted
to recognise changes in the Group’s share of net assets of the associate since the acquisition date. Goodwill relating to the associate is
included in the carrying amount of the investment and is not tested for impairment separately.
If existence of an associate is resulted from the loss of control over a former subsidiary of the Group’s consolidated financial statements,
the associate is initially recognised at the fair value of the retained residual interest held by the Group. The fair value is determined using
the methodology of the initial recognition of a financial asset, which represents the present value of the risk-adjusted future potential
cashflows to be received by the Group. Since the probability-weighted cashflows are a significant unobservable input, the fair value of the
retained residual interest is classified as a level 3 fair value.
Annual Report 2023
99
Notes to the Financial Statements continued
Note 35: Interest in associates (continued)
The following table summarises the quantitative information about the significant unobservable inputs used in the fair value
measurements of initial recognition of residual interests in Omni Bridgeway (Fund 1) LLC, which is a former subsidiary of the Group’s
consolidated financial statements.
Description
Fair value at
31 May 2023
$’000
Significant
unobservable
inputs
Range of inputs
Sensitivity of the input to fair value
Residual interest in Fund 1
55,950
Risk-adjusted
discount rate
14% - 24%
Expected cash flows 10%
Expected timing of
cash flows
0 - 6 months
Increasing the discount rate by 5% would
result in a change in fair value of ($6.813)
million. Decreasing the discount rate by 5%
would result in a change in fair value of $8.350
million.
If expected cash flows were 10% higher, the
fair value would increase by $11.907 million. If
expected cash flows were 10% lower, the fair
value would decrease by $12.051 million.
A shift the timing by defer the expected cash
flows by 6 months would reduce the fair value
by $14.202 million.
The statement of profit or loss reflects the Group’s share of the results of operations of the associate. Any change in Other
Comprehensive Income (OCI) of those investees is presented as part of the Group’s OCI. In addition, when there has been a change
recognised directly in the equity of the associate, the Group recognises its share of any changes, when applicable, in the statement of
changes in equity. Unrealised gains and losses resulting from transactions between the Group and the associate are eliminated to the
extent of the interest in the associate.
The aggregate of the Group’s share of profit or loss of an associate is shown on the face of the statement of profit or loss outside
operating profit and represents profit or loss after tax and non-controlling interests in the subsidiaries of the associate.
The financial statements of the associate are prepared for the same reporting period as the Group. When necessary, adjustments are
made to bring the accounting policies in line with those of the Group.
After application of the equity method, the Group determines whether it is necessary to recognise an impairment loss on its investment in
its associate. At each reporting date, the Group determines whether there is objective evidence that the investment in the associate is
impaired. If there is such evidence, the Group calculates the amount of impairment as the difference between the recoverable amount of
the associate and its carrying value, and then recognises the loss within ‘Share of profit/(loss) of an associate’ in the statement of profit or
loss.
Upon loss of significant influence over the associate, the Group measures and recognises any retained investment at its fair value. Any
difference between the carrying amount of the associate upon loss of significant influence and the fair value of the retained investment
and proceeds from disposal is recognised in profit or loss.
(b) Commitments and contingent liabilities in respect of associates
As part of the gain on disposal calculation for Fund 1, an allowance has been made for future costs of managing the fund and requirement
for capital commitments.
Apart from those described in Note 30, no other material commitments or contingent liabilities from share of associates.
100
Omni Bridgeway
Note 35: Interest in associates (continued)
(c) Summarised financial information for associates
Interest in those associates and joint ventures that are material to the Group for the relevant financial year is provided below:
Omni Bridgeway (Fund 1) LLC1
OB Capital Coop U.A
Income
Total expenses
Operating loss
Equity accounted investment result
Net profit/(loss)
Share of profit/(loss) in associates and joint ventures
Effect of movement in foreign currency
Net Share of (profit)/loss in associates and joint ventures
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Equity
Group's share in equity
Group's carrying amount of the investment
2023
$’000
(2,480)
6
(2,486)
–
(2,486)
(2,486)
34
(2,452)
3,341
50,228
51
57,408
(3,890)
56,336
56,336
2022
$’000
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
2023
$’000
(1)
1,629
(1,630)
6,894
5,264
263
28
291
296
136,474
664
–
2022
$’000
(5)
2,075
(2,080)
9,904
7,824
(392)
5
(387)
455
99,413
750
–
136,106
99,118
6,981
6,981
5,031
5,031
1. The entity was equity accounted for as an investment in associate when the Group lost the control on 31 May 2023, the table includes the financial information of the
entity for the periods after this date. The profit or loss and balance sheet of this entity represents the IFRS standalone financial statements of Fund 1, whereas the
Group’s share in equity is its residual interest that was recognised at fair value at deconsolidation. Refer to Note 34.
2. Included in the net share of profit/(loss) in associates, there is a share of profit of $1.606 million from an associate of the Omni Bridgeway (Fund 1) LLC, which was
deconsolidated on 31 May 2023. Refer to (d) below.
(d) Individually immaterial associates
In addition to the interests in associates disclosed above, the Group also had an interest in an immaterial associate that are accounted for
using the equity method. The interest in this immaterial associate is held via the shareholding and control of Omni Bridgeway (Fund 1) LLC,
and ceased on 31 May 2023 when the Omni Bridgeway (Fund 1) LLC is deconsolidated.
