Headline figures from Burford Capital (BUR) don't tell the whole story. Add back non-cash reorganisation and amortisation charges and profit was actually 25 per cent higher at $42.5m (£25.8m) - some way ahead of analysts' estimates. In fact, RBC Capital markets has increased its price target by 23 per cent to 190p.
Burford supplies financing for corporate litigation cases where the plaintiff has a strong chance of winning, and investment income from cases that were concluded jumped 20 per cent to $38.8m. These cases are all in the US but, in February 2012, Burford bought UK-based Firstassist - subsequently rebranded as Burford UK. This provides insurance for a party against losing a corporate litigation case and for having to pay the fees of the other party. But premiums are only calculated at the end of the case and are naturally significantly higher if the insured party loses. Picking the right case to cover remains the key and insurance-related income rose 29 per cent to $20.9m. In fact, new business written exceeded $150m, more than all of the business written in previous two years combined.
Analysts at RBC have upgraded their forecasts for 2014 and expect pre-tax profit of $49.4m, giving EPS of 22¢ (from $42.5m and 20¢ in 2013) and a dividend of 8.7¢.
| BURFORD CAPITAL (BUR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 120p | MARKET VALUE: | £245m | |
| TOUCH: | 116-120p | 12-MONTH HIGH: | 147p | LOW: 100p |
| DIVIDEND YIELD: | 2.6% | PE RATIO: | 152 | |
| PREMIUM TO NAV: | 15% | NET CASH: | $57.7m | |
| Year to 31 Dec | Net asset value (p) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (p) |
|---|---|---|---|---|
| 2010* | 105 | 1.9 | 6.7 | 2.22 |
| (¢) | ($m) | (¢) | (¢) | |
| 2011 | 172 | 15.9 | 8.8 | 3.66 |
| 2012 | 162 | 16.9 | 9.6 | 4.76 |
| 2013 | 172 | 2.1 | 1.3 | 5.23 |
| % change | +6 | -88 | -86 | +10 |
Ex-div: 21 May Payment: 16 Jun *From 11 Sep 2009 to end-Dec 2010 £1=$1.65 | ||||
