Tough FY23, outlook improving for flows & returns
In FY23 (to 31 Mar 23), market conditions created strong headwinds for asset managers, especially those with a growth equities bias like Polar. AUM declined 13% from £22.1bn to £19.2bn, with net outflows of - £1.6bn (FY22: + £0.4bn), investment performance of - £0.9bn (FY22: +£0.9bn); and fund closures of - £0.5bn. However, the story of the year was certainly not entirely negative, but mixed, with an improving picture towards year-end and also post-year-end (although we caution that economic and market conditions remain uncertain).The strength of FY22, buoyed by the bull market of calender-2021, makes FY23 results look comparatively weak. Gross income fell 18% from £226m to £186m. However, performance-tilted variable pay structures resulted in operating costs reducing by 16% from £141m to £119m, which limited margin impact. So, while core operating profit fell 31% y-o-y from £69m to £45m, core margin fell from 37% to 31%. Statutory PBT fell from £62m to £48m, and PBT margin fell from 28% to 24%.
Polar maintains a strong balance sheet, with cash of £107m (down from £121m), and no debt. This strength has given the board confidence to maintain a full-year dividend of 46p, a yield of 9.3%.
We forecast AUM growth in FY24 based on an improving outlook, although revenues are expected to fall in FY24 (lower ave. AUM), before recovering in FY25. Our fundamental value is 625p per share, 26% above the share price, and we see potential for a company and sector re-rating.
Polar Capital Holdings is an investment management company providing professional and institutional investors a range of geographical and sector funds. Co. manages 25 funds and four managed accounts across a range of long only and alternative products. Co. has one class of business, being the provision of investment management and advisory services. As of Mar 31 2017, Co. had total assets under management of £9.27 billion.
Equity Development enables companies to become better understood and supported by investors. Since our launch in 1996 we have consistently focused on helping our clients improve their communication and relationships with both existing and potential shareholders. Our clients have come from a wide variety of sectors and domiciles, are both private and quoted and range in size from micro-cap to $multi-billions. We offer free access to company research notes written by experienced analysts. These notes include detailed forecasts, financial models and a fair value. We host regular Private Investor Forums at which investors have the opportunity to hear company directors present, and to ask questions. These are free to attend. We broadcast live Webinars with company management that include active Q&A. We also make the recordings available online. We arrange face to face meetings between private investors and company management. We are active users of Twitter, commenting daily on company news, share price moves, Directors’ Dealings, Equity Development Research Notes & Events.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.