TIDMPOLR
RNS Number : 0417T
Polar Capital Holdings PLC
22 November 2021
Polar Capital Holdings plc ("Polar Capital" or "the Group")
Unaudited interim results for six months ended 30 September
2021
65% increase in core profits
Highlights
-- Assets under Management ("AuM") at 30 September 2021 GBP23.4bn (31 March 2021: GBP20.9bn)
-- Core operating profit GBP36.3m (30 September 2020: GBP22.0m)
-- Pre-tax profit GBP31.7m (30 September 2020: GBP27.0m)
-- Basic earnings per share 26.5p (30 September 2020: 23.4p) and
adjusted diluted total earnings per share 28.1p (30 September 2020:
22.1p)
-- Interim dividend per ordinary share of 14.0p (January 2021:
9.0p) declared to be paid in January 2022 (*)
-- Shareholders' funds GBP146.8m (30 September 2020: GBP114.4m)
including cash and investments of GBP140.5m (30 September 2020:
GBP111.3m)
T he non-GAAP alternative performance measures shown here are
described and reconciled to IFRS measures on the Alternative
Performance Measures (APM) page
* Further details on the timetable for the interim dividend are
described on the shareholder information page
Gavin Rochussen, Chief Executive Officer, commented:
" In the six months to 30 September 2021, AuM increased by
GBP2.5bn from GBP20.9bn to GBP23.4bn, an increase of 12% over the
period and since then has increased to GBP25.0bn as at 12 November
2021.
"Core operating profit (excluding performance fees, other income
and exceptional items) was up 65% to GBP36.3m compared to the
comparable prior half year period and up 23% from GBP29.5m in the
immediately preceding six-month period to 31 March 2021.
"This time last year, Polar Capital established a new Head of
Sustainability role and put in place separate Sustainability and
Diversity committees to increase focus on these areas, in
investment and for the Group. Six of Polar Capital's funds have
been classified as Article 8 under the European Union's SFDR
regulations and there is a pipeline of funds aiming to reclassify
as Article 8. The recently launched Smart Energy and Smart Mobility
funds are classified as Article 9 funds.
"There is much greater concern about the impact of climate
change, and this will result in growing demand for greener
technologies and the investment landscape will be shaped by the
conversations and outcomes from COP26 held in Glasgow.
"The launch of the Polar Capital Smart Energy and Smart Mobility
Funds in September 2021 were well received with early flows and
demonstrable appetite from potential investors in these funds.
"Our diverse and differentiated range of sector, thematic and
regional fund strategies and our performance led culture where 74%,
93% and 99% of our AuM is in the top two quartiles against peers
over three years, five years and since inception respectively
together with significant remaining capacity provides confidence
that momentum will continue."
For further information please contact:
Polar Capital +44 (0)20 7227 2700
Gavin Rochussen (Chief Executive)
Samir Ayub (Finance Director)
Numis Securities- Nomad and Joint Broker +44 (0)20 7260 1000
Charles Farquhar
Stephen Westgate
Giles Rolls (QE)
Peel Hunt - Joint Broker +44 (0)20 3597 8680
Andrew Buchanan
Rishi Shah
Camarco +44 (0)20 3757 4995
Ed Gascoigne-Pees
Jennifer Renwick
Monique Perks
Phoebe Pugh
Assets Under Management
AuM split by type
30 September 31 March 2021
2021
--------------------- --------------- -------------------- ----------------
GBPbn % GBPbn %
--------------------- -------- ----- -------------------- --------- -----
Open-ended funds 17.8 76% Open-ended funds 16.6 79%
Investment trusts 4.5 19% Investment trusts 3.9 19%
Segregated mandates 1.1 5% Segregated mandates 0.4 2%
--------------------- -------- ----- -------------------- --------- -----
Total 23.4 Total 20.9
--------------------- -------- ----- -------------------- --------- -----
AuM split by strategy
(Ordered according to launch date)
30 September 31 March 2021
2021
------------------------- --------------- ----------------------- ----------------
GBPbn % GBPbn %
------------------------- -------- ----- ----------------------- -------- ------
Technology 10.7 46% Technology 10.2 49%
Japan 0.2 0.8% Japan 0.1 0.5%
European Long/Short 0.1 0.4% European Long/Short 0.2 1%
Healthcare 3.8 16% Healthcare 2.9 14%
Financials 0.5 2% Financials 0.3 1%
Insurance 1.7 7% Insurance 1.7 8%
Emerging Markets
Emerging Markets Income - - Income 0.1 0.5%
Convertibles 0.8 3% Convertibles 0.8 4%
North America 0.9 4% North America 0.8 4%
European Income 0.1 0.4% European Income 0.2 1%
UK Value 1.7 7% UK Value 1.4 7%
Emerging Markets and Emerging Markets
Asia 0.9 4% and Asia 0.4 2%
Phaeacian 0.6 3% Phaeacian 0.5 2%
European Opportunities 1.3 6% European Opportunities 1.1 5%
European Absolute European Absolute
Return 0.1 0.4% Return 0.1 0.5%
Melchior Global Equity * - Melchior Global Equity 0.1 0.5%
Sustainable Thematic ** - Sustainable Thematic - -
Equity Equity
------------------------- -------- ----- ----------------------- -------- ------
Total 23.4 Total 20.9
------------------------- -------- ----- ----------------------- -------- ------
* AuM as at 30 September 2021 was GBP5m.
** AuM as at 30 September 2021 comprised of seed capital of
GBP7m.
Chief Executive's Report
Market Overview
The six-month period to the end of September 2021 saw a change
in investment environment and market leadership. Growth once again
outperformed value, and the technology sector was one of the best
performers, with the materials and industrials sectors at the
bottom of the pack.
US 10-year bond yields and the US 2-10 year yield curve hit a
post COVID-19 high on 31 March 2021 and, until recently, had been
moving persistently lower as excitement about economic re-opening
began to wane in the face of continuing COVID-19 outbreaks across
the world. This was the opposite of the prior six-month period;
equity markets had rallied strongly from the point in early
November 2020 when the first announcements on effective COVID-19
vaccines were made, and the victorious US Democrats proposed a
stimulatory set of policy initiatives.
