Gam Holding Ag · SIX:GAM
Gam — FY2014 Earnings Presentation
39 slides from Gam's earnings presentation, Mar 3, 2015
Slide 1: Results and Review 2014
Results and Review 2014 Presentation for Media, Analysts and Investors Zurich, 3 March 2015
Slide 2: Agenda and contents
Agenda and contents 1. 2014 overview Alexander S. Friedman, Group CEO 2. Financial results Marco Suter, Group CFO 3. Event after the reporting period: Swiss National Bank decision to discontinue minimum exchange rate of CHF 1.20 per euro Marco Suter, Group CFO 4. Business and strategy update Alexand
Slide 3: Agenda and contents
Agenda and contents 1. 2014 overview Alexander S. Friedman, Group CEO 2. Financial results Marco Suter, Group CFO 3. Event after the reporting period: Swiss National Bank decision to discontinue minimum exchange rate of CHF 1.20 per euro Marco Suter, Group CFO 4. Business and strategy update Alexand
Slide 4: Looking back – and ahead
Looking back – and ahead ● Underlying net profit of CHF 177.2 m Solid profitability ● IFRS net profit at CHF 169.0 m ● Proposed dividend of CHF 0.65 per share ● AuM in investment management up 9% driven by net new money (NNM) inflows of CHF 2.4 bn as well as positive market performance and currency
Slide 5: Agenda and contents
Agenda and contents 1. 2014 overview Alexander S. Friedman, Group CEO 2. Financial results Marco Suter, Group CFO 3. Event after the reporting period: Swiss National Bank decision to discontinue minimum exchange rate of CHF 1.20 per euro Marco Suter, Group CFO 4. Business and strategy update Alexand
Slide 6: Group results
Group results Change 2014 2013 in % Profitability Pre-tax profit down 7% from 2013 result Operating income (CHF m) 623.5 670.2 -7 Net profit down 16% caused by lower performance and management fees Operating expenses (CHF m) 406.8 437.1 -7 and increased tax expenses Underlying pre-tax profit (CH
Slide 7: Business metrics
Business metrics Investment management Monthly AuM development (CHF bn) Change 2014 2013 78 2013 2014 (CHF bn) in % 76 74.6 74 75.6 76.1 Year-end AuM 76.1 69.8 9 2013: 73.1 72 2014: 72.9 72.6 73.4 72.1 72.1 Average AuM 72.9 73.1 0 70 68 69.8 69.6 1 Net new money 2.4 -2.6 - 66 01.01.13 30.06.13 01.01
Slide 8: IFRS net profit: adjustments
IFRS net profit: adjustments Items unrelated to business performance (CHF m) 2014 2013 Underlying net profit 177.2 210.2 Impairment of investments -2.3 -5.8 Adjustment deferred liability GAM Lugano -5.9 - Gain from sale of investment in Artio - 13.1 Amortisation of customer relationships - -11.6 Zur
Slide 9: Group financial results
Group financial results Cost structure well aligned with the revenue volatility inherent in our business (CHF m) 712.5 670.2 Earnings subject to a natural level of fluctuation 598.5 594.9 623.5 Management fees are driven by size and 89.5 100.7 65.9 composition of AuM 19.6 82.1 570.4 554.1 542.9
Slide 10: Group operating income
Group operating income Revenues affected by lower performance fees and decline in return on assets (CHF m) Reduced operating income (down 7% from 2013) 670.2 15.4 623.5 Net management fees and commissions down 2% 100.7 14.7 – Average AuM flat 65.9 – Slight RoA reduction due to change in AuM mix
Slide 11: Group operating expenses
Group operating expenses Kept well under control and managed in line with revenue development (CHF m) 437.1 7.1 406.8 7.8 108.7 Operating expenses reduced (down 7% from 2013) 105.8 Personnel expenses down 9% – Salaries and other personnel expenses flat – Share-based payment expenses down mainly as
Slide 12: Group balance sheet
Group balance sheet 31.12.2014 31.12.2013 (CHF m) Strong liquidity Cash and cash equivalents 644 593 Operating cash flows exceeded 2014 dividend 1 payment and share buy-backs Seed capital investments 131 126 Non-current liabilities increased Other assets 224 248 Goodwill and other intangible asset
Slide 13: Treasury shares and shares outstanding
Treasury shares and shares outstanding (in millions) 31.12.2014 31.12.2013 31.12.2012 Shares issued 166.7 173.2 183.4 Treasury shares held for cancellation (2011–2014 programme) -1.2 -6.6 -10.1 Treasury shares held for cancellation (2014–2017 programme) -2.0 - - Treasury shares held to cover share-b
Slide 14: Return of cash and capital to shareholders
