EQS Group-Ad-hoc: Leonteq AG / Key word(s): Half Year Results PRESS RELEASE | LEONTEQ PUBLISHES HALF-YEAR 2020 RESULTS Zurich, 23 July 2020 Leonteq AG (SIX: LEON) today announced that while the Covid-19 crisis impacted its financial performance, its client business remained strong and the company made significant progress in executing its strategy.
In this environment, Leonteq generated a significant increase in fee income, as it continued to deliver its full-service offering to clients, including liquid market making services. Net fee income rose by 76% year on year to a record CHF 213.0 million in the first half of 2020. At the same time, net trading result was CHF -107.1 million for the first half of 2020, compared to CHF 7.5 million in the prior-year period. This was primarily due to hedging-related losses driven by the oil price shock in March (approx. CHF -20 million) as well as the widespread and unexpected cancellation of previously announced dividend payments, which affected cashflows from shareholdings owned by Leonteq for hedging purposes (approx. CHF -38 million). In addition, Leonteq recorded a significant increase in hedging-related costs as market risk exposures changed rapidly in an increasingly illiquid hedging market which were only partially offset by positive hedging contributions from Leonteq's structural long volatility position. Overall, Leonteq reported total operating income of CHF 103.5 million in the first half of 2020, compared to CHF 124.6 million in the first half of 2019. Total operating expenses increased by 5% year on year to CHF 98.7 million in the first half of 2020, reflecting investments in key strategic initiatives, partly offset by strict cost management. Personnel expenses increased to CHF 63.4 million (up 8% from H1 2019) as a result of additional hires in the areas of Sales, IT and other shared services functions. In line with guidance provided on 9 April 2020, Group net profit totalled CHF 5.5 million in the first half of 2020, compared to CHF 30.2 million in the prior-year period. Shareholders' equity amounted to CHF 659.0 million as of 30 June 2020, compared to CHF 662.5 million as of 31 December 2019. Under the new regulatory framework for securities firms, Leonteq significantly exceeded its regulatory capital requirement of CHF 20 million as of 30 June 2020.
SEGMENT AND REGIONAL RESULTS Leonteq's Insurance & Wealth Planning Solutions business line generated a 53% increase in total operating income to CHF 24.7 million in the first half of 2020 mainly driven by positive contribution from hedging activities. The number of outstanding policies serviced on the platform increased by 5% to 49,746 policies as of 30 June 2020. Leonteq reported double-digit growth in all its regional operations. In its home market of Switzerland, net fee income increased by 56% to CHF 82.0 million in the first half of 2020 while the business in Europe grew by 105% to CHF 113.2 million and the Asia region saw a 34% increase in net fee income year on year to CHF 17.8 million. As part of its regional growth strategy, Leonteq progressed with the planned expansion of its footprint in Europe and the Middle East, and it expects to receive regulatory approval for the opening of new offices in Milan and Dubai in the second half of 2020.
As part of these efforts, Leonteq is today announcing that its Smart Hedging Issuance Platform (SHIP) is now up and running, as envisaged two years ago. SHIP is designed to reduce Leonteq's hedging exposure by offering Leonteq's issuance partners the opportunity to enter into hedging transactions with external hedging partners. A total of seven leading investment banks are now connected to the platform, five of which are already executing trades. Leonteq has also extended its capabilities to enter into back-to-back hedging transactions on a bespoke basis. In addition, it has increased its offering of products manufactured outside of the Leonteq platform by adding a total of 15 third-party issuers to its marketplace. In this context, Leonteq has also established direct connectivity between its digital marketplace and Barclays' electronic trading platform. Barclays will thus become the first third-party issuer on Leonteq's automated multi-issuer platform and will be available for clients located in Switzerland as well as in select key markets in Europe and Asia. In the first half of 2020, a total notional volume of CHF 895 million, or approximately 6% of total turnover, was directly hedged by an external counterparty, compared to CHF 182 million, or approximately 1%, in the prior-year period. Leonteq has also significantly expanded its network of white-labelling issuers. Onboarding projects with Basler Kantonalbank and Rand Merchant Bank, a division of FirstRand Bank, are progressing as planned. Leonteq's cooperation with PostFinance is already live, with the scope of product offerings and internal distribution capabilities currently being extended. Following the successful launch of Leonteq's digital marketplace in September 2019, the firm has further invested in LynQs, which features an intuitive and responsive design and navigation system as well as several new functionalities that enable Leonteq's clients to manage their portfolio of structured products more efficiently across the entire value chain, including products issued outside the Leonteq platform. In addition, Leonteq launched a new mobile app that gives clients access to all the features of LynQs while on the go. Leonteq also made good progress in broadening its product offering through systematic indices, the extension of the underlying universe for actively managed certificates, the addition of new payoffs across all asset classes and the expansion of its fund derivatives business. In June 2020, Leonteq entered into a strategic partnership with BlackRock, which is expected to further diversify Leonteq's revenue base. In this context, Leonteq will develop and market structured investment products with BlackRock Luxembourg mutual fund range and iShares ETFs as underlying assets. In addition, Leonteq has improved its local footprint in Europe through the offering of listed products issued by EFG International on the Italian stock exchange, EuroTLX, and has newly defined its target markets and client segmentation for Asia.
