Burford Capital Limited

Ladies and gentlemen, thanks for standing by. At this time, I would like to welcome everyone to today's Burford Capital fiscal year 2024 and fourth 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'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. Once again, star one. And if you'd like to withdraw your question, simply press star one again. Thank you. I would now like to turn the call over to Josh Wood, Head of Investor Relations. Josh.

Good morning, everyone. Thanks for joining us today to discuss our fourth quarter and four-year results. On the call, as usual, we have our Chief Executive Officer, Chris Bogart, our Chief Investment Officer, John Malone, and our Chief Financial Officer, Jordan Leach. Before we get started, just a reminder that today's call may contain forward-looking statements that involve certain risks, uncertainties, and other factors that could cause actual results to differ materially from those discussed during the call. For information regarding these risk factors, please refer to our earnings materials relating to this call posted on our website and our filings with the SEC. We will also be referring to certain non-GAAP financial measures during the call. Please refer to today's earnings materials and our filings with the SEC for additional information, including reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures. Also, I would just highlight, as we did in our press release last week, that we've refreshed the structure of our earnings presentation. And of course, we'll guide you through some of that here on the call. If you missed the preview in the press release, there's a quick primer on page five of the presentation that I would encourage you to read for more context. And with that, I will turn the call over to Chris.

Thanks very much, Josh. And hello, everybody. Apologies in advance. It feels to me like half the people in New York and London are. I've come down with the February-March bug. So apologies if my voice is a little crackly or I am coughing during this. As Josh said, and we're going to start with slide six, as Josh said, this is a new format and it's something that you can anticipate seeing going forward. You're of course also seeing for the first time a full U.S. Form 10-K. We expect to file that later today. And these slides now take the form of our full earnings presentation, earnings release combined into one document as opposed to having two separate documents that we had in the past. We hope you'll find this useful and helpful, and it matches the way that, of course, you see all of the classic U.S. public health managers and others providing their information to people. So this first slide, 6, we'll always lead with. These are our gap numbers. And they're important to lead up front for gap prominence, but at the same time, these are not the things that management is terribly focused on. We're focused on cash more than accounting numbers. But before I take you to the cash, where there's some pretty exciting news, I will just say a word or two about accounting because I think there may have been a little bit of confusion after we put these results out, which caused, from my perspective, a reasonably adverse market reaction. Most significantly, when we show unrealized gains or losses separately in these accounting matters, that does not any longer necessarily mean that something has happened with respect to the substance of the cases. So for example, in the fourth quarter of 2024, you see a negative number for unrealized losses. That does not correlate to the portfolio performing poorly. In fact, the portfolio performed very well in the fourth quarter. We had dramatically more, multiples more of positive case milestones than we had negative case milestones. We only had a few negative case milestones amounting to a very small amount of money small single-digit millions. So Jordan is going to walk you through one of the later slides in a bridge to show you all of the different components that you now see in those kinds of numbers. But it's important not to look at them and say, oh my goodness, a number in parens means that something bad might have happened in the portfolio. That isn't the case at all. So let's turn to slide seven, which is really the focus of my message to you today. Because as I said just a minute ago, when John and Jordan and I and everybody else who runs this business looks at the business and how we think it's doing, we focus on cash. We focus on how the portfolio is performing and what is going on with respect to concluded cases and bringing in cash for the business. And on that metric, we had an amazing year. These are blowout results for us. We set a number of new records this year. Our realizations were very high in other words realizations meaning cases that have actually concluded And and they came from lots of different things. So this wasn't a period where we had just one big winner We had lots of things go well we brought in a very significant amount of cash more than we ever had in in our history and beyond just bringing in cash and realizations and we had very strong levels of net realized gains. In other words, the profits that we make on our investments. So those were an annual record by a very wide margin and much higher than they had been in prior years. So this is all consistent with the theme that we've been sounding to you for a little while, which is that after a couple of years of very slow movement in the court system because of the pandemic, Gosh, it has taken a long time for that motor to get back to running smoothly, but that's where it is now, and we're seeing the benefits of it come through in the kind of portfolio activity that we're demonstrating. And it's not only that the portfolio is performing strongly and giving us concluded cases that are generating strong cash realizations for us, it's also that our returns have recovered to very high levels. In fact, our 2024 net realized gains were about double the level of realized gains in the prior year and above our historical track record overall. So that was at more than 100%, 108% ROIC. Or for those who prefer MOECs, more than a double, more than a 2.1x MOEC. And at the same time, all of the data that I've just given you has focused on cases that have been in the portfolio and have made their way to the end and concluded. At the same time, we're continuing to grow the portfolio to set ourselves up for future performance. And you can see with the chart on the right, the portfolio has been growing by about a 15% CAGR over the last four or five years. We continue to see growth during 2024, portfolio growth of about 8%. And that's, of course, measured the way we talk about portfolio here is deployments out the door and milestones. But the other thing you're going to hear us talk about more and more, and John's going to go into this a little bit, and we're going to go into it even more at Investor Day in a month or so, is we're going to begin now sharing more about the way that we look at these things inside the business. And that's what we call target realizations. And so when we write new business, we're trying to determine what we think that business is going to produce over the life of that litigation matter. And our target realizations for our 2024 new business were up significantly year over year. And again, I believe set up a new record. Turning to slide eight, just briefly before I turn you over to Jordan, this is just a snapshot of some financial metrics. And I'm not going to go through each one of these. But I would just sort of highlight for you again that net realized gain number, the second line in the left-hand table, not quite but pretty close to being a double year-over-year. And return on equity, while we have not yet made it to that aspirational 20% that we have talked about the business being able to produce on a sustained basis, we're pleased with the progress that we're making towards that goal with a 14% rolling average for the moment. And with that, we'll be happy to take your questions at the end. I'll turn you over to Jordan and John.