Economic development in the Aurubis Group
EQUITY AND LIABILITIES
Equity 1,877 (328) 1,549 1,567
Deferred tax liabilities 227 (155) 72 96
Non-current provisions 294 0 294 222
Non-current liabilities 316 0 316 429
Other current provisions 71 0 71 81
Current liabilities 1,192 0 1,192 1,077
Total equity and liabilities 3,977 (483) 3,494 3,472 *Adjustment for measurement effects deriving from the use of the average cost method in accordance with IAS 2, from copper price-related measurement effects on inventories and for impacts from purchase price allocations, primarily on property, plant and equipment, from fiscal year 2010/11 onwards
At € 3,494 million, total assets as at September 30, 2014 are at a similar level to the previous fiscal year (€ 3,472 million as at September 30, 2013).
The Group’s equity decreased only slightly from € 1,567 million as at the end of the previous fiscal year to € 1,549 million as at September 30, 2014, mainly due to effects of € – 53 million re- cognized directly in equity, deriving from the remeasurement of defined benefit pension plans, as well as the dividend pay- ment of € 50 million, which exceed the operating net income of € 99 million. Overall, the equity ratio is 44.3 % compared to 45.1 % as at the end of the previous fiscal year.
The increase in non-current provisions resulted from an increase in pension liabilities due to the effects of the re- measurement of defined benefit pension plans mentioned above.
Borrowings reduced from € 498 million as at September 30, 2013 to € 452 million as at September 30, 2014, primarily due to scheduled redemption of external borrowing. In this connection, current borrowings amounted to € 165 million as at September 30, 2014 (€ 84 million in the previous year) and non-current borrowings were € 287 million (€ 414 million in the previous year).
Return on capital (operating)
Operating ROCE (EBIT rolling last four quarters) increased from 7.0 % in the previous year to 8.5 % in the current fiscal year due to the improvement in the operating result and the reduction in working capital.
Operating return on capital employed (ROCE)
in € million 9/30/2014 9/30/2013
Fixed assets 1,397 1,384
Inventories 1,330 1,432
Trade accounts receivable 425 395 Other receivables and assets 156 228 – Trade accounts payable (801) (818) – Provisions and other liabilities (461) (430)
Capital employed as at the
balance sheet date 2,046 2,191
Earnings before taxes (EBT) 138 114
Financial result 36 39
Earnings before interest and
taxes (EBIT) 174 153
Return on capital employed
( operating ROCE) 8.5 % 7.0 % Certain prior-year figures have been adjusted
Net assets (IFRS)
Total assets decreased slightly from € 4,035 million as at the end of the previous fiscal year to € 3,977 million as at Septem- ber 30, 2014, mainly due to the decline in inventories.
Balance sheet structure of the Aurubis Group
in % 9/30/2014 9/30/2013
Fixed assets 36 36
Inventories 44 48
Receivables, etc. 15 15
Cash and cash equivalents 5 1
100 100
Equity 47 48
Provisions 15 14
Liabilities 38 38
100 100
Certain prior-year figures have been adjusted
The Group’s equity decreased from € 1,949 million as at the end of the previous fiscal year to € 1,877 million as at Septem- ber 30, 2014, mainly due to effects of € – 53 million recognized directly in equity, deriving from remeasurement of defined benefit pension plans as well as the dividend payment of € 50 million, which exceed the net income of € 44 million. Overall, the equity ratio is 47.2 % compared to 48.3 % as at the end of the previous fiscal year.
The increase in pension liabilities is mainly due to the effects of the remeasurement of defined benefit pension plans menti- oned above.
Borrowings reduced from € 498 million as at September 30, 2013 to € 452 million as at September 30, 2014, primarily due to scheduled redemption of external borrowings. In this connection, current borrowings amounted to € 165 million as at September 30, 2014 (€ 84 million in the previous year) and non-current borrowings were € 287 million (€ 414 million in the previous year).
Return on capital (IFRS)
ROCE refers to the return on capital employed.
The operating result is used for control purposes in the Group. The operating ROCE is explained in the section “Return on capital (operating)”.
Financial position of the Aurubis Group
The Group’s liquidity sourcing is secured through a combinati- on of the Group’s cash flow, short-term and long-term borro- wings, as well as lines of credit available from our banks. It is the task of the Group’s Treasury function to provide adequate credit resources and lines of credit. In this manner, fluctuations in cash flow developments can be compensated at any time. The development of the Aurubis Group’s liquidity position is monitored regularly on a timely basis. The control and monito- ring functions are carried out on the basis of defined financial ratios.
The main key ratio for controlling debt is debt coverage, which calculates the ratio of net borrowings to earnings before interest, taxes, depreciation and amortization (EBITDA) and shows the number of periods required to redeem the existing borrowings from the Group’s income assuming an unchanged earnings situation.
The interest coverage ratio expresses how net interest expen- se is covered by earnings before interest, taxes, depreciation and amortization (EBITDA).
Our long-term objective is to achieve a well-balanced debt structure. In this context, we consider debt coverage < 3 and interest coverage > 5 to be well balanced.
Since we use the operating result for control purposes in the Group, the Group’s key operating financial ratios are presented as follows:
Group financial ratios
Operating 9/30/2014 9/30/2013
Debt coverage
= net borrowings/EBITDA 0.9 1.7
Interest coverage
= EBITDA/interest 9.1 7.1
Prior-year figures have been partially adjusted.
Additional control measures related to liquidity risks are outlined in the Risk and Opportunity Report in the Combined Management Report.
Analysis of liquidity and funding
The cash flow statement shows the cash flows within the Group and how funds are generated and used.
The net cash flow was € 409 million due to the improvement in earnings and the reduction in inventories. The previous year’s net cash flow of € – 86 million was impacted by lower earnings and a build-up of working capital.
Investments in fixed assets (including financial fixed assets) amounted to € 134 million (€ 185 million in the previous year). The largest individual investments at the Hamburg site were made in connection with the maintenance and repair shut- down of the primary copper production facilities and for the construction of the new lead refinery. Investments to improve and expand production capacity in Pirdop also continued in the current fiscal year.
In contrast to the forecast made in the Annual Report 2012/13, investing activities were significantly down on the previous year due to delayed investment projects, among other factors.
Source and application of funds
in € million
Cash and cash equivalents
9/30/2013
Cash inflow from operating activities
(net cash flow)
Cash outflow from investing activities
Cash outflow from financing activities
Cash and cash equivalents 9/30/2014 33 409 130 125 187
After deducting investments in fixed assets from the net cash flow, the resultant free cash flow amounts to € 275 million (€ – 271 million in the previous year). The cash outflow from investing activities amounted to € 134 million (€ 185 million in the previous year).
The cash outflow from financing activities amounted to € 125 million compared to a cash outflow of € 376 million in the previous year. The higher cash outflow during the previous year was mainly due to the early redemption of € 103.5 million, representing part of the bonded loan issued in February 2011, as well as another loan repayment of € 125 million.
Cash and cash equivalents totaling € 187 million were availa- ble to the Group as at September 30, 2014 (€ 33 million as at September 30, 2013). Cash and cash equivalents are utilized in particular for operating business activities, investing activities and repayment of borrowings.
The Group’s borrowings decreased to € 452 million as at September 30, 2014 (€ 498 million in the previous year). After deducting cash and cash equivalents of € 187 million (€ 33 million in the previous year), net borrowings amounted to € 265 million as at September 30, 2014 (€ 465 million in the previous year).
Net borrowings in the Group
in € million 9/30/2014 9/30/2013
Borrowings 452 498
Cash and cash equivalents (187) (33)
Net borrowings 265 465
In addition to cash and cash equivalents, the Aurubis Group has unutilized credit line facilities and thus has adequate liqui- dity reserves. Parallel to this, the Group makes use of the sale of receivables without recourse in conjunction with factoring agreements as an off-balance-sheet financial instrument in the context of factoring agreements.