Polar Capital Holdings Plc · LSE:POLR
Polar Capital — FY2021 Earnings Presentation
43 slides from Polar Capital's earnings presentation, June 2021
Slide 1: Results Presentation
Results Presentation Gavin Rochussen, Chief Executive Officer John Mansell, Executive Director Samir Ayub, Finance Director Twelve Months to 31 March 2021 polarcapital.co.uk This presentation is for use with non-US professional investors only.
Slide 2: Agenda
Agenda Page 3 Overview & highlights Pages 4-7 Market perspective & hybrid working Pages 8-13 Fund performance & capacity Pages 14-16 AuM & fund flows Pages 17-23 Financial review Pages 24-35 Strategy & outlook Page 36 Questions Page 37 Appendices This presentation is for use with non-US professional
Slide 3: Overview & Highlights
Overview & Highlights Significant progress in ESG integration within investment Strong focus on processes and at Core operating corporate level digital profit increased marketing has by 24% to benefitted client £51.5m. Performance Established diversification fees enabled Phaeacian during remote Stro
Slide 4: Market Perspective & Hybrid Working
Market Perspective & Hybrid Working This presentation is for use with non-US professional investors only. Please refer to the Important Information at the end of this presentation. 4
Slide 5: Market Perspective
Market Perspective Global indices vs volatility 90% • From the low point in March 2020, world equities staged 80% a remarkable rally into 2021, almost doubling in response to significant central bank and government stimulus 70% 60% • The pandemic presented an environment of low interest 50% rates, l
Slide 6: Market Perspective
Market Perspective Net sales of funds across Europe (€m) 300,000 • Equity funds across pan-Europe registered the 13th consecutive month of net inflows • Active equity fund flows have been positive since 200,000 April 2020 • Monthly net flows into pan-European active equity funds 100,000 increased in
Slide 7: Hybrid Working
Hybrid Working Post COVID-19 working environment • Staff have worked remotely from home since March 2020 • The principal office has been opened for certain periods when government guidelines permitted • Staff have been able to attend the office where there are benefits to wellbeing and for critical
Slide 8: Fund Performance & Capacity
Fund Performance & Capacity This presentation is for use with non-US professional investors only. Please refer to the Important Information at the end of this presentation. 8
Slide 9: UCITS Performance
UCITS Performance Annualised fund performance against benchmark (since inception) 12% 1st Quartile 2nd Quartile 10% 3rd Quartile 4th Quartile 8% 6% 4% 2% 0% -2% -4% Source: Polar Capital, 28 May 2021, Lipper quartile rankings as at 28 May 2021. Lipper Leaders fund ratings do not constitute and are n
Slide 10: US 40 Act, Cayman & LUX SICAV Performance
US 40 ACT, Cayman & LUX SICAV Performance Annualised relative performance since inception US 40 Act Funds Cayman Funds LUX SICAV Funds 3.0% 9.0% 4.5% 8.0% 4.0% 2.0% 7.0% 3.5% 1.0% 6.0% 3.0% 5.0% 2.5% 0.0% 4.0% 2.0% -1.0% 3.0% 1.5% -2.0% 2.0% 1.0% 1.0% 0.5% -3.0% Accent Global Value Emerging 0.0% 0.0
Slide 11: Performance
Performance % of UCITS Funds AuM by quartile ranking 100% • Over 93% of UCITS Fund AuM is in the top two quartiles measured against the Lipper peer group over three and 90% five years • 99% of UCITS Fund AuM is in the top two quartiles 80% measured against the Lipper peer group since inception to 28
Slide 12: Performance Against Benchmarks
Performance Against Benchmarks Percentage of AuM & Funds that have outperformed benchmark to 28 May 2021 • After a strong performance year in 2020, the technology funds are currently lagging benchmark following weaker relative performance since the ‘vaccine’ rotation in YTD November • 48% of AuM out
Slide 13: Capacity
Capacity Capacity as at 28 May 2021 • Four teams added within past four years bringing an Technology additional total capacity of c.£15bn Healthcare • Three teams have added extension strategies in the last EM Stars four years also adding capacity Phaeacian • The Phaeacian strategies added Global/ I
Slide 14: AuM & Fund Flows
AuM & Fund Flows This presentation is for use with non-US professional investors only. Please refer to the Important Information at the end of this presentation. 14
Slide 15: AuM
AuM 25 June 2021 bn £25 • Assets under management have more than doubled from AuM CAGR 22.5% £9.3bn to £20.9bn over the four years to 31 March 2021 £22.7bn Average AuM CAGR 10.1% £20.9bn • The financial year to March 2021 saw the highest single £20 year of growth in AuM of 71% £16.4bn • The financia
