Manolete Partners Releases Half-Year Results for the Six Months Ended 30 September 2024

By Harry Moran |

Manolete (AIM:MANO), the leading UK-listed insolvency litigation financing company, today announces its unaudited results for the six months ended 30 September 2024. 

Steven Cooklin, Chief Executive Officer, commented: 

“These are a strong set of results, particularly in terms of organic cash generation. In this six-month period, gross cash collected rose 63% to a new record at £14.3m. That strong organic cash generation comfortably covered all cash operating costs, as well as all cash costs of financing the ongoing portfolio of 413 live cases, enabling Manolete to reduce net debt by £1.25m to £11.9m as at 30 September 2024. 

As a consequence of Manolete completing a record number of 137 case completions, realised revenues rose by 60% to a further record high of £15m. That is a strong indicator of further, and similarly high levels, of near-term future cash generation. A record pipeline of 437 new case investment opportunities were received in this latest six month trading period, underpinning the further strong growth prospects for the business. 

The record £14.3.m gross cash was collected from 253 separate completed cases, highlighting the highly granular and diversified profile of Manolete’s income stream. 

Manolete has generated a Compound Average Growth Rate of 39% in gross cash receipts over the last five H1 trading periods: from H1 FY20 up to and including the current H1 FY25. The resilience of the Manolete business model, even after the extraordinary pressures presented by the extended Covid period, is now clear to see. 

This generated net cash income of £7.6m in H1 FY25 (after payment of all legal costs and all payments made to the numerous insolvent estates on those completed cases), an increase of 66% over the comparative six-month period for the prior year. Net cash income not only exceeded by £4.5m all the cash overheads required to run the Company, it also exceeded all the costs of running Manolete’s ongoing 413 cases, including the 126 new case investments made in H1 FY25. 

The Company recorded its highest ever realised revenues for H1 FY25 of £15.0m, exceeding H1 FY24 by 60%. On average, Manolete receives all the cash owed to it by the defendants of completed cases within approximately 12 months of the cases being legally completed. This impressive 60% rise in realised revenues therefore provides good near-term visibility for a continuation of Manolete’s strong, and well-established, track record of organic, operational cash generation. 

New case investment opportunities arise daily from our wide-ranging, proprietary, UK referral network of insolvency practitioner firms and specialist insolvency and restructuring solicitor practices. We are delighted to report that the referrals for H1 FY25 reached a new H1 company record of 437. A 27% higher volume than in H1 FY24, which was itself a new record for the Company this time last year. That points to a very healthy pipeline as we move forward into the second half of the trading year.” 

Financial highlights: 

  • Total revenues increased by 28% to £14.4m from H1 FY24 (£11.2m) as a result of the outstanding delivery of realised revenues generated in the six months to 30th September 2024.
    • Realised revenues achieved a record level of £15.0m in H1 FY25, a notable increase of 60% on H1 FY24 (£9.4m). This provides good visibility of near-term further strong cash generation, as on average Manolete collects all cash on settled cases within approximately 12 months of the legal settlement of those cases
    • Unrealised revenue in H1 FY25 was £(633k) compared to £1.8m for the comparative H1 FY24. This was due to: (1) the record number of 137 case completions in H1 FY25, which resulted in a beneficial movement from Unrealised revenues to Realised revenues; and (2) the current lower average fair value of new case investments made relative to the higher fair value of the completed cases. The latter point also explains the main reason for the marginally lower gross profit reported of £4.4m in this period, H1 FY25, compared to £5.0m in H1 FY24. 
  • EBIT for H1 FY25 was £0.7m compared to H1 FY24 of £1.6m. As well as the reduced Gross profit contribution explained above, staff costs increased by £165k to £2.3m and based on the standard formula used by the Company to calculate Expected Credit Losses, (“ECL”), generated a charge of £140k (H1 3 FY24: £nil) due to trade debtors rising to £26.8m as at 30 September 2024, compared to £21.7m as at 30 September 2023. The trade debtor increase was driven by the outstanding record level of £15.0m Realised revenues achieved in H1 FY25.
  • Loss Before Tax was (£0.2m) compared to a Profit Before Tax of £0.9m in H1 FY24, due to the above factors together with a lower corporation tax charge being largely offset by higher interest costs. 
  • Basic earnings per share (0.5) pence (H1 FY24: 1.4 pence).
  • Gross cash generated from completed cases increased 63% to £14.3m in the 6 months to 30 September 2024 (H1 FY24: £8.7m). 5-year H1 CAGR: 39%.
  • Cash income from completed cases after payments of all legal costs and payments to Insolvent Estates rose by 66% to £7.6m (H1 FY24: £4.6m). 5-year H1 CAGR: 46%.
  • Net cashflow after all operating costs but before new case investments rose by 193% to £4.5m (H1 FY24: £1.5m). 5-year H1 CAGR: 126%.
  • Net assets as at 30 September 2024 were £40.5m (H1 FY24: £39.8m). Net debt was reduced to £11.9m and comprises borrowings of £12.5m, offset by cash balances of £0.6m. (Net debt as 31 March 2024 was £12.3m.)
  • £5m of the £17.5m HSBC Revolving Credit Facility remains available for use, as at 30 September 2024. That figure does not take into account the Company’s available cash balances referred to above.

