Manolete Partners (LSE:MANO) — Full Year Results Presentation

0:00 Good afternoon, and welcome to the MANOLETE PARTNERS PLC Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and could be submitted at any time by the Q and A tab situated on the right hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and will pop your social responses where it is appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Steven Cooklin, CEO. Good afternoon, sir. Good afternoon. Thank you

0:32 very much indeed. Good afternoon to everybody. So talking is Steven Cooklin, the chief executive of MANOLETE, chartered accountant, joined by our CFO, Mark. Mark, you want to introduce yourself? Hi. Yeah. Hi, everyone. I'm a chartered accountant. I've been with MANOLETE for four years, and my history is mostly with Deloitte in the in the city. Lovely. Thank you, Mark. Moving through the slides. So, hopefully, people have had a look at the RNS that we released earlier today. From previous feedback, half the people would like a reminder of what we do. The other half say that's a complete waste of time because know what you're doing. So we thought in the interest of leveling up, we could go for the safer option. So very briefly, MANOLETE has been around since 2008 in The UK market. We focus exclusively on UK insolvency litigation, which means we're able to buy the the the the the claims that we take control of, and that gives us full control of those claims. They are our assets. So the other litigation funders, both public and private, are just pure funders of litigation and the benefits of of control to us at buying it, obviously, is is we can approach the other side. They can approach us. We can settle.

1:48 And the whole duration of the case tends to be an awful lot quicker. Plus other other things like fixing solicitors fees because they are acting for us rather than a third party are all beneficial in our world. Very broadly, and it is very broad, there's lots of variations around the edges on this. But in broad terms, we play pay around 5 to £10,000 upfront to buy a claim of it might be a claim for a few £100,000. We then pay the legal fees. Then when we get a recovery from the other side, we get all that money back, including the upfront, and we split the remainder remainder $50.50. On really large cases into millions of pounds, there'll be a ratchet in favor of of the creditors.

2:33 So our share will go down after the first million or 2,000,000 to 406% in their in their favor, And we we probably play a bit pay a bit more as well, but but but no more than 5 figures usually. The type of claims we are doing are a lot of them against directors who are usually the owner managers of their businesses, an awful lot of them run their lifestyles through their companies. And that's fine as long as at the end of the year, the business is profitable and they can declare a dividend to repay the the loan that they've taken from the company for their holiday, for their kitchen improvement, for their arsenal season tickets.

3:19 That's all fine. Where where the problems come in is if the company can't pay a dividend, it hasn't got the reserves or it's becoming insolvent or has in fact become insolvent. That is a debt due to the company from the director personally. So that's that's the biggest segment of claims. Another very big segment is called transactions that undervalue. You've got a company, something's gone wrong strategically or with a customer or with a supplier, maybe with employees, and some and some large creditors have built up within that company. The owner manager will set up a new co, clean company, and transfer the business of the old co for a very low value to the new co and leave all the debts in the old co. Obviously, that's not right. They need to pay a fair value and a proper value for for that business by by the new co.

4:12 So that that's a a typical class of claim. And and the third one worth mentioning is preferential claims. A lot of these businesses we deal with have often got family money invested, loaned, etcetera. And the rules are that you've gotta treat all creditors equally, not you can't put your family or friends above HMRC, for example, or the window cleaner. So those who pay preferentially, family members those family members have to give that money back or the direct test to go into his own pocket to to make things whole. So over the last fourteen years, we've invested in over a thousand UK insolvency claims, generating well in excess of a £116,000,000.

4:57 The returns on those cases have been very high indeed and very consistently high with internal rates of return of over a 130%. Maybe compare that to the venture capital private equity world where a good return is around 20%, and then return on investments are around a 120% as well. So really, the highest that I've certainly seen in in my financial career. The, structure is very equitable. We don't take a percentage of the top line gross recovery. We only take percentage of the net. So that incentivizes MANOLETE and my team to operate these cases very efficiently. So what's good for the creditors, HMRC, is is good for our shareholders.

