Burford Capital Ltd 6-K, filed May 13, 2024

Burford Capital Ltd (BUR)

6-K 2024-05-13 For: 2024-05-13

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Burford Capital Ltd filed this 6-K on May 13, 2024.

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Exhibit		Description

Exhibit 99.1		Release, dated May 13, 2024.



BURFORD CAPITAL LIMITED

By:		/s/ Mark N. Klein
		Name: Mark N. Klein
		Title: General Counsel and Chief Administrative Officer


Summary statements of operations
			Three months ended March 31,
Consolidated (US GAAP) ($ in thousands, except per share data)			2024	2023	% change
Capital provision income			40,761	475,933	-91%
Asset management income			1,863	1,997	-7%
Total revenues			44,295	380,905	-88%
Total operating expenses			30,138	54,299	-44%
Net income/(loss) attributable to Burford Capital Limited shareholders			(29,937)	259,425	NM
	Per diluted ordinary share		(0.14)	1.17	NM
Note: “NM” denotes not meaningful. Changes from negative to positive amounts and positive to negative amounts, increases or decreases from zero and changes greater than 700% are not considered meaningful.


Summary statements of financial position
Consolidated (US GAAP) ($ in thousands, except per share data)		March 31, 2024		December 31, 2023	% change
Capital provision assets		5,096,807		5,045,388	1%
Total Burford Capital Limited equity		2,261,789		2,290,858	-1%
	Book value per ordinary share	10.34		10.46	-1%
Non-controlling interests		864,465		916,922	-6%
Total shareholders’ equity		3,126,254		3,207,780	-3%
Total liabilities and shareholders’ equity		6,012,208		5,837,394	3%


Selected metrics¹
		Three months ended March 31,
Burford-only (non-GAAP) ($ in thousands)		2024	2023	% change
Realized gains		28,754	35,613	-19%
Realizations		61,074	61,746	-1%
Cash receipts²		137,694	97,157	42%
Deployments		59,080	66,993	-12%
New commitments		82,459	100,764	-18%
¹ Represents Burford-only capital provision-direct, unless noted otherwise.
² Represents Burford-only proceeds from capital provision-direct, capital provision-indirect and asset management and other services.

Group-wide (non-GAAP) ($ in thousands)	March 31, 2024		December 31, 2023	% change
Total portfolio	7,126,980		7,170,308	-1%


◾	Realized gains in 1Q24 down 19% to $29 million (1Q23: $36 million)
o		Realized gains comprised $45 million of gross realized gains offset by $16 million of gross realized losses primarily related to unfavorable conclusions in sub-cases within a portfolio asset that previously generated realized gains in excess of the loss
◾	Realizations in 1Q24 of $61 million (1Q23: $62 million)
o		Continued brisk post-Covid-19 pandemic pace of realizations in 1Q24 reflects continuing elevated resolution frequency amid normalized court activity and reducing case backlogs
◾	Cash receipts in 1Q24 up 42% to $138 million (1Q23: $97 million)
o		Cash receipts in 1Q24 were 2.2x total operating expenses and finance costs, and were broadly diversified with five assets generating total proceeds of $103 million and each asset’s proceeds greater than $10 million
◾	Deployments in 1Q24 down 12% to $59 million (1Q23: $67 million)
o		Burford-only capital provision-direct deployments generally in line with prior first quarters
o		$1.4 billion of Burford-only capital provision-direct undrawn commitments to legal finance assets at March 31, 2024 serves as a strong base for potential future deployments
◾	Capital provision-direct new commitments on Burford-only basis in 1Q24 down 18% to $82 million (1Q23: $101 million)
o First quarter typically quiet for new commitments—while 1Q23 was slightly more active with $101 million of new commitments, 1Q22 new commitments were lower at $44 million
◾	Group-wide total portfolio steady at $7.1 billion (December 31, 2023: $7.2 billion)


In this announcement, references to “1Q24”and “1Q23” are to Burford’s financial results for the three months ended March 31, 2024 and 2023, respectively. All figures in this announcement are presented on an unaudited consolidated basis in accordance with the generally accepted accounting principles in the United States (“US GAAP”), unless otherwise stated.


