Manolete Partners (LSE:MANO) — Full Year Results for the year ended 31 March 2025

0:03 Good afternoon, and welcome to the MANOLETE PARTNERS PLC Full Year Results Investor Presentation. The company may not be in a position to answer every question received during the meeting itself. However, the company can review all questions submitted today and publish responses when it is appropriate to do so. Before we begin, I would like to submit the following poll. And I would now like to hand you over

0:35 to CEO, Steven Cooklin. Good afternoon to you, sir. Good afternoon, Alex. Thank you very much indeed. Welcome, everyone. I know it's very busy time for results season at the moment, so really very grateful for the eight 80 plus people that have joined us today. That's magnificent. Those who haven't met me before, Stephen Cooklin. I founded the business in 2008. Originally, qualified as a ACA, chartered accountant with Cooper's and Ibrand back in 1991. That seems like a very long time ago. I then spent twenty years in corporate finance, various big and small investment banks. And then I started this business, as I said, in 2008. And I'm joined today by Rachel Lindley, our Lindley James, sorry, interim head of finance. Rachel, do you wanna introduce yourself?

1:24 Hi. I'm Rachel Lindley James. I've been with MANOLETE for about four years now, previously as associate director of finance.

1:32 Before that, I've worked in PLC's US owner managed and owner managed businesses, and I qualified in audit with Grant Thornton. Wonderful. Thanks, Rachel. You'll hear more from Rachel a little bit later.

1:46 I will jump straight in. So I know a lot of you will know about MANOLACE, so I will go through the background to those who don't, but I'll do it at a fair clip. We are in the in the sector of litigation funding, litigation finance. There is one big difference between MANOLETE and our listed peer group, and in fact, our pi private peer group, is that we buy the claims. So we are the claimant. That gives us full control over cost budgets, settlements, whether to issue proceedings, whether to appeal proceedings, everything. It's our asset, if you like. And it's only in the world of insolvency that one can take own a claim that you weren't originally involved in.

2:35 So that's our kind of unique spot, and that's really why we we have stayed within insolvency only because we we do like the control dynamics. So we've been around for sixteen years now, invested in over 1,600 UK insolvency claims and completed a very high percentage of those, 1,200, generating case settlements of £166,000,000. As you'll see a little bit later, the returns on our investments were very granular, as you can see over over hundreds of cases, are very consistently high.

3:15 The UK insolvency market. So this is going back to the year 2000 and up to the the current date. This is from the insolvency service who published these stats every every month. So in normal times, there are around 1,200 company insolvencies every every month. You see see the spike there in 2008, 2009. That, of course, was a great financial crash, Lehman Brothers, etcetera, huge spike. Then it settled down as you move into the teens, 2015, etcetera, to back to, again, 1200. It then drops off very, very sharply in, March, April twenty twenty, which was when COVID hit, globally and, of course, in The UK.

4:11 And what the government did at the time was pass emergency legislation to protect mass unemployment, frankly, by suspending many of the key insolvency laws and regulations, and that lasted for a good two years. And, of course, government had also put a huge amount of liquidity into The UK economy during that COVID period, again, to keep people afloat. So it's about, 700,000,000,000 got injected, in into, into UK corporate space. Once we reach April 22, COVID is over. The insolvency laws return to normal, and the government completely turns off the tap of this free money, very cheap money going into into the market, and the number of company insolvencies rise very, very sharply driven principally by creditors' voluntary liquidations, which is really better described as the owner managers of the company saying that's enough. We need to liquidate the company now.

5:18 And that typically although it's a very much the the the biggest part of the total insolvency market, these are the smaller and medium sized companies. When it comes to the larger companies, they tend to go through an administration pro process. So, you can see in the yellow on this chart, administrations also went through a record low level during COVID. They have recovered now to, pre COVID levels, but nowhere near as sharply as the creditors' voluntary liquidations. Now the leaders in this market are the very, very brilliant firm called FRP. They're also listed on AIM.

6:05 They they are both of the leaders in administrations. They reported, I think it's about nine months, a year ago, that their number of administration appointments was down about 50%. I'm sure they've recovered strongly since then. But as you can see, there's there's been quite a lag of these larger companies coming back into our insolvency market. The reason for that is that larger companies have bigger balance sheets, bigger options to raise equity, bigger options to restructure debt, and therefore, it was a weaker smaller companies that fell over first.

6:39 When you look at the insolvency litigation market, the pie chart here, that rep represents a a market value annually of about 500 to £750,000,000 of of litigation claims. The if you go back sixteen years before we arrived on the scene, that would have all been blue. It would have all been law firms acting on a no win, no fee for the insolvency practitioner. So the way that worked was that while the case was going on, the law firm would not charge any costs to the IP. But if any recovery was made, they would charge double in broad terms. We then came to market with our model.

