TIDMBUR
RNS Number : 1377T
Burford Capital Limited
16 March 2023
15 March 2023
Released via Form 6-K on March 15, 2023 and queued for release
via RNS upon its reopening on March 16, 2023.
BURFORD CAPITAL PROVIDES UPDATE ON STRONG 2022 BUSINESS
ACTIVITY
Burford Capital Limited ("Burford"), the leading global finance
and asset management firm focused on law, today releases an update
on its 2022 business activity. We also discuss in this release the
status and timing of Burford's Annual Report on Form 20-F which
will reflect the impact of anticipated modifications to our fair
value methodology discussed in more detail below. In addition, we
have released a 2022 Business Review which is available at
http://www.rns-pdf.londonstockexchange.com/rns/1377T_1-2023-3-15.pdf
and on the Burford Capital website at
http://investors.burfordcapital.com .
Burford is hosting two conference calls for investors. The first
will be today at 5.30pm EDT / 9.30pm GMT and the second will be at
10.00am EDT / 2.00pm GMT tomorrow. Further details are provided at
the end of this release.
2022 business highlights (1)
-- Robust cash receipts of more than $300 million in 2022
-- Meaningful upswing in portfolio activity as courts resume fully
normal operations post-pandemic
o Burford-only capital provision-direct realizations up 33% to
$350 million (2021: $264 million)
o More than 30 trials and final merits hearings already scheduled
for 2023 (nearly three times the number of such hearings in
2022) and are already seeing positive outcomes:
-- Settlement in February paid cash of $90 million to Burford
on a Group-wide basis
-- Trial win in February would result in $67 million of
proceeds Group-wide if upheld and paid in full
-- Arbitration award in March would result in $52 million
of proceeds to one of our private funds if upheld and
paid in full
-- Successful appellate resolution in March would result
in approximately $400 million of proceeds Group-wide
and approximately $100 million on a Burford-only basis
-- Record-breaking levels of new business on both a Group-wide and
especially on a Burford-only basis as we continue to pivot in favor
of balance sheet investing for our highest returning assets
-- Solid liquidity at year-end 2022, benefiting from realizations,
collections and external capital raising
-- Interim dividend of 6.25 c per ordinary share declared payable
in June 2023
(1) US GAAP requires us to present financial statements that consolidate
some of the limited partner interests in private funds we manage
as well as assets held on our balance sheet where we have a partner
or minority investor. We refer to this presentation as "consolidated".
We strive to provide a view of Burford as a stand-alone business
(i.e., eliminating the impact of these private funds) by furnishing
information on a non-GAAP basis that eliminates the effect of this
consolidation. We refer to this presentation as "Burford-only".
In addition, we strive to provide supplemental information that
presents the totality of our legal finance activities by furnishing
information on a non-GAAP basis that reflects the contribution
of both our consolidated and non-consolidated private funds. We
refer to this presentation as "Group-wide". For additional information,
see "Definitions and Use of Non-GAAP Financial Measures and Alternative
Performance Measures" later in this release.
Christopher Bogart, Burford Capital's Chief Executive Officer,
commented:
"Burford had a strong 2022, with record new business activity
and meaningful cash generation and portfolio activity. We are happy
to report that we believe the lingering effects of the pandemic on
courts and legal processes are finally falling away. Indeed, we may
well be at a turning point for the portfolio, with a very
significant level of activity - more than 30 trials and final
merits hearings, almost three times as many as last year -
scheduled for 2023."
New business
2
-- Group-wide new commitments of $1.2 billion (2021: $1.1 billion)
o Burford-only n ew commitments of $746 million (2021:
$595 million(1)
)
-- Group-wide deployments of $928 million (2021: $842 million)
o Burford-only deployments of $477 million (2021: $448
million)
(1) The $595 million for Burford-only new commitments in 2021
is presented net of the warehousing activity as discussed in the
annual report on Form 20-F for the year ended December 31, 2021
filed with the US Securities and Exchange Commission on March 29,
2022 (which presents $594 million for Burford-only new commitments
in 2021 due to rounding differences).
2022 was a strong year for new business, with new commitments
and deployments both setting new records. In addition to
undertaking more new commitments than in 2021 on both a Group-wide
and a Burford-only basis, there was greater diversification than in
the prior year, which included a global antitrust portfolio matter
to which we deployed $350 million, comprised of $212 million on our
balance sheet. Furthermore, with the Burford balance sheet now
underwriting 75% of new core legal finance assets, historically our
most profitable, Burford-only capital provision-direct deployments
excluding the global antitrust portfolio matter increased 94% to
$457 million in 2022 (2021: $235 million).
