Final Results

Highlights

Strategic and Financial Review

Introduction

FY26 was a year of significant losses for LCM. The Group recorded a net loss after tax of A$165.7 million (FY25: net loss of A$72.9 million) and reports negative net assets of A$53.6 million at 30 June 2026. The Strategic Review launched during the year did not result in a transaction. The Board has since agreed a long-term amendment to the Group's debt facility with Northleaf, and LCM has moved into run-off: the existing portfolio of case investments will be managed to conclusion, no new investments will be made, and cash realised from the portfolio will be applied to repayment of the facility.

Under the amended terms of the facility, described below, the amount owed to Northleaf will continue to accrue over the remaining life of the portfolio and must be repaid in full before any value can be returned to shareholders.

This Strategic and Financial Review sets out the results for the year to 30 June 2026 and the terms of the amended facility. The tables in this review present LCM's own position. They exclude the assets, liabilities and results of the third-party funds that are consolidated in the statutory financial statements.

Results for the year

The losses reported for FY26 are driven by investment performance, which has deteriorated sharply over the past two years. In FY26 that deterioration was compounded by concentration: a large amount of invested capital had been committed to a small number of cases, which were ultimately unsuccessful. eight investments concluded during the year, of which seven were losses and one was a win. A further two cases were lost at first instance during the year and are under appeal. These remain in the portfolio and have been written down to 50% of cost; that write-down is included in the net fair value movement.

The following additional items contributed to the loss. LCM incurred A$12.9 million of uninsured adverse costs on the Queensland Electricity class action in Australia. Related, a provision of A$4.2 million has been established for the adverse costs on cases that have lost where the level of ATE insurance is deemed insufficient to cover the potential exposure. In addition, a provision of A$20.4 million has been recognised for the clawback of performance fees previously received from Fund 1. A clawback is now likely, given the performance of the Fund's investments.

The Board responded to the deterioration in performance by substantially reducing the cost base, with operating expenses falling to A$11.0 million in FY26 from A$18.0 million in FY25, and by launching a Strategic Review to test whether value could be realised for shareholders. The Strategic Review did not result in a transaction and so LCM moves into run-off and further cost reductions will be implemented.

Balance sheet

At 30 June 2026 LCM had 37 ongoing case investments (FY25: 53). Four of these (FY25: three) have been lost at first instance and are under appeal. Total commitments across the ongoing portfolio were A$224 million (FY25: A$269 million) and invested capital was A$122 million (FY25: A$153 million), of which A$66 million (FY25: A$44 million) relates to the cases under appeal.

The FY26 losses have left LCM with net liabilities of A$53.6 million (FY25: net assets of A$114.4 million). The balance sheet includes A$33 million of investment value in respect of the cases lost at first instance and under appeal. If those appeals are ultimately unsuccessful then those amounts will also need to be written off.

Net debt rose to A$123.4 million (FY25: A$68.9 million). Cash received from concluded investments was minimal during the year, while LCM continued to fund its ongoing cases and operating expenses. Those outflows were financed by drawings under the facility, as the cash flow table below shows.

Cash flow

Events after the reporting period

Northleaf continued to waive the requirement to test the financial covenants in the facility since the reporting date. The waiver in place at 30 June 2026 was extended to 31 July 2026, then subsequently to 31 August 2026 and subsequently again to 30 September 2026. Each extension was on substantially the same terms as the original waiver: the interest margin was increased by 2.00% per annum during the waiver period. LCM has not been required to test and comply with its financial covenants at any point during the relevant period, as each waiver was in place before the previous one expired.

On 30 September 2026 LCM entered into an agreement which, subject to the satisfaction of certain conditions precedent which are substantially progressed, implements a long-term amendment to its debt facility with funds managed by Northleaf Capital Partners. The purpose of the amendment is to facilitate an orderly run-off of the remaining portfolio. The principal changes to the commercial terms of the debt facility are:

 The facility is increased from US$100 million to US$125 million and the term is extended to 31 December 2030.

 The interest margin is increased from SONIA plus 525 basis points on the original facility (which had been increased by a further 200 basis points due to the covenant waivers) to SONIA plus 1000 basis points. Interest is capitalised and added to the outstanding principal amount of the debt (paid in kind) rather than paid in cash for the remaining life of the facility.

 The amount repayable is the higher of (i) the outstanding principal plus capitalised interest and (ii) two times the principal drawn under the facility.

 If the facility is repaid in full while case investments remain outstanding, Northleaf is entitled to 25% of the gross cash proceeds of those remaining investments, including any performance fees received from the funds.

 The facility is limited recourse to the case portfolio.

The following governance changes are being implemented alongside the commercial changes:

 Two new directors, nominated by Northleaf and fully supported by the LCM Board, are to be appointed as independent directors of LCM Group Holdings Pty Ltd, the subsidiary through which the Group's investments are held and its operations conducted and to some or all of such company's wholly-owned subsidiaries.

The agreement on the terms of a long-term amendment with Northleaf to the debt facility marks the end of the Strategic Review, which was launched during the financial year. The board has formally concluded the review process with no resulting transaction, and has agreed on terms of an increased Northleaf facility. LCM now moves into an orderly run-off: the existing portfolio of case investments will be managed to conclusion in accordance with a business plan approved and supported by as per the Northleaf agreement and is not presently contemplated (or permitted under the terms of the agreement with Northleaf) that any new investments will be made.

Going concern – material uncertainty

The financial statements have been prepared on a going concern basis, which contemplates the continuation of the Group's operations and the orderly management and realisation of its investment portfolio.

On 30 September 2026, after the reporting date, the Group entered into a Second Amendment Agreement, which, subject to satisfaction of certain conditions precedent which are substantially progressed, will effect amendments to its senior secured borrowing arrangements with lender funds managed by Northleaf Capital Partners, under which funding is provided through Facility B of the Amended and Restated Senior Term Facility Agreement.

The amendment will, once taking effect, increase the facility limit from US$100 million to US$125 million, replace the previous financial covenants with covenants more appropriately aligned to the run-off profile of the Group's portfolio, extend the maturity date to 31 December 2030 and provides for interest to be capitalised rather than paid in cash. The first financial covenant test under the amended facility occurs on 31 December 2027. Further details are set out in Note 30 (Events after the reporting period).

The Directors have prepared cash flow forecasts covering a period of at least twelve months from the date of approval of these financial statements. These forecasts indicate that the Group will be able to meet its obligations as and when they fall due. However, the forecasts assume that the aforementioned amendments to the debt facility have taken effect and remain dependent upon the timing and amount of realisations from a limited number of significant investments, continued availability under the amended facility, satisfaction of utilisation conditions for future drawdowns and compliance with the revised covenant framework.

The Group's ability to continue as a going concern is materially dependent upon satisfying (or obtaining appropriate waivers of) the remaining conditions precedent to the facility amendments taking effect under the Second Amendment Agreement and achieving forecast realisations from its investment portfolio and maintaining access to funding under the amended facility. The timing and quantum of investment realisations are not wholly within the Group's control. No assumption has been made that Northleaf is contractually obliged to provide future covenant waivers, amendments or additional funding support beyond the terms of the amended facility. If realisations are materially delayed or lower than forecast, or the Group is unable to satisfy the conditions required to ensure the amendments to the facility take effect and/or to access available funding under the amended facility, the Group may be unable to obtain sufficient liquidity to meet its obligations as and when they fall due. In those circumstances, the Directors believe the Group may be unable to continue as a going concern and may be unable to realise its assets and discharge its liabilities in the ordinary course of business.

Accordingly, these events and conditions indicate that a material uncertainty exists that may cast significant doubt upon the Group's ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or to the classification and amounts of liabilities that may be necessary should the Group be unable to continue as a going concern.

Consolidated statement of profit or loss and other comprehensive income

For the period ended 30 June 2026

Consolidated

Other comprehensive income

Items that may be subsequently reclassified to profit and loss:

The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with accompanying Notes to the Financial Statements.

Consolidated statement of financial position

As at 30 June 2026

The above Consolidated Statement of Financial Position should be read in conjunction with accompanying Notes to the Financial Statements.

