Source - LSE Regulatory
RNS Number : 3209M
Burford Capital Limited
13 September 2023
 

 

September 13, 2023

 

 

BURFORD CAPITAL REPORTS FIRST HALF AND SECOND QUARTER 2023 FINANCIAL RESULTS;

STRONGEST SET OF SIX-MONTH FINANCIAL RESULTS IN BURFORD'S HISTORY

 

Burford Capital Limited ("Burford"), the leading global finance and asset management firm focused on law, today announces its unaudited financial results at and for the three and six months ended June 30, 2023.1 Burford's report on Form 6-K at and for the three and six months ended June 30, 2023, including unaudited condensed consolidated financial statements (the "2Q23 Quarterly Report"), is available at http://www.rns-pdf.londonstockexchange.com/rns/3209M_1-2023-9-13.pdf and on the Burford Capital website at http://investors.burfordcapital.com.

 

Christopher Bogart, Chief Executive Officer of Burford Capital, commented:

 

"We have produced the strongest set of six-month financial results in Burford's history, with net income attributable to shareholders of nearly $240 million and tangible book value per share growth of 12% over the past six months. Our core portfolio generated a lot of cash with realized gains tripling on our core portfolio realizations, and new business was very strong. Our new valuation methodology is sensitive to interest rate changes and thus higher rates during the first six months of 2023 were a headwind for the fair value of our core portfolio, especially during the second quarter, but these valuation movements are non-cash and unrealized and are expected to continue to fluctuate over time. Operating expenses reflect strong portfolio performance and certain idiosyncratic events."

 

1 In this announcement, references to (1) "2Q23" and "2Q22" are to Burford's unaudited financial results for the three months ended June 30, 2023 and 2022, respectively, and (2) "1H23"and "1H22" are to Burford's unaudited financial results for the six months ended June 30, 2023 and 2022, respectively.

All figures in this announcement are unaudited and presented on a consolidated basis in accordance with the generally accepted accounting principles in the United States ("US GAAP"), unless otherwise stated. Definitions, reconciliations and information additional to those set forth in this announcement are available on the Burford Capital website and in the 2Q23 Quarterly Report (as defined above). In addition, Burford applied its revised valuation methodology for capital provision assets to its unaudited condensed consolidated financial statements at June 30, 2023 and for the three and six months ended June 30, 2023 and 2022 included in this announcement. Thus, for comparative purposes, this announcement contains Burford's restated unaudited condensed consolidated financial statements for the six months ended June 30, 2022. However, because Burford has not previously issued quarterly financial statements, the unaudited condensed consolidated financial statements for the three months ended June 30, 2022 contained in this announcement have not historically been presented and therefore are not a restatement of previously issued unaudited condensed consolidated financial statements.

 

Highlights

 



Key activity2


•    

2Q23 realized gains tripled to $59 million, up 254% from $17 million in 2Q22

1H23 realized gains of $94 million, up 255% from $27 million in 1H22

•    

2Q23 realizations of $133 million, up 167% from $50 million in 2Q22

1H23 realizations of $195 million, up 178% from $70 million in 1H22, reflecting increased portfolio velocity, as the case backlog in the courts continues to clear

•    

2Q23 cash receipts3 of $150 million, up 266% from $41 million in 2Q22

1H23 cash receipts3 of $247 million, up 148% from $99 million in 1H22, primarily driven by realizations including three matters that generated aggregate proceeds of $147 million

•    

2Q23 deployments of $181 million, up 159% from $70 million in 2Q22

1H23 deployments of $248 million, up 103% from $122 million in 1H22, reflecting in part the balance sheet's greater participation in new capital provision-direct assets



2 Represents Burford-only capital provision-direct assets

3 Represents Burford-only proceeds from capital provision-direct, capital provision-indirect and asset management



Financial results4



•    

Total revenues in 1H23 of $382 million, up 214% from $122 million in 1H22, driven by higher capital provision income due to positive momentum in the progression of our portfolio

In 2Q23, while realized gains were up sharply, total revenues were $43 million (2Q22: $15 million), reflecting the impact of increased discount rates on our revised valuation methodology

•    

Operating income in 1H23 of $284 million, up 332% from $66 million in 1H22; operating income in 2Q23 was essentially at breakeven, primarily reflecting increased operating expenses

Increase in operating expenses in 2Q23 driven primarily by an increase in compensation expenses and general, administrative and other expenses compared to 2Q22

All but $1.2 million of the increase in compensation and benefits in 2Q23 compared to 2Q22 was non-cash, driven principally by accruals as a result of increases in Burford's share price and asset values

Increase in general, administrative and other expenses in 2Q23 compared to 2Q22 includes $3.3 million in audit, professional and corporate legal fees due to the development of the revised fair value methodology and build-out of quarterly reporting

•    

Net income attributable to Burford Capital Limited shareholders of $238 million in 1H23 (1H22: $7 million), with net income per ordinary and diluted share of $1.09 and $1.07, respectively (1H22: $0.03 each)

Net loss attributable to Burford Capital Limited shareholders of $22 million in 2Q23 (2Q22: net loss of $49 million), with net loss per ordinary and diluted share of $0.10 each (2Q22: net loss per ordinary and diluted share of $0.23 each)