Slide 16: Net Flows by Strategy
Net Flows by Strategy November 2020 Twelve months to 31 March 2021 Seven months April 2020 to Seven months November 2020 to October 2020 May 2021 £2,000 1,500.00 £500 Millions Millions Millions £1,500 1,000.00 £400 £1,000 500.00 £300 £500 £200 £- - £100 -£500 (500.00) £- -£1,000 (1,000.00) Dalton Fu
Slide 17: Financial Review
Financial Review This presentation is for use with non-US professional investors only. Please refer to the Important Information at the end of this presentation. 17
Slide 18: Financial Highlights
Financial Highlights Profit before tax up 49% in 2021 Core operating margin up 1% to 36% 31-Mar 31-Mar £m Change 2021 2020 AuM and Revenue Average AUM (£bn) 16.7 14.1 18% Net management fees (£m) 142.5 118.1 21% Net management fee yield 85bp 84bp 1bp Profitability and other income (£m) Core operatin
Slide 19: Operating Costs
Operating Costs Variable compensation costs up in line with profitability Cost discipline maintained Year to Year to Mar-21 Mar-20 Change Core operating margin up 1% to 36% £m £m £m Salaries, bonuses and 29.1 25.6 14% other staff costs1 Core distributions 38.5 27.7 39% Share-based payments1 2.9 3.0
Slide 20: Other Operating Costs
Other Operating Costs Year to Year to Mar-21 Mar-20 £m £m • Other operating costs before exceptional items remain flat IT 6.6 6.4 compared to prior year Rent and rates 2.8 2.7 • Termination and reorganisation costs of £6.2m were anticipated at the time the Dalton acquisition was announced. Of this t
Slide 21: Cash and Seed Investments
Cash and Seed Investments 2021 2020 Total cash and seed investments of £175.7m Total cash and seed investments of £137.9m Seed investments 39.0 Seed investments 30.1 Cash 136.7 Cash 107.8 175.7 137.9 EM Stars US mutual 7.3 EM Stars UCITS 7.1 China Stars 7.3 China Stars 5.1 China Mercury 4.2 China Me
Slide 22: Group Capital
Group Capital Year to Year to Capital allocation (£m) Regulatory Capital Mar-21 Mar-20 160 £m £m 151.4 140 Shareholder funds 151.4 116.1 36.0 120 116.1 8.3 100 30.0 23.5 Less: deferred tax and capital reserves -11.0 -8.3 80 21.4 34.2 Less: Goodwill and intangible assets -25.0 - 60 25.0 40 20.0 115.4
Slide 23: Dividend Policy
Dividend Policy • Total dividend of 40p up 21% 70p 45p 40.0p CAGR 12% • 64% pay-out ratio on adjusted total EPS 40p 60p 33.0p • Over four years to 31 March 2021 the 62.2p 35p 33.0p total dividend has grown at a CAGR of 50p 12% 28.0p 30p 51.5p 40p 40.7p 25p Policy 25.0p 36.6p • The policy in respect
Slide 24: Strategy and Outlook
Strategy and Outlook This presentation is for use with non-US professional investors only. Please refer to the Important Information at the end of this presentation. 24
Slide 25: Strategy Update – Growth with Diversification
Strategy Update – Growth with Diversification Sustainability Responsible investing • Teams formulate and implement the right responsible investing strategy for their funds • Investment teams supported by Head of Sustainability, Sustainability Committee, CIO, CRO and Risk team • ESG forms oversight a
Slide 26: Proposed new team for September 2021 launch
Strategy Update – Growth with Diversification Proposed new team for September 2021 launch A sustainable thematic strategy focussing on clean energy & clean mobility • Team of four investment professionals and two specialist staff, headed by Thiemo Lang, previously running €5bn • Long track record in
Slide 27: Distribution and Client Servicing
Strategy Update – Growth with Diversification Distribution and Client Servicing Dalton Strategic Institutional Asian client base Phaeacian Partners Partnership acquisition Segregated mandates • Asian client base • Phaeacian Partners • Dalton Strategic Partnership • Total of seven segregated increase
Slide 28: Additional capacity added in past four years
Strategy Update – Growth with Diversification Additional capacity added in past four years Capacity AuM1 Calendar year Strategy Type Style Net Flows YTD £bn £m 2017 UK Value Lift-out Value 2.5 1,571 2017 A&AI Extension Growth 2.1 505 Sustainable 2018 EM Stars Lift-out 5 617 Growth Convertible 2019 E
Slide 29: Fund Range Developments
Strategy Update – Growth with Diversification Fund Range Developments Dublin UCITS umbrella: Cayman Funds: Luxembourg SICAV umbrella • Emerging Markets Income Fund merged • European Forager team • Acquisition of Dalton Strategic into Emerging Market Stars Fund reconfigured following Partnership brou
Slide 30: Digital Marketing