7:26 And as you can see, the litigation finance piece of the pie is now up to 25%. And of that, MANOLETE of the yellow piece of the pie, MANOLETE is by far the dominant number one company at 67% of the yellow segment. The market opportunity is to turn all of the blue yellow. We listed in December 2018. What we did primarily with the, IPO proceeds was to build our own in house, regional network, covering everywhere from Edinburgh in the North to Bristol to Manchester to Leeds to Newcastle, Cambridge, and then down to, Exeter and Brighton.

8:11 And this has been absolutely key. These are partner level, employees joining us from from law firms where they've been practicing for often years and years and years, even decades. And they were tended to be the go to person in Exeter or the go to person in the Midlands. And now they would for us, since when they join us, they have amazing contacts to bring to the party. The mix of cases, again, I think this is what differentiates us again from the our peer group is it's really the same seven type case types day in, day out, month in, month out. They're listed there. And as you can see at the table at the bottom, 99% of the cases that we purchased that that we invested in in this current

9:04 in f y twenty five, 99% were purchased, and just 1% were funded. Now the reason for the small residue of funded cases, they they will almost certainly be personal bankruptcy cases. So, we can't buy those, at least not yet. So we fund those, but the the, purchase cases, the 281 are corporate, cases. Very briefly, how does insolvency happen? Company gets declared insolvent by the directors or the creditors at a petition to have it wound up. For example, HMRC, you haven't paid your taxes for two years. We've had enough. We want to appoint a liquidator, and a court appoints the liquidator.

9:49 But it could be the the CVLs, as we saw earlier. It's usually the the directors appointing the liquidators. And you see, they will do that hoping that the liquidators will not give them a hard time on any claims against directors. Happily, in The UK, we have an outstanding and very ethical insolvency practitioner industry, and and they do a fine, fine job. So an IP gets appointed one way or the other. But the thing is there's no money usually left in in the coffers in the bank account whatsoever. And the IP, the insolvency practitioner, is acting usually with personal liability. So when it comes to litigation, and most of these IPs are not lawyers, there there's a huge amount of risk that they're taking if if they if they proceed with litigation.

10:43 So having since sixteen years ago, the the opportunity to assign the case to us, sell it to us for us to then give them complete coverage on any risk, but then share the net proceeds roughly $50.50 is a dream come true for for for for for the IPs. And in fact, when I first started this back in 2008, MANOY said to me, where have you been? We needed you thirty years ago. So we then purchased a claim. We we we then drive every single stage of the claim. We are setting the fees at every single stage. The strategy is all ours. Shall we issue the claim? Shall we offer settlement to the other side? What the when the other side bank has an offer, do we take it? Don't we take it? What do we count our offer? That's all in our hands.

11:33 And it's only an insolvency where you can do that. In the funder's world, your birth and solicitation, capital management, etcetera, the the the funder cannot make those decisions at all. If they try to interfere, it becomes unenforceable. So as I say, it's only an insolvency that you get around those problems.

11:56 When new case inquiries come through to us, we we turn around pretty quickly either as accept or reject. We reject about 71% of cases that come through, not usually because of the merit of the case more that actually we we we don't think the defendants have got the means to pay anything, but we do accept about 30%. And when you look at the insolvency look at the litigation funding industry across the board, they tend to accept only three or 4% of the cases that come in. So our model's rather more efficient because it's the same type of cases repeating, repeating. If we were a birth of an LCM, we would also have a ninety six percent percent rejection rate because you're moving from Argentina one day to Australia the next day to Poland the day after. And and and, you know, that I think that's much more difficult than repeat cases in in The UK jurisdiction.

12:55 The cases tend to get settled within about a year on average. And if anyone's been through a legal case themselves before, personally, I'm divorced. It took about two or three years for that process to end, and it wasn't particularly disputed. So the law takes a long time usually, but in our world, it's fast, very, very fast, a year on average. Why? Because we own the claim. We approach the other side. We said, let's sit down. You don't wanna pay pay the legal fees in court nor do we. Let's sit down and do a deal before this all gets out of hand. And then typically, on average, we get paid the cash once we've legally completed it within about a year. Tends to be the bigger cases. They've got deeper pockets and insurance company behind them or very wealthy former investor managers, owner managers, and they can pay very quickly. It's actually the smaller cases where you've just gotta give them time to pay because they've lost their company.

13:56 Their lives are a bit all over the place. They've got a job now, and they'll need six, nine, twelve months to to to pay. If they don't pay, we've got a charge over their house. We've got restrictions of their family residency, and and we will collect on that if necessary. Happily, we hardly ever have to do that. So if you remember the the shape of the of the market curve, if I just very quickly go back here, where just in the last third of it, you've got normal, normal, normal, then it dips down because of COVID and then increases rapidly thereafter, much harder COVID. That's exactly what the same shape as our case referrals here. So when we listed the the 138 cases, we built the the business up very quickly to 334 case referrals by h one f y twenty one.

