Note 38. Related party disclosures

Overview

Related parties of the Lenzing Group include, in particular, the member companies of the B&C Group together with its subsidiaries, joint ventures and associates and its corporate bodies (executive board/management and supervisory board, where applicable) as well as close relatives of the members of the corporate bodies and companies under their influence (see note 1, section “Description of the company and its business activities” and note 39). The amounts and transactions between Lenzing AG and its consolidated subsidiaries are eliminated through consolidation and are not discussed further in this section

B&C Privatstiftung is managed by a board of trustees. No member of the Managing Board of Lenzing AG is a member of this board of trustees or the management/Managing Board of a subsidiary of B&C Privatstiftung, with the exception of subsidiaries of the Lenzing Group. The Lenzing Group has no influence over the business activities of B&C Privatstiftung.

The members of the corporate bodies of Lenzing AG (in particular, the Supervisory Board) and the above-mentioned entities are, in some cases, also members of the corporate bodies or shareholders of other companies with which Lenzing AG maintains ordinary business relationships. The Lenzing Group maintains ordinary business relationships with banks that involve financing, investing and derivatives.

Relationship with related companies

In connection with the tax group established with B&C Group (see note 29) the Lenzing Group recognized a tax credit of EUR 0 thousand through profit or loss in 2023 (2022: EUR 2,660 thousand). In 2023, the payment or advance payment respectively of the tax allocation to the B&C Group totaling EUR 153 thousand (2022: EUR 20,679 thousand) and a repayment of the tax allocation from previous years from the B&C Group in the amount of EUR 10,590 thousand (2022: EUR 0 thousand) occurred pursuant to the contractual obligation. As of December 31, 2023, the Lenzing Group recognized a liability to the B&C Group of EUR 4,759 thousand from the tax allocation (December 31, 2022: receivable of EUR 10,438 thousand). The deferred tax on the tax loss of EUR 48,020 thousand (December 31, 2022: EUR 4,626 thousand) was recognized under deferred tax assets. Income tax income of EUR 38,893 thousand was recognized in 2023 as a result of the tax allocation to B&C Group (2022: EUR 2,403 thousand).

Relationships with companies accounted for using the equity method and their material subsidiaries

Transactions with companies accounted for using the equity method and their material subsidiaries relate primarily to:

The scope of material transactions and the outstanding balances with companies accounted for using the equity method and their major subsidiaries are as follows:

In relation to trade receivables due from companies accounted for using the equity method, EUR 1,720 thousand of income (2022: EUR 90 thousand of income) was recognized from impairment losses (expense) and reversals of impairment losses (income) and EUR 3,583 thousand of expense (2022: EUR 1,417 thousand of expense) was recognized on loans to companies accounted for using the equity method, and their subsidiaries.

Kelheim Fibers GmbH, Kelheim, Germany, a subsidiary of the equity-accounted investee EQUI-Fibres Beteiligungsgesellschaft mbH, Kelheim, Germany, received a long-term, unsecured loan of EUR 5,000 thousand from Lenzing AG in 2017. The interest reflects standard bank rates.

LD Florestal S.A. received a long-term, unsecured loan of EUR 13,679 thousand from the fully consolidated subsidiary LD Celulose S.A. in the 2023 financial year. The interest reflects standard bank rates. In the 2019 financial year, LD Florestal S.A. issued a long-term unsecured loan in the amount of EUR 27,913 thousand to the fully consolidated subsidiary LD Celulose S.A. The interest reflected standard bank rates. The loan liability was fully repaid as at December 31, 2023 (December 31, 2022: EUR 2,236 thousand of the loan liability utilized). In addition, LD Florestal S.A. granted LD Celulose S.A. a land use right in the 2020 financial year. The carrying amount of the resulting lease liability amounts to EUR 117,677 thousand as at December 31, 2023 (December 31, 2022: EUR 46,098 thousand).

There were no major transactions with the other non-consolidated subsidiaries in 2022 and 2023.

Relationships with members of the Managing Board and Supervisory Board of Lenzing AG

The remuneration expensed for key management personnel, which comprises the active members of the Managing Board and Supervisory Board of Lenzing AG, in line with their functions is summarized below (including changes in provisions):

The benchmark for the long-term bonus component of the members of the Managing Board (long-term incentive/LTI) consists of selected key indicators of the Lenzing Group, each over a three-year calculation period. In addition, the company’s capital market performance is assessed in comparison with a group of selected listed companies during these periods.

The employee representatives on the Supervisory Board who were delegated by the Works Council are entitled to regular compensation (wage or salary plus severance and jubilee benefits) under their employment contracts in addition to the compensation for their activity on the Supervisory Board (in particular attendance fees). This compensation represents appropriate remuneration for their role/activities performed in the company.

In line with customary market and corporate practice, Lenzing AG also grants additional benefits, which are considered non-cash benefits, to the members of the Managing Board, selected senior executives and Supervisory Board members. One example of such benefits is insurance coverage (D&O, accident, legal protection etc.), whereby the costs are carried by the Lenzing Group. The insurers receive total premium payments, i.e. there is no specific allocation to the Managing Board and the Supervisory Board. In addition, the members of the Managing Board and selected senior executives are provided with company vehicles. The members of the Managing Board and the Supervisory Board are also reimbursed for certain costs incurred, above all travel expenses. The principles of the remuneration system for the Managing Board and the Supervisory Board are described in detail and disclosed in the 2023 remuneration report of the Lenzing Group.

The members of the Managing Board and Supervisory Board received no advances, loans or guarantees. The Lenzing Group has not entered into any contingencies on behalf of the Managing Board or Supervisory Board.

Expenses of EUR 1,469 thousand in total (2022: income of EUR 826 thousand) were recognized through profit or loss or as revaluation through other comprehensive income with relation to post-employment benefits for former members of the Managing Board of Lenzing AG. The present value of the pension provision recognized in this context, after deduction of the fair value of plan assets (net obligation), amounted to EUR 5,548 thousand as at December 31, 2023 (December 31, 2022: EUR 4,923 thousand).