Gam Holding Ag · SIX:GAM
Gam — H1 2016 Earnings Presentation
42 slides from Gam's earnings presentation, Aug 3, 2016
Slide 1: Results and Review Half-Year 2016
Results and Review Half-Year 2016 3 August 2016
Slide 2: Agenda
Agenda H1 2016 Summary Alexander S. Friedman, Group CEO H1 2016 Financial Results Richard McNamara, Group CFO Business Strategy and Outlook Alexander S. Friedman, Group CEO Q&A session Appendix
Slide 3: H1 2016 Summary
H1 2016 Summary Alexander S. Friedman, Group CEO
Slide 4: Progress on Strategic Initiatives
Progress on Strategic Initiatives We are delivering on our strategic plan – and there is more to do Strategic initiatives Actions taken Future actions Repositioning GAM • Branding simplified, ‘earned’ media increased • New distribution leadership Brand and leadership • New senior management hires •
Slide 5: Half-Year 2016 Financial Summary
Half-Year 2016 Financial Summary Subdued investment performance impacts performance fees and financial results in CHF, except where indicated H1 2015 H2 2015 H1 2016 Total period-end AuM (bn) 124.2 119.0 113.5 Investment management (bn) 73.5 72.3 65.5 Private labelling (bn) 50.7 46.7 48.0 Investment
Slide 6: AuM Movement Summary
AuM Movement Summary Uncertain markets resulted in further net outflows in investment management Investment management in CHF bn (5.6) 6.3 - (1.2) 72.3 71.8 65.5 1 31.12.15 Net flows Market FX 30.06.16 Acquisitions Pro forma AuM performance impact 30.06.16 Private labelling in CHF bn 0.9 0.6 (0.2) 4
Slide 7: Investment Management Net Flows
Investment Management Net Flows Unconstrained fixed income strategy impacted by investment performance; Japan and China equities affected by sector concerns in CHF bn Net flows in H1 2016 Absolute return (CHF -2.6bn) (2.5) • Continued outflows from unconstrained fixed income strategy (3.1) • Absolut
Slide 8: Investment Performance
Investment Performance Solid overall investment outperformance over three and five years maintained Investment performance 1 Capability 3 years 5 years Absolute return 2 45% 70% Fixed income 78% 84% Equity 55% 69% Alternatives 3 27% 100% 2 Total 58% 76% 1 % of AuM in funds (excluding mandates and se
Slide 9: Deep Dive – Absolute Return Bond Strategy
Deep Dive – Absolute Return Bond Strategy Turnaround of investment performance progressing – top quartile in relevant peer group1 AuM development in CHF bn Strong year-to-date2 investment performance in 2016 15.1 15.1 14.3 13.1 12.3 10.2 - +1.0% for absolute return bond fund 10.0 8.0 - +2.1% for abs
Slide 10: Deep Dive – Local Emerging Bond Fund
Deep Dive – Local Emerging Bond Fund Recent high demand driven by positive sector sentiment – top-quartile track record1 AuM development in CHF bn 5.0 2.4 4.0 5.7 6.3 5.6 6.1 7.2 7.0 5.4 5.3 5.3 4.6 3.9 4.8 4.0 3.0 2.0 1.0 0.0 31.12.09 30.06.10 31.12.10 30.06.11 31.12.11 30.06.12 31.12.12 30.06.13 3
Slide 11: Investment Management – Pro Forma AuM
Investment Management – Pro Forma AuM Diversifying product offering through acquisitions of THS and Cantab in addition to investments in organic growth Pro forma AuM1 by capability as at 30.06.2016 Absolute return (CHF 19.2bn) • Market-leading alternative UCITS offering • Launch of merger arbitrage
Slide 12: H1 2016 Financial Results
H1 2016 Financial Results Richard McNamara, Group CFO
Slide 13: Financial Summary
Financial Summary Decline in income partly offset by continued cost control in CHF m, except where indicated C ha nge H1 2015 H2 2015 H1 2016 H 1 2 0 16 v s H 1 2 0 15 Net management fees and commissions 257.7 260.1 231.6 (10%) Net performance fees 44.1 38.7 1.2 (97%) Net fee and commission income 3
Slide 14: Management Fee Margin
Management Fee Margin Slight decrease in investment management fee margin; driven by shifts in product and client mix in bps 70.5 68.8 66.9 64.6 64.2 62.5 2011 2012 2013 2014 2015 H1 2016 14
Slide 15: Net Performance Fees
