Analysis of the asset and liability structure
Balance sheet total up 7.7 %
The balance sheet total of the MLP Group has increased by 7.7 % to € 1,534.4 million. Despite the additions to the scope of consolidation, intangible assets on the assets side dropped from € 184.7 million to € 162.4 million as a result of scheduled depreciation/amortisation and the reduction of goodwill due to the adjustment of the variable purchase price component for Feri Finance AG. The drop in property, plant and equipment from € 83.9 million to € 80.4 million is mainly attributable to scheduled depreciation/amortisation.
Due to the deteriorated situation in the commercial property market, we had to record impairment losses of € 2.5 million on investment property.
Receivables from clients and from financial institutions in the banking business together increased only slightly by 1.9 % to € 881.0 million. These loans are essentially refinanced through the deposits of our clients (liabilities due to clients from the banking business).
Financial assets grow due to increase in capital stock
The sharp increase in financial investments from € 52.4 million to € 179.9 million is predominantly attributable to the inflow of funds of € 123.8 million due to the increase in capital stock performed in August 2008.
Tax refund claims also increased significantly and amounted to € 26.9 million (€ 9.7 million) on the reporting date.
Due to weaker business development than in the previous year, other receivables and other assets also dropped from € 162.1 million to € 147.1 million. This item essentially contains commission receivables from insurance companies resulting from the brokerage of insurance products.
Cash and cash equivalents were € 38.1 million on the reporting date and are therefore virtually unchanged (€ 37.3 million).
The item “Non-current assets held for sale and disposal groups” includes shares in a special fund set up as the basis for the wealth management concepts developed by MLP and Feri in 2007 and intended for selling on to clients. It also contains the assets of our subsidiary in Austria, whose business operations are disclosed under discontinued operations from 2008 onward. This item dropped from € 12.2 million to € 3.3 million.
Assets as at December 31, 2008
| in € million | 2008 | 2007 | Change in % |
|---|---|---|---|
| Intangible assets | 162.4 | 184.7 | –12.1 % |
| Property, plant and equipment | 80.4 | 83.9 | –4.2 % |
| Investment property | 11.7 | 14.6 | –19.9 % |
| Shares accounted for using the equity method | 2.3 | 1.6 | 43.8 % |
| Deferred tax assets | 1.3 | 1.6 | –18.8 % |
| Receivables from clients from the banking business | 275.4 | 260.3 | 5.8 % |
| Receivables from banks from the banking business | 605.6 | 604.0 | 0.3 % |
| Financial investments | 179.9 | 52.4 | >100 % |
| Tax refund claims | 26.9 | 9.7 | >100 % |
| Other receivables and other assets | 147.1 | 162.1 | –9.3 % |
| Cash and cash equivalents | 38.1 | 37.3 | 2.1 % |
| Non-current assets held for sale and disposal groups | 3.3 | 12.2 | –73.0 % |
| Total | 1.534.4 | 1.424.2 | 7.8 % |
Increase in capital stock strengthens balance sheet
In the last financial year, we further improved the capital structure of the Group, in particular with the increase in capital stock (see also Strategy) performed in August 2008. The equity ratio increased from 23.9 % to 28.0 %. With shareholders’ equity standing at € 429.1 million (€ 339.7 million), the Group’s equity capital backing remains very good. With reference to the earnings from continuing operations, this leads to a return on equity of 7.2 %.
We increased provisions on the reporting date December 31, 2008, from € 43.8 million to € 52.9 million. This was primarily due to additional provisions for pension claims, cancellation risks and bonus schemes/share-based compensations. Due to changes in the German Insurance Contract Law, which came into effect in 2008, we increased the provisions for cancellations in order to cover for the risk of having to refund earned commissions due to a premature loss of brokered insurance policies. The provisions for bonus schemes/ share-based compensations are used for incentive agreements with our consultants and for employee and consultant profit sharing schemes.
Increase in client deposits
Liabilities due to clients and financial institutions from the banking business together increased by 6.8 % to € 803.9 million. Liabilities due to banks dropped slightly from € 27.5 million to € 25.0 million. The deposits of our clients, predominantly held in accounts, credit cards and instant access accounts, increased from € 724.8 million to € 778.8 million.
Other liabilities dropped by 15.1 % to € 236.4 million. A significant portion of this item is made up of current liabilities due to our sales staff for unsettled commission claims. Due to the weaker business development compared to the previous year, these dropped by € 10.9 million to € 60.4 million. Another significant change is based on an adjustment to the variable purchase price component for the remaining shares in Feri Finance AG which MLP will acquire in 2011. At the end of 2008 we adjusted our estimate regarding the level of this liability by € 34.7 million to € 57.1 million.
Liabilities as at December 31, 2008
| in € million | 2008 | 2007 | Change in % |
|---|---|---|---|
| Total shareholders’ equity | 429.1 | 339.7 | 26.3% |
| Provisions | 52.9 | 43.8 | 20.8% |
| Deferred tax liabilities | 9.6 | 9.9 | –3.0% |
| Liabilities towards clients from the banking business | 778.8 | 724.8 | 7.5% |
| Liabilities towards banks from the banking business | 25.0 | 27.5 | –9.1% |
| Tax liabilities | – | 0.1 | >100% |
| Other liabilities | 236.4 | 278.5 | –15.1% |
| Liabilities in connection with non-current assets held for sale and disposal groups | 2.6 | – | – |
| Total | 1 ,534.4 | 1,424.2 | 7.7% |