Strategy Update – Growth with Diversification Digital Marketing Jan 2020 – April 2021 Website Webcasts Website Traffic E-mail 6 Websites launched 20 webcasts Up 150% 60,000 clients reached through our 2,400 clients participated E-mail campaigns of which 25% new clients to Polar Capital, broadening o
Slide 31: Polar Capital ranked 2nd in the UK for Brand Preference
Strategy Update – Growth with Diversification Polar Capital ranked 2nd in the UK for Brand Preference • Marketing is an area Polar Capital has invested significantly in over the past couple of years, with lockdown having accelerated many of the initiatives we had in place. The Marketing team has now
Slide 32: Polar Capital rankings in Broadridge UK Fund Buyer 50 Report
Strategy Update – Growth with Diversification Polar Capital rankings in Broadridge UK Fund Buyer 50 Report Polar Capital UK Ranking Source: Polar Capital and Broadridge This presentation is for use with non-US professional investors only. Please refer to the Important Information at the end of this
Slide 33: Broadridge Survey: 2nd for Product Quality
Strategy Update – Growth with Diversification Broadridge UK Fund Buyer 50 Survey: 2nd for Product Quality • As an investment-led boutique, the quality of our investment offering is paramount. Our products are a mix of thematic and regional funds, capacity constrained, and registered for sale in many
Slide 34: Broadridge Survey: 4th for Sales & Account Management
Strategy Update – Growth with Diversification Broadridge UK Fund Buyer 50 Survey: 4th for Sales & Account Management • Our approach at Polar Capital is to 2 additions in Europe deliver a specialist investment 2 additions in US offering with a premium service to Head of Asia- Pacific added our client
Slide 35: Summary & Outlook
Summary & Outlook The arrival in September of the Sustainable The strategy Thematic is yielding Equities team provides results An increasingly A strong additional Achieved “sustainable” diverse range of balance sheet capacity active specialist strong provides strategies with growth in an optionality
Slide 36: Thank You Questions?
Thank You Questions? This presentation is for use with non-US professional investors only. Please refer to the Important Information at the end of this presentation. 36
Slide 37: Additional Information
Additional Information This presentation is for use with non-US professional investors only. Please refer to the Important Information at the end of this presentation. 37
Slide 38: Current Investment Strategies
Current Investment Strategies Technology AuM: £10.1bn Japan AuM: £148m Established: 2001 • Technology Trust Established: 2001 • Japan Value (UCITS) Typical number of positions: 50-140 • Global Technology (UCITS) Typical number of positions: 45-55 Team size: 10 • Automation & Artificial Team size: 2
Slide 39: Current Investment Strategies
Current Investment Strategies European ex UK Income AuM: £152m UK Value AuM: £1.6bn Established: 2014 • European ex UK Income (UCITS) • UK Value Opportunities (UCITS) Established: 2017 Typical number of positions: 25-50 Typical number of positions: 30-100 Team size: 3 Team size: 2 Years’ experience:
Slide 40: Lipper Figures for Long and Alternative UCITS
Lipper Figures for Long and Alternative UCITS – as at 28 May 2021 1 Year 3 Years 5 Years Since AuM £m Percentile Percentile Percentile Inception Japan Value (S JPY) 148 85 86 63 68 31/10/2012 Healthcare Opportunities (I USD) 1,456 61 46 18 6** 3/12/2007 Healthcare Blue Chip (I USD) 71 60 45 42 40 11
Slide 41: Alternative Strategies
Alternative Strategies As at 28 May 2021 Annualised returns Strategies Inception date YTD 3 years 5 years Inception Forager (AX EUR) 1 August 2003 9.39% 3.55% 4.29% 7.74% China Mercury (AX USD) 1 August 2018 4.10% - - 5.95% Source: Polar Capital. Basis: Net of fees. Currency as stated. Past performa
Slide 42: AuM Analysis
AuM Analysis AuM by strategy Investor mix by geography Long only 95.1% UK 53.1% Alternative 4.9% Europe 37.2% Asia 7.1% USA 2.5% Open Ended Funds 81.5% Investment Trusts 18.5% AuM by investment team Investor mix by holdings Tech 49.1% Bank 24.5% Healthcare 14.1% Insurance 8.1% Platform 23.6% UK Valu
Slide 43: Important Information
Important Information Polar Capital, 16 Palace Street, London SW1E 5JD House View This document has been produced based on Polar Capital research and analysis and represents our house view. All sources are Polar Capital unless otherwise stated. Important Information The information provided in this
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