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MLP SE
Interim / Quarterly Report • Aug 9, 2019
289_10-q_2019-08-09_6f46946d-142a-418f-9d00-30b431595191.pdf
Interim / Quarterly Report
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Interim Group report for the first half year and second quarter of 2019
MLP key figures
| All figures in € million | 2nd quarter 2019 |
2nd quarter 2018 |
1st half-year 2019 |
1st half-year 2018 |
Change in % |
|---|---|---|---|---|---|
| MLP Group | |||||
| Total revenue | 151.4 | 142.7 | 329.2 | 310.6 | 6.0% |
| Revenue | 147.8 | 139.3 | 321.8 | 304.0 | 5.9% |
| Other revenue | 3.6 | 3.4 | 7.4 | 6.6 | 12.1% |
| Earnings before interest and taxes (EBIT) | –0.3 | –1.0 | 12.2 | 12.1 | 0.8% |
| EBIT margin (%) | 0.0% | 0.0% | 3.7% | 3.9% | – |
| Net profit | –0.1 | 0.5 | 9.0 | 9.8 | –8.2% |
| Earnings per share (diluted/undiluted) in € | 0.00 | 0.00 | 0.08 | 0.09 | –11.1% |
| Cashflow from operating activities | –12.1 | –16.2 | 129.1 | 50.5 | >100% |
| Capital expenditure | 1.9 | 2.9 | 3.0 | 6.0 | –50.0% |
| Shareholders' equity | – | – | 406.3 | 424.81 | –4.4% |
| Equity ratio (%) | – | – | 15.7% | 17.5%1 | – |
| Balance sheet total | – | – | 2,586.4 | 2,421.01 | 6.8% |
| Private clients (Family) | – | – | 545,800 | 541,1501 | 0.9% |
| Corporate and institutional clients | – | – | 20,950 | 20,900 1 | 0.3% |
| Consultants | – | – | 1,913 | 1,9091 | 0.2% |
| Branch offices | – | – | 131 | 1311 | 0.0% |
| University teams | – | – | 87 | 771 | 13.0% |
| Employees | – | – | 1,746 | 1,7221 | 1.4% |
| Brokered new business | |||||
| Old-age provisions (premium sum) | 785.7 | 712.9 | 1,510.3 | 1,351.1 | 11.8% |
| Loans and mortgages | 483.4 | 482.2 | 975.4 | 988.3 | –1.3% |
| Assets under management in € billion | – | – | 37.0 | 34.51 | 7.2% |
| Non-life insurance (premium volume) | – | – | 396.4 | 385.61 | 2.8% |
| Real estate (brokered volume) | 58.6 | 61.8 | 98.1 | 117.0 | –16.2% |
1 As of December 31, 2018.
Interim Group report for the first half year and the second quarter of 2019
THE FIRST HALF YEAR AND THE SECOND QUARTER 2019 AT A GLANCE
- • Total revenue rose by 6% to € 329.2 million in the first six months (H1 2018: € 310.6 million); At € 12.2 million, EBIT is also slightly above the previous year (€ 12.1 million)
- • Growth recorded in all parts of the Group and across virtually all consulting areas
- • Strongest growth recorded in the old-age provision area (up 10%), the wealth management area (up 7%) and the non-life insurance area (up 6%)
- • Forecast confirmed: Despite strong investments in the future to develop the university segment, MLP still anticipates modest EBIT growth
TABLE OF CONTENTS
- 4 Introductory notes
- 4 Profile
- 5 Investor Relations
- 9 Interim Group management report for the first half-year and the second quarter of 2019
- 9 Fundamental principles of the Group
- 9 Change to organisation and administration
- 9 Changes in the scope of consolidation
- 10 Research and development
- 10 Economic report
- 10 Overall economic climate
- 11 Industry situation and competitive environment
- 13 Business performance
- 14 Results of operations
- 18 Financial position
- 19 Net assets
- 20 Comparison of actual and forecast development of business
- 21 Segment report
- 24 Employees and self-employed client consultants
- 25 Risk and opportunity report
- 25 Forecast
- 25 Future overall economic development
- 26 Future industry situation and competitive environment
- 27 Anticipated business development
- 28 Condensed interim financial statements of the MLP Group
- 28 Income statement and statement of comprehensive income
- 29 Statement of financial position
- 30 Condensed statement of cash flow
- 31 Statement of changes in equity
- 32 Notes to the interim financial statements of the MLP Group
- 50 Responsibility statement
- 51 List of figures and tables
- 52 Executive Bodies of MLP SE
- 53 Financial calender
Introductory notes
This Group interim report was drafted in compliance with the regulations of German Accounting Standard No. 16 (DRS 16) "Interim Financial Reporting" and continues on from the 2018 consolidated financial statements. It presents important events and business transactions in the first half of 2019 and updates forecast-based information from the last joint management report. The Annual Report is available on our homepage at www.mlp-se.com.
In the description of the MLP Group's financial position, net assets and results of operations pursuant to International Financial Reporting Standards (IFRS), the previous year's figures are given in brackets.
The information in this Group interim report has neither been verified by an auditor nor subjected to a review.
Profile
The MLP Group – The partner for all financial matters
The MLP Group is the partner for all financial matters – for private clients as well as companies and institutional investors. With our four brands, each of which enjoys a leading position in their respective markets, we offer a broad range of services:
- MLP: The dialogue partner for all financial matters
- FERI AG: The investment expert for institutional investors and high net-worth individuals
- DOMCURA AG: The underwriting agency focusing on private and commercial non-life insurance products
- TPC GmbH: The specialist in occupational pension provision management for companies
The views and expectations of our clients always represent the starting point in each of these fields. Building on this, we then present our clients with suitable options in a comprehensible way, so that they can make the right financial decisions themselves. In advising and supporting our clients, we examine the offers of all relevant product providers in the market. Our product ratings are based on scientifically substantiated market and product analyses.
Manfred Lautenschläger and Eicke Marschollek founded MLP in 1971. More than 1,900 selfemployed client consultants and just under 1,700 employees work at MLP.
Investor Relations
The stock markets recorded a good start to the second quarter of 2019 and were able to maintain their upwards trend. Hopes for a soft outcome to the Brexit drama, further progress in the US trade dispute with China and positive economic data served to strengthen economic optimism. In addition, the prospect of a loose monetary policy both by the Fed and the ECB contributed to the good development, while companies were also largely able to impress with their reports. At the start of Q2, new record levels were recorded at short intervals on the indices on both sides of the Atlantic surged to new all-time highs in quick succession. This upwards trend then largely continued in April. Over the remainder of the quarter, however, disappointing economic data partially subdued the mood and led to interim profit taking. The stock exchanges had to battle massive losses, particularly in May. The escalation in the trade dispute between China and the US, as well as weak economic data increased worries regarding a global economic slowdown. Geopolitical stress factors, such as the Iran sanctions and the Middle East crisis, also had a negative impact. Growth forecasts were reduced in many places. This also led to the year's first monthly losses on the stock markets in May. Following the unexpectedly strong price decline, investors then became more willing to take risks once again at the end of the quarter and the stock markets recovered from their lows. The central banks on both sides of the Atlantic continued to attract investors with cheap money, while the increased expectations of interest rate cuts brightened the overall mood. The euro experienced something of a roller coaster ride in the reporting period. The single currency suffered from weak economic data and declined to a 22-month low of 1.1107 USD in May. In the end, the weak US dollar then helped the euro increase by 1.4%. The second quarter results were largely pleasing for the most important leading indices, which recorded overall gains.
The MLP share
The MLP SE share enjoyed a positive start to the second quarter. It benefited from the favourable stock market environment and at € 4.585 reached its highest level in the reporting period as early as in April. However, the MLP share was unable to avoid the negative developments on the stock markets in May, meaning that it shed the gains it had previously made. The figures published in mid-May were then rewarded by investors and offered the share some initial protection from further setbacks. However, the MLP share price was not able to evade the sell-out mood on the financial markets at the end of May and therefore encountered a significant correction. The dividend payout presented a further burden, and the share declined to its lowest level in the second quarter of € 3.86 on May 31. In June, however, the share price then displayed rapid recovery from its lows and once again reached continuous values above the € 4 mark. Yet despite this, the general reservations felt among investors prevented more pronounced capital gains, meaning that the MLP share displayed rather disappointing performance in the second quarter. The average Xetra trading volume, on the other hand, displayed pleasing development and was able to almost double in comparison with the first quarter to 63,688 shares from 35,134 shares.
Key figures of the MLP share
| 1st half-year 2019 |
1st half-year 2018 |
|
|---|---|---|
| Share capital as of June 30, 2019 | 109,334,6861 | 109,334,6862 |
| Share price at the beginning of the year | € 4.36 | € 5.63 |
| Highest price | € 4.80 | € 6.03 |
| Lowest price | € 3.86 | € 4.80 |
| Share price as of June 30, 2019 | € 4.15 | € 5.33 |
| Dividends for the previous year | € 0.20 | € 0.20 |
| Market capitalisation (end of reporting period) | 453,738,947 | 582,753,876 € |
1As of June 30, 2019 MLP SE held 386 shares in treasury. 2As of June 30, 2018 MLP SE held 4,124 shares in treasury.
Share buyback
As announced during the 2017 Annual General Meeting, MLP established another sharebased participation programme at the end of the financial year 2018 for MLP office managers and MLP consultants with the aim of strengthening the collaborative component in the MLP business model. In the period from December 12 to March 1, 2019, a total of 536,209 shares were bought back at an average price per share of € 4.3525. MLP then transferred 539,947 shares to the beneficiaries, meaning that MLP SE still held 386 shares in its own portfolio as of June 30, 2019.
Shareholder structure
HanseMerkur Krankenversicherung AG increased its stake from 3.02% to 5.10% in the first half of 2019 (announcement from May 2, 2019). The share of voting rights held by other shareholders remained virtually unchanged on the reporting date. The Lautenschläger family remains the largest single MLP shareholder with a 29.16% total share of the voting rights. As per the definition of the German stock exchange, the free float as at June 30, 2019 is therefore 49.81%.
MLP Annual General Meeting
At the Annual General Meeting of MLP SE, held in Wiesloch on May 29, 2019, the shareholders approved all items on the agenda. The shareholders voted virtually unanimously (99.99%) to approve the proposal of the Supervisory Board and Executive Board to pay a dividend of € 0.20 per share. The distribution rate was therefore 63% of Group net profit. Discharge was granted to the Executive Board and Supervisory Board with an approval rate of 88.47 and 79.57% respectively. With an approval rate of 99.93%, the shareholders also accepted the proposal to appoint KPMG AG Wirtschaftsprüfungsgesellschaft, Berlin, Germany as auditor and Group auditor for the financial year 2019. The shareholders also approved the system for compensation of members of the Executive Board with 79.83% of votes cast.
With 99.95% of votes cast, the amendment to the business purpose and a corresponding amendment to the company's articles of association were also approved. Among other things, the business purpose was extended to include the development and management of real estate. Following the consent already provided by the Supervisory Board and the competition authorities, the shareholders have now also given their approval for the majority stake in the DEUTSCHLAND.Immobilien Group which was communicated back in March 2019. This transaction is still scheduled to be closed in the third quarter of 2019.
In total, more than 450 shareholders took part in the Annual General Meeting. Those in attendance represented around 79% of the share capital.
All information on the Annual General Meeting is available at www.mlp-se.com.
Interim Group management report for the first half-year and second quarter of 2019
The values disclosed in the following management report have been rounded to one decimal place. As a result, differences to reported total amounts may arise when adding up the individual values.
FUNDAMENTAL PRINCIPLES OF THE GROUP
In comparison with the corporate profile described in MLP's 2018 Annual Report, the changes presented below were made during the reporting period. These relate to organisation and administration.
