Burford Capital Limited

Thank you all for joining and good morning. I would like to welcome you all to the Burford Capital Q3 to 23 results call. My name is Brica and I'll be your moderator for today's call. All lines are on mute for the presentation portion of the call today with an opportunity for questions and answers at the end. If you would like to ask a question at this time, please press star followed by the number one on your telephone keypad. Otherwise, you can type a chat question today on the webcast portion of this call. I would now like to pass the conference over to your host, Christopher Bogart, CEO of Burford Capital, to begin. So, Chris, please go ahead.

Thanks very much, and hello, everybody. Thank you for joining us today. As usual with me are John Malone, Burford's Chief Investment Officer, and Jordan Leach, Burford's Chief Financial Officer, and each of us will speak a little bit on this quarterly call, and then we'll be happy to take your questions. I'm going to start on slide three, which is sort of an overview synopsis of what we have to tell you today. And my fundamental message here is that we're having a blowout year. Things are just really going very, very well from our perspective. You know, just looking at the first number there on the slide, you know, top line revenues are up five times. And the thing that is really important to reflect on is that while our success in the YPF cases is driving some of this, so too is the rest of the portfolio. And so while in YPF we had an extraordinary win with a judgment for more than $16 billion, the largest in the history of the issuing court, and John is going to talk some more about YPF when we get to a specific slide on it. So while that's a fantastic outcome I really want to focus on cash and on what's going on in the rest of the portfolio as well, because the portfolio really has been moving forward after it's, you know, pandemic hiatus. And so what we've seen just in nine months is we've seen almost $400 million of cash come in. And, and again, that's not a single dollar of that cash is coming from YTF. That's all coming from the rest of the portfolio. which has been sitting slightly dormant while courts coped with the pandemic, and now we've seen a real resurgence in activity. And as you'll see later in these slides, more than half of our activity in the period is coming from matters that are pre-2020 in the portfolio. So exactly as we have predicted, we had a delay for a while, but we did not have any substantive impact from that delay And that delay is now clearing itself and things are moving through the portfolio. Again, you look at realized gains, basically doubling in the period. Again, no contribution there from YPS. So in terms of performance, in terms of the portfolio's output and activity levels, and again, even looking at unrealized gains showing that things are moving, we're just very pleased with how things have been shaping up this year. The portfolio as a whole is also growing. as we see both continued new business coming into that portfolio as well as the continued development of the cases that are already in there. And then a couple of other key points as we move through this slide. One of them is our sovereign wealth fund partnership, which as we announced a little while ago has been extended and expanded And sometimes it's not so easy given the way that we account for this sovereign wealth fund arrangement to see its leverage in the business because it's consolidated into our financial statements. But if you break that apart, we're now well over $100 million in income from doing that arrangement. So we're really very pleased with how that's going and with the asset management contribution to the overall profitability of the business. And of course we ended the period with very substantial cash on hand with very significant liquidity just because of all of the cash that we have generated, you know, augmented by the notes that we issued earlier this year. So all in all, I'm very happy with where we set nine months into 2023. Turning to slide four, this is fundamentally accounting and You know, it's obviously important, and Jordan's going to talk to you about many of these issues in more detail. But I think that, you know, while at the same time emphasizing the incredible growth that we've seen in so many of these numbers, you know, just, you know, things going up by five times and more, you know, I think you also can't take your eye off the cash. And we generated lots of cash, as I said on the prior slide. And And I would, I would just as we, when we run the business do this. Um, and just as you've seen in some of the analyst notes that have come out today, you know, I would really continue to focus your attention on the cash performance of the business and not be taken in by, you know, all of the accounting dynamics and some of the accrual noise. So for example, when you look at expenses on an accounting basis and Jordan will talk more about this, you know, the expenses look like they've gone up a fair bit. But that's largely because of non-cash items around, for example, the increase in our share price and the increase in the unrealized gain value associated with the YPF case. If you look at sort of run rate cash operating expenses, those really have barely budged. And as I said, Jordan, we'll talk more about those. It's pretty nice to see these book value numbers on the slides. more than $10 a share in book value, $9.5 in tangible book value. I think that when you look at those book value numbers and look at the combination of our growth and profitability and then turn your eyes to the share price, you see a degree of mismatch there that we hope will continue to close in the context of the U.S. market especially. And obviously, we point out the significant impact on return on equity that these results have had over the last nine months. So with that, let me turn you over to Jordan.

Thank you, Chris. Good morning and good afternoon to everyone. I'm on page five. So here, as Chris mentioned, we break down our capital provision income into the various components for both the three and nine month periods. Looking at the year to date comparisons of 2023 versus 2022, they show nearly a doubling of all the income metrics. Realized gains this year to date are 125 million, and unrealized gains excluding YPF are 85 million. With respect to YPF, as everyone knows, we've had two milestones in the case so far this year, and John will speak a little bit more to that shortly. The initial summary judgment and the subsequent award of damages. As a result, we have unrealized gains of $460 million over the first nine months of 2023 from our YPF related assets. Total capital provision income, you know, had a huge increase year over year from $676 million versus the $80 million last year. I'm going to switch now to page six and talk a little bit about asset management. Our asset management business continues to perform, and we continue to reap the rewards of using the funds to augment our balance sheet efforts. In the first nine months of both 2022 and 2023, we earned $41 million of asset management income. And on the bottom of this slide, we highlight the mutually beneficial relationship we have with our sovereign wealth fund partner. As we announced earlier this fall, the relationship extended through the end of 2024. Total income from BOFC has been steadily increasing year over year. And before I turn away from asset management, our cash receipts from asset management is double through the first nine months compared to last nine months in 2020, compared to the nine months in last year. at $29 million. So let me turn it over to John.