TIDMBUR
RNS Number : 5710Z
Burford Capital Limited
16 May 2023
16 May 2023
BURFORD CAPITAL REPORTS FULL YEAR 2022 FINANCIAL RESULTS;
PROFITABLE GROWTH AND UPDATE ON FAIR VALUE ACCOUNTING
Burford Capital Limited ("Burford"), the leading global finance
and asset management firm focused on law, today announces its
audited financial results for the year ended December 31, 2022
("FY22") .(1) The Burford Capital 2022 Annual Report, including
financial statements (the "2022 Annual Report"), is available at
http://www.rns-pdf.londonstockexchange.com/rns/5710Z_1-2023-5-16.pdf
and on the Burford Capital website at
http://investors.burfordcapital.com .
Christopher Bogart, Chief Executive Officer of Burford Capital,
commented:
"The pace of case progress in our portfolio quickened in 2022,
resulting in a meaningful improvement in our financial results.
Earnings per share more than doubled, driven by a 47% increase in
total revenues, including 64% growth in capital provision income.
Moreover, we deployed a record $457 million on a Burford-only basis
into new capital provision-direct assets, historically our most
profitable, and generated robust Burford-only cash receipts of $328
million.
"Court activity has continued to work through the backlog caused
by the Covid-19 pandemic, and we are seeing a high level of
portfolio activity in 2023, with 28 case milestones already having
occurred and 61 more expected through the remainder of the
year.
"We believe our portfolio is at a turning point, with a
potential increase in our realization rate as more of our capital
provision assets resolve. We expect to continue to see strong
demand for our capital from tighter financial conditions and an
unfolding economic downturn.
"We believe that our revised approach to determine the fair
value of our capital provision assets under US GAAP represents a
defining milestone in the evolution of the accounting for our asset
class, and we expect it to become the industry standard. As we
expected, the application of the revised fair value policy has
resulted in a moderate increase in the carrying value of our
capital provision assets."
(1) All FY22 figures in this announcement are audited and
presented on a consolidated basis in accordance with the generally
accepted accounting principles in the United States ("US GAAP"),
unless otherwise stated. Definitions, reconciliations and
information additional to those set forth in this announcement are
available on the Burford Capital website and in the 2022 Annual
Report (as defined above). In addition, figures in this
announcement for the year ended December 31, 2021 have been
restated as a result of applying our revised approach to determine
the fair value of our capital provision assets retroactively to the
prior three years of our annual financial statements prepared in
accordance with US GAAP. See "Revised Fair Value Methodology"
section of this announcement and "Explanatory note" in the 2022
Annual Report for additional information with respect to the
restatement of our financial statements.
FY22 highlights
New business
===================================================================================
Total Group-wide new business
-- New commitments of $1.2 billion, up 5% year on year (2021:
$1.1 billion(1) )
-- Deployments of $928 million, up 10% year on year (2021: $842
million)
Burford-only capital provision-direct assets, representing assets
capable of generating highest profits for our equity shareholders
-- Record new commitments of $726 million, up 22% year on year
(2021: $595 million(1) )
-- Record deployments of $457 million, up 2% year on year (2021:
$447 million)
Portfolio and liquidity
===================================================================================
-- Group-wide portfolio grew to $6.1 billion at December 31,
2022 (December 31, 2021: $5.3 billion), driven by new commitments,
deployments and fair value adjustments
-- Cumulative ROIC since inception from Burford-only capital
provision-direct assets of 88% (December 31, 2021: 93%);
IRR of 29% (December 31, 2021: 30%)
-- Significant external capital raising activity in 2022 with
more than $1 billion raised
o $360 million via Rule 144A/Regulation S private placement
of 6.875% senior notes due 2030
o $300 million from limited partners for new lower risk
legal finance fund, the Burford Advantage Fund
o $350 million from limited partners for new post-settlement
fund, Burford Alternative Income Fund II
-- Burford-only cash receipts in 2022 of $328 million, up 17%
year on year (2021: $281 million)
-- Burford-only cash and cash equivalents and marketable securities
of $210 million at December 31, 2022 (December 31, 2021:
$315 million)
o Expect majority of consolidated $117 million due from
settlement of capital provision assets at December 31,
2022 to be collected in cash in 2023 (2021: $86 million,
of which 58% was collected in cash in 2022)
Income
===================================================================================