5:44 And that is a a major point for us is is the the main creditor in liquidations typically is HMRC, and that is you and me, that schools, hospitals, defense budgets, what have you. And so there's an awful lot of good from the governance and the structure of what we do into society. As I said, insolvency is the only area in in the law where you can buy claims. Otherwise, you've got to just fund and and be distanced from that claim. Pre COVID, there were around sixteen, seventeen thousand UK companies going bust every year. But then in COVID, the period in lockdown, the government changed the insolvency laws temporarily to make it very difficult to make a company become insolvent to protect employment in The UK while the pen pandemic was ravaging around the globe. So the number of insolvencies dropped very sharply to around eleven thousand a year. And, obviously, our KPIs, our key performance indicators decreased as well.

6:45 But the good thing is in April 2022, which happens to be the start of this most recent financial year, those laws return return back to normal. Every year, what comes out of inside these those insolvency claims, around 2,000 claims which recover eventually in one way, shape, or form at £750,000,000. So that's really our addressable market on an annual basis. The way liquidators used to run these claims and still the majority of time because of the old habits from these claims using lawyers on a no win, no fee arrangements. So if no recovery was made, the solicitors didn't get paid anything. But if a recovery was made, they could charge double.

7:33 And so the good cases, obviously, there was no real incentive to get those done particularly quickly when you're getting paid double and you know it's it's a good case and you know the person's got money to pay. So in 2016, the govern government wasn't happy with this across all of litigation, not just insolvency, and they put forward the Jackson reforms, which made it much more difficult and unattractive to do these no window fee arrangements, these kind of ambulance chasing things you would have seen in the in the Daily Mail, etcetera. And so all the legislation regulations are very much in support of our way of doing things. So that yellow slice of third party funders, that used to be nonexistent ten, fourteen years ago, and that's been growing and growing and growing. It's now about 20%, and our mission is to turn the whole of that pie into third party funding.

8:23 And when you look at the yellow piece of that pie, the professor Walton who looked at this and did several reports online said that MANOLETE had a 67% share, very much dominant leading company in the third party funding segment. The next biggest was just 5% and then 4%, etcetera. And that's led to an awful lot of awards. We've we've won the turnaround restructuring insolvency award on five occasions. Even more importantly, the the register that a lot of lawyers and and liquidators look at is chamber's guide, which is very, very well respected. And they started running an insolvency litigation league table in 2021 '22. The next ones are due out in a few days' time. And the only company, the only single company in The UK that's in band one, the top premier league, is MANOLETE PARTNERS PLC.

9:23 When you look at our returns over many years of of running this business now, you'll see here that there are literally no cases outstanding all the way through to 2019 and just 12 left from 2020. So we have very, very consistent returns across hundreds and hundreds of cases. We're not dependent on one or two big cases. It's all spread over 689 separate completed cases, a 116,000,000 recovered. Out of that, £52,000,000 has been paid to creditors. That's mainly to HMRC. That's paid for good few schools and and and and and such like. Lawyers are being derisked. So rather than taking the risk of that no win, no fee, they've been paid by us as the work is done on fixed fees as we always said. And the durations because we're controlled, we own the case at just over a year, which in the world of litigation, I think of divorces and and and litigation in the high courts takes years and years and years. Lehman brother brothers is still going through the courts to this very day. Our average is just a year.

10:29 So a very high level of of completions and then very large numbers in the last few years since IPO, certainly when we've had good capital to to utilize and a good team. The the recoveries are over £20,000,000 a year in many years and and only just down to 16 in one or two years, and that's far higher than in in our pre IPO years. So the business has grown so far so fast with very strong returns on a consistent basis. So just going back to The UK insolvency market, you can see here this is from the insolvency service. The number of insolvencies was running pre COVID at about a thousand a month in the the CVL sector, by far the biggest, and that dropped sharply down to around five, six hundred when they passed that emergency legislation to make it very difficult to to do insolvencies.