Consolidated statement of changes in equity

For the period ended 30 June 2026

The above Consolidated Statement of Changes in Equity should be read in conjunction with accompanying Notes to the Financial Statements.

Consolidated statement of cash flows

For the period ended 30 June 2026

Consolidated

The above Consolidated Statement of Cash Flows should be read in conjunction with accompanying Notes to the Financial Statements.

Notes to the financial statements

Note 1. General Information

The financial statements cover Litigation Capital Management Limited (the 'Company') as a Group consisting of Litigation Capital Management Limited and the entities it controlled at the end of, or during, the year (referred to as the 'Group'). The financial statements are presented in Australian dollars, which is Litigation Capital Management Limited's functional and presentation currency.

Litigation Capital Management Limited was admitted onto the Alternative Investment Market ('AIM') on 19 December 2018.

Litigation Capital Management Limited is a for profit publicly listed company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is:

Level 12, The Chifley Tower

2 Chifley Square

Sydney NSW 2000

A description of the nature of the Group's operations and its principal activities are included in the Directors' report, which is not part of the financial statements.

The financial statements were authorised for issue, in accordance with a resolution of Directors, on 30 September 2026. The Directors have the power to amend and reissue the financial statements.

Basis of preparation

The Financial Report:

is a general purpose financial report;

has been prepared in accordance with the Australian Accounting Standards adopted by the Australian Accounting Standards Board (AASB) and International Financial Reporting Standards (IFRSs) as issued by the International Accounting Standards Board (IASB);

has been prepared in accordance with the requirements of the Corporations Act 2001 (Cth);

is presented in Australian dollars, which is the Group’s functional and presentation currency, with all values rounded to the nearest thousand dollars, or in certain cases to the nearest dollar, in accordance with ASIC Corporations Instrument 2016/191 unless otherwise indicated;

includes foreign currency transactions that are translated into the presentation currency, using the exchange rates prevailing at the date of the Financial Report;

has been prepared on a going concern basis using a historical cost basis, except for certain assets and liabilities measured at fair value;

presents assets and liabilities on the face of the Balance Sheets in decreasing order of liquidity; and

contains accounting policies that have been consistently applied to all periods presented, unless otherwise stated.

Principles of consolidation

The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Litigation Capital Management Limited ('Company' or 'parent entity') as at 30 June 2026 and the results of all subsidiaries for the year then ended. Litigation Capital Management Limited and its subsidiaries together are referred to in these financial statements as the 'Group'.

The Group includes fund investment vehicles over which the Group has the right to direct the relevant activities of the fund under contractual arrangements and has exposure to variable returns from the fund investment vehicles. See Note 4.

Subsidiaries are all those entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

Intercompany transactions, balances and unrealised gains on transactions between entities in the Group are eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

Note 2. Material accounting policies

Accounting standards and interpretations

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 2025.

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.

Amendment to IFRS 9 and IFRS 7 - Classification and Measurement of Financial Instruments

IFRS 18 Presentation and Disclosure in Financial Statements

IFRS 19 Subsidiaries without Public Accountability: Disclosures

IFRS S1, General requirements for disclosure of sustainability-related financial information

IFRS S2 Climate-related disclosures

The Group intends to adopt these new and amended standards and interpretations, if applicable, when they become effective. The Group has not listed other standards and interpretations which are issued but not yet effective, as they are not expected to impact the Group.

Going concern

The financial statements have been prepared on a going concern basis, which contemplates the continuation of the Group's operations and the orderly management and realisation of its investment portfolio.

On 30 September 2026, after the reporting date, the Group entered into a Second Amendment Agreement, which, subject to satisfaction of certain conditions precedent which are substantially progressed, will effect amendments to its senior secured borrowing arrangements with lender funds managed by Northleaf Capital Partners, under which funding is provided through Facility B of the Amended and Restated Senior Term Facility Agreement.

The amendment will, once taking effect, increase the facility limit from US$100 million to US$125 million, replace the previous financial covenants with covenants more appropriately aligned to the run-off profile of the Group's portfolio, extend the maturity date to 31 December 2030 and provides for interest to be capitalised rather than paid in cash. The first financial covenant test under the amended facility occurs on 31 December 2027. Further details are set out in Note 30 (Events after the reporting period).

The Directors have prepared cash flow forecasts covering a period of at least twelve months from the date of approval of these financial statements. These forecasts indicate that the Group will be able to meet its obligations as and when they fall due. However, the forecasts assume that the aforementioned amendments to the debt facility have taken effect and remain dependent upon the timing and amount of realisations from a limited number of significant investments, continued availability under the amended facility, satisfaction of utilisation conditions for future drawdowns and compliance with the revised covenant framework.

The Group's ability to continue as a going concern is materially dependent upon satisfying (or obtaining appropriate waivers of) the remaining conditions precedent to the facility amendments taking effect under the Second Amendment Agreement and achieving forecast realisations from its investment portfolio and maintaining access to funding under the amended facility. The timing and quantum of investment realisations are not wholly within the Group's control. No assumption has been made that Northleaf is contractually obliged to provide future covenant waivers, amendments or additional funding support beyond the terms of the amended facility. If realisations are materially delayed or lower than forecast, or the Group is unable to satisfy the conditions required to ensure the amendments to the facility take effect and/or to access available funding under the amended facility, the Group may be unable to obtain sufficient liquidity to meet its obligations as and when they fall due. In those circumstances, the Directors believe the Group may be unable to continue as a going concern and may be unable to realise its assets and discharge its liabilities in the ordinary course of business.

Accordingly, these events and conditions indicate that a material uncertainty exists that may cast significant doubt upon the Group's ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or to the classification and amounts of liabilities that may be necessary should the Group be unable to continue as a going concern.

Operating segments

Operating segments are presented using the 'management approach', where the information presented is on the same basis as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible for the allocation of resources to operating segments and assessing their performance.

Foreign currency translation

The financial statements are presented in Australian dollars, which is Litigation Capital Management Limited's functional and presentation currency.

Foreign currency transactions

Foreign currency transactions are translated into the entity's functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.

Foreign operations

The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the reporting date. The revenues and expenses of foreign operations are translated into Australian dollars using the average exchange rates, which approximate the rates at the dates of the transactions, for the period. All resulting foreign exchange differences are recognised in other comprehensive income through the foreign currency reserve in equity.

Fair value measurement

The Group measures its financial instruments such as litigation funding agreements and financial liabilities related to third-party interests at fair value at each balance sheet date.

Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they act in their economic best interests. For non-financial assets, the fair value measurement is based on its highest and best use.

Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities

The Group’s Executive Leadership Committee determines the policies and procedures for fair value measurement, including the litigation funding agreements. The Committee is comprised of the Chief Executive Officer, Chief Financial Officer and Head of Investments or equivalent.

The level of involvement of external valuers or specialist valuation experts is determined annually by the Committee after discussion with and approval by the Company’s Audit Committee. Selection criteria include market knowledge, reputation, independence and whether professional standards are maintained.

At each reporting date, the Committee analyses the movements in the values of assets and liabilities which are required to be remeasured or re-assessed as per the Group’s accounting policies. For this analysis, the Committee verifies the major inputs applied in the latest valuation by agreeing the information in the valuation computation to contracts and other relevant documents.

Fair-value related disclosures for financial instruments and non-financial assets that are measured at fair value or where fair values are disclosed, are summarised in the following notes:

Disclosures for valuation methods, significant estimates and assumptions Note 23

Quantitative disclosures of fair value measurement hierarchy Note 23

Financial instruments Note 22

Litigation service

Revenue is recognised at the amount the Group expects to be entitled to in exchange for its services. For each customer contract, the Group identifies the performance obligations, determines the transaction price (including any variable consideration), and recognises revenue when the performance obligation is satisfied.

Variable consideration reflects the uncertainty of outcomes in awards, settlements or other contingent events. It is estimated using either the “expected value” or “most likely amount” method and recognised only when it is highly probable that a significant reversal will not occur. Until the uncertainty is resolved, amounts received that are subject to this constraint are recorded as refund liabilities.