Portfolio activity and returns
-- Burford-only capital provision-direct realizations of $350
million (2021: $264 million)
-- Burford-only capital provision-direct realized gains of $137
million (2021: $128 million)
Both the volume and the value of case realizations picked up in
2H 2022, building on the incremental progress Burford previously
reported for 1H 2022, as courts and legal processes continued to
return to normal after the disruption caused by the Covid-19
pandemic during 2020 and 2021. Group-wide realizations were
recognized across 60 capital provision-direct assets that concluded
in 2022, up from 50 capital provision-direct assets that concluded
in the prior year. On a Burford-only basis, realizations were
recognized from over 50 resolutions in 2022, as compared to 37
resolutions in 2021.
Realized losses remained very low, suggesting that portfolio
activity has not yet normalized. Burford-only gross realized losses
of $14 million represented 1.0% of average capital provision-direct
deployed cost during the year ended December 31, 2022, as compared
to $9 million and 0.8% of average capital provision-direct deployed
cost during the year ended December 31, 2021.
The positive development in the global antitrust portfolio
matter we indicated in our 1H 2022 interim results generated a
partial realization during 2H 2022 of $258 million on a Group-wide
basis and $161 million on a Burford-only basis. Due to the rapidity
of its resolution, while this partial realization generated $52
million in realized gains on a Burford-only basis and a 42% IRR,
its ROIC was only 48% - but it is hard to complain about 42% IRRs
on large matters. The speed and capital intensity of this partial
realization had the effect of reducing our Burford-only cumulative
ROIC to 88% (2021: 93%). Our cumulative Burford-only IRR decreased
modestly by around 30 basis points during the six months ended
December 31, 2022 to 29% (June 30, 2022: 30%; December 31, 2021:
30%), principally due to the delay in the payment of a $23 million
receivable (the payment of which is not considered at risk but
awaits the resolution of some collateral litigation).
In 2022, we saw further encouraging activity in our ongoing
portfolio in a number of capital provision-direct assets as
post-pandemic courts and legal processes continued to normalize.
2023 is off to a good start, with over 30 trials or final merits
hearings scheduled, almost three times as many as actually occurred
in 2022. In the year to date, one of our cases has already paid $90
million of cash proceeds to Burford on a Group-wide basis. In
another matter we saw a trial verdict in our client's favor, which
would, if upheld and paid, produce $67 million of proceeds on a
Group-wide basis. A third matter resulted in an arbitration award
which would, if upheld and paid, produce $52 million of proceeds to
one of our non-consolidated private funds if upheld and paid in
full. Finally, a fourth matter has seen a successful appellate
resolution and would produce approximately $400 million in
Group-wide proceeds (including to Burford's non-consolidated
private funds) and approximately $100 million in Burford-only
proceeds.
Cash and capital
We generated record cash receipts from Burford-only capital
provision-direct assets during 2022, up 28% to $296 million (2021:
$231 million). Total Burford-only cash receipts from operations
were $328 million, up 17% (2021: $281 million). Deployments
continued at higher pre-pandemic levels, while our Burford-only
liquidity position remained solid at $210 million of cash and cash
equivalents and marketable securities at December 31, 2022
(December 31, 2021: $315 million ).
In 2022, we raised more than $1 billion in new external capital,
including the closing of two new private funds and a new senior
unsecured debt issuance.
Our Burford-only capital provision asset due from settlement
balance at December 31, 2022 was $115 million, the majority of
which we expect to convert into cash during 2023. Of the $63
million of Burford-only due from settlement receivables at December
31, 2021, 60% was collected in cash during the year ended December
31, 2022. The majority of the amount not yet collected from the
December 31, 2021 balance related to a $23 million single
litigation matter concluded in our counterparty's favor. However, a
pending collateral litigation is delaying receipt of our payment;
that collateral litigation does not relate to our entitlement.
Fair value and our financial statements
Burford's approach to its required fair value accounting for
legal finance assets has historically been based on the occurrence
of objective events in the underlying litigation matter. We have
not adjusted fair value based on the passage of time or our
internal assessment of how a case is progressing; we wait for the
court or tribunal to make a decision, and then we mark up or down
the asset value based on that decision using a detailed methodology
that we have developed over time. Instead of starting with the
expected outcome and moving backwards with a discounted value, we
have been starting with our cash deployments and moving forwards
based on events, either case milestones or transactions.
