Communication is Key. Annual Report 2oo9

Transcription

1 Communication is Key Annual Report 2oo9

2 Our promise MLP s corporate mission MLP is by far the leading independent financial and investment adviser in Germany for academics and other discerning clients. We are committed to providing the highest quality and excellent services that will impress our clients. Our individually tailored and holistic financial plans enable our clients to achieve their objectives in and around the fields of health and old-age provision, insurance cover, wealth management, financing and banking. We are striving to build on and expand our market position and sustainably increase our company value for the benefit of our clients, employees and shareholders. Performance and trust are at the heart of our company values. They shape our relationships with one another and with all stakeholders. Our consultants and employees represent our company s greatest asset, and we place great emphasis on their selection and further development. We encourage and expect entrepreneurial thinking and action from our consultants and employees, whose participation in our company s success forms part of our promise. We unite successful entrepreneurship with social commitment.

3 MLP Group [Table 01] MLP key figures multi-year overview All figures in million Continuing operations Total revenue Revenue Other revenue Earnings before interest and tax (EBIT) EBIT margin (%) 7.9 % 9.4 % 18.1 % 16.2 % 12.7 % 14.2 % Earnings from continuing operations Earnings per share (diluted) in MLP Group Net profit (total) Earnings per share (diluted) in Dividend per share in our promise mlp group Cash flow from operating activities Capital expenditure Shareholders equity Equity ratio 28.4 % 27.8 % 23.9 % 25.6 % 38.5 % 9.4 % Balance sheet total 1, , , , , ,086.2 Clients 6 785, , , , , ,000 Consultants 6 2,383 2,413 2,535 2,481 2,348 2,368 Branch offices Employees 1,900 1,986 1,819 1,558 1,417 1,386 Arranged new business 6 Old-age provisions (premium sum in billion) Health insurance (annual premium) Loans and mortgages 1, , , Assets under management in billion Adjustment of previous year s figures, see note 3 2 Adjusted due to the sale of the subsiduary MLP Private Finance AG 3 Adjusted due to the sale of the subsidiaries MLP Lebensversicherung AG and MLP Versicherung AG 4 Subject to the approval of the Annual General Meeting on May 20, Plus an extra dividend of 0.30 per share 6 Continuing operations 7 Basic 8 MLP without Feri 9 Based on the method of calculation employed by the German Association of Investment and Asset Management (BVI) this equates to 17.0 billion

4 MLP the leading independent consulting firm MLP is Germany s leading independent consulting firm. Supported by comprehensive research, the Group provides a holistic consulting approach that covers all economic and financial questions for private and corporate clients, as well as institutional investors. The key aspect of the consulting approach is the independence of insurance companies, banks and investment firms. The MLP Group manages total assets under management of more than 17 billion and supports more than 78o,ooo private and 4,ooo corporate clients. MLP was founded in 1971 and holds a full banking licence. The concept of the founders, which still remains the basis of the current business model, is to provide long-term consulting for academics and other discerning clients in the fields of old age provision, wealth management, health insurance, non-life insurance, financing and banking. Those with assets above 5 million are looked after by the subsidiary Feri Family Trust. Moreover, the Group provides consulting services to institutional investors via Feri Institutional Advisors GmbH. Supported by its subsidiary TPC and the joint venture HEUBECK-FERI Pension Asset Consulting GmbH, MLP also provides companies with independent consulting and conceptual services in all issues pertaining to occupational pension provision and asset and risk management. our promise mlp group

5 Communication is Key With around 2,4oo highly qualified consultants, MLP is the only independent consulting firm that supports discerning private and corporate clients, as well as institutional investors in all economic and financial questions. For us, a trusting partnership means constantly facing new challenges. An open and honest exchange of ideas with clients plays a vital role here, as communication is the key to success.

