Results of operations
MLP has demonstrated robust revenue development under the continuingly difficult market environment. In the first half year of 2009, total revenues only fell to € 231.4 million (€ 282.2 million), following on from the same period in the previous year in which the final increase in subsidised premiums for the Riester pensions scheme (“Riester step”) accounted for around € 40 million.
Total revenues (in € million)
In addition to numerous regulatory changes, the framework conditions are presently characterised, above all, by private and institutional clients deferring their investment decisions in view of the economic and financial crisis. We have provided extensive consultation services to our clients and have stood up well in comparison to the competition.
Earnings before interest and taxes (EBIT) fell from € 35.8 million to € 5.9 million. This figure includes exceptional and one-off expenses for capital market-relevant consulting services amounting to € 3.4 million as a consequence of Swiss Life’s stake in MLP. In addition, there was a one-off charge in the second quarter amounting to around € 1.1 million on account of restructuring measures at the subsidiaries Feri and TPC. Due to a tax back-payment, MLP recorded a loss from its continuing operations of € –0.1 million (€ 17.4 million).
Earnings before interest and taxes (EBIT, in € million)
Many clients are focussing on short-term investments and risk protection
Numerous clients are currently concentrating on liquidity-oriented investments such as call deposits or on increasing their level of risk protection. This is illustrated, for instance, in the non-life insurance business – following a rise between April and June, revenues for the half year stood at € 18.7 million (€ 18.8 million) thus almost equalling the level achieved in the previous year. The health insurance business also remained stable with revenues amounting to € 22.8 million (€ 22.8 million). Disability insurance, which is accounted under old-age pension provision revenues, also played a significantly more dominant role.
However, clients in the areas closely connected to the capital market are hesitant, particularly with respect to medium and longer-term investments. Against this backdrop, revenues in wealth management fell by 20% to € 33.1 million (€ 41.5 million). This reflects – in addition to subdued demand on the part of private and institutional clients at both the subsidiary Feri as well as at MLP – lower performance-linked remuneration and a greater aversion to risk of clients. Old-age pension provision stood at € 123.0 million compared to € 150.6 million in 2008. Revenues from commissions and fees across all the consulting areas amounted to € 203.5 million (€ 241.2 million). Interest income fell by 11 % from € 19.4 million to € 17.3 million due to lower interest rates.
Assets under management increase significantly
In the first half year annual premiums in private health insurance rose from € 21.3 million to € 23.8 million due a heightened level of interest following the introduction of the central health fund (“Gesundheitsfonds”). New business in old-age pension provision fell to a premium sum of € 1.9 billion (€ 3.0 billion) - the same period in the previous year having been significantly influenced by the “Riester Step”. The occupational pension business area accounted for a larger portion of this figure, contributing 10 % (full year 2008: 8 %).. MLP also achieved gains in Assets under Management that form an important foundation for future development in wealth management. They rose by 4 % to € 11.7 billion (March 31, 2009: € 11.2 billion).
Succesful new client acquisition
Between April and June MLP gained a total of 8,500 clients, taking the total number of clients to 777,000. The number of consultants stood at 2,405 (March 31, 2009: 2,435).Development of expenses
In the first half of the current financial year the commission expenses, which are largely variable, fell by 18.9% to € 72.7 million.
We improved our interest result from € 9.1 million to € 9.8 million. In this respect, interest income decreased from € 19.4 million to € 17.3 million. The interest expenses fell overproportionally. During the period under review they amounted to only € 7.5 million versus € 10.3 million for the comparative period in the previous year.
In the first half year we were able to slightly reduce the fixed costs which fell by 1%. In total they amounted to € 145.4 million. Personnel expenses rose by 6.9% to € 57.0 million due to acquisitions, general salary increases and one-off restructuring expenses (€ 1.1 million). Scheduled depreciation and amortisation fell significantly from € 10.3 to € 8.8 million. Other operating expenses decreased considerably, falling by 4.2% to € 79.7 million. In the second quarter we already began to see the positive effects of our cost reduction program that was initiated in February 2009. After adjustments for the one-off restructuring expenses at the subsidiaries Feri and TPC amounting to € 1.1 million as well as for cost increase due to an acquisition, MLP reduced fixed costs for the period from April to June by 14.4% to € 65.8 million (€ 76.9 million). MLP had announced it would reduce its fixed costs by the end of 2010 by a total of € 34 million, of which 24 million are planned for 2009, followed by a further € 10 million next year. Areas where cost savings were achieved included consulting costs, expenses for training and seminars as well as advertising measures.
We significantly improved our financial result in the first half year of 2009. Following a figure of € –8.9 million in the same period last year, the financial result in the period under review came in at € –2.1 million. This improvement was mainly due to a dividend payment to the minority shareholders of Feri Finance AG that was lower than in the previous year. In the first quarter of 2009 this only amounted to € 2.4 million (€ 7.8 million).
Taxes on earnings in the period under review amounted to € 3.9 million and were thus higher than the earnings before taxes. The unusually high tax expenses are mainly due to two special effects. The dividend payment to the minority shareholders of Feri Finance AG in the first quarter is not valued as a tax-recognized expense. In addition, in the second quarter we booked provisions for tax payments amounting to € 1.4 million following the completion of a tax audit for the years 2002 to 2006.
Overall we thus recorded earnings from continuing operations of € –0.1 million (€ 17.4 million).
Earnings development of the continuing operations
| All figures in € million | 1st half year 2009 | 1st half year 2008 | Change |
|---|---|---|---|
| Total revenues | 231.4 | 282.2 | –18.0 % |
| EBIT | 5.9 | 35.8 | –83.5 % |
| EBIT margin | 2.5 % | 12.7 % | – |
| Finance cost | –2.1 | –8.9 | 76.4 % |
| EBT | 3.8 | 26.9 | –85.9 % |
| EBT margin | 1.6 % | 9.5 % | – |
| Income taxes | –3.9 | –9.5 | –58.9 % |
| Net profit (continuing operations) | –0.1 | 17.4 | –100.6 % |
| Net margin | 0.04 % | 6.2 % | – |
In the first half year earnings from discontinued operations amounted to € –12.6 million (€ –3.1 million).
In the second quarter of 2009, the loss after taxes in the discontinued operations amounted to € –4.6 million (€ –1.2 million); at a Group level this results in a deficit of € –5.0 million (€ 7.6 million). The figure for the discontinued operations includes sale and closure costs of € 1.3 million as well as an operative loss of € 1.7 million. The figure is further burdened by tax expenses for the previously discontinued foreign activity in Switzerland amounting to € 1.5 million and resulting from the non-recognition of loss carryforwards from the financial years 2005 to 2006.
Overall we had to report a Group loss of € –6.2 million (€ 14.3 million) for the period under review. The basic earnings per share thus amounted to € –0.06 (€ 0.15). The diluted earnings per share amouted to € –0.06 (€ 0.14).