NEARSHORING TO PORTUGAL TO SUPPORT BUSINESS GROWTH Considerable uncertainty about the duration and global economic impacts of the Covid-19 pandemic is likely to persist in the second half of 2020. At the same time, interest rates in all major currencies are at historic lows, providing an attractive environment in which to offer structured investment products. Against this backdrop and given its strategic momentum, Leonteq will continue to invest in key initiatives, with total operating expenses expected to reach approximately CHF 200 million for the full year 2020. At the same time, Leonteq will closely monitor the situation and continue to safeguard its profitability. Leonteq will continue to focus on its strategic priorities to transform into a platform business and sees itself well positioned for further growth.
EXPANSION OF EXECUTIVE COMMITTEE Markus Schmid (born 1968) has extensive experience of leading top-performing teams as an HR Executive. From 2010 to April 2020, he was the Head of Corporate HR & Internal Communication, Executive Vice President and Member of the Management Board at Tecan Group, where he led the Global Human Resources function. Prior to this, he spent 13 years at Manres AG as a Managing Partner. Markus Schmid is a Swiss national and he holds a Master's in Psychology and Journalism from the University of Fribourg. Lukas Ruflin, Chief Executive Officer of Leonteq, stated: "At Leonteq, we believe that employees are our most important asset. Markus will bring his extensive experience in leading cultural transformations and in managing exemplary human resource operations to his new role and will drive forward our efforts to position Leonteq as an employer of choice. The entire Executive Committee looks forward to working together with Markus."
If you wish to participate, please use the following numbers: - Dial-in number Switzerland: +41 (0)58 310 50 00 - Dial-in number UK: +44 (0) 207 107 06 13 - Dial-in number USA: +1 (1) 631 570 56 13 Please dial in 10-15 minutes before the start of the presentation and ask for 'Leonteq half-year 2020 results'. This press release, the half-year 2020 results presentation and the half-year 2020 report are available at: http://www.leonteq.com/halfyearresults A digital playback of the telephone conference will be available approximately one hour after the conference call and can be accessed for one month at: http://www.leonteq.com/halfyearresults IMPORTANT DATES
CONTACT Investor Relations
LEONTEQ
DISCLAIMER This press release may contain specific forward-looking statements, e.g. statements including terms like "believe", "assume", "expect", "target" "forecast", "project", "may", "could", "might", "will" or similar expressions. Such forward-looking statements are subject to known and unknown risks, uncertainties and other factors which may result in a substantial divergence between the actual results, financial situation, development or performance of the Company or any of its affiliates or subsidiaries and those explicitly or implicitly presumed in these statements. These factors include, but are not limited to: (1) general market, macroeconomic, governmental and regulatory trends, (2) movements in securities markets, exchange rates and interest rates and (3) other risks and uncertainties inherent in our business. In addition, currently, it is very difficult to provide a meaningful prediction on how the governmental actions in response to the ongoing outbreak of a novel coronavirus disease (COVID-19) and other COVID-19 related factors will affect Leonteq's operations and how long such measures will remain in place. The COVID-19 outbreak has caused, and may continue to cause, uncertainty, economic instability and a significant decrease of total economic output in the affected areas and globally. The impact of the COVID-19 outbreak on the general economic environment in the markets in which Leonteq operates remain uncertain and could be significant. Against the background of these uncertainties, you should not rely on forward-looking statements. Neither the Company nor any of its affiliates or subsidiaries or their respective bodies, executives, employees and advisers assume any responsibility to prepare or disseminate any supplement, amendment, update or revision to any of the information, opinions or forward-looking statements contained in this press release or to adapt them to any change in events, conditions or circumstances, except as required by applicable law or regulation. End of ad hoc announcement |
1099791 23-Jul-2020 CET/CEST