The carrying amount the immaterial associate was nil at the year end (2022: $6.325 million), and the amount of the Group’s share of profit
from continuing operations was $1.606 million at year end (2022: $4.744 million). There were no amounts of the Group’s share of post-tax
profit or loss from discontinued operations or other comprehensive income at the year end (2022: nil).
Annual Report 2023
101
Notes to the Financial Statements continued
Note 36: Related party disclosure
Transactions with related entities
The following table provides the total amount of transactions that were entered into with related parties for the relevant financial year.
Transactions with Thomson Geer1
Transactions with Omni Bridgeway DARP Cooperatief UA2
Consolidated
2023
$'000
55
1,330
1,385
2022
$'000
38
1,838
1,876
1. During the year, the Group obtained legal advice from a legal firm associated with Michael Bowen, Thomson Geer Lawyers of $55,000. The legal advice was obtained at
arm’s length. The Group engages a number of different law firms for its external legal advice and the relationship with Thomson Geer is not exclusive. Michael Bowen
did not participate in any board decisions to appoint external counsel when Thomson Geer is being considered for engagement. Mr Bowen ceased to be a non-
executive director on 30 November 2022.
2. During the year, the Group received management fees from OB DARP Cooperatief UA, a related entity of the Group.
Loans with a related entity
The following table provides the total amount of loans with related parties for the relevant financial year.
Loans with Omni Bridgeway DARP Cooperatief UA2
Note 37: Auditor’s remuneration
The auditor of Omni Bridgeway Limited is BDO Audit (WA) Pty Ltd.
Fees for auditing the statutory financial report of the parent covering the group and auditing the
statutory financial reports of any controlled entities
Taxation fees
Consolidated
2023
$'000
6,697
6,697
Consolidated
2023
$'000
1,073
813
1,886
2022
$'000
5,167
5,167
2022
$'000
984
632
1,616
Note 38: Events after the reporting date
Apart from that disclosed in this report, no other circumstances have arisen since 30 June 2023 that have significantly affected, or may
significantly affect the consolidated entities’ operations, the results of those operations, or the consolidated entities state of affairs in the
future financial years.
102
Omni Bridgeway
Directors’ Declaration
We state that, in the Directors’ opinion:
a.
the financial statements and notes of Omni Bridgeway Limited for the financial year ended 30 June 2023 are in accordance with the
Corporations Act 2001, including:
i. giving a true and fair view of its financial position as at 30 June 2023 and performance for the year ended on that date; and
ii. complying with Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001;
b.
the financial statements and notes also comply with International Financial Reporting Standards as disclosed in the notes to the
financial statements; and
c.
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
Signed in accordance with a resolution of directors of Omni Bridgeway Limited pursuant to section 295A of the Corporations Act 2001
for the financial year ended 30 June 2023, on behalf of the directors.
Michael Kay
Andrew Saker
Non-Executive Chairman
Managing Director & CEO and Chief Strategy Officer – US
Sydney, 22 August 2023
Annual Report 2023
103
Independent Auditor’s Report
104
Omni Bridgeway
Annual Report 2023
105
Independent Auditor’s Report continued
106
Omni Bridgeway
Annual Report 2023
107
Independent Auditor’s Report continued
108
Omni Bridgeway
Shareholder information
The information set out below is current as at 31 July 2023.
(a) Distribution of shareholders
Ordinary share capital
278,689,725 fully paid ordinary shares are held by 4,170 individual shareholders. All issued ordinary shares carry one vote per share and
carry the right to dividends.
Options
There are no options issued over ordinary shares.
Share performance rights
17,003,651 share performance rights were issued to 124 rights holders under the Company’s Long Term Incentive Plan.
Distribution of securities
The number of shareholders by size of holding, in each class are as at 31 July 2023:
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Number
ordinary shares % of issued capital
Fully paid
1,267
1,516
605
718
64
519,628
4,069,774
4,486,194
19,271,817
250,342,312
4,170
278,689,725
0.19
1.46
1.61
6.91
89.83
100.00
Non-marketable parcels
There were 385 holders of less than a marketable parcel of ordinary shares.
(b) Substantial shareholders
The names of the substantial shareholders listed in the Company’s register as at 31 July 2023 are:
Shareholder
Greencape Capital Ltd.
Perpetual Investment Management Ltd.
Amitell Holdings Pte. Ltd.
Number of
ordinary Shares
% of
issued capital
22,748,652
17,828,487
15,048,196
8.20%
6.40%
5.40%
Annual Report 2023
109
Shareholder information continued
(c) 20 largest holders of quoted equity securities as at 31 July 2023
Ordinary Shares
1. HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
2. CITICORP NOMINEES PTY LIMITED
3. J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
4. BNP PARIBAS NOMS PTY LTD
5. NATIONAL NOMINEES LIMITED
6. HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
7. UBS NOMINEES PTY LTD
8. BNP PARIBAS NOMS PTY LTD
9. HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
10. CPU SHARE PLANS PTY LTD
11. BNP PARIBAS NOMINEES PTY LTD
12. HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-GSCO ECA
13. CITICORP NOMINEES PTY LIMITED
14. BNP PARIBAS NOMINEES PTY LTD
15. MR PETER FREDERICK PHILLIPS + MRS ALICE SAU HAN PHILLIPS
16. MR MATTHEW BRENDAN RYLAND
17. FIRST SAMUEL LTD ACN 086243567
18. BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM
19. MR ALEXANDER PAUL CHANG
20. HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
(d) Options as at 31 July 2023 – unquoted
There are no options issued.
