Thank you for standing by, and welcome to the Omni Bridgeway Limited OBL FY24 Results. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Raymond van Hulst, Chief Executive Officer and Managing Director. Please go ahead.
Thank you and good morning. My name is Raymond van Hulst, Managing Director and Chief Executive Officer. Welcome to Omni Bridgeway's full year results for the 12 months ended June 30, 2024. Joining me today are Guillaume Leger, Global Chief Financial Officer, Jeremy Sambrook, Global General Counsel and Company Secretary, and Nathan Kandapper, our new Global Head of Investor Relations. I took over as CEO 10 months ago on a commitment to implement significant changes towards increasing and reporting shareholder value, increasing cost coverage, transitioning to fair value, and improving our disclosures. Today, we will provide an update of our progress against this commitment. In addition to the progress on the transition, I am generally pleased with our investment performance metrics for the full year, as the portfolio's performance in the second half surpassed the already strong investment results we reported for the first half.
In this results presentation, we will cover the highlights from the financial year 2024, the performance of our portfolio, a walkthrough of our financial results, as well as our strategic priorities for financial year 2025. Guillaume will take you through the key elements of our financial results, building on some of our reporting improvements. For the full year, we made a net profit after tax and before NCI of $30.5 million, up $29.6 million compared to the financial year 2023. Investment income and fee revenue, derived from diversified sources comprising of both completions of investments and secondary market sales, was $277 million, down 10% year on year.
This is offset by an increase in income yet to be recognized, which is $140.9 million for the year, significantly up from the $55.2 million in financial year 2023. Pleasingly, our operating expenses for the year were $89.7 million, well below our target of $95 million. This reflects an 8% reduction of financial year 2023, or 11% to 12% in real terms, considering the average global inflation across our key markets. A strong focus on increasing cost effectiveness and efficiency. As announced at the Investor Day and in our Q4 portfolio update, we have now fully transitioned from estimated portfolio value or EPV to fair value as a non-IFRS measure of investment and portfolio values.
The total portfolio fair value increased to $2.8 billion, up $300 million from the half year results. As outlined at the Investor Day, this represents the net present value of the expected, loss-adjusted, and probability-weighted investment cash flows of our full portfolio. This is the total fair value and includes the share of both the third-party fund investors and OBL. The OBL-only fair value of the portfolio has now crossed the $1 billion mark, sits at $1.04 billion. We achieved our target of $625 million in fair value from new investment commitments for the year. This builds on our objective of improving our risk-adjusted pricing, which is assessed as the fair value added for new dollar of commitment, which increased by 28% for the year.
The 34 full completions during the second half, including as income yet to be recognized, delivered a 118% fair value conversion. This provides a first validation of our fair value framework and importantly, the value of the OBL only share the company's investment portfolio. We finished the year with a record 77 full and partial investment completions, which achieved an overall multiple on invested capital, or MOIC of 2.7x , well in excess of our long-term track record of 2.2x . The internal rate of return of 53%, which is on full completions only and excludes partial completions is equally strong. At the Omni Bridgeway 2023 Annual General Meeting, as incoming CEO, I committed to making the company's transformation a top priority, with a focus to accelerate shareholder returns.
At our Investor Day in March, we outlined the strategic focus areas to deliver on this commitment, which all relate to completing the transition to a capital-light fund management model. An important element of the transformation process was to improve and simplify our reporting and disclosures. A cornerstone of the reporting changes has been the transition from our bespoke historical EPV and IUV framework to fair value on a non-IFRS basis, which is now the key measure of the company's embedded value and value generation from investments. We outlined in detail our framework for this at the Investor Day and presented for the first time the resulting gross portfolio fair value and the OBL only fair value of our portfolio. In addition, we have added OBL only reporting, both on a cash and non-IFRS fair value basis, to further facilitate the interpretation of our performance and results.
