GAM Holding AG reports underlying net profit of CHF 70.2 million for the first half of 2012
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GAM Holding AG /
GAM Holding AG reports underlying net profit of CHF 70.2 million for the first
half of 2012
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The issuer is solely responsible for the content of this announcement.
Zurich, 14 August 2012
* Assets under management of CHF 111.1 billion, up 4% from year-end 2011.
* Net new money inflows of CHF 0.9 billion, CHF 0.3 billion higher than in the
first half of 2011 and a turnaround from net outflows in the second half of
2011.
* Underlying net profit of CHF 70.2 million[1], compared to CHF 100.4 million
a year earlier.
* Balance sheet strong and highly liquid, with tangible equity of CHF 623
million, cash of CHF 446 million and no debt.
Assets under management for the Group were CHF 111.1 billion[2] as at 30 June
2012, compared to CHF 107.0 billion at year-end 2011. This increase primarily
reflects positive market performance of CHF 2.9 billion. Currency movements also
had a positive effect of CHF 0.3 billion, as the strengthening of the US dollar
and the British pound against the Group's Swiss franc reporting currency
counteracted the impact of the depreciation of the euro.
Net new money inflows at Group level were CHF 0.9 billion[2] for the first six
months of 2012, up from the CHF 0.6 billion reported in the first half of 2011
and a significant improvement on the net outflows of CHF 4.4 billion experienced
in the second half of 2011. Substantial inflows came from Swiss & Global Asset
Management's market-leading private label funds business as well as from the
active fixed income strategies managed by GAM. The latter generated growth via
Swiss & Global Asset Management's well-established distribution channels in the
wholesale market, as well as via GAM's growing direct relationships with
institutions and pension consultants.
Chairman and CEO Johannes A. de Gier commented: "We will clearly do our best to
improve our results from here. However, this set of numbers validates our
diversification strategy. It demonstrates that we have the ability to capture
client flows even in an environment where demand is thin and focused on
specific, narrow areas."
Net new money - GAM
For the first half of 2012, GAM reported net new money outflows of CHF 1.0
billion, despite strong net inflows into its fixed income range - particularly
its absolute return, emerging market and catastrophe bond strategies - driven by
improved client activity from wholesale and institutional clients. Redemptions
were the result of clients rebalancing their portfolios - some at the end of
2011 - which affected certain equity and multi-manager products as well as
lower-margin, long-only fixed income products, particularly in early 2012.
Outflows were also recorded from GAM's historic private banking channels as they
continued to move their discretionary portfolio mandates in-house, in line with
common trends in the industry. The effect of this attrition is expected to ease
over time as GAM continues to successfully expand and diversify its businesses.
In the institutional business, the pipeline indicates the funding of new multi-
manager mandates in the second half of the year. As the current low-yield
environment persists, GAM is also expected to benefit from institutions
increasingly allocating assets from traditional long-only fixed income
investments to alternative, low-volatility fixed income strategies.
GAM's assets under management as at 30 June 2012 were CHF 45.4 billion, up 1%
from CHF 44.8 billion at year-end 2011.
Net new money - Swiss & Global Asset Management
Swiss & Global Asset Management recorded robust net new money inflows of CHF
3.5 billion in the first half of 2012. Relative to its asset base at year-end
2011, this corresponds to an annualised growth rate of 9%. The strongest inflows
were recorded in its private label funds (PLF) business, which has resumed its
pattern of growth in 2012. Earlier this year, Swiss & Global Asset Management
took over the servicing of a number of funds on behalf of a new PLF partner, the
Royal Bank of Canada (Suisse) S.A., and also continued to expand its business
with existing clients. Investor interest in the Julius Baer-branded funds also
improved from the first half of 2011, with particularly strong net new money
inflows into the fixed income products. The range of physical precious metal
products, especially the gold fund, also saw net inflows. Despite widespread
risk aversion, modest net inflows were recorded into the equity funds, fuelled
by demand for the European market-neutral absolute return strategy, a US-focused
product and the flagship luxury brand strategy.
At Swiss & Global Asset Management, assets under management as at 30 June 2012
were CHF 82.6 billion, 7% higher than at year-end 2011 (CHF 76.9 billion).