For some time, we have been expanding our data science
capabilities and undertaking probabilistic modeling of our
portfolio, including as previously disclosed at our 2021 Investor
Event. As we do so, we continue to consider the possibility that
over time our modeling may form a part of our valuation approach.
For the last six months, we have been engaged with the staff of the
US Securities and Exchange Commission (the "SEC") regarding the
fair value of legal finance assets, including the acceptability of
our historical valuation methodology under US GAAP. We are very
pleased with the amount of time and attention the SEC staff has put
into this effort, which has included accounting staff at the most
senior levels of the SEC.
As a result, and with the benefit of those discussions and the
ongoing expansion of our probabilistic modeling, we are engaged in
modifications to our fair value approach. We are in the process of
finalizing that approach, whereupon we will apply it to our capital
provision assets and ask Ernst & Young LLP to audit it, with
the completion of the audit driving the timetable for the
publication of our audited financial statements for the year ended
December 31, 2022. Because our revised approach is yet to be
finalized, we cannot comment on its likely outcome, but our
methodology will still rely heavily on objective adjudicative
events as it does today.
While we would obviously have preferred this process to have
occurred some months earlier so as not to disrupt the release of
our audited annual financial statements, we are pleased with these
developments, which should put to rest the years of investor
discussion we have had about this issue. Burford is the industry
leader, and it is only appropriate that we be the vehicle for the
resolution of a valuation methodology - and given that US GAAP and
IFRS are essentially identical when it comes to fair value
principles, we would expect this methodology to be the industry
standard. We look forward to providing further detail upon
publication of our audited financial statements and our annual
report on Form 20-F for the year ended December 31, 2022 (the "2022
Annual Report"), which we expect to be within the next 45-60 days
following the date of this announcement.
Burford has always considered and managed the business on a cash
basis and provided significant amounts of data to investors to
enable them to do the same (as we have today). These events have no
impact on the management and operation of the business, which is
well positioned for a strong 2023.
We note the following risk factors. Notwithstanding our present
belief, we do not know at this time whether there will be a
material change in our asset values as a result of this new
approach. Our audited financial statements and other disclosures in
the 2022 Annual Report may differ materially from prior disclosures
as a result of our new fair value methodology. In addition, in
connection with implementing our new fair value methodology, we may
be required to recast or restate our historical financial
statements and/or disclose a material weakness in our internal
controls in connection with these changes. We could be unable to
complete our audited financial statements and file the 2022 Annual
Report prior to May 15, 2023, following which we would be in
default under the SEC and NYSE rules, although a further six-month
period is generally available to cure such defaults. If we are
unable to file the 2022 Annual Report with the SEC on a timely
basis or our audited financial statements and related disclosures
differ materially from the information in this announcement, the
trading price of our securities and our access to the capital
markets could be adversely affected. In addition, under the terms
of the indentures governing our senior notes issued in private
placement transactions pursuant to Rule 144A and Regulation S under
the Securities Act of 1933, as amended, we are obligated to provide
audited financial statements to the holders of such senior notes by
April 30, 2023. Our inability to do so would constitute an event of
default under the indentures governing such senior notes if
unremedied for 60 days following requisite written notice.
Accordingly, our inability to complete our audited financial
statements in a timely manner could require us to seek an amendment
or waiver of the reporting covenant in the indentures governing
such senior notes. If we were unable to do so, we would need to
refinance such indebtedness, and there can be no assurance that we
would be able to do so on a timely basis or on satisfactory terms,
if at all.
Annual general meeting and dividend
Once we have completed the fair value review process and
released our annual report on Form 20-F for the year ended December
31, 2022 , we will schedule our annual general meeting. We are not
anticipating anything other than routine, recurring business for
this year's annual general meeting.
In order to continue our regular flow of semi-annual dividends,
the board of directors has declared an interim dividend of 6.25c
per ordinary share payable on June 16, 2023 to shareholders of
record on May 26, 2023 (with an ex-dividend date of May 25,
2023).
YPF-related assets
As previously disclosed, summary judgment motions in the
YPF-related cases have been fully briefed and are pending before
the United States District Court for the Southern District of New
York as of June 23, 2022. As of the date hereof, the parties are
awaiting the next step in the case, which could be an oral argument
on the summary judgment motions or a written decision on those
motions. As ever with litigation, it is difficult to predict the
timing of the next step in the cases or the outcome of the summary
judgment motions.