•    

Tangible book value attributable to Burford Capital Limited per ordinary share of $8.26 at June 30, 2023, up 12% from $7.36 at December 31, 2022


4 Represents Burford-only


Portfolio


•    

Group-wide portfolio grew to $7.0 billion at June 30, 2023 (December 31, 2022: $6.1 billion), due to significant fair value gains and growth in deployments and undrawn commitments

Group-wide new commitments of $557 million in 2Q23 (2Q22: $363 million) and $722 million in 1H23 (1H22: $445 million)

•    

Consolidated fair value of capital provision assets increased 18% to $4.4 billion at June 30, 2023 from $3.7 billion at December 31, 2022

Of the $672 million increase in capital provision asset value in 1H23, $280 million attributable to the YPF-related assets

•    

Fair value of Burford-only capital provision assets increased 16% to $3.1 billion at June 30, 2023 from $2.6 billion at December 31, 2022

Of the $423 million increase in capital provision asset value in 1H23, $185 million attributable to the YPF-related assets

•    

On September 8, 2023, the court rendered a decision in the YPF-related assets holding that the appropriate date for the tender offer was April 16, 2012 and that pre-judgment interest should run from May 3, 2012 at a simple interest rate of 8%

•    

Cumulative ROIC since inception from Burford-only capital provision-direct assets steady at 88% (December 31, 2022: 88%) and IRR of 29% (December 31, 2022: 29%)


Liquidity and capital


•    

Burford-only cash and cash equivalents and marketable securities of $441 million at June 30, 2023 (December 31, 2022: $210 million)

Strong liquidity position at June 30, 2023 primarily reflects issuance of $400 million in senior notes in June 2023 and increasing Burford-only realizations, partially offset by strong Burford-only deployments

On July 12, 2023, Burford redeemed in full the aggregate outstanding principal amount of the 6.125% bonds due 2024 at a redemption price of par

•    

Burford-only due from settlement of capital provision assets decreased 19% to $93 million at June 30, 2023, of which $69 million (74%) was collected in cash at September 7, 2023

•    

Total shareholders' equity attributable to Burford Capital Limited was $1,942 million at June 30, 2023 (December 31, 2022: $1,743 million)

Total shareholders' equity attributable to Burford Capital Limited per ordinary share of $8.87 at June 30, 2023 (December 31, 2022: $7.97 per ordinary share)



Dividend



•    

On September 8, 2023, Burford's board of directors declared an interim dividend of 6.25¢ per ordinary share payable on December 7, 2023 to shareholders of record on November 10, 2023, with an ex-dividend date of November 9, 2023



Investor and Analyst Conference Call

 

Burford will hold a conference call for investors and analysts at 10.00am EDT / 3.00pm BST on Wednesday, September 13, 2023. The dial-in number for the conference call is +1 646 787-9445 (USA) / +44 (0)20 4587 0498 (UK) / +44 (0)20 3936 2999 (all other locations) and the access code is 329784. To minimize the risk of delayed access, participants are urged to dial into the conference call by 9.40am EDT / 2.40pm BST.

 

A live webcast of the call will also be available at https://www.investis-live.com/burfordcapital/6499460f383e9013000dafed/rosepu, and pre-registration at that link is encouraged.

 

An accompanying 2Q23 and 1H23 results presentation for investors and analysts will also be made available on the Burford Capital website prior to the conference call at http://investors.burfordcapital.com.

 

Following the conference call, a replay facility for this event will be available until Wednesday, September 27, 2023 by dialing +1 845 709-8569 (USA) / +44 (0)20 3936 3001 (UK) / +44 (0)20 3936 3001 (all other locations) and using the replay access code 178093. A replay facility will also be accessible through the webcast at https://www.investis-live.com/burfordcapital/6499460f383e9013000dafed/rosepu.

 

 

For further information, please contact:

 

Burford Capital Limited


For investor and analyst inquiries:


Robert Bailhache, Head of Investor Relations, EMEA and Asia - email

+44 (0)20 3530 2023

Jim Ballan, Head of Investor Relations, Americas - email

+1 (646) 793 9176

For press inquiries:


David Helfenbein, Vice President, Public Relations - email

+1 (212) 235 6824



Numis Securities Limited - NOMAD and Joint Broker

+44 (0)20 7260 1000

Giles Rolls


Charlie Farquhar




Jefferies International Limited - Joint Broker

+44 (0)20 7029 8000

Graham Davidson


Tony White




Berenberg - Joint Broker

+44 (0)20 3207 7800

Toby Flaux


James Thompson


 

 


 

About Burford Capital

Burford Capital is the leading global finance and asset management firm focused on law. Its businesses include litigation finance and risk management, asset recovery and a wide range of legal finance and advisory activities. Burford is publicly traded on the New York Stock Exchange (NYSE: BUR) and the London Stock Exchange (LSE: BUR), and it works with companies and law firms around the world from its offices in New York, London, Chicago, Washington, DC, Singapore, Dubai, Sydney and Hong Kong.

