Interim Results

RNS Number : 9666S

Polar Capital Holdings PLC

07 December 2012

 



7 December 2012

POLAR CAPITAL HOLDINGS plc ("Polar Capital" or "the Company")

Interim results for the six months ended 30 September 2012

Financial Highlights

·     Net inflows in the six month period ended 30 September 2012 of US$405m despite turbulent markets and Assets under Management ("AUM") at 30 September 2012 up to US$5.30bn (31 March 2012:US$5.08bn)

·     Core operating profit excluding performance fees up 20% to £4.2m (30 September 2011:£3.5m)

·     Profit before share-based payments and amortisation of intangibles of £4.6m (30 September 2011:£4.8m)

·     Pre-tax profit of £3.8m (30 September 2011:£3.9m)

·     Basic earnings per share 3.64p (30 September 2011:3.91p) and adjusted* diluted earnings per share 4.14p (30 September 2011:4.25p)

·     Interim dividend per ordinary share of 2.0p declared (2011:1.5p) to be paid in January 2013

·     Shareholders' funds of £44.1m (31 March 2012:£46.6m) including cash and investments of £42.8m (31 March 2012:£49.0m)

*Adjusted to exclude cost of share-based payments and amortisation/impairment of intangibles

Corporate Highlights

·     Two new funds launched; the Global Alpha Fund following the appointment of the Global Equities team in the Summer and the Japan Alpha Fund, by our award-winning specialist Japanese team.

·     Awarded Specialist Group of the Year at the S&P Capital IQ 2012 UK Fund Awards.

Current AUM

·     AUM as at 30 November 2012 up over 4.5% from 30 September 2012 to US$5.55bn

Tim Woolley, Chief Executive Officer, commented:

"In markets which continue to be turbulent it is encouraging to report continued strong inflows over the period.  In particular, we saw good inflows into our Emerging Markets Income fund, our North American fund and our Healthcare fund. On the hedge side it was pleasing to see a return to net inflows over the period, albeit at a more modest level than the long only side. All these trends continue to enhance the Group's diversification. Our financial position remains robust.  This combined with our continued good performance, the investment we have made in teams and the support functions over the last few years positions us well for further growth in the year ahead barring a sell-off in markets."

For further information please contact:

Polar Capital                                                         [phone] Tim Woolley (CEO) John Mansell (CFO)  Canaccord Genuity - Nomad and Broker           [phone] Simon Bridges Cameron Duncan F T I Consulting                                                     [phone] Ed Gascoigne-Pees Jack Hickey

Polar Capital Holdings plc is a specialist investment management company offering professional and institutional investors a range of geographical and sector funds. The Company's investment strategies have a fundamental research driven approach. The Company has long only and hedge funds in its product range.

Founded in 2001, Polar currently has 84 employees of whom 43 are investment professionals managing 18 funds, and 5 managed accounts. These funds have combined assets under management of US$5.30bn as at 30 September 2012 (30 March 2012: US$5.08bn).

The Company is AIM quoted following its IPO in February 2007. Consistent with the Company's founding strategy of fostering an equity culture amongst its employees and providing high levels of transparency to clients, 41% of the equity is currently held by Directors, founders and employees.

Assets by fund / strategy	30 September 2012 US$m	31 March 2012 US$m	30 September 2011 US$m
Technology	1,321	1,481	1,176
Technology Trust plc	815	837	639
Global Technology UCITS Fund	506	644	537
Japan	1,421	1,517	1,266
Japan UCITS Fund*
UK	295	282	137
UK Hedge Fund	-	9	9
UK Absolute Return UCITS Fund*	37	35	38
UK Managed Accounts	258	238	90
Europe	654	618	560
European Forager Hedge Fund	505	499	450
European Conviction Hedge Fund	149	119	110
Healthcare	440	347	298
Global Healthcare Growth & Income Trust plc	195	180	157
Healthcare Opportunities UCITS Fund	245	167	141
Financials	526	497	364
Asian Financial Fund	53	57	52
Global Insurance UCITS Fund	381	352	238
Financials Income Fund	77	73	61
Financial Opportunities UCITS Fund	15	15	13
Global Emerging Markets	234	149	105
Global Emerging Markets Growth UCITS Fund*	117	107	91
Global Emerging Markets Income UCITS Fund	117	42	14
ALVA Global Convertibles Hedge Fund	41	39	37
North American UCITS Fund	343	137	-
European Market Neutral Fund	27	16	-
European Market Neutral Hedge Fund	19	11	-
European Market Neutral UCITS Fund	8	5	-
Total	5,302	5,083	3,943