-- Total revenues of $319 million (2021: $217 million) included
capital provision income of $319 million (2021: $195 million),
up 47% year on year, reflecting a higher level of case activity
and portfolio progression, as Covid-19 pandemic-related disruption
started to ease
-- Burford-only capital provision-direct realizations of $350
million (2021: $264 million) and realized gains of $133 million
(2021: $128 million, reflecting an outsized global antitrust
portfolio transaction in 2021)
o Positive development indicated at 1H 2022 in outsized
2021 transaction generated a partial realization in 2H
2022 of $258 million Group-wide and $161 million Burford-only
-- Burford-only capital provision-direct realized loss rate
in 2022 of only 1.0% of average portfolio at cost (2021:
0.8%), largely consistent year on year and likely reflective
of slow court processes
-- Operating income of $195 million (2021: $69 million), with
significant year on year growth arising from higher capital
provision income and lower operating expenses due primarily
to an outsized incentive compensation expense in 2021 related
to a legacy asset recovery charge
-- Net income attributable to Burford Capital Limited shareholders
of $31 million represented a $59 million improvement over
the prior year (2021: net loss attributable to Burford Capital
Limited shareholders of $29 million)
o Net income per ordinary and diluted share of $0.14 (2021:
net loss per ordinary and diluted share of $0.13)
Capital
===================================================================================
-- Total shareholders' equity attributable to Burford Capital
Limited at December 31, 2022 was $1,743 million (December
31, 2021: $1,696 million)
o Total shareholders' equity attributable to Burford Capital
Limited of $7.97 per ordinary share at December 31, 2022
(December 31, 2021: $7.74 per share)
o Tangible book value attributable to Burford Capital Limited
(non-GAAP) of $7.36 per ordinary share at December 31,
2022 (December 31, 2021: $7.13 per share)
-- As previously announced, declared 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
(1) Burford-only new commitments for 2021 of $595 million
are shown net of the warehousing activity as discussed in
the 2022 Annual Report.
Revised Fair Value Methodology
Following comments from and engagement with the staff of the US
Securities and Exchange Commission (the " SEC"), we have, in
consultation with our independent auditor, revised our approach to
fair value accounting for our capital provision assets in
consideration of Accounting Standards Codification Topic 820-Fair
Value Measurement ("ASC 820").
As a result of this work, our c apital provision assets are fair
valued using an income approach. The income approach estimates fair
value based on our estimated, risk-adjusted future cash flows,
using a discount rate to reflect the funding risk of deploying
capital for funding capital provision assets. The income approach
requires management to make a series of assumptions, such as
discount rate, the timing and amount of both expected cash inflows
and additional fundings, and a risk-adjustment factor reflecting
the uncertainty inherent in the cash flows primarily driven by
litigation risk, which changes as a result of observable litigation
events. These assumptions are considered Level 3 inputs.
A cash flow forecast is developed for each capital provision
asset based on the anticipated capital commitments, damages or
settlement estimates, and our contractual entitlement. Capital
provision assets are recorded at initial fair value, which is
equivalent to the initial transaction price for a given capital
provision asset, based on an assessment that it is an arm's length
transaction between independent third parties and an orderly
transaction between market participants. Using the cash flow
forecast and a discount rate, an appropriate risk adjustment factor
is calculated to be applied to the forecast cash inflows to
calibrate the valuation model to the initial transaction price.
Each reporting period, the cash flow forecast is updated based on
the best available information on damages or settlement estimates
and it is determined whether there has been an objective event in
the underlying litigation process, which would change the
litigation risk and thus the risk-adjustment factor associated with
the capital provision asset. Each reporting period, the updated
risk-adjusted cash flow forecast is then discounted at the then
current discount rate to measure fair value.
In a small number of instances, we have the benefit of a
secondary sale of a portion of an asset or liability. When this
occurs, the market evidence is factored into the valuation process
to maximize the use of relevant observable inputs. Secondary sales
are evaluated for relevance, including whether such transactions
are orderly, and weight is attributed to the market price
accordingly, which may include calibrating the valuation model to
observed market price.
