Polar Capital Holdings Plc · LSE:POLR
Polar Capital — FY2022 Earnings Presentation
40 slides from Polar Capital's earnings presentation, Mar 31, 2022
Slide 1: Polar Capital: Financial Results
Polar Capital: Financial Results Gavin Rochussen, Chief Executive Officer Samir Ayub, Finance Director Twelve Months to 31 March 2022 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 12-16 AuM & fund flows Pages 17-24 Financial review Pages 25-32 Strategy & outlook Page 33 Questions Page 34 Additional information This presentation is for use with non-US professional inve
Slide 3: Overview & Highlights
Overview & Highlights Strong Balance Sheet and improved core AuM increased by operating profit 6% from £20.9bn enables the second to £22.1bn. interim dividend to Compelling flows and Average AuM increase to 32p performance for a increased by 37% and total dividend number of strategies. increased 15%
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 200% • Rising inflation, a concern and focus for all central banks • Interest rate hikes, and the expectation of further hikes have caused growth stocks to rapidly de-rate 150% • Hawkish rate setting policy has resulted in asset allocators reducing ris
Slide 6: Market Perspective: Net sales of funds across Europe
Market Perspective Net sales of funds across Europe (€m) • 2021 was a near-record year for industry inflows, both in 60,000 Europe and the US 50,000 • Growing uncertainty due to rising inflation, rate hikes and geopolitical risks has pushed investors into a 40,000 risk-off stance 30,000 • The Europe
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)1 12% 1st Quartile 10% 2nd Quartile 3rd Quartile 4th Quartile 8% 6% 4% 2% 0% -2% Source: Polar Capital, 31 March 2022. 1. Only for funds that have more than 12 months performance data. Lipper quartile rankings as at 31
Slide 9: Performance
Performance % of UCITS Funds AuM by quartile ranking 100% • Since inception 81% of the UCITS funds AuM are in the first quartile against the Lipper peer groups and 100% is 90% in the top two quartiles • Over five years 93% is in the top two quartiles against 80% the Lipper peer groups 70% • Over thr
Slide 10: Performance Against Benchmarks
Performance Against Benchmarks Percentage of AuM & Funds that have outperformed benchmark to 31 March 2022 • Since inception, in excess of 80% of AuM is outperforming benchmark SI • Over five years over 50% of AuM is outperforming benchmark • While shorter term performance against benchmark has been
Slide 11: Capacity
Capacity Capacity as at 31 March 2022 • A key aspect of Polar Capital’s ethos is to manage Technology capacity in all strategies to prioritise performance Healthcare • Capacity is driven by underlying portfolio characteristics Insurance such as liquidity, turnover and market capitalisation, as UK Va
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 bn £25 • AuM has grown at a CAGR of 19% over the past Average AuM CAGR 23% £23.4bn five years £22.1bn AuM CAGR 19% • Average annual AuM has grown at a CAGR of 23% over £20.9bn £20 the past five years • Following the market sell-off post year end, AuM has £16.4bn declined from £22.1bn at 31 March
Slide 14: Net Flows by Strategy: Financial year to March 2022
Net Flows by Strategy Financial year to 31 March 2022 £1,000 Financial year to 31 March 2022 • Millions Over the financial year, more than half the strategies had positive net inflows £500 • Strong net inflows into Emerging Market Stars, Healthcare, Financials, Convertibles, Smart funds and UK Value
Slide 15: Cumulative Net Flows
Cumulative Net Flows Positive trend offset by recent Tech outflows £1800m • Total net inflows over the financial year into strategies other than Technology were £1.7bn £1600m • Technology sector net outflows coincided with rate hikes and the technology sector sell-off £1400m • Few Technology investo
Slide 16: Net Flows by Strategy: Calendar year to March 2022
Net Flows by Strategy Calendar year to 31 March 2022 Calendar year to 31 March 2022 inc Tech Calendar year to 31 March 2022 exc Tech £300 £200 Millions Millions £200 £150 £100 £- £100 -£100 -£200 £50 -£300 -£400 £- -£500 -£600 -£50 -£700 -£800 -£100 • Technology net outflows have dominated the first
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 Core profits up 35% 31-Mar 31-Mar Change 2022 2021 AuM and Revenue Average AuM (£bn) 22.8 16.7 37% Net management fees (£m) 187.3 142.5 31% Net management fee yield 82bp 85bp -3bp Profitability and other income (£m) Core operating profit1 69.4 51.5 35% Core operating profit marg
Slide 19: Operating Costs
Operating Costs Cost discipline maintained while investing for the future Year to Year to £m Mar-22 Mar-21 £m £m Salaries, bonuses and other staff 36.7 29.1 costs1 Core distributions 54.0 38.5 Share-based payments2 5.7 2.9 Performance fee interests3 10.0 24.4 Staff compensation costs 106.4 94.9 Othe
Slide 20: Other Operating Costs
Other Operating Costs Year to Year to Mar-22 Mar-21 £m £m IT • Increased IT and professional services costs due to arrival of 7.4 6.6 Sustainable Thematic team and set up of Swiss office, launch of new Rent and rates 3.0 2.8 Smart Energy & Mobility products and setting up of Singapore office, as wel
Slide 21: Exceptional Items
