27 June 2019

MANOLETE PARTNERS PLC

("Manolete" or the "Company")

Audited results for the year ended 31 March 2019

Maiden annual results ahead of expectations

Manolete (AIM:MANO), the UK's leading insolvency litigation financing company, today announces its audited results for the year ended 31 March 2019.

Financial (statutory and non-statutory) highlights:

· Revenue up 30% to £13.8m (FY18: £10.6m)

· Gross profit up 49% to £10.1m (FY18: £6.8m)

· EBIT pre-exceptionals up 77% to £7.2m (FY18: £4.1m)

· Profit before tax(before exceptional IPO costs) up 85% to £6.8m(FY18:£3.7m)

· Profit after tax (adjusted for exceptionals) up 70% to £5.5m (FY18: £3.3m)

· Proforma earnings per share (adjusted for exceptionals)¹ up 70% to 13 pence (FY18: 8 pence)

· Maiden proposed final dividend of 1.49 pence per share

· Investment in cases up 72% to £18.2m (FY18: £10.6m)

· Case gross cash inflow of £8.8m up 48% in FY19 (FY18: £5.9m)

· Cash balances of £9.7m, no debt

Operational highlights:

· 103% increase in new core UK insolvency cases: 59 in FY19 (FY18: 29), excluding Cartel Cases

· In total, 61 new case investments in FY19 (FY18: 49), representing a 24% increase

· Ongoing delivery of realised returns: 35 case realisations in FY19, generating gross proceeds of £9.3m (FY 18: 33 case realisations generating £9.0m of gross proceeds)

· Continued increase in average size of realised case completions: realised gross profits grew by 20% to £3.5m in FY19 (FY18: £2.9m)

· ROI for all case completions since inception of 180%

· Average money multiple of 2.8 times for all cases completed since inception

· Average case duration across the full portfolio of 195 completed cases is 11.6 months

· 47% increase in live cases: 84 in process as at 31 March 2019 (57 as at 31 March 2018)

· Roll-out of regional network with in-house lawyers recruited in: North West, South West & Wales, Eastern, North East, Scottish and Southern regions of the UK

· New case enquiries at all-time record levels for the four months ending 31 May 2019

· At the time of writing, 44 new case investments made since IPO in December 2018 (averaging c. 7.3 new case investments per month)

· At the time of writing, 19 cases completed since IPO (averaging over 3 case completions per month)

· Currently 99 live cases ongoing

· Successful IPO on London Stock Exchange's AIM market raising net proceeds of £14.6m

· Significantly increased capital capability and financial covenant - extension of revolving credit facility with HSBC from £10m to £20m at a maximum rate of LIBOR plus 2.75% plus £14.6m net IPO proceeds

· Three key strategic partnership agreements signed: exclusive three-year sponsorship contract with the Institute of Chartered Accountants in England and Wales (Restructuring and Insolvency Community); Key Strategic Partner of R3 (the insolvency industry's trade body); three year sponsorship deal with the Insolvency Practitioners Association.

A copy of the annual report and accounts will be available on the Company's website today and will be posted to shareholders in due course.

Steven Cooklin, Chief Executive, commented:

"We are delighted to announce our first set of annual results as a public company, following our AIM flotation in December 2018. This strong set of results is the latest milestone in our track record of delivering profitable growth, underpinned by our core ability to source, analyse and price complex legal risk. We achieved impressive double-digit growth in revenue and EBIT during the period, delivering continued outstanding investment returns yielding an average money multiple of 2.8x and ROI of 180% on completed cases since inception. The activity levels within the business are at record levels, highlighted by the 44 new case investments that the team has made since the IPO. This firmly underpins our confidence in the current and future trading performance of the business.

"We look forward to working with many more Insolvency Practitioners and their lawyers, as we deploy the proceeds of the IPO, as well as the enhanced debt facility with HSBC, to accelerate our growth plans through financing more and larger insolvency cases, and to delivering continued stand-out returns for insolvency creditors and shareholders alike."

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

Guy Wiehahn

Adrian Haxby

Rishi Shah

Instinctif Partners +44 (0)20 7457 2020

Tim Linacre

Catherine Wickman

Lewis Hill

Katie Bairsto

¹ On a proforma basis: calculated on the basis of the shares in issue after completion of the IPO. The only exceptional item is the cost of the IPO on the AIM Market of £882,000.

Chairman's Statement

For the Year Ended 31 March 2019

Overview

I am pleased to report that the Company has made excellent progress over the past year, both pre- and post-admission to AIM. When I became Chairman at the time of the Initial Public Offering in late 2018, we set out plans to capitalise on our first mover advantage and established track record, in order to accelerate the Company's growth, primarily through investing in more cases and expanding our UK regional network.

The Company's results reflect the strength, resilience and capabilities of the business, as it continues to increase the number and average size of new case investments through its expanding network of Insolvency Practitioners and Insolvency Lawyers throughout the UK.

Financial results

The business achieved impressive growth in the year ended 31 March 2019, with revenues increasing by 30% to £13.8 million (FY18: £10.6m) and profit before tax growing by 61% to £5.9 million (FY18: £3.7m)

The Company has achieved this growth through: the recruitment of additional high quality in-house lawyers, the successful deployment of the funds raised through the HSBC credit facility and the IPO, and continued hard work of the team.

Strategy

We remain focused on strengthening the profile of Manolete, as we continue to increase the number and average size of cases within our insolvency litigation investment portfolio.

An important component to our strategy is to build upon our ever-growing network of established Insolvency Practitioner and Insolvency Lawyer contacts throughout the UK. Over the past year, we have made considerable advancements in strengthening the UK team, with the appointment of six high quality in-house lawyers in different regions across the UK. We believe that, with an enhanced status as one of the UK's leading specialist insolvency litigation finance companies, combined with an increased regional presence, we will be able to strengthen our relationships with Insolvency Practitioners and legal firms, which will lead to an increased volume of enquiries.

Further powering our growth strategy, this year we signed an exclusive three-year sponsorship contract with the Institute of Chartered Accountants in England and Wales (Restructuring and Insolvency Community), became a Key Strategic Partner of R3 (the leading trade association for the UK's insolvency, restructuring, advisory, and turnaround professionals) and agreed a three year sponsorship deal with the Insolvency Practitioners Association.

These sponsorship deals are an integral part of our carefully planned marketing strategy. They give the Company a very high profile with the insolvency community in their technical conferences and networking events and ensure that the Manolete name and its business model are well recognised.

Dividend

The Board has adopted a progressive dividend policy based on a pay-out ratio of 20% of profit after tax, with one third being paid as an interim dividend and two thirds as a final dividend. For the year to 31 March 2019, the Board is proposing a final dividend of 1.49p per share. Subject to the approval of Shareholders at the Annual General Meeting on 20 September 2019, the dividend to Ordinary Shareholders is payable on 30 September 2019 to those shareholders who are on the register of members at 13 September 2019. No interim dividend was paid for the part of the financial year before the IPO.

The Annual General Meeting will be held at 10.30am on 20 September 2019 and we look forward to meeting Shareholders, should they wish to attend.

Corporate Governance

The Board of Directors is committed to good corporate governance. The Company has adopted the ten principles of the 2018 Version of the Corporate Governance Code as set out by the Quoted Companies Alliance. Our arrangements are further described in our Corporate Governance Statement in our Annual Report.

The Audit Committee report and the Remuneration Committee report in our Annual Report describe the remits and approaches of those committees to fulfilling their governance responsibilities. A statement on corporate governance is also provided on our website (https://investors.manolete-partners.com/company-information/corporate-governance).

People

Manolete's committed and highly-skilled staff are fundamental to its success, and on behalf of the Board and the Shareholders, I would like to thank all of our staff for their continued dedication.

Outlook

We are confident that we have invested in a portfolio of cases that will produce attractive returns for the Company. We are seeing a strong stream of new cases, which gives us confidence in our future prospects.

We believe that the business is very well-positioned to consolidate its leadership position in the insolvency litigation financing market. We raised £16.25m (before costs) at the IPO and we are successfully deploying these funds to grow our case-load of investments. We believe that the IPO has raised our profile significantly in our marketplace, and we are building an outstanding team of in-house lawyers to strengthen our regional network, as promised at the IPO.

The Company has made a strong start to 2019 and we look forward to a promising future.

Peter Bertram

Non-Executive Chairman

26 June 2019

Chief Executive Officer's Report

For the Year Ended 31 March 2019

I am pleased to report on a significant year of growth and delivery to Shareholders for the financial year ended 31 March 2019.

