Strategy, Team and Outlook

 

From 1 April 2022, the UK Government ended its temporary extraordinary suppression of the UK insolvency market. The number of UK insolvencies has now exceeded the pre-pandemic levels for many months now. We expect the market to grow over the coming months , as the economy realigns across many industry segments. The turnaround, restructuring and insolvency profession plays a critical role in resource reallocation following major economic turmoil events, such as Covid-19 and exceptional rises in inflation and interest rates. Working closely with key Government and major financial institutions we continue to develop the Bounce Back Loan recovery opportunity. That is already materially adding to new case opportunities in the second half of the current financial year. In the expectation of sustained higher operational activity, we have increased the number of new in-house lawyers, which is the key factor in increasing the business capacity of the Company. Further decisions will be made as the KPI data develops.

 

Dividend

 

No interim dividend is proposed for the six months to 30 September 2022 due to the EBIT loss recorded in this 6-month period.

 

Steven Cooklin

Chief Executive Officer

 

Chief Financial Officer's Review

 

I am pleased to give my review of the Company's unaudited results for the half year to 30 September 2022.

 

	6 months ended 30 September 2022	6 months ended 30  September 2021	6 months ended 31 March 2022
	Unaudited	Unaudited	Unaudited
	£'000s	£'000s	£'000s
Revenue	5,514	10,184	10,259
Cost of sales	(7,701)	(4,763)	(5,299)
Gross (loss)/profit	(2,187)	5,421	4,960
Administrative expenses	(3,071)	(2,262)	(2,815)
Operating (loss)/profit	(5,258)	3,159	2,145
KPI's
Gross profit margin %	(40)%	53%	48%
Operating profit margin %	(95)%	31%	21%
New cases (#)	83	78	81
Completed cases (#)	95	64	75
Live cases at period end (#)	264	262	272

 

The financial results for the 6 months to 30 September 2022 (H1 FY23) report an Operating loss and represent a decline from the same period last year (H1 FY22). This is due to a negative movement in the 'fair values' of open cases given the wider economic environment recorded in unrealised revenue, as well as a significant single case adverse finding as mentioned in the Company trading statement, rather than the performance of the underlying business. The reduction in fair values reflects a difficult economic environment being reported by the legal team which has required previous expectations of case settlements to be cautiously downgraded.   

Operationally, the business performed strongly and completed 95 cases in the 6 month period to 30 September 2022 (64 cases, H1 FY22) and signed 83 new cases (78 new cases, H1 FY22) and continues to realise increasing cash proceeds from completed cases. 

 

	6 months ended 30 September 2022	6 months ended 30  September 2021	6 months ended 31 March 2022
	Unaudited	Unaudited	Unaudited
	£'000s	£'000s	£'000s
Realised revenue	13,598	7,693	7,550
Unrealised revenue	(8,084)	2,491	2,709
Revenue	5,514	10,184	10,259
Mix %
Realised revenue	247%	76%	74%
Unrealised revenue	(147%)	24%	26%

 

Revenue decreased from £10.2m in H1 FY22 to £5.5m in H1 FY23 which was driven by the decrease in unrealised revenue. We look at each separately:

 

Realised revenue increased from £7.7m to £13.6m in H1 FY23, an increase of 76.8%. This was a result of a large case being settled early in the financial year (Manolete share of revenue of £4.9m) as well as an increase in the number and value of case completions in general. Case completions grew by 48% to 95 cases in H1 FY23 (H1 FY22: 64 cases).

 

Unrealised revenue declined to £(8.1)m H1 FY23 compared with £2.5m in H1 FY22 due to several factors which can be summarised as follows:

·      a high level of case completions which are removed from Investments on the balance sheet via unrealised revenue, £(7.4)m (£(2.8)m H1 FY22);

·      a lower level of new case additions in terms of value, +£3.2m (+£5.6m H1 FY22); and

·      an increased level of write-downs of existing live cases £(5.2)m which includes a single case fair value write down of £(2.3)m following an adverse decision at trial, as previously announced in the trading update of 9^th September 2022; (£(1.2)m H1 FY22).

