Good afternoon and welcome to the Manolete Partners Four-Year Results Investor presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged, and they can be submitted at any time using the Q&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 received during the meeting itself. However, the company can review all questions submitted today and publish responses where 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 to CEO Steven Cooklin. Good afternoon to you, sir.
Good afternoon, Alex. Thank you very much indeed. Welcome, everyone. I know it's a very busy time for results season at the moment, so really very grateful for the 80-plus people that have joined us today. That's magnificent. Those who haven't met me before, Steven Cooklin, I founded the business in 2008, originally qualified as an ACA Chartered Accountant with Coopers and Lybrand back in 1991. That seems like a very long time ago. I then spent 20 years in corporate finance at various big and small investment banks. I started this business, as I say, in 2008. I am joined today by Rachel Lindley-Janes, Interim Head of Finance. Rachel, do you want to introduce yourself?
Hi, I'm Rachel Lindley-Janes. I've been with Manolete for about four years now, previously as Associate Director of Finance. Before that, I've worked in PLCs, 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. I will jump straight in. I know a lot of you will know about Manolete, so I will go through the background for those who don't, but I'll do it in a fair clip. We are in the sector of litigation funding, litigation finance. There is one big difference between Manolete and our listed peer group, and in fact, our private peer group, is that we buy the claims. 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. It's only in the world of insolvency that one can own a claim that you weren't originally involved in. That's our kind of unique spot.
That is really why we have stayed within insolvency only, because we do like the control dynamics. We have been around for 16 years now, invested in over 1,600 U.K. insolvency claims, and completed a very high percentage of those, 1,200, generating case settlements of GBP 166 million. As you will see a little bit later, the returns on our investments, we are very granular, as you can see over hundreds of cases, are very consistently high. The U.K. insolvency market, this is going back to the year 2000 and up to the current date. This is from the Insolvency Service who publish these stats every month. In normal times, there are around 1,200 company insolvencies every month. You see the spike there in 2008-2009. That, of course, was a great financial crash, Lehman Brothers, et cetera, huge spike.
It settled down as you move into the teens, 2015, et cetera, to back to again 1,200. It then drops off very, very sharply in March, April 2020, which was when COVID hit globally and, of course, in the U.K. 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. That lasted for a good two years. Of course, government had also put a huge amount of liquidity into the U.K. economy during that COVID period, again, to keep people afloat. It is about GBP 700 billion got injected into U.K. corporate space. Once we reach April 2022, 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 the market.
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." That typically, although it's very much 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 process. 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. The leaders in this market are the very, very brilliant firm called FRP. They're also listed on AIM. They are by far the leaders in administrations.
They reported, I think it was 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. As you can see, 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. Therefore, it was the weaker, smaller companies that fell over first. When you look at the insolvency litigation market, the pie chart here, that represents a market value annually of about GBP 500 million-GBP 750 million of litigation claims. If you go back 16 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.
The way that worked was that while the case was going on, the law firm would not charge any costs to the IP. If any recovery was made, they would charge double in broad terms. We then came to market with our model. As you can see, the litigation finance piece of the pie is now up to 20-25%. Of that, Manolete, 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. This has been absolutely key.
These are partner-level employees joining us from law firms where they've been practicing for often years and years and years, even decades. They tended to be the go-to person in Exeter or the go-to person in the Midlands. Now they're with us. 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 our peer group, is it's really the same seven case types, day in, day out, month in, month out. They're listed there. As you can see at the table at the bottom, 99% of the cases that we invested in this current FY2025, 99% were purchased and just 1% were funded. The reason for the small residue of funded cases, they will almost certainly be personal bankruptcy cases.
We can't buy those, at least not yet. We fund those, but the purchase cases, the 281 are corporate cases. Very briefly, how does insolvency happen? Company gets declared insolvent by the directors or the creditors 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. It could be that the CVLs, as we saw earlier, it's usually the directors appointing the liquidators. You see, they will do that hoping that the liquidators will not give them a hard time on any claims against the directors. Happily, in the U.K., we have an outstanding and very ethical insolvency practitioner industry, and they do a fine, fine job. An IP gets appointed one way or the other.
