MLP SE

Legal Proceedings Report • Jun 13, 2002

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Corporate | 13 June 2002 16:12

MLP AG english

MLP AG – MLP again dismisses imputations concerning its accounting practices Corporate-news announcement sent by DGAP. The sender is solely responsible for the contents of this announcement. ——————————————————————————– MLP again dismisses imputations concerning its accounting practices Heidelberg, Germany, 13 June 2002 – MLP AG has categorically rejected the mass of untruths and factual distortions published again in today’s issue of “Börse Online” concerning the company’s accounting practices. Questions from the magazine had been submitted one day earlier with the threat of a one-hour ultimatum. MLP has issued the following statements concerning the major accusations: Total premiums for new business In the Management Report for fiscal 2001 at MLP Lebensversicherung AG the total premiums for new business were reported including the index-linked increases from the previous year. The information concerning the preceding year was adjusted accordingly. The increase for this statistical item does not, in the auditors’ unanimous opinion, have any effect upon profits. The accounting expert Prof. Karlheinz Küting, was quoted by the investor magazine regarding this issue with the following sentence: “MLP should definitely have pointed this out”, and explained this morning that he never made this statement. Nor did he state – as quoted – that he still has “many un-answered questions relating to the MLP figures”, because he has not seen the MLP financial statements. Increasing commission expenses The claim that the figures are stagnating is incorrect, because the cost of materials within the Group rose from EUR 114.5 million in 2000 to EUR 134.7 million in 2001. The commission expenditure included in this item for MLP Finanzdienstleistungen AG increased in the same period from EUR 98.9 million to EUR 115.1 million representing a rise of 16.4 percent. Other assets In accordance with the legal regulation this item covers, among others, the advance commission payments and loans to employees. This figure climbed from EUR 29.4 million in 2000 to EUR 52.3 million in 2001, that is, by 77.9 percent. This is a result of the high increase in the number of employees (1999: 1,541 and 2001: 2,576, that is 67.2 percent) and branch offices (1999: 151 and 2001: 325, corresponding to 115.2 percent). This tremendous growth makes it inevitable that the advances/loans included under the item “Other assets” rise more in comparison with the commission expenses. Cash Flow The accusation is completely unfounded that the net profit in the first quarter (I/2002) was posted twice in the cash flow calculation. An outflow of funds arises when, as is the case at MLP, major investments are made from the cash flow. For example, in 2001 MLP financed an additional office and training building in Wiesloch from the cash flow funds. Initial fee The accusation that the MLP life insurance clients were charged a premium of, for example, 5.26 percent each time they switched funds, is false. The initial fee normally charged by capital investment companies is not charged for MLP life insurance clients. The initial mark-up here is zero. Fund shares The magazine implies that investment companies invest over-proportionally in MLP shares as part of the MLP unit-linked life insurance policy scheme. Generally no individual stock may account for more than between five and ten percent in any retail fund equity portfolio. In actual fact, the investment quota for MLP shares is less than one percent. Special audit At the AGM the shareholders rejected a special audit with a majority of 99.95 percent, hence ratifying the management position. The shareholders also approved – with a 99.92 percent majority – the management proposal of appointing an additional auditor with Ernst & Young. Legal steps MLP is currently examining possible legal steps against the accusations made by the magazine. “We have no problem about answering any questions and will do so in detail as fast as we can”, explained Dr. Bernhard Termühlen today in Heidelberg. “By raising imputations which each time prove to be unfounded upon detailed inspection, the impression arises that an attempt is being made to cause direct damage to MLP. But this approach of questioning our financial reporting with constant imputations and distortions of the facts will not come to bear in the mid to long term. Because MLP is a very respectable, profitable and fast-growing company.” MLP will be posting detailed answers to the issues raised in an open format on the Internet before the end of the day for all those interested. Contact: Jutta Funck Tel: +49 (0) 62 21-3 08-11 30 Fax: +49 (0) 62 21-3 08-11 31 E-Mail: publicrelations@mlp-ag.com end of message, (c)DGAP 13.06.2002