Burford Capital Limited · LSE:BUR
Burford Capital — FY2020 Earnings Presentation
25 slides from Burford Capital's earnings presentation, Mar 24, 2021
Slide 1: Investor presentation: Full year 2020 results
MARCH 2021 Investor presentation Full year 2020 results This presentation is for the use of Burford’s public shareholders or bondholders and is not an offering of equity interests, bonds, or any other securities of Burford or of any fund sponsored by Burford.
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: Record realizations drove 2020 performance
FY 2020 IN REVIEW Substantial acceleration of realizations Steady portfolio growth Record realizations drove Group-wide realizations—capital provision-direct assets Group-wide portfolio ($ in millions) ($ in millions) 2020 performance 608 4,209 4,483 • Excluding gains from YPF-related assets, 3,218
Slide 4: Higher realizations drove higher realized gains and higher quality 2020 income
ACCELERATED REALIZATIONS Higher realizations drove higher realized gains—and higher quality 2020 income • Group-wide capital provision realized gains of $361 million were up 36% (2019: $178 million) − Significant gains in Burford's managed funds build the base for future performance fees • Burford o
Slide 5: Strong cash generation in 2020
FINANCIAL SUMMARY Strong cash generation in 2020 • Burford generated $519 million of cash receipts on its balance sheet 2020 cash receipts—Burford balance sheet only - Underpinned by $325 million of proceeds from capital provision-direct realizations - Significant contribution from capital provision
Slide 6: 2020 realizations increased cumulative returns, with little impact on concluded asset tenors
ATTRACTIVE RETURNS 2020 realizations increased cumulative returns, with little impact on concluded asset tenors Capital provision-direct Capital provision-direct Burford balance sheet only Burford balance sheet only Portfolio returns since inception—fully and partially concluded portfolio Weighted a
Slide 7: Realizations in 2020 reaffirmed Burford's ability to deliver outsized results
ATTRACTIVE RETURNS Realizations in 2020 reaffirmed Burford’s ability to deliver outsized results • Cumulative recoveries from adjudication-gains now at $835 million, up 49% from December 31, 2019 − These wins generate significant absolute returns (247% in aggregate), but on average take almost twice
Slide 8: Commitments and deployments rebounded in 2H 2020 after significant slowdown
IMPACT OF COVID-19 Group-wide new commitments Group-wide new deployments Commitments and Capital provision-direct ($ in millions) Capital provision-direct ($ in millions) deployments rebounded in 2H 2020 after significant slowdown in 1H 2020 465 490 453 335 291% 104% 247 • In 1H 2020, disruption to
Slide 9: Portfolio continued to grow in 2020 despite Covid-19 headwinds
PORTFOLIO GROWTH Portfolio continued to grow in 2020 despite Covid-19 headwinds • Portfolio grew 7% vs year-end 2019 and 13% vs June 30, 2020 ($3.9 billion) despite: − Pandemic impact on originations—Group-wide new commitments down 52% in 2020 vs 2019 − Significant capital provision-direct realizati
Slide 10: Recent large vintages have begun to deliver greater realizations
ACCELERATED REALIZATIONS Recent large vintages have begun to deliver greater realizations • Realizations from 51 capital provision-direct assets Group-wide during 2020 • Key driver of realizations was a large set of 10 related assets (18 underlying cases) − Generated $425 million of Group-wide reali
Slide 11: Recent large vintages are poised to continue to drive future realizations
ACCELERATED REALIZATIONS Share of ongoing assets’ deployed costs by vintage age Capital provision-direct—Burford balance sheet only 944 Recent large vintages are ($ in millions) 877 poised to continue to drive 726 future realizations 62% 69% 471 55% 385 • Early vintages, though small, 28% generated
Slide 12: Asymmetric returns on adjudications drive attractive total returns
ATTRACTIVE RETURNS Concluded (fully and partially) capital provision-direct assets Asymmetric returns on Burford balance sheet only—arrayed by ROIC (%) ($ in millions) adjudications drive A B C D Total attractive total returns 0% or less 0 to 99% 100 to 199% Greater than 200% $1,597 recovered ROIC R
