Burford Capital (BUR): Accounting restatement


One of the opaque companies on AIM just became more so!

Bargepole listing for me because my enigma machine is broken!! :upside_down_face:

Not ideal for shareholders IMO. (I don’t hold)


Hi anon

What seems to be happening is BUR re-aligning employee costs that relate to realised gains.

From an old RNS:

“…each year, we award eligible employees the right to receive a portion of the realized gains generated over time by the matters we originate financing for in that year.”

Previously these costs were expensed in the P&L when the associated legal cases were settled and a gain/loss realised.

In the latest H1 2021 results, BUR charged a one-off $45m for such expenses.

Now BUR has spread that $45m over 2019, 2020 and H1 2021.

The upshot is BUR’s balance sheet now always carries a ‘best guess’ provision of the employee costs dependent on realised gains. That way investors can better judge NAV because this estimated liability is included. Before the change, investors (presumably) had to guess the liability.

From this RNS:

Christopher Bogart, Burford’s Chief Executive, commented: “This remains an entirely non-cash matter; the same non-cash expense is simply being spread across 2019 and 2020 instead of being entirely recognized in 2021. Indeed, the outcome of this will be to improve our reported performance in 2021, although there is no cash impact whatsoever.”

Mr Bogart likes to emphasise “non-cash”. And the charge is indeed non-cash for that year’s accounting, but eventually the liability will be paid and I suspect the employees will be paid using cash!


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Thanks Maynard

Yes, so the company should make a provision for costs in each year, in the 2018 and 2019 accounts. (The provision obviously being an accrual estimate of sorts, for costs) matched to revenue recognised in the p&l for that year.

The difference between the provision and the final liability (when known) is usually a charge (or credit) to the p&l in the year this final liability becomes known (because the provision is released to the p&l from the balance sheet and the known accrual made). The adjustment for this difference is definitely not usually made in/as an adjustment to past period signed audited accounts.

Fortunately, there is no ifrs which allows a company to have a policy which routinely permits the restatement of prior year audited costs (and so restate that year’s audited profit).

Something went wrong. I suspect revenue was booked with no associated cost accrual in both 2018 and 2019, and the auditors told them they had to restate the prior year results when this came to light because the amounts were material and no provision had been made in those years.

Points to a lack of internal controls IMO.

I know some people love this company, so please don’t shoot me!


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Burford is interesting. I’m not sure this specific accounting issue is that relevant, but the language used by management concerns me. I always get the impression (and it’s certainly the case here) that they use the exact language they think investors want to hear.

That’s particularly concerning in Burford’s case though because the business is so hard to understand from the outside. I’ve been involved in big litigation myself and have never thought it was particularly easy to predict or “value”. It’s also difficult to evaluate what the competitive landscape will look like in 10 years.

So definitely a pass for me.



Yes. After all of the Muddy Waters business in 2019, you would think they could have sorted their accounting sorted out. The accruals concept is pretty fundamental.

Up 13x, then down 80%, then up 1x all in 9 years. What a strange company!