IPO on AIM

In December 2018, we completed a successful listing on the AIM market of the London Stock Exchange. The benefits of the IPO, in terms of public profile, strength of balance sheet and cash resources have emerged rapidly. In the final quarter of FY19, Manolete invested in 21 new cases, averaging seven new case investments per month. New case enquiries for the months of February to May 2019 were at all-time record levels. With free cash on the balance sheet at 31 March 2019 of £9.7m (FY18:£5.9m), no debt, and our unutilised £20m four-year Revolving Credit Facility with HSBC, Manolete is a highly credible financial partner to the Insolvency Practitioners (IPs), solicitor firms and barristers that provide us with case opportunities and a large proportion of repeat business.

Our status as a well-capitalised public company has also greatly assisted our ability to attract new legal talent to the Company. The plan announced at the time of the IPO to build out a regional network of locally-based, high-calibre, in-house insolvency lawyers has already been largely completed with only one of the seven regions across England, Scotland and Wales yet to be filled. The North West region was already active at the time of the IPO and since then, we have added highly experienced insolvency litigators in Scotland, the North East, the East of England, South West & Wales and the South of England.

The significantly increased financial and human resources now available to the Company have just recently come on board and we look forward to the long-term benefits that these will bring to the Company and our Shareholders, as we grow the business and take advantage of the opportunities available.

Strong operating and financial performance

Manolete has delivered another positive operating and financial performance this financial year. Operating profit increased by 77% to £7.2m (FY18: £4.1m), which was driven by several key factors.

Core new case investments increased by over 100% to 59 in FY19 (FY18: 29), excluding the group of 20 Competition Cartel cases ("Cartel Cases") that we purchased in FY18 (two further Cartel Cases were purchased in FY19).

The total number of new case investments (including the Cartel Cases) increased by 24% to a record number of 61 in FY19. Manolete has invested in new cases at a rate of more than one new case per week throughout FY19. At present, this rate has increased to 1.5 new cases invested in per week, taking us to a current total of 300 signed investments (201 of which have been completed - three of which are partially completed).

In FY19, completed cases recovered a gross total £8.8m in cash (FY18: £5.9m) before payments into Insolvent Estates, representing a 48% increase.

New case completions in FY19 were also at a high level, resulting in a 20% increase in gross profit from realised cases - 35 completed cases in FY19 generating £3.5m of gross profit (FY18: £2.9m from 33 completed cases). This means that Manolete was completing a case every 1.5 weeks throughout the year, which highlights the impressive speed of completion under our bespoke insolvency litigation finance model.

The average gross profit per completed case was £99k for FY19 (FY18: £82k). The 20% increase in gross profit per case reflects the continued rise in the average size per case.

The Cartel Cases continue to progress well. Our external legal team has completed their Phase One work and is now working to complete fully particularised claims over the next phase of work, with a view to issuing the claims within the next nine to 12 months. 20 of the 22 Cartel Cases were purchased for a nominal £5,000 per case together with a 50/50 profit share agreement. Two particularly large cases were purchased for £100,000 and £125,000 respectively, but in both of these cases, Manolete has a 90% profit share on the claims. Some of the smaller claims are likely to be uneconomic to take forward into the next phase and will be culled with low level costs on those cases provided against.

The overall Cartel Cases opportunity remains highly attractive. To reflect our increased confidence in the final outcome of these cases as a group of claims, as at 31 March 2019, we have increased our carrying value of the cases to a combined £5m (FY18: £4m). The final outcome on the Cartel Cases is hoped to be a multiple of the carrying value, but there is still much work to do to bring these cases to final fruition.

Investment returns

Our investment track record, by vintage, continues to deliver outstanding results. All vintages up to and including FY16 have been completed and FY17 is already at an 87% completion rate. FY18 contains most of the Cartel Cases and will therefore have a longer completion duration than usual. Manolete's model is characterised by short case durations, high ROIs, exceptional money multiples and very high IRRs.

Financial year	Number of investments	Number completed	%ge completion	Number outstanding	Total invested to date £000's	Total recovered £000's**	Total gain £000's **	IP share **	Manolete gain £000's **	Duration in months on completed cases**	Return on investment %**	Money Multiple **	IRR % **	Valuation of live cases £000s	Average value per Case £000s
2010	3	3	100	0	52	28	(24)	11	(35)	7	(67)	0.3	0	0	0
2011	0	0	100	0	0	0	0	0	0	0	0	0	0	0	0
2012	8	8	100	0	763	2,524	1,761	580	1,181	18	156	2.6	236	1,027	171
2013	10	10	100	0	174	780	606	316	290	7	167	2.7	281	1,084	181
2014	42	42	100	0	594	3,884	3,290	2,427	863	10	147	2.5	424	1,685	60
2015	39	39	100	0	1,404	7,648	6,244	3,290	2,954	13	211	3.1	526	1,934	60
2016	36	36	100	0	1,833	9,418	7,585	4,368	3,217	15	176	2.8	175	2,707	73
2017	31	27	87	4	1,097	3,755	2,917	1,679	1,238	10	148	2.5	652	6,705	131
2018	49	19	39	30	1,860	3,371	3,041	2,090	951	8	288	3.9	1409	10,555	185
2019	61	17*	28	44	849***	1,739*	1,434*	745	689*	6	226*	3.3*	236*	18,197	217
	279	201	72	78	8,626	33,147	26,854	15,506	11,348	11	180	2.8	394

*includes cases completed since the year-end

** only refers to completed cases

*** this vintage is still young and therefore the investment figures are comparatively low

The number of completed cases in 2019 includes three partially completed cases.

Given the record level of new case investments, particularly since the IPO, the level of unrealised profit is naturally higher than usual this year. However, it is our expectation that the current cohort of live cases in our portfolio will perform equally well compared to recent past performance indicated in the table above.

The law changes in October 2015 (Small Business Enterprise and Employment Act 2015) and April 2016 (the date the Jackson Reforms applied to insolvency litigation) radically opened up the insolvency litigation financing sector and significantly increased the appeal of Manolete's model. We believe the model is now increasingly perceived to be the most advantageous solution for helping IPs maximise returns to creditors. Consequently, in the last 18 months, we have seen a marked improvement in the number, size and quality of new case enquiries coming into the Company. This has been a continuing trend which underpins the increasingly high quality of our portfolio (84 live cases as at 31 March 2019).

People and stakeholders

I am enormously grateful to our in-house legal team for their pivotal role in delivering another outstanding performance over the last 12 months. The IPO process, in the challenging market conditions that prevailed towards the end of 2018, was a significant distraction for management, including our Head of Legal, Mena Halton, who nonetheless, kept the business moving forward at a rapid pace. By the end of May 2019, we had doubled the size of the legal team with some exceptional new hires and I believe that the platform is well-positioned to manage the continuing growth of our business.

I would also like to record my thanks to the many IPs and solicitors who refer cases to us. Over 60% of invested cases are from the same IP firms, and it is this recurring referral network that is the core engine of the Manolete business which has been built over the last 10 years. Every IP who has ever worked on a live case with Manolete has always come back to us with further case opportunities, which is testament to the bespoke insolvency litigation financing model we have adopted, the quality of our people and our expertise in financing cases.

IPs carry a heavy responsibility in the UK economy; they are entrusted to recover funds (often in very challenging circumstances) for creditors of failed businesses. Particularly against the backdrop of the issues surrounding Brexit and various other significant global financial challenges, an effective recovery and insolvency industry plays a vital role in maintaining the UK as a premier business destination. We are honoured to play our role in supporting them.

I am pleased that we are delivering on the plans set out during our IPO, as we accelerate our growth through investing in more claims, accepting higher value cases and developing our UK regional network.

Steven Cooklin

Chief Executive Officer

26 June 2019

Chief Financial Officer's Report

For the Year Ended 31 March 2019

I am pleased to give my review of the Company's audited results for the year to 31 March 2019.

Revenue

The Company's total revenues have increased significantly by 30% to £13.8m (FY18: £10.6m).Revenue is split between realised and unrealised revenue, as follows:

	FY19	FY18
	£000s	£000s
Realised revenue	7,148	6,725
Unrealised gains on investments in cases	6,624	3,905
Total	13,772	10,630

Realised revenue grew 6% year-on-year to £7.1m (FY18: £6.7m). We have seen a good level of realisations, with 35 cases completing (of which two partially closed) in the year.

