Results Presentation Six months to 30 September 2018 Gavin Rochussen, Chief Executive Officer John Mansell, Chief Operating Officer November 2018 This presentation is for one-on-one use with non-US professional investors only www.polarcapital.co.uk 30/11/2018
Results Presentation – Six Months To 30 September 2018 Contents • Highlights • Fund Flows & AuM • Fund Performance • Financial Review • Brexit and Regulation • Current Trading • Strategy & Outlook • Additional Information 2 For non-US professional investor use only. Please refer to the Important Information at the end of this presentation.
Multi-boutique Asset Manager “Polar Capital is a specialist, investment led, active fund manager with a collegiate and meritocratic culture where capacity of investment strategies is managed to enhance and protect performance” . Focused on specialist, active investment strategies Producing performance through the investment cycles Attracting and retaining leading industry talent Delivering attractive returns to shareholders Source: All opinions and estimates in this report constitute the best judgment of Polar Capital as of the date hereof, but are subject to change without notice, and do not necessarily represent the views of Polar Capital. 3 For non-US professional investor use only. Please refer to the Important Information at the end of this presentation.
Highlights Continuing to deliver on our strategy AuM growth driven by performance and net flows AuM growth driven by performance and net flows Delivering growth and increasing diversification Positive inflows into Technology, Healthcare, Insurance, Convertibles, UK and North America Delivering attractive returns to shareholders Average AuM Core operating profit Interim Dividend Adjusted Diluted EPS +34% to +81% to +33% to +85% to £13.4bn £21.7m 8.0 pence 21.9 pence Source: Past performance is not indicative or a guarantee of future results. 4 For non-US professional investor use only. Please refer to the Important Information at the end of this presentation.
Net Flows Positive for the period £700m • Net inflows in the six months of £0.9bn £500m • Eight consecutive quarters of net inflows • £300m Market sell-off in October and reduction in investor risk appetite will impact on industry £100m flows (£100m) • Early subscriptions to the recently launched (£300m) Emerging Market Stars strategies (£500m) (£700m) 2014 2015 2016 2017 2018 Q1 Q2 Q3 Q4 Source: Polar Capital, 30 September 2018. Totals may not sum due to rounding. Past performance is not indicative or a guarantee of future results. 5 For non-US professional investor use only. Please refer to the Important Information at the end of this presentation.
Net Flows By Strategy • Net inflows into 75% of the strategies £1,000m • Japan remains in net outflows and ‘Value’ £800m style showing promise £600m • Emerging Market Income strategy net £400m outflows in the six months significantly lower £200m than the prior six months. Performance has improved markedly and is Q1 against Lipper - peer group over twelve months (£200m) (£400m) 6 months 12 months Source: Polar Capital, 30 September 2018. Totals may not sum due to rounding. Past performance is not indicative or a guarantee of future results. 6 For non-US professional investor use only. Please refer to the Important Information at the end of this presentation.
AuM Progression Improving balance of AuM growth across strategies £5,000m £4,500m £4,000m £3,500m £3,000m £2,500m £2,000m £1,500m £1,000m £500m - Technology Japan European Healthcare Financials EM Income Convertibles North UK Absolute European UK Value Emerging L/S America Income Markets Stars 2015 2016 2017 2018 H1 2019 Total AuM progression £8.3bn £7.3bn £9.3bn £12.0bn £14.7bn 2015 CAGR 17.9% H1 2019 7 For non-US professional investor use only. Please refer to the Important Information at the end of this presentation.
