REG - Burford Capital Ltd - 1Q24 Results & Quarterly Report
13/05/2024 12:00
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RNS Number : 1591O Burford Capital Limited 13 May 2024
May 13, 2024
Burford Capital Reports First Quarter 2024 Results
Burford Capital Limited ("Burford"), the leading global finance and asset
management firm focused on law, today announces its first quarter 2024
results.
In addition, Burford has made available an accompanying first quarter 2024
results presentation on its website at http://investors.burfordcapital.com
(http://investors.burfordcapital.com) and at
http://www.rns-pdf.londonstockexchange.com/rns/1591O_1-2024-5-13.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/1591O_1-2024-5-13.pdf) .
Christopher Bogart, Chief Executive Officer of Burford Capital, commented:
"Our first quarter showed our highest ever reported level of first quarter
cash receipts, above-average realized gains, continued case conclusions with
loss levels below historical experience and moderate new business activity
broadly consistent with a typical first quarter. Total revenues reflected the
variable timing of recognition we expect in our business; the underlying
portfolio continued to show forward momentum with no material negative
developments, while lower operating expenses reflected the absence of elevated
variable costs."
Consolidated financial results
Summary statements of operations
Three months ended March 31,
Consolidated (US GAAP) 2024 2023 % change
($ in thousands, except per share data)
Capital provision income 40,761 475,933 -91%
Asset management income 1,863 1,997 -7%
Total revenues 44,295 380,905 -88%
Total operating expenses 30,138 54,299 -44%
Net income/(loss) attributable to Burford Capital Limited shareholders (29,937) 259,425 NM
Per diluted ordinary share (0.14) 1.17 NM
Note: "NM" denotes not meaningful. Changes from negative to positive amounts
and positive to negative amounts, increases or decreases from zero and changes
greater than 700% are not considered meaningful.
Summary statements of financial position
Consolidated (US GAAP) March 31, 2024 December 31, 2023 % change
($ in thousands, except per share data)
Capital provision assets 5,096,807 5,045,388 1%
Total Burford Capital Limited equity 2,261,789 2,290,858 -1%
Book value per ordinary share 10.34 10.46 -1%
Non-controlling interests 864,465 916,922 -6%
Total shareholders' equity 3,126,254 3,207,780 -3%
Total liabilities and shareholders' equity 6,012,208 5,837,394 3%
In this announcement, references to "1Q24"and "1Q23" are to Burford's
financial results for the three months ended March 31, 2024 and 2023,
respectively. All figures in this announcement are presented on an unaudited
consolidated basis in accordance with the generally accepted accounting
principles in the United States ("US GAAP"), unless otherwise stated. Figures
at and for the three months ended March 31, 2024 are not necessarily
indicative of the results that may be expected for the full year ending
December 31, 2024.
Definitions, reconciliations and information additional to those set forth in
this announcement are available on Burford's website at
http://investors.burfordcapital.com.
Burford-only operational and financial review (non-GAAP)
Selected metrics(1)
Three months ended March 31,
Burford-only (non-GAAP) 2024 2023 % change
($ in thousands)
Realized gains 28,754 35,613 -19%
Realizations 61,074 61,746 -1%
Cash receipts(2) 137,694 97,157 42%
Deployments 59,080 66,993 -12%
New commitments 82,459 100,764 -18%
(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) March 31, 2024 December 31, 2023 % change
($ in thousands)
Total portfolio 7,126,980 7,170,308 -1%
§ Realized gains in 1Q24 down 19% to $29 million (1Q23: $36 million)
o Realized gains comprised $45 million of gross realized gains offset by $16
million of gross realized losses primarily related to unfavorable conclusions
in sub-cases within a portfolio asset that previously generated realized gains
in excess of the loss
§ Realizations in 1Q24 of $61 million (1Q23: $62 million)
o Continued brisk post-Covid-19 pandemic pace of realizations in 1Q24 reflects
continuing elevated resolution frequency amid normalized court activity and
reducing case backlogs
§ Cash receipts in 1Q24 up 42% to $138 million (1Q23: $97 million)
o Cash receipts in 1Q24 were 2.2x total operating expenses and finance costs,
and were broadly diversified with five assets generating total proceeds of
$103 million and each asset's proceeds greater than $10 million
§ Deployments in 1Q24 down 12% to $59 million (1Q23: $67 million)
o Burford-only capital provision-direct deployments generally in line with prior
first quarters
o $1.4 billion of Burford-only capital provision-direct undrawn commitments to
legal finance assets at March 31, 2024 serves as a strong base for potential
future deployments
§ Capital provision-direct new commitments on Burford-only basis in 1Q24 down
18% to $82 million (1Q23: $101 million)
o First quarter typically quiet for new commitments-while 1Q23 was slightly
