Leonteq Ag · SIX:LEON
Leonteq — H1 2014 Earnings Presentation
47 slides from Leonteq's earnings presentation, Jul 24, 2014
Slide 1: Results Presentation First Half 2014
LEONTEQ AG 26.8 RESULTS 65% 16 % PRESENTATION 599 FIRST HALF 2014 6´130 88.3 9.4 Zurich, 24 July 2014
Slide 2: Legal Disclaimer
LEONTEQ AG | RESULTS PRESENTATION H1 2014 NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN THE USA, CANADA, AUSTRALIA OR JAPAN LEGAL DISCLAIMER This presentation of Leonteq AG (the “Company”) serves for information purposes only and does not constitute research. This presentation is not a prospectus
Slide 3: Agenda
LEONTEQ AG | RESULTS PRESENTATION H1 2014 AGENDA • Main achievements H1 2014 at a glance • Financial results H1 2014 • Market update • Rights offering • Summary & outlook • Appendix 3
Slide 4: Main Achievements H1 2014 at a Glance
MAIN ACHIEVEMENTS H1 2014 LEONTEQ AG | RESULTS PRESENTATION H1 2014 AT A GLANCE 4
Slide 5: Main Achievements H1 2014 at a Glance
LEONTEQ AG | RESULTS PRESENTATION H1 2014 MAIN ACHIEVEMENTS H1 2014 AT A GLANCE • Continued growth of group net profit (up 25% to CHF 26.8 m) reflecting ...strong increase in turnover (up 21% to CHF 9.4 bn) and 599 …declining cost-income ratio (down 5PP to 65%) - - • White-labeling business accounte
Slide 6: Financial Results H1 2014
FINANCIAL RESULTS H1 2014 LEONTEQ AG | RESULTS PRESENTATION H1 2014 6
Slide 7: Key Performance Indicators: Leonteq Continues to Grow
LEONTEQ AG | RESULTS PRESENTATION H1 2014 KEY PERFORMANCE INDICATORS LEONTEQ CONTINUES TO GROW General KPIs H1 2014 H1 2013 Change to H1 2013 Turnover (CHFbn)1 9.4 7.8 21% Share of turnover of white-labeling products 50% 54% (4PP) Average margin on turnover (bps)2 94 105 (10%) Client related KPIs Nu
Slide 8: Group Net Profit Driven by Higher Turnover and Improved Cost-Income Ratio
LEONTEQ AG | RESULTS PRESENTATION H1 2014 GROUP NET PROFIT DRIVEN BY HIGHER TURNOVER AND IMPROVED COST-INCOME RATIO Number of clients Turnover (in CHFbn) H1 2014 H1 2014 599 9.4 % % 16 21 515 7.8 H1 2013 H1 2013 0 200 400 600 800 0 3 6 9 12 Operating income (in CHFm) Group net profit (in CHFm) H1 20
Slide 9: Income Statement Reflecting Operating Leverage of the Platform
LEONTEQ AG | RESULTS PRESENTATION H1 2014 INCOME STATEMENT REFLECTING OPERATING LEVERAGE OF THE PLATFORM CHFm H1 2014 H1 2013 Change to H1 2013 Turnover (CHFbn) 9.4 7.8 21% • Higher net fee income Net fee income 77.1 64.6 19% reflects increased client Net trading income 11.9 19.3 (38%) activity Othe
Slide 10: White-Labeling Significant Contributor to Financial Results
LEONTEQ AG | RESULTS PRESENTATION H1 2014 WHITE-LABELING SIGNIFICANT CONTRIBUTOR TO FINANCIAL RESULTS Turnover (in CHFbn) 50 50 % % H1 2014 4.7 4.7 % +21 46 54 % % 3.6 4.2 H1 2013 0 2 4 6 8 10 Leonteq Securities White-labeling 119 93 Margin (bps) 97 91 H1 H1 H1 H1 ´14 ´13 ´14 ´13 Operating incom
Slide 11: White-Labeling: Implementation of Core Strategy Well Underway
LEONTEQ AG | RESULTS PRESENTATION H1 2014 WHITE-LABELING IMPLEMENTATION OF CORE STRATEGY WELL UNDERWAY • Strategic step towards further expansion with Notenstein Private Bank through formation of Notenstein PLATFORM Finance (Guernsey) Ltd – set-up now positioned for further growth; outstanding volum
Slide 12: Operating Leverage Reflecting the Scalability of the Platform
LEONTEQ AG | RESULTS PRESENTATION H1 2014 OPERATING LEVERAGE REFLECTING THE SCALABILITY OF THE PLATFORM Development of costs and number of issued products Total operating expenses per issued product (CHF)1 for the Structured Solutions division H1 2014 800 5´089 1´909 6´998 682 2013 • Number of produ
