Annual Report 2016

Financial Highlights

KEY FIGURES

2016 2015 Change from 2015
Platform assets (CHF billion)1 9.2 7.9 16%
whereof platform partner business 74% 59% 15 pp
Total operating income (CHF million) 207.0 219.7 -6%
Group net profit (CHF million) 17.2 68.6 -75%
Cost-income ratio 92% 69% 23 pp
Return on equity 4% 17%
-13 pp 


SHARE INFORMATION AS AT 31 DECEMBER 2016 

Share price (CHF) 34.00
Basic earnings per share (CHF) 1.09
Diluted earnings per share (CHF) 1.08
Total outstanding shares 15’944’504
Market capitalisation (CHF million) 542.1
Listing SIX Swiss Exchange (Main standard)
Symbol LEON
ISIN CH0190891181

1 Platform assets are defined as outstanding volume of products issued and traded through Leonteq’s platform.

PDF Annual Report 2016

Corporate governance

As a publicly listed Swiss company, Leonteq Ltd. (the ‘Company’ or ‘Leonteq’, together with its subsidiaries the ‘Group’) is subject to and complies with the Directive on Information relating to Corporate Governance (‘DCG’), its annexes and commentary issued by SIX Swiss Exchange. In accordance with the principle ‘comply or explain’, if a company opts not to disclose certain information, the annual report must contain a substantiated justification for each instance of non-disclosure. No such exceptions existed in 2016, 2015 and 2014.

The information provided in this section complies with the Corporate Governance Directive of SIX Swiss Exchange that entered into force on 1 September 2014, and with the guidelines and recommendations contained in the Swiss Code of Best Practice for Corporate Governance compiled by Economiesuisse, the Swiss business federation, dated 28 August 2014. It also complies with Appendix 1 of this Code, ‘Recommendation on Compensation for Boards of Directors and Executive Boards’, dated 28 August 2014 and which entered into force on 1 October 2014; this takes into account arts. 663bbis and 663c para. 3, of the Swiss Code of Obligations, articles entered into force on 1 January 2007 and which address transparency concerning the compensation of members of the Board of Directors and the Executive Committee.

The Ordinance against Excessive Compensation pertaining to Listed Stock Corporations (‘OaEC’) entered into force on 1 January 2014. Leonteq has undertaken the steps necessary to ensure timely compliance with the OaEC’s requirements. The requirement to provide the possibility of electronic voting had already been introduced at the Annual General Meeting (‘AGM’) 2014. To the extent necessary amendments to the Articles of Association were proposed to and approved by the AGM 2014.


GROUP STRUCTURE AND SHAREHOLDERS

GROUP STRUCTURE

Leonteq is a leading creator of, and infrastructure partner for, investment solutions in Switzerland. Furthermore it occupies a prominent position in the engineering of structured investment products. The firm has its headquarters in Zurich, with offices in Geneva, Monaco, Guernsey, Frankfurt, Paris, London, Amsterdam, Singapore and Hong Kong. Further information on the subsidiaries can be found in Note 39 of the Consolidated Financial Statements. The structure of Leonteq’s central management, as at 31 December 2016, is shown in the following chart:


leonteq-organzational-chart-board-of-directors-executive-committtee

No listed companies belong to the Group, other than Leonteq Ltd., Europaallee 39, 8004 Zurich1.

The registered shares are traded on the main standard of SIX Swiss Exchange in Zurich (security no. 19089118, ISIN CH0190891181, symbol LEON). On 31 December 2016 the Company’s market capitalisation was CHF 542.1 million.