Return of cash and capital to shareholders1 Cumulative CHF 1,083 m since 2010 Robust capital position, combined with strong cash flow generation and low capital consumption – support attractive shareholder pay-outs Total shareholder return (TSR2) of 66% since 31 December 2009 well above the SMIM T
Slide 15: Dividend
Dividend Eligible shares Total dividend Financial year1 Dividend per share (CHF) (m) payment (CHF m) 2010 0.50 188.3 94.1 2011 0.50 175.7 87.8 2012 0.50 163.6 81.8 2013 0.65 162.3 105.5 Proposed dividend payment for 2014 Eligible shares2 Total dividend Financial year1 Dividend per share (CHF) (m) pa
Slide 16: Agenda and contents
Agenda and contents 1. 2014 overview Alexander S. Friedman, Group CEO 2. Financial results Marco Suter, Group CFO 3. Event after the reporting period: Swiss National Bank decision to discontinue minimum exchange rate of CHF 1.20 per euro Marco Suter, Group CFO 4. Business and strategy update Alexand
Slide 17: Event after the reporting period
Event after the reporting period On 15 January 2015, the Swiss National Bank (SNB) announced its decision to discontinue the minimum exchange rate of CHF 1.20 per EUR. Immediately following this announcement, the CHF appreciated against the EUR as well as other major currencies such as the USD and t
Slide 18: FX sensitivity analysis: underlying net profit and AuM
FX sensitivity analysis: underlying net profit and AuM Sensitivity1: 5% depreciation of major foreign currencies against the CHF Currency split Group results full year 2014 Full-year currency translation impact on Operating income Operating expenses underlying net profit 2% 1.5% 1% 14% 16% USD 0% 38
Slide 19: Agenda and contents
Agenda and contents 1. 2014 overview Alexander S. Friedman, Group CEO 2. Financial results Marco Suter, Group CFO 3. Event after the reporting period: Swiss National Bank decision to discontinue minimum exchange rate of CHF 1.20 per euro Marco Suter, Group CFO 4. Business and strategy update Alexand
Slide 20: Key figures
Key figures Investment management Change 2014 2013 in % Resilience of business model Net management fees and commissions (CHF m) 501.6 515.2 -3 Despite challenging environment for active managers Net performance fees (CHF m) 65.9 100.7 -35 Year-end AuM growth Net fee and commission income (CHF m)
Slide 21: Investment management revenues and RoA
Investment management revenues and RoA (bps) 84.3 77.8 75.8 70.5 68.8 64.2 100.7 65.9 82.1 (CHF m) Net performance fees Net management fees and commissions 515.2 501.6 Return on assets 452.2 Return on assets - excl. performance fees 2012 2013 2014 Net management fees and commissions slightly down
Slide 22: Investment management AuM and NNM
Investment management AuM and NNM (CHF bn) 1.1 -1.8 3.4 76.1 2.5 -0.2 73.4 Net new money inflows of CHF 2.4 bn 69.8 1.3 – Broad-based inflows across product range exceeded outflows in concentrated areas – Good net new money flows in the second and third quarter of 2014 Return to AuM growth – Pos
Slide 23: Investment management AuM by product type
Investment management AuM by product type AuM investment management Absolute return single manager as at 31.12.2014, CHF 76.1 bn • Absolute return/unconstrained bond outflows from intermediaries largely offset by continuous strong net inflows from institutional clients Discretionary & • High demand
Slide 24: Our long-term strategic positioning
Our long-term strategic positioning Pure-play, independent Free from compromises and cross-pressures that are typical Business for larger financial conglomerates asset management group Attractive home for investment talents model Preferred partner for clients Active investment Built by inves
Slide 25: Mid-term growth initiatives and targets
Mid-term growth initiatives and targets Industry trends Our strategic response Our principal targets Robust industry growth • ageing demographics in Balance developed markets geographic and product • wealth creation in Asia footprint Over a business cycle, Search for reliable returns Leverage
Slide 26: Mid-term growth initiatives
Mid-term growth initiatives Balance Add investment capabilities Complement strong presence in Europe and UK and client coverage in Equities geographic and product the US and Asia Alternatives footprint Multi-asset solutions Credit & distressed assets Distribution partnerships Leverage DN