 

An adverse judgement at trial on a single large case resulted in a write down in fair value of that case by £(2.3)m, as previously announced. This case remains an open case (and hence valuation movements are booked via unrealised revenue) as Manolete has been awarded permission to appeal. Unrealised revenue is also impacted by the value of completions (which are a negative posting to Unrealised revenue as they are removed from Investments in the balance sheet). A breakdown of the movement in Unrealised revenue is shown in Note 7 to the Interim report.

 

	6 months ended 30 September 2022	6 months ended 30  September 2021	6 months ended 31 March 2022
	Unaudited	Unaudited	Unaudited
	£'000s	£'000s	£'000s
Realised gross profit	5,897	2,930	2,251
Unrealised gross profit	(8,084)	2,491	2,709
Gross profit	(2,187)	5,421	4,960
Margin %
Realised gross profit	43%	38%	30%
Unrealised gross profit	100%	100%	100%
Gross profit margin %	(40)%	53%	48%

 

Gross profit declined from £5.4m in H1 FY22 to a gross loss of £(2.2)m in H1 FY23, primarily due to the reduction in the fair value of existing cases. Once again, we should review realised and unrealised gross profit separately.

Realised gross profit increased to £5.9m H1 FY23 (£2.9m H1 FY22), an increase of 101% driven by 95 case completions. Realised gross profit margin increased to 43% from 38% H1 FY22.

 

Unrealised gross loss of £(8.1)m H1 FY23 is as previously discussed under revenue above. The unrealised gross loss results from a high level of case completions, a low value of new case additions, and a reduction in the fair value of live cases. 

 

Administrative expenses increased by 36% to £3.1m in the six months to 30 September 2022 (H1 FY22: £2.3m) which is principally attributable to an increase in the bad debt charge and a resumption of marketing activities following Covid-19 restrictions being lifted.

The increase in the bad debt charge from £36k credit in H1 FY22 to £576k charge in H1 FY23 reflects a  cautious approach adopted to provisioning by Management as a result of the wider economic conditions. During H1 FY23 Management increased specific provisions against a small number of cases and reviewed and increased the expected credit loss provision. H1 FY22 included a writeback of a previously impaired receivable which settled in full, no such instances have occurred during H1 FY23.

Operating (loss)/profit decreased by 267% to £(5.3)m in H1 FY23 (H1 FY22: £3.2m) with an operating (loss) / profit margin of (95)% (H1 FY22: 31%).

Finance costs decreased to £205k in H1 FY23 (H1 FY22: £554k). H1 FY22 included the write-off of the HSBC setup costs totalling £259k associated with the original HSBC loan facility agreed in 2018. Loan arrangement costs of £287k were incurred in respect of the new facility agreed and announced in June 2021 which have been capitalised on the balance sheet and are being amortised over the three year term of the facility.

(Loss)/profit after tax decreased by 211% from £2.1m to £(4.4)m. The post-tax margin is (81)% in H1 FY23 (H1 FY22: 21%).

No interim dividend is proposed for FY23 (FY22 interim 0.39p).

 

The Company was managing 264 live case investments (including Cartel cases) as at 30 September 2022, compared to 262 live cases (including Cartel cases) as at 30 September 2021, a 1% increase. The total investment in cases amounted to £36.2m at 30 September 2022, a decline of 13% from the value as at 30 September 2021 of £41.4m (31 March 2022 value of £45.7m).

Investments in cases are shown at fair value, based on the Company's estimate of the likely future realised gross profit. Management, following discussion with the in-house legal team, on a case by case basis, amend the valuations of cases each month to accurately reflect management's view of fair value. In addition, at the interim and year end reporting periods, a sample of material valuations are corroborated with the external lawyers working on the case who provide updated legal opinions as to the current status of the case. The Company does not capitalise any of its internal costs, these are fully expensed to the Statement of Comprehensive income.

Trade and other receivables have remained stable at £22.3m at 30 September 2022 compared with £22.0m at 30 September 2021. This amount is net of provision for bad debts.