Number of
ordinary shares
Issued capital
‘000
75,312
49,718
36,216
16,079
15,320
12,681
5,228
4,814
3,743
3,401
2,953
2,481
2,295
1,704
1,474
1,184
1,078
1,053
850
825
%
27.02
17.84
13.00
5.77
5.50
4.55
1.88
1.73
1.34
1.22
1.06
0.89
0.82
0.61
0.53
0.42
0.39
0.38
0.30
0.30
238,409
85.55
110
Omni Bridgeway
(e) Securities subject to escrow
On 20 July 2022, Mr. Guillaume Leger was issued 201,059 performance rights in relation to his appointment as Omni Bridgeway’s Global
Chief Financial Officer. On 14 July 2023, 70,306 ordinary fully paid shares were issued to Mr Leger following satisfaction of the performance
conditions for the performance period from commencement of employment to 30 June 2023 (Tranche 1) and are subject to a 12-month
voluntary escrow agreement from the date of issue.
US ownership restriction
The ordinary shares of Omni Bridgeway are subject to ownership restrictions applying to residents of the United States.
The Shares have not been registered under the US Securities Act of 1933 or the securities laws of any state or other jurisdiction of the
United States. In addition, OBL has not been registered under the US Investment Company Act of 1940 in reliance on an exemption from
registration.
Accordingly, the Shares may not be offered or sold in the United States or to, or for the account or benefit of US Persons except in
accordance with an available exemption from, or a transaction not subject to, the registration requirements of the US Securities Act,
the US Investment Company Act and applicable US state securities laws.
In order to qualify for an exemption under the US Investment Company Act, the constitution of OBL provides that where a holder is an
Excluded US Person:
• OBL may refuse to register a transfer of Shares to that Excluded US Person; and
• The Excluded US Person may be requested to sell such person’s Shares and, if the Excluded US Person fails to do so within 30 business
days, to be divested of such Shares and to receive the proceeds of sale (net of transaction costs, including any applicable brokerage) as
soon as practicable after the sale.
In addition, OBL’s constitution provides that a holder may be required to complete a statutory declaration in relation to whether they
(or any person on whose account or benefit it holds Shares) are an Excluded US Person. Any holder who does not comply with such a
request will be deemed to be an Excluded US Person.
The Shares are issued on terms under which each holder who is or becomes an Excluded US Person agrees to the above terms and
irrevocably appoints OBL as that holder’s agent and attorney to do all acts and things and execute all documents which OBL considers
necessary, desirable or reasonably incidental to effect the above actions.
Shares issued during the year
On 14 July 2023, the Company issued 70,306 shares to Mr Guillaume Leger following satisfaction of the performance conditions for the
performance period from commencement of his employment to 30 June 2023 (Tranche 1).
On 7 December 2022, the Company issued 7,755,446 shares to the vendors of OBE relating to the 2019 acquisition in satisfaction of the
third tranche of variable deferred consideration and second and final tranche of deferred consideration.
On 30 August 2022, the Company issued 2,768,359 shares relating to the FY20 LTIP vesting.
Share options – unissued shares
As at 31 July 2023 there were 17,003,651 share performance rights on issue (2022: 15,929,183)
Annual Report 2023
111
Corporate information
This annual report covers both Omni Bridgeway Limited as an individual entity and the consolidated entity comprising Omni Bridgeway
Limited and its subsidiaries. The Group’s functional and presentation currency is AUD ($).
A description of the Group’s operations and of its principal activities is included in the review of operations and activities in the Directors’
Report. The Directors’ Report is not part of the Financial report.
Directors
Michael Kay
Andrew Saker
Non-Executive Director and Chairman
Managing Director & CEO and Chief Strategy Officer – US
Raymond van Hulst
Executive Director, Managing Director and Co-Chief Investment Officer EMEA
Michael Bowen
Non-Executive Director (retired 30 November 2022)
Karen Phin
Non-Executive Director
Christine Feldmanis
Non-Executive Director
Michael Green
Non-Executive Director (formally appointed 28 April 2023)
Auditors
BDO AUDIT (WA) PTY LTD
Level 9
Mia Yellagonga Tower 2
5 Spring Street
Perth WA 6000
Bankers
NATIONAL AUSTRALIA BANK LIMITED
3/2 Carrington Street
Sydney NSW 2000
Internet address
www.omnibridgeway.com
Company Secretary
Jeremy Sambrook
Registered office and principal place
of business in Australia
Level 7, 35 Clarence Street
Sydney NSW 2000
Phone: +61 (0)2 8223 3567
Fax: +61 (0)2 8223 3555
Solicitors
DLA PIPER
Level 9, 480 Queen Street
Brisbane QLD 4000
THOMSON GEER
Level 27, Exchange Tower
2 The Esplanade
Perth WA 6000
Share registry
COMPUTERSHARE
Level 11, 172 St Georges Terrace
Perth WA 6000
The Company is listed on the Australian Securities Exchange with Sydney, Australia as its home exchange. Its ASX ticker symbol is “OBL”
and its shares were trading as at the date of this report.
