2005 Annual Report Julius Baer Holding Ltd. - GAM Holding AG

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Consolidated financial results 12 2005 consolidated financial results The 2005 consolidated financial results comprise the full financial year of the former Julius Baer Group and the month of December 2005 results of the three private banks Ehinger & Armand von Ernst AG, Ferrier Lullin & Cie SA and BDL Banco di Lugano as well as that of GAM Holding AG. The balance sheets of the acquired entities were fully consolidated as of 31 December 2005. Only selective references are made to previous reporting periods. In a generally favorable but challenging market environment, for its 116th financial year the Julius Baer Group achieved a net profit of CHF 145 million after deducting CHF 187 million for the portion of the one-time integration costs that were recognized in the reporting period and before the related tax effect (CHF 144 million after the related tax effect). Assuming continuing positive development of market conditions, Julius Baer is confident of its ability to grow its franchise and significantly increase profitability. Rapid integration boosting efficiency and customer focus Persistently volatile but generally favorable international financial markets during the year and flattening yield curves worldwide formed the backdrop for business activity in 2005. The key internal factors determining the 2005 financial results of the Julius Baer Group were sharply higher average assets under management, diverse measures to improve operating efficiency, expansion steps as part of various growth strategies, consolidation of the December financial results of the three private banks and GAM as well as one-time write-offs and provisions in connection with the acquisition. Integration of the acquired three private banks and GAM proceeded ahead of schedule, resulting in recognition of CHF 138 million of integration expenses in the 2005 financial statements. This figure mainly consists of the previously announced reductions in personnel over the next two years as part of the integration as well as the integration costs in the IT/Operations area. Furthermore, to ensure rapid, smooth and customerfocused integration of the three private
anks, the decision has been made to suspend the planned 2006 introduction of a new IT platform for the time being. This gave rise to one-time write-offs and provisions of CHF 49 million. A significant portion of the anticipated one-time integration expenses are therefore already included in the 2005 financial statements. Additional but significantly less costs will be incurred in 2006, 2007 and 2008, with recognition coinciding with the integration progress. Julius Baer: the leading pure-play wealth manager in Switzerland Assets under management of the Julius Baer Group amounted to CHF 304.3 billion as per year-end (excluding CHF 47.4 billion in Global Custody). The former Julius Baer Group accounting for CHF 173.6 billion (+28% year-on-year) or 57% of this amount, while the three private banks and GAM, consolidated as of December 2005, accounted for CHF 130.8 billion (+21%) or 43%. Broken down according to business areas, Private Banking was responsible for CHF 121.7 billion and Asset Management for CHF 181.8 billion, with investment fund assets accounting for CHF 118.5 billion of the latter figure. The structural composition of the assets under management, i.e. the asset mix, Consolidated financial results experienced some shifts due to strategic considerations, acquisition effects and the strengthened US dollar. Broken down according to investment categories, equity holdings dominated at 41%, followed by bond holdings at 21% and money market holdings at 7%. External investment fund holdings and client deposits represented 12% on the balance sheet date. The currency breakdown was as follows: Swiss franc 19%, US dollar 36%, euro 30% and other foreign currencies 15%. Sustainably bolstered income structures Operating income totaled CHF 1.5 billion, of which the former Julius Baer Group accounted for CHF 1.3 billion (+27%). CHF 198 million came from the three acquired private banks and GAM, whose financial results for the month of December are included for the 2005 financial year. When viewing this figure, it is important to consider that it includes performance fees relating to certain of GAM’s investment funds which are accounted for only at the end of the year. Broken down according to the different business units, CHF 583 million or 39% of the operating income was attributable to Private Banking, CHF 695 million or 46% to Asset Management, CHF 149 million or 10% to Trading & Sales 13
Page 1 and 2: 2005 Annual Report Julius Baer Hold
Page 3 and 4: Key figures 2004 2005 Change CHF m
Page 5: Annual Report 2005
Page 8 and 9: Foreword 4 Dear Shareholders and Cl
Page 10 and 11: Foreword 6 Annual financial results
Page 12 and 13: Foreword 8 The significant economie
Page 14: Foreword 10 2005 will go down in th
Page 19 and 20: this corresponds to CHF 2.59 per re
Page 21: 2004 2005 Change Change CHF m CHF m
Page 24 and 25: Private Banking 20 Private Banking
Page 26 and 27: Asset Management 22 Asset Managemen
Page 28 and 29: Trading & Sales 24 Trading & Sales
Page 30 and 31: Corporate Center 26 Corporate Cente
Page 32 and 33: Corporate Center 28 Our model of su
Page 35 and 36: Corporate Governance
Page 37 and 38: 1.2 Cross-shareholdings There are n
Page 39 and 40: 2.3 Changes of capital The descript
Page 41 and 42: egistered shares not physically rep
Page 43 and 44: Corporate Governance tors of Julius
Page 45 and 46: 3.3 Cross-involvement Since 2004, M
Page 47 and 48: The Chairman’s Committee receives
Page 49 and 50: Group Executive Board The Group Exe
Page 51 and 52: Group Managing Board of UBS AG, 199
Page 53 and 54: 4.3 Other activities and functions
Page 55 and 56: Equity Bonus Plan 2004 2005 Number
Page 57 and 58: 5.3 Compensation for former members
Page 59 and 60: 5.7 Additional honorariums No addit
Page 61 and 62: 7. Changes of control and defense m
Page 63 and 64: 9. Information policy Julius Baer H
Page 65 and 66:
Financial Report
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Consolidated income statement 2004
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31.12.2004 31.12.2005 Change Change
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Translation differences 2003 2004 2
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Consolidation policies and valuatio
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when the contractually stipulated p
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A hedge is regarded as highly effec
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Intangible assets Intangible assets
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In the case of defined benefit pens
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Under revised IAS 32, certain deriv
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Notes JULIUS BAER GROUP 81
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3. Credit risks Credit or counterpa
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Assets by countries/country groups
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5. Liquidity and financing risks Th
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The liquidity position of Bank Juli
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Hedges The Group hedges a portion o
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7. Reputational risks The Group’s
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3 Results from trading operations N
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7 Taxes Notes 2004 2005 Change Chan
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The depreciation and write-offs of
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Information on the consolidated bal
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12 Financial investments 31.12.2004
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Notes 31.12.2004 31.12.2005 Change
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18 Financial liabilities designated
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20a Deferred tax assets Notes 31.12
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23 Corporate capital Notes Register
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25 Pension plans and other employee
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26 Assets and liabilities by domest
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27 Consolidated off-balance-sheet t
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28 Derivative financial instruments
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29 Financial instruments (continued
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30 Risk-weighted assets (BIS) Notes
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Notes Head Office Currency Capital
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Notes Head Office Currency Capital
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Pro-forma information The following
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Movements in shares granted under v
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Notes 31.12.2004 31.12.2004 31.12.2
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Breakdown of assets under managemen
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Report of the Group auditors to the
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Financial Report of Julius Baer Hol
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lion to CHF 28 million due to capit
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Balance sheet 31.12.2004 31.12.2005
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Proposal of the Board of Directors
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Report of the statutory auditors to
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Addresses and contacts
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2005 Annual Report Julius Baer Holding Ltd. - GAM Holding AG

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