 

For more information, please visit www.burfordcapital.com.



 

Summary Financial Statements and Reconciliations

 

The tables below set forth summaries of the condensed consolidated and Burford-only statements of operations for the three and six months ended June 30, 2023 and 2022, the condensed consolidated and Burford-only statements of financial position at June 30, 2023 and December 31, 2022 and corresponding reconciliations from consolidated to Burford-only financial results. Furthermore, the tables below set forth certain additional reconciliations for financial information contained in this announcement.

 

Summary condensed consolidated statements of operations

 


Three months ended June 30,

 

Six months ended June 30, 

($ in thousands)


2023


2022

 

2023

 

2022

 



 

 

Revenues





Capital provision income





Plus/(Less): Third-party interests in capital

provision assets


4,813


16,857


(95,532)


218

Asset management income





Services and other income





   Total revenues


44,551


47,490


425,456


170,592






Total operating expenses





 





Operating income


919


20,950


327,525


113,765

 





Finance costs and loss on debt extinguishment





Foreign currency transactions (gains)/losses





 





(Loss)/income before income taxes


(11,307)


(3,230)


297,186


73,230

 





(Provision) for income taxes





Net income


(20,276)


(18,172)


281,105


54,864










Net income attributable to Burford Capital

Limited shareholders


(21,540)


(49,352)


237,885


6,928

 









Net income attributable to Burford Capital

Limited shareholders per ordinary share









Basic





Diluted







 

Summary Burford-only statement of operations

 


Three months ended June 30,

Six months ended June 30, 

($ in thousands)


2023


2022

 

2023

 

2022

 


 


 

 

 

 

 

Revenues









Capital provision income


35,392


(4,810)


351,407


95,777

Asset management income


5,684


25,829


25,041


36,763

Services and other income


2,161


(5,641)


5,466


(10,885)

   Total revenues


43,237


15,378


381,914


121,655










Operating income


(330)


(10,660)


284,338


65,826

 









Net income


(21,540)


(49,352)


237,885


65,826










Net income per share:









Basic


$ (0.10)


$ (0.23)


$ 1.09


$ 0.03

Diluted


$ (0.10)


$ (0.23)


$ 1.07


$ 0.03

 

Reconciliation of summary condensed consolidated statement of operations to summary Burford-only statement of operations


Three months ended June 30, 2023

 

(GAAP)

(Non-GAAP)

 


Elimination of third-party interests

 

($ in thousands)

Consolidated

Strategic Value Fund

BOF-C

Colorado

Advantage Fund

Other

Burford-only

Capital provision income

35,667

(100)

72

4,728

(4,983)

8

35,392

Plus/(Less): Third-party interests in capital provision assets

4,813

-

-

(4,753)

-

(60)

-

Asset management income

1,894

46

3,744

-

-

-

5,684

Services and other income

2,177

-

(1)

-

-

(15)

2,161

   Total revenues

44,551

(54)

3,815

(25)

(4,983)

(67)

43,237









Operating income

919

87

3,628

-

(4,903)

(61)

(330)









Net income/(loss)

(20,276)

87

3,628

-

(4,903)

(76)

(21,540)


Three months ended June 30, 2022

 

(GAAP)

(Non-GAAP)

 


Elimination of third-party interests

 

($ in thousands)

Consolidated

Strategic Value Fund

BOF-C

Colorado

Advantage Fund

Other

Burford-only

 

Capital provision income

35,006

(1,769)

(55,580)

16,423

48

1,062

(4,810)

 

Plus/(Less): Third-party interests in capital provision assets

16,857

-

-

(16,435)

-

(422)

-

 

Asset management income

2,394

57

23,378

-

-

-

25,829

 

Services and other income

(6,767)

1,132

-

-

-

(6)

(5,641)

 

   Total revenues

47,490

(580)

(32,202)

(12)

48

634

15,378

 









 

Operating income

20,950

(245)

(32,240)

-

138

737

(10,660)

 









 

Net income/(loss)

(18,172)

(245)

(32,240)

-

138

1,167

(49,352)

 

 


Six months ended June 30, 2023

 

(GAAP)

(Non-GAAP)

 


Elimination of third-party interests

 

($ in thousands)

Consolidated

Strategic Value Fund

BOF-C

Colorado

Advantage Fund

Other

Burford-only

Capital provision income

511,600

(207)

(48,236)

(95,041)

(12,005)

(4,704)

351,407

Plus/(Less): Third-party interests in capital provision assets

(95,532)

-

-

95,011

-

521

-

Asset management income

3,891

92

21,058

-

-

-

25,041

Services and other income

5,497

-

(2)

-

-

(29)

5,466

   Total revenues

425,456

(115)

(27,180)

(30)

(12,005)

(4,212)

381,914









Operating income

327,525

181

(27,397)

-

(11,802)

(4,169)

284,338









Net income/(loss)

281,105

181

(27,397)

-

(11,802)

(4,202)

237,885

 


Six months ended June 30, 2022

 

(GAAP)

(Non-GAAP)

 


Elimination of third-party interests

 

($ in thousands)