In addition to applying this revised valuation approach to our
FY22 consolidated financial statements, we have applied it
retroactively to the prior three years of our consolidated
financial statements. Management and the audit committee concluded
on May 2, 2023 that our consolidated financial statements for the
years ended December 31, 2021, 2020 and 2019 and the six months
ended June 30, 2022 should be restated to correct a material
understatement of capital provision assets and capital provision
income given the application of the revised valuation approach;
definitionally, any such restatement is considered to be for the
correction of a material error. The restated consolidated financial
statements for the years ended December 31, 2021, 2020 and 2019 are
included in the 2022 Annual Report, and we intend to present our
restated condensed consolidated financial statements for the six
months ended June 30, 2022 when we issue our condensed consolidated
financial statements for the three and six months ending June 30,
2023.
At the date of this announcement, we have open comment letters
from the staff of the SEC with respect to its review of our annual
report on Form 20-F for the year ended December 31, 2021 (the "2021
Annual Report") relating to, among other things, our approach to
fair value accounting for our capital provision assets in
consideration of ASC 820. Although the SEC comment letters will
remain open and will not be formally resolved until the SEC staff
has had an opportunity to review the 2022 Annual Report, we believe
that the 2022 Annual Report addresses the SEC comments in all
material respects.
Internal Control Over Financial Reporting
The SEC rules require a public company to complete a
comprehensive evaluation of its internal control over financial
reporting and to maintain disclosure controls and procedures.
Under the auditing standards promulgated by the Public Company
Accounting Oversight Board, a restatement of financial statements
is by definition evidence of a material weakness in internal
controls. As a result, Burford has no alternative but to conclude
that, due to the material weaknesses in Burford's internal control
over financial reporting, Burford's internal control over financial
reporting and Burford's disclosure controls and procedures were not
effective at each of December 31, 2022 and 2021.
During the year ended December 31, 2021 and as disclosed in the
2021 Annual Report, our management identified and disclosed
material weaknesses in our internal control over financial
reporting relating to each of (i) the preparation of evidence to
demonstrate completeness and accuracy of information prepared by
the entity ("IPE") and (ii) management review controls ("MRC"). To
remediate the material weaknesses relating to IPE and MRC, our
management, in consultation with the Audit Committee, implemented a
remediation plan to strengthen our internal control over financial
reporting. The remediation measures relating to IPE and MRC have
been fully implemented at December 31, 2022, and the operational
effectiveness of our internal control over financial reporting with
respect to these material weaknesses has been validated through
testing. Based on these measures and the testing and evaluation of
the effectiveness of our internal control over financial reporting,
our management concluded that the material weaknesses relating to
IPE and MRC have been remediated at December 31, 2022.
YPF-Related Assets Subsequent Event
On March 31, 2023, the United States District Court for the
Southern District of New York (the "Court") issued its opinion and
order in connection with the summary judgment motions filed by the
parties (the "Ruling") in the Petersen and Eton Park cases against
the Republic of Argentina and YPF. In summary, the Court decided
that (i) Argentina was liable to Petersen and Eton Park for failing
to make a tender offer for their YPF shares in 2012; (ii) YPF was
not liable for failing to enforce its bylaws against Argentina;
(iii) the various arguments Argentina had made to try to reduce its
damages liability from the straightforward application of the
formula in the bylaws were unavailing; and (iv) a hearing is needed
to resolve two factual issues to enable the computation of
damages.
The Ruling was a complete win against Argentina with respect to
liability, with the quantum of damages yet to be determined, and a
loss against YPF. The estimated impact of the Ruling on the fair
value of the YPF-related capital provision assets at March 31, 2023
is an approximate increase of $285 million on a consolidated basis,
approximately $100 million relating to third-party interests and
approximately $185 million on a Burford-only basis. At December 31,
2022, the $1,233 million of consolidated carrying value for the
YPF-related assets comprised $1,171 million of unrealized gain and
$62 million of deployed cost (December 31, 2021: $1,231 million of
carrying value). On a Burford-only basis, carrying value at
December 31, 2022 was $823 million and comprised $768 million of
unrealized gain and $55 million of deployed cost (December 31,
2021: $821 million of carrying value).
