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Burford Capital reports nine-month and third quarter 2023 financial results

November 9, 2023
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Nine-month consolidated total revenues increased fivefold to $794 million

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 nine months ended September 30, 2023.1 Burford’s report on Form 6-K at and for the three and nine months ended September 30, 2023, including unaudited condensed consolidated financial statements (the “3Q23 Quarterly Report”), is available on the Burford Capital website at http://investors.burfordcapital.com.

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

“Consolidated total revenues increased fivefold to $794 million in the first nine months of 2023 compared to the prior-year period, driven by significant growth in capital provision income with and without our YPF-related assets. Positive realizations’ momentum has continued, with Burford-only capital provision-direct realizations up 42% in the first nine months of 2023 from the prior-year period as portfolio activity has continued. Group-wide total portfolio grew 16% in the first nine months of 2023 to $7.1 billion, benefiting from significant fair value gains and growth in deployments and undrawn commitments. In the first nine months of 2023, we have grown book value 27% to $10.10 per ordinary share, the first time in our history we have surpassed $10 per ordinary share.”

 

Consolidated financial results

Summary statements of operations

 

 

 

 

 

Nine months ended September 30,

 

Three months ended September 30,

Consolidated (US GAAP)

($ in thousands, except per share data)

2023

2022

+/-%

 

2023

2022

+/-%

Capital provision income

1,016,113

153,166

563%

 

504,513

(22,579)

NM

Asset management income

5,767

7,091

-19%

 

1,876

1,583

19%

Total revenues

794,329

157,891

403%

 

368,873

(12,701)

NM

Net income/(loss) attributable to Burford Capital Limited shareholders

510,427

(51,408)

NM

 

272,542

(58,336)

NM

 

Per diluted ordinary share

2.33

(0.23)

NM

 

1.24

(0.27)

NM

 

Note: "NM” denotes non meaningful.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Summary statements of financial position

 

 

 

 

 

Consolidated (US GAAP)

($ in thousands, except per share data)

September 30, 2023

December 31, 2022

$ change

+/-%

Capital provision assets

4,894,648

3,735,556

1,159,092

31%

Total Burford Capital Limited equity

2,208,235

1,742,584

465,651

27%

 

Book value per ordinary share

10.10

7.97

2.13

27%

Non-controlling interests

828,877

644,486

184,391

29%

Total shareholders’ equity

3,037,112

2,387,070

650,042

27%

Total liabilities and shareholders’ equity

5,526,335

4,288,359

1,237,976

29%

 

 

 

 

 

 

1 In this announcement, references to (1) “3Q23” and “3Q22” are to Burford’s unaudited financial results for the three months ended September 30, 2023 and 2022, respectively, and (2) “9M23”and “9M22” are to Burford’s unaudited financial results for the nine months ended September 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 3Q23 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 September 30, 2023 and for the three and nine months ended September 30, 2023 and 2022 included in this announcement. However, because Burford has not previously issued quarterly financial statements, the unaudited condensed consolidated financial statements for the three and nine months ended September 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.

 

Burford-only operational and financial review (non-GAAP)

Selected metrics1

 

 

 

 

 

Nine months ended September 30,

 

Three months ended September 30,

Burford-only (non-GAAP)

($ in thousands)

2023

2022

+/-%

 

2023

2022

+/-%

Realized gains relative to cost

123,539

62,870

96%

 

29,145

36,269

-20%

Realizations

274,101

192,480

42%

 

79,158

122,278

-35%

Cash receipts2

379,732

229,472

65%

 

132,794

130,018

2%

Deployments

304,432

275,419

11%

 

55,986

153,289

-63%

New commitments

448,682

400,568

12%

 

17,648

105,342

-83%

1 Represents Burford-only capital provision-direct, unless noted otherwise.

2 Represents Burford-only proceeds from capital provision-direct, capital provision-indirect and asset management and other services.