6 2 annual report mlp 2009 Table of contents As a responsible and dialogue-oriented company, MLP faces up to the crucial issues of today. In this annual report you can find out about the questions confronting our clients and what answers MLP provides management 24 management report 4 The Executive Board 5 Letter to our shareholders 6 Report by the Supervisory Board 14 Essay Prof. Dr. Rolf Tilmes 16 Review of Overall economic situation 25 Industry situation and competitive environment 31 Business model and strategy 35 Disclosures pursuant to 289 (4), 315 (4) of the German Commercial Code (HGB) 37 Company objectives and corporate management 41 Remuneration report 41 Results of operations 47 Financial position 51 Net assets 58 Segment report 60 Client support 64 Personnel and social report 67 Risk and disclosure report Forecast 95 Events subsequent to the reporting date 100 investor relations 104 corporate governance report 117 corporate responsibility report

7 table of contents MLP consolidated 127 financial statements 228 FURTHER INFORMATION 128 Income statement and statement of comprehensive income 129 Consolidated statement of financial position 130 Consolidated statement of cash flows 132 Statement of changes in equity 228 List of figures and tables 230 Glossary 231 Financial Calendar Imprint, Contact 134 notes to the consolidated financial statements 226 audit opinion 227 responsibility statement cover: Profile Our promise MLP key figures The MLP Group at a glance

8 4 annual report mlp 2009 The Executive Board muhyddin suleiman Member of the Executive Board MLP AG gerhard frieg Member of the Executive Board MLP AG dr. uwe schroeder-wildberg Chairman and CEO MLP AG ralf schmid Member of the Executive Board MLP AG, Chief Operating Officer sales appointed until September 3, 2012 product management and purchasing, until March 31, 2010 planning and strategy, human resources, communication, legal affairs, audit, marketing, controlling, risk management, accounting, taxes, treasury and general administration, appointed until December 31, 2012 information technology (IT), IT-business services, group quality management, group business organisation, appointed until December 31, 2012

9 The last financial year was characterised by the most severe economic crisis of the last 8o years. The almost 5 % drop in economic performance experienced in Germany makes this more than clear. And virtually all sectors in the German economy were and still continue to be affected by the crisis. The crisis has also changed the investment and provision behaviour of our clients. Uncertain future prospects and losses on the capital markets led to clear reservations among many clients about making long-term investment decisions. For MLP, this development became apparent from the downward trend in revenue figures in the two most important areas of old-age provision and wealth management. Overall, at million our total revenue is 1o.6 % down on the previous year. The effects of the financial and economic crisis could also be seen and felt in our profits for the year. However, we did succeed in counteracting this trend through early introduction and consistent implementation of our cost cutting programme. This allowed the company s net profit situation to start seeing significant improvement again from the third quarter of 2oo9. We achieved total Group net profit of 24.2 million in the financial year. This is only slightly lower than the previous year s figure of 24.6 million. Together with our excellent equity capital backing and liquidity, this gives us scope to allow you to share in the company s success in what was a challenging financial year in 2oo9. The Executive Board and Supervisory Board will therefore propose a dividend of o.25 for the financial year 2oo9 at the Annual General Meeting.

10 After acquiring a stake of almost 27 % in our company in 2oo8, the Swiss insurance company Swiss Life lowered this holding in two stages to a level below 1o % in 2oo9. The German insurance companies Talanx and Barmenia took over these shares and now hold 9.9 % and 6.7 % stakes in MLP respectively. By doing this, Swiss Life agreed to our request of lowering its holding to below 1o %. We welcome this step, as it has once again given us a very stable shareholder structure that ensures the company s independence in the interests of its clients. The financial and economic crisis affected Germany s financial services sector at a time when the entire industry was in the midst of fundamental structural change. This change started in 2oo5 with the reform of the old-age provision market in Germany and then continued in the years 2oo7 and 2oo8 with implementation of the EU Insurance Mediation Directive, the Markets in Financial Instruments Directive (MiFID) and changes to the German Insurance Act. The discussion on the quality of financial advice in Germany, triggered by the financial crisis, eventually led to further regulatory changes. Overall, we consider this change to be both sensible and necessary, as it is in the interest of consumers, and transparent, client-oriented consulting has always been a key part of our business model. However, the speed with