As mentioned earlier, we achieved our target of $625 million in new fair value for the year, which came from 67 new investment commitments, improving our risk-adjusted pricing by 28% over financial year 2023, which is assessed as the fair value added per new dollar of commitment, a measure of capital efficiency by making each dollar work harder. Against the backdrop of what were arguably the most difficult 12-18 months in capital markets for the past decade, the value of our platform and the strength of our track record has allowed us to successfully raise and launch our innovative Fund eight, and achieve first close for Funds four and five Series II. All existing fund investors recommitted to the new series, which is a strong validation of our investment performance and platform.
At an operational level, we accomplished our strategic ambition to strengthen our position in the critical UK market by bringing in experienced talent. The global expansion stage of our leading platform for legal assets is now complete, and we will enter a new stage of expanding and leveraging this platform. While expanding strategically, this was delivered in the context of strong internal focus on cost effectiveness and efficiency, resulting in an improvement in our cost coverage ratio to 28%, up from 17% in FY 2023. This was driven by both a reduction in operating expenses, despite high inflationary environment, and a 50% increase in fee income. I won't spend too long on slide six, as we have provided you many of the highlights earlier. However, we felt it was important to provide the breakdown.
63 full and partial completions for the financial year delivered a multiple on invested capital of 2.4x . We realized an internal rate of return of 53% on the 38 completed matters, excluding the partial completions. Including income yet to be recognized, we saw the total of 77 full and partial completions, delivering a MOIC of 2.7x . These 77 completions account for $358.8 million of proceeds to the group, And $87.7 million OBL only income. This reflects an acceleration of completions when compared to the financial year 2023. Based on the overall maturity of the book and the stages of the individual investments we anticipate this acceleration to continue, Notwithstanding our inability to control the duration of individual investments.
We've seen the investment carrying value increase at a compounded annual growth rate, or CAGR, of 16% over the past five years, to approximately $896 million after completions, secondary market sales, impairments, and the deconsolidation of both the Fund one portfolio and the Fund four IP portfolio. For the full year, the increased carrying value was driven by approximately $317 million, allocated by the group towards deployment in both new and existing investments to generate future income. New for financial year 2024 is the presentation of both commitments and new fair value generated for the year. Fiscal year 2024, $631 million of new fair value was generated from $484 million of new commitments. As mentioned previously, our focus is on maximizing value generation of each dollar committed.
Thus, going forward, we will be focused on this as our measurable metric, as opposed to just mere dollars committed. Looking at our portfolio on a fair value basis, our portfolio remains well-balanced between the regions and the different investment types. This diversification is unique to only Bridgeway and reflects the geographic scope and expertise of our platform. The diversification mitigates the risks, legal, or economic events in any particular region or area of law. We are pleased with our limited exposure to single large investments, with the largest 10 cases representing less than 15% of our commitments and approximately 25% the fair value of the portfolio. It should be noted that this does not preclude us from investing in large matters. Rather, we do so on a co-funded basis with non fund external capital to mitigate any concentration risks.
Our total portfolio fair value has increased by 11% for the second half of financial year 2024 to $2.8 billion. This is net of new commitments, completions, and secondary sales, and represents the embedded value of the group's investment portfolio. We note that we only transitioned to a fair value framework as per 31 December 2023, therefore only provide this number for the second half. Of the $2.8 billion, over $1 billion of fair value is attributable to OBL, representing our co-invest and carried interest. In breaking down the 11% gain in portfolio fair value for the six-month period, $256 million of fair value generation has come from new commitments. The balance of the increase reflects the fair value movement of the existing portfolio, net of completions during the period.
The movement is a combination of material litigation events, deployments, foreign currency changes, and the discount unwind associated with the passage of time. For the second half of fiscal year 2024, total fair value profit attributable to OBL amounted to $113.9 million, pre-tax and interest, but net of platform costs. This includes realized and unrealized gains and losses, and has reflected the strong underlying value generation capacity of our platform. We note again that we only transition to a fair value framework as per 31st December, and therefore only provide this number for a second half. I will now hand over to Guillaume to take us through the financial results in more detail.