You can find detailed disclosures on our business model, our corporate structure and our control system in the MLP Group Annual Report 2018 at www.mlp-annual-report.com.
MLP Finanzberatung SE, a wholly owned subsidiary of MLP SE, signed a contract on March 19 to acquire 75.1% in the DEUTSCHLAND.Immobilien Group. The DEUTSCHLAND.Immobilien Group is a marketplace for investment properties and collaborates with around 5,800 sales partners. The comprehensive online platform comprises both third party real estate projects and, in selected areas, also real estate projects developed in-house - above all in the field of senior-citizen housing and nursing care. The company will continue to pursue and further strengthen this successful business model. There is also additional synergy potential in the existing business with MLP's private clients and in the MLP Group overall. The transaction is expected to be completed in Q3 2019.
On the basis of the resolution of the Annual General Meeting from June 29, 2017 to buy back own shares, a total of 536,209 shares with a pro rata amount of € 1.00 each in the share capital were bought back at an average price of € 4.3525 per share in the time period from December 12, 2018 to March 1, 2019. This corresponds to around 0.48% of our share capital of € 109,334,686. The buyback was used to serve a participation programme for our self-employed commercial agents and branch office managers. The respective buybacks were published in detail on our company's website. Following transfer of the shares to the eligible participants, a total of 386 shares remain in the company's own portfolio.
Change to organisation and administration
The Supervisory Board at MLP SE unanimously voted to extend the current contract of Manfred Bauer, which runs to April 30, 2020, by five more years to 2025. Manfred Bauer is responsible for Products and Services. He is also a member of the Executive Board at the subsidiaries MLP Finanzberatung SE and MLP Banking AG.
Changes in the scope of consolidation
In the reporting period, Willy F.O. Köster GmbH and Walther Versicherungsmakler GmbH were merged to form nordias GmbH with retroactive effect from January 1, 2019.
Research and development
Since MLP is a service provider, we are not engaged in any research or development in the classic sense. We also make other resources available, for example to develop our own software or refine acquired software.
ECONOMIC REPORT
Overall economic climate
Following the stagnation in economic development observed in the second half of 2018, the German economy returned to moderately positive growth of 0.4% in the first quarter of 2019. This was largely due to private consumption, which increased significantly thanks to the very low level of unemployment and resulting increases in disposable income.
However, current data would seem to indicate that the economic momentum is likely to be noticeably weaker in the second quarter. In particular the ongoing period of industrial weakness is likely to have a curbing effect. The purchasing manager index for industry remains at 45 points and thereby clearly signalises a contraction in industrial production. Export performance was also very weak in April. Automobile production declined by 8% from the level recorded in the summer of 2018.
According to calculations performed by FERI Investment Research, price-adjusted gross domestic product (GDP) in Germany declined by –0.2% in the second quarter over the preceding quarter. We should not expect a sustainable return to robust growth for the time being. The structural challenges facing the automotive industry and, above all, the ongoing threat of customs duties when exporting to the US represent continuing stress factors in the mid-to-long-term.
Industry situation and competitive environment
Old-age provision
The market environment in the old-age provision area remained difficult, as consumers continued to display reservations and uncertainty due to a range of factors. These included various political discussions on reforms to the statutory, company and private old-age provision schemes, which are still ongoing, the fact that most consumers still do not have access to transparent information on anticipated pension benefits and that the low interest rate environment is cutting into the returns of newly concluded classic life insurance policies. The overall significance of classic life and pension insurance policies has therefore declined further, whereas unit-linked policies are becoming increasingly relevant. The industry situation in the old-age provision consulting area has not changed compared with the statements made in the Annual Report of the MLP Group.
The legislation to strengthen occupational pension provision in Germany (BRSG), which has been in force since January 1, 2018, introduced another measure at the start of the year aimed at increasing the market penetration of company pension schemes. If employees choose to pay a portion of their salary into a pension fund, a pension scheme or a direct insurance policy, employers must themselves then also pay in 15% of the converted premium if they save the social security contributions resulting from this deferred compensation.
Wealth management
In the financial markets, the first half of the year continued to be characterised by low interest rates. At the same time, the share markets were able to noticeably recover from the pronounced setback encountered in the fourth quarter of 2018. After the end of the first half of the year, the financial markets and the global economy continue to face various risks. The smouldering trade war between the US and China has, in particular, significantly increased the likelihood of market volatility.
Based on information provided by the German Association of Investment and Asset Management (BVI e.V.), the agency fund rose to € 3,136 billion by the end of March. It had been just € 2,954 billion at the end of 2018. Of the total assets invested, some € 1,034 billion – around one third – were invested in open mutual funds. Mutual equity funds were able to record net Q1 inflows of € 1.4 billion, while fixed income funds lost € 3.3 billion and mixed funds lost € 46 million.
There were no fundamental changes to the industry situation described in the Annual Report 2018 of the MLP Group.
Non-life insurance
The non-life insurance area continues to gain in importance for independent brokers. According to a survey performed by AssCompact, 75% of brokers surveyed considered the private non-life insurance business to be relevant or highly relevant in 2018. In 2015, this figure was just 40%.
Many FinTech and InsurTech start-ups have sprung up and provided plenty of headlines over the last few years, in particular in the field of basic non-life insurance policies. However, this trend has now tailed off markedly. A survey undertaken by PwC determined that more than 230 FinTechs have already ceased operations since 2011, and the trend is upwards. At the same time, the number of new start-ups is also declining. Many FinTechs are now attempting to enter into cooperations with insurers as a way of surviving. As yet, no FinTechs have proven disruptive for the existing market.
The overall industry situation in this field of consulting has not changed for MLP.
Health insurance
The market environment in the private health insurance area remains difficult. This can in particular be seen in the ongoing negative trend in the comprehensive private insurance area. According to data published by the Association of Private Health Insurers, the number of persons holding comprehensive health insurance in the market has already been in decline since 2011. Indeed, the figure stood at around 8.74 million in 2018 – some 240,000 fewer than back in 2011.
In contrast to comprehensive insurance, private supplementary insurance policies are still recording gains – there are now around 26 million supplementary insurance policies in place to cover gaps in benefits in the statutory health insurance system. This corresponds to around 2% more than in the previous year. Dental plans are the most commonly brokered policies in this regard.
As a result of the Statutory Health Insurance Contribution Relief Act, the premiums paid into the statutory health insurance system are once again to be shared absolutely equally by employers and employees as of January 1, 2019. In addition, self-employed persons with a low income pay significantly lower premiums if they join a statutory health insurance fund voluntarily. The law has generally boosted the attractiveness of remaining in the statutory health insurance system.
The overall industry situation in this consulting segment has not changed compared with the statements made in the MLP Group Annual Report 2018.
Real estate
The real estate market in Germany is continuing to display positive development. The low interest rates are the main factor behind this trend. In this situation, owner-occupied and investment properties are playing an increasingly important role for many consumers with a view to longterm capital accumulation.
However, rising property prices are also proving a challenge for those looking to invest in bricks and mortar. According to a survey performed by the Institute of the German Economy (IW), the level of construction still remains far too low to meet the demand. In certain cities, such as Cologne, not even half of the new-build apartment requirements are being met (46%). Focus is now increasingly shifting to warden-assisted apartments and concept-driven properties, such as student apartments, as according to forecasts there are likely to be more and more citizens requiring nursing care and single-person households in future.
Based on an analysis performed by KPMG, no systemic risks can yet be identified in the thirdparty property financing markets, as banks have sought to tread more conservatively when concluding mortgages in comparison with the crisis years of 2008 and 2009.
Loans and mortgages
Although it appeared as though the European Central Bank and the US Federal Reserve Bank would take a step back from their expansive monetary policy, at the end of the first six months they reversed the shift in this direction – with corresponding consequences for the interest rate development. The interest rates for 10-year property loans are still at a very low level.
The German government introduced the "Baukindergeld" family housing grant scheme in September 2018. The scheme has therefore now completed its first regular half-year. The German government reports that almost € 169 million in funds were approved up to March 31, 2019, spread over around 8,000 applications.
Overall, there have not been any fundamental changes from the market environment described in the Annual Report 2018 of the MLP Group.
Competition and regulation
Neither the competitive conditions nor the regulatory environment saw any significant changes in the first half of the year in comparison with the description provided in the MLP Group Annual Report 2018.
In 2018, the German Federal Ministry of Finance (BMF) published an evaluation report on the Life Insurance Reform Act (LVRG). Although the conclusions were largely positive, capping of acquisition commission is stated as a potential measure in the report. A draft bill of the German Federal Ministry of Finance (BMF) is now available. It contains three compensation components: 2.5% for signing, 1.5% for consulting quality and also a supplementary compensation option for further services provided by the broker for the insurer. No effects on the operating business of MLP in the old-age provision area as a result of the public political debate on acquisition commission or the draft bill could be observed in the first half of 2019 or are to be expected for the coming months. Added to this is the fact that the current draft indicates that the legislation is only to be introduced from 2021. (See "Future industry situation and competitive environment" for details on the further process).
Business performance
The MLP Group was able to continue the positive growth trend of the past few quarters in the first half of the year and increase total revenue to its highest ever level of € 329.2 million. With an increase of 10.2% over the previous year, revenue in the old-age provision made a particular contribution to this. MLP also once again benefited from gains in the wealth management (+7.4%), the non-life insurance (+5.7%) and the health insurance (+ 2.6%), as well as the loans and mortgages area (+1.1%). Following a decline in the first quarter, the real estate brokerage improved once again in the second quarter and almost reached the previous year's figure. Even with this upturn, however, it was still not yet able to compensate for the decline recorded in the previous quarter.
At the end of the reporting period earnings before interest and taxes (EBIT) rose to just above the corresponding figure from the previous year.
New clients
In the first six months of the year, MLP was able to acquire 8,830 (8,800) new family clients.
As of June 30, 2019, the MLP Group served a total of 545,800 family clients (December 31, 2018: 541,150) and 21,000 corporate and institutional clients (December 31, 2018: 20.900).
Results of operations
Development of total revenue
In the period from January to June 2019, total revenue of the MLP Group increased by 6.0% to € 329.2 million (€ 310.6 million). Commission income, which increased by 6.1% from € 295.2 million to € 313.3 million, made by far the greatest contribution to this. As expected, revenue from the interest rate business of € 8.5 million (€ 8.8 million) was slightly below the previous year's level. Other revenue was € 7.4 million (€ 6.6 million).
As regards the individual consulting fields, we continue to observe very positive development in the old-age provision at the end of the first half of the year, with revenue up by 10.2% to € 84.0 million (€ 76.2 million). The brokered premium sum increased to € 1,510.3 million (€ 1,351.1 million). We also recorded further growth in the wealth management area, in which revenue was up 7.4% to € 104.7 million (€ 97.5 million). The MLP Group in particular benefited from increased new business, as well as greater performance-based income from alternative investment concepts at the subsidiary FERI. The drop in performance fees observed in the first quarter in light of volatile investment markets was therefore more than compensated. Assets under management in the MLP Group rose to a new all-time high of € 37.0 billion as of June 30, 2019 (December 31, 2018: € 34.5 billion).
Revenue in the non-life insurance rose by 5.7% to € 81.7 million (€ 77.3 million), reflecting the positive development at both DOMCURA and MLP. The portfolio of non-life insurance policies also enjoyed positive development. The premium volume received through the MLP Group rose to € 396.4 million (December 31, 2018: € 385.6 million).
At € 23.8 million, revenue in the health insurance was also up on the previous year (€ 23.2 million).
