Polar Capital Regulatory News (POLR)

Polar Capital Holdings plc ("Polar Capital" or "the Group")

Interim results for six months ended 30 September 2016

Summary of Results

Financial

· Assets under Management ("AUM") at 30 September 2016 were £7.7bn/$9.9bn (31 March 2016: £7.3bn/$10.4bn) - fund outflows of £763m offset by market and currency movements of £1.1bn

· Core operating profit, excluding performance fees, £9.2m (30 September 2015: £12.4m)

· Operating profit before share-based payments £11.2m (30 September 2015: £13.3m)

· Pre-tax profit £9.1m (30 September 2015: £11.7m)

· Basic earnings per share 7.40p (30 September 2015: 10.44p) and adjusted* diluted earnings per share 9.33p (30 September 2015: 11.46p)

· Interim dividend per ordinary share of 5.5p declared (2015: 5.5p) to be paid in January 2017

· Shareholders' funds £65.4m (30 September 2015: £69.7m) including cash and investments of £71.8m (30 September 2015: £75.1m)

* Adjusted to exclude cost of share-based payments

Corporate

· Our UK Value long-only UCITS fund will be launched at the end of January

Current Trading

Tim Woolley, Chief Executive Officer, commented:

"This was certainly a challenging period to navigate with considerable uncertainty leading up to the EU referendum and considerable volatility in markets after the result. Long-only equity funds in general experienced large net redemptions over the period and we were not immune from such industry conditions. Despite the overall challenging market conditions, a number of our funds including Biotechnology, Insurance, Global Alpha, European Income ex UK, Global Convertible Bond and UK Absolute did see net inflows over the period.

Our fund inflows have picked up markedly since the US election but it remains too early to suggest this is a reversal of the difficult industry conditions that we experienced through the first seven months of our financial year.

Overall we have become somewhat more positive on the outlook for our business over the second half of the financial year. We also expect to maintain the dividend for the current financial year."

Assets Under Management (AUM)

AUM split by strategy

AUM split by Business Unit

(in chronological order)

Chief Executive's Statement

Profit before tax fell 22% to £9.1m for the first six months of this financial year compared to the same period last year whilst adjusted diluted earnings per share fell 19% to 9.33p. The fall in profits reflects the fall in the average AUM over the period. The breakdown of the profit before tax figure is set out below.

This was certainly a challenging period to navigate with considerable uncertainty leading up to the EU referendum and considerable volatility in markets after the result. Long-only equity funds in general experienced large net redemptions over the period and we were not immune from such industry conditions. We had significant redemptions from our Japan and North America UCITS funds and from our Forager hedge fund. Net outflows across all our funds for the six months totalled £763m. Although our AUM increased over the period in sterling terms from £7.26bn to £7.66bn, this was due to market and currency movements of £1.1bn more than offsetting the aforementioned outflows. In dollar terms our AUM fell over the period from $10.43bn to $9.94bn.

Despite the overall challenging market conditions, a number of our funds did see inflows over the period. On the UCITS long only funds side we had net inflows into Biotechnology, Insurance, Global Alpha and European Income ex UK. On the Alternative side we actually experienced overall net inflows, with flows into our two absolute UCITS funds, Global Convertible Bond and UK Absolute, more than offsetting outflows on the Cayman hedge funds.

Since the end of our financial half-year the US presidential election has been decided and, as with Brexit, the pollsters were surprised and the intelligentsia were shocked at the outcome. It is too early to understand fully the implications of a Trump presidency but it would appear to be more positive for equities than bonds, with lower taxes and less regulation benefitting business. The bond market though will have to accommodate a potentially large increase in US government borrowing which will be required to fund the substantial increase in infrastructure spending Trump seems genuinely committed to delivering. The main concern now though is whether Trump's pre-election rhetoric on trade and protectionism will be enacted or, as seems more likely, will prove to have been 'election rhetoric' and his administration will in reality take a more pragmatic approach.

Our fund inflows have picked up markedly since the US election with inflows into a wide range of funds but notably Healthcare Opportunities, Biotechnology, Healthcare Blue Chip, North America, Insurance and Income Opportunities. It is though too early to suggest this is a reversal of the difficult industry conditions that we experienced through the first seven months of our financial year.

There remains the possibility of further redemptions on our Japan fund although performance has picked up markedly over the last three months and market conditions are turning decidedly more favourable to the team's style.