11:21 Then as businessmen started to realize that time was gonna be over soon, the number of insolvencies crept up and up and is now consistently far higher than the pre COVID level, and it has been like that for a long time. In fact, just announced this week, two days ago, was, 2,181. So that would be almost off the charts here, actually, with number of companies that went bust in May that's just passed. And that was the highest level of corporate insolvencies in The UK since records began for monthly counting in 2019. And you just put in your mind the shape of that curve, high, a dip, and then a strong recovery. You then look at MANOLAY's inquiries pre post IPO going up towards the pandemic, rising very fast, and then diving down as they changed the laws and then recovering just like that curve to way higher than pre pandemic.

12:21 And then with a slight time delay,

12:25 the number of signed cases, which is when they start getting put into our books, Same shape, rise rose fantastically well post IPO, dipped with COVID. When the laws changed back, it's come back much, much stronger.

12:41 And that's really translated into our financials. You can see the number of completed cases there, hundred and ninety three for this last financial year. That has driven realized revenues, which exceeded with the was more than a 100% of our revenues this year were from closed completed cases, 129%. Mark will go into the reasons why we had an adjustment to one off adjustments to the unrealized, but the the realized revenues are ones that have no subjectivity or valuation element at all. All those revenues were realized this year. Here you can see number of some cases by month. We track everything almost by a minute at MANOLETE. We're we're kind of data junkies.

13:30 And as you can see here, things had been had gone down from the COVID period. And then from November, just passed a very consistent strong rise on the number of signed cases. When you look at it quarterly, you can see it very clearly. These are the different financial years. Again, after IPO, building the business very nicely. Then halfway through that financial year, we the laws got changed, and then they got changed back. And look at this very, very strong recovery there. And that has translated into cash as well. Cash for this most most recent financial year, up 72%, so almost 27,000,000 on a gross basis. On a net basis of profit cash to MANLEY, up 47% to 13,000,000.

14:20 When you think our overheads in cash are only 9 sorry, 5,000,000 to run the business, strong organic cash generation for the for the company. And we look at that in a bit more detail, Marco, for a more extended cash flow soon, but you can see all this organic cash generation getting bigger and bigger even through those COVID years. And that was 7,700,000 generated this year before case investments, but case investments was only $5.06 odd million pounds. So we were able to repay 3,000,000 of of debt organically generated this year as well. It's just a bit more on cash. I'll flip through that. Current trading. So we ended so the first half of the year was was really a hangover from COVID. It takes, as I say, about six months for liquidators to investigate a company before handing over cases to us. So the first half was very much like the old COVID period. The second half, they'd done the work, and so we had a record number of new case inquiries, record number of new case signings.

15:24 In the second half of this year, we signed a 180 cases, which was even hard than the whole twelve months of the prior year. Case completion's also at a record level and that all of these metrics continue just as strongly into this new financial year that we're into now called f y twenty four. So for the first two months, the signed cases were a 154% higher than last year, and the cash continued to come flying in at £3,100,000 in the first eleven weeks of this year across a 134 different cases. So very, very granular. The big challenge for us has been in the last six, nine months is dealing with this tsunami of cases that we predicted to come through, but we we were ahead of that game. So we hired two new financial analysts to help do the analysis of the defendants. At the start of the case, we we added two new expert insolvency lawyers from extremely good firms, and more are due to join in the in the coming weeks.

16:28 As some of you would have read in the papers, we are doing a pilot with Barclays on the bounce back loans. So during COVID, the government put out £50,000,000,000 of bounce back loans, government guaranteed loans of about fifth £50,000 per company to many, many small businesses. Unfortunately, around 1 to 5,000,000,000 of that was defrauded. These were the the companies took took the money, but then the directors put it into their back pockets and didn't pay it back to the to to the bank. And where the bank can't, where the bank has suffered a loss, they claim that off the government, and that's us. So Barclays approached us, which was a real feather in our cap. Barclays, obviously, is an enormous global operation. MANOLETE, relatively speaking, is a small business. So for Barclays to come to us was was very flattering, but they've clearly seen what what we do.