Given the potential significance of a summary judgment decision,
we provide here information with respect to the procedure that
Burford intends to follow subsequent to the release of a summary
judgment decision by the court. That decision - like US federal
court decisions generally - is expected to be made publicly
available without any advance notice to Burford or the parties to
the case through the Public Access to Court Electronic Records
(PACER) system at www.pacer.uscourts.gov . When Burford becomes
aware of the release of a decision on PACER, given that many
shareholders do not have access to PACER, Burford will endeavor to
release a public statement promptly about the fact that a decision
has been released, without any details about its outcome or
contents. Burford will also thereafter endeavor to post the
decision on its website. However, depending on the timing of the
release of the decision, there can be no assurance that either of
those events will occur rapidly and the process of generating an
unexpected public release will inevitably incur some delay.
It is reasonable to expect that a summary judgment decision, in
this case, would be voluminous and complex. Burford will only be
able to provide any substantive public comment on the decision
after it and its litigation counsel have had sufficient time to
undertake a review and analysis of it. As such, it is very unlikely
that such a comment will occur on the day the decision is
released.
Investor and Analyst Conference Call s
Burford will host two management conference calls to maximize
the opportunity for investor and analyst participation in a
management conference call in both time zones of our dual listings.
Management's prepared remarks for both conference calls will be
pre-recorded to ensure equivalent disclosure, while the
question-and-answer session in each event will be real-time.
First conference call
Burford 's first conference call for investors and analysts will
occur at 5 .30 pm EDT / 9 .30pm GMT on Wednesday , March 1 5 ,
2023. For this conference call, we encourage audio webcast
pre-registration at:
https://www.investis-live.com/burfordcapital/63b5b0eeaeebb9120002ff8e/raboe
.
The dial-in number for the conference call is +1 646 664-1960
(US local) / +44 (0)20 3936 2999 (UK local) / +44 (0)20 3936 2999
(all other locations) and the access code is 055968. To minimize
the risk of delayed access, participants who have not
pre-registered are urged to dial into the conference call by 5.10
pm EDT / 9.10pm GMT.
In addition to being available through the audio webcast, an
accompanying 2022 business update presentation for investors and
analysts will also be made available on the Burford Capital website
prior to the conference call: http://investors.burfordcapital.com
.
Following the first conference call, a replay facility for this
event will be available until Thursday, March 30, 2023, by dialling
+1 845 709-8569 (US local) / +44 (0)20 3936 3001 (UK local) / +44
(0)20 3936 3001 (all other locations) and using the replay access
code 697297. A replay facility will also be accessible through the
webcast at:
https://www.investis--live.com/burfordcapital/63b5b0eeaeebb9120002ff8e/raboe
.
Second conference call
Burford 's second conference call for investors and analysts
will occur at 10 .00 am EDT / 2 .00pm GMT on Thursday , March 1 6 ,
2023. For this conference call, we encourage audio webcast
pre-registration at :
https://www.investis-live.com/burfordcapital/640b4ffc3e92bb0c00da171e/sjedc
.
The dial-in number for the conference call is +1 646 664-1960
(US local) / +44 (0)20 3936 2999 (UK local) / +44 (0)20 3936 2999
(all other locations) and the access code is 640912. To minimize
the risk of delayed access, participants who have not
pre-registered are urged to dial into the conference call by 9.40
am EDT / 1.40pm GMT.
In addition to being available through the audio webcast, an
accompanying 2022 business update presentation for investors and
analysts will also be made available on the Burford Capital website
prior to the conference call: http://investors.burfordcapital.com
.
Following the conference call, a replay facility for this event
will be available until Thursday, March 30, 2023, by dialling +1
845 709-8569 (US local) / +44 (0)20 3936 3001 (UK local) / +44
(0)20 3936 3001 (all other locations) and using the replay access
code 904879. A replay facility will also be accessible through the
webcast at:
https://www.investis-live.com/burfordcapital/640b4ffc3e92bb0c00da171e/sjedc
.
