Final Results

Juridica Investments Limited

('Juridica' or the 'Company')

Audited final results for the year ended 31 December 2014

Juridica (AIM: JIL), a leading provider of strategic capital for corporate legal claims to both businesses and legal markets, announces its audited financial results for the year ended 31 December 2014.

Financial highlights

§ Net cash proceeds received during fiscal year 2014 rises 99% to US$73.9 million (2013: US$37.2 million)

§ Total 2014 dividend of 20p per share (US$34.5 million) paid from net cash proceeds generated from 2014 investment activity (paid to shareholders on 14 January 2015)

§ Dividends paid since inception total 58.6p per share (US$98.8 million)

§ Net Asset Value at 31 December 2014 of US$184.2 million, which primarily consists of the discounted terminal value of the Company's investment portfolio (having a current fair value of US$150.1 million)

§ IRR on completed investments at 66.67%

§ Fully diluted loss per share of 4.49c (2013: earning per share of 4.85c)

Operating highlights

§ Gross cash proceeds of US$105.7 million generated primarily from five settlements within the antitrust and competition portfolios

§ Loss per share for period reflects increased operating expenses primarily due to earned performance fee payable to JCML 2007 Limited (in which Juridica has a 36.17% holding), reduction in discounted terminal value of investments, and increased due diligence costs

§ Enhanced investment management arrangements, including expansion of investment management team and adoption of a co-allocation policy, creates greater capabilities and opportunities for the Company's remaining capital base

Outlook

The Company has a high quality portfolio of cases that continue to progress as expected. Several of these investments are anticipated to see significant activity within the next 12 to 24 months. One antitrust case, in particular, has significant upside potential and is expected to resolve within the next twelve months.

In addition, Juridica expects to make several investments in medium to large sized patent portfolios and various commercial cases during 2015.

Commenting on the results, Lord Brennan QC, Chairman of Juridica, said:

"Our investments have continued to mature throughout 2014. Our successes this year enabled the payment of substantial dividends.. We continue to see significant opportunities to deploy capital. We look to the future with optimism and expect the portfolio to deliver attractive returns."

- Ends -

This document contains forward looking statements, which are based on Juridica Asset Management Limited's (JAML) current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. It is believed that the expectations reflected in these statements are reasonable, but they may be affected by a number of variables which could cause actual results or trends to differ materially. Each forward looking statement speaks only as of the date of this announcement. Except as required by the AIM Rules, the London Stock Exchange or otherwise by law, the Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward looking statements contained herein to reflect any change in the Company's or JAML's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

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About Juridica Investments Limited

Juridica Investments is a leading provider of strategic capital to the business community and the legal markets for corporate claims. It invests directly and indirectly in a diversified portfolio of corporate claims in litigation and arbitration. Juridica is one of the premier sources of value-added and direct financing for large business claims in the United States and one of the leading sources in the United Kingdom.

The Company's clients are Fortune 1000 companies, FT Global 500 companies, inventors, major universities, and the leading law firms that represent them. Juridica only accepts cases that have already been carefully vetted and undertaken by leading lawyers.

Juridica's capital enables the legal system to better address business claims. It does not invest in speculative claims or claims that do not demonstrate economic value and clear merits. Juridica invests only in business claims, and does not invest in class actions, personal injury, product liability, or mass tort claims. Juridica's investment strategy provides business clients with financial choices that reduce risk and assist in maximizing claim value.

The Company's goal is to provide business clients with financial choices that reduce risk and assist in maximising claim value.

Juridica was established on 21 December 2007 as a limited liability, closed-ended investment company registered in Guernsey. It has over US$200 million of assets under management. It was the pioneer in alternative litigation financing and the first closed-end fund of its kind ever listed on AIM, a market operated by the London Stock Exchange (AIM: JIL.L).

The Company has appointed Juridica Asset Management Limited as its exclusive investment manager to locate, evaluate and manage direct and indirect investments in cases, claims and disputes.

http://www.juridicainvestments.com 

Chairman's statement

On behalf of the Board, I present the results of Juridica Investments Limited ("JIL" or the "Company") for the year ended 31 December 2014.

Since the end of 2007, JIL has developed and monetised a portfolio of investments focused exclusively on business-to-business related claim investments. The portfolio is comprised of the following sectors: antitrust and competition; patents and other forms of intellectual property; and general commercial litigation. The Company does not invest in shareholder class actions, personal injury, product liability, or mass tort claims.

The Company has just completed its seventh year of operation and I am pleased to report that during 2014 the portfolio generated a record amount of cash proceeds because of five settlements in our antitrust and competition portfolio. Although our recent returns are not indicative of future returns, they are a strong endorsement of the quality of the portfolio we have invested in and developed. In addition, we have reasonable grounds for anticipating further realisation of part of the carrying value of our investments into cash proceeds over the next 12 to 24 months.

Highlights of the Company's performance include:

§ Over the course of 2014, settlements in our antitrust and competition portfolio generated gross proceeds of US$97.7 million of which US$31.8 million has been used to fulfil contingency obligations on cases that are still active in the antitrust and competition portfolio and to satisfy the necessary reserves for estimated taxes. In addition, US$8.0 million of case proceeds generated from prior period settlements in our antitrust and competition portfolio was released to the Company in accordance with the relevant investment agreements. From this combined activity, a total of US$73.9 million in net proceeds was transferred to the Company during the year ended 31 December 2014 (a portion of which was received by the Company on 30 December 2014 and a portion of which was received by the Company on 12 January 2015). An additional US$250,000 in proceeds was generated from two small settlements and a patent sale in one of our patent investments. These patent related proceeds were retained in the investment entity to fund expansion of the patent portfolio.

§ On 10 November 2014, the Company declared a dividend of 20 pence per share (approximately US$0.31 per share based on the prevailing exchange rate at that date with an aggregate amount distributed of US$34.5 million). The dividend was paid on 14 January 2015 to shareholders on the Register at 12 December 2014.

§ From inception to date, the Company's investments have generated US$275.6 million in gross proceeds. Included in this amount is US$13.1 million in gross proceeds received by the Company subsequent to 31 December 2014. Approximately US$64.1 million of these proceeds have been directed towards meeting contingent investment funding obligations and payment of taxes (or in the case of proceeds received during 2014, reserving for estimated taxes). As a result of this activity, a total of US$211.5 million represents our investments' life-to-date net cash proceeds.

§ The fair value of the Company's investments as at 31 December 2014 was US$150.1 million which represents the present value of the Company's investments' expected terminal value.

§ The NAV per ordinary share decreased from US$2.02 as at 31 December 2013 to US$1.66 at 31 December 2014. This decrease in NAV per ordinary share was attributable to the declaration of the 2014 dividend payable of US$34.5 million (approximately US$0.31 per share) as described above and a total comprehensive loss of US$5.0 million (approximately US$0.05 per share) generated during the year ended 31 December 2014.

The Company's record cash settlement results generated in 2014 and the estimated fair value of the Company's investments reflect the continued maturity of the Company's existing portfolio and serve to highlight the ability of Juridica Asset Management Limited (the "Manager") to identify and invest in strong cases, and to effectively manage those assets to conclusion.

Investment Valuation

The methodology used to value our investments is applied in a manner that follows International Financial Reporting Standards ("IFRS") fair value accounting rules and agrees with the views of our auditor.

The fair value of our remaining investment portfolio is US$150.1 million, a reduction of US$41.1 million from the US$191.2 million fair value reflected at 31 December 2013.

The change in investment valuation of US$41.1 million reflects the following:

§ The receipt of the US$75.2 million in net proceeds (including US$1.3 million related to a forward currency contract held during 2014 to protect the Company from currency fluctuations relating to the 2013 dividend which was paid on 15 January 2014).

§ Cash additions to our investments of US$12.9 million.

§ Recognition of a realised gain of US$28.8 million relating primarily to the proceeds received from the 2014 settlements in the antitrust and competition portfolio. Specifically, this amount reflects the gain in excess of unrealised gains recognised in prior periods and includes a portion related to the forward currency contract.

§ Net decrease of US$7.6 million in the carrying value of the Company's investment portfolio. This decrease reflects the present value of changes in the Manager's expectations in terms of timing and/or quantum for the terminal value of the Company's investments.

Operating Results

Most importantly, for the year ended 31 December 2014, the Company realised a gain of US$28.8 million which was primarily attributable to the five settlements occurring within our antitrust and competition portfolio. Overall, the Company reported a total comprehensive loss of approximately US$5.0 million as compared to total comprehensive gain of approximately US$5.1 million for the year ended 31 December 2013. The total comprehensive loss for the year ended 31 December 2014 was due to a combination of the following factors:

§ The realised gain of US$28.8 million described above.

§ A net unrealised loss generated from the change in valuation of the Company's investments of approximately US$7.6 million. This change in valuation was driven by reassessments of the Manager's expectation of quantum and/or timing of potential settlements in cases making up our portfolio of investments having regard to information or facts that became available or occurred during 2014.

§ Unrealised loss of US$690,000 associated with the change in valuation of the Company's forward currency hedge held by the Company at 31 December 2014 to protect the Company from currency fluctuations relating to the 2014 dividend which was paid on 14 January 2015. This unrealised loss is predominately offset by a lower US dollar denominated dividend payable at 31 December 2014 than that which was relevant at the date of declaration.

§ Company operating expenses of US$9.9 million. This amount is approximately US$2.0 million greater than it was in 2013 and was primarily due to higher management fees, due diligence and transaction costs as well as legal and professional fees. The increase in management fees resulted from the settlement proceeds received during 2014.

§ Intangible amortisation expense of US $1.1 million.

§ A performance fee payable of US$14.5 million due to the Company's former investment manager, JCML 2007 Limited ("JCML") in which JIL has a 36.17% holding.

The performance fee payable was generated as a result of the Company's life-to-date portfolio cash profits (including cash profits paid to JIL, cash profits reinvested directly into investments, and cash profits set aside as reserves in special purpose entities used to fund particular investments) exceeding the 8% cumulative hurdle ("Hurdle").

Investment Portfolio Activity

As more fully described in the Manager's report, the Company's investments continue to have significant activity in their underlying cases.

The Company's antitrust and competition portfolio had five settlements during the year ended 31 December 2014 as follows:

§ Settlement in a single defendant case that generated a significant amount of gross proceeds. While the case confronted and overcame many delays, the ultimate award reached the high-end of the Manager's settlement expectations.

§ Settlement from the final defendant in a multi-defendant case.

§ Settlements from three small defendants in a multi-defendant case. During 2014, this case had its trial delayed following an adverse ruling on the scope of the plaintiff's damages. Subsequent to 31 December 2014, the Manager was advised that the appeal effort is now advancing and that a formal request for review by the Supreme Court of the United States is being prepared.