112
Omni Bridgeway
Glossary
Throughout Omni Bridgeway Limited’s (OBL, Company, Parent) publicly available information, the following terms have the meanings
detailed in this glossary which shall be updated from time to time:
AASB
Addressable Market
Adverse cost
Australian Accounting Standards Board.
OBL’s estimate of the annual amount spent by claimants on external costs of dispute
resolution (excluding enforcement) that could be addressed by OBL’s litigation funding
service offering.
The cost that a losing party to litigation (in certain jurisdictions only) is required to pay to
the winning party as compensation for the legal costs they have incurred in the process.
After the event (ATE) Insurance
Insurance cover to protect against adverse cost exposure.
AFSL
ALFA
American Waterfall
Americas
APAC
ASX
CAGR
Committed capital / Commitments
Capital deployed
Capitalised overheads
Australian Financial Services Licence.
Association of Litigation Funders of Australia.
The waterfall refers to the order in which investment proceeds in a fund are distributed
between Fund participants. Under an American-style distribution performance fees are
calculated by reference to completed investments only.
The geographic region of North and South America.
The geographic region incorporating Asia and the Pacific Region including Australia and
New Zealand.
Australian Securities Exchange.
Compound annual growth rate.
The amount of funding that has been contracted to be provided by the Group to a
litigation investment under a signed funding arrangement.
It is equal to the total amount of capital to be provided to external parties that is either
(i) committed to investments where there is a capped amount; or (ii) the estimated
budgeted amount to run the investment to completion where the investment is open–
ended It does not include co-funder contributions, possible overheads to be capitalised;
Unless part of the investment thesis it does not include possible adverse costs that may
become payable if the underlying litigation loses. For ongoing Fund 6 investments it
includes possible adverse costs that may become payable (where applicable).
Levels are reviewed and updated where necessary.
Is equal to the total external expenditure on investments.
For completed investments it includes any net adverse costs. It does not include co-
funder contributions.
Internal costs (including borrowing costs and direct staff costs) that are incurred in
relation to Investments that are not expensed in the period they were incurred but
added to the investment carrying value and recognised through the profit and loss in line
with the completion of each respective investment.
Capitalisation occurs at the OBL and consolidation level, not within each Fund and does
not affect portfolio or Fund performance, waterfall or fees.
Completed investments / Completion
Refers to merits investments where the underlying litigation has progressed to a state
where there no further risk to the legal result as the litigation has finalisation by either
settlement, judgement, or arbitrator determination, for or against the funded claimant,
notwithstanding that such finalisation may be conditional upon certain matters such as
court approval.
For enforcement investments completion is that the point where there is no further
recovery action planned.
Direct balance sheet
Relates to investment of the Group that are not held via a Fund.
CGU
Cash-generating unit which is defined as the smallest group of assets that generates
largely independent cash inflows.
Distressed Asset Recovery Program (DARP) A strategic program of the World Bank’s International Finance Corporation to reduce the
effects of poverty in emerging markets by preventing the loss of assets and allowing
access to formal credit, while helping to preserve jobs. Refer to Fund 7.
DRP
ELFA
EMEA
Enforcement investment
ESG
EPS
Dividend Reinvestment Plan.
European Litigation Funders Association.
The geographic region incorporating Europe, Middle East and Africa where the Group
invests and offers its products and services.
Refers to investments where the underlying dispute has a debt &/or judicial finding that
is not being honoured and requires action to be collected.
Environmental, social and governance.
Earnings per share.
Annual Report 2023
113
Glossary continued
Estimated Portfolio Value (EPV)
OBL’s estimate of the value that may be achieved from an investment’s underlying
litigation from time-to-time.
For an investment where the funding entity earns:
i.
a percentage of the resolution proceeds arising from the underlying litigation or
enforcement as a funding commission, EPV is the estimate of the investment’s
recoverable amount after considering the perceived capacity of the defendant to
meet the claim and any other pertinent factors. Such amount is not necessarily the
amount being claimed, nor is it an estimate of the return to the Group if the
investment is successful. It includes the amount to the funded client and to the
Group. It does not include co-funder portion
a funding commission calculated as a multiple of the capital deployed; EPV is arrived
at by taking the estimated potential income from the investment to the funding entity
and grossing this up to an EPV using the Long–Term Conversion Rate at the time
estimation. It does not include co-funder portion, or
ii.
iii. a funding commission calculated on a combination of the above bases or on an
alternative basis, arriving at the EPV may utilise one of the above methodologies,
or a hybrid construct, or an alternative methodology depending upon the
components of the funding commission.
OBE Group’s EPV has been estimated on a conceptually consistent basis noting that,
enforcement case investments may have a multi–layered approach from a timing and
value perspective.
Regardless of how calculated, an EPV is an estimate and is subject to change over time
for a number of reasons, including, but not limited to, changes in circumstances and
knowledge relating to an investment or the defendant(s) perceived capacity to meet the
claim, partial recovery and, where applicable, ability to enforce or recover.
