Burford Capital Limited · LSE:BUR
Burford Capital — Q4 2023 Earnings Presentation
48 slides from Burford Capital's earnings presentation, Mar 14, 2024
Slide 1: Full Year and Fourth Quarter 2023 Financial Results
March 14, 2024 Burford Capital Full Year and Fourth Quarter 2023 Financial 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, financial position and results of operations of Burford Capital Limited and its subsidiaries (the “Company”, “Burford”, “we”, “our” or “us”) at and for the
Slide 3: Notice & disclaimer (continued)
Notice & disclaimer (continued) Basis of presentation; non-GAAP financial measures; alternative performance measures; definitions. The Company reports its financial results in accordance with the generally accepted accounting principles in the United States (“US GAAP”). US GAAP requires the Company
Slide 4: Burford performance at a glance
Burford performance at a glance Record earnings per share of $2.74, up 19x in 2023 Selected financial results Year ended December 31, 2023 Burford-only Burford-only capital provision income of $896 million, up 342% in 2023 Total revenues $977m Burford-only cash receipts of $489 million, up 49%
Slide 5: Group-wide total portfolio ended 2023 at more than $7 billion, up 17%
Group-wide total portfolio ended 2023 at more than $7 billion, up 17% year-over-year Strong portfolio momentum anticipated to continue in 2024 and 2025 - Burford-only capital provision-direct realizations of $496 million in 2023 reflect increased portfolio velocity, with the courts back in full swin
Slide 6: Significant growth since 2016 has enhanced Burford's scale advantage
Significant growth since 2016 has enhanced Burford’s scale advantage $2.7b 161 / 19 $489m / $185m Cumulative capital provision-direct Cash receipts / due from Global team / city presence realizations settlement $522m 64 / 5 $230m / $40m $9.85 $3.0b NYSE & LSE Quarterly reporting; 2024 annual Tangibl
Slide 7: Four pillars of Burford's value proposition
Four pillars of Burford’s value proposition 1. Core portfolio 2. Origination platform • Burford-only capital provision-direct cumulative realizations • Market leadership1 and significant scale enabled a third year in a since inception through December 31, 2023 of $2.7 billion with row of more than $
Slide 8: Summary of Burford-only core legal finance portfolio performance
Summary of Burford-only core legal finance portfolio performance 4Q23 FY23 • Six assets concluded in 4Q23 from vintage years 2010 • 36 assets concluded in FY23 from vintage years 2010 through 2023 through 2023 • $280 million committed and $152 million deployed • $522 million committed and $305 milli
Slide 9: Burford's scale and scope delivers value in 2023
Burford’s scale and scope delivers value in 2023 FORTUNE 50 CLIENT NEEDS BURFORD CAPABILITIES • $325 million Group-wide • Innovative structuring across commitment balance sheet and private funds capital pools • $225 million Group-wide deployment at close • Prepared to deliver significant amounts of
Slide 10: Strength in new business continued in 2023
Strength in new business Total new commitments Group-wide - capital provision-direct continued in 2023 ($ in millions) 955 973 444 884 897 1 106 398 • Nearly $700 million in Burford-only 229 2 4 1 113 156 202 capital provision-direct new 281 72 310 commitments in 2023 underpins future 196 569 3 64 p
Slide 11: Upswing in Burford-only capital provision-direct realizations continued in 2023
Upswing in Burford-only capital provision-direct Realizations realizations continued in Burford-only – capital provision-direct 2023 ($ in millions) 496 • Burford-only capital provision- direct realizations up 42% in 2023 compared to 2022 • Burford-only capital provision- direct realizations of $496
Slide 12: Burford has generated strong cash-on-cash returns
Burford has generated strong cash-on-cash returns • Burford has generated consistently high returns on $2.7 billion of realizations since inception in 2009 through December 31, 2023 • A recurring mix of settlements and wins drives strong returns in reasonable time frames, with asymmetrically low los
Slide 13: Favorable asymmetric returns
Burford-only concluded (fully and partially) capital provision-direct assets arrayed by ROIC Favorable asymmetric From inception through December 31, 2023 ($ in millions) returns 0% or less 0 to 99% 100 to 199% Greater than 200% ROIC ROIC ROIC ROIC Total Realized Realized Realized Realized Realized
Slide 14: Significant potential from larger and more recent vintages
Significant potential from larger and more recent vintages • Increased deployments in recent years, along with relatively low levels of resolutions, indicate portfolio could be well-positioned for significant realized gains - Potential for cumulative returns on deployed capital in the core legal fin
Slide 15: YPF-related assets have the potential to create considerable upside
We believe YPF-related assets have the potential to create considerable upside • Final judgment a complete win against Argentina of $16 billion, at the high end of the possible range of damages • Argentina has appealed to the Second Circuit Court of Appeals • Fair value of YPF-related assets of $1.4