Selected financial metrics
			Three months ended March 31,
Burford-only (non-GAAP) ($ in thousands, except per share data)			2024	2023	$ change	% change
Total revenues			31,378	338,677	-307,299	-91%
Total operating expenses			29,664	54,009	-24,345	-45%
Operating income/(loss)			1,714	284,668	-282,954	-99%
Net income/(loss) attributable to Burford Capital Limited shareholders			(29,937)	259,425	-289,362	NM

Burford-only (non-GAAP) ($ in thousands, except per share data)		March 31, 2024		December 31, 2023	$ change	% change
Tangible book value attributable to Burford Capital Limited		2,127,833		2,156,893	-29,060	-1%
	Tangible book value attributable to Burford Capital Limited per ordinary share	9.73		9.85	-0.12	-1%


◾	Total revenues in 1Q24 of $31 million (1Q23: $339 million), with portfolio case development progressing well and timing of revenue recognition variable, as expected in our business, and with no individual asset having a material impact on 1Q24 quarterly performance
o		Realized gains on total capital provision assets of $30 million in 1Q24 driven by capital provision-direct assets, representing our highest returning core legal finance strategy
o		Unrealized losses on total capital provision assets were $9 million in 1Q24 (1Q23: unrealized gains of $277 million)—fair value adjustments affected by a number of factors, including changes in discount rate, duration and litigation risk premium, the reversal of previously recognized unrealized gains upon conclusion of a matter and its transfer to realized gains and actual performance of matters as they pass through milestones
◾	Operating income in 1Q24 of $2 million (1Q23: $285 million), attributable principally to the decrease in total revenues
o		Total operating expenses normalized in 1Q24, down 45% to $30 million (1Q23: $54 million), in the absence of elevated variable costs
o		General, administrative and other expenses in 1Q24 down 6% to $7 million (1Q23: $8 million), while case-related expenditures were approximately $6 million lower
◾	Net loss attributable to Burford Capital Limited shareholders in 1Q24 of $30 million (1Q23: net income of $259 million)
o		Net loss per diluted share in 1Q24 of $0.14 (1Q23: net income of $1.17 per diluted share)
◾	Tangible book value attributable to Burford Capital Limited of $2.1 billion at March 31, 2024 (December 31, 2023: $2.2 billion)
o		Tangible book value attributable to Burford Capital Limited per ordinary share decreased 1% to $9.73 at March 31, 2024 (December 31, 2023: $9.85)


Selected portfolio metrics
Burford-only (non-GAAP) ($ in thousands)	March 31, 2024	December 31, 2023	$ change	% change
Deployed cost	1,595,505	1,573,531	21,974	1%
Plus: Fair value adjustments	1,806,542	1,814,070	-7,528	0%
Fair value	3,402,047	3,387,601	14,446	0%
Undrawn commitments	1,406,220	1,396,061	10,159	1%
Total capital provision-direct portfolio	4,808,267	4,783,662	24,605	1%
Total capital provision portfolio¹	4,851,592	4,840,117	-11,475	0%
¹ Represents capital provision-direct and capital provision-indirect.


◾	Fair value of Burford-only capital provision-direct assets increased by $14 million to $3.4 billion at March 31, 2024 (December 31, 2023: $3.4 billion)
◾	Cumulative ROIC since inception from Burford-only capital provision-direct assets of 82% (December 31, 2023: 82%) and IRR of 27% (December 31, 2023: 27%)


Liquidity and capital
Burford-only (non-GAAP) ($ in thousands)		March 31, 2024	December 31, 2023	$ change	% change
Liquidity
	Cash and cash equivalents	464,698	195,915	268,783	137%
	Marketable securities	102,873	107,561	(4,688)	-4%
	Total liquidity	567,571	303,476	264,095	87%
Due from settlement of capital provision assets		131,688	185,267	(53,579)	-29%