Following the very strong figures recorded in the previous year, revenue in the loans and mortgages area reached € 9.0 million (€ 8.9 million) in the first half year. After significant gains in the fourth quarter of the previous year, at € 8.1 million (€ 10.1 million), revenue in the realestate brokerage was still below the previous year's figure. At € 2.0 million (€ 2.0 million) other commission and fees remained unchanged. Considering only the second quarter, total revenue rose to € 151.4 million (€ 142.7 million), Commission income rose by 6.5% to € 143.6 million (€ 134.8 million). Revenue from the interest rate business of € 4.2 million (€ 4.5 million) remained slightly below the previous year's level.
The breakdown by consulting fields also displays growth in the old-age provision in the second quarter, with revenue rising by 8.2% to € 46.0 million (€ 42.5 million). With an increase of 9.0 %, the wealth management also continued to develop positively. Revenue rose to € 54.5 million (€ 50.0 million). Revenue in the non-life insurance rose by 3.3% to € 21.8 million (€ 21.1 million). Although the real estate brokerage showed improvement in the second quarter, at € 4.8 million it was not quite able to reach the previous year's figure (€ 5.2 million). Revenue in the loans and mortgages area recorded gains. With an increase of 5.4%, it stood at € 3.9 million, following € 3.7 million in the same period of the previous year.
Following € 0.8 million in the previous year, other commission and fees were € 0.9 million.
Analysis of expenses
Commission expenses primarily comprise performance-linked commission payments to our consultants. This item also includes the commissions paid in the DOMCURA segment. These variable expenses occur due to the compensation of brokerage services in the non-life insurance business. Added to these are commissions paid in the FERI segment, which in particular result from the activities in the field of fund administration. Variable expenses are, for example, accrued in this business segment due to compensation of the depository bank and fund sales.
Set against the background of higher commission income, commission expenses increased to € 173.2 million in the first half year of 2019 (€ 161.0 million). Interest expenses amounted to € 0.3 million (€ 0.5 million). The total cost of sales thereby increased to € 173.5 million (€ 161.4 million).
Loan loss provisions were € 1.5 million (€ 0.0 million). The increase in loan loss provisions can essentially be attributed to impairment losses recognised in the banking segment.
Administrative expenses (defined as the sum of personnel expenses, depreciation/amortisation and impairment, as well as other operating expenses) amounted to € 143.3 million and thus were slightly above the previous year's level (€ 138.3 million). Personnel expenses rose to € 65.8 million (€ 62.6 million). There are various reasons for this, including general salary rises, as well as higher variable compensation and profit-sharing payments resulting from the successful economic development of the company. Depreciation/amortisation and impairments increased to € 12.6 million (€ 7.7 million). This increase can essentially be attributed to the change in the treatment of leasing liabilities as a result of the new IFRS 16 accounting standard, which has been in force since January 1, 2019. This had the opposite effect on other operating expenses, which declined from € 68.0 million to € 64.9 million. In addition one-off consulting expenses of 0.4 million were accrued in the first half year in the course of acquiring the announced majority stake in the DEUTSCHLAND.Immobilien Group.
The earnings at MLP Hyp, which are disclosed as earnings from investments accounted for using the equity method as a joint venture with Interhyp, increased to € 1.3 million (€ 1.1 million).
Considering the second quarter alone, the cost of sales rose to € 79.4 million (€ 73.7 million). Largely influenced by higher commission income commission expenses rose to € 79.2 million (€ 73.4 million). Interest expenses declined to € 0.2 million (€ 0.3 million).
At € 72.4 million, administration costs in the reporting period were slightly above the previous year's figure (€ 70.2 million). Personnel expenses amounted to € 32.2 million (€ 31.2 million). Due to the aforementioned effect resulting from adoption of IFRS 16, depreciation/amortisation and impairment increased to € 6.3 million (€ 3.9 million). This was offset by the decrease in other operating expenses, which declined to € 33.9 million (€ 35.1 million).
Earnings trend
Earnings before interest and taxes (EBIT) were € 12.2 million in the first six months and thus remained virtually at the same high level as in the previous year (€ 12.1 million). In comparison with total revenue, EBIT developed on a weaker note due to the described effects in administration costs, and higher loan loss provisions.
Finance cost fell to € –0.6 million (€ –0.4 million). On this basis, earnings before taxes (EBT) were € 11.6 million (€ 11.7 million). The tax rate was 22.2%. Net profit amounted to € 9.0 million (€ 9.8 million). The diluted and basic earnings per share were € 0.08 (€ 0.09).
Considering just the traditionally rather slow second quarter, EBIT was € -0.3 million, following € –1.0 million in the previous year. With a finance cost of € –0.3 million (€ 0.0 million), EBT was € –0.7 million (€ –0.9 million). Net profit amounted to € –0.1 million (€ 0.5 million).
| All figures in € million | 1st half-year 2019 |
1st half-year 2018 |
Change in% |
|---|---|---|---|
| Total revenue | 329.2 | 310.6 | 6.0% |
| Gross profit1 | 155.7 | 149.2 | 4.4% |
| Gross profit margin (%) | 47.3% | 48.0% | – |
| EBIT | 12.2 | 12.1 | 0.8% |
| EBIT margin (%) | 3.7% | 3.9% | – |
| Finance cost | –0.6 | –0.4 | –50.0% |
| EBT | 11.6 | 11.7 | –0.9% |
| EBT margin (%) | 3.5% | 3.8% | – |
| Income taxes | –2.6 | –1.9 | 36.8% |
| Net profit | 9.0 | 9.8 | –8.2% |
| Net margin (%) | 2.7% | 3.2% | – |
Structure and changes in earnings in the Group
1 Definition: Gross profit is the result of total revenue less commission expenses and interest expenses.
You can find disclosures on major transactions with related parties in Note 19.
Financial position
Aims of financial management
You can find detailed information on the objectives of financial management in the 2018 Annual Report of the MLP Group at www.mlp-annual-report.com.
Financing analysis
At present, we are not using any borrowed funds in the form of securities or promissory note bond issues to finance the Group long-term. Our non-current assets are financed in part by noncurrent liabilities. Current liabilities due to clients and banks in the banking business represent further refinancing funds that are generally available to us in the long term.
As of June 30, 2019, liabilities due to clients and financial institutions in the banking business amounted to € 1,890.3 million (December 31, 2018: € 1,720.5 million) were offset on the assets side of the balance sheet by receivables from clients and financial institutions in the banking business of € 1,474.6 million (December 31, 2018: € 1,455.2 million).
We did not perform any increase in capital stock in the reporting period.
Liquidity analysis
Cash flow from operating activities increased to € 129.1 from € 50.5 million in the same period of the previous year. Here, significant cash flows result from the deposit business with our clients and from the investment of these funds.
Cash flow from investing activities changed from € 1.9 million to € –15.7 million. Fewer time deposits matured in the reporting period than in the same period of the previous year.
| In € million | 2nd quarter 2019 |
2nd quarter 2018 |
1st half-year 2019 |
1st half-year 2018 |
|---|---|---|---|---|
| Cash and cash equivalents at beginning of period | 498.8 | 365.1 | 385.9 | 301.0 |
| Cash flow from operating activities | 12.1 | –16.2 | 129.1 | 50.5 |
| Cash flow from investing activities | –14.4 | 4.6 | –15.7 | 1.9 |
| Cash flow from financing activities | –24.8 | –21.9 | –27.5 | –21.9 |
| Change in cash and cash equivalents | –27.1 | –33.5 | 85.8 | 30.6 |
| Cash and cash equivalents at end of period | 471.7 | 331.6 | 471.7 | 331.6 |
Condensed statement of cash flow
As at the end of H1, 2019, the MLP Group has access to cash holdings of around € 532 million. A good level of liquid funds therefore remains available. There are sufficient cash reserves available to the MLP Group. Alongside cash holdings, free lines of credit are also in place.
Capital expenditure analysis
As at the end of June 2019, the investment volume financed from cash flow of the MLP Group was € 3.0 million (€ 6.0 million). The vast majority of capital expenditure was invested in the financial consulting segment, focusing in particular on investments in software and IT.
Net assets
Analysis of the asset and liability structure
As of the reporting date of June 30, 2019, the balance sheet total of the MLP Group was € 2,586.4 million (December 31, 2018: € 2,421.0 million). On the assets side of the balance sheet, the item "Property, plant and equipment" increased to € 132.8 million (€ 78.3 million). This increase can essentially be attributed to the change in the treatment of leasing liabilities as a result of the new IFRS 16 accounting standard to be applied from January 1, 2019 onwards. According to the new standard, usage rights from leasing transactions must be disclosed under this item. As of June 30, 2019, these usage rights were € 55.5 million. The corresponding position on the equity side of the balance sheet is disclosed under other liabilities. At € 787.2 million (December 31, 2018: € 761.0 million), receivables from clients in the banking business were slightly above year-end level of 2018. Receivables from banks in the banking business remained almost unchanged at € 687.3 million (December 31, 2018: € 694.2 million). Financial assets increased slightly to € 178.4 million (December 31, 2018: € 165.3 million). Other receivables and assets declined slightly to € 148.3 million (December 31, 2018: € 158.1 million). This item essentially contains commission receivables from insurers resulting from the brokerage of insurance products. Due to the typically strong year-end business, these increase considerably at the end of the year and then decline again during the course of the following financial year.
| All figures in € million | June 30, 2019 | Dec 31, 2018 | Change in % |
|---|---|---|---|
| Intangible Assets | 152,668 | 155,892 | –2.1% |
| Property, plant and equipment | 132,806 | 78,270 | 69.7% |
| Investments accounted for using the equity method | 2,892 | 4,186 | –30.9% |
| Deferred tax assets | 6,533 | 5,368 | 21.7% |
| Receivables from clients in the banking business | 787,234 | 761,027 | 3.4% |
| Receivables from banks in the banking business | 687,337 | 694,210 | –1.0% |
| Financial assets | 178,371 | 165,279 | 7.9% |
| Tax refund claims | 18,558 | 12,758 | 45.5% |
| Other receivables and assets | 148,285 | 158,123 | –6.2% |
| Cash and cash equivalents | 471,725 | 385,926 | 22.2% |
| Total | 2,586,409 | 2,421,038 | 6.8% |
Assets as of June 30, 2019
The shareholders' equity of the MLP Group fell slightly to € 406.3 million as of the reporting date (December 31, 2018: € 424.8 million), due substantially to the dividend payment to our shareholders. The equity ratio was 15.7% (December 31, 2018: 17.5%).
Provisions decreased to € 85.7 million (December 31, 2018: € 94.5 million). This decrease is mainly attributable to the reductions in provisions for client support commission after this was paid on schedule in the course of the second quarter. Liabilities due to clients in the banking business increased to € 1,797.9 million (December 31, 2018: € 1,638.9 million) and reflect the continued rise in client deposits. Liabilities due to banks in the banking business rose to € 92.4 million (December 31, 2018: € 81.6 million). This can mainly be attributed to a higher volume of promotional loans being passed on to our clients. Other liabilities rose to € 190.1 million (December 31, 2018: € 165.8 million), primarily due to the described effects resulting from application of the IFRS 16 standard. The figure includes leasing liabilities of € 56.2 million, as well as increased liabilities from the underwriting business at DOMCURA. Lower commission claims of our consultants had an opposing effect. Due to our typically strong year-end business, they increase markedly up to the balance sheet date December 31 and then decline again in the subsequent quarters.
