436: Steven Cooklin of Manolete Partners discusses the sharp increase in both case enquires and signed cases

The Vox Markets Podcast

Steven Cooklin, CEO, of Manolete Partners #MANO discusses the sharp increase in both case enquires and signed cases as they release their interim results, which despite lockdowns, demonstrated the strength of the business.

Financial highlights:

· Total revenues increased by 15% to £10.2m from H2 FY21 (£8.9m) and were 46% below H1 FY21 (£19.0m). H1 FY21 benefitted from an exceptionally large single case settlement of £9.3m (discounted gross revenue value) and was impacted to a much lower degree by the Covid-19 related Government Temporary Measures;

· 76% of revenues were from realised completed cases (H1 FY21: 71%)

· Gross Profit increased by 38% to £5.4m from H2 FY21 (£3.9m) and was 43% below H1 FY21 (£9.5m). The decline compared to H1 FY21 was mainly due to reduced unrealised profits reflecting the decline in the number of new case investments which was suppressed due to the Covid-19 related Government Temporary Measures;

· EBIT increased 273% to £3.2m from H2 FY21 and was 52% below H1 FY21 (£6.6m);

· Cash generated from completed cases increased 3% to £4.3m (H1 FY21: £4.2m);

· Despite the temporarily challenging environment, cash generated from previously completed cases exceeded the cash costs of operating the business (before investment in new cases);

· Investment in cases has grown by 5% to £41.4m (30 September 2020: £39.3m);

· Net assets of £41.2m. Net Debt was £10.3m consisting of a drawn down loan of £11.0m, offset by cash balances of £0.7m as at 30 September 2021;

· £14m of HSBC Revolving Credit Facility remains available for utilisation, as at 30 September 2021;

· Basic earnings per share declined 59% to 4.8 pence (H1 FY21: 11.8 pence); and

· Interim dividend proposed of 0.39 pence per share (H1 FY21: 1.17p). The interim dividend to Ordinary Shareholders will be payable on 6 January 2022 to those shareholders who are on the register of members at 17 December 2021.

Operational and market highlights:

· The interim results for the six months ended 30 September 2021 reflect the operations of the Company when the UK insolvency market was artificially suppressed by the unparalleled UK Government action to support business enacted in June 2020.

· These Temporary Measures were largely ended, effective from 1 October 2021, as did a number of other business support schemes, including furlough.

· Ongoing delivery of realised returns: 64 case realisations in H1 FY22 representing a 23% increase (52 case realisations in H1 FY21), generating gross proceeds of £7.9m, over an average duration of 11.5 months

· Average money multiple of 2.6 times for the 64 cases completed in H1 FY22;

· Average case duration across the full portfolio of 434 completed cases at 11.3 months;

· New case investments declined by 39% to 78 (H1 FY21: 110) as a result of unprecedented Government support to the economy during the Covid-19 pandemic;

· 10% increase in live cases: 240 in process as at 30 September 2021 (238 as at 30 September 2020) (all excluding Cartel cases);

· 71% of live cases have been signed in the last 18 months. Only one case remains ongoing from the FY17 vintage and only two cases are outstanding from the FY18 vintage. 100% of earlier case vintages have been completed;

· Our KPIs for September and October 2021 show strong signs of recovery:

· The number of new case enquiries were 50 and 55 for those two months respectively, compared to a low of 31 for the month of March 2021 while the Temporary Measures were in force.

· New signed cases for September and October were 15 and 18 respectively, compared to 10 in August 2021;

· Cartel cases remain ongoing. In line with our strategy there has been little progress in the six months to 30 September 2021, however, we expect there will be considerable progress in the next six to twelve months. Management will reassess the investment fair value again at the year end.

About Manolette Partners

Manolete Partners Plc is the leading insolvency litigation financing company in the UK and was founded in 2009 by its CEO, Steven Cooklin.

Manolete has invested in 618 UK insolvency litigation cases and completed 388 of them. Manolete works alongside Insolvency Practitioners (IPs) from all of the “Big Four” to smaller regional firms. Manolete has worked with over 180 IP firms and their chosen legal advisers, often on multiple cases.

Manolete is different from other litigation funders because cases are completed very quickly – the average duration is less than 12 months. The large majority are settled long before trial - minimising costs and optimising returns.