The net amount of proceeds from the above settlements, along with the additional US$8.0 million of case proceeds generated from prior period settlements in our antitrust and competition portfolio that was released to the Company in 2014 totalled US$73.9 million and was transferred to the Company during the year ended 31 December 2014 (a portion of which was received by the Company on 30 December 2014 and a portion of which was received by the Company on 12 January 2015). In accordance with the terms of our facility agreement (the "Facility") with Fields Law PLLC ("Fields Law"), as revised during 2014, these proceeds were applied against accrued interest and a repayment of principal on the Facility and payments due under the swap agreement with Riverbend Investments Limited ("Riverbend"), a wholly-owned subsidiary of the Company.

Within our antitrust and competition portfolio during the year ended 31 December 2014, one investment has been dismissed in favour of the defendant. Within our commercial portfolio, two investments continue to show indications of enhanced risk. Accordingly, our Manager has further reduced the fair value of these investments. The remaining investments in all our portfolios continue to make progress with the majority of our older investments moving closer to their ultimate conclusion.

Subsequent to 31 December 2014, proceeds of US$13.1 million were received by the Company in relation to settlement of two contractual interest investments.

New Investments and Pipeline

During the year ended 31 December 2014, the Company made one additional investment which, as detailed above, was successfully concluded subsequent to 31 December 2014. This new investment was related to an existing patent investment whose underlying case previously obtained a jury verdict in favour of the plaintiff but the level of damages in the case was being appealed by the plaintiff. Through this new investment, the Company purchased a portion of the affirmed claim.

The Company also made three supplemental investments over the course of 2014, each of which has a relationship to existing investments in its portfolio. Two of these supplemental investments were made with incremental funding while the third supplemental investment was funded from money remaining in the original investment facility.

The Company has also created additional patents designed to support and enhance the enforceability and commercial relevance of existing patents owned by it as well as funding one new patent investment to develop and monetise a large portfolio of patents in the technology and sports market. The National Football League Players Association is a partner in this endeavour with the Company.

The Manager continues to review and perform due diligence on a large pipeline of potential investments.

Dividend

Based on the Company's expected results for the year ended 31 December 2014, the Company declared a dividend of 20 pence per share (or approximately US$34.5 million in aggregate) which was paid on 14 January 2015 to shareholders on the Register at 12 December 2014. Following this distribution, the Company has now returned approximately US$98.8 million (58.6 pence per share).

Outlook

JIL was the first to enter the litigation finance market. Litigation finance has become an established asset class, which is especially attractive to investors because it is non-correlated and profitable. JIL is well established and performing well in this market as demonstrated by its results.

Litigation finance, particularly in the United States, is now at the next stage where scale and diversity are the challenges. The Board has been working closely with the Manager on the systems and strategy required to meet these challenges and to advance our position as a market leader in the business-to-business litigation in which we specialise.

We look forward to the continued development of the fund and its investments and thank our investors for their continued support.

Lord Daniel Brennan QC

Chairman

16 March 2015

Investment Manager's report

Operating Highlights

During the year ended 31 December 2014, the Company's antitrust and competition portfolio generated gross cash proceeds of US$105.7 million from five settlements and the release of case proceeds generated in prior periods. After fulfilling contingency funding obligations for remaining cases in the antitrust and competition portfolio and tax and other required reserves, the net value of these proceeds totalled US$73.9 million and was transferred to the Company during the year ended 31 December 2014 (a portion of which was received by the Company on 30 December 2014 and a portion of which was received by the Company on 12 January 2015). These settlements came from three different cases, two of which were final settlements and one which was a partial settlement.  

An additional US$1.3 million in proceeds was received from the Company's forward currency contract held during 2014 to protect the Company from currency fluctuations relating to the 2013 dividend which was paid on 15 January 2014. Lastly, US$250,000 in proceeds was generated from two small settlements and a patent sale in one of our patent investments. These patent related proceeds were retained in the investment entity to fund expansion of the patent portfolio. 

As a result of the expected cash generated from the portfolio, the Company declared a dividend of 20 pence per share (approximately US$34.5 million) to shareholders on the Register at 12 December 2014. This dividend was paid on 14 January 2015. 

During 2014, the Company made two new and three supplemental investments as follows:

§ On 31 December 2014, the Company purchased a portion of an award that had been successfully appealed and was attributable to an existing patent investment. Subsequent to 31 December 2014, this new investment, along with the related patent investment, was successfully concluded.

§ The Company funded one new patent investment in partnership with the National Football League Players Association. As described in more detail below, the special purpose vehicle will monetise these intellectual property assets through sales, licensing and, if necessary, litigation.

§ The Company's three supplemental investments were each related to specific existing patent cases. Each of these supplemental investments involves the development of new patents to enhance and support the existing patent(s) in each investment. The new patents are being created in conjunction with subject matter experts.

Net asset value

JIL's net asset value ("NAV") decreased from US$2.02 per ordinary share at 31 December 2013 to US$1.66 per ordinary share at 31 December 2014. This decrease in NAV per ordinary share was due to the following:

§ 2014 dividend payable of US$34.5 million (approximately US$0.31 per share); and

§ total comprehensive loss of US$5.0 million (approximately US$0.05 per share).

Comprehensive loss

The Company's US$5.0 million in total comprehensive loss for the year ended 31 December 2014 was due to the net of the following:

§ A realised gain of US$28.8 million comprising:

§ US$27.5 million generated from the five settlements occurring within our antitrust and competition portfolio during 2014; and

§ US$1.3 million generated by the settlement of a forward currency contract that was purchased to protect the Company from currency fluctuations after it declared its 2013 dividend.

§ A net unrealised loss generated from the change in valuation of the Company's investments of approximately US$7.6 million.

§ An unrealised loss of US$690,000 associated with the change in valuation of the Company's forward currency hedge held by the Company at 31 December 2014 to protect the Company from currency fluctuations relating to the 2014 dividend which was paid on 14 January 2015. This unrealised loss was predominately offset by a lower US dollar denominated dividend payable at 31 December 2014 than that which was relevant at the date of declaration.

§ A performance fees payable of US$14.5 million.

§ Company operating expenses of US$9.9 million.

§ Intangible amortisation expense of US$1.1 million.

The performance fee payable was generated as a result of the Company's cumulative through 31 December 2014 portfolio cash profits, including cash profits paid to JIL, cash profits reinvested directly into investments, and cash profits set aside as reserves in special purpose entities used to fund particular investments, exceeding the Hurdle. Under the terms of the Investment Management Agreement with JCML, the Company's former manager, JCML is entitled to 20% of the amount exceeding the Hurdle.

Of the US$14.5 million performance fee liability, approximately US$4.7 million will be returned to JIL as a dividend from JCML from its 36.17% holding of JCML (and is included in the Company's valuation of its interest in JCML). This return of cash will occur in early 2015 when JCML declares a dividend and distributes the performance fee to its shareholders.

Company operating expenses for 2014 were approximately US$2.0 million greater than it was in 2013 primarily due to higher management fees, due diligence and transaction costs as well as legal and professional fees. The increase in management fees resulted from the settlement proceeds received during 2014.

Fair value of investments

The fair value of the Company's investments at 31 December 2014 was US$150.1 million. These investments are categorised as contractual interests, debt securities, or equity investments. Also included in this amount is the fair value attributable to the Company's forward currency contract purchased to protect the Company from currency fluctuations after it declared its 2013 dividend These categories reflect the following changes from the carrying value as at 31 December 2013:

In addition to the above changes, the Company is reflecting a fair value adjustment of approximately US$(690,000) for its forward currency contract purchased to protect the Company from currency fluctuations after it declared its 2014 dividend. This fair value adjustment is predominately offset by the reduction in the dividend liability from the date of declaration due to foreign currency translation.

Portfolio performance

During the year ended 31 December 2014, the Company's portfolio realised US$105.7 million in gross cash proceeds from several settlements and cost recoveries generated from cases in our antitrust and competition portfolio. Our antitrust and competition portfolio was funded to Fields Law Firm PLLC ("Fields Law") through a debt facility (the "Facility"). In accordance with the terms of the Facility and the related case funding agreements, reserves must be set aside from settlement proceeds to satisfy deferred legal fees and to fund future case obligations within the antitrust and competition portfolio. In addition, Fields Law is required to set aside certain reserves to satisfy US Federal and state tax obligations related to the gross proceeds. The tax obligations on the proceeds generated during 2014 from our antitrust and competition portfolio have been estimated to not exceed US$16.5 million. 

The net amount of proceeds from these settlements totalled approximately US$73.9 million and was transferred to JIL during the year ended 31 December 2014 (a portion of which was received by the Company on 30 December 2014 and a portion of which was received by the Company on 12 January 2015).  

The Facility was amended in 2014 and in accordance with its terms, US$10.0 million of these proceeds was applied as a repayment of the Facility's principal with the balance of the proceeds being applied against accrued interest and payments due to Riverbend, in accordance with the swap agreement with Fields Law. The amended Facility also provides for an additional commitment of US$17.0 million, a portion which may be funded out of proceeds.

Subsequent to 31 December 2014, and in accordance with the terms of the swap agreement with Fields Law, a clawback of US$7.0 million was made by Fields Law to Riverbend in order to ensure proper funding for the remaining cases in the antitrust and competition portfolio.

Approximately US$250,000 in additional proceeds was generated from a patent investment. These proceeds are being held in the entity that made the investment to fund further monetisation.

From inception to 31 December 2014, the Company's portfolio has generated net cash proceeds of approximately US$198.4 million.

The portfolio since inception has performed as follows:

§ Ten investments have reached completion with proceeds from the underlying cases delivering a total of US$44.4 million in gross proceeds representing a blended internal rate of return of approximately 66.67% (as calculated from the date of investment to the date of return).

§ Four investments that have produced returns still remain active even though some settlements have been reached. One such investment is a large antitrust and competition investment which consisted of six cases. Two of these cases reachedtheir completion during the year ended 31 December2014. Two other cases in this investment have had partial settlement or expense recoveries. The other three investments with partial settlements are cases that are multi-defendant in nature. Total net proceeds from active investments with partial settlements are approximately US$154.0 million.

New Investments Made During the Year Ended 31 December 2014

During the year ended 31 December 2014, JIL made two new investments with total funding of US$6.3 million.

Matter 0108-SD:

This new investment involved JIL paying US$3.0 million in exchange for a minimum US$3.4 million return and up to 21% first priority interest in the judgment or any settlement interest of the claim. This investment is related to our investment 0108-S. Subsequent to 31 December 2014, this matter was favourably resolved and delivered US$4.6 million to the Company.

Matter 9713:

This investment was made in partnership with National Football League Players Association to develop and monetise a large portfolio of patents relevant to the sporting market. The patents in this portfolio will cover such areas as wearable technology, social media, fan experience and the use of wifi in sports stadiums to solve bandwidth problems. This investment was made through a special purpose vehicle.

JIL invested US$3.3 million for intellectual property ("IP") development in exchange for a 65% share of the special purpose vehicle. All 100 invention disclosures have been drafted and 100 provisional patent applications have been filed. We expect the Company to monetise this investment through pre-litigation opportunities in the form of sales, joint ventures, and licensing.

