TIDMBUR
RNS Number : 9668S
Burford Capital Limited
09 November 2023
November 9, 2023
BURFORD CAPITAL REPORTS NINE-MONTH AND THIRD QUARTER 2023 FINANCIAL
RESULTS;
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 at http://www.rns-pdf.londonstockexchange.com/rns/9668S_1-2023-11-9.pdf
and 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
$10 per ordinary share."
Consolidated financial results
Summary statements of operations
============================================================================================
Nine months ended Three months ended
September 30, September 30,
Consolidated (US GAAP)
($ 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) September December 31, $ change +/-%
($ in thousands, except 30, 2023 2022
per share data)
--------------------------------- --------------------- --------------- ---------- -----
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 metrics(1)
=============================================================================================
Nine months ended Three months ended
September 30, September 30,
Burford-only (non-GAAP) 2023 2022 +/-% 2023 2022 +/-%
($ in thousands)
---------------------------- ---------- -------- ------ --- -------- ---------- ------
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 receipts(2) 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) September 30, December 31, $ change +/-%
2023 2022
($ in thousands)
---------------------------- -------------------- --------------------- ---------- ------
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 m eaningfully 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: $6.1 billion), due
to significant fair value gains and growth in deployments
and undrawn commitments
Selected financial metrics
===================================================================================
Nine months ended Three months ended
September 30, September 30,
Burford-only (non-GAAP)
($ 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) September 30, December 31, $ change +/-%
($ in thousands, except 2023 2022
per share data)
--------------------------- ------------------- --------------- --------- -----
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 September December 31, $ change +/-%
($ in thousands) 30, 2023 2022
--------------------------------- ------------- ------------- --------- -----
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
portfolio(1) 4,721,926(2) 3,942,700(3) 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) September December 31, $ change +/-%
30, 2023 2022
($ in thousands)
---------------------------- ----------- -------------- ---------- ------
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, +44 (0)20 3530
EMEA and Asia - email 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
+44 (0)20 7260
Deutsche Numis - NOMAD and Joint Broker 1000
Giles Rolls
Charlie Farquhar
+44 (0)20 7029
Jefferies International Limited - Joint Broker 8000
Graham Davidson
J ames Umbers
+44 (0)20 3207
Berenberg - Joint Broker 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
and risk management , asset recovery and a wide range of legal
finance and advisory activities. Burford is publicly traded
on the New York Stock Exchange (NYSE: BUR) and the London Stock
Exchange (LSE: BUR), and it works with companies and law firms
around the world from its offices in New York, London, Chicago,
Washington, DC, Singapore, Dubai, Sydney and Hong Kong.
For more information, please visit www.burfordcapital.com.
Summary Financial Statements and Reconciliations
The tables below set forth summaries of the condensed consolidated
and Burford-only statements of operations for the three and
nine months ended September 30, 2023 and 2022, the condensed
consolidated and Burford-only statements of financial position
at September 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 Nine months ended
September 30, September 30,
($ in thousands) 2023 2022 2023 2022
=================================== =========== ========== =========== ==========
Revenues
Capital provision income/(loss) 504,513 (22,579) 1,016,113 153,166
(Less)/Plus: Third-party
interests in capital
provision assets (140,412) 11,910 (235,944) 12,128
Asset management income 1,876 1,583 5,767 7,091
Services and other income/(loss) 2,896 (3,615) 8,393 (14,494)
Total revenues 368,873 (12,701) 794,329 157,891
Total operating expenses 53,068 25,319 150,999 82,146
Operating income/(loss) 315,805 (38,020) 643,330 75,745
Finance costs and loss
on debt extinguishment 29,013 20,335 70,690 57,812
Foreign currency transactions
(gains)/losses (9,811) 6,328 (21,149) 9,386
Income/(loss) before income
taxes 296,603 (64,683) 593,789 8,547
Benefit from/(provision
for) income taxes 531 7,562 (15,550) (10,804)
Net income/(loss) 297,134 (57,121) 578,239 (2,257)
=========== ========== =========== ==========
Net income/(loss) attributable
to Burford Capital Limited
shareholders 272,542 (58,336) 510,427 (51,408)
=========== ========== =========== ==========
Net income/(loss) attributable