 

Group-wide (non-GAAP)

($ in thousands)

September 30, 2023

December 31, 2022

$ change

+/-%

Total portfolio

7,103,559

6,146,871

956,688

16%

 

 

 

 

 

                     

 

§   

Realized gains of $124 million in 9M23 nearly doubled from the prior-year period (9M22: $63 million), with no contribution from YPF-related assets

o    

Realized gains in 9M23 included a $37 million gain from the resolution of an asset recovery matter

§   

Realizations in 9M23 up 42% to $274 million (9M22: $192 million)

o    

Continued strength in realizations in 9M23 reflects increased portfolio velocity, as the case backlog in the courts continues to clear

§  

Cash receipts in 9M23 up 65% to $380 million (9M22: $229 million)

o    

Cash receipts in 9M23 meaningfully exceeded total operating expenses and finance costs

§   

Deployments in 9M23 up 11% to $304 million (9M22: $275 million)

o    

50% of total Burford-only capital provision-direct deployments in 9M23 related to the 2023 vintage year

§   

New commitments in 9M23 up 12% to $449 million (9M22: $401 million)

§   

Group-wide total portfolio increased 16% to $7.1 billion at September 30, 2023 (December 31, 2022: $6.1 billion), due to significant fair value gains and growth in deployments and undrawn commitments

     

 

Selected financial metrics

 

 

 

 

 

Nine months ended September 30,

 

Three months ended September 30,

Burford-only (non-GAAP)

($ in thousands, except per share data)

2023

2022

+/-%

 

2023

2022

+/-%

Total revenues

725,927

107,432

576%

 

344,013

(14,223)

NM

Operating income/(loss)

575,550

26,487

NM

 

291,212

(39,339)

NM

Net income/(loss)

510,427

(51,408)

NM

 

272,542

(58,336)

NM


 

 

 

 

 

 

 

 

Burford-only (non-GAAP)

($ in thousands, except per share data)

September 30, 2023

December 31, 2022

$ change

+/-%

Tangible book value attributable to Burford Capital Limited

2,074,311

1,608,672

456,639

29%

 

Tangible book value attributable to Burford Capital Limited per ordinary share

9.48

7.36

2.12

29%

 

 

 

 

 

 

 

§   

Total revenues in 9M23 of $726 million (9M22: $107 million), a driver of significant earnings improvement

o    

Growth in realized and unrealized gains, excluding YPF-related assets, from increased case resolutions and milestone developments

o    

Realized gains on total capital provision assets of $125 million in 9M23 nearly doubled compared to 9M22, with no contribution from YPF-related assets

o    

Unrealized gains, excluding YPF-related assets, on total capital provision assets increased 78% in 9M23 compared to 9M22, showing portfolio activity

o    

Favorable summary judgment in 1Q23 and favorable final judgment in 3Q23 in YPF-related assets generated $460 million in unrealized gains in 9M23

§   

Operating income in 9M23 of $576 million (9M22: $26 million), reflecting growth in total revenues

o    

Operating expenses in 9M23 of $150 million (9M22: $81 million) reflect strong portfolio performance and certain idiosyncratic events—increase driven primarily by non-cash increase in long-term incentive compensation including accruals from unrealized gains on YPF-related assets and legacy asset recovery incentive compensation including accruals

 

-

Long-term incentive compensation is only paid once cash recoveries are received

 

-

Only one eligible asset recovery asset remains

o    

Salaries and benefits and general, administrative and other expenses only slightly higher after certain noted items in 9M23 compared to 9M22

o    

Legacy asset recovery incentive compensation including accruals and case-related expenditures ineligible for inclusion in asset cost continue to be idiosyncratic

§   

Net income in 9M23 of $510 million (9M22: Net loss of $51 million)

o    

Net income per diluted share in 9M23 of $2.33 (9M22: Net loss of $0.23 per diluted share)

§   

Tangible book value attributable to Burford Capital Limited of $2,074 million at September 30, 2023 (December 31, 2022: $1,609 million)

o    

Tangible book value attributable to Burford Capital Limited per ordinary share increased 29% (38% annualized) to $9.48 at September 30, 2023 (December 31, 2022: $7.36), primarily reflecting strong earnings

§   

Annualized Burford-only ROTE for 9M23 of 37%

       

 

Selected portfolio metrics

 

 

 

 

 

Burford-only

($ in thousands)

September 30, 2023

December 31, 2022

$ change

+/-%

Deployed cost

1,644,661

1,486,150

158,511

11%

Plus: Fair value adjustments

1,661,153

1,117,855

543,298

49%

Fair value

3,305,814

2,604,005

701,809

27%

Undrawn commitments

1,372,555

1,299,048

73,507

6%

Total capital provision-direct portfolio

4,678,369

3,903,053

775,316

20%

Total capital provision portfolio1

4,721,9262

3,942,7003

779,226

20%

1 Represents capital provision-direct and capital provision-indirect.

2 The fair value of Burford-only capital provision-indirect assets does not include $0.4 million of our interests in the Strategic Value Fund. All assets held at the Strategic Value Fund have concluded at September 30, 2023.

