PR Newswire
NEW YORK, Sept. 13, 2023
NEW YORK, Sept. 13, 2023 /PRNewswire/ -- Burford Capital Limited ("Burford"), the leading global finance and asset management firm focused on law, today announces its unaudited financial results at and for the three and six months ended June 30, 2023.1 Burford's report on Form 6-K at and for the three and six months ended June 30, 2023, including unaudited condensed consolidated financial statements (the "2Q23 Quarterly Report"), is available on the Burford Capital website at http://investors.burfordcapital.com.
Christopher Bogart, Chief Executive Officer of Burford Capital, commented:
"We have produced the strongest set of six-month financial results in Burford's history, with net income attributable to shareholders of nearly $240 million and tangible book value per share growth of 12% over the past six months. Our core portfolio generated a lot of cash with realized gains tripling on our core portfolio realizations, and new business was very strong. Our new valuation methodology is sensitive to interest rate changes and thus higher rates during the first six months of 2023 were a headwind for the fair value of our core portfolio, especially during the second quarter, but these valuation movements are non-cash and unrealized and are expected to continue to fluctuate over time. Operating expenses reflect strong portfolio performance and certain idiosyncratic events."
1 In this announcement, references to (1) "2Q23" and "2Q22" are to Burford's unaudited financial results for the three months ended June 30, 2023 and 2022, respectively, and (2) "1H23"and "1H22" are to Burford's unaudited financial results for the six months ended June 30, 2023 and 2022, respectively. | |
All figures in this announcement are unaudited and presented on a consolidated basis in accordance with the generally accepted accounting principles in the United States ("US GAAP"), unless otherwise stated. Definitions, reconciliations and information additional to those set forth in this announcement are available on the Burford Capital website and in the 2Q23 Quarterly Report (as defined above). In addition, Burford applied its revised valuation methodology for capital provision assets to its unaudited condensed consolidated financial statements at June 30, 2023 and for the three and six months ended June 30, 2023 and 2022 included in this announcement. Thus, for comparative purposes, this announcement contains Burford's restated unaudited condensed consolidated financial statements for the six months ended June 30, 2022. However, because Burford has not previously issued quarterly financial statements, the unaudited condensed consolidated financial statements for the three months ended June 30, 2022 contained in this announcement have not historically been presented and therefore are not a restatement of previously issued unaudited condensed consolidated financial statements. |
Highlights
Key activity2
- 2Q23 realized gains tripled to $59 million, up 254% from $17 million in 2Q22
- 1H23 realized gains of $94 million, up 255% from $27 million in 1H22
- 2Q23 realizations of $133 million, up 167% from $50 million in 2Q22
- 1H23 realizations of $195 million, up 178% from $70 million in 1H22, reflecting increased portfolio velocity, as the case backlog in the courts continues to clear
- 2Q23 cash receipts3 of $150 million, up 266% from $41 million in 2Q22
- 1H23 cash receipts3 of $247 million, up 148% from $99 million in 1H22, primarily driven by realizations including three matters that generated aggregate proceeds of $147 million
- 2Q23 deployments of $181 million, up 159% from $70 million in 2Q22
- 1H23 deployments of $248 million, up 103% from $122 million in 1H22, reflecting in part the balance sheet's greater participation in new capital provision-direct assets
2 | Represents Burford-only capital provision-direct assets |
3 | Represents Burford-only proceeds from capital provision-direct, capital provision-indirect and asset management |
Financial results4
- Total revenues in 1H23 of $382 million, up 214% from $122 million in 1H22, driven by higher capital provision income due to positive momentum in the progression of our portfolio
- In 2Q23, while realized gains were up sharply, total revenues were $43 million (2Q22: $15 million), reflecting the impact of increased discount rates on our revised valuation methodology
- Operating income in 1H23 of $284 million, up 332% from $66 million in 1H22; operating income in 2Q23 was essentially at breakeven, primarily reflecting increased operating expenses
- Increase in operating expenses in 2Q23 driven primarily by an increase in compensation expenses and general, administrative and other expenses compared to 2Q22
- All but $1.2 million of the increase in compensation and benefits in 2Q23 compared to 2Q22 was non-cash, driven principally by accruals as a result of increases in Burford's share price and asset values
- Increase in general, administrative and other expenses in 2Q23 compared to 2Q22 includes $3.3 million in audit, professional and corporate legal fees due to the development of the revised fair value methodology and build-out of quarterly reporting
- Net income attributable to Burford Capital Limited shareholders of $238 million in 1H23 (1H22: $7 million), with net income per ordinary and diluted share of $1.09 and $1.07, respectively (1H22: $0.03 each)
- Net loss attributable to Burford Capital Limited shareholders of $22 million in 2Q23 (2Q22: net loss of $49 million), with net loss per ordinary and diluted share of $0.10 each (2Q22: net loss per ordinary and diluted share of $0.23 each)