Possible EPVs are reviewed and updated where necessary.
Refer to income conversion rate.
The waterfall refers to the order in which investment proceeds in a fund are distributed
between participants. Under an European-style distribution, performance fees are
calculated by reference to all fund investments and not just completed investments.
The manager will not participate in a portion of profits/performance fee/carry until the
full amount of investor’s capital and preferred return have been fully satisfied.
Means a holder of Shares (or a person who seeks to be registered as a holder of Shares)
whom the directors of OBL have determined (i) is a US Person who is not a Qualified
Purchaser or a Knowledgeable Employee or (ii) holds or will hold Shares for the account
or benefit of any US Person who is not a Qualified Purchaser or a Knowledgeable
Employee
OBL’s Fund 1, & Fund 2&3; which were established by the Group in 2017 with generally
consistent terms.
OBL’s Fund 8 as raised in 2022.
The amount of capital agreed to be provide to an OBL Fund from OBL and external
investors.
Means funds, or fund like structures, that OBL manages, advises and invests into.
It includes Fund 1, Fund 2&3, Fund 4, Fund 5, Fund 6, Fund 7 and Fund 8.
EPV conversion rate
European Waterfall
Excluded US Person
First Generation Fund (s)
Fourth Generation Fund
Fund Commitments
Funds
Funded investments
Refers to investments where the Group has entered an unconditional binding contract.
FUM /Funds under Management
Commitments
The aggregate amount of Fund commitments (whether called or uncalled) for all the OBL
funds that are in operation at any point in time.
Funds deployed
Fund 1
Funds 2&3
Fund 4
Fund 4 (series II)
Fund 5
Refer to Capital deployed.
Funding structure for Litigation investments in the US established in 2017. A participation
in the fund was sold in May 2023 and is now deconsolidated from the group. OBL
continues to manage the Fund.
Funding structure for Litigation investments in the RoW established in 2017 with Fund
commitments of AUD 189 million.
Funding structure for Litigation investments in the US established in 2019 with Fund
commitments of USD 500 million.
Potential Funding structure to follow-on from Fund 4 with same mandate.
Funding structure for Litigation investments in the RoW established in 2019 with Fund
commitments of USD 500 million.
The Fund commitments from external investors are in structures that are not
consolidated within the Group. OBL’s 20% interest is via a parallel investing vehicle that
is consolidated.
In certain disclosures we specifically include 100% of Fund 5; this approach aggregates
the external investors’ interests with those of OBL to facilitate direct comparison between
all Funds (as the other Funds are consolidated & hence disclosed at 100%).
Fund 5 (series II)
Potential funding structure for Litigation investments in the RoW.
Fund 6
Fund 7
114
Omni Bridgeway
Funding structure for investments focused on EMEA purchased as part of OBE Group
in 2019.
Established in 2017 with Fund commitments of EUR 188 million
A joint venture with the IFC/World Bank to facilitate DARP. Fund 7 is designed to invest
in non-performing loans in the MENA region.
Established in 2019 with Fund commitments of USD 100 million (including USD 50 million
from Fund 6).
Fund 8
IC
IC approved / conditionally funded
Funding structure established in 2022 focused on investing up to EUR 150 million in
global enforcement investments.
Investment Committee(s) – OBL’s ultimate investment decision making bodies involving
internal & external members.
Refers to investments that are approved by the Group’s internal investment process but
have not reached an unconditional status. This may relate to the state of the funding
contract, or book build, loss quantification, discovery or other evidence requirements.
ICC
IFRS
ILFA
IMF
Implied Embedded Value (IEV)
Income conversion rate
International Chamber of Commerce.
International Financial Reporting Standards.
International Legal Finance Association.
IMF Bentham Limited and its Group, now known as OBL following a name change
in 2020.
IEV is the product of multiplying the EPV by the LTCR. IEV is formulaic calculation of the
gross proceed value that may possibly be generated from the portfolio of Funded
investments at any point of time based upon its EPV and the group’s historic
performance.
The LTCR is used for all IEV calculations notwithstanding that an EPV conversion rate
of a particular fund may vary, sometimes materially from the LTCR. The smaller data set
of a fund level EPV conversion rate makes that measure inherently more volatile than the
global LTCR.
It is important to note that IEV is not a forecast or estimate of future income by Omni
Bridgeway itself as this does not account for the structure and return arrangements of
Omni Bridgeway for each fund.
IEV is instead a statement of the amount of gross proceeds which would be generated
if each investment in the portfolio were to complete for an amount equal to the LTCR of
the present EPV. Future performance, including the actual conversion rate realised, may
exceed, or fall below historic performance of the LTCR.
Is the rate that EPV of completed investments converts to income for any period.
It Includes investments that fully completed in the period and the total income
recognised over the investments’ life and excludes partial completions in the period.
This rate includes consideration of lost investments.
Investment Committee (IC) (s)
Its members comprise both OBL executives and external appointees.
Investment commitment
Refer to committed capital/commitments.
Income v revenue terminology
Income yet to be recognised
Internal rate of return (IRR)
Investment committed capital
Invested capital
Knowledgeable Employee
Income, revenue and proceeds are generally used interchangeably for realised sums on
litigation investments regardless of how IFRS may classify the assets and its
consequential P&L disclosure.
