Polar Capital Holdings Plc · LSE:POLR
Polar Capital — FY2023 Earnings Presentation
37 slides from Polar Capital's earnings presentation, June 2023
Slide 1: Polar Capital: Full Year Results 2023
Polar Capital: Full Year Results 2023 polarcapital.co.uk Gavin Rochussen, Chief Executive Officer Samir Ayub, Group Finance Director This presentation is for use with non-US professional investors only.
Slide 2: Overview & Highlights
Overview & Highlights Net outflows from Technology have steadily abated over Continued net Digital the year inflows into EM marketing and Stars and brand efforts are Sustainable yielding results with penetration Thematic Funds - AuM While a difficult into new Smart Energy recovered period for market
Slide 3: 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. 3
Slide 4: Market Perspective
Market Perspective Global indices vs volatility • Significant changes in macroeconomic variables, 200% particularly interest rates, have made assessing direction and leadership in financial markets challenging 150% • The financial year began with markets in retreat following Russia's invasion of Ukr
Slide 5: Market Perspective
Market Perspective Net sales of funds across Europe (€m) • 2022 was an exceptionally challenging year for the funds 60,000 industry, with near-record net outflows in both Europe (**€293bn) and the U.S. (*$370bn) 40,000 • Positive correlation between equities and bonds in 2022 meant there were few, i
Slide 6: 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. 6
Slide 7: 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% Past performance is not indicative or a guarantee of future returns. Source: Polar Capital, 31 March 2023, Lipper quartile rankings as at 3
Slide 8: Performance
Performance % of UCITS funds AuM by quartile ranking 100 Strong UCITS fund performance against Lipper peer groups 90 80 % of UCITS AuM in the top two quartiles: 70 60 79% Over one year 50 40 65% Over three years 30 20 10 87% Over five years 0 1 Year 3 Years 5 Years Since inception 1st quartile 2nd q
Slide 9: Performance Against Benchmarks
Performance Against Benchmarks % of UCITS AuM & funds that have outperformed benchmark to 31 March 2023 • Year-to-date performance on the larger funds, mainly Technology, has improved on prior year YTD • The Global Technology Fund had challenging performance in 2021 and 2022, the two years that foll
Slide 10: Capacity
Capacity Capacity as at 31 March 2023 • Total capacity across all strategies is £60bn Technology • Total remaining capacity is £40bn Healthcare Insurance • Remaining capacity in funds that are currently receiving net inflows is: Emerging Markets and Asia – Healthcare: £6.6bn UK Value – Sustainable T
Slide 11: 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. 11
Slide 12: AuM
AuM £bn Index price 30 300 25 250 23.4 22.1 20 20.9 200 19.9 18.7 19.2 15 16.4 150 13.8 14.3 12.2 10 100 5 50 0 0 Mar-19 Sep-19 Mar-20 Sep-20 Mar-21 Sep-21 Mar-22 Sep-22 Mar-23 Jun-23 GBP AuM (LHS) Average AuM (LHS) MSCI All Country World Net Total Return Index (RHS) Past performance is not indicati
Slide 13: Net Flows By Strategy
Net Flows By Strategy 12 months to 31 March 2023 £m • Fund flows reflected the wider industry over the period 400 • Net inflows into nine of our UCITS funds, most notably 200 Biotechnology, Emerging Markets Stars and Smart - Energy (200) • In the U.S. our EM Stars strategy collected a combined £107m
Slide 14: Quarterly Technology Net Flows
Quarterly Technology Net Flows Slowing rate of outflow £bn 1.00 0.79 0.80 0.60 0.56 0.40 0.30 0.27 0.19 0.20 - (0.20) (0.22) (0.22) (0.24) (0.24) (0.26) (0.28) (0.40) (0.42) (0.60) (0.66) (0.80) Source: Polar Capital, 31 March 2023. Figures represent the Polar Capital Global Technology Fund, Polar C
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 YoY changes in statutory PBT £m 31 Mar 31 Mar Change 2023 2022 AuM and Revenue Average AUM (£bn) £19.6bn £22.8bn -14% Net management fees (£m) £154.8m £187.3m -17% Net management fee yield 79 bp 82 bp -3bp Profitability and other income (£m) Core operating profit1 £47.9m £69.4m
Slide 17: Total Operating Costs
Total Operating Costs YoY changes in total operating costs Year to Year to £m Mar-23 Mar-22 £m £m Salaries, bonuses and other staff costs1 36.1 36.7 Core distributions2 44.0 54.0 Share-based payments3 2.7 5.7 Performance fee interests 5.0 10.0 Staff compensation costs 87.8 106.4 Other operating cost
Slide 18: Other Operating Costs And Exceptional Items
Other Operating Costs And Exceptional Items Year to Year to Year to Year to Mar-23 Mar-22 Mar-23 Mar-22 Other operating costs £m £m Exceptional items £m £m IT 7.0 7.4 Recorded in operating costs Rent and rates 3.2 3.0 Termination and reorganisation costs £5.0m £3.5m Professional fees 2.6 2.4 Amortis
Slide 19: Cash And Seed Investments
Cash And Seed Investments Strong balance sheet 31 March 2023 30 March 2022 Total cash and seed investments of £151.0m Total cash and seed investments of £169.4m £m £m Cash 106.9 Cash 121.1 Seed investments 44.1 Seed investments 48.3 151.0 169.4 EM Stars US Mutual 6.1 EM Stars US Mutual 6.5 China Sta
Slide 20: Group Capital
Group Capital Strong balance sheet Capital allocation (£m) 180 156.2 Year to Year to 160 Regulatory Capital Mar-23 Mar-22 142.9 £m £m 140 29.5 28.2 Capital after regulatory deductions 114.7 126.7 120 31.0 100 31.0 Less: dividend provision -31.0 -31.0 80 26.0 26.0 83.7 95.7 60 Regulatory capital -26.
