04 May 2023
PRESS RELEASE
Ad hoc announcement pursuant to Art. 53 Listing Rules:
GAM Holding AG announces full year 2022 results and results for the first quarter of 2023
Full year highlights
- Underlying loss before tax was CHF 42.5 million compared to an underlying loss of CHF 9.6 million for the full year 2021.
- The IFRS net loss after tax was CHF 290.0 million compared to a net IFRS loss after tax of CHF 23.3 million for the full year 2021.
- Total assets under management (AuM) were CHF 75.0 billion as at 31 December 2022, with Investment Management at CHF 23.2 billion and Fund Management Services at CHF 51.8 billion, compared to a total of CHF 99.0 billion as at 31 December 2021.
- Negative market and foreign exchange (FX) movements of CHF 15.2 billion accounted for over 60% of the overall reduction in AuM.
- Despite the challenging market conditions Investment Management saw an improving net client outflow of CHF 2.6 billion during 2022, which were the lowest on an absolute and relative basis since 2018.
- Fund Management Services saw net client outflows of CHF 6.0 billion, partly driven by the final tranche of CHF 2.5 billion from one client having transferred their business to another provider as a part of a broader strategic relationship with that provider which was announced in January 2021.
- The IFRS loss was mostly driven by non-core items of CHF 224.0 million which included a brand impairment of CHF 223.5 million and a CHF 27.2 million adjustment to deferred tax assets.
- Delivered CHF 27 million of cost savings for the full year.
- Our net cash saw a 41% decline from CHF 234.8 million as of 31 December 2021 to CHF 137.9 million as of 31 December 2022 on consolidated basis. Cash at the GAM Holding AG level declined 75% from CHF 19.6 million as of 31 December 2021 to CHF 4.9 million as of December 2022.
- Good investment performance: 55% of Investment Management AuM outperformed their benchmark over three years.
First quarter 2023: highlights for the three-month period to 31 March 2023
- Investment Management AuM at CHF 23.3 billion, with net client outflows of CHF 0.6 billion and net market and FX movements of CHF 0.7 billion.
- Fund Management Services AuM at CHF 48.4 billion, with net client outflows of CHF
4.7 billion, and net market and FX movements of CHF 1.3 billion. - Strong investment performance: 91% of Investment Management AuM outperforming their benchmark over 3 years as at 31 March 2023, compared to 55% as at 31 December 2022.
Peter Sanderson, CEO GAM Investments said: “We started 2022 poised to capitalise on the hard work we had undertaken to transform GAM and put past regulatory matters behind us and during the year our talented team of professionals continued to deliver for our clients with benchmark beating investment performance. However, as a result of the decline in our assets under management and the consequent impact on our revenues and profitability, the Board has decided that the best strategic option is to recommend that we sell our business to Liontrust Asset Management. I would like to thank my colleagues, our clients and our shareholders for their patience and support over the past three years. I believe that the Board have made a strong strategic decision and we will now have a stable platform from which to serve our clients.”
Full year results 2022: business highlights
- Investment Management
- AuM totalled CHF 23.2 billion as at 31 December 2022, a reduction of CHF 7.8 billion compared with an adjusted CHF 31.0 billion as at 31 December 2021, (previously reported as CHF 31.9 billion).
- Two thirds of the CHF 7.8 billion AuM reduction was driven by negative market movement and foreign exchange of CHF 5.0 billion; net client outflows were CHF 2.6 billion, the lowest on an absolute and relative basis since 2018.
- Net outflows for intermediary clients were CHF 1.6 billion, institutional clients CHF 0.9 billion and wealth management clients CHF 0.1 billion.
- In fixed income, net outflows totalled CHF 1.4 billion, primarily driven by the GAM Local Emerging Bond and GAM Star Credit Opportunities funds, partially offset by inflows into the GAM Star Cat Bond fund.
- In equities, we saw net outflows of CHF 0.6 billion, primarily driven by the GAM Star Disruptive Growth and GAM Star Continental European Equity funds, which exceeded inflows primarily into the UK Equity Income and China Evolution Equity funds.
- Multi asset strategies experienced net outflows of CHF 0.1 billion in 2022.
- In alternatives, GAM saw net outflows of CHF 0.5 billion, driven by redemptions in the Alternative Risk Premia and GAM Star Emerging Market Rates funds, partially offset by inflows into GAM Star Global Rates and Private Shares.
