Polar Capital Holdings Plc · LSE:POLR
Polar Capital — H1 2017 Earnings Presentation
31 slides from Polar Capital's earnings presentation, December 2016
Slide 1: Interim Results Presentation December 2016
Interim Results Presentation December 2016 Tim Woolley (CEO) John Mansell (COO) This presentation is for one-on-one use with non-US professional investors only www.polarcapital.co.uk
Slide 2: Contents
Contents • Japan • Dividend • Fund Flows • Fund Performance • Industry • Financials • UK Value Fund Launch • Outlook For non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 2
Slide 3: Japan
Japan For non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 3
Slide 4: Polar Capital AUM: Japan and non-Japan AUM
Polar Capital AUM Japan and non-Japan AUM £bn 9 £8.3 £8.3 £8.3 £8.1 £7.9 £8.0 £8.0 8 £7.9 £7.8 £7.7 £7.0 £7.2 £7.2 £7.3 7 £6.0 6 5 £4.7 4 £3.7 £3.1 £3.2 £3.3 3 £2.7 £2.5 2 1 0 Japan Non-Japan Source: Polar Capital, 30 November 2016. Past performance is not indicative or a guarantee of future results
Slide 5: Polar Capital Japan Portfolio Strategy
Polar Capital Japan Portfolio Strategy Low beta valuations at extreme levels – price to book • Valuation distortion caused by QE and ultra-low interest rates • Valuation differential between high beta (cyclicals/financials) and low beta (defensives) at levels exceeding the Asian financial crises and
Slide 6: Polar Capital Japan Strategy Performance track record
Polar Capital Japan Strategy Performance track record Performance vs. benchmark since inception to 30 November 2016 (JPY I class net of fees)1,2 Ann. Since 3 Year 5 Year 10 Year Inception 3 Month 1 Year Annualised Annualised Annualised (19 October 2001) Polar Capital Japan Strategy 16.93% -9.52% 3.3
Slide 7: Dividend
Dividend For non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 7
Slide 8: Dividend
Dividend • First dividend of 5.5p payable January 2017 (2016: 5.5p) • Expect to maintain last year’s 25p for the full year • 2018 dividend expected to be defended, even uncovered, so long as – Evidence of return to growth and imminent EPS coverage anticipated – Balance sheet remains strong – No comp
Slide 9: Fund Flows
Fund Flows For non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 9
Slide 10: AUM Flows
AUM Flows AUM at 31 March 2015 £8.3 bn Gross inflows Total [long 2,275 hedge 208] £2,483m Gross outflows Total [long 2,924 hedge 196] £(3,120 )m Net flows £(637)m Performance and currency movements £(363) m AUM at 31 March 2016 £7.3 bn Gross inflows quarter 1 [long 316 hedge 64 ] £380m quarter 2 [lo
Slide 11: AUM Growth Analysis
AUM Growth Analysis 30 Sep 2015 30 Sep 2016 % Increase £’m £’m Year on Year Japan 2,005 1,078 (46.2%) Long Only (ex Japan) 4,467 5,735 28.4% Technology 1,233 1,780 44.3% Healthcare 960 1,034 7.8% Financials 682 863 26.5% GEMs 333 411 23.5% North America 1,164 1,505 29.3% Global Alpha 67 88 32.5% Eur
Slide 12: AUM Analysis
AUM Analysis AUM split by strategy Investor mix by geography Long Only 88.9% UK 66.7% Alternative 11.1% Europe 28.3% USA 3.0% Other 2.0% AUM split by business unit Investor mix by holdings Technology 23.2% Bank 23.9% North American 19.6% Polar Investment Trusts 20.6% Japan 14.1% Private Wealth Manag
Slide 13: November Fund Flows
November Fund Flows Inflows >= £20m Outflows>= £20m Healthcare Opportunities £161.9m Japan £31.3m North America £68.5m Insurance £48.4m Biotechnology £25.1m Income Opportunities £24.4m Healthcare Blue Chip £20.4m Source: Polar Capital, 30 November 2016. For non-US professional investor use only. Ple
Slide 14: Performance
Performance For non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 14
Slide 15: Lipper Figures For Long And Alternative UCITS Strategies
Lipper Figures For Long And Alternative UCITS Strategies As at 30 November 2016 3 Months 1 Year 3 Years 5 Years Since Inception Quartile Quartile Quartile Quartile Quartile Healthcare Opportunities (USD) 2 3 1 1 1 Biotechnology (Retail USD) 1 1 1 n/a 1 Healthcare Blue Chip (I USD) 2 1 n/a n/a 2 Emer
Slide 16: Lipper Figures For Regional Strategies