For further information, please contact:
Burford Capital Limited
For investor and analyst inquiries:
Robert Bailhache, Head of Investor Relations, +44 (0)20 3530
EMEA and Asia - email 2023
Jim Ballan, Head of Investor Relations, Americas
- email +1 (646) 793 9176
For press inquiries:
David Helfenbein, Vice President, Public Relations
- email +1 (212) 235 6824
Numis Securities Limited - NOMAD and Joint +44 (0)20 7260
Broker 1000
Giles Rolls
Charlie Farquhar
+44 (0)20 7029
Jefferies International Limited - Joint Broker 8000
Graham Davidson
Tony White
+44 (0)20 3207
Berenberg - Joint Broker 7800
Toby Flaux
James Thompson
Arnav Kapoor
About Burford Capital
Burford Capital is the leading global finance and asset
management firm focused on law. Its businesses include litigation
finance and risk management, asset recovery and a wide range of
legal finance and advisory activities. Burford is publicly traded
on the New York Stock Exchange (NYSE: BUR) and the London Stock
Exchange (LSE: BUR), and it works with companies and law firms
around the world from its offices in New York, London, Chicago,
Washington, DC, Singapore, Dubai, Sydney and Hong Kong.
For more information, please visit www.burfordcapital.com .
Reconciliations
Reconciliation of consolidated to Burford-only and Group-wide
proceeds from resolution of asset in early 2023
For the year to date March 15, 2023 (unaudited)
--------------------------------------------------------------------------
Elimination of
third-party
($ in millions) Consolidated interests Burford-only Other funds BOF-C Group-wide
----------------------------- ------------ -------------- ------------ ----------- ----- ----------
Settlement in February, cash
proceeds received 74 (34) 40 16 34 90
Reconciliation of consolidated to Burford-only and Group-wide
proceeds if favorable trial verdict is upheld and paid
For the year to date March 15, 2023 (unaudited)
--------------------------------------------------------------------------
Elimination of
third-party
($ in millions) Consolidated interests Burford-only Other funds BOF-C Group-wide
----------------------------- ------------ -------------- ------------ ----------- ----- ----------
Favorable trial verdict,
proceeds if win is upheld and
paid in full 50 (22) 28 17 22 67
Reconciliation of consolidated to Burford-only and Group-wide
estimated proceeds if successful appellate resolution is upheld and
paid
For the year to date March 15, 2023 (unaudited)
--------------------------------------------------------------------------
Elimination of
third-party
($ in millions) Consolidated interests Burford-only Other funds BOF-C Group-wide
----------------------------- ------------ -------------- ------------ ----------- ----- ----------
Appellate resolution,
estimated proceeds if win is
upheld and paid in full 160 (60) 100 260 40 400
Reconciliation of consolidated to Burford-only and Group-wide
deployments
Elimination of
third-party
($ in millions) Consolidated interests Burford-only Other funds BOF-C Group-wide
----------------------------- ------------ -------------- ------------ ----------- ----- ----------
For the year ended December
31, 2022 (unaudited) 727 (250) 477 302 149 928
For the year ended December
31, 2021 674 (226) 448 255 139 842
Reconciliation of consolidated to Burford-only capital
provision-direct deployments
For the year ended December 31, 2022 (unaudited)
----------------------------------------------------------
Elimination of
third-party Other
($ in millions) Consolidated interests adjustments(1) Burford-only
------------------------------------------------- ------------ -------------- -------------- ------------
Capital provision-direct deployments 605 (147) (1) 457
Capital provision-direct deployments
of the global antitrust portfolio matter - - - -
------------------------------------------------- ------------ -------------- -------------- ------------
Capital provision-direct deployments
excluding the global antitrust portfolio matter 605 (147) (1) 457
================================================== ============ ============== ============== ============
For the year ended December 31, 2021
----------------------------------------------------------
Elimination of
third-party Other
($ in millions) Consolidated interests adjustments(2) Burford-only
------------------------------------------------- ------------ -------------- -------------- ------------
Capital provision-direct deployments 674 (225) (1) 448
Capital provision-direct deployments
of the global antitrust portfolio matter 252 (39) - 213
-------------------------------------------------- ------------ -------------- -------------- ------------
Capital provision-direct deployments
excluding the global antitrust portfolio matter 422 (186) (1) 235
================================================== ============ ============== ============== ============
