ECONOMIC REPORT

Segment report

 

The financial services segment reflects revenue from all fields of consulting – i.e. old-age provision, health and non-life insurance, wealth management and loans & mortgages. 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 industry situation for the Group described in the individual fields of consulting applies accordingly to the segments.

Financial services segment

Total revenue in the financial services segment declined to € 408.5 million (€ 415.9 million) in 2015. This can essentially be attributed to the lower commission income in the field of old-age provision, which also had a corresponding effect at Group level. Development of the other key fields of consulting in this segment (health insurance, wealth management, non-life insurance) is in line with the positive development in the Group. As was the case in the Group, the loans and mortgages business also displayed positive development. At € 21.4 million (€ 22.9 million), revenue from the interest rate business was slightly below the previous year. This was due to the low interest rate.

   

Commission expenses fell to € 172.5 million (€ 176.0 million) due to lower commission income. Interest expenses also fell to € 1.9 million (€ 2.8 million) due to the low interest rate level.

 

At € 74.2 million (€ 72.8 million), personnel expenses were slightly above the previous year’s level. This was primarily due to general salary increases. At € 9.5 million (€ 9.2 million), depreciation/amortisation and impairment remained virtually unchanged. The decrease in depreciation/amortisation was more than compensated by impairments. At € 126.7 million (€ 126.6 million), other operating expenses also remained at the previous year’s level.

 

EBIT declined to € 25.6 million (€ 29.6 million), in particular due to a lower revenue level. The EBIT margin was 6.3%, following 7.1% in the previous year. The finance cost was € -0.3 million (€ -0.5 million). EBT declined to € 25.3 million (€ 29.0 million).

FERI segment

The FERI segment represents the activities of the FERI Group. Revenue is primarily generated in this segment from the wealth management field of consulting.

 

Total revenue increased to a record level of € 130.1 million (€ 113.9 million) in the last financial year. This increase can in particular be attributed to further gains in the field of fund administration, mandates gained and overall positive developments in terms of performance-based remuneration that FERI receives for the performance of client portfolios (performance fees).

 

Commission expenses increased to € 70.7 million (€ 60.3 million) as a result of increased revenue in the field of fund administration. Personnel expenses were € 30.4 million, following € 27.6 million in the previous year. This increase can essentially be attributed to higher variable remuneration than in the previous year. Depreciation/amortisation and impairment was € 1.8 million (€ 2.1 million). Other operating expenses increased from € 11.6 million to € 13.6 million, largely due to higher consulting costs within the scope of acquiring a license to operate as a capital management company (“KVG-Lizenz”), as well as the aforementioned changes to the corporate structure at FERI.

 

EBIT increased to € 13.7 million (€ 12.4 million) due to higher revenues. The EBIT margin was 10.6%, following 10.9% in the previous year. The finance cost was € -0.3 million, following € -0.7 million in the previous year. Accordingly, EBT improved to € 13.4 million (€ 11.7 million).

DOMCURA segment

The DOMCURA segment report encompasses the time period from its acquisition up to December 31, 2015 (around 5 months). 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 sales revenue and comparably high earnings in the first quarter of each year. This is then followed by a loss in Q2 to Q4. The total profit each year is therefore generated in the first quarter. However, this period is not included in our abridged reporting period for the financial year 2015. Nevertheless, the MLP Group carries full dividend entitlements for the entire year. The earnings recorded up to the point of closing are recorded in shareholders’ equity.

 

Sales revenues reached € 20.0 million in the period under review since the initial consolidation. This primarily reflects the premium volume received. Other revenue was € 2.2 million. Total revenue therefore reached € 22.2 million. Commission expenses were € 13.5 million. These are essentially accrued as variable remuneration for brokerage services.

 

Administrative expenses were € 10.5 million. Of these expenses, € 5.1 million is attributable to personnel expenses. Depreciation/amortisation and impairment was € 0.7 million. Other operating expenses were € 4.7 million.

 

EBIT was € -1.8 million. The EBIT margin was -8.1%. The finance cost was € 0.0 million. The EBT recorded by DOMCURA was therefore also € -1.8 million.

   

You can find a detailed presentation of the earnings that would have been recorded if the acquisition had been made at the start of the year in Note 6. This provides an indication of the overall positive development.

Holding segment

The Holding segment does not have active operations. Total revenue in the financial year was € 11.0 million (€ 15.4 million). This revenue can essentially be attributed to the letting of buildings to affiliated companies. Among other factors, the previous year’s figure was higher due to the reversal of provisions and a positive outcome for MLP in the negative declaratory relief claim against several former shareholders in FERI. Total revenue in 2013 was € 11.5 million.

 

Following one-off expenses in the previous year, personnel expenses dropped to € 3.8 million (€ 5.5 million). Depreciation/amortisation and impairment charges increased to € 3.2 million (€ 2.1 million). Among other factors, this was partly due to a greater one-off write-down as a result of a property being revalued. Other operating expenses amounted to € 10.7 million compared to € 10.5 million in the previous year. EBIT declined to € -6.7 million (€ -2.7 million) due to lower revenues. As already described at Group level, the finance cost took quite a hit as a result of interest payments due on a retrospective tax payment and therefore declined to € -2.3 million (€ -0.3 million). EBT consequently decreased to € -9.0 million, following € -3.0 million in the previous year.