Slide 1: Results Presentation HY 2016
ZURICH, 21 JULY 2016 LEONTEQ AG RESULTS PRESENTATION | HY 2016
Slide 2: Legal Disclaimer
LEONTEQ AG | RESULTS PRESENTATION HY 2016 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 2016 AGENDA • Key takeaways • Financial results H1 2016 • Strategic & business update • Summary & outlook • Appendix 3
Slide 4: Key Takeaways
LEONTEQ AG | RESULTS PRESENTATION HY 2016 KEY TAKEAWAYS 4
Slide 5: Key Takeaways 1/3
LEONTEQ AG | RESULTS PRESENTATION HY 2016 KEY TAKEAWAYS 1/3 • Leonteq proofs resilient to challenging markets; robust results despite reduced client demand and ongoing strategic investments • Strong progress in platform partner business with Finteq turnover up 40%, Finteq turnover ratio up 16 percen
Slide 6: Key Takeaways 2/3
LEONTEQ AG | RESULTS PRESENTATION HY 2016 KEY TAKEAWAYS 2/3 • Strong revenue growth in Asia (up 54%) and robust performance in Europe (up 17%), reflecting Leonteq’s ongoing investments into regional expansion • New office locations in London, Singapore and Hong Kong as part of Regions & a mid term r
Slide 7: Key Takeaways 3/3
LEONTEQ AG | RESULTS PRESENTATION HY 2016 KEY TAKEAWAYS 3/3 200 Trend towards larger 180 contribution from Finteq business while actively reducing own issuances 160 2016 Total operating income (in CHFm) • Strategic positioning continues to unfold 140 • Finteq 5yr CAGRs • 51% operating income 120 2
Slide 8: Financial Results H1 2016
FINANCIAL RESULTS H1 2016 LEONTEQ AG | RESULTS PRESENTATION HY 2016 8
Slide 9: Key Performance Indicators
LEONTEQ AG | RESULTS PRESENTATION HY 2016 KEY PERFORMANCE INDICATORS RESULTS IMPACTED BY DIFFICULT MARKET ENVIRONMENT General KPIs H1 2016 H1 2015 Change from H1 2015 Turnover (CHFbn) 11.8 10.7 10% Change in product mix impacts turnover and margin Finteq ratio (turnover) 74% 58% 16 PP (as indicated
Slide 10: Income Statement
LEONTEQ AG | RESULTS PRESENTATION HY 2016 INCOME STATEMENT FINTEQ BUSINESS DRIVES LEONTEQ´S RESULTS CHFm1 H1 2016 H1 2015 Change from H1 2015 Net fee income 108.6 108.8 0% • Increase in net trading income due to positive Net trading income 15.6 4.3 263% contributions from hedging activities, and a r
Slide 11: Value Drivers: Strong Growth in Finteq Business
LEONTEQ AG | RESULTS PRESENTATION HY 2016 VALUE DRIVERS STRONG GROWTH IN FINTEQ BUSINESS THROUGH PLATFORM EFFECTS Platform assets (in CHFbn) x Turnover factor = Turnover (in CHFbn) x Margin (bps) = Operating (in CHFm) income +16pp 7.5 2.5 10 Finteq % 150 100 ratio 74% +40 % % +28 +30 6.0 2.0 8 120 8
Slide 12: Operating Leverage
LEONTEQ AG | RESULTS PRESENTATION HY 2016 OPERATING LEVERAGE COST PER UNIT CONTINUES TO DECREASE Development of costs and number of products issued Cost per unit (CHF)2 1,200 CAGR H1 2016 5,855 1,090 41% % 2015 7,209 -78 1,000 • Number of products issued amount to 9,793 in H1 2016 800 801 2014 8,034
Slide 13: Personnel
LEONTEQ AG | RESULTS PRESENTATION HY 2016 PERSONNEL FOCUS REMAINS ON REGIONS AND ON HIRING OF SALES AND IT STAFF FTE development* FTE breakdown 13 17 70 IT Sales % % % 105 114 Increase of 58 FTEs in H1 2016 30.06.2016 30.06.2016 (+13%), reflecting ongoing investment phase, mainly driven 67 88 366 52
Slide 14: Segment Income
LEONTEQ AG | RESULTS PRESENTATION HY 2016 SEGMENT INCOME BANKING PLATFORM PARTNERS AND REGIONS DRIVING THE RESULT Business segments (in CHFm) % • Decline in Insurance 90 Platform Partners seg- +48 ment mainly a reflection of 75 % negative interest rate environ- 60 -22 ment in Switzerland, which impa
