Quarterly Report • Nov 7, 2007
Quarterly Report
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Report for the third quarter 2007
| Key figures in € m | 3rd Quarter 2007 3rd Quarter 2006 | 9 months 2007 | 9 months 2006 | Change in % | |
|---|---|---|---|---|---|
| Continuing operations | |||||
| Total income | 137.3 | 127.81 | 406.4 | 373.11 | 9% |
| Income from brokerage business | 95.6 | 103.51 | 289.8 | 299.71 | –3% |
| Income from banking business | 20.1 | 17.5 | 59.1 | 51.5 | 15% |
| Income from wealth management | 9.3 | – | 29.0 | – | – |
| Other income | 12.2 | 6.91 | 28.6 | 21.91 | 31% |
| Earnings before interest and tax (ebit) | 17.4 | 17.51 | 53.4 | 44.71 | 20% |
| ebit margin % | 12.7 | 13.71 | 13.1 | 12.01 | – |
| Earnings from continuing operations | 16.5 | 12.31 | 39.7 | 35.31 | 12% |
| Earnings per share (diluted) in € | 0.16 | 0.121 | 0.39 | 0.331 | 18% |
| MLP Group | |||||
| Earnings before interest and tax and | |||||
| before profit from the sale of operations (ebit) | 16.1 | 15.91 | 48.4 | 40.21 | 20% |
| Net profit (total) | 8.0 | 11.1 | 27.3 | 30.5 | –10% |
| Earnings per share (diluted) in € | 0.08 | 0.11 | 0.27 | 0.29 | –7% |
| Capital expenditure | 5.3 | 2.9 | 11.8 | 17.4 | –32% |
| Shareholders' equity | – | – | 310.0 | 323.42 | –4% |
| Equity ratio % | – | – | 24.8 | 25.52 | – |
| Balance sheet total | – | – | 1,249.4 | 1,266.12 | –1% |
| Clients 3 | – | – | 707,000 | 685,0002 | 3% |
| Consultants 3 | – | – | 2,579 | 2,5712 | 0% |
| Branch office3 | – | – | 259 | 2552 | 2% |
| Employees 3 | – | – | 1,912 | 1,599 | 20% |
| Arranged new business | |||||
| Old-age provisions (premium sum in € billion) | 1.3 | 1.5 | 3.5 | 4.3 | –19% |
| Health insurance (annual premium) | 10.3 | 21.9 | 33.9 | 55.8 | –39% |
| Loans | 300 | 314 | 918 | 963 | –5% |
| Funds under management in € billion | – | – | 11.2 | 10.84 | 4% |
1 Adjustments of previous year's figures, see note 3 and 5. 2 As at December 31, 2006. 3 Continuing operations. 4 MLP and Feri as at December 31, 2006.
MLP generates more than 97% of its total income in its core market, Germany, and is thus primarily influenced by the business development in its domestic market.
During the first nine months of 2oo7 the upswing in the German economy continued – so far apparently unperturbed by the effects of the property crisis in the USA. The positive economic development benefited particularly from consistently strong exports and further improvement in domestic, household consumption. This positive development also supports the labour market. The number of people unemployed in Germany in September fell to around 3.5 million, representing the lowest level since the autumn of 1995. The savings ratio in Germany in the first half of 2oo7 rose to 1o.9%, attaining its highest level since the mid-199os. The corresponding figure for the same period of the previous year stood at 1o.5%. This may possibly be attributable to planned purchases being brought forward into 2oo6 ahead of the increase in VAT from the start of 2oo7, as well as to a generally heightened awareness of the need for private old-age pension provision. Experts do not anticipate a significant fall in this savings ratio during the coming months. The annual inflation rate in September was running at 2.4%. The increase in the rate of inflation compared to the previous year and the associated reduction in disposable national income are particularly attributable to higher prices for food and fuels.
The subject of tax-subsidised old age pension provision is gaining in importance. Currently, around 9 million citizens utilise the state "Riester pension" subsidy. Based on the number of those eligible to take out such policies, experts estimate that the total potential for "Riester policies" amounts to 3o to 36 million. In federal cabinet circles, a compromise is currently being sought to enable an extension of the Riester old-age pension provision subsidy to include private residential property. The so-called "Wohn Riester" would represent a new subsidy instrument and contain, based on the provisional drafts by government aides, a state subsidy for the purchase of a property.
Since the beginning of September, tax-subsidised "base" pension products based on investment funds have been available on the market. During the savings phase investors can invest in various funds according to their risk philosophy. When the payout phase is reached, the fund balance is then administered in the form of a retirement pension.
The grand coalition has decided on a continuation of the remuneration conversion scheme for supporting occupational pension beyond the end of 2oo8. This facility enables employees to pay up to four percent of their gross income into a pension fund, exempt from social security deductions or taxes.
Since the healthcare reform came into effect on April 1, 2oo7, only a few noninsured people have so far returned to one of the state health insurance funds despite the new compulsory requirement for healthcare insurance. From January 1, 2oo9, private healthcare insurance companies too must offer the noninsured a so-called "base tariff". In addition to opposition to the planned portability of old-age accruals for existing customers when switching between health insurance companies, this base tariff, in particular, as well as the tightening of the criteria for eligibility to switch to private healthcare insurance has encountered huge criticism from the private healthcare insurance companies. Since the healthcare reform came into force, those seeking to change must now demonstrate three consecutive years of gross annual income of at least €48,ooo instead of the previous one-year requirement.
During the first nine months of 2oo7, there was intense discussion within the German financial services industry, particularly concerning the changes to the regulatory framework conditions. In addition to the EU Insurance Mediation Directive, that was already incorporated into national law and came into force in May 2oo7, the discussions specifically focussed on the following legislation changes:
In our view, all these changes will lead to a tightening of the competitive conditions and trigger a process of consolidation within the industry.
The already occured or respectively annouced market entry of new competitors during the current year demonstrates, on the one hand, the attractiveness of this market – however this will also lead to a further increase in the intensity of competition.
MLP significantly grew its operative business in the first nine months of the current financial year, resulting in a 2o% rise in earnings before interest and taxes (EBIT) in continued operations to € 53.4 million. This figure includes oneoff exceptional charges totalling €4.8 million in connection with compensatory payments and the merger of MLP Finanzdienstleistungen AG on MLP Bank AG. Since a large portion of these exceptional costs were incurred in the third quarter, the EBIT performance of €17.4 million during this period remained at the previous year's level.
At €4o6.4 million, total income rose by nine percent compared to the previous year's level. Net profit from continuing operations climbed by twelve percent to €39.7 million. The rise in net profit of 35% in Q3 came in significantly higher since tax expenditure during this period only amounted to €1.2 (previous year: €6.5 million), resulting from a revaluation of the deferred taxes necessitated by the corporate tax reform 2oo8.
The brokerage business accounted for the largest portion of total income in the first nine months of 2oo7, totalling €289.8 million (previous year: €299.7 million). In the period from July to September revenues in this business segment increased by nine percent compared to the previous quarter and amounted to €95.6 million (Q2 2oo7: €87.9 million).
In the banking business, income at the nine-month stage rose by 15% to €59.1 million. This figure also reflects the brokerage placement of MLP wealth management concepts. Wealth management, which shows Feri Finance AG, contributed €29.o million to total income.
The significant increase in other income is primarily made up of profits from disposals generated through the sale database business of Feri Fund Market Information Ltd, amounting to €3.9 million in Q3.
Personnel expenses in the first nine months of the current financial year increased significantly from €54.8 million to €75.8 million. This was mainly due to the comprehension of the employees of the Feri Group, which has been incorporated into the consolidation circle of the MLP Group since the fourth quarter of 2oo6. In addition, the personnel expenses for the first nine months of 2oo7 also include one-off compensatory payments.
The increase in depreciation as well as in operating expenses in the reporting period, rising from €12.4 million to €14.4 million and from €11o.5 million to €116.2 million respectively, are likewise primarily due to the first consolidation of Feri.
