MLP SE

This conference will be recorded. Good afternoon, ladies and gentlemen, and welcome to the MLP SE conference call regarding the publication of the results for the third quarter 2025 and the first nine months 2025. At this time, all participants have been placed on a listen-only mode. The floor will be open for questions following the presentation. Let me now turn the floor over to your host, Pascal Löcher.

Thank you very much and welcome to MLP's conference call to our results for the third quarter in the first nine months of 2025. With me today is our CFO, Reinhard Dose. He will guide you through the presentation. And of course, we are happy to take your questions after the presentation. So please go ahead, Reinhard.

Thank you, Pascal, and good afternoon, ladies and gentlemen. First of all, please allow me to present the key message for the first nine months of the financial year 2025. MLP remains firmly and vigorously on its good cause. Even one-off effects, which need to be processed at times, as is the case this year, do not change this. We provided information on this last Friday. Within the MLP group, we benefit more than ever from our broad and strategically interlinked positioning, which provides additional stability and at the same time generates sustainable growth year after year. During the first nine months of this year, we were able to achieve new highs in total revenue, despite the persistently difficult macroeconomic environment. This is a remarkable achievement by our team, not least because, as I already reported at the half-year stage, we have not experienced and are still not experiencing any tailwind in parts of our markets. Businesses and consumers alike are unsettled. The US President's so-called Liberation Day in particular, with its drastic tariffs, shook the capital market in April and still has an impact today. However, the lack of political decisions, the ongoing economic downturn and, not least, recent rising unemployment are also cause for concern. Despite operating in such a difficult environment, even a paid group still succeeded in setting new highs in key figures for future business development. This applies to both the assets under management of 64.2 billion euros and the managed non-life insurance premium volume of 794 million euros. In terms of earnings before interest and taxes EBIT, the MLP Group stands at 61.1 million euros after 9 months in 2025, which is below the previous year's record high figure of 66.4 million euros. In the third quarter of 2025, we achieved 18.3 million euros and thus even slightly exceeded the very strong prior year quarter. One thing is particularly noteworthy about this development. Our well-established and very successful consulting business, namely the intensive support we provide to our clients. We are their preferred dialogue partner for all financial matters. A closer look at the previous year's comparative figure makes this particular clear. Q3 EBIT 2024 includes significantly larger EBIT contributions from performance-based compensation at Ferry and from the interest rate business of MLP Banking. This shows the enormous growth in substance that we have already achieved in the MLP Group in recent years. As already reported, we have adjusted our EBIT forecast for the current year. This was due to changed expectations regarding the level of performance-based compensation in wealth management and the real estate development business. In addition, we are seeing weaker than originally expected old age provision business. As previously announced, we also intend to focus the business of our group company, Deutschland Immobilien, and thereby making it less susceptible to risk. We will benefit from this very soon, just like from our extensive IT investments, which I talked about at the half-year point. The IT investments are focused particularly on artificial intelligence, which is increasingly being integrated into our consulting services. For example, the preparation of client meetings by our consultants. And last but not least, will further strengthen our position in the corporate client business, among other things through innovative and digital companies that we have established within the MLP Group in a targeted manner and whose development we are actively advancing. This means we are following our proven path to success. We have increased our EBIT mid-term planning for 2028 to between 140 and 155 million euros. On our way there, the current year is above all a year of transition, a year in which we have invested and focused. Regardless of the necessary responses to changing markets, our business model is so robust that we have set ourselves even more ambitious yet realistic targets for 2028. The fact that we are implementing this increase in our targets at this particular point in time once again underpins how sustainably we have positioned the MLP group for this path. You can find an overview of revenue development in slide 4 of the presentation. In the first nine months of 2025, MLP increased its total revenue to a new high of around 773 million euros. The share of recurring revenue was almost 70% at the end of 24, highlighting the great and sustainable stability of our business model. We earn recurring revenue from the continuous, high-quality service provided to our existing clients throughout the M&P Group, above all the property and casualty and wealth competence fields. The remaining share of sales revenue generated from our new business particularly in the life and health competence field. In the first nine months of 25, the group grew particularly strongly in the property and casualty competence field with an increase of 7%. Compared to the same period of the previous year, MLP was able to significantly increase the managed non-life insurance premium volume. MLP also achieved growth in the life and health competence field with an increase of 4%, driven primarily by the health insurance business included in this figure and, to a lesser extent, by the old age provision business. After the first nine months of the year, the wealth competence fees recorded a slight decline in the revenue of minus 2%, primarily as a result of significantly lower performance-based compensation. This requires new record levels to be achieved in the underlying concepts even after market-related setbacks. Without the performance-based compensation, the wealth competence field would also have recorded growth, with the corresponding figure standing at 4%. While we recorded lower interest income as expected due to the declining interest rates, We were able to achieve double-digit growth rates in real estate brokerage and loans and mortgages. This is yet another example of the strength of our business model, which is based on my typical pillars. Finally, a brief look at the others competence field. As expected, revenue was slightly lower here due to the plan that strictly implemented reduction of market and business-related risks in the real estate development business. I have