Slide 1: Results Presentation FY 2014
LEONTEQ AG RESULTS PRESENTATION | FY 2014 Zurich, 26 February 2015
Slide 2: Legal Disclaimer
LEONTEQ AG | RESULTS PRESENTATION FY 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 and all documents an
Slide 3: Agenda
LEONTEQ AG | RESULTS PRESENTATION FY 2014 AGENDA • Key take aways at a glance • Financial results 2014 • Market update • Summary & outlook • Appendix 3
Slide 4: Key Take Aways at a Glance
LEONTEQ AG | RESULTS PRESENTATION FY 2014 KEY TAKE AWAYS AT A GLANCE 4
Slide 5: Key Take Aways at a Glance
LEONTEQ AG | RESULTS PRESENTATION FY 2014 KEY TAKE AWAYS AT A GLANCE • Net profit grew 61% to CHF 62.6 million, mainly driven by strong double-digit growth in turnover (up 30% to CHF 20.4 billion) • Total operating income increased 26% to CHF 200.0 million • Platform partners provided the majority o
Slide 6: Financial Results 2014
FINANCIAL RESULTS 2014 LEONTEQ AG | RESULTS PRESENTATION FY 2014 6
Slide 7: Note to Financial Results 2014
LEONTEQ AG | RESULTS PRESENTATION FY 2014 NOTE TO FINANCIAL RESULTS 2014 • As a reflection of Leonteq’s strategic priorities (platform partner business, regional expansion and new initiatives), the segment reporting structure and key performance indicators were adapted • To underline the focus on pl
Slide 8: Key Performance Indicators
LEONTEQ AG | RESULTS PRESENTATION FY 2014 KEY PERFORMANCE INDICATORS POSITIVE DEVELOPMENT IN PLATFORM PARTNER BUSINESS 1 Turnover has been calculated as the aggregated notional amount of structured products issued General KPIs 2014 2013 Change to 2013 through Leonteq’s platform plus the aggregated n
Slide 9: Group Net Profit
LEONTEQ AG | RESULTS PRESENTATION FY 2014 GROUP NET PROFIT INCREASED PLATFORM PARTNER BUSINESS DRIVING PROFITABILITY Number of platform partners Turnover (in CHFbn) 2014 2014 5 20.4 % 2 30 3 15.7 2013 2013 0 2 4 6 8 0 5 10 15 20 Operating income (in CHFm) Group net profit (in CHFm) 2014 2014 200.0 6
Slide 10: Income Statement
LEONTEQ AG | RESULTS PRESENTATION FY 2014 INCOME STATEMENT STRONG BUSINESS GROWTH DRIVES INCOME AND NET PROFIT CHF million 2014 2013 Change to 2013 Net fee income 181.1 135.9 33% • Strong growth in net fee Net trading income 20.6 24.9 (17%) income reflecting increased earning contributions from Othe
Slide 11: Strengthening of Swiss Franc
LEONTEQ AG | RESULTS PRESENTATION FY 2014 STRENGTHENING OF SWISS FRANC IMPACT ON LEONTEQ´S RESULTS • Leonteq’s results are affected by foreign exchange rate developments as revenues and expenses are unequally distributed among different currencies • Cost base is predominantly in CHF whereas revenues
Slide 12: Platform Partners Contribution Exceeding 50%
LEONTEQ AG | RESULTS PRESENTATION FY 2014 PLATFORM PARTNERS CONTRIBUTION EXCEEDING 50% 15 % 12 55 Turnover (in CHFbn) % 9 • Rising contribution from 48 platform partners in both 6 11.3 turnover (+ CHF 3.8bn 8.2 9.1 3 7.5 resp. +51%) and operating income (+ CHF 34.7m 0 2013 2014 resp. +50%) Margin Ma
Slide 13: Platform Partners: Continued Progress in the Core Strategy
LEONTEQ AG | RESULTS PRESENTATION FY 2014 PLATFORM PARTNERS CONTINUED PROGRESS IN THE CORE STRATEGY • Major achievement with initiation of first platform partnership in Asia with DBS – close to 100 products issued in the first two months • Strategic step towards further expansion with Notenstein Pri
Slide 14: Operating Leverage