Liabilities and shareholders' equity as of June 30, 2019
| All figures in € million | June 30, 2019 | Dec 31, 2018 | Change in % |
|---|---|---|---|
| Shareholders' equity | 406,264 | 424,826 | –4.4% |
| Provisions | 85,720 | 94,485 | –9.3% |
| Deferred tax liabilities | 9,170 | 10,245 | –10.5% |
| Liabilities due to clients in the banking business | 1,797,922 | 1,638,892 | 9.7% |
| Liabilities due to banks in the banking business | 92,335 | 81,625 | 13.1% |
| Tax liabililties | 4,873 | 5,197 | –6.3% |
| Other liabililties | 190,105 | 165,768 | 14.7% |
| Total | 2,586,409 | 2,421,038 | 6.8% |
Comparison of actual and forecast development of business
Following on from the first half of the year of 2019, we remain committed to the statement made in the forecast section of the 2018 Annual Report. Despite comprehensive investments in the future, we are anticipating a slight increase in EBIT over the previous year.
In the old-age provision area, we increased both new business and revenue. This consult-ing field therefore displayed slightly better development at the end of the first half of the year than forecast by us at the start of the year. Revenue in the wealth management area enjoyed positive development and was thereby within the scope of our expectations. Revenue in the health insurance was slightly above the previous year's level and thereby within the scope of our expectations. Having recorded positive revenue development, the non-life insurance area is within the scope of our expectations. Revenue in the real-estate brokerage area is still lagging behind our planned level after the first six months of the year. Following a very strong closing quarter in 2018, revenue then started to decline, particularly in the first quarter. However, we already began to see improvement here in the second quarter and this is likely to accelerate in the second half of the year. Overall, revenue developed within the scope of our expectations.
In terms of administration costs, we forecast largely stable development – despite ongoing investments in the future. Here too, we are in line with our expectations at the end of the first half of the year.
Overall, the development of costs and earnings is within the scope of our overall expectations.
Segment report
The MLP Group is broken down into the following operative segments:
- Financial consulting
- Banking
- FERI
- DOMCURA
- Holding
The financial consulting segment includes revenue from all fields of consulting – i.e. old-age provision, health and non-life insurance, as well as loans & mortgages and real estate brokerage. The banking segment brings together all banking services for both private and corporate clients – from wealth management, accounts and cards, through to the interest rate business. The FERI segment primarily generates revenue from the wealth management field of consulting, while the DOMCURA segment generates most of its revenue from the non-life insurance business. The Holding segment does not have active operations.
Financial consulting segment
Total revenue rose to € 169.3 million in the first half year of 2019 (€ 160.6 million). Sales revenue rose to € 158.6 million (€ 151.0 million), while other revenue rose to € 10.6 million (€ 9.6 million).
As a result of higher sales revenue, commission expenses increased to € 80.1 million (€ 74.9 million). Personnel expenses increased slightly to € 34.1 million (€ 33.1 million). Depreciation and impairment rose as a result of the described IFRS 16 effect, and amortisation expenses for usage rights associated with this increased to € 9.5 million (€ 5.6 million). These leasing expenses were previously disclosed under other operating expenses, which in turn fell to € 48.0 million (€ 49.9 million). EBIT improved to € –1.3 million (€ –2.1 million). The finance cost amounted to € –0.4 million (€ –0.2 million). EBT was € –1.7 million (€ –2.4 million).
Considering the second quarter alone, total revenue increased to € 79.5 million (€ 74.2 million). Sales revenue was € 74.4 million (€ 70.3 million). At € 5.0 million, other revenue raised (€ 4.0 million). Personnel expenses were € 16.8 million (€ 16.4 million). Depreciation/ amortisation and impairments increased to € 4.7 million (€ 2.9 million) as described above. Other operating expenses declined to € 24.9 million (€ 25.8 million).
EBIT improved to € –3.5 million (€ –5.1 million) in the second quarter. With a finance cost of € –0.2 million (€ 0.1 million), EBT was € –3.7 million (€ –5.0 million).
Banking segment
Total revenue increased by 3.9 % to € 40.3 million (€ 38.8 million) in the first half year, of which sales revenue represented € 38.1 million (€ 36.8 million) and other revenue € 2.3 million (€ 2.0 million). Commission expenses increased to € 15.6 million (€ 15.1 million). Interest expenses fell to € 0.2 million (€ 0.5 million). The loan loss provisions increased to € –1.3 million (€ 0.4 million), largely influenced by impairments. Personnel expenses were € 6.0 million (€ 5.3 million). Depreciation/amortisation and impairments were € 0.1 million (€ 0.0 million), while other operating expenses declined to € 16.8 million (€ 17.5 million). At € 0.3 million, EBIT was slightly below the previous year's level (€ 0.8 million). With a finance cost of € 0.0 million (€ 0.0 million), EBT was € 0.3 million (€ 0.8 million).
Considering the second quarter alone, total revenue rose by 6.3% to € 21.2 million (€ 19.9 million). Sales revenue increased to € 20.0 million (€ 18.7 million), while at € 1.3 million (€ 1.2 million) other revenue remained at virtually the same level as in the previous year. Commission expenses increased to € 8.4 million (€ 7.7 million). Interest expenses declined to € 0.1 million (€ 0.3 million). Administrative expenses increased slightly to € 12.0 million (€ 11.5 million). EBIT therefore reached € 0.0 million (€ 0.0 million). With a finance cost of € 0.0 million (€ 0.0 million), EBT was € 0.0 million (€ 0.0 million) and therefore remained at the previous year's level.
FERI segment
Total revenue at FERI rose by 7.8% to € 77.9 million (€ 72.2 million) in the first half year of 2019. Sales revenue rose to € 76.0 million (€ 70.6 million). Supported by an increase in new business, as well as greater performance-based income from alternative investment concepts, it was possible to more than compensate for the lower performance fees, themselves caused by capital market developments. Other revenue increased to € 1.8 million (€ 1.6 million).
As a result of higher sales revenue, commission expenses increased to € 47.5 million (€ 42.6 million). Loan loss provisions were € –0.1 million (€ 0.0 million). Personnel expenses amounted to € 15.8 million (€ 15.2 million). Depreciation/amortisation and impairments increased to € 1.1 million (€ 0.6 million). Other operating expenses fell to € 4.4 million (€ 4.9 million). At € 9.0 million, EBIT remained at the previous year's level (€ 9.0 million). At a finance cost of € –0.2 million (€ 0.0 million), EBT stood at € 8.8 million (€ 8.9 million).
Considering the second quarter alone, total revenue rose by 6.9% to € 40.1 million (€ 37.5 million), while sales revenue increased to € 39.2 million (€ 36.5 million). At € 0.9 million (€ 1.0 million), other revenue remained virtually at the same level as in the previous year. Commission expenses increaſed to € 24.2 million (€ 21.6 million). At € 10.8 million (€ 10.7 million), administrative expenses remained at the previous year's level. EBIT therefore reached € 5.0 million (€ 5.3 million). With a finance cost of € –0.1 million (€ 0.0 million), EBT was € 4.9 million (€ 5.2 million).
DOMCURA segment
The DOMCURA segment primarily generates revenue from the brokering of non-life insurance. DOMCURA's business model is characterised by a high degree of seasonality. Accordingly, the subsidiary records high revenue and comparably high earnings in the first quarter of each year. This is then typically followed by a loss from Q2 to Q4.
Total revenue increased by 6.4% to € 56.2 million (€ 52.8 million) in the first half year, while sales revenue rose to € 55.6 million (€ 51.7 million). This primarily reflects the premium volumes received. Other revenue was € 0.6 million (€ 1.1 million). The previous year's higher figure was influenced by a one-off positive effect.
Commission expenses also rose to € 36.4 million (€ 34.4 million). This is primarily attributable to higher sales revenue. Allowances for losses remained unchanged at € 0.0 million (€ 0.0 million). Personnel expenses increased slightly to € 7.7 million (€ 7.4 million). Depreciation/amortisation and impairments increased to € 1.0 million (€ 0.7 million). At € 3.4 million (€ 3.5 million), other operating expenses remained at the same level as the previous year. EBIT thus rose by 10.3% to € 7.6 million (€ 6.9 million). With a finance cost of € –0.1 million (€ 0.0 million), EBT was € 7.5 million (€ 6.9 million).
Considering the second quarter alone, total revenue was € 16.7 million (€ 16.7 million) and thus remained at the same level as in the previous year. Sales revenue rose by 3.6% to € 16.3 million (€ 15.7 million) and other revenue declined to € 0.4 million (€ 1.0 million). Commission expenses were € 11.3 million (€ 11.2 million). Administration costs increased to € 5.9 million (€ 5.6 million), as such EBIT was € –0.4 million (€ 0.0 million). With an unchanged finance cost of € 0.0 million (€ 0.0 million), EBT was € –0.4 million (€ 0.0 million).
Holding segment
The Holding segment does not have active operations. Total revenue in the first six months of the year was € 4.5 million (€ 4.6 million). This can essentially be attributed to the leasing of buildings to affiliated companies. Personnel expenses rose to € 2.2 million (€ 1.7 million). This increase can in particular be attributed to greater expenses for variable compensation due to the successful business development. Depreciation/amortisation and impairment was € 0.8 million (€ 0.8 million). Other operating expenses increased slightly to € 4.6 million (€ 4.5 million). EBIT therefore reached € –3.1 million (€ –2.3 million). With a finance cost of € –0.2 million (€ –0.2 million), EBT was € –3.3 million (€ –2.5 million).
Considering the second quarter alone, total revenue was € 2.2 million (€ 2.4 million). Personnel expenses declined to € 0.6 million (€ 0.7 million). At € 0.4 million (€ 0.4 million), depreciation/ amortisation and impairment remained at the previous year's level. Other operating expenses rose to € 2.6 million (€ 2.3 million). EBIT therefore totalled € –1.4 million (€ –1.1 million). At an unchanged finance cost of € –0.1 million, EBT was € –1.5 million (€ –1.1 million).
Employees and self-employed client consultants
As MLP is a knowledge-based service provider, qualified and motivated employees and consultants represent the most important foundation for sustainable company success. The focus is therefore on continuous further development of personnel work, qualifications and further training, as well as recruiting new consultants.
The number of employees rose to 1,746 (1,715) in the reporting period. The increase can essentially be attributed to employees returning from parental leave, as well as new recruitments.
Development of number of employees by segment (excluding MLP consultants)
| Segment | June 30, 2019 | June 30, 2018 |
|---|---|---|
| Financial consulting | 1,054 | 1,052 |
| Banking | 186 | 178 |
| FERI | 236 | 221 |
| DOMCURA | 264 | 258 |
| Holding | 6 | 6 |
| Total | 1,746 | 1,715 |
As of June 30, 2019, 1,913 self-employed client consultants worked for MLP. This represents a rise of more than 30 consultants compared to the previous year. The decline relative to the end of 2018 (1,928) is essentially the result of the usual seasonal effects in the first quarter.
RISK AND OPPORTUNITY REPORT
MLP's group-wide early risk detection and monitoring system is used as the basis for a groupwide active risk management. This system ensures appropriate identification, assessment, controlling, monitoring and communication of the major risks. The objective of the integrated opportunity management approach employed by the MLP Group is to secure systematic and early identification of opportunities and their assessment.
There were no significant changes to the risk or opportunity situation of the MLP Group in the reporting period. There were no extraordinary charges within the scope of our counterparty default, market price and liquidity risks, operational risks or other risks in the first half of 2019. The MLP Group has sufficient liquid funds at its disposal. Our core capital ratio on the reporting date, June 30, 2019, was 18.5% (December 31, 2018: 19.64%) and therefore remains above the 8% stipulated by the supervisory regulations plus 2.5% capital conservation buffer. The lower ratio is a result of dividend payments to our shareholders. There are currently no identifiable risks that threaten the going-concern of the MLP Group.
