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Note 2. Changes in accounting policies

The accounting policies applied by the Lenzing Group in 2021 remained unchanged in comparison with the previous financial year, with the exception of the changes described in this section.

Mandatory changes in accounting policies

The following new and amended standards and interpretations were adopted into EU law and required mandatory application by the Lenzing Group beginning with the 2021 financial year:

Standards/interpretations

Publication by the IASB

Mandatory application according to IASB for financial years from

Adopted by the EU as at 31/12/2021

IFRS 4

Extension of the temporary exemption from applying IFRS 9 in IFRS 4

25/06/2020

01/01/2021

yes

IFRS 16

Extension of practical expedient: Covid-19-Related Rent Concessions

31/03/2021

01/04/2021

yes

IFRS 9, IAS 39, IFRS 7, IFRS 4, IFRS 16

IBOR-Reform (Phase 2)

27/08/2020

01/01/2021

yes

The new or amended standards and interpretations applicable as of January 1, 2021 did not result in any significant changes to the consolidated financial statements of the Lenzing Group.

The following new or amended standards and interpretations had been published by the IASB prior to the preparation of these consolidated financial statements, but did not require mandatory application by the Lenzing Group for financial years beginning on or before January 1, 2021:

Standards/interpretations

Publication by the IASB

Mandatory application according to IASB for financial years from

Adopted by the EU as at 31/12/2021

IFRS 3

References to the Conceptual Framework

14/05/2020

01/01/2022

yes

IFRS 10, IAS 28

Sale or contribution of assets between an investor and its associate or joint venture

11/09/2014

unknown1

no

IFRS 14

Regulatory Deferral Accounts

30/01/2014

01/01/2016

no2

IFRS 17

Insurance Contracts

18/05/2017

01/01/2023

yes

IFRS 17

Initial Application of IFRS 7 and IFRS 9 – Comparative Information

09/12/2021

01/01/2023

no

IAS 1

Amendment of classification of liabilities as current or non-current

23/01/2020

01/01/2023

no

IAS 1

Disclosure of Accounting Policies

12/02/2021

01/01/2023

no

IAS 8

Definition of Accounting Estimates

12/02/2021

01/01/2023

no

IAS 12

Deferred Tax related to Assets and Liabilities arising from a Single Transaction

07/05/2021

01/01/2023

no

IAS 16

Property, plant and equipment – Proceeds before intended use

14/05/2020

01/01/2022

yes

IAS 37

Onerous contracts – Cost of fulfilling a contract

14/05/2020

01/01/2022

yes

Various

Annual Improvements of IFRSs 2018-2020

14/05/2020

01/01/2022

yes

1)

The IASB has deferred the effective date of this standard indefinitely.

2)

The European Commission does not recommend the adoption of interim standard IFRS 14 into EU law at the present time.

The Lenzing Group applies the practical relief for the accounting of COVID-19-related rent concessions. The change comprises a voluntary practical expedient for leases in which the Lenzing Group is the lessee. For leases to which the practical expedient is applied, this permits the Lenzing Group not to assess whether qualifying rent concessions occurring as a direct consequence of the COVID-19 pandemic are lease modifications. Rent reductions EUR 0 thousand (2020: EUR 58 thousand) were recognized as negative variable lease payments in the consolidated income statement during the 2021 financial year.

The other above-mentioned new or amended standards and interpretations were not adopted prematurely by the Lenzing Group. They are either not relevant for the Group or do not have a material impact on the earnings, assets or liabilities and the cash flows of the Lenzing Group.

The application of these standards and interpretations is generally planned following their endorsement by the EU.

Voluntary changes in accounting policies

Since the beginning of the 2021 financial year, the Lenzing Group has reported its consolidated income statement applying the cost of sales method. The previous presentation was according to the nature of expense method. The modification in the presentation of the income statement aims to enhance the international comparability of the Lenzing Group’s consolidated income statement. As part of this transition, some amounts previously affecting EBIT/EBITDA were reclassified to the financial result (capitalized borrowing costs for the production of non-current assets amounting to EUR 21,166 thousand in 2021, 2020: EUR 8,429 thousand, net interest from defined benefit plans of EUR minus 1,757 thousand in 2021, 2020: EUR minus 2,144 thousand, and loan commitment fees of EUR minus 2,432 thousand in 2021, 2020: EUR minus 2,033 thousand). All amounts were adjusted retrospectively. The Lenzing Group’s performance continues to be measured by EBITDA (earnings before interest, tax, depreciation on property, plant and equipment and right-of-use assets and amortization of intangible assets and before income from the release of investment grants) (see note 4 for reconciliation). The following table shows the reconciliation from the nature of expense method to the cost of sales method:

Reconciliation from nature of expense method to cost of goods sold method 
EUR '000

2021

Consolidated Income Statement – Cost of goods sold method

Revenue

Change in inventories of finished goods and work in progress

Own work capitalized

Other operating income

Gains or losses from the fair value measurement of biological assets

Cost of material and other purchased services

Personnel expenses

Other operating expenses

Amortization of intangible assets and depreciation of property, plant and equipment and right-of-use assets

Income from the release of investment grants

Earnings before interest and tax (EBIT)

Consolidated Income Statement – Nature of expense method

 

2,194,624

54,587

56,938

78,026

2,258

(1,203,153)

(452,617)

(367,721)

(164,269)

1,944

200,615

Revenue

2,194,624

2,194,624

 

 

 

 

 

 

 

 

 

 

Cost of sales

(1,692,760)

 

54,587

56,938

 

2,258

(1,198,921)

(329,344)

(128,984)

(151,118)

1,825

 

Gross profit

501,864

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other operating income

78,026

 

 

 

78,026

 

 

 

 

 

 

 

Selling expenses

(233,981)

 

 

 

 

 

(1,575)

(41,619)

(186,684)

(4,103)

 

 

Administrative expenses

(117,547)

 

 

 

 

 

(1,333)

(68,632)

(39,592)

(8,100)

112

 

Research and development expenses

(23,993)

 

 

 

 

 

(1,324)

(13,021)

(8,707)

(948)

7

 

Other operating expenses

(3,753)

 

 

 

 

 

 

 

(3,753)

 

 

 

Earnings before interest and tax (EBIT)

200,615

 

 

 

 

 

 

 

 

 

 

 

Reconciliation from nature of expense method to cost of goods sold method 
EUR '000

2020

Consolidated Income Statement – Cost of goods sold method

Revenue

Change in inventories of finished goods and work in progress

Own work capitalized

Other operating income

Gains or losses from the fair value measurement of biological assets

Cost of material and other purchased services

Personnel expenses

Other operating expenses

Amortization of intangible assets and depreciation of property, plant and equipment and right-of-use assets

Income from the release of investment grants

Earnings before interest and tax (EBIT)

Consolidated Income Statement – Nature of expense method

 

1,632,607

(41,299)

52,0801

59,1451

(10,334)

(898,392)

(353,609)1

(247,872)1

(160,448)

1,979

33,858

Revenue

1,632,607

1,632,607

 

 

 

 

 

 

 

 

 

 

Cost of sales

(1,386,412)

 

(41,299)

52,080

 

(10,334)

(870,705)

(255,046)

(114,701)

(148,232)

1,825

 

Gross profit

246,195

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other operating income

59,145

 

 

 

59,145

 

 

 

 

 

 

 

Selling expenses

(156,932)

 

 

 

 

 

(1,249)

(32,717)

(119,300)

(3,721)

55

 

Administrative expenses

(88,236)

 

 

 

 

 

(25,847)

(57,904)

3,224

(7,808)

99

 

Research and development expenses

(16,181)

 

 

 

 

 

(455)

(7,942)

(7,098)

(687)

 

 

Other operating expenses

(10,133)

 

 

 

 

 

(136)

 

(9,997)

 

 

 

Earnings before interest and tax (EBIT)

33,858

 

 

 

 

 

 

 

 

 

 

 

1)

Reclassification of capitalized borrowing costs, net interest from defined benefit plans and commitment fees from EBIT/EBITDA to the financial result.

In the 2020 financial year, a voluntary modification was implemented regarding the presentation of accrued liabilities. Accrued liabilities were presented within provisions until the 2020 financial year. In the course of the annual analysis to optimize presentation, the Lenzing Group identified that the liability character of this type of debt predominates. In accordance with IAS 1.41, current accruals of EUR 48,925 thousand (December 31, 2019: EUR 73,016 thousand; January 1, 2019: EUR 94,072 thousand) were therefore reclassified from current provisions to other current liabilities and non-current accruals of EUR 1,523 thousand (December 31, 2019: EUR 538 thousand; January 1, 2019: EUR 1,109 thousand) were reclassified from non-current provisions to other non-current liabilities. The total amount of liabilities consequently remains unchanged.

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