17:20 And they had a pilot of a 120 companies that hadn't paid anything on the bounce back loans and had clearly taken the money personally.

17:30 Twenty twenty almost 20 of them settled immediately with Barclays when they knew they were gonna be faced by MANOLETE. The other 100 went through a compulsory liquidation process into a private IP firm. We bought 48 claims last in the last financial year and another 20 on claims so far this year, and we've made hundreds and hundreds of thousands of pounds of recoveries already for Barclays. So therefore, they do not have to claim that money back off us as taxpayers. It's a terribly important thing here. And the other banks all other banks that were involved in the in the bounce back loan program that obviously is is chancellor devised, and so he's very keen to see the right thing done.

18:21 All of them have been watching the Barclays pilot, and and Barclays have been absolutely amazed at the results that have come through. Before they came to MANOLETE, their recovery rate was less than 1% on these bounce back loans, and we and we beat that within the first few weeks of taking on just a few pilot cases, which was terrific. So we're very much hoping that the banks will do the right thing. It's all being coordinated through the biz the British Business Bank part of the government. And what we did was was hire as a special adviser, the government minister who was head of counter fraud, Lord Agnew, Theodore Agnew. And he resigned at his post in the government, actually, really quite famously because he was so appalled by the level of fraud that had gone on exactly on this bounce back scheme. So that's why he's helping us on this.

19:09 Finally, before I hand over to Mark, the cartel cases. So these are these are claims against truck manufacturing businesses that the EU Commission found were guilty of price fixing between 1997 and 2011. So fourteen years, these manufacturing companies were colluding to elevate the price illegally to buyers of trucks of certain types of trucks. So Royal Mail and BT among many, many others have launched claims against these manufacturers. They are liable to pay because you cannot they they've tried all the appeals with the Commission and failed, so they are charged. But the question is, how much do they have to pay?

19:55 So we bought 22 claims of bus companies, including quite big companies like Comet and City Linkers and many others who've got claims very similar to BT and Royal Mail. And we were waiting for the competition and appeals tribunal, which is the the arm of the judiciary that that adjudicates on on competition claims. It handed down the judgment on the b ROML and BT cases in January of this year. Though the results of that judgment were handed to external values of these cases very uniquely. These are competition claims. So MANOLETE, our lawyers, our directors, none of them value these cases. They're all valued externally, and we just take that number. And that fully supported our value of 13,200,000, which includes cost, by the way, as well.

20:45 And that was very interesting with two follow on things from that judgment, very successful judgment, was number one, the next set of test cases, the rider group all settled, which was exactly our strategy on these unique cases from the very start to tuck in behind the big claims, let them spend tens, maybe even hundreds of millions of pounds running those claims, and for MANOLETE to just move on to the battlefield once we could see exactly

21:15 what would have been adjudicated on those claims. So the the other interesting thing apart from the settlement was was then DAF tried to appeal the BT judgment on five grounds. The judge dismissed four of those grounds. He accepted only one on an basis, not that it had much if any to do with the trap claims, but it did have possible application for the competition law more generally. And so he he allowed that to go through, but

21:48 he he he went on record saying it's unlikely to have much impact on on on his initial handing down on the Royal Mail cases. And then very interestingly, and this really is the the attractiveness of the defendants to settle these with the cost awards. Usually, cost awarded about 60% of costs. So the defendant had to pay Royal Mail 70% of its costs. That was £9,000,000 just in legal fees of Royal Mail. They

22:18 had to pay their own legal fees as well, so you can easily double that. And BT, 75%, so another 5,000,000. And, of course, their own legal costs again. So huge numbers, and they're faced by a huge number of other claims, including our claims. There's a huge attraction for them to settle now that the judges has said exactly what the overcharge numbers should be, is to avoid hundreds of millions of pounds of legal fees. I will now hand over to my colleague, Mark Taverner.

