Notes to the income statement
 

9 Revenue

The commission income disclosed under revenue is recognised on a regular and point-in-time basis. Revenue recognised over time totalling € 260,845 thsd was generated from the old-age provision business in the Financial Consulting segment, from the health insurance business in the Financial Consulting and DOMCURA segments, as well as from the wealth management business in the Financial Consulting and FERI segments (previous year: € 239,637 thsd). The revenue from the interest rate business includes negative interest from lending and money market transactions of € 2,352 thsd (previous year: € 1,818 thsd).

10 Other revenue

For more information on income from the reversal of provisions, please refer to Note 31. Income from the reversal of provisions for economic loss, which is offset by expenses from liability insurance refund claims, is disclosed net under income from the reversal of provisions. Income from the reversal of provisions does not contain any income from provisions for the lending business or provisions for anticipated losses from the lending business. These are part of the loan loss provisions. We make reference to Note 14 here.

The item "Cost transfers to MLP consultants and branch office managers" essentially comprises income from cost transfers of insurance premiums, services and material costs.

Income from the reversal of deferred obligations are essentially attributable to the reversal of provisions for outstanding invoices.

Own work capitalised results from the collaboration of Group employees in the development of acquired software and software created in-house.

The item "Compensation for management" contains pre-allocated profits due to management tasks for private equity companies.

Among other things, sundry other income includes advertising subsidies, income from the performance of IT services, as well as income from cost reimbursement claims.

11 Inventory changes

The income statement has been extended to include the "Inventory changes" item as a result of the acquisition of a majority stake in the DI Group. Inventory changes are € 3,940 thsd as of December 31, 2019 (previous year: € 0 thsd). These result from the change in inventories at DI-Group.

12 Commission expenses

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

13 Interest expenses

14 Valuation result/loan loss provisions

As of December 31, 2019, provisions for anticipated losses of € -1,538 thsd were recognised in accordance with IFRS 9 (previous year: € 1,216 thsd). This comprises the recognition of impairment losses for receivables of € -1,590 thsd (previous year: income from the reversal of impairment losses for receivables of € 661 thsd), as well as income from changes in provisions for anticipated losses from the lending business of € 53 thsd (previous year: € 555 thsd).

See Notes 24 and 31 for detailed explanations on the development of loan loss provisions.

Write-downs of financial instruments measured at fair value through profit or loss led to a valuation result of € 642 thsd. € -716 thsd).

15 Personnel expenses

Personnel expenses essentially include salaries and wages, compensation 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.

16 Depreciation and impairments

In the financial year 2019 depreciation of property, plant and equipment included for the first time amortisation of rights of use as per IFRS 16 of € 11,358 thsd, € 10,296 thsd thereof are attributable to rights of use on real estate depreciation and € 1,062 thsd to rights of use on vehicle depreciation. This was reduced by amortisation of rights of use from leases of € 452 thsd in the financial year.
  

17 Other operating expenses

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.

The expenses for MLP consultants and branch office managers encompass the expenses resulting from the allocation of provisions for obligations towards longstanding branch office managers, for retired staff, as well as the training allowance granted to young MLP consultants.

The rental and leasing expenses essentially comprise the service rate and other expenses that are not capitalised as per IFRS 16. This includes expenses for short-term leasing of € 15 thsd and expenses for low-value leases of € 4 thsd. In the last financial year, the expenses for variable lease payments, which were not included in the measurement of leasing liabilities (for example payments at the end of a vehicle leasing agreement) were € 31 thsd. The total outflow of cash and cash equivalents for leasing was € 11,584 thsd in 2019.

VAT expenses of the previous years are the result of subsequent recognition of VAT unity within the MLP Group, which had initially not been granted within the scope of the tax audit for the years 2008 to 2012. VAT payments granted to MLP SE in 2016 as a result of this circumstance have now been imposed again.

Sundry other operating expenses essentially comprise expenses for other taxes, charitable donations, cars, literature and expenses from investments.

