Report of the Supervisory Board
The Aurubis Group achieved record earnings in fiscal year 2014/15. The basis of this success was the fact that all of the earnings components, especially good refining charges in the recycling and concentrate sectors as well as sulfuric acid revenues, developed positively along with a good performance overall. The accomplishments of the Executive Board, the management and the employees in every department deserve our acknowledgement once again.
Collaboration between the Supervisory Board and Executive Board
The joint target of the Executive Board and Supervisory Board is to increase the enterprise value of Aurubis AG and its Group companies long-term.
With respect to Company management, the Supervisory Board and its committees closely supervised, carefully monitored and advised the Executive Board during the reporting year and performed the functions incumbent upon it by law, the Articles of Association and rules of procedure. The Supervisory Board is confident that the Company was managed lawfully and appropriately. The Supervisory Board was included in all decisions of fundamental importance for the Company promptly and directly, as explained in more detail below.
The Executive Board informed the Supervisory Board regularly, promptly and comprehensively about all of the issues relevant to the Company verbally and in two written reports per month. These included the planning process, the corporate strategy, important business transactions in the Company and the Group, the associated opportunities and risks and issues of compliance.
The Supervisory Board discussed all the transactions that were of importance for the Group in detail on the basis of the Executive Board’s reports. The Supervisory Board agreed on the Executive Board’s suggested resolutions after thorough review and consultation.
The Supervisory Board was continuously informed in detail about the Group’s earnings and employment developments, the individual Business Units and the Company’s financial position. The Executive Board extensively explained deviations in the business performance from the established plans and discussed the reasons behind them as well as the initiated measures with the Supervisory Board.
The Chairman of the Supervisory Board was also in contact with the Executive Board, in particular the Executive Board Chairman, outside of the meetings and communicated with them about current developments.
Consultations in the Supervisory Board
Four scheduled Supervisory Board meetings (on December 11, 2014, March 18, 2015, June 5, 2015 and September 11, 2015) and one extraordinary Supervisory Board meeting (on June 29, 2015) were held in fiscal year 2014/15. Two resolutions were adopted by written consent in lieu of a meeting. Dr. Reich was unable to attend two of the meetings (December 11, 2014 and September 11, 2015) due to illness. The average participation rate for the Supervisory Board members was about 96 %. The Executive Board was not present for part of two Supervisory Board meetings. Dr. Drouven’s mandate was suspended from November 1, 2014 to October 31, 2015 due to his dispatch to the Executive Board.
The topics of regular Supervisory Board consultation in meetings included the business performance, human resources in the Group, the development of the results and the raw material, foreign exchange and energy markets. The Supervisory Board also dealt with the financial situation and the status of capital expenditure. In particular, the Supervisory Board oversaw the reorganization of the Group, the earnings trend of Business Line Flat Rolled products and various optimization and development projects (Step Up) that were presented by employees in the first and second management levels below the Executive Board. The Personnel Committee chairman and the Audit Committee chairman also reported at the meetings on the committees’ work, the suggestions made and the results achieved.
In the meeting on December 11, 2014 the Supervisory Board determined the compensation for the Executive Board members for fiscal year 2013/14 contingent on the established objectives. Details are explained in this Annual Report in the Compensation Report.
In the same meeting, consultations focused on the approval of the consolidated financial statements and the separate financial statements for Aurubis AG for 2013/14, including the corporate governance report, and the preparations for the 2015 Annual General Meeting. The Executive Board gave a detailed report about the newly established Supply Chain Management division. Employees in the first and second management levels under the Executive Board presented selected optimization and expansion projects.
The Executive Board presented the revised mid-range planning in the meeting on March 18, 2015. The Supervisory Board approved the project Fit for Future, which includes a capacity expansion from 1.3 million t p.a. to 1.47 million t p.a. of copper concentrate in Pirdop. Furthermore, the Supervisory Board heard a report on the development of Business Line Flat Rolled Products.
The Supervisory Board meeting on June 5, 2015 took place at the Buffalo site in the US. The Supervisory Board utilized the visit to discuss the site intensively and to tour it. Dr. Reich wasn’t able to participate in the trip due to health reasons but dialed in to the meeting.