Slide 13: Full year 2020 total income kept pace with 2019, though higher op expenses and taxes lowered profit
FINANCIAL SUMMARY Despite the pandemic, full year 2020 total income kept pace with 2019, though higher op expenses and taxes lowered profit Burford balance sheet only results without third-party interests in consolidated entities 2020 2019 ($ in thousands) 2H 2020 2H 2019 • Slow realizations in • Ex
Slide 14: Portfolio case progress led to a moderate increase in unrealized gains in 2020
UNREALIZED GAINS Portfolio case progress led to a moderate increase in unrealized gains in 2020 Unrealized gains during 2020 Unrealized gains have typically occurred later in • No change to YPF-related assets carrying value during 2020; remains the life of an asset Realized gain at $773 million Burf
Slide 15: Increase in capital provision carrying values during 2020 driven by case milestones
UNREALIZED GAINS Increase in capital provision carrying values during 2020 driven by case milestones Valuation policy relies on objective events Aggregate carrying value1 of capital provision cases • Third-party events, such as a secondary sale Total consolidated capital provision assets at year-end
Slide 16: Continued diversification of financing across own balance sheet and managed funds
CAPITAL ALLOCATION Continued diversification of financing across own balance sheet and managed funds Group-wide portfolio by funding source at December 31, 2020 Group-wide portfolio by funding source at December 31, 2018 ($ in millions) ($ in millions) 30% 3,218 2% 68% 26% 1 Balance sheet BOF-C Priv
Slide 17: Solid asset management income with room to grow
ASSET MANAGEMENT Asset management income Capital provision-direct income Burford balance sheet only Group-wide Solid asset management ($ in millions) ($ in millions) 508 income with room to grow 6 26 2020 funds 24 397 total: 187 181 7 38 2019 funds • For first time more than one-half of 6 57 1 total
Slide 18: Vast majority of realizations generated cash proceeds in the period
COLLECTIONS Vast majority of realizations generated cash proceeds in the period Capital provision due from settlement receivables 2018 to 2020 Burford balance sheet only ($ in millions) 526 2020 396 (3) (514) (411) • At June 30, 2020, Burford had $281 million due 37 from settlement receivables 19 31
Slide 19: Substantial sources of liquidity complemented by a conservative debt structure
AMPLE LIQUIDITY Burford’s substantial sources of liquidity are complemented by a conservative debt structure IMMEDIATE LIQUIDITY CONSERVATIVE DEBT STRUCTURE • At December 31, 2020: • Burford’s debt maturities are considerably longer than its expected asset lives - Burford’s balance sheet had a recor
Slide 20: The pandemic dampened 2020 new business but we expect the impact to be temporary
IMPACT OF COVID-19 The pandemic dampened 2020 new business and may have slowed some realizations, but we expect the impact to be temporary Operations • Began working remotely in all offices in March 2020 and continuing currently • Transition to remote work has been virtually seamless, with minimal i
Slide 21: Strong 2020 performance and significant growth opportunity ahead of us
CONCLUSION Strong 2020 performance and significant growth opportunity ahead of us Existing portfolio continuing to perform • Significant realized gains, including from recent vintages • Cumulative returns highly attractive, uncorrelated and continue to improve • Unrealized gains demonstrate continue
Slide 22: Supplementary data
Supplementary data {Burford
Slide 23: Statement of comprehensive income for the year ended 31 December 2020
RECONCILIATION OF BURFORD ONLY RESULTS TO CONSOLIDATED FINANCIAL STATEMENTS Statement of comprehensive income for the year ended 31 December 2020 Elimination * The eliminated amounts arise from the services provided Burford Consolidated of Third- by the Group to the consolidated entities as investme
Slide 24: Financial position for the year ended 31 December 2020
RECONCILIATION OF BURFORD ONLY RESULTS TO CONSOLIDATED FINANCIAL STATEMENTS Financial position for the year ended 31 December 2020 Elimination of * The eliminated amounts arise from the services provided Consolidated Burford balance by the Group to the consolidated entities as investment Third-party
Slide 25: [Burford
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