A listed insolvency litigation funder continues to be bullish about its prospects despite reporting heavy losses. Manolete said the £4m loss before tax in the year to 31 March followed a year in which the firm lost a case in the Court of Appeal and suffered a lag from the pandemic, during which the government prevented insolvencies. The company had reported pre-tax profits of £4.5m the previous year.

In 2022-23, revenues increased by 2% to £20.8m. A record 193 cases were completed, up from 139. Net debt was reduced from £11.1m to £9.7m but cash reserves fell from £2.2m to £600,000. The company said today that it would not pay a final dividend to shareholders.

Steven Cooklin, chief executive, said the annual results masked a picture of two very different six-month periods: the first half being a relatively low number of insolvencies while the country emerged from the pandemic and the second half characterised by more businesses failing and therefore litigation opportunities rising. In the first half of the financial year, Manolete committed to fund 80 cases, compared with 182 in the second half.

Cooklin said: ‘While normal insolvency laws resumed at the start of the financial year, there is always a natural time lag between insolvencies commencing and the associated litigation claims being referred to Manolete, as liquidators and administrators need time to conduct their regulatory investigations before they can assemble cases for consideration by us.

‘The second half saw a strong resumption of the growth that the company had exhibited prior to the pandemic, as the UK insolvency market returned to normal operations with a strong recovery in cases being referred to us.’

But Cooklin was unable to say whether shareholders would see any significant dividends in the next year, explaining the company was still in a period of investment and extra lawyers being taken on to manage cases. 'It will present [shareholders] with a fantastic return profile over the next two, three or four years,' added Cooklin.

In total, the company wrote off around £2.8m from the value of the case that lost in the Court of Appeal. ‘There is going to be one outlier but we took our medicine,’ Cooklin said.

 

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