1. Other adjustments are due to capital deployed but not yet allocated.
2. Other adjustments are for distributed in-kind asset.
Reconciliation of consolidated to Burford-only realizations and
realized gains to capital provision-direct assets, in each case,
inclusive of related net realizations from, and related movement
on, financial liabilities at fair value through profit and loss
For the year ended December 31, 2022 (unaudited)
----------------------------------------------------------
Elimination of
third-party Other
($ in millions) Consolidated interests adjustments(1) Burford-only
------------------------------------------------- ------------ -------------- -------------- ------------
Realizations, including related net realizations
from financial liabilities at fair value
through profit and loss 406 (56) - 350
Realized gains, including related gain on
financial liabilities at fair value through
profit
and loss 162 (25) - 137
Gross realized losses 15 (1) - 14
For the year ended December 31, 2021
----------------------------------------------------------
Elimination of
third-party Other
($ in thousands) Consolidated interests adjustments(2) Burford-only
------------------------------------------------- ------------ -------------- -------------- ------------
Realizations, including related net realizations
from financial liabilities at fair value
through profit and loss 374 (109) (1) 264
Realized gains, including related gain on
financial liabilities at fair value through
profit
and loss 137 (9) - 128
Gross realized losses on cases concluded during
the year 9 - - 9
1. Other adjustments are due to realizations from subparticipations.
2. Other adjustments are for distributed in-kind asset.
Reconciliation of consolidated to Burford-only and Group-wide
partial realization related to development in global antitrust
portfolio matter
For the six months ended December 31, 2022 (unaudited)
---------------------------------------------------------------------------
Elimination of
third-party
($ in millions) Consolidated interests Burford-only Other funds BOF-C Group-wide
----------------------------- ------------ -------------- ------------ ----------- ----- ----------
Partial realization related to
development in global
antitrust portfolio matter,
including
related net realization on
financial liabilities at fair
value through profit and loss 189 (28) 161 69 28 258
Realized gains related to
development in global
antitrust portfolio matter,
including related
net realization on financial
liabilities at fair value
through profit and loss 60 (8) 52 - 8 60
Reconciliation of consolidated to Burford-only cash and cash
equivalents and marketable securities
At December 31,
--------------------------------------------------------------------------------------
2022 (unaudited) 2021
------------------------------------------ ------------------------------------------
Elimination of Elimination of
third-party third-party
($ in millions) Consolidated interests Burford-only Consolidated interests Burford-only
----------------- ------------ -------------- ------------ ------------ -------------- ------------
Cash and cash
equivalents 108 (34) 74 180 (40) 140
Marketable
securities 136 - 136 175 - 175
------------------ ------------ -------------- ------------ ------------ -------------- ------------
Total cash and
cash equivalents
and marketable
securities 244 (34) 210 355 (40) 315
================== ============ ============== ============ ============ ============== ============
Reconciliation of consolidated proceeds from capital provision
assets to Burford-only cash receipts
For the year ended December 31,
---------------------------------
($ in thousands) 2022 (unaudited) 2021
=========================================================================== ==================== ===========
Consolidated proceeds from capital provision assets 387,786 396,415
Less: Elimination of third-party interests (81,857) (139,826)
--------------------------------------------------------------------------- -------------------- -----------
Burford-only total proceeds from capital provision assets 305,929 256,589
--------------------------------------------------------------------------- -------------------- -----------
Burford-only proceeds from capital provision-direct assets 295,636 231,413
Burford-only proceeds from capital provision-indirect assets 10,293 25,176
--------------------------------------------------------------------------- -------------------- -----------
Burford-only total proceeds from capital provision assets 305,929 256,589
--------------------------------------------------------------------------- -------------------- -----------
Consolidated asset management income(1) 9,116 14,396
Plus: Eliminated income from funds 27,669 11,641
Burford-only asset management income 36,785 26,037
Less: Non-cash adjustments(2) (22,026) (7,538)
--------------------------------------------------------------------------- -------------------- -----------
Burford-only proceeds from asset management income 14,759 18,499
Burford-only proceeds from marketable security interest and dividends 3,585 2,625
Burford-only proceeds from asset recovery fee for services 734 2,386
Burford-only proceeds from insurance receipts 2,979 1,367
Burford-only proceeds from asset management and other services 22,057 24,877
--------------------------------------------------------------------------- -------------------- -----------
Cash receipts 327,986 281,466
=========================================================================== ==================== ===========
1. The consolidated asset management income for the year ended
December 31, 2022 is preliminary and unaudited and, as a result,
potentially subject to adjustment, which could be material.
2. Adjustments for the change in asset management receivables
accrued during the applicable period but not yet received at the
end of such period.