more active with $101 million of new commitments, 1Q22 new commitments were
lower at $44 million
§ Group-wide total portfolio steady at $7.1 billion (December 31, 2023: $7.2
billion)
Selected financial metrics
Three months ended March 31,
Burford-only (non-GAAP) 2024 2023 $ change % change
($ in thousands, except per share data)
Total revenues 31,378 338,677 -307,299 -91%
Total operating expenses 29,664 54,009 -24,345 -45%
Operating income/(loss) 1,714 284,668 -282,954 -99%
Net income/(loss) attributable to Burford Capital Limited shareholders (29,937) 259,425 -289,362 NM
Burford-only (non-GAAP) March 31, 2024 December 31, 2023 $ change % change
($ in thousands, except per share data)
Tangible book value attributable to Burford Capital Limited 2,127,833 2,156,893 -29,060 -1%
Tangible book value attributable to Burford Capital Limited per ordinary share 9.73 9.85 -0.12 -1%
§ Total revenues in 1Q24 of $31 million (1Q23: $339 million), with portfolio
case development progressing well and timing of revenue recognition variable,
as expected in our business, and with no individual asset having a material
impact on 1Q24 quarterly performance
o Realized gains on total capital provision assets of $30 million in 1Q24 driven
by capital provision-direct assets, representing our highest returning core
legal finance strategy
o Unrealized losses on total capital provision assets were $9 million in 1Q24
(1Q23: unrealized gains of $277 million)-fair value adjustments affected by a
number of factors, including changes in discount rate, duration and litigation
risk premium, the reversal of previously recognized unrealized gains upon
conclusion of a matter and its transfer to realized gains and actual
performance of matters as they pass through milestones
§ Operating income in 1Q24 of $2 million (1Q23: $285 million), attributable
principally to the decrease in total revenues
o Total operating expenses normalized in 1Q24, down 45% to $30 million (1Q23:
$54 million), in the absence of elevated variable costs
o General, administrative and other expenses in 1Q24 down 6% to $7 million
(1Q23: $8 million), while case-related expenditures were approximately $6
million lower
§ Net loss attributable to Burford Capital Limited shareholders in 1Q24 of $30
million (1Q23: net income of $259 million)
o Net loss per diluted share in 1Q24 of $0.14 (1Q23: net income of $1.17 per
diluted share)
§ Tangible book value attributable to Burford Capital Limited of $2.1 billion at
March 31, 2024 (December 31, 2023: $2.2 billion)
o Tangible book value attributable to Burford Capital Limited per ordinary share
decreased 1% to $9.73 at March 31, 2024 (December 31, 2023: $9.85)
Selected portfolio metrics
Burford-only (non-GAAP) March 31, 2024 December 31, 2023 $ change % change
($ in thousands)
Deployed cost 1,595,505 1,573,531 21,974 1%
Plus: Fair value adjustments 1,806,542 1,814,070 -7,528 0%
Fair value 3,402,047 3,387,601 14,446 0%
Undrawn commitments 1,406,220 1,396,061 10,159 1%
Total capital provision-direct portfolio 4,808,267 4,783,662 24,605 1%
Total capital provision portfolio(1) 4,851,592 4,840,117 -11,475 0%
(1) Represents capital provision-direct and capital provision-indirect.
( )
§ Fair value of Burford-only capital provision-direct assets increased by $14
million to $3.4 billion at March 31, 2024 (December 31, 2023: $3.4 billion)
§ Cumulative ROIC since inception from Burford-only capital provision-direct
assets of 82% (December 31, 2023: 82%) and IRR of 27% (December 31, 2023: 27%)
Liquidity and capital
Burford-only (non-GAAP) March 31, 2024 December 31, 2023 $ change % change
($ in thousands)
Liquidity
Cash and cash equivalents 464,698 195,915 268,783 137%
Marketable securities 102,873 107,561 (4,688) -4%
Total liquidity 567,571 303,476 264,095 87%
Due from settlement of capital provision assets 131,688 185,267 (53,579) -29%
§ Burford-only cash and cash equivalents and marketable securities of $568
million at March 31, 2024 (December 31, 2023: $303 million)
o Robust liquidity position at March 31, 2024 augmented by $138 million of
Burford-only cash receipts and $275 million add-on offering to 2031 senior
notes in January 2024
§ Burford-only due from settlement of capital provision assets of $132 million
at March 31, 2024 (December 31, 2023: $185 million), with 30% of December 31,
2023 balance collected in 1Q24
§ Total debt outstanding of $1.8 billion at March 31, 2024 (December 31, 2023:
$1.6 billion)
o Leverage remains well below covenant ceiling levels
Investor and analyst conference call
Burford will hold a conference call for investors and analysts at 8.00am EDT /
1.00pm BST on Monday, May 13, 2024. The dial-in numbers for the conference
call are +1 646 307-1963 (USA) or +1 800 715-9871 (USA & Canada toll free)
/ +44 (0)20 3481 4247 (UK) or +44 800 260 6466 (UK toll free) and the access
code is 7684047. To minimize the risk of delayed access, participants are
urged to dial into the conference call by 7.40am EDT / 12.40pm BST.
