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PRESS RELEASE: GAM Holding AG reports underlying net profit of CHF 202.2 million for 2010, up 35% year-on-year

GAM Holding AG /
GAM Holding AG reports underlying net profit of CHF 202.2 million for 2010, up
35% year-on-year
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Zurich, 1 March 2011 

  * Assets under management of CHF 117.8 billion, a year-on-year increase of
    4%. 

  * Strong net new money inflows of CHF 8.0 billion, on the back of continuing
    product diversification and broadening of distribution channels. 

  * Underlying net profit of CHF 202.2 million, up 35% year-on-year[1]. 

  * Strong capitalisation, with tangible equity of CHF 1.07 billion. Investment
    in organic growth and search for targeted, accretive acquisitions ongoing. 

  * Proposed dividend of CHF 0.50 per share: intended to be paid from
    contributed capital reserves, making it tax-efficient for shareholders. 

  * Cancellation of 5% of outstanding shares repurchased under 2010 buy-back
    programme, to be approved at 2011 Annual General Meeting. 

  * New three-year share buy-back programme proposed for 2011 to replace current
    one: repurchase and cancellation of up to 20% of current shares in issue,
    subject to regulatory and shareholder approval. 

Assets under management for the Group grew by CHF 4.2 billion (4%) to CHF 117.8
billion[2] as at 31 December 2010. This growth was driven principally by strong
net new money inflows of CHF 8.0 billion[2], supported by positive market
performance. However, since the Group's assets under management are reported in
Swiss francs, the weakening of the US dollar and the euro reduced these gains by
CHF 9.1 billion. 

Commenting on the Group's development in 2010, Chairman and CEO Johannes A. de
Gier said: "Our first full year of independence was marked by solid results.
This underscores the growth potential offered by our business model, and I am
very pleased with the accomplishments of our operating businesses." 

Net new money - GAM 

GAM recorded net inflows of CHF 5.9 billion, a strong turn-around from the net
outflows of CHF 4.2 billion experienced in 2009. Substantial net inflows were
recorded into its fixed income range, including the funds GAM sub-advises for
Swiss & Global Asset Management. While inflows into these fixed income absolute
return products were somewhat slower in the second half of the year, inflows
into its emerging markets strategies and its Asian and US equity products picked
up considerably as the year progressed. 

Strong contributors to net new money inflows included GAM's single manager
absolute return UCITS III products. This highlights GAM's ability to capitalise
on the ongoing shift in private client demand away from the historically
dominant offshore structures towards investments that are regulated, liquid and
offer a more favourable tax treatment. GAM has been dedicating its skills and
experience in selecting investment talent to the permanent expansion of its
range of onshore funds, drawing on both in-house and external managers. This
will enable it to continue to benefit from the trend towards onshore investing
in 2011 and thereafter. 

In contrast to private clients, institutional investors continue to demonstrate
strong interest in funds of hedge funds and are set to become the largest client
group in GAM's multi-manager business. Benefiting from its proven risk and
liquidity management, GAM achieved considerable mandate wins in the
institutional segment in 2010 - especially for alternative strategies with a low
correlation to equity markets - and has established a solid pipeline of business
for 2011. 

GAM's assets under management reached CHF 53.6 billion as at 31 December 2010,
an increase of CHF 2.6 billion or 5% on year-end 2009. 

Net new money - Swiss & Global Asset Management 

Net new money inflows at Swiss & Global Asset Management rose 23% year-on-year
and totalled CHF 9.7 billion. The greatest contributors to net new money,
particularly in the first half of the year, were the fixed income funds sub-
advised by GAM and distributed by Swiss & Global Asset Management. The physical
precious metal fund range also continued to attract client assets, while inflows
into equity funds remained muted throughout 2010. 

Inflows from institutional clients, in particular in Germany, Chile and Peru,
offset the closure of smaller mandates in Switzerland, resulting from efforts to
reposition the business to focus on growth regions and on clients with a real
interest in active investment management. 

Net inflows into the private label fund business were solid - although somewhat
lower than the extraordinary levels of 2009 - and its pipeline of future
business remains healthy. 

At Swiss & Global Asset Management assets under management at 31 December 2010
were CHF 80.4 billion, CHF 7.4 billion or 10% higher than a year earlier. 

