Manolete Partners PLC Trading Update - Significant Case Completion (0816Z)

TIDMMANO

RNS Number : 0816Z

Manolete Partners PLC

15 September 2020

15 September 2020

Manolete Partners Plc

("Manolete" or the "Company")

Trading Update - Significant Case Completion

Manolete Partners Plc (AIM: MANO), the leading listed insolvency litigation financing firm in the UK, announces a trading update and the successful completion of one of the larger cases in its portfolio of UK insolvency claims (the "Claim").

During the current trading period since 31 March 2020, Manolete has completed 40 cases, including the Claim, which itself will generate a realised gain of approximately GBP4.1m and a net pre-tax profit contribution to the current accounting period of approximately GBP2.1m (net of the reversal of the previous unrealised gain of GBP2.0m that was previously allocated to the Claim). No material write offs were sustained in Manolete's portfolio of cases. New business has developed well in the five-month period to 31 August 2020, with 84 new cases being acquired/ funded, an increase of 65% over the same period last year.

Vintages Table

 
 Financial         #         Number         %          Number         Open         Closed       Total       Total      Total      IP      Manolete   Duration    ROI    MoM 
                                                                      Cases          Case                                        Share 
    Year      Investments   Completed   Completion   Outstanding   Investments   Investments   Invested   Recovered    Gain                 Gain     completed 
                                                                                                                                                       cases 
                                                                     GBP000s       GBP000s     GBP000s     GBP000s    GBP000s   GBP000s   GBP000s    (months) 
             ------------  ----------  -----------  ------------  ------------  ------------  ---------  ----------  --------  --------  ---------  ----------  -----  ---- 
 
    2010           3            3          100%           -             -            52           52         28        (24)        -        (24)         7       -46%   0.5 
 
    2011           -            -          100%           -             -             -           -           -          -         -         -           -        0%    0.0 
 
    2012           8            8          100%           -             -            763         763        2,524      1,761      580      1,181        18       155%   2.5 
 
    2013          10           10          100%           -             -            174         174         780        606       316       290          7       167%   2.7 
 
    2014          42           42          100%           -             -            594         594        3,884      3,290     2,427      863         10       145%   2.5 
 
    2015          39           39          100%           -             -           1,476       1,476       7,029      5,553     3,290     2,263        13       153%   2.5 
 
    2016          36           36          100%           -             -           1,907       1,907       9,009      7,102     4,123     2,979        15       156%   2.6 
 
    2017          31           30          97%            1            285          1,086       1,371       4,555      3,469     2,037     1,432        12       132%   2.3 
 
    2018          29           26          90%            3           1,090         1,625       2,715      19,564     17,939    12,783     5,156        13       317%   4.2 
 
    2019          59           41          69%           18            874           849        1,723       3,766      2,917     1,507     1,410        11       166%   2.7 
 
    2020          141          41          29%           100          2,182          932        3,114       6,551      5,619     3,016     2,603         7       279%   3.8 
 
    2021 
     YTD          89            4           4%           85            853           44          897         157        113       56         57          2       130%   2.3 
 
                  487          280         57%           207          5,284         9,502       14,786     57,847     48,345    30,135     18,210       11       192%   2.9 
             ------------  ----------  -----------  ------------                ------------  ---------  ----------  --------  --------  ---------  ----------  ----- 
 

As at 4 September 2020

Note: The Vintages table excludes 22 Cartel Cases and is net of deductions for bad debt provisions.

The Claim

The Company, alongside the other interested parties in the Claim, has entered into a settlement agreement (the "Settlement Agreement") with the former directors of an insolvent UK company (the "Defendants"). The Claim was consensually settled pursuant to the Settlement Agreement, with no admission of liability or any wrongdoing by any party to the Settlement Agreement.

The Claim was settled for a gross amount of GBP15.0m of which GBP4.7m is payable in cash to Manolete. This crystallises a realised gain for Manolete of GBP4.1m representing a 17.4x Money Multiple and a Return on Investment of 1,640%.

Manolete will first receive its total costs of approximately GBP250k as a first priority payment from the settlement proceeds. Of the remaining settlement proceeds of GBP14.75m, Manolete will receive 55% of the first GBP750k; 45% of the next GBP750k; 35% of the next GBP3.5m; and 25% of the remaining GBP9.75m.

To allow the Defendants time to liquidate and generate assets, the GBP15.0m settlement proceeds will be paid in instalments as follows: GBP160k within four months, a further GBP1.0m within 18 months, a further GBP1.2m 18 months later and then seven annual payments of approximately GBP1.8m per annum.

The Claim was purchased by Manolete during its financial year ended 31 March 2018. As at 31 March 2020, the end of the Company's last financial year, Manolete had estimated the fair value of the Claim based on assumed settlement proceeds of GBP5.5m and a resultant fair value unrealised gain of GBP2.0m (please refer to case number 1 on page 16 of Manolete's "Results for the Year Ended 31 March 2020": https://investors.manolete-partners.com/results-reports/results-centre dated 3 July 2020. That document provides an analysis of the fair values underlying 17 of the larger 35 cases within the Company's portfolio of 152 ongoing cases UK insolvency claims).

The largest creditor in the insolvent estate relating to the Claim is HMRC. Manolete understands that creditors are expected to receive a significant payment of approximately GBP10.0m.

Steven Cooklin, CEO of Manolete, commented: "We are very pleased with the latest period of current trading and the significant outcome on one of our larger claims. Not only for our shareholders but also for the large return it generates for the creditors, particularly HMRC, which is the largest creditor in that insolvent company estate by far. This case serves to highlight the excellent returns our business model generates for all stakeholders, as well as the strong Ethical, Social and Governance principles that guide the way we operate.

That case settled at GBP15m and so was materially higher than our conservative estimated fair value which was based on a settlement sum of GBP5.5m. As at the year ended 31 March 2020, our team was managing 35 larger UK insolvency claims with headline values in the range of GBP1m to GBP40m, reflecting the marked increase in the average size of cases we have invested in, particularly since our IPO in December 2018. While litigation outcomes and returns are never simple to estimate, this result again highlights our conservative and measured approach to valuing unrealised gains".

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (2014/596/EU).

For further information, please contact:

Manolete Partners Plc via Instinctif Partners

Steven Cooklin (Chief Executive Officer)

   Peel Hunt (NOMAD and Joint Broker)                                          [phone] 

James Britton

Rishi Shah

Duncan Littlejohns

Liberum (Joint Broker) [phone]

Richard Crawley

James Greenwood

Instinctif Partners (Financial PR)

Tim Linacre [phone]

Lewis Hill [phone]

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September 15, 2020 11:23 ET (15:23 GMT)