FUNDAMENTAL PRINCIPLES OF THE GROUP

Control system
 

The MLP Group employs comprehensive planning and control systems. Starting from our strategy and the estimates regarding future external framework conditions, we draw up targets for key controlling figures in the strategic and operative planning process. Any deviations from our targets then become transparent within the scope of ongoing controlling processes. Based on these developments we then derive actions for our corporate management. We also continually monitor developments in the market and the competitive environment.
    

Corporate management 

EBIT and sales revenue as top key performance indicators

The Executive Board at MLP AG assesses the performance of the various business segments and reaches decisions regarding resource allocation on this basis. Earnings before interest and tax (EBIT) and total revenue (sales revenue) represent the central control parameters at MLP for overall business development in the individual business segments. Alongside this, the Executive Board also receives regular information on the macroeconomic, political and legislative factors that influence developments in the individual consulting fields. The consulting fields of old-age provision, wealth management, health insurance and non-life insurance are analysed with the aim of explaining the past performance of business segments, anticipating changes in the environment and exerting targeted influence on the future development of the segments. In line with MLP’s comprehensive consulting approach, which focuses on the views and expectations of the client, the Executive Board does not manage the Group on the basis of the contribution margin of the individual consulting fields.

 

The following overview clarifies which fields of consulting contribute to the development of revenue in the respective business segments.

We require profitable growth and sustainable development of earnings in order to achieve a sustainable increase in company value and expand our market position.

 

Beside the most important key performance indicators of EBIT and revenue, other KPIs include administrative expenses (defined as the sum of personnel expenses, other operating expenses, as well as depreciation and impairments), the return on equity, assets under management, brokered new business in the old-age provision segment and the number and turnover rate of consultants.

 

The objective of our corporate management is for all consultants and employees to actively support MLP’s strategic goals and pledge to meet our service commitment. Our established central, strategic control instrument is the so-called “ISA” (Integrated Strategic Agenda). This way, the Group objectives are broken down across all Group companies and the key segments, thereby allowing each business unit to make its own contribution to meeting the defined targets. This ensures end-to-end incorporation of all organisational units and integration into the planning and management process. The ISA grants all business segments the opportunity to get actively involved in planning targets. This promotes motivation among everyone involved and increases planning quality throughout the organisation. At the end of the obligatory ISA process (applied consistently throughout the Group), measurements are performed to assess the degree to which the objectives set by the units themselves have been achieved. ISA provides the Executive Board with a high degree of transparency in the value-added process.

 

Risk management: Important management and control element

Risk management is permanently anchored in MLP’s corporate management strategy. The members of the Executive Board, general managers of Group companies and departmental heads are responsible for detecting and classifying risks as quickly as possible. Since the departmental heads bear responsibility for the ISA as well as for costs, we are able to establish a practical link between risk management and controlling. You can find further information on risk management in the chapter entitled “Risk report”.

  

Key figures and early indicators used by corporate controlling

We regularly use simulation scenarios to be able to assess the success of our business. Important early indicators include assets under management, which reflect developments in the wealth management segment, and brokered new business in the field of old-age provision, as these two areas represent a significant portion of commission income.

 

Keeping consultant turnover low

Our objective is not only to win over the best consultants in the industry to our business model, but also to keep them loyal to our company in the long term. We therefore continually monitor our employee turnover rate and aim for a maximum annual turnover rate for self-employed consultants of 12% (+/- 2 percentage points).

 

Central market and client management

With the introduction of central market and client management in 2015, we are further strengthening the sales-oriented approach at the company HQ. Market management is responsible for controlling sales, location planning, as well as for all central sales divisions, including recruiting, university management, consultant workplaces and physicians. Client management handles all activities which are aimed directly at clients. These also include marketing activities, as well as activities within the scope of the digitalisation strategy.

 

The objectives of the adjustments are to bundle existing expertise, utilise synergies and provide the branch offices with even better channelled and targeted support. To cater to and promote the growing significance of the real estate and financing business in our revenue mix, a dedicated product management has also been established for this segment.

 

You can find further information on this in the chapters entitled “Performance” and “Anticipated business development”.