	6 months ended 30 September 2022	6 months ended 30  September 2021	6 months ended 31 March 2022
	Unaudited	Unaudited	Unaudited
	£'000s	£'000s	£'000s
Gross cash receipts	15,716	4,263	11,286
IP share & legal costs on completed cases	(8,084)	(1,507)	(5,125)
Cashflows from completed cases	7,632	2,756	6,161
Overheads	(2,584)	(2,399)	(2,100)
Net cash generated from operations before investment in cases and corporation tax	5,048	357	4,061
Corporation tax	(354)	(395)	(438)
Investment in cases	(2,803)	(2,850)	(3,620)
Net cash generated from / (used) in operations	1,891	(2,888)	3

 

Gross cash receipts of £15.7m in H1 FY23 (£4.3m H1 FY22) represents a significant increase in cash generation of 269% in comparison with H1 FY22. This is a reflection of the high number of case completions in the 6 month period and also continued cash collection of cases completed in the prior year.

 

Furthermore, cash generation was positive after payment of IP share and external legal costs on those completed cases and after payment of overheads of £(2.6)m.

 

We continue to utilise our cash resources to invest in new and existing cases, with a cash investment of £2.8m in the six-month period entirely funded from case cash receipts. Our significant cash receipts during H1 FY23 included an exceptionally large receipt of £9.5m from a single case resulting in the Company being cash generative from operations.   

 

The Company has drawn down £10.0m of its £25.0m HSBC loan facility as at 30 September 2022 and continues to deploy loan capital to finance investment in cases. During H1 FY23 the Company repaid a net £3.5m of its HSBC loan facility. The Company held cash reserves of £0.4m as at 30^th September 2022 and had £15.0m available of the £25.0m HSBC facility. This facility and cash reserves will be used to fund the expected growth in case volumes following the full relaxation of the Temporary Measures on 1 April 2022. 

 

As a consequence of the EBIT loss recorded in H1 FY23, there has been a technical breach in one of the 30 June 2022 quarter leverage covenants for which HSBC have signed a waiver. It is likely that a similar breach will occur in respect of the 30 September 2022 quarter once the test date is reached and Management are working with HSBC in order to put in place a long term solution. Management has considered the covenant breach as part of its going concern assessment. The Board are confident that a new covenant package will be in place shortly and that the HSBC facility will run its full course.

 

Mark Tavener

Chief Financial Officer

 

 

Unaudited Statement of Comprehensive Income for the period ended 30 September 2022

 

		6 months ended 30 September 2022		6 months ended 30 September 2021	Year ended 31 March 2022
		Unaudited		Unaudited	Audited
	Note	£'000s		£'000s	£'000s
Revenue	3	5,514		10,184	20,443
Cost of sales		(7,701)		(4,763)	(10,062)
Gross (loss)/profit		(2,187)		5,421	10,381
Administrative expenses	4	(3,071)		(2,262)	(5,077)
Operating (loss)/profit		(5,258)		3,159	5,304
Finance income		2		-	-
Finance expense	5	(205)		(554)	(796)
(Loss)/profit before tax		(5,461)		2,605	4,508
Taxation		1,020		(497)	(830)
(Loss)/profit and total comprehensive income for the year attributable to the equity owners of the Company		(4,441)		2,108	3,678
Earnings per share attributable to equity owners of the Company
Basic (£ per share)	11	£(0.10)		£0.05	£0.08
Diluted (£ per share)	11	£(0.10)		£0.05	£0.08

 

The above results were derived from continuing operations.

 

Unaudited Statement of Financial Position at 30 September 2022

 

Company Number: 07660874		6 months ended 30 September 2022		6 months ended 30 September 2021	Year ended 31 March 2022
		Unaudited		Unaudited	Audited
	Note	£'000s		£'000s	£'000s
Non-current assets
Investments	6	13,198		7,136	12,198
Intangible assets		2		25	13
Trade and other receivables	9	11,310		11,544	11,086
Deferred tax asset		104		205	95
Right-of-use asset		-		172	86
Total non-current assets		24,614		19,082	23,478
Current assets
Investments	6	22,964		34,299	33,520
Trade and other receivables	9	11,008		10,458	9,189
Corporation tax asset		979		-	-
Cash and cash equivalents		359		717	2,256
Total current assets		35,310		45,474	44,965
Total assets		59,924		64,556	68,443
EQUITY AND LIABILITIES
Equity
Share capital		175		174	175
Share premium		157		4	142
Share based payment reserve		485		487	429
Special reserve		5		179	5
Retained earnings		37,027		40,330	41,468
Total equity attributable to the equity owners of the company		37,849		41,174	42,219
Non-current liabilities
Trade and other payables	10	6,624		8,326	6,853
Borrowings		9,833		10,737	13,285
Total non-current liabilities		16,457		19,063	20,138
Current liabilities
Trade and other payables	10	5,618		3,679	5,594
Current tax liabilities		-		449	396
Lease liability		-		191	96
Total current liabilities		5,618		4,319	6,086
Total liabilities		22,075		23,382	26,224
Total equity and liabilities		59,924		64,556	68,443

The interim statements were approved by the Board of Directors and authorised for issue on 10 November 2022.

