2014 Valartis Group Consolidated Financial Statements
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Valartis Group AG /
2014 Valartis Group Consolidated Financial Statements
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The 2014 Valartis Group Consolidated Financial Statements, in accordance with
International Financial Reporting Standards (IFRS), show a Group loss of CHF
73.3 m for continued operations and discontinued operations, taking into
consideration non-recurring, exceptional factors (2013 on a comparable basis:
Group profit of CHF 0.4 m). This is made up of the loss of CHF 19.6 m from
discontinued operations resulting from divestment of Valartis Bank AG,
Switzerland and Valartis Wealth Management S.A. plus a loss from continued
operations of CHF 53.7 m. The loss from continued operations of CHF 53.7 m is
mainly attributable to the following factors: necessary value adjustments on
receivables from the 2012 sale of Eastern Property Holdings Ltd., impairment of
goodwill positions, a decrease in income from interest and a significantly lower
trading result in 2014 due to lower rouble valuations on private equity holdings
and losses on the ENR Russia Invest S.A. bond portfolio.
Due to divestment of Valartis Bank AG, Switzerland and Valartis Wealth
Management S.A., the provisions of the International Reporting Standards (IFRS)
for continued and discontinued operations (IFRS 5) apply for the Valartis Group
2014 Annual Report. The activities of these two companies are allocated to
discontinued operations in 2014.
Overview of continued operations
The Group loss from continued operations amounting to CHF 53.7 m is mainly
attributable to the following factors:
* value adjustments which became necessary in 2014 on receivables from the
2012 sale of Eastern Property Holdings Ltd. amounting to CHF 27.5 m due to
substantial value adjustments on real estate projects effected by that
company as a result of the current economic situation in Russia on the back
of international sanctions;
* impairment of goodwill positions amounting to CHF 10.6 m;
* a significant decrease in income from interest for continued operations
amounting to CHF 8.3 m due to declining market interest rates and the lack
of reinvestment in bonds in FY 2014;
* a significantly lower 2014 trading result due to lower rouble valuations on
private equity holdings and losses on the ENR Russia Invest SA bonds
portfolio amounting to CHF 8.1 m.
Continued operations from an operational viewpoint
Valartis Group's continued operations comprise the Private Clients and
Institutional Clients segments which include the Private Banking and Wealth
Management units together with Asset Management, Private Equity, Corporate
Finance, and Real Estate Management.
From a purely operational viewpoint, i.e. without taking non-recurring,
exceptional factors into consideration, income from commission and services for
continued operations remained stable at CHF 47.2 m (2013: CHF 47.1 m) in
comparison with the previous year. In the Private Clients segment, the Valartis
private banks performed very nicely. Income from commission and services was up
by 19 percent to CHF 40.7 m (2013: CHF 34.3 m). In particular, the bank in
Liechtenstein posted a robust annual profit for 2014.
Despite the challenging environment, continued operations achieved a net new
money inflow of CHF 285 m (2013: CHF 438 m) and client assets rose by 9 percent
to CHF 6.5 bn (2013: CHF 6.0 bn). This was largely attributable to the Private
Clients segment which achieved a net new money inflow of CHF 530 m (2013: CHF
508 m) and a rise in client assets under management of 15 percent to CHF 6.1 bn
(2013: CHF 5.3 bn). Valartis Bank (Liechtenstein) AG made the greatest
contribution to this satisfactory result.
Despite the costs arising out of implementation of new regulatory requirements
in 2014, overall costs for the financial year only rose by 2 percent to CHF
53.0 m (2013: CHF 52.0 m).
Equity capital base
In summer 2014 Valartis Group incorporated Valartis Finance Holding AG in
Liechtenstein in which the relevant operating activities of the Private Banking,
Wealth Management and Private Equity units, together with financial holdings,
are combined. Valartis Finance Holding AG is subject to the consolidated banking
supervision by the Financial Market Authority in Liechtenstein (FMA). In
Liechtenstein, as of 31 December 2014, risks are assessed using Basel II
approaches. As at 31 December 2014, the hard core capital ratio according to
Basel II for Valartis Finance Holding AG was 15 percent and the overall capital
ratio in accordance with Basel III for Valartis Group was 16 percent. This
equity capital base and the risk-bearing capacity thus cushion the above-
mentioned business risks - primarily evaluation adjustments which are not cash-
effective, or market movements - which have led to the overall Group loss.