- Over the three-year period to 31 December 2022, 55% of our AuM in funds outperformed their respective benchmark, compared to 68% as at 31 December 2021. Over the five-year period to 31 December 2022, 55% of our AuM in funds outperformed their respective benchmark, compared with 60% that outperformed over five years to 31 December 2021.1
- As at 31 December 2022, 66% and 67% of GAM’s AuM tracked by Morningstar outperformed their respective peer groups over three and five years compared to 70% and 62% as at 31 December 2021, respectively. Over three years 7 out of our 13 largest strategies delivered top decile and a further two top quintile performance.2
- As at the end of 2022 we have changed our method of presentation of the Group’s Investment Management AuM. Up until 30 September 2022 we presented our AuM to include certain assets which had historically generated two levels of fees. This presentation change has adjusted our reported AuM in Investment Management for the full year 2021 by CHF 0.9 billion to CHF 31.0 billion.
Investment management assets, flows and management fee margins (CHF bn)
| Asset Class | Opening AuM 1 Jan 2022 | Asset Class Reclassification1 | Presentation adjustement to AuM2 | Adjusted AuM 1 Jan 2022 by asset class2 | Net flows 2022 | Disposal 2022 | Market/FX 2022 | Closing AuM 31 Dec 2022 | Management fee margin 2022 (bps) | |
| Fixed income | 14.1 | 14.0 | (0.1) | 13.9 | (1.4) | (0.2) | (2.0) | 10.3 | 59.0 | |
| Multi asset | 7.7 | 7.6 | (0.7) | 6.9 | (0.1) | - | (0.2) | 6.6 | 22.0 | |
| Equity | 8.0 | 8.1 | (0.1) | 8.0 | (0.6) | - | (2.6) | 4.8 | 67.0 | |
| Systematic | 1.2 | - | - | - | - | - | - | - | - | |
| Alternatives | 0.4 | 2.2 | - | 2.2 | (0.5) | - | (0.2) | 1.5 | 58.0 | |
| Absolute return | 0.5 | - | - | - | - | - | - | - | - | |
| Total | 31.9 | 31.9 | (0.9) | 31.0 | (2.6) | (0.2) | (5.0) | 23.2 | 51.0 | |
| 1 GAM changed its six capabilities to four asset classes (Absolute Return and Systematic are now merged into Alternatives) and recognition basis to direct methodology. | ||||||||||
| 2 The method of presentation of the Group's AuM has been adjusted in 2022 and comparatives presented for prior periods have been adjusted on a consistent basis. | ||||||||||
- Fund Management Services
AuM were CHF 51.8 billion as at 31 December 2022, down from CHF 68.0 billion in 2021. This was largely driven by negative market and foreign exchange movements of CHF 10.2. billion and by net outflows of CHF 6.0 billion, primarily due to the final tranche of CHF 2.5 billion of one client having transferred their business to another provider as a part of a broader strategic relationship with that provider which was announced in January 2021.
Full year 2022: financial highlights
Financial result
- For the full year 2022, we reported an IFRS net loss after tax of CHF 290.0 million. This was driven by the underlying net loss after tax of CHF 39.0 million and after-tax non-core net expenses of CHF 251.3 million. Non-core net expenses included a brand impairment of CHF 223.5 million and a CHF 27.2 million adjustment to deferred tax assets following a recoverability assessment at year-end.
- This compares to an IFRS net loss after tax of CHF 23.3 million in 2021, which was driven by the underlying net loss after tax of CHF 7.5 million and after-tax non-core net expenses of CHF 24.4 million.
Income drivers and developments
Management fee margins
- The management fee margin earned on Investment Management assets during 2022 was 51.0 basis points, compared to an adjusted 52.7 basis points in 2021. The fee margin reduction is primarily attributable to the mix of client inflows and outflows at different margins compared to the average margin.
- In Fund Management Services, the management fee margin was 4.3 basis points, compared with 4.0 basis points in 2021, with the increase primarily reflecting the asset mix at different margins compared to the average margin.
Management fees
- Net management fees and commissions in 2022 totalled CHF 161.8 million, down 22% from the previous year. This was primarily driven by lower average AuM in Investment Management.
Performance fees
- Net underlying performance fees reduced to CHF 3.2 million from CHF 19.3 million in 2021. The main driver was a reduction in fees from GAM Star Disruptive Growth. IFRS performance fees amounted to CHF 4.1 million. The CHF 0.9 million difference between underlying and IFRS performance fees relates to performance fees attributable to external interests.