At €o.7 million (previous year: €5.1 million) and €o,3 million (previous year: €1.3 million), the finance costs, both in the first nine months of 2oo7 as well as in Q3 of the current financial year came in considerably lower than in the corresponding periods of the previous year. This shows the effects of the reduction in the cash and cash equivalents available for investment as well as of interest expenses arising from accumulation of the residual price for Feri Finance AG.
The discontinued operations comprise MLP Lebensversicherung AG and MLP Versicherung AG which were sold in 2oo5, the business activities of MLP Private Finance AG, Zürich that ceased in 2oo6 as well as the cessation of the business activities of our subsidiaries in Great Britain and Spain in Q3 2oo7 in favour of further concentration on growth markets. The overall result in this area in the first nine months of 2oo7 amounted to -€12.4 million, due mainly to operative losses incurred by our subsidiaries in Great Britain and Spain and to necessary restructuring expenses for the cessation of business activities in these countries of -€11.3 million.
Overall, MLP achieved a group result amounting to €27.3 million (previous year: €3o.5 million) in the period under review.
The rise in receivables and liabilities from the banking business at September 3o, 2oo7 results from the increased deposits business and associated investment of funds.
At the reporting reference date of September 3o, 2oo7, the financial investments and cash amounted to €154.o million, representing a reduction of €16.4 million compared to December 31, 2oo6. Significant aspects influencing this figure were the dividend payment to shareholders of MLP AG amounting to €4o million and the influx of funds from the operative business in the first nine months of the current financial year.
The changes in the deferred tax charges are associated with a revaluation necessitated by the corporate tax reform 2oo8. The tax refund claims significantly reduced during the reporting period through receipt of payment for taxes on earnings, falling from €21.1 million to €12.7 million. Tax liabilities at September 3o, 2oo7 amounted to €3.o million (December 31, 2oo6: €7.6 million). The MLPtypical business cycle is responsible for the fall in receivables and other assets from €177.1 million to €94.6 million as well as for the reduction in other liabilities from €281.9 million to €2o2.4 million.
The financial resources on the reference date stood at €1o2.8 million (previous year: €152.9 million). The cash flow from operating activities rose in the first nine months of 2oo7 from €28.7 million to €38.7 million. This change compared to the previous year is mainly attributable to tax refunds that were paid out in the first quarter of 2oo7 as well as to the effect of the consolidation of Feri from the fourth quarter of 2oo6 on. The cash flows from investing activities and from financing activities significantly improved in the first nine months of the current financial year from -€27.5 million to -€14.2 million and from -€178.2 million to -€42.1 million. A major contributory factor towards the improvement of cash flow from investing activities were the lower payments for in-house, custom-developed software. The significant improvement in cash flow from financing activities is primarily due to the share buy-back programme in the previous year.
The company's equity capital at the reporting reference date on September 3o, 2oo7 reduced to €31o.o million (December 31, 2oo6: €323.4 million), mainly due to the dividend distribution on June 1, 2oo7 to the MLP shareholders, amounting to €4o million. The result in the reporting period had a reverse effect.
In the first nine months of the current financial year, MLP invested a total of €11.8 million (previous year: 17.4 million), mainly within the consulting and sales segment in the improvement of IT support for client consultation and other client support service related processes.
In July 2oo7, MLP Finanzdienstleistungen AG acquired a 49.8% holding in Interhyp Service GmbH, which know trades under the name MLP Hyp GmbH. The company serves to handle the joint residential mortgage business of MLP Finanzdienstleistungen AG and Interhyp AG. Business activities are expected to commence at the end of 2oo7.
At September 3o, 2oo7 the premium sum in the area of long-term pension products stood at €3.5 billion, an amount which, as expected, was below the high figure of the previous year (€4.3 billion), which had been significantly influenced by the increase in subsidised "Riester pension" contributions. In the private health care business, annual premiums fell, as anticipated, from €55.8 million to €33.9 million. The loans and mortgages volume stood at €918 million (€963 million). Since the beginning of the year, the volume of funds jointly managed with Feri Finance AG has risen from €1o.8 billion to €11.2 billion.
In the first nine months of the year, MLP gained a total of 33,ooo new clients. The number of MLP consultants stood at 2,579 which represents an increase of 3o compared to the previous quarter (June 3o, 2oo7: 2,549 ). After a consolidation phase, MLP opened six new branch offices in the third quarter.
Due to the forthcoming introduction of the captial gains tax, MLP's consulting activities during the coming months will also increasingly focus on the topic of tax-optimised financial investment. During recent months, MLP has made elaborate preparations with respect to the extensive changes contained within the upcoming reform of the German Insurance Contract Law. The legislation includes a broadening of the information obligations towards the client, greater cost transparency in life and health care insurance as well as the spreading of acquisition costs over five years.
Following MLP's withdrawal from it's less successful markets of Great Britain and Spain at the start of July 2oo7, from the third quarter both units are now shown as discontinued operations. In future, the financial services company MLP will concentrate its activities on its core market, Germany, as well as on its foreign operations in Austria and the Netherlands.
On September 4, 2oo7, and with immediate effect, the Supervisory Board of MLP AG appointed Muhyddin Suleiman as a new member of the Executive Board of MLP AG with responsibility for sales and marketing. In parallel, Dr. Wulf Böttger and the Supervisory Board of MLP AG amicably agreed that Dr. Böttger would step down from his position as executive board member of MLP AG.
At €3o4.7 million, income in the consulting and sales segment in the first nine months of 2oo7 was below the previous year's level (€313.1 million). The third quarter contributed €1oo.7 million (€1o7.9 million) to segment income. Viewed within the context of a nine-month comparison, the income from the non-life insurance area developed very positively. Income from loans and income from investments remained around the previous year's level, or fell slightly. Due to the strong first quarter in healthcare insurance policies prior to the passing of the healthcare reform, income in this area is almost at the previous year's level. Income from the brokerage of old-age pension products declined, however it should be noted that the revenues in 2oo6 were positively influenced by the "Riester step" in the first quarter of 2oo6.
The expenses in this segment in the first nine months of 2oo7 amounted to €278.3 million and thus remained below the previous year's figure of €286.7 million. In Q3 the segment expenses also fell compared to the same period last year and amounted to €94.4 million (€96.7 million). The mainly variable expenses for the brokerage business account for the largest portion of the expenses in this segment. In the first nine months of 2oo7, they amounted to €128.7 million, a reduction of around five percent compared to the previous year's figure. The decrease was even more pronounced in the third quarter. In the period from July to September 2oo7, the expenses for the brokerage business fell by eleven percent to €42.6 million. Personnel expenditure in the period from January to September 2oo7 rose by six percent to €47.6 million. In the third quarter, the rise in personnel costs was somewhat sharper, rising by eight percent to €14.8 million, reflecting the impact of one-off severance payments.
Depreciation expenses in this segment in the first nine months of the current financial year amounted to €9.5 million (€9.4 million) and thus remained around the previous year's level. In Q3 2oo7, write-downs totalled €3.4 million and were therefore above the previous year's level (€3.o million). Overall, segment earnings before interest and taxes (EBIT) in the period from January to September 2oo7 amounted to €4o.6 million (€45.5 million). In Q3, an EBIT figure of €1o.5 million (€16.8 million) was achieved.
The finance costs of the segment in the first nine months of the current financial year amounted to €o.6 million and were thus significantly higher than the previous year's figure of €o.3 million. In the third quarter of 2oo7, the finance costs amounted to €o.3 million (€o.1 million).
In the first nine months of the current financial year, the bank segment continued to exhibit very positive business development. Segment income rose by 14% compared to the previous year, reaching €59.1 million. In the third quarter of 2oo7 income of €2o.1 million (previous year: €17.6 million) was achieved. Due to the increase in the deposit business and in the securities custody business, the commission income in the reporting period rose by 4% compared to the previous year, amounting to €19.1 million. In the third quarter commission income of €6.4 million (previous year: €6.2 million) was achieved. The increase in interest income to €11.1 million (previous year: €8.6 million) and €3.8 million (previous year: €3.1 million) is attributable to the higher balance sheet volume as well as to an increased rate of interest.
