4C Report - December Half Year 1/4 ly, page-5

Thank you for that work. You have been hard at it.

I do hope I can give your reckoning some fuller thought and justice. Particularly the transition from the CASE INVESTMENT PORTFOLIO, to the all important Litigation Revenue. Give me a some time please

I can add this from a first glance of your figures
Litigation Revenue: $505,545,000 [I'll comment later If I may]
Litigation Expense: $197,789,869 [note 1]
Net Revenue: $307,755,131
Less: Losses and with $38,377,139 [note 2]

Litigation Revenue can oscillate radically year to year. But more later.

Note 1 :- Over the last 7 years this has been very close to your estimate of 39% HOWEVER please note that this is a very asymmetric and very volatile average. It can oscillate radically year to year 2010 (49.2%) to 2016 (22.6%)

Note 2 Losses and with:- I have this parsed with two disclosures

a) - LCIP Written Down. These are the cases that go nowhere, yet IMF Bentham has run some preparatory expense. This too is a volatile average but over seven years this average is 4.9%

Applied to $505.5 m = $24.7 m

b) - Lost Appeals.

This is a new phenomenon. For many years IMF-Bentham NEVER had a ruling or award overturned. But then... the legal fraternity has taken it upon itself to task & query IMF-Bentham judgements, and over the last three years, done so quite successfully! Lost appeals have averaged 21,6% against prior year Judgements & Settlements.

One has to consider this, as the courts are a small community, and word gets out, and the precedents read, lawyers start counter suing. This to me signals further Lost Appeals, until it is normalised.

Applied to $505.5 m = $109.2 m

Finally Overheads $30.0 m p.a. That is last year's overheads 2016.

However :-

a) we know that IMF-Bentham increased their Case Investmeny by 50% the in one quarter - last five quarters ago.

I understand IMF-Bentham work is preparatory at the outset, and it is only in court sittings that the costlier silks are rolled out.

b) IMF-Bentham's Case Investment is now more than 50% offshore (American) based, and yet we have almost NO resolved cases from overseas (including Canada & Hong Kong) yet.

While IMF-Bentham is an old-salt in Australia, it is all virgin territory overseas. New jurisdiction, new legal history, new procedures, new staff - so to mind I am expecting external consultants will be needed to advise on matters there, that are procedural, operational well understood & rather old hat here.

I am inclined to think that $30.0 is particularly optimistic estimate into 2017, 2018 & 2019

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"external portion of the intangibles."

I am not sure how you establish your cut offs here?

Cheers