Consolidated

Strategic Value Fund

BOF-C

Colorado

Advantage Fund

Other

Burford-only

Capital provision income

175,745

(2,277)

(74,175)

498

(318)

(3,696)

95,777

Plus/(Less): Third-party interests in capital provision assets

218

-

-

(510)

-

292

-

Asset management income

5,508

218

31,037

-

-

-

36,763

Services and other income

(10,879)

-

-

-

-

(6)

(10,885)

   Total revenues

170,592

(2,059)

(43,138)

(12)

(318)

(3,410)

121,655









Operating income

113,765

(1,357)

(43,200)

-

(77)

(3,305)

65,826









Net income/(loss)

54,864

(1,357)

(43,200)

-

(77)

(3,302)

6,928

 

Reconciliation of capital provision income excluding YPF-related assets






 

 

For the six months ended June 30,

($ in thousands)

 

2023

 

2022

Capital provision income


511,600


175,745

Less: Capital provision income from YPF-related assets


(277,318)


(1,440)

Capital provision income excluding YPF-related assets


234,282


174,305

 

Summary condensed consolidated statement of financial position






 

 

At

($ in thousands)

 

 June 30, 2023

 

 December 31, 2022

 

 

 

 

 

Total assets


5,177,712


 4,288,359






Total liabilities


2,441,646


 1,901,289






Total Burford Capital Limited equity


1,942,025

 

 1,742,584






Non-controlling interests

 

794,041

 

 644,486






Total shareholders' equity

 

2,736,066

 

 2,387,070

 

 

 

 

 

Basic ordinary shares outstanding


 218,957,218


 218,581,877

 

 

 

 

 

Total shareholders' equity attributable to Burford Capital Limited per basic ordinary share

 

8.87

 

 7.97

Total shareholders' equity per basic ordinary share

 

12.50

 

 10.92

 

Reconciliation of summary condensed consolidated statement of financial position to summary Burford-only statement of financial position


At June 30, 2023

 

(GAAP)

(Non-GAAP)

 


Elimination of third-party interests

 

($ in thousands)

Consolidated

Strategic Value Fund

BOF-C

Colorado

Advantage Fund

Other

Burford-only

 








Total assets

5,177,712

(2,518)

(556,238)

(504,275)

(178,766)

(73,413)

3,862,502









Total liabilities

2,441,646

(141)

(4,234)

(504,275)

(75)

(12,444)

1,920,477









Total shareholders' equity

2,736,066

(2,377)

(552,004)

-

(178,691)

(60,969)

1,942,025

 


At December 31, 2022

 

(GAAP)

(Non-GAAP)

 


Elimination of third-party interests

 

($ in thousands)

Consolidated

Strategic Value Fund

BOF-C

Colorado

Advantage Fund

Other

Burford-only

 








Total assets

4,288,359

(2,779)

(477,590)

(409,249)

(103,523)

(76,792)

3,218,426









Total liabilities

1,901,289

(228)

(4,234)

(409,249)

(120)

(11,616)

1,475,842









Total shareholders' equity

2,387,070

(2,551)

(473,356)

-

(103,403)

(65,176)

1,742,584

 

Reconciliation of components of realizations from a consolidated basis to a Group-wide basis


Three months ended June 30, 2023

 

(GAAP)

 

(Non-GAAP)

($ in thousands)

Consolidated

 

Eliminations and adjustments

 Burford-only 

Other funds

 BOF-C 

Group-wide

Capital provision-direct

         130,520


                   2,677

           133,197

          22,986

          17,328

        173,511

Capital provision-indirect

           27,064


               (22,605)

               4,459

          22,290

                    -

          26,749

Post-settlement

                   -  


                         -  

                       -

          79,576

                    -

          79,576

Total realizations

         157,584

 

               (19,928)

           137,656

        124,852

          17,328

        279,836

 


Three months ended June 30, 2022

 

(GAAP)

 

(Non-GAAP)

($ in thousands)

Consolidated

 

Eliminations and adjustments

 Burford-only 

Other funds

 BOF-C 

Group-wide

Capital provision-direct

           54,769


                 (4,919)

             49,850

          14,043

            9,069

          72,962

Capital provision-indirect

             7,114


                 (1,792)

               5,322

          13,326

                    -

          18,648

Post-settlement

                   -  


                         -  

                       -

            8,840

                    -

            8,840

Total realizations

           61,883

 

                 (6,711)

             55,172

          36,209

            9,069

        100,450

 


Six months ended June 30, 2023

 

(GAAP)

 

(Non-GAAP)

($ in thousands)

Consolidated

 

Eliminations and adjustments

 Burford-only 

Other funds

 BOF-C 

Group-wide

Capital provision-direct

         246,252


               (51,309)

           194,943

          73,376

          52,751

        321,070

Capital provision-indirect

           39,644


               (33,089)

               6,555

          32,774

                    -

          39,329

Post-settlement

                   -  


                         -  

                       -

          98,256

                    -

          98,256

Total realizations

         285,896

 

               (84,398)

           201,498

        204,406

          52,751

        458,655

 


Six months ended June 30, 2022

 

(GAAP)

 

(Non-GAAP)

