Manolete Partners Share Discussion Threads

[maddox] 26/4/2022 08:49

RNS this morning confirming the receipt of the large case settlement, of which £5.6m belongs to MANO. But more importantly, Steven Cooklin reports that case enquiries are 'rebounding sharply upwards':

"I am pleased to report that the cash due to us, from this large investment, was received on schedule, within three weeks of the legal completion of the case. Our net debt position is now down to £6.5 million, and with new case enquiries rebounding sharply upwards following the challenges of Omicron, we look forward to further strong progress."

[xpertgreeny] 23/4/2022 14:21

More data points here supporting the Company’s thesis of a tsunami of Insolvencies coming to the UK economy. This should keep the MANO team very active for the next several years imho.

‘Tsunami’ of insolvencies hits England and Wales as pandemic support withdrawn.

[riverman77] 22/4/2022 14:12

Looks promising, although the question is how many of these cases will MANO be able to capture? There are obviously constraints in how many they can manage in their smallish team, as well as limited amounts of capital - so a tenfold increase in insolvencies (for example) won't mean a tenfold increase in new cases. I imagine more of a slow and steady recovery.

[maddox] 22/4/2022 11:37

Hi Bigbaggy,

Yes, an impressive jump. There is plenty of speculation that a deluge of insolvencies are in the pipeline - so we might be seeing the early signs. But it could also be a catch-up so we'll have to see.

[bigbaggy] 22/4/2022 10:10

Many thanks Maddox. That’s a rather large rise…!

[maddox] 22/4/2022 09:45

The CVL figures for March have been released - these figures are a leading indicator for cases that will be referred to MANO for financing. For what is now the ten month in a row showing a growth trend, and that is now firmly trending well above pre-pandemic levels:

'In March 2022 there were 1,844 Creditors’ Voluntary Liquidations (CVLs), more than double the number in March 2021 and 62% higher than March 2019.'



So, we're now trending 62% higher than the pre-Covid 2019 level of CVLs. The recent trading update indicated that Omicron has led to a lengthening of the time period between a CVL and a case referral to MANO. If this leading indicator is valid we should see this reflected in a pick-up of case-referrals reported by MANO along with the Full Year Results.

Regards, Maddox

[jsforum] 14/4/2022 20:18

Will receipt of the £9 million likely be RNS-ed?

[bigbaggy] 12/4/2022 13:58

That is the correct treatment used by all TPF companies. 101 accounting cost matching principle. Otherwise the gross margin on any completed case would always be 100% (or 0% if lost).

[cockerhoop] 12/4/2022 08:11

Internal yes, External no.

Internal legal costs are included within administrative expenses whereas external legal costs are either capitalised as Investments for open cases or recognised as cost of sales on completed cases.

[cockerhoop] 11/4/2022 20:57

Bigbaggy,

Regards your comparison of Burford and Manolete.

Burford's fair value gains are imo much more conservative, the vast majority are indeed YPF which is pretty unique in having had a percentage sold in market transactions to 3rd parties (ie establishing a market value). A relative few other cases have fair value gains usually when a case is close to conclusion or on a significant judgement. Manolete on the other hand seem to pretty crudely write up the value almost immediately on all cases.

As I understand it with regard to case operating costs Burford expense them and Manolete capitalise theirs so quite different.

[greenknight1] 11/4/2022 16:13

Litigation Capital do not recognise any revenue until the money hits their account. The current average case length for them is 27 months. There is an expectation this may increase to +36months as investments become larger and more complex.

[cockerhoop] 11/4/2022 12:53

Maddox,

As I stated above they reverse unrealised gains all the time:

2020 £1.36m of reversals
2021 £1.41m

and £0.4m in H122.

[maddox] 11/4/2022 11:59

There is delay between a completed case actually turning into cash received - it'll sit in debtors in the meantime.

However, the debtors got inflated by one particular large case (£15m) that had an extended period of settlement (9 years from memory). This was case was concluded on this unusual basis at the request of HMRC - a body that you want to keep on the right-side of. The thing to look at is the low level of write-offs - the Directors usually settle, and if they haven't got the net worth MANO don't take the case.

[farrugia] 11/4/2022 11:02

its the same always - do what they do not what they say

[cockerhoop] 11/4/2022 10:22

Maddox,

My understanding of the case is the realised cash profit for Mano is £2.7m but they've already booked £3.3m of profit for the case through P/L in previous periods so that previous fair value profit (which has gone through P/L) will be written down.

Agree the £5.6m of cash received is welcome as the net debt had ballooned in FY22 from £6.9m to £12.1m despite record cash receipts and being hampered by lack of investment opportunities.

[maddox] 11/4/2022 09:59

Hi Guys,

Just a quick point - When a case is completed the unrealised value previously attributed to profit is a deduction to unrealised income and the actual settlement value is recorded as realised revenue.

So, it's not a write-back against profit - due to an inflated estimation of future profit that doesn't materialise - it's actually revenue that turns into cash.

Hopefully, that is helpful.

Regards Maddox

[cockerhoop] 11/4/2022 09:22

MANO in time may make money for investors but don't try to tell me their accounting isn't aggressive. It's by far the most aggressive of the quoted legal funders.

[cockerhoop] 11/4/2022 09:08

Look at the accounts riverman77, they reverse unrealised gains all the time.

2021 - £1.36m
2020 - £1.4m

[riverman77] 11/4/2022 09:01

They say the 9.5m case was not typical - much bigger and not owned/controlled by MANO.

Yes they do immediately write up their new cases, which is why a drop in new cases has an immediate profit impact. They went over all this in some detail after their previous profit warning a couple of years ago. I think they provided quite detailed analysis at the time to show it was unusual for them to have to reverse these write ups, so arguably not being aggressive, although I would personally favour a more prudent approach where they just hold at cost until the case settles (even if this does mean lower profits in short term)

[cockerhoop] 11/4/2022 08:50

Tradertrev,

They basically write up the cases immediately and aggressively imo which has been my major beef with the company.

The recent £9.5m resolved case is a classic example, £3.3m of profitability had already been booked as profit. The case resolves with MANO making a £2.7m realised gain so therefore has to writeback £0.6m of previously accounted profit aggressively written up.

[brummy_git] 11/4/2022 08:41

Investor video here with CEO Steven Cooklin

www.voxmarkets.co.uk/articles/q-a-with-manolete-partners-ceo-steven-cooklin-d910fa5