The management control system’s main objective is to increase the Aurubis Group’s corporate value. Concretely, the company should generate value 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 before taxes = operating EBT,
- Operating ROCE (return on capital employed) of the Group.
These parameters are regularly presented to the Executive Board and are utilized for internal control purposes. The Executive Board’s variable compensation is also based on these parameters.
The Aurubis Group reports in accordance with International Financial Reporting Standards (IFRS). For internal control purposes, it does not comply with the IAS 2 amendment that stipulates exclusive application of the FIFO or average cost method. This is to avoid metal price fluctuations resulting from measurement according to the average cost method. Such measurement effects, in our opinion, are not necessary to gain an understanding of the Aurubis Group’s business activities and results from an operational perspective. Furthermore, purchase price allocations led to one-time effects, which would also lead to a distortion in the Aurubis Group’s presentation of the results of operations, financial position, and net assets.
Internal Group reporting and control are carried out on the basis of the operating result to present the Aurubis Group’s success independently of these measurement effects on internal control systems.
The operating result is derived from the IFRS results of operations by:
- Adjusting by effects from the use of IFRS 5,
- Adjusting for measurement results from the use of IAS 2. The metal price fluctuations resulting from the application of the average cost method are eliminated in the same manner as devaluations relating to the reporting date and appreciations in the value of copper inventories,
- Adjusting for the impact of purchase price allocations, primarily on property, plant, and equipment, since fiscal year 2010/11.
Operating return on capital employed (ROCE)
|in € million||9/30/2018||9/30/2017|
|Fixed assets excluding financial fixed assets and investments measured using the equity method||1,406||1,375|
|Trade accounts receivable||374||357|
|Other receivables and assets||191||216|
|– Trade accounts payable||-904||-905|
|– Provisions and other liabilities||-371||-388|
|Capital employed as at the balance sheet date||2,246||2,042|
|Earnings before taxes (EBT)||329||298|
|Earnings before interest and taxes (EBIT)||332||308|
|Return on capital employed (operating ROCE)||14.8 %||15.1 %|
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 Combined Management Report.