With a record number of new case investments, particularly in the months since the IPO, unrealised gains on investments grew by 70% to £6.6m (FY18: £3.9m). This reflects both the development of existing case investments and the increase in new case investments in the year. The Company raised £14.6m (net of expenses) from its IPO in December 2018 and is successfully deploying this cash to acquire new cases, whilst not relaxing the rigour of our investment appraisal process.

New cases increased by 24% to 61 in FY19 (FY18: 49 new cases) and of those invested in during the year, 27 have been taken on since the IPO. Excluding the Cartel Cases, the increase in new case investments in FY19 was over 100%, which more accurately reflects the development of the Company's core UK insolvency litigation financing business. Investment in cases on the balance sheet increased by 72% to £18.2m in FY19. Only £1m of the increase is accounted for by the encouraging progress on the Cartel Cases. As at 31 March 2019, there were 84 live cases in progress, a 47% increase (FY18: 57 live cases in process). At the time of writing we currently have 98 live cases in progress.

The majority of revenue was realised revenue. Realised revenue was 52% of total revenue (FY18: 63%). The weighting towards realised revenue reflects our strategy of securing early settlements on many of our cases. The proportion of realised revenue is lower this year due to the very high level of new investment activity, particularly since the IPO in December 2018 (27 new cases were taken on between the IPO and the FY19 year-end). We are delighted with the current portfolio of live cases and expect them to perform in line with our historic investment return levels. Although the normal caveat for litigation funding applies - it is naturally very difficult to predict when cases will reach a successful conclusion and accordingly the blend between realised and unrealised gains will change from year to year. However, our model has consistently delivered strong and fast investment returns over many years and we have every expectation that this will remain to be the case. The one exception is the Cartel Cases. They are unique in our portfolio and will take longer to realise but the potential returns are highly attractive.

In the majority of cases (excluding Cartel Cases) this year's unrealised revenue becomes next year's realised revenue, as our average case duration is circa 12 months. When a case is fully completed, revenue is then recognised as realised and previously unrealised gains on that case are reversed.

It should be noted that the full recovery on a purchased case is recognised in revenue (the share going to the insolvent estate is a cost of sale). However, on funded cases, only the Company's share of the proceeds plus our cost recovery is counted as revenue. The insolvent estate's share of a recovery on a funded case does not feature in our accounts.

The following table illustrates the growth in cases being purchased by the Company, rather than funded:

	Totals	Purchased	Purchased	Funded	Funded
		Number	%	Number	%
FY18	49	41	87	8	13
FY19	61	55	90	6	10

As can be seen above, the proportion of our new cases purchased has increased from 87% in FY18 to 90% in FY19.

Cost of sales

Cost of sales comprises: legal costs on realised cases, the initial payments made to insolvent estates on our realised case investments (both purchased and funded) and payments to insolvent estates on successful realisations of purchased cases. Cost of sales excludes payments made directly to the insolvent estates on completed funded cases.

Gross profit

Gross profit grew by 49% to £10.1m (FY18: £6.8m). Our gross profit margin increased to 73% (FY18: 64%). The growth in gross profit reflects the movement towards larger cases, in both realised and unrealised gains. It also reflects the increased number of live cases in the Company's investment portfolio.

Movement in gross profit split between gross profit on realised cases and on unrealised cases is as follows:

	FY19	FY18
	£000s	£000s
Gross profit on realised cases	3,463	2,886
Gross profit on unrealised cases	6,623	3,905
Total	10,086	6,791

The table above shows, realised gross profits grew by 20% from FY18 to FY19, whilst unrealised gross profits grew by 70%.

We analyse gross profit into the separate categories of funded and purchased cases. Our strategic preference is to purchase cases rather than fund them. Generally, our Insolvency Practitioner clients, where possible, prefer the Company to purchase cases as this gives them and the insolvent estate fuller protection from any potential adverse costs. It also provides the Company with full operational control of the case through the litigation process. The gross profit analysis in the year was skewed against this trend, principally due to the impact of seven large funded cases, four of which were realised and the other three were unrealised.

	FY19	%	FY18	%
	£000s		£000s
Gross profit on funded cases	3,606	36	860	13
Gross profit on purchased cases	6,480	64	5,931	87
Total	10,086	100	6,791	100

Administrative expenses

Administrative expenses, including PLC costs, increased by 6% to £2.9m (FY18: £2.7m) and fell as a proportion of gross revenue from 26% to 21%. In FY18, the administrative expenses increased because the Company adopted a conservative provisioning approach to a few overdue debts. In FY19, the Company has decided that it has sufficient provisions against overdue debts and that no further material provisions are necessary and it hopes a proportion of these provisions will ultimately be released, when recoveries are made.

The reduction in administrative expenses caused by the non-recurrence of significant bad debt provisions was offset by increases in staff costs, as the Company recruited more in-house lawyers to service increased activity. Staff numbers have increased from seven as at 31 March 2018 to twelve as at 31 March 2019, as the Company rolled out its promised regionalisation programme, which we believe will lead to a significant increase in enquiries and new cases. The Company is also incurring PLC-related costs following its admission to AIM in December 2018. Our marketing costs have increased as we have expanded our business development activities since the IPO, in order to increase our market share and secure a greater level of enquiries. As noted in the CEO's Report, we have acquired valuable sponsorship rights with the three key industry regulators and trade associations: The Institute of Chartered Accountants in England and Wales, R3 (the insolvency practitioners' professional association) and the Insolvency Practitioners Association.

Statutory operating profit before non-recurring items (Earnings Before Interest and Tax)

Operating profit before non-recurring items (principally being only the costs of the IPO on AIM) grew by 77% to £7.2m (FY18: £4.1m) with the operating margin improving to 52% (FY18: 38%). Operating profit after non-recurring items was £6.3m, which was a 55% increase on FY18 operating profit. Operating profit margin after non-recurring items was 46% (FY18: 38%).

The Company incurred costs of £1.6m in connection with its IPO on AIM, where trading began on 14 December 2018 and £0.9m of these have been shown as non-recurring items; the balance of IPO costs of £0.7m were charged against the share premium account.

Finance costs

Following the receipt of net IPO proceeds of £14.6m in December 2018, all debt has been repaid, although the Company agreed a £20m debt facility with HSBC in December 2018 to facilitate the growth of its case load in the future. The Company pays a 0.7% commitment fee on any unused facility with HSBC. As at 31 March 2019, the £20m HSBC facility was completely undrawn.

During the year, the Company incurred £0.4m of finance costs (FY18: £0.4m). Loan interest amounted to £0.2m (FY18: £0.3m) and the remaining costs of £0.2m (FY18: £0.0m) comprised the amortisation charges of the costs of setting up the facility. The unamortised costs of £0.6m in the balance sheet are being amortised over the four-year life of the facility

Profit before tax

Profit before tax has increased by 61% to £5.9m (FY18: £3.7m). The Company's pre-tax profit margin has increased from 35% to 43%.

Taxation

The Company's effective tax rate is 21.4%, as most of the IPO costs are not expected to be tax deductible. FY18's tax rate was quite low at 12%, because of the utilisation of tax losses brought forward and the release of deferred tax provisions. From FY20 onwards, the effective tax rate is likely to approximate to the current corporation tax rate, as the Company has relatively small amounts of disallowable expenses. The Company will discharge its corporation tax liabilities over the next few months.

Profit after tax

Profit after tax has increased by 43% to £4.7m (FY18: £3.3m). The post-tax margin has increased from 31% to 34%.

Earnings per share

The earnings per share figures in the Statement of Comprehensive Income are not directly comparable to the prior year because the Company's number of shares in issue increased from 1,015,000 to 43,571,425 after the IPO. The earnings figures are also impacted by the non-recurring costs of the IPO of £0.9m. After adjusting for these two factors, proforma earnings per share increased by 70% from 7.5 pence to 12.7 pence.

Investment in cases

The Company was managing 84 live case investments as at 31 March 2019, compared to 57 live cases as at 31 March 2018. The split between Purchased and Funded cases at these dates is as follows:

	As at 31 March 2019		As at 31 March 2018
Funded	13	15%	16	28%
Purchased	71	85%	41	72%
Total	84	100%	57	100%

The total investment in cases amounted to £18.2m in FY19, an increase of 72% (FY18: £10.6m). Investment in cases are shown at fair value, based on the Company's estimate of the likely future realised gross profit, plus costs incurred. Case valuations are reviewed on a monthly basis but are only updated when there are developments in the case. Case valuations can be reviewed downwards, as well as upwards. Any material valuations (greater than £0.1m per individual case) are corroborated with the external lawyers working on the case, who provide updated legal opinions as at the year-end and the half year-end. The Company does not capitalise any of its internal costs, these are fully expensed to the Statement of Comprehensive Income as incurred.