NON-LISTED COMPANIES BELONGING TO THE GROUP
Name Registered offices Capital Stake %
Leonteq Securities Ltd.1 Europaallee 39
8004 Zurich
CHF 15’000’000 100
Leonteq Securities (Monaco) SAM Villa Les Aigles, 15 avenue d’Ostende
98001 Monaco
EUR 500’000 99.9
Leonteq Securities (Europe) GmbH2 Goetheplatz 2
60311 Frankfurt/Main
EUR 200’000 100
Leonteq Securities (Hong Kong) Ltd. Suites 3508 – 3509 35th Floor,
Two International Finance Centre,
No. 8 Finance Street, Central Hong Kong
HKD 10’000’000 100
Leonteq Securities (Singapore) PTE Ltd. 8 Marina View, #36-03/04 Asia Square Tower 1, Singapore 018960 SGD 1’000’000 100

1  Including branches in Guernsey (Block F, Hirzel Court, St Peter Port, Guernsey GY1 2NQ, Channel Islands) and Amsterdam (ITO Tower, Gustav Mahlerplein 66-A, 1082 MA Amsterdam).Leonteq Securities Ltd. changed the adress from Brandschenkestrasse 90, 8002 Zurich to Europaallee 39, 8004 Zurich, as of January 2017.

2  Including branches in London (Level 26, The Shard, 32 London Bridge Street, London, SE1 9SG) and Paris (40, Rue la Pérouse, 75116 Paris).


SIGNIFICANT SHAREHOLDERS

The shareholding structure of Leonteq Ltd. as of 31 December 2016 is shown in the table below.

Shareholders Number of
registered shares
Percentage
of voting rights
Notenstein La Roche Privatbank Ltd / Raiffeisen Switzerland Cooperative 4’624’835 29.01
Jan Schoch3, 4 1’124’253 7.05
Sandro Dorigo4 365’001 2.29
Lukas Ruflin / Thabatseka LP / Clairmont Trust Company Limited (‘Lukas Ruflin Family Interests’)3, 4, 5, 6 1’035’429 6.49
Veraison SICAV – Engagement Fund 7 798’361 5.01
Government of Singapore 8 516’528 3.24
Other Shareholders 7’480’097 46.91
Total 15’944’504 100.00

For notifications received and individual reports of significant shareholders published during 2016 by Leonteq Ltd. according art. 120 of the Federal Act on Financial Market Infrastructures and Market Conduct in Securities and Derivatives Trading (Financial Market Infrastructure Act, FMIA) of 19 June 2015, reference is made to the Disclosure Office publication platform of SIX Exchange Regulation:

https://www.six-exchange-regulation.com/en/home/publications/significant-shareholders.html 

 

3  In addition, Jan Schoch and Lukas Ruflin Family Interests each held 462’325 Call Options with the following conditions: strike CHF 210; sub- scription ratio 1:1; maturity 19 October 2025; European. These Call Options (924’650 Call Options) are written by Raiffeisen.

4   Founding Partner.

5  Clairmont Trust Company Limited acts as trustee of a  trust which holds through Thabatseka LP (which in turn is indirectly wholly owned by Clairmont Trust Company Limited) shares in Leonteq Ltd. The trust was settled by Lukas Ruflin.

6  Represents the number of shares of Lukas Ruflin Family Interests.

7  Veraison SICAV delegated the fund administration, asset management and distribution to UBS Fund Management (Switzerland) AG. Asset Management and Distribution was redelegated to Veraison SICAV.

8  GIC Private Limited is wholly owned by the Government of Singapore and manages the reserves of the Republic of Singapore. GIC Private Limited acts as the fund manager for Government of Singapore and the Monetary Authority of Singapore.



PDF Annual Report 2016

Compensation report

GENERAL PRICIPLES

The goal of Leonteq’s compensation principles is to attract and retain employees who are crucial for the Company’s future success. Leonteq is committed to fair, balanced and performance-oriented compensation practices that align long-term employee and shareholder interests, and which incentivise appropriate risk-taking while fostering adequate risk awareness. Leonteq’s compensation system is designed to


  • support a performance culture based on merit, to differentiate and reward excellent performance, both in the short- and long-term, and to recognise the Company’s values
  • enable the Group to attract and retain employees, motivating them to achieve results with integrity and fairness, while benefitting from the career opportunities offered by a growth company, and
  • be consistent with and promote effective risk management practices and the Group’s compliance and control culture.