- Tangible book value attributable to Burford Capital Limited per ordinary share of $8.26 at June 30, 2023, up 12% from $7.36 at December 31, 2022
4 | Represents Burford-only |
Portfolio
- Group-wide portfolio grew to $7.0 billion at June 30, 2023 (December 31, 2022: $6.1 billion), due to significant fair value gains and growth in deployments and undrawn commitments
- Group-wide new commitments of $557 million in 2Q23 (2Q22: $363 million) and $722 million in 1H23 (1H22: $445 million)
- Consolidated fair value of capital provision assets increased 18% to $4.4 billion at June 30, 2023 from $3.7 billion at December 31, 2022
- Of the $672 million increase in capital provision asset value in 1H23, $280 million attributable to the YPF-related assets
- Fair value of Burford-only capital provision assets increased 16% to $3.1 billion at June 30, 2023 from $2.6 billion at December 31, 2022
- Of the $423 million increase in capital provision asset value in 1H23, $185 million attributable to the YPF-related assets
- On September 8, 2023, the court rendered a decision in the YPF-related assets holding that the appropriate date for the tender offer was April 16, 2012 and that pre-judgment interest should run from May 3, 2012 at a simple interest rate of 8%
- Cumulative ROIC since inception from Burford-only capital provision-direct assets steady at 88% (December 31, 2022: 88%) and IRR of 29% (December 31, 2022: 29%)
Liquidity and capital
- Burford-only cash and cash equivalents and marketable securities of $441 million at June 30, 2023 (December 31, 2022: $210 million)
- Strong liquidity position at June 30, 2023 primarily reflects issuance of $400 million in senior notes in June 2023 and increasing Burford-only realizations, partially offset by strong Burford-only deployments
- On July 12, 2023, Burford redeemed in full the aggregate outstanding principal amount of the 6.125% bonds due 2024 at a redemption price of par
- Burford-only due from settlement of capital provision assets decreased 19% to $93 million at June 30, 2023, of which $69 million (74%) was collected in cash at September 7, 2023
- Total shareholders' equity attributable to Burford Capital Limited was $1,942 million at June 30, 2023 (December 31, 2022: $1,743 million)
- Total shareholders' equity attributable to Burford Capital Limited per ordinary share of $8.87 at June 30, 2023 (December 31, 2022: $7.97 per ordinary share)
Dividend
- On September 8, 2023, Burford's board of directors declared an interim dividend of 6.25¢ per ordinary share payable on December 7, 2023 to shareholders of record on November 10, 2023, with an ex-dividend date of November 9, 2023
Investor and Analyst Conference Call
Burford will hold a conference call for investors and analysts at 10.00am EDT / 3.00pm BST on Wednesday, September 13, 2023. The dial-in number for the conference call is +1 646 787-9445 (USA) / +44 (0)20 4587 0498 (UK) / +44 (0)20 3936 2999 (all other locations) and the access code is 329784. To minimize the risk of delayed access, participants are urged to dial into the conference call by 9.40am EDT / 2.40pm BST.
A live webcast of the call will also be available at https://www.investis-live.com/burfordcapital/6499460f383e9013000dafed/rosepu, and pre-registration at that link is encouraged.
An accompanying 2Q23 and 1H23 results presentation for investors and analysts will also be made available on the Burford Capital website prior to the conference call at http://investors.burfordcapital.com.
Following the conference call, a replay facility for this event will be available until Wednesday, September 27, 2023 by dialing +1 845 709-8569 (USA) / +44 (0)20 3936 3001 (UK) / +44 (0)20 3936 3001 (all other locations) and using the replay access code 178093. A replay facility will also be accessible through the webcast at https://www.investis-live.com/burfordcapital/6499460f383e9013000dafed/rosepu.
For further information, please contact:
Burford Capital Limited | ||
For investor and analyst inquiries: | ||
Robert Bailhache, Head of Investor Relations, EMEA and Asia - email | +44 (0)20 3530 2023 | |
Jim Ballan, Head of Investor Relations, Americas - email | +1 (646) 793 9176 | |
For press inquiries: | ||
David Helfenbein, Vice President, Public Relations - email | +1 (212) 235 6824 | |
Numis Securities Limited - NOMAD and Joint Broker | +44 (0)20 7260 1000 | |
Giles Rolls | ||
Charlie Farquhar | ||
Jefferies International Limited - Joint Broker | +44 (0)20 7029 8000 | |
Graham Davidson | ||
Tony White | ||
Berenberg – Joint Broker | +44 (0)20 3207 7800 | |
Toby Flaux | ||
James Thompson | ||
About Burford Capital
Burford Capital is the leading global finance and asset management firm focused on law. Its businesses include litigation finance and risk management, asset recovery and a wide range of legal finance and advisory activities. Burford is publicly traded on the New York Stock Exchange (NYSE: BUR) and the London Stock Exchange (LSE: BUR), and it works with companies and law firms around the world from its offices in New York, London, Chicago, Washington, DC, Singapore, Dubai, Sydney and Hong Kong.
For more information, please visit www.burfordcapital.com.
Summary Financial Statements and Reconciliations
The tables below set forth summaries of the condensed consolidated and Burford-only statements of operations for the three and six months ended June 30, 2023 and 2022, the condensed consolidated and Burford-only statements of financial position at June 30, 2023 and December 31, 2022 and corresponding reconciliations from consolidated to Burford-only financial results. Furthermore, the tables below set forth certain additional reconciliations for financial information contained in this announcement.
