Leonteq Ag · SIX:LEON
Leonteq — FY2015 Earnings Presentation
47 slides from Leonteq's earnings presentation, Feb 4, 2016
Slide 1: Results Presentation FY 2015
ZURICH, 04 FEBRUARY 2016 LEONTEQ AG RESULTS PRESENTATION | FY 2015
Slide 2: Legal Disclaimer
LEONTEQ AG | RESULTS PRESENTATION FY 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 FY 2015 AGENDA • Key take aways • Financial results FY 2015 • Strategic & business update • Summary & outlook • Appendix 3
Slide 4: Key Take Aways
LEONTEQ AG | RESULTS PRESENTATION FY 2015 KEY TAKE AWAYS 4
Slide 5: Key Take Aways 1/2
LEONTEQ AG | RESULTS PRESENTATION FY 2015 KEY TAKE AWAYS 1/2 • 2015, a year of special focus on initiatives and investments to further build the platform partner network • Robust results, although somewhat below management expectations, yet all top and bottom line growth driven by Leonteq’s platform
Slide 6: Key Take Aways 2/2
LEONTEQ AG | RESULTS PRESENTATION FY 2015 KEY TAKE AWAYS 2/2 • First mover in digitization efforts; roll-out of new technology and various tools as part of the Smart Data initiative Technology • Significant usage increase on Leonteq’s platform; number of pricings increased by 57% to 1.2 million in 2
Slide 7: Financial Results FY 2015
FINANCIAL RESULTS FY 2015 LEONTEQ AG | RESULTS PRESENTATION FY 2015 7
Slide 8: Key Performance Indicators
LEONTEQ AG | RESULTS PRESENTATION FY 2015 KEY PERFORMANCE INDICATORS ROBUST RESULTS AND PROGRESS WITH PLATFORM PARTNERS (FINTEQ) General KPIs 2015 2014 Change from 2014 Turnover (CHF bn) 20.5 20.4 0% Change in product mix impacts turnover Finteq ratio (turnover) 58% 55% 3 PP • Multi billion low marg
Slide 9: Income Statement: Continued Profitable Growth
LEONTEQ AG | RESULTS PRESENTATION FY 2015 INCOME STATEMENT CONTINUED PROFITABLE GROWTH CHF million 2015 2014 Change from 2014 Net fee income 228.7 181.1 26% Decline in net trading income in 2015 due to lower Net trading income (4.1) 20.6 (120%) contributions from hedging activities, which did not Ne
Slide 10: Value Drivers: Transition to Finteq Business Model
LEONTEQ AG | RESULTS PRESENTATION FY 2015 VALUE DRIVERS TRANSITION TO FINTEQ BUSINESS MODEL CONTINUES TO UNFOLD +3pp Platform assets (in CHFbn) Turnover (in CHFbn) Finteq Total operating income (in CHFm) ratio 58% 15 15 140 % +20 % +5 120 Overall growth in platform assets, turnover and total % opera
Slide 11: Operating Leverage: Cost per Unit Further Improved
LEONTEQ AG | RESULTS PRESENTATION FY 2015 OPERATING LEVERAGE COST PER UNIT FURTHER IMPROVED Development of costs and number of products issued Cost per unit (CHF)2 2015 1000 7,209 CAGR 801 41% 2014 % 800 8,034 –72 • Number of products issued 704 amount to 14,402 in 2015 2013 8,560 (up 14% from 2014)
Slide 12: Personnel: Focus on Regions and Hiring of Sales and IT Staff
LEONTEQ AG | RESULTS PRESENTATION FY 2015 PERSONNEL FOCUS ON REGIONS AND ON HIRING OF SALES AND IT STAFF FTE development1 FTE breakdown 12 14 74 IT Sales % % % 95 91 31.12.2015 31.12.2015 Increase of 102 FTEs (+28%) mainly driven by 57 63 343 463 284 179 463 • 25 sales primarily in Asia and Europe •
Slide 13: Segment Income
LEONTEQ AG | RESULTS PRESENTATION FY 2015 SEGMENT INCOME SOLID GROWTH IN BOTH PLATFORM PARTNER SEGMENTS Business segments (in CHFm) % % 120 +20 -1 100 • Growth in total operating income in 2015 fully driven 80 by Banking and Insurance Platform Partners segments 60 % underlining Leonteq’s strategic 9
Slide 14: Segment Results Before Taxes