Thank you, Raymond, and good morning. I'm going to start with the consolidated group financial results on slide 12. For the year ended June 30, 2024, we reported an after-tax profit of $30.5 million before NCI, up $0.9 million in 2023. With a record number of completions, the company's gross income and revenue stood at $277 million, $30 million less than 2023, primarily due to resales in 2024. The investment completions of 2024 occurred at higher MOICs, which generated total income of $205.4 million after cost recognition, an improvement of $88.6 million.
Our focus on moderating expenses has seen employee expenses drop 14% to $63.3 million during the period, while other expenses were primarily affected by the impairment of an investment in Fund one, based on preliminary judgment. Following on from our Investor Day presentation we reported on slide 13 financial information on an OBL only basis, representing the performance of the group excluding the external fund investors' interest and reflecting the amount attributable to equity shareholders. We generated $66 million of positive net cash flows from investment activities derived from completions and the cash proceeds from the sale of a participation in Fund four intellectual property assets. Management fees increased to $24.8 million, and realized profits on fund investments brought $9.9 million of performance fees, three times the previous year's amount.
This was offset by platform expenses of $89.7 million and deployments of more than $68 million in fiscal 2024. Slide 14 provides a breakdown of management and other income, and other fee income. We have generated notably higher management fees and other fee income than previous periods, well above our initial target of $22 million for FY 2024. This comprises Funds four and five management fees on externally deployed capital, cost recoveries from funds, receipts from Fund eight cost coverage agreement, offset by reduced Fund six management fees, given this fund is now in harvest mode. This graph does not include the Fund two and three management fees that have accrued to $8 million and will be payable to OBL after preferred entitlements.
We achieved an important milestone with the first close of the Series II capital raise for Funds four and five, at improved cost coverage terms through the inclusion of transaction fees on new investments. Transaction fees, comparable to facility fees and traditional lending, will typically be payable to OBL in the first years of an investment's life cycle. This represents a significant improvement versus the Series I fee terms and is in line with our stated objective to increase cost coverage contribution from future funds. Looking to the bottom half of page 14, the increased fee revenue, combined with our internal focus on cost, has translated to an improved OpEx coverage ratio, up 11% from FY 2023 and surpassing the target of 25% provided earlier this year at Investor Day.
Cost coverage is expected to further improve into FY 2025, with a target of 35% driven by anticipated growth in investments, combined with improved terms of Funds four and five Series II, Fund eight, and OpEx reduction initiatives. A long-term target of 70% cost coverage still stands for FY 2028. As mentioned at the half-year results, we have taken firm note of our shareholders' concerns regarding the expanded cost base, and we have been working on initiatives to optimize expenses. The full impact of these efforts will continue to materialize in the financial year and beyond, with further focus on reducing the cost of our platform. Accordingly, operating expenses for the year were $89.7 million, well below our target of $95 million. This reflects 8% year-on-year reduction in the face of significant inflation across our core markets.
As we prioritize the enhancements of OBL's cost coverage, our efforts have also centered on maximizing income per dollar of platform costs. This involves leveraging the capabilities of our team, as well as refining systems and processes, while maintaining the expertise and quality of the platform. Accordingly, we have managed to deliver statistics and ratios that continue to improve, such as fair value per FTE of $14.2 million and new fair value per FTE of $3 million. Moving to page 16, this chart provides a bridge of cash usage for the full year and our liquidity balance at the end of the year. On an OBL only basis, we have around $121 million of cash and receivables. This excludes cash proceeds from completions post-June 30, 2024 and projected cash proceeds from matters classified as income yet to be recognized.
To put this in perspective, over the last four years, during which we grew our portfolio, the average annual net cash outflows was approximately $35 million. Assuming no improvement through management fees, OpEx, or completions, and assuming no deterioration through increased deployments, this would provide for more than three years of runway. Given liquidity has been a topic on the mind of investors for the past few years, we have put together slide 17 to outline the drivers of next year's cash flows and liquidity. OBL only liquidity is projected to improve in FY 2025, primarily driven by cash proceeds from completions and income yet to be recognized from second half of 2024, the acceleration of potential completions during FY 2025, and the potential for accelerated realization through secondary capital market transactions.
