Leonteq Ag · SIX:LEON
Leonteq — Investor Day (November 2016)
52 slides from Leonteq's investor day presentation, Nov 16, 2016
Slide 1: Investor Day 2016: Vision 2020 | Focus, Grow & Scale
ZURICH, 16 NOVEMBER 2016 INVESTOR DAY 2016 VISION 2020 | FOCUS, GROW & SCALE
Slide 2: Legal Disclaimer
INVESTOR DAY 2016 | VISION 2020 FOCUS, GROW & SCALE 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 t
Slide 3: Agenda
INVESTOR DAY 2016 | VISION 2020 FOCUS, GROW & SCALE AGENDA • Introduction • Vision 2020 • Financials • Summary • Appendix 3
Slide 4: Vision 2020
INVESTOR DAY 2016 | VISION 2020 FOCUS, GROW & SCALE VISION 2020 4
Slide 5: Key Messages: A Clear Vision for 2020
INVESTOR DAY 2016 | VISION 2020 FOCUS, GROW & SCALE KEY MESSAGES A CLEAR VISION FOR 2020 We delivered an impressive entrepreneurial growth story enabled by a leading technology platform We faced various challenges in a difficult market environment over the last twelve months We conducted in-depth re
Slide 6: Proven Business Model Generated More Than 1 Billion Revenues Since Inception
INVESTOR DAY 2016 | VISION 2020 FOCUS, GROW & SCALE PROVEN BUSINESS MODEL GENERATED MORE THAN 1 BILLION REVENUES SINCE INCEPTION • Leading expertise and technology for structured investment products Unique products and unit-linked insurance policies & • Unique capabilities and technology to manufact
Slide 7: The Leading Technology Platform Built from Scratch Without Legacy Issues
INVESTOR DAY 2016 | VISION 2020 FOCUS, GROW & SCALE THE LEADING TECHNOLOGY PLATFORM BUILT FROM SCRATCH WITHOUT LEGACY ISSUES Unrivaled computational power capabilities: 2 billion product combinations in 2 minutes Driving consolidation through unique cost leadership (minimum investment size of CHF 1,
Slide 8: The Most Successful Swiss IPO in Recent Years: Impressive Financial Track Record
INVESTOR DAY 2016 | VISION 2020 FOCUS, GROW & SCALE THE MOST SUCCESSFUL SWISS IPO IN RECENT YEARS1 IMPRESSIVE FINANCIAL TRACK RECORD Number of active clients Turnover (in CHF billions) Net profit (in CHF millions) Cost per unit (in CHF thousands) p.a. p.a. 1000 p.a. 21 +19% 70 +33% 11 +16% Technolog
Slide 9: Unlock Further Growth Through Addressing Challenges
INVESTOR DAY 2016 | VISION 2020 UNLOCK FURTHER GROWTH THROUGH 350 ADDRESSING CHALLENGES FOCUS, GROW & SCALE ACHIEVE SUSTAINABLY IMPROVING MONETIZATION 300 Track record resulted in excessive multiple expansion Monetization of pipeline investments to come 1 250 250 30 150 225 1 25 125 200 200 1 175 20
Slide 10: Attractive Market for a Structured Investment Products Specialist
INVESTOR DAY 2016 | VISION 2020 FOCUS, GROW & SCALE INITIATION OF STRATEGY REVIEW IN Q2 2016 ATTRACTIVE MARKET FOR A STRUCTURED INVESTMENT PRODUCTS SPECIALIST Structured investment products, Industry consolidation driven by unit costs a corner stone for investments and tightening regulatory demands
Slide 11: Automation Drives Industry Transformation
INVESTOR DAY 2016 | VISION 2020 FOCUS, GROW & SCALE AUTOMATION DRIVES INDUSTRY TRANSFORMATION SCALABILITY AS A KEY DIFFERENTIATOR • A high degree of automation allows Leonteq to offer highly tailored products with small ticket sizes Degree of automation • Cost of production substantially below indus
Slide 12: Unrivaled Unit Cost