Is the estimated value of income that may be generated from investments that are
substantially complete from a litigation perspective at that point in time but have not fully
satisfied revenue recognition accounting standards and our policies. It is subject to
change and relates to substantially completed investments with conditional settlements
or judgements on appeal which may be recognised in future periods.
Is a discount rate that makes the net present value (NPV) of investment flows equal to
zero in a discounted cash flow analysis. It is calculated on aggregated underlying journal
entries for each completed case. Calculation includes losses and adverse costs but
excludes consideration of capitalised overheads, operating overheads, and withdrawals.
The IRR from completed investments may vary materially over time.
By providing this historical information, OBL has not been and is not now in any way
providing earnings guidance for future periods.
Is the amount of funding that has been contracted to an investment under a signed
funding arrangement.
It is equal to the total capital either (i) committed to investments where there is a capped
amount; or (ii) the estimated budgeted amount to run the case to completion of hearing
where the investment is open–ended, translated to Australian dollars at the foreign
exchange spot rate prevailing on the reporting date. It does not include possible
overheads to be capitalised.
It does not include possible adverse costs that may become payable if a case loss. For
ongoing Fund 6 investments it includes possible adverse costs that may become payable
(where applicable).
Commitment levels are reviewed and updated where necessary.
refer to Capital deployed
As per the SEC’s Rule 3c-5 under the US Investment Company act of 1940,
Knowledgeable Employee with respect to any Covered Company means any natural
person who is: (i) An Executive Officer, director, trustee, general partner, advisory board
member, or person serving in a similar capacity, of the Covered Company or an Affiliated
Management Person of the Covered Company.
LatAm (Latin America)
The geographic region spanning Central and South America.
Annual Report 2023
115
Glossary continued
Long Term Conversion Rate (LTCR)
Is the rate of Income conversion that the group has experienced on all completed
investments over its life.
Whilst noting that past performance is not necessarily an indication of future
performance, past performance indicates that the Group’s litigation funding investments
(excluding OBE Group investments) have generated average gross income of
approximately 15% of EPV at the at the time of completion.
LTIP
Long-Term Incentive Plan.
Malus and clawback event provisions
These are provisions whereby participants in the LTIP may in the event of certain
specified conduct such as fraud, forfeit all or a portion of their performance rights or the
resulting shares or be required to repay all or a portion of their sale proceeds from such
securities.
Managed Investment Scheme (MIS)
An investment structure regulated under Australian Corporation Law regulations.
Management fees
MENA
Merits investment
MOIC
NCI
OBE Group
OBL
OCA
Other costs
Performance fees
Possible completion periods (PCP)
PPA
Management fees are received for the provision of investment management services
provided and are paid quarterly in arrears calculated on the net invested capital.
Middle East & North America.
Refers to investments where the underlying dispute involves ongoing questions about
facts, damages or legal outcome and there is a risk around a judicial decision.
Multiple on invested capital.
Non-controlling interest.
This represents the interests of external Fund investors in funds that are consolidated
within the Group, in accordance with each of the respective Funds’ return waterfall.
Omni Bridgeway Holdings BV and subsidiaries; it includes Fund 6 and Fund 7.
Omni Bridgeway Limited (ABN 45 067 298 088).
OBL On-line Client Administration Proprietary Database.
Includes unrecoverable due diligence costs and for Funds 2&3 and Fund 5 it additionally
includes the cost of the After–the–Event insurance policy premium.
OBL is entitled to be paid a performance fee in connection with the management of each
investment subject to the IRR generated. These are paid out of proceeds arising from the
realisation of an investment.
The possible completion period is the current estimate of the period in which an
investment may finalised. It is not a projection or forecast. An investment may finalise
earlier or later than the identified period for various reasons.
For enforcement investments, it may be split across multiple possible completion
periods. There are a variety of reasons for this which are all reflective of the nature of
enforcement investments, for example there may be multiple underlying actions with a
commensurate number of completions, or a single completion with a tranched
settlement payment structure.
PCP is a dynamic concept and is subject to regular review and updating to take account
of the circumstances of the underlying investment. It is to be expected that the PCP for
some investments within the portfolio will be adjusted at each reporting date
PCP is not necessarily the same as anticipated IFRS income recognition period governing
income recognition rules.or all investments, it may not follow that the financial result will
be accounted for, nor that cash will be collected, in the year of finalisation.
Purchase price adjustment is the adjustment in value ascribed to the investments
purchased with OBE compared to their carrying cost at the time of the business
combination in 2019.
Adjustment occurs at the OBL and consolidation level, not within OBE Group and does
not affect portfolio or Fund performance, waterfall or fees.
Principle protection cover
Insurance cover to protect against risk of losing the Capital deployed to an investment.
Qualified Purchaser
Resolution Sum
Rest of world (RoW)/ non–USA
Return on invested capital (ROIC)
SIAC
Second Generation Fund
Secondary market sale
116
Omni Bridgeway
Has the meaning given in Section 2(a)(51) of the US Investment Company Act of 1940 and
the rules and regulations of the US Securities and Exchange Commission.