Slide 16: Growth in Burford-only total revenues drives significant earnings boost
Growth in Burford-only total revenues drives Year ended December 31, Three months ended December 31, significant earnings boost Selected statement of operations data 2023 2022 % change 2023 2022 % change • Burford-only capital provision Burford-only ($ in thousands, except per share data) income up
Slide 17: Capital provision income broad based, including record realized gains
Capital provision income broad based, including record level of realized gains in 2023 Year ended December 31, Three months ended December 31, • Record level of Burford-only Capital provision income realized gains of $187 million in Burford-only 2023 2022 % change 2023 2022 % change 2023, with no co
Slide 18: Asset management income primarily driven by income from BOF-C
Asset management income Asset management income Burford-only primarily driven by income ($ in millions) 64 from BOF-C 56 • Burford-only asset management income of $64 million, driven by growth in income from BOF-C 56 88% 28 29 29 47 - European waterfall structure for performance fees on many of our
Slide 19: Increase in operating expenses reflects strong portfolio performance
Total operating expenses Increase in operating Burford-only ($ in thousands) 2023 2022 expenses reflects strong Compensation and benefits portfolio performance Salaries and benefits 46,811 35,131 Annual incentive compensation 32,697 24,338 • Strong revenue growth caused total Share-based compensatio
Slide 20: Robust liquidity
Robust liquidity Cash receipts Burford-only Liquidity and receivables Burford-only - at period end ($ in millions) ($ in millions) 489 • Liquidity remained robust at December 185 47 31, 2023, primarily reflecting solid 27 31 63 Burford-only cash receipts and the 328 16 issuance of $400 million in se
Slide 21: Laddered maturities and low leverage
Laddered maturities and Maturity of debt outstanding low leverage ($ in millions) 675 WAL of debt: 5.1 years • Laddered debt maturity schedule with WAL of capital provision-direct assets: 2.4 years1 the next debt maturity not until August 275 2025 and a weighted average life of 400 debt maturities o
Slide 22: Financial results (unaudited)
Financial results (unaudited)
Slide 23: Statement of operations for the year 2023
Statement of operations for the year ended December 31, 2023 Elimination of third-party interests Strategic Advantage ($ in thousands) Consolidated Value Fund BOF-C Colorado Fund Other Burford-only Revenues Capital provision income/(loss) 1,341,923 (1,073) (132,094) (277,102) (31,385) (3,898) 896,37
Slide 24: Statement of operations for the year 2022
Statement of operations for the year ended December 31, 2022 Elimination of third-party interests Strategic Advantage ($ in thousands) Consolidated Value Fund BOF-C Colorado Fund Other Burford-only Revenues Capital provision income/(loss) 319,108 3,709 (112,370) 661 (1,417) (6,813) 202,878 (Less)/Pl
Slide 25: Statement of operations for the three months 2023
Statement of operations for the three months ended December 31, 2023 Elimination of third-party interests Strategic Advantage ($ in thousands) Consolidated Value Fund BOF-C Colorado Fund Other Burford-only Revenues Capital provision income/(loss) 325,810 (21) (47,665) (41,371) (11,012) (5,772) 219,9
Slide 26: Statement of operations for the three months 2022
Statement of operations for the three months ended December 31, 2022 Elimination of third-party interests Strategic Advantage ($ in thousands) Consolidated Value Fund BOF-C Colorado Fund Other Burford-only Revenues Capital provision income/(loss) 165,942 (152) (27,105) (11,907) (1,194) (3,148) 122,4
Slide 27: Statement of financial position at December 31, 2023
Statement of financial position at December 31, 2023 Elimination of third-party interests Strategic Advantage ($ in thousands) Consolidated Value Fund BOF-C Colorado Fund Other Burford-only Assets Cash and cash equivalents 220,549 - (15,703) (27) (2,503) (6,401) 195,915 Marketable securities 107,561
Slide 28: Statement of financial position at December 31, 2022
Statement of financial position at December 31, 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 107,658 (1,906) (7,003) (20) (23,635) (1,415) 73,679 Marketable securities 13
Slide 29: Supplementary data
Supplementary data [Burford
Slide 30: 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 2.4 2.3 2.3 2.3 2.1 2.1 1.9 1.9 2,707 1.7 2,211 1,861 1,597 1,260 2019 2020 2021 2022 2023 Cumul
Slide 31: Selected portfolio metrics
Selected portfolio metrics • Fair value of Burford-only Selected portfolio metrics Burford-only December 31, 2023 December 31, 2022 $ change % change capital provision-direct assets ($ in thousands) increased $784 million to $3.4 Deployed cost 1,573,531 1,486,150 87,381 6% billion at December 31, 20
Slide 32: Reconciliations (unaudited)
Reconciliations (unaudited)
Slide 33: Reconciliation of capital provision income
Reconciliation of capital provision income Year ended December 31, 2023 Three months ended December 31, 2023 Elimination of Capital Capital Elimination of Capital Capital third-party Burford-only provision- provision- third-party Burford-only provision- provision- ($ in thousands) Consolidated inter