Expense drivers and developments
Personnel expenses
- Underlying personnel expenses were CHF 113.7 million down from CHF 143.1 million in 2021. This reflected the lower headcount which at 541 FTE was 10% lower than at the end of 2021. IFRS personnel expenses decreased to CHF 115.5 million in 2022 compared to 144.4 million in 2021. The CHF 1.8 million difference between underlying and IFRS personnel expenses related to a reorganisation charge.
General expenses
- Underlying general expenses for 2022 of CHF 75.8 million were slightly up on the CHF 73.2 million reported in 2021. This was as a result of an increase in professional and consulting expenses offset by lower other general expenses. Professional and consulting services expenses include the cost of CHF 3.2 million relating to strategic initiatives during 2022 and CHF 3.0 million in relation to outsourced support services. IFRS general expenses for 2022 were CHF 81.1 million, down 6% from CHF 86.7 in 2021. The CHF 5.3 million difference between underlying and IFRS general expenses mainly relates to strategic initiatives and an onerous software contract.
Depreciation and amortisation
- Underlying depreciation and amortisation of CHF 18.0 million was slightly lower than the CHF 18.2. million in 2021. IFRS depreciation and amortisation of CHF 18.0 million was down from CHF 20.2 million in 2021.
Underlying operating margin
- The underlying operating margin for 2022 was negative 25.8% compared with negative 3.2% in 2021. The change was driven mainly by income declining faster than costs. This compares to an IFRS operating margin of negative 164.1%. The difference between the underlying and IFRS operating mainly relates to the brand impairment.
Profitability and earnings per share
Underlying loss before taxes
- The underlying loss before taxes was CHF 42.5 million, compared with an underlying loss of CHF 9.6 million in 2021. The loss was driven mainly by lower revenues reflecting lower AuM and lower performance fees. The IFRS net loss before tax was CHF 266.2 million. The difference between the underlying and the IFRS net loss before tax mainly relates to the brand impairment (CHF 223.5 million).
Effective tax rate
- Underlying income tax for 2022 was a credit of CHF 3.5 million, representing an underlying effective tax rate of 8.2% compared to 21.9% in 2021. This compares to an IFRS effective tax rate of negative 8.9%. The difference between the underlying and the IFRS effective tax rate mainly relates to an adjustment to deferred tax assets of CHF 27.2 million based on the re-assessment of the future recoverability of tax losses carried forward.
Underlying net loss after taxes
- The underlying loss after taxes was CHF 39.0 million, compared with a CHF 7.5 million loss in 2021. The main driver for the loss was lower net fee and commission income and performance fees reflecting lower AuM. This compares to an IFRS net loss after tax of CHF 290.0 million. The CHF 251.0 million difference between the underlying and the IFRS net loss after tax, mainly relates to the brand impairment and adjustment to deferred tax assets.
Earnings per share
- Diluted underlying earnings per share for 2022 were negative CHF 0.25, down from negative CHF 0.05 in 2021, the decline being due to the underlying net loss. This compares to a diluted IFRS earnings per share of negative CHF 1.86. The difference between the diluted underlying and the diluted IFRS earnings per share is driven by the higher IFRS net loss of CHF 290.0 million compared with an underlying net loss of CHF 39.0 million.
Balance sheet and capital management
Assets and net cash
- Total assets as at 31 December 2022 were CHF 352.9 million, compared with CHF 755.2 million at the end of 2021. This includes intangible assets of CHF 83.2 million.
- Cash and cash equivalents at the end of 2022 amounted to CHF 137.9 million, down from CHF 234.8 million at the end of 2021.
Liabilities and adjusted tangible equity
- Total liabilities as at 31 December 2022 were CHF 202.3 million, down from CHF 276.7 million at the end of 2021.
- Adjusted tangible equity at the end of 2022 was CHF 68.7 million, compared with CHF 174.2 million at the end of 2021. The main contributor to this decrease was the IFRS net loss after tax of CHF 290.0 million.
- As at 31 December 2022, the Group had no financial debt, as in previous years.
Treasury shares
- IFRS requires a company that holds its own shares for trading and non-trading purposes to record those shares as treasury shares and deduct them from shareholders’ equity. As at 31 December 2022, the holding of own shares of 4.3 million was equivalent to 2.7% of shares in issue.
