IMF Bentham Limited Annual Report 2019

principle in a confidential US bankruptcy investment and a settlement in a confidential US appeal funding. Results will be recorded in FY20. This year we grew our team by 28 employees to 101 employees as at 30 June 2019, with important senior appointments in each jurisdiction. This increased our employee benefits expense. Our IFRS results contrast with our cash results this financial year, which reflect a cash operating profit of $6.4 million (excluding non-cash items, and adding back capitalised expenses for the period). Balance Sheet We have grown and diversified our investment portfolio significantly throughout FY18 and FY19 and acknowledged that it would take time for our P&L to reflect the benefits of this strategy. Based on an average realised investment gestation of 2.6 years from initial commitment of funds to final resolution and return on investment, coupled with any market dynamics which may extend that lifespan, we anticipate completions from FY20 onwards. As noted above, completions have commenced already. Our net assets are $515.5 million representing an increase of more than 40% (14% increase before  non-controlling interests). Cash v IFRS Results 2019 $'000 2018 $'000 Cash inflows from operating activities Proceeds from litigation funding - settlements, fees and reimbursements 43,179 94,893 Cash outflows from operating activities Payments to suppliers and employees (35,625) (44,316) Income tax received/(paid) 3,459 (13,231) Net interest paid (4,630) (6,078) Cash operating profit 6,383 31,268 Less: Net impact of classification of litigation intangible related cashflows to Investing Activities 116,851 106,999 Net Fund establishment costs 344 – Share based payments, depreciation & other non-cash items 7,837 5,964 Unrealised foreign exchange gain (3,535) (4,311) Net change in assets & liabilities (78,966) (69,537) 42,531 39,115 Net (loss) (36,148) (7,847) to trial. Whether influenced by insurers, administrative or other commercial factors, this shift in litigious strategy impacts all parties involved in dispute resolution. Dispute management approaches can and do change over time, subject to market forces. As we have previously noted, these factors are beyond our control, but we do not expect the current dynamics to endure beyond the medium term. This year our results were also impacted by the loss of two US-funded cases (including a bilateral treaty claim against Uruguay) and one in Canada. These investments were in our fund structures, so whilst the entire losses flow through our consolidated accounts the cash impact is minimal. At the end of FY19 the claim we funded against Ashley Services Group Ltd settled (and is included in our FY19 results) and actions against Murray Goulburn Co- operative Co Limited/MG Responsible Entity Limited, Sirtex Medical Limited and Forge Group Limited were successfully settled with financial returns from those investments to be accounted for in our FY20 results (assuming court approval and satisfaction of any other conditions). After the close of FY19, the claim against two respondents in a confidential Australian matter settled, and the shareholder class action against UGL settled in principle. There was also a settlement in Overview Financial Report Shareholder Information 5 Directors’ Report IMF Bentham Limited Annual Report 2019