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 include primary copper production and recycling as well as copper product fabrication 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 at Business Unit (BU) level using operating EBT and operating ROCE as the financial performance indicators. These 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 represent the development and forecast of Aurubis AG as an individual company.

The analysis of the development for the financial performance indicators outlined above during the fiscal year and the 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

    T 019
     
in € million 2014/15 2013/14
     
Revenues 7,528 7,584
Changes in inventories/own
work capitalized
   
Other operating income 59 93
Cost of materials ( 7,064) ( 7,161)
Gross profit 575 482
     
Personnel expenses ( 257) ( 216)
Depreciation and amortization
of intangible assets and property,
plant and equipment
   
Write-downs of current assets ( 60) 0
Other operating expenses ( 117) ( 123)
Operational result (EBIT) 96 94
     
Financial result 111 ( 14)
Result of normal business activities (EBT) 207 80
     
Taxes ( 62) ( 18)
     
Net income for the year 145 62

Compared to the previous year, Aurubis AG’s business performance in fiscal year 2014/15 was positively impacted by a higher concentrate throughput and, at the same time, benefited from increased treatment and refining charges and a more efficient metal yield. Furthermore, the refining charges on the copper scrap markets and revenues for sulfuric acid rose significantly again compared to the previous year. The copper product business benefited from higher cathode premiums.

Development of Aurubis AG revenues by product groups

Chart: Development of Aurubis AG revenues by product groups

Revenues decreased by € 56 million to € 7,528 million during the reporting period (previous year: € 7,584 million). This development is primarily due to lower sales of copper pro­ducts.

Due to a slightly lower cost of materials ratio compared to the previous year, and taking into account the change in inventories, own work capitalized and other operating income, the gross profit increased by € 93 million to € 575 million during the reporting year (previous year: € 482 million).

Personnel expenses increased by € 41 million to € 257 million (previous year: € 216 million), primarily due to the dissolution of a support fund and the associated assumption of the obligation in the form of a direct commitment for pension benefits for Aurubis AG employees. 

Depreciation and amortization of fixed assets decreased by € 4 million to € 45 million (previous year: € 49 million). The decrease is the result of a lower capital expenditure volume during the fiscal year. Write-downs of current assets in the amount of € 60 million relate to financial receivables from an affiliated company.

At a level of € 117 million, other operating expenses are slightly below the prior year (€ 123 million). Overall, the operational result (EBIT) therefore amounted to € 96 million (€ 94 million in the previous year).

The financial result for the reporting year is € 111 million (previous year: € –14 million). This includes dividends from subsidiaries in the amount of € 83 million (previous year: € 36 million), as well as write-ups of investment carrying amounts in the amount of € 69 million. Furthermore, an impairment loss of € 1 million was recognized against an investment carrying amount, and write-downs of € 6 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 € 34 million.

After taking a tax expense of € 62 million (previous year: € 18 million) into account, the reported annual net income amounts to € 145 million (previous year: € 62 million). At a level of 29 %, the effective tax rate is above that of the previous year (22 %) due to a change in the earnings structure.

Net assets

Fixed assets rose to € 1,940 million (previous year: € 1,870 million) due to write-ups of affiliated companies amounting to € 69 million. Inventories increased to € 739 million (previous year: € 717 million) due to higher inventories of cathodes, wire and shapes.

Taking the strong € 266 million increase in cash and cash equivalents into consideration, total assets rose by a total of € 284 million to € 3,461 million. Therefore, fixed assets account for 56 % (previous year: 59 %) of total assets, inventories account for 21 % (previous year: 22 %) and receivables and other assets account for 10 % (previous year: 14 %).

Equity increased by € 100 million to € 1,290 million (previous year: € 1,190 million) due to the net result generated for the fiscal year. At 37 % (previous year: 37 %), the equity ratio remained at the prior-year level.

Provisions increased in total by € 70 million to € 289 million, mainly due to the € 43 million increase in pension provisions and the € 29 million increase in tax provisions. The increase in pension provisions was mainly the result of the dissolution of the support fund and the transfer of pension claims to a direct commitment from Aurubis AG.

Liabilities to banks rose by € 74 million, mainly due to the take-up of bonded loans of € 300 million with the simultaneous repayment of bonded loans of € 210 million. The increase in trade accounts payable from € 486 million to € 529 million concerns concentrate deliveries that were paid for directly after the balance sheet date. Borrowings from affiliated companies increased from € 712 million to € 730 million within the context of normal financial transactions. 

Sundry liabilities fell from € 62 million to € 15 million as a result of lower VAT liabilities within the context of legal amendments to the reverse charge procedure at the beginning of the fiscal year.

Balance sheet structure of Aurubis AG

    T 020
     
in % 9/30/2015 9/30/2014
     
Fixed assets 56 59
Inventories 21 22
Receivables, etc. 10 14
Cash and cash equivalents 13 5
  100 100
     
Equity 37 37
Provisions 8 7
Liabilities 55 56
  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 amount to € 9 million. Apart from this, financial commitments under long-term storage and handling agreements amount to € 145 ­million.

Financial position

Liabilities to banks amounted to € 487 million as at the ­balance sheet date (previous year: € 413 million). Their terms to maturity are as follows:

  T 021
   
Less than 1 year € 22 million
1 to 5 years € 344 million
More than 5 years € 121 million

After including financial liabilities to subsidiaries of € 568 million (previous year: € 494 million) and deducting cash and cash equivalents of € 426 million (previous year: € 160 million), net borrowings amount to € 629 million as at ­September 30, 2015 (previous year: € 747 million).

Analysis of liquidity and funding

The annual result and the reduction in working capital lead to a positive net cash flow of € 217 million. The reduction was the result of lower trade accounts receivable due to metal price developments and higher liabilities deriving from concentrate deliveries as at the balance sheet date. The overall cash inflow from the change in working capital amounts to € 44 million during the reporting year.

The cash outflow from investments in fixed assets is € 54 million (previous year: € 64 million). Investments in property, plant and equipment of € 51 million (previous year: € 63 million) are primarily related to the construction of the new lead refinery and an employee locker room and health center at the Hamburg site. Investments were also made in various infrastructure and improvement measures.

The cash inflow from financing activities was related both to the take-up of bonded loans of € 300 million with the simultaneous repayment of bonded loans of € 210 million, as well as to the take-up of loans from subsidiaries in conjunction with the existing cash pooling arrangements.

Cash and cash equivalents at the end of the reporting period amount to € 426 million. In addition to cash and cash equivalents, Aurubis AG has unutilized credit line facilities and thus has adequate liquidity reserves. Furthermore, within the context of factoring agreements, Aurubis AG sells receivables without recourse as a financing instrument.

Capital expenditure

During the past fiscal year, € 6 million was invested in the construction of the new lead refinery at the Hamburg site. The project was concluded in 2015.

A total of € 7 million was invested in the construction of a new employee locker room and health center at the Hamburg site during the fiscal year. The total capital expenditure volume for the project is likely to amount to € 15 million. It is scheduled to be completed in spring 2016.

Furthermore, additional projects relating to general facility maintenance, infrastructure, energy efficiency and environmental protection were completed at the Hamburg and Lünen sites.