Burford Capital Limited · LSE:BUR
Burford Capital — FY2015 Earnings Presentation
22 slides from Burford Capital's earnings presentation, Mar 23, 2016
Slide 1: Investor Presentation 2015 Results
Investor Presentation 2015 Results March 2016
Slide 2: Forbes quote on Burford results
“Burford has reported eye-catching results and profits aren’t correlated with the economy or stock market.” – Forbes, 8 February 2016
Slide 3: 2015 Highlights
2015 Highlights 103.0 Operating 140.2 profit Cash receipts” $ in millions Income $ in millions $ in millions 54.2 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 “from litigation finance investments 16% ae 20% EE B90, 3 [Burford
Slide 4: Law industry: a slumbering giant now awakening
Law industry A slumbering giant now awakening $800 billion Estimated global annual revenues 34 law firms With annual revenues over $1 billion 5 law firms Eligible for the FTSE 100 Profitable Average profit margin of AmLaw 50 = 41% Despite the size of the industry, little historical use of outside ca
Slide 5: Burford: Capital provider to the global legal industry
Burford: Capital provider to the global legal industry • Leading player in rapidly growing and evolving market • From litigation funding to litigation finance to corporate finance for law – Only 13% of 2015 investments = single case litigation funding • Prime driver: tidal wave of global litigation
Slide 6: Rapid market growth and evolution
Rapid market growth and evolution • Burford’s clients include the world’s largest companies and law firms • December 2015: $45 million financing for FTSE 20 company to support portfolio of pending litigation – “ground-breaking” and a “landmark deal” • January 2016: $100 million financing for major g
Slide 7: Investment case
Investment case Uncorrelated high returns with cash generation • Litigation returns: Burford Capital Stock Price (GBp) fundamentally uncorrelated, with automatic exits • Consistently cash generative – $140 million in cash receipts in 2015 • Burford shareholder returns since October 2009 IPO to 15 Ma
Slide 8: Significant profit growth
Significant profit growth Growth in profits underpins dividend increase • $77.2 million operating profit – 27% increase over 2014 ($60.7m) – 75% operating margin 10.5pt Arial • EPS increased 42% to 31.52¢ XX% • 16% book ROE and 20% cash ROE • 8¢ dividend per share fuelled by increased profitability
Slide 9: Strong portfolio returns
Strong portfolio returns Burford has the industry’s largest diversified portfolio • Through the end of December 2015 the investment portfolio has had: – 42 investments conclude, generating – $348 million in gross investment recoveries and – $143 million net of invested capital • 70% ROIC on conclude
Slide 10: Strong portfolio returns
Strong portfolio returns Recoveries accelerating, concluded investment duration stable • Recoveries are accelerating – 40% of lifetime recoveries in 2015 from 16 different investments • Duration of concluded investments broadly unchanged around 2 years 10
Slide 11: Performance: benefits from diversification
Performance: benefits from diversification 11
Slide 12: Pace of commitments rises
Pace of commitments rises Positioning Burford’s business for the future • Cumulative investments of $693 million committed since inception in a widely diversified portfolio • Committed $206 million in 2015, up from $153 million in 2014 • Current portfolio stands at +$627 million: – $320 million of o
Slide 13: Rapid development of the market
Rapid development of the market Burford has led the dramatic evolution in litigation finance • From a standing start in 2009, where 100% of our activity was single case financing, Burford has led the dramatic evolution of the litigation finance market • The market today is composed of widely dispara
Slide 14: Geographic expansion to meet global demand
Geographic expansion to meet global demand Burford continues to expand to respond to client demand Investments: Parties Inquiries and Jurisdictions 14
Slide 15: Insurance: a successful investment
Insurance: a successful investment Burford acquired the insurance business in February 2012 for an effective cash price of $18.75 million • Since the acquisition, the insurance business has produced income of $74 million and operating profit of $54 million • Still has a significant contribution to m
Slide 16: New Initiatives: a strong start
New Initiatives: a strong start Further financing to the law market • Two lines of business in Burford’s New Initiatives segment – Judgment enforcement – Law firm lending • Generated $3.5 million of income in first full year • Assets created: $18 million • Judgment enforcement offering fee for servi
Slide 17: Balance sheet and risk management
Balance sheet and risk management • Burford operates a conservative balance sheet – as at 31 December 2015 Burford had: – $594 million in total assets – $131 million in debt – $186 million in cash (before $100 million investment in January 2016) • We intend to address demand for incremental capital
Slide 18: The leading team in the industry
The leading team in the industry Christopher P. Bogart Jonathan T. Molot Sir Peter Middleton GCB Hugh Steven Wilson 60 people — Chief Executive Officer Chief Investment Officer Chairman Vice Chairman Former EVP & General Counsel, Professor of Law, Former Chairman, Former Senior Partner, Time Warner
Slide 19: Appendix
Appendix Burford
Slide 20: Summary income statement
Summary income statement US$ ‘000 2015 % yr on yr 2014 2013 Litigation investment income 86,903 +82% 47,847 38,847 Insurance income 12,763 -48% 24,338 20,910 New Initiatives income 3,484 222 -- Other income (143) 9,627 903 Total income 103,007 +26% 82,034 60,660 Operating expenses – litigation inves
Slide 21: Segmental balance sheet – 2015 and 2014
Segmental balance sheet – 2015 and 2014 Other 31 December 2015 Litigation Litigation New corporate US$ ‘000 Investment Insurance Initiatives activity Total Non-current assets 351,963 415 18,106 1,300 371,784 Current assets 70,891 7,792 1,066 142,572 222,321 Total assets 422,854 8,207 19,172 143,872
Slide 22: Notice and Disclaimer
NOTICE AND 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 Ca