ANNUAL REPORT 2017
YOU WILL FIND THE ONLINE VERSION OF THE ANNUAL REPORT AT MLP-ANNUAL-REPORT.COM TABLE OF CONTENTS
3 Corporate Governance eric t MLP key figures – multi year Joint management report Corporate122 Corporate Governance Governance report report overview 26 Fundamental principles of the Group rkl rung ur 26 Business model MLP consolidated financial 135 MLP nterne mensf rung consolidated financial a Management 32 Control system statements 34 Research and development statements 4 The Executive Board G 136 Income statement and statement of 5 Letter to our shareholders 35 Economic report comprehensiveMLP income on ernabsc luss 35 Overall economic climate 8 The Supervisory Board 137 Statement of financial position 36 Industry situation and competitive environment 9 Report by the Supervisory Board 47 Business performance 138 Statement of cash flow 50 Results of operations 139 Statement of changes in equity 55 Financial position 14 Our goals and strategies 58 Net assets Notes 60 Segment report 140 General information 16 Investor Relations 64 Employees and self-employed client consultants 161 Notes to the income statement 169 Notes to the statement of financial position 21 Sustainability at MLP 68 Remuneration report 188 Notes to the statement of cash flow 189 73 Risk and opportunity report Miscellaneous information Risk report 73 203 Auditor’s report 90 Opportunity report 211 Responsibility statement 93 Forecast 212 Financial calendar 93 Future overall economic development 94 Future industry situation and competitive environment 103 Anticipated business development
109 Supplementary data for MLP SE (Disclosures Erg n ende Angaben f r die MLP AG (gem GB) based on HGB) 114 Explanatory report on the disclosures pursuant to § 176 (1) of the German Stock Corporation Act (AktG), § 289 (4) and § 315 of the German Commercial Code (HGB) 116 Report on remuneration transparency – appendix to the management report 121 Non-financial aspects of business activities
2 CONTENTS 2 MLP key figures – multi year overview
All figures in € million 2017 2016 2015 2014 2013¹ 2012¹ 2011¹ 2010¹
Continuing operations Total revenue 628.2 610.4 554.3 531.1 499.0 563.6 545.5 522.6
Revenue 608.7 590.6 535.7 509.7 480.5 538.1 526.7 497.3 Other revenue 19.4 19.8 18.7 21.4 18.5 25.5 18.8 25.3 Pro forma earnings before interest and tax (Pro forma EBIT) (before acquisitions) 37.6 19.7 32.5 39.0 30.7 70.5 17.3 47.0 Earnings before interest and tax (EBIT) (before one- off exceptional costs) 46.7 35.1 30.7 39.0 30.7 70.5 50.7 47.0 Operating Earnings before interest and tax (Operating EBIT) (before one-off exceptional costs) 37.6 19.7 30.7 39.0 30.7 70.5 17.3 47.0 EBIT margin (%)⁴ 6.0% 3.2% 5.5% 7.3% 6.2% 12.5% 3.2% 9.0%
MLP Group
Net profit (total) 27.8 14.7 19.8 29.0 23.9 50.5 11.5 34.1 Earnings per share (diluted) in € 0.25 0.13 0.18 0.27 0.22 0.47 0.11 0.31
Dividend per share in € 0.20² 0.08 0.12 0.17 0.16 0.32 0.60 0.30
Cash flow from operating activities 115.5 144.7 58.8 32.3 67.6 22.4 53.8 91.0
Capital expenditure 7.3 18.4 12.8 15.4 22.5 14.5 7.8 3.9 Total shareholders' equity 404.9 383.6 385.8 376.8 370.5 381.7 399.6 421.2 Equity ratio 18.7% 19.7% 22.0% 23.2% 24.2% 25.6% 26.8% 27.6%
Balance sheet total 2,169.5 1,944.1 1,752.7 1,624.7 1,533.6 1,491.3 1,489.8 1,524.0
Clients³ – – 858,700 847,600 830,300 816,200 794,500 774,500 Private clients (Family)⁵ 529,100 517,400 510,200 – – – – – Corporate and institutional clients⁵ 19,800 19,200 18,200 – – – – – Consultants³ 1,909 1,940 1,943 1,952 1,998 2,081 2,132 2,273 Branch offices³ 145 146 156 162 169 174 178 192 University teams 58 – – – – – – –
Employees 1,686 1,768 1,802 1,542 1,559 1,524 1,584 1,672
Brokered new business³ Old-age provision (premium sum in € billion) 3.4 3.7 3.5 4.1 3.6 4.8 5.2 5.0 Loans and mortgages 1,728.4 1,709.7 1,798.0 1,415.0 1,513.0 1,301.0 1,327.0 1,219.0 Assets under management in € billion 33.9 31.5 29.0 27.5 24.5 21.2 20.2 19.8
1 Values adjusted. 2 Subject to the consent of the Annual General Meeting on June 14, 2018. 3 Continuing operations. 4 EBIT in relation to total revenue. ⁵ MLP adjusted the way it counts clients in Q1 2016.