 

Unaudited Statement of Changes in Equity for the period ended 30 September 2022

 

	Attributable to equity owners of the Company
	Share Capital	Share Premium	Share based payment reserve	Special Non-distributable reserve	Retained Earnings	Total Equity
	£000s	£000s	£000s	£000s	£000s	£000s
As at 1 April 2021 (unaudited)	174	4	349	178	38,223	38,928
Comprehensive Income
Profit and total comprehensive income	-	-	-	-	2,108	2,108
Transactions with owners
Share based payment expense	-	-	63	-	-	63
Deferred tax on share-based payments	-	-	75	-	-	75
Transfer in relation to creditors paid	-	-	-	1	(1)	-
Dividends	-	-	-	-	-	-
As at 30 September 2021 (unaudited)	174	4	487	179	40,330	41,174
Comprehensive Income
Profit and total comprehensive income	-	-	-	-	1,570	1,570
Transactions with owners
Share based payment expense	-	-	106	-	-	106
Share based payments exercised	1	138	(138)	-	-	1
Deferred tax on share-based payments	-	-	(26)	-	-	(26)
Transfer in relation to creditors paid	-	-	-	(174)	174	-
Dividends	-	-	-	-	(606)	(606)
As at 31 March 2022 (audited)	175	142	429	5	41,468	42,219
Comprehensive Income
Profit and total comprehensive income	-	-	-	-	(4,441)	(4,441)
Transactions with owners
Share based payment expense	-	-	49	-	-	49
Share based payments exercised	-	15	-	-	-	15
Deferred tax on share-based payments	-	-	7	-	-	7
Dividends	-	-	-	-	-	-
As at 30 September 2022 (unaudited)	175	157	485	5	37,027	37,849

 

Unaudited Statement of Cashflows for the period ended 30 September 2022

 

		6 months ended 30 September 2022		6 months ended 30 September 2021	Year ended 31 March 2022
		Unaudited		Unaudited	Audited
	Note	£'000s		£'000s	£'000s
(Loss)/profit before tax		(5,461)		2,605	4,508
Adjustments for other operating items:
Adjustments for non-cash items	8	12,723		(364)	(444)
Operating cashflows before movements in working capital		7,262		2,241	4,064
Changes in working capital:
Net increase in trade and other receivables		(2,044)		(3,654)	(1,926)
Net (decrease) / increase in trade and other payables		(170)		1,770	2,280
Net cash generated from operations before corporation tax and investment in cases		5,048		357	4,418
Corporation tax paid		(354)		(395)	(833)
Investment in cases	6	(2,803)		(2,850)	(6,470)
Net cash generated from / (used in) operating activities		1,891		(2,888)	(2,885)
Cash flows from investing activities
Finance income received		2		-	-
Net cash generated from investing activities		2		-	-
Cash flows from financing activities
Proceeds from borrowings		1,000		3,000	5,500
Repayments made on borrowings		(4,500)		-	-
Dividends paid		-		-	(606)
Interest paid		(193)		(192)	(703)
Loan arrangement fees		-		(250)	-
Lease repayment		(97)		(97)	(194)
Net cash (used in) / generated from financing activities		(3,790)		2,461	3,997
Net (decrease) / increase in cash and cash equivalents		(1,897)		(427)	1,112
Cash and cash equivalents at the beginning of the year		2,256		1,144	1,144
Cash and cash equivalents at the end of the period		359		717	2,256

 

Unaudited notes to the financial statements for the period ended 30 September 2022

 

1    Company information

 

Manolete Partners PLC (the "Company") is a public company limited by shares incorporated in England and Wales. The Company is domiciled in England and its registered office is 2-4 Packhorse Road, Gerrards Cross, Buckinghamshire, SL9 7QE. The Company's ordinary shares are traded on the AIM Market.