The cash flows with a higher degree of certainty, namely management fees, income yet to be recognized along with their performance fees, OpEx, interest, and deployments, amount to a net cash outflow of $105 million in a hypothetical extreme zero completion scenario for FY 2025. While $121 million of liquidity is within 12 to 18 months tolerance for this scenario, we are actively pursuing initiatives to accelerate cash flows to OBL. I will now hand back to Raymond.
Thanks, Guillaume. We've aimed to outline in this results presentation that we've made significant progress in the transformation of the company and have delivered against the stated strategic change and operational targets for the year. However, our share price development does not yet reflect the progress made. Management and our board believe strongly that the embedded fair value of our assets, nor of the value of our leading global fund management platform for legal assets. We are developing and pursuing options to reverse this valuation gap through accelerated validation and release of the embedded fair value of the portfolio for secondary capital market transactions. Through these means, the company also aims to align its balance sheet towards a more capitalized fund management model, including reducing net debt and the associated interest charges.
From an operational perspective, we are targeting $700 million in fair value for new commitments for financial year 2025. We will continue our cost effectiveness and efficiency programs, and are targeting a maximum cash OpEx of $85 million for the year. Together with an increased target of $30 million for fee income, this will further improve our cost coverage ratio. We're also working towards a second close from new LP investors in Funds four or five, Series II, and we are preparing for a further fund launch. Last but not least, alongside the company, our board is also in a transition phase. At the upcoming November 2024 AGM, Michael Kay will have completed an impressive 10 year tenure as our chair. In line with governance guidelines, he will not stand for re-election, and will retire as chair and as a board member.
The board has resolved to elect Michael Green as the incoming chair at the AGM. Michael has in excess of twenty years of experience in global investment management, including as a global CEO, renowned for developing and growing two successful international fund and asset management businesses with American Century and Morgan Stanley Investment Management. Initially, the board will continue with three non-executive directors and myself as an executive director to maintain maximum agility while the company goes through the transition phase. In early calendar year 2025, we will evaluate the possibility of an additional non-executive director. With that, I would now like to open the call for questions.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you are on a speakerphone, please pick up your handset to ask a question. The first question comes from the line of David Fraser with MST. Please go ahead.
Good morning, gentlemen. How are you?
Hi, good morning, David.
Good morning, David.
Hi, Raymond. Hi, Guillaume. Quick one. Well, I've got two or three questions, then I'll jump off again because I've got a few more, so I'll let other people ask questions. But first one, could we just touch on slide 17, where you're talking about your liquidity? You know, obviously you've got known income of around about $70 million, and known outflows of $170 million. So you're still down $100 million on liquidity. Could you just elaborate why you feel you're still very comfortable with your liquidity position? Obviously, knowing that $800 million of fair value to complete will generate probably, you know, $800 million plus of obviously investment proceeds in nominal dollars. Just want to get your understanding of how comfortable you are with all of these things.
Yeah. Thank you, David. And as you pointed out on slide 17, there are six elements in that that are more certain. So on the right-hand side, the outflows, right, OpEx, interest, and deployments. And on the left-hand side, management fees and then the two blocks related to income yet to be recognized. So as you said, this sums up to net outflows. So with the liquidity that we have today of 21, we have a little bit over 12 months of liquidity before anything is collected from new completions, right? The kind of bigger block in the middle of that slide represents new completions. And then, as I stated earlier, we're looking at potential secondary market transactions that will provide another block of liquidity. So yeah, we do feel comfortable based on that, but we are looking at those secondary market transactions to provide the liquidity we need.
Yeah. So just on that, Guillaume, secondary market transactions, what's the outlook on that? I mean, are you working on currently or the expected flow and how is that market developing?
