TIDMMANO
RNS Number : 9513S
Manolete Partners PLC
14 March 2023
14 March 2023
Manolete Partners PLC
("Manolete" or the "Company")
Trading Update
Manolete Partners plc (AIM:MANO), the leading quoted UK
insolvency litigation financing company, is pleased to provide the
following update on trading for the year ending 31 March 2023
("FY23").
Since the announcement of the Company's unaudited interim
results in November 2022, trading has continued to rebound
strongly. All figures below are subject to audit.
1. Record New Case Investments
As at the time of writing, the number of new case investments
for FY23 year to date ("FY23 YTD") is 246, 55% higher than the 159
new case investments for the whole of FY22. The FY23 YTD number is
already the highest Manolete has ever recorded.
As explained in the interim results, the first half of FY23 was
still impacted by the UK Government's temporary suppression of UK
insolvencies that only ended in March 2022, such that for H1 FY23
we recorded 83 new case investments (H1 FY22: 78). The record
number for new case investments in FY23 is therefore overwhelmingly
driven by the particularly strong performance in the second half of
FY23: 163 new case investments, which is 96% higher than H1 FY23
and 101% higher than H2 FY22. Indeed, the 163 cases signed so far
in H2 FY23 is more than the Company signed in the whole 12 months
of FY22.
During its lifetime, Manolete has now invested in over 1,000 UK
insolvency litigation claims, over 80% of which Manolete has
purchased rather than funded. In more recent years, due to
favourable legal changes, over 90% of cases have been
purchased.
2. Record Case Completions
For the current FY23 YTD Manolete has already completed a record
number of cases: 168 (FY22: 139 completed cases) representing an
aggregate of GBP28.8m (FY22: GBP15.3m) comprising predominantly
legally binding settlements plus a small number of favourable Court
judgments. This record level of completed cases will drive cash
income for the foreseeable future, as the Company collects in the
cash owed by defendants on these matters.
3. Record Cash Recoveries
With two weeks to go until the year end, Manolete has delivered
record gross cash recoveries from previously completed cases of
GBP26.2m, 69% higher than the GBP15.5m for FY22. The GBP26.2m is
spread across 227 separate completed cases (FY22: 183) at an
average of GBP115k per case (FY22: GBP85k).
After all of the business's running costs (principally salaries
and overheads) and after legal fees and the Insolvent Estate's
share of our case recoveries, but before new case investments,
taxation, dividends and interest, as at the end of February 2023
Manolete has generated GBP8.7m of net cash, representing a 179%
increase compared to the comparable 11 month period for FY22 of
GBP3.1m.
For the 11 months ended 28 February 2023, after all costs
(including new case investments, taxation, dividends and interest),
the Company generated GBP2.4m of net free cashflow compared to a
net outflow of GBP5.1m for the comparable 11-month period for
FY22.
4. The UK Bounce Back Loan ("BBL") Opportunity
As previously announced, the Company is working on a pilot with
Barclays Bank to assist in the recovery of Bounce Back Loans that
appear to have been misappropriated by a number of company
directors. 119 companies were included in the Barclays pilot and,
so far, 45 cases have been assigned to Manolete, in the early
months of this calendar year. Of those 45 cases, Manolete has
already settled three cases and has offers from Directors to settle
on a further seven cases. In all but one of those combined 10 cases
the Directors have offered, or agreed to re-pay, the full amount of
the mis-appropriated BBL. This is encouraging progress as the
Manolete team have only had access to these cases for a few
weeks.
The Company is now in advanced discussions with another major UK
high street bank regarding running a separate BBL recovery pilot
programme for that institution.
While still at a relatively early stage, the BBL recovery
opportunity is potentially highly significant. The Board are
confident that the Company's business model is the best route to
optimising recoveries in this important area. Prior to Manolete's
involvement, certain banks had only managed to achieve a 0.14%
recovery on mis-appropriated BBLs.
5. Truck Cartel Cases
The judgments on the British Telecom and Royal Mail cases were
handed down on 7 February 2023. The Company's retained competition
law case value experts (Fideres Partners LLP) have accordingly
updated their valuation of Manolete's 22 cases and the Board is
satisfied that, subject to audit, the current carrying value in the
balance sheet of GBP13.2m is materially correct. Further
non-Manolete truck cartel case judgments are awaited, and the
Company's own claims remain stayed at present.
6. Court of Appeal Decision
Over our 13-year operating history, more than 97% of our 665
completed cases have been resolved and settled before trial. Often
the defendants on our cases see the good sense in settling the
litigation matter before the case is even issued through the
Courts. As we highlighted in our H1 FY23 results, one of the rare
(larger) cases that did go to a trial resulted in an equally rare
adverse trial decision for the Company. The Company was successful
in obtaining permission to appeal, but today the Court of Appeal
dismissed Manolete's appeal. While this is disappointing, it is one
of the very few that the Company has lost at trial in its 13-year
history, an enviable track record in the litigation finance
industry. The full write off of the fair value of this case had
already been accounted in H1 FY23. The final costs (including
adverse costs) consequent to the appeal of c. GBP750k, relating to
this case, will now be written off in H2 FY23 and a line drawn
under the matter.
7. HSBC GBP25m Revolving Credit Facility ("RCF")
Terms of a revised covenant package relating to the RCF have now
agreed with HSBC and credit committee approval has been granted by
the bank. The new agreement is currently being documented by both
sets of legal teams and completion is expected imminently.
Consequent to the Company's strong cash generation in FY23 YTD,
the Company has repaid a net GBP3.5m against the RCF. The Company's
current exposure under the RCF is GBP10.5m, leaving GBP14.5m
unutilised headroom on the facility, at present.
8. Trading and Financial Outlook
Whilst subject to full audit, after a Profit Before Tax loss of
GBP5.5m for H1 FY23, the Company has reported a strong run of 5
months' consecutive profitability to the end of February 2023.
Considering all the factors above (including the costs related to
the adverse Court of Appeal decision), the Board expects the PBT
loss reported for H1 FY23 to be reduced by a positive pre-tax
profit contribution for H2 FY23. The Company will give a further
update next month, once the full FY23 trading period has been
completed.
Based on many of the factors referred to earlier above, the
Board expects the Company's overall profitability to recover
strongly for FY24 and beyond.
Steven Cooklin, Chief Executive Officer, commented:
"We are delighted with the way that the Company has driven the
resurgence in its business after the two-year artificial
suppression of the UK insolvency sector, brought about by the UK
Government's reaction to the COVID-19 pandemic. The UK is now
experiencing record high levels of insolvencies and that is
directly leading to the Company's impressive operating performance.
With the persistent macro headwinds of inflation and significantly
higher interest rates, the Board expects these favourable trading
conditions to persist for the foreseeable future."
For further information please contact:
Manolete Partners via Instinctif Partners
Steven Cooklin (Chief Executive
Officer)
Peel Hunt (NOMAD and Sole Broker)
Paul Shackleton +44 (0)20 7418 8900
Instinctif Partners
Tim Linacre
Victoria Hayns +44 (0)20 7457 2020
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
TSTUSSOROBUOAAR
(END) Dow Jones Newswires
March 14, 2023 09:49 ET (13:49 GMT)
Manolete Partners (LSE:MANO)
Historical Stock Chart
From Apr 2024 to May 2024
Manolete Partners (LSE:MANO)
Historical Stock Chart
From May 2023 to May 2024