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Press Release: GAM Holding AG 2015 underlying -3-

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 

(MORE TO FOLLOW) Dow Jones Newswires

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

Press Release: GAM Holding AG 2015 underlying -3-

expectations which, although the Company believes them to be reasonable 
at this time, may prove to be erroneous. 
 
   These forward-looking statements are subject to risks, uncertainties, 
assumptions and other factors that could cause the Company's actual 
results of operations, financial condition, liquidity, performance, 
prospects or opportunities, as well as those of the markets it serves or 
intends to serve, to differ materially from those expressed in, or 
suggested by, these forward-looking statements. Important factors that 
could cause those differences include, but are not limited to: changing 
business or other market conditions, legislative, fiscal and regulatory 
developments, general economic conditions, and the Company's ability to 
respond to trends in the financial services industry. Additional factors 
could cause actual results, performance or achievements to differ 
materially. The Company expressly disclaims any obligation or 
undertaking to release any update of, or revisions to, any 
forward-looking statements in this press release and any change in the 
Company's expectations or any change in events, conditions or 
circumstances on which these forward-looking statements are based, 
except as required by applicable law or regulation. 
 
   English Press Release: http://hugin.info/142256/R/1990383/731270.pdf 
 
   This announcement is distributed by NASDAQ OMX Corporate Solutions on 
behalf of NASDAQ OMX Corporate Solutions clients. 
 
   The issuer of this announcement warrants that they are solely 
responsible for the content, accuracy and originality of the information 
contained therein. 
 
   Source: GAM Holding AG via Globenewswire 
 
   HUG#1990383 
 
   --- End of Message --- 
 
   GAM Holding AG 
 
   Hardstrasse 201 Zürich Switzerland 
 
   ISIN: CH0102659627; 
 
 
  http://www.gamholding.com 
 

(END) Dow Jones Newswires

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


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