Bellevue | Küsnacht, 27.07.2015.
Bellevue Group’s operating profit sharply higher at mid-year mark – assets under management at an all-time high of CHF 5.2 bn – bottom-line loss due to impairments and writedowns
– Bellevue Group’s first-half operating profits increase 76% to CHF 9.9 mn
– Asset Management generates a record operating profit of CHF 12.1 mn
– Further diversification of recurring earnings streams at Asset Management
– Operating profit at Bank am Bellevue declines to CHF 0.6 mn
– Assets under management jump 80% to new record high of CHF 5.2 bn
– Consolidated net loss of CHF 15.5 mn due to impairments and writedowns
Global financial markets remain highly volatile, as was clearly evident during the final weeks of the first half of 2015. Economic and geopolitical uncertainties loom large. Meanwhile the global economy continues to grow at a tepid pace. The occasional slowdown in economic activity was outweighed by central banks’ monetary action. A steady flow of liquidity from central banks remains a crucial factor for continued positive market trends. In this kind of an environment, cash allocations are high and investors are willing to bear the associated opportunity costs. Despite the persisting low rates of interest, many investors are not yet ready to shift their money into a higher risk asset class such as equities.
Steady increase in recurring income streams the basis for higher profits
The interim results show that Bellevue Group’s strategic focus on recurring income flows is paying off. During the past six months the Group strengthened the main source of its income and posted a 59% increase in net fee and commission income to CHF 36.3 mn (prior year: CHF 22.8 mn). Asset Management is credited with most of this improvement, having doubled its net income contribution, with largely recurring income streams. Commission income at Bank am Bellevue declined by about 21%. Operating expenses increased to CHF 27.4 mn (prior year: CHF 19.4 mn) in the wake of the growing business volumes at Asset Management and various investments in investment expertise. However, this 41% increase in expenses was less than the increase in operating income. As a result, Bellevue Group’s operating profit increased by 76% to CHF 9.9 mn (prior year: CHF 5.6 mn).
The significant improvement in the Group’s operating results is overshadowed by extraordinary impairment charges. As already communicated on July 15, 2015, the Board of Directors and the Executive Board have reassessed the future earnings of Bank am Bellevue’s Brokerage unit in view of the lower volume of business activities and the reduced revenues. Projections were revised and impairments and writedowns totaling CHF 24.7 mn were declared under the “Goodwill” and “Other intangible assets” items in the balance sheet as at the mid-year reporting date. The extraordinary impairments led to a consolidated net loss of CHF 15.5 mn for the period under review.
“Amid a challenging environment, Bellevue Group has achieved further progress on the operating front and obviously gained business momentum. The Group will build on its core competencies of providing original investment ideas and extensive capital market expertise to increase recurring income flows. The first-half results achieved by Asset Management confirm the successful execution of this strategy. Our overriding aim is to achieve a more balanced earnings mix from Asset Management and Bank am Bellevue,” comments André Rüegg, CEO ad int of Bellevue Group, with regard to the first-half results.
Asset Management: Operating profit doubled and assets under management at new record high
The successful acquisition and integration of Adamant Biomedical Investments AG represents another milestone in the history of Bellevue Asset Management. It creates interesting growth opportunities at the national and international level and ensures a lasting diversification of the Group’s income streams. Now one-third of the Group’s earnings are generated from sources other than BB Biotech. This diversification is fully visible for the first time in the current fiscal year, with Asset Management already reporting a record operating profit of CHF 12.1 mn for the first half (prior year: CHF 4.4 mn), an increase of 173% from the prior year period. Assets under management also reached a new all-time high of CHF 5.2 bn. This increase of 80% y-o-y is attributable to the acquisition of Adamant and the renewed strong performance of the investment products. Growth in the first half 2015 amounted to 11% despite a highly negative currency effect. BB Biotech AG was again a top performer with a gain of about 21.5% (in CHF) which eclipsed the benchmark performance by 7 percentage points. Other strong performers were the Lacuna Adamant Global Healthcare Fund and the BB Entrepreneur Europe Small Fund, which rose 25.9% (in EUR) and 27% (in EUR) during the period, beating their respective benchmarks by 6.6 and 8.8 percentage points, respectively. Private and institutional investors entrusted Bellevue Asset Management with more than CHF 300 mn in new money during the period under review. This inflow was offset by redemptions and other outflows.
Bank am Bellevue: Downturn in Brokerage activity – strong interest in Corporate Finance expertise
The Research Team achieved a return of 4.3% during the period under review with its original investment ideas and beat the performance of the SMI Index by 6.5%. Its top 5 investment recommendations outperformed the SMI index by an even greater 7.1%. Nevertheless structural and regulatory changes have clearly left a mark on the brokerage business and, together with the low investment activity among institutional investors, led to a y-o-y decline in Brokerage income. Meanwhile the Corporate Finance Team is reporting a pleasing level of demand for its comprehensive expertise in capital market transactions, also from abroad. Bank am Bellevue most recently acted as Co-Lead Manager in the stock market debut of Cassiopea, a subsidiary of Cosmo Pharmaceuticals S.A. Despite strict cost discipline, the decline in Brokerage earnings could only be partially offset, resulting in an operating profit of CHF 0.6 mn (prior year: CHF 2.6 mn) for the Bank.
Changes in the Board of Directors and the Executive Board
Dr. Thomas von Planta assumed the chair of the Board of Directors at the 2015 Annual General Meeting. He succeeds Walter Knabenhans, who was no longer standing for election after having served on the board since 2006. Dr. Mirjam Staub-Bisang, founder and CEO of Independent Capital Group AG and an acknowledged financial industry expert, especially in the field of asset management, joined the board as a new director.
André Rüegg, CEO of Bellevue Asset Management, was additionally delegated operational management responsibility for Bellevue Group on an ad interim basis in May 2015. He assumed this role from Urs Baumann, who, after three years at the helm of Bellevue Group, concurred with the Board of Directors that a new executive should oversee the next phase of the Group’s development.
Outlook
After putting Asset Management on a more successful path, management attention has now turned to improving Bank am Bellevue’s income streams. Both the Brokerage and Corporate Finance units will be retained. Thanks to its exceptionally strong capital base, Bellevue Group also has the necessary entrepreneurial freedom to take advantage of acquisition opportunities or prospective alliances.
The full report for the first half of 2015 is available at www.bellevue.ch
Agenda
Annual report 2015 February 22, 2016
Annual general meeting 2016 March 21, 2016
Contact:
Media / Investor Relations: Daniel Koller, CFO
Telephone +41 44 267 67 00, Fax +41 44 267 67 01, ir@bellevue.ch
Bellevue Group
Bellevue Group is an independent Swiss financial boutique listed on the SIX Swiss Exchange. Established in 1993, the company and its approximately 90 employees are specialists in the fields of Brokerage, Corporate Finance and Asset Management. Bellevue Group includes the two subsidiaries Bank am Bellevue and Bellevue Asset Management. The bank boasts superb knowledge of the Swiss stock and bond market and offers independent research opinions and recommendations as well as viable solutions for capital market transactions. Bellevue Asset Management is focused on selected active equity investment strategies in growing markets, in healthcare industries as well as in other special themes such as entrepreneur-led companies.
