Interim Results
Polar Capital Holdings PLC
11 December 2007
11 December 2007
POLAR CAPITAL HOLDINGS plc
Interim results for the six months ended 30 September 2007
Polar Capital Holdings plc ('Polar Capital'), the specialist asset management
group, announces core pre-tax profits up by over 170%
Financial Highlights
• Assets under management at 30 September 2007 up 46% to $3.8bn compared
to prior year period (September 2006:$2.6bn and March 2007 $3.4bn)
• Pre-tax profits up over 100% to £4.5m (September 2006:£1.1m)
• Core operating profit, excluding performance fees, up 173% at £3.4m
(September 2006:£1.2m)
• Operating margin increased to 25% (September 2006:14%)
• Basic undiluted earnings per share up to 4.8p (September 2006:1.3p) and
diluted earnings per share up to 4.1p (September 2006:1.1p)
• Interim dividend per ordinary share of 1.5p declared, to be paid in
January 2008
• £22m of cash following investments of over £11m in our recently
launched hedge funds
Strengthening of Board and further fund manager appointments
• Tom Bartlam appointed as Chairman
• Technology team strengthened by appointment of senior fund manager
• Healthcare team recruited to establish new business unit
Outlook
• In the short term investors may become somewhat more cautious
• Market volatility makes forecasting of performance fees difficult
Mark Kary, Chief Executive Officer, commented:
'Our assets under management have grown strongly over the period. While investor
concerns over the direction of the global economy will lead to a more
challenging near term environment, we continue to be well positioned for the
execution of our longer term business plan.'
For further information please contact:
Mark Kary, CEO or John Mansell, COO
Polar Capital Holdings PLC Tel: 020 7227 2700
Ed Gascoigne-Pees/Felicity Murdoch
Financial Dynamics Tel: 020 7269 7132/020 7269 7243
Nominated Adviser: Landsbanki
Simon Bridges / Claes Spang Tel: 020 7426 9000
About Polar Capital
Polar Capital Holdings plc is a research driven investment management company
providing a highly entrepreneurial environment for outstanding portfolio
managers within a structure that offers a level of marketing, administrative and
operational support normally found in much larger organisations.
Our objective is to deliver strong, sustainable earnings and dividend growth by
building a highly diversified family of long-only, long-bias, equity long/short
and other fundamentally driven hedge fund strategies managed under the Polar
Capital brand.
Today Polar Capital has a staff of 62 of whom 35 are investment professionals
managing 16 funds, one managed account and two advisory relationships. These
funds, which are aimed at institutional and professional investors, have
combined assets under management as at 30 September 2007 of $3.8bn.
Assets by strategy
30 September 31 March 30 September
2007 2007 2006
Japan $1,068m $1,082m $795m
Technology $1,035m $1,013m $871m
Global Opportunities $590m $437m $277m
Europe $499m $358m $317m
Global Emerging Markets $446m $269m $175m
UK $108m $129m $158m
Macro $56m $53m $26m
Utilities $47m $41m $13m
Total* $3,849m $3,382m $2,632m
*Excludes single $27m sub-advisory US equities account
Analysis by generation of assets
for the six months to 30 September 2007
Long Hedge Managed and Total
Advisory
Brought forward 31 March 2007 $1,563m $1,553m $291m $3,407m
Long only transferred to hedge funds -$95m $95m - -
Performance and currency movements $50m $75m -$7m $118m
Net subscriptions and redemptions -$131m $482m - $351m
Total assets at 30 September 2007 $1,387m $2,205m $284m $3,876m
Chief Executive Statement
Financial Review
This is the first full six months of the company's life following its successful
listing as a public company in February 2007. It can look back at this first
period with a sense of achievement.
Assets under management ('AUM') have risen to $3.8bn at 30 September 2007, an
increase of 46% compared to September 2006 ($2.6bn) and an 11% increase from the
$3.4bn as at 31 March 2007 the year end of the company. This rise in AUM is the
prime reason that the company has seen revenues increase in the period by 48% to
£14.6m (2006:£9.8m) and its profit after tax rise to £3.1m (2006: £0.6m). This
increased profitability has led to the diluted EPS for the period to rise to
4.1p (2006:1.1p).