Supplemental Patent Investments Made During the Year Ended 31 December 2014

During the year ended 31 December 2014, JIL funded three supplemental patent investments, as described in more detail below. Two of these supplemental patent investments were funded with a combined incremental commitment of US$2.9 million. The third supplemental patent investment was funded from US$2.4 million remaining in the original investment facility. 

Combining our internal capabilities in evaluating patent litigation with our outside subject matter experts' skills in patent development and monetisation enabled the expansion of three existing patent investments through the creation of additional patents in support of the existing patents in the existing deal structure.  

Matter 7508-O:

This investment was initiated in 2009 and was originally structured with an interest in two related litigation cases and patents that were being developed by a third party management team. We have successfully sold two patents for a combined total of US$525,000 and we believe that the value of the remaining portfolio would best be realised through its expansion. The litigation associated with this matter is ongoing, producing modest returns, and is expected to complete in 2015.

The amplified deal structure involves supplemental funding of US$600,000. These supplemental funds, coupled with the recent returns from the litigation interests and patent sales, are being used to enhance the remaining portfolio. In exchange for these capital contributions, JIL will retain an 80% economic interest in a new special purpose vehicle, which shall be assigned the underlying litigation patents as well as the new complementary intellectual property. Approximately US$750,000 of earmarked funds have been deployed. Broadly, the project calls for the development of 40 patent applications. To date, 29 US provisional patent applications have been filed, of which 11 have advanced to non-provisional filings. Three have already received a notice of allowance.

Matter 0808-C:

Following a strategic review of the ongoing litigation associated with this investment, it was determined that the specific patent assets, notwithstanding a modest judgement in one of two cases, have meaningful additional value that cannot easily be unlocked through litigation.

The claimant has assigned patents related to the technology involved in the litigation to a special purpose vehicle majority owned by JIL. Our outside experts have been working with the claimant to develop complimentary IP which, when taken with the core technology, will comprise a robust patent portfolio in the 3D printing and non-linear optimisation spaces.

The restructured deal involved a US$2.3 million investment in exchange for three pronged exposure to the underlying IP. First, JIL obtained a 64% interest in a special purpose vehicle tasked with the development of 25 new patent applications. Second, JIL obtained a 5% share in the common equity interest in AC Kinetics Inc., an industrial motors company (an interest in this technology was acquired as additional collateral at the time of financing of the two litigation cases), as well as a US$6.3 million preference to protect the original investment in the litigation. Finally, JIL retains its interest in the original litigation.

In late 2014, the claimant began the marketing of the underlying technology in AC Kinetics and received significant interest from a major industrial conglomerate. The Company's economic interest referred to above would be applicable to any sale or licensing of the technology.

Matter 0708-B:

Despite reasonable settlement proceeds, it was determined that additional litigation should not be pursued without first exhausting pre-litigation monetisation opportunities. Moreover, it has been determined that the core patent at the heart of the dispute retains meaningful value that would best be captured through the development of a complementary IP portfolio.

The claimant has assigned the core patent to a special purpose vehicle which is majority owned by JIL. This vehicle has been working to abstract the core patent into different, broader, and commercially relevant areas with a particular focus on rich media.

The restructuring called for the advancement of US$2.4 million, to acquire a 71% stake in the special purpose vehicle. Funding for this restructuring came from money remaining in the original investment facility authorised when this investment was initiated in 2008. The special purpose vehicle will file 60 patent applications centred on rich media and multimedia.

Portfolio Update

The Company's current portfolio is diversified amongst three primary groups: antitrust and competition, patent and other forms of intellectual property, and commercial.  

The cash summary at 31 December 2014 for each of these groups is as noted on the following table:

1Cumulative Net Proceeds Generated refers to partially settled investments and completed investments from inception until 31 December 2014. Additional proceeds have been generated within the antitrust and competition portfolio and the patent portfolio and have been used to fulfil funding requirements for cases within each portfolio.  

2Amount Invested in Current Portfolio Holdings reflects cash investment as at 31 December 2014 (excludes any related transaction costs) by JIL for the current investment holdings in each portfolio. Antitrust and competition portfolio reflects advances under the Facility net of repayment totalling US$13.2 million.

3Commitment Available for Current Portfolio Holdings reflects remaining funding commitment (as of 31 December 2014) by JIL for the current investment holdings in each portfolio. A portion of the commitment related to the antitrust and competition portfolio may be fulfilled from portfolio returns.

Antitrust and competition portfolio

Five cases in the Company's antitrust and competition portfolio involve violation of US or European antitrust law, three of which also involve multi-defendant, price fixing cartels. Two of these cases came to full completion during the year ended 31 December 2014. One case failed after its appeal was denied by the US Supreme Court. Of the remaining two cases both have had a series of settlements with further settlements expected. The sixth case in this portfolio is a special situation involving statutory claims and this case is presently in trial for some of its claims. All of the active cases in this portfolio are reaching maturity.

Case summaries:

§ Case 1208-A has come to full completion and has generated gross proceeds at the high end of our range.

§ Case 5608-N was dismissed in favour of the defendant and the claimant subsequently lost its appeal. A writ of certiorari was filed with the US Supreme Court and during the year ended 31 December 2014, was denied. As at 31 December 2014, the value of this case is zero, with no chance of recovery.

§ Case 8008-L was scheduled for trial in first quarter 2014, but, during the year ended 31 December 2014, it was announced that the trial would be delayed following an adverse ruling on the scope of the plaintiff's damage claim. This ruling was affirmed on appeal and the plaintiff is seeking the review of the United States Supreme Court. Uncertainty remains as to whether the requested review by the United States Supreme Court will be accepted. Three settlements with smaller defendants were reached during the year ended 31 December 2014. This investment has thus far delivered proceeds to the Company in excess of US$70 million.

§ Case 5208-E has come to full completion during the six-month period ended 31 December 2014. Net proceeds delivered to the Company met our expectations.

§ Case 5308-U is awaiting a trial date. Pre-trial merits discovery was completed in 2014. Challenges to expert opinions are pending decision by the trial court. All defendants, save one, have previously settled. Trial on the merits may occur as early as fourth quarter 2015.

§ Case 1008-A obtained a favourable liability verdict for a portion of the claims and a damages trial relating to these claims is scheduled for mid-2015. Other claims are awaiting further appellate proceedings.

Patent portfolio

The Company's patent portfolio includes ten investments, some of which involve infringement of one or more patents by one or more defendants.

Case summaries:

§ Case 0108-S obtained a jury verdict in favour of the plaintiff in the amount of US$20.0 million (including punitive damages and interest). This was in line with our expectation for the low end of the recovery range of this case and provides for the Company to recover its investment (approximately US$8.5 million including the Company's related investment in Case 0209-S). A modest supplemental investment was made during 2013 to finance the appeal and an appeal on damages. The damages award was successfully affirmed on appeal. Subsequent to year end, proceeds of US$8.5 million was received as full settlement of this investment resulting in minimal gain.

§ Case 0209-S is related to Case 0108-S and further proceedings are being evaluated now that Case 0108-S has completed.

§ Investment 0108-SD, as described above, is related to Case 0108-S and provided for the Company to purchase a portion of the award associated with 0108-S. Subsequent to year end, proceeds of $4,620,000 million was received as full settlement on this investment of US$3,000,000 million.

§ Case 0409-C obtained a jury verdict after trial in favour of the plaintiff in the amount of US$50.0 million. The Company invested US$4.8 million in this case and is entitled to receive the first US$3.0 million of cash proceeds from settlement or judgment plus 49% of remaining proceeds. Uncertainty remains until post-trial proceedings are completed, judgment is entered and appeals are completed unless the case is resolved earlier by settlement. We believe this case has a high likelihood of resolution during 2015.

§ Case 0808-C, as described in detail above, now involves several components. The underlying litigation of a key patent was subject to an adverse ruling which the plaintiff is appealing. While the litigation has continued, the Company, through its association with ipCreate, has been developing a portfolio of patents related to the key patent involved in the litigation, as described in more detail above. These patents have broad appeal especially in the field of 3D printing.

§ Case 2709-E received a favourable ruling on one of two patents that are subject to a re-examination proceeding. A third patent was not subject to re-examination. Due to the lengthy re-examination process, the plaintiff decided to abandon assertion of the patent that remains in re-examination and restart the litigation process with the remaining two patents. The case was stayed pending the re-examination process but we believe the stay will be lifted in early 2015 and legal proceedings will resume.

§ Case 0708-B, as described in detail above, has undergone a restructuring. Although the Company has received proceeds from previous litigation proceedings involving the underlying patent, we believe that significant value can be unlocked by developing a portfolio of related patents in the areas of rich media and multimedia. The inventor of the patent that was the subject of the original litigation, along with other subject matter experts, are developing these patents.

§ Case 7508-O, as described in detail above, has undergone a strategic restructuring. The Company engaged ipCreate to enhance and expand the existing portfolio of patents in the vehicle and an additional 40 patent applications have been filed, of which 11 proceeded to prioritised examination with three already being issued. We believe that these additions to the patent portfolio have the potential to significantly enhance the return on this investment. A supplement funding arrangement has been established to support the costs of expanding the existing portfolio of patents.

§ Investment 7313 reflects the Company's 7.8% preferred ownership in ipCreate.

§ Investment 9713, as described above, is a new investment established to develop and monetise a large portfolio of patents in the technology and sports market. The Company has partnered with the National Football League Players Association in this endeavour.

Commercial portfolio

The Company's commercial portfolio consists of investments in six cases that involve claims related to commercial disputes including: theft of trade secret, breach of contract and insurance subrogation.

Case summaries:

§ Case 1610 has resulted in a favourable arbitration award in the amount of US$4.0 million. While JIL has recouped its US$4.0 million investment from the settlement, the Company is seeking to recover further proceeds from its security interest in a US based coal mine, which served as a cross collateral hedge against unfavourable litigation results. While the Company had hoped that the mine would have been sold by now, market conditions are unfavourable and the timing for possible sale of the mine is difficult to predict.

§ Case 0608-S is no longer being funded. In accordance with the terms of the Company's funding agreement, the Company exercised its option to cease funding. Subsequently, a claim against the Company was filed and successfully defeated. The Company then pursued a counterclaim in arbitration to recoup its investment amount. While the arbitration panel disagreed on technical grounds, the Company believes that it remains entitled under its investment agreement to recover from the client any sums received by the client in connection with ancillary claims made by the client against other parties. The Company has demanded payment of approximately US$800,000 which the client has already been awarded in a related case. In addition, we believe that other cash assets may be available to satisfy its entitlements and has filed an action to pursue other contractual claims against the client and to foreclose on the Company's security interest with respect to the US$800,000.

§ Case 1608-T involves a judgment on behalf of insurance clients against a foreign government. Although we believe the collection efforts may ultimately be successful, timing and collection risk have increased. The carrying value of this investment has been reduced to reflect this increased risk.