PDF Annual Report 2016

Business & financial review

Leonteq Ltd. faced in 2016 a challenging year (the ‘Company’ or ‘Leonteq’ together with its subsidiaries, the ‘Group’). The Group posted a profit before taxes of CHF 17.6 million, down 75% from the prior year, and a net profit of CHF 17.2 million, compared to CHF 68.6 million in 2015. This unsatisfactory result is a combination of significantly lower revenues in the second half of 2016 as well as strategic investments that, with hindsight, reflect too ambitious growth expectations under the prevailing market conditions. Leonteq conducted an in-depth review of its business model and long-term objectives and subsequently announced its new organisational setup along three business lines. The review confirmed the overall strength of Leonteq’s business model as market-leading technology platform but also revealed that a more focused strategy and further process and organisational efficiencies need to be achieved. Leonteq also strengthened its management, assigned clear accountabilities and defined a sharpened strategy to be executed over the next four years. Progress can be measured against committed KPI targets.


GROUP RESULTS

Leonteq faced a challenging market environment during 2016 which was characterised by reduced client demand and significant market uncertainty, affecting business performance across the financial services industry. At the same time, Leonteq faced various issues and delays with platform partners which exacerbated topline weakness during Leonteq’s strategic shift away from own issuances. As a result, total operating income decreased by 6% to CHF 207.0 million in 2016. At the same time, total operating expenses rose by 26% to CHF 189.4 million, mainly due to an increase in Leonteq’s staff base by 10% year-on-year and higher office rental expenses. Thus, profit before taxes declined by CHF 51.6 million to CHF 17.6 million compared to 2015. Taxes amounted to CHF 0.4 million which led to a net profit of CHF 17.2 million in 2016.


INCOME STATEMENT
CHF million 2016 2015 Change from 2015
Net fee income 209.0 228.7 (9%)
Net trading income 5.5 (4.1) (234%)
Net interest income (7.5) (4.9) 53%
Total operating income 207.0 219.7 (6%)
Personnel expenses (111.5) (94.4) 18%
Other operating expenses (61.1) (41.5) 47%
Depreciation (16.8) (14.6) 15%
Total operating expenses (189.4) (150.5) 26%
Profit before taxes 17.6 69.2 (75%)
Taxes (0.4) (0.6) (33%)
Group net profit 17.2 68.6 (75%)


PDF Annual Report 2016

Consolidated financial statements

LEONTEQ LTD.

CONSOLIDATED INCOME STATEMENT FOR THE YEARS ENDED 31 DECEMBER 2016 AND 2015
CHF thousands Note 2016 2015
Fee income from securities trading and investment activities 213’413 229’379
Fee expense (4’421) (760)
Net fee income 10 208’992 228’619
Result from trading activities and the fair value option 11 5’462 (4’076)
Interest and discount income 2’026 985
Interest expense (9’798) (5’867)
Changes in value adjustments for default risks and losses from interest operations 311
Net result from interest operations 9 (7’461) (4’882)
Other ordinary income 44
Total operating income 207’037 219’661
Personnel expenses 13 (111’608) (94’309)
Other operating expenses 14 (56’625) (41’526)
Depreciation of long-lived assets 22 (16’772) (14’646)
Changes to provisions and other value adjustments, and losses 30 (4’474)
Total operating expenses (189’479) (150’481)
Result from operating activities 17’558 69’180
Taxes 15 (361) (545)
Group net profit 17’197 68’635
    of which allocated to shareholders of Leonteq Ltd. 17’197 68’635
Share information
Basic earnings per share (CHF) 36 1.09 4.32
Diluted earnings per share (CHF) 36 1.08 4.31

 