addressed this repeatedly during the previous quarters. And with the step announced last Friday at Deutschland Immobilien, we now intend to end real estate project developments, for which we ourselves are also responsible for construction, and thus make our real estate business less risky. We will therefore no longer initiate such projects. Only the existing projects will be carried out by ISTO completion. The growing and continuing trust in our consulting services displayed by our clients is also reflected in the key figures. They are extremely important for future revenue development. It is therefore all the more pleasing that we were able to increase assets under management to a new high of 64.2 billion euros. To the best of our knowledge, this makes us the second largest bank independent asset manager in Germany today. Let's take a quick look at our other key figure. We are also able to increase the managed non-life insurance premium volume to another record high of 794 billion euros. As of the 30th of September, the MEP Group's consultants served 597,400 family clients. The gross number of newly acquired family clients was 15,500. We also supported a further 27,800 corporate and individual clients in the NLP group. The number of consultants rose to 2,121 during the course of the year, primarily as a result of our successful trainee program. This program, which is very attractive for young professionals, equips employed junior consultants at MLP with the skills they need to succeed as self-employed consultants. Indeed, 495 trainees had already joined the program by the end of September 25 since its launch in mid-23. You can find an abridged version of the current income statement on slide 8. In the first nine months of 25, the MLP group recorded EBIT 61.1 million euros, which, as already communicated, was below the exceptional strong figure from the same period last year, but significantly above the average of the past five years, with average figures 47.6 million euros. If you now take a brief look at the right-hand section of the slide, you will see key performance indicators that underpin our strong balance sheet. Our shareholders' equity amounts to 577 billion euros. The regulatory core capital ratio was at 17.9% as of the 30th of September, which remains significantly above the requirements of the regulatory authorities. The Liquidity Coverage Ratio, or LCR for short, serves as a benchmark for short-term liquidity stress scenarios It is therefore an indicator of resilience. At 1,124%, it is also well above the 100% minimum required by regulatory authorities. Let me come back to our recently revised EBIT forecast of 90 to 100 million euros for the whole year before possible one-off effects residing from focusing of the real estate business. In terms of EBIT, however, these effects should not exceed 12 million euros and might also even have an impact on EBIT of the financial year 2025. We are more convinced than ever that we will continue our operational business success. In the current financial year, we expect sales revenue to slightly increase with property and casualty competence fees in particular. In the world competence field, we continue to expect revenues in 2025 to remain at the previous year's high level, though we remain cautious in view of the volatility of the capital market. Of course, it also cannot be ruled out that there may be positive capital market developments from which we would benefit directly in the world competence field. In line with developments in the first nine months, we are now anticipating stable revenue in the life and health competence field, having previously expected a slight increase in revenue. Within this competence field, we continue to expect a slight increase in revenue from health insurance and expect now stable revenue from old age provision. Irrespective of this, we are keeping a very close eye on our costs. As already mentioned, We have slightly increased our mid-term planning for the end of 28. The corridor now ranges from 140 to 105 million euro, 55 million euro, sorry. Previously, it was 140 to 150 million euros. We continue to expect total revenue of 1.3 to 1.4 billion euros. Performance-based compensation at CERI, which can only be planned and influenced to a limited extent, has once again been considered cautiously and therefore only included to a limited extent in the increased planning. We have left unchanged from the previous planning. In this context, I had already referred to the enormous substance of our operating business, which we have continuously built up over the past few years. This is also reflected in our planning for a continued significant growth in key figures, namely the managed non-life insurance premium volume and the assets under management. In expanding asset under management, PERI has significant further potential as an asset manager, underpinning by highly professional and modern investment research. In the area of alternative assets, with over 18 billion euros under management, PERI already maintains one of the largest expert teams in Germany. The strategic development of potential and consulting family clients, the targeted expansion of the corporate client business, and the multi-asset approach for institutional clients should lead to growth in all competence fields. The planned significant increase in earnings is also supported by our digitalization strategy, with a particular focus on AI applications, which are expected to drive ongoing efficiency gains and further improve client support. Our development of AI service agent continues at full speed. At the final stage, we'll offer clients 24-7 availability of complete processing of simple matters. An AI system which makes the sometimes time-consuming preparation for client appointments significantly easier for our consultants has already reached the practical testing phase. For example, The AI can extract the relevant data for financial consulting from documents uploaded by clients and sort and storage the right place in our systems to directly support the consultants. These new technologies are used throughout the NLP Group in a very targeted manner, but also always responsibly. Ladies and gentlemen, allow me now to move on to the summary. Our strategically developed positioning is proving itself more than ever, especially in phases without a tailwind from the market and also when it is necessary to deal with one-off effects, which can occur from time to time. Secondly, artificial intelligence as part of our digital strategy is already an additional efficiency and growth factor today and will remain so well into the future. We'll also remain vigorously active in this field. Thirdly, our increased mid-term planning for the end of 2028 underlines our sustainable growth path. In the coming years, we will benefit from the fact that we have now focused our real estate business and at the same time made strategic investments. Many thanks for your time and your interest. I am now happy to take any questions.

So ladies and gentlemen, if you would like to ask a question now, please press 9 followed by the star key on your telephone keypad. In case you wish to cancel your question, please press 3 followed by the star key. So let me just repeat, please press 9 and star to state that you have a question. The first question at the moment comes from Henry Windisch, New Ways. Your line is open.

Yes, thanks, everybody. Thank you, Rainer, for the presentation. A couple of questions from my side. Let's go with the obvious one I always ask is the net inflows and the performance fee metrics that we have seen in Q3 for our modeling. And then on the same topic, more or less, regarding the guidance card, we said there was a mix of three things. One is a lower expectation of performance fees. And, of course, the realistic development that is not turning out the way it might have looked like at the start of the year. And what is sort of a little bit of a surprise for me is a weaker old age expectation. Now, could you give us maybe a little bit of a split? So which of these three developments was the biggest one or to what extent? And then directly follow up on that why. Why has sort of your old age provision business outlook for Q4? It's very, very important for this fourth quarter. So why has your outlook a little bit changed there? I've seen you launched a new product, the portfolio vendor. And so what is sort of the, how can we think of this new outlook of yours in the old age space? And then I think the very positive highlight here is the underlying profitability. It was a very strong gain. And also say that if you include performance fees, you grew by 5% on a Q3 basis. So that looks very good. And I think the biggest improvement we've seen in profitability was in banking. Could you shed some more light on what has happened there? I've seen a positive effect in the so-called Bewertungsergebnis. Maybe that's something... that's behind this, but I don't really understand yet what is the real driver here, the banking business underlying profitability. So even if you include the net interest income, which is declined, of course, as well, the profitability is still on a very good level there in banking. So what's going on there?