§ Case 5009-S involves alleged theft of trade secrets and other contractual claims. Claimed damages are in excess of US$500 million. Any settlement is expected to be for less than claimed damages. The case has not been set for trial but trial is expected to occur during 2015.

§ Case 1410 involves a theft of business claim. The trial court ruling on liability resulted in a positive ruling. Cross-appeals on liability and plaintiffs appeal on damages are underway for which we expect decisions in mid-2015.

§ Case 6609-S involves a large, multi-party pre-litigation settlement opportunity that we believe has the potential to generate significant proceeds for the Company. Settlement negotiations for a portion of the opportunity continue. This investment is being accounted for partially as an intangible asset and partially as a contractual interest.

Valuation

We value JIL's investments using valuation and accounting methods that are applied in a manner that follows International Financial Reporting Standards' ("IFRS") accounting principles. In particular, we follow guidance provided by IFRS 13 in establishing the method of applying fair value accounting. Under this guidance, we develop a fair value of a case or investment by discounting its expected terminal value from its expected completion date. We determine our initial expectations on quantum and timing of case results by assigning a probability of various scenarios coming to fruition and applying risk factors that: i) are intrinsic to the specific case; and ii) reflect general risks within and outside of the legal process. Our assumptions behind fair value accounting are revisited on a semi-annual basis. If needed, we will re-run the investment's valuation model and revise its expected future cash flow which we then discount to the reporting date. The discount rate used for valuation purposes is the Company's cost of equity. All due diligence and transaction costs related to an investment are expensed.

As at 31 December 2014, we examined the valuation for all of JIL's core investments. In doing so, the following adjustments were made to their individual valuations:

§ Since the year ended 31 December 2013, valuation of the Company's contractual interests increased by US$7.4 million reflecting US$10.7 million in additional investment funding and a US$3.3 million net decrease due to changes to the fair value of investments categorised as contractual interests.

§ Since the year ended 31 December 2013, valuation of the Company's debt securities decreased by US$46.8 million reflecting the net of US$1.0 million in additional investment funding, US$73.9 million in net proceeds transferred to the Company during the year ended 31 December 2014 (a portion of which was received by the Company on 30 December 2014 and a portion of which was received by the Company on 12 January 2015), US$27.5 million in realised gains, and US$1.4 million decrease in the fair value.

§ Since the year ended 31 December 2013, valuation of the Company's equity investments increased by US$100,000 reflecting US$1.2 million in additional investment funding and US$1.1 million net decrease due to changes to the fair value of investments categorised as equity investments.

In addition to the above changes, since the year ended 31 December 2013:

§ the valuation of the Company's intangible assets decreased by approximately US$800,000 reflecting the net impact of additional investment funding and amortisation charges; and

§ the valuation of the Company's forward currency contract that was purchased to protect the Company from currency fluctuations after it declared its 2013 dividend decreased by US$1.8 million as the dividend was paid in 2014.

Lastly, the Company purchased a forward currency contract to protect the Company from currency fluctuations after it declared its 2014 dividend. As at 31 December 2014, this forward currency contract had decreased by US$690,000. This reduction in fair value is predominately offset by a lower US dollar denominated dividend payable at 31 December 2014 than that which was relevant at the date of declaration. This forward currency contract is classified as a financial liability.

New Co-Allocation Policy

The Manager has entered into an investment advisory agreement with a third party client, which is a well-established institutional investor, as permitted by the terms of the investment management agreement between the Company and the Manager. JIL has agreed to a co-allocation policy in respect of future investment opportunities presented by the Manager. This advisory agreement provides the Manager with significant capital to co-invest alongside the Company. 

The co-allocation policy came into effect on 5 November 2014 and provides that where a follow-on investment in respect of an existing JIL investment becomes available, JIL shall have a right of first refusal in respect of the entire follow-on investment and where new investment opportunities arise that fall within JIL's investment policy, they will be offered to JIL and the new client pro rata to each party's deployable capital.

The new third party mandate has a number of potential benefits for JIL, including access to co-fund a broader, more diverse range of investment opportunities. 

Changes to the Manager's Investment Process and Procedures

Notwithstanding the successes of the Company's investment portfolio to date, the Manager believes that further improvements can be made to the implementation of the Company's investing policy to further improve returns for shareholders going forwards. 

Having reviewed the performance of the Company's investments, the Manager has identified and implemented the following operational enhancements that it believes will further increase returns on the Company's investments. 

Case selection and pricing

The Manager is working with third party experts to further develop its proprietary systems which evaluate potential investments by a number of different metrics including time to completion of case types, win/loss metrics for both judges and lawyers and the correlation of win/loss rates with claim size. This data is then used by the Manager to establish the types of cases with the best potential for generating returns and also provides for the Manager to have a more informed basis when selecting and pricing investment opportunities that are presented to it. Where appropriate, the Manager will also seek to include IRR protection clauses in the Company's investment agreements which seek to enhance returns for long-running cases.  

Portfolio diversification and expansion of the Manager's team and expertise

In considering new investment opportunities for the Company, the Manager will seek to diversify the portfolio of cases across a broader range of case types than has historically been the case.  

When the Company launched in 2007, the litigation investments it was making was a relatively new asset class and the Manager had limited resources meaning that it concentrated its expertise on particular types of investment, namely antitrust and competition, patent and IP and commercial cases. Since launch, the Manager has not only proven its underwriting process in respect of the investments it has sourced on behalf of the Company but it has also significantly expanded its own team and expertise to include more risk management and a broader range of legal expertise.  

The Manager intends to use this expertise to broaden the range of cases that the Company may invest in going forward with the intended aim being a portfolio that remains based on business-to-business claims but is diversified across not only the three existing asset classes but also law firm portfolio finance, arbitrations, judgements and special situations. The Manager believes that a more diversified portfolio will reduce the risk of adverse judgements in a particular investment whilst reducing the average time of investments, thus providing for more regular cash proceeds to the Company and its shareholders. 

Reducing costs of investment

The Company's and the Manager's profile in the litigation funding market has improved access to potential investment opportunities. Increasingly, investment opportunities are being presented directly to the Manager (a process that is assisted by the increasing size and experience of the Manager's team) and this is expected to reduce the costs borne by the Company of sourcing investments. The increase in opportunities presented directly to the Manager should avoid the need to source investments through more expensive structures, such as the Fields Law structure through which the Company invested in the portfolio of antitrust and competition cases, in the future. 

The cost of investment for the Company is also expected to be lowered by a number of other factors including cost benefits of investing in shorter duration cases and reduced due diligence costs as a result of making co-investments with other clients of the Manager. The Manager believes that a combination of all of these factors can lead to a material increase in the internal rate of return attributable to the Company's future investments, as compared to what has already been achieved by the Company through its investment portfolio.

Notable Activities

The following activities reflect advancement in JIL's portfolio, one or more of which may have a significant positive impact on the Company's NAV as they may be concluded as a result of an award or judgment or prior to conclusion of a case that could result in net cash proceeds to the Company in excess of 10% of its current NAV. 

One antitrust case that comprises part of the security for the loan facility made to Fields Law may complete or reach an advanced stage during the next 12 to 18 months. This case has significant damages claimed by their plaintiffs that, if awarded by a jury, will be automatically trebled by the court. A judgment would, of course, be subject to appeal and possible reversal by one or more appellate courts and appeals could result in a delay of several years prior to collection or settlement.  

Another antitrust case, which had already delivered proceeds to the Company in excess of US$70 million from prior settlements, was scheduled for trial in first quarter 2014. During the year ended 31 December 2014, it was announced that the trial would be delayed following an adverse ruling on the scope of the Plaintiff's damage claim. This ruling was affirmed on appeal and the Plaintiff is seeking the review of the United States Supreme Court. Uncertainty remains as to whether the requested review by the United States Supreme Court will be accepted. Should the United States Supreme Court deny a review, the case will be deemed complete and any remaining value associated with the case will be written off.  

We expect that if any of these cases is resolved by settlement, the amount of settlement will be substantially less than the claimed damages and/or any judgment entered by the trial court for each case. We also expect that if any of these cases is settled prior to completion or a favourable jury verdict is rendered and the trial court enters judgment, such a result will have a significant positive impact on the Company's NAV. 

Outlook

Given the uncertain nature of litigation in general, and the quantum of damages that trial juries may award, the Company's portfolio has the potential to produce a wide range of potential returns. This does not detract from our belief that JIL has invested in an excellent, high quality portfolio of cases.

We believe the Company's portfolio will continue to see significant activity within the next 12 to 24 months. This expectation is based on our knowledge from managing the Company's investments which includes: confirmed trial dates; expected final decisions following trial or arbitration; and various other factors. Each of these milestones, if successful, creates real incentives for defendants to seek settlements. In addition, settlement discussions are on-going for certain investments.  

We are optimistic that the portfolio will produce further returns of capital over the next 12 to 24 months, and beyond. Our robust pipeline of investments also presents excellent opportunities for growing the capital base and income of the Company.

We would like to thank investors for their continued support. As always, we are committed to providing timely announcements and accurate reporting with as much transparency as possible. 

Disclaimer on Forward Looking Statements

This report contains forward looking statements, which are based on the current expectations and assumptions of the Manager and involve known and unknown risks and uncertainties that could cause actual results or performance to differ materially from those expressed or implied in such statements. It is believed that the expectations reflected in these statements are reasonable but they may be affected by a number of variables that could cause actual results or trends to differ materially. Each forward looking statement speaks only as of the date of this report. Except as required by the AIM Rules or otherwise by law, the Company and the Manager expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward looking statements contained herein to reflect any change in the Company's or Manager's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

Juridica Asset Management Limited

16 March 2015

Directors' report

The Directors present their report together with the audited financial statements of Juridica Investments Limited (the "Company") for the year ended 31 December 2014, with comparative information for the year ended 31 December 2013.

Principal activities

The Company is an authorised closed-ended investment company incorporated under The Companies (Guernsey) Law, 2008 (the "Law"). The Law does not make a distinction between private and public companies. Shares in the Company were admitted to trading on AIM, a market operated by the London Stock Exchange, on 21 December 2007. The address of the Company's registered office is 11 New Street, St Peter Port, Guernsey, GY1 2PF.

Investment objective and policy

The investment objective of the Company is to build a diversified portfolio of investments in claims and to provide Shareholders with an attractive level of dividends and capital growth through investing directly and indirectly in litigation and arbitration cases, claims and disputes. These investments have been made predominantly in the United States although the Company may make investments outside of the United States in jurisdictions where such investments are lawful and permitted under local law and rules on professional ethics.

