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

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Consolidated financial results 14 and CHF 78 million or 5% to the Corporate Center. Net interest income was affected by significant flattening of the yield curves, causing a further general narrowing of margins, and amounted to CHF 128 million. Results from commission and service fee activities came to CHF 1.1 billion. This total consists of CHF 1.3 billion of commission income on securities and investment transactions, plus CHF 21 million of commission income on other services, minus CHF 229 million of commission expenses. All in all, 88% of commissions earned were value-based and 12% transaction-based. The commission and service fee activities of the Julius Baer Group thus proved once again to be the most decisive and stable source of income. Results from trading operations totaled CHF 149 million. The CHF 95 million of other ordinary results was largely attributable to recognition of the CHF 61 million of proceeds from the sale of Private Banking USA, the CHF 5 million investment in Kepler Equities SA recorded in the balance sheet as a financial investment as well as to the release of provisions and accruals relating to prior years. Expenses marked by one-time integration costs The operating expenses of the Julius Baer Group amounted to CHF 1.3 billion in 2005, of which personnel expenses accounted for CHF 839 million, including CHF 78 million relating to integration measures. Included in the personnel expenses are CHF 282 million of bonus accruals, CHF 38 million of costs relating to stock- and option-based participation plans and CHF 14 million relating to staff participation plans. The performancebased compensation components from operating business thus accounted for 34% of personnel expenses. The number of employees (FTE) at the end of 2005 was 3 427, of which 1 646 worked for the three private banks and GAM. General expenses amounted to CHF 326 million or 25% of total expenses. This figure includes integration costs of CHF 63 million. Depreciation and write-offs of noncurrent assets together with valuation adjustments, provisions and losses amounted to CHF 150 million, with CHF 47 million of this amount resulting from integration measures. Net profit before taxes was CHF 189 million, and after deducting CHF 44 million of taxes net profit amounted to CHF 145 million. For the shareholders
this corresponds to CHF 2.59 per registered share, based on a weighted average of 56 million shares outstanding during the reporting period. The return on equity (ROE), calculated by dividing the net profit attributable to shareholders of Julius Baer Holding Ltd. by the average equity for the period, amounted to 5.9%. When based on the net profit attributable to shareholders of Julius Baer Holding Ltd. minus the amortization of intangible assets as well as special financial factors and divided by the average equity for the period minus goodwill, the return on equity (ROE) came to 14.8%. The cost/income ratio came to 84.5% or 71.5%, respectively, based on the same calculation methods. Our confidence in the future and earnings power of the new Julius Baer Group shall be reflected by a progressive dividend policy in line with the operating results, similar to that of the former Julius Baer Group. It is important to consider, however, that the number of shares outstanding has more than doubled and that the acquired entities are only consolidated for the month of December. The Board of Directors of Julius Baer Holding Ltd. will therefore propose a dividend of CHF 1.00 per registered share for the 2005 financial year to the Annual General Meeting sched- Consolidated financial results uled for 12 April 2006. This represents an increase in the total dividend payout from CHF 80 million to CHF 112 million. Significantly expanded balance sheet The consolidated balance sheet total grew by CHF 12.6 billion or 79% to CHF 28.6 billion in 2005. This increase is exclusively attributable to the first-time consolidation of the three private banks and the asset manager GAM, which were acquired from UBS on 2 December 2005. The fair value of the revalued assets and liabilities of the three private banks and GAM amounted to CHF 14 billion at the time of acquisition. This figure includes fair value adjustments of CHF 1.75 billion for the acquired client relationships and CHF 0.3 billion for the GAM brand. The goodwill resulting from the acquisition amounted to CHF 2.9 billion. Otherwise, the activities of Asset & Liability Management had a significant influence on the assets side of the balance sheet, with loans to banks dropping by about CHF 0.6 billion and money market investments rising by around CHF 0.3 billion. In view of the flattening yield curves, the average duration of fixed income investments was further reduced over the course of the year in order to avoid incurring any added risks. 15
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 17: anks, the decision has been made to
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
Page 67 and 68: 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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