Hello and welcome to the Burford Capital Presentation of 2021 Full Year Results. My name is Lauren and I will be coordinating your call today. I will now hand you over to your host, Christopher Bogart, Chief Executive Officer to begin. Christopher, please go ahead.

Thanks very much and hello everyone. Thank you all for joining us both on the telephone and via the webcast for our earnings call about our full year 2021 numbers. As usual, with me on the call are Jon Molot, Burford’s Chief Investment Officer and Ken Brause, Burford’s Chief Financial Officer and we will walk you through the slides that you should have before you seriatim. I will start on Slide 3, which is really just an overall summary of some of the key things that happened during the course of the year. And I would say that we are very pleased with our 2021 performance. This was the best year in our history for new business, not only in terms of the total amount of business that we wrote across all of Burford’s pools of capital, which translated into further growth in our now $5 plus billion portfolio of litigation assets. But I’d particularly highlight the strength of the balance sheet commitments and deployments, which is of course where we maximize our returns for shareholders. We also of course as you can see there have continued to produce strong returns along with very, very low losses. Before I go on in the slides, I will just comment on a couple of other things that I am seeing in the business. First of all, as we announced just yesterday, we have done the final closing now on a new fund, a $360 million fund that we call the Burford Advantage Fund and this fund is designed to fit in between the lower returning post-settlement fund activity that we already have been doing for a number of years and the traditional core high-return litigation finance matters. There was a gap in our product offering both to clients in the market and…

Thank you, Chris and thanks to all of you for joining. I am very pleased here chatting with you. If we turn to Slide 10, that’s exactly what I am going to talk about is the portfolio. And you see that we have a very large portfolio that has continued to grow, right. It’s 15% larger at the end of ‘21 than it was at the end of ‘20 and that’s based in large part on a very significant increase in our capital provision direct new commitments. They were up 80% from last year. And they have continued to increase over the last 5 years, right. We have got a compound annual growth rate of 43% over the 5 years. And when you think about what’s in that portfolio? It’s pretty incredible, the diversity of what we have built, right. We still turned down lots of matters that come our way. We have a very rigorous investment process. But fortunately, we have the internal expertise and the market reach that we are not limited to any one particular type of litigation or one type of geography or jurisdiction. So whether it’s intellectual property, whether it’s contract disputes, whether it’s a business torque, whether it’s an investor state dispute under an investment treaty, it could be in Europe, it could be in the North America, it could be international arbitration, we take it all. And we want to be there and have long been there for law firms that have diverse practices with global reach and companies who have diverse portfolios of litigation that cover lots of different topics and lots of different jurisdictions. So we’ve built a very large portfolio with diverse matters included in them. And that’s really what makes me love this business and be optimistic about its…

Well, thank you, John, and I’ll add my good morning and afternoon to everybody. Pleased to be here today as well. So I don’t have a slide for this, but before discussing our financial results, I just wanted to take a few minutes and mention some of the updates and enhancements that we’ve made to our financial reporting, which you’ve likely seen already on our website. As we’ve said, this is our first financial report prepared under U.S. GAAP. And for the most part, the U.S. GAAP rules are very similar to IFRS rules, including things like revenue recognition and fair valuing of our capital revision assets. One change, which I want to point out that also has been applied to past periods in IFRS as well, is that we are now consolidating a subsidiary called Colorado Investments which is where the third-party interest in the Petersen claims that we’ve sold reside. The result of this is an increase to assets at period end of $383 million. But there is also a corresponding liability on the balance sheet, reflecting the 38.75% of the Petersen claim that was sold. And as a result, there is no impact on Burford-only shareholders’ equity from this change in consolidating the entity. Third-party interest in consolidated assets, which had been reported as a liability under IFRS are now reported in shareholders’ equity as a non-controlling interest. But again, when we report equity-based financial metrics, our focus is on shareholders’ equity attributable to holders of ordinary shares, which, therefore, will remove that third-party interest. The change to U.S. GAAP also results in a few changes to presentation within the financial statement. For instance, one difference is at the portion of the impact of foreign currency gains and losses that relates to our capital provision assets is…

Thanks very much, Ken. And turning to Slide 19, really just summing up what you’ve heard. We were very pleased with the growth of new business in 2021, both across the business and particularly on a Burford-only basis, which sets those assets up to maximize future shareholder benefit. Despite some of the delays that we discussed, we had a strong year for cash generation, generating more than enough cash, as Ken noted, to cover all of our needs for operating expenses and financing. And we have robust balance sheet liquidity and good access to capital from multiple sources. And as we said, 2022 should be the year where at least something happens with YPF. So we’re very bullish about where we sit today and what the future holds. And with that, let me invite your questions.

Our first question comes from David Chiaverini from Wedbush Securities. David, please go ahead.

Hi. Thanks and thanks for all the details, very helpful. And it’s great see the strong rebound in new commitments and deployments. Any commentary you can provide relating to the outlook for additional commitments and deployments?