1Q23 Results
Burford has previously announced its intention to begin
quarterly reporting commencing with the three months ended March
31, 2023 ("1Q23"). Financial results for 1Q23 are expected to be
announced in the first half of June 2023.
Investor and Analyst Conference Call
Burford will hold a conference call for investors and analysts
at 8.30am EDT / 1.30pm BST on Tuesday, May 16, 2023 . The dial-in
number for the conference call is +1 646 664-1960 (USA) / +44 (0)20
3936 2999 (UK) / +44 (0)20 3936 2999 (all other locations) and the
access code is 867191. To minimize the risk of delayed access,
participants are urged to dial into the conference call by 8.10am
EDT / 1.10pm BST .
A live webcast of the call will also be available at
https://www.investis-live.com/burfordcapital/644b751569b6910d00728042/osld
, and pre-registration at that link is encouraged.
An accompanying 2022 full year results presentation for
investors and analysts will also be made available on the Burford
Capital website prior to the conference call at
http://investors.burfordcapital.com .
Following the conference call, a replay facility for this event
will be available until Tuesday, May 30, 2023 by dialing +1 845
709-8569 (USA) / +44 (0)20 3936 3001 (UK) / +44 (0)20 3936 3001
(all other locations) and using the replay access code 512960. A
replay facility will also be accessible through the webcast at
https://www.investis-live.com/burfordcapital/644b751569b6910d00728042/osld
.
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.
Summary Financial Statements, Restatements and
Reconciliations
The tables below set forth summaries of the condensed
consolidated and Burford-only statements of operations for the year
ended December 31, 2022 and restatements of operations for the year
ended December 31, 2021, the condensed consolidated and
Burford-only statements of financial position at December 31, 2022
and restatements of financial position at December 31, 2021 and
corresponding reconciliations from consolidated to Burford-only
financial results .
Summary condensed consolidated statement and restatement of
operations
For the Years Ended December 31,
($ in thousands) 2022 2021
============================================================================== ============== ==================
(as restated)
Capital provision income 319,108 194,554
Asset management income 9,116 14,396
Services and other income (8,997) 8,380
Total revenues 319,227 217,330
Total operating expenses 124,272 148,746
Operating income 194,955 68,584
Finance costs and loss on debt extinguishment 78,264 60,296
Foreign currency transactions (gains)/losses 7,674 5,499
Income/(loss) before income taxes 109,017 2,789
(Provision for)/benefit from income taxes (11,558) (9,727)
Net income/(loss) 97,459 (6,938)
Net income/(loss) attributable to Burford Capital Limited shareholders 30,506 (28,751)
Net income/(loss) attributable to Burford Capital Limited per ordinary share:
Basic $0.14 ($0.13)
Diluted $0.14 ($0.13)
Summary Burford-only statement and restatement of operations
For the Years Ended December 31,
($ in thousands) 2022 2021
============================== ============= ===================
(as restated)
Capital provision income 202,878 156,043
Asset management income 56,080 28,745
Services and other income (8,353) 7,094
Total revenues 250,605 191,882
Operating income/(loss) 127,909 46,771
Net income/(loss) 30,506 (28,751)
Net income/(loss) per share:
Basic $0.14 ($0.13)
Diluted $0.14 ($0.13)
Reconciliation of summary condensed consolidated statement and
restatement of operations to summary Burford-only statement and
restatement of operations
For the year ended December 31, 2022
---------------------------------------------------------------------------------
Elimination of third-party interests
=====================================================
Strategic Advantage
($ in thousands) Consolidated Value Fund BOF-C Colorado Fund Other Burford-only
------------------ ------------ ---------- ---------- -------- --------- -------- ------------
Capital provision
income 319,108 3,709 (112,370) 661 (1,417) (6,813) 202,878
Asset management
income 9,116 312 46,652 - - - 56,080
Services and other
income (8,997) 184 (3) (693) - 1,156 (8,353)
Total revenues 319,227 4,205 (65,721) (32) (1,417) (5,657) 250,605
Operating income 194,955 5,200 (65,857) - (919) (5,470) 127,909
Net income/(loss) 97,459 5,200 (65,857) - (919) (5,377) 30,506
(as restated)
----------------------------------------------------------------------
For the year ended December 31, 2021
