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 material markets, and the foreign exchange markets. The Supervisory Board also dealt with the financial situation and the status of capital expenditure. The Supervisory Board oversaw the acquisition of the Metallo Group and the FCM project until it was stopped. After the European Commission prohibited the sale of Segment Flat Rolled Products (FRP) to Wieland-Werke AG, strategic options for this segment were discussed in the Supervisory Board meetings. During the meetings, the chairmen of the Personnel, Audit, and Nomination Committees reported on their work, the suggestions made, and the results achieved.

In the meeting on December 10, 2018, the Supervisory Board determined the compensation for the Executive Board members for fiscal year 2017/18 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 2017/18, including the Corporate Governance Report, and the preparations for the 2019 Annual General Meeting, which included the election of Andrea Bauer to the Supervisory Board. The Supervisory Board addressed the status of the merger control proceedings and the European Commission’s concerns. Furthermore, the Supervisory Board passed a resolution not to extend the contract of Executive Board Chairman Jürgen Schachler and to let it expire on June 30, 2019.

In the extraordinary meeting on January 30, 2019, the Supervisory Board unanimously passed a resolution to appoint Roland Harings as the new Executive Board chairman effective July 1, 2019.

In the meeting on February 27, 2019, the Executive Board reported on the current business and the FCM project. Moreover, the Supervisory Board dealt with site-specific topics. Following the European Commission’s prohibition of the sale of Segment FRP to Wieland-Werke AG on February 6, 2019, the Executive Board explained different strategic options for the segment.

In the extraordinary meeting on April 16, 2019, the Supervisory Board passed a resolution to appoint Roland Harings deputy Executive Board chairman from May 20, 2019 to June 30, 2019.

In the extraordinary meeting on May 13, 2019, the Supervisory Board issued its approval for the acquisition of the Metallo Group from TowerBrook Capital Partners with an underlying enterprise value of € 380 million, as well as for the arrangement of a syndicated bridging loan.

In the meeting on June 12, 2019, the Supervisory Board focused on the status of the FCM project, whose total planned investment amount had been approximately € 320 million. The Supervisory Board reported that according to precise analyses, significantly higher investment costs were to be expected for the ongoing project. The project was therefore no longer as cost-effective as originally planned. After an extensive discussion, the Executive Board and Supervisory Board decided during the meeting to document the current status of the project as well as to end the overall project. Subsequently, the Supervisory Board unanimously decided to release Jürgen Schachler from the position of Executive Board chairman. Because the strategic considerations related to the project are still valid, however, they will contribute to the multi-metal strategy. The Supervisory Board also dealt with the status of new investments and passed a resolution on the appointment of a Technology Committee.

On August 1, 2019, the Supervisory Board approved a subproject to reduce emissions in the primary smelter (RWO) at the Hamburg site and an increase in the budget for the planned maintenance shutdown in Hamburg by written consent in lieu of a meeting.

In the meeting on September 11, 2019, the Executive Board reported on steps taken to document the FCM project. The Supervisory Board approved the budget and investment plans for 2019/20. The Executive Board presented the new division of business responsibilities and the partial organizational adjustment, which the Supervisory Board approved. The Supervisory Board established the individual targets for the Executive Board for fiscal year 2019/20 and the target values for the performance cash plan.

Committees

The Supervisory Board set up a total of five committees to fulfill its duties in fiscal year 2018/19. 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 within the Personnel Committee

The Personnel Committee met twice during the reporting period. It addressed the search for a successor for the position of Executive Board chairman. In the meeting on January 24, 2019, the Personnel Committee passed a resolution to recommend the appointment of Roland Harings as Executive Board chairman.

Work on the Technology Committee

The Technology Committee met twice during the reporting period. In addition to overseeing various optimization and development projects, the committee was primarily involved with the project to reduce fugitive emissions in the primary smelter (RWO) at the Hamburg site.

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 accounting audit; the monitoring of the accounting process; the effectiveness of the internal control system, risk management system, and internal auditing system; and compliance in the Group.

The Audit Committee addressed the tendering process for the annual and Group financial statements for fiscal year 2018/19 because PricewaterhouseCoopers GmbH Wirtschaftsprüfungs­gesellschaft, Hamburg, audited these financial statements for the tenth consecutive time in fiscal year 2017/18 – the longest period permitted without a tendering process.

The Audit Committee recommended the auditing firm Deloitte GmbH Wirtschaftsprüfungsgesellschaft, Hamburg, to the Supervisory Board as auditor for fiscal year 2018/19. The Audit Committee authorized the Executive Board to also commission the auditors with additional non-audit services to a limited extent starting October 1, 2018.

The Audit Committee chairman, Dr. Stephan Krümmer, 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 focal areas of the annual 2018/19 audit, specifically:

• A review of the balance sheet presentation of the discontinued operations of Segment Flat Rolled Products
• A financial depiction of the FCM project broken down by focus areas and amounts
• The effect of new standards on accounting

The last focal area is also an audit focus of the German Financial Reporting Enforcement Panel for 2019.

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. The 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, 2019. Following a detailed discussion of an extensive catalogue of questions answered in advance, 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 February 7, 2017 version of the German Corporate Governance Code, in the declaration and report on corporate governance, which are both part of the Management Report.

On November 4, 2019, 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, 2018 to September 30, 2019, and the Combined Management Report for the company and the Group have been audited by the auditing firm Deloitte GmbH Wirtschaftsprüfungsgesellschaft, Hamburg, for the first time in accordance with the resolution passed at the company’s Annual General Meeting on February 28, 2019 and the subsequent appointment of Deloitte GmbH Wirtschaftsprüfungsgesellschaft as auditors by the Supervisory Board. Annika Deutsch oversaw the audit of the Group and the company for the first time accordingly. The auditors have issued an unqualified auditors’ report. Deloitte GmbH Wirtschaftsprüfungsgesellschaft, Hamburg, has been the appointed auditor since fiscal year 2018/19 and audited Aurubis for the first time.

The meeting of the Supervisory Board to approve the financial statements was held on December 10, 2019. 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 separate Non-Financial Report

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

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

Dr. Thomas Bünger was appointed chief operating officer effective October 1, 2018. The Supervisory Board passed a resolution on June 12, 2019 to release Mr. Jürgen Schachler from his duties with immediate effect. He left the company on June 30, 2019 at the end of his appointment. Roland Harings was appointed deputy Executive Board chairman as of May 20, 2019. Roland Harings assumed the position of Executive Board chairman on July 1, 2019 as planned.

Renate Hold-Yilmaz, Karl-Heinz Hamacher, and Ralf Winterfeldt resigned from the Supervisory Board in fiscal year 2018/19. Dr. Ernst J. Wortberg, Supervisory Board member, long-standing Supervisory Board chairman, and Audit Committee chairman, had resigned at the close of the Annual General Meeting on March 1, 2018.

We would like to thank Dr. Ernst J. Wortberg and all of the members who left the Supervisory Board and Executive Board during the past fiscal year for their many years of successful work for the benefit of the Aurubis Group.

Andrea Bauer was confirmed as Supervisory Board member by the participants of the Annual General Meeting on February 28, 2019, after she had been court-appointed as Supervisory Board member by the Hamburg District Court effective June 22, 2018. At the request of the Executive Board, the District Court of Hamburg appointed Deniz Filiz Acar and Christian Ehrentraut as new Supervisory Board members effective May 3, 2019.

Hamburg, December 2019

The Supervisory Board

Prof. Dr. Fritz Vahrenholt
Chairman