* Including managed accounts run off the same strategy

Analysis of changes in asset types for the six months to 30 September 2012

	Long US$m	Hedge US$m	Total US$m
Total assets as at  31 March 2012	4,365	718	5,083
Performance and currency movements	(193)	7	(186)
Net subscriptions/(redemptions) from ongoing business	371	34	405
Total assets at 30 September 2012	4,543	759	5,302

Analysis of AUM by business unit and type of funds as at 30 September 2012

Technology	25%		Long only	86%
Japan	27%		Hedge funds	14%
UK	6%			100%
Europe	12%
Healthcare	8%
Financials	10%
Global Emerging Markets	4%
Global Convertibles	1%
North America	6%
European Market Neutral	1%
	100%

Chief Executive's statement

I am pleased to report that, despite the ongoing economic challenges and uncertainty in markets, we have continued to make progress over the first six months of our financial year. Our assets under management ("AUM") have continued to increase, reaching US$5.3bn at the end of September, up 4.3% from the year end level and up over 34% from this time last year. Our balance sheet remains strong and the key metric of core profitability increased 20% over the comparable period last year as set out below:

	Six months to 30 September 2012	Six months to 30 September 2011
Core operating profit	£4.2m	£3.5m
Performance fee profit	-	£1.5m
Finance income/(expense)	£0.4m	£(0.2)m
Profit before share based payments, amortisation, impairment and tax	£4.6m	£4.8m

It can be seen that profit before tax only decreased £0.2m (to £4.6m from £4.8m) as the absence of £1.5m performance fee profits in the period was partially offset by both improved core profitability and increased investment income. We can currently report that, on a mark to market basis, the quantum of performance fees  receivable in the second half of the year, though not included in these financial statements, would exceed the value of such fees received in the whole of last year.

We continued to see good inflows across a range of our products in the first six months although falls in certain key markets such as Japan impacted the asset levels of some of our long only funds. In particular, we saw good inflows into our Emerging Markets Income fund, our North American fund and our Healthcare fund. On the hedge fund side it was pleasing to see a return to net inflows over the period, albeit at a more modest level than the long only side.

Our product offering has again expanded with the launch of the Japan Alpha Fund by our award winning Japanese team and the launch of our Global Alpha Fund by the Global Equities team who joined us in the Summer.

The Global Equities team brings the number of investment teams to eleven. Since I took over as Chief Executive three years ago we have added six new teams - four on the long only side and two on the hedge/absolute return side. This is consistent with our original vision and strategy when we established Polar Capital in 2001 and set a goal of having ten to twelve world class teams. Having achieved our targeted number of teams there is no strategic imperative to add further, although it is possible we may add one more team over time and we will continue to be alert for investment talent that augments existing teams.

The new teams have expanded considerably our overall opportunity for growth in the years ahead as several of the newer strategies have significantly larger capacities than some of our more established teams and funds. Our energies will now be very much focused on realising the potential opportunity we have put in place and obtaining operating leverage from the investment we have made over the last few years, not just in investment teams but also in distribution and support infrastructure.

Our growing capability and strong performance record across a range of funds was recently recognised at the inaugural S&P Capital IQ 2012 UK Fund Awards  where we won the "Specialist Group of the Year" award. This is a tremendous accolade for our investment managers.