The expenses in the banking business, both in the first nine months of the current financial year, as well as in Q3 2oo7, increased slightly under-proportionally to the income. They amounted to €31.4 million (previous year: €26.9 million) and €1o.7 million (previous year: €9.o million) respectively.
This led to a rise of 7o% to €9.3 million in the segment's earnings before interest and taxes (EBIT) in the reporting period compared to the previous year's epoch. In the third quarter of 2oo7, an EBIT performance of €4.6 million (previous year: €2.1 million) was achieved, influenced not only by the underproportional development of the expenses but also by the release of an accrual.
In the wealth management segment income amounting to €29.o million was achieved in the first nine months of 2oo7, whereby the third quarter contributed €9.3 million to the segment income. Earnings before interest and taxes (EBIT) in the reporting period totalled €8.7 million. The third quarter contributed €5.7 million towards this figure. Comparative values for the previous year are not available for this new segment, which was created in the fourth quarter of 2oo6 within the framework of the acquisition of a majority holding in Feri Finance AG.
In this segment, earnings before tax (EBT) in the first nine months of 2oo7 amounted to €o.1 million (previous year: €1.2 million). This included an additional subsequent profit component from the sale of the former subsidiary MLP Lebensversicherung AG amounting to €4.5 million (previous year: €4.5 million). In the third quarter of the current financial year the EBT achievement of -€3.5 million was significantly below the previous year's figure of -€o.2 million due to one-off severance payments and merger expenses.
There were no significant changes to the risk situation of the group during the period under review. Currently, no existence-threatening risks to the MLP Group have been identified.
A detailed presentation of the corporate risks as well as a description of our risk management is contained in our annual report 2oo6.
Information relating to business with affiliated companies and persons is presented in the notes.
The autumn report issued by leading German economic research institutes takes the view that the distortions on the international financial markets, brought about by US sub-prime crisis, will lead to only temporary dampening of the economic momentum in Germany, MLP's core market. The experts expect economic growth of 2.6% in the current year and forecast a slight weakening of economic momentum coupled with economic growth of 2.2% for 2oo8. Experts unanimously expect further recovery in private consumption in Germany during the second half of 2oo7, thus compensating for the effect of the VAT increase from the start of the year. In 2oo8, private consumption will continue to gather momentum and become one of the supporting pillars of the sustained economic upswing. According to estimates by the Federal Labour Office, this pleasing development is having a positive effect on the labour market, with a forecasted average of 3.8 million people unemployed for the current year and a 3.5 million jobless figure in 2oo8. It is as yet unclear as to what extent risk factors such as the weakening of economic momentum in the USA, the high euro exchange rate compared to the US dollar and the sharp rise in crude oil prices during recent weeks will lastingly burden economic development in Germany.
The business activities of MLP are particularly focussed on the areas of old-age pension and healthcare provision as well as financial investment and wealth management. The framework conditions in the areas of old-age pension provision, financial investment and wealth management have not significantly altered since the end of the financial year 2oo6.
We detect a continuing heightened awareness on the part of the population in Germany with respect to the essential need for personal provision measures in order to secure an income during old age and to safeguard the level of care in case of illness. However, this realisation does not always result in specific action since many people underestimate the time aspect when building up an adequate level of provision. Provision products are thus set to remain sales-intensive in the future.
From an MLP perspective, the introduction of the healthcare reform on April 1, 2oo7 has led to a deterioration of the framework conditions in the healthcare area. The forecasted decline in the development of the healthcare business occurred, albeit with a slight delay. At the start of 2oo7, income from policies concluded in the fourth quarter of 2oo6 continued to have a positive effect on this business since, due to accounting specifics, they were not booked as revenue-effective items until the first quarter of 2oo7. Following the introduction of the healthcare reform on April 1, 2oo7, there was, as expected, a decline in the demand for private full medical insurance policies. For the coming quarter, we expect continued sluggish demand for full medical insurance. For the full year 2oo7 we therefore forecast an overall decline in the healthcare business area. However, in the medium to long term, we anticipate that demand for private full health insurance and supplementary medical cover will pick up again.
In addition to VVR (Insurance Mediation Directive) and MiFID legislation that has been introduced during this year, the changes to the German Insurance Contract Law will also have an effect on the business development of insurance companies and sales organisations. Since no final decision has yet been made concerning decisive implementation regulations, it is currently difficult to forecast the specific effects of such changes.
In view of this macroeconomic and industry-specific background we see no reason to revise the forecasts made in our annual report 2oo6 with respect to business development in the financial year 2oo7. By creating clear sales impetus in September 2oo7 we paved the way for a pleasant progress, which was evident in the first few weeks of the new quarter and we expect the MLP specific year-end dynamics. Against this background MLP still assumes an increase of the earnings before interest and tax (EBIT) figure to around €11o million from the continuing operations. In the previous year this figure, including the to be discontinued business activities in Great Britain and Spain, amounted to €84.9 million.
With effect from November 8, 2oo7, MLP will be continuing its share buy-back programme as announced, and will purchase a maximum of 1.8% of the equity capital. Based on the share price level at the time of the Executive Board's decision (October 11, 2oo7), this equates to a figure of around €22 million. Together with the dividend payment for 2oo6, MLP is thus distributing some 95% of last year's net profit from continuing operations to its shareholders.
On October 29, 2oo7 MLP AG exercised, as scheduled, its option rights to acquire the remaining 43.4% holding in Feri Finance AG. The in rem execution of the transfers of the holdings will take place in the first half year of 2o11. The exercise price which will become due in the second quarter of 2o11, comprises both a fixed price of around €47.7 million as well as a performance-related component that is largely dependent on new business development in the wealth management division.
There were no further notable events after the balance sheet date which may affect the MLP Group's net assets, financial position or results of operations.
This documentation includes certain prognoses and information on future developments founded on the conviction of MLP ag's Executive Board and on assumptions and information currently available to MLP ag. Words such as "expect," "anticipate," "estimate," "assume," "intend," "plan," "should," "could," "project" and other similar terms used in reference to the company describe prognoses based on certain factors subject to uncertainty.
Many factors can contribute to the actual results of the MLP Group differing significantly from the prognoses made in such statements.
MLP ag accepts no liability to the public for updating or correcting prognoses. All prognoses and predictions are subject to various risks and uncertainties, which can lead to the actual results differing from expectations. The prognoses reflect the points of view at the time when they were made.
At the end of the third quarter, the international capital markets can look back on a chequered development during the course of the year 2oo7 to date. A tumultuous rise in quoted prices took the main worldwide indices to new historic highs during the middle of July. Driven by a triad of positive economic data, take-over speculation and good company results, both the DAX (8,1o5 points) as well as the MDAX (11,377 points) reached levels never previously witnessed in these two indices.
Later, the spreading of the property crisis in the USA led to a huge change of mood as well as to a comprehensive consolidation in the markets. Only after repeated intervention in the money markets by the European Central Bank and the American Federal Reserve, as well as a significant lowering of the key interest rates in the USA by 5o basis points during the middle of September, were the capital markets able to recover their composure. This was followed by an extensive recovery on the worldwide exchanges. Compared to the levels at the beginning of 2oo7, the DAX was able to advance by 17.67% and the MDAX by 9.89%.
MLP's share price was not able to benefit from the overall positive development within the capital market during the first nine months of the current financial year. Compared to the first trading day of 2oo7, the MLP share fell by around 37% and closed at €9.44 at the end of trading on September 3o, 2oo7.
The significant fall in the share price was particularly attributable to the uncertainties on the part of investors concerning the changes within the regulatory environment (Insurance Mediation Directive, MiFID and German Insurance Contract Law), the tighter competitor situation through the already occured or respectively annouced market entry of new competitors during the current year as well as the uncertainty due to the management changes at MLP.
