Company Announcements

16 May 2023

BURFORD CAPITAL REPORTS FULL YEAR 2022 FINANCIAL RESULTS;

PROFITABLE GROWTH AND UPDATE ON FAIR VALUE ACCOUNTING

Burford Capital Limited ("Burford"), the leading global finance and asset management firm focused on law, today announces its audited financial results for the year ended December 31, 2022 ("FY22").¹ The Burford Capital 2022 Annual Report, including financial statements (the "2022 Annual Report"), is available at http://www.rns-pdf.londonstockexchange.com/rns/5710Z_1-2023-5-16.pdf and on the Burford Capital website at http://investors.burfordcapital.com.

Christopher Bogart, Chief Executive Officer of Burford Capital, commented:

"The pace of case progress in our portfolio quickened in 2022, resulting in a meaningful improvement in our financial results. Earnings per share more than doubled, driven by a 47% increase in total revenues, including 64% growth in capital provision income. Moreover, we deployed a record $457 million on a Burford-only basis into new capital provision-direct assets, historically our most profitable, and generated robust Burford-only cash receipts of $328 million.

"Court activity has continued to work through the backlog caused by the Covid-19 pandemic, and we are seeing a high level of portfolio activity in 2023, with 28 case milestones already having occurred and 61 more expected through the remainder of the year.

"We believe our portfolio is at a turning point, with a potential increase in our realization rate as more of our capital provision assets resolve. We expect to continue to see strong demand for our capital from tighter financial conditions and an unfolding economic downturn.

"We believe that our revised approach to determine the fair value of our capital provision assets under US GAAP represents a defining milestone in the evolution of the accounting for our asset class, and we expect it to become the industry standard. As we expected, the application of the revised fair value policy has resulted in a moderate increase in the carrying value of our capital provision assets."

¹ All FY22 figures in this announcement are audited and presented on a consolidated basis in accordance with the generally accepted accounting principles in the United States ("US GAAP"), unless otherwise stated. Definitions, reconciliations and information additional to those set forth in this announcement are available on the Burford Capital website and in the 2022 Annual Report (as defined above). In addition, figures in this announcement for the year ended December 31, 2021 have been restated as a result of applying our revised approach to determine the fair value of our capital provision assets retroactively to the prior three years of our annual financial statements prepared in accordance with US GAAP. See "Revised Fair Value Methodology" section of this announcement and "Explanatory note" in the 2022 Annual Report for additional information with respect to the restatement of our financial statements.

FY22 highlights

Revised Fair Value Methodology

Following comments from and engagement with the staff of the US Securities and Exchange Commission (the "SEC"), we have, in consultation with our independent auditor, revised our approach to fair value accounting for our capital provision assets in consideration of Accounting Standards Codification Topic 820-Fair Value Measurement ("ASC 820").

As a result of this work, our capital provision assets are fair valued using an income approach. The income approach estimates fair value based on our estimated, risk-adjusted future cash flows, using a discount rate to reflect the funding risk of deploying capital for funding capital provision assets. The income approach requires management to make a series of assumptions, such as discount rate, the timing and amount of both expected cash inflows and additional fundings, and a risk-adjustment factor reflecting the uncertainty inherent in the cash flows primarily driven by litigation risk, which changes as a result of observable litigation events. These assumptions are considered Level 3 inputs.

A cash flow forecast is developed for each capital provision asset based on the anticipated capital commitments, damages or settlement estimates, and our contractual entitlement. Capital provision assets are recorded at initial fair value, which is equivalent to the initial transaction price for a given capital provision asset, based on an assessment that it is an arm's length transaction between independent third parties and an orderly transaction between market participants. Using the cash flow forecast and a discount rate, an appropriate risk adjustment factor is calculated to be applied to the forecast cash inflows to calibrate the valuation model to the initial transaction price. Each reporting period, the cash flow forecast is updated based on the best available information on damages or settlement estimates and it is determined whether there has been an objective event in the underlying litigation process, which would change the litigation risk and thus the risk-adjustment factor associated with the capital provision asset. Each reporting period, the updated risk-adjusted cash flow forecast is then discounted at the then current discount rate to measure fair value.

In a small number of instances, we have the benefit of a secondary sale of a portion of an asset or liability. When this occurs, the market evidence is factored into the valuation process to maximize the use of relevant observable inputs. Secondary sales are evaluated for relevance, including whether such transactions are orderly, and weight is attributed to the market price accordingly, which may include calibrating the valuation model to observed market price.

In addition to applying this revised valuation approach to our FY22 consolidated financial statements, we have applied it retroactively to the prior three years of our consolidated financial statements. Management and the audit committee concluded on May 2, 2023 that our consolidated financial statements for the years ended December 31, 2021, 2020 and 2019 and the six months ended June 30, 2022 should be restated to correct a material understatement of capital provision assets and capital provision income given the application of the revised valuation approach; definitionally, any such restatement is considered to be for the correction of a material error. The restated consolidated financial statements for the years ended December 31, 2021, 2020 and 2019 are included in the 2022 Annual Report, and we intend to present our restated condensed consolidated financial statements for the six months ended June 30, 2022 when we issue our condensed consolidated financial statements for the three and six months ending June 30, 2023.

