Notes to the income statement
 

8 Revenue

All figures in €'000 2016 2015
Old-age provision 221,480 215,738
Wealth management 166,360 165,982
Non-life insurance 105,626 54,878
Health insurance 45,777 45,918
Loans and mortgages 15,433 16,186
Other commission and fees 15,414 15,579
Total commission income 570,090 514,282
Interest income 20,469 21,369
Total 590,559 535,651

Other commission and fees include revenue from property brokerage of € 11,345 thsd (previous year: € 11,325 thsd).

9 Other revenue

All figures in €'000 2016 2015*
Income from the reversal of provisions 2,005 2,714
Income from the reversal of deferred obligations 1,786 2,253
Cost transfers to commercial agents 1,622 745
Offset remuneration in kind 1,088 1,018
Own work capitalised 876 1,322
Remuneration of management 809 896
Income from the disposal of fixed assets 584 915
Rent 396 1,644
Income from the disposal of fixed assets 89 80
Sundry other income 10,554 7,080
Total 19,810 18,667

For more information on income from the reversal of provisions, please refer to Note 28.

 

Income from the reversal of deferred obligations essentially comprises income from the reversal of provisions for profit-sharing payments and performance-based remuneration, as well as income from the reversal of provisions for outstanding invoices.

 

The item “Cost transfers to commercial agents” essentially comprises income from cost transfers of insurance companies, services and material costs.

 

Own work capitalised results from the collaboration of Group employees in the development of acquired software.

 

The item “Remuneration for management” contains pre-allocated profits due to management tasks for private equity companies.

 

Income from the disposal of investments results from the sale of FERI EuroRating Services (FERI segment), as well as sale of the stake in NKK Programm Service AG (DOMCURA segment).

 

In the previous year, rental income included rent from the operating lease for an office and administration building operated by MLP AG, which ended on December 31, 2015.

 

Sundry other income includes interest income on tax credit, income from cost reimbursement claims, offset remuneration in kind and income from the performance of IT services.
 

10 Commission expenses

Commission expenses mainly consist of the commission payments and other remuneration components for the self-employed MLP consultants.

11 Interest expenses

All figures in €'000 2016 2015
Interest and similar expenses
Financial instruments measured at amortised cost 1,710 1,807
Available-for-sale financial instruments 2 40
Change fair value option
Financial instruments at fair value through profit and loss 0 74
Total 1,711 1,921

Interest expenses of € 829 thsd (previous year: € 1,259 thsd) are attributable to interest charges for liabilities due to clients in the banking business.
 

12 Personnel expenses

All figures in €'000 2016 2015
Salaries and wages 104,981 98,115
Social security contributions 14,339 12,932
Expenses for old-age provisions and benefits 2,527 2,410
Total 121,847 113,457

Personnel expenses essentially include salaries and wages, remuneration and other payments to employees. The social security contributions include the statutory contributions to be borne by the company in the form of social security insurance premiums. Expenses for old-age provisions and benefits mainly include the employer’s shares of supplementary occupational pension provision.

13 Depreciation and impairments

All figures in €'000 2016 2015
Depreciation
Intangible assets 7,500 6,598
Property, plant and equipment 6,027 5,710
Investment property 32
13,528 12,339
Impairments
Intangible assets 10,399 1,584
Property, plant and equipment 36
Investment property 1,190
10,434 2,774
Total 23,962 15,113

Impairments include impairment losses for a software development of € 10,399 thsd (previous year: € 1,584 thsd). Development work on this software has been stopped.

 

Based on the measurement pursuant to IFRS 5.25, the real estate reclassified under “Assets held for sale” in the previous year was not subject to any depreciation in the financial year 2016 (previous year: € 32 thsd). No impairments due to lower fair value were necessary (previous year: € 1,190 thsd).

 

The development of non-current assets is disclosed in Note 19 (intangible assets), Note 20 (property, plant and equipment) and Note 21 (non-current assets held for sale).
 