During the third quarter we again carried out numerous meetings with investors either at road-shows or at capital market conferences, both in Germany and abroad.
On October 11, 2oo7 the Executive Board of MLP announced the initiation of a new share buy-back programme. From November 8, 2oo7 on a maximum of 1.8% (equating to 2,o15,o31 shares) of the current equity capital of the company are to be repurchased. Based on the share price level at the time of the Executive Board's decision (October 11, 2oo7), this equates to a figure of around €22 million. The main part of the programme is being undertaken under the leadership of an investment bank. Further details can be obtained by visiting www.mlp.de. Together with the dividend payment amounting to €4o million we will thus have distributed around €62 million to our shareholders in 2oo7, a figure that corresponds to some 95% of the net profit from the continuing operations in 2oo6.
| Note 3rd Quarter 2007 3rd Quarter 2006 9 months 2007 9 months 2006 All figures in €'000 Continuing operations Income from brokerage business [8] 95,603 103,472 289,792 299,650 Income from banking business [9] 20,113 17,469 59,059 Income from wealth management [10] 9,345 – 29,002 – Other income 12,201 6,852 28,572 21,889 Total income 137,262 127,792 406,424 373,082 Expenses for brokerage business –42,555 –47,964 –128,658 –135,781 Expenses for banking business [11] –5,578 –5,074 –16,237 –14,961 Expenses for wealth management –219 – –1,755 – Personnel expenses [12] –25,057 –16,837 –75,758 –54,824 Depreciation/amortisation –4,975 –4,006 –14,382 –12,358 Operating expenses [13] –41,424 –36,438 –116,181 –110,503 Earnings of associates accounted for using the equity method –41 – –41 – Earnings before interest and tax (ebit) 17,411 17,473 53,413 44,656 Other interest and similar income 1,718 2,241 4,975 8,123 Other interest and similar expenses –1,397 –928 –4,227 –3,051 Finance cost 321 1,313 747 5,072 Earnings before tax (ebt) 17,732 18,787 54,160 49,728 Income taxes [14] –1,198 –6,532 –14,482 –14,406 Earnings from continuing operations 16,534 12,254 39,678 35,322 Earnings from discontinued operations [20] –8,508 –1,173 –12,359 –4,843 Net profit (total) 8,027 11,082 27,319 30,478 Of which shareholders of the parent company account for 8,027 11,082 27,319 30,478 minority interests account for – – – – Earnings per share in € From continuing operations basic 0.17 0.12 0.40 0.34 diluted 0.16 0.12 0.39 0.33 From continuing and discontinued operations basic 0.08 0.11 0.27 0.29 diluted* 0.08 0.11 0.27 0.29 |
|||
|---|---|---|---|
| 51,544 | |||
* Adjustments of previous year's figures, see note 3 and 5.
** The ordinary shares resulting from the conversion of convertible debentures are treated as shares already issued.
| All figures in €'000 | Notes | September 30, 2007 | December 31, 2006 |
|---|---|---|---|
| Intangible assets | 179,632 | 186,803 | |
| Property, plant and equipment | 85,534 | 89,063 | |
| Investment property | 14,796 | 15,063 | |
| Investments of associates accounted for using the equity method | 1,604 | – | |
| Deferred tax assets | 439 | 170 | |
| Receivables from banking business | [15] | 699,770 | 606,383 |
| Financial assets | [16] | 70,213 | 49,905 |
| Tax refund claims | 12,657 | 21,057 | |
| Receivables and other assets | [17] | 94,621 | 177,134 |
| Cash and cash equivalents | 83,831 | 120,507 | |
| Non-current assets or disposal group | |||
| classified as held for sale | [18] | 6,341 | – |
| Total | 1,249,438 | 1,266,085 |
| All figures in €'000 | Notes | September 30, 2007 | December 31, 2006 |
|---|---|---|---|
| Equity attributable to MLP ag | |||
| shareholders | [19] | 309,928 | 323,376 |
| Minority interest | 63 | 63 | |
| Total shareholders' equity | 309,991 | 323,439 | |
| Provisions | 31,185 | 33,908 | |
| Deferred tax liabilities | 17,151 | 19,556 | |
| Liabilities due to banking business | 682,871 | 599,699 | |
| Tax liabilities | 2,965 | 7,618 | |
| Other liabilities | [17] | 202,350 | 281,865 |
| Liabilities in connection with the disposal of non-current | |||
| assets held for sale and disposal groups | 2,925 | – | |
| Total | 1,249,438 | 1,266,085 |
| All figures in €'000 | 9 months 2007 | 9 months 2006 |
|---|---|---|
| Cash flow from operating activities | 38,728 | 28,708 |
| Cash flow from investing activities | –14,198 | * –27,539 |
| Cash flow from financing activities | –42,110 | * –178,196 |
| Changes in cash and cash equivalents | –17,580 | 177,027 |
| Changes in cash and cash equivalents due to exchange rate movements | –82 | –14 |
| Cash and cash equivalents at end of period | 102,822 | 152,933 |
| All figures in €'000 | 9 months 2007 | 9 months 2006 |
|---|---|---|
| Cash flow from operating activities | –4,261 | –4,807 |
| Cash flow from investing activities | –2,289 | –3,875 |
| Cash flow from financing activities | – | – |
| Changes in cash and cash equivalents | –6,546 | –8,682 |
| Changes in cash and cash equivalents due to exchange rate movements | –82 | –14 |
| Cash and cash equivalents at end of period | 2,532 | 2,296 |
* The payments for the acquisition of own shares were transferred from the "cash flow from investing activities" to the "cash flow from financing activities".
| All figures in €'000 | Consulting and Sales | Bank | |||
|---|---|---|---|---|---|
| 3rd Quarter 2007 3rd Quarter 2006 3rd Quarter 2007 3rd Quarter 2006 | |||||
| Segment income | |||||
| Brokerage business | 100,668 | * 107,885 |
– | – | |
| Banking business | – | – | 20,113 | 17,561 | |
| Wealth management | – | – | – | – | |
| of which with other continuing segments | 5,065 | 4,413 | – | 92 | |
| Total segment income | 100,668 | 107,885 | 20,113 | 17,561 | |
| Other income | 4,211 | * 5,629 |
1,794 | 3 | |
| Segement expenses | |||||
| Brokerage business | –42,555 | * – 47,964 |
– | – | |
| Banking business | – | – | –10,710 | – 9,042 | |
| Wealth management | – | – | – | – | |
| Personnel expenses | –14,788 | * – 13,633 |
–1,797 | * – 1,804 |
|
| Depreciation and amortisation expenses | –3,371 | * –3,026 |
–59 | – 60 | |
| Operating expenses | –33,628 | * – 32,060 |
–4,709 | – 4,553 | |
| Earnings of associates accounted for using the equity method | –41 | – | – | – | |
| Segment earnings before interest and tax (ebit) | 10,496 | 16,831 | 4,633 | 2,106 | |
| Other interest and similar income | 407 | * 140 |
0 | 0 | |
| Other interest and similar expenses | –122 | * – 79 |
–23 | * – 17 |
|
| Finance cost | 285 | 61 | –23 | – 17 | |
| Segment earnings befor tax (ebt) | 10,781 | 16,891 | 4,610 | 2,089 | |
| Income taxes | – | – | – | – | |
| Segment result from continuing operations | – | – | – | – | |
| Segment results from discontinued operations | –7,568 | * – 1,463 |
– | – | |
| Group net profit incl. minority interest | – | – | –– | – |
* Adjustment of previous year's figures, see note 3 and 5.