INVESTOR DAY 2016 | VISION 2020 FOCUS, GROW & SCALE UNRIVALED UNIT COST EXPERT ESTIMATES INDICATE SIGNIFICANT COST ADVANTAGE 10x faster1 76% cheaper Automated platform1 Manual platform1 Peer comparison2 Value chain hours hours Average cost per new product, thousands CHF Pricing 0.1 2 Top tier bank a
Slide 13: Further Grow and Scale
INVESTOR DAY 2016 | VISION 2020 FOCUS, GROW & SCALE FURTHER GROW AND SCALE LEVERAGE THE POTENTIAL OF OUR BUSINESS Scaled distribution Distribution Scaled issuance Issuance Scaled platform Issuance scalability by enabling partners Enhanced distribution Full platform to issue products from scalability
Slide 14: Achieving Network Scalability
INVESTOR DAY 2016 | VISION 2020 FOCUS, GROW & SCALE ACHIEVING NETWORK SCALABILITY EMPOWER OUR CLIENTS, PARTNERS AND EMPLOYEES Leonteq distribution Partner distribution Network partners can scale at least 10x more Leonteq Sales Leonteq Client (~900 in 2015) Network Partner empowered by Leonteq platfo
Slide 15: Three Distinct Business Lines Organized by Scale of Distribution
INVESTOR DAY 2016 | VISION 2020 FOCUS, GROW & SCALE THREE DISTINCT BUSINESS LINES ORGANIZED BY SCALE OF DISTRIBUTION I. Manufacture structured investment products via an automated platform using own and partners’ balance sheets, distributed through Leonteq’s Investment Solutions 2015 share of operat
Slide 16: Our Strategic Priorities
INVESTOR DAY 2016 | VISION 2020 FOCUS, GROW & SCALE OUR STRATEGIC PRIORITIES EMPOWER OUR EMPLOYEES, CLIENTS AND PARTNERS 1 Strengthen our platform through streamlining organizational structure and processes and empowering our personnel 2 Increase efficiency of our Leonteq distribution 3 Empower our
Slide 17: Providing Clients with Tailored Investments
INVESTOR DAY 2016 | VISION 2020 FOCUS, GROW & SCALE PROVIDING CLIENTS WITH TAILORED INVESTMENTS UNIQUE, INTEGRATED OPERATING MODEL WHAT • Provide our clients access to one of the largest universes of structured investment products • Products issued from our partners’ and our own balance sheet Our of
Slide 18: Enhanced Efficiency and Focused Growth
INVESTOR DAY 2016 | VISION 2020 FOCUS, GROW & SCALE ENHANCED EFFICIENCY AND FOCUSED GROWTH PRIORITIZE MARKETS AND SCALE DISTRIBUTION HOW Stop planned market entries Invest into focus markets2 Growth initiatives Switzerland • Access third party Market potential in focus markets balance sheets through
Slide 19: Empower Our Network Partners
INVESTOR DAY 2016 | VISION 2020 FOCUS, GROW & SCALE EMPOWER OUR NETWORK PARTNERS MODULAR SOLUTIONS & SERVICES WHAT • Provide modular IT solutions to fully enable or to enhance their partners´ structured investment product capabilities Our proposition • Offer add-on services such as regulatory suppor
Slide 20: Standardized Integration Approach
INVESTOR DAY 2016 | VISION 2020 FOCUS, GROW & SCALE STANDARDIZED INTEGRATION APPROACH FOCUSED TARGET LIST AND OFFERING HOW Banks with a clear need for structured Industry dynamics Growth initiatives investment products platform Region Pool of possible partners Market potential of a total of CHF ~5 b
Slide 21: Unique Approach to Enabling Unit-Linked Insurance Policies
INVESTOR DAY 2016 | VISION 2020 FOCUS, GROW & SCALE UNIQUE APPROACH TO ENABLING UNIT-LINKED INSURANCE POLICIES MODULAR SOLUTIONS & SERVICES FOR INSURANCE PARTNERS WHAT • Provide a modular, automated solutions to provide investments with attractive risk-return profiles and/or capital protection optio