3 The fair value of $31.4 million for the Burford-only capital provision-indirect assets did not include an additional $1.0 million for the Burford-only portion of the receivable from due from settlement of capital provision assets on concluded assets in the Strategic Value Fund for a total fair value of $32.4 million for Burford-only capital provision-indirect assets.

 

 

§   

Fair value of Burford-only capital provision-direct assets increased $702 million to $3.3 billion at September 30, 2023 (December 31, 2022: $2.6 billion)

§   

Of the $702 million increase in capital provision-direct asset fair value in 9M23, $463 million attributable to the YPF-related assets

§   

Cumulative ROIC since inception from Burford-only capital provision-direct assets of 87% (December 31, 2022: 88%) and IRR of 27% (December 31, 2022: 29%)

 

Liquidity and capital

 

 

 

 

 

Burford-only (non-GAAP)

($ in thousands)

September 30, 2023

December 31, 2022

$ change

+/-%

Liquidity

 

 

 

 

 

Cash and cash equivalents

240,028

73,679

166,349

226%

 

Marketable securities

107,006

136,358

(29,352)

-22%

 

Total liquidity

347,034

210,037

136,997

65%

Due from settlement of capital provision assets

69,530

114,650

45,120

-39%

 

 

 

 

 

 

§   

Burford-only cash and cash equivalents and marketable securities of $347 million at September 30, 2023 (December 31, 2022: $210 million)

o    

Strong liquidity position at September 30, 2023 primarily reflects continued solid Burford-only cash receipts and issuance of $400 million in senior notes in June 2023, partially offset by the redemption in full of the 6.125% bonds due 2024 in July 2023

o    

Liquidity levels enable us to take advantage of new opportunities, while recognizing the variability of cash inflows

§   

Burford-only due from settlement of capital provision assets of $70 million at September 30, 2023 (December 31, 2022: $115 million)

§   

Total debt outstanding of $1.6 billion at September 30, 2023 (December 31, 2022: $1.3 billion)

o    

Leverage decreased in 9M23, primarily driven by asset and equity growth and remains well below covenant ceiling levels

o    

In June 2023, Moody’s revised its outlook on its Ba2 rating to positive from stable

o    

In October 2023, S&P revised its outlook on its BB- rating to positive from stable

     

 

Investor and Analyst Conference Call

Burford will hold a conference call for investors and analysts at 10.00am EST / 3.00pm GMT on Thursday, November 9, 2023. The dial-in number for the conference call is +1 646 664-1960 (USA) / +44 (0)20 4587 0498 (UK) / +44 (0)20 3936 2999 (all other locations) and the access code is 151405. To minimize the risk of delayed access, participants are urged to dial into the conference call by 9.40am EST / 2.40pm GMT.

A live webcast of the call will also be available at https://www.investis-live.com/burfordcapital/65044c3f673c270c008a5d08/3q23-results, and pre-registration at that link is encouraged.

An accompanying 3Q23 and 9M23 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 Thursday, November 23, 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 241638.

A replay facility will also be accessible through the webcast at https://www.investis-live.com/burfordcapital/65044c3f673c270c008a5d08/3q23-results.

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

Deutsche Numis - NOMAD and Joint Broker

Giles Rolls
Charlie Farquhar

 

+44 (0)20 7260 1000

Jefferies International Limited - Joint Broker

Graham Davidson
James Umbers

 

+44 (0)20 7029 8000

Berenberg - Joint Broker

Toby Flaux
James Thompson
Yasmina Benchekroun

+44 (0)20 3207 7800

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.

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 that are forward-looking, 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 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.