Polar Capital Holdings Plc · LSE:POLR
Polar Capital — H1 2022 Earnings Presentation
34 slides from Polar Capital's earnings presentation, Sep 30, 2021
Slide 1: Results Presentation
Results Presentation Gavin Rochussen, Chief Executive Officer Samir Ayub, Group Finance Director Six Months to 30 September 2021 polarcapital.co.uk This presentation is for use with non-US professional investors only.
Slide 2: Agenda
Agenda Page 3 Overview & Highlights Pages 4-6 Market Perspective Pages 7-11 Fund Performance & Capacity Pages 12-14 AuM & Fund Flows Pages 15-21 Financial Review Pages 22-26 Strategy & Outlook Page 27 Questions Page 28 Appendices This presentation is for use with non-US professional investors only.
Slide 3: Overview & Highlights
Overview & Highlights AuM Growth • AuM increased 12% in the six months to £23.4bn Focus on core profit is • Average AuM yielding results increased 53% • Core operating profit2 compared to increased 65% comparable six compared to months to comparable six month September 2020 period Net inflows • Core
Slide 4: Market Perspective
Market Perspective 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: Global indices vs volatility
Market Perspective Global indices vs volatility 50% • Another change in investment environment and market leadership in the period 40% • Growth outperformed value, with Technology as one of the best performers 30% • Extensive media coverage of supply chain problems and labour shortages 20% • Talk of
Slide 6: Market Perspective: Net sales of funds across Europe
Market Perspective Net sales of funds across Europe (€m) 100,000 • Pan Europe net inflows every month into equities since April 2020, although declining equity flows since the summer • Active equities sales greater than passive 80,000 • General caution in equity valuations and increased cash levels
Slide 7: 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. 7
Slide 8: 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% 1 2 2 Source: Polar Capital, 29 October 2021, Lipper quartile rankings as at 29 October 2021. UCITS performance illustrative of Polar C
Slide 9: Performance
Performance % of UCITS funds AuM by quartile ranking 100% • Over three years 74% of AuM and 66% of funds are in the top two quartiles 90% • Over five years 93% of AuM and 72% of funds are in the 80% top two quartiles 70% • Since inception, 99% of AuM and 91% of funds are in the top quartile 60% 50%
Slide 10: Performance Against Benchmarks
Performance Against Benchmarks % of UCITS AuM & funds that have outperformed benchmark to 29 October 2021 • Q1 & Q2 of 2021 have been challenging for our larger strategies including Technology, Healthcare and Global YTD Insurance • Technology funds are defensively positioned and underweight in mega
Slide 11: Capacity
Capacity Capacity as at 29 October 2021 • Total capacity is £61bn, with remaining capacity £38bn Smart Thematic Healthcare • Largest current capacity is provided by the Sustainable Thematic Equity funds; Smart Energy and Smart Mobility EM Stars European ex-UK Income • Technology UCITS fund is soft-c
Slide 12: 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. 12
Slide 13: AuM
AuM 29 October 2021 bn £30 AuM CAGR 22% £25 £23.9bn £23.4bn £20.9bn £20 £16.4bn £14.7bn £14.3bn £15 £13.8bn £12.0bn £12.2bn £10.6bn £10 £5 £0 Total AuM Avg AuM Source: Polar Capital, 29 October 2021. All figures quoted in Pounds Sterling. Totals may not sum due to rounding. Past performance is not i
Slide 14: Net Flows by Strategy
Net Flows by Strategy Six months to 30 September 2021 800 • Majority of fund strategies had net inflows £ Millions 600 • Largest inflows were into segregated mandates • Segregated mandate inflows amounted to £596m 400 • Investment Trusts net share issuances of £136m 200 • Healthcare inflows were int
Slide 15: 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. 15
Slide 16: Financial Highlights
Financial Highlights Profit before tax up 17% £m Core operating profits up 65% 30 Sep 30 Sep Change 2021 2020 AuM and Revenue Average AUM (£bn) £22.5bn £14.7bn 53% Net management fees (£m) £92.9m £61.8m 50% Net management fee yield 83 bp 84 bp -1 bp Profitability and other income (£m) Core operating
Slide 17: Operating Costs
Operating Costs Compensation costs up due to addition of new teams Core operating margin 39% at 30 Sep 21 – 30 Sep 30 Sep expectation for full year is 37% 2021 2020 Change £m £m £m Salaries, bonuses and 17.7 12.5 42% other staff costs1 Core distributions1 25.4 16.1 58% Share-based payments2 3.5 1.9
