Burford Capital Limited

followed by the number 1 on your telephone keypad. And if you would like to withdraw that question, again, press star 1. We will also be taking web questions. You can ask a web question at any time by typing your question in the question box on the right-hand corner of your screen. Thank you. I will now turn the conference over to Christopher Bogart, Chief Executive Officer. Christopher, you may begin your conference.

Thank you very much, and hello, everybody. As usual, I'm joined by John Malo, Burford's Chief Investment Officer, and Jordan Leach, Burford's Chief Financial Officer. And in fact, Jordan and I are delighted to be coming to you live from beautiful Copenhagen today, where we have spent the day with investors here, one of Burford's groupings of investors in continental Europe, and it's a lovely day here. Quarterly results, as we've said before, we're going to do these calls in what is at least for us, we hope, a fairly short and efficient manner. The slides really do on these quarters speak for themselves. So we'll give you a little commentary on top of that, and then we'll be happy to take your questions, but we'll try not to take too much of your time. And, you know, in general, when I think about quarters, you know, while we're obviously happy to be talking to you at any time about the business, We just don't pay that much attention to individual quarters in this business. The time scale of the business operates in years, not in three month intervals. And so you get a lot of period to period variability, as you're seeing here. And we just don't, as a management team, read that much into it. And that's especially true in what we think of as what I'll call almost the dead-ish first and third quarters. Although, to be fair, last year the first quarter was extraordinary because of the YTF win late in the quarter, which obviously makes comparisons with any quarter that comes later essentially useless. So that's sort of how we think about it. But for those of you who do want to go quarter by quarter, I think, you know, obviously I would characterize this as being a mixed quarter. On the cash front, we had terrific cash performance, the highest level of cash receipts in the first quarter that we've ever reported. We had perfectly solid realized gains realizations above average for the first quarter. When you come, though, to unrealized gains, there's a lot going on in the accounting there, including some headwinds from changes in the discount rate that Jordan will talk about. But I think the important point to underline there is that That all is happening without any material negative case development. So our loss rate is actually still meaningfully below our historical average. So while it's annoying, obviously, for us to be printing an accounting loss, when I look at the business as I do on a cash basis, what I fundamentally see is that we brought in cash that was at a level well more than double the total of our operating expenses and financing costs. And so on a cash basis, I regard that as successful, even though from an accounting perspective, this quarter doesn't look as great as some have historically. So that's sort of my overall take on slide four. With that, I'll move to slide five. And slide five really just expands on slide four a little bit. And I will largely leave you to read this on your own, except that I would note just a couple of things. First, that we are swimming in liquidity right now. And that sets us up well to meet future interesting opportunities. And second, you know, we're still sitting with this enormous portfolio and we've been generating consistent returns as matters from that portfolio come through to conclusion. Slide six shows you where we are in terms of new business. And I sort of repeat what I said at the outset about the divergence between first and third quarters on the one hand and second and especially fourth quarters on the other. And, you know, this is just sort of the common sense reality of our business. Nobody who can do a fourth quarter deal with us, either law firms with a calendar year end or businesses with fiscal year ends, Nobody who can get a fourth quarter deal done just sort of hangs around and waits until the first quarter. And that's why you see these historically depressed levels of activity in the first quarter in this business. And this has existed long before we started reporting on a quarterly basis. And when you get to deployments, deployments depend on lots of factors, not just on new business. And literally, crazy as this sounds, deployments are going to depend on whether law firms are efficient in their billing. So because most law firms are calendar year entities, what they do in December is they scramble to get every dollar billed and paid that they possibly can. But lawyers are sort of notoriously bad and slow at billing. And so then what happens after they've David Miller- put forth that effort is they don't turn around in January and February necessarily and and keep on building actively and robustly. David Miller- So there that's just one of a number of factors that goes into the level of deployments that you see here and again it's not something that I that I particularly focus on on a on a quarter by quarter basis. David Miller- slide seven is the good news slide and this shows you both the cash that's coming into the business. Again, at a very high level, showing you the level of portfolio activity. And that's a high level, not only on a group-wide basis that you see there, but also on a Burford-only basis that you see there. And the bulk of that cash is coming in high returning assets. And again, realizations right on top of where we were in the first quarter of last year, well above where we were in the first quarter of 22. And so fundamentally, we're seeing portfolio velocity continue. We've had in the first half of this year, lots of activity in the cases that continued through into the second quarter. And we're pleased with how courts are dealing with not only newly filed cases, but working through COVID backlogs. We've had people in trial as recently as last week. um and we're we're happy with the status of the portfolio and our ability to continue to see cash generating from it so with that um fairly quick tour through that let me turn you over to john for a few slides thanks chris and thanks to you all as always for joining as chris says the uh

The portfolio is very active. There is tons going on. And so it's very exciting to have our handful with a lot going on in the investments we've made and seeing them move through the system. If we turn to slide eight, of course, there's the very large case that people pay a lot of attention to, the YPF cases. Everybody knows that we had a final judgment entered in September That judgment was stayed during part of the fourth quarter, but that stay was lifted and the judgment is immediately enforceable. In the first quarter, that enforcement process has commenced and been ongoing. As there is an addition appellate briefing going on, Argentina has appealed its adverse signing to the Court of Appeals for the Second Circuit, and the plaintiffs have cross-appealed the exclusion of YPF as a defendant from the case. A reminder, we, Burford, is entitled to roughly 35% of the proceeds from the Peterson case and 73% of the proceeds from the Eden Park case. Turn into slide nine. I think, as Chris said, when you look quarter to quarter, it's important not to miss James Heiting. The fundamentals of the business and those fundamentals continue, and you can look at our performance overall. James Heiting. Where it's a combination of adjudication wins adjudication losses and settlements that produce the results of our investments and. James Heiting. You can see that the settlements are the largest category and then for the cases that go to final adjudication. our wins far outstrip our losses, both in number and size. And this ends up producing very attractive returns on invested capital and IRRs. And we just continue to plug away at that core business and see the matters that are producing the sort of results within the litigation process as time goes on. If you turn to slide 10, you also see kind of the other graphic we've showed you in the past that lays out the asymmetric return profile from what I showed on the prior slide, whereas the prior slide shows what it is about the litigation process that leads to lots of decent returns and settlements, but then also some asymmetric returns when cases go to adjudication, and you see those mapped out here, that whereas the the loss rate is relatively low and the losses are confined or contained, the wins can be quite outsized. And that just makes for a very, very attractive asset class. And I don't know that I need to spend more time on it, but you can just see that we've got a large chunk of cases that are producing ROICs that are greater than 200%. So with that, I will turn it over to Jordan.