lenzing.com

Note 35. Capital risk management

General information

The overriding objective of equity and debt management in the Lenzing Group is to optimize the income, expenditures and assets of the individual operations/business units and of the Group as a whole in order to achieve and maintain sustainably strong economic performance and a sound balance sheet structure. An important role in this process is played by financial leverage capacity, the protection of sufficient liquidity at all times and a clear focus on key cash-related and performance indicators in line with the Group’s strategic course and long-term goals. This protects the ability of the group companies to operate on a going concern basis. In addition, the authorized capital and contingent capital give Lenzing AG greater flexibility in raising additional equity in order to take advantage of future market opportunities.

The equity management strategy followed by the Lenzing Group is designed to ensure that Lenzing AG and the other group companies have an adequate equity base to meet local requirements. For further informations to the financial convenants details see note 36.

Management uses an adjusted equity ratio for internal control purposes. Adjusted equity is calculated in accordance with IFRS and comprises equity as well as investment grants less the related deferred taxes. The adjusted equity ratio (= adjusted equity in relation to total assets) equaled 37.8 percent as at December 31, 2022 (December 31, 2021: 39.7 percent).

Adjusted equity is calculated as follows:

Adjusted equity
EUR '000

 

 

31/12/2022

31/12/2021

Equity

2,025,895

2,072,085

+

Government grants

82,774

57,857

-

Proportional share of deferred taxes on government grants

(20,045)

(14,238)

Total

2,088,625

2,115,704

The dividend policy of Lenzing AG, as the parent company of the Lenzing Group, is based on the principles of continuity and a long-term focus in order to support the future development of the company, to distribute dividends to shareholders in line with the company’s opportunity and risk situation, and to appropriately reflect the interests of all other stakeholders who are decisive for the company’s success.

Net financial debt

The Supervisory Board and Managing Board of Lenzing AG regularly review the development of net financial debt because this indicator is an extremely important benchmark not only for the Group’s management, but also for the financing banks. The ratio of net financial debt to EBITDA is particularly relevant. The continued optimal development of the Lenzing Group is only possible with convincing internal financing strength as the basis for increased debt capacity.

Interest-bearing financial liabilities are classified as follows:

Interest-bearing financial liabilities
EUR '000

 

31/12/2022

31/12/2021

Non-current financial liabilities

2,071,948

1,981,036

Current financial liabilities

250,282

120,125

Total

2,322,230

2,101,161

Liquid assets consist of the following:

Liquid assets
EUR '000

 

31/12/2022

31/12/2021

Cash and cash equivalents

446,873

1,113,279

Liquid bills of exchange (in trade receivables)

6,393

10,841

Total

453,265

1,124,120

Net financial debt in absolute terms and in relation to EBITDA (see note 4) is as follows:

Net financial debt (absolute)
EUR '000

 

 

31/12/2022

31/12/2021

Interest-bearing financial liabilities

2,322,230

2,101,161

-

Liquid assets

(453,265)

(1,124,120)

Total

1,868,965

977,041

Net financial debt in relation to EBITDA
EUR '000

 

31/12/2022

31/12/2021

EBITDA

241,916

362,941

Net financial debt / EBITDA

7.7

2.7

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