14:49 Then COVID hit us, so a big decline in number of cases. That lasted two years. And since then, we have risen much higher in numbers of cases than, than than than pre COVID. And that's exactly reflected in our signed cases because we're rejecting seventy percent, seventy percent get signed. I'd focus more on the right hand side because that that graph excludes what could be a one off factor of the Barclays bounce back loans. I'll come on to that in a minute. And completions are, again, very predictable on average of about a year. On the on the left hand side, you'll see that actually even during the COVID period, the in house legal team was still collecting very, very well indeed, and that generates on the right hand side realized revenues from cases, which has been very strong indeed, and this year has been an all time record.

15:46 So the volumes have increased pretty much exponentially since we returned from co COVID. What what what has been a very different story is the average size of completed cases. Because as I said earlier, it's the smaller cases post COVID, small smaller companies, sorry, post COVID that went bust first. The weakest die first. So most of our completions since the COVID period have been feeding off these smaller and medium sized cases. So although the volume has been very much higher, leading to record realized revenues, the average per case has been about half of what it was when the market was normal pre COVID. So when you look at that f y '19, the average per case that we're collecting was 200,000 pounds.

16:38 The average of the last couple of years has been half that, and this presents a massive opportunity for MANOLETE. And it's really just a natural evolution. As as the market gets back to where it was pre COVID, where administrations are back to normal levels, bigger liquidations are back to normal levels, But, automatically, the case sizes that come into us will become bigger on average. So what should happen over the next one, two, three, four years is that we will trend nicely back up to the pre COVID norm of around £200,000. And that will drop pretty directly to the bottom line profit because there won't be an incremental increase in costs at all. Rich will pick pick up on that in a in a minute.

17:28 Cash has been very much the headline, of this year's results. There has been a, 45% increase in our cash collections, in this last financial year, which is really quite stunning when you think those were the cases that we were picking up towards the the end of COVID. So that really is quite miraculous. The net cash, as Rachel will go through, has covered every single expense in the company, overheads, new case investments, interest, tax, leaving a surplus to reduce our net debt. But I won't steal break his thunder on that. We'll come to that in a minute. Here's our what we call our vintage table. Birth had started this, and we thought that's a jolly good idea. So so we we've copied them for many, many years now. So you'll see there 1,600 cases invested in and and 75% completed.

18:22 And you'll notice that all these years, all all the way up to 2019, there are zero cases outstanding. If you look at any other funder, private or public, they will have cases going back for five, six, seven, eight, nine, ten years. Not MANOLETE. We own the cases. We control it. And and the returns are summarized here. Brief word on two specialist kind of sub areas. One is the Barclays bounce back loan pilot. So this is where during COVID, the government offered small businesses a a guaranteed bank loan. So the government guaranteed the repayment of that loan for up to £50,000, most worth or £50,000.

19:10 And in the at the start of COVID, the government guaranteed £50,000,000,000 of these bounce back loans to small businesses. Unfortunately, there was a huge amount of fraud because it was self certified by the companies, which was really asking for punishment. And and so an awful lot of of that has been written off. So already 10,500,000,000 has gone from the government to the banks who lent the money under the government guarantee. And that's a huge amount of money when you think of the defense budget or the NHS or the education budget. So the banks have really been under pressure from the government to to get the money back. So we were approached a couple of years ago by Barclays Bank completely out of the blue, and they gave us a pilot scheme of of around a 100 cases to to to do. They told us that before they turned to us, their recovery rate on, on on these fraudulent loans was less than a fraction of 1% using debt recovery firms or lawyers on no win, no fee, less than than point 1%.

20:29 Our recovery rate, in a nutshell, was about 50%, which was absolutely shocking to them in a very, very nice way. So Barclays were over the moon. They told the British business bank. They told, the treasury just before the election last year. We met with all these people presented to them, and we were told in no uncertain terms that this our method would be recommended to whoever the next government will be on the fourth of July last year, obviously, the late party one. Tom Hayhoe was then appointed the counter fraud commissioner by Rachel Reeves in December. Baroness Hallett is is is is conducting a very thorough COVID nineteen, inquiry ongoing.

21:14 But, unfortunately, no one since the election has come to us. And the article here that we've summarized was in the Times yesterday, government dangerously flat footed about recovering COVID fraud. And it's worth reading because the the the the in house the civil servant efforts that they've that they've used to try to recover money has has has just not worked. It's been powerlessly poor, actually. So we will on the back of the The Times article yesterday, we will be approaching ourselves, the government, to remind them of what we have to offer. Briefly on the cartel cases. Background here.

