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 Segments, 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 the Segment 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

Income statement

in € million 2017/18 2016/17
Revenues 7,968 7,511
Changes in inventories/own work capitalized 30 -42
Other operating income 82 76
Cost of materials -7,474 -6,948
Gross profit 606 597
Personnel expenses -245 -240
Depreciation of property, plant, and equipment and amortization of intangible assets -51 -51
Other operating expenses -163 -159
Operational result (EBIT) 147 147
Financial result 24 50
Result of normal business activities (EBT) 171 197
Taxes -51 -48
Net income for the year 120 149

The business performance (gross profit) of Aurubis AG in fiscal year 2017/18 was positively influenced in comparison to the previous year by higher refining charges on the copper scrap markets, as well as by a higher metal yield. During the reporting year, the concentrate throughput was at prior-year level with satisfactory treatment and refining charges. Moreover, higher sulfuric acid revenues due to substantially higher sales prices positively impacted the result during the fiscal year.

Revenues increased by € 457 million to € 7,968 million during the reporting year (previous year: € 7,511 million). This development was primarily driven by higher sales revenues for copper products due to pricing.

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 increased slightly by € 9 million to € 606 million (previous year: € 597 million).

Personnel expenses increased in the past fiscal year by € 5 million to € 245 million (previous year: € 240 million). As was the case in the previous year, the increase was especially attributable to wage tariff agreement increases and an increased number of employees.

At € 51 million, depreciation and amortization of fixed assets remained at the prior-year level (previous year: € 51 million). Taking other operating expenses into account, the operational result (EBIT) amounted to € 147 million (previous year: € 147 million).

The financial result for the reporting year was € 24 million (previous year: € 50 million). In addition to dividends of € 52 million from subsidiaries (previous year: € 14 million), this included the net interest result of € -28 million (previous year: € -26 million) and write-ups of investment securities amounting to € 2 million (previous year: € 7 million). In the previous year, moreover, write-ups of equity interests amounting to € 55 million were also recognized.

After taking a tax expense of € 51 million (previous year: € 48 million) into account, net income for the year amounted to € 120 million (previous year: € 149 million).

Net assets

Fixed assets increased in the fiscal year by € 55 million to € 2,120 million (previous year: € 2,065 million), especially due to investments in property, plant, and equipment. These included investments in connection with the industrial heat project, the construction of the new innovation and training center, and the Future Complex Metallurgy project. In addition, during the past fiscal year, Aurubis acquired the shares that Codelco Kupferhandel GmbH had held in Deutsche Giessdraht, so Aurubis now owns 100 % of the shares.

The € 69 million increase in inventories to € 822 million (previous year: € 753 million) resulted primarily from higher inventories of raw materials due to the build-up of complex, precious metal-bearing concentrates, as well as from an increase in precious metal-bearing intermediate products.

Overall, total assets rose by € 66 million, to € 3,809 million compared to the prior year. Thus, in comparison to the previous year, the share attributable to fixed assets was 56 % (previous year: 55 %), while inventories accounted for 22 % (previous year: 20 %) and receivables and other assets accounted for 12 % of total assets (previous year: 11 %).

Due to the result, equity increased by € 54 million to € 1,510 million (previous year: € 1,456 million). The equity ratio remained at the prior-year level of 40 %.

Provisions increased by a total of € 23 million to € 284 million. The growth was due to higher pension provisions and increased personnel and tax provisions.

Bank borrowings decreased by € 49 million to € 278 million (previous year: € 327 million) due to the redemption of two bonded loans (Schuldscheindarlehen).

Trade accounts payable decreased by € 64 million to € 469 million. Trade accounts payable disclosed at September 30, 2017 were at a slightly higher level due to blister copper deliveries that had not yet been paid for as at the balance sheet date. Payables to affiliated companies primarily comprise borrowings, which increased within the context of normal financial transactions, from € 1,012 million to € 1,129 million. Other payables remained unchanged at € 20 million.

Balance sheet structure of Aurubis AG

in % 9/30/2018 9/30/2017
Fixed assets 56 55
Inventories 22 20
Receivables, etc. 12 11
Cash and cash equivalents 10 14
  100 100
Equity 40 39
Provisions 7 7
Liabilities 53 54
  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 € 9 million. Apart from this, financial commitments under long-term storage and handling agreements amounted to € 106 million.

Financial Position

Net borrowings were at € 744 million as at September 30, 2018 (previous year: € 638 million). They resulted from bank borrowings of € 278 million (previous year: € 327 million), receivables and payables to subsidiaries deriving from refinancing of € 890 million (previous year: € 830 million), and after deducting cash and cash equivalents of € 424 million (previous year: € 519 million).

Analysis of liquidity and funding

In the 2017/18 fiscal year, the net cash flow decreased by € 116 million to € 70 million. The main reason for this was the build-up of working capital as a result of higher inventories and lower trade accounts payable.

The cash outflow for investments in fixed assets was € 111 million (previous year: € 108 million). Investments of € 86 million in property, plant, and equipment mainly related to the industrial heat project, the construction of the new innovation and training center, and the Future Complex Metallurgy project. Investments of € 19 million in financial fixed assets derived from the acquisition of the remaining shares of Deutsche Giessdraht GmbH from Codelco Kupferhandel GmbH.

The cash outflow of € 49 million from financing activities (previous year: cash inflow of € 8 million) resulted from the € 71 million redemption of two bonded loans (Schuldscheindarlehen), as well as from a dividend payment of € 65 million. The take-up of loans from subsidiaries in the context of the existing cash pooling arrangements had a counter-effect.

Cash and cash equivalents at the end of the reporting period amounted to € 424 million (previous year: € 519 million). In addition to cash and cash equivalents, Aurubis AG had access to unutilized credit line facilities and thus has adequate liquidity reserves. Furthermore, within the context of factoring agreements, Aurubis AG sold receivables without recourse as a financing instrument.

In the past fiscal year, investments of € 111 million were made at the Hamburg and Lünen sites (previous year: € 108 million). The investments were made primarily in the following projects: the industrial heat project, the construction of the new innovation and training center in Hamburg, the Future Complex Metallurgy project, the training center in Lünen, and the acquisition of the remaining shares of Deutsche Giessdraht GmbH from Codelco Kupferhandel GmbH. In addition, investments were made in various infrastructure and improvement measures in the Hamburg and Lünen plants.