Results and dividend

The results for the year are shown in the Statement of Comprehensive Income on page 23. The Company declared a dividend of 20 pence per share on 10 November 2014. Accordingly, this dividend was paid on 14 January 2015 to shareholders on the register at 12 December 2014. The dividend was funded by the US$73.9 million in cash proceeds from partial settlements that were transferred to the Company on 31 December 2014 (a portion of which was received by the Company on 30 December 2014 and a portion of which was received by the Company on 12 January 2015). This declared dividend is consistent with the Company's policy of returning actual net cash profits to shareholders and follows the 14 pence per share in dividends paid in January 2014.

Audit Committee

The Audit Committee consists of Richard Battey, Lord Daniel Brennan and Kermit Birchfield. The Audit Committee is chaired by Mr Battey, and meets at least once a year to review the annual accounts, audit timetable, and other risk management and governance matters.

Statement of Directors' responsibilities in respect of financial statements

The Directors are responsible for preparing financial statements for each financial year which give a true and fair view, in accordance with applicable Guernsey law and International Financial Reporting Standards, of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing those financial statements, the Directors are required to:

§ select suitable accounting policies and then apply them consistently;

§ make judgements and estimates that are reasonable and prudent;

§ state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

§ prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors confirm that they have complied with the above requirements in preparing the financial statements.

The Directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with The Companies (Guernsey) Law, 2008. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Statement of Directors' responsibilities in respect of financial statements (continued)

So far as the Directors are aware, there is no relevant audit information of which the Company's Auditor is unaware, and each Director has taken all the steps that he or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the Company's Auditor is aware of that information.

The maintenance and integrity of the Company's website is the responsibility of the Directors. The work carried out by the Auditor does not involve consideration of these matters and, accordingly, the Auditor accepts no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website. Legislation in the United Kingdom and Guernsey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. To the best of our knowledge, and in accordance with the applicable reporting principles, the financial statements give a true and fair view of the assets, liabilities, financial position, comprehensive income and cash flows of the Company, although there is uncertainty around valuation of the Company's investments in the absence of an established market. The Investment Manager's report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal opportunities and risks associated with the expected development of the Company.

Furthermore, to the best of our knowledge and belief, this annual report includes a fair review of the development and performance of the business and the position of the Company as at 31 December 2014 together with a description of the principal risks and uncertainties that the Company faces.

In accordance with The Companies (Guernsey) Law, 2008, each Director confirms that there is no relevant audit information of which the Company's Auditor is unaware. Each Director also confirms that they have taken all steps they ought to have taken as a Director to make themselves aware of any relevant audit information and to establish that the Company's Auditor is aware of that information.

Independent Auditor

The Auditor, PricewaterhouseCoopers CI LLP, have expressed their willingness to continue in office and a resolution for their re-appointment will be proposed at the forthcoming Annual General Meeting.

Continuation and going concern

In accordance with the Company's Admission Document of 17 December 2007, the Directors convened an extraordinary general meeting of the Company, on 14 November 2013, at which a resolution was proposed that the Company be wound up voluntarily. The resolution was not passed by the Company's members. The Directors shall convene an extraordinary general meeting of the Company every three years from the date of the original meeting at which the winding-up proposal shall again be put to the Company's members.

The Directors have given consideration to the maturity of the Company's existing portfolio, the performance of the portfolio to date, the prospects for future investments and expected future cash flows, and the rejection of the resolution to voluntarily wind up the Company by the shareholders. In addition, the Directors have reviewed the Company's budgets and cash flows for the year ahead and, accordingly, are satisfied on reasonable grounds that it is appropriate to prepare these financial statements on a going concern basis.

Approved by the Board of Directors on 16 March 2015 and signed on their behalf:

RJ Battey

Director

Independent Auditor's Report to the Members of Juridica Investments Limited

Report on the financial statements

We have audited the accompanying financial statements of Juridica Investments Limited (the "Company") which comprise the Statement of Financial Position as of 31 December 2014, the Statement of Comprehensive Income, the Statement of Changes in Equity and the Statement of Cash Flows for the year then ended and a summary of significant accounting policies and other explanatory information.

Directors' responsibility for the financial statements

The Directors are responsible for the preparation of financial statements that give a true and fair view in accordance with International Financial Reporting Standards and with the requirements of Guernsey law. The Directors are also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements give a true and fair view of the financial position of the Company as of 31 December 2014, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards and have been properly prepared in accordance with the requirements of The Companies (Guernsey) Law, 2008.

Emphasis of Matter

Without qualifying our opinion, we draw your attention to Notes 2(d), 3 and 15(a) to the financial statements surrounding the fair value of non-current assets. The financial statements include non-current assets stated at their fair value of US$152,709,726. Due to the inherent uncertainty associated with the valuation of such non-current assets and the absence of a liquid market, these fair values may differ from their realisable values, and the differences could be material.

Report on other legal and regulatory requirements

We read the other information contained in the Annual Report and consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements. The other information comprises only the Corporate Information, the Chairman's Statement, the Investment Manager's report, the Directors' report, the Notice of Annual General Meeting and the Form of Proxy.

In our opinion the information given in the Directors' report is consistent with the financial statements.

This report, including the opinion, has been prepared for and only for the Company's members as a body in accordance with Section 262 of The Companies (Guernsey) Law, 2008 and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

PricewaterhouseCoopers CI LLP

Chartered Accountants

Guernsey, Channel Islands

16 March 2015

STATEMENT OF COMPREHENSIVE INCOME

The notes on pages 27 to 48 form an integral part of these financial statements.

STATEMENT OF FINANCIAL POSITION

These financial statements were approved and authorised for issue by the Board of Directors on 16 March 2015 and signed on its behalf by:

RJ Battey

Director

The notes on pages 27 to 48 form an integral part of these financial statements.

STATEMENT OF CHANGES IN EQUITY

The notes on pages 27 to 48 form an integral part of these financial statements.

STATEMENT OF CASH FLOWS

The notes on pages 27 to 48 form an integral part of these financial statements.

NOTES TO THE FINANCIAL STATEMENTS

1. LEGAL FORM AND PRINCIPAL ACTIVITY

The Company is an authorised closed-ended investment company incorporated under The Companies (Guernsey) Law, 2008 (the "Law"). The Law does not make a distinction between private and public companies. Shares in the Company were admitted to trading on AIM, a market operated by the London Stock Exchange, on 21 December 2007. The address of the Company's registered office is 11 New Street, St Peter Port, Guernsey, Channel Islands, GY1 2PF.

The investment objective of the Company is to build a diversified portfolio of investments in claims and to provide Shareholders with an attractive level of dividends and capital growth through investing directly and indirectly in litigation and arbitration cases, claims and disputes.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

(a) Basis of preparation

The financial statements of the Company have been prepared in accordance with International Financial Reporting Standards ("IFRS") and all applicable requirements of The Companies (Guernsey) Law, 2008. They have been prepared on a going concern basis, under the historical cost convention as modified by the revaluation of financial assets and financial liabilities at fair value through profit or loss.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires the Board of Directors to exercise its judgement in the process of applying the Company's accounting policies. The areas involving a degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 3.

There have been no new IFRS or IFRIC interpretations that are effective for the first time for the financial year beginning 1 January 2014, which have not previously been adopted by the Company.

For the financial year beginning 1 January 2013, the Company had early adopted IFRS 9 'Financial instruments', effective for periods beginning on or after 1 January 2018, and also early adopted the Investment Entities amendments to IFRS 10, IFRS 12 and IAS 27, effective for periods beginning on or after 1 January 2014.

In accordance with the Company's Admission Document of 17 December 2007 and its Articles of Incorporation, the Directors convened an extraordinary general meeting of the Company, on 14 November 2013, at which a resolution was proposed that the Company be wound up voluntarily. As recommended by the Directors, the resolution was not passed by the Company's members. The Directors shall convene an extraordinary general meeting of the Company every three years from the date of this meeting at which the winding-up proposal shall again be put to the Company's members.

The Directors have given consideration to the maturity of the Company's existing portfolio, the performance of the portfolio to date, the prospects for future investments and expected future cash flows, and the rejection of the resolution to voluntarily wind up the Company by the shareholders. In addition, the Directors have reviewed the Company's budgets and cash flows for the year ahead and, accordingly, are satisfied on reasonable grounds that it is appropriate to prepare these financial statements on a going concern basis.

(b) Investment entity

The Company has multiple unrelated investors and indirectly holds multiple investments through the subsidiary companies. Ownership interests in the Company are in the form of redeemable shares which are classified as equity in accordance with IAS 32 and which are exposed to variable returns from changes in the fair value of the Company's net assets. The Company has been deemed to meet the definition of an investment entity per IFRS 10 as the following conditions exist:

(a) The Company has obtained funds for the purpose of providing investors with investment management services.

(b) The Company's business purpose, which was communicated directly to investors, is investing solely for returns from capital appreciation and investment income.

(c) The performance of investments made through the Company are measured and evaluated on a fair value basis.

(c) Geographical and segmental reporting

Since the Company is engaged in the provision of similar products and services within a particular economic environment, being subject to similar risks and returns, the management considers that the Company has only one business segment and geographical focus, being investments in legal claims primarily in the United States (US), and accordingly does not present additional business and geographical segment information. The Investment Manager is responsible for the investment decisions for the Company's entire portfolio and considers the business to have a single operating segment. The Investment Manager's asset allocation decisions are based on a single, integrated investment strategy, and the Company's performance is evaluated on an overall basis.

(d) Financial assets at fair value through profit or loss

i) Contractual interests

Classification

Unless otherwise determined by the Company, investments in claims will be categorised as contractual interests held at fair value through profit or loss. These financial assets will initially be measured as the cash sum provided to acquire an interest in a plaintiff's claim or as the cash advanced to law firms under loan agreements. Attributable due diligence costs are expensed when they occur.

Recognition, derecognition and measurement

Subsequent measurement of contractual interests will be at fair value utilising a fair value model developed by the Investment Manager. The principal assumptions to be used in the fair value model are as follows:

§ Estimated duration of each contractual interest; and

§ Best estimate of anticipated outcome.

Movement in fair value arising on all performing contractual interests is recognised in the Statement of Comprehensive Income, as determined by utilising the fair valuation model.

The fair valuation model is a way of calculating the fair value of a financial asset or liability and of recognising the fair value gains and losses in that period.

Fair value estimation

Fair value will be reviewed semi-annually on an individual case basis. Events that will trigger changes to the fair value of each contractual interest include the following:

§ Changes in general US dollar interest rate assumptions (market assumption) and the time value of money;

§ Changes in any variable relating to a claim including: assessment of probability of successful judgement; range of settlement or award; expected timing until claim resolution; and extrinsic risks related to a claim;

§ Successful judgement of a claim in which the Company has a contractual interest;

§ Unsuccessful judgement of a claim in which the Company has a contractual interest;

§ Outstanding appeals against both successful and unsuccessful judgements;

§ A contractual interest to be sold at a discount or to be settled out of Court by a binding agreement;

§ Legal impediments to collectability of claims (in the US Chapter 7 Bankruptcy or Chapter 11 Court Protection from Creditors); and

§ A case is dismissed with prejudice (meaning, it can never be re-filed anywhere).