The profit before tax for the period which has increased to £4.5m (2006:£1.1m)
is attributable as follows:
Six months to Six months to Year to
30 Sept 30 Sept 31 March
2007 2006 2007
£m £m £m
Core operating profit 3.4 1.2 2.8
Performance fee profit 0.3 .01 8.0
Interest & similar income 0.8 0.3 0.9
4.5 1.6 11.7
IPO costs - (0.5) (1.0)
Profit before tax 4.5 1.1 10.7
It is particularly encouraging to note the increase in the operating profit
margin of the business. The core operating margin of the company rose to over
24% in the period from 13% for equivalent period in 2006 and the margin
including performance fee receipts was seen to rise to over 25% (2006:14%). It
should be remembered that the vast majority of our performance fees crystallise
in the second half of the year. The Board feels it is appropriate, given this
positive set of numbers to pay a first interim dividend of 1.5p. The dividend
will be paid on 19 January 2008 to shareholders on the register as at 21
December 2007 and the shares will trade ex dividend from 19 December.
The results have benefited from the crystallisation of a set of preference
shares. In practical terms it is these preference shares that deliver to a fund
manager an entitlement to a percentage of the net management fees produced from
their products and an interest in their performance fees. These shares also
provide a mechanism whereby a fund manager is able to relinquish this interest
in their management fees and reduce their interest in their performance fees in
return for the receipt of shares in Polar Capital Holdings plc. These exchanges
are expected to be earnings enhancing for shareholders and the consequence of
this period's event is an 11% increase in the diluted EPS for the six months
from 3.7p to 4.1p per share.
Investment Markets
The market backdrop to the period has been one of extreme volatility in global
equity, credit and currency markets especially in July and August as the
continued deterioration in US housing market conditions gave rise to more
serious concerns on the sub prime credit exposure of global banks, hedge funds
and other financial institutions. By mid August equity volatility had risen to
levels not seen since the end of the 2000-2003 equity bear market, the MSCI
World Equity Index had fallen 12% from peak to trough, and headlines were
dominated by the very large performance drawdowns of a number of large and well
known quantitative hedge fund houses. While general industry and market
performance has improved from the August lows the issues of sub prime exposures
will take time to work their way through the system. Markets are left to reflect
on the impact of much tightened credit conditions on the US and global economy
on the one hand, and the inflationary impact of sharply high food and energy
prices on the other.
Investment Performance
The investment performance over the six month period has been rather more mixed
than ideally we would have wished. The Global Opportunities, the European
Smaller Companies, Global Utilities, FX Macro, Russian and Latin American Funds
have all performed well. More disappointing has been the performance of our
Japanese and Technology hedge funds and to a lesser extent our long only
Technology business. While the assets in our technology hedge fund are small
($55m at the end of the period), the assets in our Japan hedge fund ($550m) are
more significant and it will be important for our performance to improve in what
has been a very difficult overall market. In the case of our long only
Technology business our underperformance has largely been a function of our 'all
cap' investment philosophy in a market where performance has been dominated by
the large/mega cap stocks. While we are comfortable that this philosophy is the
correct one for longer term outperformance, we have not as a result captured
some of the easier asset growth at a time when the technology cycle shows the
first signs of reasserting itself for 7 years.
Diversification and Asset Growth Opportunities
While we remain very committed to both our long only and hedge fund businesses,
the balance between an inevitably more directional long only business and what
should be a more defensive equity long/short business at this possibly later
stage and less certain part of the equity cycle is important. At the macro level
57% of our assets today are in hedge funds and 43% in long only; 12 months ago
the split was 58% long only and 42% in hedge funds.
Over the six month period there has been some encouraging progress on a number
of fronts. We have consistently articulated our desire to diversify the business
and how the relative emphasis on Technology and Japan would be diluted. Today
these 2 units represent 54% of our assets under management (61% in 2006). In the
meantime our Global Opportunities business (Polar Paragon Fund), our European
business (Polar Forager and Polar Conviction Funds) and the Emerging Markets
unit now represent 15%, 13% and 12% respectively of overall assets. The year to
date performance of the Paragon, Forager, Elbrus and Latam funds should lead to
continued decent asset growth momentum in these 3 business units.
Furthermore the prospects for the longer established Technology and Japan units
remain in our opinion compelling. For just over a year we have articulated a
very positive case for a recovery in the technology sector driven by both
absolute and relative earnings growth, new product cycles, historically
reasonable valuations and negative investor sentiment. In the 12 months to 30
September 2007 the Dow Jones World Technology Index has appreciated 22% versus
the MSCI World Equity Index return of 19%. We are inclined to think that market
rotation into areas of growth like Technology and Healthcare is likely to
accelerate further as the activist and private equity themes of replacing
management and increasing financial leverage loses its impetus as borrowing
costs rise. Japan has clearly been a more difficult market (up 4% in the 12
months to 30 September 2007) and the industry has seen significant redemptions..