A live webcast of the call will also be available at
https://events.q4inc.com/attendee/323980508
(https://events.q4inc.com/attendee/323980508) , and pre-registration at that
link is encouraged.
An accompanying 1Q24 results presentation for investors and analysts will also
be made available on Burford's 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
accessible through the webcast at https://events.q4inc.com/attendee/323980508
(https://events.q4inc.com/attendee/323980508) .
For further information, please contact:
Burford Capital Limited
For investor and analyst inquiries:
Americas: Josh Wood, Head of Investor Relations - email +1 212 516 5824
(mailto:jwood@burfordcapital.com)
EMEA & Asia: Rob Bailhache, Head of EMEA & Asia Investor Relations - +44 (0)20 3530 2023
email (mailto:rbailhache@burfordcapital.com)
For press inquiries:
David Helfenbein, Vice President, Public Relations - email +1 (212) 516 5824
(mailto:dhelfenbein@burfordcapital.com)
Deutsche Numis - 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
James Umbers
Berenberg - Joint Broker +44 (0)20 3207 7800
Toby Flaux
James Thompson
Yasmina Benchekroun
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 months ended March 31,
2024 and 2023, the condensed consolidated and Burford-only statements of
financial position at March 31, 2024 and December 31, 2023 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 March 31,
($ in thousands) 2024 2023
Revenues
Capital provision income/(loss) 40,761 475,933
(Less)/Plus: Third-party interests in capital provision assets (5,224) (100,345)
Asset management income 1,863 1,997
Marketable securities and other income/(loss) 6,895 3,320
Total revenues 44,295 380,905
Total operating expenses 30,138 54,299
Operating income/(loss) 14,157 326,606
Finance costs 32,567 20,553
Foreign currency transactions (gains)/losses 492 (2,440)
Income/(loss) before income taxes (18,902) 308,493
(Provision for)/benefit from income taxes 1,404 (7,112)
Net income/(loss) (17,498) 301,381
Net income/(loss) attributable to Burford Capital Limited shareholders (29,937) 259,425
Net income/(loss) attributable to Burford Capital Limited shareholders per
ordinary share
Basic $(0.14) $1.19
Diluted $(0.14) $1.17
Summary Burford-only statement of operations
Three months ended March 31,
($ in thousands) 2024 2023
Revenues
Capital provision income/(loss) 17,903 316,015
Asset management income 6,673 19,357
Marketable securities and other income/(loss) 6,802 3,305
Total revenues 31,378 338,677
Total operating expenses 29,664 54,009
Operating income 1,714 284,668
Net income (29,937) 259,425
Net income per share:
Basic $(0.14) $1.19
Diluted $(0.14) $1.17
Reconciliation of summary condensed consolidated statement of operations to
summary Burford-only statement of operations
Three months ended March 31, 2024
(GAAP) (Non-GAAP)
Elimination of third-party interests
($ in thousands) Consolidated Strategic Value Fund BOF-C Colorado Advantage Fund Other Burford-only
Capital provision income 40,761 - (9,686) (5,420) (7,271) (481) 17,903
(Less): Third-party interests in capital provision assets (5,224) - - 5,369 - (145) -
Asset management income 1,863 - 4,810 - - - 6,673
Marketable securities and other income 6,895 - (88) - - (5) 6,802
Total revenues 44,295 - (4,964) (51) (7,271) (631) 31,378
Total operating expenses 30,138 - 44 (51) (169) (298) 29,664
Operating income 14,157 - (5,008) - (7,102) (333) 1,714
Net income/(loss) (17,498) - (5,008) - (7,102) (329) (29,937)
Three months ended March 31, 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 475,933 (107) (48,308) (99,769) (7,022) (4,712) 316,015
(Less): Third-party interests in capital provision assets (100,345) - - 99,764 - 581 -
Asset management income 1,997 46 17,314 - - - 19,357
Marketable securities and other income 3,320 - (1) - - (14) 3,305
Total revenues 380,905 (61) (30,995) (5) (7,022) (4,145) 338,677
Total operating expenses 54,299 (155) 30 (5) (123) (37) 54,009
Operating income 326,606 94 (31,025) - (6,899) (4,108) 284,668
Net income/(loss) 301,381 94 (31,025) - (6,899) (4,126) 259,425
Reconciliations of operating expenses from the condensed consolidated
statements of operations to Burford-only statements of operations