◾	Burford-only cash and cash equivalents and marketable securities of $568 million at March 31, 2024 (December 31, 2023: $303 million)
o		Robust liquidity position at March 31, 2024 augmented by $138 million of Burford-only cash receipts and $275 million add-on offering to 2031 senior notes in January 2024
◾	Burford-only due from settlement of capital provision assets of $132 million at March 31, 2024 (December 31, 2023: $185 million), with 30% of December 31, 2023 balance collected in 1Q24
◾	Total debt outstanding of $1.8 billion at March 31, 2024 (December 31, 2023: $1.6 billion)
o		Leverage remains well below covenant ceiling levels


Burford Capital Limited
For investor and analyst inquiries:
Americas: Josh Wood, Head of Investor Relations	+1 212 516 5824
EMEA & Asia: Rob Bailhache, Head of EMEA & Asia Investor Relations	+44 (0)20 3530 2023
For press inquiries:
David Helfenbein, Vice President, Public Relations	+1 (212) 516 5824

Deutsche Numis - NOMAD and Joint Broker	+44 (0)20 7260 1000
Giles Rolls
Charlie Farquhar

Jefferies International Limited - Joint Broker	+44 (0)20 7029 8000
Graham Davidson
James Umbers

Berenberg – Joint Broker	+44 (0)20 3207 7800
Toby Flaux
James Thompson
Yasmina Benchekroun


	Three months ended March 31,
($ in thousands)	2024	2023
Revenues
Capital provision income/(loss)	40,761	475,933
(Less)/Plus: Third-party interests in capital provision assets	(5,224)	(100,345)
Asset management income	1,863	1,997
Marketable securities and other income/(loss)	6,895	3,320
Total revenues	44,295	380,905

Total operating expenses	30,138	54,299

Operating income/(loss)	14,157	326,606

Finance costs	32,567	20,553
Foreign currency transactions (gains)/losses	492	(2,440)
Income/(loss) before income taxes	(18,902)	308,493

(Provision for)/benefit from income taxes	1,404	(7,112)
Net income/(loss)	(17,498)	301,381

Net income/(loss) attributable to Burford Capital Limited shareholders	(29,937)	259,425

Net income/(loss) attributable to Burford Capital Limited shareholders per ordinary share
Basic	$(0.14)	$1.19
Diluted	$(0.14)	$1.17


	Three months ended March 31, 2024
	(GAAP)	(Non-GAAP)
		Elimination of third-party interests

($ in thousands)	Consolidated	Strategic Value Fund	BOF-C	Colorado	Advantage Fund	Other	Burford-only
Capital provision income	40,761	-	(9,686)	(5,420)	(7,271)	(481)	17,903
(Less): Third-party interests in capital provision assets	(5,224)	-	-	5,369	-	(145)	-
Asset management income	1,863	-	4,810	-	-	-	6,673
Marketable securities and other income	6,895	-	(88)	-	-	(5)	6,802
Total revenues	44,295	-	(4,964)	(51)	(7,271)	(631)	31,378

Total operating expenses	30,138	-	44	(51)	(169)	(298)	29,664

Operating income	14,157	-	(5,008)	-	(7,102)	(333)	1,714

Net income/(loss)	(17,498)	-	(5,008)	-	(7,102)	(329)	(29,937)


	Three months ended March 31, 2024
	(GAAP)	(non-GAAP)
		Eliminations and
($ in thousands)	Consolidated	adjustments	Burford-only
Compensation and benefits
Salaries and benefits	11,664	-	11,664
Annual incentive compensation	4,836	-	4,836
Share-based compensation	3,863	-	3,863
Long-term incentive compensation including accruals	1,638	-	1,638
General, administrative and other	7,450	(333)	7,117
Case-related expenditures ineligible for inclusion in asset cost	687	(141)	546
Total operating expenses	30,138	(474)	29,664


	Three months ended March 31, 2023
	(GAAP)	(non-GAAP)
		Eliminations and
($ in thousands)	Consolidated	adjustments	Burford-only
Compensation and benefits
Salaries and benefits	12,492	-	12,492
Annual incentive compensation	4,686	-	4,686
Share-based compensation	3,504	-	3,504
Long-term incentive compensation including accruals	19,555	-	19,555
General, administrative and other	7,751	(199)	7,552
Case-related expenditures ineligible for inclusion in asset cost	6,311	(91)	6,220
Total operating expenses	54,299	(290)	54,009