While our long only business has suffered redemptions alongside the industry, we
have continued to move forward and invest in a more significant research
resource for the unit in Tokyo that should permit the business to get
significant traction when the cycle turns.
We are encouraged by the progress in a number of our smaller and newer business
units. Inevitably when we recruit a new team and build a new unit, it will take
time for that group to establish its fund, build a performance record and
initiate the marketing process. The Global Utilities Fund (started at the end
of 2005 but restructured at the beginning of calendar 2007) has enjoyed an
encouraging calendar year of performance; a combination of this performance, the
strong thematic undercurrent of growth in the sector and its relative recession
resistant characteristics should present a significant marketing opportunity for
the fund early in the new calendar year. Equally the Polar Discovery Fund (our
foreign currency/macro fund launched in 2006) has had strong performance year to
date coupled with a stream of less correlated returns that should permit
accelerated marketing early in the New Year in what has the potential to be one
of Polar Capital's largest capacity strategies.
Other Developments
Our strategy for growth combines investment performance, taking our existing
funds to their capacity potential (we calculate that conservatively we have
about $5bn of spare capacity in existing funds), increasing the scope of each
business unit, and the recruitment of new teams. We are pleased to have
recruited Gareth Powell from Framlington and Dan Mahony from Morgan Stanley to
establish Polar Capital's Healthcare business. We have seeded a Global
Healthcare long only fund and hope that over time this unit will spawn a number
of different healthcare related strategies.
We have a number of other fund manager recruitment initiatives in place, and
continue to target the addition of 1 to 2 new teams per year.
Outlook
We cannot ignore current market concerns on the US housing market and economy,
the sub prime crisis in the financial sector and potential overspill to the
greater global economy, with the concomitant impact on asset allocation
decisions and investor behaviour. Our business and brand are focused exclusively
in fundamental and research driven investment strategies and the company has no
direct exposure to any credit related or quantitative investment strategies. It
is nevertheless possible that investors become somewhat more cautious short term
on equity directionality and allocation, particularly in more volatile markets.
We have however long been of the view that allocations to the hedge industry in
such a more challenging environment for traditional equity management will
accelerate, especially to those strategies and funds whose risk adjusted returns
and/or ability to protect capital are differentiated. At the same time Polar
Capital's long only exposure to markets like Technology, Healthcare and Japan
that have arguably been out of favour for some time would suggest a more
defensive nature to such businesses.
It is worth highlighting two shorter term concerns. Firstly market uncertainty
and volatility will lead to a more challenging environment for increasing funds
under management. Secondly, it clear that the increased volatility in markets
has made the accurate forecasting of performance fees less easy. With most of
our fund year ends falling around the calendar year end it is our intention as
stated at the time of the Initial Public Offering to give guidance of the
quantum of these fees in the middle of January.
Importantly however Polar Capital continues to focus on the execution of its
longer term business plan, and we would appear to be well positioned to grow our
assets under management and broaden out the diversification of the business. We
wish to thank our staff, investors in our funds and shareholders for all their
support and loyalty.
Mark Kary
Chief Executive
10 December 2007
Consolidated income statement
for the six months to 30 September 2007
Six months to Six months to Year to
30 Sept 30 Sept 31March
2007 2006 2007
£000 £000 £000
Restated Restated
Revenue 14,612 9,811 41,269
Interest receivable and similar income 811 297 1,108
Gross income 15,423 10,108 42,377
Cost of sales (1,069) (955) (2,165)
Net fees 14,354 9,153 40,212
Operating costs (9,834) (7,983) (29,525)
Profit on ordinary activities before taxation 4,520 1,170 10,687
Taxation (1,365) (513) (2,552)
Profit on ordinary activities after taxation 3,155 657 8,135
Basic earnings per ordinary share 4.8p 1.3p 14.7p
Diluted earnings per ordinary share 4.1p 1.1p 12.8p
All of the items in the above statements are derived from continuing operations.