Slide 22: Substantially Extended Offering
INVESTOR DAY 2016 | VISION 2020 FOCUS, GROW & SCALE SUBSTANTIALLY EXTENDED OFFERING DEVELOP POLICY ADMINISTRATION PLATFORM FOR PARTNERS HOW Selected EU life insurers assessed to have clear need for Industry dynamics Growth initiatives unit-linked solutions Size of Potential partners Total revenue po
Slide 23: One Platform to Scale All Three Businesses
INVESTOR DAY 2016 | VISION 2020 FOCUS, GROW & SCALE ONE PLATFORM TO SCALE ALL THREE BUSINESSES MODULAR IT ARCHITECTURE END-TO-END AUTOMATION Leonteq’s technology-enabled platform Product Capital guarantee Product design Risk documentation & other overlay & launch management & reporting components Is
Slide 24: KPI Targets for 2017 – 2020
INVESTOR DAY 2016 | VISION 2020 FOCUS, GROW & SCALE KPI TARGETS FOR 2017 – 2020 ACHIEVING SUSTAINABLE, PROFITABLE GROWTH 2015 2020 Investment Solutions Average annual growth in turnover 14% 15% Including future additional partners that will support Investment Solutions in reaching its KPI target, Le
Slide 25: Our Structure Follows Our Refined Growth Strategy
INVESTOR DAY 2016 | VISION 2020 FOCUS, GROW & SCALE OUR STRUCTURE FOLLOWS OUR REFINED GROWTH STRATEGY STRENGTHENING OF EXECUTIVE MANAGEMENT CEO Jan Schoch Business Legal & Development Compliance Sandro Dorigo Ulrich Sauter Leonteq’s new organizational structure effective as of January 2017, subject
Slide 26: Strengthen Executive Committee
INVESTOR DAY 2016 | VISION 2020 FOCUS, GROW & SCALE STRENGTHEN EXECUTIVE COMMITTEE ADDING EXPERIENCE, EXPERTISE AND LEADERSHIP MARCO AMATO STEVEN DOWNEY CHIEF FINANCIAL & RISK OFFICER HEAD OF MARKETS (since September 2016) (as of November 2016) Previously Previously Partner (Financial Services) Mana
Slide 27: Committed Shareholders, Partners and Employees
INVESTOR DAY 2016 | VISION 2020 FOCUS, GROW & SCALE COMMITTED SHAREHOLDERS, PARTNERS AND EMPLOYEES CONTINUED SUPPORT FOR OUR SUCCESS Long-term shareholders • As largest shareholder, Raiffeisen has committed a 10 year partnership; as a trusted long-term partner, offering full support for our strategy
Slide 28: Partner Endorsements
INVESTOR DAY 2016 | VISION 2020 FOCUS, GROW & SCALE PARTNER ENDORSEMENTS “Based on the product structuring know-how and market making capabilities of Leonteq, Notenstein La Roche PATRIK GISEL quickly established itself as one of the top players in the Swiss structured investment products market. CEO
Slide 29: Partner Statements
INVESTOR DAY 2016 | VISION 2020 FOCUS, GROW & SCALE PARTNER STATEMENTS NICK MIHIC “Through its platform, Leonteq is facilitating access to an incremental clientele for us in Switzerland. Head of Distribution Germany, The degree of automation allows for efficient handling of orders and execution.” Sw
Slide 30: Growing Partner Network
INVESTOR DAY 2016 | VISION 2020 FOCUS, GROW & SCALE GROWING PARTNER NETWORK RAIFFEISEN AND AKB COOPERATION ANNOUNCED Insurance and wealth Investment solutions Banking solutions planning solutions LTQ distribution Partner distribution Partner distribution Existing partners Bank of Montreal | Corner B
Slide 31: Financials
INVESTOR DAY 2016 | VISION 2020 FOCUS, GROW & SCALE FINANCIALS 31
Slide 32: Future Financial Communication and Reporting