H1 2012 Group results
Adjusted for certain non-cash items[3], underlying net profit for the first half
of 2012 amounted to CHF 70.2 million, a fall of 30% year-on-year. Earnings per
share were CHF 0.40, down 26% from CHF 0.54 a year earlier. The 7% decline in
average number of shares outstanding - a result of the Group's ongoing share
buy-back programme - partly offset the decrease in underlying net profit.
Annualised return on tangible equity was 22.5% (compared to 24.4% for the first
half of 2011), reflecting lower profitability, which was partly counteracted by
a reduction in tangible equity.
The Group's operating income totalled CHF 280.8 million, 14% less than in the
same period a year ago. Net fee and commission income, at CHF 245.0 million, was
also 14% lower, driven by a 7% decrease in the Group's average asset base and
the relative growth of lower-margin assets in both operating businesses as a
result of investors' reluctance to engage in products perceived to carry greater
risk. Performance fees, mainly reported at GAM, were CHF 29.4 million,
recovering from the CHF 15.6 million recorded in the first half of 2011,
primarily driven by the fixed income range.
Income from investment in associates, relating to the Group's minority stake in
Artio Global Investors Inc. (Artio), which is held purely as a financial
investment, decreased to CHF 1.8 million from CHF 12.4 million a year earlier.
This income is derived from Artio's publicly available earnings statements,
which showed a marked decline in profitability. Other operating income - which
includes gains and losses from hedging activities - declined to CHF 4.6 million
(65% lower than a year ago). The Group's gross margin fell 4.1 basis points to
51.1 basis points, with approximately half of the decrease resulting from the
substantial decline in the income from associates.
Operating expenses declined 3% to CHF 193.7 million year-on-year. Personnel
expenses were down by 6%, reflecting lower accounting charges relating to the
employee options awarded under the 2009 long-term incentive plan. These non-cash
charges are amortised over the relevant vesting periods of the grants. Accruals
for discretionary bonuses were reduced, while contractual-based variable
compensation to investment professionals increased in line with the rise in
performance fees. General expenses rose by CHF 2.2 million year-on-year to CHF
52.5 million due to two non-recurring items - the release of provisions in the
first half of 2011 and the one-time booking of irrevocable VAT expenses related
to prior periods. Excluding these two items, general expenses decreased from the
same period a year ago.
The Group's cost/income ratio for the first half of 2012 was 69.0%, up from
61.6% a year ago. The reduction in operating expenses was not sufficient to
offset the decline in revenues and the absence of a meaningful contribution from
Artio.
One-off charges following employee pension plan changes at GAM
GAM made changes to the defined benefit schemes it operates for its UK and Hong
Kong employees. These changes, which became effective in the first half of
2012, are expected to have a beneficial impact on the Group's balance sheet and
income statement in future periods, as they reduce the financial risk and
volatility of the schemes. At the same time, the changes are designed to protect
the benefits already accrued by current and former employees. The related
adjustments in the actuarial valuations resulted in a total one-off charge of
CHF 6.0 million, net of taxes. This non-cash charge is reflected in the Group's
consolidated income statement for the first half of 2012, but excluded from
underlying net profit.
Group balance sheet and capital
The Group's balance sheet remained strong, with total assets of CHF 2,279.1
million as at 30 June 2012. The cash position was CHF 445.7 million, after the
dividend payment for 2011 (CHF 87.8 million) and the utilisation of CHF 66.9
million of cash for the buy-back of own shares.
The carrying value of the stake in Artio, reported as investment in associates,
was reduced to CHF 55.5 million as at 30 June 2012, based on the outcome of an
impairment test performed according to IFRS. The related non-cash charge of CHF
22.5 million is reflected in the Group's consolidated income statement for the
first half of 2012, but excluded from underlying net profit. The impairment was
fully absorbed by the Group's capital base, lowering tangible equity but at the
same time reducing the Group's future balance sheet exposure to this non-core
participation.
Total equity amounted to CHF 1,990.2 million. Excluding the GAM goodwill,
customer relationships and brand, tangible equity stood at CHF 622.8 million,
compared to CHF 726.3 million at year-end 2011.
Distributions to shareholders
The Board of Directors of GAM Holding AG remains committed to distributing the
Group's earnings to shareholders in an appropriate fashion. Depending on
developments in the second half of 2012, the dividend for the financial year
2012 is expected to be consistent with prior years. Additional distributions
will continue to be made through the Group's share buy-back programme. As at 30
June 2012, the Group held 12.2 million treasury shares, of which 5.9 million
were bought back for future cancellation subject to approval at the April 2013
Annual General Meeting. The remaining 6.3 million shares were held as an
economic hedge in respect of the potential exposure to options granted to
employees under the 2009 long-term incentive plan.
