GAM Holding AG reports underlying net profit of CHF 177.2 million for 2014
(Thomson Reuters ONE) -
GAM Holding AG /
GAM Holding AG reports underlying net profit of CHF 177.2 million for 2014
. Processed and transmitted by NASDAQ OMX Corporate Solutions.
The issuer is solely responsible for the content of this announcement.
Zurich, 3 March 2015
Underlying pre-tax profit of CHF 216.7 million, down 7% from 2013, with cost
reductions partly compensating for lower performance fees
Underlying net profit of CHF 177.2 million, down 16% year-on-year, reflecting
the effects of a return to a more normalised tax rate of 18.2% (9.8% in 2013)
and the decline in performance fees
IFRS net profit of CHF 169.0 million, of which CHF 165.8 million attributable to
GAM Holding AG shareholders
Investment management with net new money inflows of CHF 2.4 billion; assets
under management up 9% to CHF 76.1 billion
Private labelling assets under management of CHF 47.1 billion, up 6% from
currency and market performance; net new money outflows of CHF 0.8 billion
Cost/income ratio unchanged at 65.2%
Proposed dividend of CHF 0.65 per share, unchanged from previous year
Mid-term growth initiatives announced:
* Balance geographic and product footprint with new funds and teams
* Leverage DNA as leading alternative / absolute return investors
* Capitalise on and expand multi-asset class capabilities
* Enhance operating leverage: simplification of brand architecture,
optimisation of operating model and product lifecycle management
Mid-term targets: strategic initiatives designed to achieve annualised growth of
basic earnings per share in excess of 10% and a cost/income ratio of 60-65% over
a business cycle
2014 Group results in detail[1]
Adjusted for certain non-cash and non-recurring items, the Group's underlying
pre-tax profit for 2014 was CHF 216.7 million, 7% lower than in 2013. A decline
in performance fees was partly offset by cost reductions.
Operating income totalled CHF 623.5 million (down 7% year-on-year), mainly due
to the fluctuation in performance fees. Net management fees and commissions,
which represent around 85% of the Group's overall operating income, held up
well, with a 2% decline attributable to a shift in the asset mix towards a
greater share of directional equity and fixed income products.
Underlying net profit for 2014 fell 16% year-on-year to CHF 177.2 million - a
more pronounced decrease than on a pre-tax basis. It reflects a more normalised
tax rate from the exceptionally low levels of 2013, when the Group benefited
from the release of tax accruals and tax deductions from share-based payments.
Basic earnings per share were CHF 1.07 and declined less than underlying net
profit (by 15%), due to the reduction in the number of shares outstanding
through the Group's on-going share buy-backs.
Operating expenses, at CHF 406.8 million, were also reduced by 7%, in line with
operating income, demonstrating the Group's flexible cost base. Personnel
expenses fell by 9%, largely driven by lower contractual and discretionary bonus
payments, a significant decline in the social security expenses for share-based
payments and also lower severance payments. Non-recurring credits relating to
expenses booked in prior years as well as lower consulting fees led to a 3%
reduction in general expenses.
The Group's cost/income ratio was unchanged from 2013 at 65.2%.
Alexander S. Friedman, Group CEO, said: "Overall, 2014 demonstrated that our
business model is working. At a time when active investment management faced
fundamental challenges at an industry level, our unique business mix served to
effectively ensure profit resilience and asset growth."
Investment management assets and flows
Assets under management in investment management at year-end 2014 were CHF 76.1
billion, compared with CHF 69.8 billion a year earlier. The 9% increase was
driven by robust net new money inflows, the strengthening of the US dollar
against the Group's Swiss franc reporting currency in the second half of 2014,
as well as a positive impact from market performance.
Net new money inflows of CHF 2.4 billion were reflective of healthy underlying
business momentum across the year, signalling a return to growth after the net
outflows of CHF 2.6 billion recorded in 2013. While net new money results for
2014 include assets of CHF 361 million acquired with US-based mortgage-backed
specialist Singleterry Mansley Asset Management in June, they were predominantly
driven by broad-based inflows across the Group's existing product range and
franchise. Particularly strong contributions came from specialised fixed income
strategies, strongly performing directional equity funds and long/short equity
strategies, which were the fastest growing product category in the Group's
absolute return offering.
These positive flows more than compensated for cyclical redemptions in
concentrated areas, partly due to market sentiment (physical gold ETF, local
emerging bond strategy). Due to temporary performance headwinds, the Group's
large unconstrained / absolute return bond strategy experienced outflows from
the financial intermediaries channel, a segment that is very susceptible to
performance fluctuations. With its 10-year track record of capital protection
and solid returns across market cycles, however, the unconstrained / absolute
bond strategy continued to win substantial inflows from institutional investors
particularly in the US and Australia.
