What: Litigation funder IMF Bentham Ltd (ASX: IMF) released its half-year profit results after the market's close on Monday, revealing a massive lift in income and profits compared to the same period in 2014.
So What: Over the period, a total of 10 cases were concluded (compared to just two in the corresponding period), which helped the company grow net profit by 152% to $23.01 million on the back of a 131% lift in total income from litigation contracts to $77.64 million. Meanwhile, it improved its cash position considerably to $134.4 million as at 31 December 2014 (from $105.58 million at 30 June 2014), and kept its interim dividend at 5 cents per share.
As impressive as the report may seem at first glance; investors need to remember just how erratic earnings can be in the litigation industry. In the 2014 financial year for instance, net profit fell 29% which resulted in a 41% fall in earnings per share (EPS). For this reason, the company does not provide forecasts for future periods, but did state that it had commenced nine new cases during the period which have a maximum claim value of $221 million as at 31 December 2014.
IMF Bentham isn't the only legal company posting strong results today with Slater & Gordon Limited (ASX: SGH) also lifting profit and revenues by 46.5% and 37.6% respectively.
Now What: Despite the lumpy earnings, IMF Bentham is a well-run company which continues to expand internationally, whilst also improving its reputation for success. While the stock is trading at a 52-week high of $2.26, it could still deliver excellent returns for investors over the coming years.
An even better bet than IMF Bentham