MLP KEY FIGURES – MULTI YEAR OVERVIEW 3 THE EXECUTIVE BOARD
Dr. Uwe Schroeder-Wildberg Manfred Bauer Reinhard Loose Chairman and CEO MLP SE Member of the Executive Board of MLP SE Member of the Executive Board of MLP SE Strategy, Product Management Compliance, Communication, Controlling, Appointed until April 30, 2020 Policy/Investor Relations, Purchasing, Marketing, IT, Sales, Group Accounting, Sustainability Risk Management, Internal Audit, Appointed until December 31, 2022 Legal, Human Resources Appointed until January 31, 2024
4 THE EXECUTIVE BOARD LETTER TO OUR S ARE OLDERS
In 2017, we recorded growth and achieved our forecast numbers with good earnings. This could by no means be taken for granted as our industry is far from booming. e are overall satisfied as a result. To ensure we remain successful in future, we will adhere tenaciously to the strategy we have been pursuing for the last few years.
In 2017, we recorded growth and achieved our forecast numbers with good earnings. This could by no means be After all, it was precisely this strategy – diversifying our revenue basis, together with strict cost management – taken for granted as our industry is far from booming. e are overall satisfied as a result. To ensure we remain that benefited us not only, but especially, over the course of the last twelve months. As you know, the further successful in future, we will adhere tenaciously to the strategy we have been pursuing for the last few years. development of our company is embedded in a difficult environment, in which the high-margin old-age provision business is under enormous pressure. This makes our growth all the more remarkable. It is driven by wide-ranging growthAfter all, in it the was consulting precisely thisareas strategy that we – have diversifying built up our and revenue expanded basis, in recent together years with – above strict costall wealth management – management,that benefited non-life us not only, insurance but especially, and real estateover the brokerage. course of the last twelve months. As you know, the further development of our company is embedded in a difficult environment, in which the high-margin old-age provision business is under enormous pressure. This makes our growth all the more remarkable. It is driven by wide-ranging The demerger of MLP Finan dienstleistungen AG into MLP Finan beratung SE and MLP Banking AG was a key growth in the consulting areas that we have built up and expanded in recent years – above all wealth focus of work in the past financial year. ith a significant increase in free regulatory capital, we are extending our management, non-life insurance and real estate brokerage. room to manoeuvre considerably. I would like to take this opportunity to thank all employees and MLP consultants for supporting the successful implementation of this large-scale project, as well as for their very successful work inThe the demerger past year. of MLP Finan dienstleistungen AG into MLP Finan beratung SE and MLP Banking AG was a key focus of work in the past financial year. ith a significant increase in free regulatory capital, we are extending our room to manoeuvre considerably. I would like to take this opportunity to thank all employees and MLP consultants Thefor supporting fact that there the successfulare unlikely implementation to be any changes of this in thelarge-scale foreseeable project, future as wellin terms as for of their the difficultvery successful market work conditionsin the past inyear. which we operate underlines the importance of strengthening the equity base. Low interest rates, reservations regarding signing long-term contracts, as well as regulations which are not market oriented, and in some cases go too far, will continue to burden us over the course of the next few years. owever, we anticipated thisThe earlyfact that on and there have are been unlikely proactively to be any developing changes in our the company foreseeable since future 2005. in This terms has of made the difficultMLP a completely market new companyconditions today. in which we operate underlines the importance of strengthening the equity base. Low interest rates, reservations regarding signing long-term contracts, as well as regulations which are not market oriented, and in some cases go too far, will continue to burden us over the course of the next few years. owever, we anticipated Inthis absolute early on figures, and have this been means proactively that we have developing been recording our company average since growth 2005. ofThis 12.5 has percent made MLP per ayear completely set aside new fromcompany the old-agetoday. provision area since 2005. As such, we have more than compensated for the decline in revenue in the old-age provision of over €160 million. At the same time, we have increased recurring revenue, i.e. revenue that does not require any new contracts to be signed, from around 30 percent to around two thirds.
LETTER TO OUR SHAREHOLDERS 5
In detail, total revenue rose by almost 3 percent to EUR 628.2 million in the last financial year – the highest level since the outbreak of the global financial crisis 10 years ago. e were able to record gains across all consulting segments except for old-age provision. The real estate brokerage segment, which we have been expanding since 2014, recorded the highest percentage increase. This is reported under Other commission and fees , which increased by almost 20 percent to EUR 18.4 million. The second highest increase recorded by MLP Group was in the wealth management area. Revenues increased by almost 15 percent to EUR 190.6 million here. The non-life insurance area also performed better than the previous year, recording a 4 percent increase in revenue. The loans and mortgages area also recorded significant gains. In the health insurance area, sales revenue remained at the previous year's level – despite the prominent discussions regarding citi ens insurance during the election campaign.
Only the old-age provision area remained slightly behind the previous year's figures in 2017 with revenue of EUR 208.1 million. This slight decrease can be attributed to market conditions. This reflects the ongoing reservations being displayed by many citi ens throughout the sector when it comes to signing long-term contracts.
Assets under management rose to a new record level of EUR 33.9 billion. This reflects significant gains both at our subsidiary FERI and in MLP's private client business. FERI primarily enjoyed an increase in its institutional business, both in investment management and investment consulting. At the same time, we observed very significant growth in net cash inflows among MLP's private clients. This underlines just how successfully we have positioned ourselves throughout our entire client base for the extremely important topic of wealth management.
Operating EBIT – before one-off expenses – rose by 33 percent to EUR 46.7 million. At EUR 9.1 million, the one-off expenses for further optimising the Group structure were within the announced range. This resulted in EBIT increasing to EUR 37.6 million. Group net profit also increased around 90 percent to EUR 27.8 million.