Note 22. Investments accounted for using the equity method

Investments accounted for using the equity method comprise the following:

The major investments accounted for using the equity method include, in particular, the investments in EQUI-Fibres Beteiligungsgesellschaft mbH (EFB), Kelheim, Germany, which is assigned to the Segment Division Fiber, Lenzing Papier GmbH (LPP), which is assigned to the Segment “Others” and LD Florestal S.A. (LDF), Indianópolis, Brazil, which is assigned to the Segment Division Pulp. For the strategic importance of the other investments accounted for using the equity method and their relationship with the Lenzing Group see note 39.

Investments accounted for using the equity method developed as follows:

The Lenzing Group recognizes both, measurement effects and the results from investments accounted for using the equity method, together in income from investments accounted for using the equity method.

In the 2022 financial year, an impairment of EUR 3,114 thousand (2021: EUR 0 thousand) was recognized on the outstanding purchase price receivables and non-current loans due from the buyer of EFB (and its subsidiaries) (see note 38, credit risk). The carrying amounts of the outstanding purchase price receivables and non-current loans due from the buyer of EFB (and its subsidiaries) total EUR 7,564 thousand as at December 31, 2022 (December 31, 2021: EUR 10,678 thousand) and are reported under financial assets. They carry standard bank interest rates.

In March 2021, the interest in the joint venture Hygiene Austria LP GmbH, Wiener Neudorf, Austria, which was previously accounted for using the equity method, was divested. The disposal led to the deconsolidation of the interest. The divestiture incurred a loss of EUR 4,536 thousand. A cash purchase price of EUR 1 was paid. Additionally, a long-term performance-related purchase price component was agreed (earn-out). This earn-out depends on the company’s future profitability and was set at EUR 0 thousand as at December 31, 2022 (December 31, 2021: EUR 0 thousand). The loan granted to Hygiene Austria LP GmbH in the 2020 financial year was waived as part of the divestiture and a loss of EUR 2,000 thousand was recognized (see note 39). The main activity of HGA, which is not publicly listed, was the production and sale of protective masks, in particular mouth-nose protective masks as well as FFP2 masks.

The Lenzing Group holds a lien on the remaining shares of EFB. In addition, there is a non-current earnings-related component of the purchase price, which is dependent on the company’s future business development and is reported under other non-current assets at the discounted present value of EUR 4,087 thousand as at December 31, 2022 (December 31, 2021: EUR 4,087). Moreover, the buyer was granted a credit line of up to EUR 3,091 (December 31, 2021: EUR 5,379 thousand), which can be utilized up to December 31, 2025 at the latest in the event of adverse changes in the framework conditions for EFB on the market. The credit line had not been used as at December 31, 2022 and in the previous year as at December 31, 2021.

The Lenzing Group held 20 percent of capital and voting rights as at December 31, 2022 (December 31, 2021: 20 percent). The core business of EFB, which is not publicly listed, is the production and marketing of wood-based cellulosic fibers. The relations between the Lenzing Group and this company are described in note 39.

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

The reconciliation of equity to the carrying amount of the investment in EFB is as follows:

The Lenzing Group held 40 percent of capital and voting rights in LPP as at December 31, 2022 (December 31, 2021: 40 percent). The core business of LPP, which is not publicly listed, is the production of cellulose-based products, in particular paper. The relations between the Lenzing Group and this company are described in note 39.

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

The reconciliation of equity to the carrying amount of the investment in LPP is as follows:

The Lenzing Group held 50 percent of the capital and voting rights in LDF as at December 31, 2022 (December 31, 2021: 50 percent). The core business of LDF, which is not publicly listed, is granting rights of use. The relations between the Lenzing Group and this company are described in note 39.

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

The reconciliation of equity to the carrying amount of the investment in LDF is as follows:

The investments in associates represent shares in companies in which the Lenzing Group can exert significant influence over financial and operating policies. Joint ventures are joint arrangements managed by the Lenzing Group together with one or more partners, whereby the Lenzing Group has rights to the net assets of the arrangement.