Reconciliation of consolidated to Burford-only due from
settlement of capital provision assets
At December 31,
--------------------------------------------------------------------------------------
2022 (unaudited) 2021
------------------------------------------ ------------------------------------------
Elimination of Elimination of
third-party third-party
($ in millions) Consolidated interests Burford-only Consolidated interests Burford-only
----------------- ------------ -------------- ------------ ------------ -------------- ------------
Due from
settlement of
capital provision
assets 117 (2) 115 86 (23) 63
Definitions and Use of Non-GAAP Financial Measures and
Alternative Performance Measures
Burford reports its financial results in accordance with US
GAAP, which requires Burford to present financial statements that
consolidate some of the limited partner interests in private funds
it manages as well as assets held on its balance sheet where
Burford has a partner or minority investor. Therefore, for purposes
of various presentations of Burford's financial results:
-- Consolidated refers to assets, liabilities and activities
that include those third-party interests, partially owned
subsidiaries and special purpose vehicles that Burford is
required to consolidate under US GAAP. At the date of this
announcement, the major entities where there is also a third-party
partner in, or owner of, those entities include BCIM Strategic
Value Master Fund, LP, Burford Opportunity Fund C LP, Burford
Advantage Master Fund LP, Colorado Investments Limited ("Colorado")
and several other entities in which Burford holds investments
where there is also a third-party partner in, or owner of,
those entities.
-- Burford-only refers to assets, liabilities and activities
that pertain only to Burford on a proprietary basis, excluding
any third-party interests and the portions of jointly owned
entities owned by others.
-- Group-wide refers to the totality of assets managed by Burford,
including those portions of the private funds owned by third
parties and including private funds that are not consolidated
into Burford's consolidated financial statements. Group-wide
is therefore the sum of Burford-only and non-controlling interests
in consolidated and non-consolidated private funds. Group-wide
does not include third-party interests in capital provision
assets, the economics of which have been sold to those third
parties, that do not meet the criteria to be recognized as
a sale under US GAAP. This includes the third-party interests
in Colorado and other capital provision asset subparticipations.
Burford subdivides its capital provision assets into two
categories:
-- Direct , which includes all of Burford's capital provision
assets that Burford has originated directly (i.e., not through
participation in a private fund) from its balance sheet. Burford
also includes direct (i.e., not through participation in a
private fund) complex strategies assets in this category.
-- Indirect , which includes Burford's balance sheet's participations
in two of its private funds (i.e., BCIM Strategic Value Master
Fund, LP and Burford Advantage Master Fund LP).
Burford also uses certain unaudited alternative performance
measures, including:
-- Internal rate of return ("IRR") is a discount rate that makes
the net present value of a series of cash flows equal to zero
and is expressed as a percentage figure. Burford computes
IRR on concluded (including partially concluded) legal finance
assets by treating that entire portfolio (or, when noted,
a subset thereof) as one undifferentiated pool of capital
and measuring actual and, if necessary, estimated inflows
and outflows from that pool, allocating costs appropriately.
IRRs do not include unrealized gains or losses.
-- Return on invested capital ("ROIC") from a concluded asset
is the absolute amount of realizations from such asset in
excess of the amount of expenditure incurred in funding such
asset divided by the amount of expenditure incurred, expressed
as a percentage figure. ROIC is a measure of Burford's ability
to generate absolute returns on its assets. Some industry
participants express returns on a multiple of invested capital
("MOIC") instead of a ROIC basis. MOIC includes the return
of capital and, therefore, is 1x higher than ROIC. In other
words, 70% ROIC is the same as 1.70x MOIC.
Non-GAAP financial measures and other unaudited alternative
performance measures Burford uses include:
-- Commitment refers to the amount of financing Burford agrees
to provide for a legal finance asset. Commitments can be definitive
(requiring Burford to provide funding on a schedule or, more
often, when certain expenses are incurred) or discretionary
(allowing Burford to provide funding after reviewing and approving
a future matter). Unless otherwise indicated, commitments
include deployed cost and undrawn commitments.
-- Deployment refers to funding provided for an asset, which
adds to Burford's deployed cost of such asset.
-- Deployed cost refers to the amount of funding Burford has
provided for an asset at the applicable point in time.
-- Realization : A legal finance asset is realized when the
asset is concluded (i.e., when litigation risk has been resolved).
A realization will result in Burford receiving cash or, occasionally,
non-cash assets or recognizing a due from settlement receivable,
reflecting what Burford is owed on the asset.