LEONTEQ LTD.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEARS ENDED 31 DECEMBER 2016 AND 2015
CHF thousands Note 2016 2015
Group net profit 17’197 68’635
Other comprehensive (loss)/income that will not be reclassified to the income statement
Remeasurement of the defined benefit plan 32/33 396 (5’595)
Change in own credit
Income tax on items that will not be reclassified 15/32 (84) 1’183
Total other comprehensive (loss)/income that will not be reclassified to the income statement 312 (4’412)
Other comprehensive (loss)/income that may be reclassified to the income statement
Currency translation adjustments 32 (176) (138)
Hedge accounting reserves 32 (130)
Total other comprehensive (loss)/income that may be reclassified to the income statement (306) (138)
Total other comprehensive (loss)/income 6 (4’550)
Total comprehensive income 17’203 64’085
     of which allocated to shareholders of Leonteq Ltd. 17’203 64’08

 

LEONTEQ LTD.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 31 DECEMBER 2016 AND 2015

CHF thousands Note 31.12.2016 31.12.2015
Assets
Cash in hand
Amounts due from banks 16 524’276 650’603
Amounts due from securities financing transactions 18 41’481 56’624
Amounts due from customers 17 37’860 79’063
Trading financial assets 19 2’238’601 2’450’744
Positive replacement values of derivative financial instruments 20 1’694’772 1’896’896
Other financial assets designated at fair value through profit or loss 21 908’374 1’360’118
Accrued income and prepaid expenses 16’730 19’664
Current tax assets 15 964 2’923
Deferred tax assets 15 3’719 3’334
Long-lived assets 22 55’495 39’775
Other assets 23 35’933 27’472
Total assets 5’558’205 6’587’216
Total subordinated claims 803 139
     of which subject to mandatory conversion and/or debt waiver
Liabilities
Amounts due to banks 24 439’754 331’095
Liabilities from securities financing transactions 18 324’127 306’865
Amounts due to customers 25 302’282 494’469
Trading financial liabilities 26 90’993 128’450
Negative replacement values of derivative financial instruments 20 1’464’126 1’592’889
Other financial liabilities designated at fair value through profit or loss 27 2’422’805 3’191’476
Accrued expenses and deferred income 96’765 100’937
Current tax liabilities 15 680 805
Deferred tax liabilities 15 264 39
Other liabilities 28 23’017 21’931
Expected credit loss provision 29 1’435
Provisions 30 6’674 2’200
Total liabilities 5’172’922 6’171’156
Equity
Share capital 31 15’945 15’945
Share premium 172’532 200’172
Retained earnings 31 205’121 146’571
Accumulated other comprehensive income/(loss) 32 (11’232) (11’238)
Own shares 31 (14’280) (4’025)
Group net profit 17’197 68’635
Total shareholders’ equity 385’283 416’060
Total liabilities and equity 5’558’205 6’587’216
Total subordinated liabilities
     of which subject to mandatory conversion and/or debt waiver

 

LEONTEQ LTD.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEARS ENDED 31 DECEMBER 2016 AND 2015

CHF thousands Note Share
capital
Share
premium
Retained
earnings reserves
OCI OWN SHARES GROUP 
NET PROFIT/(LOSS)
TOTAL 
SHAREHOLDERS’ EQUITY
DEFINED
BENEFIT PLANS
CHANGE 
IN OWN CREDIT
HEDGE  
ACCOUNTING
RESERVE
CURRENCY 
TRANSLATION
ADJUSTMENTS
Balance at
31 December 2014
15’926 220’955 85’093 (6’449) (239) (1’452) 62’575 376’409
Reallocation of retained earnings 62’575 (62’575)
Employee participation schemes 13 (1’097) (1’097)
Capital increase/decrease 31 19 3’077 3’096
Acquisition of
own shares
31 (2’573) (2’573)
Dividends
and other
distributions1, 2
31 (23’860) (23’860)
Other allocations to/(transfers from)
other comprehensive income
32 (4’412) (138) (4’550)
Group net profit/(loss) 68’635 68’635
Balance at
31 December 2015
15’945 200’172
146’571
(10’549)
(130) (553) (14’280) 68’635 416’060


