Slide 1: Results and Review Half Year 2019
Results and Review Half Year 2019 30 July 2019
Slide 2: Agenda
Agenda H1 2019 Summary David Jacob, Group CEO H1 2019 Financial results Richard McNamara, Group CFO Priorities and outlook David Jacob, Group CEO Q&A Appendix 2
Slide 3: H1 2019 Summary
H1 2019 SUMMARY David Jacob, Group CEO
Slide 4: H1 2019 Summary
H1 2019 Summary Finalisation of ARBF liquidation marks a key milestone for GAM • ARBF liquidation completed with 100.5%1 of assets being returned to clients • Around 75% of AuM in investment management outperformed respective Client centricity benchmarks over a three and five-year period • Continued
Slide 5: Absolute Return Bond Fund (ARBF)
Absolute Return Bond Fund (ARBF)1 Liquidation completed with over 100%2 of assets being returned to clients Client distributions3 1st and 2nd 3rd 4th 5th distribution distribution distribution distribution Clients’ interests put first at all times 100% Completion Sought to maximise liquidity while
Slide 6: Enhancement of our control environment
Enhancement of our control environment Continuous investment since 2017 • New group head of investments • New group head of front office controls 1st line • New global head of trading of defence • Centralised dealing function • Enhanced operating procedures within each investment team • Separation o
Slide 7: Net flows
Net flows Improving trend – positive net inflows in June 2019 Net flows excluding ARBF1 Industry snapshot: Global equity and bond market (in CHF bn) recovery in Q1 2019 with increased volatility in Q2 2019 (5.3) (7.8) (4.0) (3.6) Quarterly trend: (1.2) Some ARBF-related contagion effect in Q3
Slide 8: Investment performance
Investment performance1 Strong and improved three and five-year track record % of AuM outperforming benchmark 3-year 5-year Capability 30.06.2019 31.12.2018 30.06.2019 31.12.2018 Fixed income 82% 81% 81% 80% Absolute return 55% 49% 50% 53% Equity 68% 24% 60% 17% Systematic 88% 60% 88% 47% Alternativ
Slide 9: H1 2019 Financial Results
H1 2019 FINANCIAL RESULTS Richard McNamara, Group CFO
Slide 10: Assets under management
Assets under management Assets in IM at CHF 52.1bn1, PLF up at a record CHF 84.0bn Investment management (in CHF bn) (7.6)3 4.0 (0.4) 56.12 52.11 3 31.12.2018 Net flows Market performance FX impact 30.06.2019 Private labelling (in CHF bn) 6.3 (0.8) 2.4 84.0 76.1 31.12.2018 Net flows Market performan
Slide 11: H1 2019 Financial summary
H1 2019 Financial summary Lower profitability driven by revenue decline – cost savings on track Change1 H1 2019 H2 2018 H1 2018 H1 2019 vs (in CHF m, except where indicated) H1 2018 Net management fees and commissions 165.7 210.0 285.4 (42%) of which investment management 148.3 192.0 261.6 (43%) of
Slide 12: Management fee margin
Management fee margin Average management fee margin of 53.9bps – stable compared to exit margin 2018 Management fee margin1 (in bps) 64.6 63.6 62.1 59.1 53.9 2015 2016 2017 2018 H1 2019 Management fee margin by capability Capability AuM as at 30.06.2019 Management fee margin (in bps) H1 2019 avera
Slide 13: Performance fees
Performance fees H1 2019 performance fees mainly driven by systematic Performance fee eligible assets and Performance fee eligible funds by AuM performance fees (in CHF) AuM (CHFbn) % >< HWM % >< HWM 6.7bn Fund as at 30.06.19 as at 30.06.19 as at 31.12.18 6.0bn MBS 1.3 3% 2% Quantitative Fund 0.9 1%
Slide 14: Expenses
Expenses Restructuring programme on track Change H1 2019 H2 2018 H1 2018 H1 2019 vs (in CHF m, except where indicated) H1 2018 Driven by reduction in headcount as a result of the Fixed personnel expenses1 73.6 76.7 77.2 (5%) implementation of cost saving measures Lower contractual and discrectionary
Slide 15: Restructuring
Restructuring CHF 40m+ of net cost savings to be delivered by the end of 2019 Fixed personnel and general expenses (in CHF m) Additional savings potential 2020/21 On track to achieving at least one third of the CHF 40m cost savings by the end of 2019 with full benefit in 2020 ~24 – 27+ 50% of me
Slide 16: IFRS net loss
IFRS net loss Lower AuM and related revenues as primary driver H1 2019 H2 2018 H1 2018 (in CHF m, except where indicated) Underlying profit before taxes 2.1 35.4 91.3 1 Acquisition-related items (6.3) 7.0 11.4 Non-recurring items2 (7.5) (1,005.0) (73.5) IFRS (loss)/profit before taxes (11.7) (962.6)