Three months ended March 31, 2024
(GAAP) (non-GAAP)
Eliminations and
($ in thousands) Consolidated adjustments Burford-only
Compensation and benefits
Salaries and benefits 11,664 - 11,664
Annual incentive compensation 4,836 - 4,836
Share-based compensation 3,863 - 3,863
Long-term incentive compensation including accruals 1,638 - 1,638
General, administrative and other 7,450 (333) 7,117
Case-related expenditures ineligible for inclusion in asset cost 687 (141) 546
Total operating expenses 30,138 (474) 29,664
Three months ended March 31, 2023
(GAAP) (non-GAAP)
Eliminations and
($ in thousands) Consolidated adjustments Burford-only
Compensation and benefits
Salaries and benefits 12,492 - 12,492
Annual incentive compensation 4,686 - 4,686
Share-based compensation 3,504 - 3,504
Long-term incentive compensation including accruals 19,555 - 19,555
General, administrative and other 7,751 (199) 7,552
Case-related expenditures ineligible for inclusion in asset cost 6,311 (91) 6,220
Total operating expenses 54,299 (290) 54,009
Summary condensed consolidated statement of financial position
($ in thousands) March 31, December 31, 2023
2024
Total assets 6,012,208 5,837,394
Total liabilities 2,885,954 2,629,614
Total Burford Capital Limited equity 2,261,789 2,290,858
Non-controlling interests 864,465 916,922
Total shareholders' equity 3,126,254 3,207,780
Basic ordinary shares outstanding 218,673,490 218,962,441
Total shareholders' equity attributable to Burford Capital Limited per basic 10.34 10.46
ordinary share
Total shareholders' equity per basic ordinary share 14.30 14.65
Reconciliation of summary consolidated statement of financial position to
summary Burford-only statement of financial position
March 31, 2024
(GAAP) (Non-GAAP)
Elimination of third-party interests
($ in thousands) Consolidated BOF-C Colorado Advantage Fund Other Burford-only
Total assets 6,012,208 (604,919) (691,682) (199,002) (78,823) 4,437,782
Total liabilities 2,885,954 - (691,682) (154) (18,125) 2,175,993
Total shareholders' equity 3,126,254 (604,919) - (198,848) (60,698) 2,261,789
December 31, 2023
(GAAP) (Non-GAAP)
Elimination of third-party interests
($ in thousands) Consolidated BOF-C Colorado Advantage Fund Other Burford-only
Total assets 5,837,394 (634,239) (686,304) (222,413) (78,574) 4,215,864
Total liabilities 2,629,614 - (686,304) (100) (18,204) 1,925,006
Total shareholders' equity 3,207,780 (634,239) - (222,313) (60,370) 2,290,858
Reconciliation of components of realizations from a consolidated basis to a
Group-wide basis
Three months ended March 31, 2024
(GAAP) (Non-GAAP)
($ in thousands) Consolidated Eliminations and adjustments Burford-only Other funds BOF-C Group-wide
Capital provision-direct 104,193 (43,119) 61,074 28,771 30,198 120,043
Capital provision-indirect 8,778 (7,315) 1,463 7,315 - 8,778
Post-settlement - - - 27,834 - 27,834
Total realizations 112,971 (50,434) 62,537 63,920 30,198 156,655
Three months ended March 31, 2023
(GAAP) (Non-GAAP)
($ in thousands) Consolidated Eliminations and adjustments Burford-only Other funds BOF-C Group-wide
Capital provision-direct 115,732 (53,986) 61,746 50,390 35,423 147,559
Capital provision-indirect 12,580 (10,484) 2,096 10,484 - 12,580
Post-settlement - - - 18,680 - 18,680
Total realizations 128,312 (64,470) 63,842 79,554 35,423 178,819
Reconciliation of components of deployments from a consolidated basis to a
Group-wide basis
Three months ended March 31, 2024
(GAAP) (Non-GAAP)
($ in thousands) Consolidated Eliminations and adjustments Burford-only Other funds BOF-C Group-wide
Capital provision-direct 74,790 (15,710) 59,080 2,540 16,609 78,229
Capital provision-indirect 50,613 (42,178) 8,435 42,178 - 50,613
Post-settlement - - - 20,707 - 20,707
Total deployments 125,403 (57,888) 67,515 65,425 16,609 149,549
Three months ended March 31, 2023
(GAAP) (Non-GAAP)
($ in thousands) Consolidated Eliminations and adjustments Burford-only Other funds BOF-C Group-wide
Capital provision-direct 84,685 (17,692) 66,993 6,913 17,452 91,358
Capital provision-indirect 34,000 (28,333) 5,667 28,333 - 34,000
Post-settlement - - - 3,867 - 3,867
Total deployments 118,685 (46,025) 72,660 39,113 17,452 129,225