LEONTEQ AG | RESULTS PRESENTATION FY 2014 OPERATING LEVERAGE COST PER UNIT FURTHER IMPROVED Development of costs and number of issued products Cost per unit (CHF)2 2014 800 CAGR 8,034 704 48% 2013 % 8,560 -69 • Number of products 600 2012 issued amounted to 564 10,656 12,657 in 2014 500 2011 12,097
Slide 15: Operating Expenses
LEONTEQ AG | RESULTS PRESENTATION FY 2014 OPERATING EXPENSES INCREASED TO SUPPORT GROWTH Development of total operating expenses (in CHFm) • Increase in personnel 9 30 61 % % % expenses mainly driven 2014 by hiring internationally and in key functions at the head- office as well as performance- 12.3
Slide 16: Personnel Expenses
LEONTEQ AG | RESULTS PRESENTATION FY 2014 PERSONNEL EXPENSES CONTINUED HIRING REFLECTING GROWTH OF THE BUSINESS FTE breakdown1 Employees by nationality 11 13 76 Others Switzerland • 36 nationalities % % % 2014 • Increase of FTEs by 24% mainly driven by hiring of: 18% - 7 FTEs for partner 41 46 274 3
Slide 17: Segment Results
41 46 275 LEONTEQ AG | RESULTS PRESENTATION FY 2014 SEGMENT RESULTS ALL THREE BUSINESS SEGMENTS PROFITABLE Operating income (CHFm) Partner Innovation & ∆ to 2013 Development abs. (CHFm) rel. • New segment reporting Banking 83.2 Banking 29.0 54% to reflect internal organi- Platform Partners 54.2 Insu
Slide 18: Regional Development
LEONTEQ AG | RESULTS PRESENTATION FY 2014 REGIONAL DEVELOPMENT STRONG PERFORMANCE IN SWITZERLAND AND EUROPE Total operating income (in CHFm) • Switzerland and Europe 44 47 9 (double-digit growth in all % % % 2014 sales locations) with strong business performance driven by Banking and Insurance Platf
Slide 19: Usage of Net Proceeds for Accelerated Growth
LEONTEQ AG | RESULTS PRESENTATION FY 2014 USAGE OF NET PROCEEDS FOR ACCELERATED GROWTH SUPPORTING GROWTH STRATEGY PLATFORM PARTNER REGIONAL PLATFORM BUSINESS EXPANSION EFFICIENCY/INNOVATION Investments and Increase of risk-weighted • New partnership with DBS in Asia • Significant hiring of 11 sales
Slide 20: Capital Structure
LEONTEQ AG | RESULTS PRESENTATION FY 2014 CAPITAL STRUCTURE UNDERPINNING FINANCIAL STABILITY AND STRENGTH Capital development CHFm Required capital/Risk-weighted assets 2014 2013 CHFm CHFm • Increase in outstand- Tier 1 capital (31 Dec 2013) 147.5 ing volume of platform Market risk (incl. derivative
Slide 21: Capital Structure Impacted by Business Growth
LEONTEQ AG | RESULTS PRESENTATION FY 2014 CAPITAL STRUCTURE IMPACTED BY BUSINESS GROWTH • Driven by the accelerated growth in business supported by the rights offering in August 2014 risk-weighted assets (RWA) increased by CHF 350 million or 43%, mainly due to market, credit and operational risk • T
Slide 22: Balance Sheet Development
LEONTEQ AG | RESULTS PRESENTATION FY 2014 BALANCE SHEET DEVELOPMENT INCREASE IN HEDGE BOOK DRIVEN BY GROWTH IN BUSINESS Total assets % % % 12.6 86.5 1.0 31.12.2014 • Increase in hedge book driven by higher outstanding volumes % % % 10.9 88.1 1.0 issued by platform partners and Leonteq 31.12.2013 • O
Slide 23: Market Update
LEONTEQ AG | RESULTS PRESENTATION FY 2014 MARKET UPDATE 23
Slide 24: Development of Structured Products Market
LEONTEQ AG | RESULTS PRESENTATION FY 2014 DEVELOPMENT OF STRUCTURED PRODUCTS MARKET SIGNIFICANT POTENTIAL FOR FUTURE GROWTH AuM (EURbn)1 % % % Leonteq platform share2 3.4 49.4 47.2 2014 0.5% 40.3 594.3 593.9 • Decrease in AuM in Europe mainly driven % by Italy (EUR -37 bn) and 3.4 % 50.7 % 45.9 the
