Slide 1: Investor presentation: 2019 Results
APRIL 2020 Investor presentation 2019 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 (“Presentation”) does not constitute or form part of, and should not be construed as, an issue for sale or subscription of, or solicitation of any offer or invitation to subscribe for, underwrite or otherwise acquire or dispose of any securities of Burford Capit
Slide 3: New segments and key definitions
DEFINITIONS New segments and key definitions Burford has substantially expanded its disclosure this year; our annual report contains a summary of the expansions along with detailed explanations of changes to terminology and computational approaches. In these slides, it is important to know the follo
Slide 4: Lumpy earnings characteristic of litigation finance; operating margin robust at 78%
FINANCIAL SUMMARY Lumpy earnings characteristic of litigation finance; operating margin robust at 78% Burford-only results without third-party interests in consolidated entities, as adjusted US $’000 2019 2018 % change Capital provision income 316,780 392,525 Asset management income 26,130 15,799 Se
Slide 5: Growing portfolio drives attractive cash returns
2019 IN REVIEW Large, diversified portfolio Continued rapid growth Growing portfolio drives Total portfolio ($ in millions) 4,209 Annual commitments ($ in millions) attractive cash returns 1,463 1,403 1,573 3,218 1,326 847 1,029 675 2,368 565 Burford is a specialty 2,746 812 2,189 finance business f
Slide 6: Market for legal finance continues to grow—as does Burford
ROBUST MARKET DEMAND Market for legal finance continues to grow—as does Burford LAWYERS INCREASINGLY FAMILIAR WITH BURFORD’S ROBUST 2019 PIPELINE ALLOWED BURFORD’S SELECTION OF THE PRODUCTS AND SERVICES MOST ATTRACTIVE CASES AND SHOWED IMPROVED EFFICIENCY “If the economy were to move into recession,
Slide 7: Almost $1.6 billion in 2019 commitments to drive future deployments, realisations and income
RECORD-BREAKING NEW COMMITMENTS Almost $1.6 billion in 2019 commitments to drive future deployments, realisations and income • Burford committed more capital Group-wide in 2019 than ever before: $1.6 billion, with 29% growth in capital provision-direct commitments • As planned, capital provision-dir
Slide 8: Burford generates attractive returns from both settlements and adjudications
ATTRACTIVE RETURNS Burford generates attractive returns from both settlements and adjudications Capital provision-direct assets Burford balance sheet only Fully and partially concluded investments from inception through 2019 ($ in millions) Total ADJUDICATION-GAINS $559 48% IRR 21% ($141m) of deploy
Slide 9: Asymmetric returns on adjudications drive attractive total returns
PORTFOLIO EFFECT Concluded (fully and partially) capital provision-direct assets Burford balance sheet only—arrayed by ROIC (%) Asymmetric returns on ($ in millions) adjudications drive A B C D attractive total returns 0% or less ROIC 0 to 99% ROIC 100 to 199% ROIC Greater than 200% ROIC Total Deplo
Slide 10: Industry's largest portfolio with broad diversification
DIVERSIFIED PORTFOLIO Industry’s largest portfolio with broad diversification by funding source, asset type, product, geography… Group-wide portfolio1 by funding source Group-wide portfolio1 by asset type ($ in million) ($ in million) 245 290 298 1,219 4,209 4,209 2,745 3,621 Burford balance sheet o
Slide 11: …and by currency, case type, industry and exposure
DIVERSIFIED PORTFOLIO …and by currency, case type, industry and exposure Group-wide capital provision-direct commitments1 by currency Group-wide capital provision-direct commitments1 by case type ($ in millions) 2% ($ in millions) 10% 12% 2,759 2,759 76% Mixed portfolio 28% Antitrust 15% IP 12% Arbi
Slide 12: Burford's YPF-related assets have generated significant value
YPF-RELATED ASSETS Burford’s YPF-related assets have generated significant value—with potential to deliver significantly more • YPF-related assets have generated over $1 billion of value - $236 million in cash from sales of portions of Burford’s entitlement to proceeds - $773 million carrying value
Slide 13: Sustained track record of IRR around 30% with weighted average asset life of about 2 years
CONSISTENT RETURNS Sustained track record of IRR around 30% with weighted average asset life of about 2 years Capital provision-direct Capital provision-direct Burford balance sheet only Burford balance sheet only Portfolio returns—concluded (fully and partially) portfolio Weighted average life of c
Slide 14: 2019 receipts of more than $1 billion—over half on the balance sheet
STRONG CASH GENERATION 2019 receipts of more than $1 billion—over half on the balance sheet • Burford’s strong cash generation of $518 million on its balance sheet provided almost $400 million of balance sheet cash to distribute or deploy in 2019 - Cash receipts covered operating expenses and financ
Slide 15: Burford has generated substantial cash in 2019…
STRONG CASH GENERATION Burford has generated substantial cash in 2019… 2019 cash bridge—Burford balance sheet only ($ in millions) 518 (82) (39) 671 (465) (28) 25 277 206 A B C D E F G H I A. Cash balance 1/1/19 C. Operating expenses E. Dividends G. Cash balance before deployments I. Cash balance 31
Slide 16: …as well as over Burford's life
STRONG CASH GENERATION …as well as over Burford’s life Cash bridge from inception—Burford balance sheet only ($ in millions) 2,093 (362) (127) (150) 70 2,759 (166) (1,329) 699 (1,058) 536 206 A B C D E F G H I J K L A. Equity capital raised C. Cash receipts E. Interest expense G. Changes in receivab