22:51 First slide that we're looking at is the overview of the trading performance for f y twenty three. If you look at the table on the top right, and it's the pink shaded column. So in overview, we've recorded a lot of EBIT loss of 3,100,000 for the year. This was all a result of events in the first half of the year where we had a one off fair value write down and also a large case which went to trial and was unfortunately lost at trial. In the second half of the year, we've been trading profitably with an EBIT of 2,200,000. And I'll I'll explain a little bit more about the the first half, second half split later. We just go down the different categories of the profit and loss. Revenue of 20.7 in total is 2% higher than the previous year. However, that very much glosses over the fact that realized revenue, the real important part of revenue actually drives cash, was up 76% at 26,800,000 compared to 15,200,000 a year before. And this is really driven by the number of case completions in f y twenty three. A 193 cases completed compared to a 139 in f y twenty two.

24:05 One case was completed for 4,900,000 just itself, which is obviously a large case.

24:18 Continuing down the profits and loss, unrealized revenue, which is the other component of revenue, recorded a negative 6,000,000 because of those fair value write downs that I that I mentioned earlier. So this is very unusual for us to have a negative number there rather than a positive number. But, obviously, that then had a knock on impact of of the gross margin as well. Overheads increased by 1,700,000 or 34% to 6,800,000. And this is a result of a bad debt expense increase in the year. We do a very thorough review of debtors at the year end and there were a very small number we're talking about eight debtors where the defendants have either become bankrupt or had a overseas assets.

25:03 And we just come to the conclusion that these would be too difficult to chase, so we've immediately provided for those. Other administration costs are broadly flat on on previous year. Salaries increased by what is now below inflation 6%. Marketing costs have increased as obviously the economy has opened up. Post COVID, we're attending more business development events. Just just to kind of go explain a little more detail about the year of two halves, you see in the table in the top right hand corner, you can see the difference in the gross profit in the first half of the year to the second. And it's really this performance in the second half of the year, so that's from the 10/01/2022 03/31/2023.

25:52 That's really continued into our current financial year, f y twenty four as well. And you can see that's driven by the new cases signed in the KPIs table just below, 83 cases in the first half of the year. But now the the general number of insolvencies in the economy as a whole is coming through and and reaching us. There's a 118 new cases signed in in the second half of the year, whilst the number of completed cases has remained elevated and consistent in each half of the year. Also, I mentioned that we had an adverse judgment on a single case that impacted us mostly in the first half of the year. This just sets out the impact of of of that judgment, 2,800,000 to the profit and loss as a whole.

26:43 I just included in the bottom right hand side an adjust an adjusted view of our EBIT if we hadn't had this this very rare occurrence of a loss at trial. Very few of our cases go to trial. As you can see, it's had a significant impact on this year's EBIT. So moving on to the balance sheet, our largest number is investment in cases, which is the carrying value of all our open cases, both long term and short term. This is at 36,500,000 at the March 31. It comprises 351 live cases. That's the largest no high largest number of cases that we've we've ever had in our portfolio. The the long term split of that, the 13,400,000, all relates to the cartel cases that Steven outlined earlier.

27:36 Trade receivables of 24,400,000 at the end of the mark of March 2023. We've got one large case completion that completed just over a year ago that that that's repaying over a ten year time frame now. Now nine years to go that that's paying on time and that that's an unusual quirk in trade receivables. But most of our trade receivables pay within a twelve month period and on a scheduled set of repayment dates. Cash held was not point 6,000,000 at the end of March, and we've drawn down 10,400,000 of our 25,000,000 HSBC facility. Just to move on to the cash flow statement now, Steven's already mentioned that we had record cash generation in the years March 31. Again, if you look at the column on the right hand side, shaded in pink, gross cash generated, that includes the insolvency practitioners share as well as MANOLETE's share, 26,700,000.