Strategy Performance Annualised strategy performance against benchmark (3 year & SI) 25.0% 1 st Quartile First bar = 3yr 2 nd Quartile Second bar = since inception 3 rd Quartile 20.0% 15.0% 10.0% 5.0% 0.0% -5.0% Source: Polar Capital factsheet data, 30 September 2018, Lipper quartile rankings as at 30 September 2018. Lipper Leaders fund ratings do not constitute and are not intended to constitute investment advice or an offer to sell or the solicitation of an offer to buy any security of any entity in any jurisdiction. As a result, you should not make an investment decision on the basis of this information. Rather, you should use the Lipper ratings for informational purposes only. Certain information provided by Lipper may relate to securities that may not be offered, sold or delivered within the United States (or any State thereof) or to, or for the account or benefit of, United States persons. Lipper is not responsible for the accuracy, reliability or completeness of the information that you obtain from Lipper. In addition, Lipper will not be liable for any loss or damage resulting from information obtained from Lipper or any of its affiliates. For Lipper methodology please go to: http://lipperalpha.financial.thomsonreuters.com/wp-content/uploads/2015/11/S026849-Method- Lipper-Leaders-Ratings-System-International.pdf Past performance is not indicative or a guarantee of future returns. *The Polar Capital Japan Alpha Fund was renamed the Polar Capital Japan Value Fund on 12 January 2018. **Absolute return product, Benchmark: 3 month GBP LIBOR. ***3 year data is unavailable for these funds. Funds ordered according to launch date. Please refer to page 30 for Fund inception dates. 8 For non-US professional investor use only. Please refer to the Important Information at the end of this presentation.
Strategy Performance % of AuM in top quartile £11.6bn 99% 89% 68% 62% Total UCITS funds Top Quartile over 1 Top Quartile over 3 Top Quartile 5 Top Quartile Since Assets under Year Years Years inception Management Source: Polar Capital, 30 September 2018. Totals may not sum due to rounding. Past performance is not indicative or a guarantee of future results. 9 For non-US professional investor use only. Please refer to the Important Information at the end of this presentation.
Strategy Performance Performance Against Benchmarks Percentage of AuM that has outperformed benchmark • Significant percentage of Polar AuM has outperformed benchmark over long periods SI 97% • Recent performance has improved 5yr 74% notwithstanding more volatile markets 3yr 65% 1yr 68% 0% 20% 40% 60% 80% 100% Percentage of strategies that have outperformed benchmark • High success rate over long periods, SI 76% independent of region or style 5yr 44% • Value-oriented strategies have performed 3yr 40% less well over three and five years but markedly better over one year 1yr 52% 0% 20% 40% 60% 80% 100% Source: Polar Capital, 30 September 2018. Totals may not sum due to rounding. Past performance is not indicative or a guarantee of future results. 10 For non-US professional investor use only. Please refer to the Important Information at the end of this presentation.
Financial Review 11 For non-US professional investor use only. Please refer to the Important Information at the end of this presentation.
Financial Highlights H1 2019 H1 2018 Change Average AuM £13.4bn £10.0bn +34% Net management fees £57.3m £41.4m +38% (excluding research) Constant management fee yield Net management fee yield 85bps 84bps +1bps Core operating profit £21.7m £12.0m +81% Improved profit margin Core operating profit margin 38% 29% +9% Performance fee profit £5.5m - - Most fees received in December Other income £0.5m £2.4m -80% Volatility of investment programme Profit before tax and share based payments on £27.7m £14.4m +92% preference shares SBP on preference shares £(0.4)m £(2.6)m -85% Profit before tax £27.3m £11.8m +131% 85% increase in EPS Adjusted EPS 1 21.9p 11.8p +85% 33% increase in first dividend Dividend per share 8.0p 6.0p +33% Cash and investments £105.3m £75.7m +39% Very strong balance sheet Source: Polar Capital as at 30 September 2018 1: Adjustment excludes IFRS costs of preference shares included in share based payments and includes deferred remuneration costs. 12 For non-US professional investor use only. Please refer to the Important Information at the end of this presentation.
Operating Costs H1 2019 H1 2018 Change Salaries, bonuses and other staff Increase in headcount £11.3m £9.6m +18% costs Despite crystallisation of Healthcare Core distributions £13.2m £11.0m +20% team Core cash compensation costs £24.5m £20.6m +19% NIC on options £0.3m £1.0m -70% Share-based payments £2.8m £4.0m -30% MIFID II impact Other operating costs £8.3m £6.4m +30% Core operating costs £35.9m £32.0m +12% Performance fee interests £5.7m - Total operating costs £41.6m £32.0m +30% Source: Polar Capital as at 30 September 2018. 13 For non-US professional investor use only. Please refer to the Important Information at the end of this presentation.
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