You can find a detailed presentation of the business risks and opportunities, as well as a detailed description of our risk and opportunity management system in our risk and opportunity report in the 2018 Annual Report of the MLP Group.
FORECAST
Future overall economic development
There were no significant changes to our expectations for future overall economic development in the reporting period.
The experts at FERI Investment Research are predicting GDP growth of 0.7% in Germany for 2019.
You can find a detailed presentation on this in the Forecast included in the 2018 Annual Report of the MLP Group.
Future industry situation and competitive environment
Neither the competitive conditions nor the regulatory environment saw any significant changes in the first half of the year in comparison with the description provided in the MLP Group Annual Report 2018.
The market environment in the old-age provision area remains challenging. The ongoing period of low interest rates is leading consumers to generally display less interest in saving processes, while willingness to conclude long-term contracts is even lower. At the same time, however, the market potential in the old-age provision area remains promising, particularly among MLP's clientèle. After all, the statutory pension level is likely to decline further, whereas the average life expectancy is set to increase. Young professionals are particularly aware of this pension shortfall. In addition there is still potential to be tapped in the occupational pension provision area. In this area, the measures associated with the legislation to strengthen occupational pension provision in Germany are likely to stimulate further dynamism in the market.
The market environment in the wealth management area is proving even more difficult than in the past. Alongside risks in the eurozone, the trade dispute between the US and China is threatening to increase volatility on the financial markets. This could result in a further decline in the willingness to invest in the capital market among savers in Germany, who are already highly averse to risk. According to the experts from FERI, there are also signs of a bubble in the bond segment. At around € 11.9 trillion, the total value of corporate bonds worldwide has in fact reached an all-time high. Around 30 % of corporate bonds provide a negative return, even including junk bonds.
The non-life insurance business is likely to become even more important. According to a survey of insurance brokers performed by AssCompact, some 80 % of respondents believe that the private non-life insurance business will be highly relevant in the next few years.
The private health insurance (PKV) is unlikely to enjoy any significant improvements in terms of market conditions. As a result of the Statutory Health Insurance Contribution Relief Act, the competitive position of comprehensive private insurance providers is also likely to be further weakened in the second half of the year.
There is no end in sight to the low interest rate phase in the loans and mortgages area. In fact, the ECB and the US Federal Reserve are actually each considering lowering the respective prime rate again. No improvement in conditions should therefore be anticipated in the financing and investment area. In June 2019, the grand coalition discussed a property tax reform. However, this requires an amendment to the German constitution. A solution is set to be found for this by the end of the year. Accordingly, the property tax reform will not have any influence on market conditions in the current financial year.
In 2018, the German Federal Ministry of Finance (BMF) published an evaluation report on the Life Insurance Reform Act (LVRG). No draft bill has yet been passed. Even if a draft bill is passed, introduction is only planned from 2021 onwards. No effects on the current or the next financial year are therefore to be anticipated. In addition, the current draft bill provides the opportunity for brokers such as MLP, which provide higher quality consulting and services, to invoice insurers separately for said services.
Anticipated business development
Developments in the first half year were essentially in line with our expectations. Following on from the first six months of the year, we remain committed to the statements made in the Forecast section of the 2018 Annual Report that we will achieve a slight increase in EBIT in the financial year 2019.
We essentially remain committed to the qualitative assessment of our revenue forecast. How-ever, development in the old-age provision area (forecast: stable development) could also prove more positive than previously anticipated by us. At the same time, other consulting areas are primarily facing risks due to market conditions, meaning that the development could be slightly lower than anticipated at the start of the year. You can find details on our forecast in the Annual Report of the MLP Group at www.mlp-annual-report.com.
Income statement and statement of comprehensive income
Income statement for the period from January 1 to June 30, 2019
| 2nd quarter | 2nd quarter | 1st half year | 1st half year | ||
|---|---|---|---|---|---|
| All figures in €'000 | Notes | 2019 | 2018 | 2019 | 2018 |
| Revenue | (6) | 147,777 | 139,259 | 321,788 | 304,000 |
| Other Revenue | 3,644 | 3,407 | 7,445 | 6,607 | |
| Total revenue | 151,421 | 142,666 | 329,233 | 310,607 | |
| Commission expenses | (7) | –79,152 | –73,352 | –173,233 | –160,982 |
| Interest expenses | –151 | –292 | –284 | –453 | |
| Valuation result/loan loss provisions | –768 | –474 | –1,495 | 35 | |
| Personnel expenses | (8) | –32,198 | –31,195 | –65,829 | –62,551 |
| Depreciation and impairments | (9) | –6,296 | –3,926 | –12,597 | –7,712 |
| Other operating expenses | (10) | –33,927 | –35,137 | –64,860 | –67,953 |
| Earnings from investments accounted for using the equity method | 758 | 755 | 1,273 | 1,088 | |
| Earnings before interest and tax (EBIT) | –314 | –955 | 12,208 | 12,079 | |
| Other interest and similar income | 46 | 23 | 193 | 77 | |
| Other interest and similar expenses | –398 | –25 | –827 | –483 | |
| Valuation result not relating to operating activities | 6 | 9 | 41 | 3 | |
| Finance cost | (11) | –347 | 7 | -593 | –403 |
| Earnings before tax (EBT) | –661 | –948 | 11,615 | 11,676 | |
| Income taxes | 552 | 1,428 | –2,580 | –1,881 | |
| Net profit | –109 | 480 | 9,035 | 9,795 | |
| Of which attributable to | |||||
| owners of the parent company | –109 | 480 | 9,035 | 9,795 | |
| Earnings per share in €1 | |||||
| basic/diluted | 0.00 | 0.00 | 0.08 | 0.09 |
1 Basis of calculation: average number of ordinary shares outstanding at June 30, 2019: 109,204,487.
Statement of comprehensive income for the period from January 1 to June 30, 2019
| 2nd quarter 2019 |
2nd quarter 2018 |
1st half year 2019 |
1st half year 2018 |
|---|---|---|---|
| –109 | 480 | 9,035 | 9,795 |
| –1,691 | 423 | –6,948 | 423 |
| 504 | –125 | 2,050 | –75 |
| –1,187 | 298 | –4,897 | 348 |
| –1,187 | 298 | –4,897 | 348 |
| –1,296 | 778 | 4,138 | 10,142 |
| –1,296 | 778 | 4,138 | 10,142 |
Statement of financial position
Assets as of June 30, 2019
| All figures in €'000 | Notes | June 30, 2019 | Dec 31, 2018 |
|---|---|---|---|
| Intangible assets | 152,668 | 155,892 | |
| Property, plant and equipment | (12) | 132,806 | 78,270 |
| Investments accounted for using the equity method | 2,892 | 4,186 | |
| Deferred tax assets | 6,533 | 5,368 | |
| Receivables from clients in the banking business | 787,234 | 761,027 | |
| Receivables from banks in the banking business | 687,337 | 694,210 | |
| Financial assets | (13) | 178,371 | 165,279 |
| Tax refund claims | 18,558 | 12,758 | |
| Other receivables and assets | (14) | 148,285 | 158,123 |
| Cash and cash equivalents | 471,725 | 385,926 | |
| Total | 2,586,409 | 2,421,038 |
Liabilities and shareholders' equity as of June 30, 2019
| All figures in €'000 | Notes | June 30, 2019 | Dec 31, 2018 |
|---|---|---|---|
| Shareholders' equity | (15) | 406,264 | 424,826 |
| Provisions | 85,720 | 94,485 | |
| Deferred tax liabilities | 9,170 | 10,245 | |
| Liabilities due to clients in the banking business | 1,797,922 | 1,638,892 | |
| Liabilities due to banks in the banking business | 92,355 | 81,625 | |
| Tax liabilities | 4,873 | 5,197 | |
| Other liabilities | (14) | 190,105 | 165,768 |
| Total | 2,586,409 | 2,421,038 |
Condensed statement of cash flow
Condensed statement of cash flow for the period from January 1 to June 30, 2019
| All figures in €'000 | 1st half year 2019 |
1st half year 2018 |
|---|---|---|
| Cashflow from operating activities | 129,056 | 50,495 |
| Cashflow from investing activities | –15,733 | 1,929 |
| Cashflow from financing activities | –27,524 | –21,866 |
| Change in cash and cash equivalents | 85,799 | 30,558 |
| Cash and cash equivalents at the end of the period | 471,725 | 331,571 |
Condensed statement of cash flow for the period from April 1 to June 30, 2019
| All figures in €'000 | 2nd quarter 2019 |
2nd quarter 2018 |
|---|---|---|
| Cashflow from operating activities | 12,065 | –16,244 |
| Cashflow from investing activities | –14,393 | 4,567 |
| Cashflow from financing activities | –24,756 | –21,866 |
| Change in cash and cash equivalents | –27,084 | –33,544 |
| Cash and cash equivalents at the end of the period | 471,725 | 331,571 |
The notes on the statement of cash flow appear in Note 16.
Statement of changes in equity
Statement of changes in equity for the period from January 1 to June 30, 2019
Equity attributable to MLP SE shareholders All figures in €'000 Share capital Capital reserves Gains/losses from changes in the fair value of available-for-sale securities1 Revaluation gains/ losses related to defined benefit obligations after taxes Retained earnings Total shareholders equity As of January 1, 2018 109,335 148,754 959 –12,184 158,072 404,935 Effects from first-time adoption of IFRS 9 and IFRS 15 – – –959 – 8,807 7,848 As of January 1, 2018 109,335 148,754 – –12,184 166,880 412,783 Acquisition of treasury stock –4 – – – –18 –23 Share-based payment – –1,059 – – – –1,059 Dividend – – – – –21,866 –21,866 Transactions with owners –4 –1,059 – – –21,885 –22,948 Net profit – – – – 9,795 9,795 Other comprehensive income – – – 348 – 348 Total comprehensive income – – – 348 9,795 10,142 As of June 30, 2018 109,331 147,695 – –11,837 154,790 399,978 As of January 1, 2019 109,167 149,227 – –12,518 178,951 424,826 Acquisition of treasury stock 168 – – – 555 722 Share-based payment – –1,555 – – – –1,555 Dividend – – – – –21,867 –21,867 Transactions with owners 168 –1,555 – – –21,312 –22,699 Net profit – – – – 9,035 9,035 Other comprehensive income – – – –4,897 – –4,897 Total comprehensive income – – – –4,897 9,035 4,138 As of June 30, 2019 109,334 147,672 – –17,415 166,674 406,264
1 Reclassifiable gains/losses.
Interim financial statements of the Group
1 Information about the company
The consolidated financial statements were prepared by MLP SE, Wiesloch, Germany, the parent company of the MLP Group. MLP SE is listed in the Mannheim Commercial Register under the number HRB 728672 at the address Alte Heerstraße 40, 69168 Wiesloch, Germany.
Since it was founded in 1971, MLP has been operating as a broker and adviser for academics and other discerning clients in the fields of old-age provision including occupational pension provision, healthcare provision, non-life insurance, financing, wealth management and banking services.
2 Principles governing the preparation of the financial statements
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 (IFRS) of the International Accounting Standards Board (IASB) as well as the interpretations of the International Financial Reporting Interpretations Committee (IFRIC), as applicable within the European Union (EU). In accordance with the provisions of IAS 34, the scope of the report has been reduced compared to the consolidated financial statements as of December 31, 2018.
Except for the changes presented in Note (3), the condensed consolidated interim financial statements are based on the accounting and valuation methods as well as the consolidation principles that were applied to the Group financial statements for the financial year 2018. These are presented in the Group notes of the Annual Report 2018 that can be downloaded from the company's website (www.mlp-se.com).