28:41 And if you make the all the deductions for payments to consultancy practitioners, investment in new cases and ongoing cases, investment in overheads, we still have positive cash. Our cash is paid for our overheads and and and insufficient to invest in new cases as well. We we've also been able to make repayments of borrowings of of circa 3,000,000 in the year as well, which is nice in these high interest times. Just to touch very briefly on the aging of trade receivables. As I mentioned before, our trade receivables are repaid according to payment schedules and therefore the vast majority of our trade debtors are not even due yet. So we have very healthy aging profile of our trade debtors there.

29:37 And the last slide just really sets out the the history of our HSBC loan. We have a 35,000,000 package in total. The core loan is 25,000,000. We've got a further 10,000,000 uncommitted accordion if required. Current interest costs are a maximum of 3.7% above the sterling overnight index average, Sonya. And we've at the beginning of this year, we took up the option to extend the the duration of the loan to June 2025. So we're well positioned with sufficient funding for what we expect to be a expansionary couple of years.

30:26 That's it for me. Thank you very much. Excellent. Steve and Mark, thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab situated on the top right hand corner of your screen. Just while the company take a few moments to review those questions submitted today, I'd 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. As you can see, we have received a number of questions throughout today's presentation. Could I please ask you to read out the questions and give responses where appropriate to do so, and I'll pick up from you at the end? Superb. Yeah. I've been able to eyeball these as as Mark was taking through those slides. Very good questions. Very happy to take on all of them. First one is, can you please explain how you bid for a case and what kind of commercial structure is agreed?

31:15 For example, do you try to buy a claim worth 1,000,000 for 500,000 and try to make a profit by settling the claim much higher level? So it's from Siddharth b. Thank you, Siddharth. Superb question. So almost never, Siddharth, are we bidding against other firms. I it's less than 2% of the time that we told by the liquidator. I'm going out to a number of firms on this. This is very much the insolvency profession is is very much relationship based. And the reason why I paused on all those awards, which are voted on by liquidators and the chamber's guides with us as the only company in band one that's voted on by lawyers, That's those are the people that ref refer cases in every single day. They're referring new cases into MANOLETE.

32:06 Now they may they may have gone to other funders. They, of course, totally free to do that. But many have worked with us on multiple, multiple occasions. And, again, this is a very big differentiator between us and other listed funders. It's probably most other funders only work with that entity once or twice. With with MANOLETE, we work with individual insolvency practitioners on many, many different cases. So we become the go to, the trusted supporter for their claims. So looking at your 1,000,000 or half of £1,000,000 claim, that would typically if we like the if it got through the net worth test from the financial analyst, it got through the merits test, we would typically be buying that claim for around $1,520,000 pounds up front. We'd then pay for all the legal costs. When we got a settlement, we would get that £20,000 back. We'd get back the legal fees that we paid, and then we'd split the remainder $50.50 between the liquidator and MANOLETE. And you've seen the returns.

33:13 Usually, we're getting two to three times the the money that we've we've put in. We're getting that money back, which is a very high rate of return. I hope that answers your question. The second question, Kevin, very cheeky question. I like it, though. MANOLETE was recently in court five days, I believe, in a case against Michael Byfield. And he actually wrote a book about this. You might not know about that. Given that you tried to avoid going to court, what can you tell us about the case? Well, because he wrote a book, I will tell you about the case. So we won the case. We won every single penny of the damages. We won every single penny of interest that we claim for, and we're just agreeing our costs. And we've already received a £100,000.