41 46 275 LEONTEQ AG | RESULTS PRESENTATION FY 2015 SEGMENT RESULTS BEFORE TAXES BUSINESS SEGMENTS PROFITABILITY FURTHER IMPROVED Segment results before taxes (in CHFm) % 60 +25 50 • Partner Innovation & % Development segment 40 +7 expenses increased due to further extension of onboard- 30 % ing cap
Slide 15: Required Capital
LEONTEQ AG | RESULTS PRESENTATION FY 2015 REQUIRED CAPITAL REDUCTION IN TIER 1 RATIO DRIVEN BY BUSINESS GROWTH Capital development (in CHFm) Required capital per 31.12.2015 (in CHFm) 425 160 -5.1 -27.9 % % % 400 +37 33 +27 Major drivers for increase 120 in regulatory required capital 68.6 % 3.2 • Ch
Slide 16: Strategy & Business Update
LEONTEQ AG | RESULTS PRESENTATION FY 2015 STRATEGY & BUSINESS UPDATE 16
Slide 17: Strategy Update: Three Key Strategies
LEONTEQ AG | RESULTS PRESENTATION FY 2015 STRATEGY UPDATE FURTHER PROGRESS ACROSS THE THREE KEY STRATEGIES Platform partner business Regional expansion Innovation & technology • Structured investment • Strengthening of local • First mover in digitization products of DB and BMO offices with expertise
Slide 18: Platform Partner Business: Pipeline Continues to Grow
LEONTEQ AG | RESULTS PRESENTATION FY 2015 PLATFORM PARTNER BUSINESS PIPELINE CONTINUES TO GROW # Partners Today 2015 2014 ACTIVE 6 5 5 Pipeline stages* # Partners in pipeline Check point | Issuance of first product Today 2015 2014 • Imminent start of the cooperation Stage 4 • Integration Project ong
Slide 19: Platform Partner Business: On Track to 30+ Partners
LEONTEQ AG | RESULTS PRESENTATION FY 2015 PLATFORM PARTNER BUSINESS ON TRACK TO ACHIEVE STRATEGIC OBJECTIVE OF 30+ PARTNERS Partner Banking Insurance companies headquartered in EFG International (A1) Helvetia (A) Notenstein La Roche (A2) Swiss Life (A) SWITZERLAND Cornèr Bank (not rated) Swiss Mobil
Slide 20: Leonteq and DBS Cease Cooperation
LEONTEQ AG | RESULTS PRESENTATION FY 2015 PLATFORM PARTNER BUSINESS LEONTEQ AND DBS CEASE COOPERATION • Leonteq, DBS, Avaloq and Numerix ceased cooperation on the partnership to develop and implement an integrated multi-issuer investment products distribution system due to diverging interests on som
Slide 21: Update on Platform Partners Announced in H1 2015
LEONTEQ AG | RESULTS PRESENTATION FY 2015 PLATFORM PARTNER BUSINESS UPDATE ON ANNOUNCED PLATFORM PARTNERS IN H1 2015 Platform Cooperation details Next milestones partner • Potential extension of distribution • DB structured investment products now Deutsche Bank to Asia available on Leonteq’s platfor
Slide 22: Update on Platform Partners Recently Announced
LEONTEQ AG | RESULTS PRESENTATION FY 2015 PLATFORM PARTNER BUSINESS UPDATE ON PLATFORM PARTNERS RECENTLY ANNOUNCED Platform Cooperation details Next milestones partner • Finteq-model cooperation • Working on project implementation Maybank • Leonteq distribution of products in Asia and product offeri
Slide 23: Regional Expansion
LEONTEQ AG | RESULTS PRESENTATION FY 2015 REGIONAL EXPANSION FURTHER STRENGTHENING OF REGIONAL PRESENCES AND BUSINESSES • Solid top line contribution from Leonteq’s home market of CHF 99.9 million (up 14% y-o-y) Switzerland • New Zurich headquarters at Europaallee will accommodate all Zurich-based e
Slide 24: Innovation & Technology: First Mover in Digitization
LEONTEQ AG | RESULTS PRESENTATION FY 2015 INNOVATION & TECHNOLOGY FIRST MOVER IN DIGITIZATION EFFORTS Initiatives Description / Update Internal External • Allows for tailor-made proposals based on investor risk profile and focus Underlying Optimizer • Large computational power enables pricing of 2 b
Slide 25: Innovation & Technology: R&D Spending
