Press Release: GAM Holding AG 2015 underlying -2-




01.03.16 07:00
Dow Jones Newswires



Press Release: GAM Holding AG 2015 underlying pre-tax profit CHF 197.8 million






GAM Holding AG / GAM Holding AG 2015 underlying pre-tax profit CHF 197.8
million . Processed and transmitted by NASDAQ OMX Corporate Solutions.
The issuer is solely responsible for the content of this announcement.


-- Underlying pre-tax profit of CHF 197.8 million, down 9%

-- IFRS net profit of CHF 138.3 million, down 18% after a reorganisation
charge and other non-recurring and acquisition-related items

-- Diluted underlying earnings per share of CHF 0.98 (CHF 1.06 in 2014)

-- Net fee and commission income down 1% to CHF 600.6 million, of which net
performance fees up 26% to CHF 82.8 million

-- Expenses down 1% to CHF 403.5 million, with both personnel and general
expenses lower

-- Group assets under management of CHF 119.0 billion as at 31 December 2015
(CHF 123.2 billion as at 31 December 2014)

-- Investment management with CHF 0.3 billion net inflows; assets under
management down 5% to CHF 72.3 billion, reflecting negative market and
foreign exchange movements

-- Private labelling with CHF 2.7 billion net inflows; assets under
management down 1% to CHF 46.7 billion, reflecting sale of the Cayman
business

-- Proposed dividend of CHF 0.65 per share, unchanged from previous year

-- Larry Hatheway and Tim Dana to join the Group Management Board, subject
to customary regulatory approval; Andrew Hanges to step down from the
Group Management Board


Group CEO Alexander S. Friedman said: "One year ago we set out our
strategic agenda for the coming years. Since then we have focused on
disciplined execution, addressing three critical areas: our brand, our
operating model and our growth strategy. While the transition is not yet
complete, we have made good progress, even against a challenging market
backdrop.

The work we undertook in 2015 is not yet fully visible in our financial
results. This is not a surprise - we always knew our plans would take a
few years to be realised in their entirety. The transition we embarked
on is proceeding on schedule and will give GAM a solid foundation for
future profitable growth. Even in difficult times, our business is
resilient and well positioned to take advantage of the opportunities we
see in our industry over the coming years. Following the strategic steps
initiated in 2015, we are focused on executing against our plans, and we
have a number of exciting product launches in the pipeline.

2016 has begun with renewed turbulence in the financial markets.
Diverging monetary policy against the backdrop of weak global growth
along with concerns over the economic slowdown in China and the
trajectory of oil prices are keeping markets volatile. Furthermore,
worries about broader financial stress at a time when central banks and
regulators may be limited in their tools to respond are affecting
investor sentiment and flows. Investing will, no doubt, be challenging.
As high-conviction active asset managers with a strong range of absolute
return strategies, the environment ahead should provide opportunities
for us to outperform, but we will not be immune to negative market
trends."

2015 Group results

Net fee and commission income fell 1% to CHF 600.6 million. The 5%
decline in the net management fees and commissions to CHF 517.8 million
(mainly as a result of a decline in the management fee margin in
investment management to 64.6 basis points driven by the mix of net
flows across products and client segments) was largely offset by a 26%
increase in net performance fees to CHF 82.8 million.

Net other income, which includes net interest income, the impact of
foreign exchange movements, gains and losses on seed capital investments
and hedging as well as fund-related fees and service charges, fell to
CHF 0.7 million from CHF 14.7 million. Losses from foreign exchange
movements (compared with gains in the previous year), lower net gains on
seed capital and negative interest on the Group's Swiss franc cash
deposits contributed to this decline.

Personnel expenses decreased 1% to CHF 290.0 million, with declines in
both fixed and variable compensation. The compensation ratio remained
largely unchanged at 48.3% (48.2% in 2014), demonstrating the alignment
between revenues and compensation structures.

General expenses decreased 1% to CHF 104.9 million, reflecting the
firm's cost discipline and a decline in IT costs.

The underlying pre-tax profit decreased 9% to CHF 197.8 million. While
costs were managed tightly and variable compensation reduced, the
decrease in net fee and commission income and net other income could not
be entirely offset by an equivalent reduction in expenses.