We don’t really guide going forward, as you know. But I think it’s fair to say that we certainly see activity in the pipeline and in the legal industry. I think an interesting question will be, and you will notice in the management statement in the annual report, we provided some statistics about new litigation filings in the U.S. courts, showing that both civil cases in general and bankruptcy cases in particular, had fallen to 5-year lows in 2021. Now, that does not mean, first of all, that there is a scarcity of litigation. 5-year lows still mean hundreds of thousands of cases. But what it does suggest, because the conduct underpinning litigation hasn’t gone away, it’s just that probably there is some pent-up demand out there in the system. That people basically during COVID were taking their time and not rushing to the courthouse. And in lots and lots and lots of civil cases, you have many years to file a case before it goes stale, before it runs a fall of the statute limitations. So, it will be interesting over the next little while to see what happens with that pent-up demand. Whether it’s going to happen this quarter or next quarter, I have no way of knowing, but it does feel like there is some pent-up demand in the system. And then on insolvencies, which has historically given us a decent amount of business, we have gone to historic lows given the amount of stimulus in the system. Now, in a world where you are withdrawing stimulus and seeing both inflation and interest rate increases, it stands to reason that you will start to see a reversal of that downward trend in insolvencies.

Great. That’s helpful. And can you talk about – you spoke a little bit about your liquidity, $300 million of cash, you have $84 million debt maturity coming up. Can you talk about your capacity to the extent that you do see these additional opportunities, can you talk about the capacity and to the extent that you may have to turn away some business given limited capacity from a liquidity standpoint?

It’s certainly not something that we would anticipate doing. We think our liquidity is both strong and adequate for the business that we want to do. But it’s also clear that we have multiple alternative paths available to us, if we so choose. For example, in 2021, one of the larger deals that we did and this wasn’t a liquidity constraint. It was a risk management matter. But you saw that in a very short period of time, we took an extra $100 million of exposure that we did in a sidecar arrangement with our sovereign wealth fund partner. And so that was an example, again, not liquidity-based but simply the size of the matter that we were prepared to put on the balance sheet. So, I think we have numerous options on the liquidity front, not to be in a position of turning away business.

Great. And then last one for me. Can you talk about – go ahead.

No, go ahead.

So, the last one for me is any changes in the competitive landscape, whether it’s any new entrants or existing competitors becoming more aggressive?

We talked about competition in the management statement as well. And what we say there is there has always been competition in this business. That hasn’t changed. We think it’s a good thing. We think that having multiple players in the marketplace makes the use of legal finance more conventional and more mainstream, and that’s a net positive. In other words, a rising tide lifts all boats here. And so no, I don’t think that we have seen seismic changes in the competitive landscape, especially in the world of traditional commercial litigation financing. People are always trying to enter and lots of them once they do enter, figure out that this is actually a pretty hard business to do well at and lots of them then turn around and go and do something else. So, you certainly have that dynamic that continues and you certainly have hedge fund capital flowing into things that we don’t really do. Most notably into the U.S. mass market and to some extent, into the U.S. consumer litigation finance market. But in terms of where we sit at the high dollar commercial end of the market, there hasn’t really been a dramatic change in the competitive landscape. So thanks, David, for those, and we are going to intersperse telephone and webcast questions. And so from the webcast Julian Roberts from Jefferies has posed a pair of questions. The first being about the Advantage Fund, will the duration of assets in the Advantage Fund be shorter than for the average balance sheet asset? And I think the answer to that is not necessarily. We have a pretty wide range of asset durations when you look at individual matters on the balance sheet. And I think you will see the same range of durations in the Advantage…

Sure. Having left the accounting piece of how we recognize the income to Chris, on the substance. It’s not surprising that we would have a large claim family that involves multiple lawsuits with multiple claims, multiple defendants, that settlements would come at different times and that one defendant decides to settle out with one particular plaintiff or a group of plaintiffs, one plaintiff decides to settle with a large group of defendants and those will begin to give you some indicator of settlement levels, but it really – I would hesitate to say you can predict ROICs from the early activity, it takes some time before basically a market develops and says these claims are settling for this many cents on the dollar of potential recovery as a trial. And also, it’s important to note that as we have long said, our earlier settlements end up with attractive IRRs, but lower ROICs because you are saving the cost and uncertainty associated with the litigation process. So, the plaintiffs are generally taking more of a haircut whereas if you push to the eve of trial or go all the way and you are successful, you end up with larger recoveries. So, it really does depend upon the facts of the individual cases as to what people’s damages are, the risk appetites of the individual parties and how far along you are in the process. So, the first observation about does the fact that some of these are starting to resolve suggest there will be continuing progression, generally, that is the case for these large claims families. Whether there is yet a sort of market number, even putting aside the accounting noise that Chris described, I wouldn’t want to rely on it. But when you are seeing the accounting numbers, you can’t really tell where the settlement levels are coming in for because it depends to some extent how the accountants are allocating the settlement proceeds across cost versus profit.

So, I think we are ready for another question from the phones.

Our next question comes from James Hamilton from Numis Securities. James, please go ahead.