 

The principal activity of the Company is that of acquiring and funding insolvency litigation cases.

 

2    Accounting policies

 

(a)     Basis of preparation

 

The half-yearly financial statements do not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006.

 

The interim condensed financial statements for the six months ended 30 September 2022 have been prepared in accordance with IAS 34 Interim Financial Reporting. The interim condensed financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Company's annual financial statements as at 31 March 2022.

 

The statutory accounts for the year ended 31 March 2022 have been filed with the Registrar of Companies at Companies House. The auditor's report on the statutory accounts for the year ended 31 March 2022 was unqualified and did not contain any statements under Section 498 (2) or (3) of the Companies Act 2006.

The published financial statements for the year ended 31 March 2021 were prepared in accordance with international accounting standards in conformity with the requirements of the Companies act 2006. The published financial statements for the year ended 31 March 2022 have been prepared in accordance with UK-adopted International Accounting Standards (IFRS) as adopted by the UK Endorsement Board. This change in the basis of preparation is required by UK company Law for the purpose of financial reporting as a result of the UK's exit from the European Union on 31 January 2020. This change does not constitute a change in accounting policy, rather a change in framework which is required to group the use of IFRS into company law. There is no impact on the recognition, measurement or disclosure between the two frameworks in the year reported.

 

(b)    Going concern

 

The interim financial statements relating to the Company has been prepared on the going concern basis.

 

After making appropriate enquires, the Directors of the Company have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future and for at least one year from the date of the signed interim financial statements. In reaching this conclusion, the Directors have considered the position with respect to covenant compliance and ongoing discussion with HSBC respect to future covenant tests. We refer you to the 'Debt financing' paragraph within the CFO statement.  For these reasons, they continue to adopt the going concern basis in preparing the Company's interim financial statements.

 

Furthermore, the Board has continued to monitor the impact of Covid-19 on the business and the market and noted the withdrawal of temporary Government support and we continue to keep this matter under review. As our business operates in the insolvency market, any economic downturn is likely to lead to further insolvencies and related litigation cases. 

 

Our trading for the six months to 30 September 2022 continues to be cash generative and the Directors are of the opinion that the Company has adequate financial resources to continue in operation and meet its liabilities as they fall due, for the foreseeable future. Hence, the Directors believe it is appropriate to adopt the going concern basis in preparing the financial statements.

 

(c)     Revenue recognition

 

Revenue comprises two elements: the movement in fair value of investments and realised consideration.

Realised consideration occurs when a case is settled, or a Court judgement received. This is an agreed upon and documented figure.

 

IVA settlements are recognised on a cash received basis.

 

The movement in the fair value of investments is recognised as Unrealised gains within Revenue. This is management's assessment of the increase or decrease in valuation of an open case, the inclusion of value for a new case and the removal of the fair value of a completed case. These valuations are estimated following the progress of a case towards completion and also reflect the judgement of the legal team working on the case (see Note 2(d). Significant Judgements and Estimates). Hence, unrealised revenue is the movement in the fair value of the investments in open cases over a period of time.

 

When a case is completed the carrying value is a deduction to unrealised income and the actual settlement value is recorded as realised revenue.

 

Revenue recognition differs between a purchased case, where full recognition of the settlement is recognised as revenue (including the insolvent estate's share) and a funded case where only the Company's share of a settlement is recognised as revenue. This differing treatment arises because the Company owns the rights to the purchased case.

 

As revenue relates entirely to financing arrangements, revenue is recognised under the classification and measurement provisions of IFRS 9.

 

(d)    Significant judgements and estimates

 

The preparation of the Company's interim financial statements in accordance with UK adopted International Accounting Standards requires the Directors to make estimates and assumptions that affect the reported amounts of assets and liabilities at the statement of financial position date, amounts reported for revenues and expenses during the year, and the disclosure of contingent liabilities, at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the assets or liability affected in the future.

 

Estimates and judgements are continually evaluated and are based on historical experiences and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

 

The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are detailed below.

