According to Burford Capital (BUR) chief executive Chris Bogart, disputes lawyers tend to be busier in the second half of the calendar year. For that reason, the litigation funder's first half - in which net profits more than doubled to $52.8m (£40.2m) and litigation finance investments swelled by nearly three times on the comparable period to $193m - was even more impressive.
Beyond the stellar numbers, management bucked the general trend of the half-year results season to definitively call the Brexit vote as a positive. On the financial front, that logic is clear, as Burford largely earns and pays dividends in dollars while borrowing in now-devalued pounds, as it effectively did when it raised £100m in its second retail bond offering in the spring.
Operationally, the connection between UK corporates' likely uptick in general legal advice and litigation seems less clear, but the group thinks it might benefit from the additional complexities of English court judgment enforcements in Europe. Sterling's weakness is also likely to support the relative competitiveness of the UK courts and London-headquartered international arbitral institutions.
Analysts at N+1 Singer expect full-year adjusted pre-tax profits of $77.6m and EPS of 34.7¢, up from $67.9m and 31.5¢ in 2015.
BURFORD CAPITAL (BUR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 385p | MARKET VALUE: | £787m | |
| TOUCH: | 380-390p | 12-MONTH HIGH: | 385p | LOW: 158p |
| DIVIDEND YIELD: | 1.7% | PE RATIO: | 11 | |
| PREMIUM TO NAV: | 109% | NET DEBT: | 40% | |
| Half-year to 30 Jun | Net asset value ($) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2015 | 192 | 23.8 | 11.3 | 2.3 |
| 2016 | 241 | 55.8 | 25.5 | 2.7 |
| % change | +26 | +135 | +126 | +15 |
Ex-div: 6 Oct Payment: 28 Oct £1=$1.31 | ||||
