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Promethium - yeah, usage of terminology was really misplaced.
As for results - well done considering gov-registered statistics (Insolvency Services reports: cases down by 33~43% depending what period you measure to).
My FOMO pushed me to carefully deploy some capital here this morning, just to be in a little bit - in case if growth continues (although ruling effect hasn't kicked-in yet with these results).
Promethium, that's a very good roundup, although a bit biased in a way distributed more towards preferred outcome, I'll add some pinch of salt to another side of scales perhaps bringing slightly more balance.
These £10K might be incomplete costs, it's worth considering not only court fee but IP's and other legal team support fees on MANO' side, it easily adds another £20K+ per case into equation (costs much higher for more complicated cases depending on resources required {team of contracting legal assistants/consultants, etc.}) - and taking into account what 90% of cases are purchased (the rest are funded) - it puts practically all this burden on MANO's PnL effectively deflating value of capital deployed into cases.
Total extra direct costs £30K+ per case x200 cases = £6m to write off the cash-flow.
Of course some cases are easier to drop rather than continue due to these developments, thus sum might be lower, and not all representatives of defendants might even be qualified enough/aware of this path to leverage it (minus if case goes via commercial settlement route instead of court - some defendants might not be aware of it too, but those who do/have put right time into DYOR - will have significant card to play in bringing down size of settlement from now on).
Another issue to consider - time value of money, everything is being delayed, therefore present value of this cash flow is dented (and once courts are back to normal after all this covid dust settles - still long queue of pending cases to serve)
There are expected measures to be introduced by gov aimed to protect social and commercial environment to ease force-majeure impact of covid, there will be additional rig-fences against ripping-off those affected and vulnerable.
As an impact of this ruling on business model - it reduces size of market (and growth prospects) because feasibility criteria is different from now on (on profitability grounds).
Results on Wed will be covering period before this new development and implications on a ways of working, the going concern is rather about implications on future.
I do agree they can get more out of it on future cases - but it takes off heavy chunk from past cases where funds were already deployed.
P.S. I've examined historic stats (Insolvency Services and Companies House) after 2008 financial crisis in UK (Eng&W) - can't say there's huge increase in liquidations, tangible and visible - yes, but not what I would expect to see (was thinking at least doubling - but turns out not even close).. In US and Canada - situation is better (for this type of IP companies - much more cases), even Germany looks like having more promising market on insolvency-case volatility after such system-wide disturbances, but MANO is strictly bound to UK market unfortunately.
There's plenty of comments about consequences for insolvency practitioners due to this ruling: "Manolete Partners Plc v Hayward and Barrett Holdings Ltd"
long-term very negative implications, much higher costs and effectively putting significant chunk of previously acquired small value claims non-viable anymore (loss-making).
Generally significant downgrade is coming on MANO's assets (write-off) and future cashflow.
A delay on rules easing further - rule of 6 etc that limits large (revenue churning) events taking place - however a firm attitude on furlough etc being extended further. Good. Bit nervous on re the results to March 2022 - hope people don't over-react.
Thank you to whoever keeps drip feed selling me discount shares through the uncrossing auctions, you are very kind
The free float is most reassuring - now very tightly held
Not so sure why we're trapped in this "whilst restrictions remain, no insolvency shall occur"/ "no company shall fail whilst covid prevails" loop - some sort of moral decision? Certainly an economic bubble that'll break. Maybe Boris' blue sky thinking? Mad world
@FireAnt - good to see you are also into MANO, as am I.
Hmm yes - while on the one hand I can see that the message of "we have access to tons of cash" is a good thing to tell potential customers, it doesn't sound great for us investors.
OTOH, at least he was careful to add "if ever required".
The Feb presentation mentions the £20m HSBC facility, of which, at the time of writing, only £8m had been drawn down. Between the remaining loan available and the fact that incoming cash from previous cases is apparently enough to cover costs, I'm hopeful that they won't need to turn to the markets to raise cash.
The interesting thing here is that the dry period for the last ~year almost certainly will lead to cash flow problems at some point in the future - maybe 6-12 months - because of the delays involved. But at the point where that starts to bite, if all goes to plan, MANO will be snowed under with work from all the pent-up cases and will probably be in a much stronger position to borrow money - again, the business model will be proven; current trading will be rampant; and the short-term cash-flow hole that needs plugging would be a very understandable blip.
Then we start getting into areas that I find very hard to judge. Will MANO be able to take out more loans easily enough, based on the above? Woud they turn to the markets instead? If so, would the SP have risen already to reflect the fact that business is booming, or would it still be dampened because of exactly these uncertainties? That would affect the degree of dilution, which would make a low share price even lower...
Long term I'm very positive about MANO, and I think this is a great price to be in at. Medium term I'm a little concerned by the above - and it may mean that it takes longer to realise the returns than I'd otherwise like. Maybe the sensible thing would be to come back later - but with all the unknowns the timing would be very difficult. And with fewer unknowns - more certainty - the price will likely rise, and I don't want to miss out on that. I do know that I'm happy owning at this price, so I'll make do with that!