Thank you for the presentation and thank you for the time. I have got two or three if I may. Firstly, on sort of Slide 13, you highlighted the sort of your – what you expect to turn to be on the sort of capital provision in direct portfolio, and you put the ROIC at 137%, and that obviously compares to the 93% historically you have all else being equal, that should translate into a higher IRR. Is there a major duration difference between the two? I appreciate you probably haven’t put the IRR on there because it gets you too close to profit guidance, but is there a material duration difference there or should we expect the IRRs to be trending up and therefore the ROE to be trending up as well?

Well, it’s not just the – Jon can comment on this as well. It’s not just that we are trying to avoid profit guidance. It’s that as we have said in the past, while the modeling that we have done has shown to be quite accurate historically at predicting outcomes, we don’t have confidence at this moment in our ability to predict duration. Jon, you were going to add to that?

Yes. I would just – I would add to that that the complexity of it is in a probabilistic modeling, both at inception and as we update it for each matter, we are looking at all of the possible outcomes of how much money will come in and when it will come in. And just as I said in response to the earlier question, earlier matters tend to come in with lower ROICs and higher IRRs, not necessarily high IRRs, but attractive ones. Some when you go to the distance, you get not only a higher ROIC, but you even get a higher IRRs, if you end up having a very large outcome. But where all of that is being fed into the model and then it’s being aggregated across our entire portfolio. So, it is – and when we have been able to look with hindsight at the ROICs we have seen, as I mentioned before and as we explained on Investor Day, sufficient correlation between in the aggregate, what the model is predicted for a large number of matters and what those cases delivered, right. Not in any particular matter, by its nature, any particular matter is going to depart from what’s modeled because the model took into account all the various permutations that could happen and only one of them is going to have come true. But I don’t know because, as Chris said, duration is the hardest thing to predict. And the model isn’t predicting duration. It’s predicting the average across multiple durations. We are not at the point where we feel comfortable that the – if we gave you what the IRR was that we split out from the model, it would be quite as valuable as giving the ROIC.

Okay. If I could turn to the fund, just a couple of sort of clear up points if you wouldn’t mind. Firstly, on the top end of your IRR guidance there 20%, obviously, that would broadly translate into you splitting the money 50-50 with the underlying clients. And I believe 10% as a yield on funds under management is the highest I have ever seen. But I also note in the statement that there is a comment around super normal returns being shared. And I was just sort of wondering and you don’t expect those to materialize. I was just wondering, where does the super normal returns sort of point sort of arrive and what are the economics after that? And secondly, how long do you believe it’s likely to take to deploy the $360 million?

So, on the first question, the answer is a little bit complicated based on individual negotiations and also the fact that the 10% is a simple – in other words, non-compounding, non-IRR number. And so you have to match – you have to do some math to get between the simple non-compounding in the IRRs. But I wouldn’t – I would urge people not to spend any time gaming that out. Like, we are using this fund to try to fill a gap in our offering. So, we are not trying to put higher returning assets in there. We are trying the sweet spot of this fund is assets that have IRRs in the teens, and that’s what we are going after. And the reason for that super normal provision, frankly, is given the structure of the fund, it’s to make sure that we are not incentivized to take on an unduly high level of risk to try to generate those super normal return. So, that’s the governor there. And as to the timing, I think when – we don’t really have a projection, but if you look at our historic approach to funds, we tend to raise funds in these kinds of sizes as opposed to jumbo funds to preserve our flexibility about how we allocate between funds and the balance sheet going forward. So, this fund only has a 3-year investment period. And we certainly try to size these so that we are done comfortably before the investment period is up, but we are also not trying to be all done in 1 year. As you have seen from some of the footnotes we have already done something on the order of $60 million plus in matters for this fund. So, that sort of gives you a sense of the pace.

Thank you.

Great. Thank you very much, James. And at the risk of overstaying our welcome, we will just take two final quick questions from the webcast and then let you go about your days. But as usual, we are very available to investors in all sorts of different ways. I am for example, participating tomorrow in the Jefferies conference, next week, presenting at the shares conference, and we have lots of other opportunities to engage with us. So, the website questions – webcast questions, one is from Trevor Griffiths, which is sort of the question of the moment. Have you any Russian exposure subject to sanctions or reputational risk? So, the short answer to that question is no. And let me then just give a little tiny bit more nuance, Burford does not and has never done business where we need to be enforcing against assets that are in Russia or frankly, in the Ukraine for that matter. And we as a rule, do not take on matters where we are concerned about the integrity of the underlying court systems and our ability to have a fair and rule-of-law-based approach to our asset enforcement. So, if we were approached by a client where we would need to enforce against assets in Russia, we would not do those deals. We have, from time-to-time, done deals where we were needing to enforce against Russian assets, Russian-controlled assets that are outside of Russia. But that is, as a policy matter, consistent with the sanctions regimes. And so it is not uncommon for us and for other people in that business to be able to get permission from the relative governments to go and do just that. And we have successfully done that in the past. Because what we are engaged in doing is not…

Thanks everyone.

This concludes today’s call. Thank you for joining. You may now disconnect your lines.