REG - Burford Capital Ltd - 2Q23 Results & Quarterly Report
13/09/2023 12:00
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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
(http://www.rns-pdf.londonstockexchange.com/rns/3209M_1-2023-9-13.pdf) and
on the Burford Capital website at http://investors.burfordcapital.com
(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 activity(2)
• 2Q23 realized gains tripled to $59 million, up 254% from $17 million in 2Q22
o 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
o 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 receipts(3) of $150 million, up 266% from $41 million in 2Q22
o 1H23 cash receipts(3) 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
o 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 results(4)
• 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
o 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
o Increase in operating expenses in 2Q23 driven primarily by an increase in
compensation expenses and general, administrative and other expenses compared
to 2Q22
o 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
o 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)
o 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
o 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
o 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
o 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)
o 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
o 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)
o 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
(https://protect-us.mimecast.com/s/u-7CCVO9xvixqw9RsG1ZQO?domain=investis-live.com)
, 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
(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
(https://protect-us.mimecast.com/s/u-7CCVO9xvixqw9RsG1ZQO?domain=investis-live.com)
.
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
(mailto:rbailhache@burfordcapital.com)
Jim Ballan, Head of Investor Relations, Americas - email +1 (646) 793 9176
(mailto:JBallan@burfordcapital.com)
For press inquiries:
David Helfenbein, Vice President, Public Relations - email +1 (212) 235 6824
(mailto:dhelfenbein@burfordcapital.com)
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
(https://www.burfordcapital.com/) 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
(http://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 35,667 35,006 511,600 175,745
Plus/(Less): Third-party interests in capital 4,813 16,857 (95,532) 218
provision assets
Asset management income 1,894 2,394 3,891 5,508
Services and other income 2,177 (6,767) 5,497 (10,879)
Total revenues 44,551 47,490 425,456 170,592
Total operating expenses 43,632 26,540 97,931 56,827
Operating income 919 20,950 327,525 113,765
Finance costs and loss on debt extinguishment 21,124 21,636 41,677 37,477
Foreign currency transactions (gains)/losses (8,898) 2,544 (11,338) 3,058
(Loss)/income before income taxes (11,307) (3,230) 297,186 73,230
(Provision) for income taxes (8,969) (14,942) (16,081) (18,366)
Net income (20,276) (18,172) 281,105 54,864
Net income attributable to Burford Capital (21,540) (49,352) 237,885 6,928
Limited shareholders
Net income attributable to Burford Capital
Limited shareholders per ordinary share
Basic $ (0.10) $ (0.23) $ 1.09 $ 0.03
Diluted $ (0.10) $ (0.23) $ 1.07 $ 0.03
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 8.87 7.97
ordinary share
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 Burford-only 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 Burford-only 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 8.87 7.97
share
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
(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.
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