News Column

Burford Capital In First Half Profit On Litigation Investment Gains

September 4, 2014

Samuel Agini

LONDON (Alliance News) - Litigation finance investor Burford Capital Ltd Thursday reported a jump in income driven by net gains on litigation-related investments.

In a statement, company said it made USD13.6 million in net gains on litigation-related investments in the six months ended June 30, compared with USD6.7 million in the corresponding period last year.

Combined with an increase in interest and other income from litigation-related activities, as well as stable insurance-related income, this helped to increase income to USD27.4 million from USD19.5 million. The increase was slightly tempered by net losses on cash management investments at fair value through profit or loss widening to USD1.6 million from USD403,000.

Burford also reported a USD674,000 drop in expenses to USD9.1 million.

All in all, Burford swung to a USD12.4 million first half pretax profit, from a USD24.6 million pretax loss in the first half of 2013, largely due to the non-repeat of a USD26.5 million non-cash, non-net asset value charge associated with its 2012 reorganisation.

Before the acquisition of Burford UK, the 2012 reorganisation and UK restructuring costs, Burford's pretax profit increased to USD18.2 million from USD9.7 million.

In addition, Burford introduced a semi-annual dividend, and said it will pay 1.74 cent per share to shareholders in December.

"Burford's strong financial performance reflects not only the inherent demand in the market, but also our proven ability to meet that demand," Chief Executive Christopher Bogart said in a statement.

"The innovative approach to the way in which we structure our investments enables us to recognise and capture the diversity of opportunities in corporate finance solutions, beyond traditional litigation funding," Bogart added.

Over the first half, Burford made USD62.0 million of new commitments, bringing total commitments currently outstanding to USD281.0 million, with the company citing "strong" demand for capital in the litigation finance business and "significant" cash receipts from existing investments late last year and this year.

In addition, Burford said its UK insurance business is performing well, contributing USD7.5 million in operating profit in the first half.

Burford said it is seeing some signs of life in the demand for new insurance coverage, but admitted that it is too early to tell what the medium term future holds. Burford said it will continue to "watch, wait and write sensible business."

"We are declining to follow some of our competitors, who in their attempt to retain volume are reducing prices and writing new policies at premium levels we consider inevitably loss-making. In the meantime, we have seen a sharp uptick in demand for our UK litigation finance products," the company said.

Burford Capital shares were Thursday quoted up 2.9% at 123.50 pence.

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Source: Alliance News

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