RBG Holdings, the U.K. professional-services group, has announced that it will suspend its dividend policy in order to focus on reducing its £6.5 million ($8.4 million) loan. Additionally, the economic environment is causing delays in transactions at the company's Convex Capital business.
As a result of these developments, the company's shares took a hit, falling by 21% to 20 pence at 0825 GMT.
Despite the challenges, RBG Holdings remains optimistic about its prospects. Its Convex Capital business currently has a strong pipeline of 18 deals as of July 1, and the company expects deal flow to be more consistent in the second half of the year. As a result, RBG Holdings anticipates adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for the year to be in the range of £10 million to £12 million. This is a decrease from £15.8 million in 2022.
In addition to the suspension of the dividend policy, RBG Holdings has made the decision to write down the value of all remaining cases on the RBG Legal Services business balance sheet to zero. This write-down follows the failure of one of the cases, known as Project Shango. The total non-cash write-off will amount to £13.3 million. However, any successful outcomes from the remaining cases will be recorded as revenue for the group. Project Shango alone accounted for £9.3 million of the current carrying value of the remaining cases.
RBG Holdings is taking these measures in order to navigate through the challenging economic environment and maintain financial stability.