Net Performance Fees 30% of our investment management AuM has performance fee potential in CHF m 70.9 52.7 44.1 38.7 34.9 29.4 29.8 31.0 1.2 H1 20121 H2 20121 H1 2013 H2 2013 H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 Global macro/managed futures Non-directional equity Unconstrained fixed income Other
Slide 16: Deep Dive on Performance Fees
Deep Dive on Performance Fees Performance improvement required to reach high water marks (HWM) As at 30.06.16 Absolute Return Bond Fund Perf. fee eligible % (below) / Crystallisation Performance Last HWM Fund/Unconstrained AuM (CHF bn) above HWM1 date fee rate date Bond Fund strategy Absolute Return
Slide 17: Expenses
Expenses Strict cost control and drive for continued efficiency C ha nge • Fixed personnel expenses driven in CHF m, except where indicated H1 2015 H2 2015 H1 2016 H 1 2 0 16 v s H 1 2 0 15 by lower headcount Fixed personnel expenses 1 82.2 82.9 79.8 (3%) • Decrease in variable personnel expenses re
Slide 18: Underlying Effective Tax Rate (ETR)
Underlying Effective Tax Rate (ETR) ETR driven by profitability and share price development 1.2% 0.5% 1.7% 23.3% 19.9% FY15 ETR Holding company Share scheme Other impacts H1 2016 ETR costs costs 18
Slide 19: IFRS Net Profit H1 2016
IFRS Net Profit H1 2016 Primarily impacted by one-off pension credit and reduction in deferred consideration estimates in CHF m C ha nge H1 2015 H2 2015 H1 2016 H 1 2 0 16 v s H 1 2 0 15 Net management fees and commissions 257.7 260.1 231.6 (10%) Net performance fees 44.1 38.7 1.2 (97%) Net fee and
Slide 20: Capital Management
Capital Management Continue to balance business investments with shareholder returns ● Cantab acquisition funded from existing cash resources Cash ● CHF 100m revolving credit facilities available ● No external debt ● Capital used to support investment in growth Capital ● Temporary suspension of shar
Slide 21: Cantab Acquisition Overview
Cantab Acquisition Overview Alignment of interests – platform for a profitable and scalable business Deal Structure Business Metrics • GAM acquires 100% of business, excluding • AuM of USD 4.1bn as at 30 June 2016 40% of performance fee economics • Pro forma1 metrics for 2015: • Upfront consideratio
Slide 22: Business Strategy and Outlook
Business Strategy and Outlook Alexander S. Friedman, Group CEO
Slide 23: Focus on Execution
Focus on Execution Continue to deliver on our strategic plan Strategic initiatives Current priorities • Continue brand building; pre-eminent specialised active investment firm Repositioning GAM Brand and leadership • Support client retention efforts • Complete implementation of transformational oper
Slide 24: Outlook
Outlook Challenging market environment expected to continue, but targets remain ● Market environment expected to be challenging for the remainder of 2016: – Geopolitical uncertainty – Concerns over global growth – Monetary policy trajectory impacting market sentiment ● Uncertainty expected to contin
Slide 25: Appendix
Appendix
Slide 26: Performance Fee Eligible Assets and Income
Performance Fee Eligible Assets and Income Performance fee eligible assets in CHF bn 31.12.12 30.06.13 31.12.13 30.06.14 31.12.14 30.06.15 31.12.15 30.06.16 Unconstrained fixed income 13.0 16.0 14.1 14.1 12.4 10.6 8.7 6.7 Global macro / managed futures 2.0 3.4 2.7 2.8 3.0 3.4 3.9 3.2 Non-directional
Slide 27: Performance Fee Eligible Assets Analysis as at 30 June 2016
Performance Fee Eligible Assets Analysis as at 30 June 2016 Unconstrained Global macro / Non-directional Other fixed Other Total fixed income managed futures equity income Performance fee eligible assets (CHF bn) 6.7 3.2 5.1 1.4 3.3 19.7 Number of performance fee eligible funds (CHF bn) 12 12 19 15
Slide 28: General Expenses
General Expenses in CHF m C ha nge H1 2015 H2 2015 H1 2016 H 1 2 0 16 v s H 1 2 0 15 Comments Occupancy expenses 14.0 14.6 13.6 (3%) Lower consultancy and IT expenses 10.5 7.8 8.0 (24%) maintenance costs Communication and marketing expenses 14.1 15.3 14.3 1% Professional services, other fees and cha
Slide 29: Operating Margin and Compensation Ratio
