Report of the Supervisory Board

The topics regularly covered in Supervisory Board meetings included the business performance, human resources in the Group, as well as the development of the results, the raw materials markets, and the foreign exchange markets. The Supervisory Board also dealt with the financial situation and the status of capital expenditure. In particular, the Supervisory Board oversaw the planning of the large-scale project Future Complex Metallurgy (FCM) and the ONE Aurubis transformation program. Additional focuses included the sale of Segment Flat Rolled Products and the acquisition of the remaining shares of Deutsche Giessdraht GmbH. During the meetings, the Chairmen of the Personnel, Audit, and Nomination Committees reported on their work, the suggestions made, and the results achieved.

The new Executive Board compensation system was passed in the meeting on October 5, 2017. During the same meeting, the skills profile developed by the Personnel Committee for the composition of the Supervisory Board was explained and passed. The Supervisory Board approved the FCM project, as well as the investment plans and budget for 2017/18. The Executive Board presented the Group strategy to the Supervisory Board.

In the meeting on December 12, 2017, the Supervisory Board determined the compensation for the Executive Board members for fiscal year 2016/17 contingent on the established objectives. The details are explained 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 2016/17, including the Corporate Governance Report, and the preparations for the 2018 Annual General Meeting and the Supervisory Board election. The Chairman of the Nomination Committee reported on the recommendations for the election of the shareholder representatives and presented the candidates’ experience and skills.

In the extraordinary meeting on January 16, 2018, consultations took place again regarding the candidates for the Supervisory Board election, and the final election recommendations were passed.

In the extraordinary meeting on February 9, 2018, the Supervisory Board discussed the sale of Segment Flat Rolled Products to Wieland-Werke AG.

In the meeting on February 28, 2018, the Executive Board reported on the current business and the FCM project. The Supervisory Board discussed the audit tendering process for the consolidated financial statements and separate financial statements. The Audit Committee Chairman explained the process of preparing the Non-Financial Report, which is required for the first time for fiscal year 2017/18. Furthermore, the Supervisory Board approved the sale of Segment Flat Rolled Products to Wieland-Werke AG.

The Supervisory Board, which was newly elected at the Annual General Meeting, and its committees were established in the meeting on March 1, 2018.

The extraordinary meeting on March 26, 2018 focused on the mutual agreement to end the appointment of Dr. Stefan Boel at the close of July 31, 2018.

In the meeting on June 13, 2018, the Supervisory Board discussed the status of new investments. It approved the scheduled, routine shutdown in Hamburg in 2019 and passed the new Sustainability Strategy.

In the extraordinary meeting on August 8, 2018, the Supervisory Board discussed the development of the global recycling business and a potential acquisition project.

In the meeting on September 11, 2018, Dr. Thomas Bünger was appointed Chief Operating Officer effective October 1, 2018. Due to the appointment, the amendment to the division of business responsibilities was passed at the same time. The Audit Committee Chairman explained the recommendations and preference regarding the selection of the future auditors. The Supervisory Board followed the preference of recommending to participants of the Annual General Meeting that Deloitte GmbH Wirtschaftsprüfungsgesellschaft be chosen as auditor of the financial statements. Moreover, the Supervisory Board passed two diversity concepts, one for the composition of the Executive Board and one for the composition of the Supervisory Board. Details are explained in the declaration on corporate governance, which is part of the Combined Management Report. Effective October 1, 2018, the Supervisory Board reduced the individual component for determining the one-year bonus of the new Executive Board compensation, to the benefit of the EBT component.

Committees

The Supervisory Board set up a total of four committees to fulfill its duties in fiscal year 2017/18. These effectively supported the Supervisory Board’s work in the meetings. The committees prepared the Supervisory Board’s resolutions and topics to be considered in the meetings. The Conciliation Committee formed in accordance with Section 27 (3) of the German Codetermination Act (MitbestG) did not meet during the reporting year.

General statements on the composition and working procedures of the Supervisory Board and its committees can also be found in this year’s declaration on corporate governance.

Work on the Nomination Committee

The Nomination Committee met three times during the reporting period. The members discussed the recommended candidates for the election of the shareholder representatives at the Annual General Meeting on March 1, 2018 and passed a resolution on June 13, 2018 to nominate Ms. Andrea Bauer for a temporary judicial appointment as successor to Ms. Edna Schöne, who stepped down from office due to personal reasons. 

Work within the Personnel Committee

The Personnel Committee met three times during the reporting period. It addressed the cancellation of Dr. Stefan Boel’s Executive Board contract and the search for a new Chief Operating Officer (COO). In the meeting on September 11, 2018, the Personnel Committee passed a resolution to recommend Dr. Thomas Bünger as Chief Operating Officer. Due to investor remarks regarding the new compensation system, the Personnel Committee reviewed the Executive Board compensation and recommended a reduction in the individual component to the benefit of the EBT component.

Work on the Technology Committee

After approving the FCM project, the Technology Committee did not meet in fiscal year 2017/18. The Committee was not formed again.

Work on the Audit Committee 

The Audit Committee met four times during the reporting period.

In all of its meetings, the Audit Committee reviewed the quarterly reports, the separate financial statements, and the consolidated financial statements for the past fiscal year and discussed them with the Executive Board. The Audit Committee also addressed the monitoring of the accounting process and the effectiveness of the internal control and auditing system, as well as risk and compliance management in the Group. The Audit Committee recommended the auditing firm PricewaterhouseCoopers GmbH, Hamburg, to the Supervisory Board as auditor for fiscal year 2017/18. The Audit Committee authorized the Executive Board to also commission the auditors with additional non-audit services to a limited extent starting October 1, 2017.

The Audit Committee also focused on the first audit tendering process for the consolidated and separate financial statements in accordance with Regulation (EU) No. 537/2014 and presented the recommendation and preference mentioned above to the Supervisory Board.

The Audit Committee Chairmen, Dr. Ernst Wortberg (Chairman until March 1, 2018) and Dr. Stephan Krümmer, have special expertise and experience in the application of accounting principles and internal control procedures. They are independent and not former members of the company’s Executive Board.

In addition to appointing the auditors and agreeing on the auditing fee, the Committee defined the focal areas of the annual 2017/18 audit. These were as follows:

• A review of the balance sheet presentation of the discontinued operations of Segment Flat Rolled Products
• The introduction of a new chart of accounts at Aurubis AG

• Notes regarding the effect of new standards on the IFRS consolidated financial statements

The last focal area is also an audit focus of the German Financial Reporting Enforcement Panel for 2018. 

The Audit Committee furthermore monitored the independence of the auditors, obtained the declaration of 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 two Audit Committee meetings and reported on the audit of the consolidated and separate annual financial statements.

Corporate Governance and Declaration of Conformity

The regular efficiency review was performed by the Supervisory Board at its meeting on September 11, 2018. Following a detailed discussion, the Supervisory Board declared its efficiency.

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 both part of the Management Report.

On November 5, 2018, the Executive Board and Supervisory Board of Aurubis AG issued the updated Declaration of Conformity to the German Corporate Governance Code (DCGK) in accordance with Section 161 of the 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 Commercial Code (HGB), the consolidated financial statements prepared in accordance with IFRS (International Financial Reporting Standards) for the fiscal year from October 1, 2017 to September 30, 2018, and the Combined Management Report for the company and the Group have been audited by the auditing firm PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft, Hamburg, in accordance with the resolution passed at the company’s Annual General Meeting on March 1, 2018 and the subsequent appointment of PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft as auditors by the Supervisory Board. The auditor responsible was Mr. Claus Brandt, who audited the Group and the company for the second time. The auditors have issued an unqualified auditors’ report. PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft, Hamburg, has been the appointed auditing firm since fiscal year 2008/09. Its audit in fiscal year 2017/18 is its tenth audit for Aurubis. 

The meeting of the Supervisory Board to approve the financial statements was held on December 10, 2018. 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 what their main audit findings were, and were available to provide the Supervisory Board with further information, discuss the documents, and make additional comments.

The Supervisory Board concurred with the results of the audit. This agreement was reached following a detailed discussion on the auditors’ findings, and thorough consideration of the auditors’ report and of the Executive Board’s recommendation regarding the appropriation of the net income. It was also based on the Supervisory Board’s own review of the separate financial statements of Aurubis AG, the consolidated financial statements, and the Combined Management Report for the company and the Group. The Supervisory Board concluded that no objections needed 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.

Audit of the seperate Non-Financial Report

KPMG conducted, on behalf of the Supervisory Board, a substantive audit of the separate Non-Financial Report for Aurubis.

On the basis of their audit, the auditors did not raise any objections to the reporting and the satisfaction of the relevant statutory requirements and provided an unqualified audit opinion with limited assurance that the separate Non-Financial Report is in accordance with Sections 315b and 315c in connection with Sections 289b to 289e of the German Commercial Code (HGB).

Changes in the Supervisory Board and Executive Board

Effective January 1, 2018, Mr. Rainer Verhoeven was appointed as the new Chief Financial Officer. Dr. Stefan Boel left the company on July 31, 2018 by mutual agreement. Dr. Thomas Bünger was appointed Chief Operating Officer effective October 1, 2018. Mr. Burkhard Becker, Dr. Bernd Drouven, Dr. Joachim Faubel, Dr. Thomas Schultek, Mr. Rolf Schwertz, and Mr. Ralf Winterfeldt left the Supervisory Board at the end of the Annual General Meeting on March 1, 2018.

We would like to thank these Supervisory Board members and Dr. Stefan Boel for their many years of successful work for the benefit of the Aurubis Group.

The participants of the Annual General Meeting elected Prof. Karl Friedrich Jakob, Dr. Stephan Krümmer, and Ms. Edna Schöne to the Supervisory Board for the first time. The employees elected Mr. Karl-Heinz Hamacher, Dr. Elke Lossin, Mr. Stefan Schmidt, and Mr. Melf Singer to the Supervisory Board for the first time.

Edna Schöne stepped down on June 15, 2018 for personal reasons. At the recommendation of the Nomination Committee and the request of the Executive Board, the District Court of Hamburg appointed Ms. Andrea Bauer as a new Supervisory Board member effective June 22, 2018. The court appointment expires at the close of the next Annual General Meeting. At the Annual General Meeting, the Supervisory Board will propose that Ms. Andrea Bauer be elected to the Supervisory Board as a shareholder representative for the period until the close of the Annual General Meeting during which the decision on the approval of the Supervisory Board members for fiscal year 2021/22 (October 1, 2021 to September 30, 2022) is to be made. We would like to thank Ms. Edna Schöne for her commitment.

Hamburg, December 2018


The Supervisory Board