Slide 13: Operating Expenses: Focus Remained on Cost Containment
LEONTEQ AG | RESULTS PRESENTATION H1 2014 OPERATING EXPENSES FOCUS REMAINED ON COST CONTAINMENT Development of operating expenses (in CHFm) • Slight increase in personnel expenses 10 24 66 driven by continued H1 2014 % % % selective hiring • Decrease in other operating expenses due to less special 5
Slide 14: Personnel Development Continued Selective Hiring
LEONTEQ AG | RESULTS PRESENTATION H1 2014 PERSONNEL DEVELOPMENT CONTINUED SELECTIVE HIRING FTE Breakdown1 9 13 78 % % % 30.06.2014 • 323 Full time employees • More than 30 nationalities 29 43 251 • 9 locations in 8 countries 8 13 79 % % % 30.06.2013 21 37 217 0 50 100 150 200 250 300 350 Asia Ot
Slide 15: Segment Results: Both Business Segments Profitable
LEONTEQ AG | RESULTS PRESENTATION H1 2014 SEGMENT RESULTS BOTH BUSINESS SEGMENTS PROFITABLE Operating income (CHFm) 100 88.3 ∆ to H1 2013 12.2 81.9 7.3 80 abs. (CHFm) rel. Asset Management 4.9 67% 60 81.9 75.6 & Pension Solutions 40 Structured Solutions 6.3 8% • Asset Management & 20 Corporate Cente
Slide 16: Regional Development – Structured Solutions
LEONTEQ AG | RESULTS PRESENTATION H1 2014 REGIONAL DEVELOPMENT – STRUCTURED SOLUTIONS STRONG PERFORMANCE IN EU Operating income (CHFm) 100 ∆ to H1 2013 75.6 81.9 8.4 abs. (CHFm) rel. 80 9.3 • Asia performance con- Asia (0.9) (10%) 16.2 60 10.2 strained by limitations of European Union 6.0 59% busine
Slide 17: Capital Structure: Total Capital Ratio at 17.4%
LEONTEQ AG | RESULTS PRESENTATION H1 2014 CAPITAL STRUCTURE TOTAL CAPITAL RATIO AT 17.4% (vs. 18.1% IN 2013) Capital development CHFm Required capital/Risk-weighted assets CHFm Tier 1 capital (31 Dec 2013) 147.5 Market risk (incl. derivatives) 43.0 Net profit H1 2014 26.8 Interest rate 18.9 Other ca
Slide 18: Balance Sheet Development Shaped by Strong Growth in Own Issuances
LEONTEQ AG | RESULTS PRESENTATION H1 2014 BALANCE SHEET DEVELOPMENT SHAPED BY STRONG GROWTH IN OWN ISSUANCES Total assets % % % 13.2 85.8 1.0 • Total assets amount- 30.06.2014 ed to CHF 5.7 bn (vs. CHF 4.8 bn in 2013) and total % % % liabilities amounted to CHF 5.5 bn 10.9 88.1 1.0 (vs. CHF 4.6 bn i
Slide 19: Market Update
LEONTEQ AG | RESULTS PRESENTATION H1 2014 MARKET UPDATE 19
Slide 20: Development of Structured Products Market
LEONTEQ AG | RESULTS PRESENTATION H1 2014 DEVELOPMENT OF STRUCTURED PRODUCTS MARKET SIGNIFICANT POTENTIAL FOR FUTURE GROWTH AuM (EURbn)1 Leonteq platform share2 % % % 3.4 49.4 47.2 June 2014 0.4% 42.2 617.8 591.3 • Decrease in AuM in Europe mainly driven % by Italy (EUR -15.5 bn) 3.4 50.7 % 45.9 % a
Slide 21: Continued High Demand for Equity-Linked Products
LEONTEQ AG | RESULTS PRESENTATION H1 2014 DEVELOPMENT OF STRUCTURED PRODUCTS MARKET CONTINUED HIGH DEMAND FOR EQUITY-LINKED PRODUCTS Distribution of gross sales by underlying asset class in Europe1 % % % % % % 79.1 7.9 1.3 1.2 2.5 8.0 H1 2014 % % % % % % 72.4 12.6 2.8 1.4 2.6 8.2 2013 35.9 % % % % %
Slide 22: Development of Life Insurance Market Switzerland
LEONTEQ AG | RESULTS PRESENTATION H1 2014 DEVELOPMENT OF LIFE INSURANCE MARKET SWITZERLAND SWITZERLAND Unit-linked life insurance market 2012 Booked gross premiums in CHFbn Others 35 Basler Generali Pax 7.8% 2.6% • Increase in demand for 30 Zurich 3.5% unit-linked life insurance 4.9% 33.8% products
Slide 23: Life Insurance Market Europe & Asia
LEONTEQ AG | RESULTS PRESENTATION H1 2014 LIFE INSURANCE MARKET EUROPE & ASIA EUROPE ASIA Life premium volume 2013 in %* Life premium volume 2013 in %* 25 60 23.5 % 20 USDbn 947 50 47.1 % USDbn 898 16.9 % 40 15 14.1 % 12.5 12.1 % 30 % 10 20 16.9 % 5.0 5 % 10.2 3.6 3.6 3.3 % 8.3 10 % % % 2.7 2.7 % 5.