At the date of this announcement, we have open comment letters from the staff of the SEC with respect to its review of our annual report on Form 20-F for the year ended December 31, 2021 (the "2021 Annual Report") relating to, among other things, our approach to fair value accounting for our capital provision assets in consideration of ASC 820. Although the SEC comment letters will remain open and will not be formally resolved until the SEC staff has had an opportunity to review the 2022 Annual Report, we believe that the 2022 Annual Report addresses the SEC comments in all material respects.

Internal Control Over Financial Reporting

The SEC rules require a public company to complete a comprehensive evaluation of its internal control over financial reporting and to maintain disclosure controls and procedures.

Under the auditing standards promulgated by the Public Company Accounting Oversight Board, a restatement of financial statements is by definition evidence of a material weakness in internal controls. As a result, Burford has no alternative but to conclude that, due to the material weaknesses in Burford's internal control over financial reporting, Burford's internal control over financial reporting and Burford's disclosure controls and procedures were not effective at each of December 31, 2022 and 2021.

During the year ended December 31, 2021 and as disclosed in the 2021 Annual Report, our management identified and disclosed material weaknesses in our internal control over financial reporting relating to each of (i) the preparation of evidence to demonstrate completeness and accuracy of information prepared by the entity ("IPE") and (ii) management review controls ("MRC"). To remediate the material weaknesses relating to IPE and MRC, our management, in consultation with the Audit Committee, implemented a remediation plan to strengthen our internal control over financial reporting. The remediation measures relating to IPE and MRC have been fully implemented at December 31, 2022, and the operational effectiveness of our internal control over financial reporting with respect to these material weaknesses has been validated through testing. Based on these measures and the testing and evaluation of the effectiveness of our internal control over financial reporting, our management concluded that the material weaknesses relating to IPE and MRC have been remediated at December 31, 2022.

YPF-Related Assets Subsequent Event

On March 31, 2023, the United States District Court for the Southern District of New York (the "Court") issued its opinion and order in connection with the summary judgment motions filed by the parties (the "Ruling") in the Petersen and Eton Park cases against the Republic of Argentina and YPF. In summary, the Court decided that (i) Argentina was liable to Petersen and Eton Park for failing to make a tender offer for their YPF shares in 2012; (ii) YPF was not liable for failing to enforce its bylaws against Argentina; (iii) the various arguments Argentina had made to try to reduce its damages liability from the straightforward application of the formula in the bylaws were unavailing; and (iv) a hearing is needed to resolve two factual issues to enable the computation of damages.

The Ruling was a complete win against Argentina with respect to liability, with the quantum of damages yet to be determined, and a loss against YPF. The estimated impact of the Ruling on the fair value of the YPF-related capital provision assets at March 31, 2023 is an approximate increase of $285 million on a consolidated basis, approximately $100 million relating to third-party interests and approximately $185 million on a Burford-only basis. At December 31, 2022, the $1,233 million of consolidated carrying value for the YPF-related assets comprised $1,171 million of unrealized gain and $62 million of deployed cost (December 31, 2021: $1,231 million of carrying value). On a Burford-only basis, carrying value at December 31, 2022 was $823 million and comprised $768 million of unrealized gain and $55 million of deployed cost (December 31, 2021: $821 million of carrying value).

1Q23 Results

Burford has previously announced its intention to begin quarterly reporting commencing with the three months ended March 31, 2023 ("1Q23"). Financial results for 1Q23 are expected to be announced in the first half of June 2023.

Investor and Analyst Conference Call

Burford will hold a conference call for investors and analysts at 8.30am EDT / 1.30pm BST on Tuesday, May 16, 2023. The dial-in number for the conference call is +1 646 664-1960 (USA) / +44 (0)20 3936 2999 (UK) / +44 (0)20 3936 2999 (all other locations) and the access code is 867191. To minimize the risk of delayed access, participants are urged to dial into the conference call by 8.10am EDT / 1.10pm BST.

A live webcast of the call will also be available at https://www.investis-live.com/burfordcapital/644b751569b6910d00728042/osld, and pre-registration at that link is encouraged.

An accompanying 2022 full year results presentation for investors and analysts will also be made available on the Burford Capital website prior to the conference call at http://investors.burfordcapital.com.

Following the conference call, a replay facility for this event will be available until Tuesday, May 30, 2023 by dialing +1 845 709-8569 (USA) / +44 (0)20 3936 3001 (UK) / +44 (0)20 3936 3001 (all other locations) and using the replay access code 512960. A replay facility will also be accessible through the webcast at https://www.investis-live.com/burfordcapital/644b751569b6910d00728042/osld.

For further information, please contact:

About Burford Capital

Burford Capital is the leading global finance and asset management firm focused on law. Its businesses include litigation finance and risk management, asset recovery and a wide range of legal finance and advisory activities. Burford is publicly traded on the New York Stock Exchange (NYSE: BUR) and the London Stock Exchange (LSE: BUR), and it works with companies and law firms around the world from its offices in New York, London, Chicago, Washington, DC, Singapore, Dubai, Sydney and Hong Kong.