INVESTOR DAY 2016 | VISION 2020 FOCUS, GROW & SCALE FUTURE FINANCIAL COMMUNICATION AND REPORTING CLEAR ALIGNMENT OF STRATEGY AND FINANCIAL GOALS IN A NUTSHELL Simplified financial reporting Updated metrics and KPIs Active cost base management Optimized usage of capital 32
Slide 33: Simplifying Our Financial Reporting
INVESTOR DAY 2016 | VISION 2020 FOCUS, GROW & SCALE SIMPLIFYING OUR FINANCIAL REPORTING ALIGN FINANCIALS WITH OUR NEW STRATEGY One consistent view with Reporting Several reporting views coherent KPI set on a group structure (segments and business model) and segment level Half-yearly financial report
Slide 34: Introducing a New Segment Reporting
INVESTOR DAY 2016 | VISION 2020 FOCUS, GROW & SCALE INTRODUCING A NEW SEGMENT REPORTING RE-MAPPING OF THE TYPE OF BUSINESSES 2015 SHARE OF REVENUES 100% • Investment Solutions to Insurance Platform Insurance & Wealth include revenues from 12% Partners Planning Solution Leonteq and third parties 26%
Slide 35: Economics and Monetization
INVESTOR DAY 2016 | VISION 2020 FOCUS, GROW & SCALE ECONOMICS AND MONETIZATION VOLUME DRIVEN OPERATING INCOME Investment Banking Insurance solutions solutions solutions Enablers Production & platform service fees Recurring fee Issuance (volume-driven) (volume-driven) partners Operating Products and
Slide 36: Restating Our Segment Reporting: Pro Forma Financials
INVESTOR DAY 2016 | VISION 2020 FOCUS, GROW & SCALE RESTATING OUR SEGMENT REPORTING PRO FORMA FINANCIALS Investment Solutions Banking Solutions Insurance & Wealth Planning Solutions 200 200 200 +16% 150 150 150 Segment operating income 100 100 100 (in CHF m) 168 157 125 50 101 50 +20% 50 +28% 18 21
Slide 37: Key Performance Indicators
INVESTOR DAY 2016 | VISION 2020 FOCUS, GROW & SCALE KEY PERFORMANCE INDICATORS1 FRAMEWORK ALIGNED WITH NEW STRATEGY Group KPIs 2013 2014 2015 H1 2015 H1 2016 Target 2020 Platform assets (CHF bn) 5.4 7.6 7.9 8.0 8.7 Whereof platform partner business 48% 49% 59% 59% 69% Cost-income ratio2 73% 70% 69%
Slide 38: Stringent Costs Management
INVESTOR DAY 2016 | VISION 2020 FOCUS, GROW & SCALE STRINGENT COSTS MANAGEMENT FOCUSED BUSINESS MODEL WILL ALLOW FURTHER COST SAVINGS Completed cost • Reduction of CHF 10m personnel expenses (communicated in H1 2016) savings predominantly comprising savings against budgeted hirings • Further cost re
Slide 39: Additional Cost Savings of CHF 10m
INVESTOR DAY 2016 | VISION 2020 FOCUS, GROW & SCALE ADDITIONAL COST SAVINGS OF CHF 10 m REDUCTION OF 50 FTEs FULLY EFFECTIVE BY Q1 2017 Annualized impact Measure Explanation (in CHF m) Reduction in FTEs in both FTE reduction front office and corporate 8 support functions (50 FTEs) Consolidation of o
Slide 40: Capital Development: Buildup of Strong Capital Base Since IPO
INVESTOR DAY 2016 | VISION 2020 FOCUS, GROW & SCALE CAPITAL DEVELOPMENT BUILDUP OF STRONG CAPITAL BASE SINCE IPO Total equity (CHF m) Total required capital (CHF m) 500 500 • Approx CHF 250 million of capital in excess of regulatory 450 62 450 requirements 38 400 400 • Capital ratios expected to 217
Slide 41: Business Update October 2016 (YTD)
INVESTOR DAY 2016 | VISION 2020 FOCUS, GROW & SCALE BUSINESS UPDATE OCTOBER 2016 (YTD) Since the announcement of half-year 2016 results, Leonteq gained further market share despite a challenging market environment Turnover generated with products of Leonteq’s platform partners continued to grow stro