Slide 34: Total capital provision income, excluding YPF-related assets
Total capital provision income, excluding YPF-related assets Year ended December 31, 2023 2022 Elimination of Elimination of third-party Burford-only third-party Burford-only ($ in thousands) Consolidated interests total Consolidated interests total Realized gains relative to cost 251,618 (64,242) 1
Slide 35: Asset management income
Asset management income Year ended December 31, 2023 Year ended December 31, 2022 Elimination of Elimination of third-party third-party ($ in thousands) Consolidated interests Burford-only Consolidated interests Burford-only Management fee income 7,642 108 7,750 7,321 312 7,633 Performance fee incom
Slide 36: Burford-only cash receipts
Burford-only cash receipts Year ended December 31, ($ in thousands) 2023 2022 2021 Consolidated proceeds from capital provision assets 559,362 387,786 396,415 Less: Elimination of third-party interests (117,296) (81,857) (139,826) Burford-only total proceeds from capital provision assets 442,066 305
Slide 37: Burford-only liquidity
Burford-only liquidity Elimination of At December 31, 2023 Consolidated third-party interests Burford-only Cash and cash equivalents 221 (25) 196 Marketable securities 107 - 107 Total cash and cash equivalents and marketable securities 328 (25) 303 At December 31, 2022 Cash and cash equivalents 108
Slide 38: Consolidated to group-wide portfolio
Consolidated to group-wide portfolio December 31, 2023 December 31, 2022(1) December 31, 2021(2) December 31, 2020(3) Consolidated capital provision assets 5,045,388 3,735,556 3,117,263 2,714,314 Consolidated undrawn commitments 1,873,289 1,720,727 1,492,784 1,254,612 Consolidated portfolio 6,918,67
Slide 39: Capital provision-direct and capital provision-indirect total portfolio
Capital provision-direct and capital provision-indirect total portfolio December 31, 2023 December 31, 2022 Elimination of Elimination of third-party third-party ($ in thousands) Consolidated interests Burford-only Consolidated interests Burford-only Capital provision assets - direct: Deployed cost
Slide 40: Weighted average life of total indebtedness adjusted for tack-on offering
Weighted average life of total indebtedness adjusted for tack-on offering of 9.250% Senior Notes due 2031 Outstanding at Adjustment for 2024 Adjusted Adjusted Months to Adjusted ($ in thousands) December 31, 2023 tack-on outstanding weighting maturity WAL (years) 5.000% Bonds due 2026 223,073 - 223,
Slide 41: Total realizations for the years 2023 and 2022 and cumulative realizations
Total realizations for the years ended December 31, 2023 and 2022 and cumulative realizations since inception Year ended December 31, 2023 Eliminations and ($ in thousands) Consolidated adjustments Burford-only Other funds BOF-C Group-wide Capital provision-direct 564,491 (68,275) 496,216 112,188 12
Slide 42: Total realizations for the three months 2023 and 2022
Total realizations for the three months ended December 31, 2023 and 2022 Three months ended December 31, 2023 Eliminations and ($ in thousands) Consolidated adjustments Burford-only Other funds BOF-C Group-wide Capital provision-direct 229,077 (6,962) 222,115 22,273 59,415 303,803 Capital provision-
Slide 43: Deployments – capital provision-direct
Deployments – capital provision-direct Eliminations and ($ in thousands) Consolidated adjustments Burford-only Other funds BOF-C Group-wide For the year ended December 31, 2023 505,893 (123,698) 382,195 25,679 122,352 530,226 For the year ended December 31, 2022 605,402 (148,296) 457,106 30,574 147,
Slide 44: Tangible book value per share and leverage ratio covenant calculations
Tangible book value per share and book value per share and leverage ratio covenant calculations December 31, December 31, 2023 2022 2023 2022(2) ($ in thousands, except share data) ($ in thousands) Total shareholders' equity 3,207,780 2,387,070 Debt payable 1,534,730 1,252,270 Less: Non-controlling
Slide 45: Return on tangible equity, non-cash accruals and one-time or case expenses
Return on tangible equity, non-cash accruals and one-time or case expenses and collections for the two months ended February 29, 2024 December 31, Year ended December 31, 2023 ($ in thousands) 2023 2022 Eliminations and Net income/(loss) 718,199 97,459 ($ in millions) Consolidated adjustments Burfor
Slide 46: Burford-only operating expense ratios
Burford-only operating expense ratios For the year ended ($ in thousands) December 31, 2023 December 31, 2022 December 31, 2021 December 31, 2020 Consolidated operating expenses 271,236 124,272 148,746 119,083 Eliminations of third party interests: (2,698) (1,576) (3,635) (3,959) Burford-only operat
Slide 47: Life-to-date income from BOF-C, YPF-related assets fair value and realizations
Life-to-date income from BOF-C, life-to-date realizations from YPF-related assets, fair value of YPF-related assets and due from settlement of capital provision assets Eliminations and Cumulative ($ in thousands) Consolidated adjustments Burford-only Burford-only Year ended December 31, 2023 - 55,96
Slide 48: [Burford
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