News media are giving extensive coverage to supply chain
problems and intermediate goods shortages across the world. At the
margin, these trends are likely to lead companies to carry more
inventory, and to shorten supply lines in the search for
resilience.
Talk of higher inflation is widespread, particularly in the UK,
where apparent labour shortages in particular industries are
exacerbating goods shortages. Oil and gas prices have risen
rapidly. As ever, the solution has a political dimension. Europe
does not want to concede too much to Russia, which plays a big role
in gas supply.
Despite the possibility that these changes in investment
backdrop bring greater risk, financial markets have so far been
reasonably well behaved.
The reason for such a moderate response may be that growth
remains strong in much of the world; output has probably peaked at
high levels but should remain above trend through 2022. Similarly,
while central banks are starting to remove policy support, it is
likely to be some time before policy becomes restrictive.
Equally, governments have little incentive to endanger the
nascent recovery by tightening fiscal policy too rapidly. Paying
down large amounts of COVID-19 related debt would be much harder in
a lower growth phase.
Data indicates that US consumers have not spent all of the
stimulus cheques which they received. This means that there is
still pent-up consumer demand, but it may be the case that
households want to retain a higher level of savings in these
uncertain times.
There is much greater concern about the impact of climate
change, and this will result in growing demand for greener
technologies and the investment landscape will be shaped by the
conversations and outcomes from COP26 held in Glasgow.
Fund Performance
The past 18 months have seen significant variability in equity
market leadership, visible in the performance of value versus
growth and quality, of small companies versus large and, more
broadly, of disruptors versus more established businesses.
The six months to end September 2021 saw the style pendulum
swing back from value to growth, consistent with lower market
interest rates. Those Polar strategies with greater value
orientation, such as North America and European ex UK Income
underperformed over the period, although strategies which combine
value and quality, such as UK Value and Phaeacian International
Value, outperformed their benchmarks.
In the growth group, Emerging Market Stars and Asian Stars, both
of which incorporate sustainability as an important part of their
process, delivered outperformance, building on their strong
foundations since inception at Polar in 2018.
Polar Capital's Technology and Healthcare teams have had a
tougher time in the first six months of the financial year. The
Global Technology Fund and the Healthcare Opportunities fund
underperformed, in part due to the outperformance of the very large
companies in their respective areas; both strategies have an
all-cap orientation. The Technology team came into 2021 with a
cautious view of their sector, due to high valuations; their
defensive tactics, expressed via cash and index puts, have not yet
borne fruit as valuations across the sector have continued to go
up.
The small and mid-cap Healthcare Discovery fund, the Healthcare
Blue Chip fund, and the Automation and Artificial Intelligence fund
have outperformed their benchmarks nevertheless.
This time last year, Polar Capital established a new Head of
Sustainability role and put in place separate Sustainability and
Diversity committees to increase focus on these areas, in
investment and for the Group. Six of Polar Capital's funds have
been classified as Article 8 under the European Union's SFDR
regulations and there is a pipeline of funds aiming to reclassify
as Article 8. The recently launched Smart Energy and Smart Mobility
funds are classified as Article 9 funds.
As at 29 October 2021, 74% of Polar Capital's UCITS fund AuM is
ranked in the top two quartiles versus peers over three years with
21% ranked in the top quartile over the same period. Over five
years, 74% of AuM is ranked top quartile and 93% ranked in the top
two quartiles versus the Lipper peer group. Since inception, 84% of
AuM is ranked in the top quartile and 99% is ranked in the top two
quartiles.
AuM and Fund Flows
In the six months to 30 September 2021, AuM increased by
GBP2.5bn from GBP20.9bn to GBP23.4bn, an increase of 12% over the
period and since then has increased to GBP25.0bn as at 12 November
2021. The GBP2.5bn increase in AuM comprised net subscriptions of
GBP690m and GBP1,807m relating to market movement and fund
performance. There were net inflows of GBP596m into segregated
mandates, net inflows from share issuance of GBP136m by the
investment trusts and net outflows of GBP42m from the open-ended
funds.
In the six months, the largest beneficiaries of net inflows were
the sustainability oriented Emerging Market Stars Fund with GBP366m
of net inflows and the Asian Stars Fund which had net inflows of
GBP70m. Within the healthcare suite of funds, the Biotechnology
Fund benefited from net inflows of GBP199m and three segregated
healthcare mandates were funded with GBP427m. The Polar Capital
Global Financials Trust had share issuances amounting to GBP154m
while the Polar Capital Technology Trust had net share buy-backs
amounting to GBP18m.
The Convertibles team attracted GBP85m of net inflows into their
Global Convertible Fund and Global Absolute Return Fund. The
Phaeacian International Mutual Fund had net inflows of GBP27m and
the Japan Value Fund benefited from net inflows of GBP20m reversing
a multi-year period of sustained net outflows.
The Technology Fund, which had benefited from inflows in 2020,
suffered from client allocation decreasing away from the technology
sector as well as profit taking by investors following excellent
absolute performance over the past years. Net outflows from the
fund, which was soft closed in 2020, were GBP413m and the A&AI
Fund had outflows, for similar reasons, of GBP49m. While the UK
Value Opportunities Fund, also soft-closed in 2020, suffered modest
net outflows of GBP18m in the period, the team benefited from the
funding of a segregated mandate amounting to GBP169m. Our North
American Fund which has suffered sustained prior periods of net
outflows saw this trend reduce and net outflows in the six-month
period were GBP33m with net inflows in the more recent months.
Following the retirement of the lead fund manager, the GEM
Income Fund was closed and merged with the Emerging Market Stars
Fund resulting in GBP34m of net outflows in the period leading up
to the merger of the two funds. Other funds experiencing outflows
in the period were the European ex-UK Income Fund, Global Insurance
Fund and Healthcare Opportunities Fund, although outflows from the
latter were more than offset by the funding of segregated
healthcare mandates.