The thing is, there's no money usually left in the coffers in the bank account whatsoever. The IP, the insolvency practitioner, is acting usually with personal liability. When it comes to litigation, and most of these IPs are not lawyers, there's a huge amount of risk that they're taking if they proceed with litigation. Having since 16 years ago, 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 the IPs. In fact, when I first started this back in 2008, many said to me, "Where have you been? We needed you 30 years ago." We then purchase a claim. 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? When the other side makes us an offer, do we take it? Do not we take it? What do we count our offer? That is all in our hands. It is only in insolvency where you can do that. In the funders' world, your birth and solicitation, capital management, et cetera, the funder cannot make those decisions at all. If they try to interfere, it becomes unenforceable. As I say, it is only in insolvency that you get around those problems. When U.K. inquiries come through to us, 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 do not think the defendants have got the means to pay anything.
We do accept about 30%. When you look at the litigation funding industry across the board, they tend to accept only 3% or 4% of the cases that come in. Our model's rather more efficient because it's the same type of cases repeating, repeating. If we were a Berthold and LCM, we would also have a 96% rejection rate because you're moving from Argentina one day to Australia the next day to Poland the day after. I think that's much more difficult than repeat cases in a U.K. jurisdiction. The cases tend to get settled within about a year on average. 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.
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 want to pay legal fees in court, nor do we. Let's sit down and do a deal before this all gets out of hand." 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 an 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 got to give them time to pay because they've lost their company. Their lives are a bit all over the place.
They've got a job now, and they'll need 6, 9, 12 months to pay. If they don't pay, we've got a charge over their house. We've got restrictions over their family residency, and we will collect on that if necessary. Happily, we hardly ever have to do that. If you remember the shape of the market curve, if I just very quickly go back here, we're 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 than COVID. That's exactly the same shape as our case referrals here. When we listed the 138 cases, we built the business up very quickly to 334 case referrals by H1 FY2021. COVID hit us, so a big decline in number of cases. That lasted two years.
Since then, we have risen much higher in numbers of cases than pre-COVID. That is exactly reflected in our signed cases because we are rejecting 70%, 30% get signed. I would focus more on the right-hand side because that graph excludes what could be a one-off factor of the Barclays bounce-back loans. I will come on to that in a minute. Completions are, again, very predictable on an average of about a year. On the left-hand side, you will see that actually even during the COVID period, the in-house legal team was still collecting very, very well indeed. 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. The volumes have increased pretty much exponentially since we returned from COVID. 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, smaller companies, sorry, post-COVID that went bust first, the weakest die first. Most of our completions since the COVID period have been feeding off these smaller and medium-sized cases. Although the volumes have 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. When you look at that FY2019, the average per case that we were collecting was GBP 200,000. The average of the last couple of years has been half that. This presents a massive opportunity for Manolete. It's really just a natural evolution.
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, automatically, the case sizes that come into us will become bigger on average. 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 GBP 200,000. That will drop pretty directly to the bottom line profit because there will not be an incremental increase in costs at all. Rachel will pick up on that in a minute. 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 end of COVID. 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. I will not steal Rachel's thunder on that. We will come to that in a minute. Here is what we call our vintage table. Berthold started this, and we thought that was a jolly good idea. We have copied them for many, many years now. You will see there are 1,600 cases invested in and 75% completed. You will notice that all these years, 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 5, 6, 7, 8, 9, 10 years. Not Manolete. We own the cases. We control it. The returns are summarized here. Brief word on two specialist kind of sub-areas.
One is the Barclays bounce-back loan pilot. This is where during COVID, the government offered small businesses a guaranteed bank loan. The government guaranteed the repayment of that loan for up to GBP 50,000, most worthful, GBP 50,000. In the start of COVID, the government guaranteed GBP 50 billion 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. An awful lot of that has been written off. Already GBP 10.5 billion has gone from the government to the banks who lent the money under the government guarantee. That is a huge amount of money when you think of the defense budget or the NHS or the education budget. The banks have really been under pressure from the government to get the money back.
We were approached a couple of years ago by Barclays Bank completely out of the blue. They gave us a pilot scheme of around 100 cases to do. They told us that before they turned to us, their recovery rate on these fraudulent loans was less than a fraction of 1% using debt recovery firms or lawyers on no win, no fee, less than 0.1%. Our recovery rate, in a nutshell, was about 50%, which was absolutely shocking to them in a very, very nice way. 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 our method would be recommended to whoever the next government will be on the 4th of July last year. Obviously, the Labor Party won. Tom Hayhoe was then appointed the counter fraud commissioner by Rachel Reeves in December. Baroness Hallis is conducting a very thorough COVID-19 inquiry ongoing. Unfortunately, no one since the election has come to us. The article here that we've summarized was in the Times yesterday, "Government Dangerously Flat-Footed About Recovering COVID Fraud." It's worth reading because the in-house, the civil servant efforts that they've used to try to recover money has just not worked. It's been powerlessly poor, actually. On the back of the Times article yesterday, we will be approaching ourselves, the government, to remind them of what we have to offer.