The interim financial statements have been drawn up in euros (€), which is the functional currency of the parent company. Unless otherwise specified, all amounts are stated in thousands of euros (€'000). Both single and cumulative figures are values with the smallest rounding difference. As a result, differences to reported total amounts may arise when adding up the individual values.
3 Adjustments to the accounting policies
The accounting policies applied are the same as those used in the previous year, with the following exceptions:
In the financial year 2019, the following new or amended accounting principles from the IFRS standards are to be used for MLP for the first time:
- IFRS 16 Leases
- Amendments to IAS 19: Plan amendments, curtailments, settlements
- Amendments to IAS 28 and IFRS 10: Long-term investments in associates and joint ventures
- Revisions to the IFRS 2015-2017
- IFRIC 23 Uncertainty over Income Tax Treatments
The transition to IFRS 16 was performed in line with the modified retrospective approach. Comparative figures from the respective periods of previous years will not be adjusted.
The following tables show the adjustments that have been recorded for every single item.
Effects on the consolidated balance sheet
Assets
| All figures in €'000 | Dec 31, 2018 | IFRS 16 effects | Jan 1, 2019 |
|---|---|---|---|
| Intangible assets | 155,892 | – | 155,892 |
| Property, plant and equipment | 78,270 | 54,418 | 132,688 |
| Investments accounted for using the equity method | 4,186 | – | 4,186 |
| Deferred tax assets | 5,368 | – | 5,368 |
| Receivables from clients in the banking business | 761,027 | – | 761,027 |
| Receivables from banks in the banking business | 694,210 | – | 694,210 |
| Financial assets | 165,279 | – | 165,279 |
| Tax refund claims | 12,758 | – | 12,758 |
| Other receivables and assets | 158,123 | – | 158,123 |
| Cash and cash equivalents | 385,926 | – | 385,926 |
| Total | 2,421,038 | 54,418 | 2,475,456 |
Liabilities and shareholders' equity
| All figures in €'000 | Dec 31, 2018 | IFRS 16 effects | Jan 1, 2019 |
|---|---|---|---|
| Total shareholders' equity | 424,826 | – | 424,826 |
| Provisions | 94,485 | – | 94,485 |
| Deferred tax liabilities | 10,245 | – | 10,245 |
| Liabilities due to clients in the banking business | 1,638,892 | – | 1,638,892 |
| Liabilities due to banks in the banking business | 81,625 | – | 81,625 |
| Tax liabilities | 5,197 | – | 5,197 |
| Other liabilities | 165,768 | 54,418 | 220,186 |
| Total | 2,421,038 | 54,418 | 2,475,456 |
While other financial commitments from operating leasing agreements of € 62,311 thsd were disclosed in the 2018 consolidated financial statements, leasing liabilities in accordance with IFRS 16 of € 54,418 thsd are disclosed as of January 1, 2019. The resulting gap is mainly caused by the non-consideration of non-leasing-components according to IFRS 16. Amongst other things the discounting of the lease liability represents another effect.
No effects on retained earnings in shareholders' equity occur at the time of initial adoption as a result of recognising the rights of use at the level of the corresponding leasing liabilities.
On January 1, 2019 the usage rights from operating leases included under "property, plant and equipment", € 52,804 thsd are attributable to rented buildings and € 1,614 thsd to vehicle leasing.
IFRS 16
For lessees, IFRS 16 introduces a uniform approach for the accounting of leases, based on which assets for usage rights to the lease objects and liabilities for payment obligations received are to be disclosed for all leases in the balance sheet.
MLP utilises the simplified application rules for short-term leases. Leasing payments made within the scope of these agreements are recognised on a straight-line basis over the term of the lease as other operating expenses.
Non-leasing components are not taken into account in the recognised right-of-use asset.
With the initial adoption of IFRS 16, the Group recorded leasing liabilities for leases previously treated as operating leases in line with IAS 17. Among other things, the liability includes fixed payments minus any leasing incentives granted, as well as variable leasing payments that are linked to an index. These liabilities are rated at the present value of the leasing payments still outstanding as at January 1, 2019, discounted using the lessee's incremental borrowing rate of interest. This was 1.0 % p.a. on January 1, 2019.
The right to use the respective lease object is capitalised in a simplified approach with an amount equal to the leasing liability, adjusted to take into account advance payments or deferred leasing payments.
Usage rights are rated at acquisition costs, which have the following structure:
- All leasing payments made within the scope of the leasing agreement less any leasing incentives granted
- All initial direct costs accrued by the lessee and
- An estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which the asset is located or restoring the underlying asset to the condition required by the terms and conditions of the lease.
The contracts taken into account with regard to IFRS 16 include in particular the rental of office building and vehicle leasing. The rental agreements for office buildings are typically concluded for a period up to 10 years, while the rental agreements for vehicles have an average term of between 3 and 4 years. To maintain operational flexibility with regard to the portfolio of agreements, MLP incorporates extension and termination options as a contractual strategy element.
4 Seasonal influences on the business operations
Due to the seasonal development of its business, the Group generally expects earnings to be higher in the second half year than in the first half year.
5 Reportable business segments
There were no significant changes in comparison with December 31, 2018.
Reportable business segments
Information regarding reportable business segments (quarterly comparison)
| Financial services | Banking | ||||
|---|---|---|---|---|---|
| All figures in €'000 | 2nd quarter 2019 |
2nd quarter 2018 |
2nd quarter 2019 |
2nd quarter 2018 |
|
| Revenue | 74,442 | 70,278 | 19,950 | 18,740 | |
| of which total inter-segment revenue | 1,323 | 1,198 | 810 | 800 | |
| Other revenue | 5,044 | 3,962 | 1,258 | 1,204 | |
| of which total inter-segment revenue | 3,188 | 3,200 | 824 | 742 | |
| Total revenue | 79,486 | 74,240 | 21,208 | 19,945 | |
| Commission expenses | –37,352 | –34,850 | –8,375 | –7,712 | |
| Interest expenses | – | – | –138 | –292 | |
| Loan loss provisions / valuation result | –34 | –128 | –743 | –416 | |
| Personnel expenses | –16,755 | –16,442 | –3,138 | –2,669 | |
| Depreciation and impairment | –4,741 | –2,866 | –62 | –23 | |
| Other operating expenses | –24,874 | –25,798 | –8,753 | –8,847 | |
| Earnings from investments accounted for using the equity method | 758 | 755 | – | – | |
| Segment earnings before interest and tax (EBIT) | –3,513 | –5,089 | 0 | –15 | |
| Other interest and similar income | 95 | 3 | 7 | 29 | |
| Other interest and similar expenses | –289 | 84 | –12 | –10 | |
| Valuation result not relating to operating activities | 4 | 4 | – | – | |
| Finance cost | –191 | 90 | –6 | 19 | |
| Earnings before tax (EBT) | –3,703 | –5,000 | –6 | 4 | |
| Income taxes | |||||
| Net profit |
2nd quarter 2018
| Total | Consolidation | Holding | DOMCURA | FERI | |||||
|---|---|---|---|---|---|---|---|---|---|
| 2nd quarter 2018 |
2nd quarter 2019 |
2nd quarter 2018 |
2nd quarter 2019 |
2nd quarter 2018 |
2nd quarter 2019 |
2nd quarter 2018 |
2nd quarter 2019 |
2nd quarter 2018 |
2nd quarter 2019 |
| 139,259 | 147,777 | –1,997 | –2,133 | – | – | 15,717 | 16,284 | 36,520 | 39,235 |
| – | –1,997 | –2,133 | – | – | – | – | – | – | |
| 3,644 | –6,113 | –6,181 | 2,371 | 2,205 | 981 | 446 | 1,002 | 871 | |
| – | –6,113 | –6,181 | 2,171 | 2,169 | – | – | – | – | |
| 151,421 | –8,110 | –8,313 | 2,371 | 2,205 | 16,698 | 16,730 | 37,522 | 40,106 | |
| –79,152 | 1,944 | 2,080 | – | – | –11,171 | –11,260 | –21,562 | –24,245 | |
| –151 | – | –14 | – | – | – | – | – | – | |
| –768 | – | – | 0 | 0 | 98 | 69 | –27 | –60 | |
| –32,198 | – | – | –697 | –558 | –3,494 | –3,700 | –7,893 | –8,046 | |
| –6,296 | – | – | –394 | –404 | –341 | –527 | –301 | –563 | |
| –33,927 | 6,123 | 6,191 | –2,330 | –2,611 | –1,806 | –1,722 | –2,479 | –2,158 | |
| 758 | – | – | – | – | – | – | – | – | |
| –314 | –43 | –56 | –1,051 | –1,369 | –15 | –409 | 5,258 | 5,034 | |
| 46 | 0 | 3 | –6 | –42 | 0 | –12 | –3 | –5 | |
| –398 | 31 | 112 | –84 | –87 | –6 | –8 | –40 | –114 | |
| 6 | – | – | 6 | 3 | 0 | –1 | 0 | 0 | |
| –347 | 31 | 115 | –84 | –126 | –5 | –21 | –43 | –118 | |
| –661 | –12 | 58 | –1,135 | –1,496 | –21 | –430 | 5,215 | 4,915 | |
| 552 | |||||||||
| –109 |
Information regarding reportable business segments (quarterly comparison)
Information regarding reportable business segments (half-yearly comparison)
| Financial services | Banking | ||||
|---|---|---|---|---|---|
| 1st half year | 1st half year | 1st half year | 1st half year | ||
| All figures in €'000 | 2019 | 2018 | 2019 | 2018 | |
| Revenue | 158,643 | 151,006 | 38,051 | 36,807 | |
| of which total inter-segment revenue | 4,882 | 4,511 | 1,608 | 1,551 | |
| Other revenue | 10,607 | 9,636 | 2,255 | 2,000 | |
| of which total inter-segment revenue | 6,458 | 6,589 | 1,618 | 1,478 | |
| Total revenue | 169,250 | 160,642 | 40,306 | 38,807 | |
| Commission expenses | –80,085 | –74,932 | –15,576 | –15,106 | |
| Interest expenses | – | – | –219 | –453 | |
| Loan loss provisions / valuation result | –155 | –307 | –1,256 | 361 | |
| Personnel expenses | –34,139 | –33,054 | –6,030 | –5,252 | |
| Depreciation and impairment | –9,538 | –5,632 | –94 | –46 | |
| Other operating expenses | –47,953 | –49,945 | –16,844 | –17,497 | |
| Earnings from investments accounted for using the equity method | 1,273 | 1,088 | – | – | |
| Segment earnings before interest and tax (EBIT) | –1,348 | –2,139 | 287 | 813 | |
| Other interest and similar income | 249 | 58 | 14 | 27 | |
| Other interest and similar expenses | –614 | –282 | –19 | –20 | |
| Valuation result not relating to operating activities | 14 | 1 | – | – | |
| Finance cost | –351 | –222 | –5 | 7 | |
| Earnings before tax (EBT) | –1,699 | –2,361 | 282 | 820 | |
| Income taxes | |||||
| Net profit | |||||
1st half year 2018
| Total | Consolidation | Holding | DOMCURA | FERI | Banking | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| 1st half year | 1st half year 2019 |
1st half year 2018 |
1st half year 2019 |
1st half year 2018 |
1st half year 2019 |
1st half year 2018 |
1st half year 2019 |
1st half year 2018 |
1st half year 2019 |
|
| 321,788 | –6,062 | –6,490 | – | – | 51,650 | 55,562 | 70,599 | 76,022 | ||
| – | –6,062 | –6,490 | – | – | – | – | – | – | ||
| 7,445 | –12,408 | –12,413 | 4,601 | 4,535 | 1,138 | 624 | 1,639 | 1,838 | ||
| – | –12,408 | –12,413 | 4,342 | 4,337 | – | – | – | – | ||
| 329,233 | –18,470 | –18,903 | 4,601 | 4,535 | 52,788 | 56,186 | 72,238 | 77,860 | ||
| –173,233 | 6,010 | 6,369 | – | – | –34,372 | –36,419 | –42,583 | –47,522 | ||
| –284 | – | –66 | – | – | – | – | – | – | ||
| –1,495 | – | – | 0 | 0 | –30 | –12 | 11 | –72 | ||
| –65,829 | – | – | –1,682 | –2,155 | –7,386 | –7,748 | –15,177 | –15,757 | ||
| –12,597 | – | – | –790 | –817 | –650 | –1,033 | –593 | –1,115 | ||
| –64,860 | 12,399 | 12,386 | –4,476 | –4,631 | –3,491 | –3,410 | –4,943 | –4,408 | ||
| 1,273 | – | – | – | – | – | – | – | – | ||
| 12,208 | –61 | –214 | –2,347 | –3,069 | 6,859 | 7,565 | 8,953 | 8,987 | ||
| 193 | –16 | 43 | –3 | –64 | 6 | –46 | 5 | –2 | ||
| –827 | 54 | 212 | –182 | –182 | –7 | –16 | –47 | –208 | ||
| 41 | – | – | 2 | 26 | 0 | 1 | 0 | 0 | ||
| –593 | 38 | 254 | –183 | –220 | –1 | –61 | –43 | –209 | ||
| 11,615 | –23 | 41 | –2,529 | –3,289 | 6,858 | 7,503 | 8,910 | 8,778 | ||
| –2,580 | ||||||||||
| 9,035 |
Information regarding reportable business segments (half-yearly comparison)
6 Revenue
| All figures in €'000 | 2nd quarter 2019 |
2nd quarter 2018 |
1st half year 2019 |
1st half year 2018 |
|---|---|---|---|---|
| Wealth management | 54,464 | 50,030 | 104,707 | 97,523 |
| Old-age-provision | 45,956 | 42,455 | 83,973 | 76,170 |
| Non-life-insurance | 21,841 | 21,101 | 81,726 | 77,305 |
| Health insurance | 11,686 | 11,512 | 23,801 | 23,194 |
| Loans and mortgages | 3,874 | 3,661 | 8,997 | 8,882 |
| Real estate brokerage | 4,836 | 5,170 | 8,142 | 10,057 |
| Other commission and fees | 921 | 841 | 1,991 | 2,023 |
| Total commission income | 143,577 | 134,770 | 313,336 | 295,154 |
| Interest income | 4,200 | 4,488 | 8,452 | 8,846 |
| Total | 147,777 | 139,258 | 321,788 | 304,000 |
Sales revenues are regularly realised with reference to a point in time. Revenue recognised over time of € 123.146 thsd (previous year: € 117,985 thsd) was generated from the old-age provision business in the financial consulting segment, from the health insurance business in the financial consulting and DOMCURA segments, as well as from the wealth management business in the financial consulting and FERI segments.