Consolidated statement of recognised income and expense
for the six months to 30 September 2007
Six months Six months to Year to
to 30 Sept 30 Sept 31 March
2007 2006 2007
£000 £000 £000
Restated Restated
Profit for the financial period 3,155 657 8,135
(Losses)/gains on the revaluation of (204) (3) 220
available-for-sale financial assets
Deferred tax in respect of employee share options (253) 20 679
Deferred tax in respect of available-for-sale
financial assets 61 2 (65)
Total recognised gains and losses 2,759 676 8,969
Consolidated balance sheet
as at 30 September 2007
30 Sept 30 Sept 31 March
2007 2006 2007
£000 £000 £000
Restated Restated
Fixed assets 437 519 537
Available-for-sale financial assets 11,810 3,207 3,929
Deferred tax assets 601 188 856
Total non-current assets 12,848 3,914 5,322
Current assets
Receivables 3,307 3,107 4,228
Cash at bank and in hand 22,546 14,556 31,403
Total current assets 25,853 17,669 35,631
Total assets 38,701 21,577 40,953
Non-current liabilities
Deferred tax liabilities 5 - 66
Current liabilities
Trade and other payables 6,522 8,600 7,360
Current tax liabilities 461 1,757 995
Total current liabilities 6,983 10,357 8,355
Total liabilities 6,988 10,357 8,421
Net assets 31,713 11,220 32,532
Capital and reserves
Called up share capital 1,688 1,299 1,673
Share premium account 15,059 1,558 15,050
Investment in own shares (558) (734) (558)
Other reserves 1,153 794 1,563
Retained earnings 14,371 8,303 14,804
Total shareholders' funds - equity interests 31,713 11,210 32,532
Consolidated cash flow statement
for the six months to 30 September 2007
Six months Six months to Year to
to 30 Sept 30 Sept 31 March
2007 2006 2007
£000 £000 £000
Restated Restated
Cash flows generated from operating activities
Cash generated from operations 3,935 3,558 8,785
Tax paid (1,900) (2,187) (3,563)
Net cash inflow generated from operating activities 2,035 1,371 5,222
Returns on investment and servicing of finance
Interest received and similar income 811 297 1,108
Interest paid and similar charges - - (9)
Equity dividends paid (3,619) (4,825) (5,880)
Issue of share capital 24 551 14,436
Issue of preference shares by subsidiary - - 7
undertaking
Payments in relation to investment in own shares - (550) (550)
Receipts in relation to disposal of own shares - 580 756
Net cash (outflow)/ inflow from financing activities (2,784) (3,977) 9,662
Cash flows generated from investing activities
Purchase of property, plant and equipment (24) (32) (176)
Purchase of available-for-sale financial assets (8,084) (2,209) (2,708)
Net cash outflow generated from/(used in) investing
activities (8,108) (2,241) (2,884)
Net (decrease)/ increase in cash and cash equivalents (8,857) (4,847) 12,000
Cash and cash equivalents at start of period 31,403 19,403 19,403
Cash and cash equivalents at end of period 22,546 14,556 31,403
Notes to the financial statements for the six months to 30 September 2007
1. Principal Accounting Policies
Polar Capital Holdings plc is a public limited company registered in England and
Wales. The principal accounting policies applied in the preparation of these
consolidated financial statements are set out below.
Adoption of International Financial Reporting Standards ('IFRS') in the
financial year ending 31 March 2008
In the current year Polar Capital Holdings plc and its subsidiaries (together
referred to as 'the Group') have adopted all the standards and interpretations
issued by the International Accounting Standards Board and the International
Financial Reporting Interpretations Committee that are relevant to its
operations and effective for the Group's financial year beginning on 1 April
2007. The adoption of these standards and interpretations has resulted in
changes to the Group's accounting policies and the principal impact of the
adoption of IFRS on the results for the year ended 31 March 2007 are set out in
Note 10 to these financial statements.
Basis of preparation
The financial statements have been prepared in accordance with IFRS as adopted
by the European Union and the Companies Act 1985 applicable to companies
reporting under IFRS. The consolidated financial statements have been prepared
under the historical cost convention, as modified by the revaluation of
available-for-sale financial assets.
At the date of authorisation of these financial statements IFRS 8 'Operating
Segments' was in issue but not yet effective. The Group has not adopted this
Standard and does not anticipate it will have any material impact on these
financial statements when it comes into effect.
The financial statements have been prepared in accordance with IAS 34 'Interim
Financial Reporting'.
