Burford Capital's (BUR) impressive performance last year was a measure of the investment decisions made a few years ago, the effects of which were not immediately obvious due to the lengthy duration of some legal cases, according to chief executive Chris Bogart. The litigation finance group makes its money by providing finance to companies and legal firms, which are without the time or money to pursue civil redress. By the end of last year it had made 225 per cent in capital returns on the investments made in 2009 - the year of the group's formation. Last year the group grew its litigation investment income by 82 per cent to $87m. So the fact that the group invested a record $206m in litigation bodes well for future income growth.
The deals keep coming, too. Burford has concluded a $45m financing deal with a FTSE benchmark constituent for a portfolio of pending cases. And at the start of this year the group completed its largest ever transaction, lending $100m in capital to a major global law firm. The group also entered the Asian market last year, establishing a presence in Hong Kong. However, the group can only finance insolvency, as opposed to commercial litigation. Mr Bogart says its Asian activities represent a long-term strategic investment.
Analysts at broker N+1 Singer expect adjusted pre-tax profit of $60.2m this year, giving adjusted EPS of 25.9¢. This is down from $67.9m and 31.5¢, respectively, in 2015.
BURFORD CAPITAL (BUR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 287.5p | MARKET VALUE: | £588m | |
| TOUCH: | 285-290p | 12-MONTH HIGH: | 287.5p | LOW: 139p |
| DIVIDEND YIELD: | 2% | PE RATIO: | 13 | |
| PREMIUM TO NAV: | 11% | NET CASH: | $45m | |
| Year to 31 Dec | Net asset value (¢) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2011 | 172 | 15.9 | 8.80 | 3.66 |
| 2012 | 162 | 16.9 | 9.60 | 4.76 |
| 2013 | 172 | 2.10 | 1.30 | 5.23 |
| 2014 | 187 | 47.3 | 22.2 | 7.00 |
| 2015 | 212 | 67.8 | 31.5 | 8.00 |
| % change | +13 | +43 | +42 | +14 |
Ex-div: 14 May Payment: 5 Jun £1=$1.42 | ||||
