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.
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 variable compensation of the Executive Board and the management is also based on these parameters.
The Aurubis Group reports in accordance with International Financial Reporting Standards (IFRS). For internal management purposes, it does not comply with the past amendment to IAS 2 that requires exclusive application of the FIFO or average cost method. This is to avoid earnings volatilities due to 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 and need to be eliminated. Furthermore, one-time effects from purchase price allocations were eliminated that otherwise would have led to a distortion in the Aurubis Group’s presentation of the results of operations, financial position, and net assets.
The internal reporting and management of the Group are carried out on the basis of the operating result in order to present the Aurubis Group’s success independently of these measurement effects for internal management purposes.
The operating result is derived from the IFRS results of operations by:
- Adjusting by effects deriving from the application of IFRS 5
- Adjusting for measurement impacts deriving from the application of IAS 2. In this context, the metal price fluctuations resulting from the application of the average cost method are eliminated. Likewise, non-permanent write-downs or write-ups of the value of copper inventories as at the reporting date are eliminated
- Elimination of non-cash effects deriving from purchase price allocations
Compared to the previous year, the reconciliation was changed to eliminate only non-permanent write-downs and write-ups of copper inventories as at the reporting date.
Any permanent impairment losses or reversals of imparment losses are recognized as part of the operating result from this reporting year onwards and serve to better depict the results of operations, net assets, and financial position. This amendment to the reconciliation resulted in the recognition of a permanent impairment loss of € 31 million as at the reporting date. An equivalent amendment in the previous year wouldn’t have resulted in the recognition of an imparment loss in the income statment.
The purely theoretical amendment to the requirement to eliminate effects deriving from purchase price allocations did not lead to any changes to figures in the year reported or to those of the previous year.
|in € million||9/30/2019||9/30/2018|
|Fixed assets excluding financial fixed assets1||1,485||1,450|
|Trade accounts receivable||390||374|
|Other receivables and assets||196||191|
|– Trade accounts payable||-818||-904|
|– Provisions and other liabilities||-367||-371|
|Capital employed as at the reporting date||2,418||2,290|
|Earnings before taxes (EBT)||192||329|
|Earnings before interest and taxes (EBIT)||208||332|
|Investments accounted for using the equity method1||0||11|
|Earnings before interest and taxes (EBIT) – adjusted||208||342|
|Return on capital employed (operating ROCE)||8.6 %||15.0 %|
|1 The shares of Schwermetall Halbzeugwerk GmbH & Co. KG accounted for using the equity method have been included for this reporting year. This adjustment should improve the depiction of Segment FRP’s profitability. Prior-year figures have been adjusted accordingly.|
Operating ROCE defines the relationship between operating earnings before interest and taxes (EBIT) together with the operating result from investments measured using the equity method and the operating capital employed as at the reporting date and depicts the return on capital employed.
In a manner corresponding to the calculation of the operating result, operating capital employed is derived by adjusting the IFRS-based balance sheet items by the effects as previously mentioned.
A reconciliation of the balance sheet and income statement from IFRS to operating figures is provided in the Economic Report section of the Combined Management Report.