Slide 15: Segment Results Before Taxes
41 46 275 LEONTEQ AG | RESULTS PRESENTATION HY 2016 SEGMENT RESULTS BEFORE TAXES BANKING PLATFORM PARTNER SEGMENT PROFIT SUBSTANTIALLY IMPROVED Segment results before taxes (in CHFm) % 50 +47 40 • Decline in insurance platform partners segment % driven by ongoing negative 30 interest rate environmen
Slide 16: Required Capital
LEONTEQ AG | RESULTS PRESENTATION HY 2016 REQUIRED CAPITAL REDUCTION IN TIER 1 RATIO DRIVEN BY BUSINESS GROWTH Capital development* (in CHFm) Required capital per 30.06.2016 (in CHFm) 450 180 % % % 425 150 +8 +7 +23 Major drivers for increase in -12.6 regulatory required capital % 3.4 37.2 -14.0 +35
Slide 17: Accounting Update
LEONTEQ AG | RESULTS PRESENTATION HY 2016 ACCOUNTING UPDATE P&L VOLATILITY REDUCTION & BUSINESS DRIVEN REVENUE RECOGNITION • With the early adoption of IFRS 9 as of January 2016, effects arising from the change in credit spread is recorded in equity First time adoption (other comprehensive income/OC
Slide 18: Strategy & Business Update
LEONTEQ AG | RESULTS PRESENTATION HY 2016 STRATEGY & BUSINESS UPDATE 18
Slide 19: Strategy Update
LEONTEQ AG | RESULTS PRESENTATION HY 2016 STRATEGY UPDATE FURTHER PROGRESS ACROSS THE THREE KEY STRATEGIES Platform partner business Regional expansion Innovation & technology • Three new partnerships • Regional offices delivered • Leonteq Teqlabs: Fintech (Deutsche Bank, Bank of strong performance
Slide 20: Platform Partner Business
LEONTEQ AG | RESULTS PRESENTATION HY 2016 PLATFORM PARTNER BUSINESS PARTNER BUSINESS CONTINUES TO GROW Pipeline 30 25 20 • Leonteq currently manages six projects in advanced 15 stages of the onboarding 25+ 10 22+ process • Focus on Europe and Asia 5 9+ for banks; Switzerland and 3+ 5+ 0 Europe for i
Slide 21: Innovation & Technology
LEONTEQ AG | RESULTS PRESENTATION HY 2016 INNOVATION & TECHNOLOGY SIGNIFICANT ACTIVITY ON THE PLATFORM Number of pricings (in k) Pricing split between Fin and Finteq 2016 1,055 H1 2016 21% 79% • Pricings more than doubled 639 % 176 in H1 2016 compared to H1 2014 H2 2015 • More than 120 logins in H1
Slide 22: Summary & Outlook
LEONTEQ AG | RESULTS PRESENTATION HY 2016 SUMMARY & OUTLOOK 22
Slide 23: Summary & Outlook in a Nutshell
LEONTEQ AG | RESULTS PRESENTATION HY 2016 SUMMARY & OUTLOOK IN A NUTSHELL • Half year 2016 characterized by challenging market environment, reduced client demand and significant market uncertainty, affecting business performance across the financial services industry Resilience • Strong progress in
Slide 24: Outlook Until Year End 2016
LEONTEQ AG | RESULTS PRESENTATION HY 2016 OUTLOOK UNTIL YEAR END 2016 IN A NUTSHELL • Continued investments to strengthen the platform partner network Platform • Complete ongoing onboarding projects with envisaged partners partners • Further grow Finteq business through continued monetization of act
Slide 25: Appendix
LEONTEQ AG | RESULTS PRESENTATION HY 2016 APPENDIX 25
Slide 26: Present Market Reality
LEONTEQ AG | RESULTS PRESENTATION HY 2016 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 27: Total Addressable Market for Structured Investment Products
LEONTEQ AG | RESULTS PRESENTATION HY 2016 TOTAL ADDRESSABLE MARKET FOR STRUCTURED INVESTMENT PRODUCTS (SIP) Outstanding volumes (CHFbn)1 Avg ticket Number of structured investment products manufacturers2 size (CHFm) 40 586 757 16 185 97 2016 CAGR 2016 CAGR 4 -3% -15% 45 671 735 22 275 150 • Total ad