The performance of a litigation service contract by the Group entails the management and progression of the litigation project during which costs are incurred by the Group over the life of the litigation project. As consideration for providing litigation management services and financing of litigation projects, the Group receives either a percentage of the gross proceeds of any award or settlement of the litigation, or a multiple of capital deployed, and is reimbursed for all invested capital.

Revenue, which includes amounts in excess of costs incurred and the reimbursement for all invested capital, is not recognised as revenue until the successful completion of the litigation project ie, complete satisfaction of the performance obligation, which is generally at the point in time when a judgment has been awarded or on an agreed settlement between the parties to the litigation, and therefore when the outcome is considered highly probable. On this basis, revenue is not recognised over time and instead recognised at the point in time when the Group satisfies the performance obligation. Costs include only external costs of funding the litigation, such as solicitors' fees, counsels' fees and experts' fees.

The terms and duration of each settlement or judgment varies by litigation project. Payment terms are not defined by the Group's litigation contracts however upon successful completion of a litigation project, being the satisfaction of the single performance obligation, funds are generally paid into trust within 28 days. The funds will remain in trust until the distribution amounts have been determined and agreed by the relevant parties, after which payment will be received by the Group.

Income tax

When the deferred income tax asset or liability arises from the initial recognition of goodwill or 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 nor taxable profits; or

The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profits available to recover the asset.

Litigation Capital Management Limited (the 'head entity') and its wholly-owned Australian subsidiaries have formed an income tax consolidated group under the tax consolidation regime. The head entity and each subsidiary in the tax consolidated group continue to account for their own current and deferred tax amounts. The tax consolidated group has applied the 'separate taxpayer within group' approach in determining the appropriate amount of taxes to allocate to members of the tax consolidated group.

In addition to its own current and deferred tax amounts, the head entity also recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from each subsidiary in the tax consolidated group.

Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts receivable from or payable to other entities in the tax consolidated group. The tax funding arrangement ensures that the intercompany charge equals the current tax liability or benefit of each tax consolidated group member, resulting in neither a contribution by the head entity to the subsidiaries nor a distribution by the subsidiaries to the head entity.

Cash and cash equivalents

Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

Restricted Cash

Cash that is subject to legal or contractual restrictions and is not available for general use is classified as restricted cash and presented separately from cash and cash equivalents.

Trade and other receivables

Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any allowance for expected credit losses. Trade receivables generally do not have a specifically defined time frame for settlement, additionally, when the receivable is due from part of the portfolio of litigation projects, the settlement of the receivable is generally made upon an additional resolution of another litigation project within the portfolio which also may not be within a specifically defined time frame.

The Group has applied the simplified approach to measuring expected credit losses for trade receivables and contract assets, which uses a lifetime expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue.

Due from resolution of investments

Amounts due from the settlement of financial assets relate to the realisation of litigation funding assets that have been successfully concluded and where there is no longer any litigation risk remaining and represent the expected cash flow to be received by the Group. The settlement terms and timing of realisations vary by litigation funding asset. The majority of settlement balances are received shortly after the period end in which the litigation funding asset has concluded, and all settlement balances are generally expected to be received within 12 months after completion.

Contract costs

Contract costs are recognised as an asset when the Group incurs costs in fulfilling a contract and when all the following are met: (i) the costs relate directly to the contract; (ii) the costs generate or enhance resources of the Group that will be used to satisfy future performance obligations; and (iii) the costs are expected to be recovered. Contract costs are financial assets for impairment purposes. The Group’s revenue recognition policy for litigation service revenue provides further information.

Investments

Investments are financial assets recognised at fair value through profit or loss and are fair valued using an income approach. Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with net changes in fair value recognised in the statement of profit or loss. This category includes the Group's litigation funding assets. The litigation funding assets are primarily derecognised when the underlying litigation resolves and transfers to Due from resolution of financial assets.

Financial assets are derecognised when the contractual rights to the cash flows expire or when the asset, along with the associated risks and rewards of ownership, are substantially transferred to another entity.

Financial liabilities related to third-party interests in consolidated entities

Non-controlling interests where the Group does not own 100% of a consolidated entity are recorded as financial liabilities related to third-party interests in consolidated entities. Financial liabilities related to third-party interests in consolidated entities are initially recognised at the fair value. Gains or losses on liabilities held at fair value through profit or loss are recognised in the statement of profit or loss as 'Movement in financial liabilities related to third-party interests in consolidated entities'. They are subsequently measured at fair value using an income approach. Amounts included in the consolidated statement of financial position represent the net asset value of the third-parties’ interests. These amounts have been elected to be measured at fair value to reduce the accounting mismatch between the related financial asset measured at fair value through profit or loss.

Financial liabilities are derecognised when the obligation to settle through cash flows has expired or been transferred.

Impairment of non-financial assets

Non-financial assets are reviewed for impairment at each reporting date and whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount.

Provisions

Provisions are measured at 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.

Performance fee clawback

Performance fee clawback obligations may arise where performance fees previously recognised by the Company become repayable under contractual clawback arrangements contained within fund governing documents. Such arrangements typically require performance fees ultimately retained by the Company to be aligned with the overall performance of the relevant fund and the returns generated for investors over the life of the fund. As a result, the Company may be required to repay performance fees previously received where subsequent investment performance deteriorates and the contractual performance thresholds are no longer met.

The assessment of whether a clawback obligation exists requires significant judgement and is dependent on the expected ultimate outcome of the relevant fund, including assumptions regarding the performance of unresolved investments, future case outcomes, expected realisations and other factors that influence returns generated over the life of the fund.

Where a present obligation exists as a result of past events, but uncertainty remains regarding the amount, timing or allocation of the obligation, the Company recognises a provision in accordance with AASB 137 Provisions, Contingent Liabilities and Contingent Assets. The provision is measured using management's best estimate of the expenditure required to settle the obligation at the reporting date, based on the expected amount ultimately repayable under the relevant clawback arrangements.

Within Fund I, an expected clawback recovery is recognised as an asset. At Company level, the economic effect of the recovery is reflected in the measurement of the financial liability relating to third-party interests. As matters progress and the obligation becomes attributable to a specific fund, the corresponding amount is allocated to that fund. Once the obligation becomes contractually enforceable and the amount can be determined with sufficient certainty, it is reallocated to the relevant financial liability relating to third-party interests.

Borrowings

Borrowings are initially recognised at fair value net of transaction costs incurred. Subsequent to initial recognition, borrowings are stated at amortised cost.

Net finance costs

Net finance costs comprise interest income from the investment of excess funds in short-term, highly liquid investments, and interest expense and borrowing costs related to the borrowing of funds.

Employee benefits

Short-term employee benefits

Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be settled wholly within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities are settled.

Other long-term employee benefits

The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date are measured at the present value of expected future payments to be made in respect of services provided by employees up to the reporting date. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on high quality corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.

Superannuation expense

Contributions to superannuation are expensed in the period in which they are incurred.

Share-based payments

Equity-settled share-based compensation benefits are provided to employees.

The cost of equity-settled transactions are measured at fair value on grant date. Fair value is determined using either the Monte Carlo or Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do not determine whether the Group receives the services that entitle the employees to receive payment. No account is taken of any other vesting conditions.

The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous periods.

If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award may be treated as if they were a modification, depending on the specific circumstances of the award.

Issued capital

Treasury shares

When the Group purchases shares in the listed Company, the consideration paid is deducted from total equity and the shares are treated as treasury shares until they are subsequently sold, reissued or cancelled. Where treasury shares are cancelled, the balance is transferred from the treasury share reserve and offset directly against issued capital.

Dividends

Dividends are recognised when declared during the financial year and no longer at the discretion of the Company.

Earnings per share

Basic earnings per share

Basic earnings per share is calculated by dividing the profit attributable to the owners of Litigation Capital Management Limited, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year.

Diluted earnings per share

Diluted earnings per share is calculated by adjusting the denominator used in the determination of basic earnings per share to include the weighted average number of ordinary shares outstanding and the effect of dilutive potential ordinary shares, such as share options and performance rights.