CHF thousands Note Share
capital
Share
premium
Retained
earnings reserves
OCI OWN SHARES GROUP 
NET PROFIT/(LOSS)
TOTAL 
SHAREHOLDERS’ EQUITY
DEFINED
BENEFIT PLANS
CHANGE 
IN OWN CREDIT
HEDGE  
ACCOUNTING
RESERVE
CURRENCY 
TRANSLATION
ADJUSTMENTS
Balance at
31 December 2015
15’945 200’172 146’571 (10’861) (377) (4’025) 68’635 416’060
Impact of change
in accounting principle
(1’746) (1’746)
Balance at
1 January 2016
15’945 200’172 144’825 (10’861) (377) (4’025) 68’635 414’314
Reallocation of retained earnings 68’635 (13’707) (68’635) (13’707)
Employee participation schemes 13 5’368 5’368
Capital increase/decrease 31
Acquisition of
own shares
31 (10’255) (10’255)
Dividends
and other
distributions1, 2
31 (27’640) (27’640)
Other allocations to/(transfers from)
other comprehensive income
32 (13’707) 312 13’707 (130) (176) 6
Group net profit/(loss) 17’197 17’197
Balance at
31 December 2016
15’945 172’532 205’121 (10’549) (130) (553) (14’280) 17’197 385'283

1  From the total distribution of capital contribution the distribution on own shares has been deducted.

2  Dividends and other distributions are distributions of capital contribution reserves.


LEONTEQ LTD.

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEARS ENDED 31 DECEMBER 2016 AND 2015

CHF thousands 2016 2015
Cash flow from operating activities
Group net profit 17’197 68’635
Reconciliation to net cash flows from operating activities
Non-cash positions in Group results
Depreciation 16’772 14’646
Impairment of long-lived assets 905 (2)
Current taxes, net 294 4’636
Deferred taxes, net (160) (1’527)
Change in expected credit loss provision 1’435
Change in provision 4’474
Share-based benefit programs 5’368 (1’097)
Other non-cash income and expenses (1’564) (4’412)
Net (increase)/decrease in assets related to operating activities
Amounts due from banks 36’244 (24’802)
Amounts due from securities financing transactions 15’143 38’418
Amounts due from customers 41’203 3’370
Trading financial assets 212’143 512’462
Positive replacement values of derivative financial instruments 202’124 (655’617)
Other financial assets designated at fair value through profit or loss 451’744 347’175
Accrued income and prepaid expenses 2’934 (586)
Other assets (8’461) (6’591)
Net increase/(decrease) in liabilities related to operating activities
Amounts due to banks 9’037 35’066
Liabilities from securities financing transactions 17’262 (381’111)
Amounts due to customers (192’187) 300’016
Trading financial liabilities (37’457) 24’650
Negative replacement values of derivative financial instruments (128’763) 374’516
Other financial liabilities designated at fair value through profit or loss (782’378) (499’946)
Accrued expenses and deferred income (4’172) (8’805)
Other liabilities 1’086 10’309
Current taxes paid 1’540 (1’953)
Cash flow from operating activities (118’237) 147’450
Cash flow from investing activities
Purchases of long-lived assets (33’397) (23’939)
Proceeds from disposal long-lived assets
Cash flow from investing activities (33’397) (23’939)
Cash flow from financing activities
Issuance of share capital, net of issuance costs 3’096
Distribution of capital reserves (27’640) (23’860)
Purchases of own shares, net (10’255) (2’573)
Cash flow from financing activities (37’895) (23’337)
Exchange rate differences (176) (79)
Net (decrease)/increase in cash and cash equivalents (189’705) 100’095
Cash and cash equivalents, beginning of the year 275’182 175’087
Cash and cash equivalents at the balance sheet date 85’477 275’182
Cash and cash equivalents
Due from banks on demand 221’094 311’177
Due to banks on demand (135’617) (35’995)
Net cash and cash equivalents at the balance sheet date 85’477 275’182
Further information:
Dividends received 62’209 52’843
Interest received 2’026 1’151
Interest paid 9’886 6’768

