As a provider of finance for civil litigation, Burford Capital (BUR) has always had lumpy revenue streams; after all, there's no way of telling how long a case will last. However, its income has now risen to the extent that the company is introducing conventional interim and final dividend payments - kicking off with an interim dividend payable some time in December.
These interim results support the move, with litigation-related investment income up 85 per cent to $18.7m (£11.4m). Over the last five years, 26 investments of $67m have produced returns of $174m, or a 63 per cent net return. And to boost the cash pile to finance more litigation, the group successfully raised $150m in July through a retail bond issue. That follows new commitments of $62m in the first half - almost as much as in all of the previous year.
Unusually, Burford was able to release the details of one of its cases, between power generator Rurelec (RUR) and the Bolivian government. Rurelec borrowed money from Burford to grow the business, as a legal claim was affecting its ability to find finance from more conventional sources. Rurelec won the case, and for an investment of $15m Burford was paid back $26m.
Meanwhile, Burford’s UK insurance business performed reasonably well in a stagnant market, with revenue broadly flat at $7.5m.
Analysts at RBC Capital Markets expect full-year adjusted pre-tax profits of $49.4m and EPS of 22¢ (from $42.5m and 20¢ in 2013).
| BURFORD CAPITAL (BUR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 123p | MARKET VALUE: | £252m | |
| TOUCH: | 122-124p | 12-MONTH HIGH: | 144p | LOW: 109p |
| DIVIDEND YIELD: | 3.3% | PE RATIO: | 5 | |
| PREMIUM TO NAV: | 17% | NET CASH: | $15.3m | |
| Half-year to 30 Jun | Net asset value (¢) | Pre-tax profit (m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2013 | 158 | -24.6 | -11.9 | nil |
| 2014 | 173 | 12.4 | 5.7 | 1.74 |
| % change | +9 | - | - | - |
Ex-div: 13 Nov Payment: tbc £1=$1.645 | ||||