Slide 25: Structured Products Market
LEONTEQ AG | RESULTS PRESENTATION FY 2014 STRUCTURED PRODUCTS MARKET CONTINUED HIGH DEMAND FOR EQUITY-LINKED PRODUCTS Distribution of gross sales by underlying asset class in Europe1 (in %) % % % % % % 81.7 6.2 2.1 1.3 2.9 5.8 2014 % % % % % % 72.4 12.6 2.8 1.4 2.6 8.2 2013 % % % % % % 62.5 21.3 2.6
Slide 26: Life Insurance Market Switzerland
LEONTEQ AG | RESULTS PRESENTATION FY 2014 LIFE INSURANCE MARKET SWITZERLAND Booked gross premiums in CHFbn Unit-linked life insurance market 2013 35 Others Mobiliar Generali Allianz 2.3% 30 CAGR (10yr) 3.2 Pax 2.5% 5.3% • Increase in demand for % Skandia 3.5% unit-linked life insurance 25 5.1% 34.1%
Slide 27: Life Insurance Market Europe & Asia
LEONTEQ AG | RESULTS PRESENTATION FY 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 28: Summary & Outlook
LEONTEQ AG | RESULTS PRESENTATION FY 2014 SUMMARY & OUTLOOK 28
Slide 29: Summary
LEONTEQ AG | RESULTS PRESENTATION FY 2014 SUMMARY • Good financial results and strong strategic progress in 2014 • Increase of share of turnover and operating income generated through platform partner products 1/2 to above 50% • Further decrease in cost per unit despite significant investments in pl
Slide 30: Outlook
LEONTEQ AG | RESULTS PRESENTATION FY 2014 OUTLOOK • Leonteq will invest prudently in its growth strategy with focus on onboarding new platform partners, expanding its regional offices, and enhancing its platform and innovation 2/2 • Additional investments and spending in 2014 will result – on an ann
Slide 31: Appendix
LEONTEQ AG | RESULTS PRESENTATION FY 2014 APPENDIX 31
Slide 32: Platform Partners: Our Partners
LEONTEQ AG | RESULTS PRESENTATION FY 2014 PLATFORM PARTNERS OUR PARTNERS Proven model in ERS the banking and RTN PA Q insurance sector TE ON in Switzerland LE 32
Slide 33: Platform Partners: Service Offering Covering the Whole Value Chain
LEONTEQ AG | RESULTS PRESENTATION FY 2014 PLATFORM PARTNERS SERVICE OFFERING COVERING THE WHOLE VALUE CHAIN 04 MARKET MAKING 05 LIFECYCLE MANAGEMENT Leonteq produces structured investment products for platform partners. The platform partner is the PRODUCT issuer and interacts directly III OFFERING w
Slide 34: Leonteq Introduction
LEONTEQ AG | RESULTS PRESENTATION FY 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 35: Structured Investment Products: Main Product Categories
LEONTEQ AG | RESULTS PRESENTATION FY 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 36: Guiding Principles
LEONTEQ AG | RESULTS PRESENTATION FY 2014 GUIDING PRINCIPLES NCY SE E RV PAR IC S 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 Leonteq Moder
Slide 37: Awards
LEONTEQ AG | RESULTS PRESENTATION FY 2014 AWARDS HIGH QUALITY OF SERVICES & INNOVATION RECOGNIZED BY MARKET 2014 HANDELSZEITUNG • CEO of the Year, Category Banking and Insurance ERNST & YOUNG WORLD • The jury has selected Jan Schoch to represent Swiss 1st ENTREPRENEUR OF THE YEAR entrepreneurship at
Slide 38: Leonteq Platform in Switzerland
LEONTEQ AG | RESULTS PRESENTATION FY 2014 LEONTEQ PLATFORM IN SWITZERLAND Largest issuers by number of outstanding listed structured investment products (defined as all product types except leverage products) 1st on SIX Structured Products Exchange1 % 30% Yield enhancement 26.4 % exchange-listed 24.