11 which this change has taken place also initially led to greater costs and an increased administrative load. When added to the negative effects of the financial and economic crisis, this results in a very challenging market environment. MLP was able to overcome this difficult phase in the market. We have actively shaped this change in the last few years and thereby developed MLP from an independent financial and investment adviser for academics and other discerning clients to an independent consulting firm for private and corporate clients and institutional investors. Through acquisition of Feri Finance AG and TPC in the field of occupational pension provision, we can now offer comprehensive consulting concepts for our clients based on an independent investment analysis. And our service portfolio is complemented by the independent rating activities performed by Feri. As such, we are pioneers in the sector. Clients have a right to financial advice that is tailored to their own specific requirements and objectives. This is a concept to which our company has always remained true and which is rooted in our corporate culture: all consultants must be able to act independently and the advice given must be holistic, i. e. cover all aspects of private or corporate financial and wealth

12 planning. We will continue to pursue our path of seeking the best possible quality and also tailor the scope of our consulting and service portfolio even more carefully to the requirements and wishes of our clients. We will also achieve growth through strengthened client loyalty, systematic utilisation of all potential in our client base and by winning new clients. Our mid-term forecast for 2o12 also underlines this objective: With an EBIT margin of 15 %, our goal is to guide the company back to its former earnings strength once the financial and economic crisis has subsided. I hope you will continue to accompany us on this journey and would like to take this opportunity to thank you for your trust in us throughout what was clearly a difficult financial year in 2oo9. Yours sincerely, Dr. Uwe Schroeder-Wildberg

13 letter to our shareholders 5 Letter to our shareholders MLP s core values performance We always deliver top performance. Each one of us acts on our own initiative and takes responsibility for the company, which thereby allows us to take a proactive role in shaping change in our working environment and driving forward innovations. trust We deal with one another in a trusting and respectful manner and are credible in what we say and do. We focus on sustainability and fairness both among ourselves and with our business partners and clients, and remain loyal at all times.

14 6 annual report mlp 2009 Report by the Supervisory Board dr. peter lütke-bornefeld Chairman Supervisory Board members: Dr. Peter Lütke-Bornefeld (Chairman) Dr. h. c. Manfred Lautenschläger (Vice Chairman) Dr. Claus-Michael Dill Johannes Maret Maria Bähr (Employees Representative) Norbert Kohler (Employees Representative) In the financial year 2oo9, the Supervisory Board invested much time and effort in dealing with the development of the company and performed its duties of supervision in their entirety. It regularly advised and monitored the Executive Board in its management of the company. Furthermore, during the course of the last financial year the Supervisory Board paid particular attention to the economic development, financial situation, prospects and further strategy of the company. The Supervisory and Executive Boards met regularly to discuss business development, strategy and key events within the company. The Supervisory Board was directly involved in all decisions of fundamental importance to the company. The Executive Board provided the Supervisory Board with timely and comprehensive reports, both written and oral, on a regular basis and on all relevant issues related to corporate planning, strategic development, the business situation and the position and development of the Group as a whole, including the risk situation, risk management and compliance. The Supervisory Board was able to confirm the correctness of the company management by the Executive Board. MLP systematically expanded its market position among clients working in the medical profession throughout 2oo9 and acquired a 1oo % stake in the independent finance broker ZSH. Furthermore, actions relating to MLP s decision to concentrate on the consumer business in its core market of Germany were completed with the sale of MLP Finanzdienstleistungen AG, Vienna in Austria and the decision to also give up the office in the Netherlands. In the financial year 2oo9, the Supervisory Board held five regular meetings and one extraordinary meeting, which with one exception were always attended by all members in person. The Supervisory Board was informed of particularly important or urgent projects outside of the regular meetings. Where necessary, resolutions were also passed as circular resolutions. In addition to this, three meetings of the Personnel Committee and three meetings of the Audit Committee also took place, and were each attended by all committee members. Furthermore, the Chairman of the Supervisory Board met with the Chairman of the Executive Board on a regular basis to discuss specific issues. The Chairman of the Supervisory Board informed the other members of the Supervisory Board in detail about the content of the meetings with the Executive Board.