LEONTEQ AG | RESULTS PRESENTATION FY 2015 INNOVATION & TECHNOLOGY ~15% OF TOP LINE SPENT IN RESEARCH & DEVELOPMENT (R&D) • 56 platform projects completed in 2015 with a project success rate of 93% Information technology and systems Capital expenditures (CAPEX) & depreciation (in CHFm) • R&D costs ex
Slide 26: Significant Activity on the Platform
LEONTEQ AG | RESULTS PRESENTATION FY 2015 INNOVATION & TECHNOLOGY SIGNIFICANT ACTIVITY ON THE PLATFORM Number of pricings (in k) Pricings per product type 700 H2 2015 % 2% 8% 102 508 • Pricings more than doubled H1 2015 in H2 2015 compared to H1 2014 423 • Approximately 100 logins H2 2014 in 2015 ea
Slide 27: Summary & Outlook
LEONTEQ AG | RESULTS PRESENTATION FY 2015 SUMMARY & OUTLOOK 27
Slide 28: Summary & Outlook in a Nutshell
LEONTEQ AG | RESULTS PRESENTATION FY 2015 SUMMARY & OUTLOOK IN A • Special focus in 2015 on initiatives and investments to further build the platform partner network NUTSHELL • Robust results with Finteq business as key driver for top line and bottom line growth • Leonteq to continue to substantiall
Slide 29: Structural Growth Case Intact
LEONTEQ AG | RESULTS PRESENTATION FY 2015 SUMMARY & OUTLOOK STRUCTURAL GROWTH CASE INTACT IN A • Financial service industry undergoing substantial changes – digitization trend to result in reduced vertical NUTSHELL integration of banks and insurance companies • Leonteq’s business model focused on au
Slide 30: Appendix
LEONTEQ AG | RESULTS PRESENTATION FY 2015 APPENDIX 30
Slide 31: Present Market Reality: Financial Services at the Edge of Change
LEONTEQ AG | RESULTS PRESENTATION FY 2015 PRESENT MARKET REALITY FINANCIAL SERVICES AT THE EDGE OF SUBSTANTIAL CHANGES • Tectonic plate movement CHALLENGES TREND reshapes the landscape of B2B B2C financial services 70% UP 10% » 2% implemented, Legacy TO Level of vertical integration Level of vertica
Slide 32: Total Addressable Market for Structured Investment Products
LEONTEQ AG | RESULTS PRESENTATION FY 2015 TOTAL ADDRESSABLE MARKET FOR STRUCTURED INVESTMENT PRODUCTS (SIP) Outstanding volumes (CHF bn)1 Number of structured investment products manufacturers2 42 535 680 22 228 186 2015 CAGR 2015 -1.4% CAGR 52 616 652 27 325 210 2013 2013 -13.8% • Total addressable
Slide 33: Total Addressable Market for Unit-Linked Pensions Solutions
LEONTEQ AG | RESULTS PRESENTATION FY 2015 TOTAL ADDRESSABLE MARKET FOR UNIT-LINKED PENSIONS SOLUTIONS Unit-linked insurance premiums (CHF bn)1 Number of unit-linked products manufacturers2 2 201 191 16 391 91 2014 2014 CAGR CAGR +1.2% -0.9% 2 176 201 17 420 88 • Total addressable market 2012 2012 am
Slide 34: Leonteq's Unique Business Model
LEONTEQ AG | RESULTS PRESENTATION FY 2015 LEONTEQ’S UNIQUE BUSINESS MODEL THE LEADING PARTNER FOR DIGITIZATION SOLUTIONS Growth opportunities A Increase banking and C D insurance partners mainly Sell-side Buy-side automation automation in Europe and Asia B Onboard new types E of platform partners PR
Slide 35: Shaping of Leonteq's Business Model: The Leonteq Mix
LEONTEQ AG | RESULTS PRESENTATION FY 2015 SHAPING OF LEONTEQ’S BUSINESS MODEL THE LEONTEQ MIX TODAY1 FUTURE1 • Capital intensity: high ~CHF 2-3bn FIN 42% <20% • Lower ROE contribution platform assets CHF 3-5bn platform assets • Capital intensity: medium on average per FINTEQ 58% • Higher ROE contrib
Slide 36: Leonteq's Edge in the Industry
LEONTEQ AG | RESULTS PRESENTATION FY 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 globally in across EMEA, LATAM and • Most modern t
Slide 37: Digital Pipeline: Aligned Technology & Processes