Slide 39: Milestones
LEONTEQ AG | RESULTS PRESENTATION FY 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 40: Leonteq Is Unique in the Structured Products Market
LEONTEQ AG | RESULTS PRESENTATION FY 2014 LEONTEQ IS UNIQUE IN THE STRUCTURED PRODUCTS MARKET WELL POSITIONED ACROSS THE ENTIRE VALUE CHAIN Vanilla products Brokerage model Proprietary trading OFFERING (warrants, Client driven structured for structured driven structured FOCUS discount certificates,
Slide 41: Platform Partners Introduction
LEONTEQ AG | RESULTS PRESENTATION FY 2014 PLATFORM PARTNERS INTRODUCTION In a platform partnership, structured investment products are created for a partner that acts as issuer and interacts directly with the end-customer. The services comprise, inter alia, risk management and reporting, product doc
Slide 42: Downstream & Upstream Integration
LEONTEQ AG | RESULTS PRESENTATION FY 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 pro
Slide 43: Downstream & Upstream Initiatives
LEONTEQ AG | RESULTS PRESENTATION FY 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 44: Pension Solutions: Products for Every Stage of Life
LEONTEQ AG | RESULTS PRESENTATION FY 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 45: Pension Solutions: Products for Every Stage of Life
LEONTEQ AG | RESULTS PRESENTATION FY 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 46: Pension Solutions Product Matrix
LEONTEQ AG | RESULTS PRESENTATION FY 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 47: Risk Update
LEONTEQ AG | RESULTS PRESENTATION FY 2014 RISK UPDATE AVERAGE VALUE AT RISK AT CHF 1.5m IN 2014 (VS. CHF 1.1m IN 2013) VaR BY ASSET CLASS2 VaR (CHFk) Total VaR 2014 (in CHFk)1 VaR equity 989 3´000 VaR fixed income 445 VaR FX 69 2´500 VaR commodity 472 VaR investment portfolio 199 2´000 VaR total 935
Slide 48: Share Overview
LEONTEQ AG | RESULTS PRESENTATION FY 2014 LEONTEQ AG SHARE OVERVIEW % Market capitalization CHF 1,911 m (as per 31.12.2014) Share price development (in CHF)* 2014 +124 250 Outstanding shares 7,962,960 registered shares 225 200 Listing SIX Swiss Exchange 175 Listing date 19.10.2012 150 125 Ticker sym
Slide 49: Executive Committee & Board of Directors
LEONTEQ AG | RESULTS PRESENTATION FY 2014 LEONTEQ AG EXECUTIVE COMMITTEE & BOARD OF DIRECTORS EXECUTIVE COMMITTEE* Jan Schoch CEO (Founding partner) Roman Kurmann Chief Financial Officer Manish Patnaik Chief Operating Officer Sandro Dorigo Head Pension Solutions (Founding partner) Ulrich Sauter Head