Operating Margin and Compensation Ratio in CHF m H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 Net fee and commission income 302.2 306.6 301.8 298.8 232.8 Net other income/(expenses) 5.2 9.5 1.8 (1.1) 2.7 Income 307.4 316.1 303.6 297.7 235.5 Personnel expenses 141.1 152.1 145.2 144.8 125.1 General expense
Slide 30: Basic and Diluted Underlying EPS
Basic and Diluted Underlying EPS H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 Weighted average number of shares outstanding for basic EPS (m) 162.3 162.2 160.6 159.1 157.7 Dilution driven by share-based compensation plans (m) 1.4 0.9 1.2 0.8 0.1 Weighted average number of shares outstanding for diluted E
Slide 31: Currency Split – Revenues, Expenses and AuM
Currency Split – Revenues, Expenses and AuM Group income Group expenses1 AuM investment management H1 2016 H1 2016 as at 30.06.2016 4% 6% 7% 14% 13% 17% 40% 36% 33% 14% 10% 11% 31% 35% 29% USD EUR GBP CHF Other 1 GBP expenses include contractual bonuses paid in GBP, which are based on revenues in va
Slide 32: Group Balance Sheet
Group Balance Sheet in CHF m 30.06.15 31.12.15 30.06.16 Cash and cash equivalents 504 633 481 Seed capital investments 101 67 73 Other assets 275 208 197 Goodwill and other intangible assets 1,373 1,389 1,389 Assets 2,253 2,297 2,140 Current liabilities 287 297 221 Non-current liabilities 123 124 14
Slide 33: Net Cash
Net Cash in CHF m 42.2 (102.4) (8.7) (13.3) 632.9 (18.0) (18.0) (34.0) 480.7 480.7 Net cash Underlying net Dividend Share buy-backs Net seed capital FX impact Net impact of 1 Changes in net Net cash 2 31.12.15 profit H1 2016 FY 2015 for cancellation purchase M&A activities assets and other 30.06.16
Slide 34: Tangible Equity
Tangible Equity in CHF m 53.3 (102.4) 540.6 (8.7) 487.0 (12.9) (38.4) 6.4 377.9 384.3 Tangible equity IFRS net profit Dividend FY 2015 Share buy-backs FX impact Remeasurement Other Tangible equity 31.12.15 H1 2016 for cancellation of pension 30.06.16 liabilities 34
Slide 35: AuM Development by Capability
AuM Development by Capability Investment management in CHF bn AuM Net Market AuM Net Market AuM Capability Transfer 31.12.15 flows & FX 31.03.16 flows & FX 30.06.16 Absolute return 23.1 (1.5) (0.7) 20.9 (1.1) (0.2) (0.4) 19.2 Fixed income 18.6 (0.4) 0.1 18.3 0.2 0.4 0.4 19.3 Equity 13.4 (0.8) (1.0)
Slide 36: 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 Absolute return 22.2 21.5 23.1 19.2 Fixed income 19.5 19.0 18.6 19.3 Equity 13.8 13.9 13.4 10.7 Alternatives 7.7 6.9 5.3 5.6 Multi asset 12.9 12.2 11.9 10.7 Total 76.1 73.5 72.3 65.5
Slide 37: 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 Intermediaries 32.8 31.6 31.4 27.2 Institutional clients 34.3 33.8 33.7 32.0 Private clients 9.0 8.1 7.2 6.3 Total 76.1 73.5 72.3 65.5 Investment management net flows by clie
Slide 38: AuM by Product Type
AuM by Product Type Investment management AuM by product type in CHF bn 31.12.13 31.12.14 31.12.15 30.06.16 Luxembourg SICAVs 30.7 30.6 28.1 24.6 Segregated accounts 16.5 18.2 17.4 15.6 Ireland UCITS 11.1 14.4 15.7 14.7 Offshore 7.1 8.3 7.4 6.4 Swiss funds 3.0 2.7 2.0 2.6 OEICs / unit trusts 1.4 1.9
Slide 39: 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 Switzerland 35.4 37.9 31.4 31.7 Rest of Europe 9.0 10.6 15.3 16.3 Cayman 2.7 2.2 - - Total 47.1 50.7 46.7 48.0 By asset class in CHF bn 31.12.14 30.06.15 31.12.15 30.06.16 Equity 20.4 22.3 20.5 21.1 Fixed
Slide 40: Peer Group Constituents ARBF/LEBF
Peer Group Constituents ARBF/LEBF Reference to slides 9 and 10 of this presentation Absolute Return Bond fund Peer group constituents: Amundi Abs Glbl Macro 2; Amundi Abs Glbl Macro 4; Aviva Absolute Bond*; CS FI Cycle Invest*; CS Target Return*; Deka-Euro Renten AR; DWS Income Strategy Plus*; DWS I
Slide 41: Corporate Calendar and Contacts
Corporate Calendar and Contacts Forthcoming events 20.10.2016 Interim management statement Q3 2016 02.03.2017 Full-year results 2016 26.04.2017 Interim management statement Q1 2017 27.04.2017 Annual General Meeting 2017 Contacts For investors and analysts: Patrick Zuppiger T +41 58 426 31 36 patrick
Slide 42: 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