FUND OF CASH
CHF thousands Note 2016 2015
Due from banks on demand3 16 221’094 311’177
Cash overdrafts 24 (135’617) (35’995)
Total fund of cash 85’477 275’182

3  The “Due from banks on demand” balance is included in balance sheet line item “Amounts due from banks”.

 

 

LTQ_AR2016_EN

contribution reserves.

OCI

Own shares

Group net

profit/

(loss)

Total

shareholders

equity

Defined
benefit
plans

Change in
own credit

Hedge

accounting reserve

Currency
translation
adjustments

(6’449)

(239)

(1’452)

62’575

376409

(62’575)

(1’097)

3’096

(2’573)

(2’573)

(23860)

(4’412)

(138)

(4550)

68’635

68’635

(10’861)

(377)

(4025)

68635

416060

LTQ_AR2016_EN

contribution reserves.

OCI

Own shares

Group net

profit/

(loss)

Total

shareholders

equity

Defined
benefit
plans

Change in
own credit

Hedge

accounting reserve

Currency
translation
adjustments

(6’449)

(239)

(1’452)

62’575

376409

(62’575)

(1’097)

3’096

(2’573)

(2’573)

(23860)

(4’412)

(138)

(4550)

68’635

68’635

(10’861)

(377)

(4025)

68635

416060

LTQ_AR2016_EN

contribution reserves.

OCI

Own shares

Group net

profit/

(loss)

Total

shareholders

equity

Defined
benefit
plans

Change in
own credit

Hedge

accounting reserve

Currency
translation
adjustments

(6’449)

(239)

(1’452)

62’575

376409

(62’575)

(1’097)

3’096

(2’573)

(2’573)

(23860)

(4’412)

(138)

(4550)

68’635

68’635

(10’861)

(377)

(4025)

68635

416060

LTQ_AR2016_EN

contribution reserves.

OCI

Own shares

Group net

profit/

(loss)

Total

shareholders

equity

Defined
benefit
plans

Change in
own credit

Hedge

accounting reserve

Currency
translation
adjustments

(6’449)

(239)

(1’452)

62’575

376409

(62’575)

(1’097)

3’096

(2’573)

(2’573)

(23860)

(4’412)

(138)

(4550)

68’635

68’635

(10’861)

(377)

(4025)

68635

416060

LTQ_AR2016_EN

contribution reserves.

OCI

Own shares

Group net

profit/

(loss)

Total

shareholders

equity

Defined
benefit
plans

Change in
own credit

Hedge

accounting reserve

Currency
translation
adjustments

(6’449)

(239)

(1’452)

62’575

376409

(62’575)

(1’097)

3’096

(2’573)

(2’573)

(23860)

(4’412)

(138)

(4550)

68’635

68’635

(10’861)

(377)

(4025)

68635

416060

LTQ_AR2016_EN

contribution reserves.

OCI

Own shares

Group net

profit/

(loss)

Total

shareholders

equity

Defined
benefit
plans

Change in
own credit

Hedge

accounting reserve

Currency
translation
adjustments

(6’449)

(239)

(1’452)

62’575

376409

(62’575)

(1’097)

3’096

(2’573)

(2’573)

(23860)

(4’412)

(138)

(4550)

68’635

68’635

(10’861)

(377)

(4025)

68635

416060

LTQ_AR2016_EN

contribution reserves.

OCI

Own shares

Group net

profit/

(loss)

Total

shareholders

equity

Defined
benefit
plans

Change in
own credit

Hedge

accounting reserve

Currency
translation
adjustments

(6’449)

(239)

(1’452)

62’575

376409

(62’575)

(1’097)

3’096

(2’573)

(2’573)

(23860)

(4’412)

(138)

(4550)

68’635

68’635

(10’861)

(377)

(4025)

68635

416060

LTQ_AR2016_EN

contribution reserves.

