A niche litigation funder has joined the ranks of such businesses making disappointing financial projections for 2021-22. Manolete Partners plc, a listed insolvency litigation funder, said in a trading update today that it expects profit before tax to be between £5m and £6m for the year ended 31 March. This would be ‘below market expectations’, the company said, as pandemic measures – in particular the government’s temporary restriction on insolvency proceedings – continue to have an impact.
Although these measures largely ended in October, Manolete said the final elements stayed in place until this March, continuing to hit profits.
Chief executive Steven Cooklin said: ‘The impact of the final elements of these measures has had a greater than expected effect’. The number of new case enquiries did not increase at the rate expected in the final quarter, he said.
Manolete had a strong financial year in other respects, Cooklin said, increasing gross cash recoveries by 28% to £15.6m and retaining £9.7m after payments to insolvency practitioners and legal costs.
Cooklin predicted an insolvency ‘catch up’ effect over the next 12 months and beyond which will provide increased opportunities to fund cases. ‘New case enquiries have rebounded sharply upwards in the last four weeks as IPs and lawyers returned to more normal working conditions,’ he added.
Manolete reported that in the past few days it has completed one of its larger case investments for £9.5m, with all cash expected to be received within the next 25 days. The company’s retained share will be around £5.6m and will reduce net debt to £6.5m, down from the £10.3m net debt reported at 30 September 2021.
Following the announcement, Manolete shares dropped 1.1% to 225p by 11am today. Shares were as high as 320p last September. Full results will be published in June.
