Corporate control

Control system

The management control system´s main objective is to increase the Aurubis Group’s corporate value. For this purpose, a positive overall contribution to the enterprise as a whole will be generated 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 = operating EBT (Earnings Before Taxes)
  • operating return on capital employed = 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 based on these parameters.

The Aurubis Group reports in accordance with International Financial Reporting Standards (IFRS). The past amendment to IAS 2 for an exclusive application of the FIFO or average cost method was not implemented by the Aurubis Group for internal control purposes, in order to avoid metal price fluctuations resulting from valuation according to the average cost method. These are valuation effects, which in our opinion can be eliminated for an understanding of the Aurubis Group’s business activities and results from an operational perspective. Furthermore, one-time effects resulted from purchase price allocations, 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. This is to present the Aurubis Group’s success independently of these valuation effects on internal control systems.

The operating result is derived from the IFRS results of operations by:

  • adjusting for valuation 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 value of copper inventories
  • adjusting for the impact of purchase price allocations, primarily on fixed assets, since fiscal year 2010/11.

Operating return on capital employed (ROCE)

T 009
 
in € million 9/30/2017 9/30/2016
     
Fixed assets excluding fixed assets and investments measured using the equity method 1,375 1,343
Inventories 1,387 1,494
Trade accounts receivable 357 242
Other receivables and assets 216 211
– Trade liabilities –905 –798
– Provisions and other liabilities –388 –379
Capital employed as at the balance sheet date 2,042 2,114
 
Earnings before taxes (EBT) 298 213
Financial result 10 16
Earnings before interest and taxes (EBIT) 308 229
 
Return on capital employed (operating ROCE) 15.1 % 10.9 %

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 Management Report.