Trade receivables, stock and cash conversion

Trade and other receivables have risen to £3.8m (FY18: £3.0m). However, the majority (£0.6m) of this increase arises from the re-classification of the costs of setting up the HSBC facility. In FY18, these costs(£0.6m) were set off the £9.5m debt owed to HSBC. As at 31 March 2019, the Company was debt-free and so has transferred the unamortised portion of these costs into trade and other receivables.

Turning to trade receivables, many of the realisations achieved are paid by the debtor promptly, especially where the debtor is a large company, an insurance company or a wealthy individual. However, in some cases, the debtor is dependent on selling assets to realise cash or pay the award or settlement and hence cash realisation can be delayed for some months. Where appropriate, the Company will secure its position by obtaining charging orders over the relevant assets. In smaller cases, the Company sometimes accepts payments on an instalment arrangement. However, the Company monitors outstanding debtors very closely. Based on realised revenue and receivables as at 31 March 2019, the Company is converting debtors into cash in 152 days, compared to 159 days as at 31 March 2018.

In addition, the Company estimates that, out of the larger, non-current debts, 82% of the debtor balance is covered by charges over property, related liabilities to the insolvent estates or bad debt provisions

On one funded case, we successfully supported a Trustee in Bankruptcy in obtaining a Court order that resulted in a valuable London property being returned into the bankrupt's estate. As the Trustee in Bankruptcy was under pressure to distribute this value to the creditors, Manolete obtained an independent, third-party valuation of the property and acquired it for cash at that value. Once remedial work has been completed, we will seek to sell the property during the current financial year. This property is currently shown on the balance sheet as stock, whilst the refurbishment work is being undertaken.

The Company also monitors case cash realisations very closely; this includes cash received directly by the insolvent estate of funded cases. Annual case cash realisations have grown significantly over the last five years from £1.2m in FY15 to £6m in FY18 and up to £8.8m in FY19. In the month of March 2019 alone for example, the Company received £935,000 in cash mainly from two case realisations(after deducting all payments due to insolvent estates).

Borrowings and loans

The Company has been financed in the past by debt and retained profits. However, the Company is now debt free. The net proceeds from the IPO of £14.6m were received in December 2018. The Company used £5m of these proceeds to pay off the debt owed to HSBC. The Company now has cash reserves of £9.7m as at 31 March 2019. It also has an unused facility of £20m with HSBC (all of the facility is currently undrawn) and this facility and the cash reserves will be used to finance the growth of the case portfolio over the next few years.

Patrick Lineen

Chief Financial Officer

26 June 2019

The Directors present their strategic report for the year ended 31 March 2019.

Strategy and Business Model

The Company's strategy for growth and its business model are described in detail in the Annual Report. On page 13-14, we have set out the principal risks which may present challenges in executing the business model and delivering the strategy,

The financial statements for the year ended 31 March 2019 represent a very satisfactory out-turn for the business. Year-on-year Operating Profit before non-recurring items and tax and interest grew 77% to £7.2m and net assets grew 261% to £28m, following our successful IPO.

The number of employees was 12 at the end of the financial year.

The business continues to grow apace, at the financial year-end the cumulative number of signed litigation investments has grown to 279 cases. Out of 84 live cases at the financial year-end, 71 of these are purchased cases. In the month following the year ended 31 March 2019, the Company experienced a period of very high activity with case completions resulting in over £0.6m of case settlements.

Key Performance Indicators

	Year Ended 31 March 2019	Year Ended 31 March 2018	% change
	£000s	£000s
Revenue	13,772	10,630	30%
Gross profit	10,087	6,791	49%
Operating profit before non-recurring items	7,212	4,071	77%
Profit after tax	4,664	3,261	43%
Value of investments	18,197	10,555	72%

	Year Ended 31 March 2019	Year Ended 31 March 2018
	No.	No.
Number of signed litigation investments	279	218	28%
Live cases	84	57	47%
Purchased cases	71	41	73%
Funded cases	13	16	(19%)

The improvement in key performance indicators is analysed in the Report of the Chief Executive Officer and the Report of the Chief Financial Officer.

Principal risks and uncertainties

The Board is responsible for developing a comprehensive risk framework and a system of internal controls. We have identified the following as the principal risks and uncertainties the Company faces.

Principal Activity	Principal Risk	Impact	Mitigation
Market Risk	Inability to continually and successfully attract, select and pursue investments in the UK insolvency litigation market.	The Company may be exposed to adverse cost liabilities if investments underperform against expectations.	The Company focuses on well-established case selection screening procedures, rigorous internal and external cost controls, and close attention to the adequacy of liquidity in the business to comfortably support our case cost profile at all times.
Staff Risk	Over-reliance on key staff and inability to recruit new high-quality staff.	If key staff become unavailable, poor operational decisions could be made. If the right calibre of new staff cannot be recruited, expansion could be limited.	Key man life insurance on the CEO. More delegation to key staff. Comprehensive and vigorous recruitment procedures.
Litigation Risk	Unexpected Court decisions in cases proceeding to full trial.	Cases could be lost or recoveries could be worse than anticipated. Adverse legal costs (the defendant's costs) would become payable by the Company if the claim has been issued.	Press for early settlement through mediation and without prejudice settlement negotiations. Early abort of cases where unexpected, adverse evidence emerges. On purchased cases (the large majority of the Company's cases) we can abort the case if prospects deteriorate. On funded cases we can terminate funding.

Legal Costs Risk	Legal costs can turn out to be more expensive than anticipated.	Case recoveries are poorer than expected.	Press for early settlement through mediation and without prejudice settlement negotiations. Agree fixed fees with external lawyers for each stage of litigation.
Recovery Risk	It may be difficult to collect agreed settlements or judgements	The Company will suffer from bad debts	Rigorous net worth checks on defendants before cases are accepted. Securing charging orders over defendants' properties
Case Risk	Case defects emerge during the litigation process	The Company will suffer abortive legal and investment costs and adverse costs (paying the defendant's legal costs)	Rigorous legal review before cases are accepted and close supervision of live cases by experienced and competent in-house lawyers. On purchased cases (the large majority of the Company's cases) we can abort the case if prospects deteriorate. On funded cases we can terminate funding.
Relationship Risk	Relationships with key sources of enquiries may not be maintained (including important creditors such as banks and HMRC)	The rate of enquiries referred to the Company may slow down	Active marketing and engaging with insolvency practitioners and solicitors and creditor groups including HMRC
Funding Risk	The growth of our business out-strips the capital we have available to fund cases	The ability of the Company to accept new cases is limited	Following our IPO, we have a strong capital position and have additional capacity through our HSBC facility

Outlook and current trading

We are confident we have invested in a portfolio of cases that will produce attractive returns for the Company. We are seeing strong growth in new case enquiries, which give us confidence in our future prospects. Four cases have been completed since the year end and the current number of live cases is 98 compared to 84 at the FY 19 year-end. Furthermore, the average size per case continues to rise

We believe that the business is very well-positioned to consolidate its leadership position in the insolvency litigation financing market. We raised £14.6m (net of expenses) at the IPO and we are successfully deploying these funds to grow our case-load of investments. We believe that the IPO has raised our profile significantly in our marketplace, and we are building an outstanding team of in-house lawyers to strengthen our regional network, as promised at the IPO.

The Company has made a strong start to 2019 and we look forward to a promising future.

On behalf of the Board:

Steven Cooklin

Chief Executive Officer

26 June 2019

Statement of Comprehensive Income

For the year ended 31 March 2019

	Note	31 March 2019 £000s	31 March 2018 £000s
Revenue	4	13,772	10,630
Cost of sales		(3,686)	(3,839)
Gross profit		10,086	6,791

Administrative expenses	8	(2,874)	(2,720)
Operating profit	6	7,212	4,071
Exceptional costs-IPO		(882)	-

Operating profit post-exceptionals		6,330	4,071
Finance income	9	1	2
Finance expense	9	(393)	(380)

Profit before tax		5,938	3,693

Taxation	10	(1,274)	(432)

Profit and total comprehensive income for the year attributable to the equity owners of the company		4,664	3,261


Earnings per share

Basic (pence per share)	11	£0.32	£35.25
Diluted (pence per share)	11	£0.31	£35.25

The above results were derived from continuing operations.