Slide 17: Capital management
Capital management Continue to seek to enhance capital buffers Lower cash levels reflecting annual Cash and tangible equity1 compensation payments for FY 2018, (in CHF m) acquisition-related deferred consideration 633 payments and restructuring-related 481 expenditures 487 Lower tangible equity
Slide 18: Priorities and Outlook
PRIORITIES AND OUTLOOK David Jacob, Group CEO
Slide 19: Strong product positioning
Strong product positioning Distinctive strategies1 playing into four key areas of structural client demand Non-traditional sources of return and genuinely • Emerging market debt differentiated active investment approaches • Global rates • Mortgage-backed • Multi asset segregated securities accounts
Slide 20: Distribution strength
Distribution strength Strong products marketed by global distribution force with clear strategy Strong leading growth strategies Global distribution team AuM as at Net flows Net flows Rank Sector flows North America Europe Leading strategies 30.06.2019 3 years 3 years 3 years1 3 years NARROWER DRAW
Slide 21: Near-term priorities
Near-term priorities Continued strong focus on delivering on our promises Deliver investment performance for our clients Distinctive • Talent retention investment • Further strengthening of product portfolio and focus on areas of expertise strategies and services • Build further scale in private lab
Slide 22: Appointment of Peter Sanderson as CEO
Appointment of Peter Sanderson as CEO Leadership changes allow us to fully focus on the future Peter Sanderson appointed CEO of GAM, effective 1 September 2019 He brings a wealth of leadership experience and the strong skill set GAM needs to prosper in the future In various roles in the asset
Slide 23: Outlook
Outlook The market environment is expected to remain volatile and investors are likely to remain cautious and price sensitive GAM is well positioned to capture client demand with its distinct product offering and through global distribution capabilities Positive net asset flow momentum continu
Slide 24: What clients are saying about GAM
What clients are saying about GAM MEDIA ONLY FUELLING CONCERNS – INVESTORS REWARDED FOR THEIR PATIENCE “(…) There are two CLIENTS AT THE CENTRE OF OUR ACTIONS aspects regarding what has happened that provide food for “I must say that you have achieved a truly thought. One of these is that investors
Slide 25: Appendix
APPENDIX
Slide 26: AuM development by capability
AuM development by capability Investment management (in CHF bn) AuM Net AuM Net AuM Capability Market FX Market FX 31.12.18 flows 31.03.19 flows 30.06.19 Fixed income 29.2 (0.8) 0.8 0.2 29.4 (2.5) 0.6 (0.4) 27.1 Equity 8.7 (2.3) 1.0 0.1 7.5 (0.5) 0.3 (0.2) 7.1 Multi asset 7.7 (0.2) 0.5 - 8.0 (0.2) 0
Slide 27: AuM and net flows by capability
AuM and net flows by capability Investment management AuM by capability (in CHF bn) 31.12.14 30.06.15 31.12.15 30.06.16 31.12.16 30.06.17 31.12.17 30.06.18 31.12.18 30.06.19 Fixed income 19.5 19.0 18.6 19.3 20.8 27.4 37.1 38.6 29.2 27.1 Equity 13.8 13.9 13.4 10.7 12.5 11.0 12.6 12.5 8.7 7.1 Multi as
Slide 28: AuM by product type
AuM by product type Investment management AuM by product type (in CHF bn) 31.12.14 31.12.15 30.06.16 31.12.16 30.06.17 31.12.17 30.06.18 31.12.18 30.06.19 Luxembourg SICAVs 26.1 23.9 20.5 19.0 20.5 23.5 22.8 14.6 14.1 Segregated accounts 18.2 17.4 15.6 17.4 15.3 15.7 15.2 10.1 9.1 Ireland UCITS 14.4
Slide 29: AuM and net flows by client segment
AuM and net flows by client segment Investment management AuM by client segment (in CHF bn) 31.12.14 30.06.15 31.12.15 30.06.16 31.12.16 30.06.17 31.12.17 30.06.18 31.12.18 30.06.19 Intermediaries 32.8 31.6 31.4 27.2 28.4 31.7 40.6 41.8 27.4 23.9 Institutional clients 34.3 33.8 33.7 32.0 34.0 35.4 3
Slide 30: Private labelling AuM breakdowns
Private labelling AuM breakdowns By fund domicile (in CHF bn) 31.12.14 30.06.15 31.12.15 30.06.16 31.12.16 30.06.17 31.12.17 30.06.18 31.12.18 30.06.19 Switzerland 35.4 37.9 31.4 31.7 31.7 33.1 33.6 34.2 33.3 36.4 Rest of Europe 9.0 10.6 15.3 16.3 20.8 26.0 40.7 45.2 42.8 47.6 Other 2.7 2.2 - - - -
Slide 31: Key figures