Note 3. Critical accounting judgements, estimates and assumptions

Key judgements

Consolidation of entities in which the Group holds less than 100% of interests

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 (refer note 4). Where the Group does not own 100% of interests, the Group makes judgements to determine whether to consolidate the entity in question by applying the factors set forth in AASB 10, including but not limited to the Group’s equity and economic ownership interest, the economic structures in use in the entity, the level of control the Group has over the entity through the entity’s structure or any relevant contractual agreements, and the rights of other investors.

Significant estimates and assumptions

Fair value measurement of financial assets and liabilities

The Group carries its financial assets and liabilities at fair value, with changes in fair value being recognised in the statement of profit or loss. A valuation methodology based on an income approach.

The fair values of these financial assets and liabilities cannot be measured based on quoted prices in active markets, and as a result a fair value methodology is utilised. The measurement valuation technique includes a discounted cash flow (DCF) model based on the Group's estimated, risk adjusted future cash flows. The adopted discount rate reflects the funding cost of deploying capital, and is intended to capture the time value of money and market factors such as interest rates and foreign exchange rates.

The fair value framework incorporates assumptions, including the discount rate, the timing and amount of expected cash inflows and additional funding, and a risk-adjustment factor reflecting the inherent uncertainty in the cash flows due to litigation risk, which is dependent on observable case progression and milestones.

The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as case progress, credit risk and volatility. Changes in assumptions relating to these factors could affect the reported fair value of financial instruments.

The key assumptions used to determine the fair value of the litigation funding agreements, financial liabilities related to third-party interests in consolidated entities and sensitivity analyses are provided in note 23.

The Group refined its valuation methodology during the prior period. While the overall framework remains conceptually robust and consistent with industry practice, experience since implementation highlighted opportunities to enhance the setting of key assumptions so that valuations more accurately reflect the Group’s risk profile. In particular, refinements were made to:

Forecast returns: recalibrated to ensure they remain supportable in the context of historical outcomes and available market benchmarks;

Expected duration: revised to be anchored to objective case milestones and extended to reflect observed delays in resolution; and

Risk adjustment factors: updated so that recognition of value is more closely aligned to substantive external events rather than procedural steps.

These refinements result in a more conservative recognition profile and are intended to strengthen the robustness and consistency of the Group’s fair value determinations. The Group has established a process for reviewing fair value assumptions on an annual basis, with the results of that review submitted to the Audit & Risk Committee in advance of the publication of annual results.

Performance fee clawback obligation

The Company has assessed its potential obligation arising from the performance fee clawback provisions contained within the governing documents of the LCM Global Alternative Returns Fund ("Fund"). Historically, the Company received performance fees of US$28.9 million in respect of investments successfully realised during the early life of the Fund. Subsequent losses incurred by the Fund have reduced the Fund's overall investment performance and may give rise to an obligation for the Company to return a portion of the performance fees previously received.

Significant judgement is required in determining whether a present obligation exists at the reporting date and whether recognition of a liability is required. In making this assessment, the Company considers the specific terms of the Fund documentation, the overall performance of the Fund, the probability and timing of any future clawback payment, the existence of any present obligation arising from past events, and the extent to which the amount of any potential repayment can be reliably estimated.

The Company also considers the uncertainty associated with future investment outcomes, fund performance, and the ultimate returns achieved by limited partners. These factors may materially affect the amount, if any, that may be required to be repaid under the clawback provisions. Based on management's assessment of the relevant facts and circumstances at the reporting date, judgement has been applied in determining the appropriate accounting treatment and associated disclosures in the financial statements.

Note 4. Segment information

For management purposes, the Group is organised into two operating segments comprising the operations of Litigation Capital Management Limited and its wholly owned subsidiaries ("LCM") and the Group's fund structures ("Fund").

LCM

The LCM column includes the 25% co-investment in the Funds, Balance Sheet investments (ie, 100% investment by LCM) and corporate operations.

Fund 1 & 2

This comprises LCM Global Alternative Returns Fund and LCM Global Alternative Returns Fund II and their entities as disclosed in note 28. AASB 10 Consolidated Financial Statements requires the Group to consolidate fund investment vehicles over which it has exposure to variable returns from the fund investment vehicles. As a result, third party interests in relation to the Funds have been consolidated in the financial statements. The Fund column includes the 75% co-investment in the litigation funding assets and costs of administering the funds.

The following tables reflect the impact of consolidating the results of the Funds with the results for LCM to arrive at the totals reported in the consolidated statement of profit or loss and other comprehensive income, consolidated statement of financial position and consolidated statement of cash flows.

1 Realised gains relate to amounts where litigation risk has concluded and amounts are expected to be received by LCM

2 The reversal of performance fees previously recognised comprises two components. A reversal of $20,372,000 reflects the recognition of the performance fee clawback provision as disclosed in Note 16, representing the estimated liability for previously distributed performance fees that may be required to be returned to the Fund. A further reversal of $6,623,000 relates to performance fees previously recognised in respect of a specific investment, which continues to be carried as a receivable. The Group has adopted a conservative position and derecognised the performance fee component attributable to that investment

3 Unrealised gains or losses relate to the fair value movement of assets and liabilities associated with litigation contracts

4 The gain and loss related to third party interests in consolidated entities represents realised and unrealised gains and losses that relate to third party funded proportions from LCM controlled entities

Litigation service

Consolidated

Profit/(loss) before income tax expense includes the following specific expenses:

Employee benefits expense

Numerical reconciliation of income tax expense and tax at the statutory rate

Tax effect amounts which are not deductible/(taxable) in calculating taxable income:

Deferred tax asset/(liability)

Deferred tax asset/(liability) comprises temporary differences attributable to:

Unrecognised temporary differences and tax losses

Deferred tax assets have not been recognised in respect of the following items:

Expiry

Tax losses in Australia and the United Kingdom can be carried forward indefinitely, although Australian losses can only be used if the continuity of ownership test or the business continuity test is met. Net debt deductions denied under Australia's thin capitalisation fixed ratio test are subject to similar continuity tests but are limited to 15 years. Deferred tax assets of $6,187,000 (2025: $2,623,000) have not been recognised for these denied deductions, which expire between 30 June 2040 and 30 June 2041.

Note 8. Loss per share

Dilutive potential shares which are contingently issuable are only included in the calculation of diluted earnings per share where the conditions are met. As at 30 June 2026, there were 1,334,187 shares (2025: 6,107,174 shares) calculated for inclusion in diluted earnings per share, however these were not included due to their anti-dilutive effect.

Note 9. Cash and cash equivalents

Consolidated

Cash attributable to third-party investors is held within consolidated fund investment vehicles and is consolidated in these financial statements. The cash is intended to be used for investments in litigation funding assets and for fund administration activities in accordance with the relevant fund arrangements and is not available for the Group's general corporate purposes.

Note 10. Restricted cash

Consolidated

Restricted cash represents funds held as security for potential adverse costs in relation to a litigation contract under appeal (refer note 13). The funds are payable if the appeal is unsuccessful. If the appeal is successful the funds will be released to the Group.

Note 11. Trade receivables

Consolidated

There are a small number of legacy investments which are still being recorded under AASB 15 Revenue from Contracts with Customers due to the timing the contracts were entered into. These are expected to resolve in the short to medium term.

The Group separately discloses litigation contracts lost at first instance where an appeal is on foot, given the distinct recoverability considerations that arise following an adverse judgment. As at 30 June 2026, the contract cost balance includes one such contract with a carrying value of $8,065,000 (2025: $8,202,000), and should the appeal fail, this amount would be written off in full.

An adverse judgment is considered as an indicator of impairment, and the carrying value is reassessed at that point and at each subsequent reporting date. The Group carries such investments at 50% of costs invested, having regard to its entitlement on success and historical appeal outcomes in the relevant jurisdictions and in the Group's own portfolio, unless a case-specific reason to depart from that approach exists. The assessment is made across the appeal portfolio as a whole ie, management does not attempt to assign a probability of success to any one of them.