Reconciliation of consolidated proceeds from capital provision assets to
Burford-only cash receipts
($ in thousands) Three months ended March 31, 2024 Three months ended March 31, 2023
Consolidated proceeds from capital provision assets 247,561 144,485
Less: Elimination of third-party interests (120,036) (60,563)
Burford-only total proceeds from capital provision assets 127,525 83,922
Burford-only proceeds from capital provision-direct assets 112,922 77,742
Burford-only proceeds from capital provision-indirect assets 14,603 6,180
Burford-only total proceeds from capital provision assets 127,525 83,922
Consolidated asset management income 1,863 1,997
Plus: Eliminated income from funds 4,810 17,360
Burford-only asset management income 6,673 19,357
Less: Non-cash adjustments((1)) (2,197) (7,086)
Burford-only proceeds from asset management income 4,476 12,271
Burford-only proceeds from marketable security interest and dividends 5,476 881
Burford-only proceeds from other income 217 83
Burford-only proceeds from other items 5,693 964
Cash receipts 137,694 97,517
(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 portfolio to Group-wide portfolio
March 31, 2024
(GAAP) (non-GAAP)
Elimination of
third-party
($ in thousands) Consolidated interests Burford-only Other funds BOF-C Group-wide
Capital provision assets - direct:
Deployed cost 2,127,082 (531,577) 1,595,505 368,994 437,697 2,402,196
Plus: Fair value adjustments 2,733,691 (927,149) 1,806,542 172,600 208,360 2,187,502
Fair value 4,860,773 (1,458,726) 3,402,047 541,594 646,057 4,589,698
Capital provision assets - indirect:
Deployed cost 210,974 (177,182) 33,792 177,182 - 210,974
Plus: Fair value adjustments 25,060 (19,022) 6,038 19,022 - 25,060
Fair value 236,034 (196,204) 39,830 ( ) 196,204 - 236,034
Total capital provision assets 5,096,807 (1,654,930) 3,441,877 ( ) 737,798 646,057 4,825,732
Post-settlement assets:
Deployed cost - - - 248,823 - 248,823
Plus: Fair value adjustments - - - 49,193 - 49,193
Fair value - - - 298,016 - 298,016
Undrawn commitments:
Capital provision-direct 1,820,080 (413,860) 1,406,220 122,135 404,956 1,933,311
Capital provision-indirect 20,972 (17,477) 3,495 17,477 - 20,972
Post-settlement - - - 48,949 - 48,949
Total undrawn commitments 1,841,052 (431,337) 1,409,715 188,561 404,956 2,003,232
Total portfolio 6,937,859 (2,086,267) 4,851,592 1,224,375 1,051,013 7,126,980
December 31, 2023
(GAAP) (non-GAAP)
Elimination of
third-party
($ in thousands) Consolidated interests Burford-only Other funds BOF-C Group-wide
Capital provision assets - direct:
Deployed cost 2,116,304 (542,773) 1,573,531 416,318 428,110 2,417,959
Plus: Fair value adjustments 2,743,575 (929,505) 1,814,070 180,169 220,363 2,214,602
Fair value 4,859,879 (1,472,278) 3,387,601 596,487 648,473 4,632,561
Capital provision assets - indirect:
Deployed cost 164,259 (125,508) 38,751 125,508 - 164,259
Plus: Fair value adjustments 21,250 (15,490) 5,760 15,490 - 21,250
Fair value 185,509 (140,998) 44,511 ( ) 140,998 - 185,509
Total capital provision assets 5,045,388 (1,613,276) 3,432,112 737,485 648,473 4,818,070
Post-settlement assets:
Deployed cost - - - 253,062 - 253,062
Plus: Fair value adjustments - - - 45,792 - 45,792
Fair value - - - 298,854 - 298,854
Undrawn commitments:
Capital provision-direct 1,801,627 (405,566) 1,396,061 126,560 396,646 1,919,267
Capital provision-indirect 71,662 (59,718) 11,944 59,718 - 71,662
Post-settlement - - - 62,455 - 62,455
Total undrawn commitments 1,873,289 (465,284) 1,408,005 248,733 396,646 2,053,384
Total portfolio 6,918,677 (2,078,560) 4,840,117 1,285,072 1,045,119 7,170,308
Reconciliation of consolidated to Burford-only cash and cash equivalents and
marketable securities
March 31, 2024 December 31, 2023
(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 482,673 (17,975) 464,698 220,549 (24,634) 195,915
Marketable securities 102,873 - 102,873 107,561 - 107,561
Total cash and cash equivalents and marketable securities 585,546 (17,975) 567,571 328,110 (24,634) 303,476
Reconciliation of consolidated to Burford-only due from settlement of capital
provision assets
March 31, 2024 December 31, 2023
(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 131,688 - 131,688 265,540 (80,273) 185,267