14 Other operating expenses

All figures in €'000 2016 2015*
IT operations 48,075 47,610
Consultancy 15,898 12,995
Rental and leasing 14,824 14,376
Administration operations 11,381 11,528
Other external services 7,638 6,528
External services – banking business 7,560 7,277
Representation and advertising 6,935 7,941
Premiums and fees 5,180 4,231
Travel expenses 4,460 3,863
Expenses for commercial agents 3,240 2,532
Insurance 2,814 2,624
Training and further education 2,663 4,369
Entertainment 2,297 2,588
Maintenance 2,030 2,390
Goodwill 1,190 1,319
Other employee-related expenses 1,138 1,290
Audit 1,104 1,071
Supervisory Board remuneration 973 969
Sundry other operating expenses 5,738 6,027
Total 145,137 141,528

The costs of IT operations are mainly attributable to IT services and computer centre services that have been outsourced to an external service provider.

 

The consulting costs are made up of tax advice costs, legal advice costs as well as general and IT consulting costs.

 

The expenses for administration operations include costs relating to building operations, office costs and communication costs.

 

The item “External services - banking business” mainly contains securities settlement and transaction costs in connection with the MLP credit card.

 

Expenses for representation and advertising include costs incurred due to media presence and client information activities.

 

Expenses for commercial agents include costs for former consultants and the training allowance granted for new consultants.

 

Sundry other operating expenses essentially comprise expenses for other taxes, charitable donations, disposal of fixed assets and cars.

 

15 Earnings from investments accounted for using the equity method

Earnings from investments accounted for using the equity method were € 2,106 thsd in the financial year (previous year: € 1,836 thsd) and resulted from the share of earnings in MLP Hyp GmbH. In line with a company agreement, the profit distribution of MLP Hyp GmbH is disproportionate.

 

Investments accounted for using the equity method relate only to the 49.8% share in MLP Hyp GmbH, Wiesloch. The company operates the joint mortgage financing business of MLP Finanzdienstleistungen AG, Wiesloch, and Interhyp AG, Munich.

 

The shares developed as follows:

All figures in €'000 2016 2015
Share as of Jan. 1 3,481 2,772
Dividend payouts -1,836 -1,127
Pro rata profit after tax 2,106 1,836
Share as of Dec. 31 3,751 3,481

The following table contains summarised financial information on MLP Hyp GmbH:

  

All figures in €'000 Dec. 31, 2016 Dec. 31, 2015
Non-current assets 53 53
Current assets 8,823 7,640
Non-current liabilities
Current liabilities -2,660 -1,868
Net assets (100 %) 6,216 5,825
of which MLP's share in net assets (49.8 %) 3,096 2,901
Incidental acquisition costs 151 151
Dividend payout -1,708 -1,279
Cumulative disproportionate profit 2,213 1,708
Carrying amount of the investment 3,751 3,481
Revenue 14,579 12,526
Total comprehensive income (100 %) 3,216 2,825
of which MLP's share in total comprehensive income (49.8 %) 1,601 1,407
Disproportionate profit for the current financial year (65.5%/previous year 65%) 505 429
MLP's share in total comprehensive income 2,106 1,836

16 Finance cost

All figures in €'000 2016 2015
Other interest and similar income 906 509
Interest expenses from financial instruments -133 -145
Interest expenses from net obligations for defined benefit plans -489 -481
Other interest costs -1,229 -2,637
Other interest and similar expenses -1,851 -3,263
Finance cost -946 -2,753

Other interest and similar income of € 52 thsd (previous year: € 140 thsd) is attributable to interest income from deposits with financial institutions which were not included in the banking business segment and € 260 thsd (previous year: € 49 thsd) is attributable to income from the discounting of provisions. Other interest and similar expenses include expenses from the accrued interest of other provisions totalling € 627 thsd (previous year: € 584 thsd).

17  Income taxes

All figures in €'000 2016 2015
Income taxes 4,052 8,170
of which current taxes on income and profit 5,340 9,783
of which deferred taxes -1,287 -1,613

The current taxes on income and profit include expenses of € -388 thsd (previous year: € 1,967 thsd) which relate to previous periods.