| Wealth management | Internal services and administration |
Consolidation/ Other |
Total | |||||
|---|---|---|---|---|---|---|---|---|
| 3rd Quarter 2007 3rd Quarter 2006 | 3rd Quarter 2007 3rd Quarter 2006 3rd Quarter 2007 3rd Quarter 2006 3rd Quarter 2007 3rd Quarter 2006 | |||||||
| – | – | – | – | –5,065 | – 4,413 | 95,603 | 103,472 | |
| – | – | – | – | – | –92 | 20,113 | 17,469 | |
| 9,345 | – | – | – | – | – | 9,345 | – | |
| – | – | – | – | – | – | – | – | |
| 9,345 | – | – | – | –5,065 | – 4,505 | 125,061 | 120,941 | |
| 5,611 | – | 4,582 | 5,339 | –3,998 | –4,119 | 12,201 | 6,852 | |
| – | – | – | – | – | – | –42,555 | – 47,964 | |
| – | – | – | – | 5,132 | 3,968 | –5,578 | –5,074 | |
| –219 | – | – | – | – | – | –219 | – | |
| –5,772 | – | –2,700 | * –1,400 |
* – |
– | –25,057 | – 16,837 | |
| –669 | – | –877 | –920 | – | – | –4,975 | – 4,006 | |
| –2,583 | – | –4,503 | * –4,536 |
* 3,998 |
4,711 | –41,424 | – 36,438 | |
| – | – | – | – | – | – | –41 | – | |
| 5,713 | – | –3,497 | –1,518 | 67 | 55 | 17,411 | 17,473 | |
| 109 | – | 1,306 | 2,173 | –104 | – 71 | 1,718 | 2,241 | |
| –19 | – | –1,270 | * –847 |
37 | 15 | –1,397 | – 928 | |
| 90 | – | 36 | 1,325 | –67 | – 56 | 321 | 1,313 | |
| 5,803 | – | –3,461 | –193 | – | –1 | 17,732 | 18,787 | |
| – | – | – | – | – | – | –1,198 | – 6,532 | |
| –– | – | –– | – | –– | – | 16,534 | 12,254 | |
| – | – | – | – | –940 | 290 | –8,508 | –1,173 | |
| –– | – | – | – | –– | – | 8,027 | 11,082 |
| All figures in €'000 | Consulting and Sales | Bank | |||
|---|---|---|---|---|---|
| 9 months 2007 | 9 months 2006 | 9 months 2007 | 9 months 2006 | ||
| Segment income | |||||
| Brokerage business | 304,730 | * 313,109 |
– | – | |
| Banking business | – | – | 59,059 | 51,636 | |
| Wealth management | – | – | – | – | |
| of which with other continuing segments | 14,938 | 13,460 | 1 | 92 | |
| Total segment income | 304,730 | 313,109 | 59,059 | 51,636 | |
| Other income | 14,252 | * 19,005 |
1,817 | 99 | |
| Segment expenses | |||||
| Brokerage business | –128,658 | * –135,781 |
– | – | |
| Banking business | – | – | –31,367 | –26,868 | |
| Wealth management | – | – | – | – | |
| Personnel expenses | –47,566 | * – 44,777 |
–6,461 | * – 5,499 |
|
| Depreciation and amortisation expenses | –9,524 | * – 9,390 |
–177 | –224 | |
| Operating expenses | –92,546 | * – 96,711 |
–13,541 | – 13,656 | |
| Earnings of associates accounted for using the equity method | –41 | – | – | – | |
| Segment earnings before interest and tax (ebit) | 40,646 | 45,456 | 9,329 | 5,488 | |
| Other interest and similar income | 1,207 | * 581 |
1 | 1 | |
| Other interest and similar expenses | –585 | * – 322 |
–59 | –50 | |
| Finance cost | 622 | 259 | –57 | –50 | |
| Segment earnings before tax (ebt) | 41,269 | 45,715 | 9,272 | 5,439 | |
| Income taxes | – | – | – | – | |
| Segment result from continuing operations | – | – | – | – | |
| Segment results from discontinued operations | –11,262 | * – 6,231 |
– | – | |
| Group net profit incl. minority interest | – | – | ––– | – |
* Adjustment of previous year's figures, see note 3 and 5.
| Wealth management | Internal services and administration |
Consolidation/ Other |
Total | |||||
|---|---|---|---|---|---|---|---|---|
| 9 months 2007 9 months 2006 | 9 months 2007 | 9 months 2006 | 9 months 2007 | 9 months 2006 | 9 months 2007 9 months 2006 | |||
| – | – | – | – | –14,938 | – 13,460 | 289,792 | 299,650 | |
| – | – | – | – | –1 | –92 | 59,059 | 51,544 | |
| 29,002 | – | – | – | – | – | 29,002 | – | |
| – | – | – | – | – | – | – | – | |
| 29,002 | – | – | – | –14,938 | –13,552 | 377,853 | 351,194 | |
| 8,024 | – | 16,455 | 14,934 | –11,976 | –12,150 | 28,572 | 21,889 | |
| – | – | – | – | – | – | –128,658 | – 135,781 | |
| – | – | – | – | 15,130 | 11,907 | –16,237 | –14,961 | |
| –1,755 | – | – | – | – | – | –1,755 | – | |
| –16,704 | – | –5,026 | * –4,548 |
* – |
– | –75,758 | –54,824 | |
| –2,017 | – | –2,664 | –2,744 | – | – | –14,382 | –12,358 | |
| –7,857 | – | –14,214 | * –14,086 |
* 11,978 |
13,949 | –116,181 | –110,503 | |
| – | – | – | – | – | – | –41 | – | |
| 8,693 | – | –5,449 | –6,443 | 194 | 154 | 53,413 | 44,656 | |
| 211 | – | 9,356 | 10,364 | –5,801 | –2,823 | 4,975 | 8,123 | |
| –20 | – | –3,854 | – 2,734 | 290 | 56 | –4,227 | –3,051 | |
| 191 | – | 5,502 | 7,629 | –5,511 | – 2,767 | 747 | 5,072 | |
| 8,884 | – | 53 | 1,186 | –5,317 | –2,613 | 54,160 | 49,728 | |
| – | – | – | – | – | – | –14,482 | – 14,406 | |
| – | – | –– | – | – | – | 39,678 | 35,322 | |
| – | – | – | – | –1,097 | 1,388 | –12,359 | –4,843 | |
| – | – | – | – | – | – | 27,319 | 30,478 |
| All figures in €'000 | Equity attributable to MLP AG shareholders | |||||||
|---|---|---|---|---|---|---|---|---|
| Share captial |
Treasury stock |
Captial reserves |
Available- for-sale- reserve |
Other compre hensive income |
Total | equity | ||
| As at January 1, 2006 | 108,641 | – 10,505 | 11,474 | 63 | 345,456 | 455,129 | 63 | 455,192 |
| Curreny translation | – | – | – | – | 93 | 93 | – | 93 |
| Change in | ||||||||
| available for sale reserve | – | – | – | –64 | – | –64 | – | –64 |
| Net profit | – | – | – | – | 30,478 | 30,478 | – | 30,478 |
| Dividends paid to shareholders | ||||||||
| and minority interests | – | – | – | – | –62,991 | – 62,991 | – | – 62,991 |
| Convertible debentures | * 116 |
– | 2,435 | – | – | 2,551 | – | 2,551 |
| Acquisition of treasury stock | – | –111,881 | – | – | – | –111,881 | – | –111,881 |
| As at September 30, 2006 | 108,757 | –122,386 | 13,909 | –1 | 313,036 | 313,315 | 63 | 313,378 |
| As at January 1, 2007 | 108,781 | –148,353 | 14,487 | 69 | 348,392 | 323,376 | 63 | 323,439 |
| Currency translation | – | – | – | – | –7 | –7 | – | –7 |
| Change in | ||||||||
| available for sale reserve | – | – | – | –19 | – | –19 | – | –19 |
| Net profit | – | – | – | – | 27,319 | 27,319 | – | 27,319 |
| Dividends paid to shareholders | ||||||||
| and minority interests | – | – | – | – | –42,118 | –42,118 | – | –42,118 |
| Convertible debentures | * 30 |
– | 1,347 | – | – | 1,377 | – | 1,377 |
| Acquisition of treasury stock | – | – | – | – | – | – | – | – |
| As at September 30, 2007 | 108,811 | –148,353 | 15,833 | 50 | 333,586 | 309,928 | 63 | 309,991 |
* The increase in the amount of shares outstanding is due to the issue of new shares by way of the exercising of convertible bonds.