Reconciliation of consolidated to Burford-only realized gains on capital
provision-direct assets
(GAAP) (Non-GAAP)
($ in thousands) Consolidated Eliminations and adjustments Burford-only total Burford-only Capital provision-direct Burford-only Capital provision-indirect
Realized gains/(losses) for the three months ended March 31, 2024 57,862 (27,968) 29,894 28,754 1,140
Realized gains/(losses) for the three months ended March 31, 2023 69,442 (33,829) 35,613 35,613 -
Reconciliation of consolidated to Burford-only unrealized gains on capital
provision-indirect assets
(GAAP) (Non-GAAP)
($ in thousands) Consolidated Eliminations and adjustments Burford-only total Burford-only Capital provision-direct Burford-only Capital provision-indirect
Unrealized gains/(losses) for the three months ended March 31, 2024 (13,701) 4,613 (9,088) (9,366) 278
Unrealized gains/(losses) for the three months ended March 31, 2023 402,813 (126,157) 276,656 275,141 1,515
Reconciliation of tangible book value attributable to Burford Capital Limited
per ordinary share
($ in thousands, except share data) March 31, 2024 December 31, 2023
Total Burford Capital Limited equity 2,261,789 2,290,858
Less: Goodwill (133,956) (133,965)
Tangible book value attributable to Burford Capital Limited 2,127,833 2,156,893
Basic ordinary shares outstanding 218,673,490 218,962,441
Tangible book value attributable to Burford Capital Limited per ordinary share $9.73 $9.85
Definitions and use of non-GAAP financial measures and alternative performance
measures
Burford reports its consolidated 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 consolidated 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 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, which 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 one of our
private funds (i.e., 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 financing 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 financing on a
schedule or, more often, when certain expenses are incurred) or discretionary
(allowing us to provide financing after reviewing and approving a future
matter). Unless otherwise indicated, commitments include deployed cost and
undrawn commitments.
• Deployment refers to the financing provided for an asset, which adds to our
deployed cost in such asset.
• Deployed cost is the amount of financing 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, relative to
cost, 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 deployed cost, as determined in accordance with the
requirements of the applicable US GAAP standards, for the relevant financial
reporting period (consolidated statements of operations) or cumulatively
(consolidated statements of financial position).
• YPF-related assets refers to our Petersen and Eton Park legal finance assets,
which are two claims relating to the Republic of Argentina's nationalization
of YPF S.A., the Argentine energy company.
We also use certain non-GAAP financial measures, including:
• Book value per ordinary share is calculated by dividing total Burford Capital
Limited equity by the number of ordinary shares issued and outstanding.
• 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 financing 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.
• Return on tangible equity ("ROTE") is Burford-only net income/(loss) divided
by the average of tangible equity at the beginning and end of the relevant
period, with tangible equity calculated as total Burford Capital Limited
equity less goodwill. ROTE 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 net income/(loss)
attributable to Burford Capital Limited shareholders as set forth in our
consolidated statements of operations. We believe ROTE is an important measure
of our operating and financial performance and is 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.
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 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, 2023 filed with the US Securities and Exchange
Commission on March 28, 2024 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 applicable 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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