As we look ahead we feel optimistic we can make further progress over the remainder of the financial year, barring a sell-off in markets. Our financial position remains robust and with the teams we now have in place we feel well positioned for continued growth in assets and profits in the years ahead.

Tim Woolley

Chief Executive

6 December2012

Interim consolidated income statement for the six months to 30 September 2012

	(Unaudited) Six months to 30 Sept 2012 £'000	(Unaudited) Six months to 30 Sept  2011 £'000
Revenue	17,632	18,732
Finance income/expense	454	(197)
Gross income	18,086	18,535
Commissions and fees payable	(1,419)	(1,457)
Net income	16,667	17,078
Operating costs before share-based payments	(12,047)	(12,300)
Operating profit before share-based payments, amortisation/impairment and tax	4,620	4,778
Share-based payments	(319)	(320)
Amortisation/impairment of intangible assets	(540)	(540)
Profit for the period before tax	3,761	3,918
Taxation	(945)	(1,031)
Profit for the period attributable to ordinary shareholders	2,816	2,887
Basic earnings per ordinary share	3.64p	3.91p
Diluted earnings per ordinary share	3.17p	3.28p
Adjusted earnings per ordinary share	4.14p	4.25p

All of the items in the above statements are derived from continuing operations.                                         

Interim consolidated statement of comprehensive income for the six months to 30 September 2012

	(Unaudited) Six months to 30 Sept 2012 £'000	(Unaudited) Six months to 30 Sept 2011 £'000
Profit for the period attributable to ordinary shareholders	2,816	2,887
Other comprehensive income:
Net (loss)/gain on the revaluation of available-for-sale financial assets	(4)	19
Deferred tax effect	2	(3)
	(2)	16
Net movement on the fair valuation of cash flow hedges	(175)	(678)
Deferred tax effect	34	143
	(141)	(535)
Other comprehensive income	(143)	(519)
Total comprehensive income for the period, net of tax, attributable to ordinary shareholders	2,673	2,368

Interim consolidated balance sheet as at 30 September 2012

	(Unaudited) 30 Sept 2012 £'000	(Audited) 31 March 2012 £'000
Non-current assets
Property, plant and equipment	87	71
Intangible assets	-	540
Available-for-sale financial assets	21,987	26,426
Deferred tax assets	1,830	1,711
Total non-current assets	23,904	28,748
Current assets
Trade and other receivables	5,329	5,107
Cash at bank and in hand	20,828	22,583
Other financial assets	258	158
Total current assets	26,415	27,848
Total assets	50,319	56,596
Non-current liabilities Deferred tax liabilities
Deferred tax Liabilities	57	206
Current liabilities
Trade and other payables	5,197	8,493
Current tax liabilities	977	1,299
Total current liabilities	6,174	9,792
Total liabilities	6,231	9,998
Net assets	44,088	46,598
Capital and reserves
Issued  share capital	1,986	1,983
Share premium	16,037	16,010
Investment in own shares	(1,037)	(1,107)
Capital and other reserves	2,197	2,135
Retained earnings	24,905	27,577
Total equity - attributable to ordinary shareholders	44,088	46,598

Interim consolidated statement of changes in equity for the six months to 30 September 2012

	Share Capital £'000	Share premium £'000	Own shares £'000	Capital reserves £'000	Other reserves £'000	Retained earnings £'000	Total equity £'000
As at 1 April 2012	1,983	16,010	(1,107)	281	1,854	27,577	46,598
Profit for the period	-	-	-	-	-	2,816	2,816
Other comprehensive income	-	-	-	-	(143)	-	(143)
Total comprehensive income	-	-	-	-	(143)	2,816	2,673
Issue of shares against options	3	27	70	-	-	-	100
Dividends paid	-	-	-	-	-	(5,807)	(5,807)
Share based payment	-	-	-	-	-	319	319
Deferred tax on share based payments	-	-	-	-	205	-	205
As at 30 September 2012 (unaudited)	1,986	16,037	(1,037)	281	1,916	24,905	44,088
As at 1 April 2011 (restated)	1,895	15,905	(1,167)	363	880	25,504	43,380
Profit for the period	-	-	-	-	-	2,887	2,887
Other comprehensive income	-	-	-	-	(519)	-	(519)
Total comprehensive income	-	-	-	-	(519)	2,887	2,368
Issue of shares against options	5	105	25	-	-	-	135
Issue of shares on crystallisation event	20	-	-	(20)	-	-	-
Share based payment	-	-	-	-	-	320	320
Deferred tax on share based payments	-	-	-	-	614	-	614
As at 30 September 2011 (unaudited)	1,920	16,010	(1,142)	343	975	24,292	42,398