Partial settlement

Partial settlement of contractual interests occur when one or more parties, but not all parties, involved in the matter agree to terms on a settlement amount. Proceeds received by the Company are allocated between return of original principal and any gain based on the following process:

§ Proceeds are discounted at a rate equal to the Company's cost of equity;

§ This discounted value represents the portion of proceeds attributable to a return of investment with the remainder representing a gain associated with the partial settlement; and

§ The amount representing the gain is then compared against any prior gain recognised on the portion of the proceeds attributed to a return of investment (calculated by using the fair valuation model) with the difference reflected as current year realised gain or loss.

Full settlement

Full settlement of contractual interests occur when all parties involved in the matter agree to terms on a settlement amount or the full legal process has concluded with either proceeds being awarded or dismissal (no proceeds awarded). Proceeds received by the Company are first allocated to the return of any remaining principal with the remainder allocated to gain. The amount representing the gain is then compared against any prior gain recognised on the portion of the proceeds attributed to a return of investment (calculated by using the fair valuation model) with the difference reflected as current year realised gain or loss.

ii) Equity investments

Classification

The Company classifies its equity investments at fair value through profit or loss at inception. These financial assets will initially be measured as the cash sum provided to acquire the investment. Attributable due diligence costs are expensed when they occur.

Equity investments are intended to be held for an indefinite period of time, and that may be sold in response to needs for liquidity or changes in interest rates, exchange rates or equity prices. The Company could be seen to have significant influence over certain of its equity investments as a result of its stake in each of those assets. If significant influence exists, that investment, under IFRS, should be accounted for as an 'Associate' and hence the equity accounting method should be applied. However, the Board has taken the view that (a) there is no material difference in accounting for these investments as associates and accounting for them as financial assets at fair value; (b) there is no material difference in the disclosure; and (c) the strategy of the Company is to hold investments as part of an investment portfolio with a view to the ultimate realisation of capital gains rather than as a medium to carry out its own business, hence accounting for these investments as non-current assets is the most appropriate method.

Recognition, derecognition and measurement

Equity investments will initially be measured at cost and are subsequently carried at fair value. Gains and losses arising from changes in the fair value are recognised in the Statement of Comprehensive Income.

Fair value estimation

The assessment of fair value is determined by the level of assets of the investments (including intellectual property), the quality of income and earnings and the present value of future cash flows of the equity investments, discounted at the cost of equity.

Settlement

When equity investments are sold or impaired, the movement in fair value will be recognised in the Statement of Comprehensive Income. The estimates and assumptions made by the Investment Manager in determining this fair value have been outlined in Note 3.

iii) Debt securities

Classification

Debt security investments are classified at fair value through profit or loss at inception. These financial assets will initially be measured as the cash sum advanced to the law firm.

Recognition, derecognition and measurement

The debt security investments will initially be measured at cost and are subsequently carried at fair value. Gains and losses arising from changes in the fair value are recognised in the Statement of Comprehensive Income.

Fair value estimation

Fair value is determined by the present value of future cash flows, at the discount rate of the Company.

Settlement

When debt security investments are sold, the movement in fair value will be recognised in the Statement of Comprehensive Income. The estimates and assumptions made by the investment manager in determining this fair value have been outlined in Note 3.

iv) Forward foreign currency contracts

Classification, recognition, derecognition and measurement

Forward foreign currency contracts are classified as financial instruments at fair value through profit or loss at inception. They will initially be measured at the contractual amount at the date the contract is entered in to. Accordingly, only gains and losses arising from changes in the fair value are recognised in the Statement of Comprehensive Income.

Fair value estimation

Fair value is determined by the foreign currency exchange rate prevailing at that date.

Settlement

Settlement will occur at the date the contract is due to expire. Gains and losses on the settlement of the contracts will be recognised as realised gains or losses at this time in the Statement of Comprehensive Income.

(e) Due diligence and transaction costs

The due diligence and transaction costs attributable to investments in contractual interests, equity investments and debt securities, and any other due diligence and transaction costs not directly relating to an investment, have been expensed immediately in the Statement of Comprehensive Income.

Due diligence and transaction costs associated with investments characterised as intangible assets are expensed until such time as the following has been affirmed: i) the technical feasibility of completing the intangible so that it will be available for use or sale; ii) the intention to complete the intangible asset and use or sell it; iii) the ability to use or sell the intangible asset; iv) how the intangible asset will generate probable future economic benefits; v) the availability of adequate technical, financial and other resources to complete the development and to use or sell the asset; and vi) the ability to measure reliably the expenditure attributable to the intangible asset during its development, at which time they are capitalised as an intangible asset and held at cost less accumulated amortisation and any impairment loss.

(f) Foreign currency

Functional and presentation currency

Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates (the "functional currency"). The functional currency of the Company as determined in accordance with IFRS is the United States Dollar ("US Dollar") because this is the currency that best reflects the economic substance of the underlying events and circumstances of the Company. The financial statements are presented in US Dollars, the presentation currency.

Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rate prevailing at the date of the transaction. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Statement of Comprehensive Income.

(g) Finance income

Finance income arising on cash and cash equivalents is recognised in the Statement of Comprehensive Income on the effective interest basis.

(h) Cash and cash equivalents

Cash and cash equivalents comprise of cash balances and deposits held at banks with a maturity profile of 3 months or less.

(i) Taxation

The Company has obtained exempt company status in Guernsey. The Company is, therefore, only liable to an annual exemption fee of £600. The Company's subsidiaries are subject to income tax in their respective jurisdictions.

To the extent that any foreign withholding taxes or any form of profits taxes become payable, these will be accrued on the basis of the event that created the liability to taxation.

(j) Expenses

Expenses are accounted for on an accruals basis. Expenses for monitoring claims will generally be paid by the Investment Manager except in extraordinary circumstances approved by the Board of Directors of the Company.

(k) Dividends

Dividends declared during the period will be disclosed directly in equity via the Statement of Changes in Equity. A final dividend proposed by the Board and approved by the shareholders prior to the year end will be disclosed as a liability. Dividends proposed and not approved will be disclosed in the Notes.

(l) Other receivables and prepayments

Other receivables and prepayments are recognised initially at fair value and subsequently measured at cost less provision for impairment.

(m) Other payables

Other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest rate method.

(n) Capital and reserves

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity via the reserves as a deduction from the issue proceeds.

Where any group company purchases the Company's equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the Company's equity holders until the shares are cancelled or reissued. Where such ordinary shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the Company's equity holders.

(o) Intangible asset

Where the Company has entered into an agency agreement involving licensing of intellectual property, the resulting transaction will be categorised as an intangible asset (see Note 4). The cost of the intangible asset will be capitalised once it is possible to demonstrate that the intangible asset will generate probable future economic benefit. Intangible assets will be held at cost less any accumulated amortisation and any accumulated impairment losses. Amortisation will be on a systematic basis over the asset's useful life.

(p) Impairment of intangible assets

The carrying amounts of intangible assets are assessed on a semi-annual basis to determine whether there is any indication of impairment. If such indication exists, the Company estimates the recoverable amount of the asset, being the higher of the asset's net selling price and its value in use. Any impairment loss is recognised for the amount which the asset's recoverable amount is lower than its carrying value and the difference being taken to the Statement of Comprehensive Income.

The Company first assesses whether objective evidence of impairment exists. In assessing value in use, the estimated future cash flows are discounted to their present value using the discount rate that reflects current assessment of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

The amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows. The carrying amount of the asset is reduced and the amount of the loss is recognised in the Statement of Comprehensive Income.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the reversal of the previously recognised impairment loss is recognised in the Statement of Comprehensive Income. In the year ended 31 December 2014 there were no impairments (2013: US$Nil).

(q) Share-based payments transactions

The Company engages in equity settled share-based payment transactions in respect of the services received from one of its Directors and from Cenkos Securities PLC ("Nominated Adviser and Broker") as set out in the Company's Admission Document. The fair value of the services received is measured by reference to the fair value of the shares or share options granted on the date of the grant. The fair value of the share options is recognised in the Statement of Comprehensive Income over the period that the services are received, which is the vesting period.

The fair value of the options granted is determined using the Black-Scholes option pricing model, which takes into account the exercise price of the option, the current share price, the risk free interest rate, the expected volatility of the share price over the life of the option and other relevant factors. Except for those which include terms relating to market conditions, vesting conditions included in the terms of the grant are not taken into account in estimating the fair value.

Non-market vesting conditions are taken into account by adjusting the number of shares or share options included in the measurement of the cost of the services so that, ultimately, the amount recognised in the Statement of Comprehensive Income reflects the number of vested shares or share options. Where vesting conditions are related to market conditions, the charges for the services received are recognised regardless of whether or not the market conditions-related vesting condition is met, provided that the non-market vesting conditions are met.

(r) Earnings per share

The basic earnings per share value is calculated by taking the total comprehensive income/loss for the period and dividing it by the weighted average number of ordinary shares in issue over the period. The diluted earnings per share figure is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares (see Note 14(f)).

(s) Net asset value per share

Net asset value per share is calculated by taking the net assets attributable to ordinary shareholders and dividing it by the number of shares in issue at the year end.

3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

The Investment Manager makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities are outlined below.

Critical accounting judgements in applying the Company's accounting policies

The Company makes investments in claims that may involve litigation. The nature of the investments made by the Company reduces by some predetermined amount the cost of litigating a matter to a plaintiff and/or a law firm. A typical investment by the Company will include cash and may also include cash commitments subject to certain restrictions. In most arrangements, the Company is paid only from proceeds generated from the litigation and any related settlement or award. If a lawsuit fails to generate any proceeds and all legal remedies are exhausted, the Company will often not be entitled to reimbursement of the facility they advanced to the counterparty for the specific claim. In these cases the Company will write off their investment in the claim as a loss. The Company is compensated for this risk through the return structure built into the investment. The Company mitigates this risk through the use of their Investment Manager which is experienced in evaluating the investment worthiness of a particular opportunity.

In the process of applying the Company's accounting policies, which are described in Note 2, the Directors have relied upon the Investment Manager's assessment of the fair value of contractual interests including the probability of success on the merits of each claim, likelihood of settlement and claim duration. This is most evident in the assessment of the fair value applied to contracts entered into by the Company, as disclosed in Note 5.

To determine the appropriate fair value to apply to each contract, the Investment Manager follows a formal process of developing a set of scenarios for each case and assigns probabilities to each potential outcome. The probabilities are phased based on the expected progression path of each particular case. In addition, each potential successful scenario has a range of likely settlement proceeds assigned to it as well as a most likely resolution or settlement date. The scenarios not only incorporate the merits of each particular case but also consider known risks intrinsic to the particular matter, as well as general risks found in any litigation matter.