($ in thousands)

Consolidated

 

Eliminations and adjustments

 Burford-only 

Other funds

 BOF-C 

Group-wide

Capital provision-direct

           75,980


                 (5,778)

             70,202

          24,381

          12,319

        106,902

Capital provision-indirect

           12,466


                 (6,367)

               6,099

          17,901

                    -

          24,000

Post-settlement

                   -  


                         -  

                       -

          38,303

                    -

          38,303

Total realizations

           88,446

 

               (12,145)

             76,301

          80,585

          12,319

        169,205

 

Reconciliation of components of deployments from a consolidated basis to a Group-wide basis


Three months ended June 30, 2023

 

(GAAP)

 

(Non-GAAP)

($ in thousands)

Consolidated

 

Eliminations and adjustments

Other funds

 BOF-C 

Group-wide

Capital provision-direct

         246,840


               (65,387)

           181,453

            6,070

          58,504

        246,027

Capital provision-indirect

           78,794


               (65,662)

             13,132

          65,662

                    -

          78,794

Post-settlement

                   -  


                         -  

                       -

          31,939

                    -

          31,939

Total deployments

         325,634

 

             (131,049)

           194,585

        103,671

          58,504

        356,760

 


Three months ended June 30, 2022

 

(GAAP)

 

(Non-GAAP)

($ in thousands)

Consolidated

 

Eliminations and adjustments

 Burford-only 

Other funds

 BOF-C 

Group-wide

Capital provision-direct

           92,445


               (22,273)

             70,172

            8,926

          21,291

        100,389

Capital provision-indirect

             5,429


                 (3,518)

               1,911

            3,518

                    -

            5,429

Post-settlement

                   -  


                         -  

                       -

          26,116

                    -

          26,116

Total deployments

           97,874

 

               (25,791)

             72,083

          38,560

          21,291

        131,934

 


Six months ended June 30, 2023

 

(GAAP)

 

(Non-GAAP)

($ in thousands)

Consolidated

 

Eliminations and adjustments

Other funds

 BOF-C 

Group-wide

Capital provision-direct

         331,525


               (83,079)

           248,446

          12,983

          75,956

        337,385

Capital provision-indirect

         112,794


               (93,995)

             18,799

          93,995

                    -

        112,794

Post-settlement

                   -  


                         -  

                       -

          35,806

                    -

          35,806

Total deployments

         444,319

 

             (177,074)

           267,245

        142,784

          75,956

        485,985

 


Six months ended June 30, 2022

 

(GAAP)

 

(Non-GAAP)

($ in thousands)

Consolidated

 

Eliminations and adjustments

 Burford-only 

Other funds

 BOF-C 

Group-wide

Capital provision-direct

         183,566


               (61,436)

           122,130

          14,667

          60,304

        197,101

Capital provision-indirect

           20,176


               (16,776)

               3,400

          16,776

                    -

          20,176

Post-settlement

                   -  


                         -  

                       -

          43,152

                    -

          43,152

Total deployments

         203,742

 

               (78,212)

           125,530

          74,595

          60,304

        260,429

 

Reconciliation of consolidated proceeds from capital provision assets to Burford-only cash receipts

($ in thousands)

Six months ended June 30, 2023

Three months ended March 31, 2023

Three months ended June 30, 2023

Consolidated proceeds from capital provision assets

308,007

144,485

163,522

Less: Elimination of third-party interests

(87,513)

(60,563)

(26,950)

Burford-only total proceeds from capital provision assets

220,494

83,922

136,572

Burford-only proceeds from capital provision-direct assets

213,321

77,742

135,579

Burford-only proceeds from capital provision-indirect assets

7,173

6,180

993

Burford-only total proceeds from capital provision assets

220,494

83,922

136,572

Consolidated asset management income

3,891

1,997

1,894

Plus: Eliminated income from funds

21,150

17,360

3,790

Burford-only asset management income

25,041

19,357

5,684

Less: Non-cash adjustments(1)

(1,728)

(7,086)

5,358

Burford-only proceeds from asset management income

23,313

12,271

11,042

Burford-only proceeds from marketable security interest and dividends

1,563

881

682

Burford-only proceeds from asset recovery fee for services

38

83

(45)

Burford-only proceeds from insurance receipts

1,530

-

1,530

Burford-only proceeds from asset management and other services

26,444

13,235

13,209

Cash receipts

246,938

97,157

149,781

(1) Adjustments for the change in asset management receivables accrued during the applicable period but not yet received at the end of such period.