Hi, Henry. Thanks for your questions. And I start with the, let's say, easy one to answer, the net inflows. And the net inflows for the whole group for the, let's say the gross inflow for the whole year was 4.2 billion. And the gross outflow for the whole year was also 4.2 billion. And then we have overall performance of 1.2 billion. Obviously mixed in different areas. Your next question will be, where does it come from? We had outflow of a bigger customer with a consulting with extremely low margin, but with some interesting asset under management. And therefore, the area of the company sector there was relatively weak for the whole year. This was more or less explanation a little bit to the net inflows. The performance fees for the whole year was 4.8 million Euro. And I think this leads to your question then for the underlying business. And I just want to like to compare for everyone here on the call. The performance fee for the first nine months in 24 was 26.8 million Euro. That means we have 22 million Euro less less performance fees in nine months, and only, in hyphens, only 5 million euros less profit, finally. That underlines that the rest of the business in general was quite okay, I think, just to underline this. The guidance cut, yes, performance in real estate is clear. Old age provision, we will have a very strong last quarter. but perhaps not as strong as we expected. That's clear. And what's the reason for that? We see, let's say, very, very good activities in the wealth management area. And we know that our consultants obviously only have 24 hours a day. And at the moment, they invest more time in wealth management than an oldish provision. And therefore, we have a little bit mixed feelings about this. On one side, we are extremely happy what's going on in the wealth management area, especially, let's say, in the area of private consultants. The inflows are extremely good there, but this has then the result that they have less time to consult their customers in old age provision. That was the reason why we were a little more cautious there. But again, there will be a strong quarter, but perhaps less strong than we would have expected in the beginning. On the other side, we will see better results, I think, in the wealth management area in the list. in the last quarter in the private client's business. And therefore, as you also said, the underlying profitability was quite good. One reason for this profitability, of course, with the banking sector, there you also see as an outcome What I just mentioned, the inflows in this area, we have in the first nine months more than 1 billion Euro net inflow in the private customer sector and the banking, with obviously the best margins in the work management in the whole group. And therefore, this supports the banking business and in the risk, the , the risk sector. We're relatively cautious concerning risks last year, and therefore the comparison last year to this year is that we are good provided in the risk sector already from last year onwards, and therefore we had to do less this year. That was the reason why the risk figure in comparison to last year is quite good. And I hope, Henry, I have answered all your questions with that.

Yes, just a follow-up on the banking. So does this imply that this elevated margin is going to stay there at these levels, or do you see an effect coming back at Q4 maybe and also the 2026?

As always, it's depending a little bit on the development in the market, but for 25, now 13th of November, we don't expect declining margins in the banking sector. Great. Thanks a lot. Yeah. You're welcome.

The next question comes from . Your line is open.

Thank you. Good afternoon. I have three questions, please. Firstly, what's your new expectation for performance fees for the full year? Secondly, excluding any exit costs, do you expect a negative EBIT from property development in Q4? And thirdly, the EBIT range of your new guidance, may that implicitly be read as sort of headroom for the financial consulting segment for which Q4 seasonally the strongest quarter for full year EBIT, but which may be somewhat volatile. These are my questions. Thank you.

Mr. Schmidt, the performance fee in our original plans, we expected lower double-digit figure for performance fee. I just reported that we have until now 4.8 million Euro performance fee for the first nine months. I would expect something like a lower million Euro number to add on this 4.8, but we will be definitely somewhere between five and eight, I would say. just to give some numbers to that. On the property and the real estate sector, that's a good question. The question was, if we expect a negative result in the last quarter in the real estate segment, I would altogether expect a negative figure there. Yes. And then the EBIT, I think I lost the last question. Can you please repeat the last question again?

Yes, sure. I mean, you have implicitly left a range of 10 million in your new outlook for the full year, but this also refers to the fourth quarter. And what may bring you to the lower or to the upper end? Is it finally the performance of the financial consulting segment? That's my question.

Obviously, the area of performance left leaves some volatility for the last quarter. We are quite happy with all the other segments at the moment. And therefore, let's say to reach the upper area, I think we should see, we have to see no negative, let's say some positive, but at least some positive effects in the real estate segment and some perhaps a little tailwind on performance fees that would help us to come to the upper area of this range.

Thank you very much.

Thank you.

So at the moment there seem to be no further questions. If you would still like to raise a question at this point, please press 9 and the star key. So as there are no further questions at this point, I'd like to hand it back to you, Mr. Löscher.

Okay, so if there are no further questions, I would like to thank you for taking part in our conference call. And of course, you can reach us if any further questions arrive later. I wish you a good afternoon. Thank you and goodbye.