Key figures Investment management (in CHF, except where indicated) H1 2015 H2 2015 FY 2015 H1 2016 H2 2016 FY 2016 H1 2017 H2 2017 FY 2017 H1 2018 H2 2018 FY 2018 H1 2019 Net management fees and commissions (m) 236.9 239.3 476.2 214.1 220.3 434.4 218.7 245.1 463.8 261.6 192.0 453.6 148.3 Net perform
Slide 32: Performance fee eligible assets and income
Performance fee eligible assets and income Performance fee eligible assets1 (in CHF bn) 31.12.13 30.06.14 31.12.14 30.06.15 31.12.15 30.06.16 31.12.16 30.06.17 31.12.17 30.06.18 31.12.18 30.06.19 Unconstrained fixed income 14.1 14.1 12.4 10.6 8.7 6.7 5.9 6.2 6.6 6.2 - - Global macro/managed futures
Slide 33: Performance fee eligible assets analysis
Performance fee eligible assets analysis Global macro/ Other fixed Unconstrained Non-directional managed Systematic income Other 1 Total fixed income equity futures strategies Performance fee eligible AuM (CHF bn) 0.0 0.4 0.8 2.2 1.5 1.1 6.0 No. of PF eligible funds/mandates 1 3 10 11 9 12 46 Perfor
Slide 34: Key performance fee eligible strategies
Key performance fee eligible strategies As at 30.06.2019 AuM % (below)/ Crystallisation Last HWM Fund above Performance fee rate date date (CHF bn) HWM Quantitative Fund 0.9 1% Various 10% /15% / 20% / 30% 31.12.2017 Core Macro 0.7 5% Quarterly 10% 31.12.2017 Discovery 0.0 (1%) 30.06 20% 02.10.2017
Slide 35: General expenses
General expenses (in CHF m) Change H1 2019 H2 2018 H1 2018 H 1 2 0 19 v s Comments H 1 2 0 18 Occupancy 3.7 10.9 11.3 (67%) Driven by new IFRS lease standard Technology and communication 11.0 6.6 7.5 47% Expenses for outsourced IT services Data and research 10.7 11.9 11.5 (7%) Reduced level of servi
Slide 36: Operating margin and compensation ratio
Operating margin and compensation ratio (in CHF m) H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 H2 2017 H1 2018 H2 2018 H1 2019 Net fee and commission income 301.8 298.8 232.8 240.7 257.7 290.0 287.7 212.2 171.1 Net other income/(expenses) 1.8 (1.1) 2.7 2.4 (0.2) 2.4 (0.7) 1.0 (3.8) Income 303.6 297.7 23
Slide 37: Basic and diluted underlying EPS
Basic and diluted underlying EPS (in million shares, except where indicated) H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 H2 2017 H1 2018 H2 2018 H1 2019 Weighted average number of shares in issue 166.7 163.7 163.4 160.5 160.3 159.7 159.7 159.7 159.7 Weighted average number of treasury shares held (6.1)
Slide 38: Currency split – revenues, expenses and AuM
Currency split – revenues, expenses and AuM Group income1 Group expenses2 Investment management AuM3 HY 2019 HY 2019 as at 30.06.2019 9% 4% 8% 17% 13% 25% 18% 45% 43% 13% 7% 8% 26% 41% 23% USD EUR GBP CHF Other 1 Percentage splits are estimated based upon the currency exposure of the underlying AuM
Slide 39: Group balance sheet
Group balance sheet (in CHF m) 30.06.18 31.12.18 30.06.19 Cash and cash equivalents 328 328 251 Seed capital investments 51 68 55 Other assets 227 207 358 Goodwill and other intangible assets 1,631 655 650 Assets 2,237 1,258 1,314 Current liabilities 284 305 327 Non-current liabilities 139 114 163 E
Slide 40: Net cash
Net cash (in CHF m) (1.1) (15.8) 7.4 (0.5) (11.4) (55.5) 328.2 251.3 Net cash Underlying Acquisition- Net seed FX Payments made Changes in Net cash 31.12.2018 net loss related capital impact against net assets and 30.06.2019 H1 2019 deferred sales restructuring other impacts consideration provision
Slide 41: Tangible equity
Tangible equity (in CHF m) (13.6) 4.5 (4.5) 6.7 (2.1) (1.2) 184.6 174.4 Tangible IFRS Amortisation / Remeasurement Share- FX impact Other Tangible equity net loss impairment of pension based impacts equity 31.12.2018 H1 2019 IMCCs liabilities payment 30.06.2019 expense Abbreviation: IMCCs = Investme
Slide 42: Corporate calendar and contacts
Corporate calendar and contacts Forthcoming events 17 October 2019 Interim management statement Q3 2019 20 February 2020 Full year results 2019 23 April 2020 Interim management statement Q1 2020 Contacts Investor relations: Patrick Zuppiger Jessica Grassi T +41 58 426 31 36 T +41 58 426 31 37 patric
Slide 43: Cautionary statement on forward-looking information
Cautionary statement on forward-looking information This presentation by GAM Holding AG (‘the Company’) does not constitute an invitation or offer to acquire, purchase or subscribe for securities. This presentation by the Company includes forward-looking statements that reflect the Company’s intenti