Manolete Partners Share Discussion Threads

[riverman77] 14/3/2023 14:32

Yes very good udpate and things really picking up now. Only slight negative was the appeal wasn't upheld, but that was probably already priced in. Quite a contrast to LIT where cases appear to be really bogged down and heavily delayed - MANO less reliant on courts and seeing settlements come through thick and fast.

[jonwig] 14/3/2023 14:18

Trading update. Even this market won't be able to bash it down:

[sallad3] 14/3/2023 11:25

Worth a look at the LIT results today and last week's vast papework funding model disclosures in the Burford litigation against one of its clients.

[xpertgreeny] 07/3/2023 17:51

More positive words in the FT today.



Finally, to Manolete, an insolvency litigation financing company. Its business draws on companies in administration where potential fraud by directors or other issues are claimed. Following the pandemic period when the government restricted the ability to put companies into administration, business cases should increase markedly — it’s an ill wind.
Manolete is also now running a pilot with Barclays on approximately 100 bounceback loan cases. This tie-up is a considerable feather in Manolete’s cap as a relatively small listed company. The pilot is being closely monitored by the government and other financial institutions.
In spite of the recent fall of my Isa from its peak, I remain very confident of long-term growth — and meanwhile, the significant flow of tax-free dividends is very welcome.

[maddox] 16/2/2023 13:02

Hi sallad,

One might assume that a rental scheme might magnify the damage of unfair higher pricing rather command a discount. Also, presumably the likes Royal Mail will have, due to their scale, achieved a better purchase price than other smaller firms. In which case. their settlement might thus set a floor for other settlements rather than a ceiling? But as I said I think we'll just have to wait and see.

[sallad3] 16/2/2023 12:11

Theborn

The £6k is the RHA total per vehicle. How will that be split between owners and renters? City Link was all rented - 33-50% discount perhaps?

[theborn] 16/2/2023 11:15

*A breakdown, not 'a lack of breakdown'

[theborn] 16/2/2023 11:15

I did have a subsequent look at the accounds with a search for cartel cases and noted the well made points since made above. A lack of breakdown similiar to the core business vintages tables would have been particularly helpful so shareholders can do the simple math on assumed value per claim.

Perhaps it is a huge leap of faith, but I would expect (and hope) that if the 'read-thru' on the RM ruling is £6k per truck, then if Mano are holding value in accounts for any more than this, particuarly if >£6.5k as this would imply an overvaluation and therefore writedown of £1m (material), then an RNS must be provided prior to the usual update expected around the end of March.

There was an RNS for the adverse case last year (albeit a few days late and has since gone to appeal) as that represented a material impact >£1m. So I would expect the same to apply here with the NOMAD and Board expected to update shareholders.

If £6k is the magic number then you'd hope Mano have at least 2,500 trucks in their claim to justify current carrying value. Ideally well north of 3,000 to allow for potential impact on appeals etc.

Having bought in more the evening before the adverse finding RNS last year, and again in the past week following the RM decision, I'd be very upset if there is a write down and a delay in notifying the market as I've already been hurt once by this.

[maddox] 15/2/2023 18:18

Yes, well as I've said before - I'm really not happy with these 'fair-value' accounting regulations. I could see the logic to begin with but I've changed my mind. It introduces a huge element of confusion and opportunity for some to suggest manipulation - where there is no benefit in doing so.

[sallad3] 15/2/2023 18:16

RHA's latest statement is about £6,000 per truck. Split between parties to rental/lease will be interesting - NB City Link were all leased.

[sallad3] 15/2/2023 18:06

Hi Maddox

Can't see a problem in the BOD stating how many trucks are involved unless there is something to hide. It is probably in their (not yet publicly available) Claim form.

It's the biggest exposure/number on MANO's books and they have already paid Corporation Tax on the more than £10,000,000 "unrealised profit" which has all increased bank borrowings.

[maddox] 15/2/2023 17:59

Hi sallad,

I read through the judgement and tbh I'm none the wiser as to its implications for MANO. But as the final figures will be subject to a negotiation I'd be surprised if they say anything prior to an agreement. We'll just have to remain patient on this one.

BTW you usually have to pay for 'independent' advice - does that make it less independent?

Our leading indicator the Creditors’ Voluntary Liquidations (CVL) figures for January have been released - these figures are a leading indicator for cases that will be referred to MANO for litigation financing.

'In January 2023 there were 1,382 Creditors’ Voluntary Liquidations (CVLs), 2% higher than in January 2022 and 37% higher than January 2020.'



The figures are lower than I was expecting after December's big jump - so the numbers bouncing around a bit from month to month.

[sallad3] 15/2/2023 17:55

Theborn

The Judgment is from the Tribunal, specific to BT and RM, and subject to umpteen appeals so a long way to go yet.



Readers should look at last year's accounts:

There is no independent review whatsoever. It is always done by the lawyers acting for Manolete on the case.

1. Written Assessments Are Obtained From External Solicitors Or Primary Counsel Working On The Case On Behalf Of The Company.

An External Opinion Is requested From Counsel Or A Solicitor Who Is Working On the Case Which Provides An Independent Description Of that Reporting Period Ends, A Sample Of Open Case Investments For Which E merits Of The Case


2. Approach to cartel case valuation: In reaching a valuation for our cartel cases, we undertook a specific and detailed review process, as follows: we attributed each of our 22 cartel cases into 3 tiers relating to the level of data and evidence held in respect of these cases. In conjunction with an external valuation report from Collyer Bristow and an external opinion of legal prospects from a QC, we applied a discount to the valuation provided by Collyer Bristow, with the lower discount for the tier 1 cases (those with the most data) and higher discount for the tier 3 cases (those with the lower level of data)

BUT BUT BUT

Collyer Bristow are a firm of lawyers who are the SOLE instructed solicitors on MANO's single consolidated Cartel case. They have a vested interest in the outcome for their client.