15 report by the supervisory board 7 Supervisory Board meetings and important resolutions A circular resolution was drafted on February 28, 2oo9 to amend MLP AG s articles of association due to the conversion of convertible debentures to shares in MLP AG. In an extraordinary meeting of the Supervisory Board on February 16, 2oo9, Mr. Ralf Schmid was appointed as a full member of the Executive Board at MLP AG. Mr. Schmid assumes responsibility for Operations/IT. Following preparations in meetings of the Audit Committee, the meeting of the Supervisory Board on March 25, 2oo9 focused on the audit and approval of the financial statements and the consolidated financial statements as at December 31, 2oo8. The auditors participated in the meeting and gave detailed reports on the course and outcome of their audit of the financial statements and the consolidated financial statements. Following in-depth discussion, the Supervisory Board approved both the financial statements and the consolidated financial statements of December 31, 2oo8. A circular resolution on the proposals for resolutions to the regular Annual General Meeting of MLP AG on June 16, 2oo9 was passed on April 3, 2oo9. The regular Supervisory Board meeting on May 11, 2oo9 focused primarily on discussing the results and business development from the first quarter of 2oo9. The results of the second quarter, the business development in the first half of the year, reporting on the internal audit and a discussion about the business and risk strategy were all on the agenda of the regular Supervisory Board meeting on August 1o, 2oo9. Alongside this, a resolution was also passed on the assumption of contractual negotiations concerning the sale of MLP Finanzdienstleistungen AG, Vienna in Austria to Aragon AG. At the same time, the rules and procedures of the Supervisory Board were adapted to the Appropriateness of Management Board Remuneration Act (VorstAG) and the Accounting Law Reform Act (BilMoG). The November meeting focused on the results of the third quarter and the progress report of the compliance representatives on securing compliance in the MLP Group. A circular resolution was also passed on a settlement with a former member of the Executive Board regarding outstanding bonus payments dating back to 2oo5. At the meeting on December 1o, 2oo9, discussion focused on the resolution on the Declaration of Compliance in line with 161 of the German Stock Corporation Act (AktG), alongside adherence to the regulations of the German Corporate Governance Code. Thorough reporting was also provided in the field of corporate governance. The strategy for future financial years and the budget for the financial year 2o1o were also dealt with. Supervisory Board committees The Supervisory Board was regularly informed of the work carried out by its committees in 2oo9. The Personnel Committee convened three times in the reporting period. Alongside preparations for the appointment of Mr. Schmid as a full member of the Executive Board, the meetings also focused on checking the appropriateness of Executive Board remuneration and pension commitments set against the background of introduction of the VorstAG legislation and longterm succession planning in the Executive Board. Further details on Executive Board remuneration can be found in the remuneration report, which forms part of the Corporate Governance report. In the course of the introduction of the Appropriateness of Management Board Remuneration Act (VorstAG), the responsibility of the Personnel Committee was adjusted. In future, the Personnel Committee will no longer be responsible for the resolution on Executive Board remuneration, but will rather only prepare this. The following members of the Supervisory Board were in 2009 also members of the Audit, Personnel and Nomination Committee: Dr. Peter Lütke-Bornefeld (Chairman) Dr. h. c. Manfred Lautenschläger (Vice Chairman) Dr. Claus-Michael Dill Johannes Maret

