Slide 1: Results Presentation FY 2016
ZURICH, 09 FEBRUARY 2017 LEONTEQ AG RESULTS PRESENTATION | FY 2016
Slide 2: Legal Disclaimer
RESULTS PRESENTATION | FY 2016 ZURICH, 09 FEBRUARY 2017 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
Slide 3: Opening Remarks
RESULTS PRESENTATION | FY 2016 ZURICH, 09 FEBRUARY 2017 OPENING REMARKS Leonteq has had its most challenging half year in a continuously difficult market • Revenues for the second half year and the full year were much lower than anticipated at the beginning of Q3 • We were too optimistic as to how q
Slide 4: Agenda
RESULTS PRESENTATION | FY 2016 ZURICH, 09 FEBRUARY 2017 AGENDA • Overview • Financial Results 2016 • Priorities for 2017 • Corporate Governance • Outlook • Appendix 4
Slide 5: Overview
RESULTS PRESENTATION | FY 2016 ZURICH, 09 FEBRUARY 2017 OVERVIEW 5
Slide 6: Overview
RESULTS PRESENTATION | FY 2016 ZURICH, 09 FEBRUARY 2017 OVERVIEW • Total operating income of CHF 87.7 million, total operating expenses of CHF 108.5 million, H2 2016 group net loss of CHF 20.0 million • Total operating income of CHF 207.0 million, total operating expenses of CHF 189.4 million, Full
Slide 7: Financial Results FY 2016
FINANCIAL RESULTS FY 2016 RESULTS PRESENTATION | FY 2016 ZURICH, 09 FEBRUARY 2017 7
Slide 8: Income Statement: Subdued Revenues and Significantly Higher Costs Weigh on Profits
RESULTS PRESENTATION | FY 2016 ZURICH, 09 FEBRUARY 2017 INCOME STATEMENT SUBDUED REVENUES AND SIGNIFICANTLY HIGHER COSTS WEIGH ON PROFITS CHFm H2 2015 H1 2016 H2 2016 FY 2016 Change Change H2 2016 vs H2 2015 hy-o-hy y-o-y • Reduction in net fee income of CHF 20m due to Net fee income 119.9 108.6 100
Slide 9: Segmental Results: Weak Operating Performance Across Our Three Business Lines
RESULTS PRESENTATION | FY 2016 ZURICH, 09 FEBRUARY 2017 SEGMENTAL RESULTS WEAK OPERATING PERFORMANCE ACROSS OUR THREE BUSINESS LINES Insurance & Wealth H2 2016 vs H2 2015 Investment Solutions Banking Solutions Planning Solutions • Investment Solutions’ top- line declined pre-dominantly 125 125 125 d
Slide 10: Investment Solutions: Margin Mainly Influenced by Reduced Hedging Contributions
RESULTS PRESENTATION | FY 2016 ZURICH, 09 FEBRUARY 2017 INVESTMENT SOLUTIONS MARGIN MAINLY INFLUENCED BY REDUCED HEDGING CONTRIBUTIONS Turnover (CHFbn) Margin (basis points) Number of clients* 6 150 1,200 5 125 1,000 4 100 800 3 75 600 5.5 139 134 5.1 113 115 854 934 2 3.9 50 400 85 781 2.8 79 2.7 2
Slide 11: Regional Development of Operating Income
RESULTS PRESENTATION | FY 2016 ZURICH, 09 FEBRUARY 2017 REGIONAL DEVELOPMENT OF OPERATING INCOME SOLID PERFORMANCE OF ASIAN OPERATIONS Switzerland EMEA APAC 60 60 60 -13% 50 50 50 -25% 40 40 40 30 30 30 56 47 46 48 -15% 20 41 20 20 36 10 10 10 13 17 11 0 0 0 H2 2015 H1 2016 H2 2016 H2 2015 H1 2016 H
Slide 12: Revenues 2016: Low Volatility Levels Impacting H2 Performance
RESULTS PRESENTATION | FY 2016 ZURICH, 09 FEBRUARY 2017 REVENUES 2016 LOW VOLATILITY LEVELS IMPACTING H2 PERFORMANCE Record weeks; Improved client activity and certain additional • Challenging market 20,000 strong start into 2016 Seasonally slow summer issuance volumes period & post Bexit impact env
Slide 13: Cost Development 2016
RESULTS PRESENTATION | FY 2016 ZURICH, 09 FEBRUARY 2017 COST DEVELOPMENT 2016 STAFF GROWTH, NEW OFFICES AND ONE-OFFS DRIVING COSTS UP Total operating expenses (CHF m) 200 91% • Significant personnel investments undertaken 3 in 2016 87% 5 180 2 • New offices rented in Zurich, 7 London, Singapore and