 

Valuation of investments

 

Investments in cases are categorised as fair value through profit and loss. Fair values are determined on the specifics of each investment and will typically change upon an investment progressing through a key stage in the litigation or arbitration process in a manner that, in the Directors' opinion, would result in a third party being prepared to pay an amount different to the original sum invested for the company's rights in connection with the investment. Positive material progression of an investment will give rise to an increase in fair value and an adverse progression a decrease.

 

The key stages that an individual case passes through typically includes: initial review on whether to make a purchase or funding offer, correspondence from the Company in-house lawyer, usually via externally retained solicitors, to the opposing party notifying them of the Company's assignment or funding of the claim, a fully particularised Letter Before Action and an invitation to without prejudice settlement meetings or mediation, if the opposing party does not respond then legal proceedings are issued. Further evidence may be gathered to support the claim. Eventually a court process may be entered into. The progress of a case feeds into the Directors' valuation of that case each month, as set out below. 

 

In accordance with IFRS 9 and IFRS 13, the Company is required to estimate the fair value open cases at the half year and year end reporting periods, at 30 September and 31 March each year. The Company undertakes the following steps:

 

·      On a weekly basis, the internal legal team report developments into the Investment Committee on a case by case basis in writing.

·      On a monthly basis, full team meetings then take place to review progress on a case-by-case basis over several hours. A spreadsheet of each team member's individual case valuations is provided to the internal lawyer for confirmation. The Directors adjust case fair values depending upon objective case developments, for instance: an offer to settle, mediation agreed, positive or negative legal advice. These adjustments to fair value may result in an increase or decrease in value or no change required.

·      At reporting period ends, written assessments are obtained for a sample of open case investments from external solicitors or primary counsel working on the case on behalf of Manolete.

In all cases, a headline valuation is the starting point of a valuation from which a discount is applied to reflect legal advice obtained, strength of defendant's case, the likely amount a defendant might be able to pay to settle the case, progress of the case through the legal process and settlement offers.  

 

3   Segmental reporting

 

During the six months ended 30 September 2022, revenue was derived from cases funded on behalf of the insolvent estate and cases purchased from the insolvent estate, which are wholly undertaken within the UK. Where cases are funded, upon conclusion, the Company has the right to its share of revenue; whereas for purchased cases, it has the right to receive all revenue, from which a payment to the insolvent estate is made. Revenue arising from funded cases and purchased cases are considered one business segment and are considered to be the one principal activity of the Company. All revenues derive from continuing operations and are not seasonal in nature.

 

Net realised gains on investments in cases represents realised revenue on completed cases.

Fair value movements include the increase / (decrease) in fair value of open cases, the removal of the carrying fair value of realised cases (in the period when a case is completed and recognised as realised revenue) and the addition of the fair value of new cases.

 

	6 months ended 30 September 2022		6 months ended 30 September 2021	Year ended 31 March 2022
	Unaudited		Unaudited	Audited
	£'000s		£'000s	£'000s
Net realised gains on investments in cases	13,598		7,693	15,243
Fair value movements (net of transfers to realisations)	(8,084)		2,491	5,200
Revenue	5,514		10,184	20,443
Arising from:
Funded cases	115		827	1,488
Purchased cases	5,399		9,357	18,955
Revenue	5,514		10,184	20,443

                                                    

4     Analysis of expenses by nature

 

Internal legal costs are included within administrative expenses whereas external legal costs are either capitalised as Investments for open cases or recognised as cost of sales on completed cases. The breakdown by nature of administrative expenses is as follows:

	6 months ended 30 September 2022		6 months ended 30 September 2021	Year ended 31 March 2022
	Unaudited		Unaudited	Audited
	£'000s		£'000s	£'000s
Staff Costs, including pension and healthcare costs	1,827		1,754	3,519
Bad debts including expected credit losses	576		(36)	321
Professional fees	211		198	479
Marketing costs	169		111	222
Other costs, including office costs	288		235	536
Total administrative expenses	3,071		2,262	5,077

 

5     Finance expense

 

	6 months ended 30 September 2022		6 months ended 30 September 2021	Year ended 31 March 2022
	Unaudited		Unaudited	Audited
	£'000s		£'000s	£'000s
Lease liability interest	1		4	6
Other loan interest	103		71	142
Bank loan charges	101		479	648
Total finance costs	205		554	796

 

6    Investments  

 

Investments represent the expected gross profit generated on the Company's ongoing portfolio of cases on settlement. This incorporates the expected settlement less the costs incurred to initially purchase the claim, costs incurred to date, expected future costs, and the share of net gain due to the Insolvency Practitioner. 

