Burford Capital Limited · LSE:BUR
Burford Capital — Q2 2024 Earnings Presentation
39 slides from Burford Capital's earnings presentation, Aug 8, 2024
Slide 1: Second Quarter 2024 Financial Results
August 8, 2024 Burford Capital Second Quarter 2024 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 2Q24 performance at a glance
Burford 2Q24 performance at a glance Net income attributable to BCL shareholders of $54 million, driven by strong capital Selected financial results Three months ended June 30, 2024 provision income up 237% from 2Q23 Burford-only 1 2Q24 Core portfolio net realized gains 2 of $99 million up 69% f
Slide 5: Group-wide portfolio of $7.4 billion continues to scale and produce desirable realizations
Group-wide portfolio of $7.4 billion continues to scale and produce desirable realizations Realizations strengthened in 2Q24 to pull ahead of 2023 pace • Core portfolio realizations of $216 million YTD24 represent highest first half since 2020, diversified across vintage years as Covid-19 pandemic b
Slide 6: We continue to progress towards comprehensive US reporting standards
We continue to progress towards comprehensive US reporting standards Key milestones to date NYSE listing added in October 2020 Conversion from IFRS to US GAAP reporting beginning with our FY 2021 annual report Transitioned from semi-annual to quarterly reporting in 2023 Fully implemented SOX
Slide 7: Net income uplift in 2Q24 driven by higher capital provision income
Net income uplift in 2Q24 Six months ended June 30, Three months ended June 30, driven by higher capital provision income Selected statement of operations data 2024 2023 % change 2024 2023 % change Burford-only ($ in thousands, except per share data) • 2Q24 net income attributable to Burford Capital
Slide 8: Capital provision income in 2Q24 driven by incremental P&L impact from realized gains
Capital provision income in 2Q24 driven by incremental Six months ended June 30, Three months ended June 30, P&L impact from realized gains Capital provision income Burford-only 2024 2023 % change 2024 2023 % change • Burford-only capital provision income: ($ in thousands, except per share data) – $
Slide 9: Strong 2Q24 new commitments and deployments
Strong 2Q24 new commitments Total new commitments Group-wide - capital provision-direct and deployments ($ in millions) 570 1 444 138 444 • Burford-only capital provision- 398 1 1 113 100 direct new commitments of $260 1 72 335 311 310 1 million and deployments of $132 60 3 64 74 million in 2Q24 bot
Slide 10: Realizations picked up significantly in 2Q24 to deliver highest first half since 2020
Realizations picked up Realizations Burford-only - capital provision-direct significantly in 2Q24 to ($ in millions) 222 216 deliver highest first half since 195 2020 157 155 123 133 • Burford-only capital provision- direct realizations: 79 62 61 – $155 million in 2Q24, up 16% 50 from 2Q23 – $216 mi
Slide 11: We believe 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 12: Burford has generated strong cash-on-cash returns
Burford has generated strong cash-on-cash returns • Burford has generated consistently high returns on $2.9 billion of realizations since inception in 2009 through June 30, 2024 • Strong returns on realizations in 2Q24 drove an increase in the cumulative ROIC since inception from 82% to 86% • A recu
Slide 13: Favorable asymmetric returns
Burford-only concluded (fully and partially) capital provision-direct assets arrayed by ROIC Favorable asymmetric From inception through June 30, 2024 ($ 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 Depl
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: Asset management income makes a continued contribution
Asset management income Asset management income Burford-only makes a continued ($ in millions) contribution 64 56 • Burford-only asset management income remained within consistent 29 56 47 range in light of decreased activity in 25 older funds over time 12 18 6 21 • Fair value and undrawn 2 15 11 co
Slide 16: Total operating expenses materially lower compared to the prior year
Total operating expenses materially lower compared to Six months ended June 30, Three months ended June 30, the prior year Total operating expenses Burford-only ($ in thousands) 2024 2023 2024 2023 • Total operating expenses of $67 Compensation and benefits million YTD24 fell sharply by 31% compared
Slide 17: Robust liquidity and low leverage
YTD24 cash bridge Maturity of debt outstanding Robust liquidity and low Burford-only ($ in millions) 200 ($ in millions) 85 leverage 19 201 675 245 WAL of debt: 5.0 years 644 WAL of capital provision-direct assets: 2.5 years 1 • Liquidity of $443 million on a Burford-only basis at June 30, 2024 443
Slide 18: 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 three years in a row since inception through June 30, 2024 of $2.9 billion with an (2021-23) of mor
Slide 19: Financial results
Financial results [Burford
Slide 20: Statement of operations for the three months ended June 30, 2024
Statement of operations for the three months ended June 30, 2024 Elimination of third-party interests Advantage ($ in thousands) Consolidated BOF-C Colorado Fund Other Burford-only Revenues Capital provision income/(loss) 157,745 (23,332) (7,406) (5,774) (1,873) 119,360 Plus/(Less): Third-party inte
Slide 21: Statement of operations for the three months ended June 30, 2023
Statement of operations for the three months ended June 30, 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) 35,667 (100) 72 4,728 (4,983) 8 35,392 Plus/(Less): Third
