It’s not often that a company beats sky high market expectations, but this was certainly the case with Burford Capital (BUR:1,038p), a global finance company focused on investing in litigation cases and one of the largest companies listed on Aim. I have followed this company for just over two years now, having first spotted the investment potential when the shares were trading at a bargain basement 146p ('Legal eagles', 8 Jun 2015), and last advised banking profits on two thirds of your holdings at just shy of 900p and running the balance for free ('Top-slicing and running profits', 26 Jun 2017).
It’s just as well I maintained an interest because Burford’s results for the six months to end June 2017 were not just the best in the company’s history, exceeding the record profits recorded for the whole of last year, but they were well ahead of the run rate embedded in analysts’ full-year expectations, thus prompting some eye-catching upgrades. For instance, analyst Trevor Griffiths at broking house N+1 Singer raised his full-year pre-tax profit estimates by more than two thirds to $240m, an outcome that should deliver EPS of 110c (84p at the current exchange rate) and clearly supports forecasts of a 14 per cent hike in the dividend per share to 10.5c, or 8p.
The headline numbers tell it all: Burford’s income soared by almost $100m to $175.5m (£133m) in the six-month period to deliver a record half-year adjusted pre-tax profit of $145m and an 80 per cent rise in EPS to 64.25c (49p); cash generation of $173.7m from investments held on its balance sheet exceeded that in every previous half-year period; and the pace of investment continues to accelerate with total new commitments of $488m made of which $289m capital has already been deployed.