Slide 42: Summary
INVESTOR DAY 2016 | VISION 2020 FOCUS, GROW & SCALE SUMMARY 42
Slide 43: Key Messages
INVESTOR DAY 2016 | VISION 2020 FOCUS, GROW & SCALE KEY MESSAGES 1. We continue with our focused strategy in the attractive segment of structured investment products 2. We have built an attractive business and employ one of the largest and most experienced teams of structured products experts 3. We
Slide 44: Our Vision
INVESTOR DAY 2016 | VISION 2020 FOCUS, GROW & SCALE OUR VISION « We empower our clients and partners with an unparalleled manufacturing and distribution platform, setting new standards in agility, speed and efficiency on the structured investment products and pension market globally. » This will mak
Slide 45: Appendix
INVESTOR DAY 2016 | VISION 2020 FOCUS, GROW & SCALE APPENDIX 45
Slide 46: Segment Results: Pro Forma Full Year Financials
INVESTOR DAY 2016 | VISION 2020 FOCUS, GROW & SCALE SEGMENT RESULTS PRO FORMA FULL YEAR FINANCIALS 2015 Investment Banking Insurance Corporate Total CHFm solutions Solutions Solutions Center Total operating income 168.2 25.8 25.7 0.0 219.7 Total operating expenses (98.4) (22.2) (8.7) (21.2) (150.5)
Slide 47: Segment Results: Pro Forma Half Year Financials
INVESTOR DAY 2016 | VISION 2020 FOCUS, GROW & SCALE SEGMENT RESULTS PRO FORMA HALF YEAR FINANCIALS H1 2016 Investment Banking Insurance Corporate Total CHFm solutions Solutions Solutions Center H1 2016 Total operating income 100.5 12.0 6.8 0.0 119.3 Total operating expenses (56.8) (9.2) (3.4) (11.5)
Slide 48: Reconciliation 2015 Financials
INVESTOR DAY 2016 | VISION 2020 FOCUS, GROW & SCALE RECONCILIATION 2015 FINANCIALS RE-MAPPING OF SEGMENT AND BUSINESS LINE REPORTING 2015 Investment Banking Insurance Corporate Total CHFm solutions Solutions Solutions Center Leonteq Production 94.3 – – – 94.3 Banking Platform Partners 73.9 25.8 – –
Slide 49: Income Statement
INVESTOR DAY 2016 | VISION 2020 FOCUS, GROW & SCALE INCOME STATEMENT CHFm 2013 2014 2015 H1 2015 H1 2016 Net fee income 135.9 181.1 228.6 108.8 108.6 Net trading income 24.9 20.6 (4.1) 4.3 15.6 Net interest income (2.4) (1.7) (4.8) (1.5) (4.9) Total operating income 158.4 200.0 219.7 111.6 119.3 Per
Slide 50: Balance Sheet
INVESTOR DAY 2016 | VISION 2020 FOCUS, GROW & SCALE BALANCE SHEET CHFbn 31.12.2013 31.12. 2014 31.12.2015 30.06.2016 Cash and receivables 0.5 0.9 0.8 1.1 Financial assets 4.2 5.9 5.7 5.9 Other assets 0.05 0.1 0.1 0.1 Total assets 4.8 6.9 6.6 7.1 Short-term credit and payables 1.0 1.4 1.1 1.8 Financi
Slide 51: Personnel
INVESTOR DAY 2016 | VISION 2020 FOCUS, GROW & SCALE PERSONNEL FTE development 2013 2014 2015 H1 2015 H1 2016 Switzerland 232 274 343 296 366 EMEA 36 46 63 54 88 APAC 23 41 57 41 67 Total FTEs 291 361 463 391 521 FTE development 2013 2014 2015 H1 2015 H1 2016 Business units 92 135 179 139 224 Whereof
Slide 52: Key Performance Indicators Definitions
INVESTOR DAY 2016 | VISION 2020 FOCUS, GROW & SCALE KEY PERFORMANCE INDICATORS DEFINITIONS Platform assets Platform assets are defined as the outstanding volume of products issued and traded through Leonteq’s platform Return on equity Return on equity has been calculated as the ratio of annualized g