Thanks, David. I'll take that one. So we're always in the market and talking to multiple parties on the secondary market sales. To get the maximum outcome of these, we'll only announce them if and when they're binding or we've got a binding term sheet or it's closed. So we can't make any statements on how close we are to any, but we're certainly always in the market discussing these.
Yeah. If, if I may, just two more quick ones. Operating costs, forecasting $85 million in 2025, can we think about that as the new base, or is there programs in place where we'll actually lower that, further? And then heading out to full year 2028, can we just assume that it will grow at, you know, wage inflation effectively, because the current FTE will be able to deal with all the new commitments coming forward, and so we can just sort of back solve what your management fee forecast is for, for 2028.
Yeah. So there's some of the uncertainties on that is, for example, reducing the cost of office infrastructure, which is something we're looking into actively. Some of those measures will can be taken, have been taken already and will be taken in the coming year, but the full effect of those will may take one or two years in full flow through the OpEx. So I think 85, in my ideal scenario, we would keep it at 85, so not have any further inflation on that for the year after. And thereafter, I think that should be used as the base.
Great. And last one-
Just to add to that, David, real quick. So what we're looking for also is that cost coverage ratio to continue to improve over time. So we're working on both, operating expenses and management fees to keep that ratio going.
Yeah, I would just expect that Funds 19 , when and if they roll out, then they will have attractive, management and, transaction fee structures as well. Last one for me. $ 800 million of fair value in full year 2025, how much of that can we ascribe to Funds Two and Three to, I guess, determine when, the LPs have been paid back all the accrued distributions and capital, and then when you'll start to get your management fees and capital back, and then 80% of the, residual profit?
It's difficult to give the exact number on that, but we do 'cause it's the fair value is a probability weighted.
Yes
Number. Certainly, a significant portion of the completions are Fund Two, Three completions. We do expect that within the financial year, we hit the end of the or the next step in the waterfall, where it will flow to OBL. But I can't give you the exact number, given the probabilities involved.
Thanks, Simon. I'll jump off and let some other people ask questions. Thanks.
Thank you. The next question comes from the line of Daniel Goldberg with Select Equities. Please go ahead.
Hi there, this is Daniel Goldberg. Can you hear me?
Yes. Hi, Danny.
Hello, Danny.
How are you?
Good, thanks.
I've just got a question with regards to the covenants on the debt. The debt is fully drawn currently, and when I have a look at note 19 of the annual report, I can't see any covenants in relation to that debt that's in place. Are you able to elaborate why?
No, so we haven't disclosed our covenants, but they're pretty standard covenants for private credit, and we're fully in compliance with those covenants.
Okay. When I see the annual losses for the company after outside equity interests, I think there's now seven years in a row of losses. And when I have a look at the cash outflows on your bridge slide that Mr. Fraser was just referring to, it looks like there's a sum total of $173 million outflows. It makes me a little concerned that for ordinary shareholders, the losses may continue in future periods for ordinary shareholders. Is that likely to is that a fair assumption or is that more unlikely?
No, so it just goes into the value, that the OBL only value that's been built in, in the book. The company has set out already five, six years ago, to transition from a balance sheet funder to a fund management company, and that transition comes with a delay in performance fees and capital return due to the standard waterfall structures in a fund management company. That was extensively discussed at the time. That's now reflected in the OBL only value of our book, and once the fund waterfalls have reached the next stage, that value would translate into value to OBL only or to OBL shareholders. And that's what we refer to when we say we want to accelerate that conversion so that it's- it flows to shareholders.
And just to highlight, Danny, that the fees-
Yeah.
Management fees, transaction fees, and performance fees, they're all OBL only revenues. And we're transitioning as an asset manager to collect more of these fees. And since they all accrue to the shareholders, that's the kind of shifting that you're seeing here. And I said a little bit earlier that our performance fees have tripled since last year. So those performance fees are starting to kick in on a cash basis. You're going to see this in the accounting towards the end of the life of funds four and five, right? So we haven't recognized this as income. We've received the cash and the performance fees, but the income will come later. So there's a bit of timing also in the accounting books, the re-recognition of these fees that affect the numbers that you were talking about. But it's a fair-
How significant. Sorry.
