Leonteq Ag · SIX:LEON
Leonteq — H1 2015 Earnings Presentation
44 slides from Leonteq's earnings presentation, Jul 23, 2015
Slide 1: Results Presentation HY 2015
ZURICH, 23 JULY 2015 LEONTEQ AG RESULTS PRESENTATION | HY 2015
Slide 2: Legal Disclaimer
LEONTEQ AG | RESULTS PRESENTATION HY 2015 LEGAL DISCLAIMER This presentation of Leonteq AG (the “Company”) serves for information purposes only and does not constitute research. This presentation and all materials, docu- ments and information used therein or distributed in the context of this presen
Slide 3: Agenda
LEONTEQ AG | RESULTS PRESENTATION HY 2015 AGENDA • Key messages • Financial results H1 2015 • Strategy & business update • Summary & outlook • Our business & market overview 3
Slide 4: Key Messages
LEONTEQ AG | RESULTS PRESENTATION HY 2015 KEY MESSAGES 4
Slide 5: Leonteq continues on its growth path
LEONTEQ AG | RESULTS PRESENTATION HY 2015 KEY MESSAGES LEONTEQ CONTINUES ON ITS GROWTH PATH PLATFORM PARTNERS 9 • Successful onboarding of DBS with substantial pick-up in business activity in H1 • New cooperation with renowned banking and insurance partners intended in Switzerland, Europe 5 7,245 an
Slide 6: Changes to shareholder structure
LEONTEQ AG | RESULTS PRESENTATION HY 2015 KEY MESSAGES CHANGES TO SHAREHOLDER STRUCTURE Under the terms of the Leonteq IPO in October 2012, the four founding partners agreed to subject their shares to a phased lock-up of five years, to expire in three tranches, on a linear basis from the end of year
Slide 7: Changes to board of directors
LEONTEQ AG | RESULTS PRESENTATION HY 2015 KEY MESSAGES CHANGES TO BOARD OF DIRECTORS • Peter Forstmoser, who has chaired the Leonteq board of directors since September 2012, will step down from the board at the 2016 annual general meeting (AGM) • Pierin Vincenz*, currently vice-chairman, has been de
Slide 8: Financial Results H1 2015
FINANCIAL RESULTS H1 2015 LEONTEQ AG | RESULTS PRESENTATION HY 2015 8
Slide 9: Key performance indicators reflecting Leonteq's business growth
LEONTEQ AG | RESULTS PRESENTATION HY 2015 KEY PERFORMANCE INDICATORS REFLECTING LEONTEQ’S BUSINESS GROWTH General KPIs H1 2015 H1 2014 Change to 9 H1 2014 5 Turnover (CHFbn) 10.7 9.4 14% 7,245 Finteq ratio (turnover) 58% 50% 8 PP 739 CHF 111.6m Total margin (bps) 104 94 11% 21,207 Finteq margin (bps
Slide 10: Platform partner business drives Leonteq's results
LEONTEQ AG | RESULTS PRESENTATION HY 2015 PERFORMANCE PLATFORM PARTNER BUSINESS DRIVES LEONTEQ‘S RESULTS 58% Finteq ratio Platform assets Turnover Operating income 101 5 CHF 4.7bn CHF 6.2bn Margin CHF 62.4m Platform partners (+21%) (+32%) bps (+46%) 109 CHF 3.3bn CHF 4.5bn CHF 49.2m Leonteq Margin (
Slide 11: Operating leverage: cost per unit continues to improve
LEONTEQ AG | RESULTS PRESENTATION HY 2015 OPERATING LEVERAGE COST PER UNIT CONTINUES TO IMPROVE Development of costs and number of issued products Cost per unit (CHF)2 H1 2015 1000 6,936 CAGR • Number of products 806 42% 2014 % issued amount to 7,245 800 8,034 –73 in H1 2015 (+18% from 704 2013 H1 2
Slide 12: Personnel: focus on regions and hiring of sales and IT staff
LEONTEQ AG | RESULTS PRESENTATION HY 2015 PERSONNEL FOCUS ON REGIONS AND HIRING OF SALES AND IT STAFF FTE development1 FTE breakdown 10 14 76 IT Sales Net increase of % % % 79 71 68 FTEs (+21%) mainly 30.06.2015 30.06.2015 driven by • 15 sales 41 54 296 391 252 139 391 % % • 19 IT personnel +21 +21