Reconciliation of litigation contract costs

Reconciliation of the contract costs at the beginning and end of the current period and previous financial year are set out below:

Realisations during the year primarily relate to one matter in which judgment was handed down against the funded party. As a result, the contract costs have been written off in full.

The Group has recognised impairment losses of $882 (2025: $5,468) in profit or loss on contract costs for the period ended 30 June 2026.

Note 14. Investments

Investments are financial instruments that relate to the provision of capital in connection with legal finance. The Group fund through both direct investments as well as using third party capital via a fund management model. The table above sets forth the changes in litigation funding assets at the beginning and end of the relevant reporting periods.

As disclosed in note 13, the Group separately discloses litigation investments lost at first instance where an appeal is on foot, given the distinct recoverability considerations that arise following an adverse judgment. As at 30 June 2026, three such investments had a combined carrying value of $41,622,000 (2025: $26,380,000); should all current appeals fail, this amount would be written off in full.

The approach applied to these investments is consistent with that described in note 13 and note 23 ie, management does not assign a probability of success to any individual appeal, with the assessment made across the portfolio as a whole.

Note 15. Trade and other payables

Adverse costs

The Group recognises a provision for adverse costs where a funded matter has been lost at first instance and/or is under appeal and management considers it probable that the funded party may be ordered to pay the successful party's costs. Such provisions are not limited to matters under appeal and may also relate to unsuccessful matters that are not expected to proceed to appeal. For matters under appeal, the related asset may continue to be recognised where there is potential for future economic benefits. For unsuccessful matters where no appeal is expected, the related asset is derecognised, while any remaining probable exposure to adverse costs continues to be recognised as a provision until the final ruling. Adverse costs are the legal costs of the successful party that the unsuccessful party may be ordered to pay in cost-shifting jurisdictions. The Group mitigates this exposure through after-the-event ("ATE") insurance.

The Group assesses each funded matter for the probability of having to pay adverse costs and whether its ATE cover is adequate. The provision reflects the specific circumstances of the three matters concerned, taking into account the judgment, any appeal, the expected costs order, and the term of the funding agreement and ATE policy. The provision covers the estimated costs in excess of the ATE insurance held for each matter. Uninsured adverse costs exposure on matters yet to be determined is disclosed as a contingent liability where an outflow is more than remote (see Note 26).

As at 30 June 2026, the Group had an adverse costs provision of $10,659,000 (2025: nil) relating to three matters. Of this, $4,165,000 is attributable to LCM, with the balance attributable to third-party investors in Fund 1. Two of the matters are Fund 1 investments. The third is funded directly by LCM and is under appeal, whilst the adverse costs exposure is not certain, it is deemed probable on the basis of past events, as the funded party may be ordered to pay the successful party’s costs. The provision relating to that matter will be released if the appeal succeeds. The amounts are expected to be paid within 12 months.

Performance fee clawback

The Company ("LCM") has historically received US$28.9 million of performance fees from the LCM Global Alternative Returns Fund (“Fund”). These performance fees related to investments that were successfully realised during the early life of the Fund. Following losses subsequently incurred by the Fund, its overall investment performance has deteriorated. Under the clawback provisions in the Fund documentation, performance fees previously distributed to LCM may be required to be returned to the Fund to ensure that the performance fees ultimately retained by LCM are aligned with the Fund’s overall performance and the returns achieved for LPs. This exposure was disclosed as a contingent liability in the financial statements for the six month period ended 31 December 2025.

The provision recognised represents management’s best estimate of the present obligation at the reporting date. Although the maximum potential performance fee exceeds the amount recognised, management considers the likelihood of an additional outflow in respect of the difference to be remote. Accordingly, the difference has not been recognised as a provision or disclosed as a contingent liability.

Having completed a detailed assessment of the remaining portfolio in Fund 1 following a number of case losses in the second half of FY26 and the projected trajectory of returns to close, the Directors concluded that repayment of a portion of previously distributed performance fees is probable.

At 30 June 2026, LCM has recognised a performance fee clawback provision of US$14.0 million (AUD equivalent: $20.372 million) (2025: nil), representing the discounted value of the estimated liability. The amount is subsequently allocated to financial liabilities relating to third-party interests in consolidated entities when the obligation becomes contractually enforceable, can be measured with sufficient certainty and is attributable to a specific fund.

Note 17. Borrowings

On 2 December 2024, LCM refinanced its credit facility with Northleaf Capital Partners for an initial amount of US$75,000,000 (the "Facility"), with the ability to increase the facility by a further US$75,000,000 to a total commitment of US$150,000,000. During the year ended 30 June 2026, the Facility was increased from US$75,000,000 to US$100,000,000.

Interest is calculated by reference to the applicable currency benchmark, being the US Federal Funds Rate for USD drawings, the Bank Bill Swap Reference Rate (BBSY) for AUD drawings, and SONIA for GBP drawings (with fallback to the Bank of England base rate), together with a 5.25% margin.

The Facility has an overall term of four years and is secured against LCM's assets. As at 30 June 2026, LCM's outstanding utilisation amounted to US$18,182,000 on the initial credit facility, an AUD equivalent of $26,281,0001.

LCM agreed to various debt covenants including a minimum effective net tangible worth, borrowings as a percentage of effective net tangible worth, minimum liquidity, a minimum consolidated EBIT and a minimum multiple of invested capital on concluded contract assets over a specified period.

LCM incurred costs in relation to arranging the Facility of $4,995,000 which were reflected transactions costs and will be amortised over the 4 year term of the borrowings. As at 30 June 2026, $3,965,000 of these loan arrangement fees remained outstanding.

1 Converted at the functional currency spot rates of exchange at the reporting date

Covenant compliance & waivers

During the period, certain covenant requirements were subject to waiver by the lender. Under the terms of the waiver, a fee of 1.5% was charged on the outstanding principal and capitalised into the loan balance, and the applicable interest margin was increased by 2.00% per annum. As a result of the waivers obtained, the Group was in compliance with the terms of the Facility, as amended by those waivers.

On 30 September 2026, the Group entered into a long-term amendment to its debt facility with Northleaf Capital Partners (Canada) Ltd. The amendment increased the facility limit from US$100 million to US$125 million and replaced the previous financial covenants with covenants more appropriately aligned to the run-off profile of the Group's portfolio. The facility matures on 31 December 2030. Refer to Note 30 regarding events occurring subsequent to the reporting date for further information.

Note 18. Financial liabilities related to third-party interests in consolidated entities

Movements in ordinary shares issued under loan share plan ('LSP') and held by Employee Benefit Trust:

Ordinary shares

Ordinary shares - under loan share plan ('LSP')

The Company has an equity scheme pursuant to which certain employees may access a LSP. The acquisition of shares under this LSP is fully funded by the Company through the granting of a limited recourse loan. The shares under LSP are restricted until the loan is repaid. The underlying options within the LSP have been accounted for as a share-based payment. Refer to note 29 for further details. When the loans are settled the shares are reclassified as fully paid ordinary shares, the equity will increase by the amount of the loan repaid, and the shares are no longer subject to any plan-related restrictions or conditions.

Ordinary shares - held by Employee Benefit Trust

The Employee Benefit Trust (‘EBT’) holds performance related shareholdings awarded to former executive which did not vest. The Trust holds 4,723,512 shares which remain unallocated as at 30 June 2026 (2025: 5,168,979).

Ordinary shares - partly paid

As at 30 June 2026, there are currently 1,433,022 partly paid shares issued at an issue price of $0.17 per share. No amount has been paid up and the shares will become fully paid upon payment to the Company of $0.17 per share. As per the terms of issue, the partly paid shares have no maturity date and the amount is payable at the option of the holder.

Partly paid shares entitle the holder to participate in dividends and the proceeds of the Company in proportion to the number of and amounts paid on the shares held. The partly paid shares do not carry the right to participate in new issues of securities. Partly paid shareholders are entitled to receive notice of any meetings of shareholders. The partly paid shareholders are entitled to vote in the same proportion as the amounts paid on the partly paid shares bears to the total amount paid and payable.