16 8 annual report mlp 2009 The Audit Committee held three regular meetings in the financial year 2oo9. Representatives of the auditor were also present at its meetings. In the presence of the auditors and the Chairman of the Executive Board, the Audit Committee discussed the financial statements of MLP AG and the Group as well as the proposed appropriation of earnings. There were detailed consultations on relations with the auditor, proposals for electing an auditor, remuneration, audit assignment and monitoring independence. The Audit Committee received regular reports on the work of the internal audit and on legal and regulatory risks and risks to reputation. More information at Corporate Governance Corporate Governance The Supervisory Board regularly deals with the application of the Corporate Governance principles. Last year, the Supervisory Board dedicated its meeting on December 1o, 2oo9 in particular to detailed discussions on the amendments of the German Corporate Governance Code ratified on June 18, 2oo9. In the meetings held on May 11, 2oo9 and December 1o, 2oo9, the Supervisory Board examined the efficiency of its actions based on an evaluation form made available to the members of the Supervisory Board in good time prior to the meetings. The Supervisory Board also discussed procedures in the Supervisory Board, the information flow between the Committees and the Supervisory Board, and the timeliness and sufficient content of reporting by the Executive Board to the Supervisory Board on this occasion. Measures aimed at increasing efficiency were analysed. At the same meeting, MLP AG s Supervisory Board also satisfied itself that the company had met the recommendations of the German Corporate Governance Code in line with its Declaration of Compliance pursuant to 161 of the German Stock Corporation Act (AktG) in the last financial year and will in future continue to comply strictly with the recommendations of the Government Commission on the German Corporate Governance Code (version dated June 18, 2oo9). In December, the Supervisory Board and Executive Board issued a Declaration of Compliance pursuant to 161 of the German Stock Corporation Act (AktG) for the financial year 2oo9 and made it permanently available to the shareholders via its website. No conflicts of interest arose in the reporting period. A summary of Corporate Governance at MLP, including the text of the Declaration of Compliance of December 2oo9, can be found in the Corporate Governance report by the Executive and Supervisory Boards in this annual report. All relevant information is also available on our homepage at Audit of the annual financial statements and consolidated financial statements for 2009 The financial statements of MLP AG as at December 31, 2oo9 and the management report of MLP AG have been compiled by the Executive Board pursuant to the German Commercial Code (HGB). The consolidated financial statements and the group management report were drafted as per 315 a of the German Commercial Code (HGB) in line with international financial reporting standards (IFRS) as applied in the EU. The financial statements and management report of MLP AG as at December 31, 2oo9, as well as the consolidated financial statements and Group management report were audited in line with the principles of the German Commercial Code (HGB) and IFRS by Ernst & Young GmbH, Wirtschaftsprüfungsgesellschaft, Stuttgart, Germany, which issued an unqualified auditors opinion. The auditor performed the audit in compliance with the generally accepted German standards for the audit of financial statements determined by the Institut der Wirtschaftsprüfer (IDW German Institute of Auditors) and in supplemental compliance with the International Standards on Auditing (ISA).

17 report by the supervisory board 9 The financial statements, together with the management report, the auditors reports and the Executive Board s proposal for use of the unappropriated profit were made available to all Supervisory Board members in good time. The Audit Committee of the Supervisory Board examined these documents in detail and reported to the Supervisory Board on its audit. The auditor also reported on the key results of the audit and on the fact that there were no significant weaknesses in either the internal monitoring system or the risk management system. The Audit Committee also examined the risk management system, the accounting processes and the effectiveness of the internal monitoring, risk management and auditing systems, as well as the relationship to the auditor, the proposals for selection of the auditor, the auditor s remuneration, the audit assignment and monitoring of the auditor s independence, as well as the additional services performed by the auditor. The Supervisory Board also checked and discussed the documentation and reports in detail. The audit reports provided by Ernst & Young GmbH, Wirtschaftsprüfungsgesellschaft, Stuttgart, Germany, were made available to all members of the Supervisory Board and were examined in full at the Supervisory Board meeting on March 24, 2o1o in the presence of the auditor, who reported on the most important results of the audit. At this meeting, the Executive Board explained the financial statements of MLP AG and of the Group, the risk management system, the accounting processes and the effectiveness of the internal monitoring, risk management and audit system, as well as giving detailed reports on the scope, focuses and costs of the audit. The Supervisory Board concurred with the outcome of the auditors audit and, on the basis of the final outcome of the Audit Committee s audit and its own audit, found no grounds for raising an objection. Accordingly, at its meeting on March 24, 2o1o, the Supervisory Board approved the annual financial statements and the MLP AG management report, as well as the consolidated financial statements and the consolidated management report prepared by the Executive Board in accordance with IFRS. The annual financial statements are therefore adopted. After performing its own examinations, the Supervisory Board agreed with the Executive Board s proposal to pay out a dividend of o.25 per share. Both the liquidity situation and budget of the company, as well as the shareholders interest in the results, were included in its considerations. The Supervisory Board would like to thank the Executive Board, the Management of the respective Group companies, as well as all employees and all consultants working at the various companies within the MLP Group for their commitment and achievements in the financial year 2oo9. Wiesloch, March 2o1o The Supervisory Board Dr. Peter Lütke-Bornefeld Chairman