The launch of the Polar Capital Smart Energy and Smart Mobility
Funds in September 2021 were well received with early flows and
demonstrable appetite from potential investors in these funds.
Results
Average AuM over the six months to 30 September 2021 increased
by 53% to GBP22.5bn from GBP14.7bn in the comparable prior half
year period, while there has been a 20% rise in average AuM
compared to average AuM of GBP18.7bn for the immediately preceding
six months to 31 March 2021. The increase in average AuM resulted
in net management fees, after commission and rebates payable,
increasing by 50% to GBP92.9m compared to the comparable six-month
period and rose 15% compared to the immediately preceding six-month
period. Management fee yield margin declined, as anticipated, by
1bp to 83bp compared to the comparable prior six-month period.
Core operating profit (excluding performance fees, other income
and exceptional items) was up 65% to GBP36.3m compared to the
comparable prior half year period and up 23% from GBP29.5m in the
immediately preceding six-month period to 31 March 2021.
Profit before tax increased by 17% to GBP31.7m compared to the
comparable prior half year period, although it declined compared to
the immediately preceding six-month period which included
performance fee profits which crystalise in the second half of our
financial year. Basic EPS has increased by 13% compared to the half
year period to September 2020. Adjusted diluted core EPS of 28.2p
is a 25% increase on the immediately preceding six months to 31
March 2021 and a 56% increase over the comparable half year period
to September 2020. Adjusted diluted total EPS of 28.1p is a 27%
increase compared to the comparable six-month period to 30
September 2020.
Six months Six months to Six months
to 31 March to
30 September 2021 30 September
2021 GBP 2020
GBP GBP
------------- ------------- -------------
Average AuM 22.5bn 18.7bn 14.7bn
Net management fees 92.9m 80.7m 61.8m
Core operating profit 36.3m 29.5m 22.0m
Performance fee profit - 19.5m 0.5m
Other income * (0.3)m 2.5m 4.9m
Share-based payments on preference
shares (0.4)m 0.7m (0.4)m
Exceptional items (3.9)m (2.8)m -
------------- ------------- -------------
Profit before tax 31.7m 48.9m 27.0m
------------- ------------- -------------
Basic EPS 26.5p 43.8p 23.4p
Adjusted diluted earnings per
share
(non-GAAP measure) 28.1p 40.1p 22.1p
Adjusted diluted core EPS 28.2p 22.6p 18.0p
------------- ------------- -------------
The non-GAAP alternative performance measures shown here are
described on the APM page.
* A reconciliation to reported results is given on the APM page.
In accordance with the stated dividend policy, the Board has
declared an interim dividend of 14p to be paid in January 2022
(January 2021: 9p). This represents a 56% increase in the first
interim dividend which aligns with the increase in adjusted diluted
core EPS.
Net inflows have continued in October 2021 and early November
2021 and the pipeline for the remainder of the financial year is
encouraging.
Strategic progress and thanks
The sustainable thematic team joined Polar Capital in September
2021 and the Polar Capital Smart Energy and Smart Mobility Funds
were launched. This provides additional capacity in appealing
equity strategies and will, over time, further diversify the
concentration of our assets under management across a broader array
of teams. There has been considerable progress in the growth and
diversification of our distribution activities and further
investment in our digital marketing efforts. Following the funding
of further segregated institutional mandates in the period, we had
in excess of GBP1bn in segregated mandates at the period end
including a mandate with an Australian institution marking success
in our expansion into the Asia Pacific region.
Continued progress has been made in the area of sustainability
both at Polar Capital corporate level and within our funds. In
terms of SFDR, we have two Article 9 funds, six Article 8 Funds
with a pipeline of funds aiming to reclassify as Article 8.
With the attainment of a highly credible three-year track record
since joining Polar Capital, the AuM in the sustainable Emerging
Market Stars suite of fund strategies now exceeds GBP1bn and has
been instrumental in establishing a meaningful and valued client
base in the Nordic region.
During the period, Polar Capital was recognised as Boutique of
the Year in the Financial News Fund Manager awards.
We are extremely grateful for the support of our clients and the
hard work and commitment of our partners and staff during the
period as we continue to emerge from lockdown into a more
normalised working environment.
Outlook
Our diverse and differentiated range of sector, thematic and
regional fund strategies and our performance led culture where 74%,
93% and 99% of our AuM is in the top two quartiles against peers
over three years, five years and since inception respectively
together with significant remaining capacity provides confidence
that momentum will continue.
Gavin Rochussen
Chief Executive
19 November 2021
Alternate Performance Measures (APMs)
APM Definition Reconciliation Reason for use
------------------- ------------------------ ------------------- ---------------------------------------
Core operating Profit before APM reconciliation To present a measure of the
profit performance Group's profitability excluding
fee profits, performance fee profits and
other income, other components which may
exceptional be volatile, non-recurring
items and tax. or non-cash in nature.
------------------- ------------------------ ------------------- ---------------------------------------
Performance fee Gross performance APM reconciliation To present a clear view of
profit fee revenue the net amount of performance
less performance fee earned by the Group after
fee interests accounting for staff remuneration
due to staff. payable that is directly attributable
to performance fee revenues
generated.
------------------- ------------------------ ------------------- ---------------------------------------
Core distributions Variable compensation APM reconciliation To present additional information
payable to investment thereby assisting users of
teams from management the accounts in understanding
fee revenue. key components of variable
costs paid out of management
fee revenue.
------------------- ------------------------ ------------------- ---------------------------------------
Performance Variable compensation APM reconciliation To present additional information
fee interests payable to investment thereby assisting users of
teams from performance the accounts in understanding
fee revenue. key components of variable
costs paid out of performance
fee revenue.
