Results of operations, financial position and net assets of Aurubis AG

General information

In order to supplement our Aurubis Group reporting, we explain the development of Aurubis AG in the following section. Aurubis AG is the parent company of the Aurubis Group and is based in Hamburg with production sites in Hamburg and Lünen. Apart from managing the Aurubis Group, the business activities of Aurubis AG also particularly include primary copper production and recycling, as well as copper product and precious metal production. The separate financial statements of Aurubis AG have been prepared in accordance with the requirements of the German Commercial Code (Handelsgesetzbuch, HGB) and the German Stock Corporation Act (Aktiengesetz, AktG). The primary differences from the Group financial statements prepared in accordance with IFRS principles are in the accounting treatment of fixed assets, the measurement of inventories, the measurement of financial instruments and the accounting treatment of pension provisions.

The Aurubis Group is managed across all companies at Group level through Business Units (BUs), using operating EBT and operating ROCE as the financial performance indicators. These indicators are also used for Aurubis AG’s operating activities, which are a significant component of the Group. To this extent, the development and forecast of the financial performance indicators at BU and Group levels at the same time represent the development and forecast for Aurubis AG as an individual company.

The analysis of the development for the financial performance indicators outlined above during the fiscal year and the related forecast for the following year are provided in the Economic Report and the Forecast Report for the entire Group. Statements regarding the risk situation and opportunities can be found in the Group’s Risk and Opportunity Report.

Results of operations

Development of the annual result and significant income statement items (HGB)

T 021
 
in € million 2015/16 2014/15
     
Revenues 6,709 7,528
Changes in inventories/own work capitalized 53 52
Other operating income 71 59
Cost of materials (6,302) (7,064)
Gross profit 531 575
 
Personnel expenses (220) (257)
Depreciation and amortization of intangible assets and property, plant and equipment (48) (45)
Write-downs of current assets 0 (60)
Other operating expenses (131) (117)
Operational result (EBIT) 132 96
 
Financial result 34 111
Result of normal business activities (EBT) 166 207
 
Taxes (32) (62)
 
Net income for the year 134 145

Compared to the previous year, Aurubis AG’s business performance was positively influenced by higher treatment and refining charges, while concentrate throughput was at the prior-year level. In contrast, lower refining charges on the copper scrap markets and reduced sulfuric acid revenues compared to the previous year had a negative impact on the result. A lower metal gain compared to the previous year, accompanied by lower metal prices, influenced the result negatively.

Development of Aurubis AG revenues by product groups

Chart: Development of Aurubis AG revenues by product groups

Revenues decreased by € 819 million to € 6,709 million during the reporting period (previous year: € 7,528 million). The reason for the decrease was primarily lower sales revenues deriving from copper products.

With a cost of materials ratio (cost of materials/(revenues + changes in inventories)) at the prior-year level, and taking into account the change in inventories, own work capitalized and other operating income, the gross profit decreased by a total of € 44 million to € 531 million during the reporting year (previous year: € 575 million).

Personnel expenses decreased by € 37 million to € 220 million (previous year: € 257 million). While wages and salaries rose, due primarily to increases in collective wage agreement rates and higher profit participation bonuses based on the results, pension expenses were lower compared to the previous year. In the previous year, the dissolution of a support fund and the associated assumption of pension benefit obligations for Aurubis AG employees burdened the result.

Depreciation and amortization of fixed assets increased by € 3 million to € 48 million (previous year: € 45 million). In particular, the increase is the result of infrastructure projects that were completed in the previous year.

Taking other operating expenses into account, the operational result (EBIT) therefore amounted to € 132 million (previous year: € 96 million).

The financial result for the reporting year was € 34 million (previous year: € 111 million). This figure included dividends from subsidiaries in the amount of € 35 million (previous year: € 83 million), as well as a write-up of an investment carrying amount in the amount of € 15 million. Furthermore, write-ups of € 5 million were recorded as at the balance sheet date in respect of securities classified as fixed assets. The financial result also includes net interest expenses of € 22 million.

After taking a tax expense of € 32 million (previous year: € 62 million) into account, the reported annual net income amounted to € 134 million (previous year: € 145 million). At a level of 19 %, the effective tax rate was below that of the previous year (29 %) due to a change in the earnings structure.

Net assets

At a level of € 1,954 million, fixed assets were slightly up on the prior year (€ 1,940 million). The increase in inventories to € 805 million (previous year: € 739 million) primarily resulted from higher inventories of intermediates.

Overall, total assets rose by € 92 million to € 3,553 million. Therefore, fixed assets accounted for 55 % (previous year: 56 %) of total assets, inventories accounted for 23 % (previous year: 21 %) and receivables and other assets remained unchanged at 10 %.

Equity increased by € 74 million to € 1,364 million (previous year: € 1,290 million). The equity ratio remained at the prior-year level of 38 %. 


Provisions decreased in total by € 40 million to € 249 million, mainly due to lower tax provisions.

Liabilities to banks decreased slightly by € 8 million to € 479 million. Trade accounts payable decreased by € 50 million to € 479 million as at the balance sheet date.

Borrowings from affiliated companies increased from € 730 million to € 845 million within the context of normal financial transactions. Sundry liabilities increased slightly from € 15 million to € 17 million.

Balance sheet structure of Aurubis AG

T 022
 
in % 9/30/2016 9/30/2015
     
Fixed assets 55 56
Inventories 23 21
Receivables, etc. 10 10
Cash and cash equivalents 12 13
  100 100
 
Equity 38 37
Provisions 7 8
Liabilities 55 55
  100 100

Aurubis uses assets under the terms of leasing agreements that are not recognized as assets in the balance sheet. Financial commitments deriving from leases amounted to € 7 million. Apart from this, financial commitments under long-term storage and handling agreements amounted to € 132 million.

Financial position

Liabilities to banks amounted to € 479 million as at the balance sheet date (previous year: € 487 million). Their terms to maturity are as follows:

T 023
 
in € million 2015/16 2014/15
     
Less than 1 year 156 22
1 to 5 years 207 344
More than 5 years 116 121
Total 479 487

After including receivables and payables to subsidiaries deriving from refinancing, amounting to € 615 million (previous year: € 568 million), and deducting cash and cash equivalents of € 433 million (previous year: € 426 million), net borrowings amounted to € 661 million as at September 30, 2016 (previous year: € 629 million).

Analysis of liquidity and funding

There was a positive net cash flow of € 71 million in fiscal year 2015/16, which resulted from the positive result for the period. A cash outflow, particularly deriving from an increase in the inventories of intermediates, had an opposite effect.

The cash outflow for investments in fixed assets was € 43 million (previous year: € 54 million). Investments in property, plant and equipment of € 49 million (previous year: € 51 million) related to various infrastructure and improvement measures.

The cash outflow of € 22 million (previous year: cash inflow of € 103 million) from financing activities was related both to the payout of the dividends for fiscal year 2014/15 as well as the take-up of loans from subsidiaries in conjunction with the existing cash pooling arrangements, which had an opposite effect.

Cash and cash equivalents at the end of the reporting period amounted to € 433 million (previous year: € 426 million). In addition to cash and cash equivalents, Aurubis AG had unutilized credit line facilities and thus had adequate liquidity reserves. Furthermore, within the context of factoring agreements, Aurubis AG sold receivables without recourse as a financing instrument.

Capital expenditure

At the Hamburg and Lünen sites, € 51 million (previous year: € 54 million) was invested in infrastructure, energy efficiency and environmental protection.