Sorry, I was going to say it's a fair question, but I, I think we addressed, tried to address that at the Investor Day as well, that the-
Mm.
This is an element of the transition process that we've been going through over the last years.
Yeah, because the statutory losses over the last seven years are about $250 million, and the outside equity interest was significant again this year. How significant will the outside equity interest payments be for next year, do you think?
That fully depends on which case is complete and in which funds they sit. In some funds, it will be more, in some funds, it will be less. So it's difficult to give an to that. But I think-
Okay
... it's fair to say that the statutory accounting is fairly unfavorable to the transition process that we're going through and doesn't reflect the value that's been accruing for our shareholders.
We don't provide forward-looking financial information. The funds two, three waterfall will make a difference once it switches to OBL after the preferred entitlements are paid off. Then, as I said earlier, the recognition of the performance fees will come at the end of the fund. So that also will impact the future earnings you will see.
Okay. Thank you.
Thank you. Next question comes from the line of David Fraser with MST. Please go ahead.
Sorry, gents, I'm back again. Pricing in 2024, you achieved 170% ROIC on that improved pricing on your new commitments. Is that a sustainable level, do you think, going forward, or was it a number of cases that sort of really blew it out of the water? Or, how do you feel about how you're going to go forward in 2025 and onwards?
Yeah, just to break that up, David, the-- there's two different things. There's the realization of MOIC or ROIC on the historical book, that's the 2.7, and then the increased pricing is the 28% on the current new commitments. We do expect the ROIC or MOIC on the current book to continue to track higher. That's part of the increases in pricing that we've seen in the past in the structuring, but also the ROICs tend to go a bit higher towards the end of the life cycle of investments.
For matters that have been originated and underwritten in the last kind of 18-24 months, we have certainly structured in a high ROIC if our average loss rate or success rate remains stable, so we're certainly aiming to get that long-term 2.2 to continue to have that track upwards.
Okay. Thanks, James. And I guess the second question, again, you're probably not going to be able to answer this because of the Monte- Carlo modeling, et cetera, but, you're talking $800 million fair value commitment completion this year. You're targeting $700 million of new fair value in full year 2025. Two things. One, is the duration on that $700 million three years, like your standard completion duration, or is it bigger, smaller? And then the second part of the question is, how much of your total fair value for the group will roll from 2026 into 2025 to actually see that you have an increase in forecast fair value completion in 2026? I hope you understood that question.
The first one I understood. I'm not sure I understood the second one.
I'll repeat it, let's see. Yeah.
Yeah, let's deal with the first one first, and then if you can repeat the second. So, I don't know the exact number of the implied expected duration of the new commitments, but it's certainly true that we've become more reluctant in funding matters with a very long expected duration. And that have been driving, I think, the average duration expectation of the book down. In addition, the delays that have been driving the duration increase of our book historically, those seem to have now really moved out of the system. So we do think that duration ultimately will strike back to three to four years.
Okay, thank you, and then the second part of the question, and it's academic really, but you know, your fair value of $2.8 billion is the fair value of investment proceeds over the next X amount of years. And so you're discounting, for example, full year 2026 back at 12% squared, so when that rolls into 2025, it's obviously going to be discounted back at a lower year, so obviously be a bigger number. I'm just trying to get a feel for how much of your $2.8 billion of fair value will is sitting in 2026, sort of four. We know $800 million is in 2025, and then just trying to work out what's in 2026, 2027, 2028, and how quickly the tail drops off.
That's a good question, and we're happy to look into that. We'll come back to you on this separately, David. It makes... I understand the question, and we can get you that number.
Yeah, no, we're just trying to get a feel for what 26 numbers could look like.
Yep. No, fully understand the context of it.