Bridge Element Cartel cases, background here. There were price-fixing cartels proven to have operated between 1998 and 2011 by the manufacturers of six-ton weight of trucks throughout Europe. Companies like Renault, DAF, Daimler , were all colluding on price-fixing. 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. They had a fantastic claim, identical to ours. The judge awarded them the 5% overcharge and a very high cost recovery as well. Usually, in our game, you're lucky to get 50-60% of your costs if you go to trial. Royal Mail got 70% of its cost back, and BT got 75% of their cost back.
The second trial window, which we're hoping Manolete will be included in, is now being set down for September next year. That is the end game in sight for these defendants. They know that they have to pay. The only question is how much. 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, a very large amount of money. As we sit today, we've applied to go into the second wave. We are forging ahead with those 22 cases that we've purchased. Just so people know, we're talking big headline case numbers. People like Comet, they went bust. Manolete have bought all of Comet's claims for all the trucks that they bought over that cartelized period.
CityLink, the delivery firm, we bought all of their trucks as well. Obviously, a delivery firm uses an awful lot of trucks. It is very, very different to all our core business, which is why we segregate them out. Because what we have done here is we did not want to lead from the front, as we always do, because of the huge expense of these test cases. We are piggybacking very much at the end of these cases because otherwise, it would cost us five, six, seven times as much. The end game is in sight, September next year. Unless we are given offers by the defendants to settle the cases, and many, many settlements are taking place as we speak, we will go into trial. Happily, I am now going to hand over to Rachel, our Head of Finance. Hi. Thank you, Steven.
I'm just going to talk through some financial highlights, and then we'll go through them in a bit more detail on the following slides. Total revenue for the year was up 16% to GBP 30.5 million, 97% of which was made up of realized revenue. That's the revenue from completed cases. That was up 22% year on year. This meant a 3% increase in our gross profit to GBP 10.4 million from GBP 10.1 million. Overhead stayed vaguely in line with where they were last year at GBP 7.5 million, showing that we are capable of monitoring and capturing these nicely for the business. We generated an EBIT of GBP 3 million. 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 GBP 15.2 million net cash from completed cases. This has allowed us to reduce our net debt in the year from GBP 12.3 million to GBP 11.1 million. Next one, please, Steven. As mentioned, total revenue of GBP 30.5 million, which is shown in the graph of 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 live cases less the movement of the fair value to realized revenue once a case completes. Gross margin fell from 12.5% 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 GBP 2 million case roughly stay in line. As the average case completion increases, we expect our gross profits to improve in line with this. Next one, please, Steven. Overhead stayed vaguely in line with prior year, which is, as mentioned, 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, which is the positive unrealized revenue, which went to a profit for tax of GBP 1.4 million.
Sorry, Rachel. We have just lost your audio there for a second. I'm just going to turn down your camera. Rachel, can I just check that you can hear me?
Yes, I can hear you.
Perfect. Sorry, we did just lose your audio there for a second. I'm just going to keep your camera down. And Steven, I'll do the same now. Please continue.
Thank you, Alex. If you can go to the next slide, please, Steven. On our balance sheet, we've got an increased value of our investments from GBP 40.2 million to GBP 41.4 million, 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 Steven's mentioned earlier. We're getting better value cases, which is then generating a higher asset for the company. Trade receivables increased from GBP 29.3 million to GBP 31.6 million. This has been generated through the strong level of case completions during the year. I'll go into detail on trade receivables a little bit later on. Here is GBP 12.5 million compared to GBP 13.75 million last year.
Due to our strong cash generated this year, we have been able to repay GBP 1.25 million of our RCF facility. This has led, as mentioned, to a decrease in our net debt from GBP 12.3 million to GBP 11.1 million. Strong cash flow receipts of GBP 25.6 million. FY2023, for comparison, included a singular completion with a gross receipt of GBP 9.5 million. If this was removed from FY2023 as a singular large cash receipt, cash receipts for FY2023 would have been GBP 17.2 million. This is important because I feel that it shows the increase in the gross receipts from the business and how we are performing overall on cash. Net cash from completed cases was at GBP 15.2 million. 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.