The parent company of the group is MLP AG, Wiesloch, Germany. It is entered in the Mannheim Commercial Register under the number HRB 332697 with the address Alte Heerstrasse 4o, 69168 Wiesloch, Germany.
Since it was founded in 1971, MLP has been advising academics and other discerning clients in the fields of old-age and health provision, insurance cover, financial investments and loans and mortgages.
The MLP Group offers financial services, wealth management and banking services.
The interim financial report has been prepared in line with the regulations set out in IAS 34 (Interim financial reporting). It is based on the International Financial Reporting Standards of the International Accounting Standards Board (IASB) as well as the interpretations of the International Financial Reporting Interpretation Committee (IFRIC), as applicable within the European Union (EU). The interim accounts were not subject to an independent auditor's review.
Apart from the exception detailed in appendix information 3 and 5, the same consolidation principles and accounting policies as for the consolidated financial statements of the financial year 2oo6 have been applied to this interim financial report. These are presented in the Group notes of the annual report 2oo6 that can be downloaded from the company's website (www.mlp.de). The taxes on earnings in the period under review are entered based on the tax rates that were published in the last annual report.
The interim financial report has been drawn up in euros (€), the functional currency of MLP AG. Unless the notes state otherwise, all amounts are rounded to the nearest thousand euros (€'ooo). Both single and cumulative figures are values with the smallest rounding difference. As a result, differences to reported total amounts may arise when the individual values are added up.
As of 2oo7, interest costs from the accrued interest of pension provisions are no longer recorded under the items "Personnel expenses" and "Operating expenses" but under the item "Other interest and similar expenses". The change in the disclosure of these figures means that accrued interests are now stated in accordance with their economic character under finance costs. In the income statement for the period from January to September 2oo6, accrued interest of pension provisions amounting to €498 thsd from "Personnel expenses" as well as €1o5 thsd from "Operating expenses" has been reclassified to "Other interest and similar expenses". This reclassification had no effect on net profit and earnings per share.
The interim financial report contains the financial statements of MLP AG and those of its controlled companies (subsidiaries) in accordance with IAS 27, in which it holds the majority of voting rights or for which it has control possibilities through other means. In the third quarter 2oo7, holdings in associated companies were incorporated into the consolidated accounts for the first time, using the equity method. Associated companies are companies over which MLP AG exerts substantial influence but which are neither subsidiaries nor joint undertakings.
In the second quarter of 2oo7, MLP Finanzdienstleistungen AG was amalgamated with MLP Bank AG. The merged company trades under the name MLP Finanzdienstleistungen AG.
In July 2oo7, MLP Finanzdienstleistungen AG acquired a 49.8% holding in Interhyp Service GmbH which trades under the name MLP Hyp GmbH. The company handles the joint residential mortgage business of MLP Finanzdienstleistungen AG and Interhyp AG.
In the third quarter of 2oo7, Feri Rating & Research GmbH sold Feri Fund Market Information Ltd. and its database business-specialised subsidiary FI Datenservice GmbH (previously Mainsee 437. V V GmbH, Frankfurt am Main) to Lipper European Media Manager, a wholly-owned subsidiary of Reuters.
Furthermore, the MLP Group purchased units in a special fund during the third quarter of 2oo7, which are intended for sale. At the reference date, MLP had significant influence over the financial and business policy of the fund.
Apart from this, there were no changes in the scope of consolidation.
Due to the cessation of business activities in Great Britain and Spain, which, in accordance with IFRS 5, are to be presented as discontinued operations, MLP AG has adjusted the previous year's reported income statement. For this purpose, expenses and income of MLP Private Finance plc., London, Great Britain, and of MLP Private Finance Correduria de Seguros S.A., Madrid, Spain, were reclassified into the earnings of the discontinued operations.
In the following table the figures adjusted for discontinued operations and the altered disclosure of accrued interest of pension provisions (see appendix information 3) are shown:
| All figures in €'000 | 3rd Quarter 2006 3rd Quarter2006 9 months 2006 | 9 months 2006 | Change | ||
|---|---|---|---|---|---|
| adjusted | adjusted | ||||
| Income from brokerage business | 103,472 | 104,475 | 299,650 | 302,028 | –2,378 |
| Other income | 6,852 | 6,855 | 21,889 | 21,834 | 55 |
| Expenses for brokerage business | –47,964 | –48,167 | –135,781 | –136,053 | 272 |
| Personnel expenses | –16,837 | –17,832 | –54,824 | –57,716 | 2,892 |
| Depreciations | –4,006 | –4,071 | –12,358 | –12,566 | 208 |
| Operating expenses | –36,438 | –37,638 | –110,503 | –113,962 | 3,459 |
| Other interest and similar income | 2,241 | 2,256 | 8,123 | 8,268 | –145 |
| Other interest and similar expenses | –928 | –727 | –3,051 | –2,448 | –603 |
| Earnings from continuing operations | 12,254 | 11,014 | 35,322 | 31,562 | 3,760 |
| Earnings from discontinuing operations | –1,173 | 68 | –4,843 | –1,084 | –3,760 |
| Earnings per share from continuing | |||||
| operations in € | |||||
| Basic | 0.12 | 0.11 | 0.34 | 0.30 | 0.04 |
| Diluted | 0.12 | 0.11 | 0.33 | 0.30 | 0.03 |
| Earnings per share from discontinuing | |||||
| operations in € | |||||
| Basic | –0.02 | 0.00 | –0.05 | –0.01 | –0.04 |
| Diluted | –0.02 | 0.00 | –0.05 | –0.01 | –0.04 |
MLP reported the purchase price allocation that was undertaken in the course of the acquisition of Feri Finance AG in the Group financial statements for the financial year 2oo6 based on provisional figures. In the second quarter of 2oo7 new information about the value of acquired assets and liabilities became available that led to a slight adjustment in the purchase price allocation.
Compared to December 31, 2oo6, the book values of the intangible assets were adjusted from €35,789 thsd to €36,629 thsd. This led to an increase of €314 thsd of deferred tax liabilities. On the other hand, the business or firm value decreased from €118,951 thsd to €118,424 thsd.
Due to the seasonal development of its business, the Group generally expects earnings from continuing operations to be higher in the fourth quarter than in the previous quarters.
The Group interim financial report at September 3o, 2oo7 also includes the costs and income of the Feri Group which was acquired on October 2o, 2oo6. This means that a comparison with the figures of the first nine months of the financial year 2oo6 or the third quarter of 2oo6 is only possible to a limited extent.
| All figures in €'000 | 3rd Quarter 2007 | 3rd Quarter 2006 | 9 months 2007 | 9 months 2006 |
|---|---|---|---|---|
| Old-age provisions | 74,990 | 78,493 | 204,044 | 214,220 |
| Health insurance | 10,055 | 14,772 | 44,752 | 45,556 |
| Non-life insurance | 2,877 | 1,918 | 19,476 | 16,981 |
| Loans and mortgages | 4,055 | 4,097 | 10,888 | 10,752 |
| Mutual funds | 2,735 | 3,484 | 8,475 | 10,103 |
| Other income | 892 | 708 | 2,158 | 2,037 |
| Total | 95,603 | 103,472 | 289,792 | 299,650 |
Due to a modified itemisation in the previous year there were minor movements between the sub-items "Old-age provisions", "Loans and mortgages" and "Other income".