Slide 28: Total Addressable Market for Unit-Linked Pensions Solutions
LEONTEQ AG | RESULTS PRESENTATION HY 2016 TOTAL ADDRESSABLE MARKET FOR UNIT-LINKED PENSIONS SOLUTIONS Unit-linked insurance premiums (CHFbn)1 Number of unit-linked products manufacturers2 2 170 186 16 424 93 2015 CAGR 2015 CAGR -0.3% -1.2% 2 185 185 17 420 91 • Total addressable market 2013 2013 amo
Slide 29: Leonteq's Unique Business Model
LEONTEQ AG | RESULTS PRESENTATION HY 2016 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 30: Shaping of Leonteq's Business Model
LEONTEQ AG | RESULTS PRESENTATION HY 2016 SHAPING OF LEONTEQ’S BUSINESS MODEL THE LEONTEQ MIX TODAY1 FUTURE1 • Leonteq’s own issued FIN • Leonteq 26% <20% products • Manufacturing structured investment products on • EFG International behalf of platform partners • Notenstein • Risk management La Roch
Slide 31: Leonteq's Edge in the Industry
LEONTEQ AG | RESULTS PRESENTATION HY 2016 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 32: Digital Pipeline
LEONTEQ AG | RESULTS PRESENTATION HY 2016 DIGITAL PIPELINE ALIGNED TECHNOLOGY & PROCESSES BENEFITS FOR PARTNERS Revenues | Costs | SELL-SIDE BUY-SIDE LOOK-A-LIKE DIRECT Operational risks OPTIMIZER ANALYTICS ANNA INCORE TRENDS FINDER ADAPTER HNOLOG EC • Partner can get access to T Y a variety o
Slide 33: Global Distribution Network
LEONTEQ AG | RESULTS PRESENTATION HY 2016 GLOBAL DISTRIBUTION NETWORK WITH A BEST-IN-CLASS SALES FORCE Sales development (FTE)* Fee income by type of intermediary (H1 2016) 27 44 29 % % % 8% • Extensive global 30.06.2016 5% distribution network across 32% Financial institutions EMEA, APAC and LATA
Slide 34: History of Strong Double Digit Growth Rates: Financial Track Record
LEONTEQ AG | RESULTS PRESENTATION HY 2016 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 35: History of Strong Double Digit Growth Rates: Business Growth Indicators
LEONTEQ AG | RESULTS PRESENTATION HY 2016 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 36: Risk Map
LEONTEQ AG | RESULTS PRESENTATION HY 2016 RISK MAP MITIGATION OF INHERENT BUSINESS RISKS (SELECTION) MARKET RISKS High • Portfolio is hedged induced by the client flow (no Repu- tational proprietary trading) Risk » Structural long vega position protecting from market shocks Opera- • All products are
Slide 37: Risk Management
LEONTEQ AG | RESULTS PRESENTATION HY 2016 RISK MANAGEMENT STABLE ECONOMIC REVENUES THROUGH TURBULENT MARKETS • Economic revenues 20'000 20 40 40 relatively stable in different SNB market dynamics and positi- vely correlated with market BREXIT 15'00015 CHINESE volatility & uncorrelated behavior to tu
Slide 38: Market Risk
LEONTEQ AG | RESULTS PRESENTATION HY 2016 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 30 June 2016 P&L impact per shift combination Vol -5% Vol -2% Vol 0% Vol
Slide 39: Shareholder Structure
LEONTEQ AG | RESULTS PRESENTATION HY 2016 SHAREHOLDER STRUCTURE1 ALIGNMENT OF INTEREST Founding partners » Founding Partners 15% Jan Schoch3 6.50% Free float Lukas Ruflin family interests4 6.49% Sandro Dorigo5 2.29% 56% Pro forma participation adjusted for options2/3/4 29% • Raiffeisen/Notenstein: 2
Slide 40: Management Team & Board of Directors
LEONTEQ AG | RESULTS PRESENTATION HY 2016 LEONTEQ’S MANAGEMENT TEAM & BOARD OF DIRECTORS ALIGNED TO THE NEEDS OF LEONTEQ‘S GROWTH EXECUTIVE COMMITTEE Jan Schoch Chief Executive Officer (Founding partner) Marco Amato Chief Financial Officer (from 1 September 2016) Yann Besnard Head of Business Innova