GAM HLDG : reports net profit of CHF 106.3 million
08/24/2010| 12:50am US/Eastern
GAM Holding AG / GAM Holding AG reports net profit of CHF 106.3 million processed and transmitted by Hugin AS. The issuer is solely responsible for the content of this announcement.
Zurich, 24 August 2010
* Underlying net profit of CHF 106.3 million, up 36% year-on-year.
* Assets under management of CHF 116.6 billion up CHF 11.3 billion (11%)
year-on-year and up CHF 3.0 billion (3%) from year-end 2009.
* Strong net new money inflows of CHF 5.6 billion, highlighting progress
made in diversifying product ranges and distribution channels.
* Share buy-back programme announced - repurchase and cancellation of up to
10% of the company's outstanding shares over two years.
* Complementary dividend payout target of approximately 50% of annual net
* Capital strength intact, with tangible equity of CHF 1.27 billion.
Investment in organic growth and search for targeted, accretive acquisitions
* Strongly positioned to benefit from status as truly independent, active
asset management firm.
Commenting on the Group's results for the first half of 2010, Chairman and CEO
Johannes A. de Gier said: "Following our successful separation from Julius Baer,
which was completed without any negative impact on our business, our focus
during the first six months of 2010 has been on laying the foundations for
future value creation. I believe we have made significant headway on this front.
Our solid financial performance, achieved during a period of challenging market
conditions, and our progress in creating a more diversified, sustainable
business re-affirm my conviction that we are on the right track. Being a truly
independent, active asset manager gives us a competitive advantage on which we
will continue to capitalise."
H1 2010 results
Assets under Management for the Group stood at CHF 116.6 billion on 30 June
2010, an increase of CHF 11.3 billion (11%) from a year earlier and CHF 3.0
billion (3%) from year-end 2009. Strong net new money inflows in both the first
and second quarters of 2010, totalling CHF 5.6 billion, more than offset adverse
currency movements and the negative impacts of the double-digit decline in core
equity markets in the second quarter of 2010.
GAM recorded net inflows of CHF 3.7 billion in the first six months of 2010,
reversing the net outflows of CHF 5.0 billion reported in the same period a year
earlier. GAM's ongoing initiatives to diversify its product ranges and
distribution capabilities contributed to growth, with strong inflows recorded
into its fixed income and currency strategies and its UCITS III alternative
range, as well as significant institutional investment into its funds of hedge
funds strategies. Outflows in certain funds of hedge funds - mainly from private
clients and wholesale distributors, in line with industry trends - and client
attrition in GAM's managed portfolios offerings were both slower than in 2009
and were successfully counteracted by strong inflows.
Swiss & Global Asset Management's net inflows also improved, from CHF 3.7
billion in the first half of 2009 to CHF 7.4 billion, mainly reflecting inflows
into its attractive fixed income and innovative physical commodity funds. Growth
in this segment more than offset reduced interest in its actively managed equity
products, which were affected by the industry-wide low demand for equity
exposure, despite their good relative investment performance. According to the
Lipper Swiss FundFlows Insight Report and based on net new money gains, Swiss &
Global Asset Management was the most successful fund provider in Switzerland
during the first six months of 2010, boosting its local market share from 4.51%
to 5.56%. Net inflows in the private label fund business were solid, and
although they did not reach the exceptional growth levels experienced in 2009,
this market-leading business remains an important contributor to overall
Net profit for the first half of 2010 was CHF 106.3 million, a 36% increase on
the pro-forma net profit for the first six months of 2009. Earnings per share
were CHF 0.54, up 42% from CHF 0.38 over the same period in 2009.
Operating income for the first half of 2010 was CHF 367.9 million (up 28% from
the previous year). Net fee and commission income rose by 10% to CHF 286.1
million as a result of the growth in the Group's average assets under
management. Performance fees rose steeply to CHF 57.7 million (compared to CHF
3.5 million in the first half of 2009), reflecting the success of the fixed
income and currency strategies. Predominantly booked annually at the end of
June, the performance fees generated on the fixed income products boosted income
for the first half of the year. Performance fees on other products realised in
the second half of the year are unlikely to be of a similar magnitude. This
seasonal effect also led to an increase in the Group's annualised gross margin,
which rose to 62.4 basis points for the first six months of 2010 (compared to
57.0 basis points in the first half of 2009).
Following last year's IPO of Artio Global Investors Inc., its results no longer
form part of GAM Holding AG's consolidated financial statements. The retained
27.9% stake in Artio Global Investors Inc. is accounted for as an investment in
associates. GAM Holding AG's share in that company's net profit is therefore
included in operating income, with the amount derived from publicly available
financial information. Pro-forma results of previous periods have been adjusted
accordingly. During the first half of 2010, this income from associates was CHF
16.4 million, compared to CHF 13.8 million a year earlier.