to Burford Capital Limited
shareholders per ordinary
share
Basic $1.24 $(0.27) $2.33 $(0.23)
Diluted $1.22 $(0.27) $2.29 $(0.23)
Summary Burford-only statement of operations
Three months ended Nine months ended
September 30, September 30,
($ in thousands) 2023 2022 2023 2022
============================ ========= ========== ========= =========
Revenues
Capital provision income 324,995 (15,335) 676,402 80,442
Asset management income 16,141 4,559 41,182 41,322
Services and other income 2,877 (3,447) 8,343 (14,332)
Total revenues 344,013 (14,223) 725,927 107,432
Operating income 291,212 (39,339) 575,550 26,487
Net income 272,542 (58,336) 510,427 (51,408)
Net income per share:
Basic $1.24 $(0.27) $2.33 $(0.23)
Diluted $1.22 $(0.27) $2.29 $(0.23)
Reconciliation of summary condensed consolidated statement of
operations to summary Burford-only statement of operations
Three months ended September 30, 2023
----------------------------------------------------------------------------------------
(GAAP) (Non-GAAP)
-------------------------------------------------------------------------
Elimination of third-party interests
Strategic
Value Advantage
($ in thousands) Consolidated Fund BOF-C Colorado Fund Other Burford-only
====================== ============= ========== ========== =========== ========== ======= ===============
Capital provision
income 504,513 (845) (36,193) (140,690) (8,368) 6,578 324,995
(Less): Third-party
interests in
capital provision
assets (140,412) - - 140,699 - (287) -
Asset management
income 1,876 16 14,249 - - - 16,141
Services and
other income/(loss) 2,896 (1) (3) - - (15) 2,877
Total revenues 368,873 (830) (21,947) 9 (8,368) 6,276 344,013
Operating income 315,804 (193) (22,020) - (8,292) 5,912 291,212
Net income/(loss) 297,133 (193) (22,020) - (8,292) 5,913 272,542
Three months ended September 30, 2022
----------------------------------------------------------------------------------------
(GAAP) (Non-GAAP)
-------------------------------------------------------------------------
Elimination of third-party interests
--------------------------------------------------------
Strategic
Value Advantage
($ in thousands) Consolidated Fund BOF-C Colorado Fund Other Burford-only
---------------------- ------------- ---------- ---------- ----------- ---------- ------- -------------
Capital provision
income (22,579) 6,138 (11,090) 12,070 95 31 (15,335)
Plus: Third-party
interests in
capital provision
assets 11,910 - - (12,060) - 150 -
Asset management
income 1,583 48 2,928 - - - 4,559
Services and
other (loss)/income (3,615) 183 - - - (15) (3,447)
Total revenues (12,701) 6,369 (8,162) 10 95 166 (14,223)
Operating income (38,020) 6,479 (8,209) - 207 204 (39,339)
Net income/(loss) (57,121) 6,479 (8,208) - 207 307 (58,336)
Nine months ended September 30, 2023
-------------------------------------------------------------------------------------
(GAAP) (Non-GAAP)
----------------------------------------------------------------------
Elimination of third-party interests
-------------------------------------------------------
Strategic
Value Advantage
($ in thousands) Consolidated Fund BOF-C Colorado Fund Other Burford-only
--------------------- ------------- ---------- --------- ----------- ---------- ------- -------------
Capital provision
income 1,016,113 (1,052) (84,429) (235,731) (20,373) 1,874 676,402
(Less): Third-party
interests in
capital provision
assets (235,944) - - 235,710 - 234 -
Asset management
income 5,767 108 35,307 - - - 41,182
Services and
other income 8,393 (1) (5) - - (44) 8,343
Total revenues 794,329 (945) (49,127) (21) (20,373) 2,064 725,927
Operating income 643,329 (12) (49,417) - (20,094) 1,743 575,550
Net income/(loss) 578,238 (12) (49,417) - (20,094) 1,711 510,427
Nine months ended September 30, 2022
--------------------------------------------------------------------------------------
(GAAP) (Non-GAAP)
-----------------------------------------------------------------------
Elimination of third-party interests
--------------------------------------------------------
Strategic
Value Advantage
($ in thousands) Consolidated Fund BOF-C Colorado Fund Other Burford-only
-------------------- ------------- ---------- --------- ---------- ---------- --------- -------------
Capital provision
income 153,166 3,861 (85,265) 12,568 (223) (3,665) 80,442
Plus: Third-party
interests in
capital provision
assets 12,128 - - (12,570) - 442 -
Asset management
income 7,091 266 33,965 - - - 41,322
Services and
other income (14,494) 183 - - - (21) (14,332)
Total revenues 157,891 4,310 (51,300) (2) (223) (3,244) 107,432
Operating income 75,745 5,122 (51,409) - 130 (3,101) 26,487
Net income/(loss) (2,257) 5,122 (51,408) - 130 (2,995) (51,408)
Reconciliation of capital provision income excluding YPF-related
assets
($ in thousands) Three months ended Nine months ended
September 30, 2023 September 30, 2023
------------------------------------------------------- ------------------- -------------------
Capital provision income 504,513 1,016,113