Slide 24: Rights Offering
LEONTEQ AG | RESULTS PRESENTATION H1 2014 RIGHTS OFFERING 24
Slide 25: Rationale / Expected Timetable of Rights Offering
LEONTEQ AG | RESULTS PRESENTATION H1 2014 RATIONALE / EXPECTED TIMETABLE OF RIGHTS OFFERING EXPECTED NET PROCEEDS OF APPROX. CHF 173.1 MILLION TO BE PRIMARILY USED FOR • Supporting our growth strategy, which includes: - Increase of capacity to onboard white-labeling partners - Expansion of regional
Slide 26: Details of Rights Offering
LEONTEQ AG | RESULTS PRESENTATION H1 2014 DETAILS OF RIGHTS OFFERING Offered shares 1’296’295 new registered shares with nominal value of CHF 2.00 each from exist- ing authorised capital, created at Leonteq’s AGM on 17 April 2014 and fully under- written • As a result, upon completion of offering, F
Slide 27: Summary & Outlook
LEONTEQ AG | RESULTS PRESENTATION H1 2014 SUMMARY & OUTLOOK 27
Slide 28: Summary & Outlook
LEONTEQ AG | RESULTS PRESENTATION H1 2014 SUMMARY & OUTLOOK • Solid results and good strategic progress in H1 2014 • Progress in white-labeling strategy implementation and extension of service offering with launch of smart data initiative and Avaloq cooperation • In Pension Solutions business contin
Slide 29: Appendix
LEONTEQ AG | RESULTS PRESENTATION H1 2014 APPENDIX 29
Slide 30: Leonteq Introduction
LEONTEQ AG | RESULTS PRESENTATION H1 2014 LEONTEQ INTRODUCTION WHO WE ARE Independent technology and service partner for investment solutions … LEONTEQ SECURITIES AG … covering the full value chain of structured investment products … Zurich | Geneva | Guernsey … focusing on industrializing productio
Slide 31: Guiding Principles
LEONTEQ AG | RESULTS PRESENTATION H1 2014 GUIDING PRINCIPLES Y ENC SE RV AR IC SP E N Focused business A TR in attractive Transparency on risk, Service offering product niche return & performance differentiated by characteristics for proactive support of clients Experienced clients and white-labelin
Slide 32: Awards: High Quality of Services & Innovation Recognized by Market
LEONTEQ AG | RESULTS PRESENTATION H1 2014 AWARDS HIGH QUALITY OF SERVICES & INNOVATION RECOGNIZED BY MARKET 2014 HANDELSZEITUNG • CEO of the Year, Category Banking and Insurance 1st ERNST & YOUNG WORLD • The jury has selected Jan Schoch to represent Swiss ENTREPRENEUR OF THE YEAR entrepreneurship at
Slide 33: Leonteq Platform in Switzerland
LEONTEQ AG | RESULTS PRESENTATION H1 2014 LEONTEQ PLATFORM IN SWITZERLAND Largest issuers by number of outstanding listed structured investment products (defined as all product types except leverage products) 2nd on SIX Structured Products Exchange1 % % Yield enhancement 25% 23.9 22.4 exchange-liste
Slide 34: Milestones
LEONTEQ AG | RESULTS PRESENTATION H1 2014 MILESTONES 2007 Sep EFG Financial Products AG Zurich and EFG Financial Products Holding AG founded Nov EFG Financial Products (Guernsey) Limited founded as an issuer of products Dec 35 employees and FINMA Licenced Zurich Office of EFG Financial Products AG o
Slide 35: Leonteq Is Unique in the Structured Products Market
LEONTEQ AG | RESULTS PRESENTATION H1 2014 LEONTEQ IS UNIQUE IN THE STRUCTURED PRODUCTS MARKET WELL POSITIONED ACROSS THE ENTIRE VALUE CHAIN Offering focus Vanilla products Brokerage model for Client driven structured Proprietary trading (warrants, structured investment investment products driven str
Slide 36: Structured Investment Products: Main Product Categories
LEONTEQ AG | RESULTS PRESENTATION H1 2014 STRUCTURED INVESTMENT PRODUCTS MAIN PRODUCT CATEGORIES PRODUCT CATEGORY CAPITAL PROTECTION YIELD ENHANCEMENT PARTICIPATION Product type (example) Capital Protection with Participation Barrier Reverse Convertible Tracker Certificate Example • Underlying: Swis
