As is now tradition, full-year results for Burford Capital (BUR) smashed past records. Income jumped nearly a quarter to $425m (£322m), the return on the core litigation finance portfolio rose to 85 per cent, while 26 different investments contributed towards realised gains, up from 20 in 2017.
But the most startling takeaway from 2018 results was the $1.3bn of new investment commitments from external sources in the period, which partly explains the swelling net assets. This, together with October’s oversubscribed share placing, suggest the doors to private and public capital remain wide open.
Of course, this could change if Burford’s track record starts to sour, and it is tempting to view a drop in the return on equity from 37 to 30 per cent as a sign of a slowdown. But at least half of this decline was caused by the share issue, and the second half-weighted leap in net assets from $799m to $1.36bn will have only compounded the drag.
The bears will also point to an uptick in unrealised gains, from 53 to 55 per cent of reported income. But while paper profits are never a substitute for cash, investing in a litigation finance house requires greater faith than would normally be extended to most asset managers.
Analysts at Numis forecast adjusted earnings of 117¢ a share this year, rising to 175¢ in 2020.
| BURFORD CAPITAL (BUR) | ||||
| ORD PRICE: | 1,976p | MARKET VALUE: | £4.32bn | |
| TOUCH: | 1,962-1,976p | 12-MONTH HIGH: | 2,075p | LOW: 1,076p |
| DIVIDEND YIELD: | 0.5% | PE RATIO: | 17 | |
| NET ASSET VALUE | 632p | NET DEBT: | 33% | |
| Year to 31 Dec | Total Income (£m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
| 2014 | 82.0 | 47.3 | 22.2 | 7 |
| 2015 | 103 | 67.9 | 31.5 | 8 |
| 2016 | 163 | 110 | 56.0 | 9.15 |
| 2017 (restated) | 343 | 249 | 120 | 11 |
| 2018 | 425 | 305 | 151 | 12.5 |
| % change | +24 | +22 | +26 | +14 |
| Ex-div: | 23 May | |||
| Payment: | 14 Jun | |||
| £1=$1.31. | ||||