22:00 There were price fixing cartel stamp proven to have operated between 1998 and 2011 by the manufacturers of six ton weight of trucks throughout Europe. So companies like Renault, DAF, Daimler, blah blah blah were all colluding on price fixing. And the first trial, the first wave, as they call it, went to trial in January 2023. BT and Royal Mail, obviously, they buy, lease a lot of trucks, so they had a fantastic claim identical to ours. And the judge awarded them the 5% overcharge and a very high cost recovery as well. Usually, in our game, you're lucky to get 60% of your costs if you go to trial, but Royal Mail got 70% of its cost back, and b BT got 75% of their cost back.

22:55 The second trial window, which we're hoping MANOLETE will be included in, is is now being set down for September next year. And so that is the end game in sight for these defendants. They know that they have to pay. The only question is how much. And, clearly, the first wave judgment was 5% of the amount you spent on trucks, plus interest as well, of course, which is over such a long period of a very large, amount of money. So as we sit today, we've applied to go into the second wave. And, and and so, we are forging ahead with those, 22 cases that we've purchased. And just so people know, we're talking big big headline case numbers. You know, people like COMET, they went bust. MANOLAY have bought all of COMET's claims for all the trucks that they bought over that catalyzed period. CityLink, the delivery firm, we bought all of their trucks as well. Obviously, deliver firm uses an awful lot of trucks.

24:00 So so it's very, very different to all our core business, which is why we we we segregate them out. Because what we've done here is we didn't want to lead from the front as we always do because of the huge expense of these test cases.

24:14 So we are piggybacking very much at the end of of these cases because otherwise, would cost us five, six, seven times as much. The end game is in sight September, next year. And so, unless we are given, offers by the defendants to settle the cases and many, many settlements are taking place as we speak, then we will go on to trial. Hopefully, I'm now gonna hand over to, Rachel, our head of finance. Hi. Thank you, Steven. So I'm just gonna talk through some financial highlights, and then we will go through them in a bit more detail on the following slides. Total revenue for the year was up 16% to 30,500,000, 97% of which was made up of realized revenue.

25:03 That's the revenue from completed cases. That was up 22% year on year. This meant a 3% increase in our gross profit to 10,400,000 from 10.1. Overhead stayed vaguely in line with where they were last year at 7,500,000, showing that we are capable of monitoring and capturing these nicely for the business. We generated EBIT of 3,000,000, again, up on last year, 19% up due to these high number of places and completions and control of our overheads. As Steven's already mentioned, the big story for us at the moment is the cash generation, which is exceptionally strong at 15,200,000 net net cash from completed case completed cases.

25:50 And this allowed us to reduce our net debt in the year from 12.3 to 11,100,000. Next one, please, please. As mentioned, total revenue of 30,500,000, which is shown in the graph of its how it is made up. 97% as mentioned is realized revenue with 3% being from unrealized revenue. This is the revenue the unrealized revenue is our movement on fair value of life cases less the movement of the fair value to realized revenue once a case completes. Gross margin fell from fell 5% to 34%. This is due to an increase in legal spend, which is mainly inflationary purposes, and the IP share of completions. Because our average case numbers have been smaller, IPs get Sorry, Rachel. You have just frozen. Case and a £2,000,000 case roughly stay in line.

26:48 As the average case completion, increases, we expect our gross profits to, improve in line with this. Next one, please. Overheads stay vaguely in line with prior year, which is which is as mentioned is due to our cost controls. We have a very good in house legal team and good finance team, which keep on top of these regularly. The increase in EBIT is generated from strong completions in the year from which is on the positive unrealized revenue, which went to a profit for tax of one point Sorry, Rachel. We have just lost your audio there for a second. I'm just gonna turn down your camera. Rachel, can I just check that you can hear me? Yes. I can hear you. Perfect. Sorry. We had we did just lose your audio there for a second.

27:46 So I'm just gonna keep your camera down. And, Steven, I'll do the same now. Please continue. Thank you, Alex. If we can go to next slide, please, Steven. So we've got on our balance sheet, we've got an increased value of our investments from 40,200,000 to 41.4, despite our live case numbers staying in line with last year. This represents an increase in the larger cases now starting to flow through. As Stevens mentioned earlier, we're getting better value cases, which is then generating a higher asset for the company. Trade receivables increased from 29,300,000 to 31,600,000. This has been generated through the strong level of case completions during the year, and I'll go into detail on trade receivables a little bit later on.

28:39 It is 12,500,000 compared to 13,750,000 at last year. Due to our strong cash generated this year, we've been able to repay 1,250,000 of our RCF facility. And this has led, as mentioned, to a drawdown to a decrease in our net debt from 12.3 to 11,100,000. So strong cash flow receipts of 25,600,000. FY '23 for comparison include the singular completion with a gross receipt of 9,500,000. If this was removed from f y twenty three as a singular large cash receipt, cash receipts for f y twenty three would have been 17,200,000.