Capital risk management

The Group's objectives when managing capital is to safeguard its ability to continue as a going concern, so that it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to reduce the cost of capital.

Capital is regarded as total equity as recognised in the statement of financial position.

The capital risk management policy remains unchanged from the 30 June 2025 Annual Report.

Note 20. Equity - reserves

Movements in reserves

Movements in each class of reserve during the current and previous financial year are set out below:

Share-based payments reserve

The reserve is used to recognise the value of equity benefits provided to employees and Directors as part of their remuneration, and other parties as part of their compensation for services.

Foreign currency translation reserve

This reserve is used to record differences on the translation of the assets and liabilities of foreign operations.

Note 21. Equity - dividends

Franking credits

The franking credits available to the Group as at 30 June 2026 are $5,000 (2025: $5,000).

Note 22. Financial instruments

Financial risk management objectives

The Group's activities expose it to a variety of financial risks: market risk (including foreign currency risk, price risk and interest rate risk), credit risk and liquidity risk. The Group's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. The Group uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate, foreign exchange and other price risks and ageing analysis for credit risk.

Risk management is carried out by senior finance executives ('finance') under policies approved by the Board of Directors ('the Board'). These policies include identification and analysis of the risk exposure of the Group and appropriate procedures, controls and risk limits. Finance identifies, evaluates and hedges financial risks within the Group's operating units. Finance reports to the Board on a monthly basis.

Financial instruments of the Group is comprised of litigation funding assets classified as financial assets at FVTPL and financial liabilities at FVTPL related to third party interests with the remaining financial instruments held at amortised cost.

Market risk

Foreign currency risk

The carrying amount of the Group's foreign currency denominated financial assets and financial liabilities at the reporting date were as follows:

The Group had net assets denominated in foreign currencies of $39,752,000 (assets of $110,084,000 less liabilities of $70,332,000) as at 30 June 2026 (2025: net assets $71,014,000). Based on this exposure, had the Australian dollars weakened or strengthened by 10% against these foreign currencies with all other variables held constant, the Group's profit before tax for the year would have increased and decreased respectively by $3,975,000 (2025: $7,101,000). The percentage change is the expected overall volatility of the significant currencies, which is based on management's assessment of reasonable possible fluctuations taking into consideration movements over the last 12 months. The actual realised foreign exchange loss for the year ended 30 June 2026 was $2,523,000 (2025: loss of 1,053,000). The movement in the foreign currency translation reserve for the year ended 30 June 2026 was a loss of $2,843,000 (2025: gain $5,128,000).

Foreign exchange risk arises mainly from litigation funding assets and borrowings which are 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’s contract cost assets are not hedged as those currency positions are considered to be long term in nature.

Interest rate risk

The Group is exposed to changes in market interest rates primarily through:

Cash holdings with a floating interest rate; and

A US$100,000,000 (AUD equivalent of $147,376,0001) variable rate debt facility, which includes fixed capitalised borrowing costs as at 30 June 2026.

As disclosed in Note 17, LCM refinanced its credit facility with Northleaf Capital Partners on 2 December 2024 and increased the facility commitment to US$100,000,000 during the period. The four-year facility bears interest at the relevant rate plus 5.25% and replaced the Group’s previous fixed-rate borrowings, creating new exposure to variable interest rate risk.

At 30 June 2026, the Group’s financial instruments subject to variable interest rate risk were:

The Group monitors interest rate exposures across all currencies, considering expected market movements, cash requirements, refinancing options and the mix of fixed and variable rate borrowings.

The following sensitivity analysis is based on the interest rate risk exposures in existence at the reporting date.

At 30 June 2026, if interest rates had moved with all other variables held constant, post-tax profit and equity would have been affected as follows:

Credit risk

Credit risk refers to the risk that on becoming contractually entitled to a settlement or award a defendant will default on its contractual obligation to pay resulting in financial loss to the Group. The Group assesses the defendants in the matters funded by the Group prior to entering into any agreement to provide funding and continues this assessment during the course of funding. Whenever possible the Group ensures that security for settlements sums is provided, or the settlements funds are placed into solicitors' trust accounts. However, the Group’s continual monitoring of the defendants’ financial capacity mitigates this risk.

The maximum credit risk exposure represented by cash, cash equivalents, trade and other receivables, due from resolution of financial assets and contract costs is specified in the consolidated statements of financial position. The exposure for financial assets held at amortised cost is the carrying amount, net of any provisions for impairment of those assets, which includes cash, cash equivalents and trade and other receivables. The Group does not hold any collateral. For financial assets measured at fair value, credit risk is incorporated into the valuation techniques applied (refer note 23).

To mitigate credit risk on cash and cash equivalents, the Group holds cash with Australian and American financial institutions with at least an AA- credit rating.

The Group applies the simplified approach to recognise impairment on settlement and receivable balances based on the lifetime expected credit loss at each reporting date. The Group reviews the lifetime expected credit loss rate based on historical collection performance, the specific provisions of any settlement agreement, assessments of recoverability during the due diligence process and a forward-looking assessment of macro-economic factors however note that the Group’s operations are generally uncorrelated to market conditions and therefore has little to no impact on the recoverability of the Group’s financial assets.

For trade receivables and due from resolution of financial assets, at every reporting date, the Group evaluates whether the trade receivables and due from resolution of financial assets is considered to have low credit risk using all reasonable and supportable information that is available without undue cost or effort. In making that evaluation, the Group reassesses indicators of changes in credit quality of their counterparties. In addition, the Group considers that there has been a significant increase in credit risk when contractual payments are more than 90 days past due or if sufficient indicators exist that the debtor is unlikely to pay. Refer to note 11 and 12 for the respective notes on these items. Generally, trade receivables are written off when there is no reasonable expectation of recovery. Indicators of this include the failure of a debtor to engage in a repayment plan, no active enforcement activity and a failure to make contractual payments for a period greater than 1 year.

Management also monitors whether there has been a significant increase in credit risk of LFAs relative to initial recognition. This assessment is performed through ongoing review of case progression, achievement of key milestones, counterparty performance, and enforceability of settlements or awards. Where significant increases in credit risk are identified, these are reflected in the fair value measurement through reductions in expected cash flows or, where recovery is no longer expected, a full write-off of the asset. As at the reporting date, no significant increases in credit risk beyond those already incorporated into the fair value measurement have been identified.

Liquidity risk

Vigilant liquidity risk management requires the Group to maintain sufficient liquid assets (mainly cash and cash equivalents) to be able to pay debts as and when they become due and payable.

The Group manages liquidity risk by maintaining adequate cash reserves and by continuously monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities.

Remaining contractual maturities

The maturity profile of the Group’s financial liabilities based on contractual maturity on an undiscounted basis are:

Note 23. Fair value measurement

The fair value measurements used for all assets and liabilities held by the Group listed below are level 3:

Refer note 14 for movements in level 3 assets and note 18 for movements in level 3 liabilities. There were no transfers into or out of level 3 during the period ended 30 June 2026.

As at 30 June 2026, the financial liability due to third-party interests is $177,147,000 (2025: $226,538,000), recorded at fair value as represented in note 18. Amounts included in the consolidated statement of financial position represent the fair value of the third-party interests in the related financial assets and the amounts included in the consolidated statement of profit or loss and other comprehensive income represent the third-party share of any gain or loss during the period, see note 4.

Sensitivity of Level 3 Valuations

The Group’s fair value policy provides for ranges of percentages to be applied against the risk adjustment factor to more than 159 discrete objective litigation events. The tables below set forth each of the key unobservable inputs used to value the Group’s LFA assets and the applicable ranges and weighted average by relative fair value for such inputs.

LFA assets are fair valued using an income approach which is the technique adopted for LFA Assets. Under the income approach, future cash flows associated with; cash out flows, including investments and deployments, and cash inflows such as settlements or resolutions, are converted to a single current (discounted) amount, reflecting current market expectations about those future amounts. That is, the amount that could reasonably be expected to be paid to acquire the asset at that point in time. In developing our framework we also looked to Industry peers for alignment in methodology, the benefit being that adopting a similar methodology provides a level of comparability. Similar to industry peers, the framework developed applied probabilities based on observable milestones for each investment within the portfolio as well as making informed assumptions around inputs such as discount rates, timing and risk factors, all of which are considered Level 3 inputs. In cases where cash flows are denominated in a foreign currency, forecasts are developed in the applicable foreign currency and translated to AUD dollars.