 

($ in thousands)

Six months ended June 30, 2022

Three months ended March 31, 2022

Three months ended June 30, 2022

Consolidated proceeds from capital provision assets

108,541

69,369

39,172

Less: Elimination of third-party interests

(21,451)

(14,109)

(7,342)

Burford-only total proceeds from capital provision assets

87,090

55,260

31,830

Burford-only proceeds from capital provision-direct assets

81,511

55,163

26,348

Burford-only proceeds from capital provision-indirect assets

5,579

97

5,482

Burford-only total proceeds from capital provision assets

87,090

55,260

31,830

Consolidated asset management income

5,508

3,114

2,394

Plus: Eliminated income from funds

31,255

7,820

23,435

Burford-only asset management income

36,763

10,934

25,829

Less: Non-cash adjustments(1)

(26,547)

(8,725)

(17,822)

Burford-only proceeds from asset management income

10,216

2,209

8,007

Burford-only proceeds from marketable security interest and dividends

967

614

353

Burford-only proceeds from asset recovery fee for services

577

418

159

Burford-only proceeds from insurance receipts

413

-

413

Burford-only proceeds from other corporate

191

-

191

Burford-only proceeds from asset management and other services

12,364

3,241

9,123

Cash receipts

99,454

58,501

40,953

(1) Adjustments for the change in asset management receivables accrued during the applicable period but not yet received at the end of such period.

 

Reconciliation of consolidated aggregate cash receipts from three matters of note to Burford only cash receipts


Six months ended June 30, 2023

($ in thousands)

Consolidated

Elimination and adjustments

Burford-only

Aggregate cash receipts - three matters of note

181,514

(34,050)

147,464

 

Reconciliation of consolidated portfolio to Group-wide portfolio




($ in thousands)

At June 30, 2023

At December 31, 2022

Consolidated carrying value

             4,407,888

                    3,735,556

Consolidated undrawn commitments

             1,983,154

                    1,720,727




Eliminations of third-party interests:



Less: Attributable to carrying value

            (1,348,424)

                   (1,100,137)

Less: Attributable to undrawn commitments

               (471,789)

                      (413,446)




Burford-only Carrying value

             3,059,464

                    2,635,419

Burford-only undrawn commitments

             1,511,365

                    1,307,281

Burford-only portfolio

             4,570,829

                    3,942,700


 

 

Other funds carrying value

             1,115,482

                    1,076,320

Other funds undrawn commitments

                265,502

                       239,145

Other funds portfolio

             1,380,984

                    1,315,465




BOF-C carrying value

                597,340

                       516,982

BOF-C undrawn commitments

                434,930

                       371,724

BOF-C portfolio

                1,032,270

                       888,706

 

 

 

Total group-wide portfolio

             6,984,083

                    6,146,871

 

Reconciliation of consolidated to Burford-only cash and cash equivalents and marketable securities


At June 30, 2023

 

At December 31, 2022

 

(GAAP)

(Non-GAAP)

 

(GAAP)

(Non-GAAP)

($ in thousands)

Consolidated

Elimination of third-party interests

Burford-only

 

Consolidated

Elimination of third-party interests

Burford-only

Cash and cash equivalents

365,336

(31,779)

333,557


107,658

(33,979)

73,679

Marketable securities

107,180

-

107,180


136,358

-

136,358

Total cash and cash equivalents and marketable securities

472,516

(31,779)

440,737

 

244,016

(33,979)

210,037

 

Reconciliation of consolidated to Burford-only capital provision assets


At June 30, 2023

 

At December 31, 2022

 

(GAAP)

(Non-GAAP)

 

(GAAP)

(Non-GAAP)

($ in thousands)

Consolidated

Elimination of third-party interests

Burford-only

 

Consolidated

Elimination of third-party interests

Burford-only

YPF-related assets

1,512,062

(504,397)

1,007,665


1,232,549

(409,514)

823,035

Other assets

2,895,826

(844,027)

2,051,799


2,503,007

(689,602)

1,813,405

Capital provision assets

4,407,888

(1,348,424)

3,059,464

 

3,735,556

(1,099,116)

2,636,440

 

Reconciliation of consolidated to Burford-only due from settlement of capital provision assets


At June 30, 2023

 

At December 31, 2022

 

(GAAP)

(Non-GAAP)

 

(GAAP)

(Non-GAAP)

($ in thousands)

Consolidated

Elimination of third-party interests

Burford-only

 

Consolidated

Elimination of third-party interests

Burford-only

Due from settlement of capital provision assets

94,391

(1,754)

92,637


116,582

(1,932)

114,650

 

Reconciliation of consolidated to Burford-only realized gains on capital provision-direct assets


Three months ended June 30, 2023

 

Three months ended June 30, 2022

 

(GAAP)

(Non-GAAP)

 

(GAAP)

(Non-GAAP)

($ in thousands)

Consolidated

Eliminations and adjustments

Burford-only

 

Consolidated

Eliminations and adjustments

Burford-only

Realized gains relative to cost

59,335

(554)

58,781


21,497

(4,908)

16,589

 


Six months ended June 30, 2023

 

Six months ended June 30, 2022

 

(GAAP)

(Non-GAAP)

 

(GAAP)

(Non-GAAP)

($ in thousands)

Consolidated

Eliminations and adjustments

Burford-only

 

Consolidated

Eliminations and adjustments

Burford-only

Realized gains relative to cost

127,405

(33,011)

94,394


32,085

(5,484)

26,601

 

Reconciliation of tangible book value attributable to Burford Capital Limited per ordinary share






($ in thousands, except share data)

    

At June 30, 2023

 

At December 31, 2022

Total Burford Capital Limited equity


1,942,025


 1,742,584

   Less: Goodwill


 (133,962)