Means the total amount of any money, services, benefits and/or any in-kind assets that
becomes due or is collected in accord with the underlying litigation or enforcement. It is
before allowing for any amounts due to the funder, lawyers or other advisers or
participants. The funder earns a share of this Resolution sum in accord with the funding
arrangements.
includes all regions, excluding the United States of America, in which OBL has or may
have investments, LatAm.
Is the ratio of profit made above the investment cost is calculated on completed
investments across their entire life (not on an annualised basis)
Unless expressly stated to the contrary, it excludes consideration of capitalised
overheads, operating overheads, and withdrawals from investments.
It is calculated as gross investment income less all total expenditure (including any
adverse costs), divided by total investment expenditure (excluding any adverse costs).
Singapore International Arbitration Centre
OBL’s Fund 4 and Fund 5 - established by the Group in 2019 with generally consistent
terms.
A sale (in whole or part of) an existing litigation investment to another litigation investor
at a point during the life of the investment before completion.
SPV
STIP
Success rate
Success – legal
Success – financial
Special purpose vehicle
Short-Term Incentive Plan
Refers to % of investments where the underlying litigation has completed in a manner
that causes the funder to have received more that it deployed.
Refers to investments where the underlying litigation has completed to the benefit of the
funded party.
Refers to investments where the underlying litigation has completed in a manner that
causes the funder to have received more that it deployed.
TFR
Total Fixed Remuneration
Third Generation Fund / Purchased fund
OBL’s Fund 6 and Fund 7; which were established by OBE group and acquired as part
of the 2019 acquisition of that group by IMF
TSR
US Person
Withdrawal
$ weighted average
Total shareholder return.
Any natural person resident in the United States is a US person according to Rule
902(k)(1)(i) of Regulation S. In C&DI 276.01, the SEC staff clarified that a person that has
permanent resident status in the US (a so-called Green Card holder) is presumed to be
a US resident for purposes of Regulation S.
Refers to investments where the funder has ceased funding before the underlying
litigation has completed.
Is the average of results allowing for the respective relative AUD values of the
sample inputs.
Total addressable market information sources – pages 16-17
1. US: Thomas, Brigette, Industry Research Reports United States 54111, “Law Firms in the US”, IBISWorld, January 2023, pp 8, 10 / Thomson Reuters Institute and
Georgetown Law Center on Ethics and the Legal Profession, “2023 Report on the State of the Legal Market”, Thomson Reuters Institute and Georgetown Law Center
on Ethics and the Legal Profession January 2023 p 25.
2. Canada: Thomas, Brigette, Industry Research Reports Canada 54111CA, “Law Firms in Canada”, IBISWorld, May 2023, p 9.
3. UK: IRN Legal Reports, “UK Legal Services Market Trends Report 2023”, March 2023 p 5 / Lythe, Oliver, Industry Research Reports United Kingdom M69.100,
“Legal Activities in the UK”, IBISWorld, July 2023 p 7.
4. Europe: MarketLine Industry Guide, Reference MLIG230001-01, “Legal Services Global Industry Guide 2018-2027”, Marketline, July 2023, p 54.
5. Asia: MarketLine Industry Guide, Reference MLIG230001-01, “Legal Services Global Industry Guide 2018-2027”, Marketline, July 2023, p 39 and Marketline Legal Services
data.
6. Australia: Gannon, Darcy, Industry Research Reports Australia M6931, “Legal Services in Australia”, IBISWorld, February 2023, p 9 / Thomson Reuters Institute
and The University of Melbourne, “2022 Australia: State of the Legal Market Report”, Thomson Reuters & University of Melbourne, August 2022, p 8.
7. NZ: Kyriakopoulos, Arthur, Industry Research Reports New Zealand M6931NZ, “Legal Services in New Zealand”, IBISWorld, September 2022, pp 8, 9.
Annual Report 2023
117
Non-IFRS financial information and disclosure
Non-IFRS financial information included in OBL’s Annual (and Half-year) Report, associated result presentations, quarterly investment
portfolio announcement and other materials has been prepared in accordance with ASIC Regulatory Guidance 230 – Disclosing Non-IFRS financial
information, issued December 2011.
Such information has not been audited or reviewed.
Non-IFRS financial information is financial information that is presented other than in accordance with all relevant accounting standards.
The Group believes that given the unique nature of its business the inclusion of non-IFRS information is useful for investors and other
users. In our disclosures it includes, EPV, IEV, LTCR, commitment, deployed, completion, PCP, preferred return, income yet to be
recognised, investment income and other terms be-spoke to OBL. In certain instances, it is simply redisplaying IFRS information differently
(e.g. ”cash table” or “completion table” is readily reconcilable to the IFRS disclosures.)
Whilst our statutory financial reports provide historical financial information that are prepared in accordance with accounting standards
and other financial reporting requirements of the Corporations Act and have the objective of ensuring consistent and comparable
reporting of historical financial performance, position and cash flows over and between entities; our Non-IFRS material contains
information aimed to assist in informed assessment of the Group’s operations, financial position, business strategies and prospects.
It is provided to more fully explain the performance and financial position of the Group so as to provide an understanding of the
underlying business and the drivers of profit.
The Group’s non-IFRS financial information is calculated consistently from period to period; is unbiased and does not remove ‘bad news’.