----------------------------------------------------------------------
Elimination of third-party interests
==========================================
Strategic
($ in thousands) Consolidated Value Fund BOF-C Colorado Other Burford-only
------------------------- ------------ ----------- --------- -------- -------- ------------
Capital provision income 194,554 (6,263) (26,125) 193 (6,316) 156,043
Asset management income 14,396 1,843 12,506 - - 28,745
Services income 8,380 (1,091) - (217) 22 7,094
Total revenues 217,330 (5,511) (13,619) (24) (6,294) 191,882
Operating income 68,584 (1,808) (13,730) - (6,275) 46,771
Net loss (6,938) (1,808) (13,730) - (6,275) (28,751)
Summary condensed consolidated statement and restatement of
financial position
At
($ in thousands) December 31, 2022 December 31, 2021
========================================================================= ================== ==================
(as restated)
Total assets 4,288,359 3,741,504
Total liabilities 1,901,289 1,633,487
Total Burford Capital Limited equity 1,742,584 1,695,872
Non-controlling interests 644,486 412,145
Total shareholders' equity 2,387,070 2,108,017
Basic ordinary shares outstanding 218,581,877 219,049,877
Total shareholders' equity attributable to Burford Capital Limited per
basic ordinary share 7.97 7.74
Total shareholders' equity per basic ordinary share 10.92 9.62
Reconciliation of summary condensed consolidated statement and
restatement of financial position to summary Burford-only statement
and restatement of financial position
At December 31, 2022
------------------------------------------------------------------------------------
Elimination of third-party interests
========================================================
Strategic Advantage
($ in thousands) Consolidated Value BOF-C Colorado Fund Other Burford-only
Fund
----------------- ------------ --------- ---------- ---------- ---------- --------- ------------
Total assets 4,288,359 (2,779) (477,590) (409,249) (103,523) (76,792) 3,218,426
Total liabilities 1,901,289 (228) (4,234) (409,249) (120) (11,616) 1,475,842
Total
shareholders'
equity 2,387,070 (2,551) (473,356) - (103,403) (65,176) 1,742,584
(as restated)
-------------------------------------------------------------------------
At December 31, 2021
-------------------------------------------------------------------------
Elimination of third-party interests
=============================================
Strategic
($ in thousands) Consolidated Value Fund BOF-C Colorado Other Burford-only
--------------------------- ------------ ---------- ---------- ---------- --------- ------------
Total assets 3,741,504 (15,985) (342,210) (409,936) (69,410) 2,903,963
Total liabilities 1,633,487 (769) (4,001) (409,936) (10,690) 1,208,091
Total shareholders' equity 2,108,017 (15,216) (338,209) - (58,720) 1,695,872
Reconciliation of components of deployments from a consolidated
basis to a Group-wide basis
For the year ended December 31, 2022
-------------------------------------------------------------------------------------
Eliminations and
($ in thousands) Consolidated adjustments Burford-only Other funds BOF-C Group-wide
--------------------------- ============ ================ ------------- --- ----------- -------- ----------
Capital provision-direct 605,402 (148,296) 457,106 30,574 147,976 635,656
Capital provision-indirect 121,896 (101,573) 20,323 101,158 - 121,481
Post-settlement - - - 170,689 - 170,689
--------------------------- ------------ ---------------- ------------- --- ----------- -------- ----------
Total new deployments 727,298 (249,869) 477,429 302,421 147,976 927,826
=========================== ============ ================ ============= === =========== ======== ==========
For the year ended December 31, 2021
-------------------------------------------------------------------------------------
Eliminations and
($ in thousands) Consolidated adjustments Burford-only Other funds BOF-C Group-wide
--------------------------- ============ ================ ------------- --- ----------- -------- ----------
Capital provision-direct 672,931 (225,674) 447,257 143,621 138,447 729,325
Capital provision-indirect - 914 914 (1) - - 914
Post-settlement - - - 111,713 - 111,713
--------------------------- ------------ ---------------- ------------- --- ----------- -------- ----------
Total new deployments 672,931 (224,760) 448,171 255,334 138,447 841,952
=========================== ============ ================ ============= === =========== ======== ==========