7 Commission expenses
Commission expenses for the period from January 1 to June 30, 2019 increased over the same period in the previous year from € 160,982 thsd to € 173,233 thsd. They include commission payments and other compensation components for the self-employed MLP consultants, as well as the compensation for sales partners at the remaining subsidiaries. For further details, please refer to the "Results of operations" section in the Interim group management report.
8 Personnel expenses/Number of employees
Personnel expenses for the period from January 1 to June 30, 2019 increased from € 62,551 thsd to € 65,829 thsd compared to the same period in the previous year. For further details, please refer to the "Employees and self-employed client consultants" section of the Interim group management report. As of June 30, 2019, the number of employees by operating segment are as:
| June 30, 2019 | June 30, 2018 | |||||
|---|---|---|---|---|---|---|
| of which executive employees |
of which marginal part time employees |
of which executive employees |
of which marginal part time employees |
|||
| Financial Services |
1,054 | 32 | 25 | 1,052 | 33 | 24 |
| Banking | 186 | 6 | 4 | 178 | 6 | 4 |
| FERI | 236 | 7 | 45 | 221 | 7 | 33 |
| DOMCURA | 264 | 9 | 14 | 258 | 9 | 14 |
| Holding | 6 | 1 | – | 6 | 1 | – |
| Total | 1,746 | 55 | 88 | 1,715 | 56 | 75 |
9 Depreciation and impairments
| All figures in €'000 | 2nd quarter 2019 |
2nd quarter 2018 |
1st half year 2019 |
1st half year 2018 |
|---|---|---|---|---|
| Intangible assets | 2,074 | 2,577 | 4,291 | 5,064 |
| Property, plant and equipment | 4,222 | 1,349 | 8,306 | 2,648 |
| Of which Property, plant and equipment | 1,347 | 1,349 | 2,702 | 2,648 |
| Of which rights of use | 2,875 | – | 5,604 | – |
| Depreciation | 6,296 | 3,926 | 12,597 | 7,712 |
| Impairment | – | – | – | – |
| Total | 6,296 | 3,926 | 12,597 | 7,712 |
The depreciation of property, plant and equipment in the first half of 2019 includes amortisation expenses of € 5,604 thsd for the capitalised right of use as per IFRS 16.
| 2nd quarter | 2nd quarter | 1st half year | 1st half year | |
|---|---|---|---|---|
| All figures in €'000 | 2019 | 2018 | 2019 | 2018 |
| IT operations | 11,622 | 12,188 | 23,257 | 23,735 |
| Consultancy | 3,126 | 2,568 | 6,118 | 4,973 |
| Other external services | 2,777 | 1,871 | 5,490 | 3,860 |
| Administration operations | 2,537 | 2,830 | 5,089 | 5,399 |
| External services – banking business | 2,229 | 2,325 | 4,257 | 4,316 |
| Representation and advertising | 1,385 | 1,474 | 2,691 | 2,729 |
| Travel expenses | 1,712 | 1,477 | 2,563 | 2,314 |
| Premiums and fees | 1,026 | 1,085 | 2,313 | 2,611 |
| Training and further education | 1,117 | 957 | 2,009 | 1,940 |
| Insurance | 1,199 | 840 | 1,742 | 1,406 |
| Entertainment expenses | 1,079 | 1,035 | 1,742 | 1,869 |
| Expenses for commercial agents | 1,028 | 794 | 1,534 | 1,824 |
| Maintenance | 815 | 375 | 1,473 | 681 |
| Other employee-related expenses | 515 | 361 | 1,061 | 689 |
| Audit | 405 | 305 | 725 | 621 |
| Supervisory Board compensation | 237 | 247 | 470 | 501 |
| Rental and leasing | 72 | 3,319 | 240 | 6,528 |
| Goodwill | 84 | 134 | 126 | 251 |
| Sundry other operating expenses | 960 | 950 | 1,961 | 1,706 |
| Total | 33,927 | 35,137 | 64,860 | 67,953 |
10 Other operating expenses
The costs of IT operations are mainly attributable to IT services and computer centre services that have been outsourced to an external service provider. The expenses for administration operations include costs relating to building operations, office costs and communication costs. The consulting costs are made up of tax advice costs, legal advice costs as well as general and IT consulting costs. The item "External services – banking business" mainly contains securities settlement and transaction costs in connection with the MLP credit card. Expenses for representation and advertising include costs incurred due to media presence and client information activities. Sundry other operating expenses essentially comprise expenses for other taxes, charitable donations, passenger vehicles, as well as for magazines and literature.
11 Finance cost
| All figures in €'000 | 2nd quarter 2019 |
2nd quarter 2018 |
1st half year 2019 |
1st half year 2018 |
|---|---|---|---|---|
| Other interest and similar income | 46 | 23 | 193 | 77 |
| Other interest and similar expenses | –398 | –25 | –827 | –483 |
| Valuation result not relating to operating activities | 6 | 9 | 41 | 3 |
| Finance cost | –347 | 7 | –593 | –403 |
Other interest and similar income includes negative interest on bank deposits of € –126 thsd (previous year: € –97 thsd). Other interest and similar expenses includes € –221 thsd in interest expenses from net obligations for defined benefit obligations carried on the balance sheet (previous year: € –212 thsd). Other interest and similar expenses includes expenses from accrued interest on leasing liabilities of € –300 thsd pursuant to IFRS 16.
12 Property, plant and equipment
With the initial adoption of IFRS 16, usage rights from leases are disclosed under the "property, plant and equipment" item. On June 30, 2019 the usage rights from operating leases amounted to € 55,474 thsd of which € 54,023 thsd are attributable to rented buildings and € 1,451 thsd to vehicle leasing.
13 Financial assets
| All figures in €'000 | June 30, 2019 | Dec 31, 2018 |
|---|---|---|
| Measured at amortised cost | 87,579 | 86,219 |
| Measured at fair value through profit or loss | 10,143 | 9,925 |
| Debenture and other fixed income securities | 97,721 | 96,144 |
| Measured at fair value through profit or loss | 3,504 | 3,157 |
| Shares and other variable yield securities | 3,504 | 3,157 |
| Fixed and time deposits (loans and receivables) | 70,010 | 59,995 |
| Investments in non-consolidated subsidiaries | 6,990 | 5,799 |
| Investments | 145 | 184 |
| Total | 178,371 | 165,279 |
14 Other accounts receivables and assets/other liabilities
Due to the seasonal nature of the business with strong year-end performance, high receivables due from insurance companies, as well as high liabilities due to commercial agents that were settled in the first quarter of 2019 were to be disclosed as at December 31, 2018. Through the seasonal influences a lower amount of receivables and liabilities were built up in the first half year of 2019.
Other liabilities include payment obligations resulting from leases of € 56,209 thsd in the context of IFRS 16.
15 Shareholders' equity
Share capital
The share capital of MLP SE comprises 109.334.300 ordinary shares (December 31, 2018: 109,166,662). The retained earnings include a statutory reserve of € 3,129 thsd (previous year: € 3,117 thsd).
Dividend
In accordance with the resolution passed at the Annual General Meeting on May 29, 2019 a dividend of € 21,867 thsd (previous year: € 21,866 thsd) was to be paid for the financial year 2018. This corresponds to € 0.20 per share (previous year: € 0.20) per share.
16 Notes to the statement of cash flow
The consolidated statement of cash flow shows how cash and cash equivalents have changed in the course of the year as a result of inflows and outflows of funds. As per IAS 7 "Statement of Cash Flows", differentiation is made between cash flows from operating activities, from investing activities and from financing activities.
Cash flow from operating activities results from cash flows that cannot be defined as investing or financing activities. It is determined on the basis of consolidated net profit for the year. As part of the indirect determination of cash flow, the changes in balance sheet items due to operating activities are adjusted by effects from changes to the scope of consolidation and currency translations where necessary. For further details, please refer to the "Financial position" section in the Interim group management report.
Cash flow from investing activities is essentially influenced by the investment of cash and cash equivalents in time deposits, as well as time deposits which have reached maturity.
Cash flow from financing activities includes cash-relevant equity changes and loans taken out and paid back. In connection with the initial adoption of IFRS 16, the repayment portions of leasing liabilities are now contained in the cashflow from financing activities. For the first half year 2019 these amounted to € 5,657 thsd.
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 assets which can be converted into cash at any time and which are only subject to minor value fluctuation risks.
Cash and cash equivalents
| All figures in €'000 | June 30, 2019 | June 30, 2018 |
|---|---|---|
| Cash and cash equivalents | 471,725 | 331,571 |
| Loans ≤ 3 months | – | – |
| Cash and cash equivalents | 471,725 | 331,571 |
Receivables of MLP Banking AG due from banks are included in cash and cash equivalents, insofar as they are separable as own-account investing activities. Inseparable elements are allocated to the operating business of the banking business segment and therefore to cash flow from operating activities. All deposits at the Deutsche Bundesbank are disclosed under cash and cash equivalents.