A Discounted Cash Flow approach is then applied to each underlying investment on an individual basis to arrive at a net present value of the future expected cash flows.

The cash flow forecast is updated each reporting period, based on the best available information on progress of the underlying matter at the time. These objective events could include, among others:

Stage of the investment

ongoing developments

progress

recovery or sovereign risk

legal team expertise

other factors impacting the expected outcome

Each reporting period, the updated risk-adjusted cash flow forecast is then discounted at the then current discount rate to measure fair value. The discount rate includes an applicable risk-free rate and credit spread to incorporate both market and idiosyncratic asset-class risk.

As at 30 June 2026, three investments where the funded party was unsuccessful at first instance remained subject to appeal. Their fair value was $41,622,000 (2025: $26,380,000), and they are classified within Level 3 of the fair value hierarchy. The LCM portion of this value was $25,104,000 (2025: $16,733,000) or 43% of the litigation investment portfolio fair value.

An adverse first instance judgment changes the nature of an investment. Recovery becomes dependent on the outcome of the appeal, which may be some time away, and the Group may be required to fund further costs in the meantime. Where the appeal succeeds, the matter may be finally determined, remitted for retrial or settled, and the Group's recovery in each of those outcomes may differ.

Following an adverse judgment, the investment is carried at 50% of costs invested unless case-specific factors indicate otherwise. Management considers this a reasonable estimate of fair value given the uncertainty of the appeal outcome. Management tests the carrying value by comparing the aggregate carrying value of the appeal cases with the Group's aggregate contractual entitlement on success and with historical appellant success rates in the relevant courts and in the Group's own portfolio. That comparison is made across the appeal cases as a whole, not case by case, as the number of cases is small and their circumstances differ. Appeal-stage investments are reviewed at each reporting date.

As at 30 June 2026, the Group's aggregate contractual entitlement if all current appeals succeed was approximately A$190 million. This is a gross figure before timing, further funding, any retrial or remittal, and the possibility of settlement, and neither it nor the carrying value should be read as an implied probability of success. Management considers the valuation of appeal-stage litigation funding assets to be one of the most significant sources of estimation uncertainty within the Group's Level 3 fair value measurements.

Additional disclosure – valuation uncertainty and variability of outcomes

The fair value of litigation funding assets represents the Group's estimate of the value of its contractual entitlement under funding arrangements and does not represent the gross value of the underlying legal claims. The Group's contractual entitlement may be determined by reference to reimbursement of deployed capital, a percentage of proceeds recovered, a contractual multiple of invested capital, or other agreed return mechanisms, and therefore may differ significantly from the total value of any settlement, judgment or award.

The ultimate outcome of litigation and arbitration proceedings is inherently uncertain. Individual matters may result in recoveries materially above or below their carrying values and, in certain circumstances, may result in no recovery. Conversely, favourable legal, procedural, settlement or enforcement developments may result in recoveries substantially in excess of carrying value. As a result, the carrying value of individual litigation funding assets should not be interpreted as a prediction of the amount that will ultimately be realised.

Key assumptions applied in determining fair value include estimated recoveries, expected timing of resolution, future funding requirements, procedural stage, enforcement risk, counterparty recovery risk and discount rates. Changes in any of these assumptions may result in material increases or decreases in fair value. In particular, litigation outcomes are affected by legal developments, judicial decisions, settlement negotiations, appeal outcomes and enforcement processes, many of which are outside the control of the Group.

The Group categorises these assets as Level 3 fair value measurements because the valuations incorporate significant unobservable inputs and management judgement. While discount rates are a significant input within the valuation methodology, the principal sources of valuation uncertainty arise from assumptions regarding expected recoveries, the timing of those recoveries, future deployment requirements and the assessment of litigation-specific risks. Accordingly, actual outcomes may differ materially from the estimates reflected in the reported fair values.

The Group regularly reviews all significant assumptions and updates fair value assessments where new information becomes available. The progression of matters through key litigation milestones may result in significant changes in fair value from one reporting period to the next, and the passage of time alone does not necessarily result in an increase in fair value.

1 Minimum and maximum within each cohort represent the actual adjusted risk premiums applied in the period

2 Percentage of portfolio represents the percentage of the book within the cohort

At each reporting period, the Group reviews the fair value of each litigation funding asset in connection with the preparation of the consolidated financial statements. A fair value of 10% higher or lower, while all other variables remain constant, in financial assets at fair value through profit or loss would have increased or decreased the Group's income and net assets by $15,861,000 as at 30 June 2026 (30 June 2025: $28,774,000). Similarly, a fair value of 10% higher or lower, while all other variables remain constant, in financial liabilities at fair value through profit or loss would have increased or decreased the Group's income and net assets by $17,715,000 as at 30 June 2026 (30 June 2025: $22,654,000).

At 30 June 2026, should discount rates been 50 bps or 100 bps higher or lower than the actual discount rate used in the fair value estimation, while all other variables remained constant, consolidated income and net assets would have increased and decreased by the following amounts:

Reasonably possible alternative assumptions

The determination of fair value for litigation funding assets involves significant judgements and estimates. While the potential range of outcomes for the assets is wide, the Group’s fair value estimation is its best assessment of the current fair value of each asset, as applicable. Such estimate is inherently subjective, being based largely on an assessment of how individual events have changed the possible outcomes of the asset, as applicable, and their relative probabilities and hence the extent to which the fair value has altered. The aggregate of the fair values selected falls within a wide range of reasonably possible estimates. In the Group’s opinion, there is no useful alternative valuation that would better quantify the market risk inherent in the portfolio and there are no inputs or variables to which the values of the assets are correlated other than interest rates which impact the discount rates applied.

Note 24. Key management personnel disclosures

Compensation

The aggregate compensation made to Directors and other members of key management personnel of the Group is set out below:

Consolidated

Details of the remuneration of key management personnel of the Group are set out in the following tables.

1 Resigned as Director 15 January 2025

2 Appointed as Director 29 November 2024

3 Resigned as Director 5 September 2024. The amounts disclosed for Ms Gangemi represent payments made in connection with her cessation of employment, including notice period entitlements, and are classified as termination benefits.

Directors’ share options

The details of options over ordinary shares in the Company held during the financial year by each Director is set out below:

1 Outstanding share options as disclosed in Note 29.

2 On 27 October 2021, Patrick Moloney exercised 900,000 unlisted options at an exercise price of A$1.00 which were granted under the Employee share option scheme. Upon exercise, the Group issued 900,000 new ordinary shares in the capital of the Group to Patrick Moloney which have been granted under the Loan Share Plan with the sole purpose to fund the exercise price of the 900,000 unlisted options

Directors’ interests

The number of shares in the Company held at the end of the financial year by each Director is set out below:

1 Unlisted partly paid shares in the Company were issued at a price of $0.17 per share, wholly unpaid and will convert to a share upon payment to the Company of $0.17 per share. Further details provided in Note 19 to the financial statements.

No changes took place in the interest of the directors between 30 June 2026 and 30 September 2026.

Note 25. Remuneration of auditors

During the financial year the following fees were paid or payable for services provided by BDO Audit Pty Ltd, the auditor of the Company, and its network firms:

Consolidated

Audit Services - Firms related to BDO Audit Pty Ltd

Note 26. Contingent liabilities

Under-insured adverse costs exposure

In certain jurisdictions, litigation funding arrangements entered into by the Group include undertakings to meet adverse costs awarded to the successful party in the event that funded litigation is unsuccessful. The occurrence and quantum of any adverse cost award is inherently uncertain and dependent on the outcome of litigation proceedings, and accordingly it is not possible to predict whether or when such costs may be incurred.