	Three months ended March 31, 2024
	(GAAP)	(Non-GAAP)
($ in thousands)	Consolidated	Eliminations and adjustments	Burford-only	Other funds	BOF-C	Group-wide
Capital provision-direct	104,193	(43,119)	61,074	28,771	30,198	120,043
Capital provision-indirect	8,778	(7,315)	1,463	7,315	-	8,778
Post-settlement	-	-	-	27,834	-	27,834
Total realizations	112,971	(50,434)	62,537	63,920	30,198	156,655

	Three months ended March 31, 2023
	(GAAP)	(Non-GAAP)
($ in thousands)	Consolidated	Eliminations and adjustments	Burford-only	Other funds	BOF-C	Group-wide
Capital provision-direct	115,732	(53,986)	61,746	50,390	35,423	147,559
Capital provision-indirect	12,580	(10,484)	2,096	10,484	-	12,580
Post-settlement	-	-	-	18,680	-	18,680
Total realizations	128,312	(64,470)	63,842	79,554	35,423	178,819



($ in thousands)	March 31, 2024	December 31, 2023

Total assets	6,012,208	5,837,394

Total liabilities	2,885,954	2,629,614

Total Burford Capital Limited equity	2,261,789	2,290,858

Non-controlling interests	864,465	916,922

Total shareholders’ equity	3,126,254	3,207,780

Basic ordinary shares outstanding	218,673,490	218,962,441

Total shareholders’ equity attributable to Burford Capital Limited per basic ordinary share	10.34	10.46
Total shareholders’ equity per basic ordinary share	14.30	14.65


($ in thousands, except share data)	March 31, 2024	December 31, 2023
Total Burford Capital Limited equity	2,261,789	2,290,858
Less: Goodwill	(133,956)	(133,965)
Tangible book value attributable to Burford Capital Limited	2,127,833	2,156,893
Basic ordinary shares outstanding	218,673,490	218,962,441
Tangible book value attributable to Burford Capital Limited per ordinary share	$9.73	$9.85

•	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 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 within Burford’s consolidated financial statements. Group-wide is therefore the sum of

•	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 one of our private funds (i.e., Burford Advantage Master Fund LP).

•	Commitment is the amount of financing we agree to provide for a legal finance asset. Commitments can be definitive (requiring us to provide financing on a schedule or, more often, when certain expenses are incurred) or discretionary (allowing us to provide financing after reviewing and approving a future matter). Unless otherwise indicated, commitments include deployed cost and undrawn commitments.
•	Deployment refers to the financing provided for an asset, which adds to our deployed cost in such asset.
•	Deployed cost is the amount of financing we have provided for an asset at the applicable point in time.
•	Fair value adjustment is the amount of unrealized gain or loss recognized in our consolidated statements of operations in the relevant period and added to or subtracted from, as applicable, the asset or liability value in our consolidated statements of financial position.
•	Portfolio includes deployed cost, net unrealized gains or losses and undrawn commitments.
•	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, relative to cost, 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 legal finance assets over or under their deployed cost, as determined in accordance with the requirements of the applicable US GAAP standards, for the relevant financial reporting period (consolidated statements of operations) or cumulatively (consolidated statements of financial position).
•	YPF-related assets refers to our Petersen and Eton Park legal finance assets, which are two claims relating to the Republic of Argentina’s nationalization of YPF S.A., the Argentine energy company.

•	Book value per ordinary share is calculated by dividing total Burford Capital Limited equity by the number of ordinary shares issued and outstanding.
•	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, and cash received from asset management income, services and/or other income, before any deployments into financing 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 measure calculated in accordance with US GAAP 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.
•	Return on tangible equity (“ROTE”) is Burford-only net income/(loss) divided by the average of tangible equity at the beginning and end of the relevant period, with tangible equity calculated as total Burford Capital Limited equity less goodwill. ROTE 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 measure calculated in accordance with US GAAP is net income/(loss) attributable to Burford Capital Limited shareholders as set forth in our consolidated statements of operations. We believe ROTE is an important measure of our operating and financial performance and is 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 measure calculated in accordance with US GAAP 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.