- All of these shares were bought back over the regular trading line at the SIX Swiss Exchange (first trading line) and held to cover the obligations under share-based compensation plans. This position increased by 0.3 million shares, reflecting shares delivered to settle obligations under share-based compensation plans and the acquisition of new shares for share-based payment plans.
Share buy-back programme 2020-2023
- The 2020-2023 share buy-back programme for the purpose of capital reduction, which commenced on 5 May 2020, is for a maximum period of three years and allows for the purchase of a maximum of 16.0 million shares. The programme is designed to purchase shares on the ordinary trading line to cover share-based payments and to purchase shares on the second trading line designated for cancellation. When shares are purchased over the second trading line at the SIX Swiss Exchange, GAM Holding AG acts as sole buyer.
- During 2022, a total of 4.3 million shares were repurchased over the first trading line to cover share-based payments. No shares were repurchased for cancellation in 2022.
Dividend for the 2022 financial year
- The Board of Directors proposes to shareholders that no dividend will be paid for 2022 given the underlying net loss in 2022.
The presentation of the full year 2022 results of GAM Holding AG analyst, investors and media will take place on Webex on 4 May 2023 at 10.00 (CET). Materials relating to the results (presentation slides, 2022 Full Year Report and press release) are available at www.gam.com.
Upcoming events:
25 May 2023 Annual General Meeting
3 August 2023 Half year results 2023
For further information please contact:
Charles Naylor
Head of Communications and Investor Relations
T +44 7890 386 699
Media Relations
Ute Dehn Christen
T +41 58 426 31 36
Visit us: www.gam.com
Follow us: Twitter and LinkedIn
About GAM
We are an active, independent global asset manager that thinks beyond the obvious to deliver distinctive and differentiated investment solutions for our clients across our three core businesses: Investment Management, Wealth Management and Fund Management Services.
Our purpose is to protect and enhance our clients’ financial future. We attract and empower the brightest minds to provide investment leadership, innovation and a positive impact on society and the environment.
Servicing institutions, financial intermediaries, and private investors, we manage CHF 75.0 billion of assets as of 31 December 2022.
Headquartered in Zurich, GAM Investments is listed on the SIX Swiss Exchange with the symbol ‘GAM’ and we employ 541 people across 14 countries with investment centres in London, Cambridge, Zurich, Hong Kong, New York and Milan, as at 31 December 2022. Our operational centres are in Dublin, Luxembourg and London.
Disclaimer regarding forward-looking statements
This press release 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, liquidity, performance, prospects, strategies, opportunities, and the industry in which it operates. Forward-looking statements involve all matters that are not historical facts. The Company has tried to identify those forward-looking statements by using words such as ‘may’, ‘will’, ‘would’, ‘should’, ‘expect’, ‘intend’, ‘estimate’, ‘anticipate’, ‘project’, ‘believe’, ‘seek’, ‘plan’, ‘predict’, ‘continue’ and similar expressions. Such statements are made on the basis of assumptions and expectations which, although the Company believes them to be reasonable at this time, may prove to be erroneous.
These forward-looking statements are subject to risks, uncertainties, assumptions and other factors that could cause the Company’s actual results of operations, financial condition, liquidity, performance, prospects or opportunities, as well as those of the markets it serves or intends to serve, to differ materially from those expressed in, or suggested by, these forward-looking statements. Important factors that could cause those differences include but are not limited to changing business or other market conditions, legislative, fiscal, and regulatory developments, general economic conditions, and the Company’s ability to respond to trends in the financial services industry. Additional factors could cause actual results, performance, or achievements to differ materially. The Company expressly disclaims any obligation or undertaking to release any update of, or revisions to, any forward-looking statements in this press release and any change in the Company’s expectations or any change in events, conditions, or circumstances on which these forward-looking statements are based, except as required by applicable law or regulation.
1 % of investment management AuM in funds outperforming their respective benchmark (excluding mandates and segregated accounts). Three and five-year investment performance as at 31.12.2022 based on applicable AuM of CHF 13.3bn and CHF 13.1bn respectively.
2 The assets under management analysed refer to onshore open-ended funds. The peer group comparison is based on ‘industry-standard’ Morningstar Direct Sector Classification. For consistency purposes, the share class preferences in Morningstar have been set to capture the institutional share class (where available) or the cheapest retail share class for each and every fund in a given peer group. % of investment management AuM in funds outperforming their respective benchmark (excluding mandates and segregated accounts).
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