The Group maintains adverse costs insurance arrangements (commonly referred to as after-the-event or ATE insurance) which mitigate the financial impact of adverse cost awards. While these arrangements substantially reduce the Group’s exposure, a residual risk may exist in respect of adverse cost awards that may not be fully covered by insurance.

As at the reporting date, based on the Group’s assessment of its currently funded investments, the potential exposure to adverse costs not covered by insurance remains contingent on the outcome of litigation matters and cannot be reliably predicted or measured with sufficient certainty for recognition as a provision. Based on current information and reasonable assumptions, should one or more funded matters be unsuccessful and adverse cost awards be made which are not fully covered by insurance, the Group estimates that the potential under-insured adverse cost exposure for LCM could be up to A$2.5 million.

In forming this assessment, the Group has considered the status of funded proceedings, applicable insurance arrangements, historical experience, jurisdictional factors, and the inherent uncertainties in litigation outcomes.

Note 27. Parent entity information

Set out below is the supplementary information about the parent entity, Litigation Capital Management Limited.

Consolidated

Guarantees entered into by the parent entity in relation to the debts of its subsidiaries

In accordance with ASIC relief, Litigation Capital Management Limited (as holding entity), LCM Operations Pty Ltd, LCM Litigation Fund Pty Ltd, LCM Corporate Services Pty Ltd, LCM Recoveries Pty Ltd, LCM Funding Pty Ltd, LCM Singapore Pty Ltd, LCM Funding SG Pty Ltd and LCM Group Holdings Pty Ltd are parties to a deed of cross guarantee under which each company guarantees the debts of the others. The specified subsidiaries represent a ‘closed group’ for the purposes of the guarantee, and as there are no other parties to the Deed that are controlled by the Group, they also represent the ‘extended closed group’.

Contingent liabilities

The parent entity had no contingent liabilities as at 30 June 2026 and 30 June 2025.

Capital commitments - Property, plant and equipment

Material accounting policies

The accounting policies of the parent entity are consistent with those of the Group, as disclosed in note 2, except for the following:

Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.

Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an indicator of an impairment of the investment.

Note 28. Interests in subsidiaries

The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in note 2:

Note 29. Share-based payments

The share-based payment expense for the period was $563,000 (2025: $1,212,000).

Loan Funded Share Plans ('LSP')

As detailed in note 19, the Group has an equity scheme pursuant to which certain employees may access a LSP. The shares under LSP are issued at the exercise price by granting a limited recourse loan. The LSP shares are restricted until the loan is repaid. Options under this scheme can be granted without an underlying LSP share until they have been exercised and on this basis, do not form part of the Group's issued share capital. The underlying options have been accounted for as a share-based payments. The options are issued over a 1-3 year vesting period. Vesting conditions include satisfaction of customary continuous employment with the Group and may include a share price hurdle.

During the period the Group granted nil (2025: nil) shares under the LSP.

Set out below are summaries of shares/options granted under the LSP:

2026

1 Options granted without an underlying LSP share until exercised ie, do not form part of the Group's issued share capital

2025

1 Options granted without an underlying LSP share until exercised ie, do not form part of the Group's issued share capital

There were 6,550,366 options vested and exercisable as at 30 June 2026 (2025: 6,642,872).

The weighted average remaining contractual life of options under LSP outstanding at the end of the financial year was 0.732 years (2025: 0.759 years).

Deferred Bonus Share Plan ('DBSP')

The Company has in place a DBSP. Options granted under the DBSP reflect past performance and are in the form of nil cost options and will vest in three equal tranches from the date of issue and are subject to continued employment over the three year period.

In addition, the Options granted under the DBSP are subject to malus and clawback provisions. In the event of a change of control of the Company, unvested awards will vest to the extent determined by the Board, taking into account the proportion of the period of time between grant and the normal vesting date that has elapsed at the date of the relevant event.

During the period the Group granted nil (2025: 532,235) options under the DBSP.

Set out below are summaries of options granted under the DBSP:

2026

There were 694,044 options vested (2025: 634,868) and 445,467 exercised (average share price $0.190) as at 30 June 2026 (2025: 666,547. Average share price $2.054).

The weighted average remaining contractual life of options under DBSP outstanding at the end of the financial year was 0.352 years (2025: 0.817 years).

Executive Long Term Incentive Plan ('LTIP')

The Company has in place an Executive LTIP. Options granted under the LTIP in the form of nil cost options and are subject to performance conditions which require the growth of Funds under Management ('FuM') over a five year performance period.

During the period, all LTIPs lapsed as the performance conditions were not satisfied.

2026

There were nil LTIP's vested and exercisable as at 30 June 2026 (2025: nil).

The weighted average remaining contractual life of outstanding LTIP options at the end of the financial year was nil (2025: 0.263 years).

Note 30. Events after the reporting period

On 31 July 2026, the Group announced that the debt covenant waiver from Northleaf that was due to expire on 31 July 2026 has been extended to 31 August 2026.

On 1 September 2026, the Group announced that the debt covenant waiver from Northleaf that was due to expire on 31 August 2026 has been extended to 30 September 2026.

Northleaf continued to waive the requirement to test the financial covenants in the facility since the reporting date. The waiver in place at 30 June 2026 was extended to 31 July 2026, then subsequently to 31 August 2026 and subsequently again to 30 September 2026. Each extension was on substantially the same terms as the original waiver: the interest margin was increased by 2.00% per annum during the waiver period. LCM has not been required to test and comply with its financial covenants at any point during the relevant period, as each waiver was in place before the previous one expired.

On 30 September 2026 LCM entered into an agreement which, subject to the satisfaction of certain conditions precedent which are substantially progressed, implements a long-term amendment to its debt facility with funds managed by Northleaf Capital Partners.

The purpose of the amendment is to facilitate an orderly run-off of the remaining portfolio. The principal changes to the commercial terms of the debt facility are:

The facility is increased from US$100 million to US$125 million and the term is extended to 31 December 2030.

The interest margin is increased from SONIA plus 525 basis points on the original facility (which had been increased by a further 200 basis points due to the covenant waivers) to SONIA plus 1000 basis points. Interest is capitalised and added to the outstanding principal amount of the debt (paid in kind) rather than paid in cash for the remaining life of the facility.

The amount repayable is the higher of (i) the outstanding principal plus capitalised interest and (ii) two times the principal drawn under the facility.

If the facility is repaid in full while case investments remain outstanding, Northleaf is entitled to 25% of the gross cash proceeds of those remaining investments, including any performance fees received from the funds.

The facility is limited recourse to the case portfolio.

The following governance changes are being implemented alongside the commercial changes:

Two new directors, nominated by Northleaf and fully supported by the LCM Board, are to be appointed as independent directors of LCM Group Holdings Pty Ltd, the subsidiary through which the Group's investments are held and its operations conducted and to some or all of such company's wholly-owned subsidiaries.

The agreement on the terms of a long-term amendment with Northleaf to the debt facility marks the end of the Strategic Review, which was launched during the financial year. The board has formally concluded the review process with no resulting transaction, and has agreed on terms of an increased Northleaf facility. LCM now moves into an orderly run-off: the existing portfolio of case investments will be managed to conclusion in accordance with a business plan approved and supported by as per the Northleaf agreement and is not presently contemplated (or permitted under the terms of the agreement with Northleaf) that any new investments will be made.

Consolidated entity disclosure statement

For the year ended 30 June 2026

1 A trustee relationship is established through a Nominee Agreement, where the entity (the nominee) and the relevant Fund agree that the nominee will hold the Fund's investment on its behalf.

2 Limited Partners in the Funds are tax transparent and, as a result, are not considered tax residents of any particular jurisdiction

Directors’ Declaration

In the directors' opinion:

the attached financial statements and notes comply with the Corporations Act 2001, Australian Accounting Standards and other mandatory professional reporting requirements;

the attached financial statements and notes give a true and fair view of the consolidated entity's financial position as at 30 June 2026 and of its performance for the period ended on that date;

the consolidated entity disclosure statement is true and correct.

Signed in accordance with a resolution of directors.

On behalf of the directors

Director

Dated this 30th day of September 2026