29:27 This is important because I feel that it shows the increase in the gross receipts in the business and how we are performing overall on cash. Net cash from completed cases was at 15,200,000. This has allowed us to organically fund all new case investments in the year, pay all our overheads, and to repay some of our RCF facility. Trade receivables. So 59% of our trade receivables at the thirty first of March twenty twenty five were not due. This is due to the MANOLETE model. We are not like normal businesses with thirty day payment terms. A lot of our settlements are can be over several months. So as Steven said, normally, twelve months is the average that we try to obtain cash settlements for.

30:15 This helps to show that there is cash generation for the future years ahead in that 59% that is not due at the year end. The small tail of overdue balances mainly relates to judgment cases. Judgment cases vary from our settled cases as the settled cases, the defendant has agreed to pay a certain amount over a certain amount of time while judgment is enforced upon the defendant. With these judgment cases, it is a bit more long winded in collecting the funds, and this is, we go about trying to collect these by doing things like obtaining charging orders over property, which can take a while to come about and then for repay. And then with that, I will hand you back to Steven to talk about our current trading. Wonderful. Thank you, Rachel. Alex, can I just check? You can hear me? I we can hear you very clearly, Steven. Wonderful.

31:13 So important slide here, actually, current trading. So we've had a a very strong start to the current financial year. So we've almost done a a full quarter. We've already signed up 56 new investments in that quarter, which is 27% more than this the same quarter last year. Again, year to date, of those new investments, five have had headline values in excess of £1,000,000, which is what we we refer to as as as the larger cases compared to three this time last year. The referrals remain very buoyant at record high levels. We're bringing in more lawyers into the legal team. Every new lawyer who joins MANOLETE can handle about thirty, thirty five cases once they're up to speed.

32:04 So this will take us from 15 in house lawyers to to 18 by by the time we get to September. The strategy is just not changed at all. We we we are after UK insolvency cases, high volume, but also increasingly higher value. The investment case, in summary, we are the number one in our sector. Unlike our peers, we buy the case. We control it completely, which is why they complete very fast. And for investors, obviously, that is incredibly important. We have significant expertise in nationwide coverage. We now have, at MANOLETE, the largest group of in house insolvency lawyers than any other company or partnership in The UK. So we've got a bigger dedicated insolvency legal team than even the huge American slash UK, European law firms dedicated to insolvency.

33:11 The the market drivers for our business model are clearly very strong. Indeed, you cannot avoid hearing on a daily basis the pain of interest rates, the cost of cost of living crisis, taxes going up for companies. And this while it's very, very difficult for the solvent world, clearly, it drives more insolvencies. So we are the clearinghouse, if you like. Insolvency is a clearinghouse of of capitalism. It's very good for us. The durations are remarkably short, in the MANOLETE model, again, because we own the cases. So in the in in the world of law, thirteen point eight months on average to complete a case is nothing short of miraculous. They usually gone through years and years. I listened to your presentation by the well, Gateley's head of one of the heads of of of their insolvency business a few years ago and using the old no win, no fee.

34:13 And this this gentleman said that it takes him about five years to collect any cash on their hugely built up whip. As you've seen from what Rachel said, what I think is very interesting is the high operational leverage in the business. So even though we hit record numbers of cases, we hit a record realized revenue completed cases and record cash, the overheads went down, and that's because we're very much in control. It we we as as we said this time last year, we had invested in new people ahead of this big spike in insolvencies. We fully expected that to happen, and that's why the, operating costs are so low.

35:00 If we then spike up again to, to to three sorry, to to 400,500 cases a year, we already have the capacity now to handle that on on on on the people who are who are in the in the company. If we're gonna go beyond that, let's say something happens on the BBLs or something, we can scale that up very, very quickly. And the lawyers who work for us in private practice, they were partners. But, actually, it's nothing like what these what you'll read in the papers, these these new kids coming out of university being paid £250,000 at some massive London firm. A partner level remuneration is about a £100,000 in in insolvency, and the and the bonus will be maybe 5 to £10,000.

35:45 So it's not just the wonderful work that that they do with us. It's also very competitively remunerated. So we never have any problems ever hiring people. And then finally, what people can, I hope, see now over years and years and years now that we've reported, our returns are very, very consistent? An IRR, which is the kind of acid test for any business of a 130%. Well, I remember when I was a bag carrier back in corporate finance in the early nineties for PLC and and and Hill Samuel Investment Bank. We advised a lot of private equity and venture capital firms, and their rates of return per annum are good on a good investment would be about 20 to 25%.