Lipper Figures For Regional Strategies As at 30 November 2016 3 Months 1 Year 3 Years 5 Years Since Inception Quartile Quartile Quartile Quartile Quartile Japan (Retail JPY) 1 4 4 4 1 Japan Alpha (Retail JPY) 1 4 4 n/a 3 Global Alpha (Retail USD) 2 2 2 n/a 2 North American (Retail USD) 1 2 1 1 1 Eur
Slide 17: Alternative Strategies
Alternative Strategies As at 30 November 2016 Annualised returns Strategies Inception date YTD 3 years 5 years Inception Forager (AX EUR) 1 August 2003 -5.89% -0.71% 3.89% 8.57% Conviction (EUR) 1 April 2006 1.38% -2.91% -0.02% 3.65% ALVA (A USD) 1 November 2010 1.44% 1.51% 4.36% 4.38% Global Conver
Slide 18: Industry
Industry For non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 18
Slide 19: Industry Outlook
Industry Outlook • FCA Review • Regulation • Pricing • Consolidation For non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 19
Slide 20: Financials
Financials For non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 20
Slide 21: Financial Review Highlights
Financial Review Highlights • AUM – AUM at 30 September 2016 £7.7bn ($9.9bn) from £7.3bn ($10.4bn) at March 2016 – AUM at 30 November 2016 £8.1bn ($10.2bn) • Profitability – Pre-tax (pre SBP) profits £11.2m (2015: £13.3m) – Core operating profit excluding performance fees £9.2m (2015: £12.4m) • EPS
Slide 22: Financial Review: Profitability by period
Financial Review Profitability – by period 6 Months 6 Months Year 6 Months to September 15 to March 16 to March 16 to September 16 Average AUM £7.8bn £7.5bn £7.7bn £7.4bn Core operating profit £12.4m £11.3m £23.7m £9.2m Performance fee profit - £3.0m £3.0m - Interest and similar income £0.9m £(0.1)m
Slide 23: Financial Review: Costs
Financial Review Costs 6 Months 6 Months Year 6 Months to September 15 to March 16 to March 16 to September 16 Salaries and bonuses £8.4m £8.2m £16.6m £8.4m Core distributions £9.2m £8.0m £17.2m £7.1m Core compensation costs £17.6m £16.2m £33.8m £15.5m NIC on options £0.3m £0.3m £0.6m - Other operat
Slide 24: Financial Review: Other operating costs
Financial Review Other operating costs 6 Months 6 Months Year 6 Months to September 15 to March 16 to March 16 to September 16 IT £2.0m £2.2m £4.2m £2.3m Rent and rates £1.4m £1.3m £2.7m £1.3m Professional fees £0.4m £0.4m £0.8m £0.5m Insurance £0.2m £0.3m £0.5m £0.3m Travel and entertainment £0.6m
Slide 25: Financial Review: Cash and investments
Financial Review Cash and investments September 2015 March 2016 September 2016 £m £m £m Cash £25.1m £48.8m £32.2m Available for sale investments Alternative fund seed £22.5m £15.3m £16.7m Long only seed £27.5m £24.8m £22.9m £50.0m £40.1m £39.6m Total cash and investments £75.1m £88.9m £71.8m Source:
Slide 26: Financial Review: Shareholder analysis at September 2016
Financial Review Shareholder analysis at 30 September 2016 Holding Percentage Directors, founders and staff 28.1m 31% Caledonia 7.8m 9% XL 7.0m 8% EBT 1.1m 1% Hargreave Hale 8.9m 9% Blackrock 6.3m 7% Liontrust 3.3m 4% Unicorn 2.8m 3% Free Float = 51% Artemis 2.8m 3% Rathbone 2.3m 2% Others 20.9m 23%
Slide 27: UK Value Fund Launch
UK Value Fund Launch For non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 27
Slide 28: UK Value Team And Fund Launch
UK Value Team And Fund Launch • Georgina Hamilton joined in October • George Godber to join in April 2017 • Fund launch at the end of January 2017 • Fund structure is open-ended long only UCITS Dublin fund • Fund capacity £1.2bn Source: Polar Capital. For non-US professional investor use only. Pleas
Slide 29: Outlook
Outlook For non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 29
Slide 30: Outlook For The Remainder Of Fiscal 2017
Outlook For The Remainder Of Fiscal 2017 Challenges • Japan – will value remain out of favour? • European long / short – QE environment proving challenging • Regulation – continues to increase adding cost and complexity • Markets – uncertain and volatile Opportunities • Long only strategies – client
Slide 31: 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 pr
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