Slide 18: Other Operating Costs
Other Operating Costs 30 Sep 30 Sep 2021 2020 £m £m IT 3.5 3.2 • Other operating costs before exceptional items up marginally • Termination and reorganisation costs of £6.2m were anticipated at Rent and rates 1.4 1.4 the time the Dalton acquisition was announced. Professional fees 1.0 0.8 • A total
Slide 19: Cash and Seed Investments
Cash and Seed Investments 30 Sep 2021 30 Sep 2020 Total cash and seed investments of £140.5m Total cash and seed investments of £111.3m £m £m Cash1 96.0 Cash 82.5 Seed investments 44.5 Seed investments 28.8 140.5 111.3 EM Stars US Mutual 7.5 China Stars 6.7 China Stars 8.9 China Mercury 4.2 China Me
Slide 20: Group Capital
Group Capital 30 Sep 30 Sep Capital allocation (£m) Regulatory Capital 2021 2020 £m £m 160 146.8 140 Shareholder funds 146.8 114.6 39.1 114.6 120 9.2 100 13.5 8.4 Less: deferred tax and capital reserves -12.4 -9.2 80 24.7 43.2 Less: Goodwill and intangible assets -26.7 - 60 25.0 40 25.0 107.7 105.4
Slide 21: Dividend Policy
Dividend Policy • First interim dividend of 14p up 56% 70.0p 45.0p • Adjusted diluted core EPS at CAGR 13% 40.0p 30 September 2021 up 56% to 28.2p 40.0p 60.0p 33.0p 62.2p • Over three years to 31 March 2021 the 33.0p 35.0p total dividend has grown at a CAGR 50.0p of 13% 28.0p 51.5p 30.0p Policy 40.0
Slide 22: 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. 22
Slide 23: Strategy Update – Growth with Diversification
Strategy Update – Growth with Diversification Sustainability Responsible Investing Corporate Responsibility Our People • We have significantly increased central • Conducted corporate Scope 1 and 2 and • We have joined the Diversity Project initiative resource to support the investment teams who mate
Slide 24: Strategy Update – Growth with Diversification
Strategy Update – Growth with Diversification Sustainable Thematic Team Polar Capital Smart Energy Fund • Sustainable Thematic Equity team of four, led by Thiemo Lang and supported by a Product Specialist, joined in September • Exposure to • Two funds launched, Smart Energy and Smart Mobility compan
Slide 25: Strategy Update – Growth with Diversification
Strategy Update – Growth with Diversification Significant growth potential in North America, Europe and Asia, including Japan and Australia North America Size of market: $48.6tr • 4 Salespeople • Institutional and wholesale • High capacity in key products; International Value, EM and Smart Energy Eu
Slide 26: Summary & Outlook
Summary & Outlook Continued focus on Highly performance differentiated and capacity. actively Total capacity managed over £61bn A focus on growing strategies to Strong balance core earnings meet investors with £38bn provides greater Increased sheet to support demand remaining predictability of diver
Slide 27: 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. 27
Slide 28: Appendices
Appendices This presentation is for use with non-US professional investors only. Please refer to the Important Information at the end of this presentation. 28
Slide 29: Current Investment Strategies
Current Investment Strategies Technology AuM: £11.7bn Japan AuM: £157m 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 30: Current Investment Strategies
Current Investment Strategies European ex UK Income AuM: £110m UK Value AuM: £1.7bn 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 31: Lipper Figures for Long and Alternative UCITS
Lipper Figures for Long and Alternative UCITS – as at 30 Sept 2021 1 Year 3 Years 5 Years Since AuM £m Percentile Percentile Percentile Inception Japan Value (S JPY) 159 40 88 67 70 31/10/2012 Healthcare Opportunities (I USD) 1,567 13 42 14 4** 3/12/2007 Healthcare Blue Chip (I USD) 80 22 36 34 31 1
Slide 32: Alternative Strategies
Alternative Strategies As at 30 September 2021 Annualised returns Strategies Inception date YTD 3 years 5 years Inception Forager (AX EUR) 1 August 2003 14.65% 5.13% 5.81% 7.87% China Mercury (S USD) 1 August 2018 -5.22% 2.88% - 2.22% Source: Polar Capital. Basis: Net of fees. Currency as stated. Pa
Slide 33: AuM Analysis
AuM Analysis AuM by strategy Investor mix by geography Long only 95.66% UK 57.13% Europe 32.55% Alternative 4.34% Asia 6.81% USA 2.69% Open Ended Funds 76% Other 0.83% Investment Trusts 19% Segregated Mandates 5% AuM by investment team Investor mix by holdings Global Technology 46% Global Healthcare
Slide 34: 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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