Slide 14: Required Capital
RESULTS PRESENTATION | FY 2016 ZURICH, 09 FEBRUARY 2017 REQUIRED CAPITAL INCREASED REQUIREMENTS LINKED TO GROWTH IN VOLUMES Capital development (CHFm) Required capital per 31.12.2016 (CHFm) 450 150 Drivers for increase in regulatory required capital 425 140 +15% • Increase in market risk in line 1.2
Slide 15: Priorities for 2017
PRIORITIES FOR 2017 RESULTS PRESENTATION | FY 2016 ZURICH, 09 FEBRUARY 2017 15
Slide 16: Priorities 2017: Restoring Leonteq's Profitability
RESULTS PRESENTATION | FY 2016 ZURICH, 09 FEBRUARY 2017 PRIORITIES 2017 RESTORING LEONTEQ’S PROFITABILITY 1 REVENUES Improve cooperation with existing partners to resolve operational issues and focus on on-boarding of new partners 2 COSTS Substantial additional cost saving measures to control cost b
Slide 17: Action Item 1 | Revenues
RESULTS PRESENTATION | FY 2016 ZURICH, 09 FEBRUARY 2017 ACTION ITEM 1 | REVENUES BOTTLENECKS IDENTIFIED & ACTIONS INITIATED Challenges in 2016 Priorities for 2017 Issuance Balance sheet restrictions of partners lead Focus on new issuance partners with low limits to capacity issues balance sheet rest
Slide 18: Action Item 2 | Costs
RESULTS PRESENTATION | FY 2016 ZURICH, 09 FEBRUARY 2017 ACTION ITEM 2 | COSTS COST SAVINGS MORE THAN OFFSET COST INCREASE Measure Description Impact Expected 2017 run rate (CHFm) (CHFm) Cost Cost savings as • Job reduction programme completed by ~8 ~10 reduction announced 2016 January 2017 • Cost me
Slide 19: Action Item 3 | Efficiency
RESULTS PRESENTATION | FY 2016 ZURICH, 09 FEBRUARY 2017 ACTION ITEM 3 | EFFICIENCY MINIMUM REVENUE THRESHOLDS IMPLEMENTED • Minimum revenue threshold introduced for all Turnover contribution by different product margin buckets primary market transactions to increase profitability (as % of total turn
Slide 20: Action Item 4 | Capital
RESULTS PRESENTATION | FY 2016 ZURICH, 09 FEBRUARY 2017 ACTION ITEM 4 | CAPITAL IMPLEMENTING MEASURES TO REDUCE IMPACT OF REGULATORY CHANGES A changing regulatory environment • New regulations (Standard Approach for Counterparty Credit, Fundamental Review of the Trading Book) to be introduced over t
Slide 21: Changes to Executive Committee Structure
RESULTS PRESENTATION | FY 2016 ZURICH, 09 FEBRUARY 2017 CHANGES TO EXECUTIVE COMMITTEE STRUCTURE* STREAMLINED EXECUTIVE COMMITTEE CEO Jan Schoch Deputy CEO to be appointed Investment Solutions out of the five members of Insurance & Wealth Legal & & Finance & Risk Operations & IT Planning Solutions C
Slide 22: Corporate Governance
RESULTS PRESENTATION | FY 2016 ZURICH, 09 FEBRUARY 2017 CORPORATE GOVERNANCE 22
Slide 23: Corporate Governance: Process to Increase Board Independence & Diversity
RESULTS PRESENTATION | FY 2016 ZURICH, 09 FEBRUARY 2017 CORPORATE GOVERNANCE PROCESS TO INCREASE BOARD INDEPENDENCE & DIVERSITY • A process, based on clear criteria, has been started to strengthen the Board of Directors’ and the Board committees’ overall independence and diversity • The Board intend
Slide 24: Board of Directors Compensation 40% Below AGM Budget
RESULTS PRESENTATION | FY 2016 ZURICH, 09 FEBRUARY 2017 BOARD OF DIRECTORS COMPENSATION 40% BELOW AGM BUDGET Board of Directors Compensation Approved Actual Delta to AGM 2016 – AGM 2017 (CHFk) Budget Cash Shares* Total Budget AGM 2017 – AGM 2018 Pierin Vincenz 750 194 300 494 (34%) (proposal to redu
Slide 25: Executive Committee Compensation 53% Below AGM Budget