1. Represents capital calls for expenses rather than cash deployed into assets.
Reconciliation of consolidated proceeds from capital provision
assets to Burford-only cash receipts
For the year ended December 31,
---------------------------------
($ in thousands) 2022 2021
========================================================================== ============= ==================
(as restated)
==================
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 9,116 14,396
Plus: Eliminated income from funds 46,964 14,349
Burford-only asset management income 56,080 28,745
Less: Non-cash adjustments (41,321) (10,246)
-------------------------------------------------------------------------- ------------- ------------------
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
========================================================================== ============= ==================
Reconciliation of consolidated to Burford-only cash and cash
equivalents and marketable securities
At December 31,
2022 2021
------------------------------------------ ------------------------------------------
Elimination of Elimination of
third-party third-party
($ in thousands) Consolidated interests Burford-only Consolidated interests Burford-only
----------------- ------------ -------------- ------------ ------------ -------------- ------------
Cash and cash
equivalents 107,658 (33,979) 73,679 180,255 (40,577) 139,678
Marketable
securities 136,358 - 136,358 175,336 - 175,336
------------------ ------------ -------------- ------------ ------------ -------------- ------------
Total cash and
cash equivalents
and marketable
securities 244,016 (33,979) 210,037 355,591 (40,577) 315,014
================== ============ ============== ============ ============ ============== ============
Reconciliation of consolidated to Burford-only realizations
For the year ended December 31, 2022 For the year ended December 31, 2021
--------------------------------------------- ---------------------------------------------
Eliminations and Eliminations and
($ in thousands) Consolidated adjustments Burford-only Consolidated adjustments Burford-only
---------------------- ============ ================ ------------- ============ ================ -------------
Capital
provision-direct 402,196 (51,987) 350,209 374,126 (109,974) 264,152
Capital
provision-indirect 24,538 (14,216) 10,322 81,022 (45,990) 35,032
Post-settlement - - - - - -
---------------------- ------------ ---------------- ------------- ------------ ---------------- -------------
Total realizations 426,734 (66,203) 360,531 455,148 (155,964) 299,184
====================== ============ ================ ============= ============ ================ =============
Reconciliation of consolidated to Burford-only realized
gains
For the year ended December 31, 2022 For the year ended December 31, 2021
--------------------------------------------- ---------------------------------------------
Eliminations and Eliminations and
($ in thousands) Consolidated adjustments Burford-only Consolidated adjustments Burford-only
----------------- ============ ================ ------------- ============ ================ -------------
Realized gains 158,933 (25,576) 133,357 137,247 (8,818) 128,429
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
--------------------------------------------------------------------------
Elimination of
third-party
($ in millions) Consolidated interests Burford-only Other funds BOF-C Group-wide
---------------- ------------ -------------- ------------ ----------- ----- ----------
Realizations 189 (28) 161 69 28 258
Reconciliation of tangible book value attributable to Burford
Capital Limited per ordinary share
The tables below set forth the reconciliations of tangible book
value attributable to Burford Capital Limited per ordinary share to
total Burford Capital Limited equity, the most comparable measure
calculated in accordance with US GAAP, at December 31, 2022 and
December 31, 2021.
At December 31,
---------------------------
($ in thousands, except share data) 2022 2021
================================================================================ ============ =============
(as restated)
-------------
Total Burford Capital Limited equity 1,742,584 1,695,872
Less: Goodwill (133,912) (134,019)
-------------------------------------------------------------------------------- ------------ -------------
Tangible book value attributable to Burford Capital Limited 1,608,672 1,561,853
-------------------------------------------------------------------------------- ------------ -------------
Basic ordinary shares outstanding 218,581,877 219,049,877
-------------------------------------------------------------------------------- ------------ -------------
Tangible book value attributable to Burford Capital Limited per ordinary share 7.36 7.13
-------------------------------------------------------------------------------- ------------ -------------
Definitions and Use of Non-GAAP Financial Measures and
Alternative Performance Measures
Burford reports its financial results in accordance with US
GAAP. 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 therefore refer to various
presentations of our financial results as follows:
-- Consolidated refers to assets, liabilities and activities
that include those third-party interests, partially owned
subsidiaries and special purpose vehicles that we are 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.