Private labelling assets and flows
Assets under management in private labelling (which represents approximately 7%
of the Group's revenues) stood at CHF 47.1 billion on 31 December 2014, up from
CHF 44.6 billion a year earlier. This development was driven by the positive
impact of market performance and foreign exchange movements, more than
offsetting net new money outflows of CHF 0.8 billion. Redemptions from clients
of the Group's private labelling partners as well as the closure of certain
partnerships could not be compensated by new mandate wins and the expansion of
existing relationships.
Dividend and capital management
Subject to shareholders' approval at the upcoming Annual General Meeting (AGM)
on 30 April 2015, the Board of Directors plans to pay a dividend of CHF 0.65 per
share for the 2014 financial year, unchanged from the previous year. This will
represent a nominal pay-out of approximately 60% of the Group's 2014 underlying
net profit. The dividend will again be paid from capital contribution reserves
and will therefore be exempt from Swiss withholding tax.
In addition to the proposed dividend payment, in 2014 the Group returned CHF 53
million of cash and capital to its shareholders through the buy-back of 3.27
million of its own shares for cancellation. Of these, 1.23 million shares were
repurchased as part of its former buy-back scheme, which expired in April 2014,
and 2.04 million shares as part of its current programme, which started on 28
April 2014. This programme allows for the repurchase of up to 16.7 million
shares over a maximum period of three years.
The Group's balance sheet continues to be highly liquid (cash and cash
equivalents of CHF 643.9 million at year-end 2014) and strongly capitalised
(tangible equity of CHF 540.6 million), and we have no financial debt. 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. At the same time, it provides the Group with good
strategic flexibility.
Mid-term growth initiatives
The Group has undertaken a focused growth agenda for the coming years. It builds
on today's strengths and addresses attractive secular industry opportunities
through the following initiatives:
* Balance geographic and product footprint: From its strong presence in the UK
and Continental Europe, GAM Holding will expand its investment and
distribution footprint in the US, the world's largest pool of institutional
assets, and in Asia, where wealth creation will continue to support industry
growth. Investments in organic growth will be complemented by distribution
partnerships and focused acquisitions, targeted at balancing the Group's
geographic reach and its investment capabilities, adding competencies in
areas such as equities, multi-asset solutions, credit and distressed assets
as well as other alternative solutions.
* Leverage DNA as leading alternative / absolute return investors: In an
industry increasingly bifurcated between low-cost passive products and
highly active, absolute return / alternative strategies and solutions, GAM
Holding will focus on the latter. Building on its successful track record -
demonstrated also by its position as the number two provider of alternative
UCITS globally[2] - the Group will continue to broaden its range of
alternative / absolute return strategies, offering them in the form of
onshore funds or as customised solutions.
* Capitalise on and expand existing multi-asset class capabilities: The
current environment of low yields and divergent monetary policy increases
the need for 'outsourced Chief Investment Officer solutions', designed to
help pension funds, high-net-worth individuals, family offices, charities,
endowments and their financial advisers in making complex allocation and
investment decisions across asset classes. With 30-plus years of experience,
the Group already manages approximately CHF 12.5 billion in traditional
multi-asset class portfolios and CHF 5.2 billion in alternative investments
solutions. In order to build a cohesive offering and increase its market
penetration, it is now pooling its multi-asset class capabilities and
strengthening the investment process and will invest further in this area.
Over time, the current relative return, absolute return and risk-rated
offerings will be complemented by income solutions, all of them using a
variety of instruments ranging from single securities to funds, including
third-party products and passive instruments.
* Enhance operating leverage: GAM Holding will complement its growth efforts
with a search for greater efficiency. By eliminating internal complexity,
the Group will maintain a strong grip on costs and over time enhance the
operating leverage of its strategic initiatives. In the near term, it will
focus on the following areas:
Simplification of the brand architecture: In the coming months, the Group
will discontinue the use of the Swiss & Global Asset Management name.
Instead it will strengthen GAM as the Group's sole master brand and focus on
positioning the two product brands - GAM and Julius Baer Funds - which have
complementary strengths in different markets and client segments. A more
straightforward approach to branding will be accompanied by intensified
content marketing activities.
Optimisation of operating model: With the establishment of centralised
leadership over its company-wide operations function, the Group has started
to analyse the entire operations and technology ecosystem supporting its
investment capabilities and product offering. The objective of this effort
is to achieve greater consistency and efficiency across processes and
systems without sacrificing scope and diversification.
Product lifecycle management: Over the past five years, the Group has
successfully diversified its product offering towards a broad range of high-
growth and higher margin segments. The constant drive for innovation and
expansion, and hence a growing seeding pipeline, require a structured and
disciplined management of the product shelf, including focused support for
growth areas and the repositioning of products with low prospects for future
growth.