Less: Capital provision income from YPF-related assets (417,920) (695,238)
-------------------------------------------------------- ------------------- -------------------
Capital provision income excluding YPF-related assets 86,593 320,875
======================================================== =================== ===================
Summary condensed consolidated statement of financial
position
At
($ in thousands) September 30, 2023 December 31, 2022
======================================================================== =================== ==================
Total assets 5,526,335 4,288,359
Total liabilities 2,489,223 1,901,289
Total Burford Capital Limited equity 2,208,235 1,742,584
Non-controlling interests 828,877 644,486
Total shareholders' equity 3,037,112 2,387,070
Basic ordinary shares outstanding 218,698,930 218,581,877
Total shareholders' equity attributable to Burford Capital Limited per
basic ordinary share $10.10 $7.97
Total shareholders' equity per basic ordinary share $13.89 $10.92
Reconciliation of summary condensed consolidated statement
of financial position to summary Burford-only statement of
financial position
At September 30, 2023
--------------------------------------------------------------------------------------------------
(GAAP) (Non-GAAP)
-----------------------------------------------------------------------------------
Elimination of third-party interests
--------------------------------------------------------------------
Strategic Advantage
($ in thousands) Consolidated Value Fund BOF-C Colorado Fund Other Burford-only
------------------ ------------- -------------- ----------- ----------- -------------- ---------- -------------
Total assets 5,526,335 (260) (581,980) (644,955) (189,490) (73,984) 4,035,666
Total liabilities 2,489,223 (199) - (644,955) (60) (16,578) 1,827,431
Total
shareholders'
equity 3,037,112 (61) (581,980) - (189,430) (57,406) 2,208,235
At December 31, 2022
--------------------------------------------------------------------------------------------------
(GAAP) (Non-GAAP)
-----------------------------------------------------------------------------------
Elimination of third-party interests
--------------------------------------------------------------------
Strategic Value
($ in thousands) Consolidated 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 September 30, 2023
---------------------------------------------------------------------------------
(GAAP) (Non-GAAP)
------------- ------------------------------------------------------------------
Eliminations Other
($ in thousands) Consolidated and adjustments Burford-only funds BOF-C Group-wide
---------------------------- ------------- ----------------- -------------- -------- -------- -----------
Capital provision-direct 89,162 (10,004) 79,158 16,539 12,243 107,940
Capital provision-indirect 19,575 (6,228) 13,347 6,228 - 19,575
Post-settlement - - - 20,050 - 20,050
Total realizations 108,737 (16,232) 92,505 42,817 12,243 147,565
============= ================= ============== ======== ======== ===========
Three months ended September 30, 2022
---------------------------------------------------------------------------------
(GAAP) (Non-GAAP)
------------- ------------------------------------------------------------------
Eliminations Other
($ in thousands) Consolidated and adjustments Burford-only funds BOF-C Group-wide
---------------------------- ------------- ----------------- -------------- -------- -------- -----------
Capital provision-direct 160,224 (37,946) 122,278 78,455 37,224 237,957
Capital provision-indirect 8,345 (4,758) 3,587 7,847 - 11,434
Post-settlement - - - 12,146 - 12,146
Total realizations 168,569 (42,704) 125,865 98,448 37,224 261,537
============= ================= ============== ======== ======== ===========
Nine months ended September 30, 2023
----------------------------------------------------------------------------------
(GAAP) (Non-GAAP)
------------- -------------------------------------------------------------------
Eliminations Other
($ in thousands) Consolidated and adjustments Burford-only funds BOF-C Group-wide
---------------------------- ------------- ----------------- -------------- --------- -------- -----------
Capital provision-direct 335,414 (61,313) 274,101 89,915 64,994 429,010
Capital provision-indirect 59,219 (39,317) 19,902 39,002 - 58,904
Post-settlement - - - 118,307 - 118,307
Total realizations 394,633 (100,630) 294,003 247,224 64,994 606,221
============= ================= ============== ========= ======== ===========
Nine months ended September 30, 2022
----------------------------------------------------------------------------------
(GAAP) (Non-GAAP)
------------- -------------------------------------------------------------------
Eliminations Other
($ in thousands) Consolidated and adjustments Burford-only funds BOF-C Group-wide
---------------------------- ------------- ----------------- -------------- --------- -------- -----------
Capital provision-direct 236,204 (43,724) 192,480 102,836 49,543 344,859
