Note 27. Government grants

The amount accrued under this item resulted primarily from grants for investments in environmental protection and for general investment support.

Investment grants are reported as liabilities and recognized in profit or loss on a straight-line basis over the useful life of the subsidized investments as “Income from the release of investment grants”.

Government grants for cost reimbursements are recognized as other income in the period in which the related costs are incurred, unless the receipt of the grant is contingent on conditions that are not yet sufficiently likely to occur. Receivables from funding commitments are reported under other assets on the consolidated statement of financial position (see note 25).

Government grants of EUR 23,414 thousand were recognized in profit or loss in the reporting period (2022: EUR 16,445 thousand), resulting predominantly from promotion of research activities and energy topics. Any conditions attached to the grants were fulfilled and repayment, in full or in part, is therefore considered unlikely.

Government grants also included EUR 70,501 thousand of emission certificates as at December 31, 2023 (December 31, 2022: EUR 65,893 thousand). In accordance with Directive 2003/87/EC of the European Parliament and the European Council on a system for trading greenhouse gas emission certificates, a total of 374,539 EU-emission certificates and 23,167 UK-emission certificates were allocated free of charge to the relevant companies in the Lenzing Group for 2023 through national allocation plans (2022: 375,634 EU-emission certificates and 23,794 UK-emission certificates).

Emission certificates are capitalized at fair value at the time of allocation and reported under other current assets (see note 25). The difference between the fair value and the purchase price paid by the company for the emission certificates is recorded under government grants. At the end of each reporting period, a provision is recognized for the certificates used up to that date. The amount of the provision is based on the recognized asset value of the certificates if they are covered by certificates held by the company at this reporting date. If the certificates used exceed the certificates held, the provision is based on the fair value of the certificates (to be purchased subsequently) as at the relevant reporting date. Future laws and commitments on emissions, especially in the countries of the Lenzing Group’s production sites, could lead to further precautionary measures in the future.

In the 2023 financial year, 500,000 EU emission certificates were sold (2022: 0 EU emission certificates), which had been allocated to the Lenzing Group free of charge. The income from the sale amounted to EUR 40,653 thousand (2022: EUR 0 thousand) and is included in other operating income (see note 7).

In the 2023 financial year expenses for emission certificates amounted to EUR 17,995 thousand (2022: EUR 14,999 thousand).

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