MLP increases revenues to a record level despite a difficult market environment

• Total revenues rise by 5 percent to EUR 287.3 million
• Q2: Assets under management climb significantly from EUR 10.9 to EUR 11.7 billion
• Reiteration of full-year guidance – total revenues expected to reach a new all-time high

Wiesloch, 13th August 2008 - Despite a very difficult market environment, MLP, the independent financial and wealth management consulting company, increased its total revenues in the first half of 2008 by five percent to EUR 287.3 million (H1 2007: EUR 273.2 million). As anticipated, earnings before interest and taxes (EBIT) fell by 15 percent to EUR 32.7 million (EUR 38.2 million) due to costs associated with the new Insurance Contract Law. At 30th June, net profit from continuing operations stood at EUR 14.3 million (EUR 22.0 million).

“As expected, 2008 is accompanied by special challenges due to the new legal regulations. In addition, numerous uncertainty factors such as the crisis within the financial markets and the increased rate of inflation are triggering restraint on the part of many private investors,” comments MLP Chief Executive Officer Dr. Uwe Schroeder-Wildberg. “MLP has remained resilient and continues to grow even under these extremely demanding framework conditions. This has laid the foundation for us to be able to increase also full-year revenues to a new record level.”

Old age pension provision 17 percent above previous year

Revenues from commissions and fees in the first half year rose by two percent to EUR 246.2 million (EUR 240.8 million). The largest contribution towards this figure came from old age pension provision, amounting to EUR 154.3 million (EUR 132.4 million) and representing an increase of 17 percent compared to the previous year. Interest income grew by 21 percent to EUR 19.4 million (EUR 16.0 million).

Extensive changes due to the reform of the Insurance Contract Law

The first half year was characterised by numerous changes, due in particular to the new Insurance Contract Law. Following MLP’s intensive training of its consultants, predominantly in the first quarter, in preparation for the new framework conditions, the period from April to June was influenced by IT switchovers, the connection of new producer software and preparations for an increased level of cost transparency in old-age pension provision and healthcare insurance products which led, as forecasted, to higher expenditure. Against this backdrop, EBIT achievement in the second quarter fell to EUR 9.5 million (Q2 2007: EUR 18.5 million). Total revenues rose to EUR 129.1 million (EUR 127.5 million).

New business: Significant rise in assets under management

Assets under management, which form the foundation for future revenues in wealth management, climbed significantly to EUR 11.7 billion (31st March: EUR 10.9 billion), representing an increase of EUR 0.3 billion compared to the beginning of the year. In this respect, MLP benefited from appreciable growth in the inflows into funds – contrary to the market trend. Despite the new regulations in connection with the healthcare reform, annual premiums in private healthcare provision during the first six months of 2008 fell only slightly from EUR 23.6 million to EUR 21.6 million. The loans and mortgages volume stood at EUR 525 million (EUR 618 million). In old-age pension provision, the premium sum rose by 36 percent to EUR 3.0 billion (EUR 2.2 billion). “The market for old-age pension provision products is currently characterised by predatory competition. Thanks to our positive new business development we are well positioned to further increase our market share this year as well,” remarks Uwe Schroeder-Wildberg.

Positive development in the number of new clients

During the period from April to June, MLP gained a total of 11,000 new clients, taking the total number of clients at 30th June to 732,000. The number of consultants fell to 2,534 (31st March: 2,602). In the first half year, revenue per consultant rose from EUR 93,000 to EUR 98,000, a ratio that still represents a peak value in the industry.

Altered framework conditions

The reform of the Insurance Contract Law that came into effect on 1st January 2008 involves far-reaching changes for the entire industry. The provisions of the new law include an extension of the information duties towards the client as well as the spreading of acquisition costs over five years for old-age pension provision products. In addition, since 1st July there has been a requirement to provide a higher degree of cost transparency.

Full-year guidance reiterated

Despite these profound changes, MLP forecasts further growth in total revenues for the full-year 2008. At the same time, the EBIT margin will be down slightly but is not expected to fall below the high level of around 16 percent that was achieved in the financial year 2006. “This continues to make MLP the benchmark for profitability within the industry,” comments Andreas Dittmar, Head of Finance at MLP AG. For the following years MLP expects a return to an improvement in the margin.

^{*) Adjusted for the closed foreign operations in Great Britain and Spain as well as for modified evaluation and accounting methods in accordance with IFRS.
**) 31/12/2007}