Outlook
Johannes A. de Gier commented: "Looking forward to the remainder of 2012, unless
market conditions were to improve dramatically, we expect uncertainty to persist
and to continue to impact client behaviour. This in turn will make demand for
investment strategies and asset classes erratic and difficult to predict. Cost
management is and will remain a priority for us. However, we will strive to
achieve the right balance between calibrating costs to market conditions and
maintaining the stability our businesses need to thrive. I am convinced that it
will be our ability to capture opportunities when and where they arise that will
determine our success over the medium term."
The presentation for media, analysts and investors on the results of GAM Holding
AG for the first half of 2012 will be webcast on 14 August 2012 at 9:30am (CET).
Materials relating to the results (presentation slides, Half-Year Report 2012
and press release) are available on www.gamholding.com.
Forthcoming events:
23 Oct 2012 Interim management statement Q3 2012
5 Mar 2013 Full-year results 2012
17 Apr 2013 Ordinary Annual General Meeting & interim management statement Q1
2013
13 Aug 2013 Half-year results 2013
For further information please contact:
Media Relations:
Larissa Alghisi Rubner
T: +41 (0) 58 426 62 15
Investor Relations:
Thomas Schneckenburger
Bluechip Financial Communications
T: +41 (0) 44 256 88 30
Notes to editors
About GAM Holding AG
GAM Holding AG is an independent, well-diversified asset management group. Its
operating businesses - GAM and Swiss & Global Asset Management - focus on the
development and distribution of actively managed investment products and
services.
GAM Holding AG 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 111.1 billion (as at 30 June 2012) and employs over 1,000
staff with offices in Zurich (head office), Bermuda, Grand Cayman, Dublin,
Frankfurt, Geneva, Hong Kong, London, Luxembourg, Madrid, Milan, New York and
Tokyo.
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 fact. The Company has tried to
identify those forward-looking statements by using the words '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 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.
[1] The result for H1 2012 has been adjusted to exclude the reduction of the
carrying value of the investment in Artio of CHF 22.5 million, the amortisation
of customer relationships of CHF 5.8 million and defined benefit pension plan
curtailment expenses of CHF 6.0 million (net of taxes). Including these non-cash
items, the Group's net profit for H1 2012 amounted to CHF 35.9 million, as shown
in the Condensed Interim Consolidated Financial Statements.
[2] Group assets under management and net new money totals exclude the double-
count of funds managed by GAM and distributed by Swiss & Global Asset
Management, which are reported in both businesses. Including these assets, Group
assets under management totalled CHF 128.1 billion as at 30 June 2012 and net
new money inflows CHF 2.4 billion for H1 2012.
[3] The result for H1 2012 has been adjusted to exclude the reduction of the
carrying value of the investment in Artio of CHF 22.5 million, the amortisation
of customer relationships of CHF 5.8 million and defined benefit pension plan
curtailment expenses (net of taxes) of CHF 6.0 million. Including those non-cash
items, the Group's net profit for H1 2012 amounted to CHF 35.9 million, as shown
in the Condensed Interim Consolidated Financial Statements.
The result for H1 2011 was adjusted to exclude the reduction of the carrying
value of the investment in Artio of CHF 92.2 million and the amortisation of
customer relationships of CHF 5.8 million. Including those non-cash items, the
Group's net profit for H1 2011 amounted to CHF 2.4 million, as shown in the
Condensed Interim Consolidated Financial Statements.
Results & Review First Half-year 2012:
http://hugin.info/142256/R/1633599/524291.pdf
English Press Release and key figures:
http://hugin.info/142256/R/1633599/524289.pdf
Half-year report 2012:
http://hugin.info/142256/R/1633599/524290.pdf
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: GAM Holding AG via Thomson Reuters ONE
[HUG#1633599]
Unternehmensinformation / Kurzprofil:
Datum: 14.08.2012 - 07:08 Uhr
Sprache: Deutsch
News-ID 174158
Anzahl Zeichen: 18942
contact information:
Town:
Zürich
Kategorie:
Business News
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