Statement of Financial Position

As at 31 March 2019

Company Number: 07660874		31 March 2019	31 March 2018
	Note	£000s	£000s
Non-current assets
Intangible assets	13	6	-
Deferred tax asset	18	46	-
Total non-current assets		52	-

Current assets
Investments	12	18,197	10,555
Stock	14	447	-
Trade and other receivables	15	3,777	2,973
Cash and cash equivalents	16	9,692	5,934
Total current assets		32,113	19,462

Total assets		32,165	19,462

EQUITY AND LIABILITIES
Equity
Share capital	20	174	100
Share premium	21	4	1,015
Share based payment reserve	21	67	-
Special reserve	21	3,157
Retained earnings	21	24,613	6,642
Total equity attributable to the equity owners of the company		28,015	7,757

Non-current liabilities
Borrowings	19	-	8,870
Total non-current liabilities		-	8.870

Current liabilities
Trade and other payables	17	4,150	2,830
Borrowings	19	-	-
Deferred tax liability	18	-	5
Total current liabilities		4,150	2,835

Total liabilities		4,150	11,705

Total equity and liabilities		32,165	19,462

The financial statements were approved by the Board of Directors and authorised for issue on 26 June 2019.

Steven Cooklin

Chief Executive Officer

Statement of Changes in Equity

For the year ended 31 March 2019


		Share Capital	Share Premium	Share based payment reserve	Special Non- distributable reserve	Retained Earnings Attributable to the equity owners of the company	Total Equity
	Note	£000s	£000s	£000s		£000s	£000s

As at 1 April 2017		99	1,015	-	-	3,381	4,495

Comprehensive income
Profit for the year		-	-	-	-	3,261	3,261
Transactions with owners
Issue of ordinary shares		1	-	-	-	-	1
As at 31 March 2018		100	1,015	-	-	6,642	7,757
Profit for the year		-	-	-	-	4,664	4,664
Transactions with owners
Issue of ordinary shares	20	74	16,213	-	-	(37)	16,250
Transaction costs of share issue		-	(723)	-	-	-	(723)
Reduction of share premium account	21	-	(16,501)	-	3,157	13,344	-
Share based payment expense	21	-	-	21	-	-	21
Deferred tax on share-based payments	21	-	-	46	-	-	46
As at 31 March 2019		174	4	67	3,157	24,613	28,015

Statement of Cash Flows

For the year ended 31 March 2019

	31 March 2019	31 March 2018
	£000s	£000s
Cash flows from operating activities
Profit before tax	5,938	3,693
Adjustments for non-cash/non-operating items:
Fair value movements	(6,624)	(3,905)
Finance income	(1)	(2)
Legal costs on realised cases	1,387	1,375
Finance expense	393	380
Share option reserve	(21)	-
Interest paid	-	437
Operating cashflows before movements in working capital	1,072	1,978

Changes in working capital:
(Increase) in trade and other receivables	(157)	(1,390)
Increase in trade and other payables	40	163
Cash generated from operations	955	751
Income taxes refunded	-	226
Net cash generated in operating activities	955	977

Cash flows from investing activities
Investment in cases	(2,405)	(1,320)
Purchase of property	(447)	-
Purchase of intangible assets	(6)
Finance income received	1	2
Net cash (used)/generated in/from investing activities	(2,857)	(1,318)

Cash flows from financing activities
Proceeds from issue of ordinary shares(net of expenses)	15,569	1
Proceeds from borrowings	-	8,871
Repayment of borrowings	(9,500)	(3,050)
Payment of borrowing facility set up costs	(189)	-
Repayment of directors' loans	-	(230)
Interest paid	(220)	(817)
Net cash generated from financing activities	5,660	4,775

Net increase in cash and cash equivalents	3,758	4,434

Cash and cash equivalents at the beginning of the year	5,934	1,500
Cash and cash equivalents at the end of the year	9,692	5,934

Notes forming part of the Financial Statements

For the year ended 31 March 2019

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.

2. Summary of significant accounting policies

The principal accounting policies applied in the preparation of these financial statements are set out below. The policies have been consistently applied to all the years presented, unless otherwise stated.

2.1 Basis of preparation

The above audited financial information does not constitute statutory financial statements as defined in section 434 of the Companies Act 2006. The above figures for the period ended 31 March 2019 have been extracted from the Company's financial statements which have been reported on by the Company's auditors and received an audit opinion which was unqualified. The Company's statutory financial statements for the year ended 31 March 2018 have been lodged with the Registrar of Companies. These financial statements received an audit report which was unqualified and did not include any reference to matters to which the auditors drew attention by way of emphasis without qualifying their report or a statement under section 498(2) or section 498(3) of the Companies Act 2006. The financial statements for the year ended 31 March 2019 will be dispatched to the shareholders and filed with the Registrar of Companies. The preliminary announcement was approved by the Board and authorised for issue on 26 June 2019.

Measurement bases

The financial statements have been prepared under the historical cost convention. Historical cost is generally based on the fair value of the consideration given in exchange for assets.

The preparation of the financial statements in compliance with adopted IFRS requires the use of certain critical accounting estimates and management judgements in applying the accounting policies. The significant estimates and judgements that have been made and their effect is disclosed in note 3.

2.2 Going concern

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 financial statements. For these reasons, they continue to adopt the going concern basis in preparing the Company's financial statements.

2.3 Functional and presentation currency

The financial information is presented in the functional currency, pounds sterling ("£") except where otherwise indicated.

2.4 New standards, amendments and interpretations

The Company early adopted IFRS 9 'Financial Instruments' and IFRS 15 'Revenue from Contracts with Customers' on 1 April 2015 in the historical financial information presented in the Company's admission document on admission to AIM and these standards did not have a material effect on the financial statements of the Company in the period of initial application. Therefore, these standards have not been first time adopted in the current period.

The adoption of the following amendments in the current year have not had a material impact on the Company's financial statements:

	EU effective date - periods beginning on or after
IFRS 2 Share-based Payment: Amendment in relation to the classification and measurement of share-based payment transactions	1 January 2018

Certain other new standards and interpretations have been issued but are not expected to have a material impact on the Company's annual report and accounts.

New and revised IFRS Standards in issue but not yet effective

At the date of authorisation of these financial statements, The Company has not applied the following new and revised IFRS Standards that have been issued but are not yet effective.

IFRS 16 'Leases'

The IASB has published IFRS 16 'Leases', completing its long-running project on lease accounting. The new Standard, which is effective for accounting periods beginning on or after 1 January 2019, requires lessees to account for leases 'on-balance sheet' by recognising a 'right-of-use' asset and a lease liability. The date of initial application of IFRS 16 for the Company will be 1 April 2019. It will affect most companies that report under IFRS and are involved in leasing and will have a substantial impact on the annual report and accounts of lessees of property and high value equipment. This standard has been endorsed by the European Union.

The Company's management has carried out an impact review of the implementation of IFRS 16 and has decided it will apply the modified retrospective adoption method in IFRS 16, and, therefore, will only recognise leases on the balance sheet as at 1 April 2019. In addition, it has decided to measure right-of-use assets by reference to the measurement of the lease liability on that date. This will ensure there is no immediate impact to net assets on that date.

At 31 March 2019 operating lease commitments amounted to £483,000 (see note 23). Assuming the Company's lease commitments remain at this level, the effect of discounting those commitments is anticipated to result in right-of-use assets and lease liabilities of approximately £312,000 being recognised on 1 April 2019. However, further work still needs to be carried out to determine whether and when extension and termination options are likely to be exercised, which may result in the actual liability recognised being higher than this.

Instead of recognising an operating expense for its operating lease payments, the Company will instead recognise interest on its lease liabilities and amortisation on its right-of-use assets. This will increase reported EBITDA by the amount of its current operating lease cost, which for the year ended 31 March 2019 was approximately £194,000.

IFRIC 23 'Uncertainty over Income Tax Positions'

IFRIC 23, "Uncertainty over Income Tax Positions", clarifies how to recognise and measure current and deferred income tax assets and liabilities when there is uncertainty over income tax treatments.

The Company does not expect any other standards issued by the IASB, but not yet effective, to have a material impact on the Company.

The following is a list of other new and amended standards which, at the time of writing, had been issued by the IASB but which are effective in future periods. The amount of quantitative and qualitative detail to be given about each of the standards will, much like the amount of detail to be given about IFRS 16, depend on each entity's own circumstances.