 (133,912)

Tangible book value attributable to Burford Capital Limited

 

1,808,063

 

 1,608,672

Basic ordinary shares outstanding


 218,957,218


 218,581,877

Tangible book value attributable to Burford Capital Limited per ordinary share

 

8.26

 

 7.36

 

Reconciliation of shareholders' equity attributable to Burford Capital Limited per ordinary share






($ in thousands, except share data)

    

At June 30, 2023

 

At December 31, 2022

Total shareholders' equity


2,653,361


 2,387,070

   Less: Non-controlling interests


 (661,083)


 (644,486)

Total Burford Capital Limited equity

 

1,942,025

 

 1,742,584

Basic ordinary shares outstanding


 218,957,218


 218,581,877

Shareholders' equity attributable to Burford Capital Limited per ordinary share

 

8.87

 

 7.97

 

 

Definitions and Use of Non-GAAP Financial Measures and Alternative Performance Measures

 

Burford reports its financial results in accordance with US GAAP. US GAAP requires us to present financial statements that consolidate some of the limited partner interests in private funds we manage as well as assets held on our balance sheet where we have a partner or minority investor. We therefore refer to various presentations of our financial results as follows:

 

•    

Consolidated refers to assets, liabilities and activities that include those third-party interests, partially owned subsidiaries and special purpose vehicles that we are required to consolidate under US GAAP. At the date of this announcement, the major entities where there is also a third-party partner in, or owner of, those entities include BCIM Strategic Value Master Fund, LP, Burford Opportunity Fund C LP, Burford Advantage Master Fund LP, Colorado Investments Limited ("Colorado") and several other entities in which Burford holds investments where there is also a third-party partner in, or owner of, those entities.

•    

Burford-only refers to assets, liabilities and activities that pertain only to Burford on a proprietary basis, excluding any third-party interests and the portions of jointly owned entities owned by others.

•    

Group-wide refers to the totality of assets managed by Burford, including those portions of the private funds owned by third parties and including private funds that are not consolidated within Burford's consolidated financial statements. Group-wide is therefore the sum of Burford-only and non-controlling interests in consolidated and non-consolidated private funds. Group-wide does not include third-party interests in capital provision assets, the economics of which have been sold to those third parties, that do not meet the criteria to be recognized as a sale under US GAAP. This includes the third-party interests in Colorado and other capital provision asset subparticipations.

 

We subdivide our capital provision assets into two categories:

 

•    

Direct, which includes all of our capital provision assets that we have originated directly (i.e., not through participation in a private fund) from our balance sheet. We also include direct (i.e., not through participation in a private fund) complex strategies assets in this category.

•    

Indirect, which includes our balance sheet's participations in two of our private funds (i.e., BCIM Strategic Value Master Fund, LP and Burford Advantage Master Fund LP).

 

We also use certain unaudited alternative performance measures, including:

 

•    

Internal rate of return ("IRR") is a discount rate that makes the net present value of a series of cash flows equal to zero and is expressed as a percentage figure. We compute IRR on concluded (including partially concluded) legal finance assets by treating that entire portfolio (or, when noted, a subset thereof) as one undifferentiated pool of capital and measuring actual and, if necessary, estimated inflows and outflows from that pool, allocating costs appropriately. IRRs do not include unrealized gains or losses.

•    

Return on invested capital ("ROIC") from a concluded asset is the absolute amount of realizations from such asset in excess of the amount of expenditure incurred in funding such asset divided by the amount of expenditure incurred, expressed as a percentage figure. ROIC is a measure of our ability to generate absolute returns on our assets. Some industry participants express returns on a multiple of invested capital ("MOIC") instead of a ROIC basis. MOIC includes the return of capital and, therefore, is 1x higher than ROIC. In other words, 70% ROIC is the same as 1.70x MOIC.

 

Other unaudited alternative performance measures and terms we use include:

 

•    

Commitment is the amount of financing we agree to provide for a legal finance asset. Commitments can be definitive (requiring us to provide funding on a schedule or, more often, when certain expenses are incurred) or discretionary (allowing us to provide funding after reviewing and approving a future matter). Unless otherwise indicated, commitments include deployed cost and undrawn commitments.

•    

Deployment refers to the funding provided for an asset, which adds to our deployed cost in such asset.

•    

Deployed cost is the amount of funding we have provided for an asset at the applicable point in time.

•    

Fair value adjustment is the amount of unrealized gain or loss recognized in our consolidated statements of operations in the relevant period and added to or subtracted from, as applicable, the asset or liability value in our consolidated statements of financial position.

•    

Portfolio includes deployed cost, net unrealized gains or losses and undrawn commitments.

•    

Realization: A legal finance asset is realized when the asset is concluded (i.e., when litigation risk has been resolved). A realization will result in us receiving cash or, occasionally, non-cash assets or recognizing a due from settlement receivable, reflecting what we are owed on the asset.

•    

Realized gain / loss reflects the total amount of gain or loss generated by a legal finance asset when it is realized, calculated as realized proceeds less deployed cost, without regard for any previously recognized fair value adjustment.

