Further increase in balance sheet total
Against the backdrop of further increased client deposits, the balance sheet total of the MLP Group rose to € 2,169.5 million as of December 31, 2017 (€ 1,944.1 million).
Intangible assets – essentially including the client base, brand and goodwill – decreased to € 161.8 million (€ 168.4 million) as of the balance sheet date. This decline can essentially be attributed to scheduled amortisation of software. Fixed assets were declined within the scope of scheduled amortisations to € 61.9 million (€ 63.4 million).
Receivables from clients in the banking business increased to € 702.0 million (€ 626.5 million). This can essentially be attributed to the increase in promissory note bonds and own-resource loans, as well as a higher investment volume in promotional loans directly passed on to our clients. Receivables from banks in the banking business also increased to € 634.2 million (€591.0 million) as a result of higher investments in fixed-term deposits, as well as higher promissory note bonds. Around 53% of receivables from banks and clients have a remaining term of less than one year.
At € 158.5 million, financial investments were only slightly below the previous year's level (€ 162.3 million). At € 12.3 million, tax refund claims remained at the same level as the previous year (€ 12.1 million).
At € 125.7 million, other receivables and assets remained at the previous year's level (€ 122.8 million). This item essentially comprises commission receivables from insurers resulting from the brokerage of insurance products.
Cash and cash equivalents increased to € 301.0 million (€ 184.8 million). This increase can be attributed to a greater deposit volume at the German Bundesbank. At the same time, the profit transfers of FERI AG and DOMCURA AG added to the increase, while among other factors the coverage of losses of Banking AG and the dividend payment to our shareholders had the opposite effect. You can find detailed information on the change in cash and cash equivalents in the chapter entitled "Financial position".
Significant increase in return on equity
The equity capital backing of the MLP Group remains good. As of December 31, 2017, shareholders' equity was € 404.9 million (€ 383.6 million). Due to the higher balance sheet total, the equity ratio was 18.7% (19.7%). Based on Group net profit of € 27.8 million (€ 14.7 million), we therefore achieved a return on equity of 7.3% (3.8%).
Provisions of € 88.7 million (€ 91.2 million) were slightly below the previous year's level. This slight decline is essentially due to lower allocations to provisions for bonus schemes.
The deposits of our clients which are recorded under Liabilities due to clients in the banking business increased to € 1,439.8 million (€ 1,271.1 million) at the end of the reporting period. This increase is primarily attributable to short-term deposits held in bank accounts and instant access savings accounts. Liabilities due to financial institutions in the banking business rose to € 61.4 million (€ 37.7 million). This increase can mainly be attributed to a higher volume of promotional loans being passed on to our clients. This item includes the refinancing funds from funding institutions.
As a result of the improved earnings recorded, the tax liability increased to € 10.2 million (€ 3.6 million). Other liabilities amounted to € 154.9 million (€ 146.9 million). This item essentially comprises current liabilities due to our consultants and branch managers in connection with open commission claims (please also refer to the section entitled Financial position).
General statement on the economic situation
The corporate management still considers the Group's economic situation to be positive, both at the end of the reporting period and at the time of preparing the Group management report. This also applies to our financial position. Liquidity remains at a good level. The equity capital backing also remains good.
Comparison of actual and forecast development of business
At the start of the financial year, we defined our statements made in the forecast more closely in the Events subsequent to the reporting date section of the 2016 Annual Report. Taking into account anticipated one-off expenses of € 9.0 million for optimising the corporate structure of the Group, we expected to record an EBIT of at least € 36 million and an operating EBIT (before one-off expenses) of at least € 45.0 million.
At the start of the year, we also issued a qualitative estimate regarding revenue development, which we then defined more closely in the report for the first nine months in 2017.
In the old-age provision area, revenue at the end of the year fell slightly short of our expectation of it remaining at a stable level. Our revenue in the health insurance area remained at the previous year's level and was therefore within expectations. With a slight increase in revenue, the non-life insurance area developed as expected. The wealth management area enjoyed better development than forecasted and recorded a significant increase in revenue.
We expected administration costs to decline by around € 15 million in comparison with 2015 (around € 285 million when taking into account DOMCURA for a full year, despite it only having been acquired in the course of 2015). Adjusted for one-off expenses for further optimising the corporate structure, administration costs in 2017 at € 273.0 million were slightly above this target.
At € 46.7 million (before one-off expenses), operating EBIT is slightly above our forecast minimum and we have therefore reached our targets for the year.