 

	6 months ended 30 September 2022		6 months ended 30 September 2021	Year ended 31 March 2022
	Unaudited		Unaudited	Audited
	£'000s		£'000s	£'000s
Investments brought forward	45,718		37,508	37,508
Additions	2,803		2,850	6,470
Realisations	(4,275)		(1,414)	(3,460)
Fair value movement (net of transfers to realisations)	(8,084)		2,491	5,200
Total investments	36,162		41,435	45,718
Current	22,964		34,299	33,520
Non-current	13,198		7,136	12,198
Total investments	36,162		41,435	45,718

 

7   Analysis of fair value movements

 

	6 months ended 30 September 2022		6 months ended 30 September 2021	Year ended 31 March 2022
	Unaudited		Unaudited	Audited
	£'000s		£'000s	£'000s
New case investments	3,207		5,622	7,370
Increase in existing case fair value	367		892	956
Decrease in existing case fair value	(5,242)		(1,244)	(3,693)
Case completions	(7,416)		(2,779)	(4,539)
Increase in fair value attributable to Cartel cases	1,000		-	5,106
Fair value movement (net of transfers to realisations)	(8,084)		2,491	5,200

 

8 Non-cash adjustments to cashflows generated from operations

 

	6 months ended 30 September 2022		6 months ended 30 September 2021	Year ended 32 March 2022
	Unaudited		Unaudited	Audited
	£'000s		£'000s	£'000s
Fair value movements	8,084		(2,491)	(5,200)
Legal costs on realised cases	4,275		1,414	3,460
Finance expense	205		554	796
Depreciation & amortisation	96		96	193
Share based payments	65		63	218
Deferred tax	-		-	89
Finance income	(2)		-	-
Non-cash adjustments to cashflows generated from operations	12,723		(364)	(444)

 

9   Trade and other receivables         

                                         

	6 months ended 30 September 2022		6 months ended 30 September 2021	Year ended 31 March 2022
	Unaudited		Unaudited	Audited
	£'000s		£'000s	£'000s
Amounts falling due in more than one year:
Trade receivables	11,310		11,544	11,086
Amounts falling due within one year:
Gross trade receivables	12,316		11,952	10,096
Less:
Specific provisions	(1,961)		(1,841)	(1,464)
Allowance for expected credit loss	(1,199)		(655)	(865)
Trade receivables	9,156		9,456	7,767
Contract asset	1,642		836	1,245
Prepayments	210		166	177
Trade and other receivables	11,008		10,458	9,189

 

10 Trade and other payables

 

	6 months ended 30 September 2022		6 months ended 30 September 2021	Year ended 31 March 2022
	Unaudited		Unaudited	Audited
	£'000s		£'000s	£'000s
Amounts falling due in excess of one year:
Accruals - direct costs	6,624		8,326	6,853
Amounts falling due within one year:
Trade payables	736		981	734
Accruals - direct costs	3,280		1,561	3,273
Other creditors	371		471	622
Contract liability	1,125		566	846
Other taxation and social security	106		100	119
Total trade and other payables due in one year	5,618		3,629	5,594

 

11 Earnings per share

 

The Basic Earnings Per Share is calculated by dividing the profit attributable to ordinary equity holders by the weighted average number of ordinary shares outstanding during the period. Diluted Earnings Per Share is calculated by dividing the profit after tax by the weighted average number of shares in issue during the period, adjusted for potentially dilutive share options. The following reflects the income and share data used in the earnings per share calculation:

	6 months ended 30 September 2022		6 months ended 30 September 2021	Year ended 31 March 2022
	Unaudited		Unaudited	Audited
	£'000s		£'000s	£'000s
Profit and total comprehensive income for the period attributable to the equity owners of the Company	(4,441)		2,108	3,678
Weighted average number of ordinary shares	43,746,459		43,571,425	43,601,037
Basic Earnings Per Share	£(0.10)		£0.05	£0.08
Diluted weighted average number of ordinary shares	45,218,368		44,666,322	44,907,949
Diluted Earnings Per Share	£(0.10)		£0.05	£0.08