-- Realized gain / (loss) reflects the total amount of gain
or loss generated by a legal finance asset when it is realized,
calculated as realized proceeds less deployed cost, without
regard for any previously recognized fair value adjustment.
-- Unrealized gain / (loss) represents the fair value of Burford's
assets over or under their funded cost, as determined in accordance
with the requirements of the applicable US GAAP standards,
for the relevant financial reporting period (consolidated
statement of operations) or cumulatively (consolidated statement
of financial position).
For additional information with respect to non-GAAP financial
measures and unaudited alternative performance measures, see
Burford's annual report on Form 20-F filed with the US Securities
and Exchange Commission on March 29, 2022 and Burford's interim
report on the Form 6-K for the six months ended June 30, 2022
furnished to the US Securities and Exchange Commission on August 9,
2022 and, in each case, made available on Burford's website at
https://investors.burfordcapital.com . Non-GAAP financial measures
should not be considered in isolation form, as a substitute for, or
superior to, financial measures calculated in accordance with US
GAAP.
This announcement does not constitute an offer to sell or the
solicitation of an offer to buy any ordinary shares or other
securities of Burford.
This announcement does not constitute an offer of any Burford
private fund. Burford Capital Investment Management LLC, which acts
as the fund manager of all Burford private funds, is registered as
an investment adviser with the US Securities and Exchange
Commission. The information provided in this announcement is for
informational purposes only. Past performance is not indicative of
future results. The information contained in this announcement is
not, and should not be construed as, an offer to sell or the
solicitation of an offer to buy any securities (including, without
limitation, interests or shares in any of Burford private funds).
Any such offer or solicitation may be made only by means of a final
confidential private placement memorandum and other offering
documents.
Forward-looking statements
This announcement contains "forward-looking statements" within
the meaning of Section 21E of the US Securities Exchange Act of
1934, as amended, regarding assumptions, expectations, projections,
intentions and beliefs about future events. These statements are
intended as "forward-looking statements". In some cases,
predictive, future-tense or forward-looking words such as "aim",
"anticipate", "believe", "continue", "could", "estimate", "expect",
"forecast", "guidance", "intend", "may", "plan", "potential",
"predict", "projected", "should" or "will" or the negative of such
terms or other comparable terminology are intended to identify
forward-looking statements, but are not the exclusive means of
identifying such statements. In addition, Burford and its
representatives may from time to time make other oral or written
statements which are forward-looking statements, including in its
periodic reports that Burford files with, or furnishes to, the US
Securities and Exchange Commission, other information sent to
Burford's security holders and other written materials. By their
nature, forward-looking statements involve known and unknown risks,
uncertainties and other factors because they relate to events and
depend on circumstances that may or may not occur in the future.
Burford cautions you that forward-looking statements are not
guarantees of future performance and are based on numerous
assumptions , expectations, projections, intentions and beliefs and
that Burford's actual results of operations, including its
financial position and liquidity, and the development of the
industry in which it operates, may differ materially from (and be
more negative than) those made in, or suggested by, the
forward-looking statements contained in this announcement.
Significant factors that may cause actual results to differ from
those Burford expects include, among others, (i) impacts resulting
from changes to Burford's valuation policy for capital provision
assets, including any requirement to recast or restate Burford's
historical financial statements and/or disclose a material weakness
in internal controls in connection with these changes, (ii) the
successful completion of audit and other procedures and other
conditions necessary to issue Burford's audited financial
statements and to file Burford's annual report on Form 20-F for the
year ended December 31, 2022 with the SEC, and (iii) those
discussed under "Risk Factors" in Burford's annual report on Form
20-F for
the year ended December 31, 2021 filed with the US Securities
and Exchange Commission on March 29, 2022, Burford's interim report
on Form 6-K furnished to the US Securities and Exchange Commission
on August 9, 2022 and other reports or documents that Burford files
with, or furnishes to, the SEC from time to time . In addition,
even if Burford's results of operations, including its financial
position and liquidity, and the development of the industry in
which it operates are consistent with the forward-looking
statements contained in this announcement, those results of
operations or developments may not be indicative of results of
operations or developments in subsequent periods.
Except as required by law, Burford undertakes no obligation to
update or revise the forward-looking statements contained in this
announcement, whether as a result of new information, future events
or otherwise.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
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and conditions, to analyse how you engage with the information
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END
TSTUVSKROUUOAAR
(END) Dow Jones Newswires
March 16, 2023 03:00 ET (07:00 GMT)
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