· Amendments to IFRS 9 Prepayment Features with Negative Compensation (effective 1 January 2019)

· Amendments to IAS 28: Long-term Interests in Associates and Joint Ventures (effective 1 January 2019)

· Annual Improvements to IFRSs 2015-2017 Cycle (IFRS 3 Business Combinations and IFRS

joint Arrangements, IAS 12 Income Taxes, and IAS 23 Borrowing Costs) (effective 1 January 2019)

· IFRS 17 Insurance Contracts (effective 1 January 2021)

2.5 Revenue recognition

Revenue comprises fair value of investments and realised consideration. Realised consideration occurs when a case is settled, or a Court judgement received. Unrealised gains are recognised as cases appreciate in value.

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

2.6 Net finance expense

Finance expense

Finance expense comprises interest on bank loans and other interest payable. Interest on bank loans and other interest is charged to the statement of comprehensive income over the term of the debt using the effective interest rate method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.

Finance income

Finance income comprises interest receivable on funds invested and other interest receivable. Interest income is recognised in profit or loss as it accrues using the effective interest method.

2.7 Employee benefits: Pension obligations

The Company operates a defined contribution plan. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. The Company has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.

The Company has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.

2.8 Intangible assets

Intangible assets are measured at cost and are amortised on a straight-line basis over their estimated useful lives. Amortisation is charged within administrative expenses in the statement of comprehensive income so as to write off the cost of assets over their estimated useful lives, on the following basis:

Website development costs: 33.3% of cost, once the website development is complete

2.9 Stock

Stock is held at the lower of cost or net realisable value.

2.10 Financial assets

Classification

The Company classifies its financial assets at amortised cost or fair value through profit or loss. Financial assets do not comprise prepayments. Management determines the classification of its financial assets at initial recognition.

Amortised costs

The Company's financial assets held at amortised cost comprise trade and other receivables and cash and cash equivalents in the statement of financial position.

These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise principally through the provision of goods and services to customers (e.g. trade receivables), but also incorporate other types of contractual monetary asset. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue and are subsequently carried at amortised cost using the effective interest method, less provision for impairment.

Impairment of financial assets

Impairment provisions are recognised when there is objective evidence (such as significant financial difficulties on the part of the counterparty or default or significant delay in payment) that the Company will be unable to collect all of the amounts due under the terms receivable, the amount of such a provision being the difference between the net carrying amount and the present value of the future expected cash flows associated with the impaired asset.

Impairment provisions for trade receivables are recognised based on the simplified approach within IFRS 9 using lifetime expected credit losses. During this process the probability of the non-payment of the trade receivables is assessed. This probability is then multiplied by the amount of the expected loss arising from default to determine the lifetime expected credit loss for the trade receivables. For trade receivables which are reported net, such provisions are recorded in a separate provision account with the loss being recognised within administrative expenses in the statement of comprehensive income. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.

Investments

Investments in cases are categorised at fair value through profit or 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 valuation of all investments over £100,000 each is underpinned by an external legal opinion, which confirms the Directors' valuation.

Valuation of investments

Determining the value of purchased and funded litigation requires an estimation of the value of such assets upon acquisition and at the balance sheet date. The future income generation of such litigation is estimated from known information and the opinion of external senior specialist counsel and solicitors. Valuations of each case, at the balance sheet date, are therefore arrived at by the Directors, considering counsel's, or external lawyer's, assessment of the chances of a successful outcome, the state of progress of the matter through the legal system and the Directors' assessment of all other risks specific to the case.

2.11 Financial Liabilities

The Company classifies its financial liabilities in the category of financial liabilities at amortised cost. All financial liabilities are recognised in the statement of financial position when the Company becomes a party to the contractual provision of the instrument. Trade and other payables and borrowings are included in this category.

Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method.

Borrowings are de-recognised from the balance sheet when the obligation specified in the contract is discharged, is cancelled or expires. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as other operating income or finance costs.

Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.

Trade and other payables

Trade and other payables are initially recognised at fair value and subsequently measured at amortised cost. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities.

2.12 Provisions

A provision is recognised in the balance sheet when the Company has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, when appropriate, the risks specific to the liability. The increase in the provision due to the passage of time is recognised in finance costs.

2.13 Share capital

Ordinary shares are classified as equity. There is one class of ordinary share in issue, as detailed in note 20. Incremental costs directly attributable to the issue of new shares are shown in share premium as a deduction from the proceeds, net of tax.

2. 14 Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Assets held under finance leases are recognised as assets of the Company at their fair value or, if lower, at the present value of the minimum lease payments, each determined at the inception of the lease. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation. Lease payments are apportioned between finance expenses and reduction of the lease obligation in order to achieve a constant rate of interest on the remaining balance of the liability. Finance expenses are recognised immediately in profit or loss, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the Company's general policy on borrowing costs (see below). Contingent rentals are recognised as expenses in the periods in which they are incurred.

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. The costs associated with operating leases are taken to the income statement on an accruals basis over the period of the lease.

2.15 Income tax

Income tax for the years presented comprises current and deferred tax. Income tax is recognised in profit or loss except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity

Deferred income tax is recognised on temporary differences arsing between the tax bases of assets and liabilities and their carrying amounts.

The following temporary differences are not recognised if they arise from a) the initial recognition of goodwill, and b) for the initial recognition of other assets or liabilities in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

2.16 Share-based payments

Where share options are awarded to directors or employees, the fair value of the options at the date of grant is charged to the statement of comprehensive income over the vesting period. Non-market vesting conditions are considered by adjusting the number of equity instruments expected to vest at each balance sheet date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. The cumulative expense is not adjusted for failure to achieve a market vesting condition.

2.17 Exceptional items

Exceptional items are disclosed separately in the financial statements where it is necessary to do so to provide further understanding of the financial performance of the Company. They are items that are material, either because of their size or their nature, or that are non-recurring, and are presented within the line items to which they best relate.

3. Significant judgments and estimates

The preparation of the Company's financial statements under IFRS as endorsed by the EU 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.

Case valuations are reviewed on a monthly basis. Valuations are changed when there have been significant developments in a case.

Movements in fair value on investments in cases are included within income in the Statement of Comprehensive Income. Fair value gains or losses are unrealised until a final outcome or stage is reached.

At the year-end there were 84 open cases, of these 64 had a valuation of less than £100k and individually are not expected realise more than £95,000 each. These cases are not expected to have an individually material impact on the business when they are settled. The remaining 20 cases make up £16.6m of the Investments and are material to the business, the significant judgements and estimates in their valuations at the balance sheet date were as follows:

1. Judgements:

1.1 The amount that cases are discounted to recognise cases being settled before they are taken to Court ranges between 35 -50%, based on the fact of each case and management's judgment of the likely outcome

2. Estimates:

2.1 The fair value of the case is based on the opinion of Counsel or the external solicitor dealing with the case, for all cases over £100k; these assessments include various assumptions that could change over time and lead to different assessments over the next 12 months.

2.2 Future legal costs have been estimated on the likely time the case will take to complete, ranging between 6 to 18 months(excluding the Cartel cases) and whether it will go to Court, ranging between zero and 10% probability. Future results could be materially impacted if these original estimates change either positively or negatively.

2.3 Recovery of debts is based on the Company's ability to recover assets owned by the counterparty. Cases that are settled without going to Court almost always recover in full, whilst those that result in Court cases are less predictable in terms of full recovery but the directors would expect to recover between 95% and 100%.

2.4 The above valuations assume that there is no recovery for interest and costs. If cases go to Court and result in a judgement in the Company's favour, it is likely that the Company will be awarded interest and costs.

Sensitivity analysis has not been included, due to the vast amount of inputs and number of variables, making it impossible to provide meaningful data. Whilst the Board considers the methodologies and assumptions adopted in the valuation are supportable, reasonable and robust, because of the inherent uncertainty of valuation, it is reasonably possible, on the basis of existing knowledge, that outcomes within the next financial year that are different from the assumptions could require a material adjustment to the carrying amount of the £18.2m of investments disclosed in the balance sheet.

Recoverability of accrued income

Manolete's business model involves the provision of services on credit. The Company normally receives payment for services it has provided once a claim has been pursued and settled or decided in Court. This normal course of business can lead to a lengthy period before payment is received. Whilst the Company provides for irrecoverable receivables and undertakes measures to limit the length of time for payment to be received, if the settlement timing increases in the industry it will add to the pressure on the Company's working capital. With working capital tied up in unpaid cases, the Company may find itself limited to the extent it can pursue its growth strategy. Further, an increased length in settlement terms is likely to increase the risk of irrecoverable debts.

4. Segmental reporting

During the year ended 31 March 2019, the 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. Revenues 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.