18 Anne Diedrich 29 years old Lawyer MLP client since 2005

19 »What flexibility does my financial planning offer?«

20 Luca Balestrini Münster MLP consultant

21 »One of the key elements of a sophisticated financial plan is flexibility. When plans in life are changing, one s personal financial planning must change along with it. This is why MLP s consulting approach is aligned to the personal desires and goals of each individual client. To be able to adapt to clients new circumstances, MLP consultants carry out checkup talks together with their clients at regular intervals.«

22 14 annual report mlp 2009 Only consulting and qualification can build client trust prof. dr. rolf tilmes The financial market crisis has acted as a catalyst for the discussion on client-consultant relationships in Germany s financial services sector. And tension in the debate, with disappointed clients and poor quality consulting, is of course made even more acute by the personal experiences of broad sections of the population, who have lost not only money but also trust and confidence in the system. While this loss of confidence has been caused in part by developments in the market, investors are also unhappy with the type of consulting they have received, which is often not tailored to their requirements, but rather based on the product-related sales targets of certain brokers [Figure 01]. When clients are confronted with an approach of this nature, their needs and desires often remain misunderstood or even completely disregarded, which causes tension and ultimately motivates large groups of clients to simply go elsewhere. The key challenge for the future is therefore to win back client trust. Personal financial planning is the decisive success factor here, particularly in times of dwindling client loyalty. In contrast to purely product-based consulting offers, financial planning always focuses on the targets, desires and individual situation of the respective client. It caters to client requirements over the long term and guarantees both inclusion and examination of all assets, wealth and specific circumstances of the client. Incorporating the individual circumstances of each client is a key way in which personal financial planning differs from business models that promote product-based sales interests. Long-term continuity of consulting also stimulates and nurtures mutual trust between client and consultant. Personal financial planning not only offers higher quality and generates significant client benefit, it also allows qualified consultants and financial services providers to permanently distance themselves from the competition. Yet assuming a position as a provider of high quality solutions, in particular for wealthy private clients, also requires consultants that can prove their expertise through internationally recognised qualifications and certifications. Not only must they be able to demonstrate profound product knowledge, they must also boast excellent allround consulting skills, which from the client s perspective can make all the difference to both the perceived and actual quality of consulting. The world of politics has recently turned its attention to the topic of consumer protection, where many weaknesses have been identified above all in the regulatory framework conditions, the qualification of financial consultants and the quality of consulting associated with the sale of financial products. Germany s Federal Ministry for Food, Agriculture and Consumer

23 essay prof. dr. rolf tilmes 15 Prof. Dr. Rolf Tilmes, CFP (born in 1964) is Dean at the European Business School (EBS) in Oestrich-Winkel, Germany, as well as holder of the foundation-endowed Chair for Private Finance & Wealth Management. As scientific director of the PFI Private Finance Institute at the EBS, in 2009 Tilmes performed Germany s largest ever survey on the future of independent financial services brokerage. The idea behind the study was to get a meaningful picture of the condition, the business models, the per spectives and the positioning of independent financial advisers for the first time. Tilmes studied Business Studies at the EBS and at universities in the US and France, successfully completed an MBA at the J. L. Kellogg Graduate School, US, and was awarded his doctorate at the EBS. Following lengthy stays at Booz & Company, as well as InsuranceCity AG, he has worked full-time at the EBS since [Figure 01] Effects of the financial market crisis (all figures in %) Change to trust in banks in general and in one s own bank as a result of the financial market crisis Strongly affected 8 54 Not so strongly affected Not affected at all Do not know 4 3 Banks in general My bank Source: Association of German Banks (BdB), 2009 Protection has chosen to focus the discussion explicitly on qualifications as the key factor in ensuring the quality of financial advice. Indeed, the introduction of a binding minimum qualification standard has been in discussion for some time now. And while for example the relationship between the way in which consultants are paid and the quality of consulting they provide has not yet been empirically demonstrated, there is clearly a link between consultant qualification and consulting quality. Highly qualified and well trained consultants with excellent all-round skills, such as certified financial planners, already fulfil the strictest requirements regarding client-oriented financial advice. In competing for increasingly well informed, critical and educated clients, by offering personal financial planning companies can position themselves as quality providers of holistic consulting services and win back lost trust from clients.