| All figures in €'000 | 3rd Quarter 2007 | 3rd Quarter 2006 | 9 months 2007 | 9 months 2006 |
|---|---|---|---|---|
| Comission income | 11,816 | 11,210 | 35,452 | 33,687 |
| Interest and similar income | 8,365 | 6,395 | 23,473 | 17,680 |
| Change fair value option | –68 | –136 | 134 | 177 |
| Total | 20,113 | 17,469 | 59,059 | 51,544 |
| All figures in €'000 | 3rd Quarter 2007 | 3rd Quarter 2006 | 9 months 2007 | 9 months 2006 |
|---|---|---|---|---|
| Wealth managment | 5,010 | – | 16,800 | – |
| Income from consulting/fees | 4,335 | – | 12,202 | – |
| Total | 9,345 | – | 29,002 | – |
| All figures in €'000 | 3rd Quarter 2007 | 3rd Quarter 2006 | 9 months 2007 | 9 months 2006 |
|---|---|---|---|---|
| Comissions paid | 305 | 1,160 | 1,414 | 3,617 |
| Interest and similar expenses | 4,518 | 3,244 | 12,229 | 8,906 |
| Allowances for losses | 816 | 794 | 2,340 | 2,233 |
| Change fair value option | –62 | –124 | 253 | 205 |
| Total | 5,578 | 5,074 | 16,237 | 14,961 |
Personnel expenses increased from €54,824 thsd to €75,758 thsd, primarily due to the first consolidation of the Feri Group in the fourth quarter of 2oo6, as well as to general salary increases and to one-off compensatory payments.
At September 3o, 2oo7, the MLP Group had the following numbers of employees in the strategic fields of business:
| September 30, 2007 | part-time employees | September 30, 2006 part-time employees | ||
|---|---|---|---|---|
| Consulting and sales | 1,531 | 453 | 1,457 | 380 |
| Banking | 124 | 9 | 133 | 10 |
| Wealth management | 248 | 69 | – | – |
| Internal services and administration | 9 | – | 9 | – |
| Total | 1,912 | 531 | 1,599 | 390 |
| All figures in €'000 | 3rd Quarter 2007 | 3rd Quarter 2006 | 9 months 2007 | 9 months 2006 |
|---|---|---|---|---|
| it costs | 9,561 | 9,343 | 25,472 | 28,413 |
| Cost of premises | 5,567 | 4,991 | 16,540 | 16,202 |
| Audit and consultancy costs | 4,670 | 1,858 | 11,957 | 6,362 |
| Communication | 2,147 | 2,353 | 6,140 | 8,285 |
| Allowances for bad debts | 482 | 150 | 2,392 | 591 |
| Training and seminars | 2,890 | 2,210 | 8,993 | 7,495 |
| Expenses for retired sales representatives | 2,041 | 1,672 | 4,621 | 3,589 |
| Advertising expenses | 1,756 | 3,151 | 5,619 | 8,255 |
| Representation, entertaiment expenses | 1,792 | 1,039 | 4,549 | 4,153 |
| Office supplies | 695 | 661 | 2,306 | 2,090 |
| Other taxes | 45 | 43 | 136 | 131 |
| Currency translation expenses | 160 | 19 | 189 | 24 |
| Sundry other expenses | 9,618 | 8,949 | 27,267 | 24,913 |
| Total | 41,424 | 36,438 | 116,181 | 110,503 |
IT costs in the first nine months of the financial year decreased by €2,941 thsd compared to the corresponding period in the previous year, and the communication expenses fell by €2,145 thsd due to optimisation measures undertaken in the communication and IT areas.
The audit and consulting costs rose by €5,595 thsd, having been influenced by the firsttime consolidation of the Feri Group. In addition, investment was made in the optimisation of the Group structure and in sales.
In the financial year 2oo7 the expenses for advertising costs fell by €2,636 thsd to €5,619 thsd.
Allowances for bad debt compare to income from the release of allowances for bad debt amounting to €7o1 thsd that are shown in other income.
Sundry other expenses mainly comprises other banking-related expenses, rental of notebooks, insurances, other rents, other personnel costs, travelling costs as well as contributions and fees.
Income tax expenses for the current financial year are very close to the level of the comparative period of the previous year. Earnings tax expenses in 2oo7 decreased mainly by the adjustment of deferred taxes due to the corporation tax reform 2oo8. The previous year's figure contains income from trade tax refunds.
| All figures in €'000 | September 30, 2007 | December 31, 2006 |
|---|---|---|
| Receivables from clients | 268,275 | 271,451 |
| Receivables from other financial institutions | 431,496 | 334,932 |
| Total | 699,770 | 606,383 |
The rise in receivables from the banking business from €6o6,383 thsd to €699,77o thsd results from the increase in receivables from other financial institutions due to investment of funds from the increased deposit business.
| All figures in €'000 | September 30, 2007 | December 31, 2006 |
|---|---|---|
| Available for sale | ||
| Investments | 3,102 | 3,222 |
| Securities | 33,649 | 34,763 |
| Held to maturity securities | 15,960 | 11,916 |
| Loans and receivables | ||
| Loans | 1 | 4 |
| Other investments | 17,500 | – |
| Total | 70,213 | 49,905 |
Due to the seasonally strong year-end business, high receivables from insurance companies as well as high liabilities towards commercial agents at December 31, 2oo6 were reported which were then balanced out in the first quarter of 2oo7. In the third quarter of 2oo7, a lower amount of receivables and liabilities were built up. This explains the lower figure from receivables from insurance companies as well as liabilities towards commercial agents.
This balance sheet item contains assets associated with the disposal of foreign subsidiaries. It mainly contains cash. This item also includes shares in an investment fund intended for sale.
The subscribed capital consists of 1o8.811.175 (December 31, 2oo6: 1o8,781,4o3) no par value common shares. In the financial year 2oo7, 29,772 new shares were issued through the exercising of rights of conversion. In total, so far 17o.489 new shares have been issued through convertible loan stock.
MLP did not buy back any of its own shares in the period from January 1, 2oo7 to September 3o, 2oo7. In the same period of the previous year 6,621,6oo shares were acquired for the price of €111,881 thsd. This corresponds to 6.o9percent of the share capital existing at September 3o, 2oo6.
Since the beginning of the share buy-back programme a total of 8,863,1o9 shares have been purchased with an overall value of €148,353 thsd. This corresponds to 8.16percent of the share capital (date of the resolution). The acquired shares correspond to €8,863 thsd of the share capital (day of the resolution)
Through a resolution passed at the Annual General Meeting on May 31, 2oo7, MLP AG was granted further authorisation to purchase its own shares in accordance with article 71, section 1 item 8 of the German Stock Corporation Law. Up until November 29, 2oo8 a total of 1o percent of the share capital existing at the time of the passing of the resolution (May 31, 2oo7) can be bought back.
In accordance with the resolution passed at the Annual General Meeting on May 31, 2oo7, the dividend for the financial year 2oo6 amounted to €o.4o per dividend-entitled individual share. For the financial year 2oo5 MLP AG distributed a regular dividend amounting to €o.3o and an extra dividend of €o.3o.
The discontinued operations consist of MLP Private Finance plc., London, Great Britain, MLP Private Finance Correduria de Seguros S.A., Madrid, Spain, MLP Private Finance AG, Zürich, Switzerland, MLP Lebensversicherung AG, Heidelberg, and MLP Versicherung AG, Heidelberg. The business operations of the subsidiaries MLP Private Finance plc. and MLP Private Finance Correduria de Seguros S.A. were sold in the third quarter of 2oo7, and the insurance companies in 2oo5. In the financial year 2oo6 the operative business activities of the Swiss subsidiary ceased and the company was deconsolidated.