This Collyers problem has existed since before MANO was listed. I recall addressing it with concern some years ago.

Public record at

Mano -v- 27 different Truck manufacturers

Given that Crofts' solicitors were telling their clients back in 2020:
"The approximate value can be calculated by identifying how many trucks you bought between 1997 and 2011 and applying a 10% to 15% figure* to them all. This would give the approximate value of the claim." (NB trucks over 6 tonnes between 1997 and 2011.)

The final judgment seems to be only one-third of that.

I do think it would be a good idea for the BOD to give an early update as the year end is only 6 weeks away.

[cfro] 15/2/2023 17:55

Theborn, great post, thanks.

[theborn] 15/2/2023 14:32

Good digging sallad.

Worth us keeping in mind the interest award is also material. in the £15m example there could be another £4-5m added for basic interest if awarded from point of initial EU case, or significantly more if backdated to the point of original transactions. I don't have the will to read the full ruling at the moment to add certaintity on this point, so would hope Mano do the job for us with and RNS.

I specifically remember at the previous investor meeting, Mano's valuation of these cases are given from an independent law firm who itemise every claim and likely damaes outcome and apply a % success to arrive at a valuation. I may be misremembering but at the point of the £5m further write up, the judge in the case had all but notified the parties he would be awarding in favour of the claimants and they were just awaiting the final decision for the awards (which was expected before Xmas).

I'd be suprised at the time the auditors were agreeing that Mano write down value of exisiting cases, they would allow a £5m write up in the cartels unless they were very satisified regarding the points above.

Hopefully there is another £5m of upside on this in the coming months - but a company update would be helpful.

[cockerhoop] 15/2/2023 11:50

Good digging sallad3, certainly a risk the MANO have been aggressive with their fair values...........again!

[sallad3] 15/2/2023 10:31

A bit of further digging:

Comet and CityLink are the two big cases.


"A spokesman for EY told Commercialmotor.com that initial talks suggest that the majority of its near-1,700 vehicles were leased. Its fleet mainly comprised vans and cars, but it also ran about 100 tractors. The administrator is in the process of returning the vehicles to their respective suppliers, the spokesman added."

Some way to go.

[edit] above is re City Link which was owned by John Moulton's "Better Capital" business and where his Moulton Goodies is supposedly MANO's largest shareholder although Companies House records incorrectly show the Person of Significant Control is the dormant subsidiary of Jarvis Securities plc.

[sallad3] 14/2/2023 09:41

Will be interesting to see the impact of last week's Cartel decision on MANO's valuation of "The Cartel cases".


My quick take is that the award of 5% damages of "total value of commerce" is largely based on chassis alone prices (est 20%) and the total 10,000 trucks.

We know next to nothing about the number of trucks in tne MANO cases so perhaps the BOD will give us un early update on how the BT/RM £15,277,965 amount (pre interest) compares to the carrying value of £13,200,000 in MANO's accounts. NB all of last year's profit was attributable to the £5+M uplift on the Cartel cases.

Can anyone shed any more light on the implied >7,500 trucks in MANO's portfolio?

[theborn] 07/2/2023 10:32

I also highly doubt Mano will have gone to the trouble of bringing onboard such a name (nor would Lord A have joined) if they weren't certain of the Bounce Back Loan partnership being highly successful to date and a huge revenue generating opportunity. I'm looking forward to the update in the Spring as my expectation (and hope) is then we'll see standard business volumes back above pre-covid, plus the bolt on of BBL. Shares were trading at £6 pre covid so combine this and I would hope to see >£6 in the near future.

[wordsmith] 06/2/2023 10:21

The appointment of Lord A certainly lends gravitas to the Board.

[cfro] 06/2/2023 09:13

Yes, but that's exactly my point. It appears that Lord Agnew is determined to do what he can to help claw the monies back and hence it will need him, the government and Manolette all working together to make this happen.

[jonwig] 06/2/2023 07:40

cfro - Lord A appears to be no friend of the government:

A Treasury minister who resigned over the government’s “schoolboy” handling of fraudulent Covid business loans has said there has been “not a zippo” of detail about how the chancellor plans to deal with the issue.

Theodore Agnew of Oulton, who was the Tories’ anti-fraud minister, publicly resigned from his Cabinet Office and Treasury posts on Monday over the government’s decision to write off £4.3bn in fraudulent loans. He called the oversight of the scheme “nothing less than woeful”. [29/01/22.]



But its stance may have changed now, with HMRC not having the resources to collect the cash. And presumably, being so critical of the gov't, he will be a man with a plan.

(BTW, he's spitting image of Jim Broadbent.)

[cfro] 06/2/2023 07:24

Looks like an important hire. Having Lord Agnew on board can only help relations between the government and Manolette, as they will need government on their side imo if they have any hope of getting the fraudulent bounce-back money back.

[maddox] 17/1/2023 16:07

The Creditors’ Voluntary Liquidations (CVL) figures for December have been released - these figures are a leading indicator for cases that will be referred to MANO for litigation financing.

' In December 2022 there were 1,659 Creditors’ Voluntary Liquidations (CVLs), 22% higher than in December 2021 and more than twice as many as December 2019.'



As we can see the trend is once again well above pre-Covid levels, up over 110% on December 2019.

The CVL figures first recovered post-Covid back in August 2021, so by my estimation, 16 months later MANO should start to see these cases drop into their P/L. I wouldn’t expect to see a big impact, the case-dip will still be dominant and there may be a lengthening of timeframes to settlement. Nevertheless, it’ll be encouraging to see a tick-up in the next periods figs if it is apparent.

[sallad3] 11/1/2023 08:22

You can read the actual article in the Irish Times