Note 26. Equity

Share capital and capital reserves

The share capital of Lenzing AG totaled EUR 40,107,738.37 as at December 31, 2023 (December 31, 2022: EUR 27,574,071.43) and is divided into 38,618,180 zero par value shares (December 31, 2022: 26,550,000 shares). The proportion of share capital attributable to one share equals roughly EUR 1.04. Each ordinary share represents an equal interest in capital and conveys the same rights and obligations, above all the right to a resolved dividend and the right to vote at the Annual General Meeting. The issue price of the shares is fully paid in. No other classes of shares have been issued.

The Annual General Meeting on April 19, 2023 authorized the Managing Board – while at the same time canceling the resolutions regarding this matter of the Annual General Meeting of April 12, 2018 – subject to the approval of the Supervisory Board, to increase share capital by up to EUR 13,787,034.68 through the issue of up to 13,274,999 zero par value shares (“authorized capital”) – also in tranches – in exchange for cash and/or contributions in kind, within five years from entry in the commercial register. The proportion of authorized capital attributable to one share equals roughly EUR 1.04. This authorized capital was recorded in the commercial register on May 26, 2023.

With effect from July 2023, Lenzing AG carried out a capital increase that had been approved by the Annual General Meeting on April 19, 2023. A total of 12,068,180 new shares were issued. The share capital was fully paid in. The change in share capital and capital reserves is attributable to this capital increase.

In addition, a resolution of the Annual General Meeting on April 19, 2023 – authorized the Managing Board – while at the same time canceling the resolutions regarding this matter of the Annual General Meeting of April 12, 2018 – to issue, subject to the approval of the Supervisory Board, convertible bonds by April 19, 2028 in one or several tranches that grant or provide for the subscription or conversion right or a subscription or conversion obligation for up to 13,274,999 shares of the company (“contingent capital”). They can be serviced through the contingent capital and/or treasury shares.

The Annual General Meeting on April 26, 2022 authorized the Managing Board – while at the same time canceling the resolutions regarding this matter of the Annual General Meeting of June 18, 2020 and subject to the approval of the Supervisory Board – to purchase treasury shares of the company for a period of 30 months starting on the day of the resolution. The treasury shares acquired by the company may not exceed 10 percent of the company’s share capital. The equivalent to be paid for the repurchase must be within a range of +/-25 percent of the weighted average closing price of the last 20 stock exchange days prior to the start of the corresponding repurchasing program of the Lenzing share. The Managing Board was also authorized to withdraw repurchased treasury shares without any further resolution by the Annual General Meeting subject to the approval of the Supervisory Board (including the authorization of the Supervisory Board to adopt changes to the articles of association resulting from withdrawing the shares), or to resell them and to determine the conditions of sale. This authorization can be exercised in full, in part and in pursuit of one or several objectives by the company, by a subsidiary (Section 189a no. 7 of the Austrian Commercial Code) or by third parties for the company’s account. In addition, the Management was authorized for a period of five years from the date of the resolution to adopt the sale of treasury shares, with the consent of the Supervisory Board, in any manner permitted by law other than through the stock exchange or public offer, also excluding shareholders’ repurchasing rights (subscription rights), and to determine the conditions of sale.

The Managing Board did not utilize the authorizations existing on or before December 31, 2023, to issue convertible bonds and buy back treasury shares in the reporting period.

The capital reserves represent appropriated reserves of Lenzing AG that may only be used to offset an accumulated loss by Lenzing AG. These reserves were created from the inflow of funds received by Lenzing AG from shareholders in excess of share capital.

Other reserves

Other reserves include all accumulated other comprehensive income and consist of the foreign currency translation reserve, the reserve for financial assets measured at fair value through other comprehensive income, the hedging reserve and actuarial gains/losses.

The amounts attributable to the components of other comprehensive income in 2023 and 2022 include the following:

The hedging reserve developed as follows:

The fair value changes from cash flow hedges recognized in the reporting period relate to hedging against currency risks from the operating business, hedging against interest rate/currency risks from taking out loans, and hedging against gas price risks (see note 35, section “Derivative financial instruments and hedges”).

The above amounts from the reclassification to profit or loss of cash flow hedges from gas swaps and forward foreign exchange contracts are reported primarily under revenue and cost of sales as part of earnings before interest and tax (EBIT). The above amounts from the reclassification to profit or loss of cash flow hedges from interest rate- and currency-interest rate swaps are reported under financial result.

Retained earnings

Retained earnings comprise the following:

The unappropriated revenue reserves of Lenzing AG can be released at any time and distributed to shareholders as part of accumulated profits. Austrian law only permits the distribution of dividends from accumulated profits as stated in the approved annual financial statements of the parent company prepared in accordance with the Austrian Commercial Code.

The following dividends were approved by the Annual General Meeting and paid to the shareholders of Lenzing AG:

The loss for the year according to the Austrian Commercial Code (UGB) for the 2023 financial year of Lenzing AG is to be appropriated as follows:

Hybrid capital

In December 2020, a subordinated perpetual bond (hybrid capital) with a total volume of EUR 500,000 thousand and a coupon of 5.75 percent was issued. The hybrid capital has a perpetual tenor and can be called or redeemed by Lenzing AG on December 7, 2025 at the earliest. Investors have no call rights. If the hybrid capital is not called, the hybrid capital will carry a changed interest rate from December 8, 2025 (then applicable 5-year swap rate plus a margin of 11.208 percent).

Interest will be due and payable in arrears on December 7 of each year unless Lenzing AG decides to defer such interest payment. Outstanding deferred interest must be paid under certain circumstances, in particular when the Annual General Meeting of Lenzing AG resolves to pay a dividend.

The bond meets the criteria for equity pursuant to IAS 32 (Financial Instruments: Presentation). Accordingly, coupons are presented as part of appropriation of profits in the consolidated income statement.

Non-controlling interests

Non-controlling interests represent the investments held by third parties in consolidated group companies. The Group companies with non-controlling interests are listed in note 41 under “Consolidated companies”. These are companies in which the Lenzing Group holds an interest of less than 100 percent.

Of the non-controlling interests as at December 31, 2023, EUR 308,186 thousand (December 31, 2022: EUR 274,985 thousand) related to LD Celulose S.A. (LDC), Indianópolis, Brazil, which is allocated to the Pulp Division segment. As of December 31, the non-controlling shareholders held 2023 49.0 percent (December 31, 2022: 49.0 percent) of the capital and voting rights of the non-listed LDC, and have a put option to sell their shares (see note 3 and note 35). LDC’s core business consists of the production and sale of pulp.

The following table provides summarized financial information on LDC in accordance with IFRS (100 percent):

Non-controlling interests in equity include PT. South Pacific Viscose (SPV), Purwakarta, Indonesia, which is assigned to the Segment Division Fiber. The non-controlling interests in SPV totaled EUR minus 6,987 thousand as at December 31, 2023 (December 31, 2022: EUR 10,329 thousand). As at December 31, 2023 , non-controlling shareholders held 5.78 percent (December 31, 2022: 8.13 percent) of the capital and voting rights in SPV, which is not publicly listed. The core business of SPV is the production and sale of wood-based cellulosic fibers.

The following table provides summarized financial information on SPV in accordance with IFRS (100 percent):

The following shares of other comprehensive income are attributable to non-controlling interests in the subsidiaries of Lenzing AG: