Burford Capital Limited · LSE:BUR
Burford Capital — FY2021 Earnings Presentation
42 slides from Burford Capital's earnings presentation, Mar 29, 2022
Slide 1: Burford Capital Full year 2021 results
March 29, 2022 Burford Capital Full year 2021 results UPDATED ON MARCH 31, 2022 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”) for the year ended December 31, 2021 and does not purport to be a co
Slide 3: Strong portfolio growth and rising returns
Group-wide portfolio growth Group-wide new commitments Strong portfolio growth and ($ in millions) 5,094 Capital provision-direct rising returns ($ in millions) 4,483 1,023 4,209 661 955 406 244 1,152 • Group-wide portfolio continued to 3,218 1,219 1,148 720 739 196 268 grow, up 15% from year end 20
Slide 4: New business activity set new records in 2021
New business activity set new records in 2021 • 2021 was a historically strong year for new business, with significant growth in new commitments and deployments • Burford-only capital provision-direct deployments, potentially our highest returning assets, nearly doubled to a record level of $447 mil
Slide 5: Realizations reflect continued court delays
NOT A PROJECTION – SEE DISCLAIMER ON PAGE 2 Realizations reflect Group-wide realizations Capital provision-direct 608 continued court delays ($ in millions) 6 265 404 381 354 337 • Continued court delays and closures 117 60 21 19 related to the pandemic impacted the 105 54 pace of realizations in 20
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 almost $2 billion of cash recoveries over the last 12 years • A recurring mix of settlements and wins drive strong returns in reasonable time frames, with asymmetrically low losses Burford-only cap
Slide 7: Favorable asymmetric returns
Burford-only concluded (fully and partially) capital provision-direct assets From inception through December 31, 2021 Arrayed by ROIC (%) Favorable asymmetric ($ in millions) UPDATED returns 0% or less 0 to 99% 100 to 199% Greater than 200% ROIC ROIC ROIC ROIC Total Deployed: Profit: Deployed: Profi
Slide 8: Case study: 2013 vintage matter concluded in 2021 produced solid returns
Case study: 2013 vintage matter concluded in 2021 produced solid returns EVOLUTION OF LIFETIME FAIR VALUE CHRONOLOGY OF KEY CASE EVENTS Burford-only ($ in millions) Transfer of previously recognized unrealized 2013 - 2014: Burford deploys $2.0 million. Case held at cost until Pre-realization carryin
Slide 9: YPF cases have entered summary judgment phase
YPF cases have entered summary judgment phase • Summary judgment allows for possible judicial ruling without a trial; related filings will be public • If the case is resolved entirely at summary judgment, the losing party has a right of appeal, but if plaintiffs win, the judgment is immediately enfo
Slide 10: Group-wide portfolio grew 15% in 2021
Group-wide portfolio grew 15% in 2021 • Significant growth in new commitments and deployments - Group-wide capital provision-direct new commitments up 80% • Group-wide portfolio five-year compound annual growth rate of 43% Group-wide portfolio 5,094 ($ in millions) 4,483 661 4,209 406 244 1,152 3,21
Slide 11: Monetizations and claim families becoming a larger component of commitments
Monetizations and claim families becoming a larger component of commitments • Monetizations and claim families represent an increasing portion of total capital provision commitments - Represented more than half of total commitments in 2021 • Monetizations provide upfront capital in excess of budgete
Slide 12: Significant potential from larger and more recent vintages
Significant potential from larger and more recent vintages • Stepped-up deployments over the last five years coupled with comparatively low levels of resolution position the portfolio to have the potential to generate significant realized gains • Only $39 million of deployed cost remains among pre-2
Slide 13: Burford's proprietary probabilistic modeling suggests increase in expected realizations
NOT A PROJECTION – SEE DISCLAIMER ON PAGE 2 Burford’s proprietary probabilistic modeling suggests increase in expected realizations • Implied realized gains from existing Burford-only capital provision-direct portfolio of $2.2 billion increased at December 31, 2021, primarily due to significant comm
Slide 14: Selected financial highlights
Selected financial highlights SELECTED FINANCIAL HIGHLIGHTS Burford-only ($ in ‘000s, except per share data) 2021 2020 $ change • Net loss per diluted share was UPDATED primarily due to a decrease in gains, as well as higher operating expenses Realized gains 127,296 181,599 (54,303) (including legac
Slide 15: Strong asset management income
Burford-only asset management income ($ in millions) Strong asset management UPDATED 26 income 26 24 7 6 9 • Burford-only asset management 16 16 1 income increased 5% from 2020 2 3 6 6 - Increase primarily driven by growth in BOF-C income 18 13 14 12 11 - Management fees earned on BOF, BAIF and Stra
Slide 16: Operating expenses continue to be moderate and decline on a relative basis
Operating expenses continue to be moderate and decline on a relative basis • Increase in operating expenses in 2021 primarily due to $36 million legacy charge related to the asset recovery business • Operating expenses as a percentage of Group-wide portfolio, excluding asset recovery charge in 2021,
Slide 17: Liquidity remains robust
Liquidity remains robust • Cash and marketable securities of $315 million at December 31, 2021 - Marketable securities are managed by one of the top fixed income managers in the US • Cash position reflects strong growth in Burford-only deployments, partially offset by modest case realizations and $4
Slide 18: Low leverage and laddered maturities
Maturity of debt outstanding1 ($ in millions) 400 Low leverage and laddered maturities WAL of debt: 4.6 years WAL of capital provision-direct assets: 2.3 years 2 236 • Low leverage - Leverage ratio of 21% at 180 December 31, 2021 [updated] 135 • Well-laddered debt maturities 84 - Debt maturities wei
Slide 19: Burford had a strong year and is positioned for continued growth
Burford had a strong year and is positioned for continued growth Strong portfolio growth as new business set new records overall and demonstrated strong growth for Burford-only Strong cash generation and balance sheet liquidity Realizations slowed during the year given pandemic-related impacts
Slide 20: Supplementary data
Supplementary data [Burford
Slide 21: Table of contents
Table of contents Topic Slide # Financial results Statement of income for the year ended December 31, 2021 23 Financial position for the year ended December 31, 2021 24 Portfolio activity Capital provision-direct new commitments 26 Capital provision-direct new deployments 27 Capital provision-direct
Slide 22: Financial results
Financial results [Burford
Slide 23: Statement of income for the year ended December 31, 2021
Statement of income for the year ended December 31, 2021 Elimination of third-party interests Consolidated Strategic December 31, 2021 ($ in thousands) GAAP Value fund BOF-C Colorado Other Burford-only Capital provision income 127,549 (6,263) (19,408) 3,307 (5,431) 99,754 Asset management income 14,
Slide 24: Financial position for the year ended December 31, 2021
Financial position for the year ended December 31, 2021 Elimination of third-party interests Consolidated Strategic GAAP value fund BOF-C Colorado Other Burford-only $’000 $’000 $’000 $’000 $’000 $’000 December 31, 2021 Assets Cash and cash equivalents 180,255 (1,561) (38,983) - (33) 139,678 Marketa
Slide 25: Portfolio activity
Portfolio activity [Burford
Slide 26: Capital provision-direct new commitments
Capital provision-direct new commitments Group-wide capital provision-direct new commitments ($ in millions) 1,023 955 268 196 720 739 53 106 229 569 244 195 159 378 75 649 206 491 530 476 378 335 206 1 2015 2016 2017 2018 2019 2020 2021 Burford-only Funds BOF-C 1 Burford-only new commitments for 20
Slide 27: Capital provision-direct new deployments
Capital provision-direct new deployments Capital provision-direct deployments – Group-wide ($ in millions) 728 138 554 21 501 143 167 76 368 320 156 70 133 73 447 366 269 225 187 2017 2018 2019 2020 2021 Burford-only Funds BOF-C Burford Capital 27
Slide 28: Capital provision-direct realizations
Capital provision-direct realizations Capital provision-direct realizations – Group-wide ($ in millions) 608 6 265 404 381 354 337 117 60 21 19 105 54 176 321 337 287 264 228 176 2016 2017 2018 2019 2020 2021 Burford-only Funds BOF-C Burford Capital 28
Slide 29: Realized gains
Realized gains Burford-only capital provision realized gains 182 ($ in millions) 2 UPDATED 157 15 136 2 128 127 8 180 142 134 128 120 -1 2017 2018 2019 2020 2021 Capital provision-direct Capital provision-indirect Burford Capital 29
Slide 30: Realized losses
Realized losses Burford-only realized losses as a % of average portfolio at cost Capital provision-direct 3.4% 2.2% 2.0% 0.8% 0.7% 2017 2018 2019 2020 2021 Burford Capital 30
Slide 31: Portfolio performance
Portfolio performance [Burford
Slide 32: Weighted average life of concluded portfolio
Weighted average life of concluded portfolio Burford-only weighted average life of fully and partially concluded capital provision-direct portfolio ($ in millions) 2.3 2.3 2.3 2.1 1.9 1.9 1.6 1.5 1.7 1.7 1,861 1,597 1,260 1,081 784 2017 2018 2019 2020 2021 Recoveries WAL by recoveries WAL by deploym
Slide 33: 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 100% 21% 1% 1% 2% 3% 5 year to conclusion 4 year to conclusion 3 year to conclusion 2 year to conclusion 1 year to
Slide 34: 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 year end UPDATED 2021 Total carrying 2020 value: $2,900m Total carrying value: $2,565m FAIR VALUE PORTION 6% 8% Valued based on case 25% COST PORT
Slide 35: Cash flow data
Cash flow data [Burford
Slide 36: Inception-to-date cash bridge
Inception-to-date cash bridge Burford-only cash bridge since inception ($ in millions) 2,893 (3,087) ONGOING (1,274) CONCLUDED (1,813) 1,099 (504) (265) 536 (191) (166) 315 Equity raised Debt raised Cash receipts Deployments Operating expenses Interest expense and Dividends and share Acquisitions En
Slide 37: Capital provision-direct cash proceeds received
Capital provision-direct cash proceeds received Burford-only capital provision-direct cash proceeds received 2% 100% ($ in millions) 4% 1% 4% 44 1,861 89% 63 71 24 1,659 In same annual period By the end of the next In longer than one year Currently outstanding Non-cash consideration Total annual per
Slide 38: Capital provision due from settlements 2019 to 2021
Capital provision due from settlements 2019 to 2021 Burford-only capital provision due from settlements 2019 to 2021 ($ in millions) UPDATED 526 (514) 290 (258) 63 19 31 Balance at year end Asset realizations Proceeds received Balance at year end Asset realizations Proceeds and asset in Balance at y
Slide 39: Portfolio details
Portfolio details [Burford
Slide 40: Portfolio concentrations
Portfolio concentrations1 Burford-only capital provision-direct largest related 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 2 503 325 203 9% Arbitration Europ
Slide 41: Group-wide capital provision-direct portfolio composition and diversification
Group-wide capital provision-direct portfolio1 composition and diversification at December 31, 2021 By geography By currency ($ in million) ($ in million) UPDATED 102 UPDATED 83 134 236 389 874 1,642 3,764 3,764 1,012 3,056 North America Global Europe Asia Other USD EUR GBP AUD By case type By indus
Slide 42: [Burford
[Burford