Exceptional Items Year to Year to Mar-22 Mar-21 Exceptional items £m £m Recorded in operating costs • Exceptional items include non-recurring reorganisation costs related to the Dalton acquisition of £3.1m. The total amount of such costs Termination and reorganisation costs1 3.5 2.4 actually incurre
Slide 22: Cash and Seed Investments
Cash and Seed Investments 2022 2021 Total cash and seed investments of £169.4m Total cash and seed investments of £175.7m Seed investments 48.3 Seed investments 39.0 Cash 121.1 Cash 136.7 169.4 175.7 EM Stars US mutual 6.5 EM Stars US mutual 7.3 China Stars 7.8 China Stars 7.3 China Mercury 3.5 Chin
Slide 23: Group Capital
Group Capital Year to Year to Capital allocation (£m) Regulatory Capital Mar-22 Mar-21 £m £m 180.0 160.0 156.2 151.4 Shareholder funds 156.2 151.4 140.0 29.5 36.0 120.0 31.0 100.0 30.0 Less: deferred tax and capital reserves -12.4 -11.0 80.0 21.4 21.4 Less: Goodwill and intangible assets -17.1 -25.0
Slide 24: Dividend Policy
Dividend Policy • Total dividend up 15% to 46p 70.0p 50.0p CAGR 12% 62.2p 45.0p • 82% pay-out ratio on adjusted total EPS 60.0p 56.0p 40.0p • Over three years to 31 March 2022 the 51.5p total dividend has grown at a CAGR of 50.0p 35.0p 12% 40.7p 30.0p 40.0p Policy 25.0p • The policy in respect of th
Slide 25: 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. 25
Slide 26: Strategy – Growth With Diversification
Strategy – Growth With Diversification Product diversification taking effect Three of our largest teams were launched or acquired in the past five years Investment teams by AUM: AUM 1 year % AUM Growth 31 March 2022 1. Global Technology £9.2bn -9.9% 2. Healthcare £3.7bn +23.7% 3. Insurance £1.9bn +1
Slide 27: Strategy – Diversification across client channels
Strategy – Growth With Diversification Diversification across client channels £18,000 • Segregated Managed Accounts: 12 (2021: 6) Millions • Following investment into systems and a migration of £16,000 middle-office operating platform undertaken from 2018 to 2020, segregated accounts for institution
Slide 28: Strategy – Regional diversification
Strategy – Growth With Diversification Regional diversification £1,600 • Overall, almost £9bn of our AuM is from clients based Millions overseas, an increase of 92% over the past three years (£5bn as at 29 March 2019) £1,400 • Investment in Nordic distribution is yielding positive £1,200 results £1,
Slide 29: Strategy – US Strategy
Strategy – Growth With Diversification US Strategy US Strategy • Distribution and business development is on track in North American market • US 40 Act funds operating effectively with full commitment and support from independent Fund Board • The sales team is settled and motivated; new investment t
Slide 30: Strategy: Sustainability & Social Responsibility
Strategy: Sustainability & Social Responsibility Positive strides taken 13 out of 25 funds now Article 8 or 9 Article 8 Funds • Product level: – 8 additional funds (vs 2021) now Article 8 or 9 11 – Over half of our eligible funds now Article 8 or 9 5 – Four funds awarded the (Febelfin) Towards Susta
Slide 31: Strategy in summary
Strategy – Growth With Diversification Strategy in summary 01 02 03 04 Growth with We continually Regional distribution Significant remaining diversification search for highly diversification capacity remains our core active, differentiated remains a priority strategy and we are strategies with seei
Slide 32: Summary & Outlook
Summary & Outlook Teams and Continued strategies focus on launched in growing core the last five earnings to years make Strong balance Early support support a Significant up three of capacity across sheet and cash for the growing the largest six highly active generation Sustainable dividend differen
Slide 33: 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. 33
Slide 34: 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. 34
Slide 35: Current Investment Strategies
Current Investment Strategies Technology AuM: £9.2bn Japan AuM: £154m 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: 9 • Automation & Artificial Team size: 2 In
Slide 36: Current Investment Strategies
Current Investment Strategies European ex UK Income AuM: £106m 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 37: Lipper Figures for Long and Alternative UCITS
Lipper Figures for Long and Alternative UCITS – as at 31 March 2022 1 Year 3 Years 5 Years Since AuM £m Percentile Percentile Percentile Inception Japan Value (S JPY) 154 40 94 85 49 31/10/2012 Healthcare Opportunities (I USD) 1,420 54 71 28 4** 3/12/2007 Healthcare Blue Chip (I USD) 88 7 22 21 20 1
Slide 38: Alternative Strategies
Alternative Strategies As at 31 March 2022 Annualised returns Strategies Inception date YTD 3 years 5 years Inception Forager (AX EUR) 1 August 2003 -1.22% 7.82% 4.97% 7.79% China Mercury (S USD) 1 August 2018 -11.57% -2.55% - -2.58% Source: Polar Capital. Basis: Net of fees. Currency as stated. Pas
Slide 39: AuM Analysis
AuM Analysis AuM by strategy Investor mix by geography1 Long only 95.42% UK 55.48% Europe 34.97% Alternative 4.58% Asia 6.36% USA 2.41% Open Ended Funds 80.21% Other 0.78% Investment Trusts 19.79% AuM by investment team Investor mix by holdings1 Global Technology 41.72% Bank 24.99% Global Healthcare
Slide 40: 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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