	31 March 2019	31 March 2018
	£000s	£000s
Net realised gains on investments in cases	7,148	6,725
Fair value movements (net of transfers to realisations)	6,624	3,905
	13,772	10,630

	31 March 2019	31 March 2018
	£000s	£000s
Arising from:
Funded cases	4,612	2,744
Purchased cases	9,160	7,886
	13,772	10,630

5. Directors and employees

Staff costs for the Company during the year:

	31 March 2019	31 March 2018
	£000s	£000s
Staff costs (including directors):
Wages and salaries	1,537	1,025
Social security costs	169	132
Other pension costs	50	19
	1,756	1,176

Average monthly number of people (including executive and non-executive directors) employed by activity:

	31 March 2019	31 March 2018
	No.	No.
Directors	3	1
Management and administration	9	6
	12	7

Directors' emoluments:

	31 March 2019	31 March 2018
	£000s	£000s
Directors' emoluments:
Salaries and fees	581	654
Other pension costs and benefits	13	5
Share option costs	7	-
	601	659

	31 March 2019	31 March 2018
	£000s	£000s
Highest paid director:
Salaries and fees	350	473
Other pension costs and benefits	10	5
	360	478

Management consider the directors to be the key management personnel.

6. Operating profit

Is stated after charging:

	31 March 2019	31 March 2018
	£000s	£000s
Operating lease costs	194	112

7. Auditor remuneration

	31 March 2019	31 March 2018
	£000s	£000s
Fee payable to Company's auditor and its associates for the audit of financial statements	71	28

Fees payable to Company's auditor and its associates for other services:		-
Corporate finance services	168	-
Other taxation services	41	-
Total	209	-

Details of the Company's use of the Auditors for non-audit services, the reasons why the Auditors were used rather than another supplier and how the Auditors' independence and objectivity was safeguarded are set out in the Audit Committee Report in the Annual Report.

8. Analysis of expenses by nature

The breakdown by nature of administrative expenses is as follows:

	31 March 2019	31 March 2018
	£000s	£000s
Staff Costs	1,756	1,176
Office costs	243	184
Other costs, including marketing costs and expected credit losses	875	1,360
Total administrative expenses	2,874	2,720

9. Finance income and finance expense

	31 March 2019	31 March 2018
	£000s	£000s
Bank interest	1	1
Other loan interest	-	1
Total finance income	1	2

	31 March 2019	31 March 2018
	£000s	£000s
Bank loan interest	179	15
Other loan interest	-	289
Bank loan charges	172	29
Other loan charges	42	47
Total finance expense	393	380

10. Taxation

	31 March 2019 £000s	31 March 2018 £000s
Analysis of charge in year
Current tax charge on profits for the year	1,279	557
Adjustments in respect of prior periods	-	(5)
Income tax credit	1,279	552
Deferred tax	(5)	(120)
Total tax charge	1,274	432

The standard rate of corporation tax in the UK changed from 20 per cent. to 19 per cent. with effect from 1 April 2017.

In September 2016, the UK Government passed legislation that resulted in the substantively enacted tax rates in the UK being 17 per cent. from 1 April 2020. This has had a subsequent effect on the Company deferred tax asset being recognised.

The tax charge for the year differs from the standard rate of corporation tax in the UK of 19%. (2018: 19%). The differences are explained below.

	31 March 2019	31 March 2018
	£000s	£000s
Profit on ordinary activities before tax	5,938	3,693
Profit on ordinary activities multiplied by the rate of corporation tax in the UK as above	1,128	702
Effects of:
Expenses not deductible	151	5
Adjustments to tax credit in respect of prior years	-	(4)
Utilisation of tax losses	-	(151)
Provision for deferred tax release	(5)	(120)
Total taxation charge	1,274	432

11. Earnings per share

The earnings per share has been calculated using the profit for the year and the weighted average number of ordinary shares entitled to dividend rights which were outstanding during the year, as follows:

	31 March 2019	31 March 2018
	£000s	£000s
Profit for the period attributable to equity holders of the Company	4,664	3,261
Weighted average number of ordinary shares	14,585,475	92,500
Earnings per share	0.32	35.25

	31 March 2019	31 March 2018
	£000s	£000s
Profit for the period attributable to equity holders of the Company	4,664	3,261
Diluted weighted average number of ordinary shares	14,819,186	92,500
Diluted earnings per share	0.31	35.25



Opening number of shares	92,500	92,500
Shares issued during the year	43,478,925	-
Closing number of shares	43,571,425	92,500

The earnings per share is diluted by options over ordinary shares, as detailed in note 22.

12. Investments

Current asset investments comprise the costs incurred in bringing funded and purchased cases to the position that they have reached at the balance sheet date. In addition, where an event has occurred that causes the Directors to revalue the amount invested, a fair value adjustment is made by the Directors based on Counsel's and the Directors' opinion, which can either be positive or negative.

Any change in value is taken to other reserves as an unrealised gain or loss.

	2019	2018
	£000s	£000s
As at 1 April 2018	10,555	6,705
Additions	2,405	1,337
Realisations	(1,387)	(1,392)
Fair value movement (net of transfers to realisations)	6,624	3,905
As at 31 March 2019	18,197	10,555

13. Intangible assets

Intangible assets comprise the costs of developing the Company's website. The website developments costs, when complete, will be amortised over the useful life of the website, which is estimated to be three years.

	2019	2018
	£000s	£000s


Website development costs
As at 1 April 2018
Additions	6	-
Amortisation charge	-	-
As at 31 March 2019	6	-

14. Stock

The Company has purchased a house for re-sale in London, following the settlement of case in unusual circumstances. The house is being refurbished for a modest amount and will then be put up for sale.

	2019	2018
	£000s	£000s
As at 1 April 2018	-	-
Additions	447	-
Realisations	-	-
As at 31 March 2019	447	-

15. Trade and other receivables

	31 March 2019	31 March 2018
	£000s	£000s
Amounts falling due within one year:
Other receivables	-	23
Prepayments	799	15
Trade debtors	2,978	2,935
	3,777	2,973

It is the Company's policy to assess receivables for recoverability based on historical data available to management in addition to forward looking information utilising management's knowledge. The Directors consider that the carrying amount of trade and other receivables is approximately equal to their value.

Included within prepayments are the costs of setting up the HSBC facility, which are being amortised over the remaining life of the facility, which terminates on 30 November 2022. As at 31/3/18, these costs were set off the amounts owed to HSBC. The unamortised balance includes £217,000 of HSBC arrangement fees.

16. Cash and cash equivalents

	31 March 2019	31 March 2018
	£000s	£000s
Cash at bank and in hand	9,692	5,934
	9,692	5,934

All bank balances are denominated in pounds sterling.

17. Trade and other payables

	31 March 2019	31 March 2018
	£000s	£000s
Amounts falling due in one year:
Other taxation and social security	66	32
Corporation tax payable	2,557	1,278
Accruals and other creditors	1,527	1,520
	4,150	2,830

18. Deferred tax liabilities/(asset)

	2019	2018
	£000s	£000s
At 1 April 2018	5	125
Released during the year	(5)	(120)
Asset created	(46)	-
At 31 March 2019	(46)	5

The income from the deferred tax asset created has been credited to an equity reserve.

19. Borrowings

	31 March 2019	31 March 2018
	£000s	£000s
Non-current
Bank loans	-	8,870
	-	8.870

Current
Bank loans	-	-
Total borrowings	-	8,870

Reconciliation of liabilities arising from financing activities

	1 April 2017	Cash flows	Non-cash changes	31 March 2018
	£000s	£000s	£000s	£000s
Bank borrowings	-	9,500	(630)	8,870
Other loans	3,050	(3,050)	-	-
Total liabilities from financing activities	3,050	6,450	(630)	8,870

	1 April 2018	Cash flows	Non-cash changes	31 March 2019
	£000s	£000s	£000s	£000s
Bank borrowings	8,870	(9,500)	630	-
Other loans	-	-	-	-
Total liabilities from financing activities	8,870	(9,500)	630	-

The Directors consider the carrying value of all financial liabilities to be equivalent to their fair value.

The £20,000,000 credit facility was provided on the 30 November 2018 by HSBC Bank plc. The Company granted a fixed and floating charge over all of its assets in favour of HSBC Bank plc. The facility term is four years. The interest rate is LIBOR plus a maximum margin of 2.75%, depending on the Company's financial performance against agreed covenants. The arrangement fees for this facility are included within set up costs within prepayments.