Capital provision-indirect 20,811 (11,125) 9,686 25,749 - 35,435
Post-settlement - - - 50,449 - 50,449
Total realizations 257,015 (54,849) 202,166 179,034 49,543 430,743
============= ================= ============== ========= ======== ===========
Reconciliation of components of deployments from a consolidated
basis to a Group-wide basis
Three months ended September 30, 2023
---------------------------------------------------------------------------------
(GAAP) (Non-GAAP)
------------- ------------------------------------------------------------------
Eliminations Other
($ in thousands) Consolidated and adjustments Burford-only funds BOF-C Group-wide
---------------------------- ------------- ----------------- -------------- -------- -------- -----------
Capital provision-direct 69,690 (13,704) 55,986 4,379 21,819 82,184
Capital provision-indirect 32,257 (26,881) 5,376 26,881 - 32,257
Post-settlement - - - 7,466 - 7,466
Total deployments 101,947 (40,585) 61,362 38,726 21,819 121,907
============= ================= ============== ======== ======== ===========
Three months ended September 30, 2022
---------------------------------------------------------------------------------
(GAAP) (Non-GAAP)
------------- ------------------------------------------------------------------
Eliminations Other
($ in thousands) Consolidated and adjustments Burford-only funds BOF-C Group-wide
---------------------------- ------------- ----------------- -------------- -------- -------- -----------
Capital provision-direct 197,916 (44,627) 153,289 6,277 45,155 204,721
Capital provision-indirect 9,653 (7,923) 1,730 8,422 - 10,152
Post-settlement - - - 7,419 - 7,419
Total deployments 207,569 (52,550) 155,019 22,118 45,155 222,292
============= ================= ============== ======== ======== ===========
Nine months ended September 30, 2023
----------------------------------------------------------------------------------
(GAAP) (Non-GAAP)
------------- -------------------------------------------------------------------
Eliminations Other
($ in thousands) Consolidated and adjustments Burford-only funds BOF-C Group-wide
---------------------------- ------------- ----------------- -------------- --------- -------- -----------
Capital provision-direct 401,215 (96,783) 304,432 17,362 97,775 419,569
Capital provision-indirect 145,051 (120,876) 24,175 120,876 - 145,051
Post-settlement - - - 43,272 - 43,272
Total deployments 546,266 (217,659) 328,607 181,510 97,775 607,892
============= ================= ============== ========= ======== ===========
Nine months ended September 30, 2022
----------------------------------------------------------------------------------
(GAAP) (Non-GAAP)
------------- -------------------------------------------------------------------
Eliminations Other
($ in thousands) Consolidated and adjustments Burford-only funds BOF-C Group-wide
---------------------------- ------------- ----------------- -------------- -------- --------- -----------
Capital provision-direct 381,482 (106,063) 275,419 20,944 105,459 401,822
Capital provision-indirect 29,829 (24,699) 5,130 25,198 - 30,328
Post-settlement - - - 50,571 - 50,571
Total deployments 411,311 (130,762) 280,549 96,713 105,459 482,721
============= ================= ============== ======== ========= ===========
Reconciliation of consolidated proceeds from capital provision
assets to Burford-only cash receipts
Nine months Nine months
ended September ended September
($ in thousands) 30, 2023 30, 2022
---------------------------------------- ----------------- -----------------
Consolidated proceeds from capital
provision assets 440,154 282,322
Less: Elimination of third-party
interests (94,587) (70,137)
Burford-only total proceeds from
capital provision assets 345,567 212,185
----------------------------------------- ----------------- -----------------
Burford-only proceeds from capital
provision-direct assets 319,236 202,499
Burford-only proceeds from capital
provision-indirect assets 26,331 9,686
Burford-only total proceeds from
capital provision assets 345,567 212,185
----------------------------------------- ----------------- -----------------
Consolidated asset management
income 5,767 7,091
Plus: Eliminated income from funds 35,415 34,231
Burford-only asset management
income 41,182 41,322
Less: Non-cash adjustments(1) (12,137) (29,527)
Burford-only proceeds from asset
management income 29,045 11,795
Burford-only proceeds from marketable
security interest and dividends 3,625 1,845
Burford-only proceeds from asset
recovery fee for services (38) 629
Burford-only proceeds from insurance
receipts 1,533 3,018
Burford-only proceeds from asset
management and other services 34,165 17,287
----------------------------------------- ----------------- -----------------
Cash receipts 379,732 229,472
========================================= ================= =================
(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
($ in thousands) At September 30, 2023 At December 31, 2022