Great. Thank you. That's it for me. Thank you.
Thank you. Next question comes from the line of Daniel Goldberg with Select Equities. Please go ahead.
Hi, I've just got a second question in relation to slide five. You've got some commentary around the, capital raising and the new fund, Series four five funds, four, five, Series II. Can you give us a bit of an update as to how that's going and why it's taking a bit longer than you'd hoped?
Sure. I'm not sure it's-- I agree with the statement that it takes longer than I had-
Okay
... hoped. We have had a few secondary closings or further closings already in the book. I think the background is our first closing was relatively early for the market, seven to nine months before the end of the Series I. Typically, new LPs will get into a new fund or commit to a new fund when the first or early investments are known, and they can diligence those investments. That is what is currently happening. Fund five is still not, Series I is still not, still not ended its investment period. That is going on, and Fund 4 has started the investment period just a few weeks ago. We are currently in diligence with quite a few LPs that are looking into this.
So I think we're fully on track, and we're at quite normal stage in the, in the process, I would say. Does that answer your question, Danny?
To a degree. I think the rate of capital raising that's happened in the last, say, decade for the company has been a little faster than that, so it seems to have slowed down to a degree. Perhaps it's due to the current environment, interest rates, risk-return requirements. Is that, is that why it's taking several months or a bit longer? Your predecessor, Mr. Saker, was issuing new funds and raising funds at a relatively rapid clip, and it seems to have slowed down a bit. Is that incorrect?
I think so. We raised in the last 12 months, we launched Fund Eight and launched the first close of Series II, Funds four and five, which are essentially new funds. We call it Series II, but they're completely new pools of capital and new pools of investments. So I think total capital raised is somewhere in the $750 million range for those funds. I don't think that's indicating a slowdown. Launching three new funds within the last 12 months, I don't think that's indicating a slowdown. And the company actually hasn't been in the market in the prior years to launch new funds.
So, I think that may be a bit of a misconception, but we're certainly working towards further closings and further fund launches, and in that regard seem to be doing quite well, especially also compared to our peers in the market in legal finance.
Okay.
This is the operator. Are you done with the question, Daniel?
I am.
Thank you. Next question comes from the line of Rodney Pryor with Nordis Investments. Please go ahead.
Hi, thanks for taking my question. Just on slide 10, just the movement in existing portfolio of $61 million, was just trying to get a bit more detail in and around that. If I take your 12% discount rate and apply that to the starting fair value balance of $2.5 billion, that's about 150. So just wondering what comprises the $100 million delta? You know, not going up by 150, but only, you know, sort of 150, 160, but only by 60, between sort of FX and, and changed assumptions on litigation outcomes. Thanks.
Yeah. So that movement in combines the effects of a number of elements, including indeed FX, the discount unwind, but also material litigation events. So whenever there's a for example, negative first instance decision, as we have announced one in the course of this year, that will automatically reflect a negative material litigation event and will be reflected in the value of the book. And if there are positive intermediate outcomes, that will also be reflected. This number gives the combined effect of all of these.
Yeah. No, I understood that. I was just trying to... Are you able to split out a little bit the, you know, what the impact of, you know, sort of the changes on assumptions on, you know, sort of litigation is? Because I guess that goes a little bit to, you know, sort of testing the veracity of, you know, sort of the fair value balance. So I was just wanting to try and understand that more.
Okay. No, I think that's. I understand your question. It's a fair question. I don't have the split out of the numbers in front of me. But happy to take that offline and talk that through.
Okay. That'd be great. Thank you.
Okay, thank you.
Thank you. A reminder to all the participants that you may press star and one to ask a question. There are no further questions at this time. I'll now hand back Mr. van Hulst for closing remarks.
Okay. Thank you, everyone. Hopefully, we have, we've answered all of your questions. And as indicated, if there are any follow-on questions, please don't hesitate to reach out. We'll happily engage and provide more detail. Thank you for your attendance today. And I'd like to close the-
Thank
... close the call.
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.