The underlying effective tax rate increased to 19.9% from 18.2%,
reflecting a shift in the geographic split of the Group's earnings.
Diluted underlying earnings per share were 8% lower at CHF 0.98,
benefiting from the reduction in the number of shares outstanding
through the Group's share buy-back programme.

The IFRS net profit of CHF 138.3 million, all attributable to the
shareholders of GAM Holding AG, was 18% lower than in 2014 as a result
of non-recurring and acquisition-related items. Non-recurring items led
to a net charge of CHF 6.2 million and included a net charge of CHF 9.5
million for the reorganisation of the business (mainly redundancy
payments over the course of 2016 net of a pension fund curtailment
credit) and CHF 1.2 million in deal and integration costs for corporate
transactions. These were partly offset by the CHF 4.5 million gain on
the sale of the Cayman fund administration business. Net charges for
acquisition-related items amounted to CHF 13.9 million and included an
adjustment to deferred consideration liabilities and the amortisation of
client relationships from previous acquisitions.

Investment management assets and flows

Assets under management movements (CHF bn)




Opening AuM Closing AuM
Capability 1 Jan 2015 Net flows Market/FX Acquisition 31 Dec 2015
Absolute return 22.2 2.1 -1.2 - 23.1
Fixed income 19.5 0.4 -1.8 0.5 18.6
Equity 13.8 -0.5 0.1 - 13.4
Alternatives 7.7 -1.6 -0.8 - 5.3
Multi asset 12.9 -0.1 -0.9 - 11.9
Total 76.1 0.3 -4.6 0.5 72.3



In investment management, assets declined by CHF 3.8 billion to CHF 72.3
billion. Net inflows of CHF 0.3 billion and assets of CHF 0.5 billion
acquired with the real estate debt business of Renshaw Bay were offset
by the negative impact from markets (CHF 2.4 billion) and foreign
exchange movements (CHF 2.2 billion, reflecting the strengthening of the
Swiss franc).

Net flows by capability

Investors added net CHF 2.1 billion to absolute return strategies in
2015. The unconstrained/absolute return bond strategy saw redemptions
from financial intermediaries following weak performance in the second
half of 2014 and 2015, but continued to win substantial inflows from
institutional investors thanks to its ten-year track record of capital
protection across market cycles. The JB Absolute Return Europe fund,
which takes long and short positions in equities and equity-related
securities of European companies, attracted strong inflows, as did the
GAM Star Global Rates fund.

In fixed income, the GAM Star Credit Opportunities fund, which
predominantly invests in investment grade debt or high-quality issuers,
attracted solid inflows, as did specialised products such as the GAM
Star MBS Total Return and GAM Star Cat Bond funds. These were moderated
by outflows in emerging market strategies, driven by investor sentiment.
Net inflows into fixed income strategies totalled CHF 0.4 billion in
2015.

The largest inflows into equity strategies came from the JB Japan fund
as strong performance helped drive client demand. The GAM Star
Continental European fund also saw solid inflows, while GAM Star China
posted outflows amid negative investor sentiment despite outperformance
versus benchmark. GAM Star US All Cap Equity, managed externally, also
saw outflows following a prolonged period of weak performance. Net
outflows from equity strategies totalled CHF 0.5 billion in 2015.

Overall net outflows in multi asset products were CHF 0.1 billion for
the year. Good net inflows into institutional relative return products
and mandates as well as risk rated solutions for financial advisers were
more than offset by redemptions in private client advisory and mandates
stemming from GAM's previous affiliation with UBS and Julius Baer as
well as in lower-margin institutional mandates.

Net outflows from alternatives amounted to CHF 1.6 billion, mainly
reflecting withdrawals from alternative risk premia mandates,
traditional funds of hedge funds and the JB Physical Gold Fund.

Net flows by client segment

Net inflows from institutional investors amounted to CHF 1.3 billion in
2015 as strong inflows in the first half of the year were partly offset
by redemptions and the loss of two alternative risk premia mandates in
the second half. Net outflows from private clients of CHF 1.1 billion
were mainly related to GAM's previous captive channels. Financial
intermediaries contributed CHF 0.1 billion to net inflows for the year
as redemptions in the fourth quarter almost offset solid inflows in the
first nine months.

