Losses balloon at LCM after 'most challenging' year on record

(Sharecast News) - Litigation Capital Management has launched a strategic review, the asset manager confirmed on Wednesday, after a raft of unfavourable results pushed the AIM-listed firm deep into the red. The Sydney-based dispute financing specialist posted an A$82m (£40.3m) loss for the year to 30 June, compared to total income of A$44.7m a year previously.

Pre-tax losses were A$101.7m, against pre-tax profits of A$16.1m in 2024.

Net assets were also substantially lower, falling to A$114.4m from A$188.9m. Total new commitments of A$79m were added during the period, in contrast to the A$279m added last year.

As at 1130 BST, shares in LCM had tumbled 12% at 23.3p.

Patrick Moloney, chief executive, said: "This year has been the most challenging in LCM's history.

"Despite our established long-term track record of successful outcomes and consistent returns on invested capital, an unprecedented number of adverse case results have negatively impacted our performance over the past 12 months."

Further weighing on the company was a probe by prosecutors in Dubai, into both LCM and Moloney, over alleged potential corruption offences.

LCM and Moloney have since been fully exonerated and the investigation dropped

However, LCM said due process had not been followed and accused the probe - which it said had impacted strategic LCM's strategic opportunities - of being "ill-conceived and potentially malicious".

It is now reviewing legal options with a view to pursuing a compensation claim.

Looking forward, the firm said it had been exploring a range of strategic options during the second half, including potential transactions, capital raises, new partnerships and asset sales.

The review was now "well progressed", it noted, with advanced discussions underway with a number of counterparties.

In addition, LCM said it would shake up its management structure, with Moloney refocusing on active investment management.

The firm - which also has offices in London and Singapore - plans to quit under-performing investments more quickly, better manage concentration risk and ramp up scrutiny of expert evidence.

Moloney concluded: "These setbacks, while disappointing, have underscored the inherent risks of our asset class and the lessons we have learned are shaping our path forward.

"Our team's resilience and decisive actions, including significant cost reductions and a refocused investment strategy, have laid a foundation for recovery."