Fifty-nine percent of our trade receivables at the 31st of March 2025 were not due. This is due to the Manolete model. We are not like normal businesses with 30-day payment terms. A lot of our settlements can be over several months. As Steven said, normally twelve months is the average that we try to obtain cash settlements for. 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.
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. 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?
We can hear you very clearly, Steven. Wonderful.
Important slide here, actually, current trading. We have had a very strong start to the current financial year. We have almost done a full quarter. We have already signed up 56 new investments in that quarter, which is 27% more than the same quarter last year. Again, year-to-date of those new investments, five have had headline values in excess of GBP 1 million, which is what we refer to 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 30-35 cases once they're up to speed. This will take us from 15 in-house lawyers to 18 by the time we get to September. The strategy is just not changed at all. We are after U.K. 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. For investors, obviously, that is incredibly important. We have significant expertise and nationwide coverage. We now have at Manolete the largest group of in-house insolvency lawyers than any other company or partnership in the U.K.
We have a bigger dedicated insolvency legal team than even the huge American, U.K., and European law firms dedicated to insolvency. 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 living crisis, taxes going up for companies. While it is very, very difficult for the solvent world, clearly, it drives more insolvencies. We are the clearing house, if you like. Insolvency is a clearing house of capitalism. It is very good for us. The durations are remarkably short in the Manolete model, again, because we own the cases. In the world of law, 13.8 months on average to complete a case is nothing short of miraculous. They usually go on for years and years.
I listened to your presentation, by the way, Gately's head of one of the heads of their insolvency business a few years ago. Using the old no-win, no-fee, this gentleman said that it takes them about five years to collect any cash on their hugely built-up WIP. As you've seen from what Rachel said, what I think is very interesting is the high operational leverage in the business. Even though we hit record numbers of cases, we hit a record realized revenue, completed cases, and record cash, the overheads went down. That is because we're very much in control. 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. That is why the operating costs are so low.
If we then spike up again to 300, sorry, to 400-500 cases a year, we already have the capacity now to handle that on the people who are in the company. If we're going to go beyond that, let's say something happens on the BBLs or something, we can scale that up very, very quickly. The lawyers who work for us, in private practice, they were partners. Actually, it's nothing like what you'll read in the papers, these new kids coming out of university being paid $250,000 at some massive London firm. At partner level, remuneration is about GBP 100,000 in insolvency. The bonus will be maybe GBP 5,000-10,000. It's not just the wonderful work that they do with us. It's also very competitively remunerated. We never have any problems ever hiring people.
Then finally, what people can, I hope, see now over years and years and years now that we have reported, our returns are very, very consistent. An IRR, which is the kind of acid test for any business, of 130%. I remember when I was a bag carrier back in corporate finance in the early 1990s for PwC and Hill Samuel Investment Bank, we advised a lot of private equity and venture capital firms. Their rates of return per annum on a good investment would be about 20%-25%. Manolete's 130%, I think, is unparalleled in my knowledge of the financial services industry. Long may that continue, of course. Alex, I am going to hand back to you for Q&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&A tab situated on the top right corner of your screen. While the company takes a few moments to review 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&A, can be accessed via our investor dashboard. I'm Steven, Rachel, so you can see we have received a number of pre-submitted questions as well as live questions. And Steven, if I may now hand back to you and kindly ask you to read out the questions where appropriate to do so, and I'll pick up from you at the end. Thank you. Sure.
Thank you, Alex. I won't read the full question out because it's rather long, but let me try and summarize it.
It's in relation to the cartel claims. As I said in the presentation, our strategy on these is the diametric opposite to our normal cases. 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. We have piggybacked the really big companies and the really big law firms that they are using to fight the case, so BT, Royal Mail, the Road Haulage Association. They are at the cutting edge of these claims, identical claims to ours. They're spending millions and millions and millions. Our spending the last year was GBP 300,000. We think it's a very smart way to have operated these. Now the end is in sight, September next year, if not settled before.
The question here was, how do you assess a firm's asset management performance with respect to the cartel claims? 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 Mail both settled. They did not settle. They went to trial, my friend. To your question, is it a mistake not to issue proceedings earlier? I have tried to explain it. It would have cost us and our shareholders millions and millions, and indeed HSBC. The final element of this question specifically, now that your hearing date is being delayed by 12 months to 2026, are there serious efforts underway to settle? Again, this is incredibly commercially sensitive.
