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Burford Capital Reports Record Figures As Net Profit Rises 75%

Tue, 14th Mar 2017 09:01


LONDON (Alliance News) - Burford Capital Ltd on Tuesday reported a 75% lift to annual net profit in 2016 on the back of a large rise in income, prompting the company to raise its dividend.

The company, which claims to be the world's largest provider of arbitration and litigation finance, said total income in 2016 rose by 59% to USD163.4 million from USD103.0 million in 2015, driven by a 60% lift from litigation investment income and by income from new initiatives more than trebling.

Operating profit increased by 61% to USD124.4 million from USD77.2 million, leading pretax profit to rise by 62% to USD110.3 million from USD67.9 million.

Burford said is organic cash generation was "strong" during the year, with "record investment recoveries" of USD216.0 million versus USD146.0 million the year before.

Burford raised its annual dividend for 2016 to 9.15 cents per share from 8.0 cents, representing a 14% rise in dollar terms and a 38% rise in sterling terms, the company said.

"Burford has experienced another record year, its seventh consecutive year of significant double digit growth. Burford continues to lead its growing and evolving industry, and looks forward to continuing to innovate to meet its clients' ever-expanding needs," said Chairman Peter Middleton.

Also Tuesday, Burford said it has sold further participation interests in its investment related to the Petersen claims. Burford is invested in the Petersen claims lawsuit, a multi-billion dollar litigation between Argentina and the country's energy company.

In January, Burford said it sold "several million dollars" of participation interests in the possible future proceeds in its investment in the Petersen claims, stating the value of the disposals were "immaterial" but the implied value for its remaining investment was significant as it was over 10 times higher than Burford's investment to date.

On Tuesday, Burford said it has sold further participation interests equal to 10% of its total remaining interest for a total of USD40.0 million.

"The sales imply a market value for the investment of USD400.0 million, approximately 20x Burford's current invested cost, while permitting Burford to continue to retain 90% of the potential upside in this matter," said Burford.

"However, given their size and the inherent unpredictability of litigation, we do not necessarily regard the implied valuation of these sales as the appropriate carrying value for the remainder of the investment on Burford's balance sheet," Burford added.

The USD40.0 million sale will be included in Burford's 2017 results, and it said the disposal may cause a further increase in Burford's carrying value of the Petersen investment.

"However, Burford has not yet determined, nor yet consulted with its auditors about, the impact of these sales on its total carrying value of the Petersen investment, or the consequent impact on Burford's financial statements, for the 2017 financial year," said Burford.

Burford shares were up 3.5% at 758.00 pence per share on Tuesday.

By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance

Copyright 2017 Alliance News Limited. All Rights Reserved. 

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