NEW
YORK, May 16, 2023 /PRNewswire/ -- 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 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
billion1)
- 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 million1)
- 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
-
- $360 million via Rule
144A/Regulation S private placement of 6.875% senior notes due
2030
- $300 million from limited
partners for new lower risk legal finance fund, the Burford
Advantage Fund
- $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)
-
- 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)
-
- 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)
-
- 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)
-
- 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)
- 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 6.25¢ 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 capital 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.
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
Fund
|
|
BOF-C
|
|
Colorado
|
|
Fund
|
|
Other
|
|
|
Burford-only
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
Tangible 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.
View original
content:https://www.prnewswire.com/news-releases/burford-capital-reports-full-year-2022-financial-results-profitable-growth-and-update-on-fair-value-accounting-301825717.html
SOURCE Burford Capital