Slide 22: Statement of operations for the six months ended June 30, 2024
Statement of operations for the six months ended June 30, 2024 Elimination of third-party interests Advantage ($ in thousands) Consolidated BOF-C Colorado Fund Other Burford-only Revenues Capital provision income/(loss) 198,506 (33,018) (12,826) (13,045) (2,354) 137,263 Plus/(Less): Third-party inte
Slide 23: Statement of operations for the six months ended June 30, 2023
Statement of operations for the six months ended June 30, 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) 511,600 (207) (48,236) (95,041) (12,005) (4,704) 351,407 Pl
Slide 24: Statement of financial position at June 30, 2024
Statement of financial position at June 30, 2024 Elimination of third-party interests Advantage ($ in thousands) Consolidated BOF-C Colorado Fund Other Burford-only Assets Cash and cash equivalents 390,673 (31,476) (2) (2,717) (6,778) 349,700 Marketable securities 92,924 - - - - 92,924 Other assets
Slide 25: Statement of financial position at December 31, 2023
Statement of financial position at December 31, 2023 Elimination of third-party interests Advantage ($ in thousands) Consolidated 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 - - - - 107,561 Other
Slide 26: Reconciliations
Reconciliations [Burford
Slide 27: Consolidated portfolio to Group-wide portfolio
Consolidated portfolio to Group-wide portfolio June 30, 2024 March 31, 2024 December 31, 2023 December 31, 2022(1) December 31, 2021(2) Consolidated carrying value 5,238,633 5,096,807 5,045,388 3,735,556 3,117,263 Consolidated undrawn commitments 1,969,338 1,841,052 1,873,289 1,720,727 1,492,784 Con
Slide 28: Reconciliations for cash receipts
Reconciliations for cash receipts For the three months ended ($ in thousands) Q2 2024 Q1 2024 Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022 Q3 2022 Q2 2022 Consolidated proceeds from capital provision assets 125,344 247,561 119,208 132,147 163,522 144,485 105,464 173,781 39,172 Plus/(Less): Elimination of
Slide 29: Capital provision-direct deployments and realizations
Capital provision-direct deployments and realizations Reconciliation of capital provision-direct deployments - consolidated to Group-wide For the three months ended Eliminations and ($ in thousands) Consolidated adjustments Burford-only Other funds BOF-C Group-wide June 30, 2024 169,229 (37,484) 131
Slide 30: Tangible book value attributable to Burford Capital Limited per ordinary share
Tangible book value attributable to Burford Capital Limited per ordinary share Tangible book value attributable to Burford Capital Limited per ordinary share reconciliation ($ in thousands, except share data) June 30, 2024 December 31, 2023 Total Burford Capital Limited equity 2,303,187 2,290,858 Le
Slide 31: Covenant calculations at June 30, 2024 and December 31, 2023
Covenant calculations at June 30, 2024 and December 31, 2023 Consolidated net debt to consolidated tangible assets ratio calculation ($ in thousands) June 30, 2024 December 31, 2023 (1) Total principal amount of debt outstanding 1,812,939 1,563,073 Less: Cash and cash equivalents (390,673) (220,549)
Slide 32: YPF-related income
YPF-related income Capital provision income, excluding YPF-related assets reconciliation For the three months ended June 30, 2024 For the three months ended June 30, 2023 Elimination of Elimination of third-party third-party ($ in thousands) Consolidated interests Burford-only Consolidated interests
Slide 33: YPF-related fair value and realizations
YPF-related fair value and realizations YPF fair value - reconciliation of consolidated to Burford-only June 30, 2024 Elimination of third-party ($ in thousands) Consolidated interests Burford-only Capital provision assets 5,238,633 (1,703,768) 3,534,865 Deployed cost 2,440,069 (737,091) 1,702,978 D
Slide 34: Asset management income
Asset management income Asset management income Three months ended June 30, 2024 Three months ended June 30, 2023 Six months ended June 30, 2024 Six months ended June 30, 2023 Elimination Elimination Elimination Elimination of third-party of third-party of third-party of third-party ($ in thousands)
Slide 35: Undrawn commitments
Undrawn commitments June 30, 2024 Elimination of third-party ($ in thousands) Consolidated interests Burford-only Definitive 887,592 (212,942) 674,650 Discretionary 1,026,386 (222,463) 803,923 Total legal finance undrawn commitments 1,913,978 (435,405) 1,478,573 Legal risk (definitive) 42,501 - 42,5
Slide 36: Total portfolio at June 30, 2024
Total portfolio at June 30, 2024 June 30, 2024 Elimination of third-party ($ in thousands) Consolidated interests Burford-only Other funds BOF-C Group-wide Capital provision assets - direct Deployed cost 2,229,053 (559,159) 1,669,894 394,049 464,510 2,528,453 Plus: Fair value adjustments 2,771,019 (
Slide 37: Capital provision income reconciliations - QTD
Capital provision income reconciliations - QTD Three months ended June 30, 2024 Burford-only Elimination of Capital Capital third-party Burford-only provision- provision- ($ in thousands) Consolidated interests total direct indirect Net realized gains/(losses) 117,471 (18,318) 99,153 99,153 - Fair v
Slide 38: Capital provision income reconciliations - YTD
Capital provision income reconciliations - YTD Six months ended June 30, 2024 Burford-only Elimination of Capital Capital third-party Burford-only provision- provision- ($ in thousands) Consolidated interests total direct indirect Net realized gains/(losses) 175,333 (46,286) 129,047 127,907 1,140 Fa
Slide 39: [Burford
[Burford