OCI

Own shares

Group net

profit/

(loss)

Total

shareholders

equity

Defined
benefit
plans

Change in
own credit

Hedge

accounting reserve

Currency
translation
adjustments

(6’449)

(239)

(1’452)

62’575

376409

(62’575)

(1’097)

3’096

(2’573)

(2’573)

(23860)

(4’412)

(138)

(4550)

68’635

68’635

(10’861)

(377)

(4025)

68635

416060

LTQ_AR2016_EN

reserves.

OCI

Own shares

Group net

profit/

(loss)

Total

shareholders

equity

Defined
benefit
plans

Change in
own credit

Hedge

accounting reserve

Currency
translation
adjustments

(6’449)

(239)

(1’452)

62’575

376409

(62’575)

(1’097)

3’096

(2’573)

(2’573)

(23860)

(4’412)

(138)

(4550)

68’635

68’635

(10’861)

(377)

(4025)

68635

416060

(6’449) (239) (1’452) 62’575 376’409
(6’449) (239) (1’452) 62’575 376’409
(239) (1’452) 62’575 376’409
(239) (1’452) 62’575 376’409
385’283

PDF Annual Report 2016  


Statutory financial statements

LEONTEQ LTD.

INCOME STATEMENT

CHF thousands Note 2016 2015
Operating income
Dividend income from Leonteq Securities Ltd. 30’000 15’000
Interest income from Leonteq Securities Ltd. 6 11’726 12’498
Interest expense on cash overdrafts (6)
Interest expense to Leonteq Securities Ltd. (8) (5)
Total operating income 41’712 27’493
Operating expenses
Personnel expenses 7 3’120 1’584
Other operating expenses 8 754 2’281
Depreciation and amortisation
Total operating expenses 3’874 3’865
Profit/(loss) before taxes 37’838 23’628
Taxes 9 108 103
Net profit/(loss) 37’730 23’525

LEONTEQ LTD.

BALANCE SHEET

ASSETS
CHF thousands Note 31.12.2016 31.12.2015
Current assets
Due from banks 1 1’271 3’196
Due from subsidiaries 2 259 60
Accrued income and prepaid expenses 3 3’496 4’616
Total current assets 5’026 7’872
Non-current assets
Due from Leonteq Securities Ltd. 2 7’000 7’000
Financial investments 4 150’000 200’000
Investments in subsidiaries 5 135’825 83’669
Total non-current assets 292’825 290’669
Total assets 297’851 298’541
whereof subordinated in favour of Leonteq Securities Ltd. 160’191 211’273

LIABILITIES & SHAREHOLDERS’ EQUITY
CHF thousands Note 31.12.2016 31.12.2015
Short-term liabilities
Due to banks 3
Due to Leonteq Securities Ltd. 402
Due to other customers 2
Accrued expenses 293 419
Total short-term liabilities 296 823
Total liabilities 296 823
Shareholders’ equity
Share capital 13 15’945 15’945
Legal reserves 185’761 212’878
whereof general legal reserves 3’189 2’667
whereof reserves from capital contributions 182’572 210’211
Own shares 13 (14’279) (4’025)
Profit carried forward 72’398 49’395
Net profit/(loss) 37’730 23’525
Total shareholders’ equity 297’555 297’718
Total liabilities and shareholders’ equity 297’851 298’541

PROPOSAL TO THE ANNUAL GENERAL MEETING

PROPOSED APPROPRIATION OF RETAINED EARNINGS

The Board of Directors proposes the following allocation of retained earnings:

CHF thousands 2016 2015
Net profit 37’730 23’525
Profit carried forward 72’398 49’395
Accumulated profit 110’128 72’920
Distribution of profit
Allocation to general legal reserves (522)
Allocation to other reserves
Profit carried forward 110’128 72’398