LEONTEQ AG | RESULTS PRESENTATION FY 2015 DIGITAL PIPELINE ALIGNED TECHNOLOGY & PROCESSES BENEFITS FOR PARTNERS Revenues | Costs | LEONTEQ LOOK-A-LIKE LEONTEQ Operational risks OPTIMIZER ANALYTICS ANNA INCORE TRENDS FINDER DIRECT HNOLOG EC • Partner can get access to a T Y variety of state-of-
Slide 38: Global Distribution Network
LEONTEQ AG | RESULTS PRESENTATION FY 2015 GLOBAL DISTRIBUTION NETWORK WITH A BEST-IN-CLASS SALES FORCE • Extensive global distribution network across EMEA, APAC and LATAM Fee income by type of intermediary (2015) • ~1’500 contracted distribution partners, of which more 7% than 900 trade actively on
Slide 39: History of Strong Double Digit Growth: Financial Track Record
LEONTEQ AG | RESULTS PRESENTATION FY 2015 HISTORY OF STRONG DOUBLE DIGIT GROWTH RATES FINANCIAL TRACK RECORD Total operating income (in CHFm) CAGR Total operating expenses (in CHFm) 22% CAGR 250 250 19% 200 200 150 150 100 200 220 100 158 140 151 50 105 128 50 106 115 66 88 71 90 54 0 0 2009 2010 20
Slide 40: Business Growth Indicators
LEONTEQ AG | RESULTS PRESENTATION FY 2015 HISTORY OF STRONG DOUBLE DIGIT GROWTH RATES BUSINESS GROWTH INDICATORS Turnover (in CHFbn) CAGR Number of distribution partners CAGR 20% 28% 25 1,000 20 800 15 600 10 20.4 20.5 400 802 904 15.7 580 658 5 10.4 12.1 200 442 6.9 7.8 345 206 0 0 2009 2010 2011 2
Slide 41: Trend Towards Finteq
LEONTEQ AG | RESULTS PRESENTATION FY 2015 TREND TOWARDS FINTEQ STRATEGIC POSITIONING BECOMES VISIBLE 160 140 2015 120 Total operating income (in CHFm) 2014 2014 2015 100 2012 2013 80 2013 60 40 2012 20 2 3 4 5 6 7 8 9 10 11 12 13 14 Turnover (in CHFbn) Finteq (Platform partner products) Fin (Leo
Slide 42: Strengthening of Swiss Franc
LEONTEQ AG | RESULTS PRESENTATION FY 2015 STRENGTHENING OF SWISS FRANC EUR IMPACT OF CHF -6 MILLION; OVERALL IMPACT CHF -2 MILLION CHF million CHF EUR USD OTHER TOTAL Total operating income 54.1 61.7 82.9 21.0 219.7 share in % 25% 28% 38% 9% Total operating expenses 112.1 12.6 3.7 22.1 150.5 share i
Slide 43: Use of Proceeds from 2014 Rights Offering
LEONTEQ AG | RESULTS PRESENTATION FY 2015 USE OF PROCEEDS FROM 2014 RIGHTS OFFERING 50% SPENT BY END 2015 PLATFORM PARTNER REGIONAL INNOVATION & BUSINESS EXPANSION TECHNOLOGY Increase of risk-weighted • More than 10’000 products • Double digit growth in total • First mover in digitization efforts as
Slide 44: Risk Map: Mitigation of Inherent Business Risks
LEONTEQ AG | RESULTS PRESENTATION FY 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 45: Market Risk: Structural Long Vega Position
LEONTEQ AG | RESULTS PRESENTATION FY 2015 MARKET RISK STRUCTURAL LONG VEGA POSITION PROTECTS AGAINST MARKET SHOCKS Scenario analysis* for all equity and equity derivate positions as an indication of the overall risk exposure on 31 December 2015 P&L impact per shift combination Vol -5% Vol -2% Vol 0%
Slide 46: Shareholder Structure
LEONTEQ AG | RESULTS PRESENTATION FY 2015 SHAREHOLDER STRUCTURE1 ALIGNMENT OF INTEREST Founding partners » Founding Partners 15% Jan Schoch3 6.50% Free float Lukas Ruflin family interests4 6.48% Sandro Dorigo5 2.29% 56% Pro forma participation adjusted for options2/3/4 29% • Raiffeisen/Notenstein: 2
Slide 47: Management Team & Board of Directors
LEONTEQ AG | RESULTS PRESENTATION FY 2015 LEONTEQ’S MANAGEMENT TEAM & BOARD OF DIRECTORS ALIGNED TO THE NEEDS OF LEONTEQ‘S GROWTH EXECUTIVE COMMITTEE Jan Schoch Chief Executive Officer (Founding partner) Sandro Dorigo Head of Pension Solutions (Founding partner) Changes 2015/2016 Ulrich Sauter Gener