Operating expenses across the Group rose by 23% to CHF 232.2 million despite
continued cost discipline. General expenses were practically unchanged (down
1%), with savings at GAM and stable expense levels at Swiss & Global Asset
Management. However, personnel costs rose by 38%. The non-cash impact related to
the options awarded to all Group employees in late 2009 (the long-term incentive
plan) following the separation from Julius Baer and the independent listing of
GAM Holding AG increased personnel expenses by CHF 18 million. Higher income
from net fees and commissions, as well as the rise in performance fees, also led
to higher contractual-based payments to investment professionals.
Balance sheet, capital management and share buy-back programme
Total assets as at 30 June 2010 were CHF 3,042 million, with total equity of CHF
2,660 million. Excluding CHF 1,391 million of intangible assets (goodwill,
customer relationships and brand), tangible equity was CHF 1,269 million. The
current regulatory capital requirement, when aggregated across the Group, is
approximately CHF 80 million and the cash position of the Group at the end of
June 2010 stood at CHF 795 million.
GAM Holding AG is committed to maintaining a strong balance sheet and capital
structure and, at the same time, to practising efficient and disciplined capital
management. This includes returning excess capital to its shareholders either
through dividends or the repurchase of its own shares for cancellation. The
company will introduce a share buy-back programme over a separate trading line
at the SIX Swiss Exchange where GAM Holding AG will act as the only buyer. The
Board of Directors has set a maximum buy-back limit of 10% of the current shares
in issue. Based on the closing share price at the end of June 2010, this would
equate to approximately CHF 240 million.
Johannes A. de Gier: "The share buy-back programme complements our intention of
returning approximately 50% of net profits to shareholders through dividends. We
expect to be able to fund it largely with 2010 and 2011 earnings. Given our
strong capital position, it does not impede the Group's growth prospects: we
continue to invest in the organic growth of our business and to screen the
market for opportunities to make targeted, accretive acquisitions."
The share buy-back programme will run for a maximum period of two years. Shares
repurchased under the programme will be cancelled subject to shareholder
Consistent with its intention to limit shareholder dilution to less than 5%, GAM
Holding AG increased its treasury share position to 4.97% of total shares in
issue. These shares are held as an economic hedge of its exposure in respect of
the options granted under the 2009 long-term incentive plan. They cannot be
cancelled under the buy-back programme.
Conclusion and outlook
Johannes A. de Gier: "Although our results for the first half of 2010 are
encouraging, our outlook for the rest of the year remains cautious. Volatile
equity and currency markets will likely impact the level of assets under
management and therefore our results. Private investors remain generally
risk-averse and, in particular, continue to favour other asset classes over
equities and hedge fund strategies. That said, I am convinced that periods of
market uncertainty play to the strengths of truly active investment managers -
provided they are able to offer a range of products that caters to cyclical
client demand and delivers competitive investment performance. Our two scalable,
well-managed and autonomous businesses offer an excellent platform for talented
investment professionals and have the potential to act as consolidators within
the evolving landscape of the asset management industry."
The presentation for media, analysts and investors on the financial results of
GAM Holding AG for the first half of 2010 will be webcast on 24 August 2010, at
9:30am (CET). Materials relating to the results (presentation slides, Business
Review, financial statements and press release), as well as details of the share
buy-back programme, are available atwww.gamholding.com.
For further information please contact:
Larissa Alghisi Rubner
T: +41 (0) 58 426 62 15
Bluechip Financial Communications
T: +41 (0) 44 256 8833
Notes to Editors
About GAM Holding AG
GAM Holding AG is an independent, well-diversified asset management business,
with a focus on the manufacturing and distribution of investment products and
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". GAM Holding AG has assets
under management of CHF 117 billion as at the end of June 2010. It employs over
1,000 staff with offices in Zurich (head office), Bermuda, Grand Cayman, Dubai,
Dublin, Frankfurt, Geneva, Hong Kong, London, Luxembourg, Milan, New York and
 The consolidated pro-forma financial results for 2009 have been adjusted to
include income from associates (Artio Global Investors Inc.), but exclude the
consolidation of Artio Global Investors Inc.'s results for 2009. They also
exclude the amortisation of customer relationships and the elimination of
non-recurring revenues paid to GAM Holding AG by Bank Julius Baer & Co Ltd.
during the period to September 2009. Including the amortisation of customer
relationships, the Group net profit for the first six months of 2010, as shown
in the interim financial statements, amounted to CHF 100.5 million.
 Excludes CHF 14.8 billion from Julius Baer branded funds distributed by
Swiss & Global Asset Management and sub-advised by GAM.
 Excludes net new money relating to Julius Baer branded funds distributed by
Swiss & Global Asset Management and sub-advised by GAM, which is counted in both
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GAM Holding AG
Klausstrasse 10 Zürich Switzerland
Press Release and key figures:
Half-Year Report H1 2010:
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