The Investment Manager then runs a Monte-Carlo method analysis which dictates that the Investment Manager runs algorithms that rely on random sampling based on the variables within each scenario and their related probabilities. The results of the analysis provide expected outcomes and other statistical data which is used to calculate the future valuation of each particular contractual interest. A discount rate is then applied to the future value to determine the current fair value.

Determining whether intangible assets are impaired requires an estimation of the future cash flows of the intangible assets, and the use of a suitable discount rate in order to calculate present value. The carrying amount of the intangible assets is shown in Note 4. As at 31 December 2014, no impairment has been recognised.

4. INTANGIBLE ASSET

The Company's intangible asset comprises an investment structured as an agency agreement. Additions to the intangible asset during the first half of the year are deemed to have occurred at 30 June 2014 and additions during the second half of the year are deemed to have occurred at 31 December 2014. The Company amortises the intangible asset on a diminishing balance basis at a rate of 16.7 per cent every 6 months. The Directors consider that the diminishing balance basis of amortisation most accurately reflects the pattern in which the asset's future economic benefits are expected to be consumed by the Company.

In addition, the Company purchased common and preferred stock related to the intangible asset in 2012, which has been classified as a financial asset at fair value through profit or loss (Note 5). As at 31 December 2014 a cost of US$1,602,510 is deemed an appropriate approximation of fair value (31 December 2013: US$1,602,510) for the financial asset. No provision for impairment is deemed to be required.

5. FINANCIAL ASSETS AND FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT AND LOSS

a) Contractual interests

Contractual interests have been accounted for using the fair value model. At 31 December 2014, the Company had investments in 12 contractual interests (31 December 2013: 11 contractual interests).

Fair value movements of contractual interests are due to amendments in estimated cash flows arising from changes in expectations surrounding each case. The valuation of the Company's contractual interests increased by approximately US$7.4 million reflecting the net of US$10.7 million in additional investment funding, and US$3.3 million net decrease due to each investment's individual change in fair value. The valuation of the Company's contractual interest investments includes a new investment through the Company's new subsidiary Juridica Sports Technology LLC, as disclosed in Note 7.

b) Equity investments

The Company's equity investments include a holding in JCML 2007 Limited ("JCML"). The fair value of the Company's investment in JCML was assessed as at 31 December 2014 to be US$6,113,741 (31 December 2013: US$5,501,158). This assessment of fair value is deemed appropriate given the investment in the company, the level of assets (including intellectual property), and the quality of income and earnings and the projection of future cash flows. The valuation of the Company's equity investments increased by approximately US$0.1 million reflecting the net of US$1.2 million in additional investment funding, and US$1.1 million net decrease in each investment's individual change in fair value.

c) Debt securities

Note 14(d) details arrangements between the Company and Fields Law PLLC ("Fields Law"). The Loan and the Swap have been aggregated and treated as a single claim asset. Returns on the Loan and the Swap are dependent on returns in claims financed by Fields Law.

During the year, the Company was due settlement and other revenue related activity totalling US$73.9 million (31 December 2013: US$30.0 million) from its debt securities. Approximately US$36.4 million of this revenue was previously recognised as unrealised income in current and prior years through fair value movements, approximately US$27.5 million was recognised during the current year as a realised gain, and US$10.0 million was applied as a reduction in the principal balance of the loan.

Fair value movements of debt securities are due to amendments in estimated cash flows arising from changes in expectations surrounding each investment. The valuation of the Company's debt securities decreased by approximately US$46.8 million reflecting the net of US$1.0 million in additional investment funding, US$73.9 million in proceeds transferred to the Company (a portion of which was received by the Company on 30 December 2014 and a portion of which was received by the Company on 12 January 2015), a US$1.4 million decrease in the fair value and realised gains of US$27.5 million.

d) Forward foreign currency contracts

The company held one forward foreign currency contract at 31 December 2014 (31 December 2013: two). The contracts held at 31 December 2014 and 31 December 2013 were in place to settle declared dividend distributions in Sterling, and were settled prior to payment of the distributions in January 2015 and January 2014 respectively. The contract is matched to a Sterling dividend liability of the same value (Note 9). On settlement of the two contracts during 2014 the Company received proceeds of approximately US$1.3 million, which is included as a realised gain on the Statement of Comprehensive Income.

6. FAIR VALUE ESTIMATION

For instruments for which there is no active market and for which reliable pricing sources cannot be obtained, the Company may use internally developed models, which are usually based on valuation methods and techniques generally recognised as standard within the industry. Valuation models are used primarily to value unlisted equity, debt securities and other debt instruments for which markets are or have been inactive during the financial year. Some of the inputs to these models may not be market observable and are therefore estimated based on assumptions.

The carrying value less impairment provision of other receivables and payables are assumed to approximate their fair values.

IFRS 13 requires the Company to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:

§ Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).

§ Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2).

§ Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).

The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a level 3 measurement. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgement, considering factors specific to the asset or liability.

The determination of what constitutes 'observable' requires significant judgement by the Company. The Company considers observable data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.

Investments classified within level 3 have significant unobservable inputs, as they trade infrequently. Level 3 instruments include equity securities. As observable prices are not available for these securities, the Company has used valuation techniques to derive their fair value.

The Company's investment in forward exchange contracts are classified as level 2, all of the Company's other financial assets and liabilities are classified as level 3.

There were no transfers between levels for the year ended 31 December 2014 (31 December 2013: Nil). Note 5 outlines the movement within levels during the year.

The Company has identified three key unobservable inputs to the valuation model used in the valuation of investments held at fair value through profit or loss: expected quantum, expected duration, and cost of equity.

Expected quantum

The greater the quantum expected at conclusion, the greater the valuation at any point in time, other than at conclusion. The reduction of the quantum expected at conclusion, will reduce the valuation at any point in time, other than at conclusion.

Expected duration

The greater the expected duration of an investment, the lower the valuation at any point in time, other than at conclusion. The reduction of the expected duration of an investment will increase the valuation at any point in time, other than at conclusion.

Cost of equity

The Company's cost of equity is 11%. As the Company's cost of equity decreases, the valuations at any point in time will increase, other than at conclusion. As the Company's cost of equity increases, the valuations at any point in time will decrease, other than at conclusion.

The following table summarises the sensitivities:

7. UNCONSOLIDATED SUBSIDIARY INVESTMENTS

The following subsidiary investments are held by the Company but have not been consolidated, following the Investment Entities exemption per IFRS 10 (see Note 2 (b)):

There are no outstanding commitments with these unconsolidated subsidiaries at the year end, other than those disclosed in Note 11.

8. OTHER RECEIVABLES AND PREPAYMENTS

9. DIVIDENDS

The following dividends were declared during the year:

At 31 December 2014, dividends totalling US$34,491,900 (31 December 2013: US$25,674,394) had been declared and were payable.

One forward currency exchange contract was taken out at the date of declaration of dividends to manage the exposure to fluctuations in foreign currency exchange rates, as detailed in Note 5(d).

10. OTHER PAYABLES

11. COMMITMENTS & GUARANTEES

Under the terms of some of its contracts, the Company provides a line of credit to counterparties. As at 31 December 2014, the maximum commitment under these lines of credit was US$18.1 million (31 December 2013: US$5.8 million).

12. FUNCTIONAL AND PRESENTATION CURRENCY / EXCHANGE RATES

The financial statements are presented in United States Dollar ("US$") which is also the Company's functional currency. The following rate was applicable as at 31 December:

13. CAPITAL AND RESERVES

Authorised share capital: Unlimited number of ordinary shares of no par value ("shares").

Issued share capital: 110,701,754 shares as of 31 December 2014 (31 December 2013: 110,701,754 shares), of which 80,000,000 shares were issued at a premium of £1 per share on admission, and a further 30,701,754 shares issued at a premium of £1.14 on 6 April 2009. Under a Share Buyback Programme, the Company acquired 6,000,000 shares at a price of £1.02 per share on 3 November 2010, and the Company also received 126,607 of its own shares subsequent to an in-specie dividend received from the previous Investment Manager, JCML, on 27 November 2013. These shares were held in treasury, however were subsequently sold for a premium at £1.39. As at 31 December 2014, the number of shares held in treasury was nil (31 December 2013: nil).

The Company's capital is represented by ordinary shares of no par value and share premium. Each share carries one vote and is entitled to dividends when declared. The relevant movements in capital are shown on the statement of changes in equity through reserves.

The Company has authority to make market purchases of up to 14.99 per cent of its own issued ordinary shares. This authority was renewed at the annual general meeting of the Company held on 30 April 2014. A renewal of the authority to make purchases of ordinary shares will be sought from Shareholders at each annual general meeting of the Company. The timing of any purchases will be decided by the Board.

14. RELATED PARTY TRANSACTIONS

Richard Battey, as investor representative and non-executive director of the Company, is also a non-executive director of JCML. The principal of JCML is Richard Fields, who owns 257,545 Ordinary Shares in the Company (0.233 per cent equity interest) (2013: 232,545), which include 50,000 Ordinary Shares in the Company as reimbursement of £100,000 of pre-IPO costs. JCML owns 1,118,254 Ordinary Shares in the Company (1.010 per cent equity interest) (31 December 2013: 1,118,254 shares). Mr Fields is also sole beneficial owner of Juridica Asset Management Limited ("JAML").

a) Management fee

JAML replaced JCML as Investment Manager, effective 1 January 2014. From this date, JAML is entitled to a management fee of 2 per cent of the adjusted net asset value of the Company. Prior to this date, all management fees were payable to JCML.

The adjusted net asset value is the net asset value of the Company at the relevant time will be calculated, after accruing for the annual management fee but not taking into account any liability of the Company for accrued performance fees and after:

(i) deducting any unrealised gains on non-current assets; and

(ii) adding the amount of any write downs with respect to contractual interests which have not been written off.

In the year ended 31 December 2014, JAML was entitled to investment management fees totalling US$5,768,668 (31 December 2013: US$Nil) of which US$1,114,196 remained payable as at 31 December 2014 (31 December 2013: US$Nil). In the year ended 31 December 2014, JCML received investment management fees of US$103,807 in relation to services provided in the year ended 31 December 2013 (31 December 2013: US$5,153,580) of which US$Nil remained payable as at 31 December 2014 (31 December 2013: US$18,506 receivable by the Company).

b) Investment in JCML 2007 Limited

The Company acquired 15 per cent of JCML on Admission, which was subsequently diluted to 13.6 per cent by the exercise of share options by certain of JCML's employees. In 2012, the Company acquired a further holding in JCML, taking the Company's overall holding in JCML to 36.17 per cent. An impairment review of JCML has been performed as part of the fair value assessment and continues to be carried out on a semi-annual basis.

c) Performance fee

Under the terms of the Management Agreement, JCML, as Investment Manager, was entitled to a performance fee based on the adjusted net asset value ("ANAV") (being the NAV of the Company before taking into account any performance fee payable less any unrealised gains on investments plus the value of any write downs in any investments that have been written down but not written off) of the Company. The performance fee payable was for an amount equal to the sum of: (i) 20 per cent of the amount by which the ANAV exceeded a 8 per cent annually compounding hurdle but was less than an amount equal to a 20 per cent annually compounding hurdle; (ii) 35 per cent of the amount by which the ANAV exceeded a 20 per cent annually compounding hurdle but was less than an amount equal to a 40 per cent annually compounding hurdle; and (iii) 50 per cent of the amount by which the ANAV exceeded a 40 per cent annually compounding hurdle.

