Last checked at 9 Sep 2022 07:00
9 September 2022
THE INFORMATION COMMUNICATED IN THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF REGULATION 596/2014 ("MAR"). Steven Cooklin Chief Executive Officer of Manolete Partners Plc is the person responsible for this disclosure.
Manolete Partners Plc
("Manolete" or the "Company")
H1 Trading Update
Manolete Partners Plc (AIM: MANO), the leading listed insolvency litigation financing firm in the UK, announces that it has received a rare adverse decision in the High Court on one of its larger cases. While Manolete has applied for permission to appeal this surprising decision, the Board has decided to write down the full value of the case in its forthcoming results for the six months ended 30 September 2022 ("FY23 Interim Results"). The impact will be a reduction of £2.3m to pre-tax profits, of which the cash costs paid out on this case to date are £636,756.
Separately, reflecting the widely reported deterioration and challenges presenting in the UK macro-economic climate, the Board has taken a more prudent view of the valuation of the Company's c.280 ongoing litigation case investments.
As a combination of both of these factors, the Company expects to announce a pre-tax loss of c.£5m in the FY23 Interim Results, the large majority of which will be due to the adjustment of unrealised revenues and unrealised profits.
Underlying business performance and cash generation
Despite these negative factors, the business continues to operate well, in particular, gross cash generation from completed cases in the first five months of the current trading year is at a record £15m. This compares to £15.6m gross cash generation for the entire 12 months for the year ended 31 March 2022. This strong cash performance enabled the Company to repay a net £3.7m of indebtedness during the first half of this financial year. Furthermore, unaudited realised revenues, on completed cases, for the first five months of FY23 were 175% higher at £10.6m (FY22: £3.9m).
From 1 April 2022, UK insolvency regulations returned to normal after a near two-year suppression of insolvencies by the Government in response to the Covid-19 pandemic. The benefits of this are now starting to flow into the Company's key performance metrics, with new case enquiries already up 24% compared to the whole of H1 FY22. The Company is also working closely with blue-chip strategic financial services and Government entities, which may lead to a material involvement in the recovery of monies loaned to UK SMEs under the Bounce Back Loan schemes. The Company will provide a further update when the FY23 Interim Results are published.
Steven Cooklin, CEO of Manolete commented: "The Board and our legal advisers were surprised and disappointed by the very rare adverse initial judgment that we received on one of our larger cases, a case that we originally signed up in 2019. For the first time in our 13-year history, we have applied for permission to appeal that decision to the Court of Appeal. We have taken a cautious stance by reducing the carrying value of that case to zero until we know the final outcome of the appeal process. On the wider front, while we have taken a deliberately prudent view on the latest valuation of the portfolio of our 280 in-process cases, we note that our key forward-looking performance indicator of 'new case enquiries' is now showing strong signs of recovery. I am optimistic that the second half of this financial year and beyond will see much improved trading results".
For further information, please contact:
Manolete Partners Plc via Instinctif Partners
Steven Cooklin (Chief Executive Officer)
Peel Hunt (NOMAD and Sole Broker) +44 (0)20 7418 8900
Paul Shackleton
Instinctif Partners (Financial PR)
Tim Linacre +44 (0)7949 939237
Victoria Hayns