Slide 13: Income statement: solid double digit net profit growth
LEONTEQ AG | RESULTS PRESENTATION HY 2015 INCOME STATEMENT SOLID DOUBLE DIGIT NET PROFIT GROWTH OF 45% CHF million H1 2015 H1 2014 Change to H1 2014 Net fee income 108.8 77.1 41% • Total operating income increased 26% compared to Net trading income 4.3 11.9 (64%) H1 2014, while remaining stable comp
Slide 14: Segment income: growth in both partner segments
LEONTEQ AG | RESULTS PRESENTATION HY 2015 SEGMENT INCOME GROWTH IN BOTH PARTNER SEGMENTS Business segments (in CHFm) % 60 % +8 • Increase of 19% in +54 50 insurance segment despite challenging negative interest 40 rates 30 % • Rise in platform partner 50.0 49.2 turnover leads to increase in 20 +19 4
Slide 15: Segment profit before taxes
41 46 275 LEONTEQ AG | RESULTS PRESENTATION HY 2015 SEGMENT PROFIT BEFORE TAXES BUSINESS SEGMENTS PROFITABILITY IS FURTHER IMPROVING Segment profit before taxes (in CHFm) 40 % +71 30 % • Partner Innovation & Devel- +13 opment segment expenses increased due to buildup of 20 % onboarding capacities 28
Slide 16: Required capital influenced by market uncertainties
LEONTEQ AG | RESULTS PRESENTATION HY 2015 REQUIRED CAPITAL INFLUENCED BY MARKET UNCERTAINTIES Capital development (in CHFm) Required capital per 30.06.2015 (in CHFm) 400 140 % % % 0 +38 +25 -5.0 2.4 % Major drivers for increase in 24.3 375 -15.9 105 +39 regulatory required capital: 38.9 • Prudent he
Slide 17: Use of proceeds for accelerated growth
LEONTEQ AG | RESULTS PRESENTATION HY 2015 USE OF PROCEEDS FOR ACCELERATED GROWTH PRUDENT SPENDING OF NET PROCEEDS PLATFORM PARTNER REGIONAL INNOVATION & BUSINESS EXPANSION TECHNOLOGY Investments and Increase of risk-weighted • New partnership with DBS in • Significant hiring of 13 Sales • Further en
Slide 18: Strengthening of Swiss franc: SNB decision impacts results
LEONTEQ AG | RESULTS PRESENTATION HY 2015 STRENGTHENING OF SWISS FRANC SNB DECISION IMPACTS LEONTEQ´S RESULTS BY CHF -3 MILLION CHF million CHF EUR USD OTHER TOTAL Total operating income 29.5 30.2 41.7 10.2 111.6 share in % 26% 27% 37% 10% Total operating expenses 56.4 6.1 1.7 8.2 72.4 share in % 78
Slide 19: Strategy & Business Update
LEONTEQ AG | RESULTS PRESENTATION HY 2015 STRATEGY & BUSINESS UPDATE 19
Slide 20: Strategy update: further progress across three key strategies
LEONTEQ AG | RESULTS PRESENTATION HY 2015 STRATEGY UPDATE FURTHER PROGRESS ACROSS THE THREE KEY STRATEGIES Platform partner business Regional expansion Innovation & technology • Cooperation envisaged • Further build-out of • Start of development of with four banking the regional offices a multi-issu
Slide 21: Platform partner business: envisaged cooperation with five renowned partners
LEONTEQ AG | RESULTS PRESENTATION HY 2015 PLATFORM PARTNER BUSINESS ENVISAGED COOPERATION WITH FIVE RENOWNED PARTNERS • J.P. Morgan As part of the intended cooperation Leonteq envisages leveraging J.P. Morgan’s risk management capabilities while J.P. Morgan in turn aims to benefit from the automated
Slide 22: Platform partner business: extending the global footprint
LEONTEQ AG | RESULTS PRESENTATION HY 2015 PLATFORM PARTNER BUSINESS EXTENDING THE GLOBAL FOOTPRINT Partner headquartered in Banking Insurance • EFG International • Notenstein Private Bank • Helvetia Switzerland • Raiffeisen • Swiss Life • Corner Bank Europe (excl. CH) • Deutsche Bank Asia • DBS • J.