------------------- ------------------------ ------------------- ---------------------------------------
Adjusted diluted Profit after APM reconciliation The Group believes that (a)
total EPS tax but excluding as the preference share awards
(a) cost of have been designed to be earnings
share-based enhancing to shareholders
payments on adjusting for this non-cash
preference shares, item provides a better understanding
(b) the net of the financial performance
cost of deferred of the Group, (b) comparing
staff remuneration staff remuneration and profits
and (c) exceptional generated in the same time
items which period (rather than deferring
may either be remuneration over a longer
non-recurring vesting period) allows users
or non-cash of the accounts to gain a
in nature, and better understanding of the
in the case Group's results and their
of adjusted comparability period on period
diluted earnings and (c) removing acquisition
per share, divided related transition and termination
by the weighted costs as well as the non-cash
average number amortisation, and any impairment,
of ordinary of intangible assets and goodwill
shares. provides a better understanding
of the Group's results and
allows users of the accounts
to better compare results
across companies to the extent
the identification, or not,
of intangible assets affects
the relative amortisation
costs.
------------------- ------------------------ ------------------- ---------------------------------------
Adjusted diluted Core operating APM reconciliation To present additional information
core EPS profit after that allows users of the accounts
tax excluding to measure the Group's earnings
the net cost excluding those from performance
of deferred fees and other components
core distributions which may be volatile, non-recurring
divided by the or non-cash in nature.
weighted average
number of ordinary
shares.
------------------- ------------------------ ------------------- ---------------------------------------
Core operating Core operating Chief Executive's To present additional information
margin profit divided report that allows users of the accounts
by to measure the core profitability
net management of the Group before performance
fees. fee profits, and other components,
which can be volatile and
non-recurring.
------------------- ------------------------ ------------------- ---------------------------------------
Net Management Net management Chief Executive's To present additional information
fee yield fees divided report that allows users of the accounts
by average AuM. to measure the fee margin
for the Group in relation
to its assets under management.
------------------- ------------------------ ------------------- ---------------------------------------
Summary of non-GAAP financial performance and reconciliation of
APMs to interim reported results
The summary below reconciles key APMs the Group measures to its
interim reported results for the current year and also reclassifies
the line by line impact on consolidation of seed investments to
provide a clearer understanding of the Group's core business
operation of fund management.
Any seed investments in newly launched or nascent funds, where
the Group is determined to have control, are consolidated. As a
consequence, the statement of profit or loss of the fund is
consolidated into that of the Group on a line by line basis. Any
seed investments that are not consolidated are fair valued through
a single line item (other income) on the Group consolidated
statement of profit or loss.
Reclassification
Interim on consolidation Interim
reported of seed Reclassification Non-GAAP
Results investments of costs results
GBP'm GBP'm GBP'm GBP'm APMs
Investment management
and research fees 103.6 - - 103.6
Commissions and fees
payable (10.7) - - (10.7)
------------------------ ---------- ----------------- ------------------ ---------- ------------------
92.9 - - 92.9
Operating costs (60.5) 0.3 29.0 (31.2)
- - (25.4) (25.4) Core distributions
----------------------- ---------- ----------------- ------------------ ---------- ------------------
Core operating
32.4 0.3 3.6 36.3 profits
Investment performance - - - -
fees
- - - - Performance
fee interests
----------------------- ---------- ----------------- ------------------ ---------- ------------------
- - - - Performance
fee profits
Other income (0.7) (0.3) 0.7 (0.3)
Share-based payments
on preference shares - - (0.4) (0.4)
Exceptional items - - (3.9) (3.9)
------------------------ ---------- ----------------- ------------------ ---------- ------------------
Profit for the year 31.7 - - 31.7
------------------------ ---------- ----------------- ------------------ ---------- ------------------
The effect of the adjustments made in arriving at the adjusted
diluted total EPS and adjusted diluted core EPS figures of the
Group is as follows:
Earnings per share Unaudited
30 September
2021
Pence
-------------------------------------------- -------------
Diluted earnings per share 25.3
Impact of share-based payments - preference
shares only 0.4
Impact of exceptional items 3.9
Impact of deferment, where IFRS defers
cost into future periods (1.5)
--------------------------------------------- -------------
Adjusted diluted total EPS 28.1
Performance fee profit and other income 0.1
--------------------------------------------- -------------
Adjusted diluted core EPS 28.2
--------------------------------------------- -------------
Interim Consolidated Statement of Profit or Loss
For the six months to 30 September 2021
(Unaudited) (Unaudited)
Six months Six months
to 30 September to 30 September
2021 2020
GBP'000 GBP'000
----------------------------------------------- ---------------- ----------------
Revenue 103,647 68,826
Other income (722) 5,290
----------------------------------------------- ---------------- ----------------
Gross income 102,925 74,116
Commissions and fees payable (10,735) (6,055)
----------------------------------------------- ---------------- ----------------
Net income 92,190 68,061
Operating costs (60,468) (41,020)
Profit for the period before tax 31,722 27,041
Taxation (6,366) (5,216)
----------------------------------------------- ---------------- ----------------
Profit for the period attributable to ordinary
shareholders 25,356 21,825
----------------------------------------------- ---------------- ----------------
Earnings per share
Basic 26.5p 23.4p
Diluted 25.3p 22.5p
Adjusted basic (Non-GAAP measure) 29.4p 23.0p
Adjusted diluted (Non-GAAP measure) 28.1p 22.1p
----------------------------------------------- ---------------- ----------------
Interim Consolidated Statement of Other Comprehensive Income
For the six months to 30 September 2021
(Unaudited) (Unaudited)
Six months Six months
to 30 September to 30 September
2021 2020
GBP'000 GBP'000
--------------------------------------------------- ---------------- ----------------
Profit for the period attributable to ordinary
shareholders 25,356 21,825
Other comprehensive income - items that will
be reclassified to income statement in subsequent
periods:
Net movement on the fair valuation of cash
flow hedges - 1,167
Deferred tax effect - (222)
--------------------------------------------------- ---------------- ----------------
- 945
Exchange differences on translation of foreign
operations 327 (668)
--------------------------------------------------- ---------------- ----------------
Other comprehensive income for the period 327 277
--------------------------------------------------- ---------------- ----------------
Total comprehensive income for the period,
net of tax, attributable to ordinary shareholders 25,683 22,102
--------------------------------------------------- ---------------- ----------------
All of the items in the above statements are derived from
continuing operations.
Interim Consolidated Balance Sheet
As at 30 September 2021
(Audited)
(Unaudited) 31 March
30 September
2021 2021
GBP'000 GBP'000
-------------------------------------------- ------------- ---------
Non-current assets
Goodwill and intangible assets 26,743 24,998
Property and equipment 4,458 5,104
Deferred tax assets 4,598 5,783
-------------------------------------------- ------------- ---------
35,799 35,885
-------------------------------------------- ------------- ---------
Current assets
Assets at fair value through profit or loss 71,451 57,151
Trade and other receivables 27,621 23,924
Other financial assets 164 84
Current tax assets 3,136 1,966
Cash and cash equivalents 103,382 136,718
205,754 219,843
-------------------------------------------- ------------- ---------
Total assets 241,553 255,728
-------------------------------------------- ------------- ---------
Non-current liabilities
Liabilities at fair value through profit or
loss 7,692 4,258
Provisions and other liabilities 3,505 4,123
Deferred tax liabilities 3,896 4,116
-------------------------------------------- ------------- ---------
15,093 12,497
-------------------------------------------- ------------- ---------
Current liabilities
Liabilities at fair value through profit or
loss 15,076 16,124
Trade and other payables 64,182 71,598
Other financial liabilities 367 4,069
79,625 91,791
-------------------------------------------- ------------- ---------
Total liabilities 94,718 104,288
-------------------------------------------- ------------- ---------
Net assets 146,835 151,440
-------------------------------------------- ------------- ---------
Capital and reserves
Issued share capital 2,502 2,468
Share premium 19,364 19,364
Investment in own shares (21,683) (26,579)
Capital and other reserves 12,451 11,030
Retained earnings 134,201 145,157
--------------------------------------------------- -------- --------
Total equity attributable to ordinary shareholders 146,835 151,440
--------------------------------------------------- -------- --------
Interim Consolidated Statement of Changes in Equity
For the six months to 30 September 2021
Issued Investment
share Share in own Capital Other Retained
capital premium shares reserves reserves earnings Total equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ --------- -------- ---------- --------- --------- --------- ------------
As at 1 April 2021
(audited) 2,468 19,364 (26,579) 695 10,335 145,157 151,440
Profit for the period - - - - - 25,356 25,356
Other comprehensive
income - - - - 327 - 327
------------------------ --------- -------- ---------- --------- --------- --------- ------------
Total comprehensive
income - - - - 327 25,356 25,683
Dividends paid to
shareholders - - - - - (29,836) (29,836)
Issue of shares 34 - - - - (34) -
Own shares acquired - - (7,629) - - - (7,629)
Release of own shares - - 12,525 - - (10,489) 2,036
Share-based payment - - - - - 4,047 4,047
Current tax in respect
of employee share
options - - - - 2,477 - 2,477
Deferred tax in respect
of employee share
options - - - - (1,383) - (1,383)
------------------------ --------- -------- ---------- --------- --------- --------- ------------
As at 30 September
2021 (unaudited) 2,502 19,364 (21,683) 695 11,756 134,201 146,835
------------------------ --------- -------- ---------- --------- --------- --------- ------------
As at 1 April 2020
(audited) 2,417 19,101 (24,139) 695 7,646 110,358 116,078
Profit for the period - - - - - 21,825 21,825
Other comprehensive
income - - - - 277 - 277
------------------------ ----- ------ -------- --- ----- -------- --------
Total comprehensive
income - - - - 277 21,825 22,102
Dividends paid to
shareholders - - - - - (23,494) (23,494)
Issue of shares 45 38 - - - (44) 39
Own shares acquired - - (4,277) - - - (4,277)
Release of own shares - - 2,287 - - (1,150) 1,137
Share-based payment - - - - - 2,282 2,282
Current tax in respect
of employee share
options - - - - 145 - 145
Deferred tax in respect
of employee share
options - - - - 414 - 414
------------------------ ----- ------ -------- --- ----- -------- --------
As at 30 September
2020 (unaudited) 2,462 19,139 (26,129) 695 8,482 109,777 114,426
------------------------ ----- ------ -------- --- ----- -------- --------
Interim Consolidated Cash Flow Statement
For the six months to 30 September 2021
(Unaudited) (Unaudited)
Six months Six months
to 30 September to 30 September
2021 2020
GBP'000 GBP'000
--------------------------------------------- ---------------- ----------------
Operating activities
Cash generated from operations 27,015 5,718
Tax paid (5,404) (5,069)
Interest on lease (51) (65)
--------------------------------------------- ---------------- ----------------
Net cash flow from operating activities 21,560 584
--------------------------------------------- ---------------- ----------------
Investing activities
Interest received and similar income 13 37
Investment income 176 137
Sale of assets at fair value through profit
or loss 14,698 18,166
Purchase of assets at fair value through
profit or loss (30,666) (18,357)
Re-measurement of purchase consideration
in respect of business acquisition 38 -
Payments in respect of asset acquisition (363) -
Purchase of property and equipment (30) (50)
Net cash outflow from investing activities (16,134) (67)
--------------------------------------------- ---------------- ----------------
Financing activities
Dividends paid to shareholders (29,836) (23,494)
Issue of shares - 9
Purchase of own shares (7,585) (3,900)
Lease payments (653) (648)
Third-party subscriptions into consolidated
funds 3,194 2,501
Third-party redemptions from consolidated
funds (3,811) (94)
Net cash outflow from financing activities (38,691) (25,626)
--------------------------------------------- ---------------- ----------------
Net decrease in cash and cash equivalents (33,265) (25,109)
Cash and cash equivalents at start of period 136,718 107,753
Effect of exchange rate changes on cash and
cash equivalents (71) (170)
--------------------------------------------- ---------------- ----------------
Cash and cash equivalents at end of period 103,382 82,474
--------------------------------------------- ---------------- ----------------
Notes to the Unaudited Interim Consolidated Financial
Statements
For the six months to 30 September 2021
1. General Information, Basis of Preparation and Accounting Policies
1.1 General information
Polar Capital Holdings plc ("the Company") is a public limited
Company registered in England and Wales.
1.2 Basis of Preparation
The unaudited interim condensed consolidated financial
statements to 30 September 2021 have been prepared in accordance
with IAS 34: Interim Financial Reporting.
The unaudited interim condensed consolidated financial
statements do not include all the information and disclosures
required in annual financial statements and should be read in
conjunction with the Group's annual financial statements as at 31
March 2021, which have been prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by
the European Union and the Companies Act 2006 applicable to
companies reporting under IFRS.
The accounting policies adopted and the estimates and judgements
used in the preparation of the unaudited interim condensed
consolidated financial statements are consistent with the Group's
annual financial statements for the year ended 31 March 2021.
1.3 Group information
The Group is required to consolidate seed capital investments
where it is deemed to control them. In addition to the operating
subsidiaries and seed capital investments consolidated at 31 March
2021, the Group has consolidated the following two funds as at 30
September 2021:
-- Polar Capital Smart Energy Fund
-- Polar Capital Smart Mobility Fund
1.4 Going concern
The Directors have made an assessment of going concern taking
into account both the Group's current results as well as the
Group's outlook. As part of this assessment the Directors have used
information available to the date of issue of these interim
financial statements and considered the following key areas:
-- Analysis of the Group's budget for the year ending March
2022, longer-term financial projections and its regulatory capital
position and forecasts. The stress testing scenarios applied as
part of the Group's ICAAP have also been revisited to ensure they
remain appropriate.
-- Cash flow forecasts and an analysis of the Group's liquid
assets, which include cash and cash equivalents and seed
investments.
-- The operational resilience of the Group and its ability to
meet client servicing demands across all areas of the Group's
business, including outsourced functions, whilst ensuring the
wellbeing and health of its staff.
The Group continues to maintain a robust financial resources
position, access to cashflow from ongoing investment management
contracts and the Directors believe that the Group is well placed
to manage its business risks. The Directors also have a reasonable
expectation that the Group has adequate resources to continue
operating for a period of at least 12 months from the balance sheet
date. Therefore, the Directors continue to adopt the going concern
basis of accounting in preparing the consolidated financial
statements.
2. Revenue
(Unaudited) (Unaudited)
Six months Six months
to 30 September to 30 September
2021 2020
GBP'000 GBP'000
---------------------------------------- ---------------- ----------------
Investment management and research fees 103,647 67,909
Investment performance fee - 1,050
Loss on forward currency contracts - (133)
---------------------------------------- ---------------- ----------------
103,647 68,826
---------------------------------------- ---------------- ----------------
Effective 1 April 2021, the Group has discontinued its revenue
hedging programme.
3. Operating costs
a) Operating costs include the following items:
(Unaudited) (Unaudited)
Six months Six months
to 30 September to 30 September
2021 2020
GBP'000 GBP'000
----------------------------------------------------- ---------------- ----------------
Staff costs including partnership profit allocations 46,576 30,437
Depreciation 678 670
Amortisation of intangible assets 932 -
Auditors remuneration 175 133
----------------------------------------------------- ---------------- ----------------
b) Auditors' remuneration:
Audit of Group financial statements 68 43
Local statutory audits of subsidiaries 63 51
Audit-related assurance services 5 -
Other assurance services - internal controls
review 39 39
175 133
--------------------------------------------- --- ---
4. Other income
(Unaudited) (Unaudited)
Six months Six months
to 30 September to 30 September
2021 2020
GBP'000 GBP'000
------------------------------------------------ ---------------- ----------------
Interest income and cash and cash equivalents 13 41
Net gain/ (loss) on other financial liabilities
- short positions and futures 1,704 (4,600)
Net (loss)/gain on forward contracts (440) 718
Net gain on financial assets at FVTPL 360 4,308
Net (loss)/ gain on financial liabilities at
FVTPL (3,048) 5,347
Investment income 190 155
Other gain/ (loss) - attributed to third party
holdings 499 (679)
(722) 5,290
------------------------------------------------ ---------------- ----------------
Net loss on financial liabilities at fair value through profit
or loss includes a mark to market charge of GBP0.7m relating to the
deferred consideration payable on the Dalton acquisition .
5. Dividends
(Unaudited) (Unaudited)
Six months Six months
to 30 September to 30 September
2021 2020
GBP'000 GBP'000
-------------- ---------------- ----------------
Dividend paid 29,836 23,494
-------------- ---------------- ----------------
On 31 July 2021, the Group paid a second interim dividend for
2021 of 31p (2020: 25p) per ordinary share.
6. Share-based Payments
A summary of the charge to the consolidated statement of profit
or loss for each share-based payment arrangement is as follows:
(Unaudited) (Unaudited)
Six months Six months
to 30 September to 30 September
2021 2020
GBP'000 GBP'000
------------------------------ ---------------- ----------------
Preference shares 444 429
LTIP and initial share awards 2,303 810
Equity incentive plan 739 380
Deferred remuneration plan 561 663
------------------------------ ---------------- ----------------
4,047 2,282
------------------------------ ---------------- ----------------
Certain employees of the Group and partners of Polar Capital LLP
hold Manager Preference Shares or Manager Team Member Preference
Shares (together 'Preference Shares') in Polar Capital Partners
Limited, a group company.
The preference shares are designed to incentivise and retain the
Group's fund management teams. These shares provide each manager
with an economic interest in the funds that they run and ultimately
enable the manager, at their option and at a future date, to
convert their interest in the revenues generated from their funds
to a value that may (at the discretion of the parent undertaking,
Polar Capital Holdings plc) be satisfied by the issue of ordinary
shares in Polar Capital Holdings plc. Such conversion takes place
according to a pre-defined conversion formula intended to be
earnings enhancing for the Group and that considers the relative
contribution of the manager to the Group as a whole. The equity is
awarded in return for the forfeiture of a manager's current core
economic interest and is issued over three years from the date of
conversion.
In November 2021, the Biotechnology team called for a full
conversion and the Convertible team called for a partial conversion
of preference shares into Polar Capital Holdings equity (2020:
none). At 30 September 2021, three sets of preference shares (2020:
four sets) have the right to call for conversion.
The following table illustrates the number of, and movements in,
the estimated number of ordinary shares to be issued.
Estimated number of ordinary shares to be issued against
preference shares with a right to call for conversion:
(Unaudited) (Unaudited)
30 September 30 September
2021 2020
Number of shares Number of shares
--------------------------- ----------------- -----------------
At 1 April 4,426,258 4,676,882
Conversion/crystallisation (1,350,514) -
Movement during the period (718,593) 147,276
At 30 September 2,357,421 4,824,158
--------------------------- ----------------- -----------------
Number of ordinary shares to be issued against converted
preference shares:
(Unaudited) (Unaudited)
30 September 30 September
2021 2020
Number of shares Number of shares
----------------------------- ----------------- -----------------
Outstanding at 1 April 1,766,541 3,733,904
Conversion/crystallisation 1,350,514 -
Adjustment on re-calculation - (28,261)
Issued during the period (1,333,921) (1,622,380)
Outstanding at 30 September 1,783,134 2,083,263
----------------------------- ----------------- -----------------
7. Earnings Per Share
A reconciliation of the figures used in calculating the basic,
diluted and adjusted earnings per share (EPS) figures is as
follows:
(Unaudited) (Unaudited)
Six months Six months
to to
30 September 30 September
2021 2020
GBP'000 GBP'000
Earnings
Profit after tax for purpose of basic and
diluted EPS 25,356 21,825
Adjustments (post tax):
Add back cost of share-based payments on
preference shares 444 429
Add back exceptional items - acquisition
related costs 2,262 -
Add back exceptional items - amortisation
of intangible assets 932 -
Add back exceptional items - fair value charge
on deferred consideration relating to business
acquisition 686 -
Less net amount of deferred staff remuneration (1,500) (832)
------------------------------------------------ ----------------- -----------------
Profit after tax for purpose of adjusted
basic and adjusted diluted EPS 28,180 21,422
------------------------------------------------ ----------------- -----------------
(Unaudited) (Unaudited)
Six months Six months
to to
30 September 30 September
2021 2020
Number of shares Number of shares
------------------------------------------------ ----------------- -----------------
Weighted average number of shares
Weighted average number of ordinary shares,
excluding own shares, for purposes of basic
and adjusted basic EPS 95,743,599 93,307,573
Effect of dilutive potential shares - share
options 2,711,240 1,699,471
Effect of preference shares crystallised
but not yet issued 1,783,134 2,083,263
Weighted average number of ordinary shares,
for purpose of diluted and adjusted diluted
EPS 100,237,973 97,090,307
------------------------------------------------ ----------------- -----------------
(Unaudited) (Unaudited)
Six months Six months
to to
30 September 30 September
2021 2020
Pence Pence
------------------- ------------- --------------
Earnings per share
Basic 26.5 23.4
Diluted 25.3 22.5
Adjusted basic 29.4 23.0
Adjusted diluted 28.1 22.1
------------------- ------------- --------------
8. Goodwill and intangible assets
Goodwill relates to the acquisition of Dalton Capital (Holdings)
Limited, the parent company of Dalton Strategic Partnership LLP
(Dalton), a UK based boutique asset manager, which completed on 28
February 2021.
Intangible assets relate to investment management contracts
acquired as part of the business combination with Dalton and the
asset acquisition related to the International Value and World
Value equity team from the Los Angeles based asset manager First
Pacific Advisors LP (FPA). The net book value of these intangible
assets as at 30 September 2021 were GBP10.9m and GBP9.1m
respectively.
Investment
management
(Unaudited) Goodwill Contracts Total
GBP'000 GBP'000 GBP'000
---------------------------------- ---------- ----------- ---------
Cost
As at 1 April 2021 6,770 18,647 25,417
Re-measurement of goodwill(1) (38) - (38)
Revaluation(2) - 2,715 2,715
---------------------------------- ---------- ----------- ---------
As at 30 September 2021 6,732 21,362 28,094
---------------------------------- ---------- ----------- ---------
Amortisation and impairment
As at 1 April 2021 - 419 419
Amortisation for the period - 932 932
Impairment for the period - - -
---------------------------------- ---------- ----------- ---------
As at 30 September 2021 - 1,351 1,351
---------------------------------- ---------- ----------- ---------
Net book value as at 30 September
2021 6,732 20,011 26,743
---------------------------------- ---------- ----------- ---------
Investment
management
Goodwill Contracts Total
Audited GBP'000 GBP'000 GBP'000
----------------------------------- ---------- ----------- ---------
Cost
As at 1 April 2020 - - -
Acquisition during the year 6,770 18,647 25,417
----------------------------------- ---------- ----------- ---------
As at 31 March 2021 6,770 18,647 25,417
----------------------------------- ---------- ----------- ---------
Amortisation and impairment
As at 1 April 2020 - - -
Amortisation for the year - 419 419
Impairment for the year - - -
----------------------------------- ---------- ----------- ---------
As at 31 March 2021 - 419 419
----------------------------------- ---------- ----------- ---------
Net book value as at 31 March 2021 6,770 18,228 24,998
----------------------------------- ---------- ----------- ---------
1. The re-measurement of goodwill relates to the purchase price
adjustment recognised in the current period.
2. Revaluation of intangible asset relates to investment
management contracts acquired from FPA and is a result of the
subsequent fair value measurement of the deferred consideration
amount payable to FPA.
Goodwill is tested for impairment at least on an annual basis or
more frequently when there are indications that goodwill may be
impaired.
The Group has reviewed the investment management contracts
related intangible assets as at 30 September 2021 and has concluded
that there are no indicators of impairment.
9. Issued Share Capital
(Audited)
(Unaudited) 31 March
30 September
2021 2021
Allotted, called up and fully paid: GBP'000 GBP'000
-------------------------------------------- ------------- ---------
100,113,855 ordinary shares of 2.5p each
(31 March 2021: 98,745,668 ordinary shares
of 2.5p each) 2,502 2,468
-------------------------------------------- ------------- ---------
During the period, Polar Capital Holdings plc has issued 34,266
shares on exercise of employee share options and 1,333,921 shares
in connection with the crystallisation of manager preference
shares.
10. Financial Instruments
The fair value of financial instruments that are traded in
active markets at each reporting date is determined by reference to
quoted market prices or dealer price quotation (bid price for long
positions and ask price for short positions), without any deduction
for transaction costs. For financial instruments not traded in an
active market, such as forward exchange contracts, the fair value
is determined using appropriate valuation techniques that take into
account the terms and conditions and use observable market data,
such as spot and forward rates, as inputs.
The Group uses the following hierarchy for determining and
disclosing the fair value of financial instruments by valuation
technique:
Level 1: quoted (unadjusted) prices in active markets for
identical assets or liabilities.
Level 2: other techniques for which all inputs which have a
significant effect on the recorded fair value are observable,
either directly or indirectly.
Level 3: techniques which use inputs which have a significant
effect on the recorded fair value that are not based on observable
market data.
(Unaudited)
30 September 2021
------------------------------------------
Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
--------- --------- --------- ---------
Financial assets
Assets at FVTPL 71,451 - - 71,451
Other financial assets - 164 - 164
71,451 164 - 71,615
--------- --------- --------- ---------
Financial Liabilities
Liabilities at FVTPL 5,543 - 17,225 22,768
Other financial liabilities 367 - - 367
------ ------- -------
5,910 - 17,225 23,135
------ ------- -------
(Audited)
31 March 2021
------------------------------------------
Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
--------- --------- --------- ---------
Financial assets
Assets at FVTPL 57,151 - - 57,151
Other financial assets - 84 - 84
57,151 84 - 57,235
--------- --------- --------- ---------
Financial Liabilities
Liabilities at FVTPL 6,328 - 14,054 20,382
Other financial liabilities 4,069 - - 4,069
--------- --------- --------- ---------
10,397 - 14,054 24,451
--------- --------- --------- ---------
During the period there were no transfers between levels in fair
value measurements.
Movement in liabilities at FVTPL categorised as Level 3 during
the year were:
(Unaudited) (Audited)
30 September 31 March
2021 2021
GBP'000 GBP'000
------------------------------------------ ------------- ----------
At 1 April 14,054 -
Additions - 15,014
Repayment (363) (517)
Fair value movement 3,402 -
Foreign currency revaluation loss/ (gain) 132 (443)
------------------------------------------ ------------- ----------
At 30 September 17,225 14,054
------------------------------------------ ------------- ----------
11. Notes to the Cash Flow Statement
Reconciliation of profit before taxation to cash generated from
operations
(Unaudited)
(Unaudited) Six months
Six months to
to 30 September 30 September
2021 2020
GBP'000 GBP'000
---------------------------------------------------- ---------------- --------------
Cash flows from operating activities
Profit on ordinary activities before tax 31,722 27,041
Adjustments for:
Interest receivable and similar income (13) (41)
Investment income (190) (155)
Interest on lease 51 65
Amortisation of intangible assets 932 -
Depreciation of non-current property and equipment 678 670
Decrease/ (increase) in fair value of assets
at fair value through profit or loss 2,001 (9,656)
(Decrease)/ increase in other financial liabilities (3,050) 3,311
Increase in receivables (3,697) (15,302)
Decrease in trade and other payables (7,433) (2,059)
Share-based payments 4,047 2,282
(Decrease)/ increase in liabilities at fair
value through profit or loss (1,004) 175
Release of fund units held against deferred
remuneration 2,971 (613)
---------------------------------------------------- ---------------- --------------
Cash generated from operations 27,015 5,718
---------------------------------------------------- ---------------- --------------
12. Related Party Transactions
Transactions between the Company and its subsidiaries, which are
related parties of the Company, have been eliminated on
consolidation and are not included in this note. All related party
transactions during the period are consistent with those disclosed
in the Group's annual financial statements for the year ended 31
March 2021 and have taken place on an arm's length basis.
13. The Publication of Non-Statutory Accounts
The financial information contained in this unaudited interim
report for the period to 30 September 2021 does not constitute
statutory accounts as defined in s434 of the Companies Act 2006.
The financial information for the six months ended 30 September
2021 and 2020 has not been audited. The information for the year
ended 31 March 2021 has been extracted from the latest published
audited accounts, which have been filed with the Registrar of
Companies. The audited accounts filed with the Registrar of
Companies contain a report of the independent auditor dated 30 June
2021. The report of the independent auditor on those financial
statements contained no qualification or statement under s498 of
the Companies Act 2006.
Shareholder Information
Directors
David Lamb Non-executive Chairman
Gavin Rochussen Chief Executive Officer
John Mansell Executive Director
Jamie Cayzer-Colvin Non-executive Director
Alexa Coates Non-executive Director, Chair of Audit and Risk
Committee
Win Robbins Non-executive Director, Chair of Remuneration
Committee
Andrew Ross Non-executive Director
Samir Ayub Executive Director (appointed 17 November 2021)
Laura Ahto Non-executive Director (appointed 17 November
2021)
Company No.
Registered in England and Wales
4235369
Registered Office
16 Palace Street
London, SW1E 5JD
Tel: 020 7227 2700
Group Company Secretary
Neil Taylor
Dividend
A first interim dividend of 14.0p per share has been declared
for the year to 31 March 2022. This will be paid on 14 January 2022
to shareholders on the register on 24 December 2021. The shares
will trade ex-dividend from 23 December 2021.
Remuneration Code
Disclosure of the Group's Remuneration Code will be made
alongside its Pillar 3 disclosure which is available on the
Company's website.
Half Year Report
Copies of this announcement and of the Half Year report will be
available from the Secretary at the Registered Office, 16 Palace
Street, London SW1E 5JD and from the Company's website at
www.polarcapital.co.uk
Neither the contents of the Company's website nor the contents
of any website accessible from the hyperlinks on the Company's
website (or any other website) is incorporated into or forms part
of this announcement .
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END
IR DBLFLFFLLFBL
(END) Dow Jones Newswires
November 22, 2021 02:00 ET (07:00 GMT)
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