20. Share capital

	31 March 2019	31 March 2018
	No.	No.
Allotted and issued
Ordinary shares of £0.004 each(FY18-£1)	43,571,425	92,500

Allotted, called up and fully paid
'A' Ordinary shares of £0.004 each(FY18-£1)	-	7,100

During the year ended 31 March 2019, the Company sub-divided and then consolidated its existing £1 shares into shares of £0.004. It also converted the 'A' shares into ordinary shares at a rate of 90%, in order to create one class of shares. It then issued 9,563,211 bonus shares of £0.004 to existing shareholders. It then issued 9,285,714 ordinary shares for £0.004 per share in an Initial Public Offering (IPO). The Company received total cash proceeds of £16,250,000 for these IPO shares, before expenses.

Voting rights

The holders of ordinary shares are entitled to one voting right per share.

Dividends

The holders of ordinary shares are entitled to dividends out of the profits of the Company available for distribution.

21. Reserves

Share premium

Includes all current and prior year premiums received on issue of share capital, as follows:

	2019	2018
	£000s	£000s
As at 1 April 2018	1,015	1,015
Proceeds from share issues	16,213	-
Transaction costs of share issue	(723)	-
Conversion into distributable reserves	(16,501)	-
As at 31 March 2019	4	1,015

Following its IPO on the AIM Market in December, the Company applied to the Courts for most of its share premium account to be converted into distributable reserves. The Court approved this application in February. The Court stipulated that a special non-distributable reserve of £3,157,000 be created, equivalent to the unpaid creditors at the time of the application, and that the Company maintain this reserve as non-distributable until all these creditors are paid. The Company has complied with these directions.

Special, non-distributable reserve

As mentioned above, a special, non-distributable reserve of £3,157,000 was created, in compliance with the directions of the Court, following the conversion of the share premium account into distributable reserves in February 2019. The amount of the reserve is equivalent to the unpaid creditors at the date of the Court application of 31 December 2018. This reserve will be reviewed on a regular basis and, as creditors are paid, equivalent amounts will be transferred to distributable reserves.

Share based payment reserve

Includes amounts recognised for the fair value of share options granted in accordance with IFRS 2.

Retained earnings

Includes all current and prior periods retained profits and losses.

22. Share options

The Company adopted the Manolete Partners Plc Company Share Option Plan on the 21 November 2018, details of which are as follows

The Company generally considers the Black-Scholes method to value share options when issued.

Details for the share options granted, exercised, lapsed and outstanding at the end of each year are as follows:

	Number of share options No.	Weighted average exercise price £
Outstanding at beginning of year	-	-
Granted during the year	701,133	1.12
Forfeited/lapsed during the year	-	-
Exercised during the year	-	-
Outstanding at end of the year	701,133	1.12
Exercisable at end of the year	-	-

The weighted average contractual life of the options outstanding at the reporting date is 2 years and 9 months.

Exercise prices of share options outstanding at the end of the period:

	Number of share options No.	Exercise price £
CSOP Options	105,696	1.12
Unapproved Options	595,437	1.12

The fair values of the options granted during the year were calculated using the Black Scholes model, with the following assumptions:

Risk free interest rate	1%
Expected volatility	33%
Expected dividend yield	1%
Life of the option	3 years
Weighted average share price	£2.20

23. Commitments and contingences

Capital commitments

There were no capital commitments at 31 March 2019.

Operating lease commitments

The Company has one leased property and two leased pieces of equipment under non-cancellable operating lease agreements.

The future aggregate minimum lease payments under non-cancellable operating leases are as follows:

	31 March 2019	31 March 2018
	£000s	£000s
Within 1 year	190	167
Later than 1 year and less than 5 years	293	284
After 5 years	-	-
	483	451

The operating lease commitment for the rental of the property is calculated on a straight-line basis over the length of the lease.

24. Retirement benefits

The Company operates a defined contribution pension scheme for all qualifying employees. During the year, the Company charged £ 30,000 (FY18-£14,000) as employer's pension contributions. The outstanding pension creditor as at 31 March 2019 was £5,000(FY18-£2,000).

25. Financial instruments - classification and measurement

Financial assets

Financial assets measured at amortised cost comprise other receivables, trade debtors and cash, as follows:

	31 March 2019	31 March 2018
	£000s	£000s
Other receivables	0	24
Trade debtors	2,977	2,935
Cash at bank	9,692	5,934
	12,669	8,893

Financial assets measured at fair value through profit or loss comprise of investments;

	31 March 2019	31 March 2018
	£000s	£000s
Investments	18,197	10,555
	18,197	10.555

Financial liabilities

Financial liabilities measured at amortised cost comprise accruals and other creditors and bank loans, as follows:

	31 March 2019	31 March 2018
	£000s	£000s
Accruals and other creditors	1,527	1,519
Bank loans	-	8,870
	1,527	10,389

The fair value of investments is determined as set out in the accounting policies in Note 2.

The fair value hierarchy of financial instruments measured at fair value is provided below:

Fair value hierarchy

	31 March 2019
	Level 1	Level 2	Level 3
	£000s	£000s	£000s
Investments	-	-	18,197


	31 March 2018
	Level 1	Level 2	Level 3
	£000s	£000s	£000s
Investments	-	-	10,555
	-	-	10,555

26. Financial instruments - risk management

The Company's activities expose it to a variety of financial risks: market risk (including cash flow interest rate risk), investment risk, liquidity risk and credit risk. Risk management is carried out by the Board of Directors. The Company uses financial instruments to provide flexibility regarding its working capital requirements and to enable it to manage specific financial risks to which it is exposed.

The Company finances its operations through a mixture of equity finance, cash and liquid resources and various items such as trade debtors and trade creditors which arise directly from the Company's operations.

Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows associated with the instrument will fluctuate due to changes in market interest rates. Interest bearing assets including cash and cash equivalents are short-term liquid assets. It is the Company's policy to settle trade payables within the credit terms allowed and the Company does therefore not incur interest on overdue balances. No sensitivity analysis has been prepared as the impact on the financial statements would not be significant.

The interest rate profile of the Company's borrowings is shown below:

	31 March 2019			31 March 2018
	Debt	Interest	Debt		Interest
	£	Rate	£000s		Rate
Floating rate borrowings
Bank loans	-	N/A	8,870		LIBOR and Margin

Liquidity risk

The Company seeks to maintain sufficient cash balances. Management reviews cash flow forecasts on a regular basis to determine whether the Company has enough cash reserves to meet future working capital requirements and to take advantage of business opportunities.

A maturity analysis of the Company's borrowings is shown below:

	31 March 2019	31 March 2018
	£000s	£000s
Less than one year	-	-
One to two years	-	8,870
Two to five years	-	-
	-	8,870

Capital risk management

The Company is both equity and debt funded, and these two elements combine to make up the capital structure of the business. Equity comprises share capital, share premium and retained earnings and is equal to the amount shown as 'Equity' in the balance sheet. Debt comprises bank loans which are set out in further detail above and in note 20. Since raising funds through an IPO in December 2018, the Company currently has no debt but does have a £20m revolving credit facility with HSBC.

The Company's current objectives when maintaining capital are to:

· Safeguard the Company's ability as a going concern so that it can continue to pursue its growth plans.

· Provide a reasonable expectation of future returns to shareholders.

· Maintain adequate financial flexibility to preserve its ability to meet financial obligations, both current and long term.

The Company sets the amount of capital it requires in proportion to risk. The Company manages its capital structure and adjusts it in the light of changes in economic conditions and the risk characteristics of underlying assets. In order to maintain or adjust the capital structure, the Company may issue new shares or sell assets to reduce debt.

During the year ended 31 March 2019 the Company's strategy remained unchanged.

Credit risk and impairment

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. The maximum exposure to credit risk is the carrying value of its financial receivables, trade and other receivables and cash and cash equivalents, as disclosed in the notes. The Company attempts to assess the probability of credit losses but seeks to minimise its credit risk by undertaking rigorous net worth checks before taking on a case. Credit defaults do not occur very often but occasionally counterparties may default on an agreed settlement, which involves payment by instalments.

The Company does not consider that there is any concentration of risk within either trade or other receivables. The Company seeks to obtain charging orders over the property of trade receivables. The receivables' age analysis is also evaluated on a regular basis for potential doubtful debts. It is the Directors' opinion that no further provision for doubtful debts is required.

Credit risk on cash and cash equivalents is considered to be very low as the counterparties are all substantial banks with high credit ratings.

Currency risk

The Company is not exposed to any currency risk at present.

27 Related party transactions

None.

28. Ultimate controlling party

The Company has no ultimate controlling party.

29. Post balance sheet events

None.