•    

Unrealized gain / loss represents the fair value of our legal finance assets over or under their funded cost, as determined in accordance with the requirements of the applicable US GAAP standards, for the relevant financial reporting period (consolidated statement of operations) or cumulatively (consolidated statement of financial position).

•    

YPF-related assets refers to our Petersen and Eton Park legal finance assets, which are two claims relating to Republic of Argentina's nationalization of YPF S.A., the Argentine energy company.

 

We also use certain non-GAAP financial measures, including:

 

•    

Cash receipts provide a measure of the cash that our capital provision and other assets generate during a given period as well as cash from certain other fees and income. In particular, cash receipts represent the cash generated from capital provision and other assets, including cash proceeds from realized or concluded assets and any related hedging assets, and cash received from asset management income, services and/or other income, before any deployments into funding existing or new assets. Cash receipts are a non-GAAP financial measure and should not be considered in isolation from, as a substitute for, or superior to, financial measures calculated in accordance with US GAAP. The most directly comparable measure calculated in accordance with US GAAP is proceeds from capital provision assets as set forth in our consolidated statements of cash flows. We believe that cash receipts are an important measure of our operating and financial performance and are useful to management and investors when assessing the performance of our Burford-only capital provision assets.

•    

Tangible book value attributable to Burford Capital Limited is calculated by subtracting intangible assets (such as goodwill) from total Burford Capital Limited equity. Tangible book value attributable to Burford Capital Limited per ordinary share is calculated by dividing tangible book value attributable to Burford Capital Limited by the total number of outstanding ordinary shares. Each of tangible book value attributable to Burford Capital Limited and tangible book value attributable to Burford Capital Limited per ordinary share is a non-GAAP financial measure and should not be considered in isolation from, as a substitute for, or superior to, financial measures calculated in accordance with US GAAP. The most directly comparable measure calculated in accordance with US GAAP is total Burford Capital Limited equity as set forth in our consolidated statements of financial position. We believe that tangible book value attributable to Burford Capital Limited per ordinary share is an important measure of our financial condition and is useful to management and investors when assessing capital adequacy and our ability to generate earnings on tangible equity invested by our shareholders.

 

For additional information, including reconciliations of our non-GAAP financial measures to the most directly comparable US GAAP measures and reconciliations of our alternative performance measures additional to those set forth in this announcement, see the 2Q23 Quarterly Report furnished to the US Securities and Exchange Commission on September 13, 2023 and made available on our website at http://investors.burfordcapital.com. Non-GAAP financial measures should not be considered in isolation from, as substitutes for, or superior to, financial measures calculated in accordance with US GAAP.

 

 

This announcement does not constitute an offer to sell or the solicitation of an offer to buy any ordinary shares or other securities of Burford.

 

This announcement does not constitute an offer of any Burford private fund. Burford Capital Investment Management LLC, which acts as the fund manager of all Burford private funds, is registered as an investment adviser with the US Securities and Exchange Commission. The information provided in this announcement is for informational purposes only. Past performance is not indicative of future results. The information contained in this announcement is not, and should not be construed as, an offer to sell or the solicitation of an offer to buy any securities (including, without limitation, interests or shares in any of Burford private funds). Any such offer or solicitation may be made only by means of a final confidential private placement memorandum and other offering documents.

 

Forward-looking statements

This announcement contains "forward-looking statements" within the meaning of Section 21E of the US Securities Exchange Act of 1934, as amended, regarding assumptions, expectations, projections, intentions and beliefs about future events. These statements are intended as "forward-looking statements". In some cases, predictive, future-tense or forward-looking words such as "aim", "anticipate", "believe", "continue", "could", "estimate", "expect", "forecast", "guidance", "intend", "may", "plan", "potential", "predict", "projected", "should" or "will" or the negative of such terms or other comparable terminology are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements. In addition, Burford and its representatives may from time to time make other oral or written statements which are forward-looking statements, including in its periodic reports that Burford files with, or furnishes to, the US Securities and Exchange Commission, other information made available to Burford's security holders and other written materials. By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors because they relate to events and depend on circumstances that may or may not occur in the future. Burford cautions you that forward-looking statements are not guarantees of future performance and are based on numerous assumptions, expectations, projections, intentions and beliefs and that Burford's actual results of operations, including its financial position and liquidity, and the development of the industry in which it operates, may differ materially from (and be more negative than) those made in, or suggested by, the forward-looking statements contained in this announcement. Significant factors that may cause actual results to differ from those Burford expects include, among others, those discussed under "Risk Factors" in Burford's annual report on Form 20-F for the year ended December 31, 2022 filed with the US Securities and Exchange Commission on May 16, 2023 and other reports or documents that Burford files with, or furnishes to, the US Securities and Exchange Commission from time to time. In addition, even if Burford's results of operations, including its financial position and liquidity, and the development of the industry in which it operates are consistent with the forward-looking statements contained in this announcement, those results of operations or developments may not be indicative of results of operations or developments in subsequent periods.

 

Except as required by law, Burford undertakes no obligation to update or revise the forward-looking statements contained in this announcement, whether as a result of new information, future events or otherwise.

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

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