RESULTS PRESENTATION | FY 2016 ZURICH, 09 FEBRUARY 2017 EXECUTIVE COMMITTEE COMPENSATION 53% BELOW AGM BUDGET Taking responsibility for the significantly lower results, the entire EC has forgone its entitled variable compensation in the amount of CHF 2.6 million for the year 2016. This resulted in a
Slide 26: Outlook
RESULTS PRESENTATION | FY 2016 ZURICH, 09 FEBRUARY 2017 OUTLOOK 26
Slide 27: Outlook
RESULTS PRESENTATION | FY 2016 ZURICH, 09 FEBRUARY 2017 OUTLOOK • Weak start into 2017 and challenging market environment expected to persist • Speed of ramp-up of platform partners and related revenue growth difficult to predict – Close collaboration with existing partners to address bottlenecks an
Slide 28: Appendix
RESULTS PRESENTATION | FY 2016 ZURICH, 09 FEBRUARY 2017 APPENDIX 28
Slide 29: Income Statement
RESULTS PRESENTATION | FY 2016 ZURICH, 09 FEBRUARY 2017 INCOME STATEMENT CHFm H1 2015 H2 2015 FY 2015 H1 2016 H2 2016 FY 2016 Net fee income 108.8 119.9 228.7 108.6 100.4 209.0 Net trading income 4.3 (8.4) (4.1) 15.6 (10.1) 5.5 Net interest income (1.5) (3.4) (4.9) (4.9) (2.6) (7.5) Total operating
Slide 30: Segment Results
RESULTS PRESENTATION | FY 2016 ZURICH, 09 FEBRUARY 2017 SEGMENT RESULTS CHFm H1 2015 H2 2015 FY 2015 H1 2016 H2 2016 FY 2016 Investment Solutions Total operating income 86.5 81.7 168.2 100.5 61.6 162.1 Total operating expenses (49.9) (52.8) (102.7) (57.1) (76.3) (133.4) Result from operating activit
Slide 31: Balance Sheet
RESULTS PRESENTATION | FY 2016 ZURICH, 09 FEBRUARY 2017 BALANCE SHEET CHFbn 30.06.2015 31.12.2015 30.06.2016 31.12.2016 Cash and receivables 1.0 0.8 1.1 0.6 Financial assets 5.0 5.7 5.9 4.9 Other assets 0.1 0.1 0.1 0.1 Total assets 6.1 6.6 7.1 5.6 Short-term credit and payables 0.9 1.1 1.8 1.1 Finan
Slide 32: Staff Base
RESULTS PRESENTATION | FY 2016 ZURICH, 09 FEBRUARY 2017 STAFF BASE FTE by region 30.06.2015 31.12.2015 30.06.2016 31.12.2016 Switzerland 296 343 366 350 Europe 54 63 88 84 Asia 41 57 67 76 Total FTEs 391 463 521 510 FTE by function 30.06.2015 31.12.2015 30.06.2016 31.12.2016 Business units 139 179 2
Slide 33: Key Performance Indicators
RESULTS PRESENTATION | FY 2016 ZURICH, 09 FEBRUARY 2017 KEY PERFORMANCE INDICATORS1 Group KPIs H1 2015 H2 2015 FY 2015 H1 2016 H2 2016 FY 2016 Platform assets (CHFbn) 8.0 NA 7.9 8.7 NA 9.2 Whereof platform partner business (CHFbn) 4.7 NA 4.7 6.0 NA 6.8 Whereof platform partner business (%) 59.0% NA
Slide 34: Net Trading Income
RESULTS PRESENTATION | FY 2016 ZURICH, 09 FEBRUARY 2017 NET TRADING INCOME CHFm H1 2015 H2 2015 FY 2015 H1 2016 H2 2016 FY 2016 Negative treasury carry (11.7) (9.4) (21.1) (10.0) (6.9) (16.9) Hedging synergies 16.0 1.0 17.0 25.6 (3.2)* 22.4 Net trading income 4.3 (8.4) (4.1) 15.6 (10.1) 5.5 * On 19
Slide 35: Market Risk
RESULTS PRESENTATION | FY 2016 ZURICH, 09 FEBRUARY 2017 MARKET RISK Scenario analysis* for all equity and equity derivate positions as an indication of the overall risk exposure on 31 December 2016 P&L impact per shift combination Vol -5% Vol -2% Vol 0% Vol +2% Vol +5% (CHFm) • Structural long vega
Slide 36: Shareholder Structure
RESULTS PRESENTATION | FY 2016 ZURICH, 09 FEBRUARY 2017 SHAREHOLDER STRUCTURE1 Founding partners » Founding Partners 16% Jan Schoch3 7.05% Free float Lukas Ruflin family interests4 6.49% Sandro Dorigo5 2.29% 55% 29% 1 As per 31 December 2016 2 Includes 5.8% of shares subject to call options held by
Slide 37: Key Performance Indicators Definitions
RESULTS PRESENTATION | FY 2016 ZURICH, 09 FEBRUARY 2017 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 annualiz