Burford Capital Limited · LSE:BUR
Burford Capital — H1 2022 Earnings Presentation
36 slides from Burford Capital's earnings presentation, Aug 9, 2022
Slide 1: Burford Capital Interim 2022 results
August 9, 2022 Burford Capital Interim 2022 results This presentation is for the use of Burford’s public shareholders and is not an offering of any Burford private fund.
Slide 2: Notice & disclaimer
Notice & disclaimer This presentation (this “Presentation”) provides certain information to facilitate review and understanding of the business, operations and results of Burford Capital Limited and its subsidiaries (the “Company” or “we”, “our” or “us”) for the six months ended June 30, 2022 and do
Slide 3: Substantial progress towards a robust post-Covid future
Substantial progress towards a robust post-Covid future1 FIRST HALF RECORD FOR BURFORD-ONLY CAPITAL PROVISION-DIRECT NEW COMMITMENTS OF NEARLY $300 MILLION - Group-wide portfolio grew to $5.5 billion, up 7% from December 31, 2021 - Since Covid began, written more than $1.5 billion of Group-wide capi
Slide 4: Continued Group-wide portfolio growth and high cumulative returns
Continued Group-wide portfolio growth and high cumulative returns • Group-wide portfolio up 7% in 1H 2022 to $5.5 billion; compound annual growth rate of 20% since year-end 2017 • Generally, allocate higher expected IRR capital provision assets to our balance sheet and lower expected IRR capital pro
Slide 5: Further growth in Burford-only new business activity
Further growth in Burford-only new business activity • Record first-half Burford-only capital provision-direct new commitments in our potentially highest returning assets, driven by strong client demand and innovative structures - Reflects shift in asset allocation in BOF-C arrangement in May 2022,
Slide 6: Burford has generated strong cash-on-cash returns
Burford has generated strong cash-on-cash returns • Burford has generated consistently high returns on nearly $2 billion of cash recoveries since inception in 2009 • A recurring mix of settlements and wins drives strong returns in reasonable time frames, with asymmetrically low losses Burford-only c
Slide 7: Burford-only concluded assets arrayed by ROIC
Burford-only concluded (fully and partially) capital provision-direct assets arrayed by ROIC From inception through June 30, 2022 Favorable asymmetric ($ in millions) returns 0% or less 0 to 99% 100 to 199% Greater than 200% ROIC ROIC ROIC ROIC Total Deployed: Profit: Deployed: Profit: Deployed: Pro
Slide 8: YPF trial court summary judgment decision expected later in 2022 or in 2023
YPF trial court summary judgment decision expected later in 2022 or in 2023 • YPF cases are now fully briefed before the court and awaiting court resolution of summary judgment phase • Summary judgment allows for possible judicial ruling without a trial; related filings are public • If the case is r
Slide 9: Significant potential from larger and more recent vintages
Significant potential from larger and more recent vintages • Stepped-up deployments over the last several years, coupled with comparatively low levels of resolutions, position the portfolio to have the potential to generate significant realized gains • Weighted average life of our concluded portfoli
Slide 10: Court reopening and global economic challenges should benefit Burford's business
Court reopening and global economic challenges and disruptions should benefit Burford’s business Pace of case progress in our portfolio starting to increase - Should drive higher frequency of both adjudications and settlements - Delays have not caused losses, just extended the timing of case milesto
Slide 11: Selected Burford-only financial highlights
6 months ended June 30 Selected Burford-only SELECTED STATEMENT OF OPERATIONS DATA financial highlights Burford-only ($ in ‘000s, except per share data) 2022 2021 $ change • Growth in capital provision income Capital provision income 73,775 66,433 7,342 largely reflects unrealized gains Asset manage
Slide 12: Strong asset management income and private funds capital raising
Burford-only asset management income Strong asset management ($ in millions) 17 income and private funds capital raising 12 11 • Closed $360 million Burford 11 1 Advantage Fund1 1 8 7 - Fee structure rewards Burford 2 more than traditional “2&20” fund structures under most 2 9 outcomes 6 5 4 • Close
Slide 13: Operating expenses continue to be moderate and decline relative to portfolio
Operating expenses continue to be moderate and decline relative to portfolio • Total operating expenses declined in 1H 2022 primarily due to large legacy asset recovery charge in 1H 2021 • Operating expenses, excluding legacy asset recovery incentive compensation, as a percentage of the Group-wide p
Slide 14: Low leverage and laddered maturities
Maturity of debt outstanding1 Low leverage and laddered ($ in millions) maturities WAL of debt: 5.4 years 400 WAL of capital provision-direct assets: 2.4 years 2 360 • Low leverage - Consolidated net debt as a percentage of consolidated 213 tangible assets of 21% at June 30, 180 2022 121 - Consolida
Slide 15: Liquidity remains robust