Mid-term financial targets
Over a business cycle, the Group will aim to achieve the following targets (all
calculated on the basis of underlying net profit):
* Grow profitability in a sustainable fashion, measured by annualised growth
in basic earnings per share in excess of 10%
* Build a business that is robust and resilient across a variety of market
conditions and cycles, by constantly improving efficiency and operating
leverage, expressed by a cost/income ratio of 60 to 65%.
Net new money growth is one of the key drivers of profitability and operating
leverage, and is therefore reflected in the mid-term targets above. For this
reason, the Group has decided no longer to include a specific quantitative
target for annualised net new money growth (previously set at 5 to 10% in
investment management and 5% in private labelling).
Outlook
Alexander S. Friedman, Group CEO, said: "There is little doubt that in 2015 we
will have to come to terms with elevated levels of market volatility. A striking
reminder of this was provided earlier this year, when the Swiss National Bank
abandoned the minimum Swiss franc exchange rate against the euro. While the
abrupt appreciation of the franc in January did not cause us any immediate
losses and had no material impact on our investment strategies, it underscores
the need to manage our cost structure optimally.
With monetary policies around the globe starting to diverge, and the pace of
economic recovery highly uneven, asset managers operate in a challenging
environment. However, we believe that for truly active investors like ourselves,
increased volatility offers the opportunity to produce attractive alpha through
conviction investing.
Our strategy is focused on driving growth while ensuring we are strong and
flexible enough to withstand the inevitable headwinds and surprises in today's
market environment. We are confident in our ability to deliver successfully on
our growth ambitions."
The presentation for media, analysts and investors on GAM Holding AG results for
2014 will be webcast on 3 March 2015 at 9 am (CET). Materials relating to the
results (presentation slides, Annual Report 2014 and press release) are
available at www.gam.com.
Forthcoming events:
21 Apr 2015 Interim management statement Q1 2015
30 Apr 2015 Annual General Meeting
5 May 2015 Ex-dividend date
6 May 2015 Dividend record date
7 May 2015 Dividend payment date
11 Aug 2015 Half-year results 2015
20 Oct 2015 Interim management statement Q3 2015
For further information please contact:
Media Relations:
Larissa Alghisi Rubner
T: +41 (0) 58 426 62 15
Investor Relations:
Patrick Zuppiger
T: +41 (0) 58 426 31 36
Notes to editors
About GAM Holding AG
GAM Holding AG is an independent, pure-play asset management group with a focus
on active investing. With global distribution networks and investment teams
based in five investment centres in Europe, the US and Asia, it delivers
investment solutions to institutions, intermediaries and private clients through
two leading brands - Julius Baer Funds and GAM. The Group's investment
management business is complemented by a private labelling unit, which provides
outsourcing solutions for third parties.
Headquartered in Zurich, 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 123.2 billion (as at 31 December 2014)
and employs over 1,000 staff in 11 countries.
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 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 2014 has been adjusted to exclude the increase of CHF 5.9
million relating to the deferred liability from the acquisition of Arkos in
2012 and the impairment of investments of CHF 2.3 million. Including these
items, the Group's net profit for 2014 amounted to CHF 169.0 million, as shown
in the Consolidated Financial Statements.
The result for 2013 has been adjusted to exclude the gain from the sale of the
Group's investment in Artio of CHF 13.1 million, the amortisation of customer
relationships of CHF 11.6 million (now fully amortised), the impairment of
investments of CHF 5.8 million and office move expenses of CHF 4.5 million (net
of taxes). Including these items, the Group's net profit for 2013 amounted to
CHF 201.4 million, as shown in the Consolidated Financial Statements.
[2] Absolut Research, Absolut monitor alternative UCITS, Q4 2014.
English Press Release:
http://hugin.info/142256/R/1898867/674449.pdf
This announcement is distributed by GlobeNewswire on behalf of
GlobeNewswire 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 GlobeNewswire
[HUG#1898867]
Unternehmensinformation / Kurzprofil:
Datum: 03.03.2015 - 07:00 Uhr
Sprache: Deutsch
News-ID 375553
Anzahl Zeichen: 21178
contact information:
Town:
Zürich
Kategorie:
Business News
Diese Pressemitteilung wurde bisher 137 mal aufgerufen.
Die Pressemitteilung mit dem Titel:
"GAM Holding AG reports underlying net profit of CHF 177.2 million for 2014"
steht unter der journalistisch-redaktionellen Verantwortung von
GAM Holding AG (Nachricht senden)
Beachten Sie bitte die weiteren Informationen zum Haftungsauschluß (gemäß TMG - TeleMedianGesetz) und dem Datenschutz (gemäß der DSGVO).