In addition to the earnings situation after the first half of the fiscal year, the Supervisory Board addressed the potential effects of the developments in environmental legislation for the German sites. Another focus was the earnings development in Business Line Flat Rolled Products and the measures to improve “operational excellence”. The Supervisory Board extensively discussed the reorganization of the Group recommended by the Executive Board.
The Supervisory Board approved the new organizational structure during the extraordinary Supervisory Board meeting on June 29, 2015. Aurubis AG will report in the two Business Units Primary Copper and Copper Products and not in the three previous Business Units Primary Copper, Recycling/Precious Metals and Copper Products. In connection with this change, the Supervisory Board repealed the appointment of Dr. Frank Schneider as of June 30, 2015, extended the appointment of Dr. Stefan Boel to April 30, 2021 and approved the appointment of Dr. Thomas Bünger as Chief Representative.
In the meeting on September 11, 2015 the Supervisory Board increased the Executive Board’s base salary and bonus payments by 5.56 %. Furthermore, the Supervisory Board heard another report on the development of Business Line Flat Rolled Products. The focus of the meeting was on authorizing the capital expenditure planning and budget as well as the “Deep Reduction” project. The Supervisory Board also established the target quota for female Executive Board members until June 30, 2017 at 0 % since no new Executive Board members are expected to be appointed before then. The Supervisory Board set up a Technology Committee that went into effect on November 1, 2015.
The Supervisory Board set up a total of four committees to fulfill its duties in fiscal year 2014/15, which effectively supported the work in the meetings. The committees prepared the Supervisory Board’s resolutions and the topics to be considered in the meetings. The Conciliation Committee in accordance with Section 27 (3) Law on Co-determination (MitbestG) did not meet during the reporting year.
General statements on the composition and working procedures of the Supervisory Board and its committees can be found in this year’s declaration on corporate governance as part of the Aurubis AG’s Management Report.
All of the members participated in all of the committee meetings.
Work on the Personnel Committee
The Personnel Committee met six times during the reporting period. The Personnel Committee dealt with the search for and selection of the Chairman of the Executive Board during the meetings. Other focuses included the increase in the Executive Board salaries starting October 1, 2015, the new organizational structure and all of the related topics, including the extension of Dr. Boel’s appointment by another five years. The Personnel Committee discussed the recommendation to establish the target EBT for Executive Board compensation for fiscal year 2015/16.
Work on the Audit Committee
The Audit Committee met four times in the reporting period to review the separate financial statements for Aurubis AG, the consolidated financial statements and the quarterly reports for the past fiscal year, which were discussed with the Executive Board in each case before being published. The Audit Committee also addressed the monitoring of the accounting process, the effectiveness of the internal control and auditing system and compliance management in the Group. In all of the meetings, the committee dealt with the Group’s earnings trend.
The Audit Committee Chairman, Dr. Ernst Wortberg, has special expertise and experience in the application of accounting principles and internal control procedures. He is independent and not a former member of the Company’s Executive Board.
Apart from the appointment of the auditors and the agreement of the fee with the auditors, the committee established the focuses of the annual 2014/15 audit, specifically:
- Reviewing the compensation tables (contribution and accrual table) in accordance with the German Corporate Governance Code
- Reviewing Aurubis AG’s pension provisions in accordance with the German Commercial Code (HGB) stipulations, taking special consideration of the transfer of obligations from the Norddeutsche Affinerie Employees’ Pension Supplement Fund e.V. to Aurubis AG
- Reviewing the inventory processes at Aurubis AG (Hamburg and Lünen)
- Reviewing the implementation of Comex fixations
The Audit Committee furthermore monitored the independence of the auditors, obtained the declaration on their independence recommended by the German Corporate Governance Code and addressed the additional services performed by the auditors. In this regard, the designated auditors were obligated to inform the Chairman of the Audit Committee without delay about any possible grounds for exclusion or lack of impartiality arising during the audit.
The auditors’ representatives attended one Audit Committee meeting and reported on the audit of the annual accounts.
Corporate governance and Declaration of Conformity
The regular efficiency review was performed by the Supervisory Board at its meeting on September 11, 2015. The Supervisory Board reviewed its efficiency with a comprehensive questionnaire developed by an external consultant. All of the Supervisory Board members worked on this questionnaire prior to the meeting. The results were discussed in detail.