36:34 MANOLAY is a 130%. I think it's unparalleled in my knowledge of the financial services industry. And long may that continue, of course. Alex, gonna hand back to you for q and a. Yes. Of course. Thank you very much, Steven and Rachel, for your presentation this afternoon. Ladies and gentlemen, please do continue to submit your questions using the q and a tab situated on the top right corner of your screen. While the company take a few moments to view those questions submitted today, I would like to remind you that a recording of this presentation along with a copy of the slides and the published q and a can be accessed via your investor dashboard. I'm Steven Rachel. As you can see, we have received a number of presubmitted questions as well as live questions. And, Steven, if I may now hand back to you and kindly ask to read out the questions where appropriate to do so, and I'll pick up from you at the end.

37:20 Thank you. Sure. Thank you, Amit. So I I won't read the full question out because these it's rather long, but let me try and summarize it. It's it's in relation to the cartel claims. As I as I said in the presentation, this our strategy on these is the diametric opposite to our normal cases. So whereas our normal cases, we're pushing to get them settled very, very fast indeed. We're doing the opposite on these cartel claims. Why? Because we knew from past experience that these would be very high cost cases to run. So we have piggybacked the really big companies and the really big law firms that they are using to fight the case of British Telecom, Royal Mail, the Road Haulage Association. They are at the cutting edge of these claims, identical claims to ours.

38:12 They're spending millions and millions and millions. Our spend in the last year was £300,000. So we think it's a very smart way to to to have operated these. And, and now the, the new month, the end is in sight, September next year, if not settled before. So the question here was, how do you assess the firm's asset management performance with respect to the cartel claims? Well, please wait for the returns to come in. We cannot talk about the returns until they are done. This is highly commercially sensitive. I would just say, watch this space. The second element of the question, BT and Royal Melbourne settled that well, they didn't settle. They went to trial, my friend. And so if to your question, is it a mistake not to issue proceedings earlier?

39:03 I've tried to explain it. It would have cost to us and our shareholders millions and millions and indeed HSBC. Then the final element of this question specifically, now that your hearing date is being delayed by twelve months to 2026, are there serious efforts on the way to settle? And, again, this is incredibly commercially sensitive, I'm afraid this is one area we're gonna have to to pass on talking about any prospective settlements. Moving on to the next question. Strategic issue in relation to the share price. Suspect this is by the same person. So your former CFO, Mark suggested we can't control the share price, and the question says he was mistaken. Currently, you have headroom on your revolving credit facility. So what this is suggesting with the current low in the share price, should we should we not use our headroom on our RCF to buy back shares?

39:57 The short answer is this is slightly naive question because, of course, in the revolving credit facility, HSBC have control over what we can use their money for, and clearly, buying back equity of the stock market is not allowed. So nice, easy answer. Next question. Well, the shorter company and sources in The UK have remained high relative to historic levels. At such levels, MANOE is talking 1.6 PBT. How do you see profits to evolve in the coming years? If it is expected to grow, what will be driving growth in profits? Very good question. So we've seen the volume come back in in a very strong way. What we're now starting to see is the value, the size of the cases coming back. So even if the the volume is even less than it was this last year, we are we fully expect the average value to trend up to close to what it was to its pre COVID norm, which is £200,000 per case, and that would effectively double our profits through the same effort in the same cost base. So it's a brilliant question. Thank you.

41:09 The next one, a question about performance metrics around the ARC. Yeah. Before so two questions. Right. When do you expect the ARC to return to 200,000 range? I haven't got a crystal ball. It is I I've put in the presentation. If you look at the ARC slide, and I'll just read out the quote that I added because it's no point me saying, oh, I think it will come back. What I do quote is is what the insolvency service themselves said in their last report literally two days ago. I'll just read that out for me. So they said the number of administrations in May, so the bigger company cases, in May 2025 was 28% higher than April 25 and twelve percent higher than May last year.

42:04 In 2024, the number of administrations increased by 2% from 2023 and was slightly high higher than annual total seen in 2015, 2019. Then the final sentence, numbers of administrations have continued to increase since 2022 from an eighteen year annual low seen during the COVID pandemic. So those are the words of the government's insolvency service. They say it better than I can. As I say, it's in the slide if you wanna hear that yeah, read that back again. The second part of the question, why do you continue to highlight record case numbers positive when reality fewer large cases will be far more valuable?

42:50 Again, with with the greatest respect, this is a slightly naive question. Number one, the returns on the on the smaller cases are phenomenal. They when you look at the IRRs, that's not just from one or two huge cases. That's from the whole panoply of of of of granular hundreds of cases that we we execute. And what's very important on this is if you're working, let's just randomly say, the the office in Leeds, and you're you're buying a a director's loan account case of a £100,000. You're buying that, and then you're buying a transaction at undervalued for £50,000. You're creating a very, very good level of engagement with that IP. You're delivering results to him. You're paying to that case upfront, and you're covering money very, very well for him to then charge his own fees, her own fees.