Operational highlights:

  • Ongoing delivery of record realised returns: 137 case completions in H1 FY25 representing a 18% increase (116 case realisations in H1 FY24), generating gross settlement proceeds receivable of £13.9m for H1 FY25, which is 51% higher than the H1 FY24 figure of £9.2m. This very strong increase in case settlements provides visibility for further high levels of cash income, as it takes the Company, on average, around 12 months to collect in all cash from previously completed cases.
  • The average realised revenue per completed case (“ARRCC”) for H1 FY25 was £109k, compared to the ARRCC of £81k for H1 FY24. That 35% increase in ARRCC is an important and an encouraging Key Performance Indicator for the Company. Before the onset and impact of the Covid pandemic in 2020, the Company was achieving an ARRCC of approximately £200k. Progress back to that ARRCC level, together with the Company maintaining its recent high case acquisition and case completion volumes, would lead to a material transformation of Company profitability.
  • The 137 cases completed in H1 FY25 had an average case duration of 15.7 months. This was higher than the average case duration of 11.5 months for the 118 cases completed in H1 FY24, because in H1 FY25 Manolete was able to complete a relatively higher number of older cases, as evidenced by the Vintages Table below.
  • Average case duration across Manolete’s full lifetime portfolio of 1,064 completed cases, as at 30 September 2024 was 13.3 months (H1 FY24: 12.7 months).
  • Excluding the Barclays Bounce Back Loan (“BBL”) pilot cases, new case investments remained at historically elevated levels of 126 for H1 FY25 (H1 FY24: 146 new case investments).
  • New case enquiries (again excluding just two Barclays BBL pilot cases from the H1 FY24 figure) achieved another new Company record of 437 in H1 FY25, 27% higher than the H1 FY24 figure of 343. This excellent KPI is a strong indicator of future business performance and activity levels.
  • Stable portfolio of live cases: 413 in progress as at 30 September 2024 (417 as at 30 September 2023) which includes 35 live BBLs.
  • Excluding the Truck Cartel cases, all vintages up to and including the 2019 vintage have now been fully, and legally completed. Only one case remains ongoing in the 2020 vintage. 72% of the Company’s live cases have been signed in the last 18 months.
  • The Truck Cartel cases continue to progress well. As previously reported, settlement discussions, to varying degrees of progress, continue with a number of Defendant manufacturers. Further updates will be provided as concrete outcomes emerge.
  • The Company awaits the appointment of the new Labour Government’s Covid Corruption Commissioner and hopes that appointment will set the clear direction of any further potential material involvement for Manolete in the Government’s BBL recovery programme.
  • The Board proposes no interim dividend for H1 FY25 (H1 FY24: £nil).

The full report of Manolete’s half-year results can be read here.

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International Legal Finance Association Adds West U Capital as New Member

By Harry Moran |

The International Legal Finance Association (ILFA), the only global association of commercial legal finance companies, today announced the addition of West U Capital to the organization’s rapidly growing membership base. 