PROPOSED DISTRIBUTION FROM RESERVES FROM CAPITAL CONTRIBUTION

Subject to the approval of the Annual General Meeting, the Board of Directors proposes the distribution from reserves from capital contributions
of CHF 0 per share (2015 CHF 1.75 per share):

CHF thousands 2016 2015
Reserves from capital contributions
Balance carried forward 182’308 207’105
Distribution from reserves from capital contributions on treasury shares relating to the prior year period 264 29
Proceeds from capital increase 3’077
Balance before distribution 182’572 210’211
whereof confirmed by the tax authorities 168’997 193’606
Proposed distribution from reserves from capital contributions (27’903)
Balance after distribution 182’572 182’308


PDF Annual Report 2016

Shareholders' letter

leonteq-schoch-vinzenz


leonteq-shareholders-letter


Leonteq reported results for the year 2016, reflecting a combination of significantly lower revenues, especially in the second-half, as well as substantially increased costs. We have set clear priorities and initiated actions, including additional cost savings measures, to restore profitability while we expect 2017 to be a transitional year.


RESULTS 2016

In the second half and the full year of 2016 our revenues came in much lower than anticipated. This was due to a combination of unfavorable markets in H2 2016, especially towards year-end, and various issues and delays faced with platform partners. Such effects worsened due to our strategic shift away from own issuances. At the same time, our cost base increased substantially in 2016, driven by strategic investments in staff and other planned growth measures. We had as well one-off costs.

Total operating income decreased to CHF 87.7 million (down 19%) in the second half of 2016, compared to the same period in 2015, and to CHF 207.0 million (down 6%) for the full year 2016. Total operating expenses increased to CHF 108.5 million (up 39%) in the second-half of 2016 compared to the same period in 2015, and to CHF 189.4 million (up 26%) for the full year 2016. As a result, we posted a group net loss of CHF 20.0 million for the second-half 2016, compared to CHF 29.7 million in the same period in 2015. Group net profit was CHF 17.2 million (down 75%) for the full year 2016. With a Basel III CET 1 ratio of 22.7% as at 31 December 2016, compared to 26.2% at year-end 2015, Leonteq’s capital position remains strong. The board of directors proposes no dividend for 2016.


CORPORATE GOVERNANCE & COMPENSATION

The Chairman and the Vice-Chairman have waived 34% and 22% of their respective entitled board fees for the current term of office. Overall, the board of directors compensation is 40% below the budget approved by annual general meeting 2016. As already announced on 19 December 2016, the executive committee has forgone its entire variable compensation for 2016.

In the area of corporate governance, a process has been started to strengthen the board’s independence and diversity. In this context, the board will nominate two additional independent directors by the AGM 2018. In support thereof, Raiffeisen has waived its entitlement to a second board seat (as per the shareholders’ agreement with the founding partners). The remuneration committee will become the nomination & remuneration committee with the majority of the committee members being independent directors. Additional disclosure on governance and compensation has been included in the respective section of this report.


OUTLOOK

The Board and management recognise that we have made mistakes. We acknowledge that we were too optimistic as to how quickly we could implement new partnerships and drive the corresponding revenues. Continued strategic investments in personnel and other growth measures undertaken in parallel resulted in an inflated cost base. Board and management will take decisive actions to restore Leonteq’s profitability and credibility.

With these results we have disappointed our investors, our clients and our employees, for which we apologise. We are determined to do what it takes to bring our business back on a solid growth track and to restore confidence in Leonteq. This will take time as past mistakes cannot be fixed overnight and market conditions provide no tailwinds, either. However, despite this difficult situation, we continue to be fully convinced of the great potential of our business, and the quality and capabilities of our team.


leonteq-pierin-vincenz                                                                    leonteq-jan-schoch   

Pierin Vincenz                                                                                  Jan Schoch

Chairman of the Board of Directors                                             Chief Executive Officer



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