The publication of non-statutory accounts
The financial information contained in this interim report does not constitute
statutory accounts as defined in s240 of the Companies Act 1985. The financial
information for the six months ended 30 September 2007 and 2006 has not been
audited. The information for the year ended 31 March 2007 has been extracted
from the latest published audited accounts, which have been filed with the
Registrar of Companies, subject to amendments reflecting the changes in
accounting standards from UK GAAP to IFRS. The report of the independent auditor
on those financial statements contained no qualification or statement under s237
(2) or (3) of the Companies Act 1985.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of
the Company and entities controlled by the Company (its subsidiary
undertakings). All intra-group transactions, balances, income and expenses are
eliminated on consolidation.
Fixed assets
Fixed assets are stated at cost, less depreciation and accumulated impairment
provisions. Depreciation is provided at rates calculated to write off the cost
of each asset over its expected useful economic life. The carrying value of
property, plant and equipment is assessed annually and any impairment is charged
to the income statement.
Depreciation is charged on a straight line basis as follows:
Leasehold improvements 25%
Computer equipment 33%
Office furniture 33%
Financial assets and liabilities
Financial assets and financial liabilities are recognised on the Group's balance
sheet when the Group becomes a party to the contractual provisions of the
instrument.
Available-for-sale financial assets
Available-for-sale financial assets are initially recognised at fair value,
being the consideration given together with any acquisition costs associated
with the asset. The Group's investments in the funds that it manages are
designated as 'available-for-sale' financial assets and are included in
non-current assets. Such assets are subsequently carried at fair value, with any
gains or losses arising from changes in fair value being recognised in equity.
Available-for-sale financial assets are derecognised when the rights to receive
cash flows from the financial assets have expired or have been transferred and
the Group has transferred substantially all risks and rewards of ownership. When
derecognition occurs a realised gain or loss is recognised in the income
statement, calculated as the difference between the net sales proceeds and the
original cost of the financial asset. Any fair value gains or losses previously
recognised directly in equity are recycled into the income statement as part of
this calculation of the gain or loss arising on derecognition.
The Group assesses at each reporting date whether there is objective evidence
that an investment is impaired. In the case of a financial asset classified as
available-for-sale, a significant or prolonged decline in the fair value of the
financial asset below its cost is considered as objective evidence that the
asset is impaired. If any such evidence exists for available-for-sale financial
assets, the cumulative loss - measured as the difference between the acquisition
cost and the current fair value, less any impairment loss on that asset
previously recognised in the income statement - is removed from equity and
recognised in the income statement. Impairment losses recognised in the income
statement, if subsequently reversed, are taken through equity and not the income
statement.
Pensions
The Group operates a defined contribution money purchase pension scheme covering
the majority of its employees. The costs of the pension scheme are charged to
the profit and loss account in the period in which they are incurred.
Trade receivables
Trade receivables are initially recognised at fair value, and are subsequently
carried at the lower of original fair value and their recoverable amount.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand, deposits and other
short-term highly liquid investments that are readily convertible to a known
amount of cash and are subject to an insignificant risk of changes in value. For
the purpose of the consolidated cash flow statement, cash and cash equivalents
consist of cash and cash equivalents as defined above.
Trade payables
Trade payables initially recognised at fair value and subsequently at amortised
cost.
Income recognition
Revenue
Revenue represents fees receivable (excluding value added tax) during the period
for discretionary investment management and advisory services. Management fees
and performance fees are recognised when receivable. Performance fees, which are
based on the investment performance achieved for certain client portfolios
relative to predefined benchmarks, are recognized as revenue at the end of the
period over which the performance is measured.
Interest receivable and similar income
Interest receivable is recognised on an accruals basis using effective interest
methods. Dividend income from investments is recognised on the date that the
right to receive payment has been established.
Cost of sales
Cost of sales includes fees and commissions payable to third parties in respect
of the management of investment management contracts. Commissions and
distribution fees payable to third parties are recognised over the period for
which the service is provided.
Operating leases
Amounts payable under operating leases are charged to the income statement on a
straight-line basis over the lease term.
Taxation
The income tax expense represents the sum of the tax currently payable and
deferred tax.
The tax currently payable is based on taxable profit for the period. Taxable
profit differs from profit as reported in the income statement because it
excludes items of income or expense that are taxable or deductible in other
years and it further excludes items that are never taxable or deductible. The
Group's liability for current tax is calculated using tax rates that have been
enacted or substantively enacted by the balance sheet date. Income tax relating
to items charged or credited directly to equity is also dealt with in equity.