I'm afraid this is one area we're going to have to pass on talking about any prospective settlements. Moving on to the next question, strategic issue in relation to the share price. I suspect this is by the same person. Your former CFO, Mark Turbenaerts, suggested we can't control the share price. The question says he was mistaken. Currently, you have headroom on your revolving credit facility. What this is suggesting with the current low in the share price, should we not use our headroom on our RCF to buy back shares? The short answer is this is a slightly naive question because, of course, in the revolving credit facility, HSBC have control over what we can use their money for. Clearly, buying back equity off the stock market is not allowed. Nice, easy answer. Next question.
While the shorter company insolvencies in the U.K. have remained high relative to historic levels, at such levels, Manolete's clocking GBP 1.6 million 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. We've seen the volume come back in a very strong way. What we're now starting to see is the value, the size of the cases coming back. Even if the volume is even less than it was this last year, we fully expect the average value to trend up to close to what it was to its pre-COVID norm, which is GBP 200,000 per case. That would effectively double our profits through the same effort in the same cost space. It's a brilliant question. Thank you. The next one, a question about performance metrics around the arc.
Two questions, right? When do you expect the arc to return to the 200,000 range? I haven't got a crystal ball. 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'll come back." What I do quote is what the Insolvency Service themselves said in their last report, literally two days ago. I'll just read that out for me. They said the number of administrations in May, so the bigger company cases, in May 2024 was 28% higher than April 2024 and 12% higher than May last year. In 2024, the number of administrations increased by 2% from 2023 and was slightly higher than annual totals seen in 2015, 2019.
The final sentence, numbers of administrations have continued to increase since 2022 from an 18-year annual low seen during the COVID pandemic. 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 want to hear that, 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? With the greatest respect, this is a slightly naive question. Number one, the returns on the smaller cases are phenomenal. When you look at the IRRs, that's not just from one or two huge cases. That's from the whole panoply of granular hundreds of cases that we execute.
What's very important on this is if you're working, let's just randomly say the Begbies office in Leeds, and you're buying a director's loan account case of GBP 100,000, you're buying that, and then you're buying a transaction under value for GBP 50,000, you're creating a very, very good level of engagement with that IP. You're delivering results to him. You're paying for that case upfront, and you're recovering money very, very well for him to then charge his own fees, her own fees. When that same Begbies IP in Leeds gets the GBP 5 million claim, the GBP 20 million claim, the GBP 30 million claim, Manolete is in a fantastic front-of-mind position for those big cases. I hope the answer's that. Next question, Manolete represents 70% of third-party funders, Mark. This means Manolete hasn't got a big room to grow. Again, people get this wrong every year.
As I say, 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, Dr. Steven Baister. He was the most senior insolvency judge for 17 years before he retired a few years ago. Once Steven got his eyes on our 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. Tom, who was appointed corruption commissioner actually in December to recoup GBP 7.6 billion. Initially, I expected Manolete to hugely benefit from this placement with a motherload of new litigation. Sadly, it hasn't happened.
Absolutely right. In reality, isn't he his job a snooker? He works one day a week for a 12-month contract that produced little end results. Or I'm being too pessimistic. Whoever's written this, I just don't 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. They were very positive. 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. As I say, on the back of that Times article yesterday, we will be writing to the relevant ministers ourselves. I won't read out the joke, but it's a decent joke. Q1, number of—oh, sorry, next question.
Q1, number of employees doubled since 2020, but results do not reflect added value. Why? The size of the cases, the COVID, a suspension of our market for two years, and the fact that the larger cases have not come through. It says, "What are we as a board going to do about restoring meaningful profits?" Hopefully, I have explained that with the large cases and certainly the much higher volume of cases than we were seeing beforehand. The new additions to the team, of course. We have got James E here. In your report published today, you say the competition's appeal window. This is truck cartel claims, secure positions. Yes. Right. The question is, is it a formality that Manolete will be in the second wave? No, it is not. This is a very good question, James. Thank you. It is not a formality. You have to apply.
For some reason, the defendants may object. There might have to be a hearing, and then you're in the hands 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, 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. 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, will see sense in putting an end to their own massive legal spend on defending the indefensible. Cancelling along. Why does it take so long to get back to pre-COVID levels of average case sizes? Slightly repetition. I would hope I've answered that with the administrations coming back, that piece that I read out from the insolvency service. James E again, return on capital—sorry, your return on capital is far higher than 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. 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.
