Note 39. 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 “Description of the company and its business activities” and note 40). 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 30), the Lenzing Group recognized a tax credit of EUR 2,660 thousand through profit or loss in 2022 (2021: EUR 747 thousand). Contractual obligations resulted in the payment or advance payment of tax allocations totaling EUR 20,679 thousand in 2022 (2021: EUR 15,285 thousand). The Lenzing Group recognized a receivable of EUR 10,438 thousand towards B&C Group from the tax allocation as at December 31, 2022 (December 31, 2021: liability of EUR 12,644 thousand). The deferred tax on the tax loss of EUR 4,626 thousand (December 31, 2021: EUR 0 thousand) was recognized under deferred tax assets. Income tax income of EUR 2,403 thousand was recognized in 2022 as a result of the tax allocation to B&C Group (2021: income tax expense of EUR 11,900 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:

Bad debt provisions of EUR 90 thousand for trade receivables from companies accounted for using the equity method were recognized to profit or loss as income in 2022 (2021: EUR 1,160 thousand expense).

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.

Hygiene Austria LP GmbH received a long-term, unsecured loan of EUR 2,000 thousand from Lenzing AG in the 2020 financial year. The interest reflected standard bank rates. In the 2021 financial year, this loan was waived as part of the divestiture of Hygiene Austria LP GmbH. Lenzing AG guaranteed up to a maximum of EUR 1,000 thousand to a supplier of Hygiene Austria LP GmbH until the divestiture of Hygiene Austria LP GmbH.

LD Florestal S.A., issued an unsecured loan of EUR 27,913 thousand to the fully consolidated subsidiary LD Celulose S.A. in 2019, which carries standard bank interest rates. EUR 2,236 thousand of the loan were drawn down as at December 31, 2022 (December 31, 2021: EUR 14,748 thousand). 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 46,098 thousand as at December 31, 2022 (December 31, 2021: EUR 36,941 thousand).

There were no major transactions with the other non-consolidated subsidiaries in 2021 and 2022.

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 2022 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.

Post-employment benefits of EUR 826 thousand were recognized for former members of the Managing Board of Lenzing AG or their surviving dependents in the form of income on the income statement and allocations to other comprehensive income (2021: EUR 12 thousand in the form of income). 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 4,923 thousand as at December 31, 2022 (December 31, 2021: EUR 6,512 thousand).