33:58 The judgment was just last Friday. We've already received a £100,000. So, usually, I won't talk about cases, but he has been hoist by his own petard by being so vocal about it. So there you go. Chris t, what are your thoughts on growing the business via strategic acquisitions? Oh, I'd love to get into this, but I probably shouldn't as a public company. I think it's really interesting. I think it's fair. When you think of the environment that we're operating in where you've got law firms working on cases, you've got barristers working on predictors, administrators. It is quite surprising that there hasn't been an agglomeration of lawyers and IPs, IPs and forensic experts, and then, of course, funders who are really relatively new to the party must surely come into that mix. So I think it's a fascinating area, Chris. I think it's a brilliant question.

34:55 There's nothing there's nothing on the in the hopper at all. I can look at the camera and say that very, very honestly. But I I think looking to the future, think it's really interesting. James e and I hope it's not James Ewing who I went to university with because he's always interested in what we do. But, anyway, James e asks, do you anticipate any cash flowing to MANOLETE PARTNERS in the current financial year? Again, an excellent question, James. Thank you. So we've had these cartels cartel case in the book for years now. They are completely different to our main line of business. And as I've often said to shareholders, please only put a a price earnings ratio of one on this because it's we will not buy a group of cases like this ever again. So they are competition law. They're not insolvency law, which is why really, external advisers run these cases for us and evaluate value these cases for us. So we're very much in their hands. We're into an area of the law that my team, as brilliant as they are on insolvency, are not familiar with. Hence, the complete subcontracting of this. So we've always been very, very cautious with when we're gonna land these. We're very bullish on the prospects because the EU have found them liable. They gave them the biggest penalty ever under under the EU, competition law, courts of 2,900,000,000, euros, I believe it was. So they are bang to rights. As I said, one of them tried to appeal that. They failed.

36:22 So it's just about how much. And that's why that BT Royal Mail case was so important in January because it gave you the exact simple equation of how to work out how much is owing. So and and, of course, hop on the heels of that. The next test case is Rider settled very quickly. So what does this all mean for MANOLETE? Well, we're clearly in a very good position with a judgment, hundreds and hundreds of pages in our hand now. So we're we're in a much more secure position than we were even six months ago and certainly a year ago. So the thing now is is to play our cards smartly. If we would just suddenly go running to the the defendant group and send this a group in in Munich saying, oh, well, you set it right. Look.

37:13 These are numbers on BT. We we want 13 point whatever million it it is. That wouldn't be clever. Obviously, that's not how you pay your cards in a poker match. So our claims are stayed at the moment by the judge. He stayed almost all cases apart from these test cases. So we will just move forward until they come to us wanting to have a discussion. There are excellent lawyer to lawyer, Adam Hughes, as there always are in these cases, where that dialogue is pretty much ongoing. That's certainly how Ryder would have come about to settle, and that is how we intensify it. So not be too keen. And we're not we're not keen. We if they're if they're watching this, you know, we've had these for four years. We've let £1,500,000. We're not gonna rush to anything right now, and we know exactly what we're owed thanks to the BT judgment.

38:01 Mark h asks and, oh, this mark this might be one for you. At note 2.4, you seem to be saying that Do want me to pick up the first part of this? Yeah. Yeah. To the screen. I I think the the the 1.2 uplift from the cartel case valuation, it it it's it's not the end valuation being increased. It it's it's there were some future cost forecast within that valuation, and we've reduced the future cost because we we no longer think it will go as on as long or or go to trial. So so it's a reduction of cost. It's a bit of a a a kind of fine point there. But Yes.

38:50 Thank you. How long do you think the Cartagazes are going to last for really lazy? I I've I've tried to address that Yeah. If want. Answer. What percentage of claims by estimated value related to the acquisitions of claims from this sole person of significant control, John Morton, was zero. So what's behind this is CityLink, as everyone knows, was owned by John's private equity firm, Better Capital, and that's not how we came across the CityLink. Mean, CityLink is very, very well known company, of course. The liquidator of that business was up in Leeds. And when we were working actually with Deloitte to look at who were the big companies have gone bust, who might have big cartel claims. CityLink was on that list. And I I went up to Leeds to meet one on one with the liquidator, and he was very surprised he even had a claim is the truth of it. And and we paid him for that claim. We did all the all the work.