Summary condensed consolidated statements of operations
Three months ended June 30, | Six months ended June 30, | ||||||||
($ in thousands) | 2023 | 2022 | 2023 | 2022 | |||||
Revenues | |||||||||
Capital provision income | 35,667 | 35,006 | 511,600 | 175,745 | |||||
Plus/(Less): Third-party interests in capital provision assets | 4,813 | 16,857 | (95,532) | 218 | |||||
Asset management income | 1,894 | 2,394 | 3,891 | 5,508 | |||||
Services and other income | 2,177 | (6,767) | 5,497 | (10,879) | |||||
Total revenues | 44,551 | 47,490 | 425,456 | 170,592 | |||||
Total operating expenses | 43,632 | 26,540 | 97,931 | 56,827 | |||||
Operating income | 919 | 20,950 | 327,525 | 113,765 | |||||
Finance costs and loss on debt extinguishment | 21,124 | 21,636 | 41,677 | 37,477 | |||||
Foreign currency transactions (gains)/losses | (8,898) | 2,544 | (11,338) | 3,058 | |||||
(Loss)/income before income taxes | (11,307) | (3,230) | 297,186 | 73,230 | |||||
(Provision) for income taxes | (8,969) | (14,942) | (16,081) | (18,366) | |||||
Net income | (20,276) | (18,172) | 281,105 | 54,864 | |||||
Net income attributable to Burford Capital Limited shareholders | (21,540) | (49,352) | 237,885 | 6,928 | |||||
Net income attributable to Burford Capital Limited shareholders per ordinary share | |||||||||
Basic | $ (0.10) | $ (0.23) | $ 1.09 | $ 0.03 | |||||
Diluted | $ (0.10) | $ (0.23) | $ 1.07 | $ 0.03 | |||||
Summary Burford-only statement of operations
Three months ended June 30, | Six months ended June 30, | ||||||||
($ in thousands) | 2023 | 2022 | 2023 | 2022 | |||||
Revenues | |||||||||
Capital provision income | 35,392 | (4,810) | 351,407 | 95,777 | |||||
Asset management income | 5,684 | 25,829 | 25,041 | 36,763 | |||||
Services and other income | 2,161 | (5,641) | 5,466 | (10,885) | |||||
Total revenues | 43,237 | 15,378 | 381,914 | 121,655 | |||||
Operating income | (330) | (10,660) | 284,338 | 65,826 | |||||
Net income | (21,540) | (49,352) | 237,885 | 65,826 | |||||
Net income per share: | |||||||||
Basic | $ (0.10) | $ (0.23) | $ 1.09 | $ 0.03 | |||||
Diluted | $ (0.10) | $ (0.23) | $ 1.07 | $ 0.03 | |||||
Reconciliation of summary condensed consolidated statement of operations to summary Burford-only statement of operations
Three months ended June 30, 2023 | |||||||
(GAAP) | (Non-GAAP) | ||||||
Elimination of third-party interests | |||||||
($ in thousands) | Consolidated | Strategic | BOF-C | Colorado | Advantage | Other | Burford-only |
Capital provision income | 35,667 | (100) | 72 | 4,728 | (4,983) | 8 | 35,392 |
Plus/(Less): Third-party interests in capital provision assets | 4,813 | - | - | (4,753) | - | (60) | - |
Asset management income | 1,894 | 46 | 3,744 | - | - | - | 5,684 |
Services and other income | 2,177 | - | (1) | - | - | (15) | 2,161 |
Total revenues | 44,551 | (54) | 3,815 | (25) | (4,983) | (67) | 43,237 |
Operating income | 919 | 87 | 3,628 | - | (4,903) | (61) | (330) |
Net income/(loss) | (20,276) | 87 | 3,628 | - | (4,903) | (76) | (21,540) |
Three months ended June 30, 2022 | |||||||||
(GAAP) | (Non-GAAP) | ||||||||
Elimination of third-party interests | |||||||||
($ in thousands) | Consolidated | Strategic | BOF-C | Colorado | Advantage | Other | Burford-only | ||
Capital provision income | 35,006 | (1,769) | (55,580) | 16,423 | 48 | 1,062 | (4,810) | ||
Plus/(Less): Third-party interests in capital provision assets | 16,857 | - | - | (16,435) | - | (422) | - | ||
Asset management income | 2,394 | 57 | 23,378 | - | - | - | 25,829 | ||
Services and other income | (6,767) | 1,132 | - | - | - | (6) | (5,641) | ||
Total revenues | 47,490 | (580) | (32,202) | (12) | 48 | 634 | 15,378 | ||
Operating income | 20,950 | (245) | (32,240) | - | 138 | 737 | (10,660) | ||
Net income/(loss) | (18,172) | (245) | (32,240) | - | 138 | 1,167 | (49,352) | ||
Six months ended June 30, 2023 | |||||||
(GAAP) | (Non-GAAP) | ||||||
Elimination of third-party interests | |||||||
($ in thousands) | Consolidated | Strategic | BOF-C | Colorado | Advantage | Other | Burford-only |
