Polar Capital Holdings Plc · LSE:POLR
Polar Capital — FY2008 Earnings Presentation
17 slides from Polar Capital's earnings presentation, Jul 4, 2008
Slide 1: Polar Capital Holdings Plc Results for Year Ending 31 March 2008
POLAR CAPITAL HOLDINGS PLC Results for Year Ending 31 March 2008 Mark Kary (CEO) John Mansell (COO) POLAR 4 July 2008 CAPITAL HOLDINGS plc
Slide 2: Table of Contents
Table of Contents Section I • Business Review Section II • Financial Review POLAR 1 CAPITAL HOLDINGS plc
Slide 3: Business Review: Overview
Business Review Overview Macro Utilities 3% Healthcare 1% 1% Emerging Markets 9% Technology 25% Long Only 38% Global Opportunities 26% Hedge Funds Japan 13% 62% UK 4% European 18% AuM split by strategy (13 June 2008) AuM split by business unit (13 June 2008) POLAR 2 CAPITAL HOLDINGS plc
Slide 4: Business Review: Fund Closures
Business Review Fund Closures • Action taken to close poor performing and sub optimal sized funds − Asian technology hedge fund − Asian hedge fund − Asian long only fund Assets totalled $190mm at close ($339mm at 2007 peak) • Fund under review − Japan hedge fund ($569mm at peak) POLAR 3 CAPITAL HOLD
Slide 5: Business Review: Performance
Business Review Performance Fund Fund Size Launch Performance Performance Index June 1st 2008 Date Calendar 2007 YTD* YTD* $m Hedge Funds UK 123 Nov 2001 3.27% 5.60% MSCI Europe -11.66% Japan 8 Dec 2001 -8.42% -8.40% FTSE 100 -6.25% European Forager 385 Aug 2003 11.85% 1.28% MSCI Emerging Markets -2
Slide 6: Business Review: Current Fund Flows
Business Review Current Fund Flows* $bn AUM @ 31 March 2008 3.14 Gross inflows to 1 July 2008 0.35 Gross outflows to 1 July 2008 (excluding Japan Hedge Fund) (0.11) Net flows from ongoing business to 1 July 2008 0.24 Japan Hedge Fund outflows to 1 July 2008 (0.28) Performance 0.21 AUM @ 1 July 2008*
Slide 7: Business Review: Responses to Issues Raised
Business Review Responses to Issues Raised • Future of Polar’s long only franchise • Fee pressure • Future of hedge funds in a global asset allocation • Lack of performance fee revenues • Internal sentiment • Strategy for growth POLAR 6 CAPITAL HOLDINGS plc
Slide 8: Financial Review: Highlights
Financial Review Highlights • AUM − AUM at 31 March 2008 down 8.8% to $3.1bn (2007: $3.4bn). • Profitability − Pre-tax profitability up 42% to £14.5m (2007: £10.2m). − Operating margin increased to 29% (2007: 26%). • EPS and Dividend − Basic undiluted EPS up to 14.6p (2007:14.1p) and diluted EPS up
Slide 9: Financial Review: Revenues
Financial Review Revenues Management Fees Performance Fees 30 26.5 25.8 25 21.1 20.6 20.1 20 £ million 15.2 15 10 5 POLAR 0 8 To March 2006 To March 2007 To March 2008 CAPITAL HOLDINGS plc
Slide 10: Financial Review: Costs
Financial Review Costs Comments 2007 2008 • £1.4m of core distributions £m £m saved in 2008 due to crystallisation. • Other operating costs: Salaries and bonuses 7.5 8.1 − 2007 overstated due to £1m of IPO costs Core distributions 2.3 2.2 − Net £2m increase due to: Other staff costs 0.7 0.9 Overseas
Slide 11: Financial Review: Profitability and Margin
Financial Review Profitability and Margin 2007 2008 £m £m Core operating profit 2.8 6.0 Performance fee profit 8.0 8.0 Interest and similar income 0.9 1.7 11.7 15.7 IPO costs (1.0) _-_ PBT pre IFRS S.B.P. £10.7m £15.7m Share based payments (“S.B.P”) (0.5) (1.2) Statutory PBT £10.2m £14.5m Core opera
Slide 12: Financial Review: Share Based Payments
Financial Review Share Based Payments • IFRS 2 / FRS 20 has imposed additional costs on the group. • Polar proposition A manager’s interest in their management fee is exchanged for equity in the business. The dilution is intended to be less than the offsetting and linked subsequent increase in profi
Slide 13: Financial Review: Dividend
Financial Review Dividend Current Dividend Policy • Final dividend of 7.0p making 8.5p for the year (2007: 7.75p). • At 8.5p dividend covered 160% by earnings (176% pre SBP charge). • At 8.5p: 50% of core profits distributed and 62% of performance fee profits (same as per 2007). POLAR 12 CAPITAL HOL
Slide 14: Summary
Summary • Market conditions are likely to remain difficult for some time. • The opportunity for market share growth is greater today than for many years. • Polar has a number of funds that have differentiated themselves and that are marketable. • Capacity within existing funds remains an additional
Slide 15: Appendix
Appendix POLAR 14 CAPITAL HOLDINGS plc
Slide 16: Appendix: Overview of Crystallisation Event
Appendix Overview of Crystallisation Event Mechanics • Manager has 45% interest in franchise’s core profits. • Exchange of annuity in return for equity in the group. • Average of 3 years pre-performance fee profits taken for: a. Franchise & b. Group • Manager awarded an amount of equity in the group
Slide 17: Polar Capital Disclaimer
Polar Capital Disclaimer This document does not constitute an offer to sell or an invitation to buy shares in Polar Capital Holdings plc or any other invitation or inducement to engage in investment activities. Certain statements, beliefs and opinions in this document are forward-looking, which refl
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