We're trying to strike a sensible balance for the company, sensible balance for shareholders. Of course, a sensible balance in our relationship with HSBC, which has been ongoing since 2017. They've been a fantastic partner to us all the way through. I'll take a few more. Scrolling down. Alex C says, "Would you agree the business has failed to sustain high margin?" This is back to the case sizes. Let's just go through this, what Rachel said. If your average case size now is you're settling at GBP 100,000. Let's say we bought that case for GBP 5,000. Let's say out of the 100, there's then GBP 80,000 left to split 50/50 with the IP. The margin on that for Manolete is only GBP 40,000 on our investment of GBP 100,000. Now, with the bigger cases coming through, let's say we settle one at GBP 3 million.
Yes, the cost might be more, maybe GBP 200,000 would be a 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. So when they win more, we win more. There are bigger cases coming through now. Do not read my words. Read the Insolvency Service's words. That should restore the margin very healthily back to where we were before. Last two or three, if I may, Alex. Patrick, note 25 of today's finals highlights GBP 595,000 Cavendish Corporate Finance for consultancy services provided by Carl. That is a very, very fair question. Thank you, Patrick. We have, it is back to HSBC, really. We have used Cavendish to source our debt financing ever since 2017. They procured HSBC back then as a private company. That was before we IPOed.
That was a GBP 10 million RCF then. That RCF has increased and increased. On this most recent period, we asked Cavendish to do a much wider market testing on what we could get in the market. HSBC still came out as the most favorable, but Cavendish, who were kind of on risk because of that, we had to pay a higher fee. We got a much better deal out of HSBC than we did for the previous RCF with HSBC. That comfortably covered the consultancy fee with Cavendish. Thank you for asking us. Important. Last couple of questions. Do you plan on changing your accounting system to a more tax-friendly one? 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 ROI?
Jairo, yes, theoretically, but we've had people trying to compete with us. The most famous was just a few years ago. Rosenblatt Group, listed on AIM. They set up a subsidiary to do litigation finance. They set up a 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. They named their product after the Manolete killer, Islero. When it came to performing in the ring, things were rather different. After a year in business as a public company with plenty of money behind them, they had signed one insolvency claim. One. Last year, we signed 290. They gave up, having put a huge amount of effort into their practice. The business finally got sold off.
Their non-insolvency cases, I hasten to add, on non-insolvency cases, their first three results came through. I think the aggregate losses of all three lost cases were over GBP 11 million. Islero was a great—people always used to ask me exactly your excellent question. Will competitors come in? It might look simple on the outside, but you have to have a fabulous legal and finance team on your side to really execute the detail of the work we do. Finally, what will be the trigger for the share price to re-rate, given all the positive KPIs in today's results announcement? Lionel, thank you. I think it is a very good question. I do not know is the answer. I have been disappointed. I mean, we listed at GBP 1.75. The business is manyfold 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. I would hope beyond. Much better than pre-COVID is the cash underpinning of those results now. The GBP 25.6 million of gross, the GBP 15.2 million of net cash that we retain, and this is literally cash in our bank account, our overhead's about GBP 5-6 million. Out of GBP 15, you get to GBP 9. Invest in new cases, GBP 7. GBP 2 million left over, pay down debt. As this volume comes through, as the cases get bigger, we are out of the woods, I believe, now. I hope that the markets will catch up with that in due course. 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. The company can review your questions submitted today, and we will publish those responses on the Vesemir Company platform. 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?
I'll say very briefly. We had a very, very tough time during COVID, worse than I expected, because I thought it'd be over much quicker. The government at the time, Johnson, was saying it'd be over in three months. We've got a vaccine. The insolvency laws will be put back where they were within a couple of months. It lasted for two years. That is not criticism of the previous government at all.
It was the first time in 100 years that we'd had a global pandemic. We came out the other end of that. I think from every perspective, numbers of cases, numbers of referrals, cash, we have shown how resilient this team has been. 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. When you look back at the last peak of insolvencies, the great financial crash of 2008, 2009, Lehman Brothers, those Lehman cases are still going through the courts today. The litigation fallout from these challenging times this time around, spiking 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 it will be greatly valued by the company. On behalf of the management team of Manolete Partners, we would like to thank you for attending today's presentation, and good afternoon to you all.