26 January 2021
THE INFORMATION COMMUNICATED IN THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF REGULATION 596/2014 ("MAR").
Manolete Partners Plc
("Manolete" or the "Company")
Q3 Trading Update
Manolete Partners Plc (AIM: MANO), the leading listed insolvency litigation financing firm in the UK, announces record case completions and record completed case cash inflows but a continued low level of new case investments caused by the ongoing extraordinary UK Government economic support measures. All numbers in this document are unaudited and from internal Company sources.
As highlighted in the Company's interim results for the six months ended 30 September 2020 (announced 10 November 2020), new case enquiries had begun to slow sharply due to the extraordinary UK Government economic support measures that have directly led to a large decrease in the number of UK company insolvencies since the start of the Covid-19 pandemic. This has continued throughout Q3 and into the first few weeks of Q4. The Government measures are planned to continue through to April 2021 at least and so we expect the negative impact on the Company's level of new cases (which continue to be subject to our stringent levels of selection criteria) to persist for the remainder of the current financial year ending 31 March 2021.
In the third quarter of the Company's current financial year ending 31 March 2021, Manolete completed a further 43 insolvency litigation claims bringing the total for the nine months to 31 December 2020 to 95 completed cases. At the time of writing this has now risen to 108 completed cases. This is 100% higher than the 54 cases completions for the whole 12 months of the previous year ended 31 March 2020.
The 95 completed cases for the nine months to 31 December 2020 generated a gross total settlement value of £23.9m, comfortably exceeding board expectations.
Gross cash collected from completed cases in the first nine months to 31 December 2020 increased by 60% to a record £9.3m (nine months ended 31 December 2019: £5.8m). After payments to Insolvent Estates and legal fees, the Company's retained share of this cash increased by 60% to £4.8m (nine months ended 31 December 2019: £3.0m). Cash overheads for the nine-month period were £3.2m (prior year nine-month period: £3.0m), resulting in a cash inflow after payment of operational overheads of £1.5m, compared to an outflow of £32k for the comparable prior year nine-month period. Gross cash generation in Q3 of £5.1m was particularly strong with cash generated from completed cases covering not only all completed case costs and all overheads but also all costs of around 250 ongoing live cases which are expected to generate very significant cash in the Company's normal timeframes.
As a consequence of the above factors, the Board expects realised profits to be above, but unrealised profits to be significantly below, market expectations and therefore for the Company to be overall marginally EBIT profitable in H2.
Longer term, the Board believes that as the UK Government economic support measures are phased out, the longer-term impact of COVID-19 on the UK economy will lead to an increased rate of corporate insolvencies, and will underpin the Company's strong growth prospects for the foreseeable future. The Board will continue to closely monitor the evolving situation and the impact on anticipated levels of litigation finance enquiries in and beyond the near term, and the naturally needed conservatism to be applied to fair values of ongoing cases.
Steven Cooklin, CEO of Manolete, commented: "As we highlighted in our recent interim results, the emergency UK Government actions in response to the pandemic have led to a dramatic decrease in the number of UK insolvencies. This has led to a distorted reality for the economy - many commentators, including last week the Federation for Small Businesses, have highlighted the very high levels of UK companies in significant financial distress. As a consequence, we have a temporary distortion in our new cases and therefore bottom-line profits, though an excellent performance in terms of case completions and strong cash generation. Longer term, the impact of Covid-19 and its consequences on the global economy, is likely to underpin Manolete's strong growth prospects for the foreseeable future".
For further information, please contact:
Manolete Partners Plc via Instinctif Partners
Steven Cooklin (Chief Executive Officer)
Peel Hunt (NOMAD and Sole Broker) +44 (0)20 7418 8900
Instinctif Partners (Financial PR)
Tim Linacre +44 (0)7949 939237