Slide 27: Summary and outlook
Summary and outlook ● Well positioned to capture growing demand for highly active, absolute return / alternative Strong foundation strategies and multi-asset class solutions on which to shape ● Solid profitability: diversified sources of revenue and flexible cost base our future ● Robust liquidity a
Slide 28: Agenda and contents
Agenda and contents 1. 2014 overview Alexander S. Friedman, Group CEO 2. Financial results Marco Suter, Group CFO 3. Event after the reporting period: Swiss National Bank decision to discontinue minimum exchange rate of CHF 1.20 per euro Marco Suter, Group CFO 4. Business and strategy update Alexand
Slide 29: Appendix
Appendix Group and reporting structure Group balance sheet Consolidated income statement (IFRS) Investment management – AuM development Fund performance Private labelling results Private labelling – AuM development Development of major currencies against the CHF Corporate calendar
Slide 30: Group and reporting structure (as at 31 December 2014)
Group and reporting structure (as at 31 December 2014) Our disclosure at a glance Group GAM Holding AG Consolidated results Key performance indicators • Income statement • EPS, C/I ratio • Balance sheet • Net cash, tangible equity Core activities Investment management Private labelling Value drivers
Slide 31: Group balance sheet
Group balance sheet Change (CHF m) 31.12.2014 31.12.2013 in % Cash and cash equivalents 643.9 592.6 9 Trade and other receivables 31.7 64.9 -51 Accrued income and prepaid expenses 138.0 125.9 10 Financial investments 117.7 74.7 58 Assets held for sale 14.4 52.3 -72 Current assets 945.7 910.4 4 Inves
Slide 32: Consolidated income statement (IFRS)
Consolidated income statement (IFRS) Change 2014 2013 in % (CHF m) Fee and commission income 1,010.3 1,029.3 -2 Distribution, fee and commission expenses -467.4 -475.2 -2 Net management fees and commissions 542.9 554.1 -2 Net performance fees 65.9 100.7 -35 Net fee and commission income 608.8 654.8
Slide 33: Investment management – AuM development
Investment management – AuM development By product type By client segment 4.1 4.0 3.9 3.7 4.9 4.4 4.2 3.6 4.6 4.9 4.3 4.4 4.2 4.6 4.3 5.2 5.4 5.3 5.0 4.2 31.8 30.2 31.8 34.3 5.2 29.8 (CHF bn) 4.5 7.8 5.1 4.4 22.1 22.6 17.8 22.8 32.4 33.8 32.1 33.3 32.8 (CHF bn) 22.2 Dec 2012 Jun 2013 Dec 2013 Jun 20
Slide 34: Fund performance over three years, by product brand
Fund performance over three years, by product brand1 % of AuM in funds outperforming their benchmark over three years (as at 31 Dec 2014) Alternative Total Absolute return Equity Fixed income investments solutions GAM 86% 97% 70% 100% 76% Julius Baer Funds 75% 100% 23% 65% n/a Total funds 80% 99% 55
Slide 35: Private labelling results
Private labelling results Revenues and RoA stable AuM growing despite small NNM outflows (CHF bn) 10.6 (bps) 8.7 8.8 1.8 -0.1 46.2 -0.7 0.4 1.2 47.1 44.6 -0.1 (CHF m) 44.6 38.9 41.3 2012 2013 2014 Net management fees and commissions Return on assets Dec Market FX Jun Market FX Dec 2013 NNM Perf Impa
Slide 36: Private labelling – AuM development
Private labelling – AuM development By fund domicile 2.9 2.7 3.6 3.0 3.8 7.7 9.0 6.8 6.7 6.1 (CHF bn) Other Luxembourg 34.9 35.6 35.4 Switzerland 33.7 34.1 Dec 2012 Jun 2013 Dec 2013 Jun 2014 Dec 2014 By asset class 3.0 3.3 2.8 2.6 2.6 3.0 4.3 5.3 5.1 4.9 19.2 20.4 Alternative 16.3 17.0 18.2 (CHF bn
Slide 37: Development of major currencies against the CHF
Development of major currencies against the CHF 1.05 1.30 USD/CHF EUR/CHF 1.00 1.20 0.95 1.10 0.90 0.85 1.00 31.12.2013 27.02.2015 31.12.2013 27.02.2015 1.60 GBP/CHF Average FX rates 2014 1.50 1.40 1.30 31.12.2013 27.02.2015 37
Slide 38: Corporate calendar and contacts
Corporate calendar and contacts Forthcoming events 21.04.2015 Interim management statement Q1 2015 30.04.2015 Annual General Meeting 05.05.2015 Ex-dividend date 06.05.2015 Dividend record date 07.05.2015 Dividend payment date 11.08.2015 Half-year results 2015 20.10.2015 Interim management statement
Slide 39: Cautionary statement on forward-looking information
Cautionary statement on forward-looking information This presentation 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, li