The performance fee was subject to a high water mark such that no performance fee will be paid if the performance of the Company does not exceed the NAV at the end of the previous year in which the performance fee was paid.

As at 31 December 2014, the minimum hurdle rate (which is based on the adjusted net asset value) had been achieved on investments attributable to JCML. A performance fee was payable to JCML of US$14,511,058 for the year ended 31 December 2014 (31 December 2013: US$Nil), of which US$14,511,058 remained payable at the year end (31 December 2013: US$Nil). JCML will continue to be entitled to a performance fee in the future in respect of investments made prior to the termination of its appointment on 31 December 2013.

JAML replaced JCML as Investment Manager with effect from 1 January 2014. For financial periods following this date, any performance fee payable on investments will be calculated based on the date on which investments were made, and attributable to JCML for investments held at 31 December 2013, and to JAML for all new investments. JAML will become entitled to a performance fee of 20 per cent of the annualised increase in the adjusted net asset value over the hurdle rate. As at 31 December 2014, this hurdle rate had not been achieved on investments attributable to JAML.

d) Facility agreement and collateral account

The Company has entered into a facility agreement (the "Facility") with which it agrees to loan to Fields Law, a law firm in which Richard Fields is a partner, money for funding cases in which Fields Law is to act under a Co-counsel Agreement. The Company expects to enter into loan arrangements with other law firms (which may include other law firms established by the Principal of the Company) on terms and conditions similar to those contained in the Facility. The Facility available to Fields Law will be for up to approximately 50 per cent of the net proceeds of the capital raised by the Company less any loans made to other law firms.

The Facility will remain outstanding and available until the earlier of (i) the termination of the Management Agreement with JAML, (ii) the date on which Richard Fields ceases to own a controlling interest in Fields Law, (iii) the winding up of the Company, (iv) an event of default of the Facility documents, or (v) ten years from Admission. Under the Facility, drawdowns may be requested by Fields Law from time to time up to the maximum principal amount but subject always to approval by the Company in its sole discretion.

No more than US$10 million may be drawn down in respect of the same case investment, unless otherwise approved by the Company.

e) Administration fees

The Company entered into an administration agreement with Legis Fund Services Limited (the "Administrator"), now Orangefield Legis Fund Services Limited. Fees payable to the Administrator for the year were US$300,309 (31 December 2013: $60,038), of which US$33,920 remained payable as at 31 December 2014 (31 December 2013: US$16,214).

f) Directors' fees and expenses

No pension contributions were paid or were payable on behalf of the Directors.

Lord Daniel Brennan has an interest in 447,817 shares (31 December 2013: 447,817 shares) under a Share Option Agreement, details of which were disclosed in the Admission Document. Lord Brennan can exercise these share options at any time up until 17 December 2017.

The other Directors have no beneficial interest in the share capital of the Company.

g) Eleven Engineering Game Control LLC

The Company has provided a loan of US$575,000 to Eleven Engineering Game Control LLC, a company ultimately owned and controlled by JCML (31 December 2013: US$575,000). As at 31 December 2014 no further facility remains available to be drawn (31 December 2013: US$Nil). Interest will be accrued at a rate of 10% per annum, and the loan and interest are repayable on Eleven Engineering Game Control LLC's receipt of net recoveries.

h) Escon Capital Inc.

The Company has an interest in 38% (31 December 2013: 38%) of the voting common stock and 100% of the issued preference shares of Escon Capital, Inc. ("Escon"), a Delaware corporation of which Kermit Birchfield and Richard Fields are directors.

Kermit Birchfield and Richard Fields each receive a fee from Escon. Mr Birchfield receives a director's fee of US$50,000 per annum, and Mr Fields receives an employment fee of US$12,000. During the year to 31 December 2013, Juridica Asset Management US Inc ("JAMUS") received a fee from Escon for overhead support of US$260,000.The overhead support agreement was terminated with effect from 30 June 2013 and no payments were made during this year. JAMUS is a company ultimately owned by Richard Fields (from 1 January 2014, formerly owned by JCML).

15. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

a) Investment risk

There is no established market for the Company's assets. The Investment Manager's assessment of the quantum and timing of returns is subjective and based on the Investment Manager's experience and due diligence. The estimates of the outcome and financial effect on the Company of the assets are determined by the judgement of the Investment Manager. In coming to its best estimate of fair value, the Investment Manager has estimated the probability, timing and quantum of particular outcomes.

b) Cash flow and fair value interest rate risk

Interest rate risk arises from the effects of fluctuations in the prevailing levels of market interest rate on the fair value of financial assets and liabilities and future cash flows. The Company holds fixed and variable rate interest securities that expose the Company to fair value interest rate risk. For 2014, debt securities were fixed at a regular interest rate of 13.5%, until 15 December 2014 when the relevant interest rate was increased to 15.0%.

The Company is exposed to interest rate risk related to its cash balances. The Company does not actively manage this risk.

At 31 December 2014, if variable interest rates had moved by 75 basis points with all other variables remaining constant, the change in net assets attributable to holders of ordinary shares for the year would amount to approximately +/- US$209,722 (31 December 2013: +/- US$362,797), arising substantially from the cash and cash equivalents. No interest was receivable on the collateral cash deposit.

c) Credit risk

The Company is exposed to credit risk, which is the risk that a counterparty will be unable to pay amounts in full when they fall due.

The Company has in place various policies and procedures to guide the Investment Manager's evaluation and management of investment opportunities and, particularly, the credit risk associated with investment counterparties (law firms and claim interest holders) and investments. The policies include Investment Restrictions (which contain prohibitions on pursuing investments with certain kinds of claims and claim holders, those being prosecuted by certain law firms, and those where collection, counterparty or compliance risk is significant), Investment Policies (which contain guidelines for diversification of the Company's portfolio based on certain claimholder characteristics, jurisdiction(s) involved, prosecuting law firm, claim size and investment structure), and Investment Process Guidelines (which define the due diligence, investment and investment monitoring processes to be followed by the Investment Manager in claim evaluation, valuation and investment completion). Collectively, these Investment Parameters are designed to guide the investment opportunity analysis so to limit credit, collection and portfolio concentration risks associated with Company investments. In addition, the Investment Manager has, pursuant to its own Underwriting Guidelines, developed and implemented systems and procedures to analyse and (pursuant to investment contracts) manage credit risk associated with Company investments.

The main concentration to which the Company is exposed arises from the Company's loan to Fields Law. The Company is also exposed to counterparty credit risk on trading contractual interests, cash and cash equivalents and other receivables.

In accordance with the Company's policy, the Investment Manager monitors the Company's credit position on a daily basis, and the Board of Directors reviews it on a quarterly basis.

The Company is also exposed to material credit risk in respect of the contractual interests and cash and cash equivalents. The credit risk of the cash and cash equivalents is mitigated as all cash is placed with reputable banking institutions with a sound credit rating. The maximum credit risk exposure represented by total assets is as stated in the Statement of Financial Position which amounted to US$235,265,815 (31 December 2013: US$249,519,186).

d) Concentration risk

The Company seeks to minimise concentration risk by investing in a diverse portfolio of contractual interests through a number of different law firms, including interests in antitrust, patent, property damage, insurance subrogation, shareholder dispute, contract claim and arbitration cases.

The Company further seeks to minimise concentration risk by utilising a variety of Investment Parameters which are designed to guide the investment opportunity analysis so as to minimise, amongst other things, concentration risk. These Investment Parameters are further detailed in Note 15(c).

e) Liquidity risk

The Company is exposed to liquidity risk. The contractual interests are acquisition of claims, as well as loans to lawyers to fund participation in claims on a contingency fee basis, and therefore require significant capital contribution with little or no immediate return and no guarantee of return or repayment. The market for such contractual interests is not active. In the opinion of the Directors the current liquidity risk at 31 December 2014 is low as cash and cash equivalents exceed unmatched liabilities or other contractual commitments.

f) Capital risk management

The capital of the Company is represented by the net assets attributable to holders of ordinary shares. The Company's objectives when managing this risk are to safeguard the Company's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain a strong capital base to support the development of the investment activities of the Company.

The Company is closed-ended and therefore the capital risk is reduced as shareholder funds are locked in until the closure of the Company. The level of capital funding is monitored by the Board of Directors, who will ensure adequate solvency is in place prior to making distributions.

g) Foreign currency risk

Foreign currency risk is the risk that the value of a financial instrument will fluctuate because of changes in foreign exchange rates.

The Company's policy, generally, is not to manage exposure to foreign exchange movements (both monetary and non-monetary) by entering into any foreign exchange hedging transactions. However, the Company did enter into a forward currency contract, maturing 14 January 2015, to lock in the US dollar equivalent of the dividends declared during the year, which were paid to shareholders on 14 January 2015. The Directors considered that this was a prudent step in order to mitigate the cash flow impact of adverse exchange rate fluctuations on the amount of the dividends, which were declared in GBP.

The Company holds assets denominated in currencies other than the US dollar, the functional currency. It is therefore exposed to currency risk, as values of the assets denominated in other currencies will fluctuate due to changes in exchange rates. The Company may hedge future investment opportunities in the functional currency.

As at 31 December 2014, a proportion of the net financial assets of the Company are denominated in currencies as follows:

At 31 December 2014, if exchanges rates had moved by 5% with all other variables remaining constant, the change in net assets attributable to holders of ordinary shares for the year would amount to approximately +/- US$611,121 (31 December 2013: +/- US$996,321). Management assesses the risk of exposure to the general banking system, and specific banks, and invests cash in US government securities when there is perceived risk to principal.

h) Fair value estimation

The fair value of financial assets and liabilities that are not traded in an active market is determined by using valuation techniques. See Note 6 for further details.

The carrying value less impairment provision of other receivables and payables is assumed to approximate their fair value. The fair value of financial liabilities for disclosure purposes is not discounted as the Company does not expect there to be any material differences.

16. NET ASSET VALUE ATTRIBUTABLE TO EACH ORDINARY SHARE

The net asset value attributable to each ordinary share is calculated by dividing the net asset value attributable to ordinary shareholders of US$184,158,780 (31 December 2013: US$223,646,120) by the 110,701,754 ordinary shares in issue at 31 December 2014 (31 December 2013: 110,701,754).

17. SUBSEQUENT EVENTS

Following the year end, proceeds of US$13,082,726 were received by the Company in relation to settlement of two contractual interest investments. Of this amount US$8,462,726 was received as a return of capital and US$4,620,000 million was received on an investment of US$3,000,000 million in a legal fee receivable made at year end 2014.