Litigation Capital Management (LIT) H1 2026 earnings summary

Executive summary

• Statutory loss after tax was $107.8 million for the half-year ended 31 December 2025, driven by two large trial losses and adverse cost orders, compared to a $8.4 million loss in the prior year period.

• Management has shifted focus to managing the existing portfolio, with no new investments and a hands-on approach to case management and portfolio re-underwriting.

• A strategic review launched in September is well advanced, aiming to restore balance sheet strength, with two tangible opportunities being explored and a meaningful update expected within the next quarter.

• Proactive actions included securing covenant waivers, CEO involvement in case management, and a ~50% reduction in operating costs.

• The sector is experiencing contraction and similar challenges among peers, with increased risk aversion.

Financial highlights

• Net loss for the period was AUD 108 million (A$107.8 million), with total income/(loss) of negative $105.8 million and net assets falling to around AUD 6 million.

• Four investments concluded: one small win, three losses, and an adverse cost order exceeding insurance protection; two losses are under appeal.

• Operating expenses reduced to an annualized run rate of AUD 10 million, with further reductions possible; operating expenses for HY26 were A$6.1 million.

• Cash at period end was A$1.4 million, with net debt increasing to A$92.4 million (AUD 123 million as of March 31).

• Borrowings increased to $93.8 million from $77.7 million at FY25 end.

Outlook and guidance

• Strategic review is at an advanced stage, aiming for a capital injection or, if unsuccessful, a lean runoff model, with outcomes to be communicated soon.

• Expectation to provide a further update by the end of the next quarter.

• Material uncertainty exists regarding the ability to continue as a going concern, dependent on ongoing covenant waivers and lender support.