Aims of financial management
The financial management of the MLP Group is performed by the central Treasury department in cooperation with the Controlling and Risk Management departments. Our primary objective here is to secure the liquidity of the Group at all times, control the risks involved using the various financial instruments and optimise Group-wide cash management. To this end, we employ a system of rolling liquidity planning with a time frame of 15 to 18 months.
No liabilities or receivables in foreign currencies
There were no significant liabilities or receivables in foreign currencies during the reporting period, as we generate almost 100% of total income in the eurozone. It is therefore not necessary for us to hedge net items in foreign currencies by means of hedging instruments. You can find details on the financial risks in the "Financial risk management" chapter.
Equity ratio at 18.7%
The Group's equity capital backing and liquidity remain good. As of the balance sheet date, shareholders' equity amounted to € 404.9 million and was therefore above the previous year's level (€ 383.6 million). The Group net profit of € 27.8 million for the 2017 financial year had a significant effect on this. However, this was counteracted by the dividend payment of € 8.7 million for the 2016 financial year. Due to the higher balance sheet total, the equity ratio declined from 19.7% to 18.7%. The regulatory equity ratio was 20.0% on the balance sheet date (14.2%). This already reflects the successful work performed to further optimise the corporate structure, together with the objective of significantly increasing attributable equity capital by 2021. Even with today's group structure, MLP still expects increased capital requirements for the next few years in order to meet increased capital requirements and stricter requirements of Basel III.
At present, we are not using any borrowed funds in the form of promissory note bond issues to finance the Group. Our non-current assets are financed in part by non-current liabilities. Current liabilities due to clients and financial institutions in the banking business represent further refinancing funds that are generally available to us in the long term. Total liabilities due to clients and financial institutions in the banking business of € 1,501.2 million (€ 1,308.8 million) essentially comprise client deposits, which have no financing function for the Group. These liabilities are offset on the assets side of the balance sheet by € 1,336.2 million (€ 1,217.5 million) in receivables from clients and financial institutions in the banking business.
Since provisions only account for 4.1% (4.7%) of the balance sheet total, they have no significant financing function for the Group. Other liabilities increased to € 154.9 million (€ 146.9 million) on the balance sheet date, while current liabilities rose to € 149.1 million (€ 143.1 million). These are essentially liabilities from operating activities. Current liabilities are offset on the assets side by cash and cash equivalents of € 301.1 million (€ 184.8 million), which are attributable to temporarily higher deposits at the Deutsche Bundesbank, and financial investments of € 158.5 million (€ 162.3 million), as well as other current assets of € 111.1 million (€ 109.4 million).
On the balance sheet date of December 31, 2017, there were financial commitments from rental and leasing agreements amounting to € 13.7 million (€ 15.8 million). These mainly constitute liabilities from the renting of our branch offices, as well as leasing of motor vehicles and office equipment. They can result in potential total liabilities of € 67.6 million (€ 70.9 million) by the year 2023.
Cash flow from operating activities declined to € 115.5 from € 144.7 million in the same period of the previous year. Here, significant cash flows result from the deposit business with our clients and from the investment of these funds.
Cash flow from investing activities changed from € -41.3 million to € -2.6 million. Compared to the same period of the previous year new investments in financial assets were higher than in the reporting period.
Condensed cash flow statement
|All figures in € million||2017||2016|
|Cash and cash equivalents at beginning of period||184.8||94.5|
|Cash flow from operating activities||115.5||144.7|
|Cash flow from investing activities||-2.6||-41.3|
|Cash flow from financing activities||-8.7||-13.1|
|Change in cash and cash equivalents||104.2||90.3|
|Adjustments from demerger operations||12.0||-|
|Cash and cash equivalents at end of period||301.0||184.8|
As of the balance sheet date, December 31, 2017, the MLP Group has access to cash holdings of around € 353.5 million. A good level of liquid funds therefore remains available. Thus there are sufficient cash reserves available to the MLP Group. Alongside cash holdings, free lines of credit are also in place. The MLP Group has agreed-upon and non-utilised lines of credit amounting to € 131.6 million. In 2017 the MLP Group was capable of meeting its payment obligations at all times.
Capital expenditure analysis
MLP generally finances capital expenditures from cash flow. The total investment volume in intangible assets, as well as property, plant and equipment in the past financial year declined to € 7.3 million. The previous year's higher figure can essentially be attributed to greater investments in IT systems and software to support sales. By increasing our free equity capital in connection with further optimising the corporate structure we are also significantly extending our entrepreneurial and economic room for manoeuvre for example to make investments.
|All figures in € million||2017||2016||2015||2014||2013|
|Software (developed in house)||0.2||0.3||0.4||0.4||0.4|
|Other intangible assets||-||0.0||0.0||0.0||0.0|
|Payments on account and assets under construction||2.1||11.0||7.1||7.4||18.5|
|Property, plant and equipment||3.9||4.7||4.8||6.6||2.9|
|Land, leasehold rights and buildings||0.3||0.5||0.7||0.4||0.4|
|Other fixtures, fittings and office equipment||2.6||3.0||3.1||4.2||1.8|
|Payments on account and assets under construction||1.0||1.2||1.0||2.0||0.8|
|Total capital expenditures||7.3||18.4||12.8||15.4||22.5|
At € 3.7 million, the overwhelming majority of capital expenditure in the last financial year focused on investments in the banking segment. Similar to the investments in the financial consulting segment, in which € 1.3 million was invested, these are investments in operating and office equipment that focus primarily on IT systems to support sales. They contribute to the continuous improvement of consulting support and client service. Alongside these activatable investments, we also use other intensive resources for these projects which are recognised as expenses in the income statement. Capital expenditure in the FERI segment was € 0.5 million, which we invested in operating and office equipment, as well as in IT. The investments in the DOMCURA segment amounted to € 1.5 million and were aimed in particular at operating and office equipment, as well as IT.