 

The current and deferred tax is calculated using the relevant country-specific income tax rate. The anticipated combined income tax rate for domestic companies is made up of corporation tax at 15.0% (previous year: 15.0%), the solidarity surcharge at 5.5% (previous year: 5.5%) and an average municipal trade tax rate of 13.53% (previous year: 13.37%) and amounts to 29.36% (previous year: 29.19%).

 

The taxation rates likely to be applicable at their time of implementation should be used to calculate deferred income taxes. The taxation rates used here are those that are valid or have been announced for the periods in question as of the balance sheet date.

 

The following reconciliation account shows the relationship between the earnings before tax and the taxes on income and profit in the financial year:

All figures in €'000 2016 2015
Earnings before tax 18,748 27,953
Group income tax rate 29.36% 29.19%
Calculated income tax expenditure in the financial year 5,504 8,159
Tax-exempt earnings and permanent differences -4,901 -3,587
Non-deductible expenses 1,465 1,485
Divergent trade taxation charge 180 211
Effects of other taxation rates applicable abroad -21 4
Income tax not relating to the period (current and deferred) 2,044 2,249
Other -219 -351
Income taxes 4,052 8,170

The effective income tax rate applicable to the earnings before tax is 21.6% (previous year: 29.2%).

 

The item of tax-exempt earnings and permanent differences in earnings includes profit contributions from the FERI Group and the tax-free capital gains of MLP Hyp GmbH.

 

Non-deductible expenses result from entertainment expenses, gifts, as well as non-deductible operating expenses incurred in the context of tax-exempt dividends and capital gains, Supervisory Board remuneration, business tax additions and other relevant factors.

 

The tax deferrals result from the balance sheet items as follows:
 

All figures in €'000 Deferred tax assets Deferred tax liabilities
Dec. 31, 2016 Dec. 31, 2015 Dec. 31, 2016 Dec. 31, 2015
Intangible assets 1,288 1,381 12,387 13,579
Property, plant and equipment 3,854 3,577
Financial assets 110 201 262
Investment property 833
Other assets 1,267 3,509 467 210
Provisions 10,998 10,347 2 1,843
Liabilities 2,523 1,474 0 33
Gross value 16,076 16,821 16,911 20,337
Netting of deferred tax assets and liabilities -7,013 -9,788 -7,013 -9,788
Total 9,063 7,033 9,898 10,549

The deferred tax expense recognised under other comprehensive income outside the income statement is € 1,502 thsd (previous year: € 636 thsd).

 

Tax refund claims include € 6,906 thsd (previous year: € 9,378 thsd) of corporation tax and € 5,209 thsd (previous year: € 5,515 thsd) of trade tax. The major portion of € 12,090 thsd (previous year: € 14,668 thsd) is attributable to MLP AG.

 

Tax liabilities are made up of € 1,712 thsd (previous year: € 2,638 thsd) of corporation tax and € 1,935 thsd (previous year: € 1,369 thsd) of trade tax, of which € 2,511 thsd (previous year: € 333 thsd) is attributable to MLP AG.

 

The tax liabilities are due to taxes on the income and profit of the individual companies based on the corresponding national tax regime. Contingent tax liabilities are shown under deferred tax liabilities.

 

As of December 31, 2016, MLP established a provision of € 2.5 million for anticipated retrospective tax payments arising from a tax audit by the fiscal authorities. In two disputed cases, MLP anticipates being able to assert its legal position based on the expert’s reports available. In this respect, MLP has recognised an asset for the retrospective tax payment made.
 

18 Earnings per share

 

The calculation for the basic and diluted earnings per share is based on the following data:
  

All figures in €'000 2016 2015
Basis of the basic / diluted net profit per share 14,696 19,783
All figures in number of units
Weighted average number of shares for the basic / diluted net profit per share 109,334,686 108,484,800

The basic and diluted earnings per share are € 0.13 (previous year: € 0.18).