Deferred tax is recognised on differences between the carrying amounts of assets
and liabilities in the financial statements and the corresponding tax bases used
in the computation of taxable profit, and is accounted for using the balance
sheet liability method.
Deferred tax liabilities are generally recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which deductible
temporary differences can be utilised. The carrying amount of deferred tax
assets is reviewed at each balance sheet date and reduced to the extent that it
is no longer probable that sufficient taxable profits will be available to allow
all or part of the asset to be recovered.
Deferred tax is calculated using tax rates that have been enacted or
substantively enacted by the balance sheet date. Deferred tax is charged or
credited to the income statement, except when it relates to items charged or
credited directly to equity, in which case the deferred tax is also dealt with
in equity. Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against current tax
liabilities and when they relate to income taxes levied by the same taxation
authority and the Group intends to settle its current tax assets and liabilities
on a net basis.
Share-based payments
Equity-settled share-based payments are measured at fair value (excluding the
effect of non market-based vesting conditions) at the date of grant. The fair
value determined at the grant date of the equity-settled share-based instrument
is expensed on a straight-line basis over the vesting period, based on the
Group's estimate of the shares that will eventually vest and adjusted for the
effect of non market-based vesting conditions.
Segmental reporting and functional currency
The directors are of the opinion that the Group is engaged in a single, unified,
business of managing investments. No segmental reporting is therefore provided.
The Group functional currency is pounds sterling, as its operating activities
are based in the UK and all or substantially of its income and expenses are
based in pound sterling.
2. Revenue
Six months to Six months to Year to
30 Sept 30 Sept 31 March
2007 2006 2007
£000 £000 £000
Investment management fees 13,422 9,133 20,184
Investment advisory fees 193 228 490
Investment performance fees 997 450 20,595
Revenue 14,612 9,811 41,269
3. Profit on ordinary activities before taxation
Six months to Six months to Year to
30 Sept 30 Sept 31 March
2007 2006 2007
£000 £000 £000
Profit on ordinary activities before taxation is
stated after charging:
Staff costs 3,535 3,398 7,675
Depreciation of tangible fixed assets 124 108 228
Operating lease rentals
land & buildings 653 653 653
other 53 53 53
Auditors' remuneration
Audit services
Current year 30 21 40
Underprovision in prior year 42 - -
Other services relating to taxation 22 17 48
All other services 88 114 257
4. Dividends
Six months to Six months to
30 Sept 30 Sep
2007 2006
£000 £000
Dividend paid 3,619 4,825
The directors have declared a dividend of 1.5p per ordinary share in respect of
the period to 30 September 2007.
5. Earnings per ordinary share
The calculation of earnings per Ordinary share is based on the profit for the
period of £3,155,032 (September 2006: £657,552; March 2007: £8,134,609) and on
66,929,478 (September 2006: 51,214,347; March 2007: 55,584,556) Ordinary shares,
being the weighted average number of Ordinary shares in issue during the period.
The calculation of diluted earnings per Ordinary share is based on the profit
for the period of £3,155,032 (September 2006: £657,552; March 2007: £8,134,609)
and on 77,866,861 (September 2006: 58,874,511; March 2007: 63,634,996) Ordinary
shares, being the weighted average number of ordinary shares allowing for all
dilutive options of 3,074,945 (September 2006: 3,082,760; March 2007: 3,300,080)
and shares not issued under a crystallized event of 7,225,825 (September 2006:
4,356,080; March 2007: 2,178,040).
6. Available-for-sale financial assets
Six months to Six months to Year to
30 Sept 30 Sept 31 March
2007 2006 2007
£000 £000 £000
At beginning of period 3,929 1,001 1,001
Additions 8,085 2,209 2,708
(Loss)/gain on movement in fair value (204) (3) 220
At end of period 11,810 3,207 3,929
The Group's available-for-sale financial assets are principally in the funds it
manages, all of which are listed.