West U Capital is an intellectual property investment firm actively seeking and engaging in a broad range of transactions, including patent litigation funding, law firm financing, patent acquisition, patent-based lending, or some combination of the four. West U’s team has decades of intellectual property-centric investment and capital management experience to provide patent owners and law firms with a range of capital options to help them monetize their patents and grow their businesses. 

“As the world’s leading association representing the commercial legal finance industry, ILFA is excited to welcome West U Capital as its newest member,” said Shannon Campagna, ILFA’s interim Executive Director. “The addition of West U and their IP investment and litigation expertise demonstrates the increasingly diverse arenas in which legal finance helps businesses and entrepreneurs access justice. The firm will play a significant role in promoting the highest standard of operation and service for the commercial legal finance sector across investment areas.”

The firm was founded by Managing Partners Joseph Kessler and Mark Roche. Two experienced leaders in the intellectual property space, Kessler formerly co-founded and managed the IP Finance team at Fortress Investment Group, an ILFA member, and Roche co-founded and managed AT&T’s intellectual property arm, Knowledge Ventures, before co-founding IP investment firm Techquity Capital Management. 

“Joining ILFA marks an exciting milestone for West U Capital,” said Roche. “We're eager to contribute our expertise in patent litigation and law firm financing to ILFA's ongoing efforts to shape the future of commercial legal finance.” Kessler added, “ILFA's dedication to promoting transparency and ethical practices aligns with our values at West U. We look forward to collaborating with fellow members to drive innovation and ensure the continued growth and integrity of our industry." 

About the International Legal Finance Association 

The International Legal Finance Association (ILFA) represents the global commercial legal finance community, and its mission is to engage, educate, and influence legislative, regulatory, and judicial landscapes as the voice of the commercial legal finance industry. It is the only global association of commercial legal finance companies and is an independent, non-profit trade association promoting the highest standards of operation and service for the commercial legal finance sector. ILFA has local chapter representation around the world. 

For more information, visit www.ilfa.com and find us on LinkedIn and X @ILFA_Official

About West U Capital 

West U Capital is an intellectual property-centric investment and capital management firm providing a variety of capital options to help maximize the value of intellectual property, including patent acquisitions, litigation funding, law firm financing, patent-based lending, and hybrid or tailored combinations. Its partners include small and medium companies, multinational corporations, research entities, and universities from a wide array of technology and market sectors across geographical regions. With decades of transactional and investment experience, West U’s growing team has underwritten, executed, managed, and exited hundreds of IP-related investments and transactions involving billions in invested capital. 

For more information, visit https://www.westucapital.com/

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International Legal Finance Association (ILFA) Welcomes New BEUC Position Paper – ‘Justice Unchained’

By Harry Moran |

The International Legal Finance Association (ILFA), the global voice of commercial legal finance, has today commented on the new position of BEUC, The European Consumer Organisation, on the use of commercial funding for collective redress as expressed in their paper ’Justice unchained - BEUC’s view on third party litigation funding’. 

The BEUC paper acknowledges several key points:

  • Third-party litigation funding (TPLF) is essential to guarantee European consumers access to justice.
  • There is ‘insufficient evidence’ for the repeated, unsubstantiated claims of the US Chamber of Commerce that TPLF undermines the justice system.
  • There is ‘no need to add further EU rules regulating TPLF’ at this time and additional regulation of TPLF risks ‘disproportionately disadvantaging consumer organisations’ and increasing the cost of litigation for those accessing funding. 

Following the publication of the report, Neil Purslow, Chairman of the Executive Committee of ILFA, commented:

‘BEUC, the pre-eminent voice of consumer organisations in the EU, rightly recognises the vital role funders played in enabling equal access to justice for consumers in collective redress. As BEUC highlights, litigation funding not only levels the playing field for consumers, but also deters corporate wrongdoing by strengthening consumer organisations in exercising their rights.

We support the BEUC conclusion that further regulation at the EU level at this time does not make sense and that existing tools provide safeguards to ensure the system works fairly. While our critics like the US Chamber of Commerce continue to push unsubstantiated claims to constrain access to justice, BEUC has been able to see through and identify the clear benefits of litigation funding for consumers.’ 