Interim consolidated statement of cash flows for the six months to 30 September 2011

	(Unaudited) Six months to 30 Sept 2012 £'000	(Unaudited) Six months to 30 Sept 2011 £'000
Operating activities
Cash generated /used in from operations	953	(556)
Tax paid	(1,266)	(1,644)
Net cash outflow generated from operating activities	(313)	(2,200)
Investing activities
Interest received and similar income	5	3
Purchase of property, plant and equipment	(38)	(35)
Proceeds from sale of available-for-sale financial assets	4,434	644
Purchase of available-for-sale financial assets	-	(3,988)
Cash flows related to instruments at fair value through profit or loss	(49)	-
Cash flows related to derivatives	(87)	310
Net cash inflow/(outflow) from investing activities	4,265	(3,066)
Financing activities
Dividends paid	(5,807)	(4,419)
Issue of ordinary shares	30	110
Receipts in relation to investment in own shares	70	25
Net cash outflow from financing activities	(5,707)	(4,284)
Net decrease in cash and cash equivalents	(1,755)	(9,550)
Cash and cash equivalents at start of period	22,583	19,194
Cash and cash equivalents at end of period	20,828	9,644

Notes to the unaudited interim condensed consolidated financial statements

for the six months to 30 September 2012

1. General Information, basis of preparation and accounting policies

Polar Capital Holdings plc ("the Company") is a public limited Company registered in England and Wales.

The unaudited interim condensed consolidated financial statements to 30 September 2012 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 2012 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 in the preparation of the unaudited interim condensed consolidated financial statements are consistent with those used in the preparation of the Group's annual financial statements for the year ended 31 March 2012.

2. Revenue        

	(Unaudited) Six months to 30 Sept 2012 £'000	(Unaudited) Six months to 30 Sept 2011 £'000
Investment management fees	17,586	15,168
Investment advisory fees	100	100
Investment performance fees	-	3,337
(Loss)/profit on hedging	(54)	127
	17,632	18,732

3. Profit on ordinary activities before taxation                  

	(Unaudited) Six months to 30 Sept 2012 £'000	(Unaudited) Six months to 30 Sept 2011 £'000
Profit on ordinary activities before taxation is stated after charging:
Staff costs	8,403	8,361
Depreciation of tangible fixed assets	21	19
Operating lease rentals - land & buildings	383	344
- other	203	179
Audit of group financial statements	20	20
Other fees
- local statutory audits of subsidiaries	15	21
- tax services	14	50
- internal controls review	25	20

4. Dividends      

	(Unaudited) Six months to 30 Sept 2012 £'000	(Unaudited) Six months to 30 Sept 2011 £'000
Dividend paid	5,807	4,419

5. Earnings per ordinary share

The calculation of basic earnings per ordinary share is based on the profit for the period of £2,815,265 (September 2011: profit £2,887,749); and on 77,446,648 (September 2011: 73,799,718) ordinary shares, being the weighted number of ordinary shares.

The calculation of diluted earnings per ordinary share is based on the profit for the period of £2,815,265 (September 2011: profit £2,887,749) and 88,833,779 (September 2011: 88,097,043) ordinary shares, being the weighted average number of ordinary shares allowing for all options of 6,449,376 (September 2010: 6,890,608) which are dilutive as well as shares granted during the period under a crystallisation event but not yet issued of 4,937,756 (September 2011: 7,406,717).