7. Reconciliation of equity
Share Share Own Capital Other Retained Total
capital premium shares reserve reserves earnings
£000 £000 £000 £000 £000 £000 £000
At 31 March 2007 1,673 15,050 (558) 555 1,008 14,804 32,532
Profit for the financial period 3,155 3,155
Equity dividends paid (3,619) (3,619)
Issue of share capital 15 9 (14) 10
Employee share options charge 31 31
Losses on the revaluation
of available for sale
financial assets (204) (204)
Movements in deferred tax (192) (192)
At 30 September 2007 1,688 15,059 (558) 541 612 14,371 31,713
8. Notes to the cash flow statement
Reconciliation of profit before taxation to cash generated from operations
Six months to Six months to Year to
30 Sept 30 Sept 31 March
2007 2006 2007
£000 £000 £000
Restated Restated
Cash flows from operating activities
Profit on ordinary activities before tax 3,709 873 9,579
Depreciation of tangible fixed assets 124 108 228
Decrease/(increase) in receivables 920 1,841 554
(Decrease)/increase in trade and other payables (835) 736 (1,573)
Share based payment 31 - 52
Other non-cash reserve movements (14) - (55)
Cash generated from operations 3,935 3,558 8,785
9. Related party transactions
BJD 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 appointed
investment manager of the Trust. The total fees received by the Group as
investment manager of the Trust for the 6 months to 30 September 2007 were
£1,856,890 (September 2006: £1,894,891).
At the end of the period, the Group had an outstanding loan due of £557,804
(September 2006: £1,033,997) 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.
10.IFRS transition
First time adoption of IFRS:
The transition date to IFRS from UK GAAP was 1 April 2006. The accounting
policies are based on IFRS applied retrospectively and have been applied by the
Group in arriving at its transition date balance sheet amounts.
Reconciliation from UK GAAP to IFRS:
The tables below reconcile total shareholders' funds at 1 April 2006, 30
September 2006 and 31 March 2007 under UK GAAP to total equity under IFRS, and
the profit after taxation for the year ended 31 March 2007 and the period ended
30 September from UK GAAP to IFRS.
Reconciliation of shareholders' funds under UK GAAP to shareholders' equity
under IFRS
Transitional
Date
31 March 30 Sept 1 April
2007 2006 2006
£000 £000 £000
UK GAAP - Total shareholders' funds - equity interests 31,524 11,035 14,614
IFRS transition adjustments:
Fair value of available for sale financial assets (1) 220 (3) 3
Deferred tax asset relating to share options (2) 854 187 160
Deferred tax asset/ liability relating to available for
sale financial assets (1) (66) 1 (1)
IFRS - Total shareholders' funds - equity interests 32,532 11,220 14,776
Reconciliation of profit after taxation under UK GAAP to profit after taxation
under IFRS
31 March 30 Sept
2007 2006
£000 £000
UK GAAP - Profit on ordinary activities after taxation 8,150 665
IFRS pre-tax transition adjustments:
Deferred tax on share options (2) (15) (8)
IFRS - Profit on ordinary activities after taxation 8,135 657
IFRS transition adjustments relating to profit after taxation and shareholders'
equity
(1) Tax on share options
Under IAS 12 the Group has recognised a deferred tax asset in relation to the
corporation tax deduction which is expected to arise on the future exercise of
share options which had not been exercised at the balance sheet date. Under UK
GAAP the value of this asset was restricted by reference to both vested options
and the cost associated with the share options which had been recognised in the
profit and loss account. IAS 12 also differs from UK GAAP in relation to the
value of income tax deductions arising on the exercise of share options which
can be recognised in the income statement. Under UK GAAP the full value of
corporation tax deductions was recognised in the income statement whereas under
IAS 12 the tax effect of a deduction exceeding the accounting cost previously
recognised is taken directly to equity.
(2) Fair value of investments
The Group has designated the investments held at the transition date as
'available-for-sale', and they have therefore been valued at fair value,
together with the recognition of the corresponding deferred tax liability.
Shareholder Information
Directors
T Bartlam, Non executive Chairman
M Kary, Chief Executive
J Mansell, Chief Operating Officer
B Ashford-Russell
T Woolley
H Aldous, Non executive director, Chairman of Audit Committee
J Cayzer-Colvin, Non executive director, Chairman of Remuneration Committee
P Buckley, Non executive director
C Hale, Non executive director
Ms. S Street, Non executive director
Dividend
An interim dividend of 1.5p per share has been declared for the period ended 30
September 2007. This will be paid on 19 January 2008 to shareholders on the
register on 21 December 2007. The shares will trade ex dividend from 19
December 2007.
Interim Report
The interim report will be posted to shareholders in January 2008. Copies will
be available from the Secretary at the Registered Office, 4 Matthew Parker
Street, London SW1H 9NP and on the Company's website at www.polarcapital.co.uk.
This information is provided by RNS
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