Liquidity remains robust • Burford-only cash & cash equivalents and marketable securities of $430 million at June 30, 2022, up from $315 million at December 31, 2021 - Marketable securities are reported at fair value and consist of short-duration and generally investment-grade fixed income assets •
Slide 16: Burford had a strong 1H 2022 and is positioned for continued growth
Burford had a strong 1H 2022 and is positioned for continued growth ✓ Strong portfolio growth from solid new business levels ✓ Capital provision income growth of 31% and operating income of $52 million ✓ Robust liquidity position ✓ Raised over $1 billion for the balance sheet and new private funds ✓
Slide 17: Supplementary data
Supplementary data [Burford
Slide 18: Table of contents
Table of contents Topic Slide # Financial results Statement of operations for the six months ended June 30, 2022 20 Statement of financial position for the period ended June 30, 2022 21 Portfolio activity Capital provision-direct new commitments 23 Capital provision-direct new deployments 24 Capital
Slide 19: Financial results
Financial results [Burford
Slide 20: Statement of operations for the six months ended June 30, 2022
Statement of operations for the six months ended June 30, 2022 Elimination of third-party interests Strategic Advantage ($ in thousands) Consolidated Value Fund BOF-C Colorado Fund Other Burford-only Revenues Capital provision income 110,278 (2,277) (24,822) 1,368 (820) (9,952) 73,775 Asset manageme
Slide 21: Statement of financial position for the period ended June 30, 2022
Statement of financial position for the period ended June 30, 2022 Elimination of third-party interests Strategic Advantage ($ in thousands) Consolidated Value Fund BOF-C Colorado Fund Other Burford-only Assets Cash and cash equivalents 353,157 (4,800) (31,182) (25) (8,106) (4,511) 304,533 Marketabl
Slide 22: Portfolio activity
Portfolio activity [Burford
Slide 23: Capital provision-direct new commitments
Capital provision-direct new commitments Group-wide capital provision-direct new commitments ($ in millions) 503 465 118 112 377 333 101 81 108 1 95 116 284 295 238 245 32 27 57 1H 2018 1H 2019 1H 2020 1H 2021 1H 2022 Burford-only Funds BOF-C Burford Capital 23
Slide 24: Capital provision-direct deployments
Capital provision-direct deployments Group-wide capital provision-direct deployments ($ in millions) 398 64 282 120 21 218 60 57 166 15 26 64 121 59 23 214 161 31 122 81 67 1 1H 2018 1H 2019 1H 2020 1H 2021 1H 2022 Burford-only Funds BOF-C 1 Cross-hatched portions represent expected near-term deploy
Slide 25: Capital provision-direct realizations
Capital provision-direct realizations Group-wide capital provision-direct realizations ($ in millions) 488 3 177 257 32 200 3 15 163 308 6 16 107 225 182 12 25 141 70 1H 2018 1H 2019 1H 2020 1H 2021 1H 2022 Burford-only Funds BOF-C Burford Capital 25
Slide 26: Realized losses
Realized losses Burford-only realized losses as a % of average portfolio at cost Capital provision-direct 3.4% 2.2% 0.8% 0.7% 0.5% 2018 2019 2020 2021 1H 2022 1 1 Annualized. Burford Capital 26
Slide 27: Portfolio data
Portfolio data [Burford
Slide 28: Weighted average life (WAL) of concluded portfolio
Weighted average life (WAL) of concluded portfolio Burford-only WAL of fully and partially concluded capital provision-direct portfolio From inception through period end ($ in millions, WAL in years) 2.4 2.3 2.3 2.3 2.1 2.0 1.9 1.9 1.7 1.7 1,931 1,861 1,597 1,260 1,081 2018 2019 2020 2021 1H 2022 Cu
Slide 29: Timing of fair value changes
Timing of fair value changes Burford-only timing and quantum of fair value changes of fully concluded capital provision-direct portfolio FV mark as a % of ultimately realized asset At June 30, 2022 100% 21% 1% 1% 3% 3% 5 years to conclusion 4 years to conclusion 3 years to conclusion 2 years to conc
Slide 30: Aggregate carrying value of capital provision assets
Aggregate carrying value of capital provision assets Aggregate carrying value1 of capital provision assets Total consolidated capital provision assets at period end 1H 2022 Total carrying 2021 value: $3,091m Total carrying 2020 value: $2,900m Total carrying 9% value: $2,565m 7% Valued based on case
Slide 31: Portfolio concentrations
Portfolio concentrations1 Burford-only capital provision-direct largest exposures (after YPF) ($ in million) Asset value Burford-only % of Case type Geography Number of assets Number of cases Group-wide Burford-only capital provision assets Antitrust Global 2 503 339 212 9% Arbitration Europe 3 7 13
Slide 32: Cash flow data
Cash flow data [Burford
Slide 33: Inception-to-date cash bridge
Inception-to-date cash bridge Burford-only cash bridge since inception ($ in millions) 2,993 (3,212) ONGOING (1,336) CONCLUDED 1,450 (1,876) (589) (377) (205) 536 (166) 430 Equity raised Debt raised Cash receipts 1 Deployments Operating expenses Interest expense and Dividends and share Acquisitions
Slide 34: Reconciliations
Reconciliations [Burford
Slide 35: Covenant reconciliations at June 30, 2022
Covenant reconciliations at June 30, 2022 $ '000s From the condensed consolidated statement of financial position and note 14, Debt issued Debt issued 1,274 less: Cash and cash equivalents 353 less: Marketable securities 126 Consolidated net debt 795 From the condensed consolidated statement of fina
Slide 36: [Burford
[Burford