17 Contingent assets and liabilities, as well as other liabilities
Contingent liabilities arising from sureties and guarantees (face value of the obligation) increased from € 4,719 thsd as at December 31, 2018 to € 7,450 thsd, while the irrevocable credit commitments (contingent liabilities) declined from € 54,667 thsd as at December 31, 2018 to € 52,917 thsd.
Beyond this there were no significant changes compared to December 31, 2018.
18 Additional information on financial instruments
The carrying amounts and fair values of financial assets and financial liabilities, including their (hierarchical) tiers, are grouped into financial instrument classes and categories as shown in the following tables:
| June 30, 2019 | |||||||
|---|---|---|---|---|---|---|---|
| Carrying amount |
Fair value | No financial instruments according to IFRS 9 |
|||||
| All figures in €'000 | Carrying amount corresponds to fair value |
Level 1 | Level 2 | Level 3 | Total | ||
| Financial assets measured at fair value through profit or loss (FVPL) |
13,792 | 145 | 3,504 | 10,143 | 13,792 | 6,990 | |
| Financial assets (share certificates and structured bonds) |
10,143 | – | – | 10,143 | – | 10,143 | |
| Financial assets | 3,504 | – | 3,504 | – | – | 3,504 | |
| Investments | 145 | 145 | – | – | – | 145 | 6,990 |
| Financial assets measured at amortised cost (AC) | 2,216,505 | 869,974 | 54,561 | 621,502 | 714,087 | 2,260,123 | 35,666 |
| Receivables from banking business – clients | 787,234 | 116,651 | – | – | 714,087 | 830,738 | |
| Receivables from banking business – banks | 687,337 | 99,968 | – | 587,297 | – | 686,265 | |
| Financial assets (fixed and time deposits) | 70,010 | 70,010 | – | – | – | 70,010 | |
| Financial assets (bonds) | 87,579 | – | 54,561 | 34,205 | – | 88,766 | |
| Other receivables and assets | 112,619 | 112,619 | – | – | – | 112,619 | 35,666 |
| Cash and cash equivalents | 471,725 | 471,725 | – | – | – | 471,725 | |
| Financial liabilities measured at amortised cost | 2,028,570 | 1,910,893 | – | 118,276 | – | 2,029,169 | 51,812 |
| Liabilities due to banking business – clients | 1,797,922 | 1,772,284 | – | 25,860 | – | 1,798,144 | |
| Liabilities due to banking business – banks | 92,355 | 316 | – | 68,238 | – | 92,732 | |
| Other liabilities | 138,293 | 138,293 | – | – | – | 138,293 | 51,812 |
| Sureties and warranties* | 7,450 | 7,450 | 7,450 | ||||
| Irrevocable credit commitments* | 52,917 | 52,917 | 52,917 |
* Off balance sheet items. Figures before impairment.
| Dec 31, 2018 | |||||||
|---|---|---|---|---|---|---|---|
| Carrying amount |
Fair value | No financial instruments |
|||||
| according to IFRS 9 |
|||||||
| Carrying | |||||||
| amount corresponds |
|||||||
| All figures in €'000 | to fair value | Level 1 | Level 2 | Level 3 | Total | ||
| Financial assets measured at fair value | |||||||
| through profit or loss (FVPL) | 13,080 | 184 | 2,972 | 9,925 | 13,080 | 5,799 | |
| Financial assets | |||||||
| (share certificates and structured bonds) | 9,925 | – | – | 9,925 | – | 9,925 | |
| Financial assets | 2,972 | – | 2,972 | – | – | 2,972 | |
| Investments | 184 | 184 | – | – | – | 184 | 5,799 |
| Financial assets measured at amortised cost (AC) | 2,110,293 | 808,709 | 41,271 | 628,524 | 645,399 | 2,123,903 | 35,206 |
| Receivables from banking business – clients | 761,027 | 131,028 | – | – | 645,399 | 776,427 | |
| Receivables from banking business – banks | 694,210 | 108,843 | – | 583,536 | – | 692,380 | |
| Financial assets (fixed and time deposits) | 49,998 | 49,998 | – | – | – | 49,998 | |
| Financial assets (loans) | 9,997 | 9,997 | – | – | – | 9,997 | |
| Financial assets (bonds) | 86,219 | – | 41,271 | 44,988 | – | 86,259 | |
| Other receivables and assets | 122,917 | 122,917 | – | – | – | 122,917 | 35,206 |
| Cash and cash equivalents | 385,926 | 385,926 | – | – | – | 385,926 | |
| Financial liabilities measured at amortised cost | 1,861,006 | 1,755,682 | 102,115 | 1,857,797 | 25,279 | ||
| Liabilities due to banking business – clients | 1,638,892 | 1,614,863 | – | 24,032 | – | 1,638,895 | |
| Liabilities due to banking business – banks | 81,625 | 330 | – | 78,083 | – | 78,413 | |
| Other liabilities | 140,489 | 140,489 | – | – | – | 140,489 | 25,279 |
| Sureties and warranties* | 4,719 | 4,719 | 4,719 | ||||
| Irrevocable credit commitments* | 54,667 | 54,667 | 54,667 |
* Off balance sheet items. Figures before impairment.
Cash and cash equivalents, receivables and liabilities due to banking business without agreed terms to maturity, trade receivables, from companies in which the Group holds an interest and other assets all predominantly have short terms to maturity. Their carrying amounts on the balance sheet date are therefore almost identical to the fair values. The same applies to the trade accounts payable. Insofar as fair values for investments in companies cannot be reliably determined, they are measured at their cost of acquisition minus any impairments. As of the balance sheet date there is no indication of fair values being lower than carrying amounts. There are also no plans to dispose of these investments.
Determining fair value
Insofar as there is an active market for financial assets and financial liabilities, the prices of the market with the greatest trading volume on the closing date are used as the basis for determining the fair value. With investment shares, the fair value corresponds to the redemption prices published by the capital investment companies. If there is no active market on the closing date, the fair value is determined using recognised valuation models. The underlying accounting and valuation principles with respect to financial instruments remain unchanged compared to the previous year and are contained in the Annual Report 2018.
The table below shows the valuation techniques that were used to determine tier 3 fair values, as well as the significant, non-observable input factors applied:
| Type | Valuation technique | Significant, non-observable input factors |
Relationship between significant, non-observable input factors and measurement at fair value |
|---|---|---|---|
| Receivables from banking business – clients with agreed maturity |
The valuation model takes into account the present value of the anticipated future cash inflows/outflows through out the remaining term, which are discounted using a risk-free discount rate. The discount rate is based on the current yield curve. Credit and default risks, administration costs and expected return on equity are taken into account when determining future cash flows. |
Adjustment of cash flows by: • Credit and counterparty default risks • Administration costs • Expected return on equity |
The estimated fair value would increase (decrease) if: • the credit and default risk were to rise (fall) • the admin costs were to fall (rise) • the expected return on equity were to fall (rise). |
19 Related party disclosures
Within the scope of the ordinary business, legal transactions were made between individual Group companies and members of the Executive Board and the Supervisory Board in line with market conditions.
There were no significant changes in comparison with December 31, 2018.
20 Events after the balance sheet date
There were no appreciable events after the balance sheet date affecting the MLP Group's financial or asset situation.
Wiesloch, August 7, 2019
MLP SE
Executive Board
Dr. Uwe Schroeder-Wildberg Manfred Bauer Reinhard Loose
Responsibility statement
To the best of our knowledge, and in accordance with the applicable reporting principles for interim financial reporting, the interim consolidated financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group, and the interim management report of the Group includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal opportunities and risks associated with the expected development of the Group for the remaining months of the financial year.
Wiesloch, August 7, 2019
MLP SE
Executive Board
Dr. Uwe Schroeder-Wildberg Manfred Bauer Reinhard Loose
List of figures and tables
LIST OF FIGURES LIST OF TABLES
Investor Relations
05 MLP Share, SDAX und DAXsector Financial Services from January to June 2018
Management report
- 10 Economic growth in Germany
- 14 Development of assets under management
- 15 Comparison of commission income
- 17 EBIT development
02 MLP key figures
Investor Relations
06 Key figures on the MLP Share
Management report
- 17 Structure and changes in earnings in the Group
- 18 Condensed statement of cash flow
- 19 Assets as of June 30, 2019
- 20 Liabilities and shareholders' equity as of June 30, 2019
- 24 Employees by segment (excluding MLP consultants)
Notes
- 28 Income statement for the period from January 1 to June 30, 2019
- 28 Statement of comprehensive income for the period from January 1 to June 30, 2019
- 29 Assets as of June 30, 2019
- 29 Liabilities and shareholders' equity as of June 30, 2019
- 30 Condensed statement of cash flow for the period from January 1 to June 30, 2019
- 30 Condensed statement of cash flow for the period from April 1 to June 30, 2019
- 31 Statement of changes in equity for the period from January 1 to June 30, 2019
- 34 Adjustments to the accounting policies
- 36 Reportable business segments (quarterly comparison)
- 38 Reportable business segments (half-year comparison)
- 40 Revenue
- 40 Personnel expenses/Number of employees
- 41 Depreciation and impairments
- 42 Other operating expenses
-
43 Finance cost
-
43 Financial assets
- 45 Cash and cash equivalents
- 46 Classification and hierarchy levels of financial instruments as of June 30, 2019
- 47 Classification and hierarchy levels of financial instruments as of December 31, 2018
Executive Bodies at MLP SE
Executive Board
Dr. Uwe Schroeder-Wildberg (Chairman, appointed until December 31, 2022)
Manfred Bauer (Product management, appointed until April 30, 2025)
Reinhard Loose (Controlling, Purchasing, IT, Group Accounting, Risk Management, Internal Audit, Legal, Human Resources, appointed until January 31, 2024)
Supervisory Board
Dr. Peter Lütke-Bornefeld (Chairman, elected until 2023)
Dr. Claus-Michael Dill (Vice Chairman, elected until 2023)
Tina Müller (elected until 2023)
Matthias Lautenschläger (elected until 2023)
Alexander Beer (Employees' representative, elected until 2023)
Burkhard Schlingermann (Employees' representative, elected until 2023)
Contact
Investor Relations
Tel +49 (o) 6222 • 3o8 • 832o Fax +49 (o) 6222 • 3o8 • 1131 [email protected]
Media Relations
Tel +49 (o) 6222 • 3o8 • 831o Fax +49 (o) 6222 • 3o8 • 1131 [email protected]
Financial calendar
SEPTEMBER
September 23 to 25, 2019 Company presentation at the Berenberg & Goldman Sachs German Corporate Conference in Munich
NOVEMBER
November 14, 2019 Publication of the results for the first nine months and third quarter of 2019
November 25 to 27, 2019 Company presentation at the German Equity Forum in Frankfurt
Further details at www.mlp-se.com, Investors, Financial calendar
prognoses
This documentation includes certain prognoses and information on future developments founded on the conviction of MLP SE's Executive Board, as well as on assumptions and information currently available to MLP SE. Terms such as "expect", "anticipate", "estimate", "assume", "intend", "plan", "should", "could", "might", "project" and any other phrases 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 SE accepts no liability to the general public for updating or correcting prognoses. All prognoses and predictions are subject to different kinds of risks and uncertainties, which can lead to the actual results deviating from expectations. The prognoses reflect the points of view at the time when they were made.
MLP SE Alte Heerstraße 40 69168 Wiesloch Tel +49 (0) 6222 • 308 • 8320 Fax +49 (0) 6222 • 308 • 1131 www.mlp-se.com