interpretations
The following standards were applied for the first time in fiscal year 2013/14 and affected the Group.
Standards and interpretations applied for the first time
Standards/interpretations
Compulsory a pplication in
the EU Adoption by EU Commission Impact
Various Improvements to IFRS (2009–
2011) 1/1/2013 3/27/2013 During this annual improvement process, among other changes, IAS 16 “Property, Plant and Equip- ment” was adjusted such that replacement parts and maintenance units that fulfill the definition of property, plant and equipment are capitalized IFRS 13 Fair Value Measurement 1/1/2013 12/11/2012 Definition of fair value as the price that would be
received to sell an asset in an orderly transaction between market participants at the measurement date; guidance on the determination of fair value; requires note disclosures about fair value measu- rements
IAS 19 Employee Benefits (rev. June 2011) 1/1/2013 6/5/2012 Elimination of the corridor method; immediate recognition of actuarial gains and losses in other comprehensive income; planned interest on the plan assets calculated with the discount rate of the obligation; additional note disclosures. Aurubis ap- plied the amended IAS 19 for the first time in fiscal year 2013/14. The amendments must be retroacti- vely applied starting October 1, 2012.
IFRS 7 Amendments: Financial Instru- ments: Disclosures – Offsetting Financial Assets and Financial Liabilities
1/1/2013 12/13/2012 This amendment required additional note dis- closures regarding offsetting rights in the consoli- dated financial statements. In addition to additional disclosures on actual offsetting in accordance with IAS 32, additional disclosures must be provided for existing offsetting rights, regardless of whether there was actual offsetting in accordance with IAS 32.
The following standards are to be applied to all fiscal years beginning after October 1, 2013. They were not adopted early in the consolidated financial statements.
Standards and interpretations not adopted early
Standards/interpretations
Compulsory a pplication in
the EU Adoption by EU Commission Impact
IFRS 9 Financial Instruments – Classifica -
tion and Measurement 1/1/2018 open being investigated by Management IFRS 10 Consolidated Financial Statements 1/1/2014 12/11/2012 no significant effects
IFRS 11 Joint Arrangements 1/1/2014 12/11/2012 Elimination of proportional consolidation, i.e. the 50 % inclusion of the balance sheet and the income statement reporting line items in the consoli dated financial statements is discontinued and the joint venture will be accounted for using the equity method. In the future, the joint venture will be accounted for under investments measured using the equity method.
IFRS 12 Disclosure of Interests in Other
Entities 1/1/2014 12/11/2012 more extensive disclosures of interests in other entities IFRS 15 Revenue from Contracts with
Customers 1/1/2017 open being investigated by Management IAS 32 Amendments: Financial Instru-
ments: Presentation – Offsetting Financial Assets and Financial Liabilities
1/1/2014 12/13/2012 no significant effects
IAS 36 Amendments: Recoverable Amount Disclosures for Non-Financial Assets
1/1/2014 1/1/2014 no significant effects
IAS 39 Amendments: Novation of Derivatives and Continuation of Hedge Accounting
1/1/2014 1/1/2014 no significant effects
IFRIC 21 Levies 1/1/2014 6/17/2014 no significant effects
Various Improvements to IFRS (2010–2012) 7/1/2014 open being investigated by Management Various Improvements to IFRS (2011–2013) 7/1/2014 open being investigated by Management Various Improvements to IFRS (2012–2014) 1/1/2016 open being investigated by Management IAS 16
IAS 38 Amendments: Clarification of Acceptable Methods of Deprecia - tion and Amortization
IAS 19 Amendments: Defined Benefit
Plans: Employee Contributions 7/1/2014 open being investigated by Management IFRS 10
IAS 28 Amendments: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
1/1/2016 open no significant effects
Correction pursuant to IAS 8
In June 2011, the IASB passed IAS 19R “Employee Benefits”, which was adopted in European law by the EU in June 2012. This is to be applied for the first time in fiscal years that start on or after January 1, 2013.
In accordance with the new version of IAS 19, actuarial gains and losses should not be recorded using the corridor method but immediately recognized in other comprehensive income. These may not be reclassified to the income statement in subsequent periods. A second amendment concerns the calcu- lation of the interest on plan assets. This is no longer based on the expected return in the new version of IAS 19 but corre- sponds to the discount interest rate applied to the defined benefit obligation. Furthermore, the note disclosures were expanded. Aurubis has applied the new version of IAS 19 from October 1, 2013 onwards. The amendments must be applied retroactively to the beginning of the comparative period.
During the annual improvement process (2009-2011 cycle), the IASB provided clarification concerning IAS 16 “Property, Plant and Equipment” that replacement parts and maintenance units that fulfill the definition criteria of property, plant and equipment should be recognized as such and not as inven- tories. Maintenance units that are used for longer than one period are therefore to be recorded in fixed assets as items of property, plant and equipment. If used for a shorter period, they are disclosed as inventories.
The amendment to IAS 16 is required to be applied for the first time in fiscal years that start on or after January 1, 2013. Aurubis has applied it retroactively from October 1, 2013 onwards as from the beginning of the comparative reporting period.
The quantitative impacts of the retrospective corrections to the consolidated financial statements and the consolidated income statement pursuant to IAS 8 for fiscal year 2012/13 are presented in the following table:
Corrections pursuant to IAS 8
in € thousand
10/1/2012 before
correction IAS 16.8 IAS 19R
10/1/2012 after correction
Assets
Property, plant and equipment 1,249,317 6,037 0 1,255,354
Deferred tax assets 2,867 1,277 13,354 17,498
Non-current receivables and financial assets 69,070 0 (22,751) 46,319
Inventories 2,059,641 (9,978) 0 2,049,663
Other non-current and current assets 1,507,799 0 0 1,507,799
Total assets 4,888,694 (2,664) (9,397) 4,876,633
Equity and liabilities
Subscribed capital 115,089 0 0 115,089
Additional paid-in capital 342,782 0 0 342,782
Generated Group earnings 1,747,002 (2,664) (70,929) 1,673,409 Accumulated other comprehensive income components (11,491) 0 0 (11,491) Equity attributable to shareholders of Aurubis AG 2,193,382 (2,664) (70,929) 2,119,789
Non-controlling interests 4,043 0 (476) 3,567
Equity 2,197,425 (2,664) (71,405) 2,123,356
Pension provisions 107,823 0 83,833 191,656
Deferred tax liabilities 402,274 0 (21,825) 380,449
Other non-current and current liabilities 2,181,172 0 0 2,181,172
Corrections pursuant to IAS 8
in € thousand
9/30/2013 before
correction IAS 16.8 IAS 19R
9/30/2013 after correction
Assets
Property, plant and equipment 1,313,396 5,706 0 1,319,102
Deferred tax assets 5,329 1,604 1,818 8,751
Non-current receivables and financial assets 41,327 0 (21,518) 19,809
Inventories 1,950,849 (10,654) 0 1,940,195
Other non-current and current assets 747,390 0 0 747,390
Total assets 4,058,291 (3,344) (19,700) 4,035,247
Equity and liabilities
Subscribed capital 115,089 0 0 115,089
Additional paid-in capital 343,032 0 0 343,032
Generated Group earnings 1,532,430 (3,344) (46,708) 1,482,378 Accumulated other comprehensive income components 5,846 0 0 5,846 Equity attributable to shareholders of Aurubis AG 1,996,397 (3,344) (46,708) 1,946,345
Non-controlling interests 3,430 0 (410) 3,020
Equity 1,999,827 (3,344) (47,118) 1,949,365
Pension provisions 110,196 0 48,794 158,990
Deferred tax liabilities 298,512 0 (21,376) 277,136
Other non-current and current liabilities 1,649,756 0 0 1,649,756
Corrections pursuant to IAS 8
in € thousand
12 months 2012/13 before
correction IAS 16.8 IAS 19R
12 months 2012/13 after correction
Personnel expenses (434,854) 0 5,598 (429,256)
Depreciation and amortization of intangible assets and property, plant and
equipment (139,122) (1,007) 0 (140,129)
Operational result (EBIT) (195,046) (1,007) 5,598 (190,455)
Interest expense (44,161) 0 (3,999) (48,160)
Earnings before taxes (EBT) (229,681) (1,007) 1,599 (229,089)
Income taxes 76,829 326 (246) 76,909
Consolidated net income/(net loss) (152,852) (681) 1,353 (152,180)
Consolidated net income/(net loss) attributable to Aurubis AG shareholders (153,880) (681) 1,326 (153,235) Consolidated net income attributable to non-controlling interests 1,028 0 27 1,055
Basic earnings per share (in €) (3.42) (0.02) 0.03 (3.41)
Diluted earnings per share (in €) (3.42) (0.02) 0.03 (3.41)
In the 2013/14 consolidated financial statements, the compara- tive prior-year figures and the opening balance as at October 1, 2012 were adjusted to comply with the provisions of IAS 8. Under the previous version of IAS 19, the following changes would have been applicable as compared to the values cur- rently calculated for fiscal year 2013/14:
Reduction in the net income for the year by € 1,158 thousand An increase in non-current receivables and financial assets by € 19,233 thousand and a respective reduction in provisions for pensions by € 127,745 thousand
An increase in generated group equity by € 98,475 thousand A decrease in deferred tax assets or a respective increase in deferred tax liabilities by € 48,503 thousand
Main estimates and assumptions
Accounting and measurement in the consolidated financial statements are influenced by a number of estimates and assumptions, which are based on past experience as well as additional factors, including expectations about future events. All estimates and assessments are subject to continuous re- view and re-evaluation. The use of estimates and assumptions is especially necessary in the following areas:
Impairment of goodwill
Goodwill is tested for impairment at least annually in line with the accounting and measurement methods. In this context, the recoverable amount is calculated on the basis of the value in use (Note 14). The calculation of the value in use requires estimates of the future cash flow in particular, on the basis of calculations made for planning purposes. The impairment test of the Aurubis Hamburg Copper Products cash-generating unit (CGU) resulted in no impairment of goodwill in the cur- rent or the past fiscal year. A 10 % reduction in the predicted cash flow or an increase of 0.5 percentage points in the WACC after taxes from 7.5 % to 8.0 % would also not result in the need to recognize any impairment losses.
During the previous fiscal year, an impairment test had result- ed in the complete write-down of the goodwill of the Aurubis Stolberg cash-generating unit (CGU) in the amount of € 6,322 thousand (see Note 14).
Fair values in conjunction with business combinations Acquired assets, liabilities and contingent liabilities are recog- nized with their fair values when accounting for business com- binations. DCF-based procedures, whose results depend on assumed future cash flows and other assumptions, are often used. The valuation of contingent liabilities depends signifi- cantly on the assumptions with respect to the future resource outflows and the probability of their occurrence.
Fair values of derivatives and other financial instruments The fair values of financial instruments for which there are no quoted prices in an active market are determined on the basis of mathematical procedures and are influenced by assump- tions specific to the instrument. Estimates have a significant influence when the fair value is to be determined for financial instruments for which at least one significant parameter is not based on observable market data (Level 3 of the fair value hi- erarchy). The selection and application of suitable para meters and assumptions require an assessment by management. Extrapolation and interpolation procedures have to be applied in particular when data are derived from uncommon market transactions.
Detailed information can be found in the section entitled “ Additional disclosures on financial instruments” on page 190. Pension provisions and other provisions
The employees’ company pension scheme in the Aurubis Group includes defined benefit and defined contribution commitments.
Obligations deriving from defined benefit pension plans are measured in accordance with actuarial procedures. These procedures are based on several actuarial assumptions, such as, for example, the assumed interest rate, expected remuner- ation and pension developments, employee fluctuations and life expectancy. In the calculation of the assumed interest rate, high-quality corporate bonds with commensurate terms and currencies are used as a source of reference. Deviations of the actual development from the assumptions at the beginning of the reporting period lead to remeasurement of the net liability.