Slide 23: Platform partner pipeline staging model
LEONTEQ AG | RESULTS PRESENTATION HY 2015 PLATFORM PARTNER PIPELINE STAGING MODEL1 • Imminent start of cooperation • Integration project ongoing # Partners Stage 4 0 • Completion of testing phase GO-LIVE • Cooperation agreement signed • Issuance of first products • Signed agreement on scope and econ
Slide 24: Regional expansion: solid growth in all regions
LEONTEQ AG | RESULTS PRESENTATION HY 2015 REGIONAL EXPANSION SOLID GROWTH IN ALL REGIONS SWITZERLAND + 33% growth in total operating income + 45 FTEs hired y-o-y Zurich Geneva Office moves being executed or planned in Hong Kong, London, EUROPE Paris and Singapore +22% growth in total operating incom
Slide 25: Innovation & technology: at the forefront of a changing industry
LEONTEQ AG | RESULTS PRESENTATION HY 2015 INNOVATION & TECHNOLOGY LEONTEQ AT THE FOREFRONT OF A CHANGING INDUSTRY INNOVATION IPDS • Leonteq, Avaloq, DBS and Numerix started to develop a multi-issuer investment products distribution system (IPDS) • Buy-side driven solution supporting the trend toward
Slide 26: Summary & Outlook
LEONTEQ AG | RESULTS PRESENTATION HY 2015 SUMMARY & OUTLOOK 26
Slide 27: Summary & outlook in a nutshell
LEONTEQ AG | RESULTS PRESENTATION HY 2015 SUMMARY & OUTLOOK IN A • Significant strategic progress by announcing the envisaged cooperation with Swiss Life as the second NUTSHELL platform partner in the insurance sector and the intention to extend the regional footprint with Deutsche Bank in Europe an
Slide 28: Our Business & Market Overview
LEONTEQ AG | RESULTS PRESENTATION HY 2015 OUR BUSINESS & MARKET OVERVIEW LEONTEQ‘S BUSINESS MODEL MARKET OVERVIEW PERFORMANCE & RISKS CORPORATE GOVERNANCE 28
Slide 29: Leonteq's unique business model: leading partner for digitization solutions
LEONTEQ AG | RESULTS PRESENTATION HY 2015 LEONTEQ’S UNIQUE BUSINESS MODEL THE LEADING PARTNER FOR DIGITIZATION SOLUTIONS Sell-side Buy-side automation automation Independent technology and service partner for investment solutions PRODUCT FACTORY MARKET PLACE DISTRIBUTION NETWORK END INVESTOR PLATFOR
Slide 30: Leonteq's unique business model: growth opportunities
LEONTEQ AG | RESULTS PRESENTATION HY 2015 LEONTEQ’S UNIQUE BUSINESS MODEL GROWTH OPPORTUNITIES Growth opportunities A Increase banking and C insurance partners mainly Sell-side D Buy-side automation automation in Europe and Asia B Onboard new types E of platform partners PRODUCT FACTORY MARKET PLACE
Slide 31: Leonteq's edge: leadership in technology, process & distribution
LEONTEQ AG | RESULTS PRESENTATION HY 2015 LEONTEQ’S EDGE IN THE INDUSTRY SIMULTANEOUS LEADERSHIP IN TECHNOLOGY, PROCESS & DISTRIBUTION TECHNOL UTION OG RIB ST Y DI Key to Leonteq’s platform are its employees • Global distribution network • Operating in 9 locations across EMEA, LATAM and • Most moder
Slide 32: Most modern technology platform built from scratch
LEONTEQ AG | RESULTS PRESENTATION HY 2015 MOST MODERN TECHNOLOGY PLATFORM BUILT FROM SCRATCH WITHOUT LEGACY ISSUES BENEFITS FOR PARTNERS Revenues | Costs • Partner for digitization strategy TECHNOLO Structured Investment Products GY can be tailored with a minimum • Opportunity costs saved invest
Slide 33: Focus on automated processes
LEONTEQ AG | RESULTS PRESENTATION HY 2015 FOCUS ON AUTOMATED PROCESSES ENABLING A MODULAR APPROACH ALONG THE ENTIRE VALUE CHAIN BENEFITS FOR PARTNERS Revenues | Costs | Multi Issuer Cross Operational Risks Asset Price Requests Market 05 Making 06 Lifecycle Management 07 Risk & Regulatory Repor
Slide 34: Global distribution network with a best-in-class sales force
LEONTEQ AG | RESULTS PRESENTATION HY 2015 GLOBAL DISTRIBUTION NETWORK WITH A BEST-IN-CLASS SALES FORCE BENEFITS FOR PARTNERS Revenues | Individual product design New markets | Training DISTRIBUT based on payout profiles (450) IO • Partner can distribute N through its own channel Comprehensive