Private labelling assets and flows

Assets under management movements (CHF bn)




Opening AuM Closing AuM
Fund domicile 1 Jan 2015 Net flows Market/FX Disposal 31 Dec 2015
Switzerland 35.4 -3.6 -0.4 - 31.4


(MORE TO FOLLOW) Dow Jones Newswires




March 01, 2016 01:00 ET (06:00 GMT)




Press Release: GAM Holding AG 2015 underlying -2-




Rest of Europe 9.0 6.7 -0.4 - 15.3
Other 2.7 -0.4 -0.1 -2.2 -
Total 47.1 2.7 -0.9 -2.2 46.7



Assets under management in private labelling fell to CHF 46.7 billion
from CHF 47.1 billion a year earlier. The loss of one large mandate in
the second half of the year was more than offset by new business wins in
Switzerland and Italy, leading to net inflows of CHF 2.7 billion in
2015. This was counteracted by the sale of our fund administration
business in the Cayman Islands, which reduced assets by CHF 2.2 billion,
and negative market and foreign exchange movements that led to a CHF 0.9
billion decrease.

Net cash and tangible equity

The Group's balance sheet continues to be highly liquid (cash and cash
equivalents of CHF 632.9 million as at 31 December 2015) and strongly
capitalised (tangible equity of CHF 487.0 million as at 31 December
2015). The strong cash flow generation of the Group's operating
activities, combined with low capital consumption, forms a solid basis
for a continued policy of shareholder distributions.

Dividend and capital management

At the upcoming Annual General Meeting (AGM) of GAM Holding AG on 27
April 2016, the Board of Directors will propose a dividend of CHF 0.65
per share for the 2015 financial year, unchanged from the previous year,
representing an estimated total distribution of about CHF 103 million or
65% of the underlying net profit. This underscores the Board's
commitment to maintaining its policy of progressive, sustainable and
predictable dividends, increasing in line with earnings growth through
the business cycle. The dividend will be paid as at 3 May 2016 from
capital contribution reserves and will therefore be exempt from Swiss
withholding tax.

In 2015, GAM Holding AG returned CHF 55.5 million in cash to
shareholders through the buy-back of 3.1 million of its own shares for
the purpose of cancellation. The current share buy-back programme, which
started on 28 April 2014, allows for the repurchase of up to 16.7
million shares over a maximum period of three years (31% had been
utilised by the end of December 2015) and represents a flexible means of
returning excess capital to shareholders in the absence of other
opportunities for investment.

At the upcoming AGM, the Board of Directors will propose the creation of
authorised capital equal to 20% of GAM Holding AG's current share
capital. Subject to shareholder and customary regulatory approval, this
proposal is designed to further enhance GAM's strategic flexibility -
for instance in taking advantage of future opportunities for
acquisitions that meet the Group's strict financial criteria. The
proposal would allow the Board of Directors to increase the share
capital at any time until 27 April 2018 by a maximum amount of CHF
1,633,946 by issuing a maximum of 32,678,920 fully paid registered
shares with a par value of CHF 0.05 each. Of these 32,678,920 fully paid
registered shares, the Board would be authorised to restrict or withdraw
the pre-emptive rights of the existing shareholders with respect to a
maximum of 16,339,460 registered shares and allocate such rights to
third parties in certain cases, such as for acquisitions. Full details
of the proposal will be published in the invitation to the AGM.

Changes in the Group Management Board

Larry Hatheway, Group Chief Economist and Group Head of Multi Asset
Portfolio Solutions, and Tim Dana, Group Head of Corporate Development,
will join the Group Management Board on 1 May 2016, subject to the
customary approval by the Swiss Financial Market Supervisory Authority
FINMA. Larry Hatheway and Tim Dana both joined GAM in late 2015.

Andrew Hanges, Region Head UK, will step down from the Group Management
Board on the same date and focus on his work as a board member of
various investment funds and regulated entities within the Group.

Alexander S. Friedman, Group CEO, said: "On behalf of the Group
Management Board, I would like to thank Andy for his contribution and
his commitment as a member of that body and I look forward to welcoming
Larry and Tim as members of our senior leadership team."

Update on strategic initiatives

The implementation of the new operating model, as communicated with
GAM's 2015 half-year results, is well on track. By full-year 2017, this
will lead to a structural annual cost reduction of more than CHF 20
million compared with the 2014 level. The reorganisation was provisioned
for in 2015 and is not expected to result in additional charges in 2016.