============================================== ===================== ==============================
Consolidated fair value 4,894,648 3,735,556
Consolidated undrawn commitments 1,811,824 1,720,727
---------------------------------------------- --------------------- ------------------------------
Eliminations of third-party interests:
Less: Attributable to fair value (1,550,901) (1,100,137)
Less: Attributable to undrawn commitments (433,645) (413,446)
Burford-only fair value 3,343,747 2,635,419
Burford-only undrawn commitments 1,378,179 1,307,281
---------------------------------------------- --------------------- ------------------------------
Burford-only portfolio 4,721,926 3,942,700
---------------------------------------------- --------------------- ------------------------------
Other funds fair value 1,135,257 1,076,320
Other funds undrawn commitments 203,004 239,145
---------------------------------------------- --------------------- ------------------------------
Other funds portfolio 1,338,261 1,315,465
---------------------------------------------- --------------------- ------------------------------
BOF-C fair value 638,432 516,982
BOF-C undrawn commitments 404,940 371,724
---------------------------------------------- --------------------- ------------------------------
BOF-C portfolio 1,043,372 888,706
---------------------------------------------- --------------------- ------------------------------
Total group-wide portfolio 7,103,559 6,146,871
============================================== ===================== ==============================
Reconciliation of consolidated to Burford-only cash and cash
equivalents and marketable securities
At September 30, 2023 At December 31, 2022
----------------------------------------------- -----------------------------------------------
(GAAP) (Non-GAAP) (GAAP) (Non-GAAP)
-------------------------------- --------------------------------
Elimination of Elimination of
third-party third-party
($ in thousands) Consolidated interests Burford-only Consolidated interests Burford-only
------------------ ------------- ----------------- ------------- ------------- ----------------- -------------
Cash and cash
equivalents 255,568 (15,540) 240,028 107,658 (33,979) 73,679
Marketable
securities 107,006 - 107,006 136,358 - 136,358
Total cash and
cash equivalents
and marketable
securities 362,574 (15,540) 347,034 244,016 (33,979) 210,037
Reconciliation of consolidated to Burford-only capital provision
assets
At September 30, 2023 At December 31, 2022
---------------------------------------------- ----------------------------------------------
(GAAP) (Non-GAAP) (GAAP) (Non-GAAP)
------------------------------- -------------------------------
Elimination Elimination
of third-party of third-party
($ in thousands) Consolidated interests Burford-only Consolidated interests Burford-only
------------------- ------------- ---------------- ------------- ------------- ---------------- -------------
YPF-related
assets 1,931,013 (645,245) 1,285,768 1,232,549 (409,514) 823,035
Other assets 2,963,635 (905,225) 2,058,410 2,503,007 (689,602) 1,813,405
Capital provision
assets 4,894,648 (1,550,470) 3,344,178 3,735,556 (1,099,116) 2,636,440
Reconciliation of consolidated to Burford-only due from
settlement of capital provision assets
At September 30, 2023 At December 31, 2022
----------------------------------------------- -----------------------------------------------
(GAAP) (Non-GAAP) (GAAP) (Non-GAAP)
-------------------------------- --------------------------------
Elimination of Elimination of
third-party third-party
($ in thousands) Consolidated interests Burford-only Consolidated interests Burford-only
------------------ ------------- ----------------- ------------- ------------- ----------------- -------------
Due from
settlement of
capital
provision assets 71,284 (1,754) 69,530 116,582 (1,932) 114,650
Reconciliation of consolidated to Burford-only realized gains on
capital provision-direct assets
Three months ended September 30, 2023 Three months ended September 30, 2022
----------------------------------------------- -----------------------------------------------
(GAAP) (Non-GAAP) (GAAP) (Non-GAAP)
-------------------------------- --------------------------------
Eliminations and Eliminations and
($ in thousands) Consolidated adjustments Burford-only Consolidated adjustments Burford-only
------------------ ------------- ----------------- ------------- ------------- ----------------- -------------
Realized gains
relative to cost 37,566 (7,440) 30,126 51,769 (15,288) 36,481
Nine months ended September Nine months ended September
30, 2023 30, 2022
----------------------------------------------- -----------------------------------------------
(GAAP) (Non-GAAP) (GAAP) (Non-GAAP)
-------------------------------- --------------------------------
Eliminations Eliminations
($ in thousands) Consolidated and adjustments Burford-only Consolidated and adjustments Burford-only
------------------ ------------- ----------------- ------------- ------------- ----------------- -------------