Slide 35: Present market reality: financial services at the edge of substantial changes
LEONTEQ AG | RESULTS PRESENTATION HY 2015 PRESENT MARKET REALITY FINANCIAL SERVICES AT THE EDGE OF SUBSTANTIAL CHANGES • Tectonic plate movement CHALLENGES TREND reshapes the landscape of financial services 70% 10% » 2% implemented, Legacy Level of vertical integration Level of vertical integration
Slide 36: Total addressable market for structured investment products
LEONTEQ AG | RESULTS PRESENTATION HY 2015 TOTAL ADDRESSABLE MARKET FOR STRUCTURED INVESTMENT PRODUCTS MARKET CONSOLIDATION OFFERS SUBSTANTIAL GROWTH OPPORTUNITIES Outstanding volumes (CHF bn)1 Number of structured investment products manufacturers2 46 606 655 20 202 175 2015 CAGR 2015 -3.1% • Total
Slide 37: Structured investment products (SIP)
LEONTEQ AG | RESULTS PRESENTATION HY 2015 STRUCTURED INVESTMENT PRODUCTS (SIP) PRODUCTS CAN BE TAILORED TO INDIVIDUAL RISK PROFILE OF AN INVESTOR Market expectation ? of investor Offered solutions Components CALL • Rising volatility OPTION • Capital Protection • Rising markets / Most common types: u
Slide 38: Total addressable market for unit-linked pensions solutions
LEONTEQ AG | RESULTS PRESENTATION HY 2015 TOTAL ADDRESSABLE MARKET FOR UNIT-LINKED PENSIONS SOLUTIONS SIGNIFICANT GROWTH OPPORTUNITIES Unit linked insurance premiums (CHF bn)1 Number of unit-linked product manufacturers2 2 188 178 21 391 91 2014 2014 CAGR CAGR • Total addressable market +1.2% -1.1%
Slide 39: Unit-linked pension solutions: products for every stage of life
LEONTEQ AG | RESULTS PRESENTATION HY 2015 UNIT-LINKED PENSION SOLUTIONS PRODUCTS FOR EVERY STAGE OF LIFE Lifecycle Offered solutions Components Childhood • No income • High financial dependence Accumulation Family • Periodic or one-off • Increasing wealth, investments loss of second income • Shift t
Slide 40: History of strong double digit growth rates: financial track record
LEONTEQ AG | RESULTS PRESENTATION HY 2015 HISTORY OF STRONG DOUBLE DIGIT GROWTH RATES FINANCIAL TRACK RECORD Total operating income (in CHFm) CAGR Total operating expenses (in CHFm) 25% CAGR 250 250 21% 200 200 150 150 100 100 200 158 140 50 105 128 50 106 115 66 88 71 90 54 0 0 2009 2010 2011 2012
Slide 41: History of strong double digit growth rates: business growth indicators
LEONTEQ AG | RESULTS PRESENTATION HY 2015 HISTORY OF STRONG DOUBLE DIGIT GROWTH RATES BUSINESS GROWTH INDICATORS Turnover (in CHFbn) CAGR Number of distribution partners CAGR 24% 31% 25 1,000 20 800 15 600 10 20.4 400 802 15.7 580 658 5 10.4 12.1 200 442 6.9 7.8 345 206 0 0 2009 2010 2011 2012 2013
Slide 42: Risk map: mitigation of inherent business risks
LEONTEQ AG | RESULTS PRESENTATION HY 2015 RISK MAP MITIGATION OF INHERENT BUSINESS RISKS (SELECTION) MARKET RISKS High • Portfolio is hedged induced by the client flow Repu- tational (no proprietary trading) Risk » Structural long vega position protecting from market shocks Opera- • All products are
Slide 43: Shareholder structure
LEONTEQ AG | RESULTS PRESENTATION HY 2015 SHAREHOLDER STRUCTURE ~50% OF SHAREHOLDERS REPRESENTED BY THE BOARD OF DIRECTORS Market capitalization CHF 2,589m (as per 30.06.2015) Share price development since initial public offering (in CHF)* 200 Outstanding shares 15,944,504 registered shares 180 160
Slide 44: Leonteq's management team & board of directors
LEONTEQ AG | RESULTS PRESENTATION HY 2015 LEONTEQ’S MANAGEMENT TEAM & BOARD OF DIRECTORS ALIGNED TO THE NEEDS OF OUR GROWING COMPANY EXECUTIVE COMMITTEE* Jan Schoch CEO (Founding partner) Roman Kurmann Chief Financial Officer • Appointed two new Manish Patnaik Chief Operating Officer members of the