Slide 21: Dividend Policy
Dividend Policy Mar-20 Mar-21 Mar-22 Mar-23 Total cash £137.9m £175.7m £169.4m £151.0m and investments 70p 50p • Total annual dividend maintained at 46p 62.2p 45p 60p Policy 56.0p 40p • Under normal circumstances the Group 50p 35p expect to pay a total annual dividend 44.3p within a range of 55% - 8
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: Growth With Diversification
Growth With Diversification Changing landscape through diversification – five largest AuM strategies compared 100% • Good progress made to diversify our asset 10% 90% 19% base and grow AuM 5% 5% • 81% of AuM is in the largest five strategies in 80% 6% 8% 2023 vs 90% in 2020 70% 7% 11% 16% • Our % ex
Slide 24: AuM
AuM Five largest strategies over the past five rolling years • Fastest growing AuM over the five 2019 2020 2021 2022 2023 AuM years is Emerging Market Stars, CAGR albeit from a low base as the strategy was launched in Summer 2018 Global Technology £4.5bn £5.3bn £10.2bn £9.2bn £7.2bn 16.9% • The flow
Slide 25: Growth With Diversification
Growth With Diversification A measured and focussed approach to product growth New product launches represent We act decisively where a Product rationalisation is a key part of our growth strategy product is no longer commercially important in terms of cost-control viable and retaining a focus on gr
Slide 26: AI: Strong Potential For Investor Demand
AI: Strong Potential For Investor Demand Dedicated fund launched nearly six years ago • • Artificial Intelligence represents an extension of the Technology growth cycle, which Polar Capital is well positioned to benefit from AI has been a key theme in our Technology portfolios “ The breakthrough in
Slide 27: Strategy Update – Growth with Diversification
Strategy Update – Growth with Diversification Regional diversification continues Half of net new inflows Continued growth in the Local office has been • Our aim at Polar Capital is to into our EM Stars Nordic region with a established in Singapore deliver specialist investment strategy has come via
Slide 28: Specialist Products, Premium Service
Specialist Products, Premium Service Polar Capital rankings in Broadridge UK Fund Brand 50 Report 1st Thematic Equity Thematic Equity 2nd Clie nt-orientated Client-orientated Thinking Thinking 3rd Sales Sales&&accoun t account management management 7th Overall Overall brand brand score score Source:
Slide 29: Marketing Focus Is Bearing Fruit
Marketing Focus Is Bearing Fruit • Having enhanced our digital Marketing capability, we are pleased to receive third party recognition of our progress • Broadridge UK Fund Brand 50 Survey: – Polar Capital is now ranked 6th in the UK for Marketing & Communications, rising from 17th in 2019 – Our new
Slide 30: Summary & Outlook
Summary & Outlook The 'Growth with Strong Diversification' Balance Sheet strategy is enables Polar Capital is well yielding results in the FY23 positioned to distribution and dividend to be respond to fund strategies maintained Continued uncertain markets Current search for with its diverse AuM* is
Slide 31: Questions?
Questions? This presentation is for use with non-US professional investors only. Please refer to the Important Information at the end of this presentation. 31
Slide 32: 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. 32
Slide 33: Current Investment Strategies
Current Investment Strategies Technology AuM: £7.1bn Healthcare AuM: £3.8bn Established: 2001 • Technology Trust Established: 2007 • Global Healthcare Trust • Healthcare Opportunities (UCITS) Typical number of positions: 50-140 • Global Technology (UCITS) Typical number of positions: 25-80 • Biotech
Slide 34: Current Investment Strategies
Current Investment Strategies Emerging Market Stars & Asia AuM: £1.3bn UK Value AuM: £1.2bn • Emerging Market Stars (UCITS) • UK Value Opportunities (UCITS) Established: 2018 Established: 2017 • China Stars (UCITS) Typical number of positions: 40-65 • Asia Stars (UCITS) Typical number of positions:
Slide 35: Lipper Figures For Long And Alternative UCITS – As At Mar 2023
Lipper Figures For Long And Alternative UCITS – As At 31 Mar 2023 1 Year 3 Years 5 Years Since AuM £m Percentile Percentile Percentile Inception 14* Japan Value (S JPY) 163 3 20 43 29/07/20161 4** Healthcare Opportunities (I USD) 1330 5 7 19 3/12/2007 19 Healthcare Blue Chip (I USD) 158 18 5 13 11/0
Slide 36: AUM Analysis
AUM Analysis AuM by strategy Investor mix by geography Long only 95.28% UK 59.33% Alternative 4.72% Europe 30.31% Asia 5.55% Nordics 2.68% Open Ended Funds 74.30% North America 1.31% Investment Trusts 20.35% 0.82% Other Segregated Mandates 5.35% AuM by investment team Investor mix by holdings Global
Slide 37: 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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