Burford Capital Limited

Thank you for standing by. My name is Danica and I will be your conference operator today. At this time, I would like to welcome everyone to the Burford Capital Second Quarter 2024 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Chris Bogard, Chief Executive Officer. Please go ahead.

Thanks very much. And hello, everybody. Thank you all for joining us today. As usual, I'm joined by John Malo, the Chief Investment Officer, and Jordan Leach, the Chief Financial Officer. And all three of us will talk to some of the slides that have been posted. in what we hope will be a relatively brief presentation, and then we'll be happy to take whatever questions you might have. You know, before turning to the numbers and the results, I was just sort of reflecting on the fact that the next time we talk to you in the fall, Burford will have turned 15 by that point. And it's pretty interesting to reflect back on what was going on in 2009. I think I was actually on this day in 2009 sitting on Guernsey putting the business together. Little did we know then that we would be launching what has become a billion-dollar company and fundamentally changing the way that the legal industry operates economically. It's been a terrific 15-year ride. We're really thrilled with what we've been able to accomplish, and we thank all of you for making that possible with your patient capital. So turning to the second quarter and the report that we put out this morning, um we're very pleased to report a strong quarter as to both portfolio activity and cash generation on the one hand and new business to continue to refill the portfolio on the other and i'm on slide four and that slide will just call out a few key points um that i'll just talk on briefly you know we were we were principally driven this quarter in terms of revenue and profits by strong capital provision income. In other words, the income that we generate from the core portfolio. That was up 237% from the comparable quarter in 2023. So a very strong showing. And that was driven mostly by realized gains. In other words, cases that had actually come to a conclusion. And not only is that nice to see, but we saw returns on those cases that were well above our historical average, really about double our historical average. So returns of about 179% on those realizations. That obviously will be a number that will move around depending on the economics of particular cases and what happens in the portfolio. But I think that being able to produce returns at that level really does dispel any notion that we're seeing degradation or compression of returns as opposed to simple variation on a period by period basis. We saw on the new business side a robust level of new business. We exceeded our sort of trailing averages by a fair bit on both a three month and a six month basis. And so that's always pleasant in the middle of the year to see that kind of activity. As long time investors will remember, this business does tend to have a fourth quarter dominance to it. I sometimes joke with investors that it feels like we're running a retailer. And the reason for that is that lots of clients and lots of law firms, frankly, don't really need the money until you get close to the end of the year. And that's why the fourth quarter historically for us has been quite busy. And the first quarter and the third quarter are often not busy at all. You can't force lawyers to engage when they don't otherwise want to. So it was very pleasant to see that kind of second quarter activity. As I said earlier, these realizations were driven not just by one big thing. You know, when you compare obviously our income statement results to 2023, 2023 was heavily influenced by our success in YPF, which is a wonderful development, but it is indeed just one big thing, whereas this period we were demonstrating strength from multiple case activities, multiple case wins and settlements, but really drove the overall numbers. And all that turns into cash. These weren't just paper gains. These were actual cash receipts. And we've been pretty consistent in being able to demonstrate those kinds of cash receipts. So just stepping back from those numbers and before we go on, I think there are a couple of key points here. We've established that there is overall a real demand from both law firms and corporate clients for the solutions that we offer. And now that we are trying to put the pandemic in the rearview mirror, we have, I think, good runway both to continue to see the portfolio continue to perform and also to continue to add clients and develop new business. And that's where our market leadership really does count. We absolutely get business because of the quality of our team, because of the size of our capital base and the overall experience that we have in the market. So while this is always going to be a business with some period-to-period volatility, I think we've shown that we also, over a longer term, have made a very attractive, sustainable business model that can deliver desirable returns and a lot of cash. So turning to slide five, What this slide really does is pull in some Q1 data to show a fair number of first half overall data points. But the fundamental message here about the first half of the year is the same. The portfolio is performing well and new business is being generated. And again, back to the client side of things, clients want these solutions. Try to find a CFO who says he or she is happy to be spending money on legal fees. They just don't exist. And so this is now, we are set up now for what we hope is a multi-year ability to continue to grow the new business side of this business as we continue to add clients to the mix. I'm not going to go through all of the bullet points here. Jordan instead is going to take you through in some detail the things that call out here. But I would just as we go past this slide note a couple of things as we go. In addition to talking about realizations in new business, we not only have a strong liquidity position, but if you note the sort of coverage of cash against expenses, we're operating quite a high margin business, which is very pleasant as well. John's going to show you, in terms of the existing portfolio, how much we still have left to go and how consistent our performance has been with consistently low loss rates. And Jordan will talk about the asset management business, but As we've described over the last couple of years, we simply make a lot more money when we do our investments on the balance sheet, which is why you've seen us have a DMS

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