GAM thoroughly assessed its investment management product range and
closed or merged 41 funds in 2015 with a de minimis loss of client
assets as a result of these measures. Apart from allowing the Group to
focus resources most effectively, this also creates capacity to develop
and support new product launches to drive organic growth. For example,
the Group recently launched a market neutral US equity strategy, based
on the highly successful JB Absolute Return Europe fund. The Group is
also developing a new range of multi asset offerings, an institutional
trade finance strategy and a second real estate debt fund.

As announced in 2015, GAM streamlined its private labelling activities
by selling its fund administration business in the Cayman Islands.
Private labelling will now focus on the provision of management company
services and tailored third-party solutions for funds domiciled in
Europe.

The acquisition of Renshaw Bay's real estate debt business closed in
October 2015, adding CHF 0.5 billion in assets under management in the
fourth quarter. GAM intends to launch a second real estate debt fund by
mid-year, following the successful investment of the capital raised for
the first fund that closed to new subscriptions in 2015.

In November 2015, GAM unveiled a redesigned brand and a new website and
started a targeted external marketing campaign to better reflect the
evolving nature of the Group.

Financial targets

The Group affirms its financial targets. Over a business cycle, defined
as five to eight years, the Group aims to:


-- increase diluted underlying earnings per share in excess of 10% on an
annualised basis

-- achieve an operating margin of 35-40%


Compared with the targets communicated in March 2015, diluted underlying
EPS replaces the previously used basic underlying EPS to reflect the
dilution impact from share-based compensation plans. The operating
margin target is consistent with the previously disclosed cost/income
ratio target of 60-65%. The operating margin excludes the impact of net
other income to provide a better representation of the Group's operating
performance.

The presentation for media, analysts and investors on the GAM Holding AG
results for 2015 will be webcast
https://www.gam.com/en/our-company-content/investor-relations/results-centre/results-centre/
on 1 March 2016 at 9 am (CET). Materials related to the results (Annual
Report 2015, presentation slides and press release) are available at
www.gam.com.

Forthcoming events:




20 April 2016 Interim management statement Q1 2016
27 April 2016 Annual General Meeting
29 April 2016 Ex-dividend date
2 May 2016 Dividend record date
3 May 2016 Dividend payment date
3 August 2016 Half-year results 2016
20 October 2016 Interim management statement Q3 2016




For further information please contact:
Media Relations: Investor
Relations:
Elena Logutenkova Patrick
Zuppiger
T +41 (0) 58 426 63 41 T +41 (0)
58 426 31
36
Visit us at: www.gam.com
Follow us on: Twitter https://twitter.com/gaminsights
, LinkedIn https://www.linkedin.com/company/gam?trk=company_logo
and XING https://www.xing.com/companies/gam


About GAM

GAM is one of the world's leading independent, pure-play asset managers.
The company provides active investment solutions and products for
institutions, financial intermediaries and private investors under two
brands: GAM and Julius Baer Funds. The core investment business is
complemented by private labelling services, which include management
company and other support services to third-party asset managers. GAM
employs over 1,000 people in 11 countries with investment centres in
London, Zurich, Hong Kong, New York, Milan and Lugano. The investment
managers are supported by an extensive global distribution network.

Headquartered in Zurich, GAM is listed on the SIX Swiss Exchange and is
a component of the Swiss Market Index Mid (SMIM) with the symbol 'GAM'.
The Group has assets under management of CHF 119.0 billion (USD 119.2
billion) as at 31 December 2015.

Disclaimer regarding forward-looking statements

This press release by GAM Holding AG ('the Company') includes
forward-looking statements that reflect the Company's intentions,
beliefs or current expectations and projections about the Company's
future results of operations, financial condition, liquidity,
performance, prospects, strategies, opportunities and the industry in
which it operates. Forward-looking statements involve all matters that
are not historical facts. The Company has tried to identify those
forward-looking statements by using words such as 'may', 'will', 'would',
'should', 'expect', 'intend', 'estimate', 'anticipate', 'project',
'believe', 'seek', 'plan', 'predict', 'continue' and similar
expressions. Such statements are made on the basis of assumptions and


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