43:40 So when that same deadbeat's IP in Leeds gets the 5,000,000 claim, the 20,000,000 claim, the 30,000,000 claim, MANOLETE is in a fantastic front of mind position for those big cases. So I hope that answers that. Next question. MANOLETE represents 70% of the third party funders, Mark. So this means MANOLETE hasn't got a big room to grow. Again, people get this wrong every year. As I say, we if you go back to the slide with the pie chart, yes, we're 67% of the yellow bit, but the yellow bit is just 20% of the whole. We're going after the whole. There's a former judge on our board, doctor Steven Baster. He was the most senior insolvency judge for seventeen years before he retired a few years ago.

44:31 Once Steven got his he's on a board, as I say, once he got his head around our model, Steven said to all of the board members, well, it's obvious, isn't it? This is how all insolvency litigation should be done ethically and economically. Correct. Next question, I think, is something new question. So Tom was upon the COVID corruption commissioner actually in December to recoup 7,600,000,000. Initially, I expect to mentally to hugely benefit from this placement a mother load of new litigation go. Sadly, it hasn't happened. Absolutely right. In reality, isn't job a. He works one day, thirty one month contract, and produces little end results, or I'm being too pessimistic. Whoever's written this, I just don't know. I you know, we just don't know. As I've said, we had some really, really good meetings in June last year, days before the general election with really senior gatekeeper, civil servants, BBB, and others, and they were very positive.

45:35 Unfortunately, we haven't been called yet, but I'm hoping that articles like the one yesterday in the times that I highlighted during the presentation will encourage the government to reach out again. But as I say, we on the back of that Times article yesterday, we will be writing to the reverend ministers ourselves. I won't read out the joke, but it's a decent joke. Q one, number of them oh, sorry. Next question. Q one, number of employees doubled since 2020, but results do not reflect added value. Why? The size of the cases, the COVID, suspension of our market for two years, and the fact that the larger haven't cases haven't come come through. It says, what what are we as a board gonna do about restoring meaningful profits?

46:25 Hopefully, I've explained that the large cases and and certainly the the much higher volume of cases than that we were seeing beforehand and the new additions to the team, of course. Got James e here. In your report published today, you say the competition's appeal window. So this is truck cartel claims. Secure positions. Yes. We right. Is right. So the question is, is it a formality that MANOLETE will be in the second wave? No. It isn't. This is a very good question, James. Thank you. It isn't a formality. You have to ply. And for some reason, they the the the the defendants may object. There might have to be a hearing, and then you're in the hands of of a judge. Do I care? Is it that crucial for 2026 that we're in that second wave, if not the third wave, of course, after that? No.

47:16 It isn't. Because first wave went completely against the defendants. It was appealed by, I think, DAF in the court of appeal that failed completely the appeal. They appealed on, I think, at least five heads of terms, DAF. The court of appeal only allowed one of those to be heard, and they failed completely on that appeal. So that even if MANOLETE is not in that second wave, when the second wave trial comes around, it supports the 5% overcharge. It supports the interest claim back. It supports, the very high level of cost reimbursement. These finance directors and shareholders and, boards of these big companies, surely to goodness, we'll see sense in putting an end to their own massive legal spend on defending the indefensible.

48:13 Canceling along. Why does it take so long get back to pre COVID levels of average case sizes? Slightly repetition. So I I would hope I've I've I've answered that with the administrations coming back. I that that piece that I ran out from the insolvency service. James again, return on capital sorry. The your return on capital is far halving cost capital. Why pay down the RCF instead why pay down the instead of reinvesting in new claims? James, it's a balancing act between the two. You know, it's kind of flavor of the month in the city to be lowly geared. And then when things are booming, it's a flavor of the month in the city to be highly geared. So we're trying to strike a sensible balance to the company, sensible balance for shareholders, and, of course, a sensible balance in our relationship with HSBC, which has been ongoing since 2017.

49:06 They've been a fantastic partner to us all the way through. I'll take take a few more. Scrolling down. Alex c says, would you agree the business has failed to sustain high margin? So, again, this is back to the case sizes. So let's just go through this, what Rachel said. If your average case size now, is you're you're you're setting at a 100,000. So let's say we bought that case to 5,000. Let's say out of the 100, there's an 80,000 left to split $50.50 with the IP. So the margin on that for MANOLETE is only 40 on our investments of a 100,000. Now with the bigger cases coming through, let's say we settle one at £3,000,000. Yes. The cost might be more, maybe £200,000 would be typical estimate for that kind of thing, but MANOLETE then is taking a huge absolute number out of that claim as are the creditors. We are absolutely aligned.