2010 Group results 

Adjusted for non-cash items[3], underlying net profit for 2010 was CHF 202.2
million, up 35% from CHF 149.6 million in 2009, driven by a substantial increase
in revenues. Reported on the same basis, earnings per share rose to CHF 1.03
(43% higher than in 2009) and return on tangible equity reached 19.0% (12.2% in
2009). 

The Group's operating income for 2010 was CHF 712.5 million, up 21% compared to
2009. Net fee and commission income, which represents 80% of total operating
income, rose on the back of asset growth. 

Performance fees, mainly recorded at GAM, grew steeply to reach CHF 89.5 million
(CHF 17.5 million in 2009), reflecting the success of the fixed income products
as well as the contribution from GAM's internally managed hedge fund strategies.
Growth of performance fees, which will continue to be an important revenue
driver as the Group's asset base evolves, contributed towards a gross margin of
60.2 basis points for 2010, an increase of 4.5 basis points compared to that
recorded in 2009. 

The income from the retained 28% stake in Artio Global Investors Inc., reported
as income from investment in associates, decreased by 13% to CHF 27.5 million.
Derived from publicly available financial information, this income was
negatively impacted by the weakening of the US dollar against the Swiss franc.
Other operating income - which includes foreign exchange gains from hedging
activities undertaken to mitigate the Group's currency exposure - rose by CHF
8.1 million year-on-year to reach CHF 25.1 million. 

Operating expenses rose by 16% in 2010 to CHF 466.0 million, driven by an
increase in personnel expenses and partly offset by a slight fall in general
expenses. While fixed salary levels remained broadly stable, variable personnel
expenses rose commensurately with the Group's financial results, mainly driven
by contractual-based payments to investment professionals. Personnel costs also
reflected the accounting impact of the options awarded to all employees under a
long-term incentive plan introduced in 2009 following the listing of GAM Holding
AG as an independent group. 

The increase in operating expenses was outpaced by revenue growth, leading to an
improvement in the Group's cost/income ratio, which fell from 68.0% in 2009 to
65.4% in 2010. 

Group balance sheet and capital position 

The Group's balance sheet remained strong, with total assets as at 31 December
2010 amounting to CHF 2,883.0 million. The cash position at year-end was
substantial at CHF 819.1 million and the Group's outstanding debt amounted to
CHF 63.2 million, reduced from CHF 245.6 million at the end of 2009. As pre-
announced in November 2010, the carrying value of Artio Global Investors Inc.,
reported as investment in associates, was reduced by CHF 180.3 million to CHF
306.3 million. 

Total equity amounted to CHF 2,451.7 million at the end of 2010. Excluding the
GAM goodwill, customer relationships and brand, tangible equity stood at CHF
1,066.8 million. It was CHF 156.0 million lower than at year-end 2009,
reflecting the increase in treasury shares resulting from the buy-back of own
shares for cancellation under the 2010 programme and from hedging the economic
exposure from the options granted under the 2009 long-term incentive plan. 

Despite these effects, tangible equity still far exceeded the regulatory capital
requirements of the Group, which amounted to approximately CHF 71 million at
year-end 2010 (calculated by aggregating all of the regulatory requirements of
the operating businesses), highlighting the Group's strong capitalisation and
its capacity to invest in future growth. 

On the Group's potential role as a consolidator in the asset management
industry, Johannes A. de Gier commented: "The search for suitable acquisition
targets remains on our strategic agenda, but we will not consider anything less
than a compelling transaction. Any acquisition has to be strategically
convincing and financially accretive for our shareholders." 

Dividend distribution and share buy-backs 

At the Annual General Meeting on 19 April 2011, the Board of Directors of GAM
Holding AG will propose a dividend of CHF 0.50 per share for the financial year
2010. This will result in a distribution to shareholders equivalent to
approximately half of its annual underlying net profit, in line with its
previously stated commitment. The Board of Directors intends to pay this
dividend from the Group's significant contributed capital reserves, making it
exempt from Swiss withholding tax of 35% and from income tax for private
shareholders resident in Switzerland. 

Under its first share buy-back programme initiated on 26 August 2010, the Group
had repurchased 10,330,756 shares at an average price of CHF 14.94 by year-end
2010, returning around CHF 154 million to its shareholders. Shareholders will be

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