The Executive Board reports on corporate governance at Aurubis AG, also on behalf of the Supervisory Board, in accordance with Section 3.10 of the German Corporate Governance Code in the declaration and report on corporate governance, which are parts of the Management Report.
On November 6, 2015 the Executive Board and Supervisory Board issued the updated Declaration of Conformity to the Corporate Governance Code in accordance with Section 161 German Stock Corporation Act (AktG) and made it permanently accessible to the public at www.aurubis.com. Aurubis AG complies with the code recommendations with two exceptions. Additional information can be found in the Declaration of Conformity.
Conflicts of interest
There were no conflicts of interest among Executive Board or Supervisory Board members that should have been disclosed to the Supervisory Board or announced at the Annual General Meeting. There were no significant transactions with an Executive Board member or parties related to an Executive Board member.
Audit of the separate financial statements of Aurubis AG and the consolidated financial statements
The Company’s financial statements prepared by the Executive Board in accordance with the German GAAP, the consolidated financial statements prepared in accordance with IFRS (International Financial Reporting Standards) for the fiscal year from October 1, 2014 to September 30, 2015 and the Combined Management Report for the Company and the Group have been audited by PricewaterhouseCoopers AG Wirtschaftsprüfungsgesellschaft, Hamburg, in accordance with the resolution passed at the Company’s Annual General Meeting on March 5, 2015 and their subsequent appointment as auditors by the Supervisory Board. The auditor responsible was Mr. Matthias Kirschke, who audited the Group and the Company for the third year in a row. The auditors have issued an unqualified auditors’ report.
The meeting of the Supervisory Board to approve the financial statements was held on December 10, 2015. All members of the Supervisory Board received copies of the financial statements and audit reports as well as the Executive Board’s recommendation on the appropriation of the net earnings and all other documents in good time before this meeting. These documents were discussed in detail at the Supervisory Board meeting to approve the financial statements. The auditors participated in this meeting, reported in detail on how the audit had been performed and their main audit findings and were available to provide the Supervisory Board with further information, discuss the documents and make additional comments.
Following a detailed discussion on the auditors’ findings and a thorough consideration of the report by the auditors and the recommendation of the Executive Board on the appropriation of the net income, and on the basis of its own review of and discussion on the separate financial statements of Aurubis AG, the consolidated financial statements, the Combined Management Report for the Company and the Group and the Executive Board’s recommendation on the utilization of the unappropriated earnings, the Supervisory Board concurred with the results of the audit. The Supervisory Board concluded that no objections need to be raised and, in accordance with the recommendations of the Audit Committee, approved the separate financial statements of Aurubis AG, which were thus adopted, as well as the consolidated financial statements and the Combined Management Report at the meeting on the financial statements. The Supervisory Board concurred with the Executive Board’s recommendation on the utilization of the unappropriated earnings.
Changes in the Supervisory Board and Executive Board
Mr. Peter Willbrandt resigned his Executive Board mandate on October 31, 2014. Dr. Bernd Drouven was dispatched to the Executive Board from November 1, 2014 to October 31, 2015 pursuant to Section 105 (2) German Stock Corporation Act (AktG) and was appointed Executive Board Chairman. His Supervisory Board mandate was suspended during this period. Dr. Drouven has been an active member of the Supervisory Board again since November 1, 2015. Dr. Frank Schneider withdrew from the Aurubis Executive Board on June 30, 2015. Dr. Stefan Boel’s appointment was extended by five years. Mr. Erwin Faust has been Executive Board Spokesman since November 1, 2015 and is managing the Group with Dr. Boel on an interim basis. Mr. Jürgen Schachler will become the new Executive Board Chairman of Aurubis AG on July 1, 2016.
Mr. Jürgen Grundmann (Deputy Supervisory Board Chairman) withdrew from the Supervisory Board on September 30, 2015 with the start of his semi-retirement. Mr. Ralf Winterfeldt succeeded him as an alternate member. The Supervisory Board elected Ms. Renate Hold-Yilmaz as the new Deputy Supervisory Board Chairwoman on October 2, 2015.
The Supervisory Board would like to thank Dr. Drouven, Mr. Grundmann, Dr. Schneider and Mr. Willbrandt for their service for the benefit of the Aurubis Group.
Hamburg, December 2014
The Supervisory Board
Prof. Dr.-Ing. Heinz Jörg Fuhrmann