50:06 So when they win more, we win more. There's a bigger cases coming through now. Don't read my words. Read the insolvency services words. That should restore the margin very healthily back to where we were before. Last two or three, if I may, Alex. Patrick, note note 25 of today's finals highlights 595 page account Cavendish corporate finance for consultancy services provide more color. Well, that's a very, very fair question. Thank you, Patrick. So we have years back to HSBC, really. We we we've used Cavendish to source our debt financing ever since, 2017, and they procured HSBC, back then as a private company. So that was before we IPO ed. So that was a 10,000,000 RCF then RCF then.

50:57 That RCF has has increased and increased. We then on this most recent period, we asked Cavendish to do a much wider market testing on on what we could get in the market. HSBC still came out as the most favorable, but Cavendish were kind of on risk be because of because of that, we had to pay a higher fee, but we got a much better deal out of HSBC than we did for the previous r last year with HSBC. So that comfortably covered the consultancy fee with Cavendish. But thank you for asking us. Important. Last couple of questions. Do you plan on changing your accounting system to a more tax friendly one?

51:43 I don't understand what that means. I'll move on to the next one. Would the entry of new competitors paying lower prices for cases lower your IRI ROI? Giro, yes, theoretically, but we've had people trying to compete with us. The most famous was just a few years ago, Rosenblatt Group PLC listed on AIM. They set up a they set up a subsidiary to do litigation finance. They set up an product in that team called ISLERO. Now MANOLETE, the name, he's the name of the most famous bullfighter that's ever lived. ISLERO was the name of the bull who finally got the better of MANOLETE and killed him. So they named their product after the MANOLETE killer, Islero.

52:33 But when it came to performing in the ring, things were rather different. After a year in business as a PLC with plenty of money behind them, they had signed one insolvency claim. One. We last year, we signed 290. They gave up having put a huge amount of effort into their into their practice. The business finally got sold off, and they're not insolvency cases, I hasten to add, on on non insolvency cases. Their first three results came through, and I think the aggregate losses of all three lost cases was over £11,000,000. So is Islero was a great people always used to ask me exactly your excellent question. You know, will competitors come in? It might look simple on the outside, but you've gotta have a fabulous legal and finance team up on your side to to really execute the the detail of the work we do.

53:29 Finally, hope will be the trigger for the share price to rerate given all the positive KPIs in today's results announcement? Lionel, thank you. I think it's a very good question. I don't know is the answer. I've been disappointed. I mean, we listed at one seven five. The business is manifold higher than that. Yes. The profits haven't gone back to where they were pre COVID, but I think we've shown today that they are tracking very much back to that level. And I would hope beyond much better than pre COVID is the cash underpinning of those results now. The the the twenty five twenty five point six million of gross, the 15,200,000 of net cash that we retain, and this is literally cash in our bank account.

54:21 Our overhead's about $56,000,000. So out of 15, you get to nine. Invest in new cases, seven. 2,000,000 left over. Pay down debt. So as this volume comes through, as the as the cases get bigger, we are out of the woods, I believe, now, and I hope that the markets will catch up with that in due course. But thank you all very much indeed. Really excellent questions. Alex, back to you, please. That's great, Steven. Thank you for addressing all those questions for investors today. And, of course, the company can review questions submitted today, and we will publish those responses on the investment company platform. But, Steven, before I redirect investors to provide you with their feedback, which I know is particularly important to the company, could I please just ask you for a few closing comments to wrap up? Yes. So I said very briefly, we we had a very, very tough time during COVID, worse than I expected, because I thought it'd be over much quicker.

55:14 The government at the time, Johnson, was saying, you know, it'd be open in three months, but we've got a vaccine. The the insolvency laws will be put back where they were within a couple of months. It lasted for two years. Now that's not criticism of of the previous governments at all. It was the first time in a hundred years that we'd had a global pandemic. But we came out the other end of that, and and I think from from every perspective, numbers of cases, numbers of referrals, cash, we have shown how resilient this team has been, and we are now getting the dividend of COVID, which is a huge public debt, high interest rates, and therefore, a lot a lot a lot of insolvencies.

56:00 And when you look back at the last peak of insolvencies, the great financial crash of two thousand eight, 2009, Lehman Brothers, those Lehman cases are still going through the courts today. So the the litigation fallout from this from this challenging times this time around, spike in cases, will reverberate for years. Thank you all very much again, and, we look forward to your continued support. Thank you. Thank you very much, Steven and Rachel, for updating investors today. Could I please ask investors not to close this session as you will now be automatically redirected to provide your feedback in order that the board can better understand your views and expectations? This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of management team of MANOLETE PARTNERS PLC, we would like to thank you for attending today's presentation, and good afternoon to you all.