Burford Capital reports year of solid growth

The AIM-traded firm said that surge excluded contributions from YPF-related assets.

Its total realisations in the 12 months ended 31 December soared 42% to $496m, indicating sustained momentum fuelled by heightened portfolio velocity as court case backlogs continued to diminish.

Correspondingly, cash receipts jumped 49% to $489m, substantially surpassing total operating expenses and finance costs.

However, deployments saw a slight downturn, declining 16% to $382m in 2023 compared to $457m in 2022.

The company said that dip primarily reflected variations in business mix, with a notable portion of available commitment remaining unused due to rapid settlement of a large 2023 matter.

Despite those fluctuations, new commitments were resilient, ticking up 4% to $1.2bn on a group-wide basis.

The group-wide total portfolio was ahead 17% year-on-year to $7.2bn at the end of 2023, propelled by substantial fair value gains and growth in deployments and undrawn commitments.

Burford Capital's total revenue for the year reached $977m, making for a substantial increase from $251m in 2022.

The surge in revenue was driven by realised gains on total capital provision assets amounting to $187m, with significant contributions from capital provision-direct assets.

Operating income skyrocketed to $708m, attributable mainly to the growth in total revenues.

Burford said its operating expenses, amounting to $269m, reflected the strong performance of the portfolio.

Total operating expenses declined as a percentage of total revenues, dropping to 27% in 2023 from 49% in 2022.

Net income for the year amounted to $611m, representing a substantial increase from $31m in 2022.

Tangible book value attributable to Burford Capital surged to $2.2bn, with tangible book value per ordinary share increasing by 34%.

Furthermore, Burford-only return on tangible equity (ROTE) for the year stood at 32%, while the fair value of Burford-only capital provision-direct assets saw a notable increase to $3.4bn, primarily driven by the YPF-related assets.

Burford Capital said it maintained a robust liquidity position, bolstered by its cash and cash equivalents, marketable securities, and due from settlement of capital provision assets.

The firm's total debt outstanding stood at $1.6bn.

Its board declared a dividend of 6.25 cents per share, subject to shareholder approval at the May annual general meeting.

The dividend would be payable on 14 June to shareholders of record on 24 May, with an ex-dividend date of 23 May.

“Burford had an extraordinary year,” said chief executive officer Christopher Bogart.

“Our earnings per share rose 19x to $2.74, driven by a tripling of consolidated total revenues to $1.1 billion in 2023 due to significant growth in capital provision income, with and without our YPF-related assets.

“We achieved a Burford-only net income margin of 63%.”

Bogart said that with the courts “fully back in business”, Burford had an active year, and anticipated further substantial levels of activity in 2024 and 2025.

“Increased portfolio velocity was reflected in record core legal finance realisations, cash receipts and realised gains, as well as sizeable unrealized gains arising from the portfolio moving forward.

“Our return on tangible equity soared to 32% in 2023 from 2% in 2022, and we increased tangible book value by 34% to $9.85.”

At 1210 GMT, shares in Burford Capital were up 3.63% at 1,113p.

Reporting by Josh White for Sharecast.com.