Definitions and assumptions around calculations, are provided as appropriate. Where such information is a re-presentation, re-
classification or a subset of IFRS material, the identifiable IFRS components are provided in order to prove a link to the statutory financial
reports.
The primary rationale for the majority of our non-IFRS information is to provide an indicative view of the size, value and diversification
of the Group’s litigation investments (however accounted for); our past economic performance regarding litigation investments and the
interplay between OBL and NCI attribution. We feel that this is necessary due to the complex (& not readily understood or comparable)
nature of our accounting and structural treatment. This is amplified by the overriding requirement of most of our litigation investments
being required to be carried at cost (less any impairment).
Additionally, in certain disclosures we include 100% of Fund 5; this approach aggregates the external investors’ interests with those
of OBL to facilitate direct comparison between all Funds (as the other Funds are consolidated & hence disclosed at 100%).
118
Omni Bridgeway
Assumptions relating to the provisional attribution
of implied embedded value, estimated management fees
and potential performance fees
The attribution of implied embedded value (IEV)
between OBL equity and non controlling interests
(NCI) has been prepared based upon the following
underlying assumptions:
• All unconditionally funded investments in the Group’s
investment portfolio at the date stated (Portfolio
Investment(s)) complete in the selected Possible Completion
Period (PCP).
Possible completion period (PCP):
• PCP is a dynamic concept, subject to regular review
to take account of each investment's circumstance
•
It is to be expected that the PCP for some investments
will be adjusted at each reporting date.
• PCP is not necessarily the same as anticipated IFRS income
recognition period.
• All Portfolio Investments are completed at their full estimated
Estimated management fee assumptions:
portfolio value (EPV).
• Funds 4 and 5 earn management fees of up to 2.15% of
• The income received by the Omni Bridgeway funding entity
external capital deployed as well as additional service fees.
•
Includes Fund 6 management and servicing contribution
which is recognised as an equity contribution and anticipated
service fees from Fund 8.
• This approximation of management fees assumes that the
net deployed capital grows in FY24 at approximately 17%.
In practice, net deployed capital may vary over a given period,
including delays or accelerations of investment completions
or expenditure of investment budgets.
Potential performance fee assumptions:
• To determine the potential performance fees in Fund 4 and
Fund 5, it is assumed that:
–
the income received by the applicable Omni Bridgeway
funding entity equals the full IEV of an investment.
–
investments complete in line with the Group’s historical
ROIC which is used to divide the IEV between the return
of investor capital and the portfolio investment profit upon
which performance fees are payable.
• The respective Fund 4 and Fund 5 performance fee waterfalls
are then used to calculate the potential range of performance
fees depending upon the applicable IRR achieved across the
relevant investment portfolios.
• Past performance is not necessarily an indicator of future
performance. This analysis is based on the hypothetical
scenario of Fund 4 and Fund 5 investments completing at a
normalised EPV conversion rate of 15% to their respective EPV
at 30 June 2023, at an assumed ROIC. In practice, the portfolios
will complete over multiple time periods with metrics different
to those assumed.
upon the completion of a Portfolio Investment reflects the long
term conversion rate (LTCR) (which includes losses) and hence
equals the full IEV of an investment.
• The residual capital to be deployed in Funds 2&3 is deployed
in equal portions during FY24 and FY25.
• For Funds 4 and 5 the attribution is split solely in proportion
to capital commitments.
• For Fund 6 the attribution to OBL equity reflects the historic
blended average proportion of proceeds received by OBL
equity (excluding performance fees).
• FX rates are assumed to remain constant across the periods.
• Performance fees in Funds 4, 5 and 6 have been excluded from
the attribution to OBL and hence any performance fees earned
will see an IEV attribution shift from NCI to OBL equity.
The sensitivity analysis provided uses the following
assumptions:
•
IEV is adjusted to reflect variations in the income conversion
rate from the LTCR of 15%. The selected sensitivity rates are
10% and 20%.
• EPV of material impaired investments are excluded from
EPV with commensurate flow-on to IEV and attribution.
• PCP on all Portfolio Investments is delayed by 12 months.
Duration risk has traditionally been addressed through a time
based pricing escalator. Historically these capped out at a
certain level, leaving the Group exposed to further delays.
We have sought to address the risk by incorporating some
additional IRR protection provisions. The 12 month delay
sensitivity does not incorporate the effects of these duration
protections and assumes the income is the IEV at whatever
time it is received.
Estimated portfolio value (EPV) assumptions:
• EPV includes all Portfolio Investments, irrespective of
impairment provided, the Group believes there are
positive prospects of ultimate success.
• Conditionally funded and IC approved investments are
not included in the EPV.
Disclaimer
None of the content in the Omni Bridgeway Limited (OBL) Annual Report is an offer to sell, or a solicitation of an offer to buy, any securities of OBL or any other company
affiliated with OBL. In addition, nothing herein should be construed as an offer to buy or sell, nor a solicitation of an offer to buy or sell, any security or other financial
instrument, or to invest assets in any account managed or advised by OBL or its affiliates. This Annual Report is for the use of OBL’s public shareholders and is not an
offering of any OBL private fund.
Annual Report 2023
119
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