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Polar Capital makes slow progress

The active asset manager generated net inflows during the second half, but fees are still being eroded
June 28, 2017

It has been a long journey back to asset growth for Polar Capital (POLR). The asset manager reported another year of net outflows - £230m during the 12 months to the end of March. However, management was keen to stress that this was "markedly lower" than the previous year, and encouragingly it gained net new business during the second half. Eight out of the active asset manager's 12 strategies reported net inflows over the period, with particular interest in technology, healthcare, financials and European income.

IC TIP: Hold at 438p

Assets under management were up more than a quarter to £9.3bn, gaining a further £0.5bn during the two months post-year-end. But this uplift was predominately due to currency translation and market gains. Outflows from four strategies, including Japan and North America long-only strategies dampened net management fees.

Since the majority of assets under management are not denominated in sterling, management fees were also eroded because the average assets under management over the period were lower, in dollar terms, than in previous year. Performance fee income was also down almost two-thirds to £2.7m, as many of its funds underperformed their benchmarks. In better news, Polar expanded its fund range by launching a UK value fund, raising £100m at launch and building up £256m in assets at the end of May.

Analysts at Numis expect adjusted pre-tax profits of £34.3m, giving EPS of 33.3p for the year to March 2018 (from £20.4m and 21.3p in FY2017).

 

POLAR CAPITAL (POLR)

ORD PRICE:438pMARKET VALUE:£401m
TOUCH:437-444p12-MONTH HIGH:460pLOW: 276p
DIVIDEND YIELD:5.7%PE RATIO:25
NET ASSET VALUE:77pNET CASH:£59m

 

 

Year to 31 MarTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201351.715.315.013
201491.832.830.825
201596.231.127.525
2016 (restated)84.223.620.525
201773.820.417.825
% change-12-14-13 -

Ex-div: 6 Jul

Payment: 21 Jul