We will have further redemptions of around $62m on the hedge fund side this quarter as we have decided to close our ALVA hedge fund strategy at the end of December. The Global Convertible team wishes to focus on its successful UCITS product, the Global Convertible Bond fund, which has grown rapidly over the last eighteen months.

Our UK Value long only UCITS fund will be launched at the end of January. The fund will be managed by Georgina Hamilton and she will be joined by George Godber in April. Whilst the fund will not materially impact results for the current financial year, we believe the team has the potential to make a significant contribution in fiscal 2018 and beyond.

Overall we have become somewhat more positive on the outlook for our business over the second half of the financial year. We also expect to maintain the dividend for the current financial year.

Tim Woolley

Chief Executive 7 December 2016

Interim Consolidated Statement of Profit or Loss

For the six months to 30 September 2016

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

Interim Consolidated Statement of Other Comprehensive Income

For the six months to 30 September 2016

Interim Consolidated Balance Sheet

As at 30 September 2016

Interim Consolidated Statement of Changes in Equity

For the six months to 30 September 2016

Interim Consolidated Cash Flow Statement

For the six months to 30 September 2016

Notes to the Unaudited Interim Consolidated Financial Statements

For the six months to 30 September 2016

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 2016 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 2016 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 2016.

2. Revenue

3 Profit on Ordinary Activities Before Taxation

3.1) This is stated after charging:

3.2) Auditors' remuneration:

4. Taxation

The tax charge for the six months ended 30 September 2016 includes a charge for share-based payment costs of £440,000 (September 2015: £160,000) that were not deductible for tax purposes. Under UK tax legislation the Group is only allowed a deduction for share-based payment costs when options are exercised by employees. When compared to the comparative period, the smaller number of option exercises in 2016 and the lower Group share price has resulted in a higher proportion of the accounting share-based payment cost being disallowed for tax purposes during the current period.

5. Dividends

6. Earnings Per Ordinary Share

The calculation of basic earnings per ordinary share is based on the profit for the period of £6,676,500 (September 2015: profit £9,217,800) and on 90,177,700 (September 2015: 88,255,362) ordinary shares, being the weighted number of ordinary shares.

The calculation of diluted basic earnings per ordinary share is based on the profit for the period of £6,676,500 (September 2015: profit £9,217,800) and 94,180,600 (September 2015: 94,356,332) ordinary shares, being the weighted average number of ordinary shares allowing for all options of 4,002,900 (September 2015: 5,683,882) which are dilutive as well as shares granted under a crystallisation event but not yet issued of nil (September 2015: 417,088).

The calculation of adjusted basic earnings per ordinary share is based on a profit for the period of £6,676,500 (September 2015: profit of £9,217,800) but adjusted for the share-based payments charge of £2,107,700, (September 2015: share base payments charge of £1,597,500) and on 90,177,700 (September 2015: 88,255,362) ordinary shares, being the weighted number of ordinary shares.

The calculation of adjusted diluted earnings per ordinary share is based on a profit for the period of £6,676,500 (September 2015: £9,217,800) but adjusted for the share-based payments charge of £2,107,700, (September 2015: share base payments charge of: £1,597,500) and 94,180,600 (September 2015: 94,356,332) ordinary shares being the weighted average number of ordinary shares allowing for all options of 4,002,900 (September 2015: 5,683,882 ) which are dilutive as well as shares granted under a crystallisation event but not yet issued of nil (September 2015: 417,088).

7. Notes to the Cash Flow Statement

Reconciliation of profit before taxation to cash generated from operations

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 £4,290,300 (September 2015: £3,912,500). The amounts receivable at period end in this respect were £1,628,000 (March 2016: £1,319,000).

At the end of the period, the Group had an outstanding loan due of £877,700 (March 2016: £877,700) 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 employees.

9. The Publication of Non-Statutory Accounts

The financial information contained in this unaudited 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 2016 and 2015 has not been audited. The information for the year ended 31 March 2016 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 23 June 2016. The report of the independent auditor on those financial statements contained no qualification or statement under S498 of the Companies Act 2006.

Directors

Company No.

4235369

Registered Office

16 Palace Street

London, SW1E 5JD

Tel: 020 7227 2700

Company Secretary

Neil Taylor

Dividend

A first interim dividend of 5.5p per share has been declared for the year to 31 March 2017. This will be paid on 13 January 2017 to shareholders on the register on 30 December 2016. The shares will trade ex-dividend from 29 December 2016.

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 

The Half Year report will be posted to shareholders in late December 2016. 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.

ENDS