For more information, please visit www.burfordcapital.com.

Summary Financial Statements, Restatements and Reconciliations

The tables below set forth summaries of the condensed consolidated and Burford-only statements of operations for the year ended December 31, 2022 and restatements of operations for the year ended December 31, 2021, the condensed consolidated and Burford-only statements of financial position at December 31, 2022 and restatements of financial position at December 31, 2021 and corresponding reconciliations from consolidated to Burford-only financial results.

Summary condensed consolidated statement and restatement of operations

Summary Burford-only statement and restatement of operations

Reconciliation of summary condensed consolidated statement and restatement of operations to summary Burford-only statement and restatement of operations

Summary condensed consolidated statement and restatement of financial position

Reconciliation of summary condensed consolidated statement and restatement of financial position to summary Burford-only statement and restatement of financial position

Reconciliation of components of deployments from a consolidated basis to a Group-wide basis

1.        Represents capital calls for expenses rather than cash deployed into assets.

Reconciliation of consolidated proceeds from capital provision assets to Burford-only cash receipts

Reconciliation of consolidated to Burford-only cash and cash equivalents and marketable securities

Reconciliation of consolidated to Burford-only realizations

Reconciliation of consolidated to Burford-only realized gains

Reconciliation of consolidated to Burford-only and Group-wide partial realization related to development in global antitrust portfolio matter

Reconciliation of tangible book value attributable to Burford Capital Limited per ordinary share

The tables below set forth the reconciliations of tangible book value attributable to Burford Capital Limited per ordinary share to total Burford Capital Limited equity, the most comparable measure calculated in accordance with US GAAP, at December 31, 2022 and December 31, 2021.

Definitions and Use of Non-GAAP Financial Measures and Alternative Performance Measures

Burford reports its financial results in accordance with US GAAP. US GAAP requires us to present financial statements that consolidate some of the limited partner interests in private funds we manage as well as assets held on our balance sheet where we have a partner or minority investor. We therefore refer to various presentations of our financial results as follows:

We subdivide our capital provision assets into two categories:

We also use certain unaudited alternative performance measures, including:

Other unaudited alternative performance measures and terms we use include:

We also use certain non-GAAP financial measures, including:

For additional information, including reconciliations of our non-GAAP financial measures to the most directly comparable US GAAP measures and reconciliations of our alternative performance measures, see the 2022 Annual Report filed with the SEC on May 16, 2023 and made available on our website at http://investors.burfordcapital.com. Non-GAAP financial measures should not be considered in isolation from, as a substitute for, or superior to, financial measures calculated in accordance with US GAAP.

This announcement does not constitute an offer to sell or the solicitation of an offer to buy any ordinary shares or other securities of Burford.

This announcement does not constitute an offer of any Burford private fund. Burford Capital Investment Management LLC, which acts as the fund manager of all Burford private funds, is registered as an investment adviser with the US Securities and Exchange Commission. The information provided in this announcement is for informational purposes only. Past performance is not indicative of future results. The information contained in this announcement is not, and should not be construed as, an offer to sell or the solicitation of an offer to buy any securities (including, without limitation, interests or shares in any of Burford private funds). Any such offer or solicitation may be made only by means of a final confidential private placement memorandum and other offering documents.

Forward-looking statements

This announcement contains "forward-looking statements" within the meaning of Section 21E of the US Securities Exchange Act of 1934, as amended, regarding assumptions, expectations, projections, intentions and beliefs about future events. These statements are intended as "forward-looking statements". In some cases, predictive, future-tense or forward-looking words such as "aim", "anticipate", "believe", "continue", "could", "estimate", "expect", "forecast", "guidance", "intend", "may", "plan", "potential", "predict", "projected", "should" or "will" or the negative of such terms or other comparable terminology are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements. In addition, Burford and its representatives may from time to time make other oral or written statements which are forward-looking statements, including in its periodic reports that Burford files with, or furnishes to, the US Securities and Exchange Commission, other information made available to Burford's security holders and other written materials. By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors because they relate to events and depend on circumstances that may or may not occur in the future. Burford cautions you that forward-looking statements are not guarantees of future performance and are based on numerous assumptions, expectations, projections, intentions and beliefs and that Burford's actual results of operations, including its financial position and liquidity, and the development of the industry in which it operates, may differ materially from (and be more negative than) those made in, or suggested by, the forward-looking statements contained in this announcement. Significant factors that may cause actual results to differ from those Burford expects include, among others, those discussed under "Risk Factors" in Burford's annual report on Form 20-F for the year ended December 31, 2022 filed with the US Securities and Exchange Commission on May 16, 2023 and other reports or documents that Burford files with, or furnishes to, the US Securities and Exchange Commission from time to time. In addition, even if Burford's results of operations, including its financial position and liquidity, and the development of the industry in which it operates are consistent with the forward-looking statements contained in this announcement, those results of operations or developments may not be indicative of results of operations or developments in subsequent periods.

Except as required by law, Burford undertakes no obligation to update or revise the forward-looking statements contained in this announcement, whether as a result of new information, future events or otherwise.