In line with IFRS 5, discontinued operations are to be disclosed separately from the continuing operations. The income statement of the continuing operations has thus been adjusted by the expenses and income of the discontinued operations, the net result generated by these is shown in a separate line. In accordance with IFRS 5.25 MLP has suspended the scheduled depreciation on long-term assets of the discontinued operations.
| All figures in €'000 | 3rd Quarter 2007 | 3rd Quarter 2006 | 9 months 2007 | 9 months 2006 |
|---|---|---|---|---|
| Income from brokerage business | 428 | 1,176 | 2,130 | 3,498 |
| Other income | 69 | 11 | 101 | 59 |
| Total income | 497 | 1,187 | 2,231 | 3,557 |
| Other expenses | –1,801 | –2,747 | –7,269 | –7,975 |
| Earnings before interest and tax (ebit) | –1,304 | –1,560 | –5,038 | –4,417 |
| Finance cost | 31 | –24 | 74 | –62 |
| Earnings before tax (ebt) | –1,272 | –1,584 | –4,963 | –4,479 |
| Income taxes | – | 19 | – | 29 |
| Operating result from discontinued operations | –1,272 | –1,565 | –4,963 | –4,450 |
| Earnings from the sale of operations | –7,289 | 575 | –7,334 | 468 |
| Income taxes | 53 | –182 | –62 | –861 |
| Earnings from discontinued operations | –8,508 | –1,173 | –12,359 | –4,843 |
| Earnings per share in € | ||||
| From discontinued operations | ||||
| basic | –0.08 | –0.02 | –0.12 | –0.05 |
| diluted | –0.08 | –0.02 | –0.12 | –0.05 |
The posted loss in 2oo7 in the item "Earnings from disposals" mainly results from the sale business operations of the subsidiaries in Spain and Great Britain as well as from an expected purchase price reduction from the sale of MLP Lebensversicherung AG. On the other hand, income from the release of non-utilised accruals and the reduction of liabilities which were recorded in connection with the sale of MLP Lebensversicherung AG in the financial year 2oo5 were taken into account.
Cash and cash equivalents with a term to maturity of not more than three months are recorded under cash and cash equivalents. Cash equivalents are short term financial investments which can be converted into cash at any time and which are only subject to minor value fluctuation risks. The cash and cash equivalents disclosed in the balance sheet have been reduced by €17 thsd (previous year: €15 thsd) which are intended for committed donations or are subject to other restraints.
Cash and cash equivalents are split across the following balance sheet items:
| All figures in €'000 | September 30, 2007 | September 30, 2006 |
|---|---|---|
| Cash and cash equivalents | 83,823 | 150,640 |
| Non-current assets held for sale | 2,532 | 2,297 |
| Other investments < 3 months | 17,500 | – |
| Liabilities to banks due on demand | –1,033 | –4 |
| Cash and cash equivalents | 102,822 | 152,933 |
Non-current assets held for sale contain cash and cash equivalents amounting to €2,532 thsd. The previous year's figure of €2,297 thsd concerns MLP Private Finance AG, Zürich, Switzerland, MLP Private Finance plc., London, Great Britain, and MLP Private Finance Correduria de Seguros S.A., Madrid, Spain.
The sum of the disposal prices from the sale of the database business of Feri Fund Market Information Ltd. and of the assets of the subsidiaries in Great Britain and Spain is around €13,4oo thsd. This was mainly attributable to the database business of Feri Fund Market Information Ltd. In conjunction with the disposal, mainly intangible assets were closed out. In addition, cash amounting to €1,584 thsd was also closed out within the framework of the sale of the database business of Feri Fund Market Information Ltd.
The receivables from financial institutions outside the brokerage business are not incorporated into the cash and cash equivalents as these are allocated to the regular business operations of the banking business unit (previously MLP Bank AG).
The MLP Group is structured into the following business segments:
The object of the consulting and sales segment consists of consulting services for academics and other discerning clients, particularly with regards to insurance, investments, occupational old-age pension provision schemes and financing as well as the brokerage of contracts concerning these financial services.
With 2,579 consultants and a comprehensive scope of services, the Group currently caters to some 7o7,ooo clients in the named segments.
The discontinued operations of the consulting and sales segment are made up of the subsidiaries MLP Private Finance plc., London, Great Britain , MLP Private Finance Correduria de Seguros S.A., Madrid, Spain, and MLP Private Finance AG, Zürich, Switzerland.
The consulting and sales segment was expanded in the third quarter by the addition of the associate company MLP Hyp GmbH.
The banking segment includes the administration of financial portfolios, the trustee credit business, loan and credit card business, consulting regarding investment in investment funds as well as the conception and organisational implementation of new financial products for the MLP Group.
Due to the acquisition of the Feri Group in 2oo6, the segment report was expanded to include wealth management. The business operations of this segment cover wealth management and investment consulting. The sale of FI Datenservice GmbH in the current quarter represented the disposal of a subsidiary company belonging to the segment.
The main internal services and activities are embraced within the segment of internal services and administration.
As the Group chiefly confines its business activities to Germany (proportion of foreign revenue in the period under review and in the previous year is less than 3%), a geographic (secondary) breakdown of the segments is not required.
The concluded purchase contract between MLP AG and Clerical Medical International Holdings B.V., Maastricht, Netherlands, concerning the sale of MLP Lebensversicherung AG conatins a purchase price adjustment clause for the years 2oo5 to 2oo7, which provides for an increase or a decrease in the purchase price up to a maximum of €15 million. The current status leads MLP to anticipate a reduction in the purchase price of €3.2 million (December 31, 2oo6: €1.2 million). A corresponding liability has been taken into account.
MLP anticipates a further purchase price component from the sale of MLP Private Finance plc., London, Great Britain. At the reporting reference date the level of additional remuneration had not been fixed.
Beyond this, there were no other significant changes in the contingent liabilities and other obligations during the period under review.
Apart from the change in the Executive Board of MLP AG there were no significant changes compared to December 31, 2oo6.
On October 11, 2oo7 the Executive Board of MLP AG decided to implement the authorisation granted to it at the Annual General Meeting on May 31, 2oo7 relating to the repurchase of its own shares. From November 8, 2oo7 a maximum of a further 1.8 percent of the share capital, equating to up to 2,o15,o31 shares, will be bought back.
On October 29, 2oo7 MLP AG exercised, as planned, its existing option rights to acquire the remaining 43.4 percent stake in Feri Finance AG. The in rem execution of the transfers of the holdings will take place in the first half year of 2o11. The exercise price, which will become due in the second quarter of 2o11, comprises both a fixed price of around €47.7 million as well as a performance-related component that is largely dependent on new business development in the wealth management division.
There were no further notable events after the balance sheet date which may affect the MLP Group's net assets, financial position or results of operations.
Wiesloch, November 6, 2oo7
MLP AG
The Executive Board
Dr. Uwe Schroeder-Wildberg Gerhard Frieg Muhyddin Suleiman
Dr. Uwe Schroeder-Wildberg (Chief Executive Officer) Dr. Wulf Böttger (until September 4, 2oo7) Gerhard Frieg Muhyddin Suleiman (since September 4, 2oo7) Nils Frowein (until Juni 3o, 2oo7)
Manfred Lautenschläger (Chairman) Gerd Schmitz-Morkramer (Vice Chairman) Dr. Peter Lütke-Bornefeld Johannes Maret Maria Bähr (Employee Representative) Norbert Kohler (Employee Representative)
November 14-15, 2007 WestLB Deutschland Conference 2oo7 Frankfurt, Germany
December 5, 2007 Dresdner Kleinwort's Speed Investing London, UK
January 14-16, 2008 Dresdner Kleinwort German Investment Seminar New York, USA
January 21-23, 2008 Cheuvreux 7th German Corporate Conference Frankfurt, Germany
Investor Relations
Tel +49 (o) 6222 • 3o8 • 832o Fax +49 (o) 6222 • 3o8 • 1131 [email protected]
Public Relations
Tel +49 (o) 6222 • 3o8 • 831o Fax +49 (o) 6222 • 3o8 • 1131 [email protected]
MLP AG Alte Heerstraße 40 69168 Wiesloch Tel +49 (0) 6222 • 308 • 0 Fax +49 (0) 6222 • 308 • 9000 www.mlp.de
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