Realized gains
relative to
cost 171,331 (46,811) 124,520 85,809 (21,853) 63,956
Reconciliation of shareholders' equity attributable to Burford
Capital Limited per ordinary share
($ in thousands, except share data) At September 30, 2023 At December 31, 2022
==================================================================== ===================== ====================
Total shareholders' equity 3,037,112 2,387,070
Less: Non-controlling interests (828,877) (644,486)
--------------------------------------------------------------------- --------------------- --------------------
Total Burford Capital Limited equity 2,208,235 1,742,584
--------------------------------------------------------------------- --------------------- --------------------
Basic ordinary shares outstanding 218,698,930 218,581,877
--------------------------------------------------------------------- --------------------- --------------------
Shareholders' equity attributable to Burford Capital Limited per
ordinary share $10.10 $7.97
--------------------------------------------------------------------- --------------------- --------------------
Reconciliation of tangible book value attributable to Burford
Capital Limited per ordinary share
($ in thousands, except share data) At September 30, 2023 At December 31, 2022
==================================================================== ===================== ====================
Total Burford Capital Limited equity 2,208,235 1,742,584
Less: Goodwill ( 133 ,924) (133,912)
--------------------------------------------------------------------- --------------------- --------------------
Tangible book value attributable to Burford Capital Limited 2,074,311 1,608,672
--------------------------------------------------------------------- --------------------- --------------------
Basic ordinary shares outstanding 218,698,930 218,581,877
--------------------------------------------------------------------- --------------------- --------------------
Tangible book value attributable to Burford Capital Limited per
ordinary share $9.48 $7.36
--------------------------------------------------------------------- --------------------- --------------------
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:
-- 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 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.
-- 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 . T
angible 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 3Q23 Quarterly Report furnished to the US Securities
and Exchange Commission on November 9, 2023 and made available
on our website at http://investors.burfordcapital.com . Non-GAAP
financial measures should not be considered in isolation from,
as substitutes for, or superior to, financial measures calculated
in accordance with US GAAP.
This announcement does not constitute an offer to sell or the
solicitation of an offer to buy any ordinary shares or other
securities of Burford.
This announcement does not constitute an offer of any Burford
private fund. Burford Capital Investment Management LLC, which
acts as the fund manager of all Burford private funds, is registered
as an investment adviser with the US Securities and Exchange
Commission. The information provided in this announcement is
for informational purposes only. Past performance is not indicative
of future results. The information contained in this announcement
is not, and should not be construed as, an offer to sell or
the solicitation of an offer to buy any securities (including,
without limitation, interests or shares in any of Burford private
funds). Any such offer or solicitation may be made only by means
of a final confidential private placement memorandum and other
offering documents.
Forward-looking statements
This announcement contains "forward-looking statements" within
the meaning of Section 21E of the US Securities Exchange Act
of 1934, as amended, regarding assumptions, expectations, projections,
intentions and beliefs about future events. These statements
are intended as "forward-looking statements". In some cases,
predictive, future-tense or forward-looking words such as "aim",
"anticipate", "believe", "continue", "could", "estimate", "expect",
"forecast", "guidance", "intend", "may", "plan", "potential",
"predict", "projected", "should" or "will" or the negative of
such terms or other comparable terminology are intended to identify
forward-looking statements, but are not the exclusive means
of identifying such statements. In addition, Burford and its
representatives may from time to time make other oral or written
statements 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.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
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For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
QRTBLBMTMTIMBLJ
(END) Dow Jones Newswires
November 09, 2023 07:00 ET (12:00 GMT)
Burford Capital (AQSE:BUR.GB)
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