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Manolete feels "zero impact" from Covid-19

The litigation insolvency funding group continues to grow at a clip, though operating cash flow remains soft
July 3, 2020

You won’t catch many chief executives stating boldly that “Covid-19 has had literally zero impact on us”. But in Manolete Partners (MANO), boss Steven Cooklin can point to a business model which does not require face-to-face meetings to either win new business or handle existing work.

IC TIP: Buy at 544p

If anything, says Mr Cooklin, the switch to Zoom conferencing has made the job of reviewing, funding and administering litigation insolvency claims easier. Around 96 per cent of the cases Manolete takes on are settled before they end up in court, meaning the firm’s record of closing most claims within a year should continue.

A less positive continuing feature is the group’s weak cash profile. Operating cash flow came to just £1.2m in the period, meaning cash balances were all-but wiped out after accounting for investments in new cases and working capital commitments. Mr Cooklin puts this down to the latency between accounted realisations and cash receipts, which can take several months to collect.

Analysts at Peel Hunt forecast adjusted earnings of 24p per share for the 12 months to March 2021, and 28p in FY2022.      

MANOLETE PARTNERS (MANO)  
ORD PRICE:544pMARKET VALUE:£237m
TOUCH:540-580p12-MONTH HIGH:618pLOW: 220p
DIVIDEND YIELD:0.6%PE RATIO:32
NET ASSET VALUE:80.2pNET CASH:£0.6m
Year to 31 MarTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
2016*4.81.59n/an/a
2017*4.81.81n/an/a
2018*10.63.69n/an/a
201913.85.9412.01.49
202018.79.4617.03.5
% change+36+59+42+135
Ex-div:10 Sep   
Payment:30 Sep   
*Pre-IPO figures