Corporate control

Control system

The main objective of the management control system is to increase the Aurubis Group’s corporate value by generating a positive overall contribution to the enterprise beyond the costs of capital.

Corporate control parameters

In order to measure financial success for the medium and long term within the scope of value-oriented corporate control, Aurubis uses the following central control parameters:

  • Operating consolidated earnings (operating EBT = earnings before taxes)
  • Operating return on capital employed (operating ROCE) in the Group

These parameters are regularly presented to the entire Executive Board and are utilized for internal control purposes. The Executive Board’s variable compensation is also oriented to these parameters.

The Aurubis Group reports in accordance with International Financial Reporting Standards (IFRS). When the average cost method is applied in accordance with IAS 2, metal price fluctuations systematically lead to considerable discontinuities in the presentation of the Aurubis Group’s results of operations, financial position and net assets.

In our view, these measurement effects lead to an economically inaccurate presentation in the Management Report. Furthermore, a purchase price allocation resulted in one-time effects that would also lead to a distortion in the Aurubis Group’s presentation of the results of operations, financial position and net assets.

In order to present the Aurubis Group’s operating success more independently of these measurement effects on internal control systems, internal Group reporting and control are carried out on the basis of the operating result.

The operating result is derived from the IFRS results of operations by:

  • Adjustment for measurement effects deriving from the use of the average cost method in accordance with IAS 2,
  • Adjustment for copper price-related measurement effects on inventories and
  • Adjustment by impacts from purchase price allocations, primarily on property, plant and equipment, from fiscal year 2010/11 onwards.

Operating return on capital employed (ROCE)

T 008
 
in € million 9/30/2016 9/30/2015
     
Fixed assets 1,343 1,327
Inventories 1,494 1,374
Trade accounts receivable 242 307
Other receivables and assets 211 212
– Trade accounts payable (798) (761)
– Provisions and other liabilities (379) (480)
Capital employed as at the balance sheet date 2,114 1,979
 
Earnings before taxes (EBT) 213 343
Financial result 16 27
Earnings before interest and taxes (EBIT) 229 370
 
Return on capital employed (operating ROCE) 10.9 % 18.7 %

Operating ROCE shows the ratio of operating earnings before interest and taxes (EBIT) to operating capital employed as at the balance sheet date, and indicates the return on capital employed.

Corresponding to the calculation of the operating result, operating capital employed is derived by adjusting the balance sheet items in accordance with IFRS by the effects previously mentioned.

A reconciliation of the balance sheet and income statement from IFRS to operating figures is provided in the Economic Report of the Management Report.