Slide 37: White-Labeling Introduction
LEONTEQ AG | RESULTS PRESENTATION H1 2014 WHITE-LABELING INTRODUCTION BENEFITS FOR THE WHITE-LABELING PARTNER • Extended product offering provides an additional distribution channel and increases the attractiveness In a white-labeling towards end investors cooperation, structured • Depending on the
Slide 38: White-Labeling: Service Offering Covering the Whole Value Chain
LEONTEQ AG | RESULTS PRESENTATION H1 2014 WHITE-LABELING SERVICE OFFERING COVERING THE WHOLE VALUE CHAIN 04 MARKET- MAKING 05 LIFE CYCLE MANAGEMENT PRODUCT III OFFERING PRODUCT I DESIGN IN-HOUSE II PRODUCT MANUFACTURING 06 RISK & REGULATORY REPORTING 01 RISK MANAGEMENT CHOICE OF ISSUERS 08 (CREDIT R
Slide 39: White-Labeling: Our Partners
LEONTEQ AG | RESULTS PRESENTATION H1 2014 WHITE-LABELING OUR PARTNERS Proven model in the banking and LATFORM GP insurance sector EL IN in Switzerland AB -L ITE WH 39
Slide 40: Downstream & Upstream Integration
LEONTEQ AG | RESULTS PRESENTATION H1 2014 DOWNSTREAM & UPSTREAM INTEGRATION EXTENSION OF OUR VALUE CHAIN • Initiatives aim to increase the productivity of clients on both sides of their cost structure - at upstream levels, “smart data” initiative aims to enhance and improve the investment decision p
Slide 41: Downstream & Upstream Initiatives Fitting Our Core Strategy
LEONTEQ AG | RESULTS PRESENTATION H1 2014 DOWNSTREAM & UPSTREAM INITIATIVES FITTING OUR CORE STRATEGY UPSTREAM ELEMENTS UPSTREAM INTEGRATION • Product structuring • Rich database enables to identify trends within the • Product selection investor crowd and in sub-groups of peers – leading to better p
Slide 42: Pension Solutions: Products for Every Stage of Life
LEONTEQ AG | RESULTS PRESENTATION H1 2014 PENSION SOLUTIONS PRODUCTS FOR EVERY STAGE OF LIFE Leonteq’s Pension Platform covers an extensive range of product types, including products for every life cycle stage, i.e. accumulation, evolution and decumulation products. Leonteq’s product offering suppor
Slide 43: Pension Solutions: Products for Every Stage of Life
LEONTEQ AG | RESULTS PRESENTATION H1 2014 PENSION SOLUTIONS PRODUCTS FOR EVERY STAGE OF LIFE INDIVIDUAL PAYMENT ALLOCATION Inflows are split between three investment components. The policy holder‘s preferences and the time to Leonteq’s Pension maturity are taken into account. Platform allows for the
Slide 44: Pension Solutions Product Matrix
LEONTEQ AG | RESULTS PRESENTATION H1 2014 PENSION SOLUTIONS PRODUCT MATRIX ACCUMULATION + CONSOLIDATION + DECUMULATION ACCUMULATION + DECUMULATION Leonteq’s Pension Platform supports all established retirement products. By assembling accumulation, prolongation and decumulation structures the entire
Slide 45: Risk Update: Average Value at Risk
LEONTEQ AG | RESULTS PRESENTATION H1 2014 RISK UPDATE AVERAGE VALUE AT RISK AT CHF 1.2 M IN H1 2014 (vs. CHF 1.1 M IN 2013) VaR BY ASSET CLASS2 VaR (CHFk) Total VaR (in CHFk)1 2´500 VaR equity 520 VaR fixed income 453 VaR FX 77 2´000 VaR commodity 177 VaR total 665 1´500 1´000 500 0 Jan Feb Mar Apr
Slide 46: Leonteq AG Share Overview
LEONTEQ AG | RESULTS PRESENTATION H1 2014 LEONTEQ AG SHARE OVERVIEW1 Market capitalization CHF 1.42 bn (as per 30.06.2014)uniti Share price development (in CHF)2 % +373 250 Outstanding shares 6‘666‘665 registered sharesopport 225 200 Listing SIX Swiss Exchange 175 Listing date 19.10.2012 150 125 Tic
Slide 47: Executive Committee & Board of Directors
LEONTEQ AG | RESULTS PRESENTATION H1 2014 LEONTEQ AG EXECUTIVE COMMITTEE & BOARD OF DIRECTORS EXECUTIVE COMMITTEE* Jan Schoch CEO (Founding partner) Michael Hartweg Deputy CEO, Head White-labeling & Platform Development (Founding partner) Roman Kurmann Chief Financial Officer Manish Patnaik Chief Op