FireAnt, good spot - missed that, unusually sloppy of Manolete to put that in a presentation, slightly disjointed with Steve Cooklin's messaging to the market
Agree with what you're saying re dry spell, bit of cautious wait and see won't hurt here
R3 presentation - "Manolete Partners Plc - Post Covid - 19 Maximising Realisations from Claims in Insolvent Estates"
https://www.youtube.com/watch?v=SSFt1SqMhYk
Fresh off the press if you're interested
I am a little concerned about the "lead" time on referrals - e.g. say measures end in June, how long will it take to feed through into claim buys for MANO. Usually it is a good few months minimum from administrator instruction, correspondence with directors and then the purchase of the claim. This is in no way a concern about the liquidity of MANO which Steve Cooklin has gone to lengths to explain is strong. He has explained in presentations exactly how they can sit this out without concern. Instead it is just one of the short term factors that impinge on results and weigh on SP. Long term though looks very very bright
I could have been overly greedy here and got it wrong, time will tell, but I have new mercedes levels invested here and it will be easier to average down with some free cash flow if it came to it. I'm not sure if it will drop sub-200 either but I would be very, very happy to average down at those levels - I agree that it's a "when" rather than "if" re the 300s, 400s and 500s plus
Sensible plan, it would be nice to see some resilience in the June numbers despite covid, but I'm not hung up on those - this is a very different business to Burford and LCM but the one comparison is that the sector is a long term bet. I slept on MANO and have averaged down 25% just in case. Felt more prudent and less like gambling with the majority of the holding. If it drops slightly I will average down, but not expecting wild drops as March was a large one off ii sell down and we are very close to IPO price on a company that is 3 x the size of it was at listing
Excellent points Tommy, very balanced, and thanks FireAnt - will you be averaging those down or waiting/ staying put? I've averaged down a lot on this this Jan, initially from 270 with further purchases at 200 and 180. My current holding averages 219 which is basically IPO prices for a business 3x the size of it was. Some very noteworthy [big] buys going through the books the past few days - I suspect in a couple of years the returns here will be epic
This article gives the slightly less pessimistic view of the current variant debate https://www.bbc.co.uk/news/health-57150871
Ugh yeah that is grim, but I still think there is light at the end of the tunnel. There is mounting evidence that the vaccine works against the Indian variant and, small hesistant populations aside, the uptake has been fantastic.
But it would certainly be a blow to MANO if the insolvency freeze was extended again.
Trading in and out feels essentially like gambling though. I'm in this for the long term, and whether the turnaround comes in one month or four makes little difference.
Apart from the obvious thing holding the price down - the insolvency freeze - I suspect the complex and opaque accounting of these companies is a turn-off for many, which is reasonable (but could also be an oppurtunity). The main leap of faith is accepting that actual cash flow lags recognised revenues by some considerable time period. This leads to "dodgy" looking accounts that claim to be super profitable while consistently showing low or negative cash flows, but if you accept that that is just what the accounting model is for these companies - and that e.g. ROIC can't be like-for-like compared with other industries in a meaningful way - then it no longer seems suspicious. Essentially it seems similar to capitalising R&D.
Note the low cash flows are also why MANO can't realistically pay much of a dividend.
MANO is growing, taking on more staff and cases each year (Covid mega-blip aside), and for the last few years the cash from the previous year's cases (or the year before's) haven't been enough to cover the current year's operations, hence borrowing and floating. However, in their Feb shareholder presentation they explicitly state that they have now reached the point where cash coming in from settled/won cases is enough to cover the current year's costs - i.e. no more need for borrowing, and potential for higher dividend. And if they did want to borrow in order to fund more rapid growth, I would be comfortable - because the business model has been proven to work.
So this feels like an exciting time to be long MANO. It will definitely take time for the market to come around, and any more delays to insolvency proceedings would definitely be bad, but the overall story feels very positive.
The "opening floodgates" of work just waiting for when the insolvency proceedings are able to start again is just icing on the cake.
It does look like we've attracted an institutional buyer
Boris gathers*** lol, he may well have fathered them too, we have no idea how many children he has
"Boris fathers Cabinet amid grim claims there is 'close to nil' chance of June 21 'freedom day' going ahead as hoped due to India variant alert - with ministers bracing to spend ever MORE taxpayer cash keeping stricken business afloat."
The gov simply can't afford to keep these companies afloat. But I don't know what to expect anymore. Feeling bearish
BigBoo2 what news are you referring to? General variant woes and the possibility of extended lockdown?
FireAnt, can I be cheeky and ask what your average is?
Decisions decisions, mulling a sell of half my holdings to return later and average down. It does look like we might descend a bit further given the news today
I'm looking for some suggestions/explanation on the recent SP drop and CEO selling too perhaps, just want to check I've not got the blinkers on. Considering the upcoming end of year results, a very prudent PE calculation based on £12mil profit puts MANO at a PE of 8.25. The rate of its revenue growth even before covid was impressive, the industry will boom once the gov support measures cease, with the fallout of covid. And albeit miniscule, dividend as well. All of this to me says MANO should multibag, but again looking for a counter argument