39:57 John Morton had absolutely nothing to do with it because as a creditor, they have absolutely nothing to do with the decisions of a liquidator under law. So hopefully, answers your question. I I hope there's no confusion that whatsoever. James e comes with another one. Would you consider managing your Mark, this might be for you. Might be another one for me. Yeah. So we have we have discussed with both the board and our auditors about where, you know, where the fair valuing of cases is the correct accounting treatment. We've we've looked at valuing your cases of cost, and we we have all concluded and I would include HSBC as well in in in that that that that fair value and mark to market is is the correct way to to to account for these for the legal cases.

40:50 If only to give investors and shareholders a true picture of of the value of the balance sheet assets that we we have and we remember, we actually own these cases, you know, we bought them and that they are an asset of ours. We think holding them at a a at a low initial cost wouldn't really reflect the the true value to the shareholders of of those cases. But we have we have been around that that thought process. Think that's the answer. Often. Yeah. Yeah. Jamesy challenges my response on the cost of cases and suggest that I should hurry to settle because of cost of capital. Look. I take the point about cost of capital. Of course, James, one one wants money sooner, of course, to redeploy at 2.22 whatever money. Yeah. It goes without saying. But when you're talking about a negotiation situation on a settlement, you have to play your cards very smartly. And when you're talking about £13,000,000, you've gotta be careful that if you look too keen to settle too quickly, the other side will offer you maybe 50% of that if you if you're not careful.

42:09 So we have to be resolute. We put a lot of money into here. We want to maximize the return to our shareholders. If that means a difference of six months or twelve months, I don't think the opportunity or or eighteen months, whatever it is, that I don't think there's a real loss of opportunity. We've got plenty of other resources. As Mark rightly pointed out, we've reduced our net debt. We've got 14 odd million, 15 odd million headroom in our in our RCF. So it's not like we're gonna lose the other opportunities available to us. That's a really, really important point. But we do want to absolutely maximize and squeeze the maximum outcome for the cartel cases for our shareholders. I think that's everything answered, mister chairman.

43:00 Steven, Mark, thank you. And I think you addressed all those questions you have from investors. And, of course, the company will review all questions submitted today, and we will publish those responses on the Investor Meet company platform. Before redirecting investors to provide you with their feedback, which I know is particularly important to yourself and the company, Steven, could I please just ask you for a few closing comments? Certainly. Thank you very much, indeed. First of all, thank you to everyone for their time today. I would say that reflecting on these results, it's been tough to come through the last two and a half years. It's been joyous to come through the last six months where the business has rebounded so strongly way above where we were, pre pandemic with a much stronger team, a much broader team, and, a huge influx of new high quality cases.

43:51 We thank all shareholders, all partners for their patience going through that journey with us. It was almost a wartime experience of the the government effectively closing down the insolvency market. I hope in all of our lifetimes, many reasons, not just business, that that isn't repeated in our lifetimes. But I do strongly feel that the prospects of MANOLETE and the green lights on our runway now are all turning green. And having heard that interest rates have gone up now to 5% and Bank of England's advisers saying a real recession is the only way to beat inflation, I think MANOLETE is onto a very benign and positive wicket for the very long term foreseeable future. I would remind everyone that the Lehman Brothers insolvency back in 2008 is still going through the courts to this very day and paying lots of legal fees.

44:45 But the point of me saying that is that the litigation associated with this whole huge number of insolvencies will go on for years and years and years to the benefit of the company and to our shareholders. Thanks very much indeed. Steve and Mark, thank you for updating investors today. Can I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order that the management team 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 the management team of MANOLETE PARTNERS PLC, we'd like to thank you for attending today's presentation. Good afternoon to you all.