2014 - A year of continued adjustment
In financial year 2014, Valartis Group concentrated on implementation of the
strategic decisions taken in 2013 and 2014. The main focus was on the sale of
Valartis Bank AG, Switzerland to Banque Cramer & Cie S.A. at end-August 2014 and
the reorganisation of Valartis Group AG with the incorporation of Valartis
Finance Holding AG in Liechtenstein in summer 2014.
A look back
In 2007, Valartis Group was realigned in order to focus strategically on the
wealth management business with wealthy private clients and institutional
investors. Despite the financial crisis which started in 2008, Valartis Group
was able to further develop its private banking activities over the following
three years through targeted acquisitions in that segment. Valartis Group
intensified concentration on private banking by means of tactical divestments of
non-private banking activities in 2011 and 2012 and, at the same time, by
tightening its organisation in 2012 and 2013 by means of cost reduction
measures.
After it had become apparent that the acquisition capacity of Valartis Bank AG,
Switzerland could not be enhanced at the planned rate despite the 2012 newly
aligned front-office organisation, and that the bank would not attain the
appropriate critical mass within the foreseen timeframe, in 2013, Valartis Group
decided to divest the Swiss 100-percent subsidiary. By retaining a 25-percent
holding in Norinvest Holding S.A., the listed parent company of Banque Cramer &
Cie S.A., the purchaser of the Swiss bank, Valartis Group maintains in 2014 its
presence in the private banking market in Switzerland to a lesser extent.
A look to the future
Since the financial crisis, wealth management banks have found themselves in a
difficult macroeconomic environment with record low interest rates and a
challenging investment situation. In addition, implementation of a range of
complex, national and international regulatory requirements is affecting banks'
cost structures and margins. And these trends did not by-pass Valartis Group.
This environment makes it increasingly difficult for the Group to generate
sustainable operating profits. The critical mass for Valartis Group's private
banking activities as a whole has not been enhanced in spite of the sale of the
Swiss unit. The Group's results in the last few years were also influenced by
the very volatile results from non-private banking activities.
Against this background, the Board of Directors of Valartis Group is now
carefully examining the Group's strategy, business model, and structure in order
to align it more expediently to the challenging environment with the aim of
generating sustainable, appropriate yields from invested capital. In this
context, the Board of Directors will implement the corresponding measures by
summer 2015.
The 2014 Annual Report is available on the website www.valartisgroup.ch and can
also be ordered in printed form from corporate.communications(at)valartis.ch.
Agenda
Results media conference 2015 28 April 2015
Registration: corporate.communications(at)valartis.ch
General meeting 2015 2 June 2015
SIX Exchange, SIX Convention Point, Zurich
Half-year report 2015 25 August 2015
For further information, please contact:
Kim-My Schefer, Head Corporate Communications & Marketing
Tel. +41 44 503 54 02, corporate.communications(at)valartis.ch
Key Figures 2014
Valartis Group
Valartis Group is an international banking and finance group represented today
with offices in Liechtenstein, Austria, Switzerland as well as Luxembourg and
Moscow. The Group's holding company is domiciled in Switzerland and is listed on
the SIX Swiss Exchange. Valartis Finance Holding AG in Liechtenstein comprises
the operations of the private banking and wealth management divisions, together
with the private equity operations of ENR Russia Invest. Valartis Finance
Holding AG is subject to the consolidated banking supervision by the Financial
Market Authority Liechtenstein (FMA). Valartis Group focuses on the wealth
management business for wealthy private clients and institutional investors in
addition to traditional wealth management and investment advisory, it develops,
manages and markets innovative niche investment products and offers specialized
product packages. In doing so, Valartis Group combines a wide range of
traditional private banking services with specialized advisory and classical
banking services in the fields of Asset Management, Corporate Finance and
Private Equity together with innovative investment products in the categories
Stocks, Fixed Income, Alternative Investments and Real Estate. Valartis Group's
core markets include Central and Eastern Europe, the Middle East and certain
countries in North and South America and Asia.
www.valartisgroup.ch
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