Bellevue | Küsnacht, 29.07.2016.
Group operating results down 32% to CHF 6.8 mn
Increase in assets under management of 30% to CHF 6.9 bn
Broad-based inflows of CHF 126 mn in net new assets
Asset Management broadens its operating activities with the acquisition of StarCapital AG
Further earnings erosion at Bank am Bellevue
The poor start into the new investment year due to slower growth momentum in China and the oil price development cast a shadow over the investment horizon right from the outset. Additional negative factors were the sluggish pace of global economic growth and the tensions arising from geopolitics in Russia and the Middle East. Investor confidence was also undermined by the prospect of the UK leaving the European Union and, to the surprise of most observers, the Brexit option became reality. Central banks proved to be the single most positive factor for financial markets, despite initial indications that they might distance themselves from their full-fledged commitment to monetary expansion.
Bellevue Group continues to diversify its income flows and expertise
Bellevue Group made further strategic progress amid a very volatile environment. The acquisition of the German independent asset manager StarCapital AG, consummated in June, broadens Bellevue Group’s knowhow in non-healthcare areas within the fixed income, multi-asset fund and ETF fund-of-funds investment segments. Its base in Frankfurt am Main region also strengthens the Group’s position in a key European market, which management intends to steadily expand. Bellevue Group’s first-ever capital increase was successfully conducted during the reporting period to finance the acquisition of StarCapital. The issue of approximately 3 mn new registered shares raised CHF 32.9 mn in gross proceeds. This additional capital will also provide the Group with the strategic and financial flexibility it needs to continue its growth strategy.
Solid results in a challenging environment
Like all other financial services companies, Bellevue Group was challenged by the high level of market volatility witnessed during the first six months of the year, particularly in the biotech and healthcare sectors. The Group’s most important source of income – commissions and fees – declined by 18% from the prior-year level. The percentage of recurring revenues increased to approximately 80% (71% at the end of 2015). Operating costs declined by 11% because of the significant decrease in performance-based employee compensation, but that could not offset the entire drop in income. Bellevue Group’s operating profit for the first half of the year therefore declined 32% y-o-y to CHF 6.8 mn. Taking into account investment loss of approximately CHF 2.5 mn on seed capital as well as depreciation, amortization, valuation adjustments and taxes, Group net profit for the period amounted to CHF 2.8 mn.
The acquisition of StarCapital was closed on June 6, 2016 with retroactive effect from January 1, 2016. StarCapital’s profit for the period from January 1, 2016 to the closing date in the amount of CHF 2.5 mn was recognized in the net asset value and the profit for the period from the closing date to the end of June 2016 in the amount of CHF 0.4 mn was recognized in the Group’s profit and loss statement. StarCapital’s full earnings power will therefore become visible in the income statement for the second half of the year.
CEO André Rüegg’s comments on the first half results for 2016: “Bellevue Group made further progress in an extremely challenging environment by broadening its revenue flows and investment competence through the acquisition of StarCapital. We have also begun to strengthen our Group’s presence in Germany from our new base in Oberursel near Frankfurt and have deployed additional resources to intensify our sales and distribution activity in this key market. Meanwhile at the bank we are in the process of setting up a wealth management unit for entrepreneurial private clients that will bolster its income capability. The very first capital increase in the history of our Group underscored investors’ confidence in our company and emboldens us in the pursuit of our growth strategy.”
Assets under management at new record high
Assets under management reached a new all-time high of CHF 6.9 bn, an increase of 30% compared to the end of 2015. The acquisition of StarCapital accounted for much of the growth (CHF 2.5 bn). Meanwhile the Group reported organic inflows of CHF 126 mn in net new assets. Demand for its various healthcare strategies as well as for the BB African Opportunities and, in particular, BB Global Macro funds was strong. With some CHF 190 mn in assets, the BB Global Macro Fund delivered another positive return (+2.8% in CHF) despite the extreme challenges encountered in the first half thanks to its astute diversification across multiple asset classes and use of long and short investment strategies. Having delivered an outperformance of 8.2% and 6.8% (in CHF), both the BB Entrepreneur Switzerland Fund and BB Biotech AG clearly beat their benchmarks, although the latter’s total return was negative. The highly adverse market conditions in the first half also left their mark on Asset Management’s results. Besides the negative market impact of approximately CHF 1 bn on assets under management, performance fees plunged 85% to CHF 0.6 mn (prior-year period: CHF 3.6 mn). The operating results declined by 21% to CHF 9.5 mn.
Further erosion in Brokerage earnings – initial action taken to set up a wealth management franchise
The structural and regulatory-driven slowdown in brokerage activities led to a renewed drop of around 24% in Bank am Bellevue’s income. Conversely, its extensive expertise in M&A and capital market transactions was in high demand. Bank am Bellevue’s Corporate Finance Team co-managed several capital market transactions during the first half, including the initial public offering of Investis, a leading residential property company in the Lake Geneva region and a national provider of real estate services. Nevertheless, the decline in brokerage volumes led to an operating loss of CHF 1.1 mn for the bank. In order to broaden and stabilize the bank’s income base, initial action has been taken to establish a wealth management franchise at the bank.
Outlook
Bellevue Asset Management plans to list a new investment trust on the London Stock Exchange in the second half of the year. The new investment vehicle will cover a global healthcare universe and specifically address local client needs. Wealth management for entrepreneurial private clients will be set up as a new field of activity for the bank under the helm of Christian Zenker, an expert with many years of experience. This new field of activity will be established through organic and acquisitive initiatives.
The full report for the first half of 2016 is available at www.bellevue.ch
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 110 employees are specialists in the fields of Asset Management, Brokerage and Corporate Finance. Bellevue Group includes the two segments Asset Management and Bank am Bellevue. Asset Management is focused on selected active equity, bond, multi asset and ETF fund-of-funds strategies. 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.