Slide 17: Burford has significant sources of immediate as well as medium-term liquidity
AMPLE LIQUIDITY Burford has significant sources of immediate as well as medium-term liquidity IMMEDIATE LIQUDITIY MEDIUM-TERM LIQUIDITIY • In 2019, as it has historically, Burford maintained large immediately • The balance sheet’s capital provision-indirect portfolio is a medium-term available cash
Slide 18: Deployments on unfunded commitments expected to be modest
AMPLE LIQUIDITY Concluded capital provision-direct cumulative deployments Burford balance sheet only Deployments on (% of vintage commitment) unfunded commitments expected to be modest 100% • Almost two-thirds of Burford’s balance sheet undrawn commitments are 90% discretionary • Deployments on comm
Slide 19: Burford's funding approach emphasises long-dated debt and low leverage
SOLID BALANCE SHEET Burford’s funding approach emphasises long-dated debt and low leverage • Burford’s debt maturities are considerably longer than its expected asset lives • Burford’s leverage ratio is modest and well below covenant requirements Maturity of balance sheet debt outstanding Consolidat
Slide 20: Lower bottom line in 2019 largely a function of timing and lumpy litigation finance
PROFIT DRIVERS Lower bottom line in 2019 largely a function of timing and lumpy litigation finance • Top-line income down in 2019 vs 2018: - $28 million from lower realised gains - $52 million from lower fair value adjustments Capital provision-direct realised losses as a % of average portfolio Adju
Slide 21: Realised gains from portfolio likely to lag significant recent portfolio growth
PROFIT DRIVERS Realised gains from portfolio likely to lag significant recent portfolio growth • Experience has been that realisations take three years on average after commitments to occur • Significant growth of commitments began in 2017 Realisations as % of deployments by years from commitment1 C
Slide 22: Future realisations expected to be driven by seasoning of recent large vintages
PROFIT DRIVERS Future realisations expected to be driven by seasoning of recent large vintages Capital provision-direct realisations by vintage Burford balance sheet only ($ in millions) $1,260 IN REALISATIONS TO DATE ROIC: 88% IRR: 31% 322 207 183 116 122 111 74 40 41 31 13 1 23 11 34 49 83 134 148
Slide 23: Unrealised gains on Burford's balance sheet have grown significantly because of YPF-related assets
PROFIT DRIVERS Unrealised gains on Burford’s balance sheet have grown significantly because of YPF-related assets Unrealised gains on capital provision assets (direct and indirect) Summary of components of carrying value Burford balance sheet only Burford balance sheet only at 31 December 2019 at 31
Slide 24: Away from the YPF-related assets, unrealised gains have typically been modest
PROFIT DRIVERS Away from the YPF-related assets, unrealised gains have typically been modest VALUATION POLICY RELIES ON OBJECTIVE EVENTS • Third-party events, such as a secondary sale or market- observed price • Case milestones: - pre-trial rulings Realised profit/(loss) of fully concluded capital p
Slide 25: Assets under management up 16% while income up 65%
STEADY GROWTH IN ASSET MANAGEMENT Assets under management up 16% while income up 65% • AUM has expanded significantly since Burford’s entry into the business in late 2016 • Significant performance fee income deferred under European fee structure until later in life at many of the funds • Higher AUM
Slide 26: Burford took solid steps in 2019 to build on its already strong team
ENHANCED GOVERNANCE Burford took solid steps in 2019 to build on its already strong team and evolve corporate governance for second decade of growth • Board changes - Robert Gillespie and John Sievwright proposed for election to Board at 2020 AGM as independent directors and Audit Committee members
Slide 27: Burford has moved quickly and decisively to address an uncertain environment
IMPACT OF COVID-19 Burford has moved quickly and decisively to address an uncertain environment • Potential human resource risk - We took early measures to move our staff to remote working worldwide – we are operating well and continuing to engage with clients - We have had incidences of illness amo
Slide 28: Burford's future is bright
CONCLUSION Burford’s future is bright • Growth prospects are appealing Key per share statistics • Portfolio is large and diversified • Returns have been consistently attractive US$ £1 • Cash generation is strong Profit after tax (diluted) for 2019 0.97 0.78 • Liquidity is ample Net asset value at 31
Slide 29: Supplementary data
Supplementary data [Burford
Slide 30: Statement of comprehensive income for the year ended 31 December 2019
RECONCILIATION OF BURFORD-ONLY RESULTS TO CONSOLIDATED FINANCIAL STATEMENTS Statement of comprehensive income for the year ended 31 December 2019 * Elimination of third party interests is the net of the entities and Consolidated Elimination of Other adjustments** Burford-only adjustments and elimina
Slide 31: Financial position for the year ended 31 December 2019
RECONCILIATION OF BURFORD-ONLY RESULTS TO CONSOLIDATED FINANCIAL STATEMENTS Financial position for the year ended 31 December 2019 Elimination Elimination of third-party of third-party Consolidated interests* Burford-only Consolidated interests* Burford-only AS OF 31 DEC 2019 IFRS $’000 $’000 $’000
Slide 32: Burford Capital
Burford Capital