The full paper from BEUC can be found here

About ILFA

The International Legal Finance Association (ILFA) represents the global commercial legal finance community, and its mission is to engage, educate and influence legislative, regulatory and judicial landscapes as the global voice of the commercial legal finance industry. It is the only global association of commercial legal finance companies and is an independent, non-profit trade association promoting the highest standards of operation and service for the commercial legal finance sector. ILFA has local chapter representation around the world. For more information, visit www.ilfa.com and like us on LinkedIn and X @ILFA_Official. 

About BEUC

BEUC is the umbrella group for 44 independent consumer organisations from 31 countries. Their main role is to represent them to the EU institutions and defend the interests of European consumers, covering areas such as competition, consumer rights, digital rights, redress and enforcement, financial services, safety, sustainability and trade policy.

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The First Collective Work on Third Party Funding in Spain is Presented by Ramco Litigation Funding and ICADE University.

By Harry Moran |

The book La Financiación de Litigios en derecho español y comparado: estado del mercado y su regulación, (Thrid Party Funding in Spanish and Comaprative Law) published by ARANZADI LA LEY, is being presented by Ramco Litigation Funding and ICADE University. This work provides clarity and reflection on this figure, which is undoubtedly a tool that helps to dynamise the legal sector and provides better access to justice.

This is the first collective book, with 21 leading authors, on Litigation Funding in Spain and is a guide to the status, nature and regulation of this figure in Spain and in Comparative Law. It is aimed at all professionals in the legal sector and includes, in a novel way, in a single work, the perspective of professionals from different areas of the legal sector (professors, lawyers, in-house lawyers, company lawyers, arbitrators, financiers, etc.) both nationally and internationally, on the different aspects of Litigation Funding. The book has been published in Spanish and will be published in English language at the beginning of next year.

Since the first funders entered Spain in 2017, Litigation Finance has seen exponential growth year on year, following the trend observed in other countries. Spain is the fourth country in its use in Europe, after the United Kingdom, Germany and the Netherlands, as indicated in the European Parliament report.

In recent years, the Spanish market has experienced a growing demand from companies, law firms and individuals, who see Litigation Finance as a tool to monetise their legal assets, reduce costs and manage risks.

The book was presented las Wednesday at ICADE's headquarters with the intervention of the Dean of the Faculty of Law and author, Abel Veiga, who stated that a work of this nature was necessary for reflection and debate on this figure in Spain. Urquiola de Palacio, exchairman of the UIA and arbitrator, the book's prologue writer, commented on the importance of the work in Spain, as well as its potential impact in other jurisdictions, and suggested that it should be translated into English in order to be sent to the European Commission in the process of research being carried out on the regulation of Litigation Funding.

The round table was moderated by Diego Agulló (professor of International Law in ICADE)  and the speakers were Antonio Muñoz Murillo, director of litigation at Iberdrola; Paulino Fajardo, partner at HSF Kramer; Ruth Rodríguez Lazcano, lawyer at the Technical Office of the Supreme Court; and Cristina Soler, CEO of Ramco Litigation Funding.

Antonio Muñoz Murillo spoke about the importance of the in-house figure in companies and the need for legal departments to adapt to business structures in order to be proactive, exploring new models that exist in the market to add value to their operations.

Paulino Fajardo insisted on the need to normalise the figure of the litigation funder as just another operator in the market and not as something extraordinary. He stated that lawyers owe it to their clients, and that it is up to their clients to decide whether or not to use these structures, while maintaining the lawyer's total independence.

For her part, Ruth Rodriguez explained the importance of reference works to guide judges and help them to better understand the framework and the use of funders.

Cristina Soler closed the event by thanking all the authors and ICADE, highlighting how important it is for Ramco to have promoted a book of this magnitude to raise awareness of this figure, which continues to grow in Spain with a high degree of user satisfaction, as stated in the recent report published by Ramco in 2023. He insisted that funders do not generate more frivolous litigation, as they study cases in depth and their chances of success; on the contrary, they generate resources for better access to justice.

Ramco will continue to promote valuable activities that provide information and help to improve the understanding of Litigation Finance in a transparent and coherent manner.

For more information: www.ramcolf.com  

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