18 Investments accounted for using the equity method

Earnings from investments accounted for using the equity method were € 2,998 thsd in the financial year (previous year: € 2,547 thsd) and are made up from the share of earnings in MLP Hyp GmbH of € 3,011 thsd and in Projekte 2 Deutschland.Immobilien GmbH of € -13 thsd. 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 % stake in MLP Hyp GmbH, Wiesloch and the 50 % stake in Projekte2 Deutschland.Immobilien GmbH, Hanover.  MLP Hyp GmbH operates the joint mortgage financing business of MLP Finanzberatung SE, Wiesloch, and Interhyp AG, Munich. Projekte2 Deutschland.Immobilien GmbH is an intermediate holding company within the DI Group. It holds shares in project enterprises in which real estate developments are executed.

The shares of MLP Hyp developed as follows:

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

The shares of Projekte 2 Deutschland.Immobilien GmbH developed as follows as of September 1, 2019:

The table below contains summarised financial information on Projekte 2 Deutschland.Immobilien GmbH:

19 Finance cost

Other interest and similar income of € 0 thsd (previous year: € 1 thsd) relates to interest income from deposits with financial institutions that are not attributable to the banking business and € 23 thsd (previous year: € 21 thsd) relates to income from the discounting of provisions. In addition to this, other interest and similar income includes negative interest on bank deposits of € -211 thsd (previous year: € -214 thsd). Other interest and similar expenses include expenses from the accrued interest of other provisions totalling € 363 thsd (previous year: € 539 thsd).

In addition, the item comprises expenses from the accrued interest of leasing liabilities pursuant to IFRS 16 of € 587 thsd. For further details, please refer to Note 3 and 7.

20  Income taxes

The current taxes on income and profit include expenses of € -2.046 thsd (previous year: € 596 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 13.34 % (previous year: 13.45 %) and amounts to 29.19 % (previous year: 29.27 %).

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 statement shows the relationship between the earnings before tax and the taxes on income and profit in the financial year:

The effective income tax rate applicable to the earnings before tax is 17.52 % (previous year: 24.7 %).

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

Non-deductible expenses result from consultancy fees in connection with Group restructuring measures, entertainment expenses, gifts, as well as non-deductible operating expenses incurred in the context of tax-exempt dividends and capital gains, Supervisory Board compensation and other relevant factors.

Legal or economic restrictions were in place for loss carryforwards of € 1,757 thsd (previous year: € 0 thsd) with regard to their usability. No deferred tax assets were therefore recognised. If full utilisation of the loss carryforwards had been possible, it would have theoretically been necessary to recognise deferred tax assets of € 573 thsd (previous year: € 0 thsd).

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

The deferred tax income recognised under other comprehensive income outside the income statement is € 2,008 thsd (previous year: € 240 thsd).

Tax refund claims include € 3,189 thsd (previous year: € 8,158 thsd) of corporation tax and € 1,304 thsd (previous year: € 4,600 thsd) of trade tax. € 476 thsd thereof (previous year: € 8,494 thsd) relate to MLP SE and € 3,882 thsd (previous year: € 4,265 thsd) to MLP Finanzberatung SE.

Tax liabilities are made up of € 2,777 thsd (previous year: € 2,543 thsd) of corporation tax and € 3,336 thsd (previous year: € 2,654 thsd) of trade tax. € 5,603 thsd thereof (previous year: € 4,431 thsd) relate to MLP SE and € 308 thsd (previous year: € 541 thsd) to MLP Finanzberatung SE.

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 at December 31, 2019, we had undistributed profits of subsidiaries of around € 75.4 million (previous year: € 59.8 million), for which no deferred tax liabilities were formed, as we are capable of controlling the timing of the reversal of the temporary difference and it is unlikely that the temporary difference will be reversed in the foreseeable future.

The basic earnings per share is € 0.34 (previous year: € 0.32).

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

The diluted earnings per share is € 0.34 (previous year: € 0.32).