We subdivide our capital provision assets into two
categories:
-- Direct , which includes all of our capital provision assets
that we have originated directly (i.e., not through participation
in a private fund) from our balance sheet. We also include
direct (i.e., not through participation in a private fund)
complex strategies assets in this category.
-- Indirect , which includes our balance sheet's participations
in two of our private funds (i.e., BCIM Strategic Value
Master Fund, LP and Burford Advantage Master Fund LP) .
We also use 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. We compute
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 our
ability to generate absolute returns on our 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.
Other unaudited alternative performance measures and terms we
use include:
-- Commitment is the amount of financing we agree to provide
for a legal finance asset. Commitments can be definitive
(requiring us to provide funding on a schedule or, more
often, when certain expenses are incurred) or discretionary
(allowing us to provide funding after reviewing and approving
a future matter). Unless otherwise indicated, commitments
include deployed cost and undrawn commitments.
-- Deployment refers to the funding provided for an asset,
which adds to our deployed cost in such asset.
-- Deployed cost is the amount of funding we have 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 us receiving cash
or, occasionally, non-cash assets or recognizing a due from
settlement receivable, reflecting what we are 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 our
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).
-- YPF-related assets refers to our Petersen and Eton Park
legal finance assets, which are two claims relating to Republic
of Argentina's nationalization of YPF S.A., the Argentine
energy company.
We also use certain non-GAAP financial measures, including:
-- Cash receipts provide a measure of the cash that our capital
provision and other assets generate during a given period
as well as cash from certain other fees and income. In particular,
cash receipts represent the cash generated from capital
provision and other assets, including cash proceeds from
realized or concluded assets and any related hedging assets,
plus cash received for asset management fees, services and/or
other income, before any deployments into funding existing
or new assets. Cash receipts are a non-GAAP financial measure
and should not be considered in isolation from, as a substitute
for, or superior to, financial measures calculated in accordance
with US GAAP. The most directly comparable US GAAP measure
is proceeds from capital provision assets as set forth in
our consolidated statements of cash flows. We believe that
cash receipts are an important measure of our operating
and financial performance and are useful to management and
investors when assessing the performance of our Burford-only
capital provision assets.
-- Tangible book value attributable to Burford Capital Limited
is calculated by subtracting intangible assets (such as
goodwill) from total Burford Capital Limited equity . T
angible book value attributable to Burford Capital Limited
per ordinary share is calculated by dividing tangible book
value attributable to Burford Capital Limited by the total
number of outstanding ordinary shares . Each of tangible
book value attributable to Burford Capital Limited and tangible
book value attributable to Burford Capital Limited per ordinary
share is a non-GAAP financial measure and should not be
considered in isolation from, as a substitute for, or superior
to, financial measures calculated in accordance with US
GAAP. The most directly comparable US GAAP measure is total
Burford Capital Limited equity as set forth in our consolidated
statements of financial position. We believe that tangible
book value attributable to Burford Capital Limited per ordinary
share is an important measure of our financial condition
and is useful to management and investors when assessing
capital adequacy and our ability to generate earnings on
tangible equity invested by our shareholders.
For additional information, including reconciliations of our
non-GAAP financial measures to the most directly comparable US GAAP
measures and reconciliations of our alternative performance
measures, see the 2022 Annual Report filed with the SEC on May 16,
2023 and made available on our website at
http://investors.burfordcapital.com . Non-GAAP financial measures
should not be considered in isolation from, 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 made
available 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, those discussed under
"Risk Factors" in Burford's annual report on Form 20-F for the year
ended December 31, 2022 filed with the US Securities and Exchange
Commission on May 16, 2023 and other reports or documents that
Burford files with, or furnishes to, the US Securities and Exchange
Commission 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.
RNS may use your IP address to confirm compliance with the terms
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Policy.
END
FR GZGMKLVNGFZG
(END) Dow Jones Newswires
May 16, 2023 07:00 ET (11:00 GMT)
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