The calculation of adjusted earnings per ordinary share is based on a profit for the period of £2,815,265 (September 2011: profit of £2,887,749) but adjusted for the share-based payments charge of £318,676, amortisation of intangibles of £428,500 and impairment of goodwill of £111,410 (September 2011: profit of £318,591, amortisation of intangibles of £428,500 and impairment of goodwill of £111,410),and 88,833,779 (September 2011: 88,097,043) ordinary shares being the weighted average number of ordinary shares allowing for all dilutive options and as well as shares granted during the period under a crystallisation event but not yet issued.

6. Available-for-sale financial assets                                     

	(Unaudited) Six months to 30 Sept 2012 £'000	(Audited) Year to 31 March 2012 £'000
At beginning of period	26,426	29,418
Additions	-	21,851
Redemptions	(4,435)	(24,719)
Net loss on movement in fair value	(4)	(124)
At end of period	21,987	26,426

7. Notes to the cash flow statement

Reconciliation of profit before taxation to cash generated from operations

	(Unaudited) Six months to 30 Sept 2012 £'000	(Unaudited) Six months to 30 Sept 2011 £'000
Cash flows from operating activities
Profit on ordinary activities before tax	3,761	3,918
Interest received	(5)	(3)
Depreciation of tangible fixed assets	21	19
Increase in trade and other receivables	(222)	(437)
Decrease in trade and other payables	(3,296)	(4,990)
(Gain)/loss on disposal of available for sale assets	(189)	204
Gain on instruments at fair value through profit or loss	(63)	-
Loss/(gain) on derivatives	87	(127)
Share-based payment	319	320
Amortisation of intangibles	540	540
Cash generated from operations	953	(556)

8. 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.

B J D Ashford-Russell is a member of Polar Capital LLP and a director of the Polar Capital Technology Trust PLC (the Trust). Polar Capital LLP is the appointed investment manager of the Trust. The total fees received by the Group as investment manager of the Trust were £2,606,392 (September 2011 £2,453,970). The amounts receivable at period end in this respect were £855,377 (March 2012: £794,797).

At the end of the period, the Group had an outstanding loan due of £1,037,195 (March 2012: £1,106,992) from the Polar Capital Employee Benefit Trust, which was set up in 2002 to hold ordinary shares in Polar Capital Holdings plc for the benefit of the employees.

The publication of non-statutory accounts

The financial information contained in this Half Year report does not constitute statutory accounts as defined in S434 of the Companies Act 2006. The financial information for the six months ended 30 September 2012 and 2011 has not been audited. The information for the year ended 31 March 2012 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 12 June 2012.  The report of the independent auditor on those financialstatements contained no qualification or statement under S498 of the Companies Act 2006. 

Shareholder Information

Directors

T H Bartlam                         Non executive Chairman

T J Woolley                         Chief Executive Officer

J B Mansell                          Chief Operating Officer

H G C Aldous                      Non executive director, Chairman of Audit Committee

B J D Ashford-Russell                     Non executive director

J M B Cayzer-Colvin         Non executive director, Chairman of Remuneration Committee

G V Bumeder                     Non executive director

M W Thomas                    Non executive director

Dividend

A first interim dividend of 2.0p per share has been declared for the year to 31 March 2013. This will be paid on 18 January 2013 to shareholders on the register on 4 January 2013. The shares will trade ex-dividend from 2 January 2013. 

Half Year Report 

The Half Year report will be posted to shareholders in January 2013. Copies of this announcement and of the Half Year report will be available from the Secretary at the Registered Office, 4 Matthew Parker Street, London SW1H 9NP and from the Company's website at www.polarcapital.co.uk 

Remuneration Code

Disclosure of the group's Remuneration Code will be made along side its Pillar 3 disclosure which is available on the Company's website

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.

Nominated Advisorand Corporate Broker to the Company

Canaccord Genuity

ENDS

 

END

 

 

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