Financial position
The task of Group Treasury is to provide optimum liquidity and to control the Group’s liquidity to ensure that the balance sheet structure is in equilibrium in the long term. Control and monitoring are carried out on the basis of defined financial ratios. Net debt and liquidity are controlled in the medium and short term by means of regular cash flow forecasts. The main 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 expense is covered by earnings before interest, taxes, depreciation and amortization (EBITDA).
Since we use the operating result for control purposes in the Group, the Group’s operating key financial ratios are present- ed as follows:
Key Group financial ratios
Operating 9/30/2013 9/30/2012
Net borrowings / EBITDA 1.7 0.2
Interest coverage
= EBITDA / net interest expense 7.8 11.7
Analysis of liquidity and funding
The cash flow statement shows the cash flows in the Group and how the funds are generated and used.
The net cash flow was € – 86 million (€ 383 million in the pre- vious year) due in large part to the decline in earnings and the build-up of working capital. The working capital was built up due to the maintenance and repair shutdown and the start-up of a new facility to process all of the anode slimes accumulated in the Group at the Hamburg site. This led to higher invento- ries of precious metal-bearing intermediates and a low level of trade accounts payable.
Investments in fixed assets (including financial fixed assets) amounted to € 185 million (€ 169 million in the previous year) and mainly comprised investments in property, plant and equipment. The largest individual investments were the expansion of the anode slime processing capacity and invest- ments in connection with the maintenance and repair shut- down at the Hamburg site. Additional investments were made in Pirdop to improve and expand production capacities. A free cash flow of € – 271 million (€ 215 million in the previ- ous year) results after deducting investments in fixed assets from the net cash flow. Cash outflow from investing activities amounted to € 174 million compared to € 155 million in the previous year.
Cash outflow from financing activities amounted to € 376 mil- lion compared to a cash outflow of € 51 million in the previ- ous year. The higher cash outflow was mainly due to the early repay ment of part of the bonded loan issued in February 2011 as well as the scheduled return of external funds taken up. Interest payments of € 37 million (€ 44 million in the previous year) and dividend payments to shareholders and non- controlling interests of € 62 million (€ 55 million in the previous year) were incurred.
Source and application of funds in € million
Cash and cash equivalents 9/30/2012
Cash outflow from operating
activities (net cash flow)
Cash outflow from investing activities Cash outflow from financing activities
Cash and cash equivalents
9/30/2013
The reduction in cash and cash equivalents was mainly due to the operating business activities, investing activities and the partial redemption of borrowings. Cash and cash equivalents totaling € 33 million (€ 669 million in the previous year) were available to the Group as at September 30, 2013.
The Group’s borrowings decreased to € 498 million as at September 30, 2013 (€ 774 million in the previous year). After deducting cash and cash equivalents of € 33 million (€ 669 million in the previous year), net borrowings amounted to € 465 million as at September 30, 2013 (€ 105 million in the previous year).
Net borrowings in the Group
in € million 9/30/2013 9/30/2012
Borrowings 498 774
Less: cash and cash equivalents (33) (669)
NET BORROWINGS 465 105
In addition to cash and cash equivalents, the Aurubis Group has unused credit facilities and thus adequate liquidity reserves. Parallel to this, the Group makes selective use of the sale of receivables without recourse in conjunction with factoring agreements as an off-balance-sheet financial instrument.
669 86
174
376
Analysis of capital expenditure
BU Primary Copper: large-scale shutdown in Hamburg, capacity expansion and improvements in environmental protection are the cornerstones of capital expenditure Capital expenditure totaled € 104 million in BU Primary Copper during the past fiscal year. The large-scale shutdown in con- centrate processing at the Hamburg site carried out at the turn of the fiscal year was the primary focus of capital expen- diture. In addition, capital expenditure was applied to the expansion of production capacities, improvements in environ- mental protection and the leveraging of cross-BU synergies. In September 2013 the scheduled large-scale shutdown in concentrate processing in the primary copper production sector started up in Hamburg, lasting until October 2013. The main concentrate processing facilities were completely over- hauled. The last significant measures for the Future RWO pro- ject were also carried out during the shutdown. The capacity expansion of the tankhouse included in this project was finally completed.
A significant level of capital expenditure went into infrastruc- ture at the Hamburg site in the past fiscal year.
Additional capital expenditure was dedicated to the Pirdop 2014 project at our Bulgarian site in Pirdop. The first steps of the capacity expansion and the improvements in environmen- tal protection have started up already. The Pirdop 2014 project has a total budget of € 44.2 million and includes measures to improve environmental protection and to expand the concen- trate processing capacity in the primary smelter. The remain- ing measures from this project will be implemented in the next two fiscal years.
At the Olen site, in addition to replacement and maintenance projects, capital expenditure focused first and foremost on improving environmental protection and leveraging synergy effects in a cross-BU project within the Group.
BU Recycling/Precious Metals: capital expenditure for replacements and expansions are key
Capital expenditure totaled € 45 million in BU Recycling/ Precious Metals during fiscal year 2012/13.
Capital expenditure at the Lünen site in the past fiscal year was primarily applied to various replacement and mainten ance investments in the infrastructure. This included renovations to the primary smelter’s extra filter and the replacement of one of the existing anode furnace filters.
Furthermore, capital expenditure was utilized to continue using steam to produce electricity. The new turbine facility will start up by the end of 2013.
Capital expenditure in € million 111 151 185 155 115 08/09 09/10 10/11 11/12 12/13
In addition, initial investments were made at the Lünen site for internal electrolyte processing from the production facili- ties in Olen.
The project to process all of the anode slimes that accumulate in the Group (ASV 2013) ended according to schedule in 2013 and production has started.
A new end smelting furnace was successfully commissioned to expand smelting capacities in the sampling sector. We have begun the construction work to replace the lead refinery. The plan is to complete and start up the refinery in fiscal year 2014/15.
BU Copper Products: capital expenditure mainly flowing into equipment modernization and quality improvements Capital expenditure in BU Copper Products amounted to € 36 million, most of which was used for restructuring measures and investments in Business Line Flat Rolled Prod- ucts. The capital expenditure for this business line totaled € 22 million and was specifically applied to the relocation of the finished copper strip line from Finspång to Zutphen, including investments in buildings and infrastructure as well as measures to relocate the machine park. The Buffalo site was affected by this to a smaller extent, as fabrication was expanded there.
Capital expenditure in Business Line Rod & Shapes included several coordinated measures to increase efficiency and im- prove product quality in all five production lines.
Capital expenditure in Bars & Profiles was connected to the completion of the production relocation from Yverdon-les- Bains to Olen.
OVERALL STATEMENT ON THE ECONOMIC