TIDMMANO
RNS Number : 4293Q
Manolete Partners PLC
18 October 2023
18 October 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 six months ending 30 September
2023 ("H1 FY24").
Steven Cooklin, Chief Executive Officer, commented:
"In the first half of the year the business has continued its
strong growth after emerging from the Government suppression of the
insolvency sector during the Covid-19 period. The total number of
our new case investments in the first half of our current trading
year is 116% higher than the first half of last year, mirroring the
substantial rise in UK insolvencies in the post-pandemic
period.
"We have recently learned that Manolete's already exceptional
results on the initial cases in the Barclays Bounce Back Loan
("BBL") Recovery Pilot has led to the British Business Bank giving
approval to Barclays to extend the scale of the pilot. We have also
received confirmation that another well-known bank is soon to start
their own BBL Recovery programme with Manolete.
"As we continue to anticipate further sustained high levels of
activity in the UK insolvency sector, we have added significantly
to our in-house Legal and Net Worth Reporting teams with a number
of high-quality new joiners."
1. New Case Investments
The following table provides an analysis of the Company's new
case investments over the last 18 months trading, which shows the
strong growth we are experiencing following the ending of the Covid
insolvency suppression period:
H1 FY24 H2 FY23 H1 FY23
Non-BBL Case Investments 146 132 83
Barclays BBL Case Investments 33 48 0
Total New Case Investments 179 180 83
The total number of new case investments for H1 FY24 was 179,
116% higher than the 83 new case investments recorded for the
comparative first six months of the previous financial year ("H1
FY23").
The H1 FY23 new case investments were detrimentally impacted as
the Company had only just started to emerge from the temporary
two-year suppression of the UK insolvency market imposed by the UK
Government in response to the Covid-19 pandemic. Even after the
insolvency laws returned to normal, from 1 April 2022, there was
then a necessary seven-month hiatus as Insolvency Practitioners had
to investigate and collate the evidence supporting potential
claims, before being in position to present them to the Company for
investment appraisal.
The second half of the previous financial year ("H2 FY23")
displayed a sharply positive rebound: recording the Company's
highest ever number of 180 new case investments, as the UK
insolvency market began the return to normal operations.
That trend has continued into the first six months of the
current trading year H1 FY24. On a trailing 12-month view (H2 FY23
plus H1 FY24) the Company has signed 359 new case investments. That
equates to the Company signing approximately 1.4 new cases for
every business day in that 12-month period, which far exceeds the
Company's best pre-pandemic number of new case investments of 141
for the 12-months ended 31 March 2020 (0.5 new cases for every
business day in that 12-month period).
The H2 FY23 level of new case investments of 180 included 48
cases from the BBL Recoveries pilot project that the Company is
working on with Barclays Bank Plc (see separate section below for
further developments on the Company's BBL recovery programmes).
Excluding the Barclays BBL pilot cases, H2 FY23 therefore recorded
an impressive 132 new case investments. In H1 FY24 the Company
invested in a further 33 Barclays BBL cases. Therefore, excluding
Barclays BBL pilot cases, for H1 FY24 the Company recorded 146 new
case investments, an increase of 11% (H1 FY23: 132 cases).
2. Case Completions and Money Multiple
In H1 FY24, Manolete completed 116 cases, 22% higher than the 95
cases completed in H1 FY23. The total value of those 116 cases was
GBP9.2m. The value of the 95 cases in H1 FY23 was GBP18.3m but, as
previously reported, that included one exceptionally large case
completion of GBP9.5m. Excluding that one exceptional case H1 FY23
was GBP8.8m.
The average duration (measured from the date that the Company
signed the case to the date of legal completion) was 11.4 months
(H1 FY23: 14.9 months). This signifies a return to the Company's
long established case duration of around 12 months.
The Money Multiple for the 116 case completions in H1 FY24 was
2.3x (H1 FY23: 2.2x across 95 completed cases).
3. Average Case Completion Size
In reference to the case completion figures above the average
size of the 116 case completions in H1 FY24 was GBP79.3k per case,
which is 18% lower than the GBP96.8k per case completion in H1 FY23
(excluding the exceptional GBP9.5m completion in H1 FY23). This
reflects the fact that the first wave of new cases emerging
post-pandemic primarily relate to the high number of smaller UK
companies that tend to take the Creditors Voluntary Liquidation
("CVLs") insolvency route. It is the high CVL numbers that have
driven the current high growth of overall insolvencies in the UK
post-pandemic. It is only in the last seven months that the UK
insolvency market has seen any sustained recovery to pre-pandemic
levels of Administration appointments, which is the usual
insolvency route for larger company insolvencies. As the insolvency
market develops through the current business cycle, the Directors
anticipate a return to higher average case sizes, reflecting a
greater mix of larger company insolvencies.
Another factor to note is the various BBL Recovery programmes
that the Company is increasingly involved in. As these only started
to impact the Company's performance metrics from January 2023,
these have, so far, not had a material impact. The maximum BBL is
GBP50,000 per case, so as the number of BBL cases increase, this is
likely to have a more material impact on total average reported
case size. BBL cases should not adversely impact reported Money
Multiples and they tend to settle materially faster than the
Company's long-term average case duration of c.12 months.
4. Gross Cash Recoveries
In H1 FY24, Manolete delivered (unaudited) gross cash recoveries
from previously completed cases of GBP9.0m (H1 FY23: GBP15.7m)
spread across 209 separate completed cases (H1 FY23: 160). Again,
excluding the exceptional GBP9.5m from the comparative H1 FY23
figure, total gross cash received in H1 FY24 was 45% higher than
the H1 FY23 figure of GBP6.2m (excluding the exceptional large
case). The fact that in H1 FY24 GBP9.0m the gross cash receipts
were spread over 209 separate cases is a core strength of the
granularity of Manolete's business model.
5. PACCAR
Further to our announcement on 1 August 2023 regarding PACCAR
Inc & Ors v Competition Appeal Tribunal & Ors, [2023] UKSC
28, the Company is pleased to report that the decision in PACCAR
has had no adverse impact, necessitating only very minor amendments
to the standard terms of our funding agreements. Funded Cases
typically account for just 5% of Manolete's total case investments,
the 95% majority of our case investments being Purchased Cases,
where PACCAR has no relevance.
6. Building the Business Back to Full Year Profitability
Subject to auditor review of the interim accounts, the Directors
believe that the Company will report profitability for H1 FY24 at
marginally less than was reported for H2 FY23. This is primarily
due to the reduction in average case sizes and after the investment
in new staff and business development, as the Company builds
capacity to meet the current, and anticipated, significantly higher
business activity levels. Traditionally the second half of the
trading year is the stronger for the business.
The auditor's review of the interim results for the six months
ended 30 September 2023 is underway and the Company will inform the
market of the interim results announcement date, in due course.
For further information please contact:
Manolete Partners
Steven Cooklin (Chief Executive Officer) via Instinctif Partners
Peel Hunt (